International Marketing: Walmart's South Africa Entry Report

This report delves into Walmart's international marketing strategy, specifically focusing on its entry into the South African market. It begins with an introduction to Walmart, highlighting its global presence and revenue. The report then analyzes Walmart's acquisition of a stake in Massmart, m...Read More

Running head: INTERNATIONAL MARKETING
International Marketing
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Executive Summary:
The report is a discussion on international marketing with prime focus of Walmart’s entry to
South Africa. The report begins with an introduction on Walmart and then goes on to discuss
the entry of the giant retailer into the South African market. There is also discussion on
government interference of Walmart’s entry into South Africa. The report also focuses on
how Walmart has become the new shopping stop for the shoppers of South Africa. There is
also discussion on the difficulty faced by Walmart while entering the South African market.

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Table of Contents
Introduction................................................................................................................................3
Walmart Entry into South Africa Market...................................................................................3
Government Interference on Walmart Entry to South Africa....................................................4
New Shopping Destination for South Africa Shoppers.............................................................5
Walmart’s Difficult Road to South African Market..................................................................5
Conclusion..................................................................................................................................6
References:.................................................................................................................................7

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Introduction
The report is a discussion on International Marketing. Here the report primarily focuses
on the entry of Walmart into the market of South Africa. Walmart is one of the largest retail
stores in United States that generates annual revenue of around $421 billion
(Help.walmart.com 2018). The firm has employee strength of 2.1 million and is the largest
employer in private sector across the world with operations in around 15 developing and
developed countries. Walmart follows a growth strategy of saturating a market area through
spreading out. The location of the Walmart stores remained at a distance of a day’s drive
from the distribution centre and had a reputation of low pricing.
Walmart Entry into South Africa Market
Walmart made an announcement by acquiring around 51% stake in the Massmart stores
of South Africa that would inevitably mark its foray in Africa (Ramamurti 2012). The
company however made an indication that the merger would act as a springboard and
gateway to Africa. Massmart represents the fourth largest retailer of South Africa not only in
terms of revenue and had a store format and growth strategy similar to Walmart.
Walmart’s entry in South Africa led to the generation of enough interest not only in part
of the government but also the labour and other existing business firm. There was however,
enough reason for interest because since the apartheid in South Africa there has not been a
single issue of similar nature that gave rise to considerable amount of controversy (Games
2012).
The controversy of Walmart revolved around the perceptions put forward by the
stakeholders from the government and the labour unions regarding the reputation of the firm
in harshly dealing with the trade unions and sourcing the products from the existing supply

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chain outside the country. In addition, there was also the fear of the rise in unemployment in
South Africa once Walmart enters the nation.
Government Interference on Walmart Entry to South Africa
The government of South Africa had opposition on the entry of Walmart in the country
from the very beginning (Greenberg 2013). Thus, both the government and the worker union
protested the move. The government of South Africa had a belief that entry of the American
conglomerate Walmart would not only kill jobs in South Africa but also ensure pumping in
Chinese goods into the country.
The government of the country had another persistent fear regarding the financial
influence since Walmart considered the richest retailer of the world and the second largest
corporation in the world (Luiz and Stephan 2012). The firm’s wealth accumulation placed it
above the top oil conglomerates of the nation. Therefore, the firm’s decision of merging with
Massmart for entering into the South African market happened with ease.
Walmart invested an attractive portion of money thereby implying in pumping fiscal
impetus that helped in the development of skilled workers of South Africa. The arrival of
Walmart has helped in the generation of around 4.5 billion dollars.
The American investors are usually cautious about the countries that impinge themselves
on the free market capitalism. During the time, when there were discussions about Walmart
merging with Massmart in the year 2012, the American investors waited to see how the
government of South Africa would welcome Walmart before their decision of entering the
market themselves (Beaty and Kriek 2014). Now with the tapering of the foreign investment,
Walmart had the sufficient financial influence for appeasing the government that also allowed

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it to pump sufficient money into the socio economic causes when other investors are
unwilling for indulging in any kind of risk.
New Shopping Destination for South Africa Shoppers
Shoppers of South Africa might now look forward to having a newer shopping port.
This is because the Competition Appeal Court of South Africa gave nod to Walmart’s bid on
having a share of Massmart, the local retailer of the country (Strydom 2014.). The court also
appointed a committee for studying the impacts of the deal on the local producers. This kind
of supervision had a well acceptance by the business community of South Africa. The Deputy
Executive Officer of the business community of South Africa mentioned that the merger was
a positive development in the context of foreign direct investment. The deal also helped the
country in learning the process of laying a sound foundation for the foreign investors of the
future.
Walmart’s Difficult Road to South African Market
South African government officials and unions expressed their worries about arrival of
the Walmart, the US retail giant as it would lead to job loss and encourage local
manufacturing. Some members of South African government warned about a situation where
the deal would not only hit local suppliers but would lead to huge job losses (Draper and
Scholvin 2012). There were also fears and concerns related to the decision of the Court.
While providing consent for the merger to happen the judge also allowed the US retailer in
investing more than $2 billion on its decision of merging with Massmart. This would also
encourage Walmart in promoting smaller business in South Africa through the purchase of
goods from the local farmers. This would also help in reinstating close to 500 laid off
employee of Massmart based on the pending merger outcome. South Africa would also set up
a task team for analysing the influence of merger in the economy.

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The union of South Africa had a less exciting response. The spokesperson for
Commercial, Allied and Catering Workers Union of South Africa mentioned that there was a
huge difference in terms of interest, between trade unions, workers and business fraternity
when it came to the takeover of Walmart. There could not be an exact prediction of the
impact of the deal of Walmart on the South African Market.
Conclusion
The report ends by throwing a light on the difficulty encountered by Walmart on entering
the South African market. There is also discussion on Walmart being the new shopping
destination for the South Africans. The report also discusses about the interference of the
government on the decision of Walmart. However, some Africans were of the view that giant
retailer of US would use the biggest economy of South Africa as a point of entry to the rest of
the continent.

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References:
Beaty, D. and Kriek, D., 2014. Examining the entry of Walmart into South Africa: a
stakeholder management perspective. South African Journal of Labour Relations, 38(2),
pp.78-89.
Draper, P. and Scholvin, S., 2012. The economic gateway to Africa? Geography, strategy and
South Africa's regional economic relations.
Games, D., 2012. South Africa as Africa's Gateway: A Perspective from Business.
Greenberg, S., 2013. The disjuncture of land and agricultural reform in South Africa:
Implications for the agri-food system.
Help.walmart.com. 2018. Walmart.com's History and Mission. [online] Available at:
https://help.walmart.com/app/answers/detail/a_id/6 [Accessed 17 Jan. 2018].
Luiz, J.M. and Stephan, H., 2012. The multinationalisation of South African
telecommunications firms into Africa. Telecommunications Policy, 36(8), pp.621-635.
Ramamurti, R., 2012. What is really different about emerging market multinationals?. Global
Strategy Journal, 2(1), pp.41-47.
Strydom, J.W., 2014. The relationship between key demographic profile descriptors and the
propensity for inshopping and outshopping by Sowetan residents. Southern African Business
Review, 18(1), pp.122-142.