Walmart's Competitive Strategy in China: A Case Study Report

This report provides a comprehensive analysis of Walmart's competitive strategy in the Chinese market. It begins with an introduction to business strategy and Walmart's global presence, followed by a brief summary of the case study focusing on the challenges faced by Walmart in China. The report identifies strategic issues, such as ineffective market research and underestimation of associated risks. Various strategic models, including PESTLE analysis, the Uppsala model of internationalization, and Porter's Five Forces, are used to evaluate Walmart's business strategy. The PESTLE analysis examines political, economic, social, technological, environmental, and legal factors. The Uppsala model assesses market commitment and knowledge, as well as commitment decisions and current activities. Porter's Five Forces model is also applied to analyze the competitive landscape. The report concludes with a summary of findings and recommendations for future strategic decisions.

Competitive Strategy

Executive Summary
Top executives or senior management are responsible for formulating of various business
strategy that can be used to gain competitive advantages. Management effectively analysis various
external factors that impact on strategy and growth of firm thus find best suitable option that can
contributed in achievements of company goal. This report has discussed about case study of Walmart
in china market and the way management through ineffective strategy have enter into new market to
make optimum utilisation of available opportunities.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Brief summary of the case study..................................................................................................4
Identification of strategic issue ...................................................................................................4
Relevant theories and strategic model to evaluate business strategy of Walmart.......................5
Pestle analysis ............................................................................................................................5
Uppsala model of internationalisation ........................................................................................7
Porter five force Model ...............................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is term which means various action, steps and decision that are taken
by an organisation to achieve its respective goals or gained competitive advantages in industry.
Strategies also contribute in effective coordination of various departments and ensure that
department decision needs to support overall direction of firm. Walmart is an American retail
that operates grocery stores, discount department and chain of hypermarket across worldwide to
earn maximum profitability. Company was formally established on 1962, 58 years ago by Sam
Walton to provide several products and services from home, furniture, footwear, health, beauty
to electronic items. This report has discussed on case study of Walmart in china, explained about
key issue and make use of various theoretical concepts and strategy model that have contributed
in growth and success of enterprise in retail sector. Business strategy is one of the aspect which
have been chosen to applies theories of strategy development and implementation.
MAIN BODY
Brief summary of the case study
The above case study explained that globalisation have contributed in better
interconnection between different countries and exchanged of goods and services approximately
$30 trillion. Therefore, most of the manager of the organisations has seen globalisation as an
opportunity to effectively expand and grow its business operation across worldwide. For
example: Walmart by expanding its operating in China have learned about amount of risk
involved in grabbing particular opportunity. Manager of company have misunderstood political,
social, cultural and economic factors that have caused in threat of sustainability of organisation
for longer term (Belton, 2017). So, it can be stated that manager needs to conduct complete
market analysis in order to find existing taste and preferences, economic condition and political
situation of country and adopt strategic to minimise amount of associated risk to certain level.
Identification of strategic issue
From the analysis and discussion of above case study it has been learnt that Walmart
have faced certain issue that have resulted in failure of its store in china market. Company has
faced various political, social and economical issue since it has started its first operation in
Shenzhen in 1996. Such as:
11 The most important issue that have created higher risk and cost to company is that
manager has not deeply analysed or conducted market research of china that have lead to
4

formulation of ineffective strategies. Thus, less number of people was motivated to be
part of organisation despite of huge brand image and varieties of products and services
(What is Strategic Analysis 2019).11 Second issue is that manager have just identified opportunities that is available in
external environment due to globalisation but does not undertaken associated risk that
have adversely impacted on organisation operation and objectives.11 Thirdly, manager of Walmart has assumed that current business model which it have used
in home country would also work in other country like china. Thus, manager was unable
or failed to account salient difference between nations and the way they lead to high
operation risk for organisation.
Therefore, in short it can be stated that manager have overestimated benefits of
globalisation have underestimated associated risk with it which have resulted in extra cost
and loss to enterprise (16 Strategic Planning Models To Consider, 2019).
Relevant theories and strategic model to evaluate business strategy of Walmart
Several strategy model and concept can be used to evaluate business strategy which has
been used by manager of Walmart to expand operation of firm. Pestle analysis is powerful model
that helps in identifying key factors that have resulted in failure or issue in operation of Walmart
in china market. The model has included various elements such as economic condition, political
situation and social- culture of particular country that help manager in formulating better
strategies for growth of firm (Bayo Moriones, Galdon-Sanchez and Martinez-de-Morentin,
2016). Manager of Walmart have not considered all external business environmental factors that
have lead in loss to organisation. Such as:
Pestle analysis
Political factor: Each country has different set of rules and regulation which needed to be abide
by organisation in order to grow and sustain its business operation for longer time frame.
Government keeps on changing its policies as per situation or circumstances for benefits of local
residents or business. Manager without proper knowledge of china policies and rules have
planned to expand its operation of Walmart that resulted in trouble in political relationship at
both national and local level. For example: At one occasional Walmart have founded violating
national and local laws made by china government so it have forced company to close down its
stores for temporary period of time. Even it has paid penalty and additional cost despite found
5

unclaimed for particular act so it have resulted in decreased in brand image and customers
satisfaction level of enterprise. Therefore, marketing manager in order to resolved key political
issue need to update its knowledge related to existing and new legislation of china for smooth
operation of business and achievements of predetermined goals.
Economic condition: China huge population that is around 1.3 billion people so it have
motivated Walmart manager to take steps to diversified its operation in china that have large
customers base. But manager have forgotten to undertake or compared facilities and
infrastructure of US and china that have created huge problem for organisation to operates its
stores in china market. Or in another word despite more growth in retail sector of china Walmart
have to face economic issues because of lack of infrastructure facilities as compared to West
market. Therefore, marketing manager has learned that it need to deeply research about
economic condition of any country (Hughes‐Morgan and Ferrier, 2017). Like china not only in
terms of population but also availability of infrastructure and disposable income of people to
minimise amount of associated risk.
Social factor: It is another factor that have created issued related to business strategy of Walmart
as manager have not undertaken social and culture factor of china. These factors keep on
changing as per other factors such as demand, price and availability of substitute products or
recent trends within particular industry. Social- culture is second obstacle or issue in effective
operation of business or walmart stores in china. Like people living in china has very different
taste and preferences as compared to West that have made difficult for Walmart to easily attract
and motivates or appeals customers to be part of organisation. It has struggled to understand
recent culture and social preferences of local resident of china as they have very different culture
from foreign country. Thus, manager of Walmart is not able to identified right marketing mix or
products mix which can contributed in meeting expectancy of customers. So, it can be illustrated
that manager needs to understand difference between social-culture of various countries in order
to make best or optimum utilisation of globalisation.
Technological factor: There are various innovation in technology that have forced company to
take crucial steps to make use best use of technology to fulfil requirements of customers in
effective manner. Most of the people in china are making use of electronic device to connect
with each other or buy products through online sources. Walmart have make use of digital media
and social sites such as facebook, Instragram to promote its products to end users (Kaliappen and
6

Hilman, 2017). Official websites have also provided ease to customers to select specific
products or services as per their requirements and needs thus lead to some amount of sales.
Environment factor: There are limited natural resources in environment so government and
local residents of China are forcing foreign company such as Walmart to undertake steps to
protect natural resources. Company has not make much efforts related to optimum utilisation of
resources or protection of environment that have lead in dissatisfaction and forced customers to
switch to other firm for satisfaction of their needs.
Legal Laws: There are numerous laws and regulation made by government for particular
country that need to be followed by enterprise to sustain its business. Due to lack of knowledge
of government policies of china have resulted in extra cost or less profit margin and more
associated risk related to operation of business in retail sector (Park and Hwang, 2016).
Uppsala model of internationalisation
Uppsala model is one of the theories with high innovative model describing
internationalization process within companies and how firms chose to enter nearby markets with
internationalisation concepts and how varied segments can be taken care of. Walmart company
for gaining internationalisation scope among expansion in new countries market scenario there
are state aspects and change aspects where there are various parameters worked on for gaining
stronger position within world competitive market scenario. This market model of
internationalisation holds wide pace of internationalisation where their are various market
scenarios which will enable company Walmart to establish market in China business scenarios.
State aspects: Market commitment: Walmart has to strategically focus on market commitment
paradigms where there are various factors such as development of new innovation and
consumer preference services where there are various criteria to be taken care of for
establishing wide market structure in China. Market commitment holds wide space within
functional paradigm for gaining higher strategic market factors which will enhance
stronger synergy of determinants onto larger scope which will obtain new market
determinants for larger goodwill goals. The market commitment holds strong presence
within retail industry competitive market domains for generating stronger fundamental
space among major phenomenon.
7

 Market knowledge: The company should also have market knowledge such as demand
and policy parameters, price ratios fixation parameters and building wide range of
strategic policies through which stronger synergy of innovation can be built on. The
market knowledge enables to generate high ratio of effective business frameworks,
leverage focus onto wider scenarios and focus onto gaining access to latest market
knowledge goals. Market knowledge forms specific paradigms and focus onto developing
new scenarios for generating new scope onto wider demands, which will keenly bring on
new industry paradigms further within China market domains. This has been also one of
the most new important factor for governing larger goals of gaining specific functional
scope of gaining new preferences market competitive goals (Nosratabadi, Mosavi and
Chau,2019).
Change aspects:
 Commitment decisions: Walmart commitment to market for bringing on wide range
of decisions for gaining effective market scenario shall be explored where new
customer focused products and services should be served. Commitment is also one of
the most important factor within decision making aspects for gaining larger profits
and commercial goodwill organised as per demands of market scenarios. This aspect
can be understood as highly important where commitment to focus on consumers
market standards, which will pertain wider governing parameters to yearn larger goals
within market scenarios.
 Current activities: The china market within retail industry is widely growing
currently where there are wide ranges of new activities worked on, potentially for
bringing on new working scenarios and also for potentially entering new domains of
working performance metrics. This is highly important factor for yielding new
structural effective standards, potentially also entering wider market scenarios and to
trade with strong innovation for stronger market factorisation which will leverage
new investment further (Bocken, Boons and Baldassarre, 2019).
Porter five force Model
It is another business strategy model which can be used in the development of business
strategy related to Walmart expansion in international market like china or to remove various
obstacles. Porter five force models includes five elements such as power of consumer, power of
8

supplier, threat of substitute, existing rivalry and threat of new entrance in retail sectors that
helps in identifying strategies that can helped in gaining competitive advantages in new market
(Popov, Krivorotov and Starodubets, 2019). So, it can be used by manager of Walmart for
development of strategies and effective growth of enterprise in china market. Like:
Existing rivalry: It can be stated that there are large number of enterprise in retail sector in china
market that offers varieties of products and services to customers so that they select particular
company as compared to other competitors in market. So, Walmart manager need to formulate
or developed such strategy which can helped company in gaining differentiate or competitive
positioning in retail sector. Company have to launch innovative products or delivered services in
unique, attractive way so that maximum number of customers are inspired to select products of
Walmart only for growth of firm.
Power of consumer: End users or consumers are most important or crucial for organisation that
always has more power in case of availability of large number of firm in particular industry. As
stated above in case study of Walmart china, there are numerous enterprise in retail sectors so
customers have more switching power to select products of one company to another for
fulfilment of their needs. Walmart manager in order to remove its issue or challenged have to
make use of lower power of customers by meeting their unsatisfied needs. So, that they are ready
to pay high or premium prices for getting unique, attractive and best products at particular rates
for their satisfaction level.
Power of supplier: There are numerous suppliers in retail sectors that provide good quality raw
material at affordable rates so Walmart manager need to select supplier that offer material at
reasonable rates. It also needs to build strong relationship with its suppliers so that they can help
in acquiring products within limited time frame for better satisfaction of customers’ needs
(Farajpouri Haghigh and Yazdifar, 2019). Manager need to frame strategy related to effective
researched of existing infrastructure and facilities and take helps of supplier in delivery of
products to end users in minimum cost or prices so that maximum value can be given to people
living in china.
Threat of new entrance: Due to globalisation and innovation in technology more and more
firms are planning to enter into retail sector of china market for grasping opportunity of large
market share. So, like other competitors Walmart is also facing threat of increasing competition
of new entrance within retail sectors therefore manager have to developed strategy that can help
9

in creating barrier for new entrance. Or in other words, marketing manager by delivering services
beyond customer’s expectancy or adapting to social- culture, political and economic of china can
created strong brand image thus created hindrances or difficulty for new enterprise to enter into
market.
Threat of substitute products: There are some small firm that tries to imitate or copied
products of particular company such as Walmart in order to attract its customers and earn more
profit (Hakobyan and et.al., 2019). So, Walmart manager in order to protect company from loss
or various issues needs to patent and copyrights its products and technology so that most
customers are motivated to have purchased from it than other competitors in market.
CONCLUSION
It can be concluded from above case study of Walmart in China market that due to
ineffective market research by manager firm have to faced several issue or close down its stores.
In order to develop effective business strategy, it is responsibility of manager to understand
various elements of external environment like policies, economic condition and preference of
people so that company can sustain in market for many years. At last it can be stated that
manager by making certain changes in its business strategy can cater needs of people that are
staying in china and achieve its goals.
10

REFERENCES
Books and Journals
Alexander, B. and Joe, T. eds., 2019. Managing Innovation: What Do We Know About
Innovation Success Factors? (Vol. 33). World Scientific.
Bayo Moriones, J.A., Galdon-Sanchez, J.E. and Martinez-de-Morentin, S., 2016. Competitive
strategy, performance appraisal and firm results.
Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. Macat
Library.
Crowley, F. and Bourke, J., 2018. The influence of the manager on firm innovation in emerging
economies. International Journal of Innovation Management, 22(03). p.1850028.
Farajpouri Haghigh, H. and Yazdifar, H., 2019. The effect of managers’ optimism on
competitive strategy and final cost models. Religación. Journal of social sciences and
humanities.
Hakobyan, N and et.al., 2019. The implementation of Corporate Social and Environmental
Responsibility practices into competitive strategy of the company. Маркетинг і
менеджмент інновацій, (2). pp.42-51.
Hughes‐Morgan, M. and Ferrier, W. J., 2017. ‘Short Interest Pressure’and Competitive
Behaviour. British journal of management, 28(1). pp.120-134.
Kaliappen, N. and Hilman, H., 2017. Competitive strategies, market orientation types and
innovation strategies: finding the strategic fit. World Journal of Entrepreneurship,
Management and Sustainable Development.
Park, K. and Hwang, J., 2016. Organizational capability, competitive strategy and firm
performance in venture businesses. Journal of the Korea Academia-Industrial
cooperation Society, 17(2). pp.272-281.
Popov, E., Krivorotov, V. and Starodubets, N., 2019. Formation of the Company Leadership in
the Competitive Strategy. In Sustainable Leadership for Entrepreneurs and
Academics (pp. 255-262). Springer, Cham.
Online
16 Strategic Planning Models To Consider, 2019, [Online]. Available
Through:https://www.clearpointstrategy.com/strategic-planning-models/>.
What is Strategic Analysis 2019, [Online]. Available Through:<
https://corporatefinanceinstitute.com/resources/knowledge/strategy/strategic-analysis/>.
11