Management Case Study: Wal-Mart's Competitive Strategies in Mexico

This case study analyzes Wal-Mart's expansion into the Mexican market, examining its competitive strategies and the impact of NAFTA. The analysis explores Wal-Mart's cost leadership approach, which involved offering lower prices due to reduced tariffs after NAFTA. The study also discusses the challenges faced by Comerci, a major Mexican retail chain, and its attempts to compete with Wal-Mart. The case highlights Wal-Mart's advantages in purchasing power and its ability to leverage NAFTA to its benefit. The study further considers the economic impact on Mexico and the strategic responses of local businesses. The document explores the implications of these strategies for the future of the Mexican retail sector, including the importance of adapting to changing market conditions and consumer demands.

Running Head: MANAGEMENT
MANAGEMENT
Name of the Student
Name of the University
Author Note

1MANAGEMENT
Question 1
The publicity strategy for Walmart was "low price on a regular basis." It was not until NAFTA
emerge in Mexico. For the sale of American goods, Walmart charged higher tariffs. Mexico
became a free trade nation after NAFTA was introduced1. Walmart thus reduced its tariffs from
10% to 3%, which meant that it has become difficult for rivals like Comerci negotiate with each
other. It has also opened the doors to foreign investment in Mexico with the signing of NAFTA.
Walmart also paid huge fees for goods being delivered to Mexico from Europe and Asia.
Question 2
While a commendable portion of success of Wal-Mart is due to NAFTA, a major reason behind
its success is undoubtedly its competitive strategies like effective time to enter the market and
cost leadership strategy. Walmart's underlying business approach was cost leadership. This
strategy includes offering quality products to the consumers at a lower price range than its
competitors. They deliver at rates that allow them to be a pioneer. NAFTA backed this policy
very strongly as NAFTA reduced US consumer tariffs in Mexico, from 10% to 3%. NAFTA also
encouraged Mexico to develop its network for transport2. NAFTA incentives are the most
productive usage for any business, except especially Walmart. Walmart was successful for the
Mexican market as its underlying strategic approach. Along with its cost leadership strategy, the
time of Wal-Mart to enter the market of Mexico also helped it reach the leading position.
Question 3
1 Gálvez, Alyshia. Eating NAFTA: trade, food policies, and the destruction of Mexico. Univ of California Press,
2018.
2 Tsui-Auch, Lai Si, and Dawn Chow. "MNEs' Agency Within Institutional Contexts: A Study of Walmart's Post-
acquisition Practices in Mexico, Germany, and Japan." Journal of International Management 25.2 (2019): 100655.

2MANAGEMENT
This is a daunting challenge for Commerci to remain in operation in the same industry as
Walmart. Comerci has joined hands to form a group called Sinergia with two other local
Mexican firms, Soria and Gigante. Since it has been willing to reduce costs, Sinergia has raised a
threat to Walmart. However, it will require a huge amount of time, as Comeri is not both realistic
and economical for Comerci to reduce its sale price to a drastic level. Comerci faces the biggest
obstacle of reducing costs. It is nessecery for them to find vendors who can buy their goods at
affordable prices and compete with Amazon by providing their customers with items at reduced
costs. However, the strategy of Comerci does not seem to be effective3. They also could search at
vendors from Walmart and deliver good buying rates. At first it might not be so helpful to
Comercis, but it will renegotiate costs with its vendors over time as they raise their buying
power. But again, long-term thought will be important.
Question 4
Studies have shown that the local economy in Mexico has not always had gains from NAFTA.
They undoubtedly threatened small merchants because of product and price disparities in their
attempt to cope with the Walmart style of American retailers and other brands. Mexica S.A has
reviewed its marketing strategy to stay profitable. In the marketing strategies, they should
present themselves as local marketers and convince their customers that they have a conventional
twist to consider local consumers’ requirements4. It will also be a positive opportunity to
negotiate with Amazon and meet local customers and encourage the sale of property.
3 Carpio-Aguilar, Jorge Carlos, John Rincón-Moreno, and María-Laura Franco-García. "Potential of Carbon
Footprint Reduction within Retailers: Food Waste at Walmart in Mexico." Sustainable Development Goals and
Sustainable Supply Chains in the Post-global Economy. Springer, Cham, 2019. 225-240.
4 Rincón-Moreno, John, et al. "Share, Optimise, Closed-Loop for Food Waste (SOL4FoodWaste): The Case of
Walmart-Mexico." Towards Zero Waste. Springer, Cham, 2019. 165-190.

3MANAGEMENT
References
Carpio-Aguilar, Jorge Carlos, John Rincón-Moreno, and María-Laura Franco-García. "Potential
of Carbon Footprint Reduction within Retailers: Food Waste at Walmart in Mexico."
Sustainable Development Goals and Sustainable Supply Chains in the Post-global
Economy. Springer, Cham, 2019. 225-240.
Gálvez, Alyshia. Eating NAFTA: trade, food policies, and the destruction of Mexico. Univ of
California Press, 2018.
Rincón-Moreno, John, et al. "Share, Optimise, Closed-Loop for Food Waste (SOL4FoodWaste):
The Case of Walmart-Mexico." Towards Zero Waste. Springer, Cham, 2019. 165-190.
Tsui-Auch, Lai Si, and Dawn Chow. "MNEs' Agency Within Institutional Contexts: A Study of
Walmart's Post-acquisition Practices in Mexico, Germany, and Japan." Journal of
International Management 25.2 (2019): 100655.