Market Entry Assessment for Walmart: Australian Retail Industry

This report provides a comprehensive market entry assessment for Walmart in Australia. It begins with an introduction to Walmart as a multinational enterprise (MNE) and its global expansion strategy, highlighting the company's interest in entering the Australian retail market. The report analyzes the changing landscape of the retail sector and the promising nature of the Australian retail industry, supported by the success of existing players like Woolworths and Coles. A PESTLE analysis is conducted to evaluate the political, economic, social, technological, legal, and environmental factors influencing the Australian market. Furthermore, the Uppsala model is applied to understand Walmart's internationalization process. The report then examines various modes of entry, considering the oligopolistic structure of the Australian retail market dominated by Woolworths and Coles. The analysis concludes that a joint venture is the most suitable mode of entry for Walmart, recommending a strategic approach to minimize competition and maximize market penetration. The report emphasizes the potential of the Australian market for retail businesses and highlights key considerations for Walmart's successful entry.

Running head: MARKET ENTRY ASSESSMENT FOR WALMART
Market Entry Assessment for Walmart
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Table of Contents
Introduction......................................................................................................................................2
Change in the retail sector...............................................................................................................2
Analysis of retail industry in Australia............................................................................................3
Internationalization of Walmart.......................................................................................................6
Mode of entry..................................................................................................................................7
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................9

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Introduction
Walmart is one of the biggest retail giants in the world. The company operates in various
countries that include the United States, Mexico, Argentina, India, the United Kingdom,
Singapore and many more countries in the world. Thus, it is a multinational enterprise (MNE).
Like any other MNE, Walmart too want to expand its business all over the world by entering
retail industry of each and every potential country in the world (Ellickson 2016). This report
speaks about one such country where Walmart may want to make an entry to gain retail market
share in that country. The country chosen in this report for discussion is Australia. Australia is
among one of the developed countries in the world and the retail industry is quite promising in
the country. Therefore, the report analyses the reasons due to which Walmart may want to enter
the retail market in Australia too. To make the analyses two models has been considered one is
PESTLE and the other is Uppsala models. PESTLE model is relevant in this study because
before entering a market of a country overall or performance of the country needs to be assessed.
The performance of a country depends on its combined stability in political, economic, social,
technological, legal and environmental conditions. On the other hand, Uppsala model help stop
understand the internationalization of firms. Therefore, by making these analyses the report
discusses the appropriate mode for Walmart to enter the retail market for Australia.
Change in the retail sector
Retail industry is one of the oldest form of industries in the world. The industry has
changed a lot over the time. Previously, the producer brought their produced products in the
market and sell them. It means that producers were the retailers in the earlier days (Pantano et al.
2017). Later, retailers and producers became different entity. The retailers mainly were small and
sells products over counter. The retail industry further evolved when the concept of departmental

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stores came into light. However, in both cases the retailers aggregate products from distributors.
Therefore, even though the industry has evolved the only difference between a retailers in a
small store and departmental store is that in departmental stores, customers can get more variety
of products and in addition to that, products are generally cheaper in the departmental stores. The
major changes occur in the retail industry when concept of super markets came in. The super
market are the ones in which a customer can find any required household items such as grocery,
cutlery sets, cleaning products. Nowadays, under a single roof of a super market sells fashion
products and electronic products (Shaari and Hong 2018). Thus, a super market in today’s world
is the true only one stop shop. There are many such super markets companies operating all
around the world. Walmart is the largest retail super market by total revenue earned. It operates
in 10 countries all around the world and is eager to enter other countries to expand the market
(Shaw 2016). Australia is one of the potential market of retail industry. Potency of the retail
industry of Australia can understood from the success of the retail giants of the country like
Woolworths and Coles. There are many other MNE retail companies operating in the country
such as Tesco, Target, Aldi and IGA. Therefore, it is evident that entering the Australian retail
market and investing in it will be beneficial for Walmart. However, before making entry in the
country analysis of overall performance of the country is required. Therefore, the next section
focuses on PESTLE analysis retail industry of Australia.
Analysis of retail industry in Australia
To understand the overall stability and performance of Australia as a country it is
necessary to analyses every aspect of the country that impacts its overall balance. Hence, the
PESTLE analysis of the country given below.

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Political factor
The country takes the form of constitutional monarchy and Queen Elizabeth II is the head
of the state. The governor general of the country represents the Queen. However, the head of the
government of the country is the Prime Minister. The capital country is Canaberra but Sydney is
the largest city (Jain et al. 2017). Considering the land area, Australia is the 6th largest country in
the world. The country has strong international relations. It is the member of G20, OECD, World
Trade Organization and Commonwealth of Nations (Clarke and Cheshire 2018). The political
environment of the country is stable and it has close relationship with the United States.
Corruption is almost nil in Australia. Thus, Australia is an important market for MNEs since the
stricture of the country and the political stability helps organizations to grow.
Economic factors
Australia is one of the developed countries in the country and thus it is among the high
income countries in the world. It implies that the standard of living of the people of the country
is significantly high. The unemployment rate in the country is low depicting that the economic
condition of the country (Anderson and Garnaut 2017). There are various investment
opportunities in the country. The commercial properties in the country are cheap. In the last
decade, more than 50 MNEs relocated their operating offices to Australia. The cost base of the
country is also low and that means operation in the country is cheap in the country.
Social factors
The HDI of Australia is 0.938, which is very high. It indicates that the living in Australia
is good in terms of quality of life, education and health (Churchill and Craig 2019). The life
expectancy of the country is 84 years for females and 80 years for females. Apart from that, the

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population of the country is relatively low. The only drawback of the country is that the average
age of working people is increasing (Adair et al. 2019). Culturally, Australia is diverse in nature
because after Second War many immigrants entered the country. The education sector is good in
the country, especially engineering. Therefore, with minor problem the society of the country is
stable.
Technological factor
Australia lies among the top countries in respect of adoption of new technology. It is
evident from rise in technology purchases by 4% in 2018. The local companies are also adopting
te new technologies to have productive advantage (Yang 2018). The penetration of technology in
the industry of the country is more than many developed countries in the world. Therefore,
technological innovation provides business prospect in eth country
Legal factors
The fairness in business in the country is maintained by the Australian Competition and
Consumer Commission (ACCC). There are several other laws such as fair trading law,
competition law and tax law (Cosen et al. 2018). The corporate tax in the country is 30%. The
government also controls and protects the employees by employment act. Thus, legal aspect of
business in the country is strong.
Environment factors
The low population of the country has contributed to save the environment of the
country. It has mountains, forests, and that cover major part of the country. The pollution level is
also low and thus the air quality of the country is good (French et al. 2019). The only problem of

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the country in environmental aspect is the water shortage due to which the country faces drought
problem. The problem of water has aggravated due to the ongoing climate change problem.
Internationalization of Walmart
Australia is a potential market for retail companies like Walmart. Thus, the company
should start the process of entering the market of the country. Walmart expanded its operation
outside the US, first in Mexico by making a joint venture with a local retailer named Cifra. After,
expansion in Mexico, Walmart has only expanded internationally in 9 more countries. The
company expanded in the international market by using the big box format. In this format,
Walmart make an entry to new country with low price model (Park 2017). However, low price
model always work but in many cases, it increases cost of the company if there is already a
similar established company in the foreign country. It is evident from the case of China and the
United Kingdom where Walmart faced severe competition when it offered low price for its
products. The retail giants like Tesco in the UK retaliated to this low price strategy of Walmart.
However, the low price model of Walmart did not worked in Japan because of the buying habits
of the customers. Thus, it can be said that not every strategy in international market works
(Chatterjee 2017). However, from the past mode of international market entry it can be said that
the Walmart so far has used various mode of entry and they are joint venture, acquisition, wholly
owned subsidiary and new opening. Therefore, depending on the retail industry scenario, market
structure, the type of retailers that is big or small and their competitiveness Walmart has to
choose a mode of entry in Australian retail market.

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Mode of entry
The Australian retail industry is dominated by Woolworths and Coles with combined
market share of above 60%. There are super market companies like Aldi and IGA in Australia
that might pose significant amount of completion as they capture around 10% of market share
each. Therefore, the retail market structure depicts an oligopoly form and thus the existing
players of the industry has significant amount of market power (Mortimer 2017). Therefore,
entry mode of opening new exclusive store will put Walmart into pressure as it will face
competition from existing large players in the market. Therefore, Walmart should try other mode
of entry. It should be noted that all the existing firms are in good position and thus acquisition is
not possible in the current retail market scenario because Woolworths, Coles, Aldi and IGA has
significant amount of market share are in stable condition. Hence, they would not agree to the
acquisition offer of Walmart. The wholly owned subsidiary mode is not feasible too due to threat
of severe competition. Therefore, the only way to enter the retail market of Australia is joint
venture. Walmart should joint venture with any of the potential small super market chains (Nippa
and Reuer 2019). The location where Walmart should start operating is a place where the number
of existing retail giants is less. The store should be small and with gradual improvement, it can
expand further in future. It should be noted that joint venture mode of entry is safe because
licensing and other legal problems can be avoided to some extent.
Conclusion
The above discussion on assessment of Walmart’s entry in Australian retail market leads
to the conclusion that the country has a significant potential for business be it retail or
manufacturing. The political structure of the country is favorable for development of businesses.
About the economic condition of Australia, it can be said that it is a developed country and thus

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the high income of the people allow any market to expand as there is consumption. In addition to
that, the social, technological, legal and environmental factors of the country makes the entry
decision of Walmart viable. However, the problem is in which mode Walmart should enter the
market such that it sustain in the retail market in presence of domestic giants Coles and
Woolworths. After thorough analysis of the retail industry of Australia and its existing players it
seemed joint venture mode of entry is the most suitable for Walmart to enter Australian retail
industry. However, it should be noted that Walmart should start with less competitive area in the
country. Finally, it can be concluded that the desire of Walmart to enter the Australian retail
industry is justified and completely viable but it cannot enter alone, it has to take support from an
existing market player such that Walmart faces minimum legal issues and diversify the risk.

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