Global Expansion Strategy of Walmart: Market Entry Analysis Report

This report provides an in-depth analysis of Walmart's global expansion strategy, beginning with its initial multinational approach and its subsequent challenges in various international markets, including Japan and Germany, where cultural insensitivity led to setbacks. The report then focuses on the European Union market, outlining potential benefits such as a developed retail sector and low pricing tendencies, alongside challenges like cultural differences and market saturation. The study recommends a franchising market entry strategy for Walmart in the EU, emphasizing its ability to mitigate risks and leverage local expertise. The report details the implementation steps for this strategy, including market analysis and franchisee selection, to ensure successful expansion and profitability. The report concludes by highlighting the importance of adapting to cultural nuances and choosing appropriate market entry modes for effective global growth.

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GLOBAL EXPANSION STRATEGY OF WALMART
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Table of Contents
Introduction......................................................................................................................................2
Walmart’s early global expansion strategy......................................................................................2
Cultural problem in the international market...................................................................................3
European Union market entry strategy............................................................................................3
Benefits........................................................................................................................................3
Challenges....................................................................................................................................4
Choosing the market entry strategy.................................................................................................4
Implementation of the entry strategy...............................................................................................5
Conclusion.......................................................................................................................................5
Reference.........................................................................................................................................7

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Introduction
One of the leading retail giants in the international retail market, Walmart initiated its
internationalisation of business in 1991. Since then the company has faced several issues and
success as well in different market globally. This report is going to analyse the initial global
expansion strategy of Walmart and recommend a better market entry strategy for the
organisation in entering into European Union market successfully.
Walmart’s early global expansion strategy
In the initial phase, Walmart started its global expansion with the multinational expansion
strategy. According to the research of Wu, Kuehn and Jiang (2019) the multinational expansion
strategy refers to serving the customers directly with the existing brands. Therefore, the business
organisation also establishes regional headquarters and facilities in order to encapsulate the
global market in a more aggressive manner. In case of Walmart, the same practice had been
followed where the first internationalisation of Walmart business was occurred in 1991 by
expanding its market in Mexico City. Two years later Walmart International was created in order
to focus on the international market rather than the domestic market operations (Colacicco,
2018). It is definitely not a good strategy because the multinational expansion is highly risky in
the initial phases of expansion as the international market is vulnerable and full of uncertainty.
Courtemanche et al. (2019) advocated that it is better for the business companies to opt for the
multinational expansion strategy in a later phase when the international expansion will become
matured and stable enough. From that point of view, Walmart failed to choose the right strategy
in the early global expansion process.

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Cultural problem in the international market
Diversity in culture is a core characteristics in the international market. As per the
research of Li, Zhang and Shi (2019) regional influences blended with culture and tradition is a
core competency factor for the multi-national business organisation to run operations
successfully. However, in case of Walmart, the company failed to acknowledge this core
competency and started imposing its own culture in the international market. For instance, in the
international market of Japan and Germany, it was a complete disaster for Walmart because it
failed to incorporate the regional culture and tradition of both the countries. In Japan, people
were highly focused on the price of the products and it is within the Japanese culture where low
price of a product is considered to be inferior. However, Walmart still continued its low pricing
strategy despite of getting recommendation to stop the low pricing strategy in the Japanese
market. Therefore, it became very problematic for Walmart to gain advantage in Japan.
European Union market entry strategy
There are potential benefits and challenges in the European Union market for Walmart.
The listed benefits and challenges are as follows,
Benefits
 Retail practice in the European market is significantly developed and there is a strong
market trend that can help Walmart to focus on.
 Market vulnerability is very limited in the European market as the market is in stable
position and customers are liked to purchase products through the retail stores.

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 The low pricing tendency is very popular in the European Union countries. It suits the
business practice of Walmart to a great extent. The company does not have to check and
transform its original business strategy to a great extent.
 The cultural similarities is also considered to be a great advantage for Walmart to expand
its business in the European Union market. Despite of having some regional differences
the perception and the lifestyle of the Europeans and Americans are almost the same. A
quality lifestyle and shopping fury among the customers can help Walmart to
successfully meet the demands of the customers.
Challenges
 The regional cultural differences can be a threat for Walmart to continue its business
successfully.
 The saturation of the retail market of European Union can be a threat for Walmart
because there are already giant retailers to give great competition and pressure on
Walmart.
 The regulations and international pressure of Brexit is also at its alarming point that
creates an obstruction to the business environment in that region.
Choosing the market entry strategy
The franchising market entry strategy will be the best possible action that Walmart must
take in order to ensure profitability in business. Based on the research of Kacker et al. (2016) it
can be argued that the franchising market entry mode is considered to be a type of license
agreement where the organisation intends to enter into the foreign market quickly by resource
commitment. Moreover, Villegas, Villanueva and de la Cruz (2017) opined that the franchising

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entry mode enables the business organisations to reduce the vulnerability of international market
fluctuation and creates opportunity to incur more profitability. The franchising process is a
contractual partnership with the franchisor where the partner company or the franchisee is
compelled to pay lump sum payment to the franchisor and also share the future profits in terms
of royalty payments. In fact, the franchisee is generally belonged to the local or regional market.
Henceforth, it will be a success for the business organisation to gain competitiveness from the
experience of the franchisee company. Walmart can get a strategic advantage from franchising
strategy in European Union region.
Implementation of the entry strategy
The first step towards implementing the franchise market entry strategy is to focus on the
market. As per the research of Rosado-Serrano and Paul (2018) for the franchise mode of entry,
the franchisor has to build up a deep insights into the specific market trends. Therefore, an
extensive market analysis is required before the agreement. Apart from that listing the potential
franchisees is also identified as a core part that the franchisor must take. The third step is to look
into the right skill sets for the franchisee. According to Rosado-Serrano, Paul and Dikova (2018)
the purpose of right skill setting is to harness a link between the organisational objectives and the
trend in the international market. This implementation process will help Walmart to expand
business successfully in the international market.
Conclusion
The above discussion clearly states the early issues in the global expansion strategy of
Walmart. A cultural underpinnings is always influence the international market and creates

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challenges for the multinational companies. To reduce risks in the European Union region’s
business operation, it is important for Walmart to opt for the franchising entry mode and earn
high profitability from the market.

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Reference
Wu, S., Kuehn, K., & Jiang, J. (2019). A Value Perspective: The Case of Warren Buffet and His
Investment Behavior towards Apple, Walmart and Amazon. Global Journal Of
Accounting And Finance, 3(1), 78.
Courtemanche, C., Carden, A., Zhou, X., & Ndirangu, M. (2019). Do Walmart supercenters
improve food security?. Applied Economic Perspectives and Policy, 41(2), 177-198.
Colacicco, G. (2018). Internationalization decisions in the retailing sector: Walmart in South
Korea.
Li, Y., Zhang, Y. A., & Shi, W. (2019). Navigating geographic and cultural distances in
international expansion: The paradoxical roles of firm size, age, and ownership. Strategic
Management Journal.
Kacker, M., Dant, R. P., Emerson, J., & Coughlan, A. T. (2016). How firm strategies impact size
of partner-based retail networks: Evidence from franchising. Journal of Small Business
Management, 54(2), 506-531.
Villegas, J. B. G., Villanueva, C. A. F., & de la Cruz, J. T. O. (2017). Identifying strategic
groups: an assessment in mexican franchises. Revista Ibero Americana de
Estratégia, 16(2), 19-34.
Rosado-Serrano, A., & Paul, J. (2018). A new conceptual model for international
franchising. International Journal of Hospitality Management, 75, 179-188.

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Rosado-Serrano, A., Paul, J., & Dikova, D. (2018). International franchising: A literature review
and research agenda. Journal of Business Research, 85, 238-257.