Global Strategy Development and Implementation: Wal-Mart Analysis

This report provides a comprehensive analysis of Wal-Mart's global strategy, examining its international expansion from its inception to its current global presence. It explores the reasons behind the company's expansion, including an evaluation of its historical performance, product range, market share, and competitive position. The report delves into Wal-Mart's strategic choices, methods of market entry, and the reasons for its successes in countries like Canada, Mexico, and the UK, while also analyzing its failures in markets such as Germany and South Korea, attributing these outcomes to factors like cultural adaptation and localization issues. It further investigates the potential organizational and managerial problems faced by the subsidiary in a new international environment and how Wal-Mart's corporate culture has both aided and hindered its global expansion. The report concludes with an analysis of the company's political interactions with governments and offers strategic advice for the subsidiary to overcome the challenges highlighted, emphasizing the importance of customer satisfaction, understanding local preferences, and adapting to the unique business environments of different countries.

Global strategy development
and implementation
Introduction
Wal-Mart is the largest retail chain in the world and also the world’s largest
corporation. The company started its globalization in the year 1991 when it
opened a Sam’s club near the Mexico City. In the year 1993 the company did
set up the Wal-Mart International which was to oversee the growing
opportunities of the company worldwide. Consequently, the company has
enjoyed the overseas operation growth and also consumer acceptance. Wal-
Mart has never changed its brand names, the every day low price and high
ethical standards although its approach to competing in the overseas has
evolved over time. Due to its entry into the foreign markets it changed its
local regulatory frame work and customer tastes.
3000
Your assignment should highlight, analyse and critically evaluate the following:
i. Reasons for parent company’s international expansion; (including an evaluation of
the company’s historical performance, products/service range, share of the market
and competitive position within the industry);
Wal-Mart global expansion strategy
The global expansion strategy of Wal-Mart is provision of goods at low prices
that could raise the living standards of people around the world. This
strategy involves globalization efforts of the company to enter into the
overseas markets. According to Troy (1), the bottom line for the Wal-Mart’s
company is “bigger and cheaper”. This is because the company intends to
maintain its low price kind of leadership while at the same time pursuing the
aggressive store expansion worldwide. This expansion is facilitated by
opening of new stores and clubs world wide.

Historical performance evaluation
Products Range
The stores feature wide, clean, brightly lit aisles and shelves stocked with quality items
including: family apparel, automotive products, health and beauty aids, home furnishings,
electronics, hardware, toys, sporting goods, lawn and garden items, pet supplies, jewelry, and
housewares.
The top-selling product at Walmart is, surprisingly, bananas! In a recent interview, McMillon
said that Walmart sells "billions of bananas" (via Bloomberg). Bananas have been Walmart's top
seller for years. However, the supply chain for Walmart stores is global, with suppliers in the
United Kingdom, Canada, China, Mexico, Taiwan, Hong Kong, France, and other
countries. Of the top five suppliers who generate large portions of their revenues from Walmart,
four are U.S. companies and one is based in Japan.
Share of the market
Walmart's share of its U.S. total addressable market (TAM) rose to 10% in fiscal 2021, after it
fell from 7.6% in fiscal 2016 to 7.4% in fiscal 2020.
Competitive position
ii. Possible strategic choices available to the parent company;
iii. Reasons for choice of location for the subsidiary;
iv. Strategic methods of entry and the possible consequences;
How do they enter into the markets?
Wal-Mart realized that if they took too long to enter into the foreign countries
they would be allowing the competitors a lead that is too difficult to close. To
avoid this end, they ventured into foreign countries to concentrate on their
expansion efforts. This means that the main method used by the Wal-Mart
Company in entering into new markets is by venturing into foreign countries.
This is ensured by either selling the products in other retail stores which in
turn distribute to the customers or by opening up its own store which will be
used in the distribution of its products. For example as mentioned earlier, by
the year 1993 Wal-Mart international operation had only one Sam’s club in
Mexico but it ventured fast into the neighboring counties like Argentina,
brazil, Indonesia china and Japan. This countries where perceived to be
unique in the retail market in terms of the logistical systems, consumers and
relationship between the suppliers and retailers.
How do they expand while in the market?
While in the market, Wal-Mart Company opened (build) more new stores in
the countries it had ventured into thus replicating the domestic operation
abroad. The company also expanded its markets by acquiring potential
companies. It also picked up new ideas from other countries which helped

greatly in the expansion of its markets. This included the gravity wall from
Brazil, selling shoes from Canada, selling bike racks from Canada and many
more (Deresky 455).
Markets where Wal-Mart has been successful and the reasons
for the success
Wal-Mart Company has been most successful in countries (markets) like
Canada, Mexico and the UK. In Canada the company purchased all the 122
Canadian woolco discount stores thus becoming the Canada highest volume
discount retailer. The main proponent for the company’s success is the low
prices of the products and the ability to strip costs from the supply chain
which impresses the analysts. The suppliers are strictly authorized to
distribute goods at the Wal-Mart’s center within 15-30 minutes of the
stipulated schedules failure to which they would be fined. Again it has a lot of
bargaining power to extract price concession from the suppliers. In UK Wal-
Mart acquired ASDA stores which were 232 in number thus becoming the
biggest retailer in that country (Wal-Mart.com 1). ASDA warded of price
competitions which overtook all the other companies in the UK. In Mexico,
Wal-Mart Company acquired the controlling interest of the Mexican largest
retailer (Cifra) which operated stores through the county. It modified the
products so that they could meet the expectations of its Mexican users (Tilly
1). There is one common theme for the success of these three countries. For
example they have acquired some of the strongest companies in this
countries thus becoming the leading large scale retailers and they have also
modified their products to meet the needs of their immediate clients.
Markets where the Wal-Mart company has been unsuccessful
and the reasons of the failure.
Wal-Mart has failed in Germany and South Korea markets in particular. In
Germany, the company found it difficult to adapt to the German ways and it
therefore exited selling off its store (Knorr and Arndt 23). In South Korea, the
Wal-Mart company also exited selling off its store because it also could not
localize its operations (Awbi 1). There is a common theme as to why these
two countries failed and it was because the two couldn’t adapt to the needs
of the various citizens (South Koreans and Germany). These failures are
specific or relevant in each country and also similar. For example as
mentioned above they have failed because they didn’t localize their
operations. To be specific the reason as to why it failed in Germany is
because the Germany customers did not show much concern for the EDLP
approach and many people also disliked its relatively low pay and ultra-
frugal policy on managers business expenses. In South Korea it experienced
operation difficulties due to its merchandise mix and the stores which were

too far from the city centers. Another problem was high food prices and lack
of food freshness (Deresky 458).
v. The potential organisational and managerial problems for the subsidiary operating in
the new international environment; and
How does culture hinder the expansion of Wal-Mart in other
countries?
Wal-Mart’s culture is a hindrance to the company’s expansion. This is
because some of their practices do not go well with some people in some
countries (Kitlerphiroj 1). For example in Germany the Wal-Mart’s expatriate
managers were faced with massive cultures clashes which were helped by
the refusal to learn the German language. Its culture which involved
merchandise departments, supercenters far from town centers and low pries
did not go down with the South Koreans who disliked the companies
merchandise, the locations and high prices of commodities which led to their
closure. The company’s culture of acquiring building and companies and low
prices helped the company in nations like Mexico, Canada and the UK for
they became the largest retailers in these countries.
Has Wal-Mart had to change their level and method of political
interaction with governments as they have expanded
internationally?
Wal-Mart had to change the level and method of interaction with some
governments in the process of their international expansion. For example the
China’s finance, banking, taxation and insurance organizations were
bureaucratic and burdensome because the regional division of finance
guidelines and tax rules created problems. For example a corporation with
joint ventures in numerous locations served by a single supplier had to make
separate payment for each venture to the supplier. Wal-Mart Company
worked together with the Chinese administration to put up a holding
corporation that could consolidate joint venture distribution and finance.
vi. You should provide strategic advice for the subsidiary to overcome the problems
highlighted in v.
Conclusion

There are some lessons which can be learned from this case. One of them is
that companies should target to satisfy their customers so that they can get
the opportunity to expand. For example most of the Wal-Mart’s customers
are satisfied with the low prices of commodities. This has not only increased
sales but also profits. Another lesson is that companies should consider the
opinions, tastes and preferences of the people in a particular country before
setting up a company in a foreign country to avoid massive losses. The other
lesson is that a company should try to localize or understand the people’s
preferences and tastes after a careful study have been carried out to avoid
misconceptions that can bring losses. Another lesson is that the companies
that have the interest of venturing into business in foreign countries should
change and even negotiate with the various governments concerned such
that they may have a favorable condition to thrive in businesswise.