Analysis of Walmart's International Business Strategies and Culture

This report examines Walmart's international business strategies, focusing on its foreign market analysis and the strategic and environmental reasons driving its global expansion. It delves into the various market entry modes employed by Walmart, such as joint ventures, acquisitions, and wholly owned subsidiaries, and analyzes the factors influencing these choices. The report also emphasizes the critical role of cross-cultural understanding in Walmart's international success, providing a detailed analysis of how the company adapts to different cultural contexts. The report uses the Walmart case study to illustrate the importance of understanding local market dynamics, consumer behavior, and cultural nuances for effective international business operations and to achieve strategic advantages. The report concludes with a critical evaluation of Walmart's approach to internationalization and its implications for future growth.

International Business
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Table of Contents
EXECUTIVE SUMMARY .................................................................................................................3
INTRODUCTION ...............................................................................................................................4
QUESTION..........................................................................................................................................4
Question 1: Conduct foreign market analysis and critical evaluation of strategic and
environmental reasons why Walmart engaged in internationalization strategies............................4
Question 2: Using appropriate theories and critical analysis of importance of a cross culture
understanding for international business success with appropriate example of Walmart case
study. ...............................................................................................................................................6
CONCLUSION ...................................................................................................................................8
References............................................................................................................................................9
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EXECUTIVE SUMMARY
The present study is based on international business and for this Walmart case study has
taken into the consideration. It has the world leading retail organization and serve customers at
international level. With the development in business, firm has taken the help of different kinds of
foreign market entry modes. 50-50 joint venture, acquisition, FDI, 60-40 joint venture, wholly
owned subsidiaries etc has used by Walmart. Along with this, learning management, innovation,
increase customer base, take competitive advantages etc has the reasons of engagement of
organization in internationalization strategies. On then other hand, Walmart has adopted some cross
culture theories to understand cross-cultural importance in international business success.
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INTRODUCTION
International business includes various commercial transactions that take place between two
or more than two countries. There are different activities that take place between cross border nation
transaction such as exchange of goods, technology, knowledge, experience, services, resources,
skills, people etc (Akrani, 2011). The entire process is known as a global business. International
business provides various opportunities to the companies like business expansion, increase sales of
services, raise market share, increase investment level in the other countries etc. The main
characteristic of international businesses is they are operating at large scale, delivers benefits to
nations, innovation of new technology etc (Batres,Pisani and Doh, 2010). The present study is based
on international business and for this Walmart case study is taking into the consideration.
QUESTION
Question 1: Conduct foreign market analysis and critical evaluation of strategic and environmental
reasons why Walmart engaged in internationalization strategies
Foreign market analysis
Walmart is a world largest retail organization and it has build its success on a strategy of
everyday low prices. Along with this, high efficient operations, logistics and information system has
helped the company to keep inventory level minimum. It had reduced the possibilities of
overstocking and under-stocking situations. There are 2.1 million people working in Walmart 4200
stores in the US and 3600 in the rest of the world. It has increased the sales of the firm approx $600
billion till the 2014. About to $91 billion of sales generated in 15 overseas nations.
The choice of which market to enter first is not always easy tasks. From the given case
study, it has found that at the time of first five years of globalization, Walmart had got the success to
established a high presence in Mexico, Brazil, Canada and Argentina (Cairns and Roberts, 2011).
For conducting foreign market analysis, it has important to examine whether company should focus
first on Europe or Asia. It has determined that the European retail market has mature and it has easy
for new entrance organizations to grab huge market share. Relatively small in size and lack of good
relationship with the local customers has created difficulties for Walmart to expand the business
(Blenkinsopp and Pajouh, 2010). On the other hand, retail market of Asia has huge potential and it
has most distant geographically, culture and logistically as compare to US market. From this
assessment, organization decided to enter into the Canada and Asian markets.
To enter into Canada, Walmart has adopted acquisition market entry mode. From the
analysis, it has explored that there were three reasons behind following this foreign market entry
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strategy. One is Canada is a mature market where unattractive situation for greenfield operations
and high degree of competition between local companies. Second is there are significant similarities
between income and culture of US and Canada. This was requiring a new less learning to operate
the business in new country (Cadogan,2012). Last on is poor performance of Woolco which could
be available to purchase at an economical prices.
At the time of enter into Mexico, Walmart again select a different mode. The reason behind
this was the significance difference between Mexico and US in terms of income level, culture and
buying habits. Before enter into Mexico retail market, it was important for the organization to learn
more about the income level and culture of local people (Chelariu and Osmonbekov,2014). In this
situation, Walmart took decisions to adopt 50-50 joint venture with Cifra which is largest retailer of
Mexico. With the help of this, company got expertise in operational areas in the Mexican market.
Walmart further expansion was in Latin America where firm target the region two largest
markets: Argentina and Brazil. At the time of entering into Brazil, it has followed joint venture
strategy with Lojas Americana, a local retailer of Brazil (Enderwick,Tung and Chung,2011). But,
here, company could apply its learning from Mexican experience. Due to this, it has established a
60-40 joint venture with the aim of controlling over stake. After taking leaning and experience from
Brazil, Walmart has taken decision to enter into Argentina via wholly owned subsidiary.
Therefore, from the above discussion and analysis of foreign market, it has found that
Walmart has tried to use its experience and strategies in the foreign markets which it was currently
use in US (Ghemawat, 2015). After facing some issues, organization has decided to learned the
similarities and differences of foreign countries and take decisions to adopt market entry modes.
Evaluation of strategic and environment reasons of why Walmart engaged in internationalization
strategies
When Walmart take decisions to enter into foreign market and engaged in
internationalization strategies, some strategic and environment reasons have considered. Evaluation
of these reasons are as follows:
Increase sales and profit: By seen the success in US market, Walmart has decided to expand the
business at international level by different foreign market entry modes. It has increased overall
revenue of the firm (Guedes and Faria,2010). Economic growth rate in Europe, China and US was
low as compared to new merging developing nations market. It was strategic reason of why
Walmart engaged in internationalization strategies.
Increase innovation and management learning: It was environment reason because where
Walmart running its business, they all were different from each other in terms of culture, buying
habits and income level. So it was needed to learn the things from foreign market and used it in
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future for better business expansion at international level. Along with this, internationalization
strategies has helped in increase innovation within the firm so that customers could got new and
good experience of purchasing from a retail firm (Hejaz and Ma,2011). This was the only reason
that help Walmart to take competitive advantage in various foreign retail markets.
Economies of scale: It was one of the environment reason that increase engagement of Walmart in
internationalization strategies. By expanding the business with number of products, it was important
for the organization to achieve economic of scale. To accomplish it, firm has adopted various
strategies so that a unique and differentiate brand in the retail market of foreign and domestic can be
created (Wei, 2012).
Increase customer base: It was the strategy of Walmart to discourage local competitors of foreign
markets and grab their market share. For this, firm has learned the buying behaviour of customers of
US, Asia, Canada, China and Brazil. According to their purchasing habits and income level,
organization has made changes in its selling strategies (Windsor, 2013). So, this was the reason that
defines why Walmart engaged in internationalization strategies.
Question 2: Using appropriate theories and critical analysis of importance of a cross culture
understanding for international business success with appropriate example of Walmart case
study.
Walmart is one of the retailer firm in the world so for better development of organisation it is
important for their management to understand the importance of cross culture. According to case
scenario, as per, Batres, Pisani and Doh (2010), in Mexico it is very company to do business by face
to face meeting. On other hand, in china, people create on committee which decide all the decision
regarding to partnership. Each country having their own culture so if Walmart want to create a
positive relationship with other country so it is important for them to understand their culture first.
The major aspect of cross culture business is to understand their language (Griffin and Toole,2010).
For the same, it is not possible for organisation to every time translate their conversation because by
doing this they cannot create a positive relationship with other partners. Sometimes it also creates
lots of misunderstanding.
According to, Larimo and Vissak (2009) for reducing the intern culture risk of international
business Walmart use development model. By using this model they can divide their whole
company culture into sub parts. For example, in denial stage management evaluate the major
differences in culture of China, Mexico etc. In the second stage, manager of company understand
the need and requirement of all customers. In minimisation, Walmart try to understand the customer
values and beliefs. In the adaptation company try to adopt the changing behaviour of customers and
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try to understand the reason behind this. On other hand, in integration, management try their best to
achieve their long term goals before the maturity date. For achieving the target of organisation,
manger change their leadership style, communication method while interacting with other country
customers. In the last, acceptance company adopt all the changes and plan their strategies. On other
hand according to, Enderwick, Tung and Chung (2011) by following this model of cross culture,
Walmart can easily analyse the importance of a cross-cultural understanding for
international business's success.
According to, Julian (2014) for Walmart it is important to understand the need and
requirement of their other county customers and as per their suggestion change their positioning
strategies. On other hand, according to Roberts and Dörrenbächer (2012) for better relationship it is
better to increase the understanding with international customers. For the same, Walmart always try
to understand the need and requirement of their people and for this they follow some elements and
they are as followed:
Culture theme
According to, Tran (2010) every country having its own culture and it is company
responsibility to respect the customers and also follow it. culture include belief of customers,
Confucian values, endurance and trust worthless in it. On other hand, as per,Windsor (2013)
Walmart management always considered the culture of other country at the time of business deals.
For example, while doing business deal with Mexican people, company always arrange face to face
meeting and the reason behind this is Mexican people not believe in video call. By doing face to
face meeting Walmart can easily convey their message to therm and create positive relationship
with them (Guedes and Faria, 2010). Further, at the time of deal with Chinese peoples company first
convey their all message to committee and as per the permission of the committee they give their
business deal to them.
Need and requirement
The major benefit of cross culture is by using this management company can easily
understand the need and expectation of customers and according to their need Walmart produce
their all items. For example, in china people like to purchase all kind of item abut they are not ready
to pay more for single item. Due to this, it is important for organisation to understand the actual
mature of purchasing the select the price of all products. On other hand as per, Batres, Pisani and
Doh (2010) Mexican people have not enough money to spend on refrigerate and other storing times
so they can purchase food items and finish it on one day. So if company want to produce some food
items for Mexican people so it is important to understand their requirements. With the help of cross
culture,Walmart understand Mexican people need and at the time of packaging create small boxes
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of food items.
As per case scenario, by using cross culture, Walmart can easily put their focus on their
target group and create trustful partnership with them. Company time to time update their all
strategies and as per the need and requirements of other country develop their strategies. By fulfil
the need and demand of international customers Walmart increase their trust and also improve their
brand image into the customers mind (Sarkissian, 2015).
CONCLUSION
From the above study, it can be concluded that international business has delivered various
kinds of opportunities to the organizations. Walmart has also adopted the following strategy with
the aim of increased market share and raised profit level. From foreign market analysis, it has
determined that company has used different foreign market analysis. Along with this, there have
many strategic and environment reasons that engaged Walmart into internationalization strategies.
On the other hand, cross culture understanding for international business success. With the help of
this, firm has effectively run its business in the international market without any issues. It has given
the good learning and experience to Walmart to operate business in other developing retail market.
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REFERENCES
Books and Journals
Batres, L., Pisani, M. and Doh, J., 2010. A Perspective on International Business Scholarship Is It
Regional or Global. Multinational Business Review. 18(1). pp.73 – 88
Blenkinsopp, J. and Pajouh, M., 2010. Lost in translation Culture language and the role of the
translator in international business. Critical perspectives on international business. 6(1).
pp.38 – 52
Cadogan, J., 2012. International marketing strategic orientations and business success Reflections
on the path ahead. International Marketing Review. 29(4). pp.340 – 348
Cairns, G. and Roberts, G., 2011. Reflections on seven years of critical perspectives on international
business An extended editorial. Critical perspectives on international business. 7(4). pp.289
– 296
Chelariu, C. and Osmonbekov, T., 2014. Communication technology in international business-to-
business relationships. Journal of Business and Industrial Marketing. 29(1). pp.24 – 33
Enderwick, P., Tung, R. and Chung, H., 2011. Immigrant effects and international business activity
an overview. Journal of Asia Business Studies. 5(1). pp.6 - 22
Ghemawat, P., 2015. International Business to International Business. Emerging Economies and
Multinational Enterprises Advances in International Management. pp.5 – 28
Griffin, R. and Toole, T., 2010. On the meanings of structure in the international business discourse.
Critical perspectives on international business. 6(4). pp.237 – 255
Guedes, A. and Faria, A., 2010. International management, business and relations in Latin America.
Critical perspectives on international business. 6(2/3). pp.145 – 161
Hejazi, W. and Ma, J., 2011. Gravity the English language and international business. Multinational
Business Review. 19(2). pp.152 - 167
Julian, C., 2014. Research Handbook on Export Marketing. Edward Elgar Publishing.
Larimo, J. and Vissak, T., 2009. Research on Knowledge Innovation and Internationalization.
Emerald Group Publishing.
Roberts, J. and Dörrenbächer, C., 2012. The futures of critical perspectives on international
business. Critical perspectives on international business. 8(1). pp.4 – 13
Tran, B., 2010. International business ethics. Journal of International Trade Law and Policy. 9(3).
pp.236 – 255
Wei, W., 2012. A comment on China and The social responsibility of international business
scholars. Multinational Business Review. 20(1). pp.92 – 103
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Windsor, D., 2013. International Business, Corruption and Bribery. International Business
Sustainability and Corporate Social Responsibility. 11. pp.65 - 95
Online
Akrani, G., 2011. What is international business? Meaning, features and articles. [Online].
Available through: <http://kalyan-city.blogspot.com/2011/09/what-is-international-business-
meaning.html>. [Accessed on 15th June 2016].
Sarkissian, A. 2015. The Disadvantages of Corporate Culture. [Online]. Available
Through<http://yourbusiness.azcentral.com/disadvantages-corporate-culture-15692.html> .
[Accessed on 15th June 2016].
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