A Report on Analysis of Globalisation Impact on Walmart Operations

This report analyses the impact of globalisation on Walmart's organisational operations, focusing on strategies, outsourcing, and challenges. It begins by defining globalisation and its effects on business, highlighting increased competition and technological advancements. Walmart's strategies, such as product standardisation and supply chain management, are examined, alongside its global expansion into markets like India and China. The report explores Walmart's use of outsourcing, noting both cost reductions and potential hidden costs for workers. Challenges faced by Walmart due to globalisation, particularly in China and India, are discussed, followed by recommendations for mitigating risks. The report concludes that globalisation has positively affected Walmart, but strategic adaptation is crucial for sustained success. Desklib offers similar solved assignments and past papers for students.

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ANALYSIS OF THE IMPACT OF GLOBALISATION
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Executive Summary
This report is based on the analysis of the effects of globalisation on the various
organizational operations of the global companies. The organization that is taken into
consideration for this analysis is Walmart, which is a large retail store of the American origin.
The impact of globalisation on the operations of Walmart and the ways by which the
company has made use of global customers has been discussed in detail. The challenges that
are faced by Walmart in some areas of its global operations has also been discussed in the
report. The two countries where the company has faced challenges are China and India. The
recommendations are provided based on the ways of mitigating the risks and challenges that
are faced by Walmart.

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Table of Contents
Introduction....................................................................................................................3
Impacts of globalisation on business organizations.......................................................4
Strategies adopted by the organization to compete in the global environment..............5
Use of outsourcing by the company...............................................................................7
Challenges faced by the company due to globalisation.................................................9
Ways of overcoming the challenges............................................................................10
Recommendations........................................................................................................11
Conclusion....................................................................................................................11
References....................................................................................................................13

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Introduction
The concept of globalisation has been defined by OECD as the geographic dispersion
of service based and industrial activities which include, sourcing of the factor inputs,
distribution, production and cross-border networking process of the organizations.
Globalization has thereby proved to be a process where the economies of various countries
are highly interdependent on each other and are integrated in nature as well. The globalisation
based process is dynamic in nature and changes the organizational processes on a regular
basis. The process of the globalisation is considered to be deeply integrated between the
different countries and the regions of the world (Bende-Nabende 2017). This method further
involves higher amounts of trade across the borders of the various services and goods. The
development of the various global brands is able to serve the markets in the lower-income,
middle-income and the higher-income based countries of the world. The organizations also
start making higher use of the offshoring and outsourcing of the production process. The
migration of labour also increases in the process between the various developed and the
developing countries (Van Hoa and Harvie 2016). The spending of organizations on the
infrastructure of the company and innovation based capabilities have also increased after the
implementation of globalisation. The globalisation process has made the economies of
different countries much more interdependent in nature. Globalisation has thereby proved to
be process which has enabled various countries in the world to increase their shares in the
world trade (Intriligator 2017).
The report will be based on the analysis of the ways by which globalisation has
affected the different organizational processes and the ways by which they operate in the
market. The increase of the outsourcing related activities of the global or multinational

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organizations and their effects on the profitability of the companies will be analysed in the
report in detail. The company that is taken into consideration for this analysis is Walmart
which is an American retail organization and has its operations in many countries of the
world. The impact of globalisation on this organization and the challenges that have been
faced in the process will be analysed in the report (Petschow, Rosenau and von Weizsäcker
2017).
Walmart Inc. is an American multinational organization which operates a chains of
discount stores, hypermarkets and the grocery stores in the various areas of the world. The
headquarter of Walmart is located in Bentonville, Arkansas and the company was established
by Sam Walton in the year 1962. Walmart owns more than 11,718 stores in around 28
countries of the world and has its operations under different names. The countries in which
Walmart has its operations are, the United States, Canada, India, Japan, Chile, Argentina and
Brazil. The business operations of Walmart are controlled by the Walton family. The largest
share of the entire sales of Walmart is received from the United States.
Impacts of globalisation on business organizations
The main impact of globalisation on the business organizations is related to the high
levels of competition in the various industries. The competition is mainly based on the cost of
the services and products, the adaptation with technologies and the target market of the
company. The low cost production of organizations can further lead to the increase of their
share in the market. The contemporary world is affected by the environment, society and the
business organizations. The process of globalisation has been able to link the
neighbourhoods, cities, countries and the regions closely together (Berdiev and Saunoris
2018).

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The people and organizations from the different countries are intertwined with each
other due to the effects of globalisation. The economic integration on the global basis has
affected the world economies in the current business environment. The globalisation based
process has taken place for hundreds of years and has speeded up from the last few years. The
positive effects of globalisation on business organizations are related to the services and
products and the target markets which can help them to increase share in the market. Another
major effect of globalisation on the organizations is related to the rising level of usage of
technology. The internationally and entrepreneurial oriented organizations have thereby
gained the help of various technologies for exploring new opportunities of business (Zajda
2015). The e-commerce based platforms that are provided to the companies have helped the
companies in increasing their reach in the different countries of the world. The levels of
employment in the third world countries have also increased due to the increase of
globalisation and the outsourcing activities of the multinational companies.
Globalisation has however caused some negative effects on the business
organizations. The fluctuations in prices across the different operational areas of the company
is caused due to the increase in the globalisation based activities. The outsourcing activities
that are performed by the global organizations have negative effects on the jobs of the
internal employees or the people of the country where the company is operating currently.
The companies have increased their outsourcing activities for the purpose of obtaining cheap
labour from the developing countries (Oliver 2017).
Strategies adopted by the organization to compete in the global environment
Walmart has received the topmost rank among various organizations among global
retailers by the Fortune Magazine in the year 2010. The company has its operations in the
retail which experiences increase in demands on a periodic basis. The process of retailing is

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the final step related to the marketing of the products that are manufactured by the
organizations. The store retailers of the company are those who have their inventories located
in the various physical locations. The non-store retailers on the other are those who do not
possess any physical location. However, the process of marketing used by both the types of
retailers is the same (Colander 2017).
After the establishment of Walmart, the company has taken part on the globalisation
process by spreading the business operations in various other countries of the world. The
process of product standardization is used by the company in its operations in the entire
world. The products that are offered to the domestic and the global customers of the company
are similar and they are customized according to the country where it operates. The products
that are provided to the stores by different suppliers are also not customized. The main
concept that has been applied by Walmart in its areas of operations is “Think globally, act
locally”. The company mainly offers all types of household products and furniture based
products as well (Dorn and Schinke 2018).
The new concept that was introduced by Walmart in the 1983 was based on the
opening up of new concept stores which are named as the Walmart Discount Stores. The
products offered by the company are similar in the various areas of its operations. However,
the services that are provided to the customers of different stores are totally different from
each other. The major strength of Walmart in different countries is based on the low prices of
the products that are offered to global customers. The supply chain management based
activities of the company have been the major reason behind the success of the company in
all the global operations. The various systems like, customer relationship management and
radio frequency distribution which helps the company to keep track of the inventory and the
customers (Sundar 2017).

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Walmart has also launched Wi-Fi systems in the stores and free bus service to the
customers. These activities of the company have helped in the creation of strong communities
in the various areas of its operations. Walmart has also been able to develop effective
communities in different countries. The opportunities that have been provided to Walmart
with respect to the globalisation based activities have been used by the organization to the
highest levels (Berden, Bergstrand and Etten 2014). The global expansion of Walmart is
mainly based on the political environment of the countries and has been affected by the
changes that have occurred in the countries where it operates. The major strength that has
been gained by Walmart in the global operations is based on the loyalty levels of the
customers who are considered to be a major part of the business process of the company. The
focus of the consumers has thereby shifted from the retailers to the brands of various product
(Gozgor and Ranjan 2017).
The other major factor that is related to the impacts of globalisation on the operations
of Walmart is based on the changes that have occurred in the technological environment of
the company. The prices of the products of Walmart are set in such a manner which have
helped the company to enter the global markets easily. The globalization related factors have
further led to the expansion of Walmart in other areas of the world which include India and
China. These emerging markets have provided huge opportunities to the company to expand
its business operations (Shahbaz et al. 2018).
The production based costs of the company have also been reduced due to the
availability of low-cost labour in these countries of the world. The growth potential of
Walmart has also increased due to the high demands of its products in the Asian countries.
Walmart has become one of the largest private employers in the United States and many
other countries as well. The analysis of the entire operations of Walmart has thereby depicted

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that the company has been affected in a positive manner by the globalisation that has
occurred in the environment (Auer, Borio and Filardo 2017).
Use of outsourcing by the company
Walmart is considered to be the largest retailer of the world and the costs related to
the supply chain of the company have been reduced with the help of reduction in the wages
of outsourcing the jobs. The low priced products that are offered by Walmart sometimes have
hidden costs for the workers of the company. The workers deal with the products of Walmart
group, however, they are subcontracted under the other logistics organizations which provide
them low wages for the functions that are performed by them. The contracting process of
labour has become a common process for the different organizations that operate in the
modern global environment. The contracted labour of Walmart lie at the bottom of the entire
process that is based on the complex hierarchy of employees (Nadrag and Bala 2014).
The workers of the company who are present at the bottom of the supply chain mainly
conduct jobs that are physically tiring in nature. In spite strenuous load of work, the wages
that are provided to them are quite low. The workers are not provided with the extra benefits
which include health care based schemes and other major facilities as well. The major
country which has provided major outsourcing based opportunities to Walmart is China. The
operations of Walmart are outsourced to China and most of the merchandize that are offered
to the customers are made in the country. Walmart has been sourcing labour largely from the
various Asian countries (Gangopadhyay and Chatterji 2017).
This has further reduced the costs related to the production based process of the
company. The sourcing activities of the multinational companies from China has been
applied by various global organizations. Walmart had played a leading role for the process of
outsourcing labour from countries like China. The wages of the workers in these areas were

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also reduced in the process and the procurement based costs were reduced further. The
headquarters of global outsourcing of Walmart was shifted from city of Hong Kong to
Shenzhen in China in the year 2002. The suppliers of the company with their base in China
were pushed for low prices and the workers were made to provide their services in the
factories at low prices (Cole and Woodrow 2014).
The wages that were paid to the workers in the Chinese factories were lower than
their normal living standards in the country. The working hours in these factories were also
quite high and the employees and managers has placed many complaints related to this.
Therefore, it can be said that Walmart had made good use of the various outsourcing based
opportunities that were provided to the company by the emerging countries like China
(McCann and Acs 2015).
Challenges faced by the company due to globalisation
The domestic and international business of the Walmart has seen negligible amount of
increase in the year 2013. The company has closed down more than 20 stores in China and
the 26 stores in Brazil. The response that has been shown by several countries to the products
and services of Walmart have not been successful for the proper operations of the company.
The major challenges have been faced by Walmart in the major Asian countries like, India
and China. This indicates that the international efforts made by Walmart in these countries
have not been accepted by the consumers of these countries (Andersson and Andersson
2017).
The lack of high response from the customers of Walmart from India and China have
highlighted the dilemma of the management of the company based on the ways by which
they need to understand the local customers in the countries in which it operates. According
to the previous discussion it is evident that the company has been offering similar products in

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all the countries of its operations in the world. The different suppliers of the company have
provided similar products to the customers. The company has not into consideration various
factors like the choice and the preferences of the customers of the areas where the company
operates (Žarković and Ćetković 2014).
The expensive looking stores of the company that have been built in the emerging
countries have been a setback for the successful operations of Walmart in these countries.
The bulk purchase based activities are not famous in the Asian countries as the customers in
these areas prefer fresher products. The company thereby faces the challenge of convincing
the potential customers regarding the freshness and the quality of food that are offered to
them. The various scandals that have occurred in China regarding the quality of food have
been the major reason behind the lack of customers in the retail stores of Walmart in the
country (Le Heron 2016).
The contrast levels that are present in the ways by which the organization needs to
view the customers of United States and the customers of China have not been considered by
the management in a serious manner. The company has been challenged by the local
customers in other countries like South Korea and Germany which had led to the exit of the
company from these areas. The customers of the countries have therefore been affected the
policies that have been implemented by Walmart (Woolgar, Thrift and Tickell 2014).
Ways of overcoming the challenges
The main issues that have been faced by Walmart in its Asian operations are based on
the lack of understanding of the political, cultural and the economic environment of the
countries. The American retail organization is thereby trying to understand the culture and
customs of various Asian customers. The preferences of the customers in Asian countries in
the different cities as compared to the American customers who tend to have similar choices.

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The organization has therefore tried to understand the customers of these areas and offer them
with the products that are suitable for their needs (McCann and Acs 2015). The huge growth
potential that is provided to Walmart by China has been the major reason behind the entry of
the company in this country.
The management of Walmart is thereby trying to capture the market in such a manner
which will help the company to create a strong position in the Asian countries like China and
India. The company has also aimed at analysing the needs and the demands of customers so
that the products can be provided accordingly. The designs of the stores of Walmart have also
been changed in some countries to attract the customers who are not comfortable with the
expensive stores of the company (Kübler and Kriesi 2017).
Recommendations
The major recommendations that can be provided to Walmart regarding the ways by
which the company can mitigate the globalisation based challenges are as follows,
 The managers need to analyse the preferences and demands of the customers
so that they can be provided with the best products at the lowest prices.
 The external environment in which the company is planning to start its
operations needs to be analysed carefully so that the choices of the potential
customers can be analysed successfully. This will enable Walmart to provide
the best products and services to the customers.
 The company needs to change the ways of providing service to the customers
and engage the local community in the services. This will help in the attraction
of customers towards the store.

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Conclusion
The report can be concluded by stating that globalisation has caused many changes in
the successful operations of the organizations in the modern business environment. The
profitability and the revenues of the company are affected by the ways by which the various
organizational operations are conducted. The detailed analysis of Walmart has depicted that
the company has been able to form successful strategies for its operations in the global areas.
The company has however been successful in some of the areas and the has faced major
challenges in some countries like China and India. The various steps that have been taken by
the company to face the challenges in an effective manner have also been analysed in the
report. The recommendations that are provided to the company are related to the ways by
which the management of the company can reduce the challenges that are faced due to the
change of preferences of the local customers of the country. The analysis of the customer
preferences can thereby be helpful for the company to take advantage of the opportunities
that are provided by the globalisation based situations in the modern environment.

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