Ch 13 Organization of International Business

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1.Intro & Background

Wal-Mart Stores, Inc. was incorporated in 1969 and now is the world’s largest and most successful grocery retailer which was selected as world’s largest company in 2007, by Fortune 500. It has 8,970 stores in 15 countries and total revenue of $421,849 billion (2010).

Wal-Mart’s main business strategy is ‘EDLP-Every Day Low Price’ which is the key-point of their success. To accomplish this strategy, they mainly focused on efficiency of distribution structure. They used ‘Cross-docking system’, ‘POS’ system, ‘QR-Quick Response’ System. All those strategies core values are ‘Time’ and ‘Response’. Shorten the time for everything includes distribution, storing, etc directly affected lower the price of goods which could be best response to customer need.

In other words, Wal-Mart has been successful since they always managed their time and response to customer. Those points were same for Wal-Mart’s “International division” startegy. Their international division wasn’t like these days at the early stage. The international division was centralized so the branches needed to get approval for every action and decision from headquarter in USA. However, this centralization process made whole process slow and it harmed the core value of Wal-Mart. Also, they realized that the system can’t be same in other countries. It needed to be changed and modified in order to fully get into each local market place.

By the late 1990’s they started to change their policy for international division. They gave more responsibility to each division so that they don’t have to wait for approval and response from headquarter. By this change, each international divisions could meet their local market’s need more rapidly and effectively.

2. Why did the centralization of decisions in Wal-Mart’s international division at headquarters create problems for the company’s different national operations? Has Wal-Mart’s response been appropriate?

The headquarter first...
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