With Chinas business and government opening up to new businesses entering the market, it makes china the perfect new market. For Wal-Mart this will mean a large change in its business strategy, In order to develop a new business strategy Wall-Mart needs to figure out how to reformulate its business plan to fit this booming economy. I am not disagreeing with the idea of Wall-Mart trying to enter Chinas market I just believer that the EDLP will not work the same that it does here. Wal-Mart does so well in America because it is able to thrive off of the growing “rural area” population to gain Competitive advantage. This is not the same case for China, In China; the growth of the population has been concentrated to coastal areas, and not to the rural areas like in the U.S.
Wall-Mart’s business plan also wanted to use the U.S. version of distribution, logistics, and IT networks to gain economies of scale and competitive advantages. China does not have the infrastructure for Wal-Mart to gain the same scale economies and advantages. In order to have EDLP you need a well built infrastructure in order to keep the cost of the product down. The distribution in China is not the same as it is for export. Congested roads and the lack of infrastructure makes it difficult for suppliers to reach key areas.
Not only that but the difference in culture changes such as buying habits and shopping habits as well. In china consumers buy small amounts of items, and they just use them as they go, not stock up in bulk like here in the U.S. With this in mind there is no need for a giant retail warehouse.
Wal-Mart has attempted to transplant its American business model in other countries, but had no such luck. Wal-Mart has already backed out from Germany and South Korea due to its inability to tune in with their market. Even with the governmental leniency on foreign businesses entering china, china is not going to let their domestic companies suffer for slightly lower...
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