Mini-Case Study

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Why has Wal-Mart viewed international expansion as a critical part of its strategy?

Wal-Mart has viewed international expansion as a critical part of its strategy because of a number of reasons. First, Wal-Mart saw the potential for increased profits and sales in new markets.“After rapid expansion during the 1980s and 1990s, Wal-Mart faces limits to growth in its home market and has been forced to look internationally for opportunities”(Ball, 2007). Second, Wal-Mart saw the need “to protect their existing markets, profits, and sales”(Ball, 2007) from other international businesses. Finally, the third reason that Wal-Mart viewed international expansion as a critical part of its strategy was “to help satisfy management's overall desire for growth”(Ball,2007). What did Wal-Mart do to enable the company to achieve success in Canada and Latin America? Why did Wal-Mart fail to achieve similar Success in Europe?

Wal-Mart achieved success in Canada and Latin America by two different modes of entry that were available. Wal-Mart chose to enter Canada 'by acquiring 122 Woolco stores in 1994”(Ball, 2007). Woolco was a failing retail company in Canada so Wal-Mart restructured the operations using the practices and procedures that had been proven successful in the United States. Since the sociological differences between the United States and Canada were not that great this enabled Wal-Mart to be able to make their Canadian venture successful. In Latin America Wal-Mart chose to use a different mode of entry to achieve success. Wal-Mart chose to enter Latin America in Mexico first with a 50-50 joint venture with Cifra so it could overcome “the substantial differences in culture and income between the United States and Mexico”. This venture gave Wal-Mart the experience with the Latin American culture and they were able to negotiate a 60-40 joint venture in Brazil and build on that knowledge to open a wholly owned business in Argentina. Wal-Mart was able to succeed in...
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