Case Study 1: Wal-Mart’s Foreign Expansion
Wal-mart’s strategy most likely will not work in foreign markets because customers’ preferences and shopping habits are different. Wal-mart was built to fit the needs of U.S. customers in many different ways, such as one-stop place to shop, low-price strategy, and friendly customer service. Wal-mart knows what these customers want and based on their behavior, it can analyze pricing, marketing and demand-forecast. Another practice that Wal-mart does very well is the supply chain management, in order to offer “everyday low prices,” Wal-mart reduces cost by controlling and balancing consumers demand, production and distribution. The company negotiates prices and buys directly from manufacturers and bypasses intermediaries. The strategy has worked very well in the U.S. market but does not necessarily mean it will work in other markets, preference maybe based more on quality rather than low price. Take for example the European market, the “everyday low prices” strategy is attractive in every market but the purchasing habits and preferences in general differ from that of U.S. consumers. While most Americans prefer to drive to Wal-mart and make different purchases for that week or so, Europeans tend to purchase smaller quantities but more frequently, this is due to smaller living spaces and if they are going to be carrying the purchases home, that would limit the quantity they can purchase.
Another reason why Wal-mart strategy would not work in most European markets is the preference for fresh quality food. Meats for example are purchased in the meat market where fresh meat is cut and packaged right in front of the customer, fruits and vegetables are purchased in the outdoor markets where customers can bargain prices with local farmers and receive fresh fruits or vegetables. These are some of the reasons Wal-mart failed in the Germany and South Korea.
Wal-mart became successful in Mexico firstly due to the strategy...
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