1. How does expanding internationally benefit Wal–Mart?
Wal-Mart is a company that was able to exercise economies of scale in each country they operate. Its suppliers, as well, had no choice but have to give them low costs because Wal-Mart was demanding more products and quantity as a strategy. Wal-Mart has increased its profit by hiring over 500,000 employees, all of them in their own home country. They have also learned new techniques from doing business in other countries. Not all the countries they are operating have the same preferences or choices, so they had to change the products they were offering as well.
2. What are the risks that Wal-Mart faces when entering other retail markets? How can these risks be mitigated?
The local retail stores already know the market and have mastered it, leaving Wal-Mart with no chance to be successful. Beside this, Wal-Mart is one of the retail stores with more presence in other countries but there are other companies working abroad. Carrefour has a 50% of its sales in its subsidiaries abroad France and Ahold have a 70 % of its sales in other countries. They have more experience than Wal-Mart in the global market and that’s why Wal-Mart has to study the other businesses, join them, or buy them out. Applying this activity, they can reduce risks and use the resources of the local store related to labor, market development, suppliers, infrastructure, etc.
3. Why do you think that Wal- Mart first entered Mexico via joint-venture? Why did it purchase its Mexican joint venture partner in 1998?
I think Wal-Mart didn’t want to risk starting on its own in a foreign market without known it well. They realized that Mexico was a different market and expectations about the new customers and its preferences or customers where different. After they entered to the market an analyzed it deeply, they realized that it could do better on its own and buying up the market is a good strategy for that. They had experimented...
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