Introduction to Wall Mart
We will be dealing with the issue being faced by Wall mart in China in this analysis. Wall mart has tried to implement its strategy which were a huge success in USA in to china but has tilled now failed to make a dent in the Chinese retail market. When wall market started in USA; it grew and flourished under the radar of big retailers and never came into direct competition with these big retailers as it would have easily destroyed the new company. Wall mart followed some very innovative practices in China like everyday low prices; focus on customer, relentless cost control followed by the firm, the love-hate relationship with suppliers and the legendary logistics and supply chain management practices which were followed by Wall Mart. These strategies have been described in the next section. These were the strategies which led to Wall-Mart becoming a huge success and it became the largest retailer in the world solely on the basis of its US operations. The next logical step for Wal- Mart was to expand the business internationally. It targeted the billion plus Chinese people. The retail market in China had been recently opened to foreign players. Before this retail in China was a central government controlled activity. China is facing many issues in China such as income disparity, local protectionism, infrastructural deficiencies, regulatory restrictions, lack of IT which made its supply chain so effective in USA and the completely different consumer behavior of Chinese as compared to USAir has been 10 years since Wal-Mart opened business in China but it has not been able to make profits in the Chinese markets. We will be discussing the issues faced by Wal-Mart in this country and what can be the solution to these issues being faced by the company in China.
Wal-Mart Strategies of Success.
1) Everyday Low prices –Wal-Mart distinguished itself from all other retailers in USA who used to offer discounts sporadically by declaring this policy. It claimed that Wal-Mart customers will be able to shop from the retailer at prices which were lesser than the competition on every day. The important thing in this strategy was that Wal-Mart always kept its promise even if it had to sell the goods on a loss. This builds immense reputation among the customers.
2) Customer is No.1 – Customer has been the focus of the world of Wal-Mart’s employees. This legacy was provided by the founder of Wal-Mart -Sam Walton who used to constantly train his employees to treat the customer respectfully. Sam’s ten rules of customer service are still being followed by Wal-Mart in order to ensure customer satisfaction and great customer service.
3) Small Town Locations – During the initial growth phase, Wal-Mart grew under the competition’s radar. They operated in these towns which were considered as unviable by big retailers at that time.
4) Relentless Cost Control – Saving was given as much importance in Wal-Mart as was creating a sale. Wal-Mart relentlessly tried to cut costs to pass on the benefits to the customer.
5) Partnership With Suppliers – Wal-Mart provided big volumes to its suppliers but extracted a lot from them. It was always trying to push them to cut costs. Many processes being followed by suppliers were modified by Wal-Mart in order to reduce costs.
6)Unrivalled Distribution and Logistics Management – The IT infrastructure of Wal-Mart was connected with its suppliers in order to ensure that constant update on inventory requirements reach the customer. It followed Just in time approach and utilized cross docking method to reduce inventory of its stores.
Issues faced by Wal-Mart in China.
1) Immediate Issues.
A) Market Segmentation
➢ Large amount of income disparities in China. The coastal regions have very high per capita income of 2117 $ where the inner and western regions have significantly less purchasing power.
➢ China is not one market likes USA –...