Case 9 Case 9
Wal-Mart Operations in Brazil: An Emerging Giant
___________________________________ This case was prepared by Professor Masaaki Kotabe, Louie Pranic and Richard Smith of the Fox School of Business at Temple University and Kleber G. de Godoy and Moacir Salzstein of Fundação Getúlio Vargas, São Paulo, Brazil, and updated by Dan Zhang under the supervision of Professor Masaaki Kotabe for class discussion rather than to illustrate either effective or ineffective management of a situation described (2008).
Kotabe/Helsen, Global Marketing Management, 5e
Case 9 Introduction In September 1994, Brazil was experiencing a new thrust in its economy. After several years of hyperinflation, the "Real Plan", implemented in March, 1994, an economic stabilization program that indexed the Brazilian currency to the U.S. dollar, began to reduce inflation to reasonable levels. In February 1994, the annual inflation rate was 40%, whereas by September of that same year, it was a relatively low 3%. A lower inflation rate was viewed as a viable step in improving the purchasing power of the Brazilian people, particularly in the lower socioeconomic segment of the population. The optimistic scenario encouraged many foreign companies to make new investments in Brazil. If Brazil is the leading economy in Latin America with a population of more than 170 million, why not invest there, now that a better business horizon lies ahead in this continental country? Wal-Mart Stores, the world leader in retailing, announced on May 9, 1994 that it had decided to invest heavily in Brazil through a partnership with Lojas Americanas, Brazil's leading department store chain. Later in 1997, Wal-Mart Stores purchased back the full minority interest in its Brazilian joint venture from Lojas Americanas to own and manage the whole Wal-Mart operations in Brazil. Following the implementation of “Real Plan” in 1994, and subsequent...