The success of Wal-Mart was proportionately based on NAFTA since the organization had to deviate from its business model that is used in most of the international market. The reason why this was so was due to the tariffs of Mexico ‘the host nation’ which made the procurement process to be very expensive. The other major issues that were encountered by Wal-Mart but solved by NAFTA were poor infrastructure that reduced its levels in the logistics sector. The technological systems of Mexico where also not effective leading to faulty data in the significant procedure of decision making (Iacovone, Javorcik, Keller, & Tybout, 2011).
With the entry of NAFTA into the Mexico, it encouraged the nation to improve its transportation network hence solving the transportation issues that were being experienced. The high tariffs that were being experienced on the transportation of American goods were reduced from the standard 10% to 3%. All the alterations in the market operation systems made Wal-Mart to be the biggest competitor to the local companies such as Comerci, Gigante and Soriana. The foreign investment gates were also improved hence benefiting the general operations of Wal-Mart in the foreign land. With all these help from NAFTA, the pre-NAFTA Wal-Mart required the organization not to rely heavily on its business model since it did not a strong... [continues]
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