Wall-Mart Goes South

Topics: Wal-Mart, Retailing, Department store Pages: 3 (929 words) Published: March 11, 2013
Wal-Mart Goes South

“Save money. Live better” is the slogan of the 1962 founded American multinational retailer corporation that runs chains of large discount department stores and warehouse stores around the world. Wal-Mart today is the world’s 18th largest public corporation according to Forbes Global 2011 list. In 1991 Wal-Mart opened its first stores in Mexico and the competition between the store and local supermarkets began. Wal-Mart being so large and worldwide gave the company an advantage in negotiating low prices with many suppliers. Nevertheless, other local supermarkets such as Comerci, Soriana, and Gigante, didn’t give up the market to Wal-Mart so easily. They took action and started to think about ways and methods in order to fight a retail war against Wal-Mart. How has the implementation of NAFTA affected Wal-Mart’s success in Mexico? The implementation of NAFTA has affected Wal-Mart’s success in Mexico. For example, “NAFTA reduced tariffs on American goods sold to Mexico from 10 to 3 percent” (Daniels, Radebaugh, & Sullivan, 2011, p. 315). Also, Wal-Mart encountered logistics problems caused by poor roads and the scarcity of delivery trucks (Daniels, Radebaugh, & Sullivan, 2011). “NAFTA encouraged Mexico to improve its transportation infrastructure,” (Daniels, Radebaugh, & Sullivan, 2011, p. 315). NAFTA helped solve Wal-Mart’s logistics problems (Daniels, Radebaugh, & Sullivan, 2011). In addition, NAFTA “opened the gates wider to foreign investment in Mexico,” (Daniels, Radebaugh, & Sullivan, 2011, p. 315). For example, Wal-Mart’s foreign suppliers such as Sony began to build manufacturing plants in Mexico. As a result, Wal-Mart could now buy these products such as Sony’s Wega TVs without having to pay the high import tariffs (Daniels, Radebaugh, & Sullivan, 2011). How much of Wal-Mart’s success is due to NAFTA, and how much is due to Wal-Mart’s inherent competitive strategy? In other words,...
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