Walmart 's Case

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Wal-Mart, founded by Sam Walton in 1962, is the world’s largest public corporation. Wal-Mart, whose headquarters are located in Bentonville, Arkansas, was incorporated in 1969, and later in 1972, it was listed on the New York Stock Exchange. In 2006 Wal-Mart became the number one retailer in the United States and is currently the world’s largest private employer. Wal-Mart has more than 6,800 stores world-wide, in countries such as: Canada, China, Germany and Britain. Due to the rapid growth of the company, Wal-Mart decided to develop three types of retail stores: discount, super centers and neighborhood markets. These stores are all very popular in the United States and around the world. This business philosophy of owning various types of stores has allowed Wal-Mart to reach more people and sell a wider variety of products, which has enabled Wal-Mart to create a larger customer base. In the case presented in the textbook, Wal-Mart was trying to penetrate the markets in Argentina and Brazil by attempting to create a different shopping experience for consumers. However, because of the nature of the supermarket industry in Argentina and Brazil, Wal-Mart has not seen any profits and has faced many problems with implementing their “Everyday Low Price” strategy ("Wal-Mart history timeline," 2012). By exporting their “main street USA” type of shop all over the world, Wal-Mart sought to bring a different type of shopping experience to other cultures and make profits in the process. However, because of the nature of the supermarket industry and cultural influences in Argentina, Wal-Mart did not see the profits that the company had aspired for when embarking on this endeavor. Argentineans simply did not enjoy the American supermarket experience. It is clear that Wal-Mart is facing similar problems in Brazil, where they are trying to implement their “Everyday Low Price” strategy. Brutal competition coupled with the inability to achieve economies of scale has significantly impacted Wal-Mart’s bottom line. One of the reasons Wal-Mart may have started opening stores globally is to reach out to more customers. Reaching out to more customers would allow Wal-Mart to potentially earn more revenue and increase their bottom-line. Another reason for global expansion may have been to add more value to the company by diversifying their market base. By expanding operations in countries such as Brazil, it would also allow for Wal-Mart to take advantage of low labor costs relative to the United States. Furthermore, developing a unique logistics network and an optimal and efficient supply chain across the globe could improve Wal-Mart’s overall operations (Simchi-Levi, Kaminsky & Simchi-Levi, 2008). Another reason Wal-Mart may have started opening stores globally is to diversify its market. This strategy of diversifying the market is important because it reduces risk against poor market conditions. As a result, Wal-Mart was able to capture emerging markets like South America, South Africa, Indonesia, and China, which are essential for growth because the United States markets are almost saturated. Some of the other reasons Wal-Mart may have for operating globally is to attempt to alleviate some of the competition that they are facing by eliminating many of their competitors. Wal-Mart is the biggest retailer in the United States; however, it is not the largest in other parts of the world. This indicates that there are other big companies that are operating around the globe, in which case Wal-Mart could penetrate those markets and gain market share. On the flip side, those competitors can easily enter current markets where Wal-Mart has operations, which means it is up to Wal-Mart to make the first move. The last key reason for global expansion may have been to fulfill Sam Walton’s dream of a true multi-national image. In the United States Wal-Mart has changed its slogan many times in the past few years. They first capitalized on “Everyday...
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