This paper looks at Wal-Mart Stores as the subject of study. This large United States based organization is recognized as the world’s leading retailer and has extensive global operational influence. Wal-Mart has been the object of much research, both by economists, trade organizations and scholars. This company has evolved from very humble beginnings to establishing itself as an ‘economic power’ in its own right. Wal-Mart opened its first store in 1962, in Rogers, Arkansas, based on its founder, Sam Walton's experience in the retailing sector during the 1950's, and a study he conducted prior to opening his first store. In 1972, the Wal-Mart stock was offered on the New York Stock Exchange which led to significant capitalization and growth. During the 1980's, Wal-Mart experienced rapid growth opening Sam’s Club members-warehouse stores and later 'Supercentres'. A recent corporate press release sums up its current status, "Today, 10,185 stores and club locations in 27 countries employ 2.2 million associates, serving more than 176 million customers a year” (Wal-Mart Corporate, 2012, p. 1). Understanding the Wal-Mart business model
Wal-Mart’s position as the world’s No. 1 retailer inevitably invites strong competition worldwide. This in turn has strengthened this organization’s resolve to maintain their position by utilizing multiple strategies in order to maintain competitive advantage. One of their strategies has incorporated the ability to form relationships or partnerships not only in the United States, but also within the international environment. In order to implement its overseas representation, Wal-Mart has embarked on an expansion program, seeking to maintain both growth and
COMPARATIVE STRATEGIES – WAL-MART
4 profitability. Its primary methodology in securing partnerships with large overseas retail operations has been primarily by the acquisition of majority shareholdings.
Much research has been conducted regarding the viability of acquisition and potential problems inherent within this corporate growth strategy. Effort is directed within this study to ascertain the long term viability of Wal-Mart’s implementation of modern economic principles. This analysis is conducted regarding opinions derived from researched sources either favoring the implementation of trade and comparative advantage utilizing the acquisition mechanism or perhaps the employment of less opportunistic methods. Moreover, the issue of costs and profit maximization will be evaluated relating to the Wal-Mart model in order to establish strategies that can be utilized in order to achieve optimal efficiency. However, there are conflicting viewpoints regarding the best methodology needed to enable such efficiency. Finally, attention is directed at the consumers’ choice, and how it is directed and influenced by strategies implemented within the Wal-Mart corporate business model. Competing viewpoints
In evaluating trade and comparative advantage via the acquisition trail, Hayward (2002) suggests that multinationals tend to invest in overseas start-ups rather than acquiring existing overseas operations. His argument is based on the premise that for an organization’s planned entry into a foreign market, expertise derived from a multinational’s existing operational and marketing experience is more relevant to overseas market entry than the benefits derived from acquisition. However, he concedes that expansion by acquisition can be enabled by investing in existing overseas operations which have a similar corporate product and management function, or by acquiring a more diverse though related business model, which will allow for market COMPARATIVE STRATEGIES – WAL-MART
5 changes to be factored into any risk analysis. Hayward and other sources are accessed, so as to provide a balanced viewpoint of an organization such as Wal-Mart; regarding its choice of acquisition strategy...
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