Wal-Mart’s Business Opportunities and Threats in China Essay Example
Walmart China currently sees China as a place full of opportunities and a fast growing market for the company because of China's uprising middle class and still unexplored markets. However, there serious challenges this market entails. Walmart has had a proven success in China because of the following key factors.
Cost management – Walmart’s key theme in China was offering the fair prices (versus lowest in the U.S.) prices in the market all year around, because its focus is on targeting China's middle class consumers.
Supplier partnership – Walmart was able to build a win-win partnership with their suppliers in China while still acting as a very strong negotiator. Insisting on lower prices, Walmart was also working with suppliers to help them achieve those prices by providing them with support and consultancy and going into details to achieve efficiency for their businesses.
Targeting a neglected niche – Walmart started up by focusing on the customers that everyone else seemed to neglect, the small town shoppers. The strategy was especially successful as it achieved instant market saturation leading to very strong loyalty. This strategy also helped stay below leading competitors radar while building up their competitive advantages (distribution centers, etc.) that allowed them to grow bigger into mainstream.
Distribution system – Walmart has managed to build one of the most efficient distribution systems in the US. Distribution centers were constructed so that any Walmart’s stores will always have a distribution center less than a day’s drive away and operating its own truck fleet has led to 99.5% on time delivery record.
Employees – Walmart awarded its employees differently, shifting the focus from salaries and into profit-sharing stock based rewards, working to improve the employees skills, trust and involvement by doing constant job shifts and sharing the corporate information with them.
Challenges in China’s retail market
Employees –
Cost management – Walmart’s key theme in China was offering the fair prices (versus lowest in the U.S.) prices in the market all year around, because its focus is on targeting China's middle class consumers.
Supplier partnership – Walmart was able to build a win-win partnership with their suppliers in China while still acting as a very strong negotiator. Insisting on lower prices, Walmart was also working with suppliers to help them achieve those prices by providing them with support and consultancy and going into details to achieve efficiency for their businesses.
Targeting a neglected niche – Walmart started up by focusing on the customers that everyone else seemed to neglect, the small town shoppers. The strategy was especially successful as it achieved instant market saturation leading to very strong loyalty. This strategy also helped stay below leading competitors radar while building up their competitive advantages (distribution centers, etc.) that allowed them to grow bigger into mainstream.
Distribution system – Walmart has managed to build one of the most efficient distribution systems in the US. Distribution centers were constructed so that any Walmart’s stores will always have a distribution center less than a day’s drive away and operating its own truck fleet has led to 99.5% on time delivery record.
Employees – Walmart awarded its employees differently, shifting the focus from salaries and into profit-sharing stock based rewards, working to improve the employees skills, trust and involvement by doing constant job shifts and sharing the corporate information with them.
Challenges in China’s retail market
Employees –