Summary
With international sales of more than $450 billion in 2010, Wal-Mart is among the largest retailers in the world. Wal-Mart, one of the Fortune 500 corporations, evolved from a modest retail location founded in 1962 into an unrivaled chain of hyper retail locations. Wal-Mart’s growth was explicit due to a well-executed plan. In the United States, local expansion grew rapidly in the middle 90s, and the local market felt too tiny for the business (Geringer & McNett, 2020). To expand internationally, the company traveled to several countries in South America, Asia, and Europe. The results of this transnational growth were inconsistent in the various economies. This discussion reviews the globalization endeavors of Wal-Mart, focusing on the reasons and strategies that ensured the success of the expansion of the company into Asia and Latin America while providing guidelines and measures to ensure that expansion into the world’s most populous nations, India and China, is a success.
Case Study Solutions
The Significance of Wal-Mart’s International Expansion Strategy
Wal-Mart’s entry into the global market was seen as inevitable and essential. The corporation had initially achieved its highest growth in the United States and no further expansion was foreseeable. To do this, Wal-Mart would follow an extremely unconventional approach to its global expansion strategy. At the time, it was customary to either grow businesses in Europe, where the infrastructure was more advanced, or in the Asian market, where the enormous population had shown to be very alluring. As a result, the company’s strategy for global expansion would prove to be crucial to its success. Wal-Mart, therefore carefully planned and carried out its foreign growth. Several Latin American nations were chosen by Wal-Mart to lead the company’s efforts to go global. Despite having no prior experience in the South American market, Wal-Mart opened stores there and saw excellent results. This made it possible for the business to expand into other markets like China and India. The company’s expansion required this aggressive expansionist strategy to thrive in the market. And as a result, it was able to grow into the leading retail chain store in the world’s biggest economies.
Wal-Mart’s Success Strategies in China and Latin America
Wal-Mart had to start on a small scale to be successful in Latin America. First, they were able to research emerging markets through a 50/50 joint venture with Cifra in Mexico. It gradually advanced to full ventures as it gained a deeper understanding of the market over time. In Brazil, for instance, Wal-Mart implemented the lessons from Mexico and entered a 60-40 joint venture with Lojas Americana. In China, it had to adopt a different approach due to government regulations. It was forced to enter a joint venture with Chinese partners who had political influence while maintaining controlling holdings. It had to accept that local product sourcing was required by government policy, and it did so by acquiring goods from American firms in China, such as Proctor & Gamble. As a result, Wal-Mart’s success in China was based on its capacity to distribute locally unique and scarce goods all over the country. Because not all products from the United States and Latin America were suitable for the Chinese market, it had to learn how to choose its products carefully.
Wal-Mart’s Requirements to Achieve Success in India
India is a challenging market for foreigners to enter because of the country’s strong traditional and communal beliefs. The majority of Wal-Mart’s customers will feel that the company is aiming to take over their society if it tries to fully own any sites, so it is best to always have a joint venture there. Second, assuming that the demands of the customer come first, it could be a good idea for Wal-Mart to placate Indians by adapting to their way of life rather than upsetting it.
Concepts
International Business
The first idea that has a direct connection to the case study is a global business. It is described as a type of business that works internationally. Wal-Mart’s growth into the aforementioned emerging markets and internationalization are the subject of the analysis. According to the report, Wal-Mart revised its approach to reach the new markets thirty years ago after realizing the enormous prospects that emerging economies could present. Answering the second and third questions has been aided by this idea. For instance, Wal-Mart’s strategy to identify the demands of Mexican customers and offer Chinese customers a wider variety of products aided its international development.
Sociocultural Forces
This idea relates to how different societies’ cultures affect different kinds of enterprises. Religion, popular culture, linguistic diversity, and social structure are all possible perspectives on culture. One of the crucial factors to comprehend when a company is trying to establish itself in a new market is culture (Geringer & McNett, 2020). It was crucial for Wal-Mart to comprehend the sociological order of the cultures it was trying to penetrate in Latin America and China. In China, for instance, there was no need to sell ladders. Wal-Mart started with a joint venture while studying the market because it had previously understood the sociocultural influences at play in that area.
International Trade and Investment
This idea relates to companies finding new opportunities and investing in them to grow their markets and gain access to products and services that might not otherwise be available domestically. It was crucial for Wal-Mart to comprehend global trade and investment when it decided to increase its market and access goods and services from outside. This concept clearly reveals its significance in steering Wal-Mart’s development. In other international economies like Mexico, Brazil, China, and India, it assisted Walmart in locating potential clients and other commercial prospects.
Reference
Geringer, J. M., & McNett, J. M. (2020). International business (3rd ed.). McGraw-Hill Education.