Global Expansion of Wal-Mart

International Business
ASSIGNMENT 2

Case Summary on Global Expansion of Wal-Mart

14th June, 2017

Submitted To:

Course Instructor: Mr. Prachanda Man Shrestha

Submitted By:-

Mohit Maheshwari

EMBA Fall 2015- Semester III- Part I

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Global Expansion of Wal-Mart

Global expansion has been gathering a great deal of tending. Thither are many significant
elements to be weighed in the decision-making process such as business strategies, entry
modes, and threats and opportunities in the grocery stores. The proper business strategies
and entry modes employed will increase the firms chances of success and influence the
future of the retailer.

Many models of internalization explain the succession of foreign expansion, demonstrating that
companies who go international will do better in foreign grocery stores that are standardized to
their domestic markets. This was why Walmart chose to introduce the markets of Canada and
Mexico.

Wal-Mart Stores, Inc., branded as Walmart, is an American multinational retail corporation that
operates chains of big discount department stores and warehouse stores. Headquartered in
Bentonville, Arkansas, the company was set up by Sam Walton in 1962 and incorporated on
October 31, 1969. The society goes under the Walmart name in the US and Puerto Rico. It goes
in Mexico as Walmart does Mxico y Centroamrica, in the United Kingdom as Asda, in Japan
as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and
Canada. (Wal-Mart Corporate Site, 2017)

After its start in 1962 Walmart ever since had constant growth rates and successfully gained
market share in the merchandise and food retailing markets. By 1990, however, Walmart realized
that its chances for development in the United States were becoming more limited. To maintain
steady growth rates and profits the company resolved to extend globally. The core competency
of Walmart is the cost. Selling merchandise and food for low costs made them gain market
shares and continue the growth rates. Going global gives companies the opportunity of using
location economies to secure the quality, use economy of scale to lower the production costs per
unit and benefit from learning effects. A global supply chain and global markets will bring down
the production costs since more volume is arranged following a higher demand through
international markets. Especially for Walmart expanding internationally supports and secures
their core competency: Selling everyday life goods at a depressed cost.

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Global Expansion of Wal-Mart

Walmarts decision to expand globally has been successful as seen in Walmarts domination in
the grocery stores. Walmarts success is a glorious story in the business world for being capable
to maintain their jobs not just domestically, but also globally. The business strategies and entry
modes used were wisely selected as they ensured profitability on a long term base. Even though
Walmart faced challenges in the foreign markets, they sunk in these markets successfully as they
swept over their competitors in the retail industry. Walmart also demonstrated strong strategic
management skills because Walmart chose their positions and target countries carefully.

Walmart success can also be accredited to their efforts in filling their customers from all social
classes through offering a broad scope of products using a low pricing strategy and attracting
brand loyalty through repeat purchase. Some other notable winner was that the firm was capable
to outlast the tough recession periods where the slower economy contracted business cycles,
business slowed down growth and raised unemployment rates. However, Walmart continued
its business operations during the recession years and got a successful retailer in the industry
beyond the edges.

Wal-Mart saw that if it didnt expand internationally, other global retailers would get it to the
poke. In fact, Wal-Mart faces significant global competition from Carrefour of France, Ahold of
Holland, and Tesco from the United Kingdom. Carrefour, the worlds second biggest retailer, is
perhaps the most global of the plenty. The innovator of the hypermarket concept now operates in
26 states and generates more than 50 percent of its sales outside France. Compared to this, Wal-
Mart is a laggard with just 17 percent of its gross revenue generated from international
operations. Nevertheless, there is even room for significant worldwide expansion. The
worldwide retail market is yet very disconnected. The top 25 retailers controlled just 18 percent
of worldwide retail sales in 2002, although forecasts suggest the number could hit 40 percent by
2009, with Latin America, Southeast Asia, and Eastern Europe is the primary field of battles.
(Wal-Mart Corporate Site, 2017)

Bibliography
Wal-Mart Corporate Site. (2017, June 14). Retrieved June 14, 2017, from
http://corporate.walmart.com/our-story

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