Assignment

Topic : List of 25 MNEs & example of Evolution of One MNE

 Assignment – International Business

List of 25 MNEs
1. Wal-Mart Stores
2. Exxon Mobil
3. Chevron
4. General Electric
5. Bank of America Corp.
6. ConocoPhillips
7. AT&T
8. Ford Motor
9. J.P. Morgan Chase & Co.
10. Hewlett-Packard
11. Berkshire Hathaway
12. Citigroup
13. Verizon Communications
14. McKesson
15. General Motors
16. American International Group
17. Cardinal Health
18. CVS Caremark
19. Wells Fargo
20. International Business Machines
21. UnitedHealth Group
22. Procter & Gamble
23. Kroger
24. AmerisourceBergen
25. Costco Wholesale

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 Assignment – International Business

Wal-Mart Stores, Inc.

Wal-Mart Stores, Inc. (formerly branded as Wal-Mart, branded as Walmart since 2008)
(NYSE: WMT) is an American public corporation that runs a chain of large discount
department stores and a chain of warehouse stores. In 2010 it was the world's largest
public corporation by revenue, according to the Forbes Global 2000 for that year. The
company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and
publicly traded on the New York Stock Exchange in 1972. Wal-Mart, headquartered in
Bentonville, Arkansas, is the largest majority private employer[8] and the largest grocery
retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the
U.S. from grocery business. It also owns and operates the Sam's Club retail warehouses
in North America.

Wal-Mart has 8500 stores in 15 countries, with 55 different names. The company
operates under its own name in the United States, including the 50 states. It also operates
under its own name in Puerto Rico. Wal-Mart operates in Mexico as Walmex, in the
United Kingdom as Asda ("Asda Wal-Mart" in some branches), in Japan as Seiyu, and in
India as Best Price. It has wholly-owned operations in Argentina, Brazil, and Canada.
Wal-Mart's investments outside North America have had mixed results: its operations in
the United Kingdom, South America and China are highly successful, while it was forced
to pull out of Germany and South Korea when ventures there were unsuccessful.

Evolution of Wal-Mart

The year 2006 marked the most significant retrenchment for Wal-Mart since it undertook
its international expansion in the early 1990s, in an effort to rejuvenate sales growth.
Wal-Mart, the world's largest retailer, admitted defeat in its long-standing effort to
penetrate successfully the German retail market. On July 30, 2006, the behemoth
announced that it was selling its operations in Germany to German retailer Metro AG.
Wal-Mart had been trying to make its German stores profitable for eight years. Wal-Mart
announced a pretax loss on the sale of $1 billion. Wal-Mart had previously announced in
May that it would sell its 16 stores in South Korea.

Wal-Mart apparently underestimated the ferocity of German competitors, the frugality of

German shoppers, and the extent to which regulations, cultural differences, and labor
unions would impede its ability to apply in Germany what had worked so well for it in
the United States. German discount retailers offer very low prices, and German shoppers
have shown they can be very demanding. Germany's shoppers are accustomed to buying
based primarily on price. They are willing to split their shopping activities among various
retailers, which blunt the effectiveness of the "superstores" offering one location for all
the shoppers needs. Employees filed a lawsuit against the retailer's policy against

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 Assignment – International Business

romantic relationships between employees and supervisors. Accustomed to putting their

own groceries in shopping bags, German shoppers were alienated by clerks who bagged
groceries. Moreover, German regulations limited Wal-Mart's ability to offer extended and
weekend hours, as well to sell merchandise below cost in an effort to lure consumers with
so-called loss leaders. Strong unions also limited the firm's ability to contain operating
costs.

Wal-Mart also experienced a loss of seasoned executives when it acquired several

German retailers. The two retailers were headquartered in different cities. Following the
mergers, Wal-Mart consolidated the two headquarters in one city, prompting many
executives to leave rather than relocate. Perhaps reflecting this "brain drain," Wal-Mart's
German operations had four presidents in eight years. Wal-Mart has not been alone in
finding the German discount market challenging. Nestle SA and Unilever are among the
large multinational retailers that had to change the way they do business in Germany.
France's Carrefour SA, Wal-Mart's largest competitor worldwide, diligently avoided
Germany.

With the withdrawal from the German and South Korean markets, Wal-Mart is currently
operating in 11 countries. This compares to Carrefour of France (29 countries), and Metro
of Germany (30 countries), the second and third largest global retailers, respectively.
Wal-Mart's international ambitions are now centered in Asia and Latin America, with
India and China the firm's most promising growth markets. However, Wal-Mart can
expect to experience similar growth challenges in these countries. For example, India
does not permit foreign firms to establish stores unless they sell only one brand. In late
2006, Wal-Mart agreed with China's state-run union to set up unions at its 60 stores in
that country. Moreover, China is limiting the size of large-scale retail outlets, which is
likely to limit Wal-Mart's plans to introduce the superstore concept.

SWOT Analysis Wal-Mart

Strengths
• Wal-Mart is a powerful retail brand. It has a reputation for value for money,
convenience and a wide range of products all in one store.
• Wal-Mart has grown substantially over recent years, and has experienced global
expansion (for example its purchase of the United Kingdom based retailer
ASDA).
• The company has a core competence involving its use of information technology
to support its international logistics system. For example, it can see how
individual products are performing country-wide, store-by-store at a glance. IT
also supports Wal-Mart's efficient procurement.
• A focused strategy is in place for human resource management and development.
People are key to Wal-Mart's business and it invests time and money in training
people, and retaining a developing them.
Weaknesses

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 Assignment – International Business

• Wal-Mart is the World's largest grocery retailer and control of its empire, despite
its IT advantages, could leave it weak in some areas due to the huge span of
control.
• Since Wal-Mart sell products across many sectors (such as clothing, food, or
stationary), it may not have the flexibility of some of its more focused
competitors.
• The company is global, but has has a presence in relatively few countries
Worldwide.
Opportunities
• To take over, merge with, or form strategic alliances with other global retailers,
focusing on specific markets such as Europe or the Greater China Region.
• The stores are currently only trade in a relatively small number of countries.
Therefore there are tremendous opportunities for future business in expanding
consumer markets, such as China and India.
• New locations and store types offer Wal-Mart opportunities to exploit market
development. They diversified from large super centres, to local and mall-based
sites.
• Opportunities exist for Wal-Mart to continue with its current strategy of large,
super centres.
Threats
• Being number one means that you are the target of competition, locally and
globally.
• Being a global retailer means that you are exposed to political problems in the
countries that you operate in.
• The cost of producing many consumer products tends to have fallen because of
lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to
low-cost regions of the World. This has lead to price competition, resulting in
price deflation in some ranges. Intense price competition is a threat.

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 Assignment – International Business

Control Strategy for Wal-Mart

• Commitment – Enthusiasm in Business
• Share – Staff Involvement in Decision making
• Listen & Communicate – Customers and Staff
• Appreciate – Good efforts
• Celebrate – Good Achievements
• Motivate – Challenging goals and rewards for High
performers
• Exceed – Deliver more than promises
• Control – Operating Costs
• Swim Upstream – Evaluate Competition and do something
different.

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 Assignment – International Business

Wal-Mart’s Retail Mix

Customer Location
Service

Store
Design Retail Merchandise
And Strategy Assortment
Display

Communication Pricing
Mix

Porter’s 5 forces Models

• Potential Competitors: Medium pressure

o Grocers could potentially enter into the retail side.
o Entry barriers are relatively high, as Wal-Mart has an outstanding
distribution systems, locations, brand name, and financial capital to fend
off competitors.
o Wal-mart often has an absolute cost advantage over other competitors.

• Rivalry Among Established Companies: Medium Pressure

o Currently, there are three main incumbent companies that exist in the same
market as Wal-Mart: Sears, K Mart, and Target. Target is the strongest of
the three in relation to retail.
o Target has experienced tremendous growth in their domestic markets and
have defined their niche quite effectively.
o Sears and K-Mart seem to be drifting and have not challenged K-Mart in
sometime.
o Mature industry life cycle.

• The Bargaining Power of Buyers: Low pressure

o The individual buyer has little to no pressure on Wal-Mart.
o Consumer advocate groups have complained about Wal-Mart’s pricing
techniques.

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 Assignment – International Business

o Consumer could shop at a competitor who offers comparable products at

comparable prices, but the convenience is lost.

• Bargaining Power of Suppliers: Low to Medium pressure

o Since Wal-Mart holds so much of the market share, they offer a lot of
business to manufacturers and wholesalers. This gives Wal-Mart a lot of
power because by Wal-Mart threatening to switch to a different supplier
would create a scare tactic to the suppliers.
o Wal-Mart could vertically integrate.
o Wal-Mart does deal with some large suppliers like Proctor & Gamble,
Coca-Cola who have more bargaining power than small suppliers.

• Substitute Products: Low pressure

o When it comes to this market, there are not many substitutes that offer
convenience and low pricing.
o The customer has the choice of going to many specialty stores to get their
desired products but are not going to find Wal-Mart’s low pricing.
o Online shopping proves another alternative because it is so different and
the customer can gain price advantages because the company does not
necessarily have to have a brick and mortar store, passing the savings onto
the consumer.

• Complementors: Low pressure

o One complementor that exists for Wal-Mart is Sam’s Wholesale Clubs.
Although the same company owns this, it complements Wal-Mart by
offering the same products in wholesale form, making the company more
profitable.
o Suppliers of goods need to have innovative products to attract customers.
o For the most part, complementors do not affect Wal-Mart’s business
model.

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