GROUP 4 | IBI1504

INTERNALTIONAL BUSINESS
STRATEGY

LECTURER: CUNG THI ANH NGOC

CLASS: IBI1504

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No Name & ID
.
1 DINH THI MY DUYEN – HE153030
2 NGUYEN DINH DONG – HS150303
3 PHAM TAN DUNG – HS150158
4 BUI VAN HUAN – SE05550
5 PHAM DUC NAM – HE141251

GROUP REPORT
International Business Strategy

Group: 4
Members:

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Table of Contents
1. Differences between Global Standardization and International
Strategy....................................................................................................4
a. Definition.........................................................................................4
b. Differences between Global Standardization and International
Strategy.................................................................................................4
2. Closing Case: Walmart.....................................................................5
a. Introduction to Walmart...............................................................5
b. The way Walmart expanding their internationally benefit........7
c. The risks that Walmart faces when entering other retail
markets and how they be mitigated..................................................10
d. Why do you think that Walmart first entered Mexico via a
joint venture? Why did it purchase its Mexican joint venture
partner in 1998?.................................................................................13
e. Strategy of Walmart.....................................................................14

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1. Differences between Global Standardization and

International Strategy.
a. Definition
- Global Standardization Strategy is an organization’s strategic guide to
globalization that connects it with the rest of the world. In other words, a
global strategy refers to the plans an organization has developed to grow
beyond its local or domestic borders. It specifically aims at increasing the
sales of goods or services abroad
- International Strategy refers to the plans laid down by strategic managers
to guide commercial transactions taking place between entities in different
countries. In simple words, it is a way in which a firm decides acquiring
and utilizing resources to achieve international goals and objectives.

b. Differences between Global Standardization and International

Strategy

Global Standardization International Strategy

Strategy
Based on Service or Provides the exact product
Product offering or service descriptions
offered to the customers in
all countries that it operates
Based on Customers’ Quite effective when it
Engagement comes to customers’
engagement, however, a
company can connect with
its customers in
international strategies by
setting up better
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Each market is served
with specific and tailored
products that are best
suited to the customers in
that particular market
Seem to create a greater
amount of engagement
than global marketing
does since they are
working with a tailored
strategy for every
country.
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communication channels
Based on Advertising Typically aired on Tend to air tailored
worldwide mediums advertisements specific
to the local markets of
that area.
Based on R&D and R&D and marketing research are thorough in both
Marketing Research global as well as international strategies Allows
subsidiaries independence to plan and execute different
competitive moves
Based on Strategy Plans and executes Allows subsidiaries
Integration and competitive battles on a independence to plan and
Competitive Moves worldwide level and does execute different
not allow freedom to competitive moves
execute tailored competitive
moves

2. Closing Case: Walmart

a. Introduction to Walmart
- Wal-Mart Stores, Inc., branded as Walmart, is an American multinational
retail corporation that operates chains of large discount department stores
and warehouse stores. Headquartered in Bentonville, Arkansas, the
company was founded by Sam Walton in 1962 and incorporated on
October 31, 1969. The company operates under the Walmart name in the
US and Puerto Rico. It operates in Mexico as Walmart de México y
Centroamérica, in the United Kingdom as Asda, in Japan as Seiyu, and in
India as Best Price. It has wholly owned operations inArgentina, Brazil,
and Canada.
- Activities:
 Walmart helps people around the world save money and live better --
 anytime and anywhere -- in retail stores, online and through their mobile
devices.

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 Each week, more than 245 million customers and members visit our
nearly 11,00 stores under 71 banners in 27 countries and e-commerce
websites in 10 countries. With fiscal year 2014 sales of approximately
$473 billion, Walmart employs 2.2 million associates worldwide.
 Walmart is the world's largest company by revenue, according to
 the Fortune Global 500 list in 2014, the biggest private employer in the
world withover two million employees, and the largest retailer in the
world.
 The company was publicly listed on the New York Stock Exchange in
1972. In the late 1980s and early 1990s, the company rose from a
regional to national giant.
 By 1988, Walmart was the most profitable retailer in the US and by
October 1989 it had become the largest in terms of revenue.Walmart
Global’s
 ACTI
 1962, Walmart was established in Arkansas by Sam Walton and has
grown rapidly to become the largest retailer in the world with 2002 sales
of $218 million, 1.3 million associates, and some 4.500 stores.
 1991, Walmart’s operations were confined to the US.
 In the US, Walmart established a competitive advantage based upon a
combination of efficient merchandising and progressive human relations
policies.
 Walmart was a leader in the implementation of information systems to
track product sales and inventory.It developed one of the most efficient
distribution systems and promotion of widespread stock ownership
among employees which led to high productivity enabling it to decrease
operating costs – a strategy to gain market share first in
 general merchandising.
 By 1990, due to market saturation in US, Walmart decided to expand
globally. Walmart started to expand internationally in 1991 by opening
its first stores in Mexico, a joint venture with Cifera. There were some
initial problems: poor infrastructure, crowded roads, and a lack of

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 leverage with local suppliers, which resulted in stocking problems, raised

costs and prices, limited ability to gain market share and problems with
merchandise selection.
 By the mid-1990s, Walmart found ways to adapt to the local
environment: Partnership with a Mexican trucking company, more
appealing merchandise, suppliers built factories near its Mexican
distribution centers which helped to drive
 down inventory and logistics costs.
 1998, acquiring a controlling interest in Cifera.
 By 2002, Mexican operation with 600 stores generated more than $10
billion. The company also expanded into Canada, Britain, Germany,
Japan, S.Korea, Brazil, Argentina and China and had over 1200 stores
outside US, 303,000 associates, and revenues of more than $35 billion.
 Walmart was aided by 3 developments when expanding internationally:
Barriers to cross-border investment fell during the 1990sWalmart
Global’s Expansion Case Study
 Ability to reap significant economies of scale from its global buying
power due to international expansion. (Walmart key suppliers have long
been international companies).
 Advances in information systems, particularly the spread of Internet-
based software.

b. The way Walmart expanding their internationally benefit

- Wal-Mart was able to exercise economies of scale
 Wal-Mart uses its volume to reduce its costs of purchase from vendors, as
much as possible. Wal-Mart also leverage it economies to provide
relationship with its suppliers that could would out volume discount that
Wal–Mart would pass on to its customers. Moreover, 90% of the U.S
populating lives within 15 miles of Wal-Mart store. These strategic
geographic locations of Wal-Mart have assisted Wal-Mart to achieve
very high volume and sales and generate economies of scale, as a result.

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- demanding more product and quantity:

 Walmart Sells a Whopping 75 Million Products
 There are Over 11,000 Walmart Stores Globally
 There are 74,000 Personal Shoppers Staffed
 A Total of 5,993 Stores Reside Outside of the US
 60 Million Items are Currently Listed for Sale
- Technology innovation
 Invests in DroneUp, the Nationwide On-Demand Drone Delivery
Provider
 Alphabot - Helping to Revolutionize Online Grocery Pickup and
Delivery
 AI For Stock Management And Store Cleanliness: Walmart sponsored
Texas A&M University for its computer vision projects. One of the
projects involves creating camera systems that would detect water on the
floor and let the employees know — so that they can remove the water.
 Augmented Reality For Customer’s Enhanced Experience: Walmart
recently introduced an AR scanner in its mobile app; the camera, when
pointed at items on a shelf, brings out the products’ names, prices,
customer ratings, and other details while moving the phone from one
product to another. The technology was first developed by a team at an
internal Walmart hackathon using Apple’s ARKit technology.
 Virtual Reality For Enhancing The Employee-Customer Experience:
Walmart has been using virtual reality to train its associates. The
associates can learn by watching modules through the headsets. This lets
them recreate a real-life store environment to experiment, learn, and

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handle difficult situations. In fact, “Walmart was one of the first

companies to benefit from VR’s ability to enrich employee education”.
 Wireless Charging For Store Maintenance: Walmart selected Ossia
innovation at the Walmart Innovation Summit in April 2018, out of
hundreds of applications, when they showcased how Cota Real Wireless
Power would transform the retail experience.
 Autonomous Driving For Product Delivery: Walmart has also partnered
with Waymo to work on an online grocery pilot project. The purpose,
they say, is to learn more about the customers and give them a unique
convenient experience.
 Cloud Computing For Enhancing The Customer’s Experience: This has
enabled Walmart to more effectively store and analyze data that could
be used to drive online sales and boost retail efforts.
 Blockchain And IOT For Tracking Food Safety: Walmart partnered
with IBM to implement the Food Trust blockchain for its live food
business. It quickened tracing the food from farm to store in real-time,
thus making the process more transparent.

c. The risks that Walmart faces when entering other retail

markets and how they be mitigated

- Consumer culture and psychology:

 Wal-Mart is a company with many American characteristics. While its
retail methods are well-suited to the US market, they are ineffective in
countries where the infrastructure is different from the US market, the
tastes and preferences of customers are also different, and retailers
available there have dominated the market.

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 Example:
o In Korea: Koreans like to buy fresh food, but Walmart only
focuses on canned and ready-to-eat foods.
o In Japan: Japanese people like to shop in clean, tidy, bright stores,
not a gloomy place, too many goods are piled up like the old
warehouse at Walmart
- Fierce global competition from large corporations:
 Carrefour of France, Ahold of the Netherlands, and Tesco of England.
Carrefour, the world's second largest retail group, is perhaps the most
global of these. A pioneer of the hypermarket concept, currently
operating in 26 countries and generating more than 50% of its revenue
outside of France. Compared to this group, Wal-Mart is behind with just
over 20% of its revenue from international operations in 2006.
However, there are still opportunities for business expansion into
potential markets. In 2006, the top 25 retailers were holding less than
20% of global retail sales, although this figure is forecast to reach close
to 40% by 2010 with main markets in regions such as Latin America,
Southeast Asia and Eastern Europe.
- Rise of e-commerce
 Wal-Mart is suffering in China because e-commerce is developing
strongly, the growth rate is up to 40%/year. Wal-Mart recently acquired
a $500 million stake in online retailer 360Buy. However, Wal-Mart also
has difficulty in that many retailers such as Dang Dang and Mecoxlane
are willing to take no profits to gain market share.
- Management model

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 Most successful American companies in Japan, such as McDonald's,

assign senior Japanese executives to manage their branches, allowing
them to have a certain degree of "autonomy". But Walmart does the
opposite, handing over management to a group of foreign leaders.
Eastern culture is much different from Western culture and foreigners
will have little understanding of consumer tastes in the host country.
That "Walmart's branches in the world are managed in a centralized
manner, under the command of the head office in the US", it is this type
of management that separates Walmart from Japanese and Korean
consumers.
- The “Wal-mart Effect”:
 When Walmart enters a province, a district, or an entire industry, the
impact is always dramatic. And that impact is always a mixture of good
and bad: good for consumers and shoppers, but bad for existing stores.
Good for factory and manufacturing efficiency, but dangerous for
suppliers that cede too much control to Walmart. That is the “Walmart
effect”. This makes the market where Walmart intends to enter-afraid,
cautious because they are aware that with its huge purchasing power and
expansion, Walmart is a "killer" of other brands.
 Poor infrastructure, crowded roads, lack of financial support with local
suppliers. Many suppliers cannot or will not ship directly into Wal-Mart
stores or distribution centers, which has resulted in difficulty in stocking
goods, thereby increasing costs and prices.

 To limit the risks on Wal-Mart has made:

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- Wal-Mart focuses on the cultural and psychological factors of consumers

to sell goods that are more suitable to the preferences and tastes of local
people.
- Entering through a joint venture with a large retail company in that
country to minimize risk
- Wal-Mart entered the market mainly by acquiring existing retailers and
then transferring experience in information systems, logistics and
management. Some countries set up stores separate goods.
- Create a close relationship of the company with a transport company in
the market that it wants to penetrate to improve the distribution system,
better serve the company, thereby helping to reduce inventory and
logistics costs.
- Today, when information technology develops strongly, e-commerce is
widely applied. Wal-mart has actively linked with websites and taken
advantage of the developed online sales system. Wal-Mart strengthened
its e-commerce system by forming an alliance with AOL in 2001 to also
provide internet access to suburban and rural areas, especially those areas
that did not have Wal-Mart stores. Wal-Mart's purpose is to attract new
market segments and reduce the impact on existing stores. Wal-Mart also
uses a niche retail model that combines E-Commerce and Traditional
Commerce.

d. Why do you think that Walmart first entered Mexico via a

joint venture? Why did it purchase its Mexican joint venture
partner in 1998?

- Wal-mart doesn't want to risk starting in a new market where they see
potential but don't have a lot of information and experience about that
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market, of course high growth potential and big profits mean high rates,
high risk of failure. So they decided to choose a joint venture with
another company that already exists in mexico. It is an agreement
between two or more local companies to reduce risk and share profits
with each other. Their brand will be introduced and accepted smoothly
thanks to that local company. In this way, if wal-mart has to bear risks or
losses, it is also limited because it shares a part with the local company.
That gives wal-mart a safe move. After participating in the mexico
market for a while, they saw great things in this market, they decided to
buy their partner company in 1998 because at that time they knew how to
operate and also profit from the market when there is no risk, and they
want the profits to go to their hands only.

e. Strategy of Walmart

- According to Walmart, there are more than 150 Walmart distribution

centers in the United States alone that are the hubs for our business. Our
distribution operation is one of the largest in the world in terms of store,
club and direct customer service. Transportation company Walmart has a
fleet of 6,100 tractors, 61,000 trailers and more than 7,800 drivers. Our
network of distribution centers delivers general merchandise, dry
groceries, perishable groceries, and other specialty categories to our
consumers on a daily basis. Each distribution center covers more than 1
million square feet and employs more than 600 employees who unload
and transport more than 200 trailers daily. Each distribution center
supports 90 to 100 stores within a radius of more than 150 miles. Along
with Amazon, Carrefour of France, Alibaba, etc. Walmart is currently the
dominant owner of more than 12,000 stores in 28 countries outside the
US. What does that mean? According to my data and analysis, Walmart
is using a transnational strategy. In theory, it is an international business
structure in which a company's global business activities are coordinated
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through the cooperation and interdependence between its headquarters,

operations and subsidiaries or international retailers. A transnational
strategy brings together the benefits of centralization brought about by a
global strategy along with the locally responsive character of domestic
strategies. This is true because Walmart is a large company that
consumes a lot of products, but they do not sell the same and do not do
business the way they do in the United States. Each Walmart branch is
adjusted to suit the needs of local consumers. This is why Walmart is at
the forefront of shopping for families across the globe. Each Walmart
branch is tailored to the needs of local consumers. This is why Walmart
is at the forefront of shopping for families globally.
- To be able to penetrate the Chinese market and succeed, they used the
same strategy as when entering the Mexican market, which was a joint
venture with a large company owned by the son of the Vice President of
China. . Or when it entered the Brazilian market, Walmart acquired
several well-received companies there and then introduced its own
products.
- All have demonstrated the importance of using this strategy. From that,
Walmart's internationalization strategy is Transnational Strategy: High
Cost Pressure. High pressure on local responsiveness. In my opinion, this
is the most viable strategy for a retailer like Walmart because people in
that area have hard-to-break cultures and habits that are unable to try
exotic and new products. day. For example, on the Nicobar Islands in
India, according to the opinion of the people here, wearing sandals is far
from the ground - the quintessence of the god Shiva. Then of course we
wouldn't be able to consume shoes in such a place. Then of course we
wouldn't be able to consume shoes in such a place. I see they are
compromising to consider a market to be able to come up with a suitable
strategic plan to penetrate the market of that area.

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