RAJAN SHARMA

48-MBA-19
GLOBAL BUSINESS OPERATIONS

Question- How much of Walmart’s success is due to NAFTA, and how much is due to
Walmart,s inherent competitive strategy? In other words, could any other U.S retailer have
the same success in Mexico post-NAFTE, or is Walmart a special case?

Answer- Walmart was known for its slogan in USA which was everyday low price, which
was the reason for problems faced by Walmart with its working in Mexico before NAFTA
came. One of the main reason for the problem was the importing charges faced by the
company because of which company was not able to sold good/ offer goods to customers at
affordable prices, which is how they like to represent their brand. Although NAFTA would
have helped any company which was willing to work in the foreign country the strategic
skills and policies of the Walmart also played a big role. The company is best and is leading
in the case of offering most competitive prices with large power to deal in negotiation.

Walmart distribution system was also very good and helped them in reducing the expenses.
They also spent a lot on making centralised warehouses and had second most powerful
system to run logistics in smooth manner. I believe local Mexican companies like comerci
would have been a great competition for Walmart if NAFTA had not come but in case of
other U.S retailer entering Mexico post NAFTE would probably not have been so successful
as Walmart is due to the kind of technology skills and strategies that Walmart used would not
have been in their arsenal.

Question- What can a local retailer like comerci do to compete against Walmart?

Answer- Various steps can be taken by the local retailers like Comerci in order to compete
against big retailers like Walmart can be enlisted as below:
1. Companies like Comerci can make purchase partnership with other local companies
to buy the product in the bulk from the supplier by negotiating.
2. Local retailers can also develop relationship with customers and provide them with
the loyalty benefit cards and coupons making them more desirable to the customers.
3. The govt. help can also be taken by the local retailers so that the monopoly
atmosphere doesn’t get created.
4. Selection of many suppliers and choosing one which provide best rate in the market.
5. The last option that companies can do is merging so as to fight and compete with
brand like Walmart.

Question- How can NAFTA be beneficial to suppliers of Walmart?

Answer- The implementation of NAFTA has helped Walmart as well as its suppliers a lot.
Rules of NAFTA affected Walmart’s success in various ways some of which can be enlisted
as bellows:
1. With implementation of NAFTA companies start building there manufacturing plants
In the Mexico itself so supplier were able to produce products in Mexico itself which
was lot cheaper and also favourable for Walmart as the company was able to get
product at the better price
2. NAFTA also allowed foreign investment in the Mexico which led to Walmart being
able to build its manufacturing plant in Mexico with cheap labour.
3. NAFTA also reduced the tariff from 10% to 3% on American good sold in Mexico
which helped Walmart suppliers a lot.
4. NAFTA also influenced Mexico in improving the transportation infrastructure which
lead to solution to the logistic problem of the suppliers of Walmart.
5. Lowered import charges also helped Walmart suppliers to lower the rate which led to
Walmart selling customers at lower prices too.