Case Study Walmart
An Analysis of Walmart’s Global Expansion:
Key Facts, Issues and Strategies
Fall 2011
Executive Summary
Since 1991, Walmart International has experienced mixed results with its big-box, low cost strategy around the world, yet managed to progress to running 4,112 units in 15 countries – just shy of matching the number of units in the United States. The famous “Everyday low prices”, one-stop-shop Walmart boasts such a product assortment that it achieves economies of scale and scope in operations and marketing (Etgar & Rachman-Moore, 2010). Reception of this strategy was so poor in Germany and Korea that Walmart withdrew from those countries in 2006 (Boyle, 2009). Other countries, such as Brazil, Canada and the United Kingdom, have been very receptive with hundreds of units per country.
Walmart’s success is based in maximizing its supply chain. In spite of its size and clout, Walmart is attempting to further increase its buying power by consolidating its purchasing with partners (Boyle &Wolf, 2010). The larger the amount of any commodity a large retailer can purchase, the greater the concession on price, delivery, and credit it can extract. In some cases the exclusivity can be a demonstration of monopsonistic procurement and the buyer power that comes with it (Guruswama, Sharmy & Jos, 2007).
As a result of analyzing Walmart’s global expansion using several analytical tools I will highlight its successes, its failures and its learning curve. I will suggest a future strategy for Walmart in two of the most likely targets for growth – India and China – that will capitalize on these findings and build on emerging management processes within Walmart International.
History of Walmart Global Expansion
Walmart took its first step into the global arena in Mexico in a joint venture with Grupo Cifra in 1991. This first step grew by leaps and in 2008 Walmart held 55% of the Mexican retail market and was the largest employer in Mexico (DeGregorio,
Key Facts, Issues and Strategies
Fall 2011
Executive Summary
Since 1991, Walmart International has experienced mixed results with its big-box, low cost strategy around the world, yet managed to progress to running 4,112 units in 15 countries – just shy of matching the number of units in the United States. The famous “Everyday low prices”, one-stop-shop Walmart boasts such a product assortment that it achieves economies of scale and scope in operations and marketing (Etgar & Rachman-Moore, 2010). Reception of this strategy was so poor in Germany and Korea that Walmart withdrew from those countries in 2006 (Boyle, 2009). Other countries, such as Brazil, Canada and the United Kingdom, have been very receptive with hundreds of units per country.
Walmart’s success is based in maximizing its supply chain. In spite of its size and clout, Walmart is attempting to further increase its buying power by consolidating its purchasing with partners (Boyle &Wolf, 2010). The larger the amount of any commodity a large retailer can purchase, the greater the concession on price, delivery, and credit it can extract. In some cases the exclusivity can be a demonstration of monopsonistic procurement and the buyer power that comes with it (Guruswama, Sharmy & Jos, 2007).
As a result of analyzing Walmart’s global expansion using several analytical tools I will highlight its successes, its failures and its learning curve. I will suggest a future strategy for Walmart in two of the most likely targets for growth – India and China – that will capitalize on these findings and build on emerging management processes within Walmart International.
History of Walmart Global Expansion
Walmart took its first step into the global arena in Mexico in a joint venture with Grupo Cifra in 1991. This first step grew by leaps and in 2008 Walmart held 55% of the Mexican retail market and was the largest employer in Mexico (DeGregorio,
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