Wal-Mart’s Foreign Expansion
Summary
The closing case explores the international expansion of Wal-Mart, the world’s largest retailer. Wal-Mart began its international expansion in the early 1990s in an effort to continue its growth. The company began with a joint venture in Mexico with local retailer, Cifra. Initially, the company tried to implement strategies similar to those that had proved so successful in the United States, however Wal-Mart quickly realized that to succeed, it would have to adapt to local demands. The company hired local managers who understood the Mexican culture and buying preferences, and changed its strategies accordingly. Wal-Mart continued its international expansion by establishing operations in Europe and South Korea, but in these markets, the company had less success. Not only did Wal-Mart compete head-to-head with established retailers, but its product offerings did not match the needs of consumers. Wal-Mart has had much greater success in China where it has found some parallels between the shopping habits of Chinese and Americans. Wal-Mart has also adapted its strategy to fit the local market and now not only allows unions, but is also selling a product mix designed to meet the demands of China.
QUESTION 1: Do you think Wal-Mart could translate its merchandising strategy wholesale to another country and succeed? If not, why not?
QUESTION 2: Why do you think Wal-Mart was successful in Mexico?
QUESTION 3: Why do you think Wal-Mart failed in South Korea and Germany? What are the differences between these countries, and Mexico?
QUESTION 4: What must Wal-Mart do to succeed in China? Is it on track?
QUESTION 5: To what extent can a company like Wal-Mart change the culture of the nation where it is doing business?
Additional Readings and Sources of Information
Cracks in a Particularly Thick Glass Ceiling http://www.businessweek.com/magazine/content/08_16/b4080058309099.htm?chan=search Toyota’s All-Out Drive to Stay Toyota
The closing case explores the international expansion of Wal-Mart, the world’s largest retailer. Wal-Mart began its international expansion in the early 1990s in an effort to continue its growth. The company began with a joint venture in Mexico with local retailer, Cifra. Initially, the company tried to implement strategies similar to those that had proved so successful in the United States, however Wal-Mart quickly realized that to succeed, it would have to adapt to local demands. The company hired local managers who understood the Mexican culture and buying preferences, and changed its strategies accordingly. Wal-Mart continued its international expansion by establishing operations in Europe and South Korea, but in these markets, the company had less success. Not only did Wal-Mart compete head-to-head with established retailers, but its product offerings did not match the needs of consumers. Wal-Mart has had much greater success in China where it has found some parallels between the shopping habits of Chinese and Americans. Wal-Mart has also adapted its strategy to fit the local market and now not only allows unions, but is also selling a product mix designed to meet the demands of China.
QUESTION 1: Do you think Wal-Mart could translate its merchandising strategy wholesale to another country and succeed? If not, why not?
QUESTION 2: Why do you think Wal-Mart was successful in Mexico?
QUESTION 3: Why do you think Wal-Mart failed in South Korea and Germany? What are the differences between these countries, and Mexico?
QUESTION 4: What must Wal-Mart do to succeed in China? Is it on track?
QUESTION 5: To what extent can a company like Wal-Mart change the culture of the nation where it is doing business?
Additional Readings and Sources of Information
Cracks in a Particularly Thick Glass Ceiling http://www.businessweek.com/magazine/content/08_16/b4080058309099.htm?chan=search Toyota’s All-Out Drive to Stay Toyota