Walmart
1. Due to the differences between the US and China markets, Wal-Mart should not replicate its original domestic model to China completely. In the US, it gained success by setting up stores in rural towns instead of city centres to avoid competition. It expanded its scale to achieve economies of scale, and provided “Every Day Low Prices” by minimizing the cost through effective supply chain management. However, if the same model is applied in China, many problems would emerge.
In the rural area, due to the low income level and different consumption pattern, the sales would be insufficient to support a large supermarket. Besides, transportation and infrastructure were underdeveloped without proper management. Local governments were in favor of local companies because of private and fiscal benefits and set up ad hoc barriers to bar foreign retailers.
In nationwide expansion, it suffered from the regulations on the number of stores per city and the setup of unions, the lack of information-technology network to support its communication and supply chain management and the differences in consumer behaviors. These made the entrance of Walmart extra difficult and hindered it from enjoying the success by replicating the domestic model.
As the expansion was restricted, as a result, Walmart could not enjoy the low cost from economies of scale and lost its leading edge on supply chain. The above factors made Walmart very difficult to build the same competitive advantage in China with its successful domestic model.
2. Firstly, Walmart should consider customization in two aspects. Firstly of all, it should customize to the Chinese consumption culture and pattern, for example, developing a labelling system to ensure the freshness of food and having a pre-cooked food section to take care of the working class like dual-working couples. Secondly, it should customize its service and products to the social and economic trend. It can conduct more marketing researches and sales
In the rural area, due to the low income level and different consumption pattern, the sales would be insufficient to support a large supermarket. Besides, transportation and infrastructure were underdeveloped without proper management. Local governments were in favor of local companies because of private and fiscal benefits and set up ad hoc barriers to bar foreign retailers.
In nationwide expansion, it suffered from the regulations on the number of stores per city and the setup of unions, the lack of information-technology network to support its communication and supply chain management and the differences in consumer behaviors. These made the entrance of Walmart extra difficult and hindered it from enjoying the success by replicating the domestic model.
As the expansion was restricted, as a result, Walmart could not enjoy the low cost from economies of scale and lost its leading edge on supply chain. The above factors made Walmart very difficult to build the same competitive advantage in China with its successful domestic model.
2. Firstly, Walmart should consider customization in two aspects. Firstly of all, it should customize to the Chinese consumption culture and pattern, for example, developing a labelling system to ensure the freshness of food and having a pre-cooked food section to take care of the working class like dual-working couples. Secondly, it should customize its service and products to the social and economic trend. It can conduct more marketing researches and sales