BUS

Situation (Jamille Sunga)

After Walmarts success in the US, the business started expanding overseas in 1991, and opened their first international store in Mexico. Walmarts expansion in other countries resulted acquisitions, and joint ventures. They were able to achieve success in countries such as United Kingdom, Canada, and Mexico in which 85% of Walmarts revenue came from these three countries. While in Germany and South Korea, Walmart encountered problems that had left them with no choice but to stop their operations.

Business Model (Anais Tamrazian)

Walmart\’s business model was simple and involved working directly with product manufacturers to reduce the selling price and bring affordable yet quality products and produce to the local communities. They partnered with individual owned and local farmers all over the country they entered, in order to afford selling their products for such a low price without resulting in a loss. Walmart had dedicated to keep production of products within local producers or by entering joint ventures.

Stakeholders (Jamille Sunga)

Shareholders
Shareholders depend on the financial performance of Walmart in international market. They risked losing stock value if Walmart strategic approach was not a success.
CEO
Just like the shareholders, the CEO has a financial stake on the company and risk losing stock value. He is responsible for Walmarts global expansion, and determines what strategy should be implemented when entering a new market.
Low income consumers
Walmarts low pricing has improved the lives of many low income individuals who struggled to live paycheck to paycheck.
Competitors
Local competitors were affected because they had lost market share from Walmart, and some experienced a continuous decline in sales.
Small businesses
Near by supermarkets risked losing all of their customers because they could not compete with Wal Mart\’s low prices and variety of merchandise.

Competition (Anais Tamrazian)

Walmarts competitors were the leading domestic retailers, and local supermarket established in each market they entered. However, they either acquired or formed a joint venture with several of their competitors to reduce or eliminate strong competition.
When entering into Mexico City in 1991, Walmart infiltrated a joint venture with Cifra, which at the time was Mexicos leading retailer. After six years of operation Walmart owned a large portion of Cifra, and later changed the company\’s name to Walmart de Mexico.
In 1994, Walmart entered Canada and acquired a majority of the Woolco stores, which were similar discount stores like K-Mart in the United States. After the acquisition Walmart rebranded the stores, but agreed to keep the current employees and management team.
In Brazil Walmart actually opened a few of their own stores upon entering, however later purchased 118 struggling stores, run by a Dutch retailer in the northeastern part of town. The following year Walmart acquired 140 stores owned by a Portuguese retailer located in the in the south of Brazil.
Similarly to Brazil, when Walmart entered Argentina they opened their own stores. Right away, they were faced with a strong competitor, Carrefour, which had been operating since 1982. Walmart was unable to be number one in the market, yet was very successful.
In 2005, when Walmart entered Central America they acquired one third of the Central American Retail Holding Company. They did not rebrand here, they chose to keep the stores identity and emphasized their strategy of localization. When Walmart entered Chile, they acquired almost 60 percent of the largest food retailer in the area, D&S.
When entering Asia, China specifically, Walmart partnered with Sams Club to follow regulations set in place for foreign retailers. In South Korea Walmart operated for about eight years, but was faced with strong competition and had to sell their stores and exit. When they entered japan a similar situation took place, though they did not lose money, sales only accounted for a small percentage of their global revenue.
As the discount retail store entered into Germany, they acquired Wertkauf and Interspar retail chains, however could not compete with existing stores and stepped out. Unlike Germany, when Walmart entered the United Kingdom they took over Asda and were able to grow into the second largest retailer in the area.
In 2011, Walmart entered into Africa with a bid to manage Massmart. They were now operating 377 stores across the country under the Massmart brand.

Target Market (Maysa Salah)

Walmarts initial target market was lower income families or individuals. However, when they started growing internationally, they expanded their target market to the emerging middle class.

Problems and Solutions

Problem 1 (Jamille Sunga, Anais Tamrazian)
A major problem in Walmarts attempt to expand around the globe was understanding the different cultures they entered into. For instance in South Korea, consumers liked to spend on prestigious, high quality products and prefered quality over low prices. In Japan, Walmarts low price model didnt work for the consumers because they perceived cheap prices with cheap products. In Germany, shoppers did not like to be smiled at or have their groceries bagged for them. These were issues the company never considered before because there was no need for it in America.
Solution 1 (Jamille Sunga, Anais Tamrazian)
As a solution, Walmart should have researched about the spending habits of South Koreans. It was evident that the company didnt try to learn the cultural differences as they didnt try to adjust their business model. Since Koreans have high expectations of products and services, Walmart could have focused more on diversifying their product mix into food and beverages and as well as providing excellent quality products and customer service.
Before entering Japan Walmart needed to learn about the culture and the consumers buying behavior. The Japanese consumers were very demanding and expected good value when buying a product. To satisfy Japanese consumers product demand, Walmart should have adapted to local culture and designed their product mix accordingly. Walmart needed to work harder with building close relationships with Japanese suppliers because the culture is heavily reliant on personal relationships.
In Germany, Walmart made the mistake of running their store like they did in the United States. It was necessary for them to tweak their operation strategies to become synced with the culture of Germany and manage without any lifestyle differences.
Problem 2 (Anais Tamrazain)
Another main concern for Walmart when expanding into new territory, was following regulations and working with the labor unions. An example of this problem came in China and in Germany. In China, regulations required foreign retailers to join partnerships with local ventures to operate in the county. In Germany it was difficult for Walmart to grow due to strict regulations set in place that hindered their pricing methods and locations.
Solution 2 (Anais Tamrazian)
To abide by the rules and follow government regulations Walmart had to alter their American strategies to operate successfully in these countries. To follow Chinese regulations Walmart decided to partner with a local investor and Sams Club, which was a large retailer in Shenzen. Then in 2005, Walmart joined yet another partnership with Citic Pacific, which was a holding company based in Hong Kong. This was a bold but strategic decision that helped to diversify Walmarts business.
As a solution to the different local laws, regulations, and influential labor unions, Walmart had to improve the way they operated and managed their stores. Instead of assuming that the labor unions of Germany would have been similar to the ones in the U.S., Walmart should have researched in detail both the regulations and the involvement of the labor unions. In doing so, they would have been able to expect the differences they would experience in Germany and plan ahead to avoid any problems.
Problem 3 (Anais Tamrazian)
When Walmart tried entering into new regions like Argentina, China, and Germany it was quickly faced with strong competitors that were not willing to back down. This was a problem because for a few of these new Walmart stores it was the reason why they were not able to flourish and become as successful as they did in other regions, such as the United States.
Solution 3 (Maysa Salah)
Wal-mart uses systems thinking, operating as giant system broken up into different departments, this systematic structure makes it difficult for small stores to compete, because wal-mart has specialized departments, they caused a wide range of closures to businesses in different industries.
Problem 4 (Anais Tamrazian)
It was problematic for Walmart to grow at a steady pace in Argentina because they did not partner with a local retailers that would have helped to increase their popularity and trust amongst consumers. Because Walmart opened its own new stores and did not chose to partner with an existing retailer it became vulnerable to price rivalry and supplier prohibition.
Solution 4 (Maysa Salah)
Although it was not a requirement under Angentian regulations to partner with other companies, it would have been beneficial for Walmart to do so.