Wal-Mart & Managing Globalization
Wal-Mart’s global expansions primarily consist of an acquisition or a series of acquisitions followed by a period of assessment. In this period of assessment the company judges the profitability of the stores which they have acquired and the company tries to implement their way of doing business. The usually select a store or a couple stores and put in their signature wider supermarket isles, more checkout counters and smiling faces on their associates. This is the Sam Walton way and they have a desire to stick to it. They also implement their everyday low price guarantees and rollback pricing strategies whenever possible.
This acquisition strategy is powerful in that it allows Wal-Mart to quickly gain a sizable share of the market very quickly. The downside to this acquisition approach is that is rather high in cost for entering a market that the company is not sure they will succeed in. The Wal-Mart executives also do not appear to do very much market research before entering a foreign market. I feel that this resistance to market research greatly hinders their initial cost. In many countries they enter in a manner which appears to be blindly and expect to adjust their stores based
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They do not determine if their particular supermarket strategy will be accepted, they just merely assume that everyone will appreciate their way of doing business and that every consumer is the same at their core, which is not necessarily true. One they have entered a market through acquisitions and have attained a period of success they usually go on to build a series of their own stores throughout the country. They have also been known to complete more acquisitions in order to further their market share, more quickly.
When building their own stores abroad they try to implement their supercenters and large stores which sell a large variety of items, but they often implement stores which are similar to those which they have acquired. They believe that if the method of retailing has worked in a country, in the past, it will continue to work. Wal-Mart has been most successful in North America and in the UK. With North America, they have shown great results with Mexico and Canada. These three countries represent the top three international operations for Wal-Mart and are similar in that their markets closely resemble that of the United States.
The acquisitions in these countries were so successful because the parent companies which they acquired were already doing well and had similarities to that of Wal-Mart. In Mexico the people are extremely receptive to the prices and are willing to ride busses a long ways in order to go shopping at these low price stores. The Canadian market was also similar to that of Wal-Mart’s parent company as the culture is not remarkably different from that of the United States and thus a large amount of adaptation was not needed.
The same is true for their UK operations, where the people value the same friendly service and low prices as in the United States, as well as greeters at the doors and price rollbacks. The greatest similarity in these operations is the fact that Wal-Mart was able to acquire already successful operations with large market shares in countries with developed infrastructure. This fact that they could take already thriving stores and implement their price saving techniques allowed for their vast success.
Wal-Mart is not the best at choosing products for the consumers; however they are extremely talented with slashing prices and streamlining the supply chain of their goods. When an international market allows Wal-Mart to focus on this aspect of the supermarket business the results are staggering. The developed infrastructure is also vital to Wal-Mart in that they are needed for the sophisticated product stocking practices, and their demands to be able to supply low cost, just-in-time retailing for customers. It is this retailing which allows Wal-Mart to stock so many items in their limited space.