Walmart International Strategy

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Wal-Mart’s operation started in 1962 when its founder Sam Walton opened the first Wal-Mart store in Rogers, Arkansas. Wal-Mart’s growth was rapid and succeeded in taking advantage against its competitors because he used an Every Day Low Price strategy which relied on limiting costs via economies of scale, the use of computer technology, and a hub-and-spoke distribution network. In the mid-2000s, the US economy declined and as a result, the retail sector incurred a long-period stagnation. For this reason, Wal-Mart decided to expand his operations internationally. By today, Wal-Mart operates 971 discount stores, 2,447 supercenters, 591 Sam’s Clubs and 132 neighborhood markets in the US and 3.020 retail stores in other countries. WAL-MART’S INTERNATIONAL…show more content…
Wal-Mart’s target was to improve his international presence following three strategies: (i) expanding into new markets with multiple formats, (2) opening new stores in existing markets and (3) increasing sales at existing international stores. Although, Wal-Mart stores achieved to be distinctive in close to the USA markets such as Canada and Mexico, they had poor financial performance in the Asian and European countries. More specifically, in the late 1990s, Wal-Mart expanded into the South Korean and the German markets but it failed in both of them and exited quickly…show more content…
Using the eclectic theory, Wal-Mart's entry into Germany can be critically analyzed in terms of locational, ownership , and internalization dimensions. First, analyzing both the ownership and internalization dimensions simultaneously. The fact that Wal-Mart entered Germany through a completely owned German subsidiary shows that it had the ability to follow its own approach to transactions in the business operation. However, Wal-Mart failed to take benefit of ownership due to several reasons. First of all, some stores needed renovation but Wal-Mart did not take this into account immediately. As a result, customers linked the brand “Wal-Mart” to the image of run-down stores. Furthermore, Wal-Mart failed to achieve its objective of being a popular brand in Germany because it did not differentiated its services in comparison with the local competitors. Coming to the locational dimension. When Wal-Mart entered the German Market it went for massive hiring of people from the Union this deteriorated it's "excellent- consumer service". Moreover it compounded its personal loss along with the logistic losses thus in leading to staff-cut, shut down stores and open new one in order to increase its profitability. But it underestimated the austere zoning laws, which became a thorny issue for Wal-Mart

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