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1 How Question has the implementation of NAFTA affected Walmarts success? Answer In 1986, Mexico joined GATT to help open its economy to new markets. In 1990 with additional free trade negotiations with Canada and US taking place, founder Walmart met with Cifra and Stated 50/50 partnership. This partnership was extremely successful as they have broken all records. Prior to 1990, Walmart never move to outside US but now they have developed Walmart international division in1993. They have expended themselves to 15 countries. Walmart now have 8000 retail stores worldwide of which 3659 outside US. They resolved many of the problems by trial and error but emergence of NAFTA help them very much. As NAFTA reduced tariffs on American goods sold in Mexico from 10 to 3 percent. Perior to NAFTA, Walmart was not a threat for companies like Comerci, Gigante and Mexican top retailers but once tariffs goes down which removed barriers and as a result Walmart get opportunity. NAFTA encouraged Mexico to improve its transporation infrastructure. Benefits of NAFTA are for every company but Walmart use them most effectively. To conclude, we cant say that Walmart itself was nothing its NAFTA who made them. We can say, in case of Mexico, only high tariffs were the hurdle to their winning strategy everyday low price which is supported by NAFTA. Question 2 How much of Walmarts Success is due to NAFTA, and how much is due to Walmart inherent competitive strategy? In other words, could any other U.S. retailer have the same success in Mexico post-NAFTA, or Walmart is special case. Answer Walmarts basic strategy to win the markets is offered prices. They offer prices market lower then every other which help them to become a leader. This strategy was supported by NAFTA very much as NAFTA reduced tariffs on American goods sold in Mexico from 10 to 3 percent. NAFTA encouraged Mexico to improve its transportation infrastructure. Benefits of NAFTA are for every company but Walmart use them most effectively. Walmarts inherent competitive strategy was effective for Mexican market. Time to Enter Market: Time to enter in market helps a lot. Take the case of South Korea, Wal-Mart has missed a proper timing to enter the Korean market, and was unable to capture logistically efficient locations which can allow building an efficient distribution system with advantage of economies of scale that it enjoyed in the US market. Major Korean retailers had already located their stores in key commercial areas and developed their distribution networks to optimize the merchandising and the retailing operations prior to Walmarts market entry Buying behavior of Residents: Buying behavior of country in which you are working matter a lot. Again take the case of Korea, Wal-Mart expected the Korean consumers drive to to its stores for price shopping as the American consumers do. However, this location strategy did not match well with the Korean consumers lifestyle and shopping habits. Korean consumers have substantially different shopping styles and preferences compared to North American consumers. They prefer to purchase smaller units on a more frequent basis and to have accessibility to a store in walking distance. Korean consumers were quality conscious and tend to be more brand-loyal, less likely to switch to less expensive products. Korean consumers were unwilling to compromise the customer service and the quality for the low price, and expected to see sales people in each aisle of the retail stores and aggressive promotion in the value of service and products offered by the retailers (Ramstad, 2006b) References: 1. Ramstad Evan (2006b). South Koreas E-Mart is no Wal-Mart, which is precisely why locals love it. Wall Street Journal. ( Eastern Edition). New York, NY. Aug, 10, 2006. p 1. Question 3 What has Comerci done in its attempt to remain competitive? What are the advantages and challenges to such strategy and how effective do you think it will be? Answer In 2004, Comerci form a purchasing constorium with two other stuggling hometown supermarkets chains, Soriana and Gigante, to negotiate better bulk prices. The collaboration, known as Sinergia. They have formed this constorium to negotiate bulk prices. This can help them to rise again. Major reason of winning of Walmart was low prices. As we have studied that Comerci was unable to offer low prices because they are not getting them at low cost. The first challenge they faced is that it was initially rejected by COFeCo and met resistance from the consumer Product Counsil of Mexico in fear that it will use its purchasing power to force unreasonably low prices by latter on accepted in second presentation provided that it issue regular reports to CoFeCo outlining the nature of its purchasing. Second challenge was that Sinergias purchases are currently limited to only local suppliers, and its future is still uncertain. There might be a possibility that if local supplies came in discount store business then Walmart will it self through foren supplies but Sinergia will end up. Although in foren sells Walmart still have more power of negotiatable supplies. Question 4 What else do you think Commercial Mexicana S.A should do, given the competitive position of Walmart? Answer I think, Comercial Mexicana needs to change it business model. They need to develop small stores everywhere in the country and make large wherehouse in each city from where they supply to stores. This above diagram very well explains my model. Like change there business model from city super store to convenient store. ... View Full Document

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