97%(30)29 out of 30 people found this document helpful
This preview shows page 1 - 3 out of 11 pages.
Case 20: Walmart in AfricaIntroduction Walmart, a leading US retail giant, had gained international experience through joint ventures and subsidiaries in many countries like Mexico, Canada, Argentina and China. It had been successful in attracting the consumers on a large scale through its policy of 'Every Day Low Price' (EDLP), customer centric approach and encouragement given to customers to return the purchased items in case of any defect in the products. The customers were also enticed to purchase large quantities because of the low pricing when compared with the competitors. Walmart also offered a wide range of products and groceries which was another attraction to the customers to shop under a single roof. Walmart had a large scale presence in 15 countries and projected revenue of $405 billion for 2010. Through their international operations in Japan and Germany, Walmart had also learnt lessons on different consumer behavior. While Japanese consumers felt that a low price was indicative of low quality and did not patronize many of Walmart stores, in Germany governmental restrictions on low price strategy favored the local retailers leading to a disfavor of Walmart by the consumers. South American experience and Chinese experience for Walmart had boosted the international revenue to a comfortable level due to the policy of EDLP and also adopting to local cultures employing local people and procuring major stocks locally. Wal-Mart has an extensive presence in the UK through the Asda chain; significant operations in Latin America; large operations in China and East Asia (although not in South Korea); and it has entered India through a joint venture. There are no real opportunities in Europe,especially after its abortive foray into Germany, and European retailers are poised to dominate East Europe. That brings Africa into focus. Walmart had planned to enter the African continent, where many of the countries had shown reasonably good economic growth and increased levels of consumption, through acquisition of Massmart, a retail giant in South Africa having 288 stores. This joint venture would provide opportunitiesto Walmart to expand its footprint in African countries which were expected to register a growth of over 5% in their GDP.Research shows that most retailers find it tough to use global growth to boost sales and grow profits. A look at Wal-Mart’s previous efforts at global expansion provides good context for this latest foray. Given the current state of the American economy, international markets have to be its future source of growth.
PART A: Strategic ContextPESTEL ANALYSISoPolitical Factors: Wal-Mart is facing a certain problems in expanding to other international markets currently. There are restrictions on foreign direct investment in multi-brand retail in certain countries, like India. This situation is proving negative for its expansion plans.