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Running Head: CASE 7: WAL-MART IN AFRICA1Case Study 7: Wal-Mart in AfricaTiffin University April 7, 2019
CASE 7: WAL-MART IN AFRICA 2Case 7: Wal-Mart in AfricaIntroductionSamuel Moore Walton founded Wal-Mart in 1962 in Rogers, Arkansas. Before founding Wal-Mart, Walton worked for JC Penney’s Corporation, Inc. “Wal-Mart was founded on the principle of passing on the discounts that retailers could manage from the wholesalers to the consumers and making money through the higher volumes achieved” (Deresky, 2017, p. 356). With this strategy, Walton’s company excelled and grew into a giant retailer in the United States and across the world. By 1978, Wal-Mart had implemented pharmacies, auto service centers, andjewelry divisions. Wal-Mart, a billion-dollar company, thrived off the motto: “Everyday Low Prices.” Although Wal-Mart was extremely successful, it was frowned upon surrounding due to its business practices and labor issues. For example, Wal-Mart was accused of being anti-unionist(deterring employees from joining or forming unions), displaying employee discrimination (discriminating against women), exhibiting poor working conditions (forcing employees to work off the clock, denying overtimes, and employing illegal immigrants), offering low wages, and failing to correct the behaviors of known overseas labor concerns. In 1991, Wal-Mart opened its first overseas store in Mexico City, Mexico. Wal-Mart chose to enter international markets by joining ventures and/or subsidiaries already established inthose countries. Mexico proved to be successful by implementing the American business model, as well as countries like Argentina, Canada, Brazil, and many other countries. However, in countries like Germany, Japan, and South Korea, Wal-Mart failed to maintain stability due to cultural differences, mass competition, international regulations, and maintaining negative images. In 2008, the United States economy dropped, forcing Wal-Mart to venture into African countries because of their stable politically elected governments, Massmart (second biggest
CASE 7: WAL-MART IN AFRICA 3retailer in Africa), and the rising emerging incomes. Initially, “Opposition to the deal also came from three government departments: Economic Development; Trade and Industry; and Agriculture, Forestry, and Fisheries” (Deresky, 2017, p. 361). On March 9, 2012, the Competition Appeal Court for South Africa ruled in favor of Wal-Mart, allowing Wal-Mart to enter the retail market. Internal Strengths and WeaknessesStrengths Since entering Africa and merging with Massmart, Africa has steadily developed at a faster pace. Deciding to merge through Massmart was definitely a strength for both Wal-Mart and Africa. Not only is Africa developing at a faster pace, but the middle class is constantly expanding and rapidly growing. Also, deciding to expand internationally “not only helps the company to grow, but also strengthens the company’s retail leadership position. By growing internationally, the company diversifies its income sources, gains valuable new experience and further benefits from economies of scale” (Jurevicius, 2019). Essentially, Wal-Mart’s strength is