Wal-Mart Stumbles in its Global Expansion Strategy

Wal-Mart Stumbles in its Global Expansion Strategy -...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Walmart’s Strategy through the World Anil Gupta, the Michael Dingman Chair in Global Strategy & Entrepreneurship at the Robert H Smith School of Business, University of Maryland, has been watching Walmart for a number of years. In an interview with Forbes India, Gupta talks about Walmart’s entry strategy in various countries, the mistakes it made and the lessons learnt. Mexico : Walmart, which is No 1 here, entered through a 50:50 joint venture with the leading retailer. They soon acquired the partner completely. In their business, local marketshare is critical. So what Walmart sells in Canada, which is right next to the US, over 85% of it is sourced from Canada. It is all about local economies of scale, local purchasing power and local logistics. Discount retailing is a very “multi-local” business. When Company A competes with Company B, local scale and local market power determine the cost structure, branding and retail presence in eyes of customer. Wherever Walmart did not pursue this logic they ran into trouble. In the 1990s when Walmart opened its first store in Mexico, they had a huge American-style parking lot. They found all the shopping carts were piled at far end of parking lot – because customers came in via buses not cars and went to one side which was closer to the bus stop. They made mistakes in terms of the product mix. They were selling the same thing as in the US. There was a story about them selling golf balls to customers whose income levels were low. The mistakes they made in Mexico were relatively early and non-fatal. They recovered from them very quickly. That was really the first non-US foray so they were learning on the fly. Today Mexico is a fantastic story for Walmart. Brazil : In Brazil it took them more time to become No 1 because they had tough competitors like Ahold and Carrefour. As the competitors stumbled, they acquired the Ahold stores. Over time Walmart strengthened in Brazil. They made mistakes again with regard to localization of the product mix. Argentina : Argentina hasn’t been a high priority market for Walmart. They entered in 1995 by setting up 100%-owned greenfield stores. They were pretty tiny: by 2007 they had only 13 stores. Argentina is a small economy compared to Brazil and Mexico. In 2007, according to a Citigroup report, Walmart’s marketshare of organized retail was 4% and the combined marketshare of the two biggest players was 22%. No 3 is not a desirable position in discount retailing because it requires local scale and local marketshare. One could ask: what are you doing in Argentina? Become No 1 or get out. Costa Rica, Guatemala, Honduras, Nicaragua
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/24/2011 for the course BUSINESS 101 taught by Professor Thanh during the Spring '11 term at RMIT Vietnam.

Page1 / 4

Wal-Mart Stumbles in its Global Expansion Strategy -...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online