Faculty of Business, Government & Law

FACULTY OF BUSINESS, GOVERNMENT & LAW

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1. Identify the enterprise – Walmart

• Organizational form: Walmart Stores, Inc., known as Walmart is an American multinational retail corporation in Consumer staples sector. The enterprise operates retail stores in various formats globally, includes supercentre, discount store, supermarket and small formats. To become the largest retailer, the company entered international markets through different modes such as joint venture in Mexico and Hong Kong, Partnership in Brazil and Indonesia, acquisition in Korea and UK…
• Firm’s role in the global pattern of trade: Participating in international business not only brings more profit for the enterprises itself, it also offers more choices for consumers, more employment opportunities and increase growth rate of foreign countries by optimizing use of resources. With more than 10,900 retail units in 27 countries, Wal-Mart became the world's largest retailer with ROI was 18.2% and 18.6% for fiscal 2013 and 2012. In 2013, it created remarkable sales at $466.1 billion - $135 billion in sales from its international market. It is also considered as one of the largest private employers in the US and Canada since it has about 2.2 million employees globally - 1.3 million in the U.S. alone.
• Competitive advantages allow a firm to perform better than its competitors when it possesses one or more sources of distinctive competence relative to others. In undertaking global expansion, Wal-Mart has many   which comes from its original market-US. By having strong buying power with giant domestics suppliers as P&G, Coke, 3M, it can purchase goods at low cost for its international markets. Effective supply chain and logistics management which are supported by leading-edge IT are also its strengths in managing its foreign outlets. Market globalization made standardization strategy critical tool creating competitive advantage for MNC by achieving economy of scale
• Walmart also took comparative advantages from countries it does business which can be beneficial for both parties. In order to maintain low production costs, company shifts manufacturing jobs to China, Bangladesh and other nations, where the cost of labour is less expensive. Besides, China is also one of its important international market since the lower purchasing power of the Chinese consumer offered huge potential to a low-price retailer like Wal-Mart.
• According to New trade theory, companies try to reach economies of scale so that they can produce more goods at lower costs to gain competitive advantage over their rivals. To achieve economies of scale by expanding its business size, Walmart chose countries that held similar factors of production or culture such as Mexico, Brazil, Argentina and Canada. This strategy also helps the company reduce the risks of entering new markets. Walmart offers value from economies of scope as well. By purchasing a grocery store chain in UK, Walmart acquired a logistics channel for produce or by acquiring Woolco in Canada, Walmart easily expanded into this big potential market.
• MNEs choose FDI rather than enter foreign markets through alternative models such as joint ventures, strategic alliances… because they can have advantages in ownership, location can internalization (OLI Paradigm). In 2012, the Indian government allowed 51% FDI in multiband retail opened a door for Walmart to expand its business in India
• Based on Stages Models of Internationalization, Walmart started its growth at third stage of the model. Its first store was operated in 1962 in Rogers, Ark. Due to reduction of trade barriers worldwide and development of technology, the company quickly expanded to international market. In 1970s, Walmart went public by offering stock on the New York Stock Exchange. The number of stores and employees increased rapidly in 1980s which resulted in big sales. In 1991, Wal-Mart became an international company when it pursued globalization aggressively since its first move across the border to Mexico. Just two years later, Wal-Mart International was created. Today the serves more than 200 million customers each week at more than 11,000 stores in 27 countries.
• Being a multinational retailer, Wal-Mart has to deal with many different social - cultures in its international market. These factors can affect the way customers perceive the products or restrict company’s business strategies. For example, in China, Walmart failed when open big box stores in this market which did not fit with Chinese customer behaviour. Thus, Walmart tried to down size the stores to meet the need of customers in one of its biggest international markets.
• Walmart also has to face with country risk which is exposure to potential loss or adverse effects on company because of complicated political and legal systems in foreign markets. According to legal system of US, stores only have to shut down when they cause public health issues. However, in 2011, 13 Walmart stores located in Chongqing, China had to shut-down for seven days just because Wal-Mart labelled ordinary pork as organic.

1. BOOKS, JOURNAL ARTICLES, BUSINESS MAGAZINES

• Matthews, C. 2012 ‘10 Ways Walmart Changed the World’ Time, 29 June, accessed 28 March 2014, <http://business.time.com/2012/07/02/ten-ways-walmart-changed-the-world/>

• How Walmart affects global economy, what did Walmart do since last 50 years

• Boyle, M. 2009 ‘Wal-Mart’s Painful Lessons’ Bloomberg BusinessWeek, 13 October, accessed 28 March 2014, <http://www.businessweek.com/managing/content/oct2009/ca20091013_227022.htm> 

• The challenges that Walmart had to face when doing business in Japan, India, Russia and Chile due to cultural resistance to the discount model, restrictions on foreign ownership or high competition.

•         Govindarajan, V. & Gupta, A. K. 2002 ‘Taking Wal-Mart Global: Lessons From Retailing's Giant’ Strategy+business, 19 June, accessed 28 March 2014,

• Explain why Walmart went global, identify the ways Walmart chooses the markets and entry strategies to be successful based on its competitive advantages.

• 'Not All Overseas Markets Are Right Fit' 2012, Mmr, 29, 11, p. 136, Business Source Complete, EBSCOhost, viewed 26 March 2014.

Landler, M. and Barbaro, M. 2006, ‘Wal-Mart Finds That Its Formula Doesn’t Fit Every Culture’, 2 August, accessed 28 March 2014,

• Walmart failed due to different culture in Germany, Brazil and Korea

• Halepete, J., Iyer, K.V.S. & Park, S.C. 2008, "Wal-Mart in India: a success or failure?", International Journal of Retail & Distribution Management, vol. 36, no. 9, pp. 701-713.

• Problems about ownership and location that Walmart had to deal with while expanding in India. There are also some recommendations that Walmart needs to perform to be successful in Indian market

• "Wal-Mart, Bharti call off JV", 2013, Financial Express,

• Wal-Mart plans to continue to grow the cash-and-carry business while working with the Indian government and interested stakeholders to create conditions that enable foreign direct investment (FDI) in multi-brand retail.

• Gupta, A.K. & Govindarajan, V. 2004, Global strategy and organization, J. Wiley, Hoboken, NJ

• Analyse how Walmart expands its business and identify Walmart’s strategies to achieve economies of scale and economies of scope

• Roberts, Bryan; Berg, Natalie 2012, Walmart: Key Insights and Practical Lessons from the World's Largest Retailer, e-book, accessed 26 March 2014.

• Successes through best practice of procurement, logistics, systems and store format innovation as well as failures of Walmart, the relationship between the company and its stakeholders.

• Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., and Freeman, S. 2012 International Business: The New Realties. Australasian Edition. Pearson.

• Text book with theories and concepts about environment of international business.

• Jeannet, J.P., and Hennessey, H.D. (2001), Global Marketing Strategies, 4th edn., Houghton Miffin Boston.

• How to analyse and identify organizational limitations and the international marketing environment so that the companies can choose the right markets with appropriate market entry strategies

1.  INTERNET SITES

• Walmart 2014, accessed 28 March 2014, <http://www.walmart.com/>

The official site of company offers information and data about its business, history, organization, financial report…

• World Bank 2014, accessed 28 March 2014, <http://www.worldbank.org/en/country>

• Hu, B., 2012, ‘More Foreign Direct Investment in Retail for India”, 15 February, accessed 28 March 2014, < http://blogs.worldbank.org/endpovertyinsouthasia/ic4d/more-foreign-direct-investment-retail-india>

• The site offers information about demographics, legal environment, and ease of doing business level… of many countries all over the world. It also posts business news about how countries manage their trading and how big companies react to these rules.

• OECD 2014, accessed 28 March 2014, <http://stats.oecd.org/index.aspx?queryid=169>

• The site shows the exchange rate against US dollar monthly and other important data such as economic condition of many countries, which help us know how risky Walmart has to deal in global market

1. STATISTICS AND SECONDARY DATA

• Chan, V., Buckland K. and Murphy, S. 2013, ‘ Wal-Mart sees currencies hurting growth after 680 million hit’, Bloomberg BusinessWeek, 19 August, accessed 28 March 2014, <http://www.businessweek.com/news/2013-08-15/wal-mart-sees-currencies-hurting-growth-after-680-million-hit>

• A Multinational Company has to use  different currencies in the tranactions. The fluctuations in the exchange rates could be a serious risk for the company. Walmart  does business worldwide in local currencies and makes financial report in US dollar but does not use hedging so it may have to deal with more financial risk. However, Walmart gained $680 million in the second quarter of 2013 because of the stronger dollar.

• McDuling, J. 2013, ‘New Walmart CEO Doug McMillon would have been the perfect choice—20 years ago’, Quartz, 25 November, accessed 28 March 2014, <http://qz.com/150764/new-walmart-ceo-doug-mcmillon-would-have-been-the-perfect-choice-20-years-ago/>

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• Industry center – Discount, variety stores, accessed 28 March 2014 <http://biz.yahoo.com/ic/732.html>