Wal-Mart Case Study - Nafta

Q#1: NAFTA is a treaty between Canada, Mexico & US, aimed to foster greater trade between the three countries. It eliminated the large number of tariffs on goods shipped between the three countries. Before NAFTA Wal-Mart was not successful in Mexico as it had to deviate from its business model, because of the tariffs it faced more costs, so its aim of providing customer with low prices was not met. In addition to this, poor infrastructural facilities and US technological base created further problems, like inefficient logistic transport and faulty data for decision making. After the implementation of NAFTA tariffs were eliminated. Which reduced the costs, it provided the reason for the development of infrastructure to improve transport facility and encourage foreign companies like SONY to start their operations in Mexico to take advantage of the Canadian and American markets. These results supported Wal-Mart by providing it with low costs, improved facilities and local suppliers. NAFTA helped Wal-Mart to continue with its basic business model, so it faced the success it had faced in other regions of the world.

Q#2: As discussed in Q#1 that NAFTA helped Wal-Mart to return to its basic business model, so here we can say that NAFTA led the company to the way where it could use its own strategies and basic competencies. So NAFTA basically built the success path of Wal-Mart. And further as we know that Wal-Mart is best at its job, so it was when it followed the path embarked by their principles, NAFTA being the reason. The issues that were working as a hurdle before the treaty were solved by the treaty’s effects.

I believe that Wal-Mart is a special case, as it has competitive edge over its competitors. Following strategies plays the role for this achievement:-

1. Every day low prices.

2. Interaction with suppliers at every point.

3. Strong bargaining power with suppliers.

4. Secured merchandize movement.

5. Bulk purchases.

6. Strong and wide distribution network.

7. Usage of the second most powerful system and latest technology to run, handle and control its logistics.

8. Availability of huge capital.

9. Clear