Wal Mart Case Study

Wal-Mart is the world`s largest retailer. It has more than 7,000 stores worldwide, employing nearly 2.0 million people, and has annual sales of more than $350 billion. The next-largest global retailer, Carrefour (a French discount retailer), has sales of $99 billion, and Wal-Mart`s nearest U.S. competitor in the general merchandise category, Target, has $59 billion in annual sales. More than 70 percent of Wal-Mart`s merchandise comes from China. If Wal-Mart were a country, it would be China`s eighth-largest trading partner, ahead of Russia and Great Britain.[pic 1]

Although the bulk of Wal-Mart`s sales come from the United States, its international division contributes significantly to the corporate bottom line. Roughly 40 percent of Wal-Mart stores are located in 13 markets outside the United States and account for about 25 percent of sales. In fact, Wal-Mart`s international operations generated a larger sales gain in 2006 than its U.S. unit ($17.9 billion versus $16.4 billion). In order to appeal to consumers of differing levels of affluence and sophistication in various countries, you might expect that Wal-Mart would need to change its strategy. But that is not the case. The giant retailer`s strategy is the same everywhere in the world-Everyday Low Prices (EDLP) and Everyday Low Costs (EDLC). It carries this strategy out to near perfection through its own version of global sourcing and distribution that has other retailers clamoring to copy.

WAL-MART`S INTERNATIONAL GROWTH

Wal-Mart operates in North and South America, Europe, and Asia. It has used multiple entry strategies in various countries.

North and South America

Canada

Wal-Mart`s first international venture was Canada – a market similar to that of the United States. Wal-Mart initially bought 122 Canadian Woolco stores, and today it operates 290 stores in that country.

Mexico

In Mexico, Wal-Mart used an acquisition strategy (buying Suburbia stores that sell clothing to young women, VIPS restaurants, Superama supermarkets, and 62 percent of Cifra, then Mexico`s largest retailer). It also established its own Mexican Wal-Mart stores and Sam`s Clubs. Mexico has been a big success for Wal-Mart, largely because of Cifra`s thorough understanding of the Mexican consumer. Wal-Mart is now the largest retailer in Mexico with more than 900 stores. Outside of the United States, Mexico is Wal-Mart`s largest market. Wal-Mart`s Mexican operations achieve a 4.5 percent net margin – better than the 3.5 percent overall Wal-Mart margin.

Puerto Rico

This is another big success for Wal-Mart. It established its own stores in Puerto Rico and bought Supermercados Amigo – Puerto Rico`s second largest grocery retailer.

Brazil and Argentina

Wal-Mart entered these countries in the mid 1990s with disappointing results. Both countries faced miserable economic situations, with inflation spiraling out of control, devaluation of currencies, and defaults on loans, plus a political maelstrom in which Argentina`s presidency seemed to be a revolving door. To this day, Wal-Mart has opened only 15 stores in Argentina.