Walmart Designing and Managing International Organizations

Charles Young

OTMT 618-14 (1968)

Written assignment for week #2 – case (1) Walmart Team/Country selection

Designing and Managing International Organizations

        (1) Based on Wal-Mart’s successes when first opening and then subsequently operating in markets outside the United States, what should Wal-Mart do when determining how they should open and then how they should operate in any new market?

Wal-Mart’s success will be able to determine the best practices concerning international expansion; it is possible to learn from mistakes and success. Firstly in Mexico and Canada Wal-Mart’s implementation seems to confirm that international retail expansion is more likely to succeed if the retailer in question is the “first-mover”, which means the first foreign company of it’s type to enter the new market. Wal-Mart international’s experiences have shown us how important the evaluation of market attractiveness and the need for local customization is. Additionally the format that the retailer will want to apply in the foreign market is very important as well. However there are also factors such as market trends, the size and scale of the potential market and the timing of the expansion. All these factors depend on the actual economic situation of the foreign market.

The case allows us to suggest that entering economically developed markets through acquisitions or joint ventures seems to be the smartest choice for Wal-Mart. Their model as a low cost operator is more exportable to markets that are economically developed and have small customization needs. The success of acquisitions or joint ventures is probably due to the fact that there are many well-established competitors in developed markets with the best locations and the best prices in their environment. An acquisition will allow Wal-Mart to penetrate the market much more efficiently. Moreover with the actual size and power of Wal-Mart, many companies even in developed markets would be unable to compete with this giant, therefore acquisitions or even joint ventures are very likely to be possible. This is mentioned in the case; in fact Wal-Mart entered Canada, Central America, Mexico and the UK through joint venture and acquisitions and it is safe to say that this is where they were successful. These countries were attractive markets where Wal-Mart was able through acquisitions and joint ventures implement its personal business model with a small amount of local market customization, this turned out to be successful for the retailer.