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Wal-Mart Goes South

Executive Summary:

Wal-Mart has grown over the years. Wal-Mart made a move into Mexico, where they made a great success in. Due to Wal-Mart doing so well in Mexico, management created the Wal-Mart International Division in 1993. Wal-Mart has now expanded to 15 other countries. Wal-Mart is looking to international expansion for growth. People stand strong behind the Wal-Mart company which plays a major role in its success.

Questions

1. How has the implementation of NAFTA affected Wal-Mart success in Mexico?

The North American Free Trade Agreement (NAFTA), has helped Wal-Mart with their import charges on the goods sold in stores, which made it hard for them to promote their slogan “Every Day Low Prices”. Wal-Mart was paying huge import fees on goods shipped to Mexico. The NAFTA encouraged Mexico to improve their transportation and build manufacturing plants in Mexico so Wal-Mart could buy the products without paying the fees.

2. How much of Wal-Mart’s success is due to NAFTA, and how much is due to Wal-Mart’s inherent competitive strategy? In other words, could any other U.S retailer have the same success in Mexico post-NAFTA, or is Wal-Mart a special case?

A great deal of Wal-Mart success is due to NAFTA due to the expensive import fees they would have to pay to have goods shipped to Mexico. It’s not easy being competition for Wal-Mart. Much of Wal-Mart success comes from tested practices. “Every Day Low Prices” is Wal-Mart’s slogan. Due to Wal-Mart size and volume of the purchases, they can negotiate with suppliers to drop prices to agreeable prices. The likely hood of another U.S retailer having the same success in Mexico is very slim to none. Wal-Mart has had many difficulties but they are on track and promoting great products at great prices.

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