Walmart's Global expansion Strategy | Globalization | MBA Case study examples with solutions

Summary

The video script discusses Walmart's international expansion strategy, highlighting its success in countries like Mexico, Canada, and China, and challenges in Germany and South Korea. It emphasizes the necessity of growth for survival, the importance of understanding cultural differences, and the adaptation of Walmart's EDLP model. The script also suggests strategies for market entry, local operations, and cultural sensitivity to ensure success in global markets.

Takeaways

• 🌐 Walmart's international expansion was necessary for growth, as the U.S. market was saturated and represented only a small fraction of the global population.
• 🏬 The company's exit from Germany and South Korea within a decade highlights the challenges of adapting to local markets and cultural differences.
• 📈 Walmart's success in the U.S. was not easily replicated abroad, indicating the importance of local market understanding and strategy adaptation.
• 🛒 The 'everyday low price' approach did not resonate with all international customers, suggesting the need for a more tailored pricing strategy.
• 💡 Information technology and logistics played a crucial role in Walmart's operations, with technological constraints in countries like China affecting efficiency.
• 🛍️ Cultural differences in shopping behavior and expectations posed significant challenges, such as the German market's resistance to non-negotiable pricing.
• 🔄 Walmart leveraged its U.S.-based resources, such as buying power and expertise in store management, to support its global expansion.
• 🌟 The company's ability to learn from its mistakes and adapt its strategies was key to its success in some international markets.
• 🛑 Bureaucracy and government relations were significant hurdles in some countries, impacting Walmart's expansion efforts.
• 🏆 To succeed globally, Walmart needed to standardize its approach in market entry strategy, business operations, and cultural sensitivity.
• 🔄 The script suggests that Walmart should continue acquisitions and partnerships, operate with local flexibility, and conduct extensive cultural research for future expansions.

Q & A

What was the main reason behind Walmart's international expansion?

Walmart needed to grow to survive, and the international arena was the only one in which significant growth was possible.

Why was growth critical for Walmart?

Growth was critical to satisfy capital market expectations and to meet the expectations of its own employees.

What were the three reasons Walmart could not afford to confine its operations to the United States?

Walmart had already saturated most of the domestic markets, the US accounts for just over four percent of the world's population, and developing countries with lower levels of disposable income offered huge growth opportunities for discount retailers.

How did Walmart leverage its resources from the United States during its global expansion?

Walmart used its enormous buying power with domestic suppliers to procure goods more cheaply for its non-US stores and tapped into domestic knowledge bases and competencies in areas such as store management, supplier technology implementation, merchandising expertise, logistics, and information technology.

What were the challenges Walmart faced in China and Germany regarding logistics and technology?

In China, Walmart faced technical constraints due to a lack of modernized suppliers, hindering high levels of efficiency like barcoding. In Germany, it encountered technological limitations when attempting to introduce advanced information systems and inventory management to suppliers.

Why did Walmart exit the German market?

Walmart exited the German market in 2006, labeling it as a difficult one due to cultural differences in shopping, technological limitations, and the difficulty in applying Walmart's U.S. culture to its international operations.

What were the key cultural barriers Walmart faced in its international expansion?

Key cultural barriers included German customers' dissatisfaction with the lack of bargaining, the difficulty in applying Walmart's U.S. culture to international operations, and the need to adapt to local customer behavior and perceptions.

What strategies did Walmart use to overcome bureaucratic challenges in countries with subsidiaries?

Walmart sponsored trips to its headquarters in the United States and made donations to local charities to appease government officials.

What were the main competitors Walmart faced in the European and Canadian markets?

In the UK, Tesco was a major competitor. In Canada, Walmart faced competition from established retailers like Eatons, Zellers, and Bay.

What are the three strategic suggestions for Walmart's international business operations?

1) Continue the acquisition strategy targeting businesses with similar models dominant in the local market. 2) Operate local stores with flexibility to reach diverse consumer segments, adapting the business model and strategy to the local market. 3) Conduct extensive research into cultural factors, customer behavior, perceptions of EDLP, store formats, local culture, regulations, and supplier relationships.