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Wal-Mart, the new face of capitalism

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  1. Presentation of PPR and Puma
  2. Presentation of the operation
  3. Decision and Executive Summary

Which firm embodies the quintessential American multinational dominance better than Coca-Cola? Jealously preserving its secret recipe of its drinks, it has established a strong brand which is unparalleled and features a wide variety of choices; Coca-Cola flooded the world as the flagship soda brand. The Atlanta company has even had the dubious privilege of giving rise to a neologism, or 'Cocalization', the people's consecration of its global domination. However, on 3 March 2006, the business section of ?The New York Times' published a front page story that widely relativized the omnipotence of the most famous beverage manufacturer.

In 2005, Coca-Cola introduced new lower calorie drink in the US market, Coke Zero. It is fairly similar to Diet Coke, in that it contains aspartame. One customer of the cola giant, however, was found to have a better idea: Create a lean drink containing splenda, another type of sweetener, which he thought would sell better.

The customer then asked to review the Coca-Cola name and the formula of the drink, which was a fairly surprising demand for a firm as powerful as Coca-Cola. He turned out Coke Zero, and reformulated the recipe for its drink released in May 2005, 'a Diet Coke With Splenda'. Who was this client who was influential enough to ensure the success of Coca-Cola's marketing plans? This was the retail group Wal-Mart Stores Inc., a leader in the retail industry in the US market.

Though the name is relatively unknown in France, it has also given rise to a neologism, the ?Wal-Martization', and Coca-Cola had to pay the price. Representing 20% of the soda market in the United States, Wal-Mart is a client that even Coca-Cola cannot ignore, which is why the soft drinks manufacturer was forced to follow instructions handed down by the retailing titan.

For a long time, distributors found themselves vulnerable to the whims of major brands. Retailers depended on these major companies as their massive advertising budgets, accrued customer loyalty, and brand image of the enterprises were coveted by retailers to realize their profits.

The last forty years have witnessed a shift in the balance of power and it seems now that the shelves of the distributors have become the resource coveted by the national brands. Wal-Mart has been the spearhead of this reversal. The group is now not only the largest distribution group but also the biggest company worldwide in terms of staff and in 2006 overtook the top spot from Exxon in terms of turnover: 351.1 against 347.3 billion dollars.

Two comparable figures that reflect two dynamic but profoundly different entities: Exxon employs 50,000 employees, Wal-Mart 1.9 million, the sales of Exxon increases with the rising price of petroleum; Wal-Mart's sales have increased despite the lower prices it offers. Exxon has grown thanks to its "merger of the century" with Mobil in 1999. Wal-Mart has reached its present size through organic growth almost exclusively.

Often mentioned is the weight of the military-industrial complex in determining U.S. policy, but it would appear that the most influential company in America is not specialized in the production of high-tech weapons, but in distribution of consumer goods.

Tags: Wal-Mart internationalization strategy, retailing activities, capitalism

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