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Wal Mart: Managing Globalization in 2007

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  1. Wal Mart's global expansion strategy
    1. CEOs play a role in the success of the chain
    2. Price Strategy
    3. The International Expansion Strategy
  2. Effects on the retail chain's international success
    1. Strategy adapted according to the country
    2. Difficulty in entering all markets

Wal Mart, an American public multinational corporation, is currently the largest retail chain in the world. The company was founded by Sam Walton in 1962, incorporated on October 31, 1969

With the creation of an International Division in 1993, Wal Mart realized that an expansion into foreign countries can increase the company's turnover. Initially, it was a difficult task in the context of the complexities of international business. But, a few years later it seemed that the international division was profitable and was making some huge numbers in the game. Wal Mart, in 2006, became the world's largest company with a turnover of $312.4 billion

The document focuses on different areas of development of Wal-Mart . Firstly, we will study the Wal Mart's global expansion strategy, and its contribution to the retail chain markets that achieved cult status in no time.

Wal Mart's global expansion strategy:
Since the last 35 years, the company Wal Mart has entered many foreign countries in order to increase its turnover and its sales. To improve the trust of the customers and respond to their needs, the founder Sam Walton and the successive CEOs set up certain strategies in order to become a great international entity. Indeed, it is important for them to make known the company in the whole world. Their objective was to make the brand Wal Mart ahousehold name.

Following the CEO's footsteps:
Following the death of the founder Sam Walson, several CEOs have followed in his footsteps over the years like Bob Martin in 1993, John Menzer in 1999 or Lee Scott in 2002. Year after year, the strategic choices of Wal Mart evolve with the entry of a new CEO. Indeed, everyone does not choose the same strategies.

Price Strategy:
Sam Walton chose, during his first years, a pricing strategy considered to be infallible. This strategy is based on three principal points to enhance cost leadership: the ?Every Day Low Price? (EDLP) strategy, the Rollback and the Special Buy.

The pricing philosophies:
Concerning the EDLP strategy, it is a permanent low price policy. The consumers do not have need to wait for discount or specials offers. The posted price is the discounted price. It means that the company, by selling the product make minimum profit but prefer the sales increase in volume. Wal-Mart sells the cheapest products in the world all the year.

The Rollback and the Special Buy is when Wal-Mart decides to put certain products and items on sale or add to the amount of the products available for the same price.

[...] Wal-Mart set up this strategy in 1994 when it wanted to conquer the Canadian market. For that, it purchased the Canadian Woolco discount stores. By January 2006, Wal-Mart had 272 Discount Stores and 6 Sam's Club in Canada. Owing to this, Wal-Mart became Canada's largest retailer in 2002. Wal-Mart followed this strategy in two other countries outside Europe: in the United Kingdom in 1999 when it acquired the ASDA Group and in Germany in 1997 by buying the German Wertkauf Group. [...]

[...] The ?Greenfield? Development This strategy of "Greenfield" Development takes place primarily in South America such as for example in Argentina and in Brazil. With the opening of new Sam's Club in Mexico City, Sao Paulo in May 1995 or Buenos Aires in August of the same year, Wal-Mart became a large firm in the area. Indeed, in 2005, Wal-Mart had become the 6th largest retailer of Brazil. Wal-Mart chooses to open stores in strategic zones, like the Greater Buenos Aires area or the metropolitan area of Sao Paulo. [...]

[...] However, Wal-Mart had the business acumen to offer new products in certain countries to adapt to the local culture. For example, in Mexico, the company has decide to market meat, cheese and such products, that are more likely to be appreciated by the local population. It is the same case in Brazil, where people speak Spanish or Portuguese. Demographic choice To reach out to as many consumers as possible, Wal-Mart set up its stores in very populated countries. This was the case when it settled in Indonesia because it is the fourth most populated country in the world or in China, which is the most populous country in the world. [...]

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