Wal Mart: Managing Globalization in 2007

Résumé du document

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.

Extraits

[...] But, after few years it appears that the international division becomes profitable and makes some profits. So Wal Mart is, in 2006, the world's largest company in the world and its turnover is of $312,4 billion the same year. Its expansion is shown in particular with its entry in new countries and new markets. The study will be done in several points: firstly, we will study the Wal Mart's global expansion strategy, after we will discuss about these strategies and their contribution to the retail chain's international success. [...]

[...] Local Partnership To settle on the Asian market, Wal-Mart sets up a strategy aiming at creating partnerships with local companies. For that, the group joins companies by buying part of their capital. Indeed, in South Korea or in Japan or in Indonesia, Wal-Mart does not hesitate has to collaborate with national companies in order to benefit from their knowledge about the needs of the local consumers and the demographic population. Concerning China, Wal-Mart combines two strategies by opening Sam's Club directly and also by creating a join venture with a Chinese partner. [...]

[...] In January 2006, Wal-Mart has 272 Discount Stores in Canada and 6 Sam's Club. Thanks to that, Wal-Mart is first Canada's largest retailer in 2002. Wal-Mart follows this strategy in two other countries to Europe: in the United Kingdom in 1999 when it acquired the ASDA Group and in Germany in 1997 by buying the German Wertkauf Group. With these acquisitions, Wal-Mart increases its number of stores by 400 units, whose majority are Discount Stores. It wants to benefit from the notoriety of the groups that it buys to increase its customers more. [...]

[...] Even if it appears some faults in the international strategic system, Wal- Mart remains one of greatest world group and increases each year its net sales and its sales turnover. Wal-Mart can, even if it knew unhappy experiments in Germany and South Korea, adapt overall to the countries where it wants to be established. It can count on its international notoriety to attract the customers. The strategies they use contribute to the international success of the chain because it adapts the strategies to the country and not the reverse. And in a general way, it is a success. [...]

[...] and employs more than 150000 people. Bartlett et Ghoshal's theory According to Bartlett and Ghoshal, there would be a bond between the requests for the environment and the strategy to be set up by the company. This theory breaks up into 4 distinct options: - Global strategy : imply to address itself to the worldwide market like only one market without differentiations, while seeking to exploit economies associated with the concept of products - International Strategy: sets up the development of new products and new processes in a country and its expansion abroad by transferring technologies and knowledge in marketing - Comprehensive strategy: imply to address itself to the worldwide market like only one market without differentiations, while seeking to exploit economies associated with the concept of standardized products, while manufacturing on total scale and while following a strategy formulated and controlled by the central seat - Transnational Strategy: include the strategic capacities of the preceding models: sensitivity, efficiency and innovation Concerning Wal-Mart, the adopted strategy would be the multidomestic strategy because according to the country or the company settles, it sets up certain prerogatives in order to adapt their products to the local consumers. [...]