Entry mode strategies of wall-mart in MEXICO

Résumé du document

Entry mode in the international business: The joint venture of Wal-Mart and Cifra. This paper will study why this venture is called a wealthy marriage. There will be a comparison of Wal-Mart's entry mode in Mexico and China, and a recommendation for foreign investment, as well as an analysis of the common problems faced when one wants to invest.

Extraits

[...] - Cooperative or contractual joint venture Contract whereby two parties are involved in exploration, marketing, training . not construction and building. - Wholly owned subsidiary (The owner's box)The investing firm owned of the new entity. This new entity can be owned by construction or International acquisition of local business. By going alone you need a lot of partner and logistics to enter the foreign market. - Umbrella Holding Company (The big House)A company which combinates all the firm's existing investment under an umbrella combining procurement, manufacturing, maintenance, training and sales. [...]

[...] Entry mode strategiesof wall-mart in MEXICO Issues : Entry mode in the international business The joint venture of Wal-Mart and Cifra, why it is a wealthy marriage? Comparaison of Wal-Mart's entry mode in Mexico and China Recommandation for foreign investment Transfer related entry-mode - International subcontracting MNE (Nike) brings the technology and the RAW materials to the manufacturer (OEM in China) responsible for the process of manufacturing. The products are bought back by the MNE and will be sold on the international market. - International leasing (transfer of machine)The foreign firm leases out (legue) its new or old machines and/or equipement to the leasee (often in developping country) for extra income. - International licensing (Get the extra)The licensor grants the property rights as its brand, technology and/or managerial skills to the licensee in exchange for royalty. [...]

[...] 2 main reasons:-The country has gross domestic product in excess of $420 billion and a population of more than 95 million.- The creation of NAFTA: The government in 1990's has begun to focus on social needs, reform taxes system, privatized state enterprises, liberalized trade with North country. The economy grew up with a strong anti-inflationary commitment.Prosperity gave opportunity to make lower-price stores more desirable for customers who had low purchase power due to the peso crisis. - Mexico is close to Advantage of American distribution system and network. [...]

[...] The strategy at “every day low pricing” had limited competition on both side. RecommendationsThe common problem when you want to invest in adeveloping country are: different needs and want of customers, lack of infrastructure, misunderstanding of credit culture, hyperinflation, accounting and tax rules and lack of suppliers bases.So Conduct research of market concerning the country (taxes on trade), consumers (needs and wants), bureaucratic boundaries, economic stability, governance power and so on.But, the most important is to establish and keep good relationship with distributors and investors.The FDI transfer is more risky but the long-haul investment is more credible especially in China. [...]

[...] The joint venture Cifra-Wal-Mart is a success The challenge under the Joint-venture in Mexico The barriers encountered for investment in Mexico (1)-Bureaucratie, high tariffs of imported goods from America. The Peso crisis (decreased the purchasing power in 1994, because of too many investment in international market by the government) (2)-The lack of network and Infrastructure (energy and communication) and distribution system. The cultural mexican customer related barriers.(wants and needs): low purchasing power since peso crisis so focus on price and food. [...]