SWOT Analysis• Efficient Supply Chain/Logistics system. • Unionised & Strict labour laws.• Efficient cross docking & Inventory • Unable to adapt internationally. management. • Poor public Image.• Service innovation & Technology.• Strong penetration strategies.• World’s largest private satellite communication systems.• Globalization. Growing Middle • International trade blocks and zoning class globally. regulations.• E-Business. • Terrorism and Wars.• Inorganic growth leading to • Strong competition in Europe. consolidation. • Anti-Competitive and Anti-Dumping laws.
Why Globalize?• Walmart needed high levels of growth to continue to survive.• High levels of growth possible only through globalization.• Saturation of Domestic markets.• US accounts for 4% of worlds population.• Discount retailing key to developing economies with double digit growth rates.• Advantages • Leverage local buying power with US based MNC’s. • Utilize competencies of Efficient store management, technology & logistics.
Entry Mode Decision Matrix Strategic Importance Hi of Country Lo Lo Hi Stand-alone Attractiveness of Country
Route to Globalization - 1• Mexico • 1991 : Through a joint venture with Cifra, a Mexican retail company, Walmart went global, opening a Sam’s Club in Mexico City. • 1997:Wal-Mart Stores acquires majority interest in Cifra, creating Wal-Mart de Mexico.• Canada • 1994 : Walmart expanded into Canada with the purchase of 122 Woolco stores. • 2013 : Walmart Canada has 379 total retail units.• China • 1996 : Walmart opened its first stores in China at Shenzhen. • 2007 : Walmart purchased a 35% interest in Trust-Mart.
Route to Globalization - 2• United Kingdom • 1999 : Walmart entered the United Kingdom with the acquisition of ASDA. • 2013 : ASDA has 565 total retail units.• Japan • 2002 : Walmart acquired a 6.1% stake in Seiyu. • 2005 : Walmart acquired a majority interest in Seiyu, making Seiyu a Walmart subsidiary • 2008 : Seiyu became a wholly owned subsidiary.• Chile • 2009 : Walmart acquired a majority in Distribución y Servicio D&S S.A. • 2010 : D&S renamed to Walmart Chile & operates 329 stores.
Route to Globalization - 3• India • 2007: Walmart announced an agreement with Bharti Enterprises to establish a joint venture, Bharti Walmart Private Limited.• South Africa • 2011 : Walmart acquired a majority stake in Massmart Holdings Limited.
Tale of Four Countries• Cost effective acquisition • Effective JV with Cifra utilizing• Minimum Cultural adaptation local market knowledge.• Store design & Customer • Overcame cultural barriers service. • Compete with Carrefour.• Wiped out Eaton & Co ( 50% mrkt share ) • Offering Financial services. • Successful acquisition of ASDA. • Successful acquisition of ASDA. • Used M&A synergies of local • Used M&A synergies of local knowledge. knowledge. • Strong completion from Tesco • Strong completion from Tesco & Sainsbury. & Sainsbury.
Tale of Four Countries• Lack of scale – Only 16 stores. • Entered in stake with Seiyu in 2002 and bought it over in 2007.• Minimum Cultural adaptation. Taller racks in Korea. • Cultural barriers – Cheap is of low• Store design & Customer quality. Small is beautiful service. • Small store formats.• Exited Korea in 2006 • Running with no break even yet. • Successful acquisition of Wertkauf & Interspar. • Entered through JV but built scale through acquisition of • Failed to integrate culturally. Bompreco’s. • High labour cost & established competitors (ALDI & LIDI ). • Utilized discount tactics • Exited in 2007. • Strong completion from Carrefour & Sendas.
Global Strategy• Walmart used Multidomestic strategy in Americas resulting in very successful penetration.• It’s use of a global strategy with out developing economies of scale have resulted in failure. E.g. Germany & Korea• Walmart is trying to move towards a transnational strategy to effectively utilize local and global competencies.• Its Transnational strategy in UK worked successfully but has found it difficult to emulate in other countries.