How to operate successfully in an international environment; A case study of Wal-Mart in Germany Introduction Many business activities usually shape up the aspirations and daily activities of people in all parts of the world. This can be attributed to the fact that, Business enterprises present a wide and rich variety of different organizational goals and objectives which cater for the needs and wants of consumers starting from a consumer who purchases a loaf of bread to a giant oil exploration carried out by a big company for the government. Nevertheless, for a long time, many organizations have managed to maintain a stable relationship with the society and the environments in which they operate in. However with the ever deepening and expanding ties between the societies and many firms within their environments, relationships between them and the society becomes complex. Despite that organizations see themselves as global players in their operations and outlook, it is usually hard for them to adapt to changing circumstances and changing environment. This can be seen in the case for Wal-Mart in Germany, (Harrison, Dalkiran,& Elsey,2000). Strategic Problem facing Wal-Mart In less than eight years, Wal-Mart has successfully been able to open up over 85 stores in the whole world, however, it was not able to successfully integrate itself in Germany as in 2006, and the U.S retail giant left the market at over $1 billion USD. The domestic success of Wal-Mart is normally based on factors like low prices, high volume sales and even distribution channels that are streamlined of which none of these factors do well and fit in German’s regulatory regime or culture. The attitude of Germans plus their culture only favors the medium, and sm... ... middle of paper ... .... (2008), International Business: Environments and Operations, Pearson Education Dunning, J. H. (1993), Multinational Enterprises and the Global Economy, Addison-Wesley Harrison, A. L., Dalkiran, E., and Elsey, E. (2000), International Business, Oxford University Press , chapter 13, pp. 272-291 Hymer, S., (1976) The International Operations of Nation Firms: A Study ofForeign Direct Investment”, Cambridge, MLT Press. Laudicina, P. A. (2005), World Out of Balance: Navigating Global Risks to Seize Competitive Advantage, McGraw-Hill Porter, M. E. (1998), The Competitive Advantage of Nations, The Free Press IMD World Competitiveness Yearbook, International Institute for Management Development The Global Competitiveness Report, World Economic Forum Rugman, A. M. and Collinson, S. (2008), International Business, Financial Times Prentice Hall
Roberts, Bryan. Berg, Natalie. Walmart: Key Insights and Practical Lessons from the World's Largest Retailer. Kogan Page Limited, 2012. Print.
According to Smithson, Walmart can expand its markets to new and emerging markets especially in the third world countries, which can significantly increase its revenues. Secondly, the company can reform is employment practices and improve the quality standard and in doing so, attract more customers and improve its brand image. On the other hand, the company faces threats such as the rising healthy lifestyle trend I that the company in most cases does not provide customers with healthy goods. At the same time, the company can capitalize on this aspect and increase its revenues. Aggressive competition from other discount retailers such as Target creates a great threat to the company (Smithson, 2015).
Wal-Mart has had a significant economic impact on the US, as well as the economies of countries that have relations with the US. Wal-Mart is the world’s biggest company of any kind, with 80 percent of the households in America purchasing something from the superstore; it is the nation’s largest retailer. Wal-Mart’s continuing price reduction has given Americans the advantage of being able to afford 15 to 20 percent more than they previously could. (Hansen) In a world governed by globalization and greed, competition has become rigid; as a result firms like Wal-Mart have utilized advanced marketing strategies to insure that they are on the ‘neck’ of competition, and are the core deciders of the market. (Ortega) However, Wal-Mart made decisions that were of a disadvantage to aspects of the economy, including the depletion on a small scale of Small Town USA.
The opportunities to acquire other companies in Europe, Asia, and South America are virtually unlimited, and Wal-Mart always has the option to build its own stores there as well. Wal-Mart has also created additional opportunities for itself by designing several formats for its stores. The superstore concept which is such a success in the U.S. can be used in foreign countries where indicated, but Wal-Mart has also developed other store concepts that it can use where conditions seem to favor them: discount stores, neighborhood markets, and Sam 's Club warehouses, in addition to Internet web sites in the native language of the country ("Wal-Mart Fact Sheets"). Wal-Mart can exploit its opportunities by developing distinctive branding such as the Sam 's Club for every segment of its
Wal-Mart is currently proceeding across the globe and in its operations; the rules and regulations were set by a host country. In the previous years, international operations produced a generous amount of income for the company. However, it is challenged by major countries such as China as it is compelled to
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
In the United States and all over the world, the entry and operations of big retailers like Wal-Mart into a small town sparks great controversy within the community. The fact that people contemplate on the fact that the policies and actions of Wal-Mart are destructive to a small town’s economy is not new. Most small town’s economies are run by subsistence and self-reliant traders. With time, the traders embrace the division of labor and specialization of skills in accordance with the trade, production and manufacturing needs of the community. In such a market, a simple move like a decision by the producers to sell directly to the consumers may spark
Wal-Mart Stores Inc. is in the discount, variety stores industry. It was founded in 1945, Bentonville in Arkansas which is also the headquarters of Wal-Mart. Wal-Mart operates locally as well as worldwide. It operated 1209 discount stores, 1980 super centers, and 567 Sam’s Club by January 31, 2006. It has also extended its operations to many international countries. It runs its retail stores in two forms: Sam’s Club and Wal-Mart Stores. The Sam’s Club sells assorted product lines such as hardwares, electronics, jewelry, and to mention a few. The Wal-Mart stores also offer similar products in addition to the following: health and beauty products, apparel for women, men and children, household appliances etc (www.yahoo.finance.com). The Vision Statement, Mission Statement, Values and Code of Conduct, Corporate Governance: Directors, Executive Management, Committees and Stakeholder will be the key elements that will discussed in this report as it relates to Wal-Mart. In addition to that, the major trends in the general/macro environment and industry will be analyzed.
It creates an environment where it is difficult for retailers to grow their business. According to Jia (2005), Wal-Mart destroyed 50-70 percent of small discount retailers from 1988 to 1997 (Basker 191). It shows that Wal-Mart wreck small-scale business within few years. As Wal-Mart is a big multinational company and operates on the much bigger platform. It does not require any sponsor's but on the flip side, the small-scale business needs funds and sources to establish themselves in the market. Between 1963—one year after the first Wal-Mart store opened in Rogers, Arkansas—and 2002, the quantity of single-store retailers in the United States declined by 55 percent (Basker 178). Overall, taking the evidence into consideration it is seen that the entrance of Wal-Mart in the business world has a serious impact these minor businesses. In a Pew Research Center (2005) study, 19 percent of respondents with a Wal-Mart store in their general vicinity felt that it had a negative impact locally, and 24 percent of all respondents suspected that Wal-Mart was awful for the nation (Basker 178). This research shows that Wal-Mart has negative effects on both locally and for the country as well. Wal-Mart makes a hard-focused condition. Each new Wal-Mart store diminishes nearby contenders' piece of the pie and profit edges and makes a few organizations close (Basker 190). Wal-Mart creates a
... and each division to have a different manger to work both for his store and for the company. They can increase there overseas branches by having a different strategic plans. They can even divide the products into different categories such as very high or low end products. Need to use new technologies with different approaches so that can ready to use new technologies with in a short span of time. The main generic strategy is to have over all cost leadership by which the Wal-Mart can control the cost. The supply and distribution system has to be more effective in present one so that they can save both time and money while doing distribution of there products from ware house to the stores.
The organization has had to ensure that it has retail stores in many countries globally and website options in more than 100 countries. The company further enhances access of online stores in more than 37 countries which is accessible all the time and people are able to access the services regardless of their location. Globalization further affects the organization in the sense of international market management which requires it to engage in strictly global decision making. The organization’s production networks have been geared to enhancing global competition (Lüsted, 2012) .The Company is further good when it comes to seizing the opportunities available in global market. For the organization to find efficient as well as cheap means of production, it has to bargain hard so as to allow its contractors to have low profits. This mostly is consequential to the suppliers cutting corners with the use of cheap
In recent decades, the process of globalization has accelerated and the world economy has become increasingly interdependent. The rise in the number of businesses that extensively operate in more than one foreign country, which is known as multinational corporations, plays an important role in the ongoing procedure of globalization. The United Nations has reported that multinational corporations hold one-third of world’s productive assets and control 70 percent of world trade (Schermerhorn et al., 2014). As there is a considerable growth in international businesses, worldwide economy is becoming more highly competitive. The global economy not only offers great opportunities for multinational enterprises but also on the other hand, creates many difficulties for them. Therefore, success in the large-scale economy requires a number of elements. One of the major determinants is dependent on global managers. In the operation of organizations, managers may encounter different international management challenges that restrict their business development. These challenges often include issues associated with the host countries, the global workforce diversity management, management across cultures, difficulties in competitive global business environment as well as in the process of global planning and controlling. This essay is going to discuss the above international management challenges in a broad sense and giving illustration in aspects of each challenge.
Wal-Mart is one of the world's greatest assets to most people. It provides consumer's a place they can go to virtually get anything they need from, car repairs, to groceries, prescription's, even the latest toys and electronics. With all that said, this paper relates to the different forces in business that affects business: competitive, economic, political + legal + regulatory, technological, cultural + social, demographic, and natural forces. Although there are technically seven we are going to focus on competitive, political, technological, and natural forces.
At the first, Wal-Mart only operates its business in home country. However, Wal-Mart became more integrated and independent by expanding internationally. In 1991, Wal-Mart start expands the business at international level which includes 26 countries outside of the United State such as Mexico, China and Canada. Now, Wal-Mart totally has more than 6100 stores in foreign country. The step taken by Wal-Mart is to improve and maintain their achievement outside of the home country. Wal-Mart’s strategy which expands their market at international level gains a lot of benefit to their business.
The paper focuses on the increased complexity of globalized organizations and methods of altering the process within the structure. Business and environment change constantly to sustain development in emerging markets and increase efficiency. Integration of relationships and processes of the world systems, help to manage local, regional and planetary balance to manage duplication of success become conceivable. The retail giant Wal-Mart exhibits its ability to transform the organization asynchronously with the increase integration of globalization.’ Wal-Mart unveils the type of integration possible between globalization, and business services as it adapts, eliminating redundancies and repetitive movement. It observes the effect and influence, propagated on business through it use of supply chains, and influence.