Wal-Mart Stores: “every Day Low Prices” in ChinaEssay Preview: Wal-Mart Stores: “every Day Low Prices” in ChinaReport this essayWAL-MART STORES:“EVERY DAY LOW PRICES” IN CHINAPrepared by:Daniel MagenReport Distributed February 10, 2012Prepared forFlorida Atlantic UniversityMAN 4602: Global Business OperationsSpring 2012: F 9:30 – 12:30Focus/PerspectiveJoe Hatfield, President and CEO of Wal-Mart Asia. Responsible for implement Wal-Marts business model Every Day Low Prices (EDLP) to China.Recommendation & Plan for ImplementationWal-Mart has to implement their business model EDLP and define a different strategy for Chinese market and culture.Internal & External Strategic IssuesWal-Mart faces several environmental, cultural, political, economical, social and legal issues and challenges that may act as obstacles for being successful in China. Several internal issues include:
A. What happens to the businesses that pay for EdLP, and for this new approach, if the company fails? Is this all tied to the lack of EdLP? Where is a significant amount of business driven by the lack of EdLP business model? B. What is a Wal-Mart’s EdLP strategy, what are its responsibilities, and what do they expect and expect from Wal-Mart? D. Is Wal-Mart a leading leader in global e-commerce and e-commerce for the benefit of all, or does Wal-Mart’s approach to market design have any bearing on its own business performance or growth? E. The Wal-Mart strategy is a business of the middle and above ground, the low end of a traditional business model. It does not require the introduction of new technology, yet it is based on a business model that is consistent with the traditional model of business. In response to a series of recent Wal-Mart and financial reports, the US National Bureau of Economic Research, the Joint Agency for Research and Analysis of Consumer Product-Price Index, and the Government Accountability Office conducted studies, some of them covering the entire global economy and market. The results of these analyses are published in the most recent edition of The Quarterly Journal of Economics. In response thereto, the New York Fed conducted various studies and assessed more than 15,000 industry participants. These studies assessed the following factors: Wal-Mart
Wal-Mart is expected to have an ongoing growth phase that will continue even in low-income neighborhoods, with potential for significant expansion throughout the economic development effort;
Wal-Mart generates jobs in low income areas from a number of sources, including sales and service of services;
Wal-Mart’s business model is highly diversified in size, scope, operations, quality, and value;
Wal-Mart’s business model enables the ability to offer value. It delivers high quality, high-quality consumer products such as clothing, health care, home improvement, food services, prescription drugs, e-books. It is able to compete and prosper across the different sectors of its business. Wal-Mart has a significant influence on the growth of its current and future businesses, as well as all the business in the U.S. and around the world.
ELECTRONIC CHANGE INTERESTS: This essay focuses on the impact of an ongoing digital transformation (D.C. digital transformation is the development of digital businesses in the digital age, and in particular for Wal-Mart Stores). The term digital transformation consists principally of changes in technology, economies of scale, and the way that individuals and communities can connect with the businesses that are directly involved. This article emphasizes the importance of digital change. Digital changes also increase the level of self-discipline required for businesses that are being built on the Internet, and enable people, institutions and organizations to better align their own practices, interests, and goals as they move away from one social or cultural niche to the next.
INTRODUCTION
Digital transformation has been studied for the past 50 years, and is associated with two important steps that have happened: first, new technologies, with the emergence of the internet, brought about by smart appliances and digital transformation, and second, innovation takes another form – by investing in technology.
Digital technology and its applications have been described as “smart,” “innovative,” or “technology-related.” For example, in
A. What happens to the businesses that pay for EdLP, and for this new approach, if the company fails? Is this all tied to the lack of EdLP? Where is a significant amount of business driven by the lack of EdLP business model? B. What is a Wal-Mart’s EdLP strategy, what are its responsibilities, and what do they expect and expect from Wal-Mart? D. Is Wal-Mart a leading leader in global e-commerce and e-commerce for the benefit of all, or does Wal-Mart’s approach to market design have any bearing on its own business performance or growth? E. The Wal-Mart strategy is a business of the middle and above ground, the low end of a traditional business model. It does not require the introduction of new technology, yet it is based on a business model that is consistent with the traditional model of business. In response to a series of recent Wal-Mart and financial reports, the US National Bureau of Economic Research, the Joint Agency for Research and Analysis of Consumer Product-Price Index, and the Government Accountability Office conducted studies, some of them covering the entire global economy and market. The results of these analyses are published in the most recent edition of The Quarterly Journal of Economics. In response thereto, the New York Fed conducted various studies and assessed more than 15,000 industry participants. These studies assessed the following factors: Wal-Mart
Wal-Mart is expected to have an ongoing growth phase that will continue even in low-income neighborhoods, with potential for significant expansion throughout the economic development effort;
Wal-Mart generates jobs in low income areas from a number of sources, including sales and service of services;
Wal-Mart’s business model is highly diversified in size, scope, operations, quality, and value;
Wal-Mart’s business model enables the ability to offer value. It delivers high quality, high-quality consumer products such as clothing, health care, home improvement, food services, prescription drugs, e-books. It is able to compete and prosper across the different sectors of its business. Wal-Mart has a significant influence on the growth of its current and future businesses, as well as all the business in the U.S. and around the world.
ELECTRONIC CHANGE INTERESTS: This essay focuses on the impact of an ongoing digital transformation (D.C. digital transformation is the development of digital businesses in the digital age, and in particular for Wal-Mart Stores). The term digital transformation consists principally of changes in technology, economies of scale, and the way that individuals and communities can connect with the businesses that are directly involved. This article emphasizes the importance of digital change. Digital changes also increase the level of self-discipline required for businesses that are being built on the Internet, and enable people, institutions and organizations to better align their own practices, interests, and goals as they move away from one social or cultural niche to the next.
INTRODUCTION
Digital transformation has been studied for the past 50 years, and is associated with two important steps that have happened: first, new technologies, with the emergence of the internet, brought about by smart appliances and digital transformation, and second, innovation takes another form – by investing in technology.
Digital technology and its applications have been described as “smart,” “innovative,” or “technology-related.” For example, in
EmployeesShopliftingWal-Mart pays low salaries and does not offer any type of share for employees. As a result, high rate of managers turn over and unhappy workforce, makes very difficult reproduce domestic business model in China. Corruption and delinquency are very common in under developed countries. China is not the exception, having a high rate in corruption, is another obstacle for Wal-Mart to be efficient amd keep low prices. Several External issues include:
Chinese Consumer BehaviorToo Many CompetitorsDiverse PopulationLocal ProtectionismBackward InfrastructureRegulatory restrictionsChinese behavior in terms of consumption is hard task to define. Chinese are not predictable. First, because of lack of infrastructure and automobiles, customers use bicycles and walk and therefore they go every day and make small purchases. In addition, purchases are more impulsive and Chinese do not have preferences for any specific brand they are looking for the best offer. Furthermore, customers spend their free time visiting malls and stores comparing new businesses, quality of the products and prices. Clearly, forecasting sales in this type of market is a hard duty. China is a rapidly emerging economy is attracting investors from all over the world. Every year new retailers have been approved by the government to open their business in China. Wal-Mart, as a top 25 chain stores in China, has to be competitive with prices and try to dominate the domestic and international competition. Indeed, this seems to be almost impossible since local retailers have more advantages in knowledge, better relationship with suppliers, and have established cheap distribution system. Chinese population has experienced a rapid economic growth in the last 20 years. This economic growth had not only increase income and wealth but also had created a significant gap between rich and poor. Rural sector in China is in a very considerable disadvantage that it is almost impossible for retailers to create a uniform marketing strategy. China implemented new fiscal policy that prohibits local government to impose barriers against foreign firms, these new policy seems to be ineffective, because authorities are not enforcing them. Before 1997, China lacked of expressways. In addition, construct highways is a slow process and very costly. Lack of infrastructure is affecting Wal-Marts distribution system and imposing high cost in logistics. Government has regulatory restrictions that limit foreign retailers expansion by allowing them to open three stores in each city. Also, Wal-Mart is not allowed to open in every city.
Alternative Strategic OptionsThere are several alternative strategic options that can be implemented for Wal-Mart to accomplish business purpose. Some alternatives are:Get strong local knowledgeUnderstand the culture and traditionsUnderstand customer behaviorMerge and acquisition of existing companiesCustomize their products partially according to the demandWork close with the suppliersReference to Key ReadingAccording to Joan Margretta, “a business model isnt the same thing as a strategy, even though many people use terms interchangeably today. Wal-Mart showed in the United States that they have a clear understanding between these words. By using the business model of discount retailing and developing an unique strategy that fits in the American market.
[quote=Gavin]I’ve been using a Wal-Mart business model since I moved to Oakland. It has been through the rough, hard times and has provided me with an opportunity to learn how to be successful. Since then, I’ve developed a strong sense of how important customer service is and as a parent of a family that is looking to build the best career possible. As a parent who understands that there are many more ways to achieve your goals than just a short distance drive between a supermarket and the nearest door, I take advantage of the opportunities presented by Wal-Mart.
[quote=Dieter]From how I see it, and many others I see, we’re only getting better now and even we are now working the hardest. And for those of us who have the potential to accomplish and succeed with the benefits of this, it’s even harder to do it ourselves. We don’t have a way to really get into business quickly, so it has to be with financial flexibility, but you have to learn to live with the risk, and there are going to be times where we will have to lose our way.
[quote=Yorick]I’ve been using Wal-Mart business model since I moved so far away from Oakland. It has been through the rough, hard times and has provided me with an opportunity to learn about how to be successful. Since then, I’ve developed a strong sense of how important customer service is and as a parent of a family that is looking to build the best career possible. As a parent who understands that there are many more ways to achieve your goals than just a short distance drive between a supermarket and the nearest door, I take advantage of the opportunities presented by Wal-Mart.
[quote=Yorick]But I think it’s time we started talking about how we work from a consumeristic perspective. For example, I have a good perspective that’s not really about what customers need and doesn’t need, but what they spend on things that I care about. So I don’t just mean how I spend money – what I spend makes a difference. I want people to like me, and that’s what I do. What I look for at Wal-Mart is to know the quality of the product, who is buying it, what their budget is, and what customer service is like. But it’s not always just one thing. You have to understand how these things are actually being collected from all the stores and people who are willing to spend money for this. People will get paid to bring it in when the cost at the supermarket is minimal. It also means when they’re being paid for it themselves. You can never just say, ‘I’m buying a different product.’”
Recommend course of actionWal-Mart would be able to implement their business model EDLP because China has similar US characteristic. On the other hand, Wal-Mart has to use a different strategy that fit in the Chineses environment. In addition, get strong local knowledge, understand the culture and traditions, understand customer behavior, merge and acquisition of existing companies, customize their products partially according to the demand and work close with the suppliers. Finally, competitors are going for low prices and providing low quality. Successful business means good business model, being different and have a unique strategy.
SILVIO NAPOLI AT SCHINDLER INDIAPrepared by:Daniel MagenReport