Essay About Walmart Stores And Wal-Mart

Faculty of Business, Government & Law
FACULTY OF BUSINESS, GOVERNMENT & LAWAssignment CoversheetStudent ID numberU3103744Unit nameInternational BusinessUnit number6241Name of lecturer/tutorMichael CorlissName of AssessmentReport PlanDue date1 AprilWord CountStudent declarationI certify that the attached assignment is my own work. Material drawn from other sources has been appropriately and fully acknowledged as to author/creator, source and other bibliographic details. Such referencing may need to meet unit-specific requirements as to format and style. I give permission for my assignment to be copied, submitted and retained for the electronic checking of plagiarism.Signature of student:________________ Date: __________Identify the enterprise – WalmartOrganizational form: Walmart Stores, Inc., known as Walmart is an American multinational retail corporation in Consumer staples sector. The enterprise operates retail stores in various formats globally, includes supercentre, discount store, supermarket and small formats. To become the largest retailer, the company entered international markets through different modes such as joint venture in Mexico and Hong Kong, Partnership in Brazil and Indonesia, acquisition in Korea and UK…Firm’s role in the global pattern of trade: Participating in international business not only brings more profit for the enterprises itself, it also offers more choices for consumers, more employment opportunities and increase growth rate of foreign countries by optimizing use of resources. With more than 10,900 retail units in 27 countries, Wal-Mart became the worlds largest retailer with ROI was 18.2% and 18.6% for fiscal 2013 and 2012. In 2013, it created remarkable sales at $466.1 billion – $135 billion in sales from its international market. It is also considered as one of the largest private employers in the US and Canada since it has about 2.2 million employees globally – 1.3 million in the U.S. alone. Competitive advantages allow a firm to perform better than its competitors when it possesses one or more sources of distinctive competence relative to others. In undertaking global expansion, Wal-Mart has many   which comes from its original market-US. By having strong buying power with giant domestics suppliers as P&G, Coke, 3M, it can purchase goods at low cost for its international markets. Effective supply chain and logistics management which are supported by leading-edge IT are also its strengths in managing its foreign outlets. Market globalization made standardization strategy critical tool creating competitive advantage for MNC by achieving economy of scaleWalmart also took comparative advantages from countries it does business which can be beneficial for both parties. In order to maintain low production costs, company shifts manufacturing jobs to China, Bangladesh and other nations, where the cost of labour is less expensive. Besides, China is also one of its important international market since the lower purchasing power of the Chinese consumer offered huge potential to a low-price retailer like Wal-Mart. According to New trade theory, companies try to reach economies of scale so that they can produce more goods at lower costs to gain competitive advantage over their rivals. To achieve economies of scale by expanding its business size, Walmart chose countries that held similar factors of production or culture such as Mexico, Brazil, Argentina and Canada. This strategy also helps the company reduce the risks of entering new markets. Walmart offers value from economies of scope as well. By purchasing a grocery store chain in UK, Walmart acquired a logistics channel for produce or by acquiring Woolco in Canada, Walmart easily expanded into this big potential market.MNEs choose FDI rather than enter foreign markets through alternative models such as joint ventures, strategic alliances… because they can have advantages in ownership, location can internalization (OLI Paradigm). In 2012, the Indian government allowed 51% FDI in multiband retail opened a door for Walmart to expand its business in IndiaBased on Stages Models of Internationalization, Walmart started its growth at third stage of the model. Its first store was operated in 1962 in Rogers, Ark. Due to reduction of trade barriers worldwide and development of technology, the company quickly expanded to international market. In 1970s, Walmart went public by offering stock on the New York Stock Exchange. The number of stores and employees increased rapidly in 1980s which resulted in big sales. In 1991, Wal-Mart became an international company when it pursued globalization aggressively since its first move across the border to Mexico. Just two years later, Wal-Mart International was created. Today the serves more than 200 million customers each week at more than 11,000 stores in 27 countries.Being a multinational retailer, Wal-Mart has to deal with many different social – cultures in its international market. These factors can affect the way customers perceive the products or restrict company’s business strategies. For example, in China, Walmart failed when open big box stores in this market which did not fit with Chinese customer behaviour. Thus, Walmart tried to down size the stores to meet the need of customers in one of its biggest international markets.Walmart also has to face with country risk which is exposure to potential loss or adverse effects on company because of complicated political and legal systems in foreign markets. According to legal system of US, stores only have to shut down when they cause public health issues. However, in 2011, 13 Walmart stores located in Chongqing, China had to shut-down for seven days just because Wal-Mart labelled ordinary pork as organic.BOOKS, JOURNAL ARTICLES, BUSINESS MAGAZINESMatthews, C. 2012 ‘10 Ways Walmart Changed the World’ Time, 29 June, accessed 28 March 2014, <