CO6: Walmart around the world

Question 1

Business Model Walmart

Answer 1

International retail that focus on a low-cost strategy, core of the business is EDLP = Everyday low prices model.

• economies of scale
• standardized products in every store
• convenience for customer & operational efficiency
• high volume of sale with low margin per unit

Question 2

Walmart Case Short

Answer 2

–>Expansion to other countries

Obstacles for replication business model in other countries:

• Union –Labour costs
• Differences in customer preferences

Succesful marketing entering: Canada, Mexico, UK

Unsuccessful marketing entering: South Korea, Germany

Question 3

Which characteristics of Walmart´s business model have been essential for its success in the US? And how different market conditions in other countries create obstacles ?

Answer 3

Essential for the success of Walmarts Strategy:
- Economies of Scale
EDLP (Everday low prices model + relentless focus on convenience and operational efficiency)

Focus: low costs! How low cost can be achieved:
economies of scale, distribution network, IT system, law salaries, efficient inventory management

Different market conditions in other countries:
- labor costs
- periodic cycles of discount and markups
scale economy achievement due to competition
- lack of partner - price wars and supplier boycotts

Question 4

Describes characteristics of foreign markets where Walmart performed well and the characteristics where Walmart struggled?

Answer 4

Success:

• Parntership,
• closeness to U.S –>Economies of scale
• acquisition of local companies
• no local strong competitor pursuing low cost strategy

Struggled:

• different customers values (low prices = low quality)
• loyal customer base
• infringement of local law (Germany), Unions
• luxurious, service oriented shopping experience

Question 5

How can foreign market characteristics affect Walmart´s choice of entry mode?

Answer 5

Foreign market characteristics:

• loyalty of consumers to local companies
• strong domestic players
• weak domestic players –>which can be acquired
• partner needed (China)

Question 6

How can industry characteristics affect the choice of entry mode ?

Answer 6

Industry characteristics:

• level of competition
• high –>Acquisition, Joint Ventueres

Question 7

Walmart enter via acquisiton or Greenfield investments, Which entry mode was more likely to result in sucessfull operations ?

Answer 7

successful market entering mostly by acquistions (or alliances) with local partners

• already existing customer base and relations
• operations of scale already established