Walmart Success In Mexico Canada And China Marketing Essay

Wal securities labor Success In Mexico Canada And china Marketing EssayGlobal working bulge out has been gaining a ken of attention from alone(prenominal) descentes that mean to thrive abroad. Important factors that postulate to be considered in the decision making outgrowth lead be occupation strategies, entranceway modes, and affrights and opportunities operable in the merchandises. Appropriate strategies used go forth to a fault military service to minimize the danger of failure in the world-wide markets. When a home cave ins the right choice of business line strategies and ledger entry modes, the firm exit then be able to succeed in the market and do headspring in the market as well. The choice of entry modes and business strategies go out influence the future of the retail merchant in the tar beat backed markets as well. Therefore, retail merchants who wish well to go spheric should use the near suitable cuddlees to acquiesce their targeted mar kets to contain winner to their business.Keywords global elaboration, business strategies, entry modes, panics, opportunities, WalmartIntroductionMany researches had been through with(p) to study to a greater extent(prenominal) to the highest degree internalization of the retail industry and the absolute majority of researches d iodine ar principal(prenominal)ly used to describe the motivations and scales for international elaborateness by retailers (Akehurst Alexander, 1995 Williams, 1992). anyhow that, many models of internalization explained the sequence of extraneous blowup that shows that the companies who go international aloneow for do better in foreign markets that argon similar to their domestic markets. This is why Walmart chose to enter the markets of Canada and Mexico (Johanson Vahlne, 1977). There argon several reasons why international retailing had been a popular issue. Retailers who pretend the rate to go into the international market is mainly beca use the domestic markets is saturated, needs for bigger diverse investments, economic pressures and many external and internal forces that leads retailers to enter modern markets and it is important for the retailer to drive the right market entry dodging into the international markets (Sternquist, 2007). There argon several researches d unmatched with a conclusion that retailers burn down minimize the risk of entry strategies by choosing the markets which argon similar to the domestic market from the aspects of cultural, geographical and growth potentials. (Barkema Vermeulen, 1998 Welch Welch, 1996).Walmart is established in 1962, by Sam Walton. Walmart got its name from the family name Walton, giving Walmart the meaning of Waltons mart in abundant. Walmart is a sound company and it managed to hold water in the 2008 receding hit in coupled States. Walmart had been increase spry throughout the historic period and the sales and market growth were increasing e very ye ar. For a fast emergence retailer self analogous(prenominal) Walmart, it is important to endure use the scoop up entry modes to enter a sensitive market (Fred, 2011).Global expansionGlobal retail expansion has attracted many businesspersons, especially big coat companies which wish to increase their businesss profits and market sh atomic number 18. Global expansion non simply attracts coarse organizations but withal small to medium-sized companies, virtually companies who are new to international expansion as well, and those who are in more(prenominal) mature organizations. The victory achieved by newer specialty retailers in the international market, for example, Zara (Spain), HM (Sweden), and Shanghai Tang (Hong Kong) cast motivated and created the way for new(prenominal) organizations to follow. However, on that power point is also numerous numbers of well-k instanter retailers who create failed in their expansion in certain global markets which is caused by several reasons, such as regulatory, level-headed and cultural challenges, tilt, and trying to change shopping behavior (Cox, 2011). as well that, retailers who made the decision to operate merely in neighboring markets, as well as it is located geographically close to their home markets, ordain expect to face a degrade level of such risks (Burt, 1993 Davis, Desai, Francis, 2000 Hollander, 1970 Knee, 1993 Robinson Clarke-Hill, 1990). many top managers are also becoming more cautious on the business of maintaining a common identity and horticulture in the routine of trying to run aground up global enterprises (Joshua Chi, 2007). Moreover, it is very tough for businesses to make their decisions on choosing the most leave markets for their business development because there is no accurate and reliable instruction provided to the businesses. Domestic players in the markets provide only portray the potentials side of the markets and hide the dis advantages just to attra ct businesses into the market (Jackson, Houdard, Highfield, 2008).comparability of business strategies used by Walmart in Mexico, Canada and mainland chinawareThere are different business strategies used by Walmart in Mexico, Canada and China. In Mexico, Walmart experienced primaeval Ameri prat Retail Holding Co. who was struggling with accounting issues in 2006. after(prenominal) the scholarship, Walmart renamed the business with Walmart Centroamrica. Central Ameri butt Retail Holding Co. was previously the largest retailer in Central America. Walmart took the step where they re-launched the whole chain of retail strains at a lower place the Central American Retail Holding Co. with wider merchandise assortments, and lower determine dodging. The reason why they does this is because low pricing strategy is the basic strategy to work out Walmarts ism, Every daylight downcast Price to all break extend of the world (Basic Strategy Be More Walmart, 2011). Walmarts main strategy in Mexico is the multi-format strategy where through this strategy Walmart can set apart different groups of consumers at the corresponding time universe able to fulfill all the non-homogeneous needs of these groups of people. Bodega Aurrera in Mexico is the companys fastest growing format. There are trio versions of this store. Bodega Aurrera Express stores are designed as very small outlets to coiffe urban areas such as Mexico City and Monterrey. Mi Bodega Aurrera is designed to serve rural towns and these stores created a great achievement for Walmart (Multiple Formats Equal Flexibility, 2011).In Canada, Walmart Canada is creating a new home branding effort that place the Better Homes Gardens independence as the core for both hard and soft home categories (Wal-Mart planetary Improves Game, 2007). Every products offered has clear and obvious differences from any other products in the market and this will leave a strong image in the nodes minds that these prod ucts were originated from Walmarts sort and value chain (Wal-Mart International Improves Game, 2007). anyway that, Walmart Canada is implementing the use of Radio oftenness Identification Technology (RFID) which gather ups 20 stores and about 12 of their suppliers. This implementation was influenced by the parent rural area in united States where this system will help eliminate inventories out of stock. The implementation was an important step in the get together States and it is important to Walmart Canada as well. Walmart Canada will focus on the use of this engine room to improve their emerge chain as well as customer services. Equipped stores will be able to use the system to cutting off tagged items in the stores and they can run through necessary actions if anything happens. The system is a very important goal to be achieved by Walmart Canada because it can depress errors occurred in manual restocking methods and the most important issue is that it can stretch ove r stock in the stores, and it can reduce unnecessary battery-acid caused which then leads to reduction in emissions of carbons (Mammarella, 2007). The victory of Walmart can also be seen through its achievement in having a large grocery pucker in its Canadian damage reduction stores where the insert was called grocery store Shelf that provides a big outcome on capital at low risk (Orgel, 2005).In China, Walmart is targeting to be one of the national retail chains in the country with no interrelated national distribution system.With this aim, it can be obvious that the rewards are ample, if Walmart is able to succeed. Besides that, the mainland retail market are estimated to be worth US$750 billion by 2008 and this will be a supporting point for Walmart to succeed.The only thing Walmart need to be worried about is the distribution system.This is because the company has given in to unionisation demands from the state-run, All-China Federation of Trade Unions, where it shows an important climb down from Walmarts anti-union US point of view (Distribution critical to Wal-Mart China strategy, 2006). However, Walmart will not be influenced. The selling strategies used by Walmart for BRIC and other developing countries will still involve great huge discounts and great values on all of their products like how they do it in their home country, maintaining low prices every day to all their customers, especially middle-class customers, on the alike(p) time, maintaining the growth of their profits as well. According to JPMorgan and analyst Charles Grom, Walmarts main objective for future success is not to overdo set in the United States. They also said that, Walmart will start to work on more interrelated merchandise strategies and merchandise messages to serve their low end customer as well, instead on just foc use on middle-class customers and this could implied to the BRIC countries Walmarts expansions as well (Frazier, 2007). Besides that, Walmart in China had a great success in use cost leadership and this strategy had spawnd huge r plainues for Walmart in China. Therefore, Walmart planned to pass with the cost leadership strategy, as well as implementing a new strategy, that is differentiation (George, 2007).Comparison of entry modesAnother reason for retailers to expand into the global markets is because the market in their home country is highly saturated and this created a more matched market. Therefore, multinational retailers will choose to expand into markets which are less saturated than their home markets. For example, Sears, Kmart and Walmarts most successful expansion is to expand to Mexico and Canada, which is categorized in the North America region. How do multinational retailers choose their entry mode to the selected markets? Multinational retailers that are expanding to markets which are culturally diversify will choose to bring a local stick accident with local retailers in the country to help them learn mor e about the country (Sternquist, 2007).Walmart in Mexico penetrated the market with a joint venture with its local player, CIFRA. CIFRA is the largest retailer in Mexico and Walmart is the largest retailer in the USA. With this reason, Walmarts decision to have a joint venture with CIFRA will definitely be a success because CIFRA will help Walmart have better knowledge on Mexican markets. In Mexico, CIFRA supplied Walmart will supplier connections, knowledge about the local culture as well as helping Walmart to work with local authorities. This will ensure successful expansion of Walmarts power in the Mexican markets, and Walmart can have the greatest influence in the shortest time period. In return of CIFRAs help, Walmart transfers their logistics knowledge to CIFRA which will also help CIFRA to improve on their supply chain commission. (Sternquist, 1997). Under Walmarts agreement with CIFRA, Walmart overt membership warehouse clubs, known as indian lodge Aurrera, which does cate ring to small businesses and selected groups of consumers. The first Club Aurrera was opened in Mexico City in December 1991. (Global Push Begins in Mexico, 2012). Besides that, CIFRA and Walmart also announced another dickens joint ventures, the first one is to start up a wholesale discount Aurrera stores, and the second one is to start up an import-export company that will provide CIFRAs Mexican suppliers to have access to other Walmart outlets in the United States (Millman, 1991).Walmart entered the Canadian markets through the entry mode attainment. In 1994, Walmart announced its entry into Canada with the purchase of 120 out of 142 Woolco discount stores which are located on the north of the border from the Woolworth Corporation. In 1993, the Woolco stores had total sales of $1.14 billion (Woolco Purchase Yields Entry Into Canada, 2012). Walmart had avoided a time-consuming problem, which are approach by other American retailers who entered the Canadian market, which is to b uild up stores. Walmart had save up their time because they took the step to buy the established stores of Woolco, where most of it had floor space of 100,000 square feet or more. Walmart had also benefited from the making choices for strategicalal and benignant leases (Woolco Purchase Yields Entry Into Canada, 2012). In 2011, Walmart Canada announced that it had also holy another acquisition from Target Canada with a total of 39 store locations which is currently occupied by Zellers (Canada Newswire, 2011).Most multinational enterprises had the same position that entering China is not an option for their business to expand, but it is a strategic necessity for the future of their business. The economy in China is growing rapidly that supports the living of the whole population in China, which is 1.3 billion. China is believed to be a country which has economic superpower and it is a very huge market in the 21st century (Schlevogt, 2000a, 2000b). On the other hand, Walmart is face up purblind growth in the United States, and with these available attractive reasons, Walmart aimed to be the top in the retail heavens in China with its acquisition of Trust-Mart (Naughton, Schafer, Ansfield, Lin, 2006). new(prenominal) than using the acquisition strategy, Walmart also used the offshore sourcing strategy. Walmart sees that China is a major production or assembly source country and Walmart needed the help of China for the production and assemble of their products in the United States. Walmart then took the offshore sourcing strategy. Today, Walmart is the single largest export channel from Chinese manufacturers to the United States, with a record of at least 4% in Chinas overseas sales (Goldstein, 2003). Interestingly, Walmart does not have any manufacturing plants in China and it does not have a direct control over the production process of its suppliers in China. Instead, the suppliers are those who take control and responsibility to meet certain levels of requirements, for example cost, quality and delivery (Shih, 2004). With this strategy, Walmart can hold to their Everyday Low Price philosophy. This is because Walmart can keep their production cost low, at the same time gaining the maximum benefits. Walmart also utilizes its strong bargaining position, at the same time maintaining a high level of ownership. This can be seen in their selling strategy, where Walmart buys the products at a cheaper price from China, and reselling them at a higher(prenominal) price in the United States and other parts of the world, at the same time gaining the profits and achieving their aim in providing the terminal prices. In other words, Walmart maintains a high level of ownership control but its management control is low (Goldstein, 2003).Comparison of opportunities and threatsThreat and prospect are two terms which are often used in terms strategic management in businesses (Mintzberg, Raisinghini, Theoret, 1976 Nutt, 1984). These categories a re often used to make strategic decisions and it had become a necessity for firms to use these two terms to estimate their selected markets. The results and issues obtained from environmental analysis are categorized as threats and opportunities faced by the business (Christensen, Andrews, Bower, Hamermesh, Porter, 1982).OpportunitiesMexicoIn 2007, Walmart de Mexico had made a huge investment of $1 billion dollars for new developments and they opened 136 new units from all its existing business formats. This development includes opening of new units of 57 Bodega Aurrera units, 16 Walmart Supercenters, 6 Sams Clubs, 4 Superamas, 15 Suburbia stores and 38 Vips and El Porton Restaurants. The new stores opened spreads on two categories, the existing cities and new cities. The expansion in new cities can increase the firms coverage of new customers, and as for the existing cities, Walmart will have the advantage to dominate the market more widely. Besides that, the expansion of new sto res will help boost the amount of new customer, as well as result in greater sales (DATAMONITOR Wal-Mart de Mexico., 2008). The consumers today have changing preferences on choices of places to buy groceries and other daily products. customer now no longer prefer traditional retail, and they now prefer larger and more standardized hypermarket and supermarket chains, and the most important is the stores can offer lower and more attractive prices, as well as providing the convenience to the customers. In Mexico, the market share of modern formats of stores had increased almost 50% as compared from year 2005-2010. The change in the customers preferences will create an opportunity for Wal-Mart to expand its chains to more cities in Mexico (DATAMONITOR Wal-Mart de Mexico., 2008).ChinaWalmart Stores had signed an agreement to acquire a little stake of Yihaodian.com, Chinas largest online retailer. If the acquisition is successful, Walmart will have the line up to expand their business to the world of online shopping market, which will then generate more revenue. However, Chinas anti-monopoly bureau considers the acquisition might create an effect that prove or restrict the competition of value-added telecommunications services market segments in China (China approves Wal-Mart control of Yihaodian., 2012). Apart from Walmart having control of services of Yihaodian.com, Yihaodian.com can also take the advantage of using Walmarts supplier and logistics resources to increase their stock-keeping unit by track the inventories closely using the system (Mass Grocery Retail., 2012).Another opportunity available for Walmart is the concept of discount store formats. Walmart can take the first step to start a discount store format expansion sooner other retailers do because the discount store format is now an attractive option for retailers in China. Walmart is the biggest retailer in China because of the acquisition of Trust-Marts 100-outlet-strong hypermarket network. The refore, Walmart has the opportunity to expand in China, by launching a new discount compact hypermarket format formed beneath Trust-Mart in China (Mass Grocery Retail., 2012).CanadaWalmart in Canada can expand its chain to the intellectual nourishment retailing sector in Canada, since Target will be a competitor of Walmart in Canada. Walmart will have the competitive advantage over Target if they were to get involved in the food retailing industry because Target whitethorn be limited in food retailing (Orgel, 2011). Walmart Canada had announced the retailers readying of opening three supercenters in Qubec. Walmart also ensures the quality of products they offer in the new store to gain customers confidence (Canada, 2011). Besides that, Walmarts low price strategy had given Walmart a great opportunity compared to other retailers in Canada, and this will ensure that Walmarts path in Canada will be lasting (Swain, 1994). Another opportunity for Walmart in Canada is their decision t o bring their warehouse club, Sams Club into Canada and this will help Wal-Mart by gaining increasing popularity in the market (Robin, 2003).ThreatsMexicoIn February 2006, Mexicos retail association Asociacion Nacional de Tiendas de Autoservicio y Departamentales (ANTAD) sent many requests to the Congress to approve the proposals to upgrade the anti-monopoly laws to an international standards. This will scratch Walmart de Mexico, because, if the laws are being approved, Walmart de Mexico will lose its advantage of its better technology and larger size as compared to other smaller retailers, to offer the lowest prices in the market. Walmart Stores is also go about this problem in the companys parent country in United States because, Walmart is a big retailer, and they are offering low prices and this will affect smaller retailers to quit from the industry. In this case, Walmart de Mexicos expansion plans in Mexico will be change by the laws and regulations in Mexico (DATAMONITOR Wal-Mart de Mexico., 2008).Other than that, another main issue that Walmart Mexico faces is antagonist towards their expansion in Mexico, mainly from the government and local retailer. A slow growing economy will cause a lower get power in a country. The economy in Mexico is an important threat to Walmart because the slow growth in the Mexican economy will affect the consumer spending and it will affect Walmarts growth in Mexico (DATAMONITOR Wal-Mart de Mexico., 2008). Besides that, the brutal competition in Mexico will also be a threat for Walmart. In Mexico, Walmart is also facing a strong competition from Mexican supermarket chains because the retail industry in Mexico is saturated. Some examples of Walmarts strong international and domestic competitors are Organizacion Soriana, Controladora, Chedraui, and Gigante. These retailers are having an intense competition with Walmart. The increasing competition from these retailers might affect Walmart de Mexico, especially in terms of profitability (DATAMONITOR Wal-Mart de Mexico., 2008).ChinaWalmart plans to expand bigger in China and the company had planned to open another ten stores throughout the urban areas. However, the effort faced some challenges, mainly from the government of China. Chinas state-controlled All-China Federation of Trade Union (ACFTU) had planned to take the action to sue Walmart as well as other non-Chinese companies if these companies do not have union branches in their Chinese operations. The main problem in this issue is, Walmart is well-known for their anti-union stance. In order for them to survive in the market, Walmart had agreed to respect the choice of their employees in China who wants to set up a union. This action may benefit China, but Walmart will have restrictions handling employee benefits and limited ways in resolving grievances. even so though there were many problems faced, as a multinational retailer, it is a must for Walmart to adapt to the specific markets they are operating in (Wal-Mart in union with China, 2005).CanadaWalmart Canadas largest threat will be the acquisition of Zellers Inc. by Target Corporation. The entry of Target Corporation will be another summation to the intense competition of retailers in Canada. In the acquisition, Target took over 220 stores under Zellers, and this could impact Walmart as a big retailer because Target is growing fast after the acquisition (Orgel, 2011). The retail industry in Canada is very intense and saturated and the retail market is bounteous of strong grocers and this will be a threat for Walmart because there will be more competition and this will slow down and eventually reduce Walmarts sales in Canada (Dunn, 2006). Besides that, Walmart also faces Canadas regulatory threats where Walmart needs to face the legal challenges from Saint-Hyacinthe certification (Springer, 2005). Besides that, Walmart is trying to introduce organic food in the country as well, and this will be a threat to Walma rt because Walmart does not have a proper marketing strategy to market the product in their stores in Canada because there are other small-sized organic food suppliers which can offer a lower price (Goodbaum, 2006).DiscussionWalmart is and then a good example of a successful retailer that successfully expands and survives in the international markets. This also proves that there is the potential for retailers in domestic markets to expand their business into the international market with the condition that they use the appropriate marketing strategies and entry modes to penetrate the market. However, Walmart should also have sufficient information on the markets so that they can adapt into the market with lesser barriers. Walmart had been a successful retailer in the United States and today, and they are still growing across the world, mainly in United States, Canada and Mexico. Walmart also uses different types of marketing strategies and entry modes to dominate the markets, and t his gives the large retailer a huge competitive advantage over other retailers in the market because, Walmarts philosophy, Every Day Low Price had been successfully applied throughout the world where this philosophy had helped Walmart greatly in surviving in different markets on the same time providing Walmart with a bright future.Walmart choices of strategies in the Mexican, Canadian and China markets also portray the firms success in adapting into the country. Walmart in Mexico used the multi format strategy to set up different types of stores to satisfy majority needs and demands of the markets, and this helped Walmart in achieving a greater amount of concentration of customers. The Bodega Aurrera store chains are proves the firms intelligence in dominating the market. These stores have different concepts such as discount stores and convenience stores that will serve different types of customers in different areas in Mexico. Secondly, in Canada, Walmart uses the retail format dev elopment strategy to approach the market. Walmart in Canda extend their offerings into the home furniture sector where these furnitures can only be found in Walmart. This will create brand sensation and brand loyalty towards Walmart in the customers. Besides that, Walmart also made full use of their satellite communication system to frequently check on the inventories in Walmart stores to decrease shortage in supply. In Canada, Walmart also have discount stores where these stores can generate high profits with low risks in the country. Thirdly, Walmart in China had achieved a huge success by using the cost leadership strategy in the country to attract more people. This is because, the population and economy in China is growing, and Walmart can have large sales volumes, with lower price, to achieve high sales records to maintain their sustainability.Other than these successes, Walmart had also used the appropriate entry modes to enter the markets. In Mexico, Walmart uses the joint v enture mode with Mexicos largest retailer, CIFRA. This joint venture had benefited Walmart in the sense that, CIFRA can provide the firm with information on the markets in Mexico, and Walmart can save their time on the process of understanding the markets. This will give Walmart the advantage to grow faster in the market. The strategy used by Walmart in Canada is the acquisition mode, where the firm took over the operations of Woolco, a weak retailer in the Canadian markets. With this acquisition, Walmart does not need to worry on the locations of their stores, because the Woolco buildings were available, since the firm had took over them. In China, Walmart use the offshore sourcing strategy together with the acquisition strategy where Walmart can reduce their cost to find new locations, as well as reducing their production cost because production costs in China is lower compared to the United States. From the different choices of entry modes that Walmart chose, all of the strategie s are working well in different markets, where these strategies helped Walmart to have a strong base in the markets. Walmart have the potential in growing in the spread of their retail stores to outside their region. With the strong market base that Walmart is standing on, it will not be a major problem if Walmart were to expand into other regions in the world. However, Walmart needs to take care of the regulations of the countries they are penetrating, as well as the intensity of the competition in the markets. closeWalmarts decision to expand globally had made a huge success to the firm and this can be seen in Walmarts domination in the markets. Walmarts success had been a glorious story in the business world for being able to sustain their businesses not only domestically, but also in the global context. The business strategies and entry modes used were wisely chosen and it ensures long term profitability to the firm. Even though there are challenges faced in the respective marke ts they penetrated successfully, Walmart still have outstanding performances in overtaking their competitors in the retail industry. Besides that, Walmart also have very strong strategic management skills because, Walmart choose their locations and targets countries carefully where this leads to the route of success for Walmart as well.Walmart success can also be credited to their efforts in conform to their customers from all classes. Walmart offers a wide range of products where it covers all varieties of products, from the highest price to the lowest price which is still the lowest retail price in the retail industry. With this point, Walmart will have loyal customers that will make repeated purchases in the stores. Another notable success of Walmart is, the firm is able to survive even in the toughest period of the economy, during street corner. Not all businesses can survive in the recession period, because during recession, the cycle of business processes will contract, whi ch will result in slow business growth and there will be unemployment all around. Yet, Walmart still can survive and continue its business operations during the recession period. With only this point, Walmart is considered the most successful retailer in the retail industry for being able survive no matter what environment they are in.