Minicase: The Globalization of Wal-Mart

In venturing outside the United States, Wal-Mart had the option of

entering Europe, Asia, or other countries in the western hemisphere. It
realized that it did not have the resourcesfinancial, organizational, and
managerialto enter all of them simultaneousl! and instead opted for a
carefull! considered, learning-"ased approach to mar#et entr!. $uring
the first % !ears of its glo"alization &'((' to '((%), Wal-Mart
concentrated heavil! on esta"lishing a presence in the Americas* Me+ico,
,razil, Argentina, and -anada. .his choice was motivated "! the fact that
the European mar#et was less attractive to Wal-Mart as a first point of
entr!. .he European retail industr! was alread! mature, which meant
that a new entrant would have to ta#e mar#et share awa! from an
e+isting pla!er. .here were well-entrenched competitors such as
-arrefour in /rance and Metro A0 in 0erman! that would li#el! retaliate
vigorousl!. Moreover, European retailers had formats similar to Wal-
Mart1s, which would have the effect of reducing Wal-Mart1s competitive
advantage. Wal-Mart might have overcome these difficulties "! entering
Europe through an ac2uisition, "ut the higher growth rates of the 3atin
American and Asian mar#ets would have made a dela!ed entr! into
those mar#ets e+tremel! costl! in terms of lost opportunities. In
contrast, the opportunit! costs of dela!ing ac2uisition-"ased entries into
European mar#ets were relativel! small. Asian mar#ets also presented
ma4or opportunities, "ut the! were geographicall! and culturall! more
distant. /or these reasons, as its first glo"al points of entr!, Wal-Mart
chose Me+ico &'(('), ,razil &'((5), and Argentina &'((%), the countries
with the three largest populations in 3atin America.
,! '((6, Wal-Mart felt read! to ta#e on the Asian challenge. It targeted
-hina, with a population of more than '.7 "illion inha"itants in 658
cities, as its primar! growth vehicle. .his choice made sense in that the
lower purchasing power of the -hinese consumer offered huge potential
to a low-price retailer li#e Wal-Mart. Still, -hina1s cultural, linguistic,
and geographical distance from the United States presented relativel!
high entr! "arriers, so Wal-Mart esta"lished two "eachheads as learning
vehicles for esta"lishing an Asian presence. /rom '((7 to '((9, Wal-
Mart agreed to sell low-priced products to two :apanese retailers, Ito-
;o#ado and ;aohan, that would mar#et these products in :apan,
Singapore, <ong =ong, Mala!sia, .hailand, Indonesia, and the
>hilippines. .hen, in '((5, Wal-Mart formed a 4oint venture with the -.
>. >o#phand -ompan!, a .hailand-"ased conglomerate, to open three
?alue -lu" mem"ership discount stores in <ong =ong.
@nce Wal-Mart had chosen its target mar#ets, it had to select a mode of
entr!. It entered -anada through an ac2uisition. .his was rational
"ecause -anada was a mature mar#etadding new retail capacit! was
unattractiveand "ecause the strong economic and cultural similarities
"etween the U.S. and -anadian mar#ets minimized the need for much
learning.
/or its entr! into Me+ico, Wal-Mart too# a different route. ,ecause there
were significant income and cultural differences "etween the U.S. and
Me+ican mar#ets a"out which the compan! needed to learn, and to
which it needed to tailor its operations, a greenfield start-up would have
"een pro"lematic. Instead, the compan! chose to form a %8-%8 4oint
venture with -ifra, Me+ico1s largest retailer, counting on -ifra to provide
operational e+pertise in the Me+ican mar#et.
In 3atin America, Wal-Mart targeted the region1s ne+t two largest
mar#ets* ,razil and Argentina. .he compan! entered ,razil through a
4oint venture, with 3o4as Americana, a local retailer. Wal-Mart was a"le
to leverage its learning from the Me+ican e+perience and chose to
esta"lish a 68-58 4oint venture in which it had the controlling sta#e. .he
successful entr! into ,razil gave Wal-Mart even greater e+perience in
3atin America, and it chose to enter Argentina through a wholl! owned
su"sidiar!. .his decision was reinforced "! the presence of onl! two
ma4or mar#ets in Argentina.
Question 1-
Discuss the strategies used by Wall Mart to enter into the global
market.
Question 2-
Why wall Mart used diferent mode of entry to enter in Canada
Me!ico and "atin #merica$
Question %-
Why Wall Mart delayed its decision to enter in the #sian
Market$
Minicase: Chocolatiers Look to Asia for Growth
[2]
<umans first cultivated a taste for chocolate 9,888 !ears ago, "ut for
India and -hina this is a more recent phenomenon. -ompared to the
sweet-toothed Swiss and ,rits, "oth of whom devour a"out 75 l"s &'' #g)
of chocolate per capita annuall!, Indians consume a paltr! %.A oz and the
-hinese, a mere 9.% oz &'6% g and (( g, respectivel!).
Western chocolate ma#ers hungr! for growth mar#ets are "an#ing on
this to change. According to mar#et researcher Euromonitor
International, in the past % !ears, the value of chocolate confectioner!
sales in -hina has nearl! dou"led, to BA'9.' million, while sales in India
have increased 65C, to B9(9.A million. .hat is a pittance compared to
the nearl! B9%-"illion European chocolate mar#et. ,ut while European
chocolate sales are growing a mere 'C to 7C annuall!, sales in the two
Asian nations show no sign of slowing.
European chocolatiers are alread! ma#ing their mar# in -hina. .he most
aggressive is Swiss food giant DestlE, which has more than dou"led its
-hinese sales since 788' to an estimated B('.% millionstill a relativel!
small amount. It is closing in on Mars, the longtime mar#et leader,
whose sales rose 58C during the same period to B(6.F million.
0reen .ea =isses
DestlE1s =it =at "ar and other wafer-t!pe chocolates are a "ig hit with the
-hinese, helping the Swiss compan! swipe mar#et share from Mars.
Ital!1s /errero is another up-and-comer. It has "oosted -hina sales
nearl! F(C since 788', to B%%.6 million, drawing !ounger consumers
with its =inder chocolate line, while targeting "ig spenders with the
upscale /errero Gocher "rand. Indeed, its products are so popular that
the! have spawned -hinese #noc#offs, including a /errero Gocher loo#-
ali#e made "! a -hinese compan! that /errero has sued for alleged
counterfeiting. $espite those pro"lems, the privatel! owned /errero has
steadil! gained mar#et share against third-ran#ed -ad"ur! Schweppes,
whose -hina sales have risen a modest 76C since 788', to B%A.6 million.
Until now, U.S.-"ased <ershe! has "een a relativel! small pla!er in
-hina. ,ut the compan! has adopted am"itious e+pansion plans,
including hoo#ing up with a local partner to step up its distri"ution and
introducing green-tea-flavored <ershe! =isses to appeal to Asian tastes.
Attractivel! >ac#aged
Underscoring -hina1s growing importance, Switzerland1s ,arr!
-alle"aut, a "ig chocolate producer that supplies man! leading
confectioners, opened a factor! near Shanghai to alleviate pressure at a
Singapore facilit! that had "een operating at capacit!. .he compan! also
inaugurated a near"! -hocolate Academ!, 4ust ' month after opening a
similar facilit! in Mum"ai, to train local confectioners and pastr! chefs
in using chocolate.
Unli#e -hina1s chocolate mar#et, India1s is dominated "! onl! two
companies* -ad"ur!, which entered the countr! 68 !ears ago and has
nearl! 68C mar#et share, and DestlE, which has a"out 97C mar#et
share. .he two have prospered "! luring consumers with attractivel!
pac#aged chocolate assortments to replace the traditional dried fruits
and sugar confectioneries offered as gifts on Indian holida!s, and "!
offering lower-priced chocolates, including "ite-sized candies costing
less than 9 cents.
.he confectionar! companies have "een less successful, though, at
developing new products adapted to the Indian sweet tooth. In 788%,
DestlE launched a coconut-flavored Munch "ar, and -ad"ur! introduced
a dessert called =ala#and -rHme, "ased on a popular local sweet made of
chopped nuts and cheese. ,oth sold poorl! and were discontinued.
Q.1 Why global established retailers chosen #sian markets for
their growth$ &ow 'estle and Cadbury got com(etiti)e
ad)antage in *ndia$
Q. 2 What were main reasons of failure of two (roducts
launched by DestlE I -ad"ur! in 788%.
J.9 <ow 0lo"al chocolate companies mar#eting strategies differ in
India I -hinaK $iscuss wh! the! adopted different strategies in these
two mar#ets.

Minicase: Compter !e"boar#s Abroa#: $W%&T' (erss
$W%&T)
An!one who has traveled to Austria or 0erman! and has used computers
therein c!"ercafes, offices, or at the home of friendswill instantl!
recognize this dimension of LdistanceM* their keyboards are not the
same as ours. @nce-familiar letters and s!m"ols loo# li#e strangers, and
new #e!s are located where the! should not "e.
+2,
Specificall!, a 0erman #e!"oard has a JWEG.N la!out, that is, the L;M
and LNM #e!s are reversed in comparison with the U.S.-English JWEG.;
la!out. Moreover, in addition to the LnormalM letters of the English
alpha"et, 0erman #e!"oards have the three umlauted vowels and the
Lsharp-sM characters of the 0erman alpha"et. .he Less-tsettM &O) #e! is to
the right of the zero &L8M) #e!. &,ut this letter is missing on a Swiss-
0erman #e!"oard, since the LOM is not used in the Swiss variation of
0erman.) .he u-umlaut &P) #e! is located 4ust to the right of the L>M #e!.
.he o-umlaut &Q) and a-umlaut &R) #e!s are to the right of the L3M #e!.
.his means, of course, that the s!m"ols or letters that an American is
used to finding where the umlauted letters are in the 0erman version
turn up somewhere else. All this is enough to "ring on a ma4or headache.
And 4ust where the hec# is that LSM #e!K E-mail happens to depend on it
rather heavil!, "ut on the 0erman #e!"oard, not onl! is it D@. at the top
of the L7M #e! "ut it also seems to have vanished entirel!T .his is
surprising considering that the LatM sign even has a name in 0erman* der
Klammeraffe &lit., LclipU"rac#et mon#e!M). So how do !ou t!pe LSMK ;ou
have to press the LAlt 0rM #e! plus LJM to ma#e LSM appear in !our
document or e-mail address. Gead! for the E+cedrinK @n most
European-language #e!"oards, the right LAltM #e!, which is 4ust to the
right of the space "ar and different from the regular LAltM #e! on the left
side, acts as a L-omposeM #e!, ma#ing it possi"le to enter man! non-
AS-II characters. .his configuration applies to >-sV Mac users will need
to ta#e an advanced course. @f course, for Europeans using a Dorth
American #e!"oard, the pro"lems are reversed, and the! must get used
to the weird U.S. English configuration.