Walmart around the World

Question 1.
We assume you have already been familiar with Walmart's sources of
competitive advantage in other classes or references. Could you summarize
Walmart's competitive advantages in U.S. and its business model?
We have studied before the supply chain of Walmart and how it led the success
in America. We believe Walmart's success accounts its greatest portion for its excellent
operational management, which is in other sense its competitive advantage.
First of all, the business strategy of Walmart is "Every Day Low Price (EDLP
strategy)", which attracts customers by offering the products with the lowest price. Its
fuctional strategies are exceptionally well-aligned to EDLP. Thus their strategies are
strategically fit.
In terms of the supply chain, Walmart shows an efficient supply chain. It has
relatively little variety of products (less customized), longer production lead-times, high
set-up costs, and larger batch sizes that allow the firms to supply at a low unit cost. The
six major drivers (facility, inventory, transportation, information, sourcing, and pricing)
and their roles are also critical in creating this characteristic. For instance, Walmart has
purchased and been operating its own logistics system (transportation driver), and could
take advantages in terms of inventory costs. All the supply chain factors of Walmart
mesh perfectly well together to lower its supply costs and thus enable the EDLP strategy.

Question 2.
Evaluate Walmart's globalization strategy over the last two decades. Where
did Walmart struggle? Where did it do well? Can location characteristics
explain the differences in Walmart performance? What are the location
characteristics that affect its performance?
Our team has summarized whether Walmart has struggled or succeeded in
different countries (we scored them in a 5 points scale), and the characteristics of these
locations on the table below. Some explanations are also followed by.
Country

Success

Location Characteristics

/Region

Score

/Walmart's strategies

Mexico

Used Mexican center and brought EDLP strategy into the

country

NAFTA helped the extension

Cheap labor force was available

Canada

Argentina

Qucikly changed mistake

Retained former employees

Acquired poorly managed company

Similar to Walmarts US stores but differentiated

W/O local partner

Expanded using smaller stores; similar with Mexico and

Brazil

Brazil

China

Used US-based format

Slow to adapt to local tastes in Brazil

Covered up both northeastern and southern part

Launched middle market targeted middle class

Competitive Market

Urban intensive life

Missed target positioning

Acquired poor chains

Price oriented tough competition and customers high

loyalty on existing market

Germany

South
Korea

UK

Japan

Central
America
Chile

Africa

Suppliers strong loyalty on existing competitors

Strict regulation on pricing and location

Strong influential labor union

Cultural difference in consumers opposed to U.S.

Service-oriented

Valued luxurious image

Customer focused on different values

Acquired retailers that had similar business model to U.S.

Competitive Market

Unsuitable starategy (Low Price with Low Quality)

Acquired major retailer

Allowing stores local identity

Acquired successful domestic payer

Local partner has similar customer and operations to U.S.

Local partners other business entice customers

Operated under Massmart

Loose competition

Lack of infrastructure

Corrupted government

Hence, we believe the locations' distinctive social cultures (market, orgnizational,

consuming behaviors), geographical features (residential), political factors (regulations,

trading barriers), and other retail industry status all affected the performance of
Walmart.

Question 3.
What are your team's recommendation to a company which is researching any
global operations in the retail industry?
Our recommendations to global operations in the retail industry are shown below
in regarding to the four location characteristics that affected the performance of
Walmart.
Characteristic

Detailed recommendations

s
Social
Cultures

Consuming and organizational behaviors differ greatly. It is

hence highly recommended to deploy a thorough research on the

consumption patterns, and hire local employees. (ref. German case)

Population density and accessibility must all be considered.

Geographical

Industries should be located in the areas within the local customers

Features

interest, and with high accessibility to distribution systems and

infrastructure.

Local regulations and international agreements affect operation

Political

and management. It must be checked whether international treaties

Factors

and local regulation are favorable to entry and operation. (ref. Mexico
case)

If the industry status is similar to that of domestic market, it

Industry

could possibly retain its core competencies by acquiring similar

Status

companies. (ref. UK case) If not, the best option seems to be acquiring a

local network or company with high performance records.