FACULTAD DE NEGOCIOS

CARRERA DE ADMINISTRACION Y NEGOCIOS INTERNACIONALES

WALMART
Group members:
Alexia Castaeda Marquina
Perla Apolitano Corrales
Sonia Chvez Valeriano
Yohana Jurez Chunga

Course:
Global Market Perspectives

Professor:
Edwin Eduardo Sagastegui Toribio

TRUJILLO PER
2015-1

Contenido

1. Criteria for selecting a country.......................................................................3

2. Mistakes made in the process.......................................................................5
3. Constructive criticism of the actions taken.....................................................6

WALMART
By 2004, Wal-Mart, the world's largest company operated discount stores,
neighborhood stores, hypermarkets (Wal-Mart Super centers) and membership
warehouses (Sam's Club). In the 1990s Wal-Mart started to expand abroad. It entered
China in 1996. In China, Wal-Mart operated and aggressively expanded its retail
business in partnerships, joint venture partners and suppliers.
China poses a huge challenge for Walmart as there exist cross-cultural diversities
among the Chinese population. Walmart needed to understand the Chinese market
first and then think of a business model that can fit the country.
Expansion of Wal-mart in China
1996-2004: Slow Growth

Wal-mart is not flexible and doesnt adapt to the China market

Underdeveloped Infrastructures and IT Systems in China

1. Criteria for selecting a country

1.1.
Market size
The number of individuals in a certain market who are potential buyers and/or
sellers of a product or service. Companies are interested in knowing the
market size before launching a new product or service in an area.
China is a lucrative market for western retailers due to its huge population,
booming middle class and rising disposable incomes.
1.2.
Economy
China is the second largest economy in the world.
1.3.
Consumer Behavior
Consumer Behaviour is the study of individuals, groups, or organizations and
the processes they use to select, secure, use, and dispose of products,
services, experiences, or ideas to satisfy needs and the impacts that these
processes have on the consumer and society.
Chinese consumers are more inclined towards tailor-made products and a
shopping environment that reflects local preferences.
More than prices, Chinese buyers are concerned about the authenticity and
quality of products.
1.4.

Retail Market Growth

An increase in the demand for a particular product or service over time. Market
growth can be slow if consumers do not adopt a high demand or rapid if
consumers find the product or service useful for the price level.
China is one of the fastest growing retail markets in the world. The Chinese
retail market was estimated at $680 billion for 2006, making it the world's
seventh largest.
1.5.
Competition Environment
A competitive environment is the dynamic external system in which a business
competes and functions. The more sellers of a similar product or service, the
more competitive the environment in which you compete.
Wal-Mart is up against French retailer Carrefour in its bid for Trust-Mart.
Carrefour currently has more stores in China than Wal-Mart, and both retailers
must compete with large Chinese retailers, like China Resources and
Shanghai Brilliance Group.
1.6.
Industry Structure
An explanation of the operations and relationships within a given industrial
sector.
For example: In China
- The market is largely fragmented.
- Chinese retailers are regional.
- The sizes of Chinese retailers are relatively small.
- Huge opportunities for foreign retailers.
1.7.
Political Environment
Government actions which affects the operations of a company or business.
These actions may be on local, regional, national or international level.
Business owners and managers pay close attention to the political
environment to gauge how government actions will affect their company.
For example: In China
- Socialist market economy with Chinese characteristics.
- Focus on reforms and economic development.

2. Mistakes made in the process

2.1.
The main mistakes in China
Walmart after 18 years in the Asian giant, acknowledged that cultures between
America and Asia are very different.
Totally different cultures, lifestyle, consumer habits and how to transport were
the main reasons why Walmart failed.
Ignorance of the market.

Limited space to store basic consumer staples were paramount and nothing
served them buy more great products if not could store these properly.
Walmart did not understand that a business model will not always be
successful if it does not meet the needs of our customers
2.2.
The main mistakes in Brazil and Argentina
According to Roland, the main mistakes made in Brazil and Argentina were:
Walmart brought administrative staff of the US and didn't use the local

talent of Brazil and Argentina.

Walmart not done a good job in product mix; in the selection of offer for
consumers, Walmart thought they were going to eat the same as in
America. This was regarded as the worst mistake

2.3.
The main mistakes in Germany
Ignorance of the market
Walmart thought that the American marketing could simply extrapolate to the
European country. In addition, they were wrong in the procurement policy
spaces and the acquisition of staff.
Walmart's success in the US and other markets is the constant expansion that
allows its enormous purchasing power. In Germany it is very difficult to achieve
this rate of expansion, this is dedicated to that a series of legal restrictions.
Scheduled failure
Bought 21 branches of the consortium Wertkauf, a successful chain that
secured huge profits. Only a year later made an acquisition that would cost the
German post. Walmart pay 560 million euros for 75 supermarkets "spar"
regular fame and located in hard to reach places. This acquisition was one of
the main causes of the accumulated by the company amounting to billions of
dollars losses.
Where it was
He despised the local experience. Tiaras Rob was the director of 200 stores in
the United States and was also a director at Walmart - Germany until 2001. In
2001 was director Volker Barth, a German, but in that time the company
already had massive conflicts with unions and notoriety in German public
opinion. Personnel policy of Walmart held several times headlines.
The German court banned the company implement its code of conduct for its
employees. Also the German court denied the consortium the possibility of
putting a phone line where workers could "betray" violations of the code of
conduct by colleagues. Even the ban on romantic relationships between staff
were classified as absurd by the German court.

3. Constructive criticism of the actions taken

3.1.

Do not assess the target market, Walmart

Thought that China, being the world's second largest economy, will have the
same characteristics as the US market, the same characteristics of the
consumer who has purchasing power. In this case Wal-Mart should develop an
intense and indulge market research, he must study the cultural dimensions
that presents this country. Besides not having in their strategic planning
contingency plans in which case things went well.

3.2.

Working with their people

Another mistake he made was to bring its administrative staff to manage new
stores in China, Brazil and Argentina, after it was found to have many frictions
between top management and employees. In this case we had to include
these countries in senior management personnel, since what is sought is a
friendly, peaceful working environment where senior management share the
same beliefs, customs colleagues.

3.3.

Diversification of the concept of Wal-Mart

For many countries is signified quality, product diversification, high prices are
good quality etc. but in many cities in China Wal-Mart how cheap is associated
with poor quality, in other Chinese shops opposite happens products of high
prices associated with good quality.

3.4.

Wal-Mart did not adapt to the culture of their future consumers

It was based on providing local products made in China, but has failed to keep
pace with the demand of consumers looking for something different and tastes
of this market It is more sophisticated and demanding. In this case Wal-Mart

had to invest in projects on the trend of Chinese consumer behavior before

purchasing a product and identifying characteristics such as Chinese
consumers are more inclined towards products tailored.

3.5.

Altered inventory statement

The company Walmart has started shopping in large quantities without having
sales at the same level. Walmart inventories affected since the information
reported was not real.

Proposal: For a company to be sustainable over time have to climb a series of

steps and the first is legal. The company has to conduct an internal audit,
which help regulate those bad declared inventory.

3.6.

Overcoming sales

As we have analyzed in China consumers lead very busy lives it is why we do

not have enough to go to a supermarket and buy what they need time and
prefer to buy in a nearby area.

Proposal: Implement ads on the train where products are promoted with their
barcodes that way can take the order through an application from the phone.

3.7.

Identification of target cities

Walmart managers in China should study the different types of consumers that
exist in China, every city has a custom and different language (all Chinese
speak Mandarin and Cantonese). Identifying the type of consumer in each city
the company will realize that now the Chinese culture demands especially food

products (fruits and vegetables) of the highest quality because for them it is a
symbol of wealth.

Proposal: Sell products according to the city to which they are addressed for
example in Hong Kong and Macao to carry a portfolio of more specialized
products and according to their lifestyle because in these two cities the
wealthiest Chinese population is concentrated.

In the rest of the cities leading in offering products at the same prices that are
cities where the majority of the population are middle class people.

3.8.

Technology implementation

Walmart is one of the largest chains of supermarkets world, has a broad

portfolio of products offered and yet all these have a place within the
establishment.
Proposal: Through internet sales of some appliances, the company could
reduce storage costs and would not work with high product in stock. Having
the opportunity to sell to several cities simultaneously and with less human
resources.