The Success of Wal-Mart Internationally
The Wal-Mart stores were branded as Walmart ever since 2008 and Wal-Mart before 2008.
Wal-Mart is an American multinational retailer organization that operates a chain of big disco unit branches and warehouses stores. This organization is the world’s 18th biggest public organization in accordance to the Forbes global 2000. The organization has over 2 million employees and is the biggest retailer in the world. The Walton family controls Wal-Mart Company and has a 48% ownership stake in the company. The company like many other faces challenges in its overseas investments due to several factors such as marketing and rising companies offering the same services ad goods thus bringing competition. Some of the places where the Wal-Mart company has experienced challenges are in china and Germany.
The challenges faced by Wal-Mart in these two countries shall be discussed and most importantly the solutions that the company used to overcome the challenges and maintain a steady market in these overseas countries (Johnson 5). In china, Wal-Mart has faced various challenges, Wal-Mart is used to be the most successful retailer in the world and not being in second positions or second favorite as it was the case in the China’s market. Wal-Mart is faced with stiff problems in it’s seek to conquer the market of china. The retail market of china is at an estimate of 860 billion dollars as in the year 2006, this makes it the seven largest. In this retail economy, Walmart is only ranked at position eleven on the main stores in china and with sales of 9.9 billion Yuan.
This is behind other international retail companies like the Taiwan’s trust mart with 13.2 billion Yuan, France’s Carrefour with 17.4 billion Yuan to name but a few. In the effort to come up with solutions of this market completion, Walmart faced limitations that narrowed their stores to specific cities and locations. However, these restrictions did not go for long as the company expanded other 25 stores in china in October 2006. The management of Wal-Mart had to come up with new strategic imperatives in order to find lon lasting solutions to the above challenges(Anita 45).
In the search for success in china, has used three general strategies namely the go global, go up-market and the go native. On the go global strategic imperative, this was a strategy that was aimed at solving the issue of the less number of stores in that were facing competitors from other established and rising stores in china, as a result, the management of the Wal-Mart china had to create many stores across china as a general solution to the competitor’s issue. This would d result to the greater scrutiny of the fortunes of Wal-Mart in china market. The go native strategy was aimed at adapting to the Chinese market that had various groups of people; this was a strategy that was used by the Carrefour to succeed in the Chinese market. This was done in the food sector whereby the needs for the Chinese people were by far different from those of other customer in different parts of the world. They opted for fresh foodstuffs in the Wal-Mart stores in china.
The go up market strategy was aimed at the provision of good quality products at reasonably low prices. In china, the Wal-Mart officials have their eyes fixed at the middle class Chinese who can afford the goods and services at their stores. As a result, the Chinese market is booming in the middle class unless when the market was common for everyone (Johnson 13). Product was one of the fields where changes were needed. This was due to the fact that Wal-Mart discovered that the tastes of china were different from those back at the United States.
In fact, the favorites of the Chinese people were much different from any other part of the world that Wal-Mart had a branch. It was definite that that the “gallon jar of pickles” that had made the Wal-Mart famous for in the United States did not go down well among the Chinese people. In relation to the products, Wal-Mart discovered that the Chinese people wanted the leafy vegetables that could only be purchased locally. This was a major complication to a company tat was used to a strategy of global centralized purchasing. As a result, the WWal-Mart management had to change its purchasing strategy and had to obtain the products locally.
The vegetables part in the china’s Wal-Mart is twice bigger that that in the United States. Other products offered include the chicken feet, Ma- ling branded stewed pork ribs plus Gulong brand stored lettuce. This was a considerably different collection of products that was offered in the American society (Anita 46). Then government of china’s regulations plus the poor transport systems in china was a challenge. The Wal-Mart decided to source almost all its product in china to overcome the above problems. This applied in substances such as tobacco and alcohol that had to be bought locally in accordance to the china’s government regulations.
The Walmart easily maneuvered the transport, sourcing, and political challenges and in the year 2004, an approximate of 85% of the products in Wal-Mart china were supplied by around 14,000 Chinese suppliers (Anita 46).In Beijing, most of the retailers had failed to capture this location of Chinese market due to the change in the sourcing and the products methods. The solution to this by Wal-Mart was the opening up of SAM’S CLUB in this area that had a cost 18 dollars to become a member. In this location, Wal-Mart in china was successful according to a report by Tom McLaughlin the vice President of merchandising and marketing of the Wal-Mart china due to what he called as “high quality and low prices”. The Wal-Mart china also used the neighboring markets and supercenters market models as they were used in the United States to meet the needs of the customers. The result of the success in facing the problems in china was basically an organization that was much different and unique from that of the American Wal-Mart.
Operations in china despite the difference, the stores have managed to accumulate proved profits of 670million dollars in the year 2004. Germany is another location that Wal-Mart has faced challenges and has eventually come up with solutions that has seen a significant increase in its sales Anita 49).