Myeshia Brown
Adam Jorgensen
Mike Moritz
Michelle Smith
T-Th 11AM
May 13, 2010
WAL-MART
WHERE DOES THE COMPANY OPERATE INTERNATIONALLY?
Mexico was Wal-Mart’s first foray into international expansion. In 1991, they formed a joint
venture with Cifra stores, eventually buying Cifra altogether in 1997. They changed the name
to Wal-Mart in 2000. In 2006, they got permission to open the first Wal-Mart Bank in Mexico,
which opened in 2007.
Argentina: They opened a Sam’s Club in Avellaneda, then a Supercenter shortly thereafter.
They purchased Auchan stores, and later added Changomas, Mi Changomas and Changomas
Express to their roster.
Brazil: as Wal-Mart, Todo Dia, Bompreco, and Sodae stores, then amalgamated into one name –
“Wal-Mart: Nova marca, nova slogan” – less than a year ago.
Canada: Bought the Woolco chain in 1994 and changed the name immediately.
Central America: Wal-Mart operates in Guatemala, El Salvador, Honduras, Nicaragua and Costa
Rica under one umbrella.
Chile: Wal-Mart bought Distribution y Servicio stores, shopping centers and financial centers,
Hypermarkets, Hiper de LIDER, Express de LIDER, Bodega Acuenta and Ekono.
China: In 1996, they opened a Wal-Mart Supercenter and Sam’s Club in Shenzen, and then
bought the Trust-Mart chain in 2007. They also opened Smart Choice stores in 2009.
Japan: They bought a 37% share of Seiyu stores in 2002.
India: They operate as BestPrice Modern Wholesale stores.
United Kingdom: They bought the ASDA supermarket chain in 1999. They still operate as ASDA.
http://walmartstores.com/AboutUs/259.aspx?p=246
http://walmartstores.com/AboutUs/243.aspx
http://www.walmartbrasil.com.br/
http://walmartstores.com/AboutUs/266.aspx?p=246
http://walmartstores.com/AboutUs/272.aspx?p=246
http://walmartstores.com/AboutUs/8935.aspx?p=246
http://www.businessweek.com/magazine/content/05_09/b3922073.htm
http://walmartstores.com/AboutUs/274.aspx?p=246
http://walmartstores.com/AboutUs/276.aspx?p=251
(Brown, Jorgensen, Moritz, Smith 2)
http://walmartstores.com/AboutUs/275.aspx?p=246
http://walmartstores.com/AboutUs/246.aspx
Wal-Mart Stores, Inc., Company Profile, September 2009, Datamonitor USA, New York, NY
(Brown, Jorgensen, Moritz, Smith 3)
HOW LONG HAS IT BEEN DOING BUSINESS INTERNATIONALLY?
Wal-Mart has been doing business internationally since 1991, when it partnered with Cifra
stores in Mexico; WalMart International was founded in 1993. Started in Arkansas in 1962, the
Wal-Mart Corporation is, at present, active in 14 different countries. It has been involved in
international banking since 2006.
http://walmartstores.com/AboutUs/246.aspx
http://walmartstores.com/AboutUs/243.aspx
(Brown, Jorgensen, Moritz, Smith 4)
WHAT TYPE OF BUSINESS IS THE COMPANY DOING INTERNATIONALLY (I.E.,
RETAILING , MANUFACTURING, DISTRIBUTING, ETC.)?
While Wal-Mart may be best known for being the largest grocery retailer in the United States,
its most productive business is distribution…and its one and only customer is Wal-Mart. WalMart’s distribution network was key to its success and its place at the top of the retail heap.
Yet, for all of the publicity, Wal-Mart holds only 4% of the world’s retail presence.
Using their “retail-link”, which has a database almost twice that of the IRS, Wal-Mart places
distribution “hubs” in different areas of the country (and world), and places stores not (always)
in densely-populated areas and cities, but in rural communities near its distribution centers.
With a wide variety of products and the forward-thinking use of information technology to keep
up on supply and demand, Wal-Mart has an advantage over other retailers who used a more
traditional growth strategy. They have the world’s largest private fleet of satellites, which
handle everything from product distribution to air conditioning temperature.
Criticisms against Wal-Mart include that they use unfair business practices to close smaller,
competing businesses. Sometimes this is true, but many times it is not. Buying goods for lower
prices leaves more money for a consumer to spend, including elsewhere.
http://www.pbs.org/newshour/bb/business/wal-mart/unique.html
http://www.youtube.com/watch?v=S_LN50mJGSo&feature=related (Penn & Teller video)
http://www.iwim.uni-bremen.de/publikationen/pdf/w024.pdf
(Brown, Jorgensen, Moritz, Smith 5)
WHY DID THE COMPANY CHOOSE TO GO INTERNATIONAL?
Wal-Mart International, formed in 1993, bears the slogan: “Saving people money so they can
live better – worldwide”. Wal-Mart now operates over 4,000 retail locations and employs well
over a quarter of a million people worldwide. Of course, it was a business decision first and
foremost. They could fulfill a need in some places; they could improve the service and
profitability of existing chains in others. The benefits to the communities, both local and global,
are a welcome side-effect. In most markets, Wal-Mart’s international expansion strategy has
been successful for both the company and the community in which they do business.
http://walmartstores.com/pressroom/FactSheets/#InternationalOperations
http://walmartstores.com/AboutUs/246.aspx
http://walmartstores.com/pressroom/news/9750.aspx
(Brown, Jorgensen, Moritz, Smith 6)
WHAT WAS THE COMPANY ’S MARKET ENTRY STRATEGY (HOW DID IT ENTER A
PARTICULAR INTERNATIONAL MARKET?
When Wal-Mart decided to go into Central America, they repeated their Mexico strategy: find a
partner for the initial investment, buy the partner (or partners) out, and rebrand. Wal-Mart
partnered with the Dutch company Royal Ahold NV, the family who owned majority shares in
one of the region’s biggest supermarkets, La Fragua, and the Corporation de Supermercados
Unidos. Wal-Mart, a few years later, bought Royal Ahold’s 33%, bringing its ownership up to
51%.
It is interesting to note that the company that bought the partnership was not our Wal-Mart
that we see on Carson Street, but rather Wal-MEX, the Mexican arm of the Wal-Mart
Corporation.
http://walmartstores.com/pressroom/news/5384.aspx
http://goliath.ecnext.com/coms2/gi_0199-5479011/Wal-Mart-buys-big-in.html
(Brown, Jorgensen, Moritz, Smith 7)
WHAT RISKS DOES THE COMPANY FACE BY OPERATING INTERNATIONALLY?
o
o
Answer
Citation (source)
Q.What risks does the company face operating international?
A.Why some of us are all for wal-mart and like to go there not everyone feels the same way.
Wal-Mart tried to enter Indonisia but soon had to leave after rioters came and destroyed one of
their centers. They also tried South Korea but were unsuccessful because of their location they
had chosen, it was to far for people to commute back and forth. Another problem is that in
Germany it is forbidden to price goods below their cost which made them loose a substantial
amount of money. Wal-marts low value proposition doesnt go by with everyone. With China
Wal-Mart will have to do more than just offer them their low prices, they would rather them
offer some products that may be a little more pricey. They dont care about the price initially
they are more concerned about brand and suggest that they have there own brand. In order for
them to go international they must team up with someone already in that area.
http://www.xlpresents.com/RetailMerchandiser_WalMart.pdf
http://www.iwim.uni-bremen.de/publikationen/pdf/w024.pdf
(Brown, Jorgensen, Moritz, Smith 8)
WHAT ARE THE EFFECTS OF FOREIGN GOVERNMENT REGULATION ON THE
COMPANY?
o
o
Answer
Citation (source)
Q.What are the effects of forign government regulation?
A.There are certain regulations in different countries. In germany they have regulations that do
not allow anyone to price goods that are lower than there actual cost. Regulations like this can
cause them to lose profits. There are also new retail regulations for big businesses that state
they must become eco friendly, they call green initiatives.
http://www.xlpresents.com/RetailMerchandiser_WalMart.pdf
http://findarticles.com/p/articles/mi_hb3042/is_9_44/ai_n29375400/
(Brown, Jorgensen, Moritz, Smith 9)
WHO ARE THE MAJOR COMPETITORS YOUR COMPANY FACES IN THE
INTERNATIONAL MARKETPLACE? WHAT STRATEGIES IS THE COMPANY UTILIZING
TO COMPETE EFFECTIVELY INTERNATIONALLY ?
Carrefours, headquartered in France, is Wal-Mart’s biggest indirect competitor. Next is WalMart’s former partner Royal Ahold of the Netherlands, and direct competitor Kroger, USA. In
the USA, Target is thought to be Wal-Mart’s biggest competitor. On the global stage, however,
the reality is far different from perception: Target is not even in the top ten.
Germany was going to be to Wal-Mart what Mexico was to Central America: a gateway. But
that didn’t happen. Germans didn’t like Wal-Mart. They didn’t like the enforced cheer required
of its employees. They didn’t like the locations of the stores. There was huge competition
against Wal-Mart by long-established local companies, and the tendency toward nationalism is
strong there.
In South Korea, they misread the market: yes, Korean housewives, who are an economic force
to be reckoned with there, wanted discounts, but they wanted it on things like fresh foods –
very little packaged foods are consumed there, compared with the US. Wal-Mart couldn’t
compete, and after a ten million dollar loss, sold the Korean stores to Korean retailer Shinsegae.
http://internationaltrade.suite101.com/article.cfm/walmart_learns_a_lesson
http://www.shinsegae.com
(Brown, Jorgensen, Moritz, Smith 10)
HOW DO CURRENCY FLUCTUATIONS AND EXCHANGE RATES AFFECT YOUR
ORGANIZATION?
Wal Mart is a company that deals greatly in the international market. More specifically, WalMart trades greatly with China. Wal-Mart purchases 27 billion dollars of its inventory from
China or companies that deal with china. The 2010 exchange rate between the U.S. dollar and
the Chinese Yuan was 1 Dollar = 6.8 Yuan. Wal-Mart looks to take advantage of the relatively
cheap labor and inventory rates caused by this exchange rate. However, with the continuation
of the devaluation of the American dollar could make Wal-Mart more vulnerable to profitmargin losses due to the current currency fluctuations in the economy. The devaluation of the
American dollar has also led Wal-Mart to stop doing as many of its operations in the U.S. and
moved them to China, as well as Central and South America, where the exchange rates are
more profitable.
"XE - Universal Currency Converter." XE - The World's Favorite Currency and Foreign Exchange
Site. Web. 12 May 2010. <http://www.xe.com/ucc/convert.cgi>.
2010, In January. "Stock:Wal-Mart (WMT)." Main Page. Web. 12 May 2010.
<http://www.wikinvest.com/stock/Wal-Mart_%28WMT%29>.
(Brown, Jorgensen, Moritz, Smith 11)
HOW MUCH REVENUE IS YOUR COMPANY GENERATING THROUGH INTERNATIONAL
OPERATIONS ? HOW HAS IT BEEN TRENDING FOR THE PAST 5 YEARS? (I
RECOMMEND USING A CHART /GRAPH TO HELP ANSWER THIS QUESTION .)
Wal-Mart as of 2009 was the largest public corporation in the world. Its status in the global
business world is matched by none, generating huge revenues and profits in the international
market. Its business' in 14 different countries outside of the U.S. has led it to 21.3% of its total
revenue to the tune of over 100 billion dollars. Its revenue growth has become increasingly
stagnant, starting with a 11% revenue growth in 2005 to just 6% in 2010. 6% growth is still a
number that many organizations in today's global economy that many would dream to achieve
and Wal-Mart feels like they have lost.
"Wal-Mart Stores Revenue Growth (WMT)." YCharts - Fundamental Stock Charts. Web. 12 May
2010. <http://ycharts.com/companies/WMT/revenue_growth>.
http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irolnewsArticle&ID=1345359&highlight
(Brown, Jorgensen, Moritz, Smith 12)
OVERALL, HOW EFFECTIVE IS YOUR ORGANIZATION AT INTERNATIONAL
OPERATIONS ? PLEASE JUSTIFY YOUR ANSWER WITH YOUR OWN ANALYSIS .
The overall effectiveness of Wal-Mart on a global scale cannot be matched by any of its
competitors. Its profits are higher than 6 of its top competitors combined including Costco,
Sears, Target, and J.C. Penney. Its global strategy of low prices on everything from production
and manufacturing (its trading partners; Wal-Mart is not in the production/manufacturing
business) to the prices on the shelves of the stores has helped Wal-Mart create a stranglehold
on its place at the top of its market. It has more than 6 times the amount of stores worldwide
than that of Target. Its total profit margin of over 600 billion dollars a year makes it more than
just a successful company, but a dominating purchasing power. Its ability to outsource to China
(and other countries) allows them the ability to buy mass quantities at the lowest possible price
that its competitors cannot match. While some countries are beginning to question Wal-Mart's
near monopoly on its market, most countries accept and praise their arrival as Wal-Mart
employs millions world-wide at relatively high wages. Its global market strategy has been an
essential part of its growth and a main reason it is atop the international business ladder.
Walmart, At. "Walmartstores.com: Fact Sheets." Walmartstores.com. Web. 12 May 2010.
<http://walmartstores.com/pressroom/FactSheets>.