Brief Summary of the Case:
The case explores the expansion of the world’s largest retailer, Wal-Mart,
internationally. Wal-Mart began its international expansion in the early 1990s
to continue its growth. The company began with a joint venture in Mexico.
Initially, the company tried to implement strategies like those that had proved
so successful in the United States, however, Wal-Mart quickly realized that to
succeed, it would have to adapt to local demands. The company hired local
managers who understood the Mexican culture and buying preferences and
changed its strategies accordingly. Wal-Mart continued its international
expansion by establishing operations in Europe and South Korea, but in these
markets, the company had less success. Not only did Wal-Mart compete headto-head with established retailers, but its product offerings did not match the
needs of consumers. Wal-Mart has had much greater success in China where it
has found some similarities between the shopping habits of the Chinese and
Americans.
1. Do you think Wal-Mart could translate its merchandising strategy wholesale
to another country and succeed? If not, why not?
No, I don’t think Wal-Mart could translate its merchandising strategy wholesale
to another country and succeed because their merchandising strategy is based
on the methods and culture of retailing of the United States. Also, as we
learned in the text many countries and have different cultures and backgrounds
so the company moving into a new country needs to adapt to the differences
and find the right technique that works in that market as opposed to sticking
with the original strategy in its country. Basically, Wal-Mart cannot just go into
any country and simply implement the same strategy used in the U.S. for that
new country without doing some research first to see if it would work. Most
often than not, it will not and that is because it is a completely new
environment and culture.
2. Why do you think Wal-Mart was successful in Mexico?
Wal-Mart was successful in Mexico because they adapted their merchandising
strategy to the Mexican culture by doing research on the retail market in
Mexico, their shopping behavior, and the local cultural norm. This helped WalMart learn the unique shopping behaviors of the Mexicans, which allowed them
to rejuvenate their strategies accordingly. For example, Wal-Mart noticed that
most of the Mexican customers did not own a car unlike most of the American
customers and they found that the Mexican consumers preferred buying
fresher since they usually cooked the food that day; therefore, they stocked
their stores with more produce and meats. Basically, adaption is the key to
survival in different environments and economies.
3. Why do you think Wal-Mart failed in South Korea and Germany? What are
the differences between these countries and Mexico?
Wal-Mart failed in South Korea and Germany because they didn’t adapt to the
culture as well as they did with the Mexican culture. In addition, the products
that Wal-Mart offered weren’t up to the standards of South Korean and
German culture. The cultures that are in countries like Germany, and South
Korea have a preference of high-end and higher-quality merchandise than what
was offered by Wal-Mart. The low-price strategy is fantastic in some cultures;
however, it is gratuitous in a place where paying more is accepted. Therefore,
the key difference between these countries and Mexico is that Mexico accepts
the low-price strategy.
4. What must Wal-Mart do to succeed in China? Is it on track?
For Wal-Mart to succeed in China, it must do proper research to gain an
understanding of the consumers and their shopping culture. To ensure its
success in the country, Wal-Mart has strayed from its traditional strategy to
embrace the notion of unions. This decision has led the company to purchase a
stake in China’s Trust-Mart chain, which should allow Wal-Mart to expand even
further. Wal-Mart now considers China its most important growth market. With
that, Wal-Mart does appear to be on track in the country. They just need to
continue maintaining and adapting to the Chinese culture by meeting the needs
of the consumers.
5. To what extent can a company such as Wal-Mart change the culture of the
nation where it is doing business?
A company such as Wal-Mart can change the culture of the nation where it’s
doing business only to a limited extent by providing and offering different
products and goods to its consumers; therefore, changing the way they shop
and buy merchandise. However, most countries such as China already had
successful discount chains like Trust-Mart when Wal-Mart entered the market
so the culture wasn’t changed much and in Mexico, consumers weren’t
changed by Wal-Mart either but instead by the global economy. Lastly, WalMart wasn’t even successful or able to change the culture of Germany and
South Korea where consumers preferred higher quality merchandise.
Therefore, Wal-Mart has the ability to change the culture of some nations but
it’s still very limited as proven by the countries we read about in the text.