WalMart Strategic Management Essay: Discussion On The Challenges Encountered By The Company
Wal-Mart was founded by Sam Walton in 1962; it was incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It started with a single store in Rogers, Arkansas in 1962 and has grown to what is now the worlds largest and arguably, the most emulated retailer. Some researchers refer to Wal-Mart as the industry trendsetter. Today, this retailing pioneer has annual revenues of over $500 billion, 11,000 stores and 2.2 Million associates worldwide. Wal-Mart is the biggest food retailer in the world and has a presence in several nations. In some nations (e.g. the US, Canada, China), Wal-Mart is a great success. However, Wal-Mart has failed in some countries (e.g. Germany, South Korea, Japan).
First: Describe Wal-Mart’s failure in Europe’s largest economy, then Japan and South Korea. Find the reasons and come up with improvement points.
Second: Wal-Mart’s experiences are also an example of the importance to adapt to culture when starting a business in a new country. Use Wal-Mart’s experiences in Germany, South Korea and Japan to illustrate some key principles related to product failure and product deletion.
To accomplish the task, you should apply Strategic Marketing in your case study. Key elements are:
- Obtain key information about the marketing problem
- Concentrate on suitable objectives
- Identify the relevant options available
- Select the appropriate course of action
- Establish a marketing plan to get the job done
The present Wal-Mart strategic management essay revolves around the concept of strategic marketing which includes different kinds of business and marketing careers that help a business organization to make the most profit with consumer understanding and demand. The strategic market mainly builds off knowledge in the market which revolves around customer-centred psychology. Strategic marketing techniques also include it several kinds of promotional strategy, research on markets, marketing communications, marketing through social media, and lastly, supply chain management. These dynamics altogether sums up the overall strategic management systems that are being taken up by several organizations to run a business successfully by knowing the trends of the market. The campaigns that are related to the market ultimately revolve with a specific goal of profit to the organization. In this Wal-Mart strategic management essay, Wal-Mart is the organization that has been taken into consideration which is considered as the most emulated retailer. Wal-Mart is also considered as the industry trendsetter due to the specific strategic management approach that it has taken up for its retail business. The concerned organization is considered as the biggest food retailer in the world and also has a presence in several nations. Wal-Mart has been successful in some nations that include the US, Canada, China with its evolving marketing techniques. Whereas, on the other hand, Wal-Mart is not successful in establishing its retail business in Germany, South Korea, Japan. Several business issues made problems and the organization could not become successful in establishing a business in such nations. The Wal-Mart strategic management essay will highlight the problems, experiences that have been faced by Wal-Mart in settling businesses as well as the key approaches that are needed to be taken further by the organization so that there is successful business integration in the concerned nations. The certain reason of failures from the origination’s end has also been highlighted in the Wal-Mart strategic management essay.
Wal-Mart did not understand the consumer behaviour of German, and so the planning of acquiring the German market was strategized according to the way the company proceeded with America. The customers of German generally prefer private shopping in the neighbourhood place. But on the other instance Wal- Mart opened a big supermarket and begged the customer for purchasing food. Therefore, a contradiction of culture occurred in German. This is the only reason Wal- Mart needs to change the business procedure for successfully continuing the business.
Wal-Mart has a great internal environment with a perfect leadership structure and an advanced logistics system. It also possesses a proper batch of purchase models and strong power of the human resource system to bear down the competitors which it possesses. The painful lessons which have been learned from German include that the organization should learn propriety in terms of expanding quickly based on classes of definite range in a sale. In the case of the external environment highlighted in this section of Wal-Mart strategic management essay, Wal- Mart can have a new strategy with the initiation of a new marketing model (Spicer and Hyatt, 2017). This is because acquiring new models will help in capturing new markets which include European markets. Certain local political problems are present in Europe which also acted as a threat to expand the retail business of Wal- Mart (Wal-Mart, 2019). In such an aspect Wal- Mart needs to learn about the strengths and opportunities for resisting the weaknesses that exist in business affairs. According to the PEST analysis of Wal- Mart through the macro environment, the political situation is under control and several technologies used in the business for increasing the efficiency of the war (Barney and Mackey, 2018). As per the readings used to prepare this Wal-Mart strategic management essay the economic factor is not in a positive direction due to the global effects of the economic crisis. According to the Five forces, there are different characters of powers in consumers and competitors as follows. The customers of German have strong power in purchasing and had a lot of shopping environments, which are like Aldi and. On the other hand, Aldi is a huge competitor of Wal- Mart which opens store near the residences of groups of the consumer. They also ensure high quality and also maintain a perfect position of cost leadership at a low price than other food retailers. Wal–Mart also uses different strategies for achieving and maintains a cost leadership position that includes a new warehouse system and maintains a low price every day in the store. To satisfy the customers of German, Wal- Mart even cut down the specific cost so that the customers get attracted (Bloom and Hinrichs, 2017).
In such an aspect, the findings obtained in the Wal-Mart strategic management essay signifies that the Empress Plan is more suitable for Wal- Mart, to restore the business in Germany and solve the problems that are being faced by the concerned organization. This is because the Empress plan will help in mutual benefits between the organization and the customers to acquire market share and also in avoiding conflicts. Four advantages discussed in the context of this Wal-Mart strategic management essay are associated with the empress plan which is like low cost, high competitive advantage, better communication, and convenience. In such an aspect the concerned organization can collect a lot of franchisee fees that guarantee specific cash flow. This will also help the organization to run successfully and mitigate the risk factors that are associated with the business. The main competition of the franchise model is not much popular in Germany, as there are very few convenient stores which are situated beside the gas station. On such instance, Wal- Mart has convenience stores with a high competitive advantage. The franchise model mentioned in the Wal-Mart strategic management essay mainly uses local customers as employees who have a similar background and culture and can ensure proper communication with the local people. At this instance, the model fuses the culture of German with the customers of German and also will improve the brand image of Wal- Mart. This will help Wal- Mart to enlarge and expand business in Germany (Ma and Osiyevskyy, 2017).
Coming to Japan, Wal-Mart initially failed while doing an entry to Japan in the mid of 1990, as it came through selling its products through the local supermarkets, another problem was that the selling was disappointing in nature. The failure in the first instance can be counted with the slow market drive by the local supermarkets. This counts as a disadvantage concerning indirect exporting. As per the readings used to develop this Wal-Mart strategic management essay, Japan is considered as the wealthiest and developed economic nation in the world. The consumer market of Japan counts the second largest in the world. The concerned organization did a partnership with Seiyu Ltd while entering Japan. The acquisition stake was increased by Wal- Mart and the partnership mainly minimized the strong competition of domestic markets. In the huge economic development state of Japan, Wal- Mart somehow could not manage to cope up with the business properly and so faced several blockages while marketing expansion (Simpson and Power, 2016).
Wal–Mart adopted an international strategy for the global expansion which had core competencies to capitalize upon the rivals. There are several important parts of the value chain mentioned in the segment of Wal-Mart strategic management essay which include expertise, decision making, international operations, and new products which are being controlled with its parameter. On the other hand, such centralized character in the overall decision making often impedes the abilities of the overall subsidiaries which response to the demands of local people (Nygaard et al. 2017).
The operating system of Wal-Mart is cost-efficient and the structure is lowest in expense among the industry. The price of food was kept 20% lower than the other competitor supermarkets. Therefore, the study examined in the sections of Wal-Mart strategic management essay illustrates that Wal-Mart tried to copy the successful strategy that has been implemented previously in America. The strategy of 'Everyday Low Price' was initiated in Japan's international market. But the problem was faced differently this time in the market of Japan. The nation is economically developed and so for the consumers, the low price of commodities refers to low quality, which made a backdrop of the expansion policy of Wal- Mart (Wal-Mart, 2019). It can be said from the analysis of Wal-Mart strategic management essay that there was inefficiency in analyzing the state of values which created such a mess while initiating the business plan. Though the policy of keeping low price was successful in nations like German, Korea, China, and Mexico because they were poor countries but it did not work out in Japan though. The organization kept such a strategy because at the time of entry the Wal-Mart did not have such consumer income. The session was having a prolonged low-income session. In such an aspect to remove the concept of low price and low-quality concept from the minds of the consumer, Wal-Mart started to increase the price of the commodities. This created several questions in the minds of the consumer due to sudden disparity in the price of the products. Japan is a country that has a high context of collectivism in society. The family bonding and the groups always prefer and emphasize on the prestige and quality. In such an aspect, the Wal-Mart's sacking had 25% of the Seiyu's workforce which was again wrongly felt by the people of Japan. Wal-Mart opened 24 hours store in Japan to hold on to the customers, but even that did not work. Several inflations took place with the employees because; they felt stressful in working 24 hours.
The study explored in the Wal-Mart strategic management essay also mentions that there were several decisions taken up by the managers of America, Canada, and the British which appointed Japanese managers to understand the trends and demands of the market. There was another core competence of introduction in Japan that was made by Wal-Mart, which was the technology-focused system of inventory replenishment which was directly linked with the suppliers. The inventories were managed and monitored with great effect. The installation and implementation of information technology were not at all easy in Japan, because the people of Japan believe in interaction more while business transaction. Several closed networks operate in Japan and for Wal-Mart it was hard to penetrate in such channels. Wal-Mart has, however, tried to eliminate any kind of a middle man so that the implementation of several systems is directly controlled by the headquarter itself (Shabbir, 2015).
In such a context, it is the duty of Wal-Mart to understand the local demands, specific preferences, expectations, and the struggle of common people in Japan. This will help the concerned organization to act wisely with the concepts of business integration throughout the country. This is because until and unless the concerned organization studies the culture and lifestyle of targeted consumers, it will be unable to hold a business successfully (Power and Mitra, 2016).
Wal- Mart had faced a major failure while entering South Korea to expand the retail business. The same style of American business expansion was followed here in the case scenario of Wal-Mart strategic management essay, which did not come to any effect. There was several shortfalls form the part of Wal- Mart in the enabling of value exchanges with the Korean consumers as they significantly taste different as compared to the American customers. ‘The Everyday Low Price’ even did not work in South Korea as the Korean consumers also believe in ‘value’ more than price. The store positions of Wal- Mart were not at all well-positioned in South Korea to attract a sufficient group of customers (Wal-Mart, 2019). The context of South Korean consumption did not pace up to the strategies that were developed by Wal- Mart. There was no effective localization strategy that would project in a clear and transparent growth in the market. In such aspect of Wal-Mart strategic management essay, Wal-Mart needs to focus on the importance of compatibility of a corporate and unique proposition of value with a proper fit in strategy with the local market conditions of South Korea (Muda, 2017).
In South Korea, the international expansion strategy of South Korea showed a mixed performance. This is because the overall proportion of international sales had faced a growth of 9% of the total sale in the tear 1998 to an increase of 22% in the year 2007. It can be said that Wal- Mart failed in understanding the difference between localization of the products and the core competitive advantage. There are drastic and several modifications that were needed to adapt to export in a foreign market with a perfectly different environment and culture. The argument raised in this section of Wal-Mart strategic management essay signifies that the overall ability in coordinating with the overseas market and understanding the preferences is not too easy to adopt. In such an aspect there are different studies and surveys which are needed to be done to understand the types and cultures of people residing in that country. This will give a basic idea of the types of commodities that are mostly needed. This will also create an assumption of the pricing techniques which are to be kept so that the consumers can easily avail of the products without any contradiction in mind. The consumer of South Korea mainly keeps interested in fresh food products and frequently visits supermarkets or traditional markets to buy a small number of fresh products. In such an aspect there are various transplantations of local markets that are convenient and situated in an indoor format. This is because the people of South Korea mainly consume live seafood which is available in the local markets better than the supermarket. In the supermarket mainly the available food is mostly stored food and not the actual fresh one that is available in the local markets of South Korea (Balashova and Gromova, 2016). The Korean consumers viewed Wal-Mart mainly as a store from where they can purchase nonfood item in a larger amount when needed. The consumer prefers to visit the local store for food items and items with the utmost necessity. The shopping attitude of South Korean people is daily based. They do not prefer going to the market once a week or after two weeks. These are the only reasons the shopping behaviours of Korean consumers did not match with the concept of Wal- Mart’s retail format (Frynas and Mellahi, 2015).
Therefore, considering the study examined in the sections of Wal-Mart strategic management essay it can be said that there were several mismatches, assortment, merchandising contexts that contributed as a factor for the failure of the organization. Therefore, in such an instant, the concerned organization needs to look for the human resources from South Korea itself to understand and match the trends of South Korean people. This will require both the appointment of managers and employees for the convenient store of Wal-Mart in South Korea. This is because it is the local people who will understand the trends, class, culture, ethnicity of the local people (Banks et al. 2016). They can understand the ultimate transformations that are required in the business perspectives to successfully evaluate the order of retail market in South Korea. Wal-Mart needs to understand that there are certain demographical changes and with the change in demography the trends of the consumer also change. This is because every place has its richness of culture and people of the area are attached and associated with that system only. The business perspective will only evaluate if and only the concerned organization gives efforts in understanding the situation and analyze the place accordingly. As, Wal-Mart mainly deals with food, and there are several varieties of food habits with the change of place and people. So, effective decisions are to be taken whenever there is a plan in integrating the business through an international expansion strategy. This will help Wal-Mart in further analyzing the loss and profit of the ideas and business expansion as well. The recommendations are given in the context of this Wal-Mart strategic management essay with the conclusion which should be followed by Wal- Mart to have a strategic business plan and integrate the retail business successfully (Ayers and Odegaard, 2017).
It can be said that several reasons have been highlighted in the Wal-Mart strategic management essay which was the main cause of failures that have been faced by Wal-Mart in nations like Germany, South Korea, and Japan. The marketing approach and strategies needed to be kept different to understand and meet customer demands which are the most important part of business integration. There were several inappropriate experiences which have been faced by the concerned organization itself that has created obstacles in expanding the retail business. There should be several strategies taken up to run the business successfully in Germany, South Korea, and Japan. These strategies are suggested as recommendations that are needed to be followed by the organization to integrate successfully through global perspectives.
The Recommendations given below within this Wal-Mart strategic management essay should be followed by Wal- Mart to gain successful business integration and strategic idea for international market expansion:
According to the detailed analysis performed on this Wal-Mart strategic management essay that has been done on the business aspects of Wal-Mart, it mainly targets two aspects to introduce a long term strategy development plan. The plan includes Marketing Orientation and Working Management system.
In the case of marketing orientation, the marketing strategy of Wal-Mart needs to be developed based on seeing selling as a core and improving the overall profit of the convenient store and also in a proper cultivating of leaders within employees. This should form the general headquarters of Wal-Mart to encourage and stimulate the enthusiasm of the employees.
The next step is to improve the image of Wal-Mart brand by building a unique brand mark that will purposely make another highlight for the use of the franchise model. Wal-Mart can come up with sponsorship and several environmental protections, can use charity donations, and also build a perfect reputation for achieving a better share of the market and also attract new customers.
In the case of working management systems, three aspects are to be initiated by Wal-Mart, which include the development of strategy and sports union. This will be initiated by the development of a human resource that aims at the store. The tutor and bursar are a part in are a part of the plan to ensure the development of franchisees. The next step mentioned in the Wal-Mart strategic management essay includes the dense development of strategies so that the convenience store becomes a part of the handy principle. This is because; the process will further help in the building up of narrative access flows with the quality analysis system for improving the technology related to the spots so that every store gets guaranteed benefits. This reflects on the core advantage of the franchise model. There should be a building of new principles related to the products which are called the Unique Suitable and Convenient system or USC. This will initiate in the making of own labelled brand products. Wal-Mart can aloes reduce the cost of the products to attract customers in the first phase. The concerned organization can open a tiny kitchen inside the store, to sell some handmade food. These kinds of handmade food may include sandwiches, soups, and fried items and so on. This will make the procedure unique and attractive as well. The package system needs to be attractive because the package works as a display and publicity system as well. The logistics systems need to be advanced and upgraded; this is because it will further help in the refrigerant of products so that it remains fresh and also satisfies the customers. The findings obtained in the Wal-Mart strategic management essay signify that this will overall help in the modification of the market orientation system and also in the working management system as well. This will help in the adjustment of the organization with the culture of German, South Korea, and Japan for future operations.
Wal- Mart should develop a strategy in Japan through which it can better respond to the demand of the country's local market, preferences, and choices. The organization also needs to open convenience stores to capture the segments of the market and also offer fresh local products. The manager of Japanese stores should be Japanese who can understand and analyze the market better. This will help Wal- Mart to integrate successfully in Japan because this is such a place where quality is preferred and there is no pressure of keeping commodities of low price. The international strategy mentioned in the Wal-Mart strategic management essay thus adopted by the concerned organization should be a bit revised and modified in order of implementation. This will help Wal- Mart from withdrawing from the market of Japan, where there is already an investment of USD 1 billion done.
In the case of South Korea, Wal- Mart needs to analyze the environment, culture, values, and style and industry trends to initiate a successful business ahead. This is because the South Korean people are mostly dependent on local and fresh foods. Therefore too much storage foods and technological innovation can lead to a feeling of westernization. To avoid such problems, human resources should be gathered from the locality itself. This is because it will help local people to connect properly as well the employees and the manager will understand which deal to give when and act accordingly. This will also create a sense of valuation and exchange policy on behalf of the organization. Therefore, from the overall analysis done in this Wal-Mart strategic management essay it can be said that if the recommendations are followed by the concerned organization in perfect order it will create a huge change in the international expansion theory mainly in Germany, Japan and South Korea.
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