Brian Cash
Wal-Mart Case Study
International Business
How has the implementation of NAFTA affected Wal-Mart’s success in Mexico? When NAFTA was implemented in Mexico, it was an almost immediate success for Wal-Mart. This was because they lowered and abolished the tariffs that Wal-Mart was required to pay prior to the implementation of NAFTA. With the lack of tariff fees, all of the Wal-Marts' in Mexico have been able to offer the “Every Day Low Prices” that we Americans are used to. The Mexican population has other retail options, but none offer the variety of products at the prices that Wal-Mart can offer them. Prior to NAFTA, Wal-Mart was having strong levels of success all over Mexico, but was taking a huge hit as it
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Wal-Mart is still successful but the due to NAFTA and is a successful business model for other companies to follow. If other companies such as Target or K-Mart tried to venture into that market they could be just as successful, but would still be competing against Wal-Mart’s enormous scale.
3. What have Comerci and Soriana done to remain competitive? What else do you think they need to do to remain competitive in the future?
Comerci and Soriana were once the staple consumers flocked too. This was of course due to the lack of many other options available to them in the market. Wal-Mart of course came in with their “Every Day Low Price” guarantee and that changed everything in Mexico’s consumer market. Both companies reacted by trying to lower their prices in order to compete with Wal-Mart, but the mega-business that is Wal-Mart has a much deeper wallet and was able to firmly grip the market with its buying power. Mexico retailers use a different pricing structure known as “high and low”, rather than lowering the prices they offer sales or deep discounts but still cannot compete with Wal-Mart’s pricing. (Daniels, Radebaugh, & Sullivan, 2013) So Comerci, Soriana and Gigante formed a purchasing consortium that allows them to negotiate better pricing from suppliers. This collaboration known as Sinergia, ran into problems with Mexican regulators and the consumer product council. These agencies feared that Sinergia would use its
Walmart faced strong entrenched competition in Canada and Europe. In these developed countries, they couldn’t gain critical mass through internal growth, so they had to acquire companies that have been in the market already. They acquired Woolco, a money losing operation, applied many of the American business practices, and within a few years, the Canadian operations were successful. They have 317 stores, and they account for more than 35 percent of the Canadian discount and department store market. In Europe, Walmart entered Germany by acquiring the Wertkauf hypermarket chain in 1998 and entered the UK by acquiring the 229-store ASDA group. They the leader and are now losing ground to Tesco. A major problem for Walmart in the European market is overexpansion. Accompanied with the famous “Always low prices” approach, they met large resistance from the competition and regulators. Large price wars began because Walmart was accused of underselling the competition. They struggled to build a strong competitive base in German losing more than $1 billion. They were unable to create a competitive advantage, so they sold their operations to a competitor, Metro. They also faced problems in Korea, so
Walmart has destroyed tens of thousands of small businesses and countless manufacturing jobs over many years. According to a study done in 2012, the US has lost over 56,000 manufacturing facilities since 2001. 85% of what is sold at Walmart is made overseas. 80% of Walmart suppliers are in China. Our economy is being
First off, Walmart has transcended the idea of a monopoly. although economically it hasn't exactly been allowed to corner the market in "supermarkets' it more than out does its competitors with a GDP ranking higher than some countries. Walmart has a profound impact on the state of economics on a global level, and more importantly on a local level. As examined thoroughly is the tendecy for Walmart to drive local shops out of business in smaller towns, and essentially suck its noncorporate
1. What is the significance of determining whether a country follows the rule of law?
Wal-Mart has expanded beyond the United States, they have gone global. Wal-Mart continues to offer food and goods at a low price and continue to thrive by using the mission statement that the retail giant was built upon which is great customer service and low prices.
Despite Wal-Mart providing countless amounts of products to its customers, it is still resulting in the closing of buisnesses. Wal-Mart’s biggest suppliers are outsourced. This is takes jobs away from the working class. In the documentary Is Wal-Mart Good for America? The host states, “But from 2002 faced sharp foreign completion”(42:18-42:24). The documentary refers to a small-town factory that was closed due to the opening of a local Wal-Mart.
Currently, there are roughly 7,800 Wal-Mart stores worldwide (Wal-Mart, 2012), and they are in 16 different markets throughout the world. Throughout the company, Wal-Mart employs more than 2 million people and serves more than 100 million customers a year. Any new company who wants to enter in the same market as Wal-Mart must be able to counteract their size and scale and likely must have a long-term horizon like Wal-Mart. It would take someone decades to match Wal-Mart as well as likely require Wal-Mart’s operations and offerings to reduce in quality. With the reputation that Wal-Mart has established, they take much of the business away from other companies. As for those other companies trying to have an impact in the same market, it will be minimal or non-existent unless the new company specializes in something that Wal-Mart does not offer. Wal-Mart is branching out into other areas of the market, such as groceries, it will have a bigger impact within its markets.
Wal-Mart is one of the most successful retailers in the world (Wal-Mart corporate 2012). Currently, there
People complain that these low prices kill off all other competition, but the American economy is based on competition, making it hard to fault them for being one step ahead of their competitors.
Wal-Mart constantly sets development goals and has a huge success rate of achieving them. Globalization has allowed Wal-Mart to give back to international communities in the form of employment and offering everyday low prices on their products. Society benefits due to the employment opportunities and affordable merchandise. Wal-Mart will continue to dominate the retail industry and they will continue to conquer and fulfill their ethical
Wal-Mart’s position from the competitive forces model competition among rivals is fairly weak. The market is crowded but Wal-Mart has the lowest costs, prices, profits, and market share. Wal-Mart exerts a great deal of effort in making sure they are innovative and meeting customer requests. The bargaining power of suppliers is weak as well. For most producers, Wal-Mart would be their largest account. The bargaining power of buyers is also weak. There is a very broad base of customers and a meaningful demand for low prices. The threat of new entrants is weak. Wal-Mart has a scale of operation that is very important, it would take years, maybe even decades, for a new company to be on the same level. Even prominent companies today would have really difficult time matching the costs and prices Wal-Mart provides.
Partnerships and networks between big and small companies will contribute to the success in the future (Delaney, 2009).
Wal-Mart started its global market in 1991, where they opened up a store in Mexico City.
Question No.1: The freedom in the world survey evaluates the state of political rights and civil liberties around the world. Provide a description of this survey and a “ freedom” ranking of the leaders and laggards of the world. What factors does this survey consider when forming the ranking?
The success of Wal-Mart since the first store opened has allowed them to stay ahead of their competition. They are always planning, controlling, leading, and organizing starting at the corporate level and working down to the cashiers. Target is one of their direct competitors but Wal-Mart is still well ahead in the Fortune 500 ranking. Wal-Mart continues to find ways to appeal to their consumer base and that stems from solid management and leadership. They are using their resources and making changes both internally and externally.