Wal-Mart in China (2012) Harvard Case Solution & Analysis

WAL-MART IN CHINA (2012)

Introduction:

Wal-Mart, being a reputable brand all over the world and especially in the United States is engaged in operating retail and super markets that include discount warehouse, grocery stores, and various mixtures of merchandise stores. The thing that makes Wal-Mart different from their competitors is EDLP i.e. Everyday Low Pricing Strategy. The basic sections of the company include Sam’s club, a division that is inside U.S and international segment of Wal-Mart. Wal-Mart that is known as the world’s largest retailer is making an effort to make its position strong in China. China being a fastest economy is giving a tough time to the CEO of the company to make its global expansion strategy successful. As the U.S market for Wal-Mart has become saturated, there is an urgent need to explore and exploit growth opportunities in international growth.

Wal-Mart Global

The history of Wal-Mart started from 1945 when Sam Walton, the founder of the company opened its first retail outlet in Arkansas. There were three guiding principles behind the company’s success that the management of the company still follows. First principle was to respect each and every employee in the organization. Second, the company’s vision and principle were to give customers more than they have expected from the company. Last but not the least; the founder needs each and every employee to struggle for distinction and quality. The company is planning to implement new and advanced technologies in their various departments like operations and supply chain. This has been done to bring efficiency in the overall process and continue to maintain its brand image as the market leader in the international retail world.

Wal-Mart China:

In order to achieve its global expansion strategy, Wal-Mart entered China by opening Sam’s club and supermarket in Shenzhen city in 1996.In addition to that, the management of the company believes sourcing through local operations. Along with that, the management believes that success always comes within the local individuals, and thus the company has made itself engaged in the development of local talent and to promote diversity. Furthermore, the company is focusing on developing and enhancing the capabilities of female workers in the company. Almost all the workers and employees working at Wal-Mart china is the Chinese locals. In China, Wal-Mart is operating Sam’s club, neighborhood markets and supercenters in China as well.

Problem Statement:

Wal-Mart is actively committed in implementing is Every Day Low Pricing to boost its international expansion. However, the company took a break and stops its expansion, specifically in China in 2012. The president of Wal-Mart stated that the company is facing difficulty in securing real estate and unable to find the proper location in the stores. Furthermore, the company is also facing problems in their operational department as the supply chain of the company is not efficient as it should be. Moreover, the competition is getting intense with an increasing trend of globalization. The company is facing intense rivalry from global as well as from local competitors as well.

Analysis:

Market Size:

The size of the Chinese market has reached nearly half of the U.S market and estimated to be at the same level within a few years. The Chinese retail and grocery market is on the positive line and elevating fast towards growth. Statistics have shown that sales from Wal-Mart china are not on the positive side and able to gained hardly 5% share in the market. In addition to that, revenues generated from the operations in China accounts for 2% of the total revenue.

PEST analysis:

Political analysis

In china, 1979 is known to be the year in which the economy of the country begins to boost. The economic reforms and different social policies focused on boosting the country and focus on making developments in the country to make it more stable and established. These factors have become the top most priority by the regulatory bodies in China. According to the World Bank's report, the political and economic development

n China cannot be compared with well-developed countries like the United States, Germany and Czech. But, the country is trying to maintain and to increase the economic and social level of individuals living in china by providing business opportunities. Despite that, the country is performing much better than other developing countries like India and found to be politically better than these developing countries. In addition to that, the country is moving towards stability year by year.

Economic analysis

After the economic improvements in China, the real output of the country in terms of GDP has increased to an average growth rate of 9.7% per annum that can be said as the tremendous growth in the record. There are two main aspects behind the steep growth rate in China, first; the company is getting a huge amount of capital investment......................

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