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

Social analysis

Social factors play a vital role in developing individual’s perception about a certain brand or a product. Quality has always been a top priority by Wal-Mart and thus a basic reason for a person to come and shop. There are certain social factors that influence individuals go to Wal-Mart if their requirements are getting all the service at one place.

Technological analysis

The regulatory bodies in china are focusing and investing so much on education and construction, and the technology in China is at the fastest speed. However, the country is facing problems with respect to the operations and supply chain in various businesses. The basic supply chain problems faced in the industry include low quality of equipments related to supply chain, non-availability of advanced and heavy duty vehicles, high dependency on manual work and long time for loading. Because of this, China is being on the higher side in terms of supply chain.

SWOT analysis:

Strengths:

One of the main strengths of the company is a strong position in the market along with worldwide famous branding. The company is able to achieve economies of scale through huge size and its command over the suppliers that helped Wal-Mart to decrease its cost, and this becomes a competitive advantage for the company against their rivals. In addition to that, the company has sufficient amount of funds to make its global expansion strategy successful. Other than that, the company has command over its operating systems and skills in terms of management as well. Further, the company’s cost leadership strategy has been the most successful one and made Wal-Mart stand out against the competitors. The company is implementing EDLP strategy that allows them to lower down its cost to the extent that cannot be done by its competitors.

Weaknesses:

One of the biggest weaknesses of the company includes its level of difference in terms of culture. Wal-Mart is a U.S brand. U.S and China are highly diverse and opposite in terms of social and cultural aspect in fact, they are said to be the two opposite corners. Cultural differences have become a major issue in the growth and development of Wal-Mart in china. In addition to that, the management at Wal-Mart failed to maintain good and healthy relationships with the government of the country. Other than that, despite various trials and efforts, Wal-Mart china has failed to secure share in the international market.

Opportunities

For Wal-Mart, one of the biggest opportunities is doing business in one of the fastest growing industry in china. Statistics have shown that the retail and grocery industry has become one of the most rapidly growing markets in the country. Further, china is a country that has its expertise in making low quality and low cost imitated products, and that can be an enormous opportunity for the country. Furthermore, people are more inclined towards online mode for shopping, and this has become a major factor of growth of Wal-Mart.

Threats

One of the major threats faced by the company is the increased competition from both online and traditional brick and mortar retail stores. Further, the company is facing a major threat from substitute products, i.e. various e-commerce sources. In addition to that, the company is confronting resistance from the local retailers and community members of the country as they are forcing them to stop their operations.

Targets and objectives

The mission statement of the company states that its mission is to help individuals in saving money and providing low pricing and discounts to make their lives better. By making expansions in China, the company is trying to achieve its vision with the help of its Chinese franchise by doing successful business in the Chinese market.

As far as the market share of the company is concerned, the management of the company is planning to increase its market share by the end of 2015. Furthermore, the retail industry in China is growing at an enormous rate and the analysts have estimated that the company will have grown double in size in the coming years.

Market segmentation strategies:

Wal-Mart has segmented the china market on the basis of social class and their status in the economy. Several opportunities emerged for international retailers as China’s middle class gained power. Even beyond what was reported, many analysts believed that most Chinese had more money. Also, middle-class status brought a more selective Chinese consumer. No longer satisfied with cheap imitations, the Chinese became status conscious. Paying premium prices for products and services that might enhance their “status” was quite common....................................

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