The Analysis of Environmental Factors Influencing Walmart in the Chinese Market
The purpose of this essay is to analyse the environmental factors of Walmart in the Chinese market, and then use the evidences gathered from the environmental analysis to critical analyse and evaluate the strategies Walmart made to adapt to the market.
In order to develop and implement strategies to keep Wal-Mart’s competitiveness in the Chinese market, analysis of the environmental impact in this international market is very important. PEST factors (Figure 1) are considered when analyse external environment, and the four elements: politics, economy, society and technology form the principle fields for analysis of the environment (Kent and Omar, 2003). The model is chosen to identify the continually changing macro environment Walmart is facing.
Figure 1 PEST Factors
Source: Kent and Omar, 2003
The first section will examine the political factor. Varley and Rafiq (2004) suggest that changes in law and governmental policies will affect retailers’ interests in a market.
Walmart had to quit the business with local partner in India due to the policy uncertainty. However, the investment environment in China is more open and the stable policies make retailers know what fields they can spend money in. At a news conference recently, Chinese Premier Li Keqiang repeatedly called for urbanization and claimed it to be an inevitable trend. The policies to step up the process are highly expected to be announced at the upcoming Party meeting in November (Li, 2013). As a result, Walmart has taken the potential policy into consideration and plan to open more stores in smaller cities.
In terms of the economic factor, changes in the economic environment influence consumers’ willingness and ability to buy goods and services as well as retailers’ decisions on investments (Varley and Rafig, 2004).
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