Case Analysis- Wal-Mart
The implementation of Wal-Mart’s strategy in China has failed to achieve the desired sales results. Despite being the leading retailer in the world, Wal-Mart’s model of success that provides a key competitive advantage in the U.S. does not equally translate to diverse international communities. Likewise, Wal-Mart struggled in Germany and eventually withdrew by selling its stores to rival Metro. Despite the challenges currently being faced in China, Wal-Mart has experienced international success in Mexico, Canada and Britain. What long-term strategy should Wal-Mart adopt in China?
What Should Wal-Mart Do?
Although the continued market expansion into China may seem desirable, Wal-Mart should slow expansion in China until infrastructure expands to support its unique distribution system. China’s under-developed highway network severely hampers Wal-Mart’s effort for efficient distribution. Instead of ending operations, it is important for Wal-Mart to remain a viable competitor in the Chinese market and not completely abandon its foothold gained thus far. As infrastructure continues to develop, Wal-Mart must remain patient with a continued focus on a long-term strategy in its operational expansion in China. As infrastructure improves, this will further support Wal-Mart’s distribution model providing a more advantageous position. This slower methodical approach to growth, although not normally experienced by Wal-Mart in U.S. operations, is necessary in China.
History of Wal-Mart
Wal-Mart was founded by Sam Walton in 1962. He believed that the future of retailing was in discounting. For him that meant “Every Day Low Prices.” One way to keep the prices down was to avoid competition. He opened stores in rural towns that were being ignored by other retailers, allowing Wal-Mart to grow and establish a strong foothold in the market. Customers no longer had to travel long distance to get the products they...