Essay on Walmart China Case Analysis

1960 Words Dec 1st, 2011 8 Pages
WALMART-China CASE ANALYSIS
Walmart-world’s largest retailer, is a successful as a king of retailing in US market. After this success, Wal-Mart Stores started eyeing areas beyond its home country and looking at unchartered waters in the overseas markets.
Wal-Mart’s mature discount concept and business model were ready to be exported. The management firmly believed that consumers were alike everywhere around the world in searching for quality products at great prices and desiring to be treated well. So, Walmart began its expansion strategies in the Chinese market.

The article mentions the reasons for Wal-Mart's decision to go global , discusses in detail the entry strategy and the localization strategies including procurement
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Satisfying consumer's demand in different regions became a costly practice. Low income in rural areas raised concerns on Wal-Mart's US-bred strategy of locating stores in smaller communities.

Lack of support-Local Protectionism : The local governments had incentives to protect state-owned enterprises under their jurisdiction as they were the base of their political power and a source of private benefits as well as fiscal revenue .
Wal Mart's entrance to Shanghai: It has published a new commercial plan to restrict the opening of new supercentres in the inner city which delayed in obtaining municipal approval. This has put Wal-Mart in a much disadvantaged position against major competition in Shanghai's retail market.
Unfavorable Infrastructure: Infrastructure was another hurdle for Walmart. The highways were costly to use, toll fees reached as much as 10% or more of total freight costs. In fact, toll collection at the local level was arbitrary and illegal. Due to the under-developed highway network that Wal-Mart depended, caused an increase in costs and more waste especially with perishable goods.
Regulatory Restrictions: If a distribution centre served a large enough number of stores, economies of scale would be achieved thereby pushing costs down.But, only three stores were allowed to be launched in one city and only a handful of cities were open to foreign retailers . Every store opening had to be approved by the central government which made

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