Walmart’s Global Strategy

In the early 1990s, Walmart established itself as an international company by opening a Sam's Club near Mexico City, and shortly after, creating Walmart International. The company first focused its efforts in the Americas, where barriers to entry were relatively lower than other continents and markets. Because the purchasing power of consumers in South America was low, Walmart's low-price model was successful in attracting and retaining customers. However, major domestic retailers in Mexico constructed a joint buying and operational alliance to contest Walmart. In 2005, it was discovered that Walmart de Mexico had paid large sums of bribes to expedite the growth and development of the business throughout the country. In the Asian market, Walmart initially faced pressure from the Chinese government to allow Chinese workers to unionize, and were eventually forced to concede. But the low purchasing power of the Chinese consumer attracted the company to establish a presence despite facing cultural, linguistic, and geographical differences. In regard to the European market, the company faced major issues with its business strategies. As the text explains, relatively small size and lack of strong local customer relationships would be severe handicaps in the European arena (Luthans, Fred, and Doh, Jonathan D). This issue is exemplified by Walmart's catastrophic failure in Germany. The company took an ethnographic approach when hiring personnel for their German stores, which quickly highlighted considerable cultural differences. German consumers were put off by the practices that the American managers employed in the stores, and business suffered immensely. Eventually, Walmart had no choice but to withdraw from the German market, and sell all of its remaining stores. After examining many of the issues that developed as Walmart pushed the expansion of the company internationally, a diagnosis of why these problems occured can be formulated. It is apparent that the lack of research and market analysis of the cultural differences and habits of each country that Walmart pursued was the main underlying problem. Walmart's overall neglect of national responsiveness led the company to struggle at the beginning developmental stage in many of the new countries. As evident from the text, Walmart encountered many obstacles as it struggled to grow internationally, however, there is a solution that could correct a majority of the problems faced. Countless issues arose from not properly structuring the business model around the target country, and rather importing Walmart's home strategy to the new markets. If Walmart took a polycentric predisposition as part of its international growth strategy it would have significantly greater success. This is a philosophy of management whereby strategic decisions are tailored to suit the cultures of the country where the multinational corporation, in this case Walmart, is trying to operate. (Luthans, Fred, and Doh, Jonathan D) Though this approach is much costlier to implement, by formulating strategies towards each individual country, Walmart would improve customer satisfaction and retention.

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