Case Report

Walmart Around the world

Introduction
Walmart’s globalization strategy over the last two decades: Struggles, Success, Location Characteristics
and Why
In 2012, Walmart International became the third largest retailer in the world. Interestingly enough,
behind Carrefour, French retailer; and Walmart US. Walmart US was successful for various reasons. They
minimized costs, leveraged technology, dealt directly with manufacturers, and became customer
focused. They stuck to their true to their goal, which was to help people save money so they can live
better. Carrefour basically imitated the American approach in another bigger and developed market like
Europe. Nevertheless, how did Walmart International fair in the global market, apart from Walmart US?
I will Evaluate Walmart’s globalization strategy over the last two decades. We will see where the retailer
struggled. Where did the retailer do well? We will also evaluate if location characteristics can explain the
difference in Walmart International’s performance. Walmart entered in some countries through
acquisitions and in some countries through Greenfield investment. We will see what mode of entry was
best and why it was best for those reasons. We will also explore if location characteristics drove the
mode of entry. If it did or did not, why so? Later, we will look into 2013, when Walmart decided to enter
the Indian market in a joint venture with Bharti Enterprises. We will explore if this was a good idea to
establish in India, especially with joint venture as the mode of entry.
Where did the retailer struggle?
Walmart struggled in many markets. Walmart could not estimate not only the demand, but also the
characteristic of the shopper in the strategic location in many of the geographies like Asia. Walmart
struggled because they could not adjust its strategy to better fulfill local customers’ needs. In some
countries, like Brazil, Japan, and South Korea, Walmart could not adjust its strategy to better fulfill local
customers’ needs. Meeting local regulations and a proper mode of entry added to their struggles. The
places they struggled were places were they were not educated enough on the shopping culture. The
local competition were able to maintain a foothold because they knew the market and had established
themselves.
 In Brazil, they could not adapt to the areas locasl mix. They had products more suited for
American suburbs then Brazilian suburbs. Another issue, the Brazilian market was already had
periodic cycles were there discounts and markups. Walmart’s core model was to always provide
discounts. It was hard if your competitors were already providing that service.
 In Japan, the consumer characteristics were very different from Americans and how they viewed
products. In Japan, Americans viewed cheap products as with low quality. Another issue were
the fragmented market due to relationship driven supplier base.
 In South Korea, pushing their core model, Walmart could not gain any traction and lost a lot.
Korean shoppers were more into luxurious, service oriented shopping rather than low prices.
They also had fierce competition form a local conglomerate. Many global retailor could not
operate their also.
Where did Walmart do well?
Walmart did well in some markets. Because they were already a well-established brand in the US, they
were able to leverage those advertisement campaigns where the already existing propelled the brand in
the new market. Walmart also did very well in various markets because it could offer the market the
niche products and necessities at very competitive prices. It helps that Walmart has a large amount of
capital from markets where it was successful and their Walmart US brand. This enabled Walmart to
expand globally easily and fiercely for 20 years. Walmart smartly invested a lot various countries to get
economies of scale and grab market shares. Those resulted in many profitable results. Walmart had a lot
of experience in its own market. In addition, with similar markets in developed countries, they were able
to use that experience to their advantage.
 In Canada, Walmart an acquired a company with significant market share. They saw an
opportunity and knew where the problem lied. They rebranded the store, kept everyone, and
changed the culture; allowing them to grow 265% compared to 46% from its next rival. Because
the Canadian store already had a similar model to America’s Walmart, the transition was
seamless. In this market, they were also able to adapt to the locations characteristics by
changing advertising methodologies and carrying a wider variety of options for customers.
Walmart also had expertise in the grocery products, which helped them, grow and rid the
competition.
 In Central America, Walmart used its capital to enter this market via acquisitions. Walmart took
a hold of this area by buying a 33% stake in the Central American Retail Holding Company from
the Dutch retailor Royal Ahold. This company operated in 363 markets, amongst other stores in
five countries. They were in Guatemala (120 stores), El Salvador (57 stores), Honduras (32
stores), Nicaragua (30 stores), Costa Rica (124 stores). Market increased its stake to 51 percent
and became one division. Walmart was smart in this acquisition. The local markets had strong
identities strong footholds, and had high degree of localization in their respective region. They
decided to leave as is, 645 different formats.
 In Chile, Walmart entered through acquisitions; Walmart bought 58.2% stake in Chile’s largest
food retailer and very successful also. BY aggressively taping into this market and offering credit
card services to less affluent customers, they were very successful
Walmart had many markets where it failed, but many where it succeeded, and sometimes both. In
Australia, for example, the store was successful because of the technology and expertise it already
possessed. The store structure worked well for Walmart also. However, Walmart’s core of selling less
than others was difficult. Inn China, success was due to the compilation of products and retailer margins.
However, in the beginning, local product sourcing with slim and sharp margins, were the issue.
Can location characteristics explain the difference in Walmart performance?
Location characteristics was a big factor in the success of Walmart in the various markets. Because of
the local manners in which local customers shopped, the value they instilled in prices, discounts, and
products, type of customer that came in, and the economic and financial standards and necessities of
those customers. Those conditions determined and dictated how a retailor should operate. Every
market is different. Countries and its people have different needs. They also have different value. Some
people do not care about the price, and other prefer the service. These determined the profitability; it is
the understanding of the market. Location plays a very critical role in the performance of the company.
Location characteristics drove the strategy on how to enter the market. In some markets, Walmart
needed to bring in different methodologies of operations, but mostly in markets that were similar to
that of the US. Introducing different ways in other markets proved tough. In some markets, the
competition would have proven too big or with a strong foothold in the market, and so presented an
obstacle even if the objectives were carried out. From the success of Walmart in various markets,
acquisition of an already established business seemed like the best option.
The idea of the green-field method had its disadvanges. It has an extremely high-risk investment. The
entry cost is extremely high, most of the time. Local government regulations are an obstacle. This
reduces FDIs from certain countries. The initial fixed cost in itself is a very big investment. However,
Walmart had the capital; it proved larger when the local characteristic proved unfavorable to Walmart
and their expertise. For some countries like the US and the UK, the pricing and inventory model was a
positive factor. In countries like German, it was a bit different. They favored quality and royalty in their
brands, they actively supported environmental concerns, and they followed decisions of their unions,
this proved problematic for Walmart. Walmart had to change its strategy based on the market. This
would decide if they would be successful or not.
Was it a good idea to go to India? Was joint venture as the mode of entry good or bad?
Location characteristics makes a difference difference in performance because the location will
determine the character of the customers. Knowing the best way to enter the market would be to
research the retail space in India. Based on the history of Walmart’s success, AN acquisition would be
best, because in essence, they would be acquiring the knowledge of said location and its characteristics.
Knowing the customer that comes in, and their economic and financial standards and necessities would
help. The above characteristics will decide the sales and the product that the stores. This will ultimately
determine the margins and revenues of India’s market. However, not the same, a joint venture would
fare the same because they would be buying into learning the market. They would have a partner that
would know the market and have an identity. This would be better than a Greenfield investment, based
on Walmart’s history. With the influence of factors like cost, competition, government, and market,
Walmart's strategy was built the geography it was in. With an intense pressure for local customer
responsiveness, Walmart adopted different strategies for different locations. When it had local
knowledge in various countries where it was successful. It showed that the strategy was better than in
the countries where there were Greenfield investments.