Why has Walmart viewed international expansion as critical to its strategy?

1 02 Question 1: Why has Walmart viewed international expansion as critical to its strategy?

Walmart is a competitive store, operating not just in the US but internationally. It has more than 5,000 regular and discount stores and more than 500 wholesale stores. Embracing an international strategy allowed Walmart to enter the foreign market, opening up the whole world.

The internationalization strategy will ideally enable Walmart to serve approximately seven billion people. This increases its profit margin relative to the local market in the United States, which constitutes an estimated 350 million people. Nevertheless, the internationalization strategy comes with the challenge of investments and the need to integrate diverse stakeholders from different social-cultural backgrounds, which would affect the company’s product line and general operations.

Compared with other business strategies, much of Walmart's global expansion occurs in emerging markets. The company can easily create a brand name in such markets in a relatively low-contested environment (Walton, 2020). However, in developing countries, Walmart also has other challenges with the supply chain process, such as a limited supply chain, limited resources, and diverse legal frameworks. Yet, such investments in both emerging and dominant economies are the fundamental reasons for Walmart’s continued competitiveness over the years.

Question 2: What did Walmart do to enable the company to succeed in Latin America and China?

Walmart started small with its plans to work in Latin America. This included undertaking a 50/50 partnership with Cifra in Mexico to optimize investment in other regions. Partnering with Cifra in 1991 gave Walmart a sound foundation to establish itself in the foreign land as the former was already operational (Walton, 2022). This also allowed a slow-paced entry into the

2 market, mitigating the risk of business failure. The feasible investment plan allowed the company to diversify its portfolio from Mexico further and create a 60-40 joint venture with Americana in Brazil. The company also adapted its investment plan to the prevailing needs of the new regions without necessarily adopting the American model.

Walmart's approach in Mexico and China differed from that of North America and Europe primarily because of Chinese government regulations. The Chinese government exercises significant control over the economy, with regulations that often favor local businesses and impose restrictions on foreign entities. These regulations can include limitations on foreign ownership, strict compliance with labor laws, and a complex approval process for opening new stores or expanding operations. For Walmart, this meant navigating a bureaucratic framework needed to be more present in its North American and European operations. Besides, Walmart controlled the majority of holdings in the joint venture with Cifra. The Chinese government implemented regulations that made it necessary for businesses like Walmart to procure goods domestically, which prompted them to turn to US firms like Proctor & Gamble, which were already operational in China.

The regulatory environment in China has also pushed Walmart to rapidly adapt to digital commerce more aggressively than in other markets. Ideally, the Chinese retail market is highly digitalized, with a significant portion of retail sales occurring online, facilitated by platforms like Alibaba. Hence, Walmart had to develop strategic partnerships, such as its investment in JD.com, innovate in e-commerce and digital services, and adapt to the Chinese business environment (Walton, 2020). Yet, Walmart was still able to succeed in the Chinese market. This was due to its capacity to reallocate limited and locally isolated items nationwide.

3 Question 3: What should Walmart do – or not – to help ensure the company succeeds in India?

India presents a challenge for foreigners, primarily because of its deeply ingrained customs and communal beliefs. Even for international students studying in China, assimilating into Chinese society can be challenging. Walmart should continue to operate as a joint venture in India. Arguably, acquiring additional stores would only harm them since most consumers would perceive them as attempting to control their culture. Second, given that India is a traditional country, Walmart should try to purchase most of its goods from regional manufacturers. Walmart is compelled to implement distinct tactics for each of the several caste systems in India due to the vast income disparity. Walmart must support community development, school building, hospital financing, low-income people's scholarships, and the handicapped community.

SECTION 2 Next, list three ideas related to the data in the case study found in Units 1 through 4.

• Summarize the concepts • Describe how the concepts connect to the case study's content • Describe how the concepts assisted in resolving a problem that arose throughout the case study.

Three topics that I have determined are pertinent to this case study include international marketing, sociocultural dynamics, and political forces that affect global trade.

Sociocultural Forces: This idea concerns how the cultures of various societies affect various types of businesses. One might examine culture through the lenses of religion, language, material culture, and social structure. Again, the local culture is one of the most important things to understand when a firm tries to establish itself somewhere new (Geringer et al., 2016). When

4 Walmart planned to expand its business, the corporation needed to comprehend the cultures of China and Latin America regarding societal organization. For example, in China, people lived in small spaces, so there was no need to develop large parking lots or sell ladders, whereas in Argentina, people took buses. Walmart entered the industry through a joint venture to get insight into the societal variables that influenced its first view.

Political Forces that Affect Global Trade: How far the government gets involved in commercial affairs and how much socioeconomic stability it can offer through monetary, fiscal, and political policies (Geringer et al., 2016). When it entered the Chinese market, Walmart had to prepare for a Chinese government that aimed to restrict international companies. Due to this, Walmart was compelled to purchase goods locally and form partnerships with partners that shared political views in order to keep the company afloat. If Walmart cooperated with local businesses or sourced items locally, the Chinese government would have let it start doing business and functioning in the market.

Marketing Internationally: This is about how far the government gets involved in commercial affairs and how much socioeconomic stability it can offer through monetary, fiscal, and political policies (Geringer et al., 2016). When it entered the Chinese market, Walmart had to prepare for a Chinese government that aimed to restrict international companies. Due to this, Walmart was compelled to purchase goods locally and form partnerships with partners that shared political views to keep the company afloat. If Walmart cooperated with local businesses or sourced items locally, the Chinese government would have let it start doing business and functioning in the market.

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References Geringer, J. M., Ball, D. A., Minor, M. S., & McNett, J. M. (2016). International Business. New York, NY: McGraw-Hill Education.

Walton, S. (2020). History of Walmart. Made in America. Our format.

Walton, S. (2022). Walmart de México. Leadership: Leaders, Followers, Environments, p. 359.