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Part2

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Wal-Mart's Foreign Expansión
Wal-Mart, the world's largest retailer, has built its suc-cess on a strategy of everyday low prices, and highly efficient operations, logistics, and information systems that keeps inventory to a minimum and ensures against both overstocking and understocking. The company employs some 2.1 million people, operates 4,200 storesin the United States and 3,600 in the rest of the world, and generates sales of almost $400 billion (as of fiscal 2008). Approximately $91 billion of these sales were generated in 15 nations outside of the United States. Facing a slowdown in growth in the United States, Wal-Mart began its international expansión in the early 1990s when it entered México, teaming up in a joint venture with Cifra,Mexico's largest retailer, to open a series of supercenters that sell both groceries and gen-eral merchandise.
Initially the retailer hit some headwinds in México. It quickly discovered that shopping habits were different. Most people preferred to buy fresh produce at local stores, particularly items like meat, tortillas and pan dulce which didn't keep well overnight (many Mexicans lacked largerefrigerators). Many consumers also lacked cars, and did not buy in large volumes as consumers in the United States did. Wal-Mart adjusted its strategy to meet the local conditions, hiring local managers who understood Mexican culture, letting those managers control merchandising strategy, building smaller stores that people could walk to, and offering more fresh pro-duce. At the same time, thecompany believed that it could gradually change the shopping culture in México, educating consumers by showing them the benefits of its American merchandising culture. After all, Wal-Mart's managers reasoned, people once shopped at small stores in the United States, but starting in the 1950s they in-creasingly gravitated towards large stores like Wal-Mart. As it built up its distribution systems inMéxico, Wal-Mart was able to lower its own costs, and it passed these on to Mexican consumers in the form of lower prices. The customization, persistence, and low prices paid off. Mexicans started to change their shopping habits. Today Wal-Mart is Mexico's largest retailer and the country is widely considered to be the company's most successful foreign venture.
Next Wal-Mart expanded into a numberof developed nations, including Britain, Germany and South Korea. There its experiences have been less successful. In all three countries itfound itself goinghead to head against well-established local rivals who had nicely matched

their offerings to local shopping habits and consumer preferences. Moreover, consumers in all three countries seemed to have a preference for higher qualitymerchan-dise and were not as attracted to Wal-Mart's discount strategy as consumers in the United States and México. After years of losses, Wal-Mart pulled out of Germany and South Korea in 2006. At the same time, it contin-ued to look for retailing opportunities elsewhere, partic-ularly in developing nations where it lacked strong local competitors, where it could gradually alter the shopping culture toits advantage, and where its low price strategy was appealing.
Recently, the centerpiece of its international ex-pansión efforts has been China. Wal-Mart opened its first store in China in 1996, but initially expanded very slowly, and by 2006 had only 66 stores. What Wal-Mart discovered, however, was that the Chínese were bargain hunters, and open to the low price strat-egy and wide selectionoffered at Wal-Mart stores. In-deed, in terms of their shopping habits, the emerging Chínese middle class seemed more like Americans than Europeans. But to succeed in China, Wal-Mart also found it had to adapt its merchandising and op-erations strategy to mesh with Chínese culture. One of the things that Wal-Mart has learned is that Chínese consumers insist that food must be freshly harvested, or...