Walmart

Wal-Mart is an American multinational company specializing in retail, founded in 1962 in Arkansas by Sam Walton. It began to internationalize in the early 90’s and is now headed by son, Robson Walton. With sales amounting $419 billion and profits of nearly $16 billion, it is ranked as the 18th largest public company in the world. Wal-Mart employs about 2.1 million people and serves 200 millionpeople in about in 8361 stores (including Sam’s Club wholesalers) in UK (with the ASDA brand), the Americas and Asia. Main competitors include Carrefour, Metro and Tesco.

In U.S., Wal-Mart was able to develop competitive advantages that remain unrepeatable for competitors. Among these, the most important is the logistics/distribution aspect. By being a pioneer in using IT’s in its distributionsystem, Wal-Mart has been able to commit to a low-price strategy that has had a very important role in achieving its actual market share. Therefore, by developing synergies in distribution channels, information systems, transportation, stock and use of bargaining power, the company has been able to keep costs low enough to maintain its “Always Low Prices” policy. This competitive advantage remainsits main success driver.

Being widely successful but foreseeing limited growth in the U.S., Wal-Mart saw international expansion as a must. In order to do so, the organization saw developing countries as the most attractive markets. However, entry strategies were different depending on the country. The first tryout was a close neighbor: Mexico. Diluting risk through a 50-50 JV with GrupoCifra, Wal-Mart was able to acquire experience in the internationalization process. However, cross-cultural issues were faced in order to attain its actual leading position. The lack of knowledge of the Mexican market (concerning store layouts, distribution infrastructure and consumer tastes) represented a drawback in its beginnings. Nevertheless, the capability of quickly learning and respondinghelped revert the situation and become Mexico’s top retailer company. This knowledge would later prove very valuable in later projects.

Following success in Mexico, other developing countries were taken into account. The experience acquired before helped Wal-Mart adopt new entry strategies in relation to the stake it had in its entry JV’s (60-40 and later acquisitions in Brazil) until it was ableto set up a wholly owned subsidiary in Argentina. Even though these new ventures also had drawbacks, they allowed Wal-Mart to further develop knowledge. Thus, it was able to identify certain customers’ behavior that could later be applied to stores in other countries (e.g. wine department in Argentina or the multi-floor stores adapted from Korea in New York).

The next step was related to theAsian market, especially China. This stage, however, proved a difficult one for Wal-Mart. Several entry barriers proved a great challenge for the organization. As with Mexico, lack of knowledge of the culture and environment (business, politics, etc.) traduced into loss efficiency in the company’s beginnings in the China. Endorsement of local suppliers and protection of national companies meantthat Wal-Mart had to “play the game” in the Chinese’s government terms. Terms that were prejudicial to Wal-Mart’s competitive advantages (a lack of efficiency in costs due to inefficiency of suppliers and in the supply chain), therefore, to its strategy. Nonetheless, as time went by, organizational learning related to Chinese’s business environment occurred. The understanding of the creation andconsolidation of relationships with businessmen and government officials became a critical factor of the organizations’ success in China. Then again, new knowledge was acquired.

After partially “conquering” and understanding developing countries, the next targets were developed nations. This stage required different strategies due to the countries’ barriers. High competition remained the most...