Economics Sample Paper on Walmart’s Global Strategies

Walmart’s Global Strategies

Introduction

Walmart is the biggest retail outlet worldwide. It got incorporated in October 31, 1961 and had its shares in the New York Stock exchange by 1972.Walmart offers a wide combination of goods with their daily low prices strategy in its retail stores. In addition, the firm offers its merchandise through many electronic commerce websites such as samclub.com and Walmart.com (Roberts & Berg, 2012).Walmart, Sam’s Club (a membership only club) and the international division are all managed by Walmart. The firm’s revenues also stem from Sam’s Club membership fee revenues, income of tenants and income from financial services. Major centers are located in, Puerto Rico, Brazil, China, Japan, Mexico, Argentina, and the UK.

Internationalization History

Walmart was a creation of Sam Walmart, who believed in selling products at the lowest prices. It started as a small business entity and quickly realized that could persuade potential consumers in other countries to buy its products at lower prices. They then moved into China and Mexico and later on moved to explore African countries. The cost leadership strategy worked in their favor, and Walmart started moving out to buy other retail stores. Nowadays the effect of Walmart is felt global.

Walmart International Retail Units

Walmart’s   chains  majorly operate in Chile,   Mexico, Central America,  and  the company’s joint business enterprise  is based in china  and India There are also other controlled subsidiaries located in China. Within the international section, discount stores are located in Puerto Rico and Canada; the supercentres are located in Argentina, Brazil, China, Japan, Mexico, Puerto Rico and the UK, while the Sam’s Clubs are located in Brazil, Canada, China, Mexico and Puerto Rico deployment to benefit its foreign outlets. The techniques enabled Walmart to reduce costs and influence sales. Other stores operated by Walmart are Supermoms supermarkets, and Vips restaurants, Suburbia’s specialty department stores as well as Bodegas discount stores. In addition, the company runs Todo Dias supermarkets in Brazil

Walmart Success in China and Mexico

According to Chan (2011), in China and Mexico, Walmart obtains a lot of revenues by applying cost reduction technique. China and Mexico’s majority of the population had a low purchasing power which acted in favor of Walmart that sold goods at lower prices. Low prices appealed to low-income earners in these countries and increased their demand for goods from Walmart’s outlets.

Walmart’s Mixed Reaction in Europe and Japan

  Walmart encountered a lot or resistance in these regions. Walmart could only retain clients who had low power of purchasing and therefore do not value quality. Customers who value quality associated Walmart’s   lower prices with a compromise in quality (Roberts & Berg, 2012). The same happened in Europe, where the majority of shoppers were middle-income earners and instead of embracing the low prices, associated the low prices with a decline in quality. Walmart’s growth was tremendously affected by this.

Challenges with Corporate Social Responsibility

 According to Roberts and Berg (2012), Walmart engages in a lot of corporate social responsibility activities as a means to trying to retain the global fame and become a world leader. Walmart has, therefore, launched so many projects meant to sustain the environment. The corporate social responsibility acts by Walmart however do not go unchallenged. Critics argue that smaller prices charged by Walmart makes customers shun less advanced mainstream businesses thus driving down the gains obtained by towns in small communities. They still argue that Walmart hurts the United States economy due to massive reliance on products from the Chinese. Walmart is arguably the    largest importer in the Unites States in many classes like   fast-moving consumer goods and electronics. Activists have always blocked Walmart from erecting new store locations. They claim that the new store could cause problems like environmental challenges; traffic builds up, public safety, bad public relations, low benefits and wages, and greedy pricing (Roberts & Berg, 2012). Critics strongly believe that before Walmart can boast of corporate social responsibility, it must start by paying better salaries and addressing all the environmental and social challenges that it causes.

Walmart’s Global Explanation Strategy

 Due to Walmart’s desire to expand, it had to move out of the United States and get other markets. It had already exhausted a large segment of the local market, and the United States had a little population that could not facilitate its proper growth.  Emerging markets with lower income levels also offered Walmart a reason to go global by expanding its networks in various countries (Chan, 2011).

 In order to expand globally, the corporation had the ability to influence two main resources originally initially coined in the United States. It enjoyed its immense purchasing ability with big suppliers like Proctor & Gamble, Pfizer, Kellogg, Coke, Hallmark, Revlon 3M, and Nestlé, to procure goods cost-effectively for its non-United States stores.

Walmart’s Future Global Explanation Goal

  Walmart’s future goal is to take charge in the units of digital and physical retailing globally (Roberts & Berg 2012). The firm is strengthening its online plan by establishing multi-channel means, and making most use of the investments that it has made in building its worldwide Electronic commerce unit.

            From the point of view of Chan (2011), due to increased global competition Walmart seeks to focus further on price in the future. It seeks to advocate price leadership through thorough huge merchandising functions, and support these through robust marketing campaign.  Apart from TV advertising Walmart also plans to use the social media to connect with its customers easily in a bid to reinforce its price messaging.

Reference

Chan, A. (2011). 22. Walmart in China(pp. 87-93). Ithaca: ILR Press.

Roberts, B., & Berg, N. (2012). Walmart key insights and practical lessons from the world’s largest retailer. London: Kogan Page.