Global Facility Location for Wal-Mart retail outlet in East Asia
For a firm or company seeking to set up its operations in a foreign market, country-specific and industry-specific factors will play a role in deciding whether the firm or organization will be located in the new market or not (Wagner, 2009). Other than considering country-specific and industry-specific factors, such organizations or firms must do a SWOT analysis with the aim of understanding the potential of success in the new market. This paper focuses on the location of Wal-Mart retail outlet in East Asia, specifically China. It clearly identifies the country-specific and industry specific factors that would be used to decide if and where to locate Wal-Mart’s new outlet while discussing the quantitative tool or methodology that would help in analyzing whether or not the selected country is favorable for the location of Wal-Mart’s outlet.
Country-specific factors
The business facility choice is Wal-Mart retail outlet that aims at penetrating the retail industry in East Asia. China is the country chosen for the location of Wal-Mart’s retail outlet in East Asia. Some of the country-specific factors that would be used in deciding whether to locate the facility in China include geography, infrastructure, political forces, legal forces, and economic forces (Wagner, 2009). In terms of geography, Beijing, China’s capital, selected as the ideal location for Wal-Mart’s outlet in East Asia has an urban area of 1,368 square kilometers and the city or municipality is about 6,336 square miles. Its unique geographic location sees it enjoy benefits of connecting to other countries in East Asia such as Japan, and therefore, the location is an ideal business hub will be of significance to Wal-Mart’s outlet. In terms of infrastructure, China, with a specific focus on Beijing, has invested heavily in infrastructure that speeds up transportation, communication, and industrial set up, all of which could benefit Wal-Mart’s outlet in the city. Concerning political forces, the Chinese government facilitates and supports international business, and this should be considered an advantage for Wal-Mart in its bid to establish an outlet in the country. Concerning legal forces, it is important to consider whether the Chinese government interferes with private businesses as this can affect the bid to establish Wal-Mart’s outlet in the country. Moreover, in terms of economic forces, China has a stellar record of high economic growth in recent years, and this could prove beneficial to Wal-Mart once its outlet is established in the country’s capital (The Staff of Entrepreneur Media, Inc., 2015).
Industry/business-specific factors
China is one of the countries with the most lucrative and fast-growing retail markets not only in East Asia but the world. Research indicates that China’s retail sales in 2009 hit $1.8 trillion, and this has been on the rise annually. Some of the industry/business-specific factors that would be used in deciding whether to locate the facility in China include the retail market structure and retail sector opportunities for foreign companies (Wagner, 2009). China’s retail market structure is fragmented and encompasses several small and medium-sized retailers, which means that big-box retailers like Wal-Mart would have a tough time penetrating the industry. On the other hand, regarding China’s retail sector opportunities, the fact that the Chinese government strongly supports the development of e-commerce in the retail sector with an of increasing online shopping could jeopardize Wal-Mart’s achievement of its profitability objectives as it seeks to establish a physical retail outlet in China.
Methodology or Quantitative tool recommendation
Of course, in the analysis of whether China’s Beijing would be an ideal location for the establishment for Wal-Mart’s retail outlet in East Asia, quantitative tools of research would be used. Some of the quantitative tools of research that would be used in the analysis include Custom Hybrid, Online-Web, face-to-face interaction, phone, mail, and the Central Location Intercept. The use of the mentioned tools in the analysis would be pivotal or helpful when it comes to outdoor interviewing that will ensure information is obtained directly from participants in the city of Beijing on their thoughts of whether the establishment of a Wal-Mart outlet in the city is ideal. Also, the use of the tools mentioned above would be fundamental to the collection of the details of potential customers as well as sampling and coming up with key information needed when it comes to establishing the retail outlet in China. The image below shows the quantitative tools that would play a crucial role in the analysis.
Decision to locate the facility
Despite the restrictive industry-specific factors such as China’s fragmented retail structure and the unfavorable retail sector opportunities, China remains the best and favorable location for Wal-Mart’s retail outlet in East Asia. One of the reasons why the outlet would be located in Beijing, China, is the high population that would provide a wide customer base for the established outlet (The Staff of Entrepreneur Media, Inc., 2015). Also, Beijing being China’s capital has a well-developed infrastructure, which would boost and play an integral role in the facility’s operations in the region. Moreover, the fact that the Chinese government supports international fully coupled with the ideal geographical location of Beijing would boost the establishment of the outlet in the country. Below is a map of East Asia, and China where Wal-Mart’s retail outlet would be located.
References
Wagner, T. (2009). Foreign market entry and culture. München: GRIN Verlag GmbH.
The Staff of Entrepreneur Media, Inc. (2015, May 20). 10 Things to Consider When Choosing a Location for Your Business. Retrieved May 03, 2017, from https://www.entrepreneur.com/article/244866