Walmart’s Global Expansion

In: Business and Management

Submitted By LaurenzVogel
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Walmart’s Global Expansion

1 How does expanding internationally benefit Walmart?
After its beginning in 1962 Walmart ever since had constant growth rates and successfully gained market share in the merchandise and food retailing markets. “By 1990, however, Walmart realized that its opportunities for growth in the United States were becoming more limited”. To keep steady growth rates and profits the company decided to expand globally. The core competency of Walmart is the price. Selling merchandise and food for low prices made them earn market shares and continue the growth rates. Going global gives companies the opportunity of using location economies to secure the quality, use economy of scale to lower the productions costs per unit and benefit from learning effects. A global supply chain and global markets will lower the production costs since more volume is ordered following a higher demand trough international markets. Especially for Walmart expanding internationally supports and secures their core competency: Selling everyday life goods at a low price.

2 What are the risks that Walmart faces when entering other retail markets? How can these risks be mitigated?
The strategy for success worked very well in the United States. That does not mean that it works very well in other countries. There are different preferences and consumer patterns in different countries. Adding to that Walmart may face strong competition from already established retailers that have a better understanding in local needs and demands of the customers. Another thread could be a strict government that protects the local economy or an instable government/economy. Through strong market research or co-operation/acquisition of local retailer companies Walmart could gain critical knowledge of the local market and its consumers. Especially a co-operation with an established company…...

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