How_Wal-Mart_Established_Its_Current_International_Presence

International Business – 26329 Introduction Wal-Mart, back to the year 1962, was just a small discount store that established by Sam Walton has now became one of the largest multinational retail corporation with more than 9,600 stores at 28countries around the world. In the year 1989, as the developing of world trade organization and regulation, Wal-Mart started to realize that it was a right time and advantages to enter the international market with its advanced technology system, strong corporate culture, frontier management practice and supply chain system while its has opened the first store in Mexico at 1991. By that time, Wal-Mart started to accept the challenge in the international market by constantly enhancing and optimizing their business process, information system, supply chain and management practice in order to cope with the rapid changing environment and rival competition of the international market. Moreover, it’s current international scale and commercial success has to a greater and lesser extent influencing the business world’s pace in terms of business process, logistic system, business innovation and management practices. Thus, it has become a valuable topic to investigate on what is the driving force and cornerstone that pushing Wal-Mart from a small store to a multinational corporation. Growth and innovation process of Wal-Mart “Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, services or processes, in order to advance, compete and differentiate themselves successfully in their marketplace.” ( Sam Brook, 2009) Wal-Mart as a multinational corporation has simultaneously moving its innovation and growth from many aspects in order to step up the pace of rapid changing environment. Thus, why and how Wal-Mart could have established its current international presence could be examined by it driving forces that support the growth and innovation process which will be discuss below. Wal-Mart’s Culture and Policy First of all, what are the basic belief and value that pushing Wal-Mart to its current international presence' What are the intangible factors that making Wal-Mart so extraordinary successful' In fact, the answer will definitely be the underlying culture and policies of Wal-Mart, which are actually one of most important pillars that support their growth and innovation by providing them a clear direction. Consequently, Wal-Mart culture and policy are strongly lies on Sam Walton beliefs and values which can be concluded as: * Respecting every individual * Exceeding customers expectation * learning continuously, striving for excellence, and embracing changes Moreover, Wal-Mart culture had strongly been disseminated and influencing every aspect of their business practice and operation while this could be examined by the underlying culture on their employees, customers and organization which will be discuss below. “Family Organization Culture” Firstly, Wal-Mart basic belief that based on ‘respecting every individual” had generated a “family organization culture” toward their employees globally. Based on this culture, they tend to give their employees a feeling of working as a family. For example, several policies that had been generated such the “profit-sharing programme’ in Mexico are allowing their employees to buy shares of the store they working at with a discount price. Another example is the “Open door” policy that implemented globally gives their employees the opportunity to share their suggestion, opinion, ideas and voice concern as well as the different version of “Wal-Mart cheers” that adjusting according to different country. Lastly, those policies are actually helps to maximize their employee’s commitment and are helping Wal-Mart to solve many internal business process problems as well as generating some greatest ideas for Wal-Mart to ensure the continuous growth in international market. “Customers first Culture” Another basic belief of Wal-Mart is “exceeding customer’s expectation” which had generated the “Customers first Culture”. Based on this culture, Wal-Mart had also generated several policies towards their customer, for example, “10 foot rule” which employees are encouraged to ask if they need any help, greet them and look at their eye whenever customers come near within 10 feet, which are giving a sense of friendly to shop in Wal-Mart. Another most common and famous policy is the “always commit to low price” which has help Wal-Mart to keep up their effort to provide low price products and services to their customers. Thus, these policies and culture are actually helping Wal-Mart in keeping their customers loyalty and attracting more customers globally. “Company innovation Culture” The third basic belief which is “learning continuously, striving for excellence, and embracing changes” are being one of the main roots that keeping Wal-Mart continuously growth. By adhering to this culture, Wal-Mart had continuously looking for a breakthrough in terms of their business practices. For example, Wal-Mart future plan included opening a new bank and providing several more store concept. This could actually help to formulate a new direction for their growth and a better way to do things in order to serve their global customers better as well as being more competitive. Technological Business Practices Secondly, (Troot, 2005), a management expertise also had mentioned that ‘one of the most essential factors nowadays that facilitating the innovation process of the multinational organization is the commitment to technology.’ In the early stage, Wal-Mart are realizing that as being an “aggressive” retailing company, it’s essential to enhance the efficiency of their entire business process which would ease their expansion national and internationally as well as cutting down their operation cost in order to provide low cost products to their customers. Thus, most of their early capital had been invested on technology in terms of their logistic and information system. Supply Chain System: Specifically, Wal-Mart had link its logistic system closely to their information system in order to enhance the efficiency in their supply chain and communication system. In this way, their satellites and pull system is a good example of their innovation results. Those sophisticated computer and satellites systems allow them to share and process massive of customers purchasing and inventory data among their distribution center, headquarters and suppliers which enable Wal-Mart to ship the right products to the right stores at the right time and correct quantity with the lowest cost. Organization Vigilance System: Additionally, apart from supply chain system, their strong information system is also acting as the vigilance system that helping Wal-Mart to keep aware on their external environment which could also enables them to collect valuable information from it. By using that valuable information, Wal-Mart could then make a critical decision on their business process. For example, the information system that called “pull system” allows them to track their customers purchasing pattern. By understanding the customers’ purchasing pattern, their manufacturers could get a clearer command on what products are Wal-Mart selling daily which enable them to avoid twin dangerous of producing surplus products that are not selling or too little products in heavy demand. Another example is their satellites system that enables their top management to monitor their external environment while controlling over their entire business process globally by just sitting in the control room. Thus, most valuable information such as their customers purchasing pattern and population data that collected from their external environment could then being analyze by their sophisticated information system in order to ease their global expansion by knowing what model of store is suitable and which best product and services is best to be provided. Lastly, Wal-Mart that had emphasized more in term of technology than its competitors is making them having more competitive advantage through its speed, scale and simplicity on the international market. Global Market Adaptability The third issue to be examined is the adaptability of Wal-Mart. In this way, adaptability of an organization can be simply explained as the ability of an organization to fit into their business environment. In order to understand why and how Wal-Mart had established its current international presence, it’s essential to examine how Wal-Mart had adapted to their global market. Furthermore, how Wal-Mart had adapted to global market could be examined through four basic elements which are their entry mode, business practices, expansion strategic and the adaptability to worldwide economics. Adaptability to worldwide economics: As largest retailing companies in the world, Wal-Mart realized that in order to be competitive, they must understand the way to lower down their products cost. Back to the latter of 20 Century, with the developing of many Asian country such China with its fast developing in manufacturing country had made Wal-Mart realized that they could take this advantages to optimize their product cost. Hence, Wal-Mart is taking their products from their suppliers that located globally with more than 18 countries in recent years. By understanding well the worldwide economics, they could know that which country having best resources to produce which particular products with high quality and a lower price. Lastly, by adapted to worldwide economic, Wal-Mart could also build up a strong network with their suppliers and manufacturers around the world with the capability to imports and provide different range of products to different countries with a lowest price and better quality. Expansion strategic: Another issue to examine how Wal-Mart has adapted to its current international position will be lying on its expansion strategic. In this way, Wal-Mart and its competitors are actually using the different approaches to enter market. Consequently, Wal-Mart is exploited the economics of density as their expansion strategic. Unlike their competitors which is Carrefour and Tesco, Wal-Mart normally started their expansion in the rural places before entering the high population, by doing so, Wal-Mart are actually gaining an opportunity to build up their strength and refine skills before they entering higher population and more competitive market. They will then opening stores close to each other while slowly moving from less population area to the high density area like big cities. However, this expansion strategic is actually more systematically and strategically and at the meantime easing Wal-Mart distribution, cutting cost in advertisement and facilitating their training due to the density of their stores. Thus, their expansion strategic are actually making them more adaptable to the global market while this might be one of the reasons why Wal-Mart owing more branches internationally than its competitors because they are being well-prepared in terms of more understanding in the customers purchasing pattern and preferences comparing to Tesco and Carrefour expansion strategic which they will typically chosen to open their store firstly on high population area. Entry Mode: Moreover, Wal-Mart also aware that chosen the appropriate entry mode is essential for their expansion in the global market because they are adapting a strange market and culture. Admittedly, the entry mode that mainly be used by Wal-Mart based on acquisition and merger and partly on FDI and joint venture due to the different countries policies and culture. The main reason why Wal-Mart takes acquisition and merger as their main entry mode is firstly due to their strong financial power to buy the stake of others company. Secondly, acquisition and merger is actually allowing Wal-Mart avoiding the barrier to entry the market with faster assesses into one other culture and customers buying pattern which will ease and fasten their expansion. For example, the acquisition of Seiyu in Japan; the merger of Wal-Mart with Asda which are the third largest retailing company in UK in year 1999, and had currently became the second largest retailing company in UK with its growth from 46stores to 542 stores today. Another example is Wal-Mart in Mexico which they had to choose joint venture other than acquisition due to the protection of Nation Corporation by their government, Wal-Mart had joint venture with Citra, one of the leading retailing companies in Mexico and had now successful to open 1,932 stores there. Lastly, we can see that Wal-Mart had chosen a faster way to be adapted to the global market by acquisition and merger because they realized that speed of expansion is a competitive advantages in the international market rather than other types of entry mode such as foreign direct investment which will be slowing down their adaptability to the market since they have to start everything from zero. Business Practices: In order to be adapted to the certain market and business environment, Wal-Mart also understood that it’s essential to provide different range of products and services as well as their business model in order to suit the different demand and size of the market. Consequently, in order to suit the market size, Wal-Mart has continuously developed different stores concept such as Wal-Mart supermarket, Sam Walton Club and Wal-Mart Express. For example, Sam Walton Club had open up a niche market for Wal-Mart which it is a combination of discount store and supplier. This store normally opens in the area that is surrounded by many small businesses because they are selling large quantities of goods and is good to act as a supplier to small business. Another example is Wal-Mart express which is a small discount store that providing a range of products from simple grocery shopping to even gasoline service while this store concept is focusing on the smaller towns that are unable to support a larger store. In terms of services, Wal-Mart had also provided different range of services according to the customer purchasing pattern and market. For example, in certain area, Wal-Mart had launch a range of services such as their MoneyCenters, Wal-Mart Credit Card, Pharmacy service centers and e-buying to convenient customers from buying their products as well as helping their customer to save money. In terms of products, Wal-Mart had provided different range of products to suit their business environment and customers’ preference. For example, in the business environment that surrounded by agriculture industries, Wal-Mart will set up a department in their store that specifically selling some agriculture products while in the environment with high population, Wal-Mart will then set up lots of department to sell different range of products such as groceries, books to medicines products. Lastly, the high adaptability in business practice from Wal-Mart could actually fulfill the different demand and preferences of their global customer which will be vary due to the different culture and living standard. Unlike K-Mart, which is one of the main competitors of Wal-Mart in the early stage has now facing the bankruptcy due to the low adaptability to the rapid change environment. Conclusion Wal-Mart today is still being energetic in its current international presence with its continuous growth which could be seen from its current corporate image and annual sales. After the discussion and examination above, we could conclude that Wal-Mart is actually gaining their international position through its culture, technological business practice and strong adaptability. Firstly, with its culture that acting as an intangible value of Wal-Mart is making them being able to formulate a clearer direction for its growth and innovation. Secondly, with their technological business practice, Wal-Mart is capable to expand strategically and systematically on their scale while at the meantime reducing the entry barriers and streamline the complicated issues in their business process globally. Lastly, with their strong adaptability, Wal-Mart is being able to continuously tailor their business practices and management system to suit the rapid changing environment of the international market. Consequently, those three values are also acting as the characteristics why Wal-Mart being so competitive in their current international presence while overcoming the threats of their competitors. Last but not least, those three values will definitely sustaining Wal-Mart current international presence while driving Wal-Mart to a breakthrough point in terms of their innovation and growth. References 1. Angela da Rocha and Luis Antonio Dib (2002), ‘The entry of Wal-Mart in Brazil and the competitive responses of multinational and domestic firms’, International Journal of Retail & Distribution Management, Vol.30, No.1, pp.61-73 2. Charles fishman peguin (2007), The Wal-Mart Effect- How an out-of-town superstore became a superpower, England, Clays Ltd, St.Ives plc 3. Carl H. Tong and Lee-Ing Tong (2006), ‘Exploring the cornerstones of Wal-Mart success and competitiveness’, Vol.16, No.2 4. Enrico Colla and Marc Dupuis (2002), ‘Research and managerialissues on global retail competition: Carrefour/ Wal-Mart’, International Journal of Retail & Distribution Management, Vol.30, No.2, pp.103-111 5. Enrico Colla and Marc Dupuis (2002), ‘Research and managerialissues on global retail competition: Carrefour/ Wal-Mart’, International Journal of Retail & Distribution Management, Vol.30, No.2, pp.103-111 6. Emek Basker (2007), ‘The Causes and Consequences of Wal-Mart’s Growth’, Journal of Economic Perspectives, Vol.21, No.3, pp.177-198 7. Lichtenstein, NelsonView (2005), ‘WAL-MART AND THE NEW WORLD ORDER; A Template for Twenty-First Century Capitalism'’, The City University of New York on behalf of the Murphy Institute for Worker Education and Labor Studies, Vol. 14, pp.21 8. Management practices of Wal-Mart [Online], Available: http://ivythesis.typepad.com/term_paper_topics/2007/10/management-part.html 9. Richard B. Freeman and Alice O. (2011), ‘Wal-Mart innovation and productivity: a viewpoint, Canadian Journal of Economics, Vol.44, No.2, May, pp.468-508. 10. Stanley D. Brunn (2006), Wal-Mart World, London, Taylor & Francis Group 11. Tim Hannagan (2008), Management Concepts & Practices- Fifth edition, Edinburgh, Pearson Education Limited. 12. Wal-Mart Homepage [Online], Available: http://walmartstores.com/aboutus/297.aspx 13. ‘Wal-Mart, Tesco and Carrefour do battle in the East’, Emerald Group Publishing Limited, Vol.24, No.2, pp.5-7. 14. Wal-Mart self branding [Online], Available: http://www.brandingstrategyinsider.com/2009/03/a-walmart-brand-for-the-ages.html 15. Wal-Mart future investment [Online], Available: http://investors.walmartstores.com/phoenix.zhtml'c=112761&p=irol-newsArticle&ID=1345359&highlight 16. Wal-Mart stores concept [Online], Available: http://en.wikipedia.org/wiki/Walmart#Walmart_Supercenter 17. Wal-Mart in Japan [Online], Available: http://www.businessweek.com/magazine/content/05_09/b3922073.htm 18. Wal-Mart failure in Japan [Online], Available: http://money.cnn.com/magazines/fortune/fortune_archive/2007/08/06/100141311/index.htm