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Walmart has already dominated the Americas and China Markets and have set their sights on the Indian market. However, Walmart must overcome the strict government barriers, frustrating bureaucracy, and poor infrastructure in order succeed in the Indian market with the lessons Walmart learned from previous ventures.
Sam Walton opened the first Walmart in Rogers, Arkansas in 1962 to bring great opportunity and value to his customers after being inspired with the success of his dime store. Walmart soon became the dominant firm in the United States retail industry due to high levels of service, the purchasing economies and strong inventory management. As the stores grew, so did Mr. Walton’s aspirations. Before Mr. Walton passed away in 1992 he experimented with new store formats such as Sam’s Club and Walmart Supercenters, and even made the decision of expanding into Mexico. Many did not believe that Walmart would be able to transferrer Walmart business practices and culture on a global scale (Geringer, M., McNett, J., & Minor, M.,2018).
How it works
There are several reasons that Walmart was so successful in establishing on a global scale. Walmart first selected emerging markets with large, growing populations, such as Mexico, Argentina, and Brazil in the Americas market and China in the Asia market. Walmart opened the first international store in 1991 in Mexico City. Walmart used a strategic alliance, fifty-fifty joint venture, with retail conglomerate, Cifra, to manage the culture differences between the United States and Mexico. Cifra provided Walmart with insight on Mexico’s retail culture worked and how to operate in the Mexico market. Walmart then entered the Brazil market on a majority-owned venture of sixty-forty with Lojas Americana. Then allowing Walmart to enter Argentina market on their own.
Once the Americas market was established Walmart set their sights on China in 1996. Due to restrictions in Beijing on foreign retailers, such as having to be government-backed partners and limitations on how many stores, Walmart had to form a strategic alliance with two politically connected Chinese partners. Walmart had to adapt their current marketing mix since they varied from the other product strategies Walmart due to the sociocultural forces of China. Walmart also had to learn the importance of public relations in China, therefore they collaborate with central and local governments and local communities (Geringer, M., McNett, J., & Minor, M.,2018).
Walmart not only succeeded but exceed expectations and now has over six thousand international retail stores that employ over nine-hundred-thousand associates over twenty-six international markets because Walmart was able to enter into joint ventures with cop rotations who were already established in that market and understanding how to adapt to different marketing mix with each country due to sociocultural forces (Geringer, M., McNett, J., & Minor, M.,2018).
One alternative for Walmart instead of the Indian market was the European Market. The alternative was rejected because Walmart did not have the market share that was needed to compete with the established competitors in the European market (Geringer, M., McNett, J., & Minor, M.,2018). Walmart did try one store in Germany but after a decade closed because it could not compete with German discount chains. Another reason for the failure was that the Walmart formula of an all-in-one shopping destinations did not transfer to the German’s culture (Landler & Barbaro, 2006). Currently no other alternatives are possible that fall into Walmart current strategy of selecting emerging markets for international expansion.
For Walmart to succeed in India every bit of knowledge that was learned on pervious international ventures will need to be utilized. This includes the knowledge gained from joint ventures in Mexico, Brazil, and China. Walmart must enter into a joint venture with an established corporation that understands the differences between the United States and India. Walmart must adapt the marketing mix based on India’s sociocultural forces. As well as understand the importance of public relations and how collaboration with central and local governments and local communities will help navigate the frustrating bureaucracy in India.
With this knowledge, one solution would be to enter into the whole sale trade market where there are no restrictions for foreign companies regarding Foreign Direct Investments (FDI) (Kongraju, V., 2014). This solution allows Walmart to overcome the strict government barriers and enter the retail market until the Indian Government revises the reform and lift some of the restrictions on foreign retail companies within the next few years. Until then Walmart can prefect their logistics system with new innovated strategies to be able to navigate India’s poor infrastructure. As well as adapt the corporation’s strategic mindset to accommodate the requirements of the Indian market due to their diversified culture and multi-dimensional background.
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