Walmart has pursued various globalization strategies over time. It initially used a multidomestic strategy in the Americas, which was very successful. However, using a global strategy in other countries without developing economies of scale led to failures, such as in Germany and Korea. Now Walmart is trying to move towards a transnational strategy to better leverage both local and global competencies. Its transnational approach worked well in the UK but has proven difficult to replicate elsewhere.
12. Why Globalize?
• Walmart needed high levels of growth to continue to survive.
• High levels of growth possible only through globalization.
• Saturation of Domestic markets.
• US accounts for 4% of worlds population.
• Discount retailing key to developing economies with double digit
growth rates.
• Advantages
• Leverage local buying power with US based MNC’s.
• Utilize competencies of Efficient store management, technology & logistics.
13. Entry Mode Decision Matrix
Strategic Importance
Hi
of Country
Lo
Lo Hi
Stand-alone Attractiveness
of Country
14. Route to Globalization - 1
• Mexico
• 1991 : Through a joint venture with Cifra, a Mexican retail company, Walmart went
global, opening a Sam’s Club in Mexico City.
• 1997:Wal-Mart Stores acquires majority interest in Cifra, creating Wal-Mart de Mexico.
• Canada
• 1994 : Walmart expanded into Canada with the purchase of 122 Woolco stores.
• 2013 : Walmart Canada has 379 total retail units.
• China
• 1996 : Walmart opened its first stores in China at Shenzhen.
• 2007 : Walmart purchased a 35% interest in Trust-Mart.
15. Route to Globalization - 2
• United Kingdom
• 1999 : Walmart entered the United Kingdom with the acquisition of ASDA.
• 2013 : ASDA has 565 total retail units.
• Japan
• 2002 : Walmart acquired a 6.1% stake in Seiyu.
• 2005 : Walmart acquired a majority interest in Seiyu, making Seiyu a Walmart
subsidiary
• 2008 : Seiyu became a wholly owned subsidiary.
• Chile
• 2009 : Walmart acquired a majority in Distribución y Servicio D&S S.A.
• 2010 : D&S renamed to Walmart Chile & operates 329 stores.
16. Route to Globalization - 3
• India
• 2007: Walmart announced an agreement with Bharti Enterprises to establish
a joint venture, Bharti Walmart Private Limited.
• South Africa
• 2011 : Walmart acquired a majority stake in Massmart Holdings Limited.
19. Tale of Four Countries
• Cost effective acquisition • Effective JV with Cifra utilizing
• Minimum Cultural adaptation local market knowledge.
• Store design & Customer • Overcame cultural barriers
service.
• Compete with Carrefour.
• Wiped out Eaton & Co ( 50%
mrkt share ) • Offering Financial services.
• Successful acquisition of ASDA. • Successful acquisition of ASDA.
• Used M&A synergies of local • Used M&A synergies of local
knowledge. knowledge.
• Strong completion from Tesco • Strong completion from Tesco
& Sainsbury. & Sainsbury.
20. Tale of Four Countries
• Lack of scale – Only 16 stores. • Entered in stake with Seiyu in
2002 and bought it over in 2007.
• Minimum Cultural adaptation.
Taller racks in Korea. • Cultural barriers – Cheap is of low
• Store design & Customer quality. Small is beautiful
service. • Small store formats.
• Exited Korea in 2006 • Running with no break even yet.
• Successful acquisition of
Wertkauf & Interspar. • Entered through JV but built
scale through acquisition of
• Failed to integrate culturally. Bompreco’s.
• High labour cost & established
competitors (ALDI & LIDI ). • Utilized discount tactics
• Exited in 2007. • Strong completion from
Carrefour & Sendas.
21. Global Strategy
• Walmart used Multidomestic strategy in Americas resulting in very
successful penetration.
• It’s use of a global strategy with out developing economies of scale
have resulted in failure. E.g. Germany & Korea
• Walmart is trying to move towards a transnational strategy to
effectively utilize local and global competencies.
• Its Transnational strategy in UK worked successfully but has found it
difficult to emulate in other countries.