Wal-Mart in 2005: Managing Globalization


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Case Details:

Case Code : BSTA137
Case Length : 18 Pages
Period : -
Organization : -
Pub Date : 2005
Teaching Note :Not Available
Countries : US
Industry : -

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction

In 2005, Wal-Mart, the largest retail chain in the world was also the world's largest company with a turnover of $285.2 billion. Wal-Mart's globalization had started in 1991, when it opened a SAM'S Club near Mexico City. In 1993, Wal-Mart International was set up to oversee the growing opportunities for the company worldwide. Since then, the overseas operations had enjoyed rapid growth and consumer acceptance. Wal-Mart International employed more than 400,000 associates in Argentina, Brazil, Canada, China, Germany, Korea, Mexico, Puerto Rico and the United Kingdom. Wal-Mart also owned a 42% interest in Seiyu, Ltd., a leading Japanese retailer. Overseas sales amounted to $56,277 million in 2005.

Wal-Mart's approach to competing in overseas markets had evolved over time. When it entered a foreign country, Wal-Mart adjusted to the local regulatory framework and customer tastes. The retailer made necessary modifications such as merchandise offerings.

However, Wal-Mart did not change three main ingredients: Brand names (Wal-Mart and Sam's Club), everyday low price strategy (EDLP), and high ethical standards. Brand names had been an important asset while entering foreign countries and establishing an initial market. Wal-Mart extended ELDP to overseas markets both to make supply chain management more effective and to gain the trust of customers. Despite the difficulties involved, Wal-Mart had also held steadfast to its high ethical standards.

Wal-Mart believed customers were alike across the world, regardless of how different their countries looked...

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