The Success Story of Wal-Mart in Mexico
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Case Details:
Case Code : BSTR264 Case Length : 14 Pages Period : 1991 - 2007 Pub Date : 2007 Teaching Note :Not Available Organization : Wal-Mart de Mexico SAB de CV Industry : Retail
Countries : Mexico, USA
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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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Excerpts
Background Note
Wal-Mart was founded by Samuel Moore Walton (Sam Walton) in 1962. Before
starting his own discount stores, Sam Walton had worked at JC Penney
Corporation, Inc. for a brief period and had later run Ben Franklin franchises .
His experience in retailing led Sam Walton to believe that buyer behavior in the
US was changing rapidly and discount stores would be in great demand in the
future especially in the smaller towns. When he was operating the Ben Franklin
franchises, he proposed to the owners that the business could grow rapidly by
passing on more margins to customers and making profits on volume, rather than
bargaining with wholesalers in order to make profits...
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A Successful Entry
Wal-Mart entered Mexico in 1991 through a joint venture with Cifra, the
family-owned company of the Mexican businessman, Jeronimo Arango. Cifra was a
dominant player in the organized retail market in Mexico at the time. Wal-Mart
consolidated its position in Mexico after it acquired a major stake of 62% in
Cifra in 1997...
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Low-Prices for the Customer
Nearly 70% of the population in Mexico lived below
the poverty line and they depended largely on informal street shops for
cheap food and clothing. Under such a scenario, Walmex's low-price
strategy raised enormous interest among Mexican customers. The low-price
strategy suited the socio-economic conditions of Mexicans, which led to
the company's immediate acceptance and quick growth. Through its
low-price strategy, Walmex was able to strategically penetrate into
markets which otherwise depended on unorganized vendors... |
Walmex into Banking
Walmex planned to open its first in-store bank branch in Mexico by June 2007.
Walmex's bank, Banco Wal-Mart de Mexico Adelante SA, was to offer savings
accounts, debit cards and consumer loans to start with and subsequently expand
to mortgages and car loans. According to the company, its banks would operate
within Walmex stores, but not in its restaurants. Walmex's banking unit would be
Wal-Mart's first banking venture anywhere in the world...
Excerpts Contd...>>
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