Abstract
The idea behind what would become Walmart was a store that would offer a large variety and volume of products offered at low prices, everyday. Sam and J.L. Walton, the founders of Walmart, believed that American small towns would benefit from a large retail shopping center because of the everyday low prices and the large quantity of products; they also believed that a large discount retail store would benefit from small towns and make a significant profit. People would be willing to purchase everyday products at everyday low prices. The first store under the Walmart name (Walmart Discount City) opened in 1962 in Rogers, Arkansas.
During the 1970s, Walmart enhanced its production and distribution methods by building its own warehouse to store its products. The idea was Walmart could purchase its products in bulk and store them in its warehouse. This way Walmart could ensure that its store's shelves would remain stocked. Walmart went public in 1970 and was listed on the New York Stock Exchange by 1972. By 1977, Walmart ranked first on return on equity, return on capital, sales growth and earnings growth among America's discount and variety stores.
Throughout the 1980s, Walmart continued to acquire new businesses and expand as a company. Walmart developed a new type of store that offered items in bulk and required a membership fee under the Walmart name called Sam's Club. Walmart also tried to adopt the idea of a "Hypermart" (a store that combined retail, restaurants, banks, and even a video rental store). The idea of the "hypermart" was taken from a French entrepreneur, but the idea fell through when the costs to heat and cool the extremely large facilities, traffic congestion, and lack of parking space created more drawbacks than advantages.
In order to rectify the mistakes of the "Hypermart", Walmart developed the "supercenter" concept in 1988. Walmart constructed smaller facilities that offered just grocery and retail items instead of the extra perks like the video store and restaurants.
Company Criticisms
While Walmart had been extremely successful since its humble beginnings in Rogers, Arkansas in the 1950s, Walmart did face several setbacks on the way to becoming the fastest company to reach $1 billion.
One of Walmart's criticisms was that it avoided dealing with sales representatives and often was able to get vendors to cut their prices even more than the vendors had originally planned. In 1987, there was retaliation from a variety of manufacturer representatives claiming that by eliminating them from the buying process, Walmart took over the manufacturers' control on how to sell their products.
In order to correct some of its negative image caused by the retaliation from manufactures, Walmart created a "Buy America" program. The program's goal was to work with the manufacturers to help create American-made products that would compete with foreign imports. Walmart was successful at cutting its imports by approximately five percent between 1985 and 1989.
Tags: Walmart expansion strategies, Walmart Brazil, Carrefour
Extract
[...] Already by 2004 Walmart accounted for 45 percent of general merchandise percent of health and beauty aids, and 29 percent of non-food grocery sales in the U.S., and the company is still growingvii. However, Walmart stores have recently seen the U.S. rate of sales growth slow noticeably, from 11.6% in in in 2009 to just 1.0% in 2010viii. A reason for the recent declining growth in sales could be attributed to recent recession in the United States, or, some believe, that Walmart has reached a saturation point in the U.S. [...]
[...] Walmart's core competencies do not fit into diversifying to the local market. This caused them to suffer big losses and low market penetration. Table Discount/Hypermarkets WalmartBRAZIL Entering Brazil Since 1980, the first worldwide retailer leaded an internationalization policy. By focusing on the growing South-American market, Walmart chose to enter two promising markets Argentina and Brazil in 1995. As a multinational company, before entering the Brazil market, Walmart managers decided to conduct a market research in Brazil to determine if the Brazilian market would lead to a rapid return on investment. [...]
[...] Walmart needs to adapt to the local environment. Walmart should have also considered a joint venture strategy. Tesco succeeded in South Korea through joint venturing with a local company. This success was contributed to the fact that the local company already had exposure to the local environment. They knew what the locals wanted and how to go about selling the company's products. Overall Walmart failed from lack of overall market research. Walmart did not realize what the local market wanted and failed to adapt to that local market. [...]
[...] When Walmart sold its stores it posted a 9.9 billion won loss the year before. Pulling out of South Korea will put Walmart on a list with Nokia, Nestlé, Google, and other big name companies who have failed in the demanding South Korean marketxx. Walmart's Strategy in South Korea - and Why it Failed Walmart's strategy of global standardization worked in places like Mexico, Canada, and the United Kingdom, it failed in South Korea. Walmart went into the market without any market research. [...]
[...] Walmart's lack of adaptation and their "every day low price" strategy did not fit well within the Korean market. Walmart did not adapt to the culture and local environment in South Korea. In a global strategy the focus is on one major type of product. In this strategy the firm is faced with a strong pressure for cost reduction but with weak pressure for local responsiveness. Products within this strategy are highly standardized worldwide. Firms usually tightly coordinate their products and pricing throughout the world using a global strategy. In a multinational strategy the focus is on flexibility. [...]
