WAL-MART CHAIN STORES
Research and choose one international corporation to discuss (Wal-Mart). You may use the Fortune Global 500 to help you choose a corporation (http://money.cnn.com/magazines/fortune/global500/2009/). The corporation you choose may be headquartered in either the United States or a foreign country.
1. Provide a company overview, and identify the countries in which the corporation operates.
2. Identify the types of market systems and types of legal systems that exist in the countries where the corporation operates. What effect do these have on the company’s operations?
3. Discuss the possible sources of political risk for: (a) the countries in which the company has a presence and (b) the basic nature of their products and operations. If you were a political consultant for the company, how would you suggest the company approach its political risk given trends in international political systems?
4. Identify the stakeholders the company must satisfy. Why is this process more difficult for companies operating internationally?
5. Summarize the company’s code of conduct. State the reasons why it is in the company’s best interest to follow its code of conduct when operating in foreign countries.
6. Does the company have any social programs in the country/countries where it operates? If so, briefly describe one.
7. What are the indicators the company might monitor to guide their investment and actions in the future?
Wal-Mart is a retail store that operates more than four thousand outlets in the world. It is the largest retail store in the United States of America and is largest retail chain in the world as well. It also dominates the retail store market in Mexico, Canada and the United Kingdom. Its sales include general merchandise such as household needs, family apparel, electronics, shoes, jewelry and beauty aids. The store also runs a photo processing center, tire and lube express and a department of pharmacy. Wal-Mart operates in twenty eight countries and employs more than two million people globally. In other countries other than the United States, Wal-Mart uses different names. The stores are called Welmex in Mexico, Toda Dia in Brazil, Seiyu in Japan, Asda in the United Kingdom, Supercentre and Discount Store in Canada, Trust-Mart in china, Econo in Chile, Pari in Costa Rica, Dispensa Familiar in Guatemala, Dispensa Familiar in El Salvador, Pali in Nicaragua, Dispensa Familiar in Honduras, Changomas in Argentina and Best Price in India. Most recently, Wal-Mart acquired fifty one percent of Mass-mart stores in South Africa, a retail store with two hundred and eighty eight outlets operating in fourteen countries in the southern Africa region (Pereira, 2002).
In the United States where Wal-Mart has its greatest presence, the market system is a free market economy under a capitalistic setting. The consumers relate to the economy by seeking the best value at the lowest prices with free political beliefs and protected rights. Wal-Mart is succeeding by appealing and supporting the consumer needs while striving to remain efficient in its business aspects and offering the lowest prices possible (Courser, 2005). In operating in the other countries, Wal-Mart had to adjust in order to remain flexible and adapt by showing local understanding. Being a typical American store it had to change many of its ways in order to reach out to the suspicious German consumers and the British consumers who are seen as being reserved. Generally, consumer tastes and preferences vary in different countries and therefore Wal-Mart was aware of the fact that selling the same products it sold in the United States in the same way would lead to failure. In the Chinese market for instance, Wal-Mart realized the customers had preference for leafy vegetables than anywhere else where it had outlets. Due to the strict government regulation in China, Wal-Mart could only source for some products such as tobacco and alcohol locally (Towers, 2004).
When venturing into Germany, Wal-Mart acquired more than one hundred of two chain stores which were already operating in Germany. It opted to rebrand due to the low levels of customer care and service that had been dominating the German market. Changing the culture of the consumers in Germany was however not easy and some strategies which had worked well in many other countries were received suspiciously in Germany, for instance, the culture of having Wal-Mart greeters at the store entrance was perceived by the customers as being superficial. The success of Wal-Mart in the global market can majorly be attributed to the way it has been implementing its business culture by tailoring it to local tastes, politics and legal frameworks. Wal-Mart also has a culture of obtaining ideas from its staff for example the successful singles shopping nights held on every Friday nights in its outlets in Germany (Towers, 2004). Given its global presence and success, Wal-Mart can succeed in many other places in the global market provided it tailors its operations to fit the local political and legal needs.
Wal-Mart has two categories of stakeholders: market and non-market stakeholders. Among the market stakeholders that Wal-Mart has to satisfy are stockholders who are interested in the market performance and dividends paid thereof, the Wal-Mart executives who are also interested in market performance since their compensation depends on it, the employees who earn their livelihood from Wal-Mart. Good market performance means they can retain their jobs. The other market stakeholders are the community where Wal-Mart operates and the consumers who are interested both in good performance of the store to benefit from employment and low prices respectively and the non-profit organizations which benefit from funding through the Wal-Mart good Works foundation. Another group of market stakeholders are other retailers (Pereira, 2002).
According to Pereira (2002), Wal-Mart must also satisfy a number of non-market stakeholders such as labor unions. Wal-Mart has it that they can take care of their employees and provide good compensation plans and therefore should not join labor unions. However, Wal-Mart was once charged by the national board on labor relations for violating federal laws by not allowing the employees to hold elections and join the United Food and Commercial Workers International union. The other two non-market stakeholders are international retail stores and politicians. Politicians may be for or against new advancements of Wal-Mart into their districts and some depend on Wal-Mart for campaign funding.
Wal-Mart has a code of conduct on which it has established its culture based on the philosophy ‘respect for the individual, service to customers and striving for excellence’. The code of conduct has been instilled and perpetuated through its employees in all its outlets globally. Some aspects of the code are adjusted in order to attain ‘service to customers’ in new market segments (Pereira 2002). Wal-Mart also operates social programs in the countries it operates by funding non-profit organizations in those countries through the Wal-Mart good Works foundation. For example in Chile and El Salvador, the foundation has successfully funded education, children and environmental programs (Zimmerman & Hudson, 2006).
The actions and investment decisions of Wal-Mart in the future are guided by their strong desire to dominate the global retail store market while providing the locally needed goods and services at the lowest market prices possible. The store venture into new market areas based on the customer base and consumer needs it can satisfy (Sobel & Dean, 2007).
References
Courser, Z. (2005). Wal-Mart and the Politics of American Retai. Washington DC: Competitive Enterprise Institute.
Pereira, M. (2002). Wal-Mart: Staying on top of the fortune 500. The Graduate School of Political Management, George Washington University.
Sobel, R. S. and Dean, A. M. (2006). Has Wal-Mart buried mom and pop?: the impact of Wal-
Mart on self-employment and small establishments in the united states. Western Economic
Association International
Towers, D. (2004). Wal-Mart: A glocalised company. Managing Global Business. Lyon: University of Jean Moulin
Zimmerman, A. and Hudson, K. (2006), Managing Wal-Mart: How U.S. Store Chief Hopes to
Fix Wal-Mart. The Wall street Journal, Monday Extra.
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