International Business and Walmart Paper Example

Why has Walmart viewed international expansion as a critical part of its strategy?

During its rapid expansion in the 1980s and 1990s, the company faced limits to growth in its domestic market hence opting to expand internationally to tap into emerging markets and maximize the opportunities that existed internationally.

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What did Walmart do to enable the company to achieve success in Latin America and China?

The European markets were large, but the company would have to share it with established competitors in the region to succeed (Ball, Geringer, Minor & McNett, 2012). Therefore, they decided to expand to emerging markets as the starting point for its international expansion. To achieve success, it used a joint venture to manage differences in culture and income between America and Mexico. It also consulted with its conglomerate, Cifra, which provided expertise in managing operations in Mexico, and base for learning about retail. It also ventured with local retailers in Brazil, and when in Argentina, it did so, as the whole, because it had mastered the Latin American markets (Ball et al., 2012).

In China, they also used a joint venture with the local retailers, considering that Beijing had serious restrictions on foreign retailers that included the government-backed partners (Ball et al., 2012). It also familiarized itself with the Chinese market through its partners on retailing and the types of goods to be sold in the Chinese market. It also sourced its products from local manufacturers and weighted purchases on locally manufactured American brands. It also built good relationships with the local government and communities to facilitate approval processes which proved challenging to the company (Ball et al., 2012).

Why should Walmart do or not do to help ensure that the company achieves success in India?

India is also a large emerging market for Walmart, considering it demographic advantages and increased disposable income among its population. Like China, India has tight restrictions on foreign-owned retail businesses. To succeed, Walmart has to venture with local retailers to identify operational as well as retail challenges in the markets, to enable it to develop a smooth entry strategy (Ball et al., 2012). The company has to collaborate with the local government to enable smooth operations in the country. In addition, Walmart has to conduct a market survey to develop a strategic market plan for its operations in consultation with local retailers in India (Ball et al., 2012). It also has to establish solid relationships with the suppliers, distributors and the consumers hence achieving success.

Three concepts from Units 1 to 4

Globalization

Globalization: Globalization is the spread of capitalism in the free market capitalism to every market and to every part of the world. It is the fact that different cultures and economic systems around the world are connected, due to an influence of multinational companies as well as improved communication (Ball et al., 2012). The recent times have marked increased integration of the national economies that result in international markets expanding. The world economies of the world are continuously linking up through expanding international trade in service and manufactured goods (Ball et al., 2012).

Walmart, as a company aimed to expand to venture into new markets abroad. It seeks to find new opportunities in the emerging markets, not only to expand its business but also to increase its revenues. The company sells its products to people in other parts of the world this reflecting little or no difference to the home products (Ball et al., 2012). Walmart's expansion strategy aims to venture into markets, which have high disposable income, for instance, Latin America and Asia. Globalization has enabled Walmart to venture into markets, due to increase in flexibility of world markets as well as revision of trade policies that govern both domestic and international trade. Walmart's venture into the Asian market is as a result of reduced restrictions on trade policies (Ball et al., 2012).

Globalization has helped solved the problem of trade restrictions within trade regions. Walmart has taken advantage of the globalized markets to expand its businesses internationally thus venturing into emerging markets. Globalization has enabled the interaction of people within regions and thus making trade easier for multinational companies (Ball et al., 2012). Through ventures in trade, with local companies with similar businesses, international companies such as Walmart have successfully penetrated markets that were initially impenetrable for instance the Chinese markets (Ball et al., 2012).

Regionalization of trade

Regionalization of trade: Regionalization of trade is the adoption of regional and local strategies to venture into new markets. It begins by firms competing in their own country before settling on foreign operations when the market is no longer adequate for expansion (Ball et al., 2012). Companies often begin by expanding regionally, due to the flexibility of the trade agreements and the physical/cultural proximity to the other. Some companies expand globally once the regional markets are stable.

Walmart adopted a regionalization strategy, to venture into Mexico and the Latin America, once the American market limited its growth due to competition (Ball et al., 2012). Venturing into Mexico was one of the easiest ways to expand regionally, and once, it was successful, it expanded to entire Latin America. Its globalization strategy then began by venturing into the Chinese and Indian markets where there are disposable income and large growing population (Ball et al., 2012).

Walmart adopted a regionalization strategy to expand its businesses in the foreign markets and it was marked with huge success (Ball et al., 2012). Walmart realized that once they succeed regionally, globalizing its ventures to the emerging markets would ensure that it remains competitive both regionally and internationally.

Culture

Culture: Culture is the total sum of rules, beliefs, institutions, techniques, and artifacts that characterizes the human populations (Ball et al., 2012). It also defines boundaries among different groups of people. Multinational businesses have to accept that cultures are different and it is important to learn the existing characteristics among those cultures to enable a company to adopt into them (Ball et al., 2012). Culture often determines the acceptability of certain goods and services, as well as acceptance of a given company within a given territory. Culture highly defines the scope and extent of international trade within a given region. Culture also determines the adaptability of specific trading entity and acceptance of its product and services to the entire community. It is important that companies apply different marketing mixes to enable it to overcome the different attitudes and values across markets hence reaching potential customers (Ball et al., 2012).

Walmart is a multinational store that was founded in the United States, characterized by western cultures. Venturing into the Latin America and Asia, meant that they had to learn the different cultures for it to adapt to them (Ball et al., 2012). This implied adopting different market mixes that included mergers and ventures that enabled it to penetrate into those markets. Collaboration with the government and the local leaders enabled the company to break cultural barriers, and it also enables it to venture into the tightly regulated markets regardless the existing policies (Ball et al., 2012).

Walmart learned the different cultural characteristics of its upcoming markets to enable it to venture into them successfully (Ball et al., 2012). Culture is a major determinant of trade, and it is important that the company respect's people culture, through learning of its consumption patterns and embracing their preferences. For instance in China, Walmart purchased its products from local manufacturers as well as sourcing supplies from other multinational industries such as Proctor and Gamble factories in China (Ball et al., 2012). This highly illustrates the influence of culture on customer purchases and preferences.

Reference

Ball, D., Geringer, M., Minor, M., & McNett, J. (2012). International business. McGraw-Hill Higher Education.