The Analysis of Things to Consider in Opening BranchesforWalmart
The Analysis of Things to Consider in
Opening Branches for Walmart
Based on Walmart’s previous successful examples of opening branches in non-American countries, there are several things that should be considered.
To begin with, Walmart needs to consider the target audience in the foreign countries when opening branches. The target audience of Walmart supermarkets is usually from the middle class or low-income class who always occupy the majority of the population in the majority of countries. Walmart attracts those from low-income class with low prices. For example, Walmart has successfully entered Mexican markets or Chinese markets who have lots of people from low-income class. Though the individual purchasing power of people from middle class or low-income class is not as strong as that of people from high class, the large population has compensated for this.
Besides, Walmart has developed a strong management system which helps them to achieve success. In order to enter international markets, Walmart has developed many strategies including integration strategy, diversification strategy as well as internalization strategy. For example, Walmart has achieved great success in the integration strategy. In 2008, they had only 10 percent of private brands and in 2010, they had increased the private brands up to 20 percent because the private brands are cheaper and attract more consumers.
In addition, Walmart needs to consider how to respect local culture and how to adapt to local customers. When opening the supermarket branches in a foreign country, the supermarkets may meet lots of challenges of adapting to local cultures. For example, some products in South Africa do not sell well because locals do not use the products in their daily life at all. In this way, managers need to do a specific research on which products are needed in the local markets. In other words, Walmart needs to conquer the culture differences when opening supermarket branches in the non-US markets.
And based on the failure example of Walmart such as the failure experience in India, there are some things that managers should take into consideration.
First of all, Walmart needs to consider the cultural differences. As it is mentioned above, Walmart has adapted to some non-American cultures successfully and adapt to their local cultures such as China. However, they also meet lots of obstacles in many other foreign countries such as Germany. For many Germans, they would rather go to their local markets for shopping, and they do not like supermarkets from other countries, which demonstrates that the local awareness of Germans is quite strong. And some local employees think that the Walmart working practice is quite strange. For example, in America, Walmart employees may do the morning exercise together, which is considered to cheer employees up. However, if the same practice is conducted in Germany, local German employees may think that it is rather annoyed. And it is regulated in Walmart that employees should keep smiling all the way, but it is completely weird to smile at a stranger. What’s more, the reputation of Walmart in Germany is not so strong enough to attract local consumers. Based on the above reasons, Walmart has encountered failure in Germany. Therefore, it is advised that Walmart has to consider the cultural differences even it is in the developed western countries.
What’s more, the managers should make a clear and specific analysis on the local competitors. For example, at first, Walmart also encountered failure in China. Though China is a huge market, it has lots of brands of supermarkets from all around the world, which means that Walmart also has lots of competitors. Walmart needs to consider and analyze the advantages and disadvantages of local competitors and how to use the advantages of Walmart to defeat their competitors. These are quite practical issues. If Walmart wants to enter African markets continually, it also needs to consider the local competitors in Africa.