How and why has Wal-Mart established its current international presence? An explanation

Contents

Introduction

The Company: Wal-Mart stores, Inc
A brief History of Wal-Mart
Wal-Mart Today
The strategy of Wal-Mart

International expansion of Wal-Mart
Wal-Mart’s joint venture
Wal-Mart’s acquisitions
Wal-Mart’s grenfield investments

Conclusion

References

Bibliography

Introduction

Wal-Mart is the leading company in retail markets worldwide, with a net sale of $ 344,992 million in 2007 (Wal-Mart, 2007). Recently, its one-day sales topped the GDPs of thirty-six sovereign countries.

“If it were a Independent Republic of Wal-Mart, it would be China’s sixth largest export market, and its economy would rank thirtieth in the world, right behind Saudi Arabia’s” (Moreton, 2006, 59)

Many would argue that Wal-Mart is “the face of retail globalization” (Helen, 2008, 10). Nevertheless, this multinational company had to struggle through testing times to reach this status.

The growth of any corporation is neither assured, nor a straightforward process – Wal-Mart’s development was not only connected with executive ambition, motivation, progression and new opportunities; but also inevitably uncertain times, unnecessary costs, legitimacy and resistance. This consequently lead to Wal-Mart’s failing in certain markets, and for this reason the board of directors need to comprehend why these different events occurred, as well as considering possible approaches to overcrossing certain barriers. This work takes a closer look at how Wal-Mart became so influential, which will be done through considering their history until present, and their strategy. Specifically discussed will be whether Wal-Mart adapted their global strategy in different countries, and if so, how such adaption was implemented.

The Company: Wal-Mart stores, Inc.

A brief History of Wal-Mart

To understand Wal-Mart’s universal success, it is essential to provide a brief history and overview of the company.

The company name Wal-Mart derived from its founder Sam Walton (Wal ton’s Mart). During the period of prosperity, he opened his first discount store in Roger, Arkansas in 1962. Walton opened his first discount store in Roget, Arkansas in 1962 – and only five years later, 24 stores combined a sale of $12.6 million. By the beginning of the seventies, Wal-Mart had 1,500 employers in 38 stores which amounted to $44.2 million in sales. Through achieving capital from going public to New York Stock Exchange in year 1972, Wal-Mart continued to expand. By 1975 the company owned 125 stores with 7,500 associates bringing $340.3 million of sales and only four years later, they broke through the border of $1 billion (Wal-Mart, 2008a).

In the 1980s, fundamental changes enabled Wal-Mart further expansion in grocery retailing. Whilst, from a personal view the new CEO David Glass enabled this expansion; from an operational side, the acquisitions of a major enemy in grocery, called Phillips Food Centers, and a food distributor, MacLane Company Inc, pushed Wal-Mart to become an important food retailer (Palmer, 2005). By 1987, Wal-Mart reached sales of $15.9 billion, with 200,000 employees working in 1,198 stores in 29 states. Furthermore, records after records were beaten, such as the first $100 billion sales in a year; the largest employer in the US in 1997; and the largest private employer worldwide with 1,140,000 associates in 1999.

Wal-Mart Today

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Today Wal-Mart is the largest company in the retail market; in international markets Wal-Mart Inc. supplies more than 49 million consumers per week, in 3,280 stores – and even more in the con-sumers in their 4,249 home market units (Wal-Mart, 2008b). Table 1 illustrates the number of actual units (India not included) in each country worldwide – with a more detailed plan of the US included.

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“Thinking globally, Serving locally” (Wal-Mart, 2008b, 1) provides different styles and operating formats for each country. This is demonstrated by the fact that 75 percent of the stores worldwide are working under different brand names, listed in figure 1.

Wal-Mart’s success and growth is base on its three main segments:

- Wal-Mart Stores
- International
- Sam’s Club

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