How many retailers would one expect to be in the top ten of the global fortune 500? There is
one, and it has a firm second position, leaving behind mammoth companies such as Ford and
General Motors (www.fortune500.com). Wal-Mart is the world’s largest retailer with 195
billion dollars in revenue in the year 2000, with operations mainly concentrated in the United
States. Renowned in the United States for their discount centres, they have diversified into
wholesaling to sustain the explosive growth of the seventies and eighties. Making use of
acquired knowledge in distribution and inventory management technology, these new
formulas proved to be profitable as well. However, the United States of America were not big
enough to satisfy the needs of such a giant company, and international expansion was
inevitable. After entry in South-America and Asia, Europe is the next market to be penetrated
by Wal-Mart. The time seems right, as extensive liberalization has opened up the European
Union and far-reaching economic integration between member states have created a huge
common market, offering scale economies in purchasing and distribution similar to U.S.
operations. Wal-Mart can use experience from previous foreign expansions to implement the
correct strategy for Europe. This paper analyses Wal-Mart’s European strategy, the rational
behind its move to Europe and implications for its European competitors. It explains the
following problem statement:
Wal-Mart’s entry into the European market was a strategic move rather than the pursuit of a
growth opportunity.
A brief review of Wal-Mart’s history will be followed by the factors explaining their success
in the United States, coming together in a concept called “strategic fit”. After a short summary
of their foreign expansion into South-America to stress the importance of the transferability of
the concept of strategic fit, a description of the European retail industry will be given. Then
the European retail industry is analysed with the help of the generic five forces model from
Porter. The paper ends with a conclusion hinting at the future of the European retail market.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 2. Wal-Mart's European Strategy
- 2.1 Wal-Mart History and Success Formula
- 2.2 Strategic Fit
- 2.3 Competition in Europe
- 2.3.1 Carrefour
- 2.3.2 Metro AG
- 2.3.3 Aldi
- 2.3.4 Ahold
- 2.4 Industry analysis using Porter's five forces model
- 2.4.1 Internal Rivalry in European Retailing Industry
- 2.4.2 Barriers to entry
- 2.4.3 Supplier Power
- 2.4.4 Threat of Substitutes
- 2.4.5 Buyer Power
- 2.5 Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper analyzes Wal-Mart's strategic move into the European market, exploring the rationale behind this decision and its implications for European competitors. It examines Wal-Mart's history and success formula in the United States, the concept of "strategic fit," and the competitive landscape of the European retail industry. The analysis utilizes Porter's five forces model to assess the industry dynamics.
- Wal-Mart's success formula in the US and its transferability to Europe.
- The concept of "strategic fit" and its role in Wal-Mart's competitive advantage.
- Analysis of the European retail industry and its competitive dynamics.
- The application of Porter's five forces model to the European retail market.
- Implications of Wal-Mart's entry for existing European retailers.
Zusammenfassung der Kapitel (Chapter Summaries)
1. Introduction: This introductory chapter sets the stage by highlighting Wal-Mart's remarkable global success, particularly its second-place ranking in the Fortune 500. It establishes the context for the paper's central question: whether Wal-Mart's European expansion was a strategic maneuver rather than simply a pursuit of growth. The chapter introduces the problem statement and outlines the structure of the subsequent analysis, promising to examine Wal-Mart's history, its success formula, the concept of "strategic fit," and a detailed analysis of the European retail industry.
2. Wal-Mart's European Strategy: This chapter delves into the core of Wal-Mart's approach to the European market. It begins with a historical overview of Wal-Mart's development, highlighting its foundational principles and the factors contributing to its phenomenal growth in the United States. The chapter then explores the concept of "strategic fit," demonstrating how Wal-Mart's strategy aligns with its goals, environment, resources, and capabilities. Further, it touches upon Wal-Mart's international expansion, emphasizing the transferability of its strategic fit to new markets. Finally, the chapter provides an overview of the European retail industry and its key players, setting the stage for a detailed competitive analysis.
2.1 Wal-Mart History and Success Formula: This section details the history of Wal-Mart, outlining its origins as a discount retailer targeting rural communities in the United States. The chapter describes Wal-Mart’s success as a confluence of three key factors: its strategic focus on underserved rural markets, its pioneering use of technological innovations in inventory management and distribution, and its unique organizational culture emphasizing employee empowerment and customer satisfaction. Detailed examples illustrating each of these factors, such as the company's use of satellite technology and the “ten-foot rule” for customer service, showcase how these components intertwined to create a powerful competitive advantage.
2.2 Strategic Fit: This section introduces the crucial concept of "strategic fit," arguing that Wal-Mart's success wasn't merely a result of replicable individual strategies, but rather a cohesive alignment of its internal and external environments. The high customer return rate compared to competitors like Kmart is presented as evidence of this strategic harmony. The chapter links this concept to Wal-Mart’s future expansion plans and underscores its significance in predicting success in the European market.
Frequently Asked Questions: Wal-Mart's European Strategy
What is the main topic of this document?
This document provides a comprehensive preview of a paper analyzing Wal-Mart's strategic move into the European market. It explores the rationale behind this decision, its implications for European competitors, and utilizes Porter's five forces model to assess the industry dynamics.
What does the Table of Contents include?
The table of contents covers an introduction, a detailed look at Wal-Mart's European strategy (including its history, strategic fit, competition analysis focusing on Carrefour, Metro AG, Aldi, and Ahold, and an industry analysis using Porter's five forces model), and a conclusion.
What are the key objectives and themes?
The key objectives are to analyze Wal-Mart's European strategy, examine its success formula, understand the concept of "strategic fit," analyze the European retail industry's competitive dynamics, apply Porter's five forces model, and assess the implications for existing European retailers. Key themes include the transferability of Wal-Mart's US success to Europe, strategic fit as a source of competitive advantage, and the competitive landscape of the European retail market.
What are the chapter summaries?
The introduction sets the context and outlines the analysis. The main chapter on Wal-Mart's European Strategy delves into its history, success formula (focusing on underserved markets, technological innovation, and organizational culture), strategic fit, and the European retail landscape. Section 2.1 details Wal-Mart's history and success formula, 2.2 discusses strategic fit, while the remaining sections of chapter 2 analyze the European retail competition and industry dynamics using Porter's Five Forces.
What is Wal-Mart's success formula, according to the document?
Wal-Mart's success is attributed to a combination of three key factors: its strategic focus on underserved rural markets, its pioneering use of technological innovations in inventory management and distribution, and its unique organizational culture emphasizing employee empowerment and customer satisfaction.
What is the significance of "strategic fit" in Wal-Mart's strategy?
Strategic fit refers to the cohesive alignment of Wal-Mart's internal and external environments. It's argued that Wal-Mart's success stems not from individual strategies but from this overall harmony, which is considered crucial for predicting success in the European market.
Which European retailers are specifically analyzed as competitors to Wal-Mart?
The document specifically names Carrefour, Metro AG, Aldi, and Ahold as key competitors in the European retail market.
How is Porter's Five Forces model used in this analysis?
Porter's Five Forces model is used to analyze the competitive dynamics of the European retail industry, examining internal rivalry, barriers to entry, supplier power, threat of substitutes, and buyer power.
What are the implications of Wal-Mart's entry into the European market?
The document implies that Wal-Mart's entry into the European market will have significant implications for existing European retailers, although the specific consequences are not explicitly detailed in the preview.
- Quote paper
- Tomislaw Dalic (Author), 2001, Wal-Mart's European Business Strategy, Munich, GRIN Verlag, https://www.grin.com/document/20727
