International Business 1. Evaluate the strengths and weaknesses of Wal-Mart’s entry strategy into Mexico. When Wal-Mart entered Mexico, there were a number of positive as well as negative points which were encountered by this global retail chain. These embody the essential strengths and weaknesses that Wal-Mart had when it decided to make its mark within the North American neighbor of the United States…
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This is the reason why Wal-Mart decided to move south of the United States to Mexico. When one understands how this move came about, the strengths and weaknesses are easily distinguished. The strengths that can be accounted here included the already known name of Wal-Mart which spoke volumes about the kind of trust and confidence that the American consumers had in this retail giant. Also the everyday low pricing mechanism, and the highly efficient operations with state of the art logistics spoke at length of how Wal-Mart had made its name as a benchmark within the American retail spheres. This was the era of early 1990s when Wal-Mart had made a decision to explore the Mexican market. It teamed up with one of the already established retailers – Cifra, so that assistance could come in handy for both the chains. They decided to launch supercenters which would sell groceries and general merchandise. Wal-Mart had a win-win situation because it was entering into a completely new market and its operations within the United States had taught it that diverse customers can be served well, if there was a proper hierarchy within tasks and when operations were handled amicably. Thus the strengths for Wal-Mart depended a great deal on how it entered into the Mexican markets and created a name for itself all over again. Even though it was renowned in the United States, the slow down in the home country meant that Wal-Mart had to come up with something different and new. This could have only taken place with entrance within a new zone, yet being attached with the United States in one way or the other. Mexico is a neighboring nation of the United States and hence there were fewer risks involved for Wal-Mart because the region was more or less the same. With these strengths, came the weaknesses as well. Wal-Mart did not quite study the Mexican shopping habits and since it had already teamed up with Cifra, it knew little about the shopping trends revolving around the Mexicans. This was an important aspect related with Wal-Mart as it needed to find out more about them to begin with. The Mexicans preferred to buy fresh produce from local stores which included items like meat, tortillas and pan duice. This was an important understanding that must have been worked upon well by Wal-Mart before it decided to land within the Mexican market. Yet somehow there was a missing link present here. Since the Mexicans did not quite have large refrigerators at home, this meant that they bought on a regular basis. It actually asked them to come back again and purchase fresh produce. Also many Mexicans did not have cars which essentially meant that they could not shop much in one go. They would come back and buy small chunks though (Anand, 2009:171). This implied for fewer volumes of purchases on their part which defied the concept of large retail chains which were introduced by Wal-Mart in the first place. Hence the weaknesses were quite of a stringent nature as far as Wal-Mart was concerned. These needed to be worked upon at to produce sound results. What this fundamentally meant was the fact that Wal-Mart was losing ground within Mexico and since it was a new market, anything to this effect was not at all appreciated by the head quarters. Wal-Mart knew that its strengths and weaknesses
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