Market Entry Strategy of Retailer in China - The Case of Walmart - Dissertation Example

This area of research was of immense interest because the global chain had achieved success and failures in different markets. To evaluate the entry mode choice Wal-Mart was selected for this study, being the largest global retailer. China was selected as the location because of the phenomenal economic growth in recent decades and the high consumer base, both of which have been attracting foreign retailers. Thus, three objectives were set at the beginning of the study. All the three objectives have been achieved based on a study with qualitative data and qualitative analysis. The study finds that both push and pull factors motivated Wal-Mart to enter China. Its home market was saturated and Wal-Mart was driven by the sheer size of China’s consumer base. Since the outcome of any foreign venture depends upon the initial entry mode, Wal-Mart’s entry mode has been evaluated. The study finds that during the time that Wal-Mart entered China it had no alternative but to enter into a joint venture but it appears that Wal-Mart did not assess several factors before entering the market. For instance, it did not conduct proper research on the partner characteristics and the expected synergies; it did not take into account the local business environment, the consumer characteristics, and the government regulations. Wal-Mart also did not assess Carrefour’s entry and presence in China. Wal-Mart started gaining foothold only after China further opened up its economy following accession into World Trade Organization (WTO). Under the circumstances, the entry mode adopted by Wal-Mart cannot be said to have been effective.

Wal-Mart overall failed to utilize its strengths to acquire market-specific knowledge before making the entry mode decision. While the timing of the entry was perfect (weak retail sector and high potential in China), Wal-Mart tried to impose its home market strategies which did not work in the Chinese business environment. Wal-Mart attempted standardizing operations across countries but this is not feasible in a retail environment. The entry choice of Wal-Mart into China does not conform to the theories governing entry mode choice. This suggests that no single entry mode can be generalized to be the right entry mode. Literature on the subject amply suggests that different factors influence the entry mode choice. This study confirms that different factors have to be taken into account when evaluating the entry mode, without which the expected synergies may not be achieved. The outcome of this study is expected to benefit the retailers that plan expansion into emerging economies. Based on the limitations, the study recommends other areas of research on the subject.

Globalization includes several factors such as global investments, global production, and marketing, growth in the global media, and increase in world travel all facilitated by the advancement of telecommunication technology and information systems (Kayabasi, Mucan & Tanyeri, 2012).