Wal-Mart's Growth Plan in China - Case Study Example

WALMART CASE ANALYSIS by 12/08/2009 Alternative will have a positive effect on the decision criteria. (-)------>Alternative will have a negative impact on the decision criteria. (0)---- No effect expected on the decision criteria. ()---Effect cannot be gauged on the decision criteria. Preferred Alternative. From the above alternative assessment table we can conclude that Wal-Mart should go for alternative 4 i.e segment the market according to spending power f the buyers and adopt different strategies for each market i.e cost leadership or differentiation depending on the market. Action and Implementation Plan 1) The market should be divided in three segments according to the geographical disparity in income of china as seen in Exhibit 14. 2) The affluent region of China - the coastal region should be targeted for Cost leadership strategy.Wal-Mart should treat the coastal region strategically same as USA but culturally different. 3) A series of retail chains, supermarkets and distributors should be developed in this region to achieve economies of scale and thus drive the cost lower for Wal-Mart. 4)As after 2005 ; retail companies can fully own logistics in China Wal-Mart should take majority stake in some of its suppliers ; improve their IT infrastructure and make it compatible with Wal-Mart's system. Help the suppliers in implementation of IT infrastructure and reward the ones who implement the required practices for achieving supply chain efficiencies. 5) Centralize procurement and supply chain which will allow economies of scale and drive the cost lower. 6) However decentralize the financial accounting for each store; prepare a separate balance sheet for each store .This will eliminate local government's opposition to store being opened in their area and taxes being paid in some other area. 7) In order to win over local population and to get the know-how of how the local population behaves in buying staff the store only with local population; even the retail store's manager should be from the local population. They should be given thorough training on Wal-Mart's value system and way of doing business. However they will be able to come up with better solutions to increase sales. Decentralize marketing and promotional expenditure to store manager level. 8) Use technology to deal with the high level of thefts in stores. RFID tags can easily detect a customer who is trying to move out of the shop without paying the bill. 9)This cost leadership strategy should be adopted only in the coastal region because the number of customers in this region will be large enough to give Wal-Mart economies of scale in this region and allow the strategy to materialize. 10) The interior region & the western region do not have enough affluent customers to give Wal-Mart economies of scale in order to achieve cost leadership. Here they should go for differentiation strategy. 11) Their stores should target special needs of customer which cannot be met by the local market. They may even cater only to the business customers in this area. 12) The stores should be few and small in size. Return on Investment should be the main criteria for evaluation of store in these regions. Bibliography Rugman, A. M. & Collinson, S. C., (2009). International Business. (5th edition), Prentice Hall. Robbins Stephens (2009)Organizational Behaviour(Twelfth Edition), Prentice Hall Asia Research Centre, Case Study on Wall Mart Stores : Everyday low prices in China Read More