Wal-Mart Expansion Challenges - Case Study Example

The main reason as to why the store if facing so much resistance is due to its size and its control over the market. Wal-Mart can enter different markets in different countries through acquisitions, the formation of joint ventures, or even the establishment of its own stores (Roberts & Berg, 192). Therefore, it poses a threat to small scale businesses in the urban market. With Wal-Mart in the urban markets, many businesses fear that they may not be able to maintain the same market size as before.

This is because; being a large store, it can acquire items at cheap costs and thus, charge cheap prices. On the other hand, the government resists Wal-Mart’s extension to the urban because the store is large and could pose a competition to the government parastatals. Over the past years, the study shows that Wal-Mart has been able to maintain excellent relations with different kinds of people. The store reported that all these nifty relationships between its buyers and all other institutions that it dealt with all arose out of trust (Soderquist, 165).

It is through this building of trust that Wal-Mart was able to win the approval of zoning commissions and committees. The managers of the store also reported that they also won the approval through being a staunch and involved citizen in the United States of America. This was mainly through participation in the charitable giving and general caring of the communities (Soderquist, 190). Thus, the management of Wal-Mart changed its operations from entirely profit-oriented goals to both service-oriented and profit-oriented objectives.

A manager of the Store recently reported that the store creates a compelling rapport for itself through being caring to its customers and to the community too.Wal-Mart has mainly specialized in operating with large stores and thus, running significantly smaller stores will lead to loss of economies of scale and operation below its potential. The operational managers of the stores also assert that; Wal-Mart will face the challenge of loss of purchase discounts and benefits of buying in bulk if it establishes smaller stores.

Many customers may also lose trust in it, leading to low customer loyalty and thus poor operations. Running smaller stores also implies that it would not be able to charge low prices as compared to if it was large (Roberts & Berg, 215). Therefore, customers will suffer the effect of paying higher prices. Hence, it is more beneficial if Wal-Mart operates as a large store than operating as a smaller store.