Wal-Mart Organisation Business Strategies - Assignment Example

Assignment 2 Name: Institution: Date: Question 1 The Wal-Mart organisation targeted the Latin American region as among its first investment avenues. In its expansion in the Latin America, Wal Mart sought to utilize the direct investment approach. In this regard, the organization established subsidiaries in the market. The establishment of the subsidiaries allowed for increased direct market influence in the market. A study by Nwankwo (2013) established that organizations adopting this approach have an increased market influence in the industry. In this case, the study developed a hypothesis that subsidiaries adoption allowed for increased market influence in the industry. In its analysis, the study affirmed this hypothesis. It established that subsidiaries enhanced organizational foreign market success through a number of factors. On one hand, it allows for ownership and development of a brand name. Branding is an imperative new marketing tool that allows and provides for organizational strategic market positioning. For instance, in its expansion mechanism Wal-Mart developed a subsidiary in Mexico formerly known as the Sam’s club (Luthans & Doh, 2012). The establishment allowed for an increased relationship between the organization and its customer base. In this regard, the increased customer relationships in the market allowed for increased market influence as the organization was able to brand its products (Ming-Ling, Donegan, Ganon & Kan, 2011). This is the same case that applied in the organizations investments in Brazil. In its initial years in the market, the organization targeted Mexico, Brazil and Canada as key among the Latin American nations in which it established its influence and subsidiaries. The Mexican and Brazil markets provided an investment opportunity due to reduce market competition as well as the reduced risk of substitutes in the market. These are two key elements essential for enhancing eventual organizational success. This can be argued based on the porters’ five forces model analysis. In the model analysis, Karagiannopoulos, Georgopoulos and Nikolopoulos (2005) argued that industrial success is based on reduced existing competition as well as a low possibility for products substitutes. The existence of such a market situation enables organizational industry success and strategic establishment and influence exertion in the market. Historically, it is established from the case study that the organization diversified its operations to the financial industry y in both markets. This is a drastically developing industry with the increased income levels and subsequent financial management ignorance reduction in the economies. Thus, both markets provide Wal-Mart with an increased market expansion potential into the future. In addition, the organization targeted Canada as an ideal investment destination (Luthans & Doh, 2012). In this case, the market, relatively mature, provides the organization with a conducive expansion environment due to its transparency and fair trade policies and practices. In developing into the discusses Latin American countries, the organization faced a number of cultural challenges that on the other hand presented growth and expansion potential for its models. One key cultural challenge in the market was the existing financial management systems. The Latin American society was traditionally adapted to own home storage for gained finances. Moreover, the society was accustomed to the use informal lending Shylocks. As such, the lending system was unregulated and minimal trust existed in the concept of money management agency mode (Bailey, 2004). Therefore, the venturing of the Wal mart business into the market faced an establishment challenge. In this case, the organization faced an increased challenge of establishing its market influence by establishing a business model that was in defiance to the existing societal cultural perspectives’. Therefore, the organization faced an increased market challenge through increased promotional costs in a bid to establish and create increased market knowledge on the products offered in the new banking system. However, as Gasse and Tremblay (2011) argued cultural beliefs that form the secondary market aspects if mitigated successfully present increased business opportunities, the Mexican and Brazil cultures offered such opportunities to Wal-Mart. Upon successful cultural financial knowledge and perception change, the increased societal populations in the market presented the organization with an increased market increment potential. As such, reduced competition in the market and the changing cultural aspects present increased market expansion opportunities for the Wal-Mart Company in the Latin American market. The organization is expected to have increased its market presence through he presented market opportunity prior to the establishment of competition in this market (Luthans & Doh, 2012). Question 2 The Wal-Mart Company developed a strategic expansion plan in the market. In this case, the organizational strategic plan mapped out the organizational strategic expansion target markets. Among the targeted markets include China, Japan, Latin America and South Africa. China is recognized as an emerging economy in the market. In this case, the economy presents an increased market expansion and growth potential. The economy has an increased population as well as available labour supply. As such it presents both an increased customer base as well as labour supply. Studies, such as the one developed by Tyers and Yang (2004) established that the Asian market, China inclusive, presents an increased labour supply opportunity. In fact, Wal-Mart continues to rely on the Chinese market for both labour and raw materials supply. Statistics presented in the case study indicate that with its trade ratios, if Wal-Mart was a country it would be ranked as the seventh trader with China, a position ahead of the United Kingdom. Therefore, this presents the argument that the economy presents increased business opportunities for the organization. However, the economy poses a number of risks on the organization. This is especially with the changing Chinese labour and environmental policies. O one hand, the labour policies changes have led to increase labour costs with the joining of unions by the Wal-Mart employees thorough the All China Federation of trade Unions (ACFTU) advocacy in 2006. Further, environmental pollution advocacy in the Asian market has led to increased raw materials supply that is deemed to increase and raise the cost of production in the long run (Chen & Ross, 2007). Therefore, this presents a decreasing profitability in the organizational profitability levels. In addition, the organization has a strategic pan of extending onto the South African market. In this case, the organization has over the years implemented a due diligence on the Mass Mart Company. The organization is a leading retailer in the South African market. Therefore, through the organization, Wal-Mart expects to venture in the market and establish its market influence. The South African economy represents a growing economy trend in the African region. Moreover, the economy is establishing an increased development in the industry. Therefore, the organization will attain an increased profitability potential in the future by strategically growing simultaneously with the economy. Moreover, investing in the economy, the organizations attain an increased Africa continent investment opportunity. Subsequent, to its strategic location in Africa, investment in South Africa allows for increased expansion on the African market in the long run. However, investment in the economy presents a market competition risk. The South African economy, a member of the BRICS (Brazil, Russia, India, China and South Africa) economy association, is relative mature economy. Therefore, the economy has a relative stiff market competition. Moreover, the organization has a relatively legal challenge due to the increasing environmental and labour regulations that will relatively increase the production costs in the long run. Therefore, competition and increased production costs pose an increased market operation risk of r Wal-Mart in the South African market (Luthans & Doh, 2012). In its global expansion, Wal-Mart should focus on both the Latin America and the Asian markets. On one hand, the Latin American market provides an opportunity through which the organization can develop. On one hand, over the years and its investment in the Mexican, Brazil and Canada, the organization has developed a strong brand name as well as increased reputation in the market. Thus, the organization has a positive market perception. Therefore, the organization has an increased market competitiveness edge over its rivals in the market. With its initial investment in Mexico, the organization is perceived as a local organization, thus offering it a competitive edge. In addition, the organization has an increased market potential in the Asian region. The case study establishes that the organization failed to initially invest in the Asian market due to increased geographical distance and associated costs that it would not afford at the time. However, organizational performance statistics on the Wal-Mart organization reveal that the organization has an increased financial stability in the market. As such, the organization has an increased potential to invest in the highly populated Asian market with a growth and expansion potential. Therefore, it is highly recommended that in order for Wal-Mart to enhance its future development and success chances in the market, it should focus on investing in the Asian and Latin American regions. Question 3 The Wal-Mart organization has a strategic plan to enhance its increased Latin America, Europe, Japan, China and Russia. In this case, the organization has adopted increased market expansion strategy diversity in the market. As such, the organization has categorized the respective markets with regards to the respective regions. On one hand, in targeting the Latin American market, the organization has adopted a direct market investment strategy. In this case, the organization seeks to establish a framework through which it will strategically establish direct investments in the market through subsidiaries. Direct investment is an ideal investment approach through which markets can increase their overall influence through customer relationships building. A study developed by Hansotia and Rukstales (2002), established that direct market investments in the market allowed for increased market success through established market relationships that allow for increased consumer satisfaction as well as loyalty to the respective organizations. In addition, direct investments in the market allows for increased market success through direct business models adoption that are respective to the definite cultures. In this case, subsidiaries enhance the adoption of business models that favour increased cultural consideration in the respective businesses. Therefore, such organizational expansion approaches provide for reduced business society conflicts in the market. With respect to the European market, the organization has an increased market success possibility through joint ventures and partnerships establishment. The European market both eastern and western, such as the German and UK economies respectively, are relatively established. As such, adopting direct investment approaches exposes the organizations to increased existing competition in the market. Therefore, as evidenced by the Wal-Mart organizational failure in the Germany market, direct investments are unviable in these markets. Therefore, the organization has established a strategic framework for joint ventures and partnerships in the market. Thus, the organization intends to venture into this market through increased strategic alliances such as those investing in the UK market. Cairo (2006) argued that strategic alliances allow for competition reduction in the market through the adoption of the alliance distribution channels as well as business models. Therefore, the organization will strategically achieve increased market performance in the European region through reduced competitions impacts (Luthans & Doh, 2012). Finally, the organization invests through a shared model in the Japanese, Chinese and the Russian economy. In this case, the organization is adopting a strategic low investment approach in the market. In this case, the organization seeks to establish market competitiveness in the industry through ousting other competitors. The organization enjoys economies of scale in the market. Glass and Stefanova (2012) argued that economies of scale in the market arise as a result of mass production in organizations. Therefore, Wal-Mart with its global status in the market has an increased market advantage over its local competitors in the Asian market that have high production costs. Based on this analysis, it is apparent that the organization adopts diverse strategic expansion approaches in the respective markets based on the market and consumer base analysis. Strategic management of multinational organisations acknowledges the concept of increased market culture diversity on the global platform. In this case, the principles advocate for increased diversity in market expansion and penetration techniques. Thus, multinational organisations management principles hedge increased market performance on appropriate and accurate market analysis. Therefore, market evaluation in the industry plays an imperative expansion role. References Bailey, K. M. (2004). Citizen participation in environmental enforcement in Mexico and the United States: A comparative study. Georgetown International Environmental Law Review, 16(2), 323-358 Cairo, R. (2006). Co-opetition and strategic business alliances in telecommunications: The cases of BT, deutsche telekom and telefónica de españa. The Business Review, Cambridge, 5(2), 147-154. Chen, Z., & Ross, T. W. (2007). Markets linked by rising marginal costs: Implications for multimarket contact, recoupment, and retaliatory entry. Review of Industrial Organization, 31(1), 1-21 Gasse, Y., & Tremblay, M. (2011). Entrepreneurial beliefs and intentions: A cross-cultural study of university students in seven countries. International Journal of Business, 16(4), 303-314. Glass, V., & Stefanova, S. K. (2012). Economies of scale for broadband in rural United States. Journal of Regulatory Economics, 41(1), 100-119. Hansotia, B. J., & Rukstales, B. (2002). Direct marketing for multichannel retailers: Issues, challenges and solutions. Journal of Database Marketing, 9(3), 259-266. Karagiannopoulos, G. 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