Plan of Entry for Walmart - Case Study Example

PLAN OF ENTRY FOR WALL-MART Student’s Name Course Tutor Date Introduction Australia is factually the smallest continent and the largest island in the World, with a multiethnic and cultural population estimated to be about 20 million. The country is ideally situated in a unique geographical, economic and cultural position to provide business and trade links between North America, Europe and the Asia-Pacific region. The paper therefore discusses the suitability of the country to enable Wal-Mart open a retail outlet. Significance of investing in Australia The economy of Australia enjoys a distinct competitive advantage in terms of production as well as processing of primary products necessitated by presence of abundance of natural resources and world class infrastructural network that includes transport and telecommunications. According to Parham (2002, pp 1-23), the country also offers one of the undisputable low cost environments of doing business, good domestic market, high levels of skilled labours, and competitive costs of salary for professionals. Some of the key attractions for doing business in Australia include good climate, availability of many multilingual professionals who are competent in European and Asian languages. In addition, Australia is considered as a key tourism destination in the world. The financial deregulatory concept of Australia has witnessed the removal of so many business restrictive measures and controls coupled with relatively low levels of risk on returns that has resulted in attraction of foreign investment. The country has also introduced so many schemes of financial incentives and special taxation to lure multinational companies to extend their businesses in Australia. At the moment investment in the country is a reliable point of entry for extending investments in the lucrative Asia-Pacific block (Penrith 2006, pp 103-124). Consideration of social trends Social trends of the country have a lot of impact on the business investments scheme growth. Australia is a country with a lot of diversity hence affecting positively the retail business which has to satisfy the local cultures and taste of the areas in which they are to start operations or are already operating. This has been the main reason for most of the retail operators in the country limiting their operations to specific regions. However, the trend is gradually shifting from isolationism to towards cultural integration in which people of all states and opposing cultures are embracing materials and foods from other communities and states. The movement geared in the direction of social integration would potentially make it possible in the near future for foreign and local retailing businesses to spread their wings across the country (Pip 1983, pp 36-52). The company must take note of the dynamics in patterns of consumption of goods. Increase in income levels as well as more women who have the willingness to take up professional jobs up on attainment of education has had a lot of shifts in the shopping pattern which is now moving in the direction of fulfilling the dire need of what is termed as convenience shopping, notably Supermarkets specialising in home deliveries. Australian consumer is price and quality conscious thus this awareness would enable Wal-Mart’s entry into the country to reorganise its supply chain relationships to suit the local market pressures. A recent analysis established that many nations go through a unique food and other non-food items consumption evolutionary pattern. In the initial stage, the main focus for the supermarket chains is to obtain basic dietary inputs, followed by focus on building and improving basic foods, while the third stage is to add premium food items. Factually, majority of the urban Australia has already reached the third stage hence a resourceful avenue for supermarket chains to open food and non-food retail outlets. The future of Wal-Mart in Australia would be determined by the creation of formats and models that suits the urbanite and the rural population (Doing business in Australia 2011, pp 3-8). Tax requirements In Australia, taxable income of a taxpayer is assessed annually based on the lodgement of filing an income tax return. The liability to income tax is arrived at based on the amount of taxable income being filed. The tax liability can therefore be paid before or after the income tax return lodgement. Most taxpayers are also subject to some sort of income tax prepayment. Wage and salary earners are liable for income tax deductions from any form of remuneration they get from their employers. Business taxpayers who receive payment of goods and services without the Australian Business Number (ABN) may have deduction of the tax done by the payer. On the other hand, people who are self employed, individuals who get non-salary income, superannuation funds and companies are required by law to make their tax payments through quarterly or yearly installments, which is pegged on the size of the business. The installment payments are basically offset against the annual tax liability of the taxpayer as determined in the annual tax return. Any money that might remain after the satisfaction of liability may upon request is refunded to the taxpayer. It is also important to note that non-residents who derive Australian-sourced interest, dividend, and royalty income generally have withholding tax being deducted at source. The amount of tax that is withheld is therefore determined in regard to whether the recipient is resident in a nation that has entered an agreement of Double Tax with Australia (Macfarlane 1998, pp 3-13). Risk analysis It is important for Wall-mart to have a good understanding of the nature of general business risks as a precondition for good mechanisms of response. The company should take some look at the general risks before making conclusions. As mentioned by Wood (1977, pp 12-25), risk analysis generally occurs at various levels. To understand risk at a business level it is more beneficial to consider the effects that it has as well as the viable causes. Critical examination of the effects can make one to describe the kind of effects that can occur immediately after the occurrence of a risk. A detailed analysis may therefore show the degree of the effect in relation to some categories of effects such as lead time and costs. Another way of looking at risks is to ideally focus on the factors that precede the occurrence and causes of risk. Another vital level of risk analysis involves the investigation of the entire project. It calls for all project managers to respond to the usual questions relating to the total budget requirements or the tentative dates of project completion. If risks are taken into consideration, then the company can do a simulation to determine the viability of the project. A similar exercise can be carried out costs of the project. The information obtained from risk analysis will serve to offer critical insights in the opening of a supermarket outlet and the necessary input in finding effective responses for risks optimisation. The essence of embracing Technology All aspects of retailing in modern world relates to technology. Business experts have demonstrated that the main difference between the successful and dwindling business is mainly routed in the application of technology. In fact, it is technology that may help an organised retailer to shine over the unorganised ones by benefitting from both service and cost advantages. Retailing business is regarded as a technology-intensive operation. For example, it has been shown that on a daily basis over 500 gigabytes worth of data are transmitted from the over 1,200 sales point counters of JC Penney to its management headquarters. This illustrates that in modern world, successful retailers work hand in hand with their vendors so as to shorten lead times, predict patterns of consumer demand and reduction in inventory holding, which leads to reducing costs. Wal-Mart as the pioneer of the concept of ensuring competitive advantage via information and distribution systems in retail business should also introduce to the Australian market the techniques of innovative logistics, notably electronic data interchange and cross-docking. In the modern business world, online systems adequately link the terminals of point-of-sales to the office where thorough analyses on volumes of sales by item, stores, classification, are performed online. Besides vendors, the main focus of Wall-mart in its bid to enter the Australian market should be to develop a long term link with the diverse consumers. It should make use of a new concept in retailing referred to as `Data Warehousing'. It helps in tracking the information of the potential and existing customers. Besides having the knowledge of the products purchased and the purchasers, vital information on critical issues such as psychographics and demographics will be captured (Ernst & Young 1995, pp 47-61). Australian business and requirements of product compliance Retail companies that have interest in doing business in Australia should ensure that their existing products are in compliance with the Trade Practices Act and Territory or State fair business and trading laws. The main compliance therefore includes: Labeling The agreement stipulates that the labeling and packaging requirements of Australia are strictly adhered to. Barcodes and EAN which are applied internationally must be followed. EAN refers a retail system that identifies products as they transit in the supply chain globally. Detailed information in regard to labels that are a requirement by Customs can then be obtained from the relevant government department (English 2006, p 76). Refund and warranties policies According to Waterhouse and Company (1994, pp 1-7), the laws of Australia require that a product should perform according its stipulated description of sales. A product can also be claimed even if there is no official warranty. The same warranty regulation also applies even to services. In the event of the need to replace a given product by a retailer, the supplier is called upon to either: Meet the costs of the good’s repair Replacement of the good Meet the costs of obtaining an equivalent good Product safety and liability As mentioned by Dixon and O'Mahoney (2010, pp 14-29), Australian product liability laws compel manufacturers, distributors and retailers to be legally responsible for the safety standards they either make or sell. If a consumer suffers any form of injury or damage is inflicted on a property due to faulty goods, then they are bound by legislation to seek compensation from the retailer, distributor or manufacturer. Wall-mart should ensure that the following standards are met: Products are fully certified and meet threshold of safety standards Products must have clear instructions of usage and must adhere to compliance requirements by the Australian Competition and Consumer Commission (ACCC), a government institution mandated to reinforce quality of products in accordance to the Federal Trade Practices Act. Environmental Regulations Certain products and appliances are imported or manufactured outside Australia and as such may be required to comply with the government environmental standards prior to being sold. Such standards include energy rating, efficiency in fuel consumption, water efficiency and emission of greenhouse gases. Bibliography Dixon, Tim & O'Mahoney, James, 2010. Australia in the Global Economy 2010, Leading Edge Education, Pearson Australia Doing business in Australia. Retrieved on 01 October, 2011 from Read More