Market Entry Strategy.Contemporary International Marketing Issue. Wal-Mart Stores Inc - Assignment Example

? Market Entry Strategy and Contemporary International Marketing Issue Table of Contents Table of Contents 2 Part 3 Market Entry Strategy 3 Overview 3 Critical evaluation of market entry strategy used by Wal-Mart at the time of entering India 3 The factors that influenced Wal-Mart’s decision to enter Indian market 4 References 6 Part 2 7 Contemporary International Marketing Issues 7 Introduction 7 Contemporary Issues 7 Conclusion 10 References 11 Part 1 Market Entry Strategy Overview Wal-Mart Stores Inc is recognised as one of the renowned American multinational retailer operating successfully, since 1962. Being headquartered in United States, it operates in more than 15 countries in about 8,500 stores in the entire globe. Due to which, it is recognised as the world's second largest public corporation that enhanced its revenues by US$ 469.162 billion and net income by US$ 016.999 billion by the first quarter of 2013. Critical evaluation of market entry strategy used by Wal-Mart at the time of entering India The retail market of India is one of the largest growing sectors and it contributes to about 15%, towards the GDP of the country. Retailing sector is the most organized sector with large amount of target customers of annual income of more than Rs 45 lacks. Keeping such scenario in mind, Wal-Mart, one of the largest retailers of US decided to enter into the market of India (Onkvisit & Shaw, 2004, pp. 456-470). However, Wal-Mart entered the market of India through the strategy of franchising in order to capture it. It is the procedure in which, the franchisor presents a chain of stores to distribute varied types of products to its target customers. This strategy proved quite effective for Wal-Mart as it helped in fulfilment of the vision of presenting best quality of products at lowest possible prices. Due to which, the level of customers started increasing at a considerable level, thereby creating a stable position in the market among other retail owners. Along with this, its market share also enhanced from 5% at initial sages to about 35% in the year 2011-2012. Apart from this, the total sales increased from US $ 412.112 billion to US $ 435.127 billion in 2012, among other retailers in the market. Due to which, the level of reputation and brand image of Wal-Mart increased to a considerable extent that proved quite effective for the entrant to dominate other retailers. Not only this, the strategy of presenting worth mentioning services to the customers also acted as a strength for the organization of Wal-Mart thereby enhancing its brand value considerably. Moreover, it also helped in creating a strongest brand image within the minds of the customers that enhanced its level of sustainability in the market among other contenders. Other than this, due to wide range of products of varying qualities, Wal-Mart became able to attract numerous customers of diverse economic standards. Due to which, it attained a hike in its total sales by almost 65% as compared to other retailers in this competitive market. Therefore, due to such above mentioned activities, Wal-Mart attained the brand name of, ‘World Largest Retailer’, that continued to fulfil the demands of its low-income group customers. Therefore such type of strategy acted as a boon for the new entrant in Indian market, thereby enhancing its profit margin from US $ 311.23 billion to 342.121 billion (Kotabe & Helson, 2011, pp. 376-389). Hence, it might be depicted from the above mentioned points that the strategy of franchising proved extremely effective in generating a strong brand image in the segment of retailing. The factors that influenced Wal-Mart’s decision to enter Indian market In order to understand the retail market scenario of India, Porter’s five forces is used. Threat of new entrants- the threat of new entrants is extremely low as it requires high rate of investment at the initial levels. This fact acted as a boon for the retailer like Wal-Mart as it comprises of huge amount of cash required for investment at the time of entering the market (Doole & Lowe, 2012, pp. 456-479). Competitive rivalry- the level of rivalry is quite high among the competitors. Therefore, in order to create a sustainable position, the strategy of presenting, quality products at lowest prices proved effective for Wal-Mart. Due to which, Wal-Mart became successful in attracting large amount of customers thereby enhancing its market share from 3% to 20% significantly. Bargaining power of the customers- the bargaining power of the customers is also quite low due to the absence of other competitors. As a result, Wal-Mart became successful in capturing large sections of the market by presenting innovative designed or featured products at a quite lowest price. Other than this, high quality of customer services also proved beneficial for Wal-Mart to enhance its loyalty and trust within the minds of the customers. Bargaining power of the suppliers- the bargaining power of the suppliers is also quite low as the retail sector is quite unorganized in nature. This also proved extremely effective for Wal-Mart as compared to others (Bradley, 2005, pp. 345-359). Threat of substitutes- threat of substitutes is also comparatively less, as no immediate substitute retailer is present just as Wal-Mart. So, it is extremely advantageous for Wal-Mart to present its products in the market to create dominance. Hence, due to all these above mentioned factors, Wal-Mart decided to enter the Indian market among others. References Bradley, F. (2005). International Marketing Strategy, 5th Edition. London: Prentice hall. Doole, I & Lowe, R. (2012). International Marketing Strategy, 6th Edition. New York: Cengage Learning. Kotabe & Helson. (2011) Global Marketing Mangement, 5th edition. London: Wiley. Onkvisit, S & Shaw, J. (2004). International Marketing: Analysis and Strategy, 4th edition. London: Routledge. Part 2 Contemporary International Marketing Issues Introduction In this age of globalization and industrialization, it is extremely difficult for any organization to retain its competitiveness. This is because; the threat of new entrants is increasing at a rapid pace in each and every sector. So, maximum extent of the marketers tries to retain their dominance in the market by presenting qualitative products at lowest prices. Still varied types of contemporary issues are faced by the marketers or the organizations in this age of aggressiveness, which need to be handled effectively. Contemporary Issues Contemporary issues are described as those issues that are entirely related with the present situation of any country or market. So, it is extremely essential for any organization to undergo vivid research to analyse the current situations of the markets. Still some of the most relevant contemporary issues are described below: Innovativeness- it is one of the most challenging issues faced by almost maximum extent of the organization owners. It is mainly due to the changing trends and patterns of the customers. Now a day’s maximum extent of the customer desire for inventive products and services so as to cope up with the changing situations. So, keeping this fact in mind, a reputed retailer (Wal-Mart) tried to present varied types of innovative featured products for its customers. Not only this; along with innovativeness, Wal-Mart also tried to present them at a quite lowest price so as to retain its portfolio in the market. This strategy helped Wal-Mart to attain relief from the issue of innovativeness or changing trends, thereby attracting large array of new customers along with retention with the older ones. Apart from customer bases, it also helped Wal-Mart to increase its range of profit margin and total sales as well. Quality- other than innovativeness, quality of the products or services also affects the buying perspective of the customers. Now a day, maximum extent of the customers offers high degree of value over quality as compared to quantity. So, Sony Corporation tried to offer value-added products to its customers at a competitive price. This strategy proved effective for the organization to retain its brand image and reputation in the market among others. Along with this, its total sale also increased from 5% to 20% as compared to other contenders. Due to which, its profit margin and revenues also enhanced with a significant extent. Advertising policy- it is also another challenging issues faced by maximum extent of the organizations in global perspectives. This is because; if the features of the products are not displayed properly, then the customers might not become aware about those products. As a result, the sale of those products and services might not be increased that might adversely affect the total revenue of the organization. Therefore, it is extremely essential for the organization (Macdonald’s) to offer high degree of concentration over promotional or advertising activities in order to increase its sale. Only then, the equity and brand recognition of Macdonald’s might get enhanced in the global markets among other contenders (Vignali, 2001, pp. 100-111). Onshoring- it is also another global issue faced by maximum extent of the marketers in this age. Due to this issue, the marketers try to shift their manufacturing or production unit from host countries to the home country. Such an issue is faced by Apple Inc, in which the production unit of Mac computers had to be changed from Chinese market to US market so as to enhance its production efficiency. Along with this, it also helped in reducing the carrying costs required at the time of transportation by almost 30%. Pricing transparency- it is also another challenge faced by the retail players such as Wal-Mart. Therefore, in order to maintain its transparency in the market among other rival players, it tried to present the products at a competitive price. This strategy proved extremely beneficial for the retailer, thereby enhancing its range of customers and profit margin as well. Side by side, the total sales and net income also increased by 25% that enhanced its brand portfolio and recognition. Thus, the strategy of competitive pricing proved highly effective. Corporation with suppliers- this issue is also viewed within the organization operating in global perspectives. Such type of issue is seen, when the bargaining power of the suppliers are extremely high due to extreme competitiveness. In such a condition, the owner or the marketer had to present them the rate required by the supplier so as to attain the products like Big Bazaar. It is done so as to present the products to its customers and to fulfil the demands of the customers. Only then, the range of customers of Big Bazaar might get enhanced thereby amplifying its profit margin and values. Competitiveness-this is also another challenging issue faced by maximum mobile owners in global environment. Therefore, in order to cope up with such issues, Nokia Corporation tried to develop varied types of inventive products so as to attract new customers. This might prove effective for the organization to enhance its range of customers and total sales to a considerable extent. So that the brand value and equity of the organization might remain consistent in the coming years as well (Cateora & et. al., 2010, pp.345-378). Shortage of skilled workers-this issue is also faced by numerous organizations. Among them, Samsung Corporation is one such organization that faced the above mentioned problem at the time of entering the UK markets. However, in order to cope up with such issue, the organization implemented varied types of training programs so as to enhance the inner skills and talents of the employees. Only then, the level of performance of the employees might get enhanced thereby amplifying its range of productivity. Other than this, such type of trainings might also enhance the level of devotion and dedication of the employees towards work thereby improving the profit margin of the organization along with its brand value and recognition in the market. So, training is extremely essential for any organization to retain its equity in this age (Czinkota & et. al., 2011, pp. 345-456). Technological changes- in order to cope up with this issue, the electronic goods manufacturer such as Philips had to make varied types of technological changes. Only then, it might retain its dominance and supremacy in the market among other contenders. Otherwise, its reputation might get faded significantly due to the presence of under-developed technologies or parts (Usunier, 2012, pp. 274-289). Thus, the above mentioned problems are extremely common for the marketers, entering or operating in different foreign markets. Conclusion Conclusively, it might be depicted from the above mentioned points, that each and every marketer or organization need to change their ways of thinking and strategies so as to remain competitive for the future time. Otherwise, the organization may not run effectively in the foreign markets among other rival players. And as a result, its reputation might get faded slowly and gradually in long run. References Cateora, P. & et. al. (2010) International marketing, 14th Edition. London: McGraw-Hill. Czinkota, M. & et. al. (2011). International Marketing. New York: Cengage Learning. Usunier, J, C. (2012). Marketing Across Cultures, 6th Edition. London: Pearson. Vignali, C. (2001) ‘McDonald’s: think global, act local – the marketing mix ‘British Food. Journal, Vol 103, No 2, p97-111. Read More