-WALMART'S JAPAN STRATEGY - Case Study Example

Summarization of article d ‘Wal-Mart’s Japan strategy’ The article deals with the struggles and the story behind the retail giant’s international expansion into a highly developed and sophisticated Asian market, namely Japan. The company began its operations, not through a direct entry, but by acquiring Seiyu, one of the largest (fifth) supermarket chains in Japan. But within one year (2003), the success of the strategy became suspect. One primary reason was the basic strategy followed by the companies.

While Seiyu, focused on small grocery based stores in the centre of a locality, Wal-Mart, following it American strategy was more intent of creation of large scale operations, with huge outlets, usually in the suburban areas. The author goes on to explain the issues faced by the company in its quest for international expansion. The major problem faced in Japan was the cultural diversity that existed between its American and Japanese employees. Another factor is that the company, known for its low prices, did not find favor with the Japanese mentality.

Unlike the United States, the Japanese equated low prices with poor quality. In Mexico and the United Kingdom, the company faced stiff from other retailers. In Mexico, three of the prominent retailers formed an operational alliance to get the benefits of large-scale purchases in order to compete with Wal-Mart. The study suggests that the entry of Wal-Mart into Japan was timed perfectly (in a strategic context). The country was just emerging out of a recession and Wal-Mart hoped that low prices would be a hit with cash strapped consumers.

But the strategy has not been accepted well by the people because of the reason mentioned above. The next section provides a balance sheet and income statement of the corporation for the years 2000 - 2003. It can be seen that there has been a steady growth over these years in all parameters like assets, income, profits and dividends. This shows that the company’s local and international expansion strategy was working in its favor, despite the problems it faced. Another interesting feature given is the time line (history) of the company starting from its birth in Arkansas in 1962.

It shows the steps taken by the company on its quest to become an international retailer. The countries in which the company operates is also given in a separate table. The study goes on to state that the slow and steady growth strategy is ideal in Japan, where recession has hit even established local and international retailers like Carrefour. The mindset of the Japanese people with regard to low prices and quality is also slowly undergoing a change. The policy of developing strategic supplier agreements will also be an advantage.

Some issues also exist with regard to its labor policies and views on forming trade unions also exist. But the company is confident that its low price model will be a success in Japan as well in the long-run (Wal-Mart’s Japan strategy). References “Wal-Mart’s Japan strategy”. In-depth integrative case 2. Provided by student.