Walmart's Expansion in Africa Case Study

Case Summary: Walmart’s Expansion in Africa

Preview

Since its start up in 1962, Walmart has expanded into several other countries including Argentina, Canada, and Mexico. With more than 25% of Walmart’s revenue coming from international operations, further international expansion was planned. Walmart decided to expand into Africa as research indicated the African economy had a growth rate of over 5%, and many countries had various mineral and agricultural resources.

International Growth

Walmart’s first international venture began with expansion into Mexico in 1991 through partnering with Grupo Cifra SA de CV, and going by the name “Walmex.” Walmex was very successful in attracting and retaining customers with its daily discount strategy, and expanded into the restaurant and banking business in 2007. With many presenting opportunities, Walmart stretched out into Asia in 1996. Success in Asia did not come easily, as operations in China, the first Asian market Walmart entered, were very restricted. The language barrier also proved to be difficult for Walmart’s success. In order to attract more customers Walmart had to begin selling live animals, extend returned goods time frame, and hire Chinese leaders to previously American held positions. Although Walmart was so successful in the Asian and Latin markets, their engagements in the German and Korean markets proved to be ineffective. Taking into consideration both thriving and failing markets that Walmart entered into, international operations expected a profit of $14 billion in 2010 spanning over 8,500 outlets under 55 different names in 15 countries.

Massmart

With Walmart’s U.S. sales in 2010 being $258 billion, just 1.1% higher than the previous year, Walmart began to focus on international operations. Africa attracted many businesses during the global economic crisis of 2009 as they were actually able to progress during the difficult economic period. In 2010, Walmart acquired the African...