Wall Mart Gobal Strategy

In 1991 Wal-Mart decided to expand globally due to the fact that Wal-Mart started to face bounds to growth in its domestic market and literally has been forced to quest for international opportunities. According to David Glass Wal-Mart CEO instead of waiting for companies to start to come to the US market and increase the competitive pressure at home, expanding internationally will assist in safeguarding Wal-Mart domestic position dominance. Specifically, international expansion will keep prospective competitors in their home markets rather than to quest the US market.

Mexico was the focus of Wal-Mart first expansion effort for a number of reasons. First, it was geographically interesting because it is close to the US. Secondly Mexico offers a large market with different segments of 100 million people. Thirdly, Mexico was a perfect market appropriate for supermarkets because it was developing rapidly and 74 % of the country lived in a city. Finally, the Mexican market was an emerging market with a large potential.

The Entry strategy that was adopted by Wal-Mart in Mexico was the 50-50 joint venture with Cifra, Mexico’s largest retailer, this strategy will draw to Wal-Mart many advantages because counting on Cifra will provide operational expertise in the Mexican market. Moreover, there was a significant income and cultural differences between the United States and Mexican markets about which the company needed to learn, and to which it needed to tailor its operations, the local market requirements would have made a startup challenging. The venture developed a price-club store called Club Aurrera that required an annual membership of about $25. Shoppers could choose from about 3,500 products ranging from fur coats to frozen vegetables. Within the year, the joint venture operated three Club Aurreras, four Bodegas discount stores, and one Aurrera combination store.

The joint venture with Cifra allowed Wal-Mart to enter the market with an already established...