Walmart

Abstract

The case focuses on the retailing giant Wal-Mart's expansion strategies in the Chinese market. It elaborates the reasons for Wal-Mart's decision to go global in the early 1990s. The case discusses in detail the entry strategy and the localization strategies including procurement and store management.

It also explores the corporate governance practices followed by the company in China. The case further discusses the problems the company faced in China because of the differences between the operational and cultural environment of its home market and the Chinese market. It ends with a discussion on the future prospects of the company in the Chinese market.

“Walmart Case Study” 3.

To maintain its practice of EDLP, Wal-Mart adopted a three pronged approach in China. First, it focused on increasing local procurement thus reducing procurement costs. Second, it maintained satisfactory supplier relationship during its initial years by paying suppliers within 3-7 days. Third, it established modern commodity distribution centers and computerized its management to improve efficiency and reduce cost.

Unlike Chinese companies, at Wal-Mart, associates found a high degree of transparency in relation to career growth. All new employees went through three months training at Shenzhen. Wal-Mart valued an individual's competence rather than personal connections when promoting an employee.

The Problem Areas

Wal-Mart's Chinese operations have had their share of problems. The company's supply chain operations were not as efficient as in its home market. In addition, there was stiff competition from both local Chinese retailers and from foreign retailers who had established their base in China. Thus, even after...