Asda Walmart Essay

Asda-Wall-Mart essay

Wal-Mart is a US-based multinational corporation. Critically discuss the costs

and benefits likely to have occurred as a result of its takeover of ASDA, a UKbased company.

Wal-Mart is a US based corporation established in 1962 by Sam Walton as one self-service

store, in period of 40 years it has developed into one of the biggest and most influential

corporations in the world, operating 5000 facilities in 15 different countries. On 26 th of July

1999, it successfully acquired the UK based third biggest retail chain ASDA with its 229 stores

for 11billion dollars. (OU case study for B200 TMA 07, 2005, pg.61,55,54). In this essay I will

identify and examine the benefits and costs that have occurred as a result of Wal-Mart’s

takeover of ASDA, however, first it will be necessary to define the term “multinational

corporation” and identify the motives that may lead the companies to become MNCs.

It is estimated that there are some 35000 multinational corporations worldwide. The MNCs

are defined as businesses that own or control foreign assets in more than one country. These

numbers of MNCs raise a question, what makes the ownership of foreign assets so

attractive for the companies, that they are ready to invest billions of dollars into the

acquisitions. In order to answer this question, first we should consider that the primary

objective of the for-profit businesses is to maximize their profitability. The ownership of

foreign assets presents them with a range of opportunities to achieve this objective.

Depending on the business nature and its corporate strategies, by locating their operations

within the countries with the suitable market and economic conditions, the companies may

be able to increase their market share so sustaining their growth and improving profitability.

Or they may also gain competitive advantages by jumping tariff barriers and by achieving

significant reductions in costs, such as: labour, transportation, the...