Wal-Mart

WAL-MART: PILING ‘EM HIGH AND SELLING ‘EM CHEAP AROUND THE GLOBE

The internal point of view: “Wal-Mart employees who do not think globally are working for the wrong company.” – David Glass, chief executive, Wal-mart.

The external point of view: “Wal-Mart must think and act as if it’s a global company. Otherwise, it can’t grow enough in North America to maintain its stock price. It needs to be in South America. It needs to be in Asia. It needs to be in Europe.” – George Rosenbaum, Leo J. Shapiro Associates.

When a major retailer like Wal-Mart sets its mind and cash to global expansion, it’s amazing what it can do. At the end of the 1980s, Wal-Mart was a mostly U.S. phenomenon; by the end of the 1990s, it was a global presence, poised to become the world’s dominant retailer. From a base of about 2200 U.S. stores and sales of less than $125 million in the early 1990s, Wal-Mart expanded to more than 3600 stores worldwide, with sales of $205 billion and a net income of $6.64 billion. Not bad for a company that began its international expansion in 1993 with the purchase of 122 Woolco stores in Canada.

Spurred on by NAFTA, Wal-Mart quickly moved into Mexico using joint ventures to end the decade with more than 400 Mexican stores. In Hong Kong, through a joint venture with Ek Chor Distribution System Co. Ltd, Wal-Mart established several Value Clubs, which became stepping stones to mainland China, the most populous country in the world and a market with an emerging middle class. Because Ek Chor is actually owned by CP Pokphand of Bangkok, Wal-Mart also entered Thailand, and then Indonesia. In 1995, the retailing giant once again looked south, moving into South America with stores in Brazil, Argentina, and Chile.

Most of these companies appear to be good markets for Wal-Mart, as each constitutes a heavily populated emerging market. Although not high in discretionary income, each of these markets exhibits growing income, giving people more money to shop while...