Wal-Mart

Wal-Mart

Other than profit, what other reasons would Wal-Mart have for opening stores globally? Why would Wal-Mart want strong centralized or localized control of its stores?

Wal-Mart’s primary reason for opening stores in other countries is to increase profits. It needs to open these stores because the opportunities for growth in the United States are dwindling (p. 309). In the United States, Wal-Mart has stores in most locations, meaning that the potential for new locations is not there. This means that they cannot generate the same profit gains that they desire unless they venture into new markets (p. 309).

In addition to growth of profits, Wal-Mart stands to benefit from opening new stores globally by building an international supply chain network. This will potentially provide many additional opportunities for Wal-Mart. The world is becoming more global and there is pressures created by foreign competition, therefore it is necessary to become more global in order to compete (p. 313). If Wal-Mart is able to grow into a global enterprise it can get better deals when purchasing products that are universally sold around the world. The company will also be able to tap into new technologies and products that can then be sold in traditional markets, such as the United States. Also by being global, Wal-Mart will be able to tap into a more diverse and talented pool of employees.

Wal-Mart should want centralized and localized control of its stores in non-US markets. This is due to the fact that Wal-Mart is having a variety of supply chain issues. In the new markets, Wal-Mart does not own its own distribution system, as it does in the US, which means that it cannot control the deliveries as well in the new markets. The company relies on local suppliers and truck drivers who are new to the concept of timely deliveries. This means that instead of having less than 10 deliveries a day like the stores do in the US, the stores can have 300 deliveries a day. Having so...