Walmart Company’s Global Strategy and International Business

Abstract

Wal-Mart has been successful in operating retail shops in various countries globally. It is based in the U.S. and owns stores all over the world. The managers of the subsidiaries report to the top management at the headquarters in the U.S. It has been established in 15 countries in the world, and the stores are given different names in the various countries. Wal-Mart has been successful because the company has adequate resources. The company has been effective in utilizing technology to improve the quality of services offered to customers. The company has high bargaining power over the suppliers. As such, the company can sell products at low prices. In addition, the company has its transport facilities to move products across the borders. This makes the products of Wal-Mart cheap and affordable to the customers. Wal-Mart can reach as many customers as possible because it has spread in many regions globally.

Introduction

The term international business refers to the management of business operations in many countries. It also refers to the management of multinational firms. Many countries have opened up their boundaries to allow trade with other countries. This has facilitated the integration of countries in the world into a global trade network. As such, international businesses have evolved, and many investors are venturing into the international markets to seek market opportunities. Since the international market involves interaction with people from different cultural backgrounds, the managers of international businesses have been required to learn the cultures of different countries. The managers of international businesses must be conversant with the cultural practices of the people in the countries in which they manage the businesses. The international market is complex, and having knowledge of the dynamics in the market is important to ensure international businesses succeed (University of Lethbridge 2011). This paper presents the analysis of the global strategy and international business with respect to Wal-Mart. The paper provides a detailed analysis of Wal-Mart and looks at some approaches established by the company.

Background

Wal-Mart is a public corporation with its headquarters located in Bentonville, Arkansas, in the U.S. The current CEO, who is also the president of Wal-Mart, is known as Mike Dude, and the chairman of the Corporation is known as S. Robson Walton. The company is an international organization based in the U.S. and has operations in various countries. Initially, it was called the Wal-Mart Stores, Inc. However, it has been branded, and its name changed to Wal-Mart in the year 2008. The firm was founded in the year 1962 by Sam Walton. It was then incorporated in the year 1969. In the year 1972, for the first time, the company traded publicly on the New York Stock Exchange (Moreton 2009).

Today, Wal-Mart is a multinational retail shop and has been ranked the 18th largest public Corporation in the world by Forbes Global 2000 (Hitt, Ireland & Hoskisson 2011). Wal-Mart was established as a private Corporation which was controlled by Walton’s family. However, the public can buy shares of the company after it was incorporated as a public company. The company has employed many people in the global labor market. In this respect, the company ranks among the world’s largest employers. In addition, it is the United States’ largest grocery retailer. Wal-Mart operates chain stores, with various subsidiaries located in different countries across the world. It is said to have about 8,500 stores across the world located in 15 countries. The company operates in 55 different names (Soderquist 2005).

Over the years, the company has accumulated a wealth of resources, and this has been a competitive advantage over other similar companies in the market. The success of Wal-Mart is based on the availability of many resources. The resources of the company range from tangible resources to intangible resources (Sherman 2012). Tangible resources include those resources that can be seen and can be touched. On the other hand, intangible resources refer to those resources that can not be touched, and neither can they be seen. Some of the tangible resources that are available to the Wal-Mart stores include financial resources, organizational resources, and physical resources, among others. An example of intangible resources includes the goodwill of the Corporation, the brand name of the company, and the strong organizational culture, among others. Wal-Mart Stores has been competitive globally because it has adequate resources. In addition, the company has gained a large portion of the global market. This has been achieved because customer loyalty has been attained in most of the countries where Wal-Mart has established its businesses. Therefore, the company has commanded a large market share in the global markets (Sherman 2012).

Review of theory

Wal-Mart resources

In this section, the overall resources of Wal-Mart will be discussed. This will include the ways in which the resources can be used to gain a competitive advantage. The author will discuss how the available resources can be developed to maintain a sustainable competitive advantage. The section will also focus on the dynamic capabilities of the Wal-Mart stores.

Wal-Mart Inc. has enough resources to implement global strategies, and this has been one of the competitive advantages of the company over other companies in the market. One of the biggest resources that the company has is the human resource. The human resource in the Wal-Mart Corporation has significantly contributed to its success. The Corporation gives everyone an equal opportunity to become a leader. The opportunity to become a leader in Wal-Mart Corporation is availed in different ways. One of the ways in which the leadership opportunity is offered is through talent management. Talent management at Wal-Mart Corporation is done by the Global Talent Management team. The leaders of the Corporation also attend training by the business leadership series programs. These trainings are done during seminars in different nations and are offered by the senior executive officers of the subsidiaries of the company. The company also utilizes its human resources by offering them experimental learning on their jobs when work is in progress (Koontz & Koontz 2007).

The financial resource has also been a major success factor for the company. Notably, the company has been in operation for a long time and has been making massive profits. Wal-Mart has been rated as the fastest growing and the largest public corporation in the U.S. This ranking has been based on the revenues made by the company. The availability of adequate financial resources has been a substantial boost to the operations of Wal-Mart. Therefore, the company can expand its operations at will. Additionally, the company can make many long terms and short term investments to generate profits. The achievement of the goals of the company has been possible without strain on the resources. According to the financial statement of the year ended January 2012, the current assets of the company amounted to a staggering $ 54 975 million. With this amount of current assets, the Corporation will not have problems in financing the short term investments. The non-current assets, according to the financial statement, amounted to $ 138 431 million. Therefore, financing long term projects will as well not be as a big challenge to the Corporation (Robinson 2012).

Organizational resources are the other class of resources that have contributed to the success of the company. The company has several subsidiaries and retail stores worldwide. The subsidiaries are widely distributed, and the company can access and meet many customers. In fact, the managers of the various regions in the world meet regularly to discuss the success of the company is venturing into many markets. The meetings are done through video conferences due to the geographical distances between the organizations. The geographical distance acts as a barrier making it difficult for managers to meet physically. In the meetings, the regional managers discuss how they can improve their services to customers. The information is forwarded to the regional managers, who then implement the issues agreed upon during the meetings (Soderquist 2005).

Wal-Mart has a considerable amount of physical resources, which include buildings and transport vehicles. The Corporation has many buildings that are built in different areas worldwide. These include warehouses, stores, and also outlet stores where the company can sell products. The products of the company are transported to the stores through shipments, whereby the ships belong to the company. The availability of physical products is made possible by the financial capability of the Corporation because it can make as many long-term investments as possible in different parts of the world. It can buy the transportation equipment to enable the distribution of the products. The transport needs to be efficient since the Corporation deals with grocery retailing, among other products (Palikala n.d).

Wal-Mart is rich in informational technology resources. The information about the Corporation can be assessed online. The company has a database rich in information that helps reach and serve as many customers as possible. Wal-Mart can advertise its products online and can also make online sales. Customers make online orders and receive the orders in time. Wal-Mart became the first retail Corporation to use the Electronic Data Interchange (EDI). The organization can send the description of orders directly to the manufacturer. In return, the manufacturer sends a confirmation note to the retailer as well as the invoice. All this is done through the online system. The parties can make online payments for the commodities purchased or sold. The informational technology resources are particularly crucial, especially in the current time when the growth in technology is too high. It is worth mentioning that customers are now turning to online sources for information about the availability of products from different outlets. The customers are also making online orders and online payments (Soderquist 2005).

The database of the company has information that advertises for the jobs available in Wal-Mart. Potential employees interested in working at Wal-Mart can find the opportunities online and apply for the posts online. The managers and leaders of the Corporation are geographically separated, and they cannot communicate face to face. The information technology in Wal-Mart assists in easing the communication between the managers from different regions and improve the flow of information from the top management down to the managers at the lower level of the organization. In the database of the company, they also provide legal information that can be used or accessed by those who need to know the legal rights of the Corporation and those who are not lawyers but want to sue the company (Parr and Smith 2005).

Technology is the main intangible asset that Wal-Mart has used in its success. Wal-Mart relies so much on computerized inventory controlled systems. It also uses specialized distribution networks. This has served as a secret to the success of this Corporation because the company has efficient controls on the stocks in the many stores located all over the world. The Corporation can supply goods and services to the right people through the use of specialized distributors. Timely delivery is one of the important elements in the distribution of goods ordered by customers. The success of the Corporation is, to a considerable percentage, contributed by the e-commerce enabled trading, which is a result of technological advancement (Parr and Smith 2005).

Wal-Mart’s competitive advantage

Wal-Mart is considered one of the most competitive businesses in the U.S. and the world at large. Wal-Mart can offer goods through online channels due to the availability of online retail stores. Customers make online orders, which are cheap and easy to access from anywhere as long as customers can access the network. Online orders are usually cheaper compared to the orders made at the stores. This enables the Corporation to get in touch with many customers internationally. This facilitates the making of high sales and hence maximizing the profits. This gives the Corporation a competitive edge over the other competing such as Kmart (Soderquist 2005).

Wal-Mart has so many large stores across the world. It is capable of distributing the goods using its own means of transport. The company also owns storage stores located in different regions. Therefore, the transport cost and the storage cost are lowered, and this is reflected at the final cost of products in the Wal-Mart outlets. Wal-Mart can sell its products at a low price, which is affordable to the customers. The prices of the company are relatively low as compared to other outlets. This aspect attracts customers and makes Wal-Mart extremely competitive (Kneer 2009).

Wal-Mart is resourceful in terms of building infrastructure because the structures are widely distributed. This means that Wal-Mart has so many outlets across the globe. It is capable of constructing outlets even in the furthest places where there are many customers. The Corporation has the capability of distributing its products effectively. In addition, it can use technology in its distribution channels. This ensures that stores are always stocked, and customers do not lack what they need at any one time. Deliveries by the Wal-Mart distributors are also made in time due to their efficiency in distribution. Wal-Mart Corporation is also motivated employees by giving them incentives. This enables employees to give outstanding services to customers, and in return, make the customers happy and encourage them to buy from the Wal-Mart outlets (Kneer 2009).

Wal-Mart has also established itself as one of the organizations with the strongest bargaining power. It can bargain with its suppliers and get the supplies at a low cost. As a result of its bargaining power, the company can acquire goods at a low cost compared to its competitors. The company can sell products to its customers at a low cost, hence increasing the volume of sales (Palikala n.d).

Wal-Mart has considerable economies of scale, which boosts its competitive advantage. As such, the company has lowered the prices of products to the final customers. Advertising products has helped boost sales significantly. In the year 2010, the company had an advertisement advantage of approximately 1.55%. The company has invested a good amount of money in technology. The technology also helps gain more sales and boost profits further. In the year 2010, it had an advantage of up to 1.7 %, which was from the expenditure on the information systems (Palikala n.d).

The company works towards fulfilling the main philosophies that were established by the founder. The philosophies are respected to the individuals; this leads to the proper treatment given by Wal-Mart to its employees. The second philosophy is the offering of the best services to customers. The company has established strategies to enhance the provision of goods and services at the lowest prices. The third philosophy that has inspired success is the philosophy that states that the Corporation should always strive for success (MBA Knowledge base 2012).

Sustainable competitive advantage

For the Corporation to be successful for a long time, it should establish a competitive advantage that can be sustained for a long time. The company has been the leading retail stores in the world. Some of the strategies that the Corporation developed to ensure competitive advantage are discussed below.

The Corporation has identified its suppliers and established its own distribution centers. As such, the compare purchases products at a low price. This has been reflected in the selling prices of all products. The prices have been attractive to customers over time. Wal-Mart has also won the trust of long term customers. The trust of customers has been increased due to the company’s ability to offer quality products at relatively low prices. The ability of the Corporation to avail the deliveries on time has also enabled it to create a sustainable advantage over its close competitors (Palikala n.d).

Wal-Mart can process orders faster and deliver the orders on time due to the advanced information systems and the control systems available. The Corporation can import its own products directly without the need to use the agents who are involved in the importation of goods. This also helps in the reduction of the product prices. It also speeds up the distribution of products to the required outlets. Wal-Mart Corporation has issued its regional managers with authority to make decisions that can improve their business and increase competitiveness. This reduces the bureaucratic procedures that may require to be followed in the implementation of the decisions. It speeds up the process of making decisions and gives motivation to the managers and employees because they feel part of the company. As a result, the workers have always worked towards achieving the goals of the Corporation (Parr and Smith 2005).

Wal-Mart has used the information system to gain a competitive advantage over its close competitors. It has pioneered most of the technological innovations which are now being applied in most organizations. For instance, it was the first company to use information systems to control the inventory. It was also among the first organizations to use the Electronic Data Interchange (EDI), which help speed up the processing of orders. In a bid to enhance the control of inventory by the use of computers, the company also introduced bar code scanning. This was introduced at the selling points and also at the inventory stores (Soderquist 2005).

Firm Analysis

Strategy development

Wal-Mart has embraced the strategy of ensuring that high volume is attained at a relatively low cost. The low pricing coupled with enhanced customer service is aimed at ensuring customer satisfaction. Therefore, it can be asserted that Wal-Mart’s strategy centers on three aspects, including low cost, high volume, and customer satisfaction. At low cost, it can be observed that the company incurs minor production costs. This is made possible due to the unmatched distribution capability that the company enjoys over its competitors. With respect to high volume, Wal-Mart has been able to register increased growth in sales due to the low prices the company offers to the customers. Lastly, on consumer satisfaction, the company offers low prices for its products. The company also observes employee motivation and effective data management to enhance the customer experience. It can be summed up that the company has managed to acquire volume through the low pricing strategy and the provision of quality services at the convenience of the customers. It is imperative to note that the company has located its business in areas with minimal competition. The company has also remained innovative on how to enhance customer loyalty (Soderquist 2005).

VRIO Analysis

The initials VRIO stands for Value, Rarity, Imitability, and Organization. VRIO analysis is an analysis of an organization in terms of the resources that it possesses. The resources of a company include the assets and the competencies that a company can use in improving its business operations. This is aimed at increasing the profitability of the company. Value analysis answers the question of whether the firm or the company can exploit an opportunity with the available resources and also neutralize the threat that can be available. Resources are few and scarce. In connection to this statement, the term Rarity in the VRIO analysis refers to the ability of the Corporation to control the resources that are available to it. Imitability from the word imitate is the analysis of whether the company’s products can be duplicated or copied by another company. Organization analysis answers the question of whether the company structure is organized and whether it can exploit available resources (Barney 2002).

VRIO Analysis of Wal-Mart

In the VRIO analysis of Wal-Mart, the management of the Corporation has exploited the resources and uses them to achieve success in implementing the goals of the company. This can be reflected in the success achieved by the company. It has been the most successful retail Corporation over the years. This can be credited to the organization of the company because there is well-organized management that can utilize the resources. The Value part of the VRIO analysis is a factor whereby the Corporation has utilized the available opportunities by use of its resources. It has also effectively managed the rare resources. The company has avoided the imitation of products by the use of technology (Barney 2002).

Delta Model of Business Strategy

The delta model of business strategy is a model that involves the customers in the management process. The model was developed by Arnoldo Hax and Dean Wilde and is referred to as the customer-centric model. The delta model of business strategy enhances innovativeness and creativity geared towards ensuring customer satisfaction. This strategy is said to be a shift from the ordinary strategies, and it introduces strategic flexibility in the ever-changing business environment. One of the philosophies that were developed by the pioneers of Wal-Mart Corporation is to give the best services to customers. Therefore, the management of the Corporation involves the customers in their innovations to ensure that customers are satisfied. They apply the Delta model in their business strategies (Hax & Wilde 2003).

Bottom of Pyramid Strategy

The bottom of pyramid strategy is an approach in business whereby the developments of new models are targeted at the areas that are not technologically developed. In this strategy, it is believed that the less developed regions can become successful through the involvement of multinationals (Prahalad 2008). Wal-Mart has used this strategy to get access to the less developed areas and has received a favorable response in terms of profits.

Conclusion

Wal-Mart is the most successful retail Corporation in the world. It has made immense profits from its operations. The success of the Corporation is attributable to the rich resources that the Corporation has. It has able human resource that has helped it in the management of the resources. The Corporation has also utilized the information systems to improve services to customers. It can deliver orders on time and has developed trust from customers due to the low prices and the quality products that are offered to customers. This has enabled the Corporation to establish a sustainable resource base and sustainable profits over the years. The Corporation has also done VRIO analysis appropriately. In return, the company has utilized its resources in achieving the success that it has enjoyed over its competitor organizations. In fact, the success of Wal-Mart has been recognized through the various awards that it has won. It has also used the bottom of the pyramid business strategy to develop the less developed regions in the U.S., as well as in other countries where it has established stores. In a general sense, Wal-Mart is the most successful retail stores in the world. This success is attributable to the management strategies of the company and the resources available to it.

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