Business Expansion: A Case of Wal-Mart

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Table of Contents

Introduction
Current Strategy at Wal-Mart
Technology used at Wal-Mart
Recommendations on the Organizational Strategy in China
Conclusion
References

Introduction

Global organizations continue to expand their physical borders as they venture into the international market in search of huge revenue and profits.

With the advent of globalization, most international companies find it easier to coordinate and control their operations as they target the achievement of bottom-line organizational objectives. However, challenges continue to influence the extent of success that organizations record in their international market operations.

Organizational culture, organizational transformations, and conflict management, for instance, are important aspects that managers must address as they pursue their expansion plans and programs.

This paper seeks to discuss the topical issue of business expansion comprehensively, especially by paying close attention to Wal-Mart. The analysis evaluates the ability and possibility of Wal-Mart expanding and successfully establishing its operations in China.

Current Strategy at Wal-Mart

Wal-Mart mainly focuses on localization as its main strategy of expanding into international markets. Through localization, the retailer acquires establishments through buy-out or enters into a merger with the locally existing and already established firms (Jones, 2010).

Because the local firms already understand the market better than Wal-Mart itself would do, the firm seeks to enter a foreign market through an already existing venture.

This gives it the necessary competitive advantage over other rival firms because it does not begin its operations in a new international market from a new start, but continues with what already exists.

Additionally, the international market strategy by the firm involves maintaining the local brands exactly as they existed before. Even after buying or forming a merger with a local enterprise, Wal-Mart does not re-brand it with its own symbols, logos, and colors.

This is an important strategy in international market operation because local consumers often feel comfortable with local names and brands, which they view as representing their true beliefs, lifestyle, and attitude (Jones, 2010).

In the UK, for instance, Wal-Mart operates in the market under the brand name Asda, while in Japan the company operates under the brand name Seiyu (Walmart, 2013).

Maintaining the local connection is an important factor for any market, and the retailer achieves this through adopting names that are well recognized by the local market. The organizational structure adopted by the company is also crucial in its performance.

Centralization is pursued partly, where the retailer manages its sales, marketing, as well as materials management at the company’s headquarters. Store operations, on the other hand, are divided and distributed according to regions that are headed by regional managers (Jones, 2010).

Technology used at Wal-Mart

From an organizational point of view, Wal-Mart relies on the capabilities of information communication technology to help in the formulation and implementation of decisions. Part of the retailer’s technology innovation in the business model focuses on reduction of operation time and the related cost.

The radio frequency identification technology, abbreviated as RFID, is particularly used for communication and exchange of data between the organization and other external organizations.

The RFID tags help Wal-Mart to communicate effectively with its suppliers concerning stock levels to avoid stock-out situations (Roberts & Berg, 2012).

Its in-store technology involves a wide range of communication technology that aim at easing communication and improving efficiency in performance. The Point of Sale software solution is used at virtually all the checkout points in all its stores worldwide, save for the case of Japan.

The online marketing strategy mainly focuses on individuals, and especially buyers to sustain e-commerce. The company targets to create more sales, at the same time maintaining the related costs as low as possible through online marketing.

This strategy also provides easy, fast, and reliable feedback information from the consumers, which enables Wal-Mart make appropriate adjustments in fulfilling the market desires (Roberts & Berg, 2012).

Recommendations on the Organizational Strategy in China

It is important that Wal-Mart makes complete adjustments that wholly reflect on the Chinese market and its characteristics. The Chinese market considers low prices as the best strategy that can win their confidence and loyalty.

Although Wal-Mart is known for low prices in its traditional US market, its strategy never puts emphasis on quality. While this strategy has worked in US to produce successful performance, it may not be the same case in China.

Thus, Wal-Mart should maintain the low prices strategy, but win the loyalty and trust of the Chinese buyers that the products are also of high quality. This may call for the retailer to put pressure on its Chinese suppliers to consider high quality in their products (Jones, 2010).

The shopping experience in China needs to be carefully studied and understood by managers at Wal-Mart to be able to offer services that match the local consumers’ attitudes and behaviors. The Chinese, for instance, are hard to maintain their loyalty over a brand like is the case with other markets where Wal-Mart operates.

Instead, the Chinese are more conscious about a brand, and this is what informs their purchase decisions. It is also worth pointing out that the Chinese are inclined to buy out of impulse rather than conducting a careful market research.

As such, Wal-Mart should target more use of promotions that attract the masses, and which have the likelihood of inciting their emotions into buying (Jones, 2010). Salespersons can be used in this case to influence the consumers into making immediate or quick buy decisions.

The partial centralization strategy that Wal-Mart adopts and pursues in its operations need to be adjusted, especially for the case of China. In general, the Chinese community or society is relatively less homogeneous (Jones, 2010).

By adopting a more decentralized approach and strategy, Wal-Mart managers in China will have the freedom and ample room to make decisions that will be more fitting to the local market scenario.

This freedom will allow the managers to enter into direct business deals and agreements with their suppliers, which will make business operation easy. Additionally, the managers may have the courage to form franchises and expand their operations to rural China, where majority of the retailers in the country have been neglected.

Conclusion

Businesses mainly expand their operations to cover other international markets with the view of making more profits and enabling quick growth and development. In doing so, the companies adopt and implement various strategies that help them achieve their goals and objectives.

Wal-Mart is an international company that operates in many countries throughout the world. The company’s main business strategy that has helped it register great success in the international market includes localization.

The firm buys locally existing firms or forms mergers to create the perfect opportunity of launching into the foreign market. Wal-Mart does not necessarily use its brand name in the foreign markets, but rather maintains the original local brand names that they merge with or acquire.

Wal-Mart’s operation in China could face some challenges that may call for certain strategy adjustments. The Chinese people have a different shopping experience, where they are more likely to buy out of impulse.

Although low price is also a big influence in the Chinese market, emphasizing on quality could ensure the company makes great impact. Use of promotions and salespersons will most likely influence immediate purchase decisions, thus enabling Wal-Mart to achieve high revenues and huge profits.

References

Jones, R. G. (2010). Organizational theory, design, and change, 6th edn. New Jersey, NJ: Prentice Hall.

Roberts, B., & Berg, N. (2012). Walmart: Key insights and practical lessons from the World’s largest retailer. London. Kogan Page.

Walmart (2013). Save money. Live better. Web.

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