Wal-Mart InternationalEssay Preview: Wal-Mart InternationalReport this essayWal-Mart InternationalSam Walton started his own company and made it into the leader in discount retailing that it is today. Through his business practices, he and his associates led the company forward for thirty years. Today the company is still growing steadily. Wal-Mart executives continue to rely on many of the traditional goals and philosophies that Sams legacy left behind, while simultaneously keeping one step ahead of the ever-changing technology and methods of todays fast-paced business environment. The organization has faced, and is still facing, a significant amount of controversy over several different issues.
In 1962, when Sam Walton opened the first Wal-Mart store in Rogers, Arkansas, no one could have ever predicted the enormous success this small-town merchant would have. Sam Waltons talent for discounts retailing not only made Wal-Mart the worlds largest retailer, but also the worlds number one retailer in sales. Indeed, Wal-Mart was named “Retailer of the Decade” by Discount Store News in 1989, and on several occasions has been included in Fortunes list of the “10 most admired corporations.” Even with Waltons death (after a two-year battle with bone cancer) in 1992, Wal-Marts sales continue to grow significantly. Wal-Mart is successful not only because it makes sound strategic management decisions, but also for its innovative implementation of those strategic decisions.
Wal-Mart stores operate according to their “Everyday Low Price” philosophy. Wal-Mart has emerged as the industry leader because it has been better at containing its costs, which has allowed it to pass on the savings to its customers. Wal-Mart has become a capability competitor. It continues to improve upon its key business processes, managing them centrally and investing in them heavily for the long-term payback.
Based on Wal-Marts position in 1994, which was considered a year of expansion for the company, (Wal-Mart added 103 new discount stores, 38 “Super-centers”, 163 warehouse clubs, and 94,000 new associates) interest debt increased 52.3%. Sam Walton expressed his belief that by the year 2000 Wal-Mart should be able to double the number of stores to about 3,000 and to reach sales of $125 billion annually. Walton predicted that the four biggest sources of growth potential would be the following: 1. Expanding into states where it had no stores; 2. continuing to saturate its current markets with new stores; 3. Perfecting the Super-center format to expand Wal-Marts retailing reach into the grocery and supermarket arena — a market with annual sales of about $375 billion; 4. Moving into international markets (Thompson & Strickland, 1995).
It wasn’t long until Wal-Mart decided to do the same. In 2005, it started to attract a large number of shoppers with the intention of becoming one of Wal-Marts’ leading sales hubs in the United States. At first, Wal-Mart went with a concept of what to call its corporate-sponsored operations because they were both in the business of selling quality goods and services through the chain store. Wal-Mart and its partner competitors then found that they could also use the product of those stores to be more profitable by doing business in some of their own stores. Wal-Mart is so successful because it is so successful, but it is also so powerful because of the quality of its products.
Although Wal-Mart’s model was always based on high-margin products, it was once again a model that was used by many other chains that were trying to expand into other markets. The only place where this model was accepted in an obvious way and in a way that was clearly a good fit was in the U.S. The U.S. market for Wal-Mart merchandise continues to grow, especially through the international expansion of Wal-Mart. We can see Wal-Mart’s success in the United States more accurately when the company’s store stores expanded, in the United Kingdom more broadly, and its store stores began to spread more globally. To some extent, the growth of Wal-Mart in the United States is one reason why the company continues to prosper in the United States, although in other respects, it may be one reason Wal-Mart’s success has been limited in some quarters beyond what it had hoped to achieve.
How was Wal-Mart’s success in the U.S. compared to the U.S.? Well, there are major factors at work here. The first is to distinguish the company’s business model from those of any U.S. chain before it with a few very key distinctions. Wal-Mart’s main focus is on price-effective discounting from its own stores. This allows it to sell at cheaper prices than competitors. The second is because of some changes in the industry. Most products are more variable and cost-effective than products of less significant brand names. This is not a bad characteristic of the business model. The U.S. market for Wal-Mart merchandise also has some similarities with other U.S. chains. Wal-Mart is an example of how such factors can produce significant growth. The third reason is to create new opportunities by working with suppliers that are able to take advantage at their own pace and with innovative practices. Wal-Mart is not only more experienced in its business, but has a lot of great potential in expanding its markets, including the U.S. market, to more than 65,000 outlets in 37 markets, that are large on both the local level and the global scale.
Wal-Mart did not build a brand that rivaled it in sales. It also didn’t find a place with a strong brand that could compete with it if it tried. Wal-Mart was able to make the right choices because it was able to find the right suppliers and through these and other means find its right suppliers. Wal-Mart also grew through its manufacturing, which made up 70
Along with its entry into the more established markets in Canada and Mexico, Wal-Mart was considering entering the more stable, but yet undeveloped markets of Latin America–specifically Brazil and Argentina. Argentina offered a mature and growing target market that could embrace the discount store concept at a rapid pace. If Wal-Mart made the decision to enter Argentina, upper management projected that the Company would expand into the Argentine market with a mix of Wal-Mart and Sams Club stores.
In terms of costs, Wal-Mart budgeted expansion costs for Argentina using a model similar to those used in the American and Canadian markets. The company forecasted that each new store would cost roughly $20 million to build