Walmart Analysis Essay Example

Published: 2019-09-30
Walmart Analysis Essay Example
Categories: Strategy Business Walmart
Pages: 7
Wordcount: 1768 words
15 min read

Walmart is an American retail corporation with numerous discount departmental stores and warehouses situated in various parts of the world. The company's headquarters are situated in Bentonville, Arkansas, and it was founded in 1969. Over the years, the corporation has continued to grow tremendously, and it has opened numerous new branches in nations such as the U.S., UK, and India among others. The primary reason for choosing this organization for this analysis is that Wal-Mart is a multinational, widely recognized corporation with millions of customers around the world. This essay is a summary report of various factors that have made the corporation a success since its establishment.

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Foundations of Global Business

Major Nations Where Wal-Mart Operates

Wal-Mart conducts its trading operations in over twenty-eight nations around the world. Three of the major nations where the corporation operates include the U.S., UK, and India. In the U.S., the corporation is referred by its name, Wal-Mart. However, its subsidiaries in the UK are referred as ASDA while those in India are known as Best Price.

Membership of the U.S., UK, and India to IMF, WTO, and World Bank

Since their accession to the three global organizations, all the three nations have upheld the guidelines stipulated by the World Bank, IMF, and WTO. Due to this factor, Wal-Mart corporation has greatly increased its trade in the three member nations. In addition, the institutional structures of the three nations have also supported the continued excellent performance of Wal-Mart corporation.

Political Institutions and The Judicial System of the Three Nations

Because of a good political structure in the U.S., the Wal-Mart Corporation has expanded to almost all states in the nation. The UK, on the other hand, both the monarchy and the government have greatly supported trade in the nation. Finally, India boasts of transparent political systems that also supports trade both locally and internationally. Also, the three nations have remarkable judicial systems, which have greatly supported the continued good performance of the Wal-Mart corporation. The systems have formed numerous legislations that ensure a smooth flow of business operations in the respective nations.

Governance, Competitive Markets, Property Rights and Corruption

The three nations have strong and stable political governance that promotes the development of trade. Nevertheless, this enhances the occurrence of intense market competition for other corporations retailing similar products to those produced by the Wal-Mart corporation. This competition is beneficial to the final users of the produced products as it results in0 the production of high quality products. In addition, the nations have clear and transparent property rights and stringent measures for fighting corruption. Such include strict legal penalties or fines charged on all entities prosecuted for corruption.

Wal-Marts Products, Tariff and Non-Tariff Barriers Facing the Corporation

Most of the goods and services produced by the Wal-Mart corporation are household items. The corporation does not produce the goods itself but instead buys them from distributors around the world in bulk. It then sells the products to the public at affordable retail prices. The primary reason why the corporation has performed its retail business well in all the three nations is because it does not face any tariff or non-tariff barriers.

The Trading Blocs in the U.S., UK, and India and Their Contribution to Wal-Marts Performance

There are three principal trading blocs in the U.S. They include NAFTA, AFTA, and MERCOSUR (Gunther & Connolly, 1999). On the other hand, the UK is a member of the European Union (EU) trading bloc. Finally, India is a member of the ASEAN and APEC trading blocs. These trading blocs eradicate all the trading barriers that may affect all Wal-Marts trading operations.

Conducting Business for Wal-Mart in the U.S., UK, and India

There are several things that a person should consider when conducting business for the Wal-Mart corporation in the three mentioned nations. First, the UKs market has a great respect for art and culture. These aspects support social change, social capital and business therapeutic interventions in the UKs vibrant, enterprising society. India, contrariwise, has a vibrant culture and strong religious beliefs. Nevertheless, the U.S. is characterized by a multicultural customer base.

Global Business Environment

Hofstede's Cultural Dimensions in the U.S., UK and India

There are various factors that were considered when analyzing the three nations using Hofstede cultural dimensions 6-D model. According to the model, India has the highest power score while the UK has the lowest score. Also, in terms of individualism versus collective society index, the U.S. has the highest score whereas India has the lowest score. In the uncertainty avoidance index, the U.S has the highest score, with India having the lowest score. The same results can be portrayed in the fifth dimension of masculinity versus femininity.

In the long orientation dimension, the U.S. scores the highest while the UK and India tie at the same score. Lastly, in the indulgence dimension, the U.S. scores the highest while India scores the lowest. In light of these Hofstedes cultural dimension results, it is evident that India has a culture of restraining pessimism, which could influence business decisions. For this reason, a U.S. based Wal-Marts Corporation executive will be expected to communicate broadly and collectively when addressing his/her colleague in India. This is particularly when discussing various issues pertaining Wal-Marts subsidiary, Best Price.

Wal-Mart Operates in Nations That Are Considered Politically and Economically Risky

Wal-Mart has structured its branches in some nations, which are considered to be economically as well as politically risky. Most of these countries are situated in African as well as Latin America. Two examples of such countries include Malawi and Nigeria. Malawi is a poor nation while Nigeria is politically unstable, due to the existence of extremist groups such as Boko Haram.

Wal-Mart Operates in Civil Law or Common Law Nations

The corporation also conducts its trading operations in nations governed by common law. Among them is the United States, which is ruled by the federal law. Common laws are beneficial to the performance of companies, such as the Wal-Mart Corporation. This is because it is easier to deal with a common law than the civil law. Common law systems are also flexible and more adaptable to the changing conditions, unlike the static civil codes.

OPIC insures Wal-Mart

Wal-Marts international operations are insured by the Overseas Private Investment Corporation (OPIC) (OPIC, 2012). OPIC is a government corporation that is self-sustaining, and with a board of governors approved by the U.S. Senate. The main objective of the corporation it to provide political risks insurance for all organizations that participate in foreign markets.

Wal-Marts Intellectual Property Rights

The corporation has over two thousand trademarks and more than two hundred patent grants. Among these intellectual property protection rights include images names of the numerous stores worldwide, symbols, and various products such as computer software among other innovations.

Corruption Perceptions Index in India and the UK

According to the Transparency International Corruption Perception Index report of 2015, India has a remarkably high corruption rate (Ernst & Young, 2015). This high rate of corruption affects Wal-Marts operation in the nation, through its subsidiary corporation, Best Price. Due to this aspect of corruption, Best Price faces intense competition from cheap smuggled goods in the country, which are sold to the market via corrupt dealings.

Consequently, the Transparency International ranked the United Kingdom to have a low level of corruption. This means that the nation offers a better business environment for Wal-Marts subsidiary, ASDA, compared to Indias highly corrupt environment. Nevertheless, there still exists some minor corruption cases that are often reported in the United Kingdom from time to time. Such cases can also affect the optimal performance of ASDA.

Global Business Strategy and Organization

Wal-Marts Mode of Entry into the Foreign Markets

The corporation uses numerous market entry strategies when venturing into a new market. Nevertheless, the most common strategy used by the corporation is an acquisition. This methodology was well evidenced when the corporation launched its branches in the Canadian market (Hayden et al., 2002). Nevertheless, the Corporation also uses other market entry strategies, such as the formation of a strategic alliance, when venturing into other markets. This method was evidenced when the corporation opened its branches in the Mexican market.

Wal-Mart Corporation Market Exit Strategy

The widely used market exit strategy by Wal-Mart corporation is liquidation. Under liquidation, all assets of a company are divided equally among all the shareholders of the corporation. Creditors are also paid. For instance, Wal-Mart used liquidation when exiting from the German market. The chief reason the corporation failed in the German market is that Wal-Marts American executives pressured the German Wal-Marts executives to adapt to the American management methodologies (Knorr & Arndt, 2003). However, this move was not accepted by Wal-Marts staff in German, which led to poor performance and losses for the company.

Wal-Marts Corporate Social and Ethical Responsibilities

The corporation performs numerous social responsibility roles. For instance, the corporation helps the disadvantaged in the society by partaking in charitable humanitarian activities. In 2015, the corporation participated in the energy saving programs such as using solar panels, installation of energy efficient lighting bulbs, and saving of fuel. Also, through the Wal-Mart Foundation, the Corporation supports women training and empowerment programs worldwide as part of its social responsibility.

Wal-Marts Mission Statement

The corporations mission statement is saving people money so that they can live well. Wal-Marts strategies and decisions are manifested by the companys mission statement. This primarily because all its stores sell their products at a reduced price. This helps in saving money for the corporations consumers.

Wal-Marts Strategy Formulation

Wal-Mart is a stakeholder orientation corporation. This is because all its activities are influenced by both the market stakeholders and non-market stakeholders. All these stakeholders contribute a significant influence on the companys policies and strategies in its operation to meet its goals.

Wal-Mart is Not a Stateless Corporation

Wal-Mart is not a stateless corporation, as it does not manufacture or produce goods in other nations apart from the U.S. All its other subsidiaries, located in different nations, import its goods from the companys headquarters, which are situated in Bentonville, Arkansas, United States.

Wal-Marts Organizational Structure

Wal-Mart uses a hierarchical functional structure in its organization. This is because the authority and directives are created from the top levels of the companys management and passed on to employees by the middle-level managers. This governance structure has enabled Wal-Mart to function efficiently over the years.

The Matrix Organizational Structure for the Wal-Mart Corporation

The matrix organizational structure is the most effective for large business organizations like Wal-Mart Corporation rather than the hybrid organiz...

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