Walmart International has continued to show growth over the years after beginning their expansion outside of the United States. However as shown in the case study regarding this growth it was not without problems.
Issue Problems / Identification
Redesign of parking lots for stores since in many of these international cultures customers arrive using public transportation for additional space for parking lots was not necessary.
Adapting the products in certain international stores to more closely identify with the products the culture searches for. Without doing so the customers were continuing to shop at the smaller local retailers that were known to them.
Walmart had to realize that in some international markets the growth rate would be slower and would need to account for this when planning for their continued growth in that area.
Stakeholder Analysis and Management Evaluation
Walmart stakeholders were identified as the executive management team, employees, and also partners that held interests in some of the international markets.
Upon review of the international culture and product research Walmart International was able to make adjustments to the products sold to best fit the market.
Executives continued to review the international markets that showed loss or slow growth and made either necessary adjustments in the expansion speed or pulled out of the area if it was not showing growth potential.
Recommendations and Implementations
While Walmart International has shown growth over the years with their development and entrance to foreign countries, it has not been without issues and sales issues that needed to be addressed immediately, along with the executive decision and management skills to realize when it was time to withdraw from an area. In the area of sales and adapting the Walmart model to international companies they needed to identify early on where they could utilize their concept with little to no change such as in Canada and Mexico where they were able to operate with minimum change to their store concepts. However this was not the case when entering other markets.
Walmart leadership had to be diligent in being able to identify the areas where there standard model would not be supported by the local patrons. In many cultures it had to adjust the products that they would carry and make adjustments to provide the products most sought after by the local population. Also there was no need to incur expense on land for large parking lots when most patrons arrived on public transportation. Adapting to the local culture and the needs needed to be researched and adjustments made to the already successful Walmart model. It was a learning experience for Walmart management but one that did not take long.
Walmart International and its management team along with the stakeholders have used their leadership knowledge and market industry research to provide the company with set goals and guidelines for the implementation and processes to ensure their continued international expansion remains on target and is successful. While they have identified and learned many of the factors that need to be addressed on the way this has allowed them to develop a solid plan of implementation and growth. In doing so they will be able to see further growth and expansion without many of the growing pains that were present in the initial phases of the expansion.
The learning experiences that have been worked through have allowed Walmart International to setup a plan for implementation that are based on the experiences for those international markets they have already expanded in. This allows them to use the information and “lessons learned” that are specific to a region to guide them through the process during growth and avoid the same mistakes. Listed below are several examples of this:
International Growth in markets such as Mexico, and similar countries of the America will require less real estate purchase, or can handle larger stores with the need of less parking since these customers in the majority of cases utilize public transportation or walk to the stores and do not require adequate parking.
Another area to be reviewed during the continued expansion and the international growth initiative of Walmart International is to continue to do extensive research when partnering with retailers that are in the area already. In doing so they must review the reputation of the stores in question and make sound business decisions how partnering and linking together will affect their acceptance in the area. On several occasions through this process Walmart International had to overcome obstacles that were caused by those that they either bought out or partnered with. Along these lines they must also fully investigate the ability of local retailers as to competition on price to ensure that they can truly provide the lowest prices. In many of these cultures the population is loyal to the local “small” retailer and unless there is equity to be gained may continue to shop with them and not support the big box stores.
Walmart International will continue to show large gains in profits and provide stakeholders with the ability to increase capital and continue expansion throughout the international markets if they stay on track and are able to continue to move forward with expansion with little to no loss. While slow expansion is costly they may find that they will need to push through some of these based on the acceptance and growth potential in certain areas. While these areas may potentially be viewed as insignificant and not of importance we have seen in competitive market studies that areas will slow acceptance and expansion rates over the long term have provided some of the best profits and sales revenues in the international markets. Slow expansion is not a failure in implementation and planning, it simply is the way that the area and culture adjust and accept the new business that has arrived.
It is crucial in international expansion that CEO’s and business leaders to understand the full impact of the international global expansion and weight the risks against the gains properly. Stakeholders across Walmart International will be called upon to carry more responsibilities through the global expansion and continue to execute on the day to day activities that will continue to take place throughout the global expansion. During expansion it is easy for executives and their staff to get wrapped up in the growth and the hype, and forget about the day to day operations that are not changing in the already saturated markets. The team must find a fine balance so that there is not a negative impact from the growth on the already developed markets.
Key components that may be done to help facilitate a smooth global expansion are:
Prepare market segmentation analysis to determine which products are most likely to sell in the specified market. Product acceptance and need can vary from region to region and culture to culture.
Prepare gap analysis on the products. Is there a need for a product that is not currently being met locally?
Perform a SWOT analysis against the competition in the area. Determine if your item will be competitively priced in the market and determine acceptance of your chain, and products in the local market. This is essential when competing against other large retailers or local retailers that have a large customer following. Branding is hard to break in some cultures and markets. You must show value and difference to sway buyers.
Proper planning and market analysis is what stands behind Walmart International’s success or failure