Consider the information in the article below on Walmart. Evaluate the challenges faced by multinationals such as
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Curious Case Of Walmart's Foray Into Africa Walmart's investment eight years ago into South African retail giant Massmart has divided opinion. The stark reality on the ground is that its stock price is in the doldrums and profits are a rarity. But not all is lost, if the recent appointment of Walmart veteran Mitch Slape, as CEO and president of Massmart, is anything to go by, according to industry analysts. Slape replaces Guy Hayward, whose resignation was announced at the beginning of May, weeks before Massmart released its trading statement. Slape had held various roles within the Walmart group, and his appointment is seen as Walmart increasing its operational control and taking a more active role in running the business, says Bjorn Samuels, an equity analyst at Argon Asset Management. Walmart caused quite a stir in the South African retail fraternity when it signalled its intention to acquire a 51% controlling stake in Massmart eight years ago. So fraught was the $2.5bn deal that it triggered competition concerns, which were eventually resolved by South Africa's Competition Tribunal. This paved the way for a retail matrimony that has been beset by disappointment, starting with an underperforming share price. This has raised questions about whether Walmart's foray into South Africa has been worth it. "Clearly not," argues Wilhelm Hertzog, an analyst and portfolio manager at Cape Town- based Rozendal Partners. "It has not been a good investment for Walmart on all fronts. Massmart's share price has gone nowhere in that time period and the rand has depreciated. Operationally, Massmart has underperformed its peers. So, clearly it was a bad investment for Walmart - there's no two ways about it." Argon's Samuels disagrees. Walmart had stated from the outset that it would use Massmart as a platform to grow Walmart's exposure to Africa. "Therefore, the initial offer of $2.3bn, less than 20% of annual group capex, made the investment worth it from Walmart's perspective." Massmart's announcement earlier in 2019 that it would build 47 new stores between 2019 and 2021, mostly in Kenya and Zambia, could also be read as a vote of no-confidence in South Africa. This lack of confidence in the domestic economy is prevalent among most companies in South Africa. "If you look at other industrial businesses in the country, most are in The Curious Case Of Walmart's Foray Into Africa Walmart's investment eight years ago into South African retail giant Massmart has divided opinion. The stark reality on the ground is that its stock price is in the doldrums and profits are a rarity. But not all is lost, if the recent appointment of Walmart veteran Mitch Slape, as CEO and president of Massmart, is anything to go by, according to industry analysts. Slape replaces Guy Hayward, whose resignation was announced at the beginning of May, weeks before Massmart released its trading statement. Slape had held various roles within the Walmart group, and his appointment is seen as Walmart increasing its operational control and taking a more active role in running the business, says Bjorn Samuels, an equity analyst at Argon Asset Management. Walmart caused quite a stir in the South African retail fraternity when it signalled its intention to acquire a 51% controlling stake in Massmart eight years ago. So fraught was the $2.5bn deal that it triggered competition concerns, which were eventually resolved by South Africa's Competition Tribunal. This paved the way for a retail matrimony that has been beset by disappointment, starting with an underperforming share price. This has raised questions about whether Walmart's foray into South Africa has been worth it. "Clearly not," argues Wilhelm Hertzog, an analyst and portfolio manager at Cape Town- based Rozendal Partners. "It has not been a good investment for Walmart on all fronts. Massmart's share price has gone nowhere in that time period and the rand has depreciated. Operationally, Massmart has underperformed its peers. So, clearly it was a bad investment for Walmart - there's no two ways about it." Argon's Samuels disagrees. Walmart had stated from the outset that it would use Massmart as a platform to grow Walmart's exposure to Africa. "Therefore, the initial offer of $2.3bn, less than 20% of annual group capex, made the investment worth it from Walmart's perspective." Massmart's announcement earlier in 2019 that it would build 47 new stores between 2019 and 2021, mostly in Kenya and Zambia, could also be read as a vote of no-confidence in South Africa. This lack of confidence in the domestic economy is prevalent among most companies in South Africa. "If you look at other industrial businesses in the country, most are in The Curious Case Of Walmart's Foray Into Africa Walmart's investment eight years ago into South African retail giant Massmart has divided opinion. The stark reality on the ground is that its stock price is in the doldrums and profits are a rarity. But not all is lost, if the recent appointment of Walmart veteran Mitch Slape, as CEO and president of Massmart, is anything to go by, according to industry analysts. Slape replaces Guy Hayward, whose resignation was announced at the beginning of May, weeks before Massmart released its trading statement. Slape had held various roles within the Walmart group, and his appointment is seen as Walmart increasing its operational control and taking a more active role in running the business, says Bjorn Samuels, an equity analyst at Argon Asset Management. Walmart caused quite a stir in the South African retail fraternity when it signalled its intention to acquire a 51% controlling stake in Massmart eight years ago. So fraught was the $2.5bn deal that it triggered competition concerns, which were eventually resolved by South Africa's Competition Tribunal. This paved the way for a retail matrimony that has been beset by disappointment, starting with an underperforming share price. This has raised questions about whether Walmart's foray into South Africa has been worth it. "Clearly not," argues Wilhelm Hertzog, an analyst and portfolio manager at Cape Town- based Rozendal Partners. "It has not been a good investment for Walmart on all fronts. Massmart's share price has gone nowhere in that time period and the rand has depreciated. Operationally, Massmart has underperformed its peers. So, clearly it was a bad investment for Walmart - there's no two ways about it." Argon's Samuels disagrees. Walmart had stated from the outset that it would use Massmart as a platform to grow Walmart's exposure to Africa. "Therefore, the initial offer of $2.3bn, less than 20% of annual group capex, made the investment worth it from Walmart's perspective." Massmart's announcement earlier in 2019 that it would build 47 new stores between 2019 and 2021, mostly in Kenya and Zambia, could also be read as a vote of no-confidence in South Africa. This lack of confidence in the domestic economy is prevalent among most companies in South Africa. "If you look at other industrial businesses in the country, most are in
Expert Answer:
Answer rating: 100% (QA)
Answer Multinational corporations like Walmart face numerous challenges when operating in host countries as highlighted in the case of Walmarts foray ... View the full answer
Related Book For
Statistics The Exploration & Analysis Of Data
ISBN: 9780840058010
7th Edition
Authors: Roxy Peck, Jay L. Devore
Posted Date:
Students also viewed these marketing questions
-
Given below are the demand schedule and supply schedule for the labour market for supervisors. Remember that demand for labour represents the employers' demand for workers, while supply represents...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
A medical research study on a new medicine for multiple sclerosis is being conducted with 24 patients. After the study was concluded, it was determined that 16 patients reacted favorably to the...
-
In Problems , (A) Form the dual problem. Discuss in detail.
-
How does myosin convert the chemical energy released by ATP hydrolysis into mechanical work?
-
Current Liabilities The following items are accounts on Smiths balance sheet of December 31, 2007: Taxes Payable Accounts Receivable Notes Payable, 9%, due in 90 days Investment in Bonds Capital...
-
Wyer's Accounting Museum is exploring the purchase of a new building with a useful life of 15 years to use as its main gallery space. The building will cost $850,000. Once it has been purchased, the...
-
Apix is considering coffee packaging as an additional diversification to its product line. Heres information regarding the coffee packaging project: Initial investment outlay of $40 million,...
-
Operations and supply chain ___________________________ leverages the vast amount of data in enterprise resource planning systems to make decisions related to managing resources.
-
your son will be attending an expensive university in 12 years . you deposit $5,000 per year , at the beginning of today's period. Estimate how much money will be in the college fund 12 years...
-
Mary and george finally decide on a 3 bederoom home on machester ct . The price of the home is 1 8 8 , 0 0 0 . What is the amount the couple will have to finance? If the couple purchases the home on...
-
a) A 20-year, $80,000 mortgage carries an annual interest rate of 8% compounded semiannually. How much is the monthly payment?b) What will be the future value of of ach to be for eat the baiming...
-
The contents of the report include: 1. Project Charter (Students can chose their FYP or any other sample project, in IT/Business domain) 2. Detailed Scope document 3. Work break down structure (WBS)...
-
Gemini Inc. operates a goods store that caters for government, private individuals, and organizations. The company has three service departments and two operating departments. Data on the five...
-
Discuss the advantages and disadvantages of using power-law kinetic models versus mechanistic kinetic models in the simulation of complex chemical reactions. When might one approach be preferred over...
-
Variable Cost Concept of Product Pricing Smart Stream Inc. uses the variable cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 4,000 cellular...
-
Briefly discuss the implications of the financial statement presentation project for the reporting of stockholders equity.
-
Is the model fit in Exercise 14.16 useful? Carry out a test using a significance level of .10.
-
The cotton aphid poses a threat to cotton crops in Iraq. The accompanying data on y = infestation rate (aphids/100 leaves) x1 = mean temperature (C) x2 = mean relative humidity appeared in the...
-
The report described in the previous exercise also classified students according to region of residence and whether or not they had a credit card with a balance of more than $7000. Do these data...
-
How does authority become power?
-
What are the downsides of using coercive power? What are its benefits?
-
How does having extensive social networks help garner power?
Study smarter with the SolutionInn App