Course: Strategic Management

Case Study Analysis WALMART DE MEXICO When Walmart de Mexico y Centroamerica (WdM) decided to buy the power generated by Electrical del Valle de Mexico's (EVM) wind farm, EVM's struggling project received a significant boost. While the proposed wind farm was located in an area with abundant wind resources, absent a creditworthy offtaker, the project would not have been able to line-up financing. With (WMC) 15-YEAR PPA (Power Purchase Agreement) in hand, the developers were able to gain financial backing, buy and erect the turbines, and begin generating electricity by 2010.

For WdM, becoming the wind farm's offtaker accomplished a number of important objectives. EVM guaranteed electricity rates below those charged by Mexico's state-controlled utility, shaving costs for the famously thrifty retailer. In addition, the project allowed WMC to get closer to some of its sustainability goals. The wind farm would supply electricity to 348 WMCFACILITIES IN Central Mexico, providing 18% of the electricity WdM consumed in 2010.

The wind farm was just one part of the efforts WdM was undertaking in the sustainability area. The company had pledged to meet ambitious goals, looking to reduce waste in its and its suppliers' operations. In the energy area, the company was hoping t receive 50% of its energy from renewable sources by 2015, even in a period of rapid growth, increasing its square footage in Mexico by 12% in 2012 alone. All told the efforts of WdM had made it the world's leading retailer in the area of sustainability -a distinction the company hoped to build on.

The success of the EVM wind farm had ignited Manuel Gomez Pena's thinking about further renewable energy projects. Gomez, WdM director of sustainability, was considering ways the project financing structure might be further adopted to allow WdM to participate in and benefit from other projects. Gomez was also considering the mix of renewable energy sources. In addition to wind, solar and mini hydroelectric projects were possibilities that WdM could consider.

Any project that Walmart de Mexico undertook had to work in concert with Mexico's electricity grid and rate-making structure. Mexico's political leadership had announced a commitment to electricity from renewable energy sources to move the country away from its traditional reliance on natural gas and oil. Mexico's government-controlled electricity utility had simplified the transmission rates for renewalbe energy and had constructed a few projects of its own. However, there were no special feed-in tariffs for renewable energy and only a few tax incentives for the construction of renewable energy projects. Furthermore, there was a dearth of independent project developers with the

resources and expertise to build large-scale projects.

Gomez also had to take into account WdM's capabilities and focus. While the company had made sustainability a priority, corporate officials were loath to take on projects that took them too far from the company's central activity of retailing. The company's investment group analyzed sustainability projects on the same basis as any other project - concentrating on the return of investment.

Gomez believed that the situation called for creative thinking. Reuirement: Case study analysis step by step: Step 1: Facts about the case Step 2: Problem area Step 3: Solutions to the problem Step 4: Final solution and recommendation Guide Questions: 1. What is the case all about? (Facts about the case) 2. What are the problems in the case? (Problem area) 3. What are the solutions to the problem? (Solution to the problem) 4. Give the final solution and recommendations regarding the case study. (Final solution & Recommendation)