WALMART'S GLOBAL EXPANSION Wal Mart was established in Arkansas in USA in 1962 by Sam Walton . Today , it is America's biggest retailer , and in fact the largest retailer of the world . It differentiated itself from the competition through the HR practices and efficient distribution system. Employees at Wal-Mart are called associates, and were asked to participate in decision making at each level.. Also Wal-Mart was one of the first companies to set up an effective information system that vastly improved their inventory management and distribution and supply capabilities. In 1990, Wal-Mart realized that the American market would soon be saturated and opportunities for growth were getting extremely limited. As American companies wish to register double digit growth rates and this is no longer possible in the USA, Wal-Mart decided to expand its operations to the global scene. Although critics said that the Wal-Mart was too American a company to be effective anywhere else, their words were ignored as Wal-Mart opened stores in Mexico. In Mexico, the Wal-Mart stores ran into problems, due to the following reasons : Wal-Mart manages anticipated good roads and infrastructure which were not available. Hence Wal-Mart's famed delivery service could not be replicated. Local suppliers could not match the service of suppliers in America and delivery times and standards were not met. The stores originally kept merchandise that was relevant for the American market, but would not appeal to anyone in Mexico, such as ice-skates, lawn mowers etc. After considerable time and effort, the situation in Mexico was rectified, through the following and is now a jewel in Wal-Marts' crown. It developed a partnership with a Mexican Tucking company, to help improve their delivery times and inventory management. It's stores began stocking goods suited to Mexican taste. Wal-Mart's suppliers began to build factories in areas around Wal-Mart stores and distribution centers and this led to greater efficiency in distribution network. Having learned from the Mexican experience that it could compete outside USA, Wal-Mart decided to continue the expansion programme, and opened branches in Japan, Germany, Canada, Britain and South Korea . By 2002, the company had 1200 stores outside US, and generated revenues of $35 billion from. There were several reasons for Wal-Mart's international success, including: Liberalisation of foreign economies and removal of barriers to cross-border trade. The increased bargaining power that Wal-Mart now had over its global suppliers. Advances in Information Systems, and internet-based software that allowed Wal-Mart to exercise control over its global operations , in terms of pricing inventory and profit data. Wal-Mart realized tat its international competitors would steal a march on it if it did not expand global. Carrefour, the second largest retailer in the World , is much more a global payer than Wal-Mart is, with 50 % of its sales generated outside France, its home country. (Wal-Mart generates just 17 % of its sales from the international operations). The global retailing market is still greatly fragmented, with the top 25 retailers controlling just 18% of worldwide sales. Forecasts suggests an international consolidation is due, with Latin America, Southeast Asia and Eastern Europe being the battlegrounds. 1. Summary ( Case - 5 lines and problems -5 lines) 2. SWOT analysis 3. Why did Wal-Mart expand globally instead of focusing in USA ? 4. Do you think that the globalization wave has helped Wal-Mart for entry into other countries ? 5. References