How Wal-Mart Could Continue with the Growth Strategy
Wal-Mart topped the list as the world’s largest retailer by the year 2002 by using a strategy of selling branded products in the United States. The company has also applied the low price strategy which also comes with the benefits of eliminating the expenses of frequent sales promotions and making the sales more predictable. The company has also succeeded in reducing its costs through economies of scale. The low-price strategy has helped the company to excel in the German market, as well as other markets. The same strategy which helped “force” the retailers in Germany to reduce prices could be helpful in forcing Australia’s smaller-end retailers to reduce prices.
Wal-Mart was faced with a challenge to compete with other players in the market to continue growing. The strategy to become an international company would greatly affect its marketing, and provide an opportunity for the company to earn more markets. The company had already established markets in various parts of the United States with more than 440 locations in Asia, “900 locations in the Americas”, and “over 350 in Europe” (Yoffie, 2).
Maintaining these stores in operation while trying to launch more, would present an opportunity for the company to retain the market as well as cover more markets. It is still evident that the company, even today, is yet to establish outlets in some markets around the world, which could offer an opportunity for continued growth. In addition, the company could explore other techniques to expand, such as merging with companies that had already made advances in certain areas around the world.
This could help them achieve growth with minimal costs. The company has a variety of commodities including electronics, and one strategy would be to analyze what was best for every market and then avail these products. It would be expected that different consumers around the world would respond differently to various commodities provided by the marketers. Knowledge of the customer’s tastes and preferences would help them retain the current market as well as gain more.
The company could also maintain market and improve on expansion by making sure that customer experiences were catered for, for example by utilization of new methods of marketing such as internet marketing. Internet marketing provided an opportunity for customers to shop faster, with lesser inconveniences, and with the comfort of being at home. The e-commerce strategy and online marketing also availed an opportunity for the company to advance its expansion goals. This is because of the potential the internet market had (and still has) for growth.
Possible Limits to the Growth Desired
Several limits would be expected to manifest to limit the growth dream for the company. One of the threats to such a growth strategy would be the role of the competitors in the marketplace. While seeking to expand markets in places like Asia and Europe, it must be considered that other companies, especially the local companies, had advantages over Wal-Mart as far as the local market was concerned. In addition, more powerful corporations had already launched their outlets in these markets, and this would render the company disadvantaged because these corporations had advantages over Wal-Mart.
Other challenges relating to the local market included the determination of the tastes and preferences of the customers as well as retaining them. Although e-commerce operations launched by the company in the mid-1990s were an innovative strategy that would expand Wal-Mart’s market, they would be faced with a number of challenges. Payments made through the internet are prone to theft and criminality because of cyberattacks.
This would mean that the company would need to invest a lot in ensuring safety, and again, assure the customers that its channels were safe, a failure to which customers would not support this strategy widely. Although mergers and acquisitions are also a quick way of entering and expanding markets, many challenges relating to the running of the company are to be faced, for example, the workforce to retain after the acquisition, what channels and operations to suspend or retain after mergers, among others. Any company wishing to launch markets in the international market is faced with challenges of overcoming, leave alone determining the legal barriers that exist in the local market, as well as those imposed by international bodies like the WTO and others on international business operations.
While some countries restrict certain operations (which could affect Wal-Mart), others have requirements that would present an added cost to the company. Other regulations related to environmental concerns, and concerns for social corporate responsibility of firms to the locals. Wal-Mart has not only succeeded in selling its goods cheaply but also selling brand names and this strategy could help it expand around the world. While it expands, strategies such as sharing advertisements could help it realize low costs. “Europeisation” would also present some limitations to Wal-Mart in countering challenges and the problems related to moving from protected national markets such as increased competition (Hultén & Anna, 1).
Asia and Europe offer Wal-Mart real opportunities for international market dominance
The benefits of expansion into the European and Asia market for the Wal-Mart have already been felt, with the company realizing growth of 10% profit because the market growth in Mexico, Canada, and China helped to make up for the decline of sales at the U.S. stores (Bloomberg, 2010). Expansion into the Asian and European markets would render the company the advantage of serving customers with a wide range of preferences and cultures, and this would mean diversified markets.
For instance, venturing into the Asian and European market would help the company diversify as relates to customers who have different preferences, differences about concerns on personal finances, and unemployment. The company for example experienced a decline in its sales in the United States as customers in the United States were concerned about personal finances, unemployment, and gas prices, unlike customers in other markets.
Entry into the European and Asian market would advance the strategy of the company to capture more market by offering cheaper products to lower-income customers. Unexploited market in China, as well as parts of Europe and Asia, as well as weak competition, availed a growth opportunity for the company to enter and grow its markets. Markets such as in China have shown a tendency of the central government having a bias against foreign companies and favoring local, as well as favoring local and state-owned companies.
How the company could take advantage of its global reach to propel itself through the years to come
The company could take advantage of its global reach through a variety of techniques, some of which have already been mentioned in the previous sections. First of all, global reach represented an opportunity to reach more customers. Once the company has a global reach, it has an opportunity to sell its commodities to various customers with different tastes and preferences. In addition, not only can the company sell more commodities, but that it can use the global outreach to learn tastes and preferences for different customers around the world, and this can help it modify its products to suit the same or like markets in future.
The company has already established a distribution system that aims at reducing costs through use of free-trade-zone distribution centers. In addition, cross-docking can help them to continue providing goods to the consumers at the desired time. Linkage of the various suppliers around the world through certain channels presents an opportunity for them to meet and share their experiences with the company, as well as propose methods or ways of improving current situation.
Being at different countries around the world avails the opportunity for the company to access a large market that is diverse in terms of tastes and preferences. Tastes and preferences varies across the globe and therefore provides an opportunity for the company to launch various commodities to capture these markets, or to modify existing products to suit these markets and improve the existing condition. There are areas that have not yet been explored as relates to particular commodities.
Wal-Mart therefore, through global presence, has an opportunity to explore these markets and earn more money. Various challenges faced in some of the markets around the world avails the opportunity for Wal-Mart to design specific solutions for the company’s challenges. For instance, challenges in management in one country can be improved by learning from others in a different country. Various laws applicable for the entry into local business in some countries offer an opportunity for the company to learn before launching stores in other markets.
Bloomberg. “Wal-Mart profits rises 10% on international growth (Update3)”. 2010. Bloomberg. Web.
Yoffie, David. Wal-Mart, 2005. Harvard Business School, (2005): 1-9.