Abstract

This case is about Wal-Mart’s entry into the African continent and the challenges it faced. The case also highlights the challenges that Wal-Mart could encounter in establishing itself in the African retail market. Wal-Mart started to put more emphasis on the international markets to fuel its growth as the opportunities available in the domestic market had dwindled since the financial crisis of 2008. Wal-Mart started expanding into international markets in 1991. Previously, it had faced mixed results in global markets. While it was highly successful in some markets like Mexico, it also experienced failures in markets like Germany and South Korea. Wal-Mart started to focus on Africa as other markets which offered good growth potential like India were still closed to foreign players. Some countries in Africa offered good growth opportunities for big MNCs like Wal-Mart despite the bevy of problems they faced like political instability and poor economic conditions. Wal-Mart decided to expand in Africa inorganically by acquiring a local retailer. Wal-Mart ran into trouble when some trade unions and government departments alleged that its entry would lead to huge job losses and damage the domestic manufacturing sector of South Africa. Though some analysts were optimistic that Wal-Mart’s business model might prove successful in Africa too because of the lower income levels of people in many African countries, others were still skeptical about Wal-Mart’s fortunes in Africa.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the issues and challenges faced by multinational companies like Wal-Mart when entering new markets.
• Appreciate the importance of MNCs understanding the local market conditions when entering new markets.
• Analyze the strategies that need to be followed by companies when entering a foreign market of which they have little experience.
• Discuss and debate the strategies that Wal-Mart should follow in the future to succeed in the African market.
• Discuss the lessons that Wal-Mart should learn from its experiences in international markets like Germany and South Korea.

Keywords

Globalization/ International Strategy, International Marketing, International Business, Strategy, Emerging markets, Modes of entry, Macro-environment, Growth strategy, Competition, Africa, Wal-Mart, Massmart