Wal-Mart in Africa

Wal-Mart in Africa
Case Code: BSTR428
Case Length: 15 Pages
Period: 2011-2012
Pub Date: 2013
Teaching Note: Available		 Price: Rs.400
Organization: Wal-Mart
Industry: Retail
Countries: Africa
Themes: Globalization, International Business, Emerging Markets
Wal-Mart in Africa
Abstract Case Intro 1 Case Intro 2 Excerpts

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.

Issues

The case is structured to achieve the following teaching 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
  • Explore the policies that Wal-Mart should follow to avoid any future controversies that it might face regarding its business practices in Africa

Contents

Keywords

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

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