Wal-Mart in Africa
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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 |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Wal-Mart's Past Experience in International Markets
Wal-Mart had mixed results in its operations in foreign countries. It operated very successfully in rich markets like Mexico, Canada, and the UK (Refer to Exhibit-IV for the Soci-Economic data of key countries where Wal-Mart operated). It operated in Mexico through its subsidiary called Wal-Mart de Mexico. Right from the time it first started its overseas operations in Mexico in 1991 through a joint venture with a local retailer called Cifra, it had grown in size to become the biggest retailing company in the whole of Latin America...
Wal-Mart Embarks on an African Safari
Wal-Mart started putting more emphasis on the international markets to drive its expansion since the financial crisis of 2008 . The main reason for its enhanced international focus was the limited growth opportunities in its domestic (US) market since the financial crisis. Strong sales growth and a record number of new stores opened made its international segment grow faster. Wal-Mart's international segment grew by 15.2 percent year on year for the fiscal year 2012. Its operating income from international operations for the fiscal year ending January 31, 2012, was US$ 6,241 million...
Initial Hiccups
Wal-Mart's offer was to buy a controlling stake of 51 percent stake in the South African retailer. Its offer was accepted with some conditions. First of all, Wal-Mart would be restrained from cutting any jobs in Massmart for two years after the merger. Wal-Mart was also to give preference to the 503 Massmart employees who had been retrenched in June 2010 in its future recruitments. Wal-Mart agreed to honor labor bargaining rights for at least three years after the merger. In a move to develop the local manufacturing sector, Wal-Mart agreed to implement a program to improve the competitiveness of local suppliers within three years of the merger approval date. It earmarked 100 million rand (US$13.37 million) for a supply-chain training program...
Smooth Ride?
As the court was deliberating on the appeal against the merger, Wal-Mart and Massmart were busy moving ahead with their integration, which included aligning product sourcing. McMillon said, "Massmart is currently located in 12 markets so that's our focus. Building our business in the markets that we are currently in is our primary focus... We are excited about the region. We have a long-term view"...
Exhibits
Exhibit I: Criticisms against Wal-Mart
Exhibit II: Countries in which Wal-Mart Operated in 2012
Exhibit III: Consolidated Income Statement of Wal-Mart for Fiscal Years 2010-2012 (in US$ Millions)
Exhibit IV: Socio-Economic Data of Key Countries Where Wal-Mart Operated
Exhibit V: Operating Income from International Operations for Fiscal Years 2010-2012 (in US$ Millions)
Exhibit VI: Major Retailers in South Africa
Exhibit VII: List of Countries in Which Massmart Operated in 2012
Exhibit VIII: Socio-Economic Data of Countries Where Massmart Operated
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