Wal-Mart's Foray in Brazil
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Case Code: BSTR332 Case Length: 17 Pages Period: 1995-2008 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Wal-Mart Stores Inc. Industry: Retail Countries: Brazil/US Themes: International Business, Globalization |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Brazil is a highly strategic country for Wal-Mart and we are going to continue growing in the country."
- Héctor Núñez, President and CEO of Wal-Mart Brazil in 2008.
"Wal-Mart began its operation in Brazil in an absolutely fantastic way. The five stores were opened in a few months and, through a very aggressive pricing strategy, attracted thousands of enthusiastic consumers ready to empty the shelves."
- Masaaki Kotabe, University of Texas, in 2001.
Introduction
In August 2008, Wal-Mart Brazil, a part of the international operations of the US-based Wal-Mart Stores Inc. (Wal-Mart), announced that it planned to invest US$ 1 billion in its Brazilian operations. The investment was to give a boost to the expansion plans of Wal-Mart, the world's largest retailer, in the year 2009 in the country.
According to a statement released by the company, this would be the largest investment that Wal-Mart had ever made in Brazil and would aid in opening about 80 to 90 stores. Analysts were of the view that with the slowdown of sales in the US market, Wal-Mart was looking at markets like Brazil and China to achieve growth.
Wal-Mart entered Brazil in 1995 through a joint venture with a local retailer. Its intention was to recreate the success it had achieved earlier in Mexico, the first Latin American country that the company had entered. However, Wal-Mart Brazil faced challenges like frequent 'out of stock'situations and inability to stock the right merchandise mix in the stores.
It also faced problems due to the formats of some of its stores, as the Brazilians did not find them suitable. Moreover, Wal-Mart Brazil faced stiff competition from local retailers as well as from French retailer Carrefour SA (Carrefour) in Brazil. The company also had to bear the effects of an unstable Brazilian economy in the late 1990s.
In the first decade of its operations in the country, Wal-Mart opened only 25 stores in the country. However, after the stabilization of the Brazilian economy in 2004, Wal-Mart began expanding aggressively in the market. In 2004 and 2005, Wal-Mart Brazil acquired two retail chains that consolidated its position in the country....
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