Wal-Mart's Strategies in China
|
Case Code: BSTR178 Case Length: 28 Pages Period: 1994-2005 Pub Date: 2005 Teaching Note: Not Available |
Price: Rs.500 Organization: Wal-Mart Industry: Retail Countries: China Themes: International Business, Globalization Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Welcome to Wal-Mart China
On March 04, 2004, Wal-Mart Stores Inc. (Wal-Mart) held its Board of Directors' annual meeting in China.
It was an indication of the importance the company accorded to its Chinese operation. Although Wal-Mart entered China way back in 1996, it had adopted a slow expansion approach in the country.
However, in the early 2000s the company began to realize that China had the potential to replicate its US model of massive growth due to a huge population of over 1 billion and an increasing per capita disposable income. The members of the Wal-Mart board wanted the company to "get a lot more aggressive" in its expansion in China. Wal-Mart planned to increase the number of its stores in China from 48 in 2005 to 90 in 2006.
Industry observers pointed out that China was a unique market for Wal-Mart. The company sold goods worth $940 million and purchased to the tune of $18 billion5 from Chinese manufacturers in 2004, thus having a substantial presence both as a purchaser and a seller of goods in China.
In December 2004, the Chinese government eased restrictions on foreign retailers to fulfill its commitments as a World Trade Organization (WTO) member. Experts commented that this would help Wal-Mart's expansion efforts in the country.
Most analysts said that Wal-Mart's expansion in China would create more jobs and improve supply chain efficiencies in the retail sector of the country. However, a few analysts were critical of Wal-Mart's operations in China. They pointed out that Wal-Mart had reduced wages to below sustenance levels not just at its own stores but at supplier's end as well.
Since the time it entered the Chinese market, Wal-Mart had offered the Chinese 'Tian Tian Ping Jia'; its global practice of Every Day Low Prices (EDLP). At the same time, it had also successfully localized its offerings to Chinese consumers with significant innovations. However, analysts pointed out that it had not been all smooth sailing for Wal-Mart in China; it had got over a lot of hurdles. They predicted that Wal-Mart would not be able to rest easy as there would be plenty of challenges in the future as well.
Buy this case study (Please select any one of the payment options)
| Price: Rs.500 |
Price: Rs.500 | PayPal (11 USD) |
