Walmart - User Centred Design

International Marketing Strategy

Table of Contents

Introduction 2

International Expansion Strategies 3

Macro Environment issues 3

Political environment 3

Economic environment 3

Socio-Cultural environment 4

Technological Environment 4

Micro Environment issues 4

Competitive intensity 4

Marketing Infrastructure 5

Customer characteristics 5

Company issues 6

Competitive strategies 6

Standardization vs. adaptation 6

Organizational Structure 7

Motivations for market entry 8

Modes of market entry 8

Performance 8

Short term strategy 12

Medium term strategy 12

Long Term Strategy 12

Marketing Mix Strategies 13

Conclusion 13

Recommendations 14

Plan - of Action 14

References 15

Bibliography 15

Introduction

For the purpose of this assignment, I have chosen Wal-Mart and its marketing strategy for its entry into China.

Wal-Mart is the world's wealthiest corporations; it recorded sales of over $ 256.3 billion, more than many small countries' entire annual GDP. To put this in to perspective; if Wal-Mart were to be treated as a country, it would have ranked 20th on the annual GDP list (Talton, 2004).

Wal-Mart is a global leader in supermarket retailing commencing operations in China in 1996, in the province of Shenzhen (Wal-Mart China, 2007).

There are two important facts about Wal-Mart that we need to know in order to understand its international Marketing Strategy.

1) Wal-Mart has its roots in the small towns of South and Western parts of USA, these regions are known for their dislike of planning, regulations, unions and low wages, this explains Wal-Mart's low-price strategy.

2) Most of Wal-Mart's internationalization has occurred in the post cold war era, when the concept of global liberalism and free trade were dominant. One of the major players n the global era has been china which is a major source of cheap labor.

International Expansion Strategies

Macro Environment issues

Political environment

Wal-Mart believes in the concept of globalization. It has made the best use of this concept of ` world economy. Wal-Mart functions in almost all the countries of the world, it's first country outside the United States of America was Mexico, after it has gone from country to country reshaping their economy and had arrived in the UK under the management of ASDA, a hugely successful low price Supermarket chain.

Wal-Mart enjoys a give and take policy with the political situation of any country, to a very large extent its strategies and decisions dominate whole countries.

Wal-Mart entered china in 1996, under the barricade of many political constraints, it was able to open only 6 stores in 3 cities in its first 4 years of operation.. This slow growth is mainly due to the slow paced retail deregulation by the Chinese government.

However, the fact that Wal-Mart has survived in china is a good new as the times ahead are more favorable as China in its bid for membership to World Trade Organization is likely to deregulate retial more and more but gradually.

Economic environment

China is a country of 1.5 billion people. Therefore this provides Wal-Mart with cheap labor market, which is its basic strategy as it then transforms its cheap labor into cheaper products and effectively pricing its competition out of the market.

However, in its bid to control the Chinese economy, the government has introduced various means to control foreign retail companies in china, one of those rules states that all employees must be a part of trade union which are in turn a member of All china Federation of trade unions, Wal-Mart meets the economic burden of having to pay 2% of all its employee's wages as membership fee to the union, while the workers themselves are only required to pay .5 % of their income as membership fee (Brunn, 2006, pp.310).

Socio-Cultural environment

China is a completely different Culture to Wal-Mart's familiar territory. However, the insistence by the Chinese government to hold only a minority stake, while a local partner maintained a majority stake in the early years of trade barrier restrictions were a blessing in disguise for Wal-Mart, it allowed walmart to enter into partnership with Supercentres and Sam's clubs. These joint ventures allowed Wal-Mart to penetrate the culturally different Chinese market very effectively. The local partners helped it to understand this culturally difference.

Technological Environment

Technologically china has a very tech savvy population; However, Technology has not spread enough for Wal-Mart to take any advantage of it. For example, Wal-Mart maintains a very limited number of suppliers on its list because most of the suppliers in China do not have Electronic Data Interchange systems, which is the core of its supply chain management system in USA (Brunn, 2006 pp.308).

Also, the trucking companies that Wal-Mart used to rely on for logistics support did not have the technology to monitor the flow of goods.

Micro Environment issues

Competitive intensity

Wal-Mart in china has intensive competition from two other retailers, Carre Four and Metro. Other competitors are Ekchor Lotus a Thai retailer. These competitors had the first mover's advantage into shanghai a market that Wal-Mart is long considering for entry. As Chan and colleagues (1997) point out, first movers are