Dacapio, Mary Joy T.

OPMGTQM

BSA 1A February 2020

WAL-MART STORES INC.

(CASE ANALYSIS)

Wal-Mart Stores Inc. (Wal-Mart) as one of the renowned retailer in the industry,
discovered that in the early 1990’s, Japan is currently facing problems with regards on the
declination of real estate on the country. This scenario prompted many foreign retailers to enter
the market. Wal-Mart start exploring the Japan Market in 1997. The company observed and
found out that lots of foreign retailers like Costco and Carrefour who both entered Japan dated
1998 and 1999, were faced on different difficulties because both parties entered the market
without a local partner. Wal-Mart , convinced by the scenario, concluded that it should have a
local partner for it will be very helpful for the company to better understand the peculiarities of
the Japanese Market. Seiyu Limited (Seiyu), Japan’s fifth largest retailer in 2002, happened to
be the alliance of Wal-Mart to enter in the Japan Market successfully. In the early years, Wal-
Mart and Seiyu identified IT and distribution as the key areas for reforming the retail business of
Seiyu. During 2002 and 2003, Wal-Mart also conducted extensive focus group researches and
studied retailers in Japan so that it could apply this insight to the management of Seiyu’s stores.
Seiyu launched five-year plan in December 2002, called as th “New Seiyu” program. Through
this Seiyu wanted to implement best practices offered by Wal-Mart model. In line with the above
program, in August 2003, Seiyu began the roll out of Wal-Mart’s store information system called
as “Smart System”. Despite these efforts, Seiyu registered consecutive losses on 2003 and 2004.
Yet, experts have concluded that though Seiyu faced difficulties onto having consecutive losses,
its performance however, improved marginally with a reduction of losses in 2003 and announced
to have cut down costs in 2004 compared with the same period of the prevous year. Those were
just some of the major improements of Seiyu with the help of Wal-Mart Stores Inc. In 2005
however, Seiyu announced that it would not expect to make any profit until 2006, due to the
opening of the Super Centre of the same year. By that same time, in August 2005, Wal-Mart
announced that it was contemplating lauching stored with its own brand name in Japan.
 Wal-Mart announced that it would go global in the early 1990’s. The reason for this it to
look for international markets. One of the reasons why the company wanted to look for
international markets is due to the fact that Globalization and Liberalization opened up new
markets and created opportunities for discount stores so that Wal-Mart grasp the pportunity to go
global. Another thing is that, Wal-Mart also realized that U.S. only represents 4% of the
population around the world and confining itself to the U.S. market would mean missing the
opportunity to tap potentially vast markets elsewhere. Athough Wal-Mart had the scope to
expand in the U.S., it is becoming difficult for the company to sustain its double digit growth
rate. Wal-Mart is suffering from soft sales and rising inventories, especially of its Sam’s Club
divisions. Added to that fact is that Wal-Mart was facing stiff competition from K-Mart and
Target, which had started eating into Wal-Mart’s market share. During the first five years of its
globalization initiative (1991-1995), Wal-Mart concentrated on Mexico, Canada, Argentina, and
Brazil, which were close to its home market. It started with Canada and Mexico due to the
similarities in people’s habits, culture, and the business environments in these countries and also
because the North American Free Trade Agreement (NAFTA) made it easier for the U.S.
companies to enter these markets. Wal-Mart’s decision to enter Argentina and Brazil was based
on the high growth rates of the Latin American markets.