Carla Cordero - Carles De Oleza - Alex Doldn - Patricia Igual - Luis Prez

How to transfer core competencies to other countries?

Outline
History Overview - Vision, Mission and Goals Interna & External Analysis -Value Chain -SWOT & Pestel Analysis -5 Forces Model -Main Competitors Internationalization -Driving Forces -Entry decisions -Examples of success and failure Suggestions

History Overview
1962: Walten Brothers opened fist Walmart in Arkansas 1970: Walmart became public 1990: 1st National retailer 1991: International Expansion 1993: Creation of Great Value 2003: Largest corporation in the world 2012: 50th Anniversary

Mission Statement, Vision, Goals, & Purpose

Mission Statement: To help people save money so they can live better

Goal:

Becoming in an international brand

Vision: If we work together, well lower the cost of living for everyonewell give the world an opportunity to see what its like to save and have a better life.

Advertising slogans: Save Money. Live better

Customer Target
Wal-Mart's targeted demographic:
Modest incomes Shoppers interested in prices

But the customer base is changing

Internal & External Analysis

Firms Value Chain

General administration Human resource management Technology development Procurement

Inbound logistics

Operations

Outbound logistics

Marketing and sales

Service

Support Activities
Firms infrasctructure: Human resources:
- Based on Interaction practices between company and employees -Low pay but other benefits (health care plans, retirement plans, or promotion opportunities) -2.2 million associates globally. -Every time we open a supercenter, we provide roughly 300 jobs -Women57% of our U.S. workforce, 27% of corporate officers, and 20% of our Board of directors. close connection between headquarter and local stores.

Techonology development: It is the key factor of the company. It constitutes a competitive advantage against
competitors. - Computer-based technology POS (Point of sales) system Satellite System

Procurement:
-Wal-Mart deals directly with manufacturers, by passing all intermediaries. - EDI : Electronic data interchange

MANUFACTURER WALMART - CUSTOMERS

Primary Activities
Inbound Logistics
-VMI system (Vendor managed inventory) continuous replenishment -EDI (Electronic Data Interchange

Operations
3 business segments: a)WalMart stores Super centers Discount centers Neighborhood markets b) SAMS Club

Outbound Logistics
-Hub and spoke distribution system. - CROSS DOCKING: logistic technique to make the distribution process more efficient

Marketing and sales

- Word of mouth communication. -focuses on everyday low prices Save money, live better -Sales are on a selfservice, cash-and-carry basis.

Service
-accepting returned goods -Satisfaction guarantee - Opening hours(24/7)

c)WalMart international

Business Formats
1) Walmart Stores
Walmart Discount Stores 629 in the US Walmart Supercenter: Walmart Discount Stores + Full Service Supermarket. 3,029 in the US. Walmart Market: Previously branded as Walmart Neighborhood Market. 199 in the US.

2) Sams Club. Buy in large quantities. 611 opened in the US.

Walmart in the US

Distribution Channels
Saturation Strategy The company owns a fleet of more than 3,000 trucks and 12,000 trailers. The Wal-Mart Way Cross Docking.

Resource - Based View Of The Firm

Competency Valuable Difficult to Rare imitate Difficult to substitute Conclusion

Integrated technology of supply chain Ability to generate large sales volume Superior logistics system

Yes Yes Yes

Yes No Yes

Yes No Yes

Yes Yes Yes

Sustainable Compt. adv Comp. Parity Sustainable comp. adv

Operation decentralization
Strong culture Human resources (management team and employee autonomy)

Yes
Yes

Yes
Yes

Yes
Yes

No
Yes

Temp. comp. adv

Sustainable comp. adv

Yes

Yes

Yes

No

Temp. comp. adv

Helpful
INTERNAL FACTORS STRENGTHS

Diversity in products & services Convenient prices & locations Strong market presence Customer loyalty Strong financial performance Cost and pricing advantages over rivals Good supply chain

SW

Harmful
WEAKNESSES Brand image-weak reputation Low global presence Behind rivals in ecommerce

EXTERNAL FACTORS

Global Expansion: new geographic areas Increasing online sales Strategic alliances Acquiring rival firms

OPPORTUNITIES

Intense Competition Laws and Regulations: Trade policy Cultural barriers Current economy Slow market growth Transport of distinctive comptency THREATS

PESTEL Analysis
Political: Policies on economy, trading agreements (NAFTA) . Economical: Unemployment Rate, slightly increase in consumption. Socio Cultural: Faster pace of live- Efficiency is key. Technological: Use of IT technologies. Online shopping. Environmental: Recycling, Contamination issues. Legal: More laws and more complex.

The Five Forces Model

1. Bargaining Power of Customers: Low
I. Customers usually make small purchases. II. A large number of customers. III. Wal-Marts main customers are individuals.

2. Bargaining Power of Suppliers: Medium-Low

I. Wal-Mart purchases huge quantities of products from its suppliers. II. Low switching costs from one supplier to another. III. Products have a lot of substitutes. IV. Almost all the products are not critical for Wal-Mart.

The Five Forces Model

3. Potential entrants / Barriers to entry: Medium-High
I. II. III. IV. V. Economies of scale. High capital requirements. Customers mainly look for products with low prices and standard quality. Low switching costs among companies for customers. Requires a precise distribution system.

4.
I. II. III.

Power of Substitutes: High

Prices and quality of substitute products are very competitive. Performance of substitute products are similar. Consumer switching costs are low.

The Five Forces Model

5. Potential Competitors/ Rivalry: High
I. II. III. IV. V. Wal-Mart represents the 25% share of the U.S. Supermarket business. Competitors have similar sizes. Industry growth is slow. Exit barriers are high. There is a high production capacity WAL-MART main competitors:

Retailer Industry: Target K-Mart

Supermarket Industry: Dollar General Lowes Food.

Strategic Group Map

High Customer service/ Price Low Low Number of Product Categories High

Main Competitors
Retailer Industry: Target
I. II. III. IV. Target is the main competitor of Walmart ranked #33 in the Fortune 500. Target offers very similar products. Target went abroad in January 2011. I.

Supermarket Industry: Dollar General

One of the main competitors, pursuing low prices. II. Good location in smaller communities is the main competence advantage. III. Strategy: Save time, save money IV. Many items per $1

Mission: to Make Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional guest experiences.

Mission: to best serve others by keeping it real and simple.

Business-Level Strategy: Combined Strategy

Walmart combines a Cost-Leadership and Differentiation strategies because:
I.
II. III.

IV. V.

Allowed to achieve a large scale and an efficient supply chain. Has its own low-cost brands, like Great Value. A unique cost structure that allows Walmart to establish the lowest prices and achieve competitive advantage. (best value/price combination ) Present in many different industries and markets with efficient distribution channels. Very difficult strategy to imitate by offering a broad quantity of products at a low price.

Internationalization

Internationalization
Reasons for expanding abroad Risks International Strategy Success Key issues

Forces Favoring Globalization

3 main reasons
Saturated domestic market United States represents only 4% of worlds population (missing of 96% of potential customers) Emerging Markets with lower disposable income offer huge platforms for growth in discount retailer.

Economies of Scale Growth Revenues Reduce political risk

Risks of Expanding Abroad

Management Risk
Culture, language, customer preferences, distribution systems.

High investment

Political and Economic risks

Exchange Rates risk

Entry Decisions
Important decisions any company needs to face when going international:
What markets to enter, when and what size. What strategy to follow. What mode of entry.

What markets to enter?

Europe:
Mature Markets High Rivalry Lack of strong costumer relationship

What markets to enter?

Asia:
Most distant geographically
Most different culturally and logistically Required high financial and managerial resources

What markets to enter?

Latin America:
Closest markets Large population Emerging Markets

Walmart International

What Strategy to follow

Global
Trans National

Inter national
Low

Multi domestic
High

Local Responsiveness

Mode of entry of International Expansion

Mode of entry of International Expansion

Year 1991 1994 1994 1995 1996 1998 1999 2002 2002 2007 Country Mexico Brazil Canada Argentina China South Korea U.K. Japan Germany India Mode of Entry 50% Joint Venture Cifra 60% Joint Venture Lojas Americana Acquisition Woolco (weak player) Wholly owned Susbidiary New opening, JV, Acquisition Adquisition Acquisition of ASDA Acquisition Seiyu Acquisition of Wertkauf and Spar Joint Venture

2011

Southern African Countries

Acquisition of Massmart Holding Limited

Examples of International Success

Mexico:
Largest Walmarts foreign presence (68%) 38% Retail Market Share in Mexico

Canada
One of the most successful international expansion Acquired Woolco Stores and changed structure

Both countries are close and were exposed to Walmart.

Examples of International Success

China:
Most populous country Lower income in middle-class families Adaptation to market 85% of products from local suppliers.

Examples of International Failure

Germany
Walmart was not able to benefit from economies of scale Unable to become cost leader Mode of entry:
Wertkauf (right move) Spar (wrong move)

Culture differences Low profitability market Lost $1 Billion

Examples of International Failure

India
Political and legal barriers:
Foreign companies are not allowed to set up big stores unless they sell only one brand.

South Korea
Very demanding customers Did not customized to market Big companies also fail in South Korea

Key Success Factors

A supply chain with integrated technology An ability to generate large sales volume (economies of scale)

Every Day Low Prices Superior logistics systems Decentralized operations A strong and unique culture (in U.S.)

Suggestions

Think local, act global

Locally leveraged:
Shared knowledge between units.

Worldwide learning:
Advantages of interconnected economies.

Adaptation:
To locally customize processes and services

Questions & Answers