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

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:

close connection between headquarter and local stores.

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 millionassociates 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 ourBoard of
directors.

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

Operations

Outbound
Logistics

Marketing and
sales

Service

-VMI system

3 business
segments:

-Hub and spoke

distribution
system.

- Word of mouth
communication.

-accepting
returned goods

-focuses on
everyday low
prices

-Satisfaction
guarantee

(Vendor
managed
inventory)
continuous
replenishment
-EDI
(Electronic
Data
Interchange

a)WalMart stores
Super centers
Discount
centers
Neighborhood
markets
b) SAMS Club
c)WalMart
international

- CROSS
DOCKING:
logistic
technique to
make the
distribution
process more
efficient

Save money, live

better
-Sales are on a selfservice, cash-andcarry basis.

- Opening
hours(24/7)

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
Neighborhood Market. 199 in the US.

as

Walmart

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
Difficult
Competency

Valuab Rar
le
e

to
imitate

Difficult to
substitute

Conclusion

Integrated technology of supply

chain

Sustainable Compt.
adv

Yes

Yes

Yes

Yes

Ability to generate large sales

volume

Yes

No

No

Yes

Superior logistics system

Yes

Yes

Yes

Yes

Operation decentralization

Yes

Yes

Yes

No

Strong culture

Yes

Yes

Yes

Yes

Temp. comp. adv

Sustainable comp.
adv

Human resources (management

team and employee autonomy)

Yes

Yes

Yes

No

Temp. comp. adv

Comp. Parity
Sustainable comp.
adv

EXTERNAL
EXTERNAL
FACTORS
FACTORS

INTERNAL
INTERNAL
FACTORS
FACTORS

Helpful
Helpful
STRENGTHS

SW

Diversity in products & services

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

Global Expansion: new geographic

areas
Increasing online sales
Strategic alliances
Acquiring rival firms

OPPORTUNITIES

OT

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

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
IV. Wal-Mart purchases huge quantities
of products from its suppliers.
V. Low switching costs from one
supplier to another.
VI. Products have a lot of substitutes.
VII. 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. Power of Substitutes: High

I.
II.

Prices and quality of substitute products are very

competitive.
Performance of substitute products are similar.

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

Customer service/
Price

Hig
h

Lo
w

Lo
w

Number of Product
Categories

Hig
h

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

Supermarket
Industry: Dollar
General

I.

I.

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.

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

Business-Level Strategy:
Combined Strategy
Walmart combines a CostLeadership 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

What markets to enter?

Latin
America:
Closest markets
Large population
Emerging Markets

Walmart International

Cost Pressures

High

What Strategy to follow

Global

Trans
National

Inter
national

Multi
domestic

Low

Low

High

Local Responsiveness

Mode of entry of International

Expansion

Mode of entry of International

Expansion
Year
1991

Country
Mexico

Mode of Entry
50% Joint Venture Cifra

1994

Brazil

60% Joint Venture Lojas Americana

1994

Canada

Acquisition Woolco (weak player)

1995

Argentina

Wholly owned Susbidiary

1996

China

New opening, JV, Acquisition

1998

South Korea

Adquisition

1999

U.K.

Acquisition of ASDA

2002

Japan

Acquisition Seiyu

2002

Germany

Acquisition of Wertkauf and Spar

2007

India

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