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Situation analysis: Wal-Mart in U.S.

Context

Customers
High disposable income;
P. behavior: few trips & big planned
purchase;
Brand loyalty;
Processed food, rather than freshness.

No union or legal barriers;


Developed infrastructure;
Authorities not blocking.

Company

Strong corporate culture: low-cost &


customer;
EDLP as value proposition;
Very centralized management;
Hypermarkets mainly in small towns.

Competition
Wal-Mart leader in U.S.

Collaborators
Integrated IT systems with WalMart;
Low bargaining power;
Partnerships;
Efficient logistics.

Situation analysis: Wal-Mart in China


Customers

Context

Local Protectionism: taxes;


Income disparity & consumption: urban Vs.
Illegal Tolls & lack of geographic fre
rural;
Poor Infrastructure;
Purchasing behavior: many trips - little
Labor unions. & tighter labor regula
purchase;
Comparing prices in different shops;
Impulse purchase;
Freshness of the food;
Company
Shoplifting.
Strong corporate culture: low-cost &
customer;
EDLP as value proposition;
Very centralized management;
Hypermarkets in big cities.

Competition
Intensified competition;
Local players dominating the market;
EDLP standard value proposition;
Supermarket as the most common format.

Collaborators
Lack of IT integration with
suppliers: purchasing &
distribution more difficult.

Strategy: defining & implementing it

Peterson, Management decision model

High
Low

uncertainty

What is the next step


Adaptative
manageme
nt

Scenario
Planning

Maximum
sustained
yield

Build
resilience

Controllable Uncontrollable
Controllability

(1/7)

Strategy: defining & implementing it


Scenario planning (simplified)

High

AGRESSIV
Citizen
protest
E

STATUS
I love
US!
QUO

Low

Cultural
change

RESticking
to
EDUCATE
ADAPTATI
traditions
ON
EXIT US out!
We want

Low

High

Foreign business restrictions

(2/7)

Strategy: defining & implementing it Alternatives (3/7)


1-3
year
(local supermarket chain)
s
+ adopting a homogenous bm to local fit
+ usage of established /proven
channels
+ better fit for local needs
+ elimination of cross cultural problems
+ support of local authorities

Aggressive

5-7
year
(changing store format)
s
+ higher decentralization (growth potential)
+ follows Wal-Mart global strategy (Mexico)
+ higher responsiveness to meet local needs
+ support of local authorities

Adaptation

- unions problem remain


- loss of control

- risky negotiation process M&A


- non-usage of possible synergies
- against global/uniform strategy

Exit

(Withdraw from that market)

month
s

+ no union problem
+ no change of value proposition
+ short time horizon
+ known losses
- not following global expansion strategy
- loss of the future market
- not following global expansion strategy

Re-educate

(educate chinese)

10 15

years

+no change of value proposition


+usage of synergies
-still union problems
-very long time horizon
-no possible short term measures
-ignore local disparities

Strategy: defining & implementing it


Scenario planning: Alternative selection

High

AGRESSIV
E
STATUS
QUO

Low

Cultural
change

REEDUCATE
ADAPTATION
ADAPTATI
ON
EXIT

Low

High

Foreign business restrictions

(4/7)

Strategic
Road Map (5/7)
Strategy: defining & implementing
it

Strategic imperatives

Key
Local autonomy
(org. structure)

Efficient staf
(corporate culture)

Guanxi

(ext. environment)

China coverage
(control, org. size)

Strategic
Road Map (6/7)
Strategy: defining & implementing
it
Critical initiatives
1.Identify change agent & involve
3.Support from top-management

(org.
(org. structure)
structure)

4.Communication

(corporate
(corporate
culture)
culture)

Efficient
Efficient
staf
staf

Local
Local
autonomy
autonomy

Key
Key

2.Convince & involve key stakeholders

1.Adapt Wal-Marts China mission & vision statement to Chinas culture


2.Create organizational chart (national, regional, local)
3.Define clear responsibilities & power for decision making
4.Incentives to foster commitment
5.Develop profit centers

1. Bonus and compensations system


2. Performance review system
3. Training

1st year

2nd year

3rd year

4th year

5th year

Strategic
Road Map (7/7)
Strategy: defining & implementing
it

(ext.
(ext.
environment)
(control,
(control, org.
org. size)
size) environment)

China
China
coverage
coverage

Guanxi
Guanxi

Critical initiatives
1.Establish budget for business related meetings
2.Contact & develop relationship influencer
3.Networking events: Chinese New year
4.Develop relationship with local Government

1.Marketing research to understand needs


2.Taylor product offering
3.Launch new supermarket format

Risks
(a) Chinas Government: tighter restrictions to foreigner
(b) Product offering not aligned with local tastes:
Market research
Benchmarking
Pilot trial with only a set of stores

1st year

2nd year

3rd year

4th year

5th year

Thank you for your time

Team

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