Analysis of Wal-Marts Expansionary Efforts Into China
Analysis of Wal-Mart’s Strategy and Business Model for Expansion into China.
Introduction
Business organizations in the modern world face an ever-increasing challenge to compete for a share of the global market. Advances in transportation, communications, and technology make it possible for a company to build a device in one country out of components made in a dozen other countries and sell it anywhere in the world. To survive in this business environment, businesses must devise strategies that minimize the risks associated with global expansion and maximize the return. A successful global strategy brings growth and a larger share of the market. A failed strategy can seriously affect growth and, in some cases, force the business to close. The key to a successful strategy is to understand the differences within each market. It is also important for the business to adapt its domestic model so as to best utilize the business’ strengths in response to those differences. The market within the United States is relatively homogeneous and stable. The global market and markets within other nations are just the opposite. Distance matters in the global market. With distance comes a wide variety of cultural, administrative, political, geographic, and economic differences. [i]The strategy that embraces these differences will succeed. The purpose of this paper is to review Wal-Mart’s domestic business model and identify the factors contributing to the success of that model, identify the unique characteristics of the market in China and how these characteristics compliment or work against the strengths of the domestic model, evaluate the success of Wal-Mart’s strategy and the application of its domestic business model in China relative to the models used by its primary competitors, and recommend changes to Wal-Mart’s strategy and business model to improve Wal-Mart’s competitive edge in China and other Asian nations.
Wal-Mart’s Domestic
Introduction
Business organizations in the modern world face an ever-increasing challenge to compete for a share of the global market. Advances in transportation, communications, and technology make it possible for a company to build a device in one country out of components made in a dozen other countries and sell it anywhere in the world. To survive in this business environment, businesses must devise strategies that minimize the risks associated with global expansion and maximize the return. A successful global strategy brings growth and a larger share of the market. A failed strategy can seriously affect growth and, in some cases, force the business to close. The key to a successful strategy is to understand the differences within each market. It is also important for the business to adapt its domestic model so as to best utilize the business’ strengths in response to those differences. The market within the United States is relatively homogeneous and stable. The global market and markets within other nations are just the opposite. Distance matters in the global market. With distance comes a wide variety of cultural, administrative, political, geographic, and economic differences. [i]The strategy that embraces these differences will succeed. The purpose of this paper is to review Wal-Mart’s domestic business model and identify the factors contributing to the success of that model, identify the unique characteristics of the market in China and how these characteristics compliment or work against the strengths of the domestic model, evaluate the success of Wal-Mart’s strategy and the application of its domestic business model in China relative to the models used by its primary competitors, and recommend changes to Wal-Mart’s strategy and business model to improve Wal-Mart’s competitive edge in China and other Asian nations.
Wal-Mart’s Domestic