Walmart has pursued various globalization strategies over time. It initially used a multidomestic strategy in the Americas, which was very successful. However, using a global strategy in other countries without developing economies of scale led to failures, such as in Germany and Korea. Now Walmart is trying to move towards a transnational strategy to better leverage both local and global competencies. Its transnational approach worked well in the UK but has proven difficult to replicate elsewhere.

1. Globalization strategy
Walmart
Pradeep Loganathan
© Pradeeploganathan.com

2. Agenda
• Key facts
• Competitors
• SWOT analysis
• BCG Analysis
• VRIN analysis
• Route to Globalization
• Globalization analysis
• YIPS Model

3. Walmart !
• Worlds largest retailer.
• If revenue was considered as GDP it would be 23 country ahead of
Sweden.

4. Walmart - Divisions
• 4 different segments
• Walmart Stores- sales amounted to 64.3%
• Discount Stores- 561.
• Supercenters- 3158.
• Supermarkets – 267.
• Walmart.com.
• Small format stores – 19.
• Sam’s Club- sales amounted to 13.0%
• 620 stores.
• Is a member only, cash and carry operations.
• International- sales amounted to 16.7%
• 6148 stores globally including distribution centers.
• Other- amounted to 6.1%
• Private labels.
Source : http://stock.walmart.com/financial-reporting/unit-counts-square-footage

5. Walmart vs Competitors
Direct Competitor Comparison
Walmart Carrefour SA Costco Target Industry
Market Cap: 243.92B N/A 44.89B 42.82B N/A
Employees: 2,000,000 412,4641 96,000 N/A 4.52K
Qtrly Rev Growth
0.04 N/A 0.10 0.07 0.00
(yoy):
Revenue (ttm): 469.16B 104.18B1 101.22B 73.30B N/A
Gross Margin (ttm): 0.25 N/A 0.12 0.30 0.26
EBITDA (ttm): 36.30B N/A 3.77B 7.35B N/A
Operating Margin
0.06 N/A 0.03 0.07 0.07
(ttm):
Net Income (ttm): 17.00B 523.10M1 1.80B 3.00B N/A
EPS (ttm): 5.02 N/A 4.11 4.52 3.24
P/E (ttm): 14.55 N/A 25.05 14.68 N/A
PEG (5 yr expected): 1.63 N/A 1.71 1.21 N/A
P/S (ttm): 0.52 N/A 0.44 0.58 N/A
Source : Yahoo Finance 09/03/2013

6. SWOT Analysis
• Efficient Supply Chain/Logistics system. • Unionised & Strict labour laws.
• Efficient cross docking & Inventory • Unable to adapt internationally.
management.
• Poor public Image.
• Service innovation & Technology.
• Strong penetration strategies.
• World’s largest private satellite
communication systems.
• Globalization. Growing Middle • International trade blocks and zoning
class globally. regulations.
• E-Business. • Terrorism and Wars.
• Inorganic growth leading to • Strong competition in Europe.
consolidation. • Anti-Competitive and Anti-Dumping
laws.

7. BCG Analysis

8. VRIN Analysis
Competency Valuable Rare Inimitable Non-Substitutable Conclusion
Integrated technology of supply chain Yes No No Yes Competitive parity
Ability to generate large sales volume Yes Yes No Yes Temp. comp. adv
Superior logistics system Yes Yes No Yes Temp. comp. adv
Operation decentralization Yes Yes Yes No Temp. comp. adv
Strong culture Yes Yes Yes Yes Sustainable comp. adv
Human resources (management team and
employee autonomy) Yes Yes Yes No Temp. comp. adv
Management routines and practices Yes Yes Yes Yes Sustainable comp. adv

9. Walmart - 1962

10. Walmart - 1982

11. Walmart 2003

12. Why Globalize?
• Walmart needed high levels of growth to continue to survive.
• High levels of growth possible only through globalization.
• Saturation of Domestic markets.
• US accounts for 4% of worlds population.
• Discount retailing key to developing economies with double digit
growth rates.
• Advantages
• Leverage local buying power with US based MNC’s.
• Utilize competencies of Efficient store management, technology & logistics.

13. Entry Mode Decision Matrix
Strategic Importance
Hi
of Country
Lo
Lo Hi
Stand-alone Attractiveness
of Country

14. Route to Globalization - 1
• Mexico
• 1991 : Through a joint venture with Cifra, a Mexican retail company, Walmart went
global, opening a Sam’s Club in Mexico City.
• 1997:Wal-Mart Stores acquires majority interest in Cifra, creating Wal-Mart de Mexico.
• Canada
• 1994 : Walmart expanded into Canada with the purchase of 122 Woolco stores.
• 2013 : Walmart Canada has 379 total retail units.
• China
• 1996 : Walmart opened its first stores in China at Shenzhen.
• 2007 : Walmart purchased a 35% interest in Trust-Mart.

15. Route to Globalization - 2
• United Kingdom
• 1999 : Walmart entered the United Kingdom with the acquisition of ASDA.
• 2013 : ASDA has 565 total retail units.
• Japan
• 2002 : Walmart acquired a 6.1% stake in Seiyu.
• 2005 : Walmart acquired a majority interest in Seiyu, making Seiyu a Walmart
subsidiary
• 2008 : Seiyu became a wholly owned subsidiary.
• Chile
• 2009 : Walmart acquired a majority in Distribución y Servicio D&S S.A.
• 2010 : D&S renamed to Walmart Chile & operates 329 stores.

16. Route to Globalization - 3
• India
• 2007: Walmart announced an agreement with Bharti Enterprises to establish
a joint venture, Bharti Walmart Private Limited.
• South Africa
• 2011 : Walmart acquired a majority stake in Massmart Holdings Limited.

17. Globalization strategies

18. Globalization - Entry Strategy.
• Strategic Importance
• Economic Environment
Country • Competition
• Political
• Legal
Strategy • Economic
• Acquisition
• Start new stores
• Greenfield Operations
Implementation • Join Ventures

19. Tale of Four Countries
• Cost effective acquisition • Effective JV with Cifra utilizing
• Minimum Cultural adaptation local market knowledge.
• Store design & Customer • Overcame cultural barriers
service.
• Compete with Carrefour.
• Wiped out Eaton & Co ( 50%
mrkt share ) • Offering Financial services.
• Successful acquisition of ASDA. • Successful acquisition of ASDA.
• Used M&A synergies of local • Used M&A synergies of local
knowledge. knowledge.
• Strong completion from Tesco • Strong completion from Tesco
& Sainsbury. & Sainsbury.

20. Tale of Four Countries
• Lack of scale – Only 16 stores. • Entered in stake with Seiyu in
2002 and bought it over in 2007.
• Minimum Cultural adaptation.
Taller racks in Korea. • Cultural barriers – Cheap is of low
• Store design & Customer quality. Small is beautiful
service. • Small store formats.
• Exited Korea in 2006 • Running with no break even yet.
• Successful acquisition of
Wertkauf & Interspar. • Entered through JV but built
scale through acquisition of
• Failed to integrate culturally. Bompreco’s.
• High labour cost & established
competitors (ALDI & LIDI ). • Utilized discount tactics
• Exited in 2007. • Strong completion from
Carrefour & Sendas.

21. Global Strategy
• Walmart used Multidomestic strategy in Americas resulting in very
successful penetration.
• It’s use of a global strategy with out developing economies of scale
have resulted in failure. E.g. Germany & Korea
• Walmart is trying to move towards a transnational strategy to
effectively utilize local and global competencies.
• Its Transnational strategy in UK worked successfully but has found it
difficult to emulate in other countries.