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Carla Cordero - Carles De Oleza - Alex Doldán - Patricia Igual - Luis Pérez
How to transfer corecompetencies 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, we’ll lower the Advertising slogans: cost of living for everyone…we’ll give Save Money. Live better the world an opportunity to see what it’s like to save and have a better life.
Customer Target• “Wal-Marts targeted demographic: – Modest incomes – Shoppers interested in prices• But the customer base is changing
Firms’ Value Chain General administration Human resource management Technology development ProcurementInbound Outbound Marketing Operations Servicelogistics logistics and sales
Support ActivitiesFirms 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 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.Techonology development: It is the key factor of the company. It constitutes a competitive advantage againstcompetitors.- Computer-based technology POS (Point of sales) system Satellite SystemProcurement:-Wal-Mart deals directly with manufacturers, by passing all intermediaries.- EDI : Electronic data interchange MANUFACTURER – WALMART - CUSTOMERS
Primary ActivitiesInbound Operations Outbound Marketing and ServiceLogistics Logistics sales-VMI system 3 business segments: -Hub and spoke - Word of mouth -accepting returned distribution system. communication. goods(Vendor managed a)WalMart storesinventory) - Super centers - CROSS DOCKING: -focuses on everyday -Satisfaction - Discount centers logistic technique to low prices guaranteecontinuous make the - Neighborhoodreplenishment markets distribution process “Save money, live - Opening more efficient better” hours(24/7)-EDI (Electronic b) SAM’S Club -Sales are on a self-Data Interchange c)WalMart service, cash-and-carry international basis.
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) Sam’s Club. Buy in large quantities. 611 opened 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 to Difficult to Competency Valuable Rare imitate substitute ConclusionIntegrated technology of supply chain Yes Yes Yes Yes Sustainable Compt. advAbility to generate large sales volume Yes No No Yes Comp. ParitySuperior logistics system Yes Yes Yes Yes Sustainable comp. advOperation decentralization Yes Yes Yes No Temp. comp. advStrong culture Yes Yes Yes Yes Sustainable comp. advHuman resources (management team andemployee autonomy) Yes Yes Yes No Temp. comp. adv
SW Helpful Harmful INTERNAL FACTORS STRENGTHS WEAKNESSES • Diversity in products & services •Brand image-weak • Convenient prices & locations reputation • Strong market presence •Low global presence • Customer loyalty •Behind rivals in e- • Strong financial performance commerce • Cost and pricing advantages over rivals • Good supply chainEXTERNAL FACTORS • Global Expansion: new geographic • Intense Competition areas • Laws and Regulations: • Increasing online sales Trade policy • Strategic alliances • Cultural barriers Acquiring rival firms • Current economy • Slow market growth • Transport of distinctive comptency OPPORTUNITIES 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-Mart’s 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 Model3. Potential entrants / Barriers to entry: Medium-HighI. Economies of scale.II. High capital requirements.III. Customers mainly look for products with low prices and standard quality.IV. Low switching costs among companies for customers.V. Requires a precise distribution system.4. Power of Substitutes: HighI. Prices and quality of substitute products are very competitive.II. Performance of substitute products are similar.III. Consumer switching costs are low.
The Five Forces Model• 5. Potential Competitors/ Rivalry: HighI. Wal-Mart represents the 25% share of the U.S. Supermarket business.II. Competitors have similar sizes.III. Industry growth is slow.IV. Exit barriers are high.V. There is a high production capacity WAL-MART main competitors: Retailer Industry: Supermarket Industry: • Target • Dollar General • K-Mart • Lowe’s Food.
Strategic Group MapHighCustomer service/ PriceLow Low Number of Product Categories High
Main Competitors Retailer Industry: Target Supermarket Industry: Dollar GeneralI. Target is the main competitor of Walmart I. One of the main competitors, pursuing low prices.II. ranked #33 in the Fortune 500. II. Good location in smaller communities isIII. Target offers very similar products. the main competence advantage.IV. Target went abroad in January 2011. III. Strategy: Save time, save money IV. Many items per $1Mission: to Make Target your preferredshopping destination in all channels bydelivering outstanding value, continuous Mission: to best serve others by keeping it realinnovation and exceptional guest experiences. and simple.
Business-Level Strategy: Combined Strategy Walmart combines a Cost-Leadershipand Differentiation strategies because:I. Allowed to achieve a large scale and an efficient supply chain.II. Has its own low-cost brands, like Great Value.III. A unique cost structure that allows Walmart to establish the lowest prices and achieve competitive advantage. (best value/price combination )IV. Present in many different industries and markets with efficient distribution channels.V. Very difficult strategy to imitate by offering a broad quantity of products at a low price.
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 world’s 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 strongcostumer 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
Mode of entry of International ExpansionYear Country Mode of Entry1991 Mexico 50% Joint Venture Cifra1994 Brazil 60% Joint Venture Lojas Americana1994 Canada Acquisition Woolco (weak player)1995 Argentina Wholly owned Susbidiary1996 China New opening, JV, Acquisition1998 South Korea Adquisition1999 U.K. Acquisition of ASDA2002 Japan Acquisition Seiyu2002 Germany Acquisition of Wertkauf and Spar2007 India Joint Venture2011 Southern African Countries Acquisition of Massmart Holding Limited
Examples of International Success• Mexico: – Largest Walmart’s 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.)