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EXPANSION OF WALMART INTO THE ASIAN MARKET

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 EXPANSION OF WALMART INTO THE ASIAN MARKET

Introduction

Walmart is an American retail chain of grocery stores that was founded by Sam Walton in the year of 1962 with the purpose of providing retail products to the customers.  The headquarters of the company is in Bentonville, Arkansas. According to the report from January 2018, the company has got 11,718 stores across the world. The company offers a variety of products like electronics, music, movies, furniture, clothing, jewellery, home improvement, pet supplies, toys, health and beauty, fitness and sporting goods, craft supplies, photo finishing, grocery and party supplies. Walmart has got around 2.3 million employees globally. For internationalization of the company, Walmart explored the market outside of US because the population of US was very small and it hindered the growth of the company. Other reasons for the expansion of Walmart were because of the market saturation and the limitations in the market. As stated by Hunt et al (2018), the advertising strategy adopted by Walmart was the ‘Promises of Low Price” and this attracted the international customers. The business strategy adopted by Walmart in each country was to have different names for the stores and to provide products of different quality according to the preferences of the local customers. The corporate strategy adopted by Walmart was to sell products of high quality at the lowest price.

 For the expansion of its market, Walmart chose the regions of Asia and Europe. For the expansion into the Asian region, the company must understand the cultural differences for achieving the success in that region. The cultural difference will play a major role in the growth and development of the company as well as for the management of the company.  For the effective expansion, a company must learn the ways of the general public and should get the idea about the perspective of life in that country. As stated by Yoder et al (2016), for doing business in a foreign country, one must know the behaviour styles, business practices, negotiating techniques and cultural values of the country in which the company is doing the business.  Walmart is expanding their business in the Asian countries in spite of the differences in culture for the promotion of the brand and for increasing the sales of the company. Companies like Walmart have their own set of cultures and therefore they faced difficulties adapting to the Asian culture which is completely different from the American culture. Internationalization is important for the growth and development of the company and the Asian market gives Walmart the needed opportunity because of its high population. Growth of the company was vital for meeting the expectations of the capital market and this can be done by increasing the profit and sales of the company. The expectations of the employees should be met as the employees are responsible for the development and growth of the company. This Report Deals with the various strategies and processes used by Walmart for the expansion in Asia will be discussed thoroughly for the better understanding of the readers. Lastly, the challenges and problems will be discussed that Walmart faced during the expansion of the company into the Asian market.

Internationalisation of Walmart

 

Internationalisation can be defined as the concept when a company moves its operations to foreign lands for increasing the sales and profitability of the company. The concept of internationalisation can be best understood by the approaches of internationalisation which are the economic approach, the behavioural approach and the relationship approach. As stated by Morgan (2017), the market imperfections should be exploited by the FDI for weakening the competition in the global market which increases the profit making of the company. This kind of advantage is necessary for the company as this helps to focus on the ownership factor and allows the company to successfully compete with the rival companies of the market. This is known as ownership advantage and this helps the company with the competition in the international market of Asia. It was known that the Asian markets had great hopes for the business of Walmart after the globalization in the year of 1991. On the other hand, the Asian market is geographically very distant and the most unique according to culture and logistics from the market of US. For setting the market in Asia, the company needs huge administrative and budgetary assets.  During the year of 1996, Walmart entered the Asian market and targeted China because the population of China is more than 1.2 billion and this increased the potential of Walmart as the purchasing power of the people of China is low. The geographical, linguistic and cultural difference of China is responsible for the high entry barriers. Walmart sold products of low price to the Japanese retailers Yaohan and Ito-Yokado and these products were market to Singapore, Malaysia, Thailand, Philippines, Japan, Indonesia and Thailand. 

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