Globalization is revolutionizing the way businesses conduct their operations in the various nations. Irrespective of the proliferation of the internalization, barriers to entry impede the sole mandate of individual businesses. This scenario is mostly witnessed in large corporations, which offer retail services to the consumers (Horn 2015, p.57). More so, setting bases in more developed states require an understanding of the people’s tastes and their preferences, far from capitalizing on the purchasing power. Wal-Mart has experienced tremendous growth in different localities.
One of the significant models that can be utilized is franchise, to connect with the locals, based on what they want. According to Hicks (2015, p.113), he defines franchise as identification of a local investor, who understands the markets turmoil and the preferences of the customers. It enables a new entrant to maneuver seemingly complex environment and reduces the chances of violating the commerce laws. Wal-Mart’s entry in cities outside United State has been achieved through partnering with the local businesses, which have mastery of the trading experiences in the native land. The strategic reason for this is to identify with local’s culture, hence increases the sales (Bayraktar 2015, p.25). Retail businesses are increasingly becoming popular, and local brands take precedence over the new emerging ones. To remain unique, differentiating the services is optimal in securing the market share.
For example, entry of Wal-Mart in China faced resistance, due to the culture of consuming fresh produce. The business had to adjust into displaying uncovered meat and also introduced unionism. Furthermore, the business environment in developed nations became more competitive and threatened the existence of the company (Chen and Shapiro 2012, p.116). The move to enter the untapped opportunities in the developing nations would improve the performance, hence profits.
The advent of modern technology has increased the awareness of brands all over the world. The rate of internet access is in the high levels,and Wal-Mart can seize the chance to further reach out to areas with strict entry barriers. The advertising model is predominantly shaping the world. People are interconnected via the internet, and it’s easy to place the products on sale for viewership by an array of consumers (Freeman et al. 2011, p.487). The advantage of this model is that it has no geographic limitations. However, the critical issue is to understand what the consumers want. Large retailers such as Amazon, Alibaba, eBay among others, have been able to retain the market command through this channel. Wal-Mart can integrate modern technology to reach out to the uncovered markets in the world. This would minimize the threats of the competitors in a saturated market.
Direct sale model is regarded as reaching out to the customers without engaging an intermediary. It’s a traditional form of selling, which encompasses meeting customers physically, to complete the transaction. Currently, the seller can easily connect with the customers through online platforms. Use of social Medias such as Facebook, Youtube, among others, has continually improved the number of customers served per a given time (Walabyeki 2016, p.86). Political stands of a particular country dictate how well the direct selling can perform in the selected countries. If the policies for new entrants are strict, the business might find it hard to sail through threats of the legal confines,
Wal-Mart choice to engage in the international market is far fetched from the desire to become a global retailer, serving people from different cultures and backgrounds. One of the strategic reasons was to increase the global expansion. The company has been able to achieve this, through setting bases in various countries. Currently, Wal-Mart is seeking the new markets in the developing nations, which present potential for growth (Simmerling 2015, p.52).
Through lowering the prices, offering discounts and adapting to the culture of the native states, the business has attracted a myriad of customers. Due to this, it has been able to achieve its objective, of increasing the sales, hence more profits. Furthermore, the need to retain the brand name necessitated expansion to other areas such as China, restricting the model of operation to fit the locals.Moreover, the changing market environment was a huge cause of disruption (Mizuno 2011, p.505). With the emergence of similar businesses in the developed countries, the market share diminished. To curtail the cut-throat competition, the only option for Wal-Mart was to seek overseas opportunities, in states that lacked modern retail services. This way, the company has braced the impediments presented by similar enterprises.
Wal-Mart and Ethical Question
Business ethics are defined as minimum standards that regulate the operations of the company. According to Lewinsohn-Zamir (2015, p.82), a business should conduct its activities in a manner that is acceptable to various players such as customers, governments,and other interested parties. The guideline that every organization should follow has been codified as laws and is customarily referenced to conform to the stipulated requirements.
Like any other business, Wal-Mart has a huge responsibility of maintaining ethical behavior while operating in foreign countries. One, the issue of creating employment should be among the strategies rather than focusing on making profits alone (Lee and Jung 2014, p.87). The top list of the challenges that face developing nations is the issue of unemployment. In the recent years, Wal-Mart identified opportunities in the low developed states, hence started new franchises. As a way to give back to the society, it’s prudent enough for the company to employ the highest percentage of locals, compared to the foreigners. This would significantly reduce the rate of unemployment, and subsequently, increase the number of customers. Despite exponential expansion, Wal-Mart has not translated the same in improving the standards of living of the people in the host countries.
Far and above, quality of the products is core, for any company that aspires to sustain for long in the market. The optimal strategy that is employed by Wal-Mart is price reduction, which does not work well in other countries (Lee and Jung 2014, p.82). For example, the China’s market failed to respond to the discounts, until the business conformed to the culture of the Chinese. Again, the company offers differentiated products, but the essence of products value is rarely covered. Instead, Wal-Mart should select what to provide to customers by integrating modern methods of ascertaining the health implications of the goods they sell. It can be achieved through rigorous assay testing of the consumables received from the suppliers. This would reduce aggravated violation of the Food Safety Regulations of the native states (Horn 2015, p.72).
Furthermore, there is need to acquaint with laws of the foreign countries where they set their businesses. In most instances, companies enter a new market with the little knowledge of the requirements. Instead of adapting to the regulations of the native land, they choose to standardize the operations. Some of the areas that need more considerations are the taxation laws, which govern the tax remittance procedures and compliance. Additionally, they stipulate the rate of corporation tax that helps the host country to develop infrastructure such as roads, hospitals, schools among others. Despite the considerable presence of Wal-Mart in selected countries, more has not been done in regards to helping the states they operate in. Emphasis should be laid on addressing immediate needs, to develop a good working relationship with the local governments and the people.