Wal-Mart case study - China operation
Contents:
Though China has made tremendous strides and enjoyed incredible growth since opening its markets to global trade and investment in , the development of its economic institutions and its infrastructure has lagged behind that in the West.
The second obstacle is cultural. Chinese consumers, for example, tend to be very different from those in the West, which makes it difficult for Western companies to appeal to local consumer tastes. The third obstacle is political.
Here's Why Walmart Stumbled on The Road to China
All of these factors led G. Walmart has learned these lessons the hard way. The American retailer has struggled to understand Chinese consumers and Chinese culture. Chinese consumers, unlike those in the U. Walmart therefore struggles to find the right product mix to offer in the cities and 25 provinces in which it operates. This makes it challenging to sell a core set of products nationwide.
Walmart has also suffered from troubled relationships with politicians—both local and national. The company has had its fair share of run-ins with the law.
Localization Strategies
On one occasion the Chinese government fined Walmart for violating local and national laws and even forced it to close stores temporarily for purported product violations. Walmart paid the fines, even though the company believed the claims to be unfounded. The company did not anticipate that scaling up its business model there would present so many problems. Although China has led the globe in infrastructure investment over the past several years, outside of its largest cities e.
Third, it established modern commodity distribution centers and computerized its management to improve efficiency and reduce cost Unlike Chinese companies, at Wal-Mart, associates found a high degree of transparency in relation to career growth.
Wal-Mart expansion campaign in China begins in the year of , where it sent a team to evaluate the prospect of investment in that country. Despite of it, China is certainly a very attractive market to invest in as the indicators in economic has been shining for the last twenty years. Chinese consumers, for example, tend to be very different from those in the West, which makes it difficult for Western companies to appeal to local consumer tastes. Upload your own papers! Advances in information technology and transportation have helped facilitate globalization—connecting developed and developing worlds, lifting some million people out of poverty along the way. Also, Wal-Mart did not make use of its first mover advantage and expanded slowly in China First, it focused on increasing local procurement thus reducing procurement costs.
All new employees went through three months training at Shenzhen. Wal-Mart valued an individual's competence rather than personal connections when promoting an employee. According to a report by People's Daily Online, Du Limin who started her career as an ordinary checkout person at Wal-Mart, became general manger of a Sam's Club in Shenzhen in just two years.
In , Wal-Mart figured among the 15 most popular foreign employers in China in a survey of university students conducted by ChinaHR. Wal-Mart suppliers also underwent "standards training.
Wal-Mart also restricted overtime to three hours per day and emphasized that safety requirements were met and satisfactory accommodation was provided to the workers Wal-Mart's Chinese operations have had their share of problems. The company's supply chain operations were not as efficient as in its home market. Also, in order to refine the bad image that it received in the host country, Wal-Mart in China has begin the social responsibilities campaign early where it involves itself in environment protection, donation to the wellbeing of senior citizen, education support, and disaster relief Wal-MartChina, Sam Walton as the founder of the company have laid down 3 basics belief to be carried out in doing a retailer business, they are respect for individuals, serve our customer, and strive for excellence Saporito, Moreover, whenever associates of Wal-Mart come to a customer within ten feet, they will have to greet and offer helps to the customer.
China is a collectivist culture, different to the host country which is more on the individualists.
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Moreover, the Chinese are also higher on the power distance if compared to host country Hofstede, Furthermore, it is also noted that the Chinese of which have lived under influence of western culture will aware of their self-enhancement thus low power distance, and more ambitious rather than those who never lived under the influences Jaw, et. Wal-Mart has many strength points in China, one of which is its partner in the expansion campaign. This partner will surely have a reliable knowledge towards the market condition and situation thus provides good information for Wal-Mart to adapt its strategy.
In addition, to imply the strategy of low cost, Wal-Mart is using local procurement to stock the shelves in its mart. Moreover, good relationships were also being established with the suppliers, where Wal-Mart is paying the supplier within days ICFAI, Wal-Mart encourage its workers to perform better, thus it provides career incentives to those that performs well. It gives training opportunity for them, by sending them to U. S to attend a training program. Despites of its strengths, Wal-Mart in China also have several falling points, where it faces some difficulties in applying the Just in Time technology.
This off course will affect the efficiency in the distribution of the goods and furthermore affect the low price strategy not being carried at the best.
Wal-Mart case study - China operation
Moreover, Wal-Mart in China is not applying an aggressive expansion strategy where it only managed to open 77 stores in 11 years of operations. The lack of market knowledge has also hinders Wal-Mart to have a wholly owned company based in China thus the profit will have to be shared with others unlike Carrefour that able to operate in sole-ownership since Euromonitor, Business economics - Operations Research.
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