Carla Cordero - Carles De Oleza - Alex Doldán - Patricia Igual - Luis Pérez

How to transfer core
competencies 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-Mart's targeted demographic:
– Modest incomes
– Shoppers interested in prices
• But the customer base is changing

Internal & External
Analysis

Firms’ Value Chain
General administration
Human resource management
Technology development
Procurement
Inbound Outbound Marketing
Operations Service
logistics logistics and sales

Support Activities
Firms 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 against
competitors.
- Computer-based technology
POS (Point of sales) system
Satellite System
Procurement:
-Wal-Mart deals directly with manufacturers, by passing all intermediaries.
- EDI : Electronic data interchange
MANUFACTURER – WALMART - CUSTOMERS

Primary Activities
Inbound Operations Outbound Marketing and Service
Logistics Logistics sales
-VMI system 3 business segments: -Hub and spoke - Word of mouth -accepting returned
distribution system. communication. goods
(Vendor managed
a)WalMart stores
inventory) - Super centers - CROSS DOCKING: -focuses on everyday -Satisfaction
- Discount centers logistic technique to low prices guarantee
continuous make the
- Neighborhood
replenishment 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.

Walmart 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 Conclusion
Integrated technology of supply chain Yes Yes Yes Yes Sustainable Compt. adv
Ability to generate large sales volume Yes No No Yes Comp. Parity
Superior logistics system Yes Yes Yes Yes Sustainable 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

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 chain
EXTERNAL 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 Model
3. Potential entrants / Barriers to entry:
Medium-High
I. 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: High
I. 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: High
I. 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 Map
High
Customer service/ Price
Low
Low Number of Product Categories High

Main Competitors
Retailer Industry: Target Supermarket Industry:
Dollar General
I. 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 is
III. 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 $1
Mission: to Make Target your preferred
shopping destination in all channels by
delivering outstanding value, continuous Mission: to best serve others by keeping it real
innovation and exceptional guest experiences. and simple.

Business-Level Strategy:
Combined Strategy
Walmart combines a Cost-Leadership
and 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

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 strong
costumer 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

Walmart International

What Strategy to follow
Trans
Global
National
Inter Multi
national domestic
Low High
Local Responsiveness

Mode of entry of International Expansion

Mode of entry of International Expansion
Year Country Mode of Entry
1991 Mexico 50% Joint Venture Cifra
1994 Brazil 60% Joint Venture Lojas Americana
1994 Canada Acquisition Woolco (weak player)
1995 Argentina Wholly owned Susbidiary
1996 China New opening, JV, Acquisition
1998 South Korea Adquisition
1999 U.K. Acquisition of ASDA
2002 Japan Acquisition Seiyu
2002 Germany Acquisition of Wertkauf and Spar
2007 India Joint Venture
2011 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.)

Suggestions

“Think local, act global”
• Locally leveraged:
– Shared knowledge between units.
• Worldwide learning:
– Advantages of interconnected economies.
• Adaptation:
– To locally customize processes and services

Questions & Answers