New Market Entry: Walmart
Introduction of Walmart
Business strategic management is one of the tools that aid any organization to come up with new strategies that would increase the growth in new markert niches. This paper elucidates the entry of Walmart in China. The portfolio analysis gives the view on the market growth in relation to the share of the it. This is attained in view of the performance evaluation related to the set goals. This would involve evaluating the establishment of the service lines, the scoring criteria and the weighting factor.
Walmart is an American company that operates as a discount chain and is the most successful retail brand that values, convenience, money and various products that are catered in one store. Most of the products are sold at a low price while considering selling in large volumes. Sam Walton is believed to be its founder. The operation of Walmart started almost 60 years ago with a store in Arkansas in the USA. It has approximately 500 shops located worldwide and approximately, 3200 outlets in the United States only. Walmart sales double its competitors. However such corporations have to maintain a high level of growth to ensure they attain high profits. There are both internal and external factors that contribute to the success of this organization. This calls for the SWOT analysis that would aid assessment of the new entry strategies. Walmart has targeted Chinese market, as there is a high market share that exhibits the growth. This is done having in mind that the new entry would grow to be the next cash cow.
Consequently, this requires more cash investments to ensure that the organization still upholds the lead. The services under the start cell are appealing to the markets and while they experience, low competition. This section is exhibited in the location where it has focused on ensuring that services are concentrated on offering high profit margins.
Enhancing quality services ensures the high performance in this industry. That may bring increase in the market share. Inherently, studying of a new market entry fosters the SWOT analysis in studying the internal and external factors.
Strength and Weakness
Walmart exists as a powerful brand having a wide range of products represented in one store. It exhibits a large number of sales having high reputation. Moreover the chain has a highly proficient inventory management system that focuses on high competition.
Walmart has huge span of control that may affect its sections in the manner in which they are managed. There are allegations that they are engaged in child labor laws as well as relying on the temporary workers. They also offer low benefits to the workers making the pay less attractive. Walmart only operates in a very few countries that are located outside the United States that reduces the profit.
In addition, there is a presence of several international market opportunities that makes the company have large customer base. It uses various strategies such as the use of markets that would focus on super centre, neighborhood. It aims at focusing on specific areas such as the Europe and China region that enables it to form strategic alliances with other global retailers.
Having in mind that it is the target in competition, it is mainly the aim for majority of retailers. There are many stores that tend to focus of specific areas that offer great competition. There are also changes in political pressures that make them to shift the way they operate in various countries.
From SWOT analysis, it is evident that the growth is achieved from what has been attained. It is vital for companies to develop a strategy that would aid them to have a control plan on how they would manage their development. It should be considered that a strategy that is employed in one business may differ from others. This enables the stakeholders to manage the company ensuring the growth. Apparently, the market of the United States tends to be overcrowded with competition. However, there is a need to look for alternative means which would be used to ensure the companies get international markets.
The analysis gives the opportunity to analyze the environment the company is operating in. Moreover, it researches possible issues that may occur and assists in setting the goals of the corporation based on the influence of political, economic, social, technological, legal and environmental factors.
Political, Economic and Social Forces
This gives a manner in which a political system may have an impact on the international community. Most multinational companies face the risk involved hence, any policy that they develop has to be in tandem with the prevailing political situation. For instance, Walmart is major in American market that makes it to become a faction in major political ideologies and may affect greatly the growth of the company.
This consists of factors such as the economic depression or economic surge that may affect any multinational company in a given region. Walmart has achieved this by ensuring that their business model exhibits low profit margins. For instance when there is an economic surge, selling at low prices would not suffice well to customers. On the other hand, the depression period would pose a threat to the volume of sales. This has been achieved by studying thoroughly the market before entering a particular market niche.
This attributes to the social factors that influence a particular market. These may destabilize a corporation if they are not well checked. This is of a great challenge as the target market of Wal-Mart was selected to fit the American culture that focuses on the attitude pertained to the shopping behavior. The idea may clash if the target market does not meet the goal. This may impact negatively the nature of the business.
These are the technology and the innovativeness that are associated with the operation of the business. Companies that engage the latest technologies would exhibit greater growth than compared to those that do not exhibit those. Walmart has ensured that there is a new technology employed in operating at different markert points. A challenge that faces Walmart in new entries is that, some countries may lag behind in technology and may not embrace the new one applied worldwide. This has been solved by ensuring that the systems are integrated and synchronized.
Legal and Environmental Forces
The legal forces may have an impact on the various organizations as they enter a new market. This would force a new corporation to abide the set legal frameworks. The entry of Wal-Mart in India has been streamlined to ensure that they are in tandem with the legal framework.
The manner in which the corporations operate, ascertain the manner in which they utilize the environment. All operations should be enhanced to ensure that they are environmental friendly. For instance, Walmart was criticized for using timber and wood. They had to halt the production of furniture and look for other alternative more environmental friendly means. Multinational companies enjoy the privilege that they do not only get profits from their domestic companies, but also from the international markets that are located. They would also easily shift to other markets if the environment does not favor them. It is vital for a company to carefully study the market environment of a given region before entering that one. This would require having a strategic plan that the company is able to take the full advantage of the available opportunities that may exist. This would avoid mix ups and any confusion.
Walmart has employed price strategy in its new entry in India in which, they have managed to set up a low market price that would attract more clients. In turn, they opt to sell in large volumes. They have also perfected the art of partnering with an existing company in a given market so as they can progressively adjust their way of operation in that country. The entry of Walmart in Chinese market has been felt with great challenge spending approximately $1.4 million discussing the various possible entries into the Indian market.
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