Global supply chain Case study
Wal-Mart Changes its tactics to meet international tastes- Case Study.
Wal-Mart is the largest retailer in the world. The first store was opened in 1962 by Sam Walton. Today, Wal-Mart has well over 3,000 stores worldwide. The emphasis on customer satisfaction, and always low prices, has resulted in Wal-Mart becoming the world’s largest retailer with annual revenue exceeding $218 billion.
Wal-Mart, entered Argentina, along with other nations across the globe, in an attempt to capture shares, of a lucrative market. By exporting their, “Main Street USA”-type shop all over the world, Wal-Mart sought to bring, a different shopping experience to other cultures and to make a lot of money in the process. However, because of the nature of the supermarket industry in Argentina, and cultural influences, Argentinians are not embracing American supermarkets, as Wal-Mart is not seeing the profits, the company had hoped, at the beginning of its venture.
Further Challenges in the global market.
As the first US retailer to enter Argentina, in November 1995, Wal-Mart had optimistic hopes of capturing the Argentine consumers, by showing them the benefits of hypermarket shopping, and adding much revenue for good fortune. By offering lower prices than local merchants, and other European chains and American-style service and convenience, Wal-Mart was sure to capture the hearts, and wallets of Argentineans.
Unlike its entry into Mexico and Brazil, though, Wal-Mart was facing obstacles alone in Argentina, without the luxury of local partnerships. When opening its first supercenter, Wal-Mart had to fight protests from suppliers, for selling at prices below costs, a strategy that is not accepted nor regulated in Argentina.
- Wal-Mart’s effort to stock, such a wide variety of merchandise is hurting it.
- Squeezing out costs in the supply chain, is crucial to it’s EDL pricing formula.
- Bumper-to-bumper traffic of San Paulo.
- The biggest issue: Wal-Mart is shipping product on time and getting on the shelf.
- Wal-Mart recently built a warehouse in Argentina, and Brazil to reduce distribution problem.
Wal-Mart’s troubles in South America stem partly from its own mistakes.
- Some goods are useless in San Paulo.
- Example: Live trout, American footballs, Cordless tools.
- Wal-Mart brought in stock-handling equipment, that didn’t work with standardized local pallets.
- Installed a computerized bookkeeping system, that failed to take into account Brazil’s wildly complicated tax system.
- Wal-Mart’s Mr. Glass characterized, the missteps are regarded as temporary problems, and inevitable in entering a new market.
LET’S discuss, the case in detail.
- Other than a need to expand, what other reasons would Wal-Mart have for opening stores globally?
- Why would it be beneficial for Wal-Mart, to have suppliers in different countries?
- What are the problems they faced in the global market?
- Suggest some ways to overcome these challenges.