International Marketing of Walmart Inc - Case Study Example

International marketing (Walmart Inc.) Student’s Name: Instructor’s Name: Course Code: Date of Submission: Executive summary This report was about Walmart Inc. which is an American founded company that is looking forward to expand its territories by entering the Australian market. The reason that is assumed to have contributed to this scenario is the fact that Australia is an island and that yet many companies to enter the industry. The country has one the most stable political environment and legal systems that have continued to create confidence among the investors. In addition, technology use is also very advanced and that if the company chose to employ online business strategy could play a very significant role in reaching wider marketing and also enhancing its efficiency. This analysis however, has established that competition may be a major threat for the company especially when competing with already established local companies. However, what is considered key advantage for the company is the price discounting something that will give it an advantage over the home-based companies like Woolworth and Wesfarmers. Finally, because the company has a strong brand, good revenue base, experienced in international business after having established in other countries and price discounting capabilities realized from low cost operations, franchising has been recommended as the best entry strategy for the company. Table of Contents Emerson C. (2012). Australian Export Awards celebrate 50 years of innovation, Media release, 27th November 2012, available at: http://trademinister.gov.au/releases/2012/ce_mr_121127.html 12 Hammond, M. (2012). Sagging consumer confidence set to drag down retailers in 2012, Retrieved on 10th December, available at: 12 OECD Factbook. (2012). Economic, Environmental and Social Statistics, retrieved on 3rd December 2012, available at: 12 1.0 Introduction Walmart Inc. is one of the largest chains of discount department and warehouse stores in the United States of America and that is currently considering Australia as a potential international market. The retail company was established in 1962 by Rodgers Arkansas in the United States. The company was dedicated to improving and making different in the lives of its customers. This is according to visionary leadership of Sam Walton and other generational leaders who have focused more on the idea of helping the customers and providing them with diverse and quality household goods at discounted prices. Since 1962, the retail company has embarked on a journey to creating impact in the society by delivering them with what desire for use using different strategies something has helped it employ over 2.2 million associates as per now and also able to serve over 200 million customers in its 10,000 stores placed in different parts of the world. Among those countries that the company has shown strong interest in is Australia (Walmart 2011). 1.1 Australia as a destination market Australia is located at the south of equator and is an island continent that is bounded by Indian Ocean to the West and Pacific Ocean from the East. The country occupies cool temperate climate of about 10 degrees from the south and 43 degrees from the south latitude. The neighboring countries of Australia include Papua New Guinea, Indonesia and New Zealand. The country is both governed by state governments which are six in number and the federal government (Wollumbin 2012). Despite the country having the indigenous people who have lived in the country for over centuries the country is now dominated by foreigners who first came into country as explorers and colonialists. As per the 2011 statistics report by Australian Bureau of Statistics (ABS), the country’s current population is approximately 23 million. 1.2 Consideration of Australia by Walmart Walmart Inc.’s consideration of Australia may have been informed by one major factor and which is its geographical location. As noted earlier the county is also an Island continent and the company’s move might have been informed by the level of competition given that the country’s borders with its neighbors is composed of water and therefore no single country can claim to have direct contact with it. 2.0 Marketing environment analysis The business environment both in which the company is operating in and the one that it’s planning to enter is affected by a number of forces which include the economic and financial factors, the social and cultural factors, political, technological and competitive factors as well all of which can be explained in the PESTLE Model as shown in diagram 1 below. Source: Ignitestrategicsolutions 2011 The model identifies six major forces that may influence the company strategy especially irrespective of the industry and the time. This similar scenario can be reflected in the case of Walmart Inc. and it is move to enter the Australian retail market. 2.1 Political factors Australia like many other countries from the west enjoys relatively stable environment and the benefits can flow right from the top to the bottom. Australia is one of the important retail markets in the Asia-Pacific region. The country hosts a very vibrant and stable political environment that allows for skill development, advancement in education and multi-lingual workforce. What this means for the company is that its business will enjoy a comfortable and very save market (Australian Trade Commission 2011). 2.2 Economic and financial factors Despite the fact that the country has for many years managed to have a very stable economy, what is happening in the global business has not spared the country even. Global recession and financial crisis like the eurozone are some of the example economic factors that have influenced the country’s retail industry. For instance there are very eminent challenges like discounting and consumer confidence as well as online retailing is likely to emerge. What this means therefore is that the retail company must be able to employ cost measures that will ensure that is able to break-even while discounting its prices to attract the market (Hammond 2012). 2.3 Social factors The country has a relatively very small population of about 23 million people. This is a very small market as opposed to the likely markets that the business could have from other continents. This means that the market is small and therefore the company must have to struggle and win the market to its side. Further, large part of the population is weighing towards the adult and the aged with about 65%. This means that the company may have to import some of the workforce to meet the shortfall. In addition, the country’s also composed of different cultures given that the country is dominated by foreigners from parts of the world including Asia and more especially China and Vietnam as well as Philippines among the Britons who the colonial masters. This therefore implies that the company has to apply a multi-cultural approach that could serve the interests of various groups (The economist 2012). 2.4 Technological factors In Australia technology is at advanced stage. Like in the case of the United States and other developed countries, majority of the Australians have adopted the use of new technology facilitated by the introduction of the internet and communication device like smartphones to interact with suppliers from all over the world. Currently it is estimated that over 80% of the Australians have access to internet while the frequency of surfing is thought to be about 4 times a week. This makes the market favorable for online marketing and transacting with the customers. To Walmart which is a USA based company is a key advantage in reducing operational costs and especially those associated with order process. This in turn helps the business to maintain its discounted prices (Australian Trade Commission 2011). 2.5 Environmental factors Environmental aspect is also an important issue in this case. Like is from cases where the public has continued to press for business practices that take due regard for the environment and that are eco-friendly the same case is being reflected in Australia. For example in 2010, the survey done by Australian Bureau of Statistics, revealed that 80% of the consumers for various products from across industries wished that the business dealers be responsible and protect the environment. What this means therefore that the company must ensure that it has developed product packages that are biodegradable and are less carbon to the environment. Cost could also be incurred for carbon crediting (The economist 2012). 2.6 Legislative factors Australia is considered one of the countries in the world with most transparent, efficient and open business legal framework. Corruption levels in the country for instance are said t be lower than other developed countries like the US, UK and most of the regional countries like Indonesia and New Zealand. This is attributed to strong systems that are used for checks and balances. This therefore requires that the company has high level principles to ensure high level of integrity is maintained among the workforce (The economist 2012). 3.0 SWOT analysis Most commonly businesses use the SWOT model to determine their chances of excelling in implementing a given strategy. The SWOT model talks of the strengths, weaknesses, opportunities and threats that influence the business strategy success as shown in diagram 2 below. Source: Ignitestrategicsolutions 2011 3.1 Strengths Walmart Inc. has numerous capabilities that may be considered as strength in implementing whatever strategy of their choice. First and foremost, the company is diverse in product base something gives it a competitive advantage. This is because the company deals in almost all household brands. Further, the company is considered to offer the most discounted prices in the market. Finally, the company has good revenue base alongside having well stocked stores where one can make all purchases from one shop (Nisbett 2003). 3.2 Weaknesses Walmart is a very huge company and to manage it requires a lot commitment and experience team of professionals who can take it forward. Controlling the company therefore becomes a major issue. Another major challenge is to liaise with suppliers who have the bargaining power to have the inventory supplied on time. Since the company tries to offer the most discounted prices in the market and always customers tend to attach quality with price, consumers are questioning the quality standards of the products delivered by the company (The economist 2012). 3.3 Opportunities Expansion for the market has continued to increase as the world population continued to increase. Technology has come into play and online transactions can be made possible that will enhance efficiency in product delivery. On the same line, the company has the chance of reducing its operational costs since it has the numerous stores something that reduces the company’s travel costs (Harkness and Mohler 2003). 3.4 Threats The company is likely to experience very stiff competition from the already established companies in the market. The likely competitors from the market include Woolworths, Wesfarmers, Coles Supermarkets Pty Ltd, Dick Smith Electronic Pty Ltd and Big W and many more. Further, since the company is also depended on built infrastructure, it is very likely that some natural disasters like fire, earthquakes and wild wind could easily break them down (Hammond 2012). 3.5 Selected strategy Since it is now very clear that the retail industry is well established in the country is very established, it is proposed that use of franchising strategy will be the best choice strategy for Walmart Inc. this is because it will give the company to opportunity to build its brand from scratch and help attract as many customers as possible. This is strategy is also preferable because many of the rival companies are well established and price competition is playing key role. With price discounting strategy, the company stands a better chance to develop its own market share that may be getting best price for quality goods (Emerson 2012). 4.0 Conclusion and recommendation This study was purposed at analyzing a business and try to evaluate it is entry into the foreign market. In this case, the company that has been studied is Walmart Inc. which is the largest retail company founded in the United States. The analysis has looked into its move to enter the Australian market. However, what has emerged is that the market environment found in Australia looks almost similar to that of the United States. However, since the industry in the country is at an advanced stage and that almost all the companies operating in the market are very advanced, it is recommended that using the franchising as an entry strategy will give the company a key advantage given that price war has dominated the market when the company is able to offer the most discounted price in the market. This help the company attract and establish its own market niche that may be looking for quality at best prices. References Australian Trade Commission. (2011). Australia: Democratic and politically stable, retrieved on 9th December, available at: http://www.austrade.gov.au/Invest/Why-Australia/Democratic-and-Politically- Stable/default.aspx Emerson C. (2012). Australian Export Awards celebrate 50 years of innovation, Media release, 27th November 2012, available at: http://trademinister.gov.au/releases/2012/ce_mr_121127.html Hammond, M. (2012). Sagging consumer confidence set to drag down retailers in 2012, Retrieved on 10th December, available at: http://www.startupsmart.com.au/cash-flow/sagging-consumer-confidence-set-to-drag- down-retailers-in-2012/201203135662.html?pop=1&print=1&tmpl=component Harkness, J. and Mohler, P. (2003). Cross-Cultural Survey Methods. London: Wiley. Hofstede, G. (2001). Culture's Consequences. Sydney: Sage. Nisbett, R. (2003). The Geography of Thought: How Asians and Westerners Think Differently ... and Why, Free Press OECD Factbook. (2012). Economic, Environmental and Social Statistics, retrieved on 3rd December 2012, available at: http://www.oecd-ilibrary.org/economics/oecd-factbook-2011-2012_factbook-2011-en The economist. (2012). Culture: The effort behind the effortlessness. Retrieved on 4th December 2012, available at: http://www.economist.com/culture Walmart 2011, History timeline, retrieved on 10th December 2012, available at: http://corporate.walmart.com/our-story/heritage/history-timeline Wollumbin. (2012). retrieved on10th December 2012, available at: http://www.bigvolcano.com.au/info/general.htm Read More