Critical Thinking Essay: Wal-Mart’s Global Strategies

   I need your help for writing essay (5 pages not including the cover page and references page)  

The topic as below:

Wal-Mart’s Global Strategies

In Chapters 8 and 9, we reviewed several types of global expansion  strategies a company can undertake when entering new markets. For this  assignment, you will read Walmart’s Global Strategies case study (p. 279) and then respond to the following questions and make decisions based on those questions.

1. What was Walmart’s early global expansion strategy? Was this a good strategy for Walmart? Why or why not?
2. What cultural problems did Walmart face in some of the international markets it entered?

Now, assume the role as the Director of Walmart’s global strategic  planning team. You have been tasked to explore the benefits and  challenges of expansion into one of the following regions. Choose one of  the following regions and describe the opportunities and challenges in  that region. Summarize the cultural environment, choose an entry  strategy from the text, and describe how you would implement this entry  strategy. Make sure you are very detailed in your explanation.

 Regions:

• Latin America
• European Union
• Southeast Asia
• Russia
• Middle East

  Directions:-
  – Write an essay that includes an introduction paragraph, the essay’s   body, and a conclusion paragraph to address the assignment’s   guide questions. – Do not address the questions using a  question-and-answer format.  
   –  Charts/diagrams should be labeled and can be added within the body of your paper.  
  – APA style should be used  
  – Font will be: Times roman 12, and double space should be between  lines   
  -At least 3-4 scholarly, peer-reviewed journal articles will be  used as references (including the below two).     
  Recommended Reference:   

• “In-Depth Integrative Case Study 2.2: Walmart’s Global  Strategies” (p. 279) in International  Management: Culture, Strategy, and Behavior 
• Ahsan, M., & van Wyk, J.  (2018). Going past entry mode: Examining foreign operation mode  changes at the strategic business unit level. Journal of Managerial Issues, 30(1), 28.
• Jiang, F., Ananthram, S., &  Li, J. (2018). Global mindset and entry mode decisions: Moderating roles of  managers’ decision-making style and managerial experience. Management  International Review, 58(3),  413-447.

279

operations, with 6,300 stores and more than 900,000 asso-
ciates in 27 countries outside the continental U.S.5 (See
Exhibit 1.) According to international chief C. Douglas
McMillon, Walmart is “progressing from being a domes-
tic company with an international division to being a
global company.” In two decades Walmart International
has become a $100 billion business. If it were a stand-
alone company, it would rank among the top five global
retailers.6 (See Exhibit 2.) Walmart International’s

Introduction
In 1991, Walmart became an international company when
it opened a Sam’s Club near Mexico City. Just two years
later, Walmart International was created. Since venturing
into Mexico in 1991, Walmart International has grown
somewhat erratically. During the 1990s, the retailer
exported its big-box, low-price model, an approach the
company expected to be as successful in foreign markets
as it was in the United States. Although Walmart has had
success in several overseas markets, this success has been
far from universal. For example, in Mexico, China, and the
U.K., the company’s efforts to offer the lowest price to
customers backfired because of resistance from established
retailers. And in Germany, Walmart could not seem to fit
its model to local tastes and preferences. In Japan, its joint
venture had a series of setbacks, many related to buying
habits for which the Walmart model did not respond well.
In Mexico, three of the largest domestic retailers con-
structed a joint buying and operational alliance solely to
compete with Walmart.1 Its presence in Hong Kong ended
after only two years during the 1990s, and it shuttered
operations in Indonesia in the mid-1990s after rioting inci-
dents in Jakarta. Walmart also owned approximately 16
stores in South Korea and 85 in Germany; however, it sold
off these operations in 2006 after merchandise failed to
match consumer tastes, distribution and re-bagging prob-
lems arose, and strong loyalties to other brands made
attracting customers difficult and expensive.2

In addition, labor advocates and environmentalists have
created headaches for the U.S. behemoth, making contin-
ued expansion both cumbersome and expensive. For
instance, in 2006, Walmart faced a strong public relations
campaign from the All-China Federation of Trade Unions
(ACFTU) over Walmart’s refusal to let its workers in
China unionize. Walmart was eventually forced to con-
cede, perhaps because the Chinese government also lent
its weight to the ACFTU’s campaign in its effort to estab-
lish unions in all foreign-funded enterprises throughout
the country.3 Despite its public battle with the ACFTU,
Walmart China received the Howard Award for “Most
Respectable Foreign Enterprise in China” in 2014.4 As
Walmart continues to expand its global operations, ana-
lysts are curious to see how the company is received and
whether consumers’ opinions in fragmented market set-
tings are a match with Walmart’s low-price model.

Notwithstanding these challenges, today Walmart
International is a fast-growing part of Walmart’s overall

In-Depth Integrative Case 2.2

Walmart’s Global Strategies

Exhibit 1 Walmart International Operations, June 2015
Retail Units
Market (June 2015) Date of Entry

Mexico 2,360 November 1991
Canada     400 November 1994
Brazil 499 May 1995
Argentina 108 August 1995
China 433 August 1996
United Kingdom 621 July 1999
Japan 346 March 2002
Costa Rica 225 September 2005
El Salvador 91 September 2005
Guatemala 223 September 2005
Honduras 82 September 2005
Nicaragua 88 September 2005
Chile 399 January 2009
India 21 May 2009

Source: “Where in the World Is Walmart?”  Walmart,  http://corporate.walmart.com/our-
story/our-locations  (last visited March 3, 2016).

Exhibit 2 The Largest Global Retailers, 2014
Walmart $476bn

$105bn Costco

$99bn Carrefour

$99bn

$99bn

Lidl

Tesco

$98bn Kroger

$86bn Metro Ag

$81bn Aldi

$79bn Home Depot

$73bn Target

Source: Original graphic created based on information from Deloitte (www2.deloitte.
com/an/en/pages/about-deloitte/articles/consumerbusiness.html).

280 Part 2 The Role of Culture

Walmart Early Internationalization
In venturing beyond its large domestic market, Walmart
had a number of regional options, including entering
Europe, Asia, or other countries in the Western hemi-
sphere. (See Exhibits 3 and 4.) At the time, however,
Walmart lacked the requisite financial, organizational, and
managerial resources to pursue multiple countries simul-
taneously. Instead, it opted for a logically sequenced
approach to market entry that would allow it to apply the
learning gained from its initial entries to subsequent ones.
In the end, during the first five years of its globalization
(1991 to 1995), Walmart decided to concentrate heavily
on establishing a presence in the Americas: Mexico,
Brazil, Argentina, and Canada. Obviously, Canada had the
business environment closest to the U.S. and appeared
to be the easiest entry destination. The other countries
that Walmart chose as its first global points of entry—

business represents a solid chunk of Walmart’s overall
$482 billion in revenue for the fiscal year 2015.7

With a market capitalization of more than $200 billion
in 2016, Walmart is worth as much as the gross domestic
product of Algeria. Four of America’s 10 richest indi-
viduals are from Walmart’s low-profile Walton family,
which still owns a 40 percent controlling stake. The com-
pany’s portfolio ranges from superstores in the U.S. to
neighborhood markets in Brazil, bodegas in Mexico, the
ASDA supermarket chain in Britain, Japan’s nationwide
network of Seiyu shops, and a controlling stake in South
African retailer Massmart. Walmart sources many of its
products from low-cost Chinese suppliers. The pressure
group China Labour Watch estimates that if it were a
country, Walmart would rank as China’s seventh largest
trading partner, just ahead of the U.K., spending more
than $18 billion annually on Chinese goods.8

Exhibit 3 Walmart International Retail Unit Count (2001–2006)
Country 2001 2002 2003 2004 2005 2006

Argentina 11 11 11 11 11 11
Brazil 20 22 22 25 149 295
Canada 174 196 213 235 262 278
China 11 19 26 34 43 56
Germany 94 95 94 92 91 88
Japan 0 0 0 0 0 398
Mexico 499 551 597 623 679 774
Puerto Rico 15 17 52 53 54 54
UK 241 250 258 267 282 315
South Korea 6 9 15 15 16 16

Total 1,071 1,170 1,288 1,355 1,587 2,285

Source: Walmart Annual Reports for fiscal years 2001, 2002, 2003, 2004, 2005, 2006.

Exhibit 4 Walmart International Retail Unit Count (2006–2015)
Country 2007 2008 2009 2010 2011 2012 2013 2014 2015

Argentina 13 21 28 43 63 88 94 104 105
Brazil 299 313 345 434 479 512 558 556 557
Canada 289 305 318 317 325 333 379 389 394
Chile 0 0 197 252 279 316 329 380 404
China 73 202 243 279 328 370 393 405 411
Costa Rica 137 149 164 170 180 200 205 214 217
El Salvador 63 70 77 77 78 79 80 83 89
Guatemala 132 145 160 164 175 200 206 209 217
Honduras 41 47 50 53 56 70 72 75 81
India 0 0 0 1 5 15 20 20 20
Japan 392 394 371 371 414 419 438 438 431
Mexico 889 1,023 1,197 1,469 1,730 2,088 2,353 2,199 2,290
Nicaragua 40 46 51 55 60 73 79 80 86
Puerto Rico 54 54 56 56 55 56 55 56 55
UK 335 352 358 371 385 541 565 576 592
Total 2,757 3,121 3,615 4,112 4,612 5,360 5,826 5,784 5,949

Source: Walmart Annual Reports for fiscal years 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015.

In-Depth Integrative Case 2.2 Walmart’s Global Strategies 281

business in over 145 cities throughout Mexico. Opening
nearly 100 stores in 2015, Wal-Mex has shown no signs
of slowing down. As of 2016, it operated over 2,200
stores in Mexico.14

The rapid growth of Wal-Mex over the last decade has
not been problem-free. A 2012 report by the New York
Times uncovered widespread bribery occurring at the
Wal-Mex executive level, resulting in a three-year-long
corruption investigation by the U.S. Justice Department.
According to the New York Times report, a senior Walmart
lawyer was contacted by a former executive at Walmart
de Mexico in September 2005. In the e-mail and follow-
up conversations, the former executive (later identified as
the lawyer in charge of obtaining construction permits for
Walmart de Mexico) indicated that Walmart de Mexico
had paid bribes for permits throughout the country to fuel
growth prospects. In response, Walmart dispatched inves-
tigators to Mexico City. Those investigators found over-
whelming evidence of bribery and hundreds of suspect
payments totaling more than US$24 million. The investi-
gation also found that Walmart de Mexico’s top execu-
tives had taken steps to conceal the evidence from
Walmart’s headquarters.15  Shortly after the investigation
commenced, Walmart warned shareholders that its reputa-
tion could be affected by the bribery scandal. Shares
dropped by 5 percent in April 2015, representing approx-
imately US$10 billion in value. Walmart noted that inqui-
ries from media and law enforcement could affect the
“perception among certain audiences of its role as a cor-
porate citizen.”16  Between 2012 and 2015, roughly two
dozen representatives from the U.S. Justice Department,
FBI, SEC, and IRS became involved in the investigation.17 
In the wake of the investigation and bribery charges,
Walmart has created a new executive position to ensure
that all Walmart employees are complying with the U.S.
Foreign Corrupt Practices Act.18 

In late 2006 the company was also approved by Mexico’s
Finance Ministry to open its own bank. In a country
where 75 percent of citizens have never had a bank
account due to high fees, “Banco Walmart de Mexico
Adelante” added much-needed competition to the finan-
cial services industry and offered consumers lower fees
than traditional banks.19 In November 2007, Wal-Mex
opened its first consumer bank, Banco Walmart, in Toluca;
by December 2014, the company had opened branches in
2,100 stores. Banco Walmart especially targeted the low-
income market in a country where just 24 percent of
households have savings accounts, compared with 55 per-
cent in Chile. In the short term, this strategy included
luring newcomers with easy instructions and entry points,
like minimum balances of less than $5 and no commis-
sions, compared with $100 minimums at competing
banks. Long term, Wal-Mex’s plans included boosting
sales via debit cards and easing users into more profitable
services like insurance. In 2014 alone, credit card sales

Mexico (1991), Brazil (1994), and Argentina (1995)—were
those with the three largest populations in Latin America.9

The European market had certain characteristics that
made it less attractive to Walmart as a first point of entry.
The European retail industry was mature, implying that a
new entrant would have to take market share away from
an existing player—a very difficult task. Additionally,
there were well-entrenched competitors on the scene (e.g.,
Carrefour in France and Metro A.G. in Germany) that
would likely retaliate vigorously against any new player.
Further, as with most newcomers, Walmart’s relatively
small size and lack of strong local customer relationships
would be severe handicaps in the European arena. In addi-
tion, the higher growth rates of Latin American and Asian
markets would have made a delayed entry into those mar-
kets extremely costly in terms of lost opportunities. In
contrast, the opportunity costs of delaying acquisition-
based entries into European markets appeared to be rela-
tively small.10

While the Asian markets had huge potential when
Walmart launched its globalization effort in 1991, they
were the most distant geographically and different cultur-
ally and logistically from the U.S. market. It would have
taken considerable financial and managerial resources to
establish a presence in Asia.11 However, by 1996, Walmart
felt ready to take on the Asian challenge and it targeted
China. This choice made sense in that the lower purchas-
ing power of the Chinese consumer offered huge potential
to a low-price retailer like Walmart. Still, China’s cultural,
linguistic, and geographical distance from the United
States presented relatively high entry barriers, so Walmart
decided to use two beachheads as learning vehicles for
establishing an Asian presence.12

During 1992–93, Walmart agreed to sell low-priced
products to two Japanese retailers, Ito-Yokado and Yao-
han, that would market these products in Japan, Singa-
pore, Hong Kong, Malaysia, Thailand, Indonesia, and the
Philippines. Then, in 1994, Walmart entered Hong Kong
through a joint venture with the C.P. Pokphand Company,
a Thailand-based conglomerate, to open three Value Club
membership discount stores in Hong Kong.13

Success in Mexico and China
Overall, Walmart has had a very successful experience in
Mexico. In 1991 Walmart entered into a joint venture with
retail conglomerate Cifra and opened a Sam’s Club in
Mexico City. In 1997 it gained a majority position in the
company and in 2001 changed the store name to Walmart
de Mexico, or, more commonly, “Wal-Mex.” In addition
to its 256 Walmart Supercenters and 161 Sam’s Club
warehouses, Wal-Mex also operates Bodega food and gen-
eral merchandise discount stores, Superama supermarkets,
and Suburbia apparel stores. The majority of its stores are
located in and around Mexico City; however, it does

282 Part 2 The Role of Culture

high-quality general merchandise and food. Germany was
seen as the largest single base for retailing in Europe.
Wertkauf’s annual sales were about $1.4 billion, and its
stores operated similar to the popular Walmart Super-
center format in the U.S. Walmart’s executives considered
Wertkauf as an “excellent fit” for Walmart and hoped that
it would provide the company with an ideal entry into a
new market.30

However, Walmart’s operations in Germany quickly
turned into a costly struggle. There were a number of
critical factors that the company underestimated when it
entered the new market. First of all, the stores of the
acquired German retail chain were geographically dis-
persed and often in poor locations. Also, Walmart had
faced some serious cultural differences, which it tried to
resolve by making one error after another. For example,
the company initially installed American managers, who
made some well-intentioned cultural gaffes, like offering
to bag groceries for customers (Germans prefer to bag
their own groceries) or instructing clerks to smile at cus-
tomers (Germans, used to brusque service, were put off).31

Other problems, however, were largely outside
Walmart’s control. Two German discounters, Aldi and
Lidl, dominated the grocery business, with smaller shops
that featured cut-rate, though still good-quality, food. Aldi
also heavily promoted one-week sales, featuring deeply
discounted merchandise, ranging from wine to garden
hoses, that draw customers back. While Walmart’s vast
size gave it enormous leverage in purchasing clothing and
other goods, it had to buy much of the food for its German
stores locally. And there, it lacked the muscle of Aldi,
which had 4,100 shops and a presence in nearly every
town in the country.32

“Germany is the home of the discounter,” said Mark
Josefson, a retail analyst at Kepler Securities in Frankfurt.
“Walmart is not competing on price, and that is one of its
main attributes in its home market.” Beyond these com-
petitive pressures, there was another serious factor to con-
sider, namely that the German consumer was one of the
most parsimonious and price-conscious in Europe. Profit
margins in German retailing were the lowest in Europe.33

Walmart struggled in Germany for almost 8 years.
Analysts said that Walmart Germany was losing about
€200 million (£137 million) a year on a turnover of about
€2 billion, despite several attempts to turn around the
business. In 2006 it finally made the decision to withdraw
from the German market, by selling its 85 German stores
to the rival supermarket chain Metro and taking a pre-tax
loss of about $1 billion (£536 million) on the failed ven-
ture.34  The decision to sell out to the Metro Group came
two months after Walmart sold its 16 stores in South
Korea and it appeared a rare retreat by the world’s largest
retailer from its breakneck global expansion.35

In contrast, Walmart’s second retail destination in
Europe, the United Kingdom, has brought the company

grew by 50 percent, with over a half of a million active
credit card users in total. Later that year, Wal-Mex cashed
in on the successes of Banco Walmart by selling the busi-
ness to Inbursa for US$250 million.20,21

Wal-Mex’s plans for future growth involve more heav-
ily targeting the 16–24-year-old age group, which consti-
tutes 55 percent of Mexico’s population. In 2016, Mexico
ranked as Walmart’s number one international destination
with over 2,300 retail outlets, far ahead of its second
major international destination, the United Kingdom,
which had only 600 stores.22 In 2014, Walmart de Mexico
was a top performer globally with a gross margin of 22
percent and 9.7 percent growth in operating income over
the previous year.23

Though not as easy as its experience in Mexico,
Walmart has also found decent success in China. Walmart
entered the Chinese market in 1996 when it opened a
Supercenter and Sam’s Club in Shenzen. As of 2016 the
company had expanded to 433 stores with over 100,000
employees. In order to cater to its Chinese shoppers,
Walmart has introduced “retail-tainment” and attempted
to create a more hands-on shopping experience.24 China’s
Tourism Bureau even named one underground Walmart
store a tourist destination.25

In addition to its own stores, Walmart has had a stake
in the Taiwanese Bounteous Company Ltd., which owned
the popular chain of Trust-Mart stores.26 In late 2006, The
Wall Street Journal publicized a $1 billion deal between
Walmart and Bounteous, in which Walmart would acquire
Trust-Mart’s 100 stores over the course of three years. In
light of Walmart’s slowing U.S. sales and the termination
of its operations in Germany and South Korea, the com-
pany’s expansion in China is quite timely. Like its opera-
tions in Mexico, Walmart has also entered the Chinese
financial service industry, by introducing a credit card
with Bank of Communications Ltd.27

Walmart’s expansion has not gone unnoticed. Domestic
Chinese rivals have also built up their businesses in order
to compete. Shanghai Bailan Group purchased four rival
supermarkets and department stores nearly a decade ago,
now employing over 200,000 and operating over 6,000
stores.28 China Resources Enterprise has hired away man-
agers from foreign chains and cut staff in order to increase
its profitability.29  While these efforts signal greater com-
petition for Walmart in particular, they are necessary for
domestic companies to survive in China’s $4 trillion retail
market, which has been increasingly competitive ever
since the country joined the WTO and dropped restrictions
on foreign retailers.

Mixed Results in Europe and Japan
In 1998 Walmart entered the European market through
Germany by acquiring 21 Wertkauf hypermarkets, one-
stop shopping centers that offered a broad assortment of

In-Depth Integrative Case 2.2 Walmart’s Global Strategies 283

the store. Taking a page from Britain’s ASDA, Seiyu
instead used its marketing dollars to compare prices
against competitors. With the pressure of prolonged reces-
sion, Japanese consumers have finally accepted that they
can buy quality merchandise for a lower price.41  After
spending 100 billion yen (roughly $1.2 billion), Walmart’s
situation in Japan had stabilized by 2010, with two years
of consistent profits.42 As of 2016, Walmart holds at about
440 Seiyu stores across Japan.

Refocusing on Latin America
The year 2005 became another turning point in Walmart’s
strategy. Somewhat frustrated by strategic failure in Ger-
many, and very slow expansion in the developed countries
like Canada and the U.K., the company has turned its
focus toward Latin America. Walmart has decided to
leverage its positive experience in Mexico toward other
South American countries. In 2005 Walmart successfully
entered this market with the purchase of a 33-1/3 percent
interest in Central American Retail Holding Company
(CARHCO) from the Dutch retailer Royal Ahold NV.
CARHCO is Central America’s largest retailer, with
363 supermarkets and other stores in the following five
countries: Guatemala (120), El Salvador (57), Honduras
(32), Nicaragua (30), and Costa Rica (124). CARHCO has
approximately 23,000 associates. Its sales during 2004
were approximately $2.0 billion.43

Prior to that, in March 2004, Walmart bought a
118-store supermarket chain, Bompreco, in northeastern
Brazil for $300 million, also from Royal Ahold of the
Netherlands. This acquisition has significantly increased
Walmart’s competitive position in the country. In 2006 the
company made another successful deal with Portugal-
based Sonae by purchasing its 140 Brazilian stores for
$757 million. The Sonae purchase was expected to boost
Walmart’s presence in Brazil’s wealthier southern states.
With the Sonae acquisition, the Walmart store count
increased to 295 units in 17 of Brazil’s 26 states. How-
ever, this move made Walmart only the third-largest
retailer in Brazil, following Carrefour of France and Com-
panhia Brasileira de Distribuio Po de Acar.44

Brazilian operations, however, have struggled in recent
years. Frustrated by lackluster operating profit margins,
Walmart invested US$22 billion between 2010 and 2015
in capital improvements to spur sales in Brazil. Between
2007 and 2013, the number of Walmart locations across
Brazil doubled. Despite the investment, sales growth con-
tinued to stall. By 2013, Walmart had posted its fifth con-
secutive operating loss in Brazil. In December 2015,
Walmart strategically closed 60 stores across Brazil, rep-
resenting 10 percent of its operations.45

Another step in the sequence of its strategic moves in
Latin America was Walmart’s expansion into Chile. In
2009 Walmart acquired a majority stake of D&S’s (short

much-needed success. Walmart entered the U.K. market
in June 1999 by acquiring ASDA Group PLC, Britain’s
third-largest food retailer. Walmart offered £6.7 billion
($10.8 billion). The cash deal, which topped a rival bid
from the British retail group Kingfisher PLC, was pre-
dicted to double Walmart’s international business at a
stroke and put it in a position to expand its retailing exper-
tise throughout Europe.36

Walmart executives said they hoped to draw upon
ASDA’s management talent and experience. ASDA’s
stores are a little less than half the size of Walmart’s
supercenters of more than 200,000 square feet (18,000
square meters) in the United States, but the lack of space
in much of Europe for new out-of-town shopping develop-
ments could make ASDA’s formula more relevant as a
platform for expansion.37

However, while the chain has been only a moderate
success, delivering consistent results, Walmart has been
frustrated in its efforts to expand, though competing in
Britain’s feverishly competitive supermarket industry has
taught Walmart a good deal. Nevertheless, ASDA is now
something of a center for excellence for its global grocery
sales. The head of global marketing for Walmart is based
at ASDA’s head office in Leeds. And, in an example of
Walmart’s global distribution muscle, The Wall Street
Journal recently reported that the best-selling wine in the
whole of Japan is an own-label ASDA Bordeaux.38

The third major strategic step in Walmart’s early 2000s
global expansion was entering the Japanese market. In
2002 Walmart set foot in Japan with the purchase of a 6
percent stake in the 371-store Seiyu chain. Despite con-
tinued losses, Walmart gradually raised its stake, making
Seiyu a wholly owned subsidiary in June 2008. Walmart
has had to confront numerous issues in Japan, from long-
time Seiyu managers resisting its initiatives to a tendency
among Japanese shoppers to equate low prices with infe-
rior products. Also, bulk deals did not play well in a coun-
try where many lived in small urban apartments, and the
country’s grocery distribution system was populated with
wholesalers who brokered deals between suppliers and
retailers, skimming profits. Even rival Carrefour aban-
doned this market.39

Edward J. Kolodzieski was the man in charge of turn-
ing Seiyu around. As CEO of Walmart Japan, Kolodzieski
has slashed expenses, closed 20 stores, and cut 29 percent
of corporate staff. In-store butchers were removed, with
most meat now processed in a central facility. With the
freed-up floor space, Seiyu bulked up meals-to-go offer-
ings. To bypass the middlemen, Seiyu has also boosted
the number of products it imports directly from manufac-
turers by 25 percent in 2009, and also focused on increas-
ing sales of its own private-label brands.40

The biggest change, however, was a shift away from
weekly specials to “everyday low prices” in areas like
baby care and pet products, and, eventually, throughout

284 Part 2 The Role of Culture

115 new stores, creating 30,000 new jobs. The new stores
will increase Walmart China’s total store count to 530.
Additionally, Walmart will invest US$60 million to
remodel and refresh a portion of the existing Chinese
stores that it operates.51

Rather than being the “largest” retailer in China,
Walmart is aiming to be the most trusted. This long-term
goal includes improving the perceived quality of the
goods it sells. Though online retailer Alibaba still holds
a dominant lead in online market share, part of Walmart’s
strategy includes embracing online sales. In 2012, the
company acquired Yihaodian, an online retailer that sells
perishable goods, and in 2015, Walmart released a cell
phone app to provide consumers with the ability to order
products for either home or in-store delivery.52   

India
The other attractive growing market from the BRIC group
that also drew Walmart’s attention is India. India is widely
regarded as one of the world’s fastest-growing retail mar-
kets—and one of the most frustrating for foreign retailers.
Despite the liberalization of the Indian economy, foreign
companies are still prohibited from owning a majority
stake in grocery stores. Due to the legal and logistical
difficulties of entering the Indian marketplace, Walmart
has adopted a strategy of partnering with local companies.
Walmart originally joined with the Bharti Group, an
Indian conglomerate, to form a joint venture intended to
open stores under the Best Price Modern Wholesale brand
name. During their five-year partnership, Walmart and the
Bharti Group opened 20 stores in urban centers across
India. Though the partnership was amicably dissolved in
2013, Walmart remains open to using the joint-venture
approach as it expands across the country.53

In the summer of 2015, Walmart announced aggressive
expansion plans with a renewed focus on wholesaling
stores as opposed to traditional retail. While government
restrictions prevent majority ownership of grocery stores
by foreigners, there are no restrictions over wholesalers.
By 2020, Walmart plans to open 50 new stores, more than
tripling its current number. These new stores, acting as a
one-stop shop for a variety of grocery-type items, are tar-
geting small business owners as customers, rather than
everyday consumers. In total, Walmart will invest between
US$240 and US$300 million in the Indian market, creat-
ing 2,000 permanent jobs.54,55,56

Canada
Established in 1994 and headquartered in Mississauga,
Ontario, Walmart Canada currently operates 394 stores
and serves more than 1 million customers each day across
Canada. Walmart is Canada’s third-largest employer with
more than 90,000 associates and was recently named one
of Canada’s top ten corporate cultures by Waterstone
Human Capital.57

for Distribución y Servicio) 224-store chain for $1.6 bil-
lion. In acquiring D&S, the nation’s leading grocer and
third-largest retailer, Walmart hopes to cement its domi-
nance in Latin America, where it is by far the biggest
retailer with $38 billion in sales, estimates research firm
Planet Retail, double that of its closest rival, Carrefour. In
Chile, Walmart enters a market that has long been inhos-
pitable to foreign retailers. Home Depot, Carrefour, and
JCPenney are among the companies that have tried, and
failed, to make it in Chile, a nation of 17 million with the
sixth-largest retail market in Latin America.46

Walmart has increased D&S’s expansion budget from
$150 million to $250 million, which would go toward
opening nearly 70 stores in fiscal year 2010, many of
them small stores that cater to lower-income shoppers,
according to Vicente Trius, Walmart Latin America’s
president and CEO. The appeal of D&S goes well beyond
its stores. About 1.7 million Chileans carry a Presto card
issued by its financial services unit, up from 1.2 million
in 2004. “There is a saying here that large retailers gener-
ate sales with [stores] and earnings with their credit
cards,” says Rodrigo Rivera, a partner with the Boston
Consulting Group in Santiago.47

Indeed, analysts estimate some South American retail
chains generate upwards of 70 percent of their profits
from financial services. (At D&S that figure is just
17 percent.) Walmart already offers financial services in
Mexico and Brazil, though its attempts to launch a bank
in the U.S. have failed. The retailer is keen to grow the
Presto business by adding more low-risk services such as
selling life insurance for outside vendors.48

Walmart’s Plans for 2016 Forward
After several years of rapid international growth, Walmart
presented revised plans in 2016 aimed at retooling its
existing stores while continuing global expansion. Inter-
nationally, the company plans to refocus on neighborhood
stores and supercenters, which will better meet market
demands. Throughout 2016, Walmart identified and
closed 115 significantly underperforming international
locations, impacting roughly 6,000 employees. More than
half of the store closures occurred in Brazil, with the
remainder spread across South America.49

Despite the strategic closings, more than 200 new
international locations, consisting of supercenters and
local neighborhood stores, were opened internationally in
2016. This results in the largest, fastest international
expansion in Walmart’s history. In particular, the Indian,
Chinese, Canadian, and African markets are key to
Walmart’s future international strategy.50

China
In 2015, Walmart announced ambitious growth plans for
China. By the end of 2017, the company hoped to open

In-Depth Integrative Case 2.2 Walmart’s Global Strategies 285

improve the user interface. Unlike Amazon, which has no
physical stores, Walmart sees digital ordering with in-
store pickup as a unique niche with potentially high
growth. Grocery items, with the need to be refrigerated,
are not able to be easily fulfilled by other online retailers,
like Amazon, but are well-suited for in-store pickup at a
Walmart. Using the Walmart app, customers can order
groceries and other fresh food items and quickly pick up
their merchandise in person.

Walmart is also developing and modernizing its deliv-
ery and fulfillment systems. To a large degree, this means
emulating Amazon’s strategy. To compete with Amazon’s
“Prime” shipping services, Walmart has begun offering
“Shipping Pass,” which provides users with unlimited
three-day shipping on all online orders. Amazon Prime
has led to increased consumer loyalty, a benefit Walmart
also hopes to gain. To modernize its delivery services and
increase its ability to ship to all locations around the
world, Amazon is currently developing drone delivery
services. In 2015, Walmart also announced its intent to
utilize drones in the near future.

Building an extensive online infrastructure has the sec-
ondary benefit of increasing the variety of digital products
that companies like Amazon and Walmart can offer. Spe-
cifically, companies with a massive networking infrastruc-
ture can provide customers with online services, like
cloud storage, using the servers that they already have
purchased. Amazon first took advantage of this by offer-
ing free storage space to Prime members and to other
customers for a monthly fee. Walmart has followed by
introducing OpenOps, an open-source cloud service.

Despite the progress, Walmart’s online sales still lag
far behind Amazon’s. While Walmart’s product line con-
sists of nearly a million items, Amazon boasts over
19 million. In 2015, despite the introduction of its
“Walmart Pay” mobile wallet and millions in investment,
Walmart’s online sales grew only 12 percent. During the
same period, Amazon’s sales grew by 20 percent, further
increasing its already overwhelming lead in global online
sales. By the end of the year, Walmart recorded US$13.7
billion in online sales while Amazon recorded a record
US$107 billion, leading some to question if Walmart
could ever pose as a serious e-commerce challenger.64,65

Continued Challenges with Corporate
Responsibility
Like other retailers, Walmart continues to face challenges
from its exposure to the realities of production and sales
in emerging and developing regions. On the sales side, as
noted above, Walmart has been embroiled in corruption
scandals in Mexico and India. On the production side, a
fire at a Bangalore textile factory in late 2012 and two
horrific accidents at garment factories in Bangladesh in
2013 have placed renewed pressure on U.S. and European

In January 2015, Walmart Canada announced that the
company will invest several hundred million dollars in
capital improvements over the following year. Plans
included opening 30 new supercenters by the end of the
fiscal year, adding 230,000 square feet of additional retail
space. In total, about 1,000 new permanent in-store jobs
will be created by the new stores, as well as 3,700 con-
struction jobs.58

In addition to store expansions, Walmart Canada is
investing tens of millions of dollars into its distribution
network and e-commerce projects. Walmart Canada’s
website currently receives 400,000 customers every day
and boasts 150,000 different items for sale. Online order-
ing, with in-store pickup, constitutes a portion of this cur-
rent e-commerce investment. Walmart’s focus on
improving its distribution centers is aimed at increasing
the company’s market share in the fresh food and grocery
sector. Approximately 300 permanent jobs will be added
to the distribution side of the business with these invest-
ments.59

Walmart Canada has leveraged the failure of other for-
eign retailers within Canada to its advantage. In 2015,
Target announced that it would be withdrawing from the
Canadian market, leaving a network of 133 empty big-box
retail spaces in its wake. In mid-2015, Walmart Canada
agreed to purchase 13 former Target locations, as well as
a distribution center.60

South Africa
Walmart first emerged in South Africa through its US$2.4
billion purchase of 51 percent of Massmart, the country’s
third-largest retailer, in 2010. Since then, Walmart has
been slow to expand. A lack of infrastructure has caused
headaches; at the current time, distribution networks
across the country are inconsistent, increasing the amount
of time that it takes products to reach consumers. Addi-
tionally, there are not enough shopping centers and malls
to accommodate stores as large as Massmart. In response,
Walmart is moving toward building standalone stores. In
2015, Walmart constructed 19 new ground-up
stores.61  Walmart also views South Africa as a bridge to
the rapidly emerging African marketplace. In 2015,
Walmart announced plans to enter Nigeria, and the
Massmart brand has plans to open a few stores in strategic
locations in Angola.62,63   

Walmart’s Global.com Challenge
to Amazon.com
Sensing the shift towards digital sales in both developed
and developing economies, Walmart has heavily invested
in building its e-commerce infrastructure. The company
spent tens of billions in 2015 alone.

With more commerce being conducted on smart-
phones, Walmart introduced a new mobile app in 2015 to

286 Part 2 The Role of Culture

lessons did Walmart learn from its experience in
Germany and in Japan?

3. How would you characterize Walmart’s Latin
America strategy? What countries were targeted as
part of this strategy? What potential does this
region bring to Walmart’s future global expansion?
What cultural challenges and opportunities has
Walmart faced in Latin America?

4. What group of countries will be targeted for
Walmart’s future growth? What are the attractive-
ness and risk profiles of these countries? What
regions of the world do you think will be vital for
Walmart’s future global expansion?

5. How would you characterize Walmart’s response to
pressure for greater ethics and social responsibilities
in its expansion strategy and supply chain? Are its
responses appropriate and adequate?

Exercise
You are part of Walmart’s global strategic planning group
and have been asked to explore the benefits and chal-
lenges of expansion into the following regions. Divide
your group into six teams, each representing a country or
region of the world other than North America.

Team Country/Region

1 Latin America
2 Western Europe
3 Central/Eastern Europe
4 Japan
5 China
6 Russia

Describe the opportunities and challenges of expansion in
your assigned country or region. Be sure to summarize
the cultural environment, how it differs from the U.S., and
what challenges that might pose for the company.

Source: This case was prepared by Tetyana Azarova of Villanova University under the
supervision of Professor Jonathan Doh as the basis for class discussion. Additional
research assistance was provided by Ben Littell. It is not intended to illustrate either
effective or ineffective managerial capability or administrative responsibility.

clothing brands to take greater responsibility for the work-
ing conditions of the factories from which they source
products. What happened in Bangladesh has underscored
the difficulties and vulnerabilities of outsourcing produc-
tion to sometimes unreliable and unethical suppliers.

In early 2013, more than 1,000 workers were killed
when an eight-story garment factory in Dhaka caught fire
while thousands worked inside. Not two weeks later, a fire
killed eight workers in another site in Bangladesh. After
initially denying it had production at these locations,
Walmart eventually confirmed that it had ordered gar-
ments from a supplier who utilized the plant.66  Then, on
June 11, another fire erupted at a Dickies garment factory
on the outskirts of Dhaka, causing employees to run from
the building, raising further questions about safety in
Bangladeshi factories.67

As a result, Walmart and the Gap Inc. subsequently
announced their signing of the Bangladesh Worker Safety
Initiative to ensure factory safety in Bangladesh. This
agreement, backed by a $50 million commitment, will be
overseen by the Bipartisan Policy Center, a nonprofit
group based in Washington. As part of this effort, various
U.S. retail trade groups who had been concerned about
the legal liability associated with the competing,
European-dominated agreement will join with Walmart
and the Gap.68  On June 25, 2013, the Obama administra-
tion announced it was suspending trade privileges with
Bangladesh, removing the country from the list of coun-
tries with most-favored-trade status. The move came after
pressure from unions and continuing concerns about the
Bangladeshi government’s ability to maintain safe work-
ing conditions in its factories.69 Walmart and other retail-
ers continue to struggle with how to manage extended
global supply chains with multiple layers of suppliers.

Questions for Review

1. What was Walmart’s early global expansion strat-
egy? Why did it choose to first enter Mexico and
Canada rather than expand into Europe and Asia?

2. What cultural problems did Walmart face in some
of the international markets it entered? Which early
strategies succeeded and which failed? Why? What

1. Jennifer McTaggart, “Walmart versus the World,”
Progressive  Grocer,  October 15, 2003, p. 20.

2. “‘Walmart’ in Japan Sees Losses,”  Associated
Press, August 23, 2006,  www.sptimes.com/2006/
08/23/Business/_Wal_Mart__in_Japan_s.shtml.

3. David Lague, “Unions Triumphant at Walmart in
China,”  New York Times, October 12, 2006,  www.

nytimes.com/2006/10/12/business/worldbusiness/
12iht-unions.3134329.html?_r=0.

4. “China Fact Sheet,”  Walmart Inc.,  www.wal-
martchina.com/english/walmart/award.htm.

5. “Where in the World Is Walmart?”  Walmart, http://
corporate.walmart.com/our-story/our-locations (last
visited March 3, 2016).

ENDNOTES

In-Depth Integrative Case 2.2 Walmart’s Global Strategies 287

23. “Financial Highlights,”  Walmart México y Cen-
troamérica,  www.walmex.mx/informe/2014/en/
fortaleza_financiera/datos.html.

24. Clay Chandler, “The Great Walmart of China,” For-
tune, July 25, 2005,  money.cnn.com/magazines/
fortune/fortune_archive/2005/07/25/8266651/index.htm.

25. Pallavi Gogoi, “Walmart’s China Card,”  Business-
Week,  July 26, 2005.

26. “Walmart’s Cheap Doubling in China,”  24/7 Wall
Street, February 27, 2007,  www.247wallst.
com/2007/02/walmarts_cheap_.html.

27. “Walmart Buys China Grocery Chain,”  Wire Ser-
vices, October 17, 2006,  www.sptimes.com/2006/10/
17/Business/Wal_Mart_buys_China_g.shtml.

28. Bailian Group, www.bailiangroup.cn/html/english/.
29. Gogoi, “Walmart’s China Card.”
30. “Walmart Reaches Agreement to Acquire German

Hypermarket Chain,”  Business Wire,  December 18,
1997,  www.thefreelibrary.com/Wal-mart+Reaches+
Agreement+To+Acquire+German+Hypermarket+
Chain.-a020081857.

31. Mark Lander, “Walmart Gives Up Germany—
Business—International Herald Tribune,”  New York
Times, July 28, 2006,  www.nytimes.com/2006/07/28/
business/worldbusiness/28iht-walmart.2325266.html.

32. Ibid.
33. Ibid.
34. Allan Hall, Tom Bawden, and Sarah Butler,

“Walmart Pulls Out of Germany at Cost of $1bn,”
The Times, July 29, 2006.

35. Lander, “Walmart Gives Up Germany.”
36. Tom Buerkle, “$10 Billion Gamble in U.K. Doubles

Its International Business: Walmart Takes Big Leap
into Europe,”  New York Times,  June 15, 1999,  https://
web.archive.org/web/20080226063515/http://www.iht.
com/articles/1999/06/15/walmart.2.t.php.

37. Ibid.
38. Clark, “Wal-Mart, the U.S. Retailer Taking Over

the World by Stealth.”
39. Boyle, “Walmart’s Painful Lessons.”
40. Ibid.
41. Ibid.
42. Mariko Sanchanta, “Wal-Mart Bargain Shops for

Japanese Stores to Buy,”  The Wall  Street Journal,
November 15, 2010, p. B1.

43. “Wal-Mart Announces Central American Invest-
ment,”  Walmart, September 20, 2005,  http://corpo-
rate.walmart.com/_news_/news-archive/2005/09/20/
wal-mart-announces-central-american-investment.

44. Gordon Platt, “Wal-Mart Bets Big on Brazil’s
Market,”  Global Finance,  January 1, 2006, 

6. Matthew Boyle, “Walmart’s Painful Lessons,”
BusinessWeek, October 13, 2009,  https://www.
dii.uchile.cl/wp-content/uploads/2011/05/13_
BUSINESS_WEEK_WalMarts_Painful_Lessons .

7. “Annual Reports & Proxies,”  Walmart,  http://stock.
walmart.com/investors/financial-information/annual-
reports-and-proxies/default.aspx.

8. Andrew Clark, “Wal-Mart, the US Retailer Taking
Over the World by Stealth,”  Guardian,  January 12,
2010,  www.guardian.co.uk/business/2010/jan/12/
walmart-companies-to-shape-the-decade.

9. Vijay Govindarajan and Anil K. Gupta, “Taking
Walmart Global: Lessons from Retailing’s Giant,”
Strategy  +  Business,  June 19, 2002,  www.strategy-
business.com/article/13866?pg=all.

10. Ibid.
11. Ibid.
12. Ibid.
13. Ibid.
14. Walmart Annual Report 2015.
15. David Barstow, “Vast Mexico Bribery Case Hushed

Up by Wal-Mart after Top-Level Struggle,”  New
York  Times,  April 21, 2012,  www.nytimes.
com/2012/04/22/business/at-wal-mart-in-mexico-a-
bribe-inquiry-silenced.html?_r=1.

16. Stephanie Clifford, “Bribery Case at Wal-Mart May
Widen,”  New York Times, May 17, 2012,  www.
nytimes.com/2012/05/18/business/wal-mart-con-
cedes-bribery-case-may-widen.html?pagewanted=all.

17. Aruna Viswanatha and Devlin Barrett, “Wal-Mart
Bribery Probe Finds Few Signs of Major Miscon-
duct in Mexico,”  The Wall Street Journal, October
19, 2015,  www.wsj.com/articles/wal-mart-bribery-
probe-finds-little-misconduct-in-mexico-1445215737.

18. David Welch,  “Wal-Mart Mexico Probe
Threatening Global Growth Success:
Retail,”  Bloomberg BusinessWeek, April 25,
2012,  www.bloomberg.com/news/articles/
2012-04-25/wal-mart-mexico-probe-threatening-
global-growth-success-retail.

19. Geri Smith, “In Mexico, Banco Walmart,”  Business-
Week,  November 20, 2006.

20. Carolyn Whelan, “Walmart Gets Its Bank—in
Mexico,” Fortune,  January 29, 2008,  http://archive.
fortune.com/2008/01/28/news/international/walmart_
bank.fortune/index.htm?section=money_latest.

21. Amy Guthrie, “Wal-Mart de Mexico Sells Bank
Business to Inbursa,”  The Wall Street Journal,
December 18, 2014,  www.wsj.com/articles/wal-
mart-de-mexico-sells-bank-business-to-inbursa-
1418941370?cb=logged0.9633912930255639.

22. Walmart Annual Report 2015.

288 Part 2 The Role of Culture

archive/2015/02/11/walmart-canada-announces-
expansion-plans-retailer-continues-to-accelerate-
food-and-e-commerce-growth.

59. Ibid.
60. Phil Wahba, “Target’s Loss Is Wal-Mart’s Gain in

Canada,”  Fortune, May 8, 2015,  http://fortune.
com/2015/05/08/walmart-target-canada/.

61. Tiisetso Motsoeneng, “Wal-Mart Makes Slow Prog-
ress Navigating Africa’s Challenges,” Reuters,
June 2, 2015,  www.reuters.com/article/us-wal-mart-
stores-africa-idUSKBN0OI12V20150602.

62. “Massmart Announces Plans to Expand to Angola,”
Ventures, April 9, 2014,  http://venturesafrica.com/
massmart-announces-plans-to-expand-to-angola/.

63. Yomi Kazeem, “Walmart Is Planning to Open
Retail Outlets in Nigeria,”  Quartz, July 31, 2015,
http://qz.com/469407/walmart-is-planning-to-open-
retail-outlets-in-nigeria/.

64. Phil Wahba, “In 2015, Amazon Ate Even More of
Walmart’s Lunch,”  Fortune, December 22, 2015,
http://fortune.com/2015/12/22/retail-ecommerce-
2015-amazon-walmart/.

65. Madeline Vuong, “Walmart’s E-commerce Growth
Slows to 8% as Amazon Soars to Record Sales,”
Geek Wire, February 18, 2016, www.geekwire.
com/2016/walmart-and-amazon-face-off-over-online-
retail-market/.

66. Mathew Mosk, “Walmart Fires Supplier after
Bangladesh Revelation,”  ABC  News Blotter, May
15, 2013,  http://abcnews.go.com/Blotter/wal-mart-
fires-supplier-bangladesh-revelation/
story?id=19188673#.Ua3fGEC7Itg.

67. Ulfikar Ali Manik and Jim Yardley, “Another
Garment Factory Scare in Bangladesh,”  New York
Times, June 14, 2013, p. A11.

68. Steven Greenhouse, “U.S. Retailers Announce Safety
Plan,”  New York Times,  May 31, 2013, p. B6.

69. Steven Greenhouse, “Obama to Suspend Trade
Privileges with Bangladesh,”  New York  Times,
June 28, 2013, p. B1.

https://www.gfmag.com/magazine/january-2006/
milestones–wal-mart-bets-big-on-brazils-market-.

45. Brad Haynes and Nathan Layne, “Insight: Lost in
Translation—Wal-Mart Stumbles Hard in Brazil,”
Reuters, February 17, 2016,  www.reuters.com/
article/us-walmart-brazil-idUSKCN0VQ0EQ.

46. Boyle, “Walmart’s Painful Lessons.”
47. Ibid.
48. Ibid.
49. Krystina Gustafson and Courtney Reagan, “Wal-Mart

to Close 269 Stores as It Retools Fleet,” CNBC,
January 15, 2016,  www.cnbc.com/2016/01/15/
wal-mart-to-close-269-stores-as-it-retools-fleet.html.

50. Ibid.
51. Laurie Burkitt, “Wal-Mart Says It Will Go Slow in

China,”  The Wall Street Journal,  April 29,
2015,  www.wsj.com/articles/wal-mart-to-open-115-
stores-in-china-by-2017-1430270579?cb=log
ged0.09944356285914002.

52. Ibid.
53. Shashank Bengali, “Wal-Mart, Thwarted by India’s

Retail Restrictions, Goes Big: Wholesale,”  Los
Angeles Times, July 23, 2015,  www.latimes.com/
world/asia/la-fg-india-walmart-20150723-story.html.

54. Ibid.
55. Shivani Shinde Nadhe, “Walmart Eyes $300-mn

Investment by 2020,”  Business Standard, February
17, 2016,  www.business-standard.com/article/com-
panies/walmart-chalks-out-expansion-plans-for-
india-116021600459_1.html.

56. Kurumi Fukushima, “Wal-mart Renews India Whole-
sale Expansion, Plans 50 New Stores by 2020,”
The Street, August 12, 2015,  www.thestreet.com/
story/13253722/1/wal-mart-renews-india-wholesale-
expansion-plans-50-new-stores-by-2020.html.

57. Walmart Canada,  www.walmartcanada.ca/about-us/.
58. “Walmart Canada Announces Expansion Plans;

Retailer Continues to Accelerate Food and
E-Commerce Growth,”  Walmart, February 11,
2015,  http://corporate.walmart.com/_news_/news-