Wal-Mart Case Study

Wal-Mart Case Study

Wal-Mart’s domestic presence as of July 31, 2006 consisted of 1,146 Wal-Mart stores, 2,098 Supercenters, 567 Sams Clubs, and 107 Neighborhood Markets. Internationally, the Company operated units in Argentina (12), Brazil (293), Canada (278), China (60), Costa Rica (131), Germany (85), Guatemala (119), Honduras (37), Japan (393), Mexico (815), Nicaragua (36), Puerto Rico (54), El Salvador (59), South Korea (16) and the United Kingdom (322). These figures are available in the investor relations section on Wal-Marts website. John Menzer, vice chairman of Wal-Mart Stores Inc., speaking at the CIES 50th World Food Business Summit on June 16, 2006, spoke to Wal-Marts strategic goals. “We at Wal-Mart recognize that being both an efficient business and environmentally friendly are goals that can work together,” said Menzer. “We understand the importance of utilizing renewable energy sources, creating less waste, and offering our customers access to sustainable products.”

“With opportunities for growth dwindling at home, the company is opening fewer than 100 domestic stores a year, down from as many as 150 in the early 1990” (Simchi-Levi et al, 2003, p. 1). One has to question whether they have run out of room to expand in the United States or are more communities standing up to prevent Wal-Mart from moving in? In 1999 author Al Norman wrote a book entitled Slam-Dunking Wal-Mart, excerpts can be found at www.sprawl-busters.com. "Sprawl" is defined by the National Trust for Historic Preservation as "poorly planned, low-density, auto-oriented development that spreads out from the center of communities." It creates that doughnut effect in some cities where acrylic and asphalt suburban shopping malls form a ring around the dead center, where the old downtown sits decaying (Norman, 1999) Wal-Mart if facing tough challenges on its domestic front and is looking at expanding internationally to compete.

International Supply Chain

It’s true that today’s consumers have become international consumers. This is especially true in the electronics and automotive industries. Yet, when it comes to personal items such as foods and clothing it is sometimes difficult to compete internationally. There has to be a large incentive for companies to brave the dangers of expanding internationally. “Even if companies don’t do business overseas, the presence of foreign competitors in home markets can affect their business significantly” (Simchi-Levi et all, 2003, p 6)

While Wal-mart is very familiar with international supply chains that bring its products into the United States importing goods from the United States into Brazil proved to be a new challenge for them. Not owning the distribution channels in a foreign location always proves to be challenging. Brazilians were not impressed with Wal-Marts product mix especially in the food and clothing sectors. Their competitors have the advantage of knowing the markets and its people. The competition uses goods that are supplied locally through trusted sources. When Wal-Mart first began opening its Brazilian stores it had no partner which is a different strategy than most of its foreign operations. In countries such as Mexico and China Wal-Mart began by partnering with already established companies eventually buying up interest to become the largest stakeholder.

In countries such as Brazil Wal-Mart soon discovered the “Wal-Mart Way” wasn’t going to work in their favor. Merchandising