The Great Walmart of China

When Wal-Mart sent an advanced team of executives to China in 1994, they were responsible for researching this enormous untapped market that offered over one-hundred cities with populations of more than one million. The external environment that was challenging Wal-Mart’s expansion into the Chinese market was complicated. Wal-Mart opened their superstore which was designed to meet the needs of the people in the new Chinese market. They could not just walk in with the US business model and expect to last. During the research and development period the team of executives in China examined the cultural differences and way to offer unmatched convenience to their new market.

Many Chinese tend to shop on foot, live in small apartments with smaller refrigerators, forcing them to visit the store every one or two days. They also found their new market to be more “hands-on” shoppers. This stems from the open-air markets that many people are used to do their shopping. Wal-Mart had to understand how their employees’ cultural differences would change their operations in the superstores. According to the text, Chinese tend to hold a high level of obligation toward following direction at work. This fit nicely in to Wal-Mart’s style of “red shirts, mass cheering, incessant pep rallies and veneration of a deceased founder.” However, the consumers in China are not going to consume hot dogs and apple pie. They want their culture represented. Therefore, Wal-Mart adopted a global geographical divisional structure. Wal-Mart could not offer the same items in Smallville, USA as Mexico City nor Chongqing.

The global geographical division allowed the Chinese region to tailor to the needs of the consumers in that region. Offering Dong’s Chicken Feet along with Oreos and Gatorade are an example of this structure. Plus the consumers’ attraction to “clamor” has transitioned into joining items together such as the wine with Sprite. Wal-Mart also buys about 10% of its products sold in the US from China. Companies that adhere to the global geographical division typically seek low-cost manufacturing within the country, coupled with meeting the needs of its customers. One problem with this structure is the autonomy of each region’s division. Wal-Mart needs to a horizontal connection between their geographical regions. This way new products or operational ideas are not lost due to the structural autonomy.

The environmental domain in China has effected the growth of Wal-Mart in China. Locating sites has been difficult. Due to the fact that the municipal governments control prime real estate, Wal-Mart has a difficult time locating in prime areas. Plus, Wal-Mart has to compete with the state-run Shanghai Brilliance and