Faulkner University Walmart Cultural Issue Case Study

Prior to beginning work on this discussion,

• Review Chapters 8 and 9 of International business: Theory and practice (3rd ed.) (Links to an external site.)
• Review The Top Ten Cultural Risks for Global Business (Links to an external site.).
• Review the Case Study Introduction and Case Study Company Profile in the Walmart Case Study (Links to an external site.) interactive.

Discussion Instructions

In the Leadership and Teamwork course you created and built your own Walmart in a new global location. In your Global Marketing course, you created a global marketing plan that is strategically competitive and socially responsible. For this course, based on the location you have chosen to build your own Walmart, identify one cultural issue and one legal issue you anticipate encountering as you build and operate your Walmart in its new global location. Discuss how you plan to address the cultural issue and the legal issue. Your initial response should be a minimum of 200 words. PAA format. please cite references.

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Walmart Case Study
Allison Bailey
BUS 622 Global Marketing
Dr. Jeffrey Kimmel
October 15, 2020
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Walmart Case Study
Introduction
Walmart has established itself as the biggest retail company in the world, and it still
shows intentions to expand to places they consider viable for their business. India, besides
carrying out the majority of its retail businesses the traditional way still records exciting annual
retail sales returns. That has made it one of Walmart’s most preferred destinations, however,
the country’s political, economic, and cultural practices impact the company’s decision.
Besides opting for India, Walmart has not been able to operate at the retail level due to the
restrictions imposed upon foreign retail companies choosing to operate in the country. This
case study looks at some of the political, economic, and cultural practices that limit Walmart’s
exploitation of the opportunity in India. Further analysis is also carried out on Walmart’s
decision to expand its operations to Egypt and the impacts that decision has based on the culture
and politics in Egypt.
Part A
Summarize some of the elements in India’s political, economic, and cultural
environments that can impact the market opportunity
Despite India presenting a potential market opportunity to Walmart, there are a number
of factors that can impact the exploitation of the presented opportunity. As a way of protecting
the local retailers, Indian government-imposed laws limiting foreign retail companies
conducting business in India (Worstall, 2017). As one of the requirements, it is mandatory for
foreign businesses intending to operate at a retail level to make huge investments as high as
$100 million where at least $50 million is deployed for back-end activities. In addition, India’s
economy is characterized by many local retail outlets that have much local advantage and could
be possible competitors at a local level. Also, cultural practices like local Indians opting to
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purchase their products from the small local outlets instead of Walmart’s big stores could be
an impact on the company’s sales.
Explain some of the obstacles facing Walmart and other foreign retailers in India
The two main obstacles facing Walmart and other foreign retailers in India are related
to the difference in infrastructure and the political decision regarding the imposed regulations
on foreign retail companies. With regard to the difference in infrastructure, India’s retail market
is made up of a supply chain where suppliers still use the traditional approach to business. The
out-of-date supply chain approach is a risk factor to components like perishable goods,
especially considering that the food industry has become the most dominating sector (Kannaiah
and Vinayagamoorthy, 2016). However, to address problems with outdated supply chains, it
will require heavy capital investment to revolutionize the way of doing business.
Another effect could arise from the suppliers’ side who might also be suppliers to their
competitors with intentions to just maintain specific products within the retail market. The
imposed laws inclined towards creating more jobs for the local communities and saving small
local retailers are also an obstacle to both Walmart and other foreign retail companies. Walmart
and other foreign retailers dealing in a variety of brands are only restricted to a 51.0% share
indirect investments (Kannaiah and Vinayagamoorthy, 2016). Such laws restrict the full
exploitation of the vast Indian retail market.
Explain which quadrant of the matrix applies most directly to India. Provide your
rationale
Based on the matrix, quadrant C, franchising most directly applies to India in this
context. Franchising is regarded as the appropriate market entry strategy in which there are
lower barriers to entry, in a culturally distant type of market (Keegan, 2020). Indian market is
characterized by consumers who prefer local brands products and services to foreign
companies. Through franchising, Walmart is able to enter into a contract with a local retail
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company and let the company operate under Walmart’s developed system but at a fee. Through
that approach, Walmart will be able to break into the market since consumers will be able to
purchase its product considering it is being delivered to them under a locally know retailer.
Part B
Elements in Egypt’s political, economic, and cultural environments that can impact the
market opportunity for Walmart expansion
Egypt is a good destination for a retail-oriented company like Walmart. Egypt is the
most populated country among Arab states in the region and it is ranked third among most
populated countries in Africa (Index Mundi, 2019). That offers a good market opportunity at
the retail level. However, the recent political aggression experienced in the country, i.e.
overthrowing a president (Nour, 2017), impacts Walmart’s decision. The cultural environment
is also a potential impact on the expansion decision, Egyptians widely speak Arabic therefore
foreign language brands could be a problem for retailers to purchase. However, the economic
reforms accepting more foreign direct investments is good for Walmart and other foreign
retailers to exploit the retail market.
What market expansion strategy you would suggest for Walmart in your selected country
Considering the cultural setting of Egypt, exhibited majorly by Muslim practices, the
best expansion strategy would be Walmart adopting a joint venture type of market penetration
(Keegan, 2020). Joint ventures allow Walmart to team up with local retailer companies in
Egypt that already sell retail products branded in Arabic. That will easily insure the company’s
penetration of the local retail market.
Analyze each of these utilities that Walmart may be creating in Egypt
Through distribution channels, Walmart is able to provide satisfaction from the product
or service they offer to customers. The forms of utilities Walmart may be creating in Egypt
include;
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Form utility; Walmart has had a competitive advantage over its competitors through the
provision of products and services at lower prices, despite being quality products that meet
customer needs. Through the provision of quality products at a cheaper price, they will be
satisfying the Egyptian retail market.
Place utility; Place utility involves making the needed product or service available to
customers. Through the use of a well-established distribution channel, which has been
Walmart’s main strategy, it will certainly offer place utility to customers. Place utility to
customers will be offered through ensuring the needed products are always available.
Time utility; Walmart adopts an efficient logistics approach to retail trading. Through that, it
has ensured a timely supply of products to its customers. With this approach, they will be able
to satisfy customers in Egypt through timely deliveries, an act they have been performing
effectively.
Information utility; Walmart is able to attain brand recognition through ensuring customers
understand their products. They use local suppliers as their main suppliers and customers are
able to understand the products, the consumer. That will offer satisfaction to Egyptian
customers considering they understand the brand they get products from.
SWOT analysis for Walmart.com in Egypt
A SWOT analysis takes a look at Walmart by reviewing its internal strongholds and external
threats. The strengths and weaknesses are internal factors while its threats and opportunities
are the external factors it is facing (Marcilla, 2014). In comparison to other companies carrying
out similar business, Walmart’s strengths like within its large revenue base. It is the largest
retail company in the world therefore it enjoys factors like economies of scale that allows it
sells products at relatively cheaper prices However, one of its weakness is being involved in
labor-related lawsuits. Due to its approach to business, Walmart pays its employee lower wages
based on a part-time basis.
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Eternal factors facing Walmart include opportunities and threats. The opportunities
presented to Walmart are that they are able to expand to other territories including Egypt due
to its brand recognition and faster growth trait (Marcilla, 2014). The healthy products sold at
Walmart grocery outlets receive more demand from customers who want to eat healthy foods.
However, the company faces external threats from competitors like Amazon. The main
advantage Amazon enjoys is the lower price advantage, its competitors have been working
price elimination techniques which threaten its customer base.
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References
Kannaiah, D., and Vinayagamoorthy, A. (2016). Foreign Direct Investment and Retailing in
India: Opportunities and Challenges. International Journal of Economics and Finance;
Vol. 8, No. 12 p.216-223
Keegan, W. J., & Green, M. C. (2020). Global Marketing (10th ed.). Retrieved
from https://www.vitalsource.com
Marcilla, L. B., (2014). Business Analysis for Wal-Mart, a Grocery Retail Chain, and
Improvement Proposals. Retrieved from
https://riunet.upv.es/bitstream/handle/10251/44289/Business%20analysis%20for%20
Walmart%20FINAL%20TFC%20Laura%20Barber%C3%A1%20Marcilla.pdf?seque
nce=1
Nour, A. (2017). Egypt: Impact of the Modern Investment Law. Retrieved from
https://www.tamimi.com/law-update-articles/egypt-impact-of-the-moderninvestment-law/
Worstall, T. (2017, April). Walmart Expands Again in India – But Still Not Able to Open
Consumer Stores to Consumer Detriment. Retrieved from
https://www.forbes.com/sites/timworstall/2017/04/30/walmart-expands-again-inindia-but-still-not-able-to-open-consumer-stores-to-consumerdetriment/#7c47e2e31173