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English For International Trade - GlobalizationWalmart

April, 2012

GROUP 1 (AVNT2_1)

1.Nguyn ThiYn Ngoc (35k8.1)

2.Nguyn ThiNgoc Nguyn (35k8.2)

3.Pham ThiKim Loan (35k8.2)

4.Nguyn ThiQuHng (35k8.2)

5.Nguyn c Hng (35k8.2)

6. Phan Cng at (35k8.2)

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INTRODUCTION

In the last few years, a number of major changes took place all over the worlCountries, earlier committed to tight governmental control of their economies, haredirected their political concepts and initiated drastic reforms in order to facilitate traThe world has arrived in the global market place, at least in some terms. Not least becaof new technologies like the Internet that is about to mark the beginning of a new erainternational business relations. The challenges an entity faces by forming a strategy participate in 21st centurys global economy, that is, to be competitive at a worldw

stage, are intriguing to discuss and shall be the objective of this paper. Both authors shthe opinion that the worlds largest retail chain at present, the Wal-Mart Stores, will bevery interesting company to examine, since Wal-Mart already took a few steps, icountries, towards its global appearance. To begin with, let us take a closer look at tsituation of globalization and this famous companys profile.

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CHAPTER 1: GLOBALIZATION AND ITS EFFECT

Globalization refers to the increasingly global relationships of culture, people, aeconomic activity. It is generally used to refer to economic globalization: the globdistribution of the production of goods and services, through reduction of barriersinternational trade such as tariffs, export fees, and import quotas and the reductionrestrictions on the movement of capital and on investment. Globalization may contributeeconomic growth in developed and developing countries through increased specializatand the principle of comparative advantage. The term can also refer to the transnatio

circulation of ideas, languages, and popular culture.

In particular, it is the name for the process of increasing the connectivity aninterdependence of the world's markets and businesses. This process has speeded dramatically in the last two decades as technological advances make it easier for peopletravel, communicate, and do business internationally. And when economies become mconnected to other economies, they have increased opportunity but also increas

competition.

The effects vary a lot from one part of the world to another, and from one area business to another. Communications infrastructure is important to modern businesses, not all countries have got one. There is also the non-traded sector ie goods and serviwhich are not traded internationally. Domestic services, for example, have to be providwhere the house is; you cant export a clean house.

A global business globalization refers to a company's undertaking of sales and asseacross international borders and the resulting flow of capital, goods, services, and labachieve this include developing a global consumer market, establishing transnationcorporations to reduce production costs, product branding and positioning, competiti based pricing, and more.

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Competition

Foreign businesses buy into domestic markets. Deregulation opens up markets competition. Deregulation encourages innovation in new products and markets whchallenges traditional market leaders

Meeting consumer expectations and tastes

Generally, consumers all over the world are better informed, have higher incomand therefore higher and more exacting expectations. This forces businesses to meet higstandards.

Economies of scale

Selling into a global market allows for enormous economies of scale, although nall industries benefit from these.

Choice of location

Businesses are now much freer to choose where they operate from, and can movea cheaper and more efficient location. In the last decade the UK has been seen by ma businesses as an attractive business location, especially in financial services, and ma businesses have located in the UK which has boosted the UK economy but also proviincreased competition for UK businesses. This increased movement of businesses and jhas, to some extent, forced governments to compete with each other in providing attractive and low-cost location. Ireland, for example, offers tax holidays to busines

relocating there. Manufacturing businesses are increasingly relocating to low-wacountries such as Indonesia. Inputs vary in price across the world, and businesses now hmore freedom of movement in moving to get hold of those cheaper inputs eg labourdeveloping countries, or financial advice in the City of London. One limitation on thi

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that managers wont always move to some countries if living conditions are unpleasanteven dangerous.

Multi-national and multi-cultural management

This is a major challenge to businesses and their managers. A multi-nation business environment is more complex with more variables, and so is more difficultmanage. A multi-cultural employment policy leads to employees of many differenationalities, languages, religions and cultures in different offices across the globe. Themployees react in quite different ways to incentives, to motivation and it is very difficto find managers who are sensitive to all these different factors. It is very easy inadvertently give offence and demotivate workers. For example, the Japanese weinitially very disappointed with their Thai employees who didnt respond well to Japanmethods of building up corporate loyalty and motivation. Once they turned producttargets into a game, the Thais worked extremely well.

Globalisation of markets

National borders are becoming less and less important. Markets stretch acro borders and MNCs are well-placed to take advantage of this. The same issues of languand culture and so on arise. Consumers are more alike, but by no means the same. Ma businesses have made expensive mistakes by not taking local variation sufficiently iaccount. Marketing, in particular, is a minefield because of its dependence on languaThe marketing books are full of stories, often very amusing, of how businesses gotwrong. For example, the GM Nova failed in Spain because NoVa means doesnt go

Spanish

CHAPTER 2: WALMART STORES INC

I. OVERVIEW

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1. Wal-Mart StoryWal-Mart Stores, Inc. is an American public corporation that runs a chain of larg

discount department stores. It is the world's largest public corporation by revenue and

founded by Sam Walton in 1962. It is the largest private employer in the world and fourth largest utility or commercial employer. Wal-Mart is the largest grocery retailer in tUnited States, with an estimated 20% of the retail grocery and consumables business,well as the largest toy seller in the U.S. It also owns and operates the North Americcompany, Sam's Club. Walmart serves customers and members more than 200 millitimes per week at more than 10,130 retail units under 69 different banners in 27 ountrWith fiscal year 2012 sales of approximately $444 billion, Walmart employs 2.2 milli

associates worldwide.Walmart, with the opening of the first Walmart discount store in Rogers, Ark. Th

company incorporated as Wal-Mart Stores, Inc., on Oct. 31, 1969. The company's sha began trading on OTC markets in 1970 and were listed on the New York Stock Exchantwo years later.

The company grew to 276 stores in 11 states by the end of the decade. In 1983, tcompany opened its first Sams Club membership warehouse and in 1988 opened the fsupercenter -- now the companys dominant format -- featuring a complete groceryaddition to general merchandise. Walmart became an international company in 1991 whit opened its first Sam's Club near Mexico City.

2. HistoryThe company was founded in 1962 as a single Discount Store in Rogers, Arkans

by a visionary and by the time legendary man named Sam Walton. Since then the chain been growing at an unrivaled rate, starting with 9 stores and total sales of $ 1.4 millinow about to finish the fiscal year 1998 with total sales of US $118 billion and 2,1stores. The company consists of discount stores, SAMs Wholesale Club (introduced1983, Midwest City, OK), Wal-Mart Supercenters (1988, Washington, MO) and dediscount warehouse outlets (Buds Discount City).

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1962 Wal-Mart beginsBefore opening Wal-Mart, Sam traveled the country studying everything he cou

about discount retailing. He became convinced American consumers wanted a new type

store. Trusting his vision, Sam and his wife Helen put up 95 percent of the money for first Wal-Mart store in Rogers, Ark.

1972 Wal-Mart goes publicDiscounters such as KMart quickly expanded in the 1960s, while Sam only h

enough money to build 15 Wal-Mart stores. In 1972, Wal-Mart stock was offered for tfirst time on the New York Stock Exchange. With this infusion of capital, the compagrew to 276 stores in 11 states by the end of the decade.

The 1980s Wal-Mart comes of ageIn 1983, the first Sams Club members-warehouse store opened. The fir

Supercenter opened in 1988, featuring a complete grocery, and 36 departments of genemerchandise. By 1989, there were 1,402 Wal-Mart stores and 123 Sams Club locatioEmployment had increased tenfold. Sales had grown from $1 billion in 1980, to $ billion.

The 21st century one of the most successful retailers in the worldIn 1991, Wal-Mart became an international company when we opened a Sam's Clu

near Mexico City. Just two years later, Wal-Mart International was created. Having writta unique success story in the history of retail industry, thanks to the rousing leadershipSam Walton, the company internationally came off the ground by opening its first stoabroad in Mexico City in 1991. Since then Wal-Mart has extended its internation presence to Puerto Rico(1992), Canada (1994), China (1996), Brazil (1995), Argent(1995), South Korea (1996) and Germany (1998).

The company is one of the major job generators in America, it has created mothan 825,000 jobs and also supports thousands of U.S. manufacturing jobs, especially byongoing America First-Campaign.

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Today, 7,390 stores and club locations in 14 markets employ more than 2 millioassociates, serving more than 176 million customers a year. The major merchandise lininclude house wares, consumer electronics, sporting goods, lawn and garden items, hea

and beauty aids, apparel, home fashions, paint, bed and bath goods, hardware, automotrepair and maintenance items, toys and games, and grocery.

3. Mission statement3.1. PurposeSaving people money to help them live better was the goal that Sam Walto

envisioned when he opened the doors to the first Walmart more than 40 years ago. Todthis mission is more important than ever to our customers and members around the wo

We work hard every day in all our markets to deliver on this promise. We operate with same level of integrity and respect that Mr. Sam put in place. It is because of these valuand culture that Walmart continues to make a difference in the lives of our customemembers and associates

Save MoneyWe know that price matters to our customers, whether they live in the United State

the United Kingdom, Argentina or Japan. That's why we offer the best quality merchandat the lowest prices in all our stores, from school supplies, to household items and tquality groceries.

We also look at savings that go beyond the prices you see in our stores. Foexample, we are working with our suppliers to introduce more energy efficient produthat can save customers money for years to come.

And because every Walmart store or Sam's Club is designed to reflect the loccommunity, our customers know they will find the lowest prices around on the produthat match their lifestyle.

Live Better

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Saving money is a means to helping our customers live better. By offering the be possible prices on the products our customers need, we can help them afford somethinlittle extra.

Whether it's a grandmother who can buy her grandchildren a special gift because ssaved money on her prescriptions, or a young family saving money to buy their first howe see our mission come to life every day.

We also see opportunities to help people live better beyond the walls of ouWalmart stores and Sam's Club locations. Thats why we support causes that are importto our communities, like education, and why we are working hard to do our part protecting our planet and conserving our natural resources for generations to come.

Its the reason why we joined with Mercy Corps and USAID to help small farmein Guatemala, and its the reason why you see Fair Trade Coffee on the shelves at SamClub. By working closely with our communities and suppliers, we can reach beyond jour customers to help improve the lives of people around the globe.

Saving people money so they can live better is at the heart of everything we do, athese are just a few examples of the many ways we bring that mission to the communeach and every day. Simply put, helping people live better is more than something we dits who we are.

4. System stores4.1. Walmart Discount StoresOur stores feature wide, clean, brightly-lit aisles and shelves stocked with a varie

of quality, value-priced general merchandise, including:- Family apparel- Healthy and beauty aids- Electronics- Toys- Lawn and garden items- Jewelry

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- Automotive products- Home furnishings- Hardware

- Sporting goods- Pet supplies- Housewares

4.2. Walmart SupercentersOur Supercenters were developed in 1988 to meet the growing demand f

convenient, one-stop family shopping featuring our famous Every Day Low Prices. Wsave you time and money by combining a full grocery and our general merchandise un

one roof.There are 3,029 Supercenters nationwide, and most are open 24 hours. Supercent

average 185,000 square feet and employ about 350 or more associates.Supercenter groceries feature:

- Bakery goods- Meat and dairy products- Fresh produce- Dry goods and staples- Beverages- Deli foods- Frozen foods- Canned and packaged goods- Condiments and spices- Household supplies

Most Supercenters also have many specialty shops such as:- Vision center - Tire & Lube Express- Brand-name restaurants

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- Portrait studio and one-hour photo center - Pharmacy- Health clinic

- Employment Agency- Hair salon- Bank

Walmart Neighborhood MarketsWalmart Neighborhood Markets offer a quick and convenient shopping experien

for customers who need groceries, pharmaceuticals, and general merchandise all at ofamous Every Day Low Prices.

First opened in 1998, there are now 168 Walmart Neighborhood Markets, eacemploying about 95 associates. A typical store is about 42,000 square feet.Walmart Neighborhood Markets feature a wide variety of products, including:

- Fresh produce- Meat and Dairy products- Frozen foods- Dry goods and staples- Health and beauty aids- Stationery and paper goods- Drive-through pharmacy- Deli foods- Bakery items- Canned and packaged goods- Condiments and spices- Pet supplies- Household supplies- One-hour photo center

Walmart Express Stores

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Sears Roebuck and K-Mart were considered to be Wal-Marts main competitors, baccording to recent figures of the retail industry, K-Mart is the only big chain that mightable to keep Wal-Marts fast pace.

K-Mart is the second-largest U.S. retailer. By yearend, almost the entire chain about 2,000 stores will be converted to the Big K format, similar to Wal-Mart's Supercenconcept, K-mart's new store format has been boosting sales, "contributing to a 90% jumpfiscal fourth quarter net income." With the adaptation of a concept that Wal-Mart alrea proved successful, K-Mart is giving the evidence that Wal-Mart at present is the undoubindustry leader. Therefore, according to, Wal-Mart's toughest rivalries are overseas; glocompetitor Carrefour (France) originated the hypermart concept, and Metro AG, wh

operates department and specialty stores, is the #2 retailer worldwide (neck-and-neck wSears Roebuck) and the leader in Europe.

CHAPTER 3: WAL-MARTS GLOBAL EXPANSION STRATEGY

I. OverviewWal-Mart has been trying to integrate its Multinational strategy more toward

Transnational Strategy, including National responsiveness, international operations andlearning from its worldwide operations. Through this approach the company wants become best low cost goods provider not only in USA, but globally. Wal-Mart puts mucmore emphasis on customer orientation since it is in retail industry, acquiring adistributing goods at low cost and worldwide learning through decentralization, sharedknowledge, and competitiveness across borders.

Since Wal-Mart is very new to International Business it is still in process o

becoming a global player. Emphasis on National Responsiveness has led to a decreaseefficiency of its operations, as it cant achieve the economy of scale that one enjoysstandardized products.

Wal-Mart formulates a blueprint of all the strategies for managers to follow Thcompany stays near to its market and adapted itself to the need and culture of people, it

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- Customers: Although the Woolco acquisition was Wal-Mart's first entry intoCanada, the company had a head start in building a consumer franchise becaumost Canadians live near the United States border and were already familiar wi

Wal-Mart. Wal-Mart leveraged this high brand recognition into customeacceptance and loyalty by introducing its "everyday low prices" approach tomarket accustomed to high/low retail pricing.

- Business Model:A broad merchandise mix, excellent customer service, a high in-stock position and rewarding employees for diminished pilferage were among tUnited States core attributes that were successfully transplanted into Wal-MarCanadian operation.

The transfer of Wal-Mart's corporate DNA to Canada produced dramatic resultBetween 1994 (the time of acquisition) and 1997, sales per square foot increased froC$100 to C$292 and market share rose from 22 percent to 45 percent. During the sa period, expenses as a percentage of sales in Canada declined by 330 basis points. WMart's Canadian operation turned profitable in 1996 - only two years after acquisition. 1997, it had become the leading discount retailer in the country.

3. Wining the local battle

For Wal-Mart, winning the local battle involves two steps:

Firstly, local adaptation

A company wishing to establish local presence must understand the uniqueness the local market and decide which aspects of its business model require little change, wh

require local adaptation and which need to be wholly reinvented. Wal-Mart's entry inChina provides insights into this process.

As the most populous country in the world, China is a major potential market fretailers. Retail sales in China grew at an annual rate of 11 percent between 1990 and 19

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propelled by economic liberalization and a large pent-up demand for consumer goods. the Chinese market also poses unique challenges because regulations and governme policies are often unpredictable and China's infrastructure is not well developed. Al

middle-class disposable income is dramatically lower in China than in the United Statesthat even discount-minded Wal-Mart must reinvent its business model to operate within reach of key population groups. Finally, Wal-Mart had to accept that most Chinese tend buy in small quantities, and that language differences required tailored marketiapproaches for product labeling and brand names.

Wal-Mart responded by conducting a number of experiments. First, it experimentwith different store formats to see which had the greatest customer appeal. One was tShenzhen Supercenter, a hybrid store combining a supercenter and a warehouse club whmemberships were sold but non-members could also shop at "everyday low prices" plus percent premium. The Shenzhen operation also experimented with stocking merchandtargeted at a predominantly male market. Wal-Mart also began testing smaller satellstores that seemed to fit better with the buying habits, as well as the transportation ashopping trends, in China.

In addition to varied formats, Wal-Mart tested merchandise items to determine whwould have the greatest consumer appeal and fit best with the Chinese culture. As a resuWal-Mart began to carry a wider range of products, particularly perishable goods thappealed to the Chinese palate.

Product sourcing was another area requiring adaptation. Wal-Mart had throptions: (1) products obtained from global suppliers; (2) products manufactured in Ch

by global suppliers such as Procter & Gamble, and (3) products from local suppliers. WMart elected to purchase 85 percent of its merchandise for the Chinese market in Chithrough a combination of options 2 and 3. This solution sought to balance the desirelocal customers for high-status United States-made consumer goods and pressure frlocal governments to purchase domestic goods.

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Secondly, battles with local competitors

Whenever a company enters a new country, it can expect retaliation from loccompetitors as well as from other multinationals already operating in that markSuccessfully establishing local presence requires anticipating and responding to thecompetitive threats. Wal-Mart has used several approaches to neutralizing loccompetitors in different markets:

Acquiring a dominant player. Wal-Mart used this approach in its entry intoGermany.5 In December 1997, it acquired the Wertkauf hypermarket chain of 21 storeone of the most profitable hypermarket chains in the country, from the Mann family

Germany. Having determined that building new hypermarkets in Germany would be advised due to the mature European market and that strict zoning laws precluded greenfioperations, Wal-Mart spent more than two years exploring potential acquisitions, includBritain's Tesco, Germany's Metro and the Netherlands' Makro. Wertkauf's stores, similarformat to Wal-Mart's, featured high-quality personnel and locations, and were larger ththe average German hypermarket.

Acquiring a weak player . Acquiring a weak player in the local market is aneffective approach, provided the global company has the ability to transform the we player within a very short time. This is what Wal-Mart did in Canada in acquiring Woolc

Launching a frontal attack on the incumbent . Attacking dominant and entrenchedlocal competitors head-on is feasible only when the global company can bring significcompetitive advantage to the host country. Wal-Mart's entry into Brazil illustrates t potential - and the limitations - of a frontal attack.

Carrefour, the French retailer, had been operating in Brazil since 1975. When WaMart entered Brazil in 1996, it decided to overtake competitors by aggressively pricing products. This strategy backfired, as Carrefour and other local competitors cut priceswell, leading to a price war and initial losses.

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Wal-Mart realized that its global sourcing did not provide any built-in pricadvantage because the leading sales category in Brazilian supercenters was food itemwhose sourcing tended to be local. Competitors such as Carrefour had an advantage in lo

sourcing because of their long relationships with local vendors.

So Wal-Mart chose to focus on areas where it could differentiate it self: customservice, targeted at neutralizing Carrefour, and merchandise mix, targeted at overwhelmsmaller local competitors.

An industry observer remarked: "While small shops in Brazil have a stroncustomer service component, most large stores, including Carrefour, have adopted t

European ethic that the customer is fortunate to have them available and if they aunhappy about something, they are welcome to go next door. To entice shoppers awfrom these large but user-unfriendly stores, Wal-Mart stressed its customer service, an asenhanced by its policy for hiring and promotion.7

4. Speed of global expansion

Did Wal-Mart globalize quickly enough? One way to evaluate its speed is t

compare the company with other retailers such as J.C. Penney, Kmart and Sears in tUnited States, and Carrefour and Metro outside the United States. As of 1998, J.Penney's global presence was minimal; only three of its 1,200 stores were located outsthe United States - in Chile and in Mexico. In 1998, Kmart was a wholly domestcompany, deriving all of its sales revenues from its United States stores. As for Sears,non-United States outlets (all in Canada) were responsible for 8 percent of the compantotal 1997 sales revenues of $41 billion. Further, international sales as a percentageSears' total sales remained more or less constant from 1995 to 1998. Thus it is clear tWal-Mart established a global presence at a far more rapid rate than did its three larUnited States competitors.

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A business profile of Carrefour (which announced a merger with fellow Frenretailer Promodes Group in 1999) is shown in Exhibits IV and V. Carrefour's firinternational move outside France occurred in 1973, when it entered Spain. It to

Carrefour nearly 25 years to build to 79 billion FFr ($15 billion) in international salescontrast, Wal-Mart took six years to reach $7.5 billion in international sales. Howevercomparison of Exhibit II with Exhibit IV indicates that Carrefour's financial performancits international operations is better than Wal-Mart's.

In 1998, Metro A.G. was the second-largest retailer in the world, behind Wal-MaIn 1997, some 7 percent of its total sales were generated outside Germany (compared w4 percent in 1995 and 5 percent in 1996). As of that year, its degree of globalization wasa par with Wal-Mart's. In 1998, Metro took the major step of acquiring S.H.V. Makro the Netherlands. Metro's consolidated sales revenues for 1998 are estimated at DM 1 billion, out of which foreign sales would constitute 37 percent.

II. Walmart in global online sales expansion

By Jonathan Birchall in New York Walmart, the worlds largest retailer by sale

has expanded its global e-commerce presence, launching new websites in Latin Amerand China as it vies with international rivals including Amazon, Carrefour and Tesco, sales in rapidly emerging online markets.

In Latin America, Walmart has started online retail operations in Mexico, Chile aArgentina, which together with China give it an e-commerce presence in half of the countries outside the US where it currently has stores.

The retailer has described its global e-commerce initiative as a multibillion-dolopportunity and has invested heavily over the past two years in creating a platform tcan be easily replicated in different countries and languages.

Latin Americas consumer e-commerce market is estimated to be worth about $30and Chinas more than $40bn, compared with the US $170bn. But both are expanding

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In the United Kingdom, the company is seeking to grow its general merchandise business "in a meaningful way," said Doug McMillon, president and chief executiWalmart International.

ASDA, Walmart's U.K. grocery brand, is trumpeting its "price guarantee" prograwhich uses technology to track prices from major national retailers. When ASDA prices above the cost of rivals, shoppers receive a voucher in the amount of the price differenfor use in their next visit.

Japan executives are intensifying their focus on everyday low prices. The companwhich already rolled out boxed lunches that it says are less expensive than those from m

competitors, is now focusing on low-price private label items such as cream cheese awine that sells under the Oak Leaf Vineyards label.

While Japan has a reputation for not being a price sensitive market, McMillon sashoppers there do have an increasing appetite for everyday low prices, a Walmart staple.

Stores inIndia, China and Central Americaare working with local farmers tosend produce directly to stores. The initiatives aim to establish sustainable farming meth

while also providing a safe and reliable supply of fresh fruits and vegetables.

China, which started its Direct Farm program in 2007, is leading the way. WalmaChina partners with 350,000 farmers and plans to increase the number to 1 million by end of next year, China President and CEO Ed Chan said.

India's program is smaller. There are about 120 local farmers involved today anWalmart hopes to grow that number to 5,000 by 2015, said Arti Singh, Walma

spokeswoman.

The effort also should help reduce the amount of food via spoilage and other factoCountries with modern supply chains report around 6 percent of produce is lost to waThat rises to as much as 30 percent in China and up to 40 percent in India, executives sai

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In up-and-comingBrazil, an "end-to-end" sustainability program has resulted ingreener packaging on items ranging from Band-Aids to Neve toilet paper. Such prograhelp cut Walmart's costs while reducing wasteful packaging and cutting energy use rela

to shipping.

IV. What can we learn from Walmarts international expansion?

As part of its International Business Insight series, the Financial Times recentlooked at Walmarts expanded Ecommerce presence in Latin America, where it hlaunched online retail operations in Mexico, Chile and Argentina.

Doug McMillon, head of Walmarts international business, told the Financial Timin a recent interview that the retailer was focusing initially on markets where it already stores, which can also be used to deliver goods to customers. We believe our 8,000 poiof distribution [stores] give us an opportunity to leverage that network, more than a puonline retailer can do, he said.

Part of a global Ecommerce initiative viewed internally as a multibillion-dollopportunity, Walmart values Latin Americas consumer Ecommerce market at abo

$30bn, slightly less than China (projected at more than $40bn) and less than a fifth of US $170bn.

The Latin American Ecommerce market is expanding by high, double digit rates ais being driven by a growing middle-class steadily adapting the tools of the trade PCs Internet connectivity (if not yet smart mobile devices in large numbers).

Walmart is already the largest retailer in Mexico and has been selling toy

consumer electronics and home appliances from Walmart.com.mx site since June 201Walmart added sites in Chile and Argentina in late November.

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By using its stores to deliver online orders, Walmart is also laying the foundation fthe future of shopping in markets where emerging middle classes are hungry for more t just apparel, electronics and dry goods.

CHAPTER 4: ADVANTAGES AND DISADVANTAGESI. Advantages

- The biggest advantage of a global strategy is that it enables a company to leveraeconomies of scale. When it sells the same product worldwide, it can buy its ramaterials in bulk, potentially saving the company hundreds of thousands of doll per year. Economies of scale can save a company money in labor, packaging an

marketing material costs, too.(Efficiency)

- Global strategy also is useful with regard to product life cycle. A company ca phase its release of products, introducing older products into newer markets asaving the launch of a product's most recent version for well-developed markets. Fexample, a laptop company could sell its older-model laptops, particularly unsoleftover stock, to a less-developed market after it launches a new laptop model. T

older model may be outdated by American or European consumer standards operating speed and random access memory, but the strategy is a way to get rid old stock as long as it is on par with competition in the less-developed market.(LifeCycle)

- Increased free trade between nations- Increased liquidity of capital allowing investors in developed nations to invest

developing nations- Corporations have greater flexibility to operate across borders- Global mass media ties the world together - Increased flow of communications allows vital information to be shared betwe

individuals and corporations around the world- Greater ease and speed of transportation for goods and people

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- Reduction of cultural barriers increases the global village effect- Spread of democratic ideals to developed nations- Greater interdependence of nation-states

- Reduction of likelihood of war between developed nations- Increases in environmental protection in developed nationsII. The disadvantage of global strategy

- The major downside to pursuing a global strategy is that a one-size-fits-all approadoes not work in all markets. Some markets have particular tastes or are mosensitive to pricing. Moreover, a company's products invariably are more popularone country than another country; deciding in which country a product will b popular is a problem. If a company estimates incorrectly, the mistake could cost ifortune.(Macroeconomic Risk )

- A global strategy includes an operational risk. If employment laws or corporatilaws change in the country where a company manufactures its global product, ththat could ruin everything. Likewise, if a war breaks out, employees go on strike a natural disaster occurs where a company manufactures its global product, then

may not be able to fulfill its obligations (Operational Risk)

- Increased flow of skilled and non-skilled jobs from developed to developing natioas corporations seek out the cheapest labor

- Increased likelihood of economic disruptions in one nation effecting all nations- Corporate influence of nation-states far exceeds that of civil society organizatio

and average individuals- Threat that control of world media by a handful of corporations will limit cultur

expression- Greater chance of reactions for globalization being violent in an attempt to preser

cultural heritage- Greater risk of diseases being transported unintentionally between nations

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- Spread of a materialistic lifestyle and attitude that sees consumption as the path prosperity

- International bodies like the World Trade Organization infringe on national an

individual sovereignty- Increase in the chances of civil war within developing countries and open w

between developing countries as they vie for resources- Decreases in environmental integrity as polluting corporations take advantage

weak regulatory rules in developing countries

CONCLUSIONWal-Mart has changed its course of action from being an organic growing company to acquiring company. Since Wal-Mart reached its objective of being the number one retaiin the U.S. in early 1991, it had been shifting its focus on becoming a global chain, startto expand into the international market. This expansion has proven to be overwhelminsuccessful, and therefore Wal-Mart in the long run can maintain this strategy and ensure continuous growth of its businesses. The company is present in Asia, South America, recently started to conquer the European market by purchasing a German 100-stores chaYet the company should not overexaggerate its pace, and wait for one or two years, befit enters the French market as well. In fact, it will face though competition there. In terof Israel, however, the fundamental data is promising and Wal-Mart would build a perf base for a future penetration of the markets in the Middle East, once the tense situateases and business obstacles in the Arabic countries begin to diminish.

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