While reading the Wal-Mart and Bharti case study, I couldn’t
help but find parallels to the company I work for. Wal-Mart faced many threats
when the company decided to enter the Indian market. In addition to the
country’s poor infrastructure that posed problems to Wal-Mart’s operations, the
company also needed to conform to a different culture. (Bose, 2012)
My company recently opened agencies in three other southwest
region markets, including Los Angeles, Denver and Phoenix. Before entering
these markets, the company completed extensive research on each city’s culture,
industry, geography, and economic conditions.
What this research provided was invaluable insight into the
new market, which helped with the decision to start operating there. This made
me think about Wal-Mart and the extent of research conducted in the foreign
markets they enter. (Bose, 2012)
India aside, the company discontinued operations in South
Korea and Germany due to cultural differences in how Wal-Mart operates and the
products they sell. In my opinion, I believe that as a Fortune 500 corporation
Wal-Mart should have done more extensive research. This research would have yielded
a better understanding of the market, providing Wal-Mart with the tools
necessary to make an educated decision on whether or not to start operating in
South Korea and Germany. At the very least it would have given the company
sufficient information on how to excel as a foreign organization. (Bose, 2012)
Shane,
ReplyDeleteCan you elaborate a bit more on what exactly your company did to research the new areas where they would expand their operations? What exactly did they study and analyse? Was it the targeted populations, the areas where they would set up their offices or the targeted customer?
I agree with you in that Wal-Mart should have done their research on the international country's culture and their customs so that it could better serve their consumers. I am curious as to how your company has implemented the findings of their research. :)
Xiomara
Xiomara,
DeleteMy company conducted a survey of each market to gauge expansion based on industries/businesses in the new locations. As a marketing agency, it is the company's goal to continue expansion. That said, our company primarily focuses on travel/tourism and government agencies (some products, but mainly services). Strategic analysts completed in-depth market analysis to determine whether these new markets offered enough opportunities in these industries to foster continued growth and survival of the company.
I hope that provides more insight!
Shane, you raise some good points. Having an understanding of the local culture and on the ground conditions of the market you are entering are both absolutely critical to the success of a new venture. Do you think that having a local partner makes a difference? For instance, do you think partnering with Bharti was(is) an asset for Walmart in terms of understanding the local culture? What might be the limitations of relying on a single partner for cultural insights?
ReplyDeleteJessica,
DeleteYou raise great questions. I waiver on this issue a bit. For instance, I believe that having a local partner does make a difference, but I also believe it may hinder some aspects of the company's culture. I think Wal-Mart having Bharti is a great alliance; however, I believe they should have established local partners in the markets in which they failed. Giving the benefit of the doubt, India is a very unique and challenging country to enter, but as an American-grown corporation, perhaps Wal-Mart would have benefited from a local partner in Germany and South Korea as well.
I think one of the largest limitations to relying on a local partner when entering a new market is that the company may have alter the company's culture, affecting the brand and (possibly) the products in a way that the organization is significantly changed. This in turn may transform Wal-Mart (in this case) into a completely different corporation than those found in America - the model and company culture that made it successful in the first place.