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Wal-Mart Company was branded as Walmart since the year 2008. Before then, the company was referred to as Wal-Mart. Apparently the company is an American public multinational corporation and it normally runs long chains of large discount department and also warehouse stores. It is worth noting that the company is the world’s 18th largest public corporation and this is in accordance to Forbes Global 2000 list. It is also the largest public corporation after the rankings that are normally based on revenue. Most importantly the company is the world’s largest employer as it accommodates over 2 million employees. This paper explores more on Walmart Company, highlighting much on the company’s operation in Brazil.
A brief history with regard to the company is that it was founded by Sam Walton in the year 1962. It was the incorporated on October 31, 1969 and then the company publicly traded on the New York Exchange in the year 1972. The company’s headquarters are based on Bentonville, Arkansas. Walmart has been declared as the largest grocery retailer within the U.S. For example in the year 2009, the company produced about 51% sales amounting up to US$258 billion just within the U.S and this was from grocery business. It the same company that takes care of the Sam’s Club retail warehouses found in the Northern America. Walmart Company owns 8,500 stores in exactly fifteen countries and these are 55 varied names. It is worth noting that the company normally operates under its particular name within the U.S and this includes 50 states and Puerto Rico. Normally, Walmart Company operates in a couple of countries, Mexico as Walmex, within the U.K as Asda, In Japan as Seiyu and also in India as Best price. Apparently the Company has entirely owned all the operations in Argentina, Canada and Brazil. The Company’s investments that are just outside the North America tend to contain some mixed results; taking in to consideration the Company’s operations in the U.K, South America and also China are quite successful and at the same time it was compelled to pull out of Germany and South Korea the time when the country’s ventures were quite successful (GDCCSR, 2010).
Identification of the major drivers of globalization for the industry
Globalization of market
The term globalization means merging of various national markets into a massive global marketplace. It is notable that global business is normally made possible owing to given falling barriers in order to trade across the border. Apparently a company’s size never counts to facilitate or even get advantaged due to markets’ globalization. Actually it is quite possible to offer a quality product globally. It is however apparent that very minute differences normally exist especially between particular national markets like the existing consumer tastes, cultural systems, legal regulations and also various preferences. In order to effectively handle all these differences, it is quite imperative to put in place marketing strategies. This would assist in matching the current prevailing conditions in a certain country. In order to perfectly illustrate this, Walmart Company may be compelled to change their product from a nation that heavily relies on local preferences and tastes.
Globalization of production
This normally points out much regarding sourcing of a company’s goods and services from various locations that exist in various locations globally in order to benefit from the national differences with regard to the cost and also the quality of factors of production. It is worth noting that the main idea here is to effectively compete through offering good quality products at a relatively low cost. A good example is Nike, happens to be one of the most world’s powerful companies and leading marketers of athletic shoes. Analysts classify the company as an apparel one and it has a couple of factories in many low cost countries like Indi and China.
Falling Barriers to Trade and Investment
The declining challenges that normally face international trade have made it possible for most of the firms to presume that the world is their sole market. The fact that there has been decline of barriers to investments and generally trade has allowed companies to set up various institutions at a given optimal location to cater for production. A given company may design a particular product in a particular country, produce a component parts in other several countries, make arrangements that would lead to assembling of the product in a different country and ultimately export that particular product around in many other places worldwide. Experts have proved that lowering most of the trade barriers has really assisted in facilitating the globalization of production. Further research shows that foreign direct investment has quite played an increasing and a positive role with regard to the global economy.
Changes in technology are responsible for advances in communication, processing of information and technology transportation that also includes the internet. All these have been of much help to firms in linking their given global operations into unique and sophisticated information networks. Apparently the current quick development of the internet and the related www may be termed as the latest expression that explains the alleged development. As well, innovations have been quite rampant in the transportation technology area. The current development regarding commercial jet aircraft has been of great importance considering the fact it has seen the time required to move to various locations reduce significantly.
Identification of a country for market entry
Regardless of the global economic slow, Brazil has witnessed a triumph through emerging as the world’s top developing nation with regard to its markets. Most of the country’s companies have been naturally making a beeline to Brazil as the country has proved to have potential in provision of massive untapped market. One of the interested companies is the world’s largest retailer, Walmart Company. Reports have shown that the company has fetched close to $ 775 million in order to cater for its intended operations in the South America’s largest country. The retailer hopes to set up at least 80 stores especially in the year 2011 and this happens to be one of its overall expansion plans to benefit from the burgeoning Brazilian middle class.
Walmart in Brazil
The company has already made investments worth about $ 3.8 billion in Brazil for the last five years. The retailer owns more than 450 stores in the same country and all these are under nine retail brands. Considering last fiscal year, the company’s growth in Brazil alongside other countries like Mexico and China saw the country record some of its massive sale increases. Considering the company’s expansion in Brazil, it has been of great importance for the company as it is apparent the Walmart is maintaining its dreamt financial strength globally. In Brazil, the Company normally sits third when considering the sales. Notably, the company is already behind the world’s massive retailer, Carrefour (ANUPREETA DAS, 2011).
Analysis of the economic development stage of the country
Economy - overview
Being recognized by large and also well-developed agricultural, manufacturing, mining and also various service sectors, Brazils economy can be classified as having outweighed all countries in South America. At the same time Brazil is rapidly expanding its presence in all world markets. Ever since the year 2003, It has been one of distinct characteristics that the country has quickly expanded its macroeconomic stability, build up its foreign services and also reduction of its given debt profile through shifting its debt burden to the side of real denominated and rather instruments that are held domestically. In 2008, the country converted to being a net external creditor and other two ratings agencies that awarded Brazil’s investment grade status on top of its debt. Immediately after the record growth in 2007 and 2008, the beginning of the global financial crisis caught the better part of Brazil come the month of September 2008. Apparently Brazil was hit two quarters of recession considering that the country’s global demand commodity-based exports declined and its external credit perished. However this set a new achievement for the country as it ultimately emerged as one of the world’s emerging markets that were beginning to recover. Confidence among consumers and also investors was reviving at a positive rate and the GDP growth came back to positive by the year 2010, it being backed by a significant recovery within the country’s exports. Foreign investors have shown much interest in Brazil. Apparently the key factor to explain the same is the fact that the country is experiencing a strong growth and also high interest rates hence it being a better destination for foreign investors. The current large capital that has been flowing in over the years have been the major determinant to the quick appreciation of the country’s currency hence compelling the government to ascertain that some amount of tax has been imposed on some foreign investments. Pledges by President Dilma ROUSSEFF have shown hope for possible maintenance of the former commitments by the administration to inflation that has been aiming by the Central Bank, an existing floating exchange and financial moderation (Tung, 2001).
Exploration of the risks and opportunities of the company doing business in the country
However the Brazil’s economy still has some hitches. It is noteworthy most of the economic challenges are normally debt related. Those of the domestic debts normally date back to 1994-2003. However Brazil made an attempt to control this trend in the year 2006. Currently the president has introduced some significant economic programs in order to control taxes hence increasing public investment. Considering the present GPD, it counts up to $ 1.6 trillion and the actual rate regarding the same is 3.7%. Unemployment rate has gone up to 9.6% while inflation reads 3%. Most of the industries are textiles, aircraft, shoes, chemicals, motor vehicle and steel. The agricultural products normally entail rice, wheat and sugarcane (Nanno Mulder, 2004).
Brazil was severely hit by various internal economic issues though the country’s economy never collapsed. All these can be counted to have taken place due to Brazilian economy cum the country’s economic policies and programs that were adopted by president Cardoso and later put in place by President Lula Da Silva. More about Brazilian economy, it has been undergoing a progressive growth and development ever since 2004. This has been a significant factor that has enabled most of the people get employed and get real wages. Brazilian economic system is ultimately on a floating exchange rate, a unique termed as inflation targeting and a given compressed fiscal policy. Still the country had to withstand a steep depreciation in its currency and this caused a swift adjustment regarding the country’s current account between the years 2003 and 2006. This preceded trade surpluses. Finally the surplus agricultural production was the cause of the drastic increase in exports (Jones, 2009).
Identification of strategic actions and measurements, to include performance priorities, sources of competitive advantage, and competitive strategy in the industry in the identified country
Walmart Company normally hires UBS as adviser considering that the company weighs a possible purchase of Carrefour South African (CARR.PA), an operating Brazilian unit. Currently there exist no negotiations between the two companies and at least to imminent deal. Walmart is instead amassing a special group of advisers in order to assist the company explore a potential bid. There were no much comments by Walmart and hence Carrefour and UBS were not approachable with regard to the companies’ comments. Walmart’s CEO Mike Duke has been referring to global expansion as a possible drive towards the company’s success while its market back at home has struggled. Interestingly, Brazil happens to be one of the few countries where he talked of possible expansion. The ongoing battle for the Carrefour’s local operations tend to underline the apparent Brazil’s retail industry importance especially to the visiting foreign investors as they are still looking for the way out towards world’s most powerful, promising and successful markets. Reports reveal that a takeover of Carrefour’s Brazilian unit from the U.S. superpower could be of great importance especially making an attempt to at least reduce disintegration in the Brazil’s retail industry, whereby 60% has been heavily preoccupied by top ten players. Current, Walmart has a relatively lower market share as compared to Carrefour, considering that it has about 12% while Carrefour has a 14% share.
At first Walmart approached Carrefour in order to commence strategies on exploration of the purchase Brazilian unit 2009 though the negotiations were not reached upon amicably during that time. The main problem was that the two companies never agreed over the price, a particular was said to be full of knowledge of the same situation reported to the Reuters on a condition of secrecy. In case Walmart would acquire Carrefour, this would make Brazil world’s greatest food retailer having a market of about 27 percent besides 51 billion sales, calculations given by Thompson Reuters (Kwapong, 2005).
Carrefour’s future on operations in Brazil has been the key focus of speculation ever since the company’s failed attempt to form an alliance with Grupo Pao Acucar, Brazil’s largest retailer in the previous month. Actually the controlling shareholder by Carrefour highly supported the entire plan and the Diniz family as well, it being a shareholder in Pao de Acucar and rivals with the Carrefour in France, never supported the deal. One of the key shareholders of Sao Paulo-based Pao de Acucar that was sought in June in order to combine Walmart and Carrefour in order to fend off potential unsolicited approach meant for the French retailer’s local operations by Walmart. Ultimately the decision led to a serious dispute which saw the shareholder, Pao de Acucar Chairman Abilio Diniz abandoned the plan. Walmart CEO Marcos Samaha recent allegations said that the major purpose for the retailer to be focused on organic growth and development there though never predicted acquisitions in Brazil in 2011. The CEO is revamping its given operations taking place in Brazil. This includes cutting of costs and then replacement of the top vice presidents in, assist in fighting control of food and appliances by Pao de Acucar (Mango, 2011).
Reports by Walmart have revealed annual global revenue of about $ 421 billion. This is from operations within fifteen countries globally and it has been within Brazil for exactly fifteen years. Its unique operations normally have nine different and distinct names and it employs 80,000 Brazilian staff. After checking their website, one is bound to recognize the writing that “We seek to grow in a sustainable way and respect the culture and customs of the Brazilian people” .