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Walmart is one of the biggest multinational retail companies in the United States today operating a chain of hypermarket stores, grocery, and discount outlets. Sam Walton, who has operated at its helm assisted by other family members, established it in 1962. After a successful startup, he decided to incorporate the company in 1969. It has grown to over 11,350 stores spread across 27 countries, with some functioning using 55 different names such as Sam’s Club retail warehouse. Its headquarters are in Arkansas, Bentonville, and it operates under the name Walmart in North, Central, and South America. The company has over 2.2 million workers distributed across its network of stores. In 2018, business reports estimated the organization to have had sales revenue of over $500 billion. In 1972, it was listed in the NYSE with the founding family holding 51 percent of the shareholding. The company ventured in the international market after a great success at home. Some of the global ventures have worked well for them, while others, such as in Germany and South Korea, failed to progress. Certain international business forces such as strategic operations, global environments, management strategy, and ethics have contributed to its growth. This paper will analyze these factors and assess their contribution towards Walmart’s global success.
Walmart’s International Environmental Forces
Business International Foundation
Walmart’s international business foundation is anchored on several key factors, namely, philanthropy, community engagement, and environmental sustainability. It has succeeded in placing itself strategically in all its outlets business environments. Walmart does not import labor force but works with the local people in all its operations. This strategy has helped it adapt easier and establish a better foundation for the business. By engaging local people in its day-to-day running of the operations, it is able to make them feel as part of the growth (Harrison, 2019). Conformity to the laws and regulations in the new markets on the global platform has helped the company run its operations with minimal disruption. Walmart has been able to follow the safety employment and taxation laws of the countries in which they have established their operations.
Philanthropy has been another key factor creating a good working rapport between the company and the locals in its business environments. Giving back to the community has become one of its mantras in sectors such as environmental sustainability, nutrition, women empowerment, and disasters, for instance hunger. Each international business has the obligation to support the people around them in order to empower them and create a better market for their products (Humes, 2011). Producing eco-friendly products is another key factor that has boosted the sustainability campaign for Walmart in terms of environmental conservation.
Global Business Environment
Globalization has played a significant role in boosting Walmart’s global business environment by opening up new strategic locations. Its success in the international market has been founded on societal support through opening up new economic opportunities, developing sustainable supply chains, and empowering local communities. Social-cultural engagements have played a key role in the growth of Walmart. By empowering and supporting the society, they are able to create a conducive environment for their business. This move has helped the company to navigate the murky waters of international competitions from other rival companies globally and locally. Its success in local operations has been achieved through strategic alignment with its suppliers, leaders, NGOs, and the locally elected leaders (Aswathappa, 2010). This approach has eased its operations and spearheaded the efforts to be a leader in governance, as well as environmental and social issues that touch on the lives of their consumers, communities, and shareholders. By using their size and muscle for the good of the society, Walmart has managed to develop a strong and convincing image for its global business.
Since its first international outlet in Mexico in 1991, Walmart has continued to expand aggressively on the global market adapting to the needs of its customers. Its international business strategy has always remained to pursue faster growth and venture in new markets. Product differentiation has been one for contributing factors for its adaptability in the dynamic and competitive global market. The strategy has been able to produce consistent results in the past with annual growths in revenues and profitability. However, some of the strategies are not sustainable in the long term, with emerging ecommerce competitors such as Amazon. Walmart has to find ways to cope with this competition by identifying a mix of strategies that will foster growth and expansion in the international market. It has begun to solidify its growth in the already established market by realigning resources to countries where there is greater potential. This has been the case in the UK grocery market, which is saturated and not ideal for aggressive investment. They are redirecting excess resources to India, which they identified as a strategic future market for their business. Identifying new market segments is a priority for the company at the moment as witnessed in the U.S., where they are focusing more on wealthy people. They are already established in the lower and middle-income population and they have now shifted their focus on tapping high-income earners. Identifying market niches and meeting the demand of emerging markets, Walmart will be able to advance its international strategy without considerable challenges from competitors in the future.
Economically, Walmart faces evolving issues both at home and in other countries. There are many economic challenges affecting the company’s revenues and profitability. The U.S. economy has not been doing well lately and it has seen a significant decline in employment opportunities. This is a sign of tougher times ahead, and Walmart should focus more on developing countries with a potential market. Such economies have increased demand for products, and the company can fill in the gap instead of focusing on the constricting economies.
In an increasingly competitive market, Walmart has an obligation to invest in research and design of the current technological trends. For example, Amazon has gained a considerable market share over a very short period due to their ecommerce platform (Mcgee, 2018). The retail sector competitive landscapes prompt for aggressive and timely development of technologies that will complement the running of operations in Walmart. They can try to invest in automation of their services to enable faster delivery. The management can also take advantage of business analytic programs to help them study their market and focus on the most profitable areas. Increased usage of mobile phones and access to the internet is another opportunity where Walmart can reach more clients by going the e-commerce way. This move will generate more revenues for them and create a bigger market share.
The transition of Walmart from a regional retailer to a global powerhouse speaks volumes about their management strategy. From the onset, they planned to provide customers with the products they needed whenever and wherever. Their next focus was on cost structure whereby they were able to put them in check allowing them to price their products lowly (Stankevičiūtė, Grunda, & Bartkus, 2012). Thereafter, the company focused on supply chain management, where they sought to exploit and enhance opportunities of gaining competitive advantage and achieve leadership in the market.
Mainly, its operations focus more on supply chain, inventory management, and sales performance. Their success is partly due to their efficiency in operation management. Walmart operates under 10 decision areas, namely, designing of goods and services, quality management, process and capacity design, location strategy, layout design and strategy, HR and job design, supply chain management, inventory management, scheduling and maintenance, which the management prioritizes at all times.
Its goal financially is to establish a consistence growth in terms of revenues and profitability. This goal is only achievable if the company remains objective in meeting the growing customer needs especially on the online platform, which is taking the market and business to new levels. They cannot afford to show complacency to their competitors and they have to keep up with the trend. Better financing will assist the company in advancing its strategy of expansion to newer markets.
Walmart’s international business forces are managed by a team that has a greater understanding of its operations, which is evident from their growth and financials. They are on the right track and should endeavor to keep up with the emerging business trends across their branches. This can be done by understanding the nature of each market and exploiting the available opportunities. By doing so, the company will be able further their growth into the future and remain competitive.
Walmart’s Ethical Issue
The company’s contribution to the environment and philanthropy efforts shows their fabric of valuing their consumers. The management has always insisted on producing eco-friendly products, which will do no harm to the customers. Helping the needy and empowering different groups in the community, they show their power of compassion and concern for their neighbors. Many organizations lack these Christian values, especially on a global platform, which has in many cases led to harm (Morillo, Mcnally, & Block, 2015). They have collaborated with other NGOs and governments to help the less fortunate achieve their goals, more so in education. This attitude shows a great sense of social responsibility by Walmart.
In conclusion, it should be mentioned that Walmart has seen soaring revenues from its operations both at home and on the global front due to its strategic alignment. This has been the case because it has exploited its international environment business forces and turned them to its benefit. The company has adapted in new environments and established a working rapport with the locals, both consumers and regulatory authorities, including governments. Technological innovation and discovery of new ways of doing business pose the greatest threat to Walmart and it has to find a way to automate its services and offer support to its consumers. Embracing emerging trend will also help them maintain the leading position in the retail sector more so if they are able to venture in the online market. Their social responsibility efforts are admirable and they have boosted them on the global markets as locals embrace them easily and establish strong foundations.
Aswathappa, K. (2010). International business. New Delhi: Tata McGraw Hill Education.
Harrison, J. A. (2019). Working for respect: Community and conflict at Walmart. Social Forces. doi:10.1093/sf/soz019
Humes, E. (2011). Force of nature: The unlikely story of Wal-Mart’s green revolution. New York, NY: Harper Business.
Mcgee, R. W. (2018). How large is Walmart? A comparison of Walmart sales to nation’s GDP. SSRN Electronic Journal. doi:10.2139/ssrn.3102735
Morillo, J., Mcnally, C., & Block, W. E. (2015). The real Walmart. Business and Society Review, 120(3), 385-408. doi:10.1111/basr.12060
Stankevičiūtė, E., Grunda, R., & Bartkus, E. V. (2012). Pursuing a cost leadership strategy and business sustainability objectives: Walmart case study. Economics and Management, 17(3). doi:10.5755/j01.em.17.3.2143