Critical Issues in Globalization

Table of Contents

Introduction.

Background of Walmart

International Marketing Strategy Framework.

Critical Evaluation of Business Environment

Economic Environment

Political Environment

Socio-cultural Environment

Legal Environment

Marketing Mix.

Product

Price.

Place.

Promotion.

Conclusion.

References.

Introduction to Critical Issues in Globalization Report

The aim of the report is to perform an analysis on a selected multinational business organization. The organization selected for the analysis is Walmart. The report will discuss the background of this business organization and will identify the organization’s strategic frameworks of internationalizing its business. Moreover, the report will evaluate the impact of economic, political, socio-cultural and legal environments on its business. It will also analyze the Marketing Mix of this organization.

Background of Walmart

Walmart was founded by Sam Walton in 1962, U.S. (Wells and Ellsworth 2016). The first Walmart was built in Roger, Arkansas. Walton was a smart thinker; just like the other businesses trying to be successful and wanted to make money. Unlike the others he had another concept. He believed that he would be successful if he sold his items at a low price. Many thought that this idea would never follow through. The aspirations of this company became greater than he expected(Wells and Ellsworth 2016).It was founded on the premise of providing products to the consumers at a discounted price. Today, Walmart operates in 15 different countries under 60 different brands with more than 9029 retail stores. It recorded sales worth $514.4 billion by the end of fiscal year 2019 (Walmart 2019). Walmart’s primary product range includes general merchandise like apparel, entertainment, home goods and features pharmacy too.

Wal-Mart offers employment opportunities to many people around the world. In fact, the company has an employee base of over 2.2 million people throughout its numerous facilities in the United States and other nations (Walmart 2019). Wal-Mart strategies are categorized as either domestic or international strategies. The secret to the success of the world's largest wholesale and retail chain is its versatility and affordability. Walmart outlets offer a huge range of products for various purposes. It is difficult to name a product category that is not in the company's stores.Walmart sells electronics, goods for sports and outdoor activities, toys, products, furniture, medicines, cosmetics, jewelry, clothes, shoes, household goods and even car tires and more.The retail industry is having an increasing competition; many players that are coming with their strategies and policies to enjoy the benefits that the industry seems to be having (Muñoz, Kenny and Stecher 2018). The main competitor of Walmart in the United States in Kmart; the company has a different approach to business and is likely to be a great threat to the company.

Walmart’s supply chain management is highly responsive. This means that the system changes with the changes in demand and customers’ needs. Although the information that the company has on the trend of business assists it to be slightly certain of the amount of product they should procure at a certain point, the demands of customers keep changing, thus changing the supply system is important. The company have adopted computers in their supply chain management. This is where it uses a real time stock managements system, which has set reorder levels of certain goods. After a sale at the cashier, a code records the sale in the main database.Walmart’s lack a visionary strategy; the management policies have no clear guidelines and set out strategy to see it succeed in the future. They seem to be riding on the success that the company has attained and lacking ways to create an increased business in the future (Wells and Ellsworth 2016).

International Marketing Strategy Framework

To stand out amidst high competition, Walmart has an effective marketing strategy; the strategy is responsive to the needs of certain market thus the system may seem different in different countries. To come up with the specific marketing approach to use, the company undertakes a massive marketing and market research to establish the best persuasion approach they will use in the particular market. In particular the company adopts 4p of Marketing Mix approach were it ensures that the 4p’s (Pricing, products, promotion and place) have been addressed accordingly; the prices set for the same products vary with the target market and the place that the company sells (Li and Liu 2018). As per the policy, the marketing department that is at the head office and represented at every outlet is mandated with the role of advising the company on the best way they can improve their products and services. For instance, in some branches, there are personal marketing approaches, while in others there are indirect marketing methods. The main agenda that the department’s aim at meeting is to have satisfied and loyal customers; to develop and retain customer loyalty, the company has implement a CRM (customer relationship management) programs in all its branches (Marr 2017).

To ensure that the company maintains it leadership skills around the world, the organization has considered using business-to-business relation approaches; approaches that ensure that there is good interaction of businesses in the same line, thus the company has improved pricing strategy and it ensures that it is ethical and acceptable (Walmart 2019). Moreover, for handling employees of different countries, the company has combined various motivational theories like expectation theory and equity theory so that they can come up with the approach to handle the disparities in salaries that seems to prevail; when they do this they will be assured of qualified and highly motivated staffs (Elder and Dauvergne 2017). According to industrial relations, a company that has good human resources management like the way Wal-Mart claim should have salaries harmonized and probably higher than that offered by similar companies; the company should look into its policies (Li and Liu 2018). To remain competitive amidst, the company is looking for ways to differentiate its services and products from other businesses.

Critical Evaluation of Business Environment

Economic Environment

Economic trends directly affect the performance of the organization. The economic factors that affects Walmart are stability and exchange rates of host country, government interventions and related services in the free market, economic system in host country, interest rates, inflation rate, unemployment rate, economic growth rate, labor cost and economy productivity etc. These factors are the aggregate investment and demand in an economy (Marr 2017). Walmart will be affected by these factors in different country as these factors changes country to country.

Political Environment

This factor plays a significant role, as they ensure long term profitability for the organization. Walmart operates in number of countries providing variety of products in discount. This factors highly welcomes international retailers. Stability in this factors results in economic stability and further results in better growth for the organization (Courtemanche,Carden, Zhou and Ndirangu 2019). This factors also affects the supply chain. The factors needed to consider are Employee benefits, industry safety regulation, wage legislations, Anti-trust laws, bureaucracy etc.

Socio-Cultural Environment

These factors are important in terms of profitability of international business. These factors influence the customers buying behavior which direct impact on the brand of the organization. Factors like social media, customer engagement, customer convenience and customer services affect the retailer sector (Reich and Bearman 2018). It is important to be engaged in public actives and corporate social responsibilities. It may also affect the organization customer base if not taken seriously. They directly impact the culture of an organization.

Legal Environment

Walmart has number of retailer stores around the world and it is important to consider legal factors which include data protection, health and safety law, employment law, consumer protection, discrimination law and many more. These factor can result in financial losses as well as poor reputation if not followed properly (Elder and Dauvergne 2017). Walmart has also faced lawsuits related to labor force in history. Law is an important factor because legal pressures do not just result in loss of business but legal challenges can also result in substantial fines and financial losses.

Marketing Mix

Product

A product is a tangible or intangible good that is offered to a market based on the demand. A company starts its marketing strategy by deciding the product line it's going to present to people. Walmart is a retail company that possesses a broad range of products and brands to its shelf. Food, electronics, medicines, grocery, apparel, fashion items, furniture, stationary, sports, party supplies, books, jewelry, and hundreds of other product categories with thousands of brands under each group can be found on Walmart. It has made and designed each store in a way that people never leave the place without finding their necessities or buying something (Marr 2017). It creates environment with a broad range of product of every category that people gets very little time to think about not to buy something. When a customer enters its stores, the smoothness of finding a product and the next moment discovering himself on a section which can be his potential need makes the customer most of the time to buy more than he needs at that moment. And the high focus on customer service with properly trained employees doesn't let a customer to be disappointed for a long time (Courtemanche, Carden, Zhou and Ndirangu 2019).

Price

Price is the negotiable value a customer pays in return for taking a good or service. It's the combination of operating costs and profit in a way that customers find it not too much forsomething they're paying. Everyday low price is the primary strategy and slogan of Walmart. It wants to provide a place to the world where people of all areas and section can find their desired goods at a price that suits their affordability (Bose 2017). This company offers its products at a price that's relatively lower than the competitors. And that's how it has beaten all the competition and made people go to its stores. It has set the prices of different products in a way that people feel an urge to buy a bulk amount of goods from their stores. The same kind of product can be found in different brands with different price tags. Now it's up to people to buy based on their budget.Walmart keeps the price low at least 15% lower than the market value and still managed to achieve a handsome profit margin as this company itself buys in a bulk amount and keeps its stores always filled (Reich and Bearman 2018). And the suppliers also have a goodrelationship with this company as they know people will buy their products repeatedly and the demand will never diminish. Walmart also use consumer behavior, timing, and events to decide the prices so that it doesn't leave a wrong impression.

Place

A place is where customers will find their desired products or services. It can be either a physical or online location that ensures the maximum availability of the goods.Walmart has made the fastest global expansion than any other retail company. It has 11700 stores in over 28 countries (LeCavalier 2016). In each country, this company has made sure to open its stores at the most convenient locations. It used the market saturation concept to enter some markets. Not all region of every country is well-populated or has a higher standard of living. It has gone to those places as well, and its service has made other retail stores, that were situated before Walmart, to shift elsewhere, as they were unable to make profits anymore. In this way, this company started one kind of monopoly in lots of areas of different countries. Walmart has one of the largest and most effective distribution networks (Ellickson 2016). Its warehouses are situated in a way so that its stores can enjoy direct shipping of supplies from the inventory:thus, it reduces the operating cost of transportation, labor wages, etc. Also, the suppliers have a good relationship with the suppliers, which give a massive advantage to this company

Promotion

Promotion ensures the public exposure of a business and its products. Without an effective promotional campaign, a company puts itself in vulnerable position.The famous slogans of Walmart, such as "Save Money. Live Better." "Lowest Price Store."etc. work more than enough if the company's promotional activities are considered (Reich and Bearman 2018). Other activities, like providing frequent discounts and coupons and special benefits to regular customers are its primary offline promotional campaigns. It has now started its e commerce site as well, where it gives a free shipping facility to the A-graded customers. Also, its 90 day return policy without any receipts makes people come to the stores without thinking (Elder and Dauvergne 2017). Nowadays, Walmart has made itself more visible in online promotions with different offers as well. This company uses consumer psychology and designs each content to create a push on people's minds to buy from its stores.

Conclusion on Critical Issues in Globalization Report

It can be concluded that a brief analysis of Walmart is carried out in the report along with marketing mix and external factors affecting the organization. Walmart has made itself a specialist when it comes to successfully using each of the marketing mixes. This brand has made a position in people's minds, which is very difficult to break by any other company. Although it still hasn't reached many potential markets around the world, it didn't significantly affect its sales and profit. And if the situation of this company during this pandemic is considered, it still is in a favorable position because of its low-cost strategy, which made people buy from its stores more as people are facing money problems and searching for places which can offer necessities at a lower price.

References for Critical Issues in Globalization Report

Bose, N. 2017.Walmart is testing a new pricing strategy to keep up with Aldi and Kroger. Available at: http://uk.businessinsider.com/r-exclusive-wal-mart-launches-new-front-in-us-price-war-targets-aldi-in-grocery-aisle-2017-2

Courtemanche, C., Carden, A., Zhou, X. and Ndirangu, M. 2019. Do Walmart supercenters improve food security? Applied Economic Perspectives and Policy41(2), pp.177-198.

Elder, S. and Dauvergne, P. eds., 2017. Farming for Walmart: The Politics of Corporate Control and Responsibility in the Global South. In world scientific reference on natural resources and environmental policy in the era of global change: Volume 2: The Social Ecology of the Anthropocene: Continuity and Change in Global Environmental Politics (pp. 173-196).

Ellickson, P.B. 2016. The evolution of the supermarket industry: from A & P to Walmart. In Handbook on the Economics of Retailing and Distribution. United Sates: Edward Elgar Publishing.

LeCavalier, J. 2016. The rule of logistics: Walmart and the architecture of fulfillment. United Sates: University of Minnesota Press.

Li, C. and Liu, M. 2018. Overcoming collective action problems facing Chinese workers: Lessons from four protests against Walmart. ILR Review71(5), pp.1078-1105.

Marr, B. 2017. Really big data at Walmart: Real-time insights from their 40+ petabyte data cloud. Forbes.com23.

Muñoz, C.B., Kenny, B. and Stecher, A. eds. 2018. Walmart in the global south: Workplace culture, labor politics, and supply chains. Austin:University of Texas Press.

Reich, A. and Bearman, P. 2018. Working for respect: Community and conflict at Walmart. New York:Columbia University Press.

Statista 2018.Walmart Stores’ advertising spending in the United States from 2009 to 2016 (in billion U.S. dollars).Available at: https://www.statista.com/statistics/192068/us-ad-spending-of-walmart

Walmart 2019. About us.Available at: https://corporate.walmart.com/our-story 

Wells, J.R. and Ellsworth, G. 2016. The Inexorable Rise of Walmart? 1988—2016. Available at: https://www.hbs.edu/faculty/Pages/item.aspx?num=50834

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