Walmart achieved great success with their “Every Day Low Prices” strategy. Through supplier negotiations, Walmart has enjoyed high profits resulting in their ability to maintain low operational costs and it turn, pass that savings on to their customers. While the company’s success was largely attributed to Walmart’s ability to maintain low prices and provide exceptional customer service, they also depended on their revolutionary internal distribution process (Farhoomand, 2006). At the time of their opening in Shenzhen, the biggest challenge Walmart faces were the 700 chain store companies that were already operating in China. Until 2005 when China officially lifted distribution restrictions for foreign companies, Walmart had been forced to rely on Chinese suppliers to outfit their stores. Brief analysis
Walmart’s US supply chain includes their own distribution warehouses that are strategically located within a one-day drive of the stores it served, a Walmart-owned trucking fleet that was solely responsible for the physical distribution of inventory, and a robust information technology system that allowed both suppliers and wholesale customers to purchase, invoice and pay for good electronically. Chinese consumers are also very different from the American customer-base Walmart had been used to. Chinese consumers had less money to spend and spent less if they did shop. They also had a tendency to shop for basic necessities (Farhoomand, 2006). Without stock options, low wages resulted in decreased employee satisfaction and increased management turnover. Faced with the reality of shutting down operations in Germany and South Korea and their continued loss in revenue in Japan, it appears that Walmart’s management team needs to take another look at their strategy for global expansion and address the cultural implications and considerations for market growth (Farhoomand, 2006). Alternate course of action
An alternate course of action for Walmart’s...
References: Farhoomand, A. (2006). Wal-Mart Stores: Every Day Low Prices in China. Harvard Business School.
Harvey, M., Speier, C., & Novecevic, M. M. (2001). A theory-based framework for strategic global human resource staffing policies and practices. International Journal of Human Resource Management, 12(6), 898-915. doi: 10.1080/09585190110063147
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