Retail India: Analsis and Evaluation of Wal-Mart's Global / Transnational Strategy
Attached is the Full Report of my Report - Analysis and Evaluation of Wal-Mart's Global / Transnational Strategy. Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Download global_and_transnational_strategy_walmart_full_report_.pdf Name Vijay Kodandaraman Bysani Student I.D.Number 02913971 Course Master of Business Administration Unit Title Global and Transnational Strategy Unit Code SM 448 Unit Tutor Ron Phillips Assignment Topic Analysis and Evaluation of Wal-Mart's Global / Transnational Strategy Newcastle Business School University of Northumbria Newcastle Table of Contents Particulars Page 1 List of Figures 4 2 List of Tables 5 3 List of Images 6 4 List of Appendices 7 5 Executive Summary 8 6 Introduction to Globalisation & Transnational Strategy in relation to Retailing 12 7 Introducing Wal-Mart 14 8 Wal-Mart and International Expansion 16 9 Internal Analysis - Analyzing Resources 18 9.1 Financial Resources 18 9.2 Human Resources 18 9.3 Physical Resources 18 9.4 Intellectual or Intangible Resources 19 10 Culture Analysis 20 11 The Pyramid of Organizational Development 21 12 BCG Matrix 24 13 P.E.S.T. Analysis 26 13.1 Political Influences 26 13.2 Economic Influences 26 13.3 Social Influences 26 13.4 Technological Influences 27 13.5 Key Summary 27 14 Five Force's Analysis 29 15 S.W.O.T. Analysis 32 15.1 Strengths 32 15.2 Weaknesses 32 15.3 Opportunities 32 15.4 Threats 33 16 Value Chain Analysis 34 16.1 Inbound Logistics 34 16.2 Operations 34 16.3 Outbound Logistics 35 16.4 Marketing and Sales 35 16.5 Service 35 16.6 Infrastructure 35 16.7 Human Resource Management 36 Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani 16.8 Technology Development 36 16.9 Procurement 36 16.1 Key Summary 37 17 Generic Strategy 38 18 Yip's Globalisation Drivers 42 18.1 Market Drivers 42 18.2 Cost Drivers 42 18.3 Country Drivers 42 18.4 Competitive Drivers 43 18.5 Key Summary 43 19 Competitive Advantage 46 20 Core Competences 48 21 Sustainable Competitive Advantage 49 22 Kay's Distinctive Capabilities 50 22.1 Architecture 50 22.2 Reputation 50 22.3 Innovation 50 22.4 Strategic Asset 51 23 Configuration and Co-ordination 52 23.1 Configuration 52 23.2 Co-ordination 53 24 Pressures for Co-ordination and Integration 54 25 Dicken's Framework 55 26 Transnational Model 56 27 Conclusion 58 28 Limitations of Report 60 29 References 67 30 Bibliography 72 31 Declaration 78 Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani 1. List of Figures Particulars Page 1 Figure 11.1.: The Pyramid of Organizational Development 22 2 Figure 11.2.: Comparative Analysis of K-Mart and Wal-Mart 23 3 Figure 12.1.: BCG Growth Share Matrix for Wal-Mart 25 4 Figure 17.1.: Porter's Generic Strategies 41 5 Figure 18.1.: Visual Representation of Yip's Drivers 45 6 Figure 26.1.: Wal-Mart's Transnational Strategy 57 Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani 2. List of Tables Particulars Page 1 Table 6.1.: The Blind Men and The Elephant 10 2 Table 13.1.: P.E.S.T. Analysis 28 3 Table 14.1.: Five Force's Analysis 31 4 Table 18.1.: Yip's Drivers 44 Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani 3. List of Images Particulars Page 1 Image 7.1.:Fortune Magazine Front Cover Featuring Wal-Mart 15 Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani 4. List of Appendices Particulars Page 1 Appendix 1: Wal-Mart Income Statement 61 2 Appendix 2: Wal-Mart Balance Sheet 62 3 Appendix 3: Growth Rate Analysis (%) 63 4 Appendix 4: Wal-Mart Store Details 64 5 Appendix 5: Wal-Mart International Store Details 65 6 Appendix 6: Photographs of Wal-Mart Stores 66 Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani 5. EXECUTIVE SUMMARY Globalisation in retailing is being driven by several factors, including low growth in domestic markets, information technology, global consumer and shopping patterns, and the opening up of new markets. However it is not easy for retailers to become global. Performance in foreign markets depends on careful adaptation of the home formula, since there are still regional differences and mostly local sourcing RESEARCH AIMS AND OBJECTIVES The author attempts to apply theory to practise by applying relevant theories and frameworks in analyzing the short-listed organization and evaluate the firm’s global / transnational strategy in accordance of its global drivers. This report has three main aims. First, it attempts to identify and discuss the relevant frameworks. Second, it aims at applying these frameworks in analysis to the short listed organisation. And finally, it concludes the direction and nature of the firm’s global / transnational strategy directions. . STRUCTURE OF THE REPORT This report consists of parts, each of which is further divided into sub-sections covering relevant areas to the topic under discussion. Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani The first part introduces the reader to the report and also outlines the structure and topics of discussion. The second part defines and set the context to global / transnational strategy in relation to the retail industry before setting the context to the short listed organization and giving the reader a good background of current status of the organization with market forces. The third part identifies key strategic issues with detailed analysis involving the external environment and internal environment covering the near and far environment extending itself into the culture and resources of the organization before exploring in greater analysis the value chain. The fourth part extends into the generic strategies adopted the organization and then explains in detail the Yip’s globalisation drivers before concluding the competitive advantages and core competencies and the sustainable competitive advantages. The fifth part introduces Kay’s distinctive capabilities with greater analysis and extending itself with the configuration and co-ordination of activities concluding with the pressures for co-ordination and integration. The sixth part introduces in analysis the transnational model. The final part sets the final context linking all the key frameworks and analysis with the author’s own conclusions and future directions and expresses the author’s limitation to this report. Introduction to Globalisation and Transnational Strategy in relation to Retailing Globalisation refers to growing economic interdependence among countries as reflected in increasing cross-border flows of three types of entities: goods and services, capital and knowhow (Govindrajan and Gupta, 2001). The term globalisation can relate to any of several levels of aggregation: the entire world, a specific country, a specific industry, a specific company, or even a specific line of business or functional activity within the company (Govindrajan and Gupta, 2001). Transnational strategies although global in nature incorporate a global configuration and a high degree of co-ordination allowing the business to retain local responsiveness (Stonehouse, et. al., 2000) The two most strategic expansion routes for international retail expansion are global and multinational strategies (Sternquist, 1997). Global retailers replicate a standard format throughout their expansion worldwide while multinational strategies result in adaptation of their retail offering (Sternquist, 1997). Multinational retailer’s expansion is generally slower than global retailers and the management is decentralized. Multinational target markets in closer proximity. International expansions of retailers are challenging and unpredictable, and a slow approach is healthy (Voyle, 2003). Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani As markets evolve, differentiation becomes more important. It’s interesting to note, most of the industries, practically all the industries are attempting to globalize today like the automobile industry has done over the last few decades. Automobile industry peaked during the 1950s and since then there has been a decline and ever since it’s been growth of the major players and consolidation of the smaller ones. Success in the motor industry comes not from size and scale but from developing competitive advantages in operations and marketing these advantages internationally (Kay, 2003). Global brands are a recent phenomenon. Until 10 to 15 years there weren’t any global brands, many companies were multinationals tending to function as a collection of individual enterprises with separate factories and different products in each country. The manifesto of global brands emerged in 1983 when Theodore Levitt published “The Globalization of Markets”. It was the emergence of homogenisation. Enabling this was technology with mass transport and communication and the disappearance of national tastes and preferences. The multinational corporation operates in a number of countries and adjusts its products and practices in each at high relative costs. The global corporation operates with resolute constancy at low cost, as if the entire world were a single entity; it sells the same things in the same way everywhere (Tomkins, 2003) Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani 7. Introducing Wal-Mart Wal-Mart is the world’s largest corporation (Fortune, 2003; Yoffie and Wang, 2002; Image 7.1.). Wal-Mart is also the largest private employer in the United States of America (Yoffie and Wang, 2002). Wal-Mart is U.S.A.’s biggest seller of DVDs, diamonds, groceries, toys, guns, CDs, apparel, dog food, detergent, jewellery, sporting goods, videogames, socks, bedding, and largest film developer, optician, private truck fleet operator, energy consumer, and real estate developer (Fortune, 2003). Americans save about US$10 Billion by shopping at Wal-Mart (Buffet, 2003). Wal-Mart’s revenue accounted for 15% of the entire U.S. retail market in 2002, excluding automobiles (Yoffie and Wang, 2002; Appendix 1). Sales globally have been affected over the recent weeks. International sales increased 14.3% to $10.3 billion (Buckley, 2003; Appendix 1; Appendix 3). Wal-Mart’s revenues are forecast to approach $700 billion in 2010 (Fernie and Arnold, 2002). Wal-Mart has four large scale retail formats; Wal-Mart Stores, SAM’s Club, Wal-Mart Supercenters and Neighbourhood Markets Global And Transnational Strategy – SM 448 – Assignment May 2003 Vijay Kodandaraman Bysani
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