Introduction
Globalisation of industries has become one of the fundamental issues that have marked significant business transformations in the current days. Companies across the world are constantly seeking an international breakthrough and spending a substantial amount of money and time to enhance their global expansion (Deresky, 211). Particularly in the modern business environment, advancement of a company from regional to international expansion is becoming an essential strategy to balance the global market.
International management is an administrative practice that entails controlling business operations in several nations. Deresky (208) asserts that, the global business managers must always possess a great understanding of economic, cultural, and political environment of the foreign markets to expand continentally. Walmart International is one of the multinational firms that have a great business reputation in several European and Asian nations. Central to examining the concept of global business expansion, this essay uses Walmart international stores to examine how the international management influenced its distribution across the world.
Overview of Walmart international
Walmart Company is among of the most successful American companies that have managed to triumph in the international market. Walmart has prolifically initiated several international stores in different nations through its broad international management system (Walmart, par. 1). Walmart began as a small American retail company and managed to become an international company in the year 1991, when it expanded its operations to 26 countries outside America. Currently, Walmart is one of the world’s four leading retailers and has approximately 5,500 international stores, with more than 800,000 business associates (Walmart, par. 1). Surprisingly, Walmart’s Global Sourcing Office is available in China, something that indicates successful global expansion.
Despite growing rapidly in the international market, little remains known about the influence and contribution of the international management of Walmart in its successful expansion. In developing an understanding of the global expansion of Walmart, this assessment emphasized in examining the involvement of the international management professionals of Walmart in the expansion of its stores across the world.
Walmart began developing slowly in America some decades and within a span of time, the company grew exponentially across the boundaries and different economies subsequently to becoming one of the leading global retailers (Gereffi and Christian, 573). Despite getting tough moments in expanding across the world, the international management of Walmart thought it was imperative to find the strategic means of penetrating into the global market. In a study examining the impacts of Walmart, Gereffi, and Christian (573), revealed several issues pertaining to the growth and global expansion of Walmart as an international leading retailer. According to this study, Walmart embraces public sociology where it underscores three important global expansion techniques. These techniques according to Gereffi and Christian (573) include, “incorporation of new media and audiences, the need to go global with our research, and the ability to work for change from within.” Driven by the notion that global economies are depending on retail trade to enhance the international relations and economic affairs, Walmart has always remained motivated to expand internationally.
Objectively, since it began expanding internationally, the company has always advocated for a new business strategy that bases its market approach on low prices and international sourcing to gain unprecedented global expansion (Gereffi and Christian, 575). Speaking of international expansion, Walmart has expanded internationally and dominated the retail business in the United Kingdom, Canada, Brazil, Argentina, Germany, and in some Asian countries including China, Japan, India, Chile and even in Africa (Walmart, par. 2). Statistically, research reveals that Walmart has expanded and performed better internationally than in its homeland America. According to Gereffi and Christian (579), “over 80% of the more than 60,000 factories in Wal-Mart’s database of suppliers are in China, with projected estimates for Chinese-sourced projects reaching $30 billion by 2010.” Another study conducted by Deresky (204), indicates that seventy percent of its international sales come from retail outlets known as Seiyo in Japan, Asda of Britain and Bompreco of Brazil. Several inter-reliant aspects of the international management have highly contributed to Walmart’s global expansion.
International management at Walmart
The competent international management team of Walmart has been very influential in ensuring the global expansion of the company, making the firm grow from merely few regional stores initiated in America to several multinational stores (Walmart, par. 2). The international management of Walmart has been effective in understanding different market characteristics in different nations. The principle formula for its success includes low pricing techniques, obsessive inventory control, and abundant stocking of its stores, (Deresky, 204). The management of Walmart international understands that politics differ internationally, and before extending its operations in some nations, they are mindful of the political climates. Before venturing in any nation, they usually analyse the political atmosphere that includes assessing policies governing trading agreements, and political influences among other issues. In so doing, the skilled international management team has enabled Walmart to enter different international markets without breaching business practices of different nations and meet the international business challenges in the most professional manner.
Walmart’s business model
Behind its internationalism, Walmart international has been operating with a unique business model that perhaps proves the best in international market penetration. An investigation undertaken by Gereffi and Christian (576) reveals that the Walmart’s international business model that sets its focus on low product pricing or discount format, strategic business location, and corporate culture, is effectual in globalisation. From their study, Gereffi and Christian (573) assert that most allegations regarding the Walmart’s impact across the borders hinge upon five important sociologically relevant matters. “These sociological themes include the Wal-Mart’s business model, its economic impact, its labour relations, its community mobilization, and its ties to the global economy “(Gereffi and Christian, 574). However, it is clear that all these themes simply reflect its business model. With this business model well understood by its entire international management team, Walmart has managed to manoeuvre successfully through different international markets (Walmart, par. 3). This is an all-round business model that significantly contributes to making Walmart an international retail juggernaut, where all economies benefit from its discounted products.
Walmart international appreciates global cultural differences
Coupled with high experience in understanding the influence of cultural differences in the international business, the international management of Walmart has played a crucial role in its global expansion. Historically, Walmart’s initial experience in some European markets provides considerable indication that its international management team has contributed positively to its global development. Initially, Walmart failed to understand the political and cultural atmosphere of some European markets, and consequently threatened to pull out of Germany in 2006 after performing dismally (Deresky, 203). Moreover, Walmart Company had earlier struggled in surviving in South Korea and Japan when its formula of success failed to conquer these markets. Learning from this important lesson, the international management professionals of Walmart have been in the forefront in analysing political, cultural, and social aspects that influence global market performance (Deresky, 205). The team of professional international managers that include Chief Executive Officer and President, Doug McMillon, have played an essential role in establishing the core elements of international business expansion.
Countries across the world have different people with different cultural norms. Walmart international management understands that cultural difference is an important business concept that needs an inclusion in order to prosper internationally. In order to avoid receiving negative reputation continentally, Walmart’s international management team developed a corporate culture that eminently impressed its consumers. Bound to understanding sociological relevance in penetrating across borders, Walmart’s corporate culture considers small-town values, patriotism, and conformism as important business facets that contribute to its internationalization.
Through understanding socio-cultural differences, Walmart has a testimony when it managed to triumph in the Ozark Mountains of Arkansas, where issues of homogeneity, lagged rural development and isolation affected families. At its inception, Walmart felt that the city retailers had ignored this market segment and when they introduced average brands for average families, both the company and the community grew interpedently. This form of corporate culture fostered by Sam Walton, where cultural and social disparities received attention, made Walmart perform in the small-towns across several nations.
Walmart and its global responsibility
The international management of Walmart has learnt the essence of engaging in global responsibilities (including ethical issues), which have significantly fuelled their global market penetration. Through their competent international management team, Walmart advocates for the corporate social responsibility issues including “preserving the environment, fighting hunger, empowering women, and providing access to healthy, affordable food” (Walmart, par. 2). The practice of improving the social lives of individuals in the foreign environments enables them gain a positive market reputation, which facilitates them to attain an international recognition.
The team of the international managers of Walmart has always ensured proper assessment of the financial and economic factors that include taxation, interest rates, and inflation rates to ensure financial stability (Walmart, par. 4). This management team has always identified and familiarised with issues concerning their potential competitors, foreign trade laws, physical elements, human population, and labour aspects that determine their explosion and penetration into the new markets.
Across all its outlets in the world, Walmart international has unequivocally demonstrated high sense of global social responsibilities that entail supporting the local communities in socioeconomic development. In Argentina, Walmart has a testament in aiding the people against national disasters like the case of 2012, where it engaged in humanitarian aid against flooding and hurricane disasters in Buenos Aires Province (Walmart, par. 2). In the same year, Walmart international management acknowledged the food shortage problems in Argentina and assisted the Food Bank Network, which was a national, and NGO campaign against hunger.
In the Republic of China, Walmart international has continuously supported women development initiatives. In 2012 evidence of China, the company collaborated with the China Women’s Development Foundation (CWDF) to support women empowerment (Walmart, par. 2). These actions of acknowledging community development and mobilization across the world have helped Walmart penetrate several foreign markets (Gereffi and Christian, 577). Corporate culture of understanding the corporate social responsibilities has enabled Walmart to gain good global reputation.
Walmart’s international management has also acknowledged the significance of protecting the environment (Gereffi and Christian, 578). Its international management team has engaged in several environmental responsibilities including water conservation, electricity consumption control, reducing gas emissions, recycling solid waste, and reducing plastic bag usage, which are common causes of environmental problems in China (Walmart, par. 6). Although being one of the polarised issues in almost all its international social and environmental responsibilities, Walmart has at least struggled to enhance environmental standards that assist in reforming its core strategies. Initially as learnt in its collapse in Germany, one of the issues that led to the collapse of Walmart in this nation was its inability to understand environmental and social norms (Gereffi and Christian, 579).
Education being an international development issue, Walmart has unremittingly engaged in supporting the youth development agenda, in which education is one of the core issues promoted by the company. Internationalisation entails understanding the different environmental, social, and cultural issues that make substantial impact in company’s existence, something that Walmart considers integral.
Walmart and global supply chain
Walmart’s history of demise in some nations and markets has provided important lessons that demonstrate significant improvements witnessed in its global expansion. In the South Korea, Walmart record of underperformance where circumstances forced the company to sell its 16 retail stores to a Korean discount chain is significant to understand its present supply chain strategies (Deresky, 206). Lack of competitive supply chain and its misunderstanding of the local retail market in the South Korea, contributed to its demise. The company invested heavily in festive social products and electronic products, which were against the expectations of the customers who rather required food products (Gereffi and Christian, 579).
After desperately tumbling in certain Asian and European markets, Walmart international management team embraced new forms of modernised supply chain strategies in their business model that has so far brought them to a victory. As demonstrated by Gereffi and Christian (583), mainstream modern research on the Walmart international focuses on its supply chain strategies.
Many market researchers argue that one of the major contributors to the downfall of small manufacturers is the continuous demands to improve their supply chain management and cut down commodity prices, something which Walmart already maintains (Gereffi and Christian, 577). Walmart international has a major intent of improving individual’s lives through their live better approach that aims at improving lives across all economies through their low cost product strategy (Walmart, par. 1). Global retailers who collaborate with Walmart in the chain management have indicated that Walmart has driven-commodity chains that have greatly influenced its international reception across all economies.
Since its initial agendas under the founder Sam Walton, Walmart has extensively ensured that its international supply chain management team understands the essence of providing average products for ordinary communities and households (Deresky, 207). Walmart international from its latest report has revealed new and enhanced ethical sourcing strategies that aim at enhancing its rapport with other stakeholders in the global supply chain systems.
Walmart’s trade & labour relations
Globalisation of businesses requires a deep understanding of the aspects related to the trade policies, partnerships, and the labour relations across the borders. In terms of issues pertaining to the international trade, Walmart international has consistently developed good trade partnerships with other multinational corporations (Deresky, 204). To ensure steady development of the import and export relations, Walmart international has always pushed for enhancement of the trade liberalisation that contributes to positive relations with other global corporations (Gereffi and Christian, 577). Throughout its history, Walmart has been an aggressive importer of products fairly from all nations, which has impelled other organisations to bond in partnership with the company.
Almost every Walmart international store has remained unionised. An explicit example of the unionisation of Walmart international is in China, where trade relations of the company have extended to the China Federation of Trade Unions, significantly developing its reputation with the state. In Mexico, Canada and back at home in the United States, Walmart is gradually influencing trade relations with all companies.
A company willing to venture internationally must understand that an aspect of the international labour relations is something to consider. The labour theme is an integral issue across the Walmart’s facilities in the World. Surprisingly, the strong corporate rapport between Walmart and China has impelled NGOs and U.S labour oppositions against the global sourcing model of Walmart to change (Gereffi and Christian, 583). Initially, the U.S national labour committee and some NGOs opposed Walmart’s global sourcing model that favoured and supported nations with moderately fragile environmental and labour standards. Over the years, the company has gradually developed means of acknowledging the spirit of local communities and the essence of considering the local labour in enhancing talent management across the borders.
The international management team of Walmart understands the significance of providing local communities with employment in the company, the need to observe the labour relations, formulating labour unions within the stores, and observing the ethical standards in employment. Walmart international spurns racial discrimination, gender bias, child labour and other unethical employment practices.
Walmart’s financial stability
Finance is the focal point of growth and development of any corporate organisation whether regional or multinational. The international management team of Walmart has incessantly described financial constancy as an aspect that has contributed to its global expansion over the few decades of its extensive achievements. Its financial potency has enabled the company expand exponentially over its transformation period that has enabled the company spend increasing amounts of finance on its global expansion strategies. Walmart ranks among the American heavy spenders of finance in expanding its business within America and outside. As revealed by the Foreign Direct Investment (FDI), statistics indicate that Walmart ranks among the top companies in the global investment as it is also among the companies seeking international breakthrough to dominate profitable new markets (Deresky, 207). With its ability to provide economically friendly products, Walmart international has increasingly enhanced its financial capacity over the few decades that enable it manoeuvre despite the financial crunches of 2007 that led to the demise of several organizations in the U.S.
Walmart’s technological awareness
Technology has become anticipation for many consumers and organisations, and its integration in any organisation positively enhances its global outlook. Technology has grown exponentially across the world and has now become one of the conditions that favour organisational triumph globally (Deresky, 208). Walmart international has understood the essence of having technological expertise in its operations across the globe that makes its reception easy in different nations. According to several investigations, understanding pressure from U.S technological competence in Walmart has significantly assisted the company to expand internationally.
As postulated by Gereffi and Christian (576), due to rising technical need in firms, “Walmart has become “the major drive of technology-based productivity gains in the American economy.” Being technologically competent with well-maintained technical sector, Walmart has remarkably received attention in the global business paradigm. Offshore procurement, supply, and chain management have become efficient and effective through the new technological innovations. Technology has supported internationalisation of Walmart in several ways and there is need to understand them.
Technology has fostered global expansion of Walmart through effectively connecting the company with its international suppliers, stakeholders, and even customers. In terms of the supply chain, technology has helped Walmart international by enabling the company to communicate well with their international suppliers through enhanced logistics and information systems (Gereffi and Christian, 578). For instance, Walmart brought technological efficiencies in ASDA, which was initially a UK supermarket that impelled growth of the company through enhanced supplier relations to unimaginable extents.
Technological innovations within the company have enhanced customer relations where integration of Universal Product Codes (UPC) and those used in restraining overstocking have enhanced customer satisfaction and preferences. The technologically motivated supply chain system has enhanced the rapport between Walmart and its business partners, where initial errors that strained supply chain relationships have reduced over its transformation period. Errors in the financial and accounting have reduced considerably since the inception of technical operations.
Personal views and opinions
Personally, the concept of international management seems to be in its premature stage and although integral in the business realm, little attention has prevailed on this issue. Although with no exact definition, International management is all about multinational organisations and the competence of its management to manage several organisations. Due to insufficient research on this concept, little remains known on the background of the globalisation of Walmart.
Nonetheless, it is impossible to refute that Walmart international should receive praise for its expertise in developing a business model that has successfully enabled the company triumph. One might dispute that Walmart has not proved competitive in the global heights, especially when one considers the history of its partial downfall in Germany, Hong Kong, Japan South Korea, and Indonesia. Despite being a well-learnt lesson, international management might not have contributed to its demise. When closely observed, global politics on international issues especially those involving the Asian economies and America might have contributed significantly to its initial downfall in these nations.
Conclusion
International management is a business practice that entails managing more than a single business unit in different countries. This practice is influential in the success and survival of a business in the foreign markets. Walmart is one of the most successful international companies that have managed to penetrate through the global market with the secret behind its triumph remaining unknown to many. Behind its success, the international managers led by Doug McMillon and other firm executives have played a critical role in the growth of its stores internationally. A team of the experienced international managers in Walmart has been critical in identifying, assessing, and developing means of conquering the new international markets.
Among other business environmental issues, they analyse the international trade policies, economic factors, political, socio-cultural, physical, and even the technological aspects that influence their ability to penetrate into the new markets. With its discount business approach where consumers of different economies manage to purchase Walmart’s products, the international team has been integral in its global expansion.
Works Cited
Deresky, Helen. International management: managing across boarders and culture text and cases, London: Pearson Education International, 2008. Print.
Gereffi, Gary and Christian, Michelle. “The Impacts of Walmart: The Rise and Consequences of the World’s Dominant Retailer.” Annual Review of Sociology 35.1 (2009): 573–591. Print.
Walmart. Walmart International. 2013. Web.