Content area
Full Text
Successful companies often internationalize in stages, with a less committed international entry mode (e.g. exports, joint ventures) and gain knowledge in the process that helps to prepare for an increasingly committed foreign entry mode (e.g. acquisition, greenfield). Knowledge about the culture and political systems in these early forays coupled with significant knowledge about their own business capabilities position firms for success. The ability to identify where their specific skills, capabilities and competencies lie contributes to success.
In recent years, information technology, communication and travel were expected to contribute to a homogenization of international consumers, but differences in national culture have remained and perhaps have grown more diverse (de Mooij and Hofstede, 2002). International expansion must always consider the role of national culture in business dealings and cannot assume that computing technologies are used in the same way around the world.
Walmart has learned these lessons through its expansions into many countries, beginning with joint ventures, then expanding by direct purchases of established retail outlets or direct entry. From its small town beginnings in 1962, Walmart has grown to be the largest private employer in the world, fueled by its strategy of “everyday low prices”, made possible by the relentless pursuit of supply chain efficiencies. However, this growth has not been achieved without controversy. The company has been criticized for labor practices, disruption of communities, treatment of women, abuse of suppliers and driving manufacturing jobs overseas, among other things. And growth has not been without reversals, particularly in the company’s efforts to expand internationally.
While there is no cookie cutter approach to successful international expansion, companies generally need to ask two basic questions as they consider making such a move:
What key business competencies have been mastered in the domestic market that might be “exported” to other markets?
How do we tailor these competencies to address cultural differences with goals of acceptance and meeting business demand in international locations?
This paper examines cases where Walmart has been able to export its domestic competencies in ways that are acceptable in other cultures, as well as cases in which it has not.
The beginning of international expansion
Founded and thriving on the principle of economies of scale, Walmart began selling for less in small...