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Published by:
IBS Center for Management Research (2016)
14 pages
Data source:
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The case discusses the strategy adjustments made by the world's largest retailer, Wal-Mart, while operating in the world's most populous country, China. US-based Wal-Mart started operating in China in 1996 but managed to expand to only 415 stores by 2015. The retailer, like many other international players, faced problems in China and lost the trust of Chinese consumers. Wal-Mart's globally successful policy of Every Day Low Prices failed in this market. Moreover, the retailer had to tackle fierce competition from local retailers, and was involved in various scandals which further tarnished its reputation. Following these hurdles, it became difficult for Wal-Mart to sustain and expand its revenues in the country. Therefore, the retailer adjusted its existing strategies to overcome the problems it was facing in the Chinese market. Wal-Mart made its testing and food quality standards stringent and increased investment to ensure food safety in China. Further, the case explores how Wal-Mart enhanced its reach among Chinese consumers by entering the e-commerce market. The retailer's attempt to understand the Chinese shopping culture is also discussed. The case illustrates various reasons given by industry experts on whether China could be considered as an exceptionally tough market for international companies, including retailers. Analysts opined that the steps taken by Wal-Mart to strengthen its holding in the different market environment of China looked promising. However, they pointed out that there was no guarantee that the retailer would succeed and that only the coming years would reveal how well the strategy adjustment would work for Wal-Mart.
Learning objectives:
1. To recognize the challenges faced by Wal-Mart in China, an international market for the retailer. Discuss various factors which led to tarnishing Wal-Mart's reputation in China. 2. To analyze the role of consumers' preferences and choices in deciding any retailer’s strategy when it operates in the foreign market. 3. To understand the two different approaches of standardization and adaptation, and the related marketing mix. Since China was altogether a different market from other global markets, which approach should the retailers follow while operating in China. 4. To understand how a generic strategy of cost leadership failed in the case of Wal-Mart China. 5. To derive some management lessons for managers of international players operating in China from the case of Wal-Mart’s struggle and strategic adjustment.
China, Retail, 1996-2015, Very large
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