Research Paper: Business in Romania

[Name of Instructor]

Abstract

Wal-Mart Inc. is the world's no. 1 retailing store, based in the U.S. The purpose of the paper is to analyze the conditions of opening a franchise of Wal-Mart in Romania. The paper provides a brief overview of Wal-Mart and the political and social conditions in Romania. The paper recommends opening up a Wal-Mart store, in Romania, by acquiring a local retailer.

Business in Romania

Introduction

The purpose of the paper is to analyze the conditions of opening a franchise of Wal-Mart in Romania. For this purpose, the paper presents a brief overview of the Wal-Mart. The paper also discusses the rationale behind choosing Romania, the mode of entry and the macro environment of Romania. The plan to mitigate potential risks, identified in the analyses of macro environment of Romania, has also been discussed in the paper.

Wal-Mart

Wal-Mart Stores Inc. is a U.S based multinational retailer chain, bigger than Europe's many other retail chains such as: Tesco, Metro AG etc. Wal-Mart operates under the primary industry of Warehouse Clubs and Superstores. This industry is comprised of 20 major U.S companies having 4000 stores, with estimated annual revenue of approximately $360 billion (Troy, 2011). The U.S warehouse club and superstore industry is highly concentrated and the top four companies account for 90 per cent of the total annual revenue.

The products and services of Wal-Mart include grocery, entertainment, health and wellness, hardlines, apparel and home. The target market of Wal-Mart Inc. is the families and individuals with modest income.

Experience in International Markets

Wal-Mart opened its first store in 1991, in Mexico, by establishing a joint venture with Cifera, the largest Mexican retailer. This initial step of expanding into international market was largely criticized. In fact, Wal-Mart made a number of faulty steps that made the critics proved right (Wal-Mart: Mexico's Biggest Retailer, 2001). However, Wal-Mart's experience in Mexico aided in meeting up with several issues and proved to be a cornerstone in opening up other stores in Canada, Asia, Africa, Europe, and South America.

Reasons for International Expansion

Wal-Mart established its own stores in Argentina, Brazil and China, and accounted for more than $35 billion international revenue (Rocha & Dib, 2002). The market saturation in U.S.A is one of the main reasons behind Wal-Mart's international expansion. The other reasons include: reaping vital economies of scale by expanding internationally from its global buying power and competing with the global competition ...