Wal-Mart Case Study Analysis

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Analysis of Wal-Mart's Entry Strategy:

One of the biggest challenges the company had to face while entering into the Mexican market pertained to the maze-like coherent existence of both conventional and contemporary retail merchandising patterns. Wal-Mart therefore faced challenges not only at strategic levels, but also in execution of its operations. An analysis of the same is as follows:

Weaknesses:

The entry strategy initially designed was aimed to resonate with the company's core competencies. However, the biggest drawback was the failure to embrace the variations this potential market possessed in terms of traditional retail behavior and also the wide acceptance and predominance of small-scale retailers.

The absence of adequate research to gauge the buying behavior of consumers in Mexico struck as a major weakness for the company. As compared to American merchandise culture, Mexico offered a stark variation in its buyer habits. A majority of the buyers preferred purchase of fresh produce due to lack of large refrigerators and also due to the existence of local neighborhood stores. Purchase in bulk quantities was not a preferred buying method, and the company found it difficult to justify its economies of scale.

Strengths:

Wal-Mart's selection of Mexico as a growing market was perhaps justified by the company's vision and core competencies and its match to the customer profiles and the demographics of the market. In a country where almost seventy percent of the population survived in conditions well below the poverty line, the idea of retail stores offering better quality products at reduced prices was indeed luring. The reputation of the company and its low-pricing strategies were able to build quick consumer interest and acceptance. It is worth mentioning here that prior to Wal-Mart's entry in the Mexican market, the existing buyer habits revolved around frequent purchases of day-to-day products from neighborhood street shops. The products offered by these local players were generally manufactured locally and failed to offer superior quality. Wal-Mart on the contrary built its differentiation by offering cheaper and higher quality products. Mexico did not boast a large competitive front in terms of organized retailing. Some of the key players included Soriana, Gigante and Commerical Mexicana. Wal-Mart entry strategy was then customized to focus on its operations. True to its mission, the company offered quality by effectively managing its database. Logistics and transportation costs were reduced by building efficient distribution networks throughout the country. With the development of logistics came the flourishing of an efficient and cost-effective supply chain, the resultant cost reductions could thus easily be transferred to the consumers.

The size of Cifra and also the geographical proximity of Mexico were factors that contributed to the decision. This, in addition to Wal-Mart's competency of managing its inventories effectively through the development of regional distribution centers.

The store infrastructure was customized to allow for maximum display of the merchandize. The consumers were attracted by low cost promotions and sales. Security checks as per the standard regulation of the country were taken to offer a greater comfort zone for the ...