International Business: Wal-Mart Assignment

Essay by khalod_ksa May 2006

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Question #1: Do you feel that the company has dealt with each of these issues effectively? Justify.

Answer: Wal-Mart has faced several quandaries in its efforts towards continuous domestic and international development. One issue which this company had to deal with was facing protesters who did not want Wal-Mart to be built near their home. These people were fighting against Wal-Mart because of the fear that this large corporation could in fact force smaller local stores out of business. Protesting against the construction of a new Wal-Mart in his area, one man had posed the question, "Low prices at what cost?" These people felt as though Wal-Mart would create a detrimental loss of good jobs nearby. In response to this, Wal-Mart allowed a vote to occur by the city council. The company handled the situation well, and only went through with the construction once they had held this vote.

However, these citizens were still offended by the creation of this store locally.

Wal-Mart is able to keep their prices so low because of low-cost Asian imports. While Chinese workers work in factories making 25 to 50 cents an hour, Wal-Mart sells items for the lowest costs possible. This makes competitors unable to compete with these amazing prices, though this is ethically wrong. This issue has been addressed on several occasions, and Wal-Mart associates respond by saying that the company currently fully obeys China's Trade Union Law. The world's largest retailer fails to be based upon ethics, which enable many to be against this company.

To keep these low prices, Wal-Mart also has very low wages for all of its workers- inside and outside of the country. This presents a problem with the workers, but not much action is taken to change this. With the number of people which Wal-Mart employs, a raise in the pay would greatly affect the gross income of the company.

Question #2: Identify and explain two competitive advantages that Wal-Mart currently has over other companies in its industry.

Answer: Wal-Mart has many advantages over other companies in its industry that pose problems for competing companies. One great advantage that they have is their unbeatable low prices. In the documentary, one man said that the price of a doll is about 5 dollars at Wal-Mart when made in China, but would be around 70 or 80 dollars if it was made in the United States. These prices are impossible to beat for competitors, and in addition, Wal-Mart is already known for these prices. When looking for cheap items, people will easily turn toward the lower costs at Wal-Mart rather than its competing companies. In addition to this, since this company is the most profitable in its industry, many companies want to pitch their products to them, giving them an advantage once more.

Secondly, Wal-Mart's ability to expand abroad as it has makes it simple for them to have worldwide domination. They continuously have to glocalize their products as they did in China, Brazil and Germany. Wal-Mart is very well-known, since it has 1700 stores in 10 countries outside of the United States. They are known for happy faces, which are seen each time someone enters a Wal-Mart store. With its low prices and ability to expand abroad with a strong company name, Wal-Mart is automatically given great advantages over other companies in its industry. Competition is still growing with each day, and many companies will continuously try and compete with this company's price and good name.

Question #3: In your opinion, what is the biggest challenge that faces Wal-Mart as it attempts to further expand its position in the global marketplace? Explain.

Answer: As Wal-Mart continues to expand its position in the global marketplace, it may face many challenges. In my opinion, the biggest challenge that it will have to face is dealing with competitors. As companies throughout the world expand, they strive to be the best. Wal-Mart is the most successful out of all of its competitors, and these smaller companies realize this. This company must focus on service on the front end once more, to ensure that their customers stay loyal to them. Competing companies could band together to surpass the level of success reached by Wal-Mart, and to ensure that this will not happen, the corporation must enforce its policies and guarantee that their suppliers remain efficient and strive to improve constantly.