Walmart's China expansion: learning from international failures through stakeholder engagement
WalMart succeeded in China despite experiencing massive failures on Germany and South Korea. This is a result of their focus on creating a more open interchange of information with the Chinese government and giving the government a clearer view of how the company would progress. This also allowed WalMart to better plan their value chain with more cooperation than they had ever had in the past.
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Wal Mart Case Continuation
WalMart in China
Annotated Outline of Final Project
WalMart Globally: Why a Fast-Fail Mentality Pays
Failures in Germany & South Korea a Result of Strong Ethnocentrism
Both failures show the WalMart corporate culture had a very strong bias towards ethnocentrism (Ming-Ling, Donegan, Ganon, Kan, 2011) including a believe in their distribution and supply chain systems being so advanced that they could transcend cultural boundaries (Taylor, 2003).
Failures Showed Weaknesses In Managing Governments And Ignorance Of Their Roles As Stakeholders
German government sues WalMart for violation of worker rights, specifically in the area of hours they attempted to push workers to be on the job (WalMart Investor Relations, 2013).
Chinese government courted as a key stakeholder and full disclosure given over how satellite uplinks are used (Ming-Ling, Donegan, Ganon, Kan, 2011) and the WalMart executive management team starts thinking with the same Long-Term orientation (LTO) as exemplified in the Hofstede Model of Cultural Dimensions. This is seen in how strategy is defined for market entry throughout the WalMart annual reports & Securities Exchange Commission (SEC) filings (WalMart Investor Relations, 2013).
II. China -- The Start Of A New Era For WalMart Global Expansion
a. Think Infrastructure And Stakeholder First, Then Value Proposition
i. Supply Chain Variations in China
1. Mapped to existing supply chain management processes WalMart was excelling at in western nations (WalMart Investor Relations, 2013).
2. Gap Analysis Completed -- Looking for where speed and time-to-market were the critical factors for supply chain items that were unique to the Chinese market (Ming-Ling, Donegan, Ganon, Kan, 2011).
3. Chinese consumers shop four times as more frequently than American counterparts, as the former want to have fresh seafood, produce and other ingredients for their food preparation. This puts an exceptional level of stress on a supply chain (WalMart Investor Relations, 2013).
ii. Supply Chain Piloting Pervasive At WalMart China
1. Goal: Get an assessment of how accurate ship and delivery times are for Chinese-based suppliers.
2. Defining purchasing and procurement strategies that are effective across the many provinces of China, including the variations in currency were completely modeling and piloted before launch of a single store (WalMart Investor Relations, 2013)
III. WalMart Succeeds In Redefining Their Value Chain in China
a. Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales and Aftersale Service -- all primary activities were galvanized around the expectations of the Chinese customer and the need for transparency the Chinese government required (WalMart Investor Relations, 2013).
b. Support Activities including Firm Infrastructure, Human Resource Management, Technology Management and Procurement designed to support Joint Venture (JV) market access strategy initially (WalMart Investor Relations, 2013).
c. Value Chain Transparency -- Using Analytics and Reporting to give the Chinese communist party a sense of ownership over the growth of WalMart. Shared EDI counts and supply chain cycles, allowed Shanghai pilot store data to be seen by the Chinese government so they would also have ownership over results.
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- Ming-Ling, C., Donegan, J.J., Ganon, M.W. & Kan, W. 2011, "Walmart and Carrefour experiences in China: resolving the structural paradox", Cross Cultural Management, vol. 18, no. 4, pp. 443-463.
- Porter, M.E. 1986, "Changing Patterns of International Competition", California management review, vol. 28, no. 2, pp. 9-9.
- Taylor, R. 2003, "China's Consumer Revolution: Distribution Reform, Foreign Investment and the Impact of the WTO", Asian Business & Management, vol. 2, no. 2, pp. 187-187.
- WalMart Investor Relations, 2013. Investor Relations. Retrieved May 8, 2013, from Wal-Mart Investor Relations and Filings with the SEC:
- http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-estimates ↗
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