Walmart's international operations and global expansion strategy

¶ … Wal-Mart Stores, Inc.'s International Operations Process

Current International Operations Process

As the largest retailer in the world, Wal-Mart's international operations process is of course highly complex, but it is still fairly straightforward to understand. The company's international interests are far-flung and assume various forms around the world, but Wal-Mart Stores, Inc. ("Wal-Mart") organizes its business into three core segments to accomplish its operations processing:

Wal-Mart Stores. The Wal-Mart Stores segment is further comprised of three different retail formats, 1) Discount Stores, 2) Supercenters and 3) Neighborhood Markets (all of these format are located in the United States) (Wal-Mart, 2005).

Sam's Clubs. This segment consists solely of membership warehouse clubs, also all located in the U.S.; at the end of last year, Wal-Mart operated 1,478 Discount Stores, 1,471 Supercenters, 538 Sam's Clubs, as well as 64 Neighborhood Markets in the United States (Wal-Mart, 2005).

International. (Wal-Mart, 2005). The final segment operates in eight countries and Puerto Rico; like the company's flagship stores and clubs, this segment also competes in a variety of formats depending on operational necessity and consumer preference. The company also owns an unconsolidated 37.8% minority interest in a retailer (The Seiyu, Ltd.) in Japan; further, in February 2004, the company acquired a supermarket chain in northern Brazil, Bompreco S.A. Supermercados do Nordeste, with 118 "hypermarkets," supermarkets and mini markets (Wal-Mart, 2005).

This global expansion was accomplished through a strategic combination of new store construction and acquisitions (International Operations, 2005). According to the Fact Sheet on International Operations, "This strategy has given us excellent market penetration and opportunities for future development"; further, this approach has been enormously successful, with international sales reachingd $47.5 billion in fiscal year ending 2004, a 16.6% increase over the previous year, and operating profits rose to $2.3 billion, an increase of 18.6%. The company adds that Wal-Mart International plans to open 155 to 165 new stores in existing markets this year (International Operations, 2005).

Internal and External Customers.

According to Harry E. Chambers (2001), internal customers are defined as any individuals, groups, departments, or teams within your organization that directly benefit from an individual's efforts. "They are those you serve within the organizational structure," he says, "and those who support you in your service to others. They may be the next link or the preceding link in the process chain" (p. 185). By contrast, external customers defined by Chambers are being "those outside your organization who directly receive the end results of your collective efforts. They may be customers, clients, patients, student members, constituents, taxpayer, etc., and they are the individuals or groups who benefit from what you do" (p. 186). External customers will be the ones who will either accept or reject the ultimate product or service a company provides. According to Chambers, "With external customers, there is usually a monetary exchange. You provide a product or service for which they pay money" (p. 186). The author also emphasizes the importance of providing timely services to both internal and external customers since the company's success depends on it. A recapitulation of Wal-Mart's internal and external customers in its international operations is provided below.

Internal Customers. Depending on the hierarchal level involved, internal customers for the operations process function for Wal-Mart's International business segment would consist of supply chain managers, individual store management teams, local vendors, country managers, and the top management at the company's headquarters in Bentonville, Arkansas.

External Customers. These will be the same for virtually all of the company's international operations; while there will be distinct cultural differences involved, the bottom-line for any major retailer is its external customers, the typical consumers. The company is careful to tailor their local operations to meet the specific needs of the populations it is serving; according to the Wal-Mart Fact Sheet on the topic, the company tries "to offer our customers what they are used to buying. For example, we offer some Mexico food brands in our stores that are in high Hispanic population areas. We've experienced international success through our ability to adapt Wal-Mart's unique concepts to each new country" (p. 2).