Walmart’s Global Expansion to South Korea

Introduction

Walmart is a retail company that owns a chain of discount department stores, hypermarkets, and grocery stores in the United States, in addition to the Sam’s Club warehouses. The company, founded by Sam Walton in 1962, has its headquarters in Bentonville Arkansas. As of October 2021, the company had more than ten thousand stores plus clubs in twenty-four nations, operating under forty-eight different names. According to a list by Fortune Global 500, as of 2020, the company was the largest by revenue, recording five hundred and forty-eight billion dollars.

In the current modern business surroundings, firms can diversify their businesses to nations other than their nation of incorporation. When operating beyond territories, leaders decide as well as develop approaches that are responsive to the desires of global plus domestic consumers. The retail sector is a very competitive segment in an economy, and companies operating across borders, require effective strategies to succeed. Despite owning stores in several nations, Walmart desires to continue expanding internationally. This paper analyses the company and suggests why expanding to South Korea is a wise decision.

Organization Analysis

Material Requirement Planning System

In the retail industry, offering customers low prices with reduced purchasing charges is the primary goal while directly buying materials from manufacturers. Walmart is a great negotiator in procuring materials (Alsharari, 2021). The steps that it follows include meeting vendors and understanding their cost structure. It trusts in long-haul relationships with vendors, primarily local plus regional vendors as well as suppliers. The firm procures only after ensuring the unavailability of the product at a reduced price. The material requirement planning is carried out via an international data-sharing system referred to as Retail Link. The system is designed to close the divide between the value chain and the suppliers by offering information to the latter about inbound and outbound logistics thus reducing delays in distribution and costs. When distribution costs are cut, the delivery increases at a significant rate. By viewing updated records on data, obtaining the inventory level data plus downloading purchase orders could be accomplished via a retail link of the company.

Forecasting, Capacity Planning, and Scheduling

Walmart has adopted a business model that can replicate stores across the nation by avoiding competition. The company has very loyal manufacturers, and therefore the flow of goods is uninterrupted. Consumer demands in the market are better predicted by them via analysis of collected market data. The SMART Forecasting team at the firm’s labs has designed an innovative, scalable, cloud-agnostic platform to improve the company’s capacity to forecast consumer demand while bettering items in stocks and decreasing food wastage.

The capacity planning elements for the company include products, services, plus human resources. This should be in consideration by making sure that the facility layout also conforms to the consumers’ behavior (Hunt, Watts, & Bryant, 2018). For instance, separating the consumer care desk from a cashier’s counter. Recently, Walmart launched an advanced scheduling system that is supported by the JDA Workforce Management solution from Scottsdale (Alsharari, 2021). Its advanced and predictable scheduling system enables more than one million associates to check schedules, change shifts, and pick up unfilled shifts.

Current Planning Functions

At the center of Walmart’s approach to replenishing inventory effectively is a logistics practice called cross-docking. This means the direct transit of products from inbound or outbound truck trailers without the need for additional storage (Alsharari, 2021). This is accomplished by unloading goods from an incoming semi-trailer truck or railroad car as well as directly loading the materials into outbound trailers, trucks, or rail cars. Products from suppliers have been delivered to the company’s distribution centers, where the product is cross-docked and afterward taken to the firm’s stores.

Walmart like many companies in the retail sector, relies on timely delivery, price reduction as well as service quality provided by their suppliers to earn more profit. Successful management of supplier performance impacts the entire supply chain’s quality. This is why the company sees the importance of establishing an efficient technique to improve it and ensure the quality of products and services. Evaluating and comparing supplier performance, ensures and maintains the best services possible and eliminates suppliers who do not adhere to performance requirements. In the same manner supplier performance impacts current planning functions, it is also connected to customer demands. Its management sets the stage for various suppliers to identify consumer needs as well as expectations. Understanding what people want is helpful as the company understands how to set the pricing as individuals always prefer goods at the lowest possible prices.

The logistics practice by the company, which is cross-docking as mentioned earlier, ensures that the inventory, as well as transportation costs, are shallow, decreases the transportation time, and ensures efficiency. Walmart’s drivers constantly deliver products to distribution centers where the goods are stored, repackaged, and distributed without being held in storage (Martin, Veiga, & Galhera, 2021). Items will cross from a loading dock to another dock within twenty-four hours, and the trucks would otherwise return empty unsold merchandise. The approach has significantly lowered the company’s costs, enabling it to pass the savings onto its consumers with highly competitive prices. Thus, the company can enter into international markets without the need to invest in an attempt to prepare for global expansion.

Facility Location

Important Factors

Two factors may pose a challenge to Walmart’s ambitions of entering international markets that is cultural differences and state set of laws. The global business space is usually plagued by diverse cultural problems (Martin, Veiga, & Galhera, 2021). This is among Walmart’s most challenging hurdles in its desire to globalize. In Asia, the local communities offer resistance to the company. For instance, it is viewed as one that is influencing plus grabbing business opportunities from local businesses. In other cases, the local trade communities put pressure on the authorities to deny the firm permission to operate. They do all this in an attempt to protect their interests by dragging in the community. When the resistance from local traders persists, it affects the distribution of the goods to those markets, affecting the whole business. The variation in culture is a factor that Walmart has to persevere to open stores in other places.

When trading internationally, a company must be wary of nations’ policies. Despite thriving in the United States, in other nations, Walmart is viewed as just another international investor targeting to exploit a country’s financial and human resources (Hunt, Watts, & Bryant, 2018). For instance, this was the case when the firm decided to enter China. The country offers a great market since it is densely populated. However, the regulations of the government were too strict and restrictive that they curtailed the company’s distribution operations to Chinese markets. The government also restricted the firm to specific counties to reduce competition.

Ranking

Regarding ranking, it is safe to state that both cultural differences and state set of laws are significant and could affect the company’s chances to open new stores internationally. For example, regarding cultural differences, with constant resistance from locals and local traders, it is hard for operations such as distributions to work. Additionally, regarding the state’s set of laws, it will be difficult for Walmart to conduct any business operations without cooperation from the government of the host nation. The cultural differences factor is awarded 0.5 while the state set of laws is awarded 0.5 as well which means that the scale factor is 1.

Factor Rating Method

The ideal market for Walmart to invest in an attempt to enter is the South Korean market. Data from the results of the factor rating method on the two factors mentioned above indicate that the company should continue with a plan to set up new stores in South Korea since they have an average weight on the decision. The issues have affected top United States companies in the Asian market, and thus, the firms have developed strategies to counter this. This is promising since the retail company can study approaches other successful companies have used to withstand the pressure from local businesses and authorities.

Conclusion

The paper has looked at one of the top organizations in the retail sector, which is Walmart. The firm has thrived so well in the United States to the extent it has explored other international markets. For instance, the company had more than ten thousand stores plus clubs in twenty-four nations worldwide. This is very impressive, but still, the company is not done yet in its attempt to expand globally. The paper suggests that Walmart enters the South Korean market despite the possible challenges it could face. According to findings from the factor rating method, the firm should pursue that market. The likely challenges have impacted other top United States firms internationally, and Walmart can learn from how the companies tackled the issues.

References

Alsharari, N. M. (2021). Management accounting practices and e-business model in the US Walmart corporation. In 21st century approaches to management and accounting research. IntechOpen. Web.

Hunt, I., Watts, A., & Bryant, S. K. (2018). Walmart’s international expansion: Successes and miscalculations. Journal of Business Strategy, 39(2), 22-29. Web.

Martin, S. B., Veiga, J. P. C., & Galhera, K. M. (2021). Introduction: Labor contestation at Walmart in Latin America as test case of global diffusion by multinationals. In Labor contestation at Walmart Brazil (pp. 1-10). Palgrave Pivot, Cham. Web.