Wal-Mart Stores: “Everyday Low Prices” In China Essay

661 WordsMay 1, 20123 Pages
Case Write up WAL-MART STORES: “EVERYDAY LOW PRICES” IN CHINA Executive Summary Despite its humble beginnings in Arkansas in 1962 the first Walmart that Sam Walton opened generated sales of $975000 and 17 years later after expanding and opening several more stores, their sales “surpassed $1 billion.” Mr. Walton's insistence for discount prices or “Every day low prices” as well as tactics like opening discount stores in towns of less than 50,000 people, thus barring other competitors like Kmart by meeting the market's demands, led to his rapid expansion and growth. Walton's idea of pinching every penny the company earned encouraged efficiency within the company and also drove its suppliers to increase efficiency to meet its demands. Proof of miserly conduct is further shown by the fact that employees, even top level CEOs, that travel for Walmart on business are known to ride in coach class seating and even split a $49 a night room to save a couple bucks. Despite being ranked as #1 in Fortune 500 in 2002 and named the most admired company by Fortune in 2003 and 2004, they still sat at 20th among the top 25 chain stores in China. One of its world competitors, the French Carrefour, ranked 5th and unlike Walmart had begun to see numbers in the black. Finally, in 2005 the President of Walmart China resigned and just a year later in 2006, the company retreated completely from Germany. These two things did not cast a very good light on the events to come for the company when trying to gain strength in China. Analysis of Key Strategic Points China's entry to the WTO in December 2001 sped up the growth of China's emerging market, but this didn't make it easier for foreign companies to jump in. Not only did local protectionism pose a threat to costs due to “taxes and fees” to Walmart in different provinces but companies like Carrefour were welcomed by most Chinese

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