Walmart in the Chinese Market.edited

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Walmart in the Chinese Market Introduction Walmart was founded in 1962 by Sam Walton in the United States, where he opened his first store in Rogers, Arkansas. The company has tremendously grown to be the largest retail store in the world, having started operations in 27 countries and having 11,200 stores across those countries. Walmart Company established its first store in China in 1996, and to avoid most of the pitfalls that most of the businesses have found themselves making a blunder, Walmart has been able to adapt business model that fits to the cultural differences as well as local sourcing to ensure that the price of their products remain as low as possible. With the aim of ensuring that the needs of various segment of customers are met, Walmart China had to operate three retailing formats (Yuan et al., 2021). The first one is supercenters where its aims to save customer’s money and time. To ensure that all customers get the same price of the products, Walmart China harmonizes its prices across all their shops in China. The second format is Sam’s Club in China, where only the members are allowed to have goods at a low cost as well as able to buy in bulk for either their personal use or for their businesses. The third format is Neighborhood Markets which includes the stores that are located near residential areas so as to ensure shopping experiences has been made easier. Walmart China International Management Aspects. i. Entry strategy Walmart entered the Chinese market in 1996, establishing its first shop in Shenzhen. Walmart has been able to maintain its market entry strategy throughout the years, and this has been influenced by three factors. First, Walmart ensures that it sources locally for the products it offers to its customers. Sourcing for products locally helps Walmart to cut costs associated with importation, thus being able to keep its prices low (Wiltshire, 2021). Sustainable development is another

factor that is an entry strategy for Walmart. In 2018, Walmart built its first environmentally friendly store, which helped them to save 40% of the energy they were using. The third factor is online presence in the Chinese market. Given that more people are shifting to online shopping, this factor has made Walmart tap into the potential of online customers, hence being successful. ii. Market expansion strategy and global business strategy Walmart continues to expand its operations in China and globally. In 2021, China announced its plan for the next five to seven years to open more than 500 new stores and warehouses in China. This can be attributed to Walmart's sales growth in China, which saw the company realize a 6.3% increase. Walmart's expansion is aimed at reaching low-tier customers, hence increasing the sales of fresh groceries. Walmart is aiming to have at least 40 new stores each year in the second and third-tier cities in China (Badiane & Xiaodan, 2019). Globally, the company has 11,200 stores which are located in 27 countries. iii. International marketing- Targeting, Positioning, and Product strategy Walmart Target strategy : Demographic and psychographic segmentation are the targeting strategies that Walmart uses. The company understands the psyche of the customers hence knowing that all that the consumer wants are goods of high quality at a low price. Thus, Walmart introduced a slogan, “Every Day Low Price” strategy to their customers, which motivates the customers to visit the store and seek the products that are offered at a low price. Walmart Positioning strategy : The Company’s position strategy is low prices and satisfied customers’ services. Low price is achieved through local sourcing, which contributes to 95%, while satisfying customer services are stressed through friendly services, a good shopping experience, and quality goods.

Walmart Product strategy : Walmart strive to provide quality products to their customers. Due to their "Every Day Low Prices," products are priced in a competitive way which gives them a competitive advantage compared to their competitors (Pandey et al., 2021). iv. International Marketing - Pricing, Place, and Promotion strategy. Walmart Pricing strategy : Walmart's pricing strategy is determined by bulk sales which allow them to maximize their sales instead of overpricing products. Through their procurement department, bargaining is done to ensure that the cost of the supply chain is low, thus able to keep pricing low. Walmart Place strategy : Walmart locate its stores in an urban setup where there is a dense population (Pandey et al., 2021). This is done to maximize their market reach as well as accessibility for their customers. This strategy has helped the customers as well as Walmart given the convenience that customers get while doing their shopping, and on the hand the delivery process when the customer decide to go online route. Walmart Promotion strategy : Due to their nature of procuring products in large quantities, Walmart is able to benefit from the economies of scale. The economies of scale help them buy in bulk hence selling these products at relatively lower cost to their customers. This makes them to offer their products, thus becoming more competitive than other retailers. v. Walmart’s Organizational Structure To ensure effectiveness and clarity in the management of Walmart stores, the company has adopted a hierarchical functional organizational structure in its operations in Chinese markets. The organizational structure feature pertains to 2 vertical lines of authority and command. The top manager’s issue directives and organizational mandates are implemented by the middle-level

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managers. The functional-based organizational features constitute groups of employees who perform specific functions. Other departments include HRM, technology, and marketing. The structure has helped the company manage its expectations, and enhance better decision-making. vi. Communication Flows and Effectiveness Walmart employs a top down communication strategy which entails the information being passed form the most senior to the most junior, and vice verses. As a result, communication flow is maintained to avoid confusion. New policies and organizational strategies are developed and the corporate headquarters and passed directly to regional managers (Alsharari, 2021). The regional managers pass down the information to the store managers. Communication is enhanced through effective monitoring and control by all the managers. There are lengthy communication and approval processes which in the middle level, making lower levels to effectively adjust their business practices. This effective communication flow has helped the company build strong employee relations and it has enhanced the ability to understand and even share feelings and ideas among corporate members. vii. Decision-Making Process and Authority Decision-making is a fundamental and critical activity of Walmart in the Chinese market. In the Chinese market, Walmart has developed and adopted 10 business strategic decision areas of operations. The managers utilize their customer analytics to induce resolutions over marketing procedures. Consumer behaviors are tracked, analyzed, and from Walmart's website, shared across stakeholders for decision-making (Yanrong, L. I. U, 2013). This step-by-step decision- making framework has helped Walmart develop more thoughtful and deliberate decisions. As a result of the analysis of the customers shopping behaviors, most of the needs and preferences are

met hence satisfying their customers which leads to customers’ loyalty. In addition, when Walmart wants to introduce another store or want to implement another plan, customers are involved in most cases through research and survey that are passed to a section of customers. Their responses are very vital when it comes to the Walmart decision making. viii. Walmart’s Negotiation Type and Tactics Negotiation Type Walmart implements a competitive negation style in the Chinese market. This style helps the company achieve short-term and critical business agreements easily. This negotiation style gives a competitive edge in Chinese and global markets. However, Walmart Company has been accused of mistreating their suppliers through buying the products at low cost so that they can sell them to their customers at lower cost, hence giving them a competitive advantage over their competitors (Waddock, 2022). This shows their bargaining power is high while that of their supplier is low due to existence of various suppliers. Given the competition that exist among the suppliers, Walmart take advantage of the situation, hence ensuring that the benefits becomes theirs, and are extended to the customers. Negotiation Tactics Price Tactics Walmart ensure that they have competitive procurement department that is able to negotiate with their suppliers and ensure that the company has realized good profits. Given their utilization of the economies of scale while procuring for their products, they are able to buy a lower prices which enable them to resell the goods at a competitive prices than their competitors (Neebe, 2020). In addition, sourcing locally for the 95% of their products allows them to cut a lot of

production cost, hence making the price of the products to the customers to be as low as possible. These pricing tactics help the company influence both future success and its long-term continuity. The tactic helps the company determine and realize its profits from its sales and aid products/service competition in Chinese markets. Generally, negation pricing tactics have helped the store develop courteous and more constructive business interactions in China through win- win strategies. It has also helped the company create business concessions that have accrued a competitive advantage in business operations across the Chinese markets.

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References Wiltshire, J. C. (2021). Walmart Supercenters and Monopsony Power: How a Large, Low-Wage Employer Impacts Local Labor Markets. Job market paper . Badiane, K., & Xiaodan, F. (2019). Strategic Analysis and Competitive Sustainability of Hypermarkets in China: Wal-Mart versus RT-Mart. British Journal of Economics , 16 , 2. Pandey, R., Dilip, D., Jayant, J., Vashishth, K., Nikhil, N., Qi, T. J., ... & Qhi, L. Y. (2021). Factors Influencing Organization Success: A Case Study of Walmart. International Journal of Tourism and hospitality in the Asia Pacific (IJTHAP) , 4 (2), 112-123. Yanrong, L. I. U. Strategy adjustment of Walmart China. Management Science and Engineering, (2013), 7(4), 80-100 Neebe, K. (2020). Sustainability at Walmart: Success over the long haul. Journal of Applied Corporate Finance , 32 (2), 64-71. Waddock, S. (2022). Corporate Responsibility: The Dark-Side Paradoxes of Success. In Leadership and Business Ethics (pp. 279-295). Springer, Dordrecht. Alsharari, N. M. (2021). Management Accounting Practices and E-Business Model in the US Walmart Corporation. Accounting and Finance Innovations , 3. Yuan, M., Zhang, N., & Wong, Z. G. (2021, December). Walmart China Face the Marketing Strategic Issues and What’s their Future Plan. In 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) (pp. 2922-2926). Atlantis Press.

Walmart in the Chinese Market.edited

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