IIPM BUSINESS & ECONOMY
The exit
will hammer the pricing leverage that Wal-Mart enjoys from its European suppliers due to its large scale German operations. This tantamounts to a significant rise in prices of Wal-Mart’s products in the EU and hence, a slug for its largest overseas venture Asda stores in UK – which is still far away from shaking the local big daddy Tesco. In 2005, Tesco gained 1.2 % market share in UK, as compared to just 0.1% by Wal-Mart. This means the company’s European operations would come under pressure.
Wal-Mart currently operates in 14 countries outside US. But it has much of its operations in US. As per the first quarter results of 2006,
overseas contribution to total sales was just 20% whereas Wal-Mart aims to take it to over 30%, which now looks tough. Sadly, Asia hasn’t been a bed of roses either. In May this year, Wal-Mart sold its South Korean arm to retail chaebol Shinsegae Co. for $882 million. With India out of bounds due to the FDI blockade, China seems to be the only saving grace. The firm presently operates with 55 Wal-Marts and three Sam’s Clubs in China. However, the lessons remain the same. If the company doesn’t adapt to local cultures, low price strategy alone will not rescue it from losing out in other world markets either. And Wal-Mart cannot afford mayhem in Asia as well.
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Source :- IIPM Editorial, 2006, Editor - Prof. Arindam Chaudhuri
For More IIPM Info, Visit below....
http://famous-blogger.blogspot.com/
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The exit
will hammer the pricing leverage that Wal-Mart enjoys from its European suppliers due to its large scale German operations. This tantamounts to a significant rise in prices of Wal-Mart’s products in the EU and hence, a slug for its largest overseas venture Asda stores in UK – which is still far away from shaking the local big daddy Tesco. In 2005, Tesco gained 1.2 % market share in UK, as compared to just 0.1% by Wal-Mart. This means the company’s European operations would come under pressure.Wal-Mart currently operates in 14 countries outside US. But it has much of its operations in US. As per the first quarter results of 2006,
overseas contribution to total sales was just 20% whereas Wal-Mart aims to take it to over 30%, which now looks tough. Sadly, Asia hasn’t been a bed of roses either. In May this year, Wal-Mart sold its South Korean arm to retail chaebol Shinsegae Co. for $882 million. With India out of bounds due to the FDI blockade, China seems to be the only saving grace. The firm presently operates with 55 Wal-Marts and three Sam’s Clubs in China. However, the lessons remain the same. If the company doesn’t adapt to local cultures, low price strategy alone will not rescue it from losing out in other world markets either. And Wal-Mart cannot afford mayhem in Asia as well.For Complete IIPM Articles, Click here
Source :- IIPM Editorial, 2006, Editor - Prof. Arindam Chaudhuri
For More IIPM Info, Visit below....
http://famous-blogger.blogspot.com/
http://iipm-growth.blogspot.com/
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