Hmmm... seems like the nearer the completion of my MBA.. the more work needed to be done. These are part of the syllabus for us to do 5 case studies.. here are 2 out of 5. I'm currently doing 3 more... then there's case study as well as group project as well as test next week, and final exam the week after.
I am also currently doing the write up of our ABR ... and we haven't really done the questionairre yet!!!! Yikes!!! It is stressfullllllll!!!!!
WAL-MART’S FOREIGN EXPANSION
CASE DISCUSSION QUESTIONS
1) The Wal-Mart strategy is to provide every day low prices via its highly efficient operations, logistics and efficiency information system that keeps inventory at a minimum as well as preventing over or under-stocking. From the article, it can be seen that Wal-Mart is successful in the USA as well as 15 nations outside the USA.
However, Wal-Mart also faces problem in some other countries as showed during its initial foray into Mexico and China. These two countries possess different culture in the way people shop and by adapting to these differences, Wal-Mart eventually are able to attract local consumers and then thrive in these countries.
In this regard, Wal-Mart succeeded in other countries by adapting its core merchandising strategy to fit each country’s different culture and norm.
2) Initially, Wal-Mart was facing problem in Mexico due to the difference in shopping habits as Mexican prefers buying fresh products at local stores. This was due to the fact that the food they purchased does not keep fresh overnight which was further aggravated by the lack of large refrigeration at home. As they also lack cars, Mexican do not buy food in bulk.
To cater for the culture difference, Wal-Mart adjusted its strategy to reflect the Mexican culture by hiring local managers with local Mexican knowledge whom are able to control Wal-Mart merchandising strategy. Wal-Mart also builds smaller stores for Mexican to ensure ease of walking advantage and offering more fresh produce.
In addition, Wal-Mart also aimed to change its Mexican customers’ shopping habit by demonstrating that the US merchandising culture of larger distribution centers would enable lower cost of merchandise. This will result in savings which will ultimately be received by the consumer. Wal-Mart perseverance, customization as well as low prices offered ultimately changed the Mexican shopping habits. As a result, Wal-Mart became the largest Mexican retailers. In turn, Mexico is now Wal-Mart’s most successful foreign venture.
3) Wal-Mart failed in South Korea and Germany mainly due to the fact that both countries are developed countries with existing established local rivals that had adapted its offering to their consumers’ preference and local shopping habits. In this regard, the existing local rivals have already secured their consumers’ loyalties which make it difficult for newcomers such as Wal-Mart to compete.
In addition, the consumers prefer high quality merchandises rather than Wal-Mart’s offering of low price due to discount strategy. This further strengthens consumer resistance from patronizing Wal-Mart.
4) Expanding in China fits Wal-Mart aim to venture in developing market with the lack of strong local competitors as well as the ability to shape the existing shopping culture toward its benefits and low-price strategy appeal. In the first decade of its operation in China, Wal-Mart expands slowly as shown by only 66 stores were being opened from 1996 - 2006. Even though Chinese’s bargain hunting culture ensure acceptance of Wal-Mart’s low-price strategy and wide selection offered, Wal-Mart still fail to adapt local culture in its merchandising and operations strategy.
By understanding the local Chinese culture of having their food freshly harvested or killed before the purchase as well as offering local delicacies such as turtles, Wal-Mart had earned the Chinese trust to purchase. In addition, though initially Wal-Mart was against union of workers, it adapted by allowing union for its Chinese workers, where union act as arm of state rather than in USA where union are used for labor contracts bargaining.
Adaptions of these local cultures enable Wal-Mart to expand rapidly via acquisition of Trust-Mart chain by 35 per cent. In this regard, Wal-Mart is on track for success in China which it now considers as the centre of its growth strategy.
5) By studying the culture of a nation, companies like Wal-Mart are able to tackle the consumer’s preference and therefore enjoying tremendous growth. Beginning from its founder Sam Walton, combination of culture values was kept constant with a business modal that are able to respond quickly to a changing world. Even today, Wal-Mart identifies its challenge as to lead change while upholding the culture that makes them a great company. In the age of globalization, Wal-Mart had embarked in the expansion of its business worldwide that had presented them with more challenges due to diverse cultures and norms they had to face.
Based on their failure in German, Wal-Mart had learned that they cannot create change unless they first understand the culture that they want to change. It adopted localization in its policy of going abroad, in the sense that it had to be flexible and adaptable as well understanding of the locals. This is vital to ensure its survival in its new territory.
After global consumer acceptance, Wal-Mart will be able to convince local customer of its core values which includes placing customers first with good services and products at lowest costs. As Wal-Mart values are towards the consumer benefits, by highlighting the advantage of patronizing Wal-Mart, it will ultimately able to convince customer to appreciate their original core values which was demonstrated by its success in Mexico and China.
In this regard “Glocalization” or going global but also localized toward the culture of each country, Wal-Mart are therefore able to run a global business in which it is able to maintain its huge economies of scale and buying power while in the same time being flexible at the local level.
GOOGLE IN CHINA
CASE DISCUSSION QUESTIONS
1) Google decided to operate in China due to the strategic and vast opportunity that China’s internet population of 100 million users presented. This translated into world’s largest internet market as well as potential major source of marketing revenue for Google. Decision was therefore made for Google to establish full operations in China in term of having its own computer server and a Chinese website. Operating in China also solved the problem of slowness for Google in serving the Chinese market which was made worst by the censorship imposition as well as tackling its rival’s presence in China such as Yahoo!, MSN and Baidu.
Google would also be compromising its “don’t be evil” mantra by operating in China as it would be subjected to Chinese regulations including information censure. In this regard, Google adopted the stance of giving its Chinese users “the greatest amount of information possible”.
The fundamental philosophical approach towards ethics that Google undertake when it decide to enter China is the Utilitarian Ethics on which the moral worth of actions or practices is determined by their consequences. Utilitarianism judges an action desirable if it resulted in the best possible balance of good consequences against bad consequences. In this regard, the Chinese people though would only be able to access censored information, it is better than no information at all or experiencing bad service. Google too would benefit in term of getting access to the Chinese users and therefore earning better revenue which would be a positive result against in shareholders’ satisfaction.
Another theory that defines Google’s decision is the Rights Theories which recognize human being as having the fundamental rights and privileges transcending national boundaries and culture. Rights establishment should be set at level of the minimum of morally accepted behavior. In its decision in operating in China, Google’s objective was to give the Chinese users “the greatest amount of information possible” within the stipulation of the China government rule and regulation. This is basically the minimum standard required of the rights for information which can be defined as the fundamental rights and privileges of the China people.
2) The engagement of self-censorship by Google China was in accordance of the China’s rules and regulations which clearly violated Google’s mantra of “don’t be evil”. This resulted in its Chinese users claiming that Google are more interested in making profits than defending its principle. However, Google management defended the move by claiming that giving the Chinese users limited information is better than none at all.
In my opinion however, Google should be standing for its mantra of “don’t be evil” which is no censure at all for information. In this regard, it is better for Google to operate outside China where it would not be govern by Chinese regulations. Google would then be able to give fair free access of information even though its service would be degraded due to Chinese government direct censorship. As seen in recent news, Google had since ceased its operation due to reason as stated by its chief legal officer David Drummond “We have decided we are no longer willing to continue censoring our results," written in January 2010. Since then, Google shifted its operation to Hong Kong while its Chinese website was maintained in order to direct users towards its Hong Kong website.
In this regard, it is better for the government to censure rather that doing self censorship because of Google’s original philosophy of free information for all. In addition, there are still possibilities that the Chinese government to engage in further censorship on top of the self censure.
In the long term as globalization expands further, it is not unlikely for China’s internet users or even the China government itself would be able to accept availability of information without censure. By sticking to its principle, Google would be better off as it would be able to stick to its principle of “free information for all” which in the long run would earn it credence towards its future Chinese internet users.
3) Should all foreign search engines refused to invest in China due to censorship, the immediate result would be in term of knowledge available both in China and outside of China. The Chinese people would be deprived from relatively free information that these search engines provides while the outside people will be less well-informed of what transpired in China. In addition, China would lose financially as these search engines will withdraw their facilities and therefore closing down their China offices as well as laying of their local staffs.
However, in the increasingly globalised world where information access is of paramount importance, I believe that in the future, the Chinese people would be able to access the foreign search engine to access the information they wanted. The Chinese government would also in the long term, be pressurized by the international bodies to open up its close door policy in free information for all.
In the initial stage, the Chinese government and its sanctioned search engine would clearly benefit i.e. the Chinese government would upheld its value via censoring information deemed sensitive while Baidu would enjoy the vast Chinese internet market which directly translated to tremendous advertising revenue.
The Chinese people would clearly be at the losing end the most as they would only received safe and regulated information as opposed to the full access of free information available that they have the right to. The foreign search engine including Google would also be at a losing point as they are unable to tap the huge number of China’s internet users that represent huge potential earning in term of revenue from advertising etc.
4) Should all foreign search engine refused to invest in China due to censorship, the local search engine Baidu would certainly benefited as there would be no direct competitors.