Question

What kind of entry strategies did Walmart choose to enter into: Canada, Japan, and Uganda. What are the pros and cons of such entry strategies?

Answer 1

The market entry strategies Walmart choose to enter are

· Canada- Acquisition

· Japan- Stake Acquisition- by purchasing a 6% stake in the company called Seiyu, a Japanese Retailer.

· Uganda- Stake Acquisition- Purchasing a 51 % stake in Massmart, a company located in South Africa which already has approximately 285 stores across South Africa.

Pros and Cons

Acquisition- Walmart’s mode of entry to Canada was through the acquisition of the company called Woolco. Woolco is the discount retail chain of F.W. Woolworth. Thus was formed Wal-Mart Canada. Wal-Mart Canada has been successful consistently in this market thus operating more than 300 retail outlets. Advantages- Acquisitions help the company to have great market power, avoid duplication, access to new competencies and resources. Disadvantages include- cultural clash between the two companies, risk of being redundant in the products and increases the debt burden to the acquiring company.

Stakes Acquisition- such as Japan and Uganda is a great way to entry to foreign markets. The advantages are- Ownership will be retailed for the acquiring company. There are chances that the acquired company might become a wholly owned subsidiary later thus expanding the whole company. They share knowledge and resources. Disadvantages are- If the acquisition is financed through credits, then there is a greater risk of cash becoming volatile, improper management might lead to miscommunication.

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