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Walmart Case Study

Essay by   •  August 4, 2012  •  Case Study  •  907 Words (4 Pages)  •  1,783 Views

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The architect and founder of Wal-Mart is Sam Walters. Mr. Walters established the first store in the small town of Rogers, Arkansas in 1962. Wal-Mart has established itself as a dominate organization in the global export of consumer goods. The motto and the driver force behind all of their business decisions are "saving people money so they can live better." Since the beginning, Mr. Walters has strived to bring families and communities by providing with the concept of a one-stop shop (Super Centers). In 46 years of operations, Wal-Mart has expanded their concepts and vision in 14 countries around the world: United States, Mexico, Puerto Rico, Canada, Argentina, Brazil, China, the United Kingdom, Japan, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua ("Sustainability progress to,").

All of the countries that Wal-Mart operates in are functioning under a free market system. In addition, the United States, United Kingdom, Puerto Rico, and Canada are governed by individualism. Hence, Mexico, Argentina, Brazil, China, Japan, Costa Rico, El Salvador, Guatemala, Honduras, and Nicaragua are governed collectivism.

A free market system is a form of economy, which consist of different layers of ownership of the industry by the government. There are three different levels of government low, mid-level, and higher. The United States is an example of low-level government interference. With the intention of functioning under laissez-faire economy, In short, the absence of government in business affairs. Brazil has mid-level government interference, and China is governed by a higher level of government interference.

There are political risks when conducting business in any foreign country. Conducting business in China could possibly be one of the most challenging business adventures that Wal-Mart has every encountered. In particular, China is a communist country and with that being said, the government pays an active role in all organizations business affairs. The government has the authority to nationalize industries through asset confiscation, expropriation, currency inconvertibility and contract repudiation (Chang). As an illustration, Wal-Mart has been known as an organization that is not in support of unionizing. In contrast, the Chinese government supports the All-China Federation of Trade Unions (ACFTU). The unionization of Wal-Mart open a gateway of allowing the Chinese Government accesses to foreign companies, coupled with, the ability to control the increasing private sector labor force. The president of the National Committee of U.S. China Relations, Mr. Dave Orlins stated that "To expand in China, one needs government support," he says. "This is what you should be doing in China" ("Wal-Mart strikes pay," 2008).

With the understanding of the circumstances and the conditions that will be encountered, one could devise ways to reduce political risk. The way to mitigate political risk is to first, understand the customs and tradition of their work force. Second, we need



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