Pressure to Globalize
The U.S. markets have been saturated for the past couple of years,
prompting Walmart to take global measures to expand their operations. However,
they’re internationalization strategy has been in vain as Walmart have failed
to capitalize on certain markets and reflect their presence globally.
As shown above, the operating income in U.S. has been gradually increasing,
however, the operating income overseas has slowly begun declining as of 2014.
Walmart’s operating margin is even more concerning, showing a drastic decline
from 2013 onwards. (Hoium, 2014)
Even though Walmart has been stable and growing in the U.S. markets, it
has been highly unsuccessful in translating their dominance on a global scale.
Barriers to Entry in Foreign Markets
It’s always been a challenge for retailers when it comes to globalization,
not only Walmart but Carrefour in China, Tesco in the U.S., Target in Canada,
etc. Failure to adapt to the local market, and rigid regulations against
foreign investment have been the major contributing factors for failure for
many of these multinationals. Haing to highly
modify their supply chain, suppliers and procurement strategy in each country
to meet its regulation and policies, these organization face a higher risk than
Local Consumers Beliefs and Attitudes
In emerging markets, organized retailing is usually fragmented, and
retailing is done mainly through the locals. Furthermore, foreign entrants fail
to provide something new and innovative to attract local customers. In fact,
customers find it more challenging than convenient to shop from these stores,
due to its locational inconvenience and poor customer orientation. They prefer
smaller local shops with narrow product lines providing exactly what the client
needs. On the other hand, in developed markets, consumers perceive these
multinationals as premium players with quality products, and therefore
customers feel more satisfied and comfortable purchasing from these globally
known retailers. Hence Walmart was
unable to emulate its success in other foreign emerging markets.