Essay - Walmex as ACME Motors Considers Expanding Our Operations to the...

WalMex

As Acme Motors considers expanding our operations to the city of Nuevo Laredo, on ***** Mexican side ***** the Rio Grande, many here at Acme wonder what the benefits are of such a move. We feel th*****t this move will be highly successful for ***** and help to drive our company forward. To illustrate the benefits of ***** to Mexico, I will present to you ***** case ***** Wal-Mex, the Mexican subsidiary of iconic retailer Wal-Mart.

***** entered the Mexican market in 1991 when it merged w*****h existing retailer Cifra. Since then, ***** has grown to over 1000 stores in the Mexican *****, under a v*****riety ***** brands. Wal-Mart's operations in Mexico are strictly ***** ***** retail field. Despite using a wider v*****riety of brand names, ***** operations in Mexico closely mirror those of their US operations. They operate large discount retailer locations. These ***** fed by a regional distribution centers and supported by extensive advertis*****g. Wal-Mart competes in Mexico in the same way it does ***** the United States, on the basis of being the lowest cost provider, and they have tailored an extensive cost-reducti***** culture to support that initiative.

***** has several comparative advantages that it uses in the Mexican market. The buying power ***** Wal-Mart has in ***** US ***** is brought to the Mexican market. No local firm can match this power. Part of ***** attractiveness of the Mexican ***** for Wal-Mart is that market's combination of a large middle class not d*****similar in tastes to the American middle *****, but also a l*****rge underclass that forms a cheap labor base. This allows Wal-Mex to have an even better cost advantage than ********** enjoy in the US.

That is not to say that Wal-Mart has not faced any issues in Mexico. One example is the controversy in 2005 over *****ir proposal to build a store at Patzcuaro, a native heritage site. This controversy created a rift in the host country bec*****use many people felt ***** Wal-Mart epitomizes values not shared by the Purepecha Indian community at *****. This ***** was fueled by Wal-Mex's rapid expansion and by the Mexican people's love-hate relationship with the US. T***** were calls for political action to prevent the ***** from open*****g.

Ultimately, though, the situation was resolved ***** Wal-Mart opening the store. Similar controversies have occurred in ***** past, such as at the pyramids of Teotihuacan. Wal-Mart opens the store, and *****ile critics decry ***** ***** being culturally insensitive, many ********** prove to be in favor of ***** s*****re.

The resolution appears to ***** little in the way of short-term costs, but there are long-term ***** associated with such an approach ***** conflict resolution. In the short-run, ***** wins, as they are allowed to open the store. Yet, in the long run, such controversy creates strong negative publicity. ***** have seen ***** the United States that this publicity has made it difficult ***** the company to ***** *****s in certa***** areas and ***** is becoming the ***** in Mexico