Essay: Business Expansion Report on Proposal for Wal-Mart

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¶ … Business Expansion

Report on Proposal for Wal-Mart engagement in China.

The Wal-Mart store is one of the leading American subsidized markets for domestic goods that have been subsidized. In the recent past, it has been considering expansion of their stores to other countries and one of them would be in China. The report is solely aimed at looking into the possibility of expanding the stores to China, the challenges, the cultural differences, the market trend, the political atmosphere as well as the legal situation that should be expected by the Wal-Mart management and how to overcome them all.

The sole reason for the research was to look at the viability of the Chinese market for the expansion of the Wal-Mart stores and to provide adequate data and information to the Wal-Mart management about the China market before they venture into the expansion bid into China.

Through the observation of the legal system, the business opportunities, the threats to the kind of business Wal-Mart engages in, the market needs and demand and the cultural differences that exist therein, it was concluded that China is a country worth trying out the expansion process of Wal-Mart since the possibilities of thriving and the strengths of Wal-Mart outweigh the threats.

1.1. Introduction

The Wal-Mart was founded by Sam Walton in 1962 in 719 Walnut Avenue in Rogers, Arkansas. Today there are 706 stores in the U.S.A. offering competitive prices and good shopping experience to millions of Americans across the U.S.A. The size of and average store, according to Walmart Corporate (2011) is 10,800 square feet and has an employee base of about 225 people.

In the Wal-Mart stores, there are a wide variety of items offered for clients. These include family apparel, Healthy and beauty aids, Electronics, Toys, Lawn and garden items, Jewelry, Automotive products, Home furnishings, Hardware, Sporting goods, Pet supplies, House wares among many other supplies that clients can walk in and shop for.

With such a wide variety that the store deals in, it seeks to have further expansions to business viable countries in the developing world. Hence this research and report that detailed the market situation of China through data that was obtained from observation of the business trends, business documents, legal documents and business data on the internet and information on reliable websites.

1.2. Wal-Mart Operations

Wall-Mart has several stores throughout the U.S.A. with each store offering a wide variety of goods. Lately, there have been other subsidiary centers that have been opened to bridge the gap that existed between Wal-Mart and the other chain stores. Some of these stores are like the Wal-Mart Supercenter, Neighborhood market by Wal-Mart, Supermercado de walmart, market side, Sam's club and Walmart International.

Wal-Mart is in the process of reorganizing its operations within three geographical locations with units that are headed by regional presidents; these regions are the South, North and West. This is aimed at facilitating the growth as the chain store seeks to enter new markets and develop new regions across the U.S.A. And better leverage their resources.

Wal-Mart is said to have one of the most efficient merchandise replenishment mechanism that take no more than 48 hours to replenish hence offering the customers and all round supply and availability of stock, or delivery period that is less than 48 hours.

Wal-Mart engages in selling sustainable merchandise that is strict on the lifespan observation. There is a strict observation of the quality from the manufacture materials and standards to the storage and the ultimate consumption ad use by the consumer.

According to Walmart Corporate (2011), Wal-Mart believes in and observes the environmental conservation and provide the consumer with environmental friendly products like the compact florescent light bulbs, fair trade coffee, organic produce and so on that helps in energy saving and environmental conservation.

1.3 Why China

There is a growing business potential in China with each year seeing a growing trade base and an increasing number of trade partners. China is open to the whole world for trade hence giving all the willing traders a ready chance to invest in China.

One reason why the Wal-Mart should invest in China is the promising economic trends that are there. The total world trade that was experienced in January to July 2007 was a staggering $391.9 billions, which was a 12.4% increment as compared to the same period of the previous year as shown in Consulate General of India, (2007).

The other reason why China is suitable for Wal-Mart business is that there is a British legal system that has been adopted in China hence there is an atmosphere that is conducive and the American-based business will not have a hard time in terms of acquainting itself with the business environment. Further communication and interaction will is relatively easier and advantageous for the staff that will relocate from USA to China since English and Chinese are the bilingual legal languages used in China (Abacus CPA, 2007).

There is a conducive political environment and a stable social environment; two prerequisites to the success of a business in any country. The Wal-Mart will take advantage of the peace and welcoming consumer base to attract the customers to the new stores that will be opened in China.

The other factors that would put China at a more strategic position for trade and setting up of a Wal-Mart would be appropriate are the availability of the man power, availability of international banking system and there is no restrictions in the funds transfer system and amounts.

2.0 National business system and cultural conditions.

There are various differences in the business system as well as culture that exist between the American culture and the Chinese that the Wal-Mart management will have to put into consideration before they set sail to China. One fact about the business system in China is that it is highly inclined towards the socialism system with a belief in common ownership of the means of production and the resources. This is in stark contrast to the American business system that is entirely capitalistic in nature. This difference in the business system will mean that the Wal-Mart management will have to adjust their business culture so as to make the people of China feel like they are part and parcel of the business and that it belongs to the society. Some of the ways of achieving this is the high involvement of the locals at all levels in the organization and developing a strong CSR program that will make the society around feel the presence of the Wal-Mart as an organization.

The fundamental cultural differences that may negatively affect the operations of Wal-Mart in China if not well taken care of are outlined below as shown by Pre-Departure Orientation for Chinese Students, (2011).

The Americans treat conception of self on self-reliance and self-promotion is more accepted as they value freedom from external interference, while the Chinese the conception of self is viewed from a group perspective and they value self modesty as well. In social relationships, the Americans are more comfortable with peers and there is minimizing the importance of social ranking. This is the opposite of the Chinese culture who would like to know who is in charge and they are highly formal hence this business atmosphere must be created and the clients be made to feel there is a figure of authority to whom they can report or approach on burning issues.

The Chinese are also known to value reciprocation of obligations as one should be responsible for each other, yet among the Americans, there is an evident avoidance of interdependent relationships and situations that will bring up long-term obligations and responsibility for the other. At the work level, the Americans value completion of the assigned tasks than the relationships and friendships. In Chinese culture, they are relationships oriented where the maintenance and sustenance of relationships is more important than accomplishing a task.

The other significant difference is that Americans do have the zeal to directly confront, criticize, handle controversial topics and press to the logical end their opinions while the Chinese are the opposite. They avoid as much as possible direct confrontation and heated discourse, avoid open criticisms and controversial topics and concern themselves more with maintaining peace and harmony among themselves.

Their sense of time is such that they have interest in the past as much as they are interested in the long-term future, yet on the other hand Americans are less interested in the past and pay much focus on the near future.

There is more respect to personal relationships than the written laws and procedures for engagement, Americans on the other hand will give preference to the law and the written rules. They assume that it is the rules that produce fair and good results and fair results for everyone; it as well leads to reasonable procedures and decisions.

There are a number of difficulties that the Wal-Mart is bound to face once the stores open doors in… [END OF PREVIEW]

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