Walmart is a multinational retail company that operates as a chain of supermarkets to provide a wide range of products and services to its customers for the fulfillment of their needs and preferences. The company wants to shift to India and expand its business operations and processes to ensure successful international business as well as generate more revenue in business along with obtaining competitive advantage. The strategic objectives of the organisation are to generate more profit and gain competitive advantage in business, so Walmart should go global and enter new markets to enhance the profit level (Walmart.com 2017).
Determinants of Internationalisation
The various determinants of internationalization are size of the company, competitors in the global market, innovativeness, location and predicted business outcomes. Walmart has decided to go global and thus the directed opportunism has been undertaken to maintain flexibility of business operations and ensure successful global business. The company wanted to increase its sales for satisfying the expectations of the capital market and create a more dedicated and committed workforce by linking between the growth and effects on stock price (Ball et al. 2012).
Reasons for choosing India is that the company has all the necessary supply chain infrastructure, direct farm programs and development of suppliers, which has made the country a proper place to make investments and deliver the best returns to the shareholders or investors. One of the major problem arisen was the requirement for retailers by the Indian Government to source more than 30 percent from the small suppliers and it was quite difficult for Walmart to follow that rule (Cavusgil et al. 2014).
While going outside Australia, it is important for Walmart to enter the specific market segments through various modes like direct exports, indirect exports and licensing. The direct export entry mode allows for capitalizing on the scale economies and gain better control while distributing the products and services in the market. The indirect exports are the management of processes where the domestic based export intermediaries are considered and the exporter has little control over the delivery of products in the foreign markets. Proper licensing would be essential for Walmart to start its business operations in India for managing the availability of resources within the specific market (Reisman et al. 2015). To enhance the efficacy of entry modes, investments and acquisition could also be done to gain the potential of reaching new market segments in Australia as well as ensure successful functioning of the organisation within the business environment (Walmart.com 2017).
The strategic choice of entry mode that is most suitable for Walmart has been proper licensing and joint venture with Bharti Group, which can improve the entire retail business. The significant income and cultural similarities also help in managing the strategic alliance and gets transformed into a healthy and viable business. A local presence should be established to determine the uniqueness of the local market and reinvent the business to sustain in the global market (Ball et al. 2012). To adapt to the buying behaviours, Walmart’s acquisition could not only bring better benefits for the organisation but would also result in delivering the best quality products and services according to the expectations and demands of the Indian customers.
Ball, D., Geringer, M., Minor, M. and McNett, J., 2012. International business. McGraw-Hill Higher Education.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.
Reisman, W.M., Craig, W.L., William W.. Park and Paulsson, J., 2015. International commercial arbitration: cases, materials, and notes on the resolution of international business disputes. Foundation Press.
Walmart.com. (2017). Cite a Website - Cite This For Me. [online] Available at: https://www.walmart.com/ [Accessed 8 Dec. 2017].