International Operations & Expanding Globally
International Operations & Expanding Globally Tamara Garwood American InterContinental University Abstract Many companies are egger to expand their operations international in hopes of flourishing abroad. They under estimate what is needed to be successful in the international market as well as challenges they may encounter. This paper will discuss those challenges and ways in which to ensure a successful transition into the international market place. International Operations & Expanding Globally Wal-Mart is considered the largest retail store in the United States.
It is a company that has set goals on maintaining low prices while encouraging growth and expansion. They have gone from being recognized domestically, to spreading their retail techniques into the international level. With this said this is the perfect organization to analyze the pros and cons of global expansion. This will provide the perfect scenario as what to do and not do in the process of going global. The company has the notion that spreading operations internationally will provide the organization with what it needs to maintain its market standing.
This of course would be in the event of a downward spiral of sales, in the United States which has occurred lately due to the recession. With this said the company is striving to open even more stores internationally with 25% of its sales already coming from this segment (Bartels, C. , 2010, June 4). The international segment is striving to grow to reach the quest for the number one spot as retailer. This includes not only in the U. S. market but worldwide. The question at hand is what are the challenges the organization has or will face and the best way to handle these issues.
Walmartstores. com: Investor Relations – Walmart Updates Growth Plans states: The challenges include but are not limited to “Walmart stores general economic conditions, including the effects of the current economic crisis, competitive pressures, geopolitical conditions and events, inflation, deflation, consumer confidence, credit availability, spending patterns and debt levels, currency exchange fluctuations, unemployment rates, personal income and other tax rates, trade restrictions, vailability of attractive investment opportunities in non-United States markets, availability of appropriate locations for new or relocated units, local real estate and other laws, ordinances and initiatives that may prevent us from building or relocating, or that impose limitations on our ability to build or relocate, stores in certain locations, availability of necessary utilities, weather conditions, availability of skilled labor, material and other construction costs, insurance costs, operating expenses, sociological concerns, interest rate fluctuations ,other capital market conditions, human resources issues and other factors and risks”. The company had experienced a large class action lawsuit against them with over a million employees involved, claiming accusations against the organization for discrimination against woman in hiring or promotion practices (Bartels, C. ,2010, June 4).. While this was an unfortunate event it should have never occurred.
The company 6 years prior to this occurring had hired a law firm to review the company’s human resources practices. The law firm uncovered widespread disparities in practices amongst employees and unequal treatment. The organization now has a Global Ethics office which promotes the organizations ethical culture. This offers their employees a place to go to report certain issues as well as continuing education on ethical practices to maintain a proper ethical culture (Walmartstores. com: Investor Relations – Walmart Updates Growth Plans. ,n. d. ). The next big challenge they faced were the relationship with local vendors and maintaining the societies they inhabit culture.
To build a connection to their international customer base they set out to have an organic growth strategy with strong capital discipline and optimization of their portfolio of formats and worldwide brands. They will allot a certain amount of capital per country in hopes of improved returns from their investments. Wal-Mart has learned in the past and is continuing to learn factors to be successful internationally. It cannot press upon international customers the same principles as they have in the U. S. This may be large supersize stores or even supersize items that some inhabitants of countries may not even have room to store these products. With this said success results in a clear understanding and respect in ones cultural and ethnic differences.
Only then can an organization obtain the knowledge and key to successfully conducting business internationally. References Walmartstores. com: Investor Relations – Walmart Updates Growth Plans. (n. d. ). Walmartstores. com: Investor Relations – Investors. Retrieved November 4, 2011, from http://investors. walmartstores. com/phoenix. zhtml? c=112761&p=irol-newsArticle&ID=1345359&highlight Bartels, C. (2010, June 4). Wal-Mart has eye on global expansion – Business – US business – msnbc. com. msnbc. com – Breaking news, science and tech news, world news, US news, local news- msnbc. com. Retrieved November 4, 2011, from http://www. msnbc. msn. com/id/37509252/ns/business-us_business/t/wal-mart-has-eye-global-expansion/