Question

1. Is it easy to become enamored with a company when it has enjoyed so much success over the years? What are Wal-Mart’s weaknesses?

2. Does Wal-Mart’s new neighborhood store format run counter to the cost-cutting emphasis that is at least partially responsible for the success of its traditional stores? Explain.

3. What challenges can Wal-Mart expect with its international expansion efforts?

Answer 1

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It is easy to become enamored with a company when it has enjoyed so much success over the years. What are Wal-Mart's weaknesses?

When a company is enamored with success, it is not a guarantee that the company has excelled in their business. The same scenario is connected with Wal-Mart, a multinational retailing corporation, whereby the company focusses more on the profits and price cuts in the expense of hiring qualified staff and offering the staff better pay. Therefore, a weakness lies in the fact that instead of channeling rewards to employees to improve their service delivery to customers and a form of motivation, the company motivates the supervisors for disciplining the staff. Hence, the employee’s morale is low leading to poor customer services which further leads to a negative corporate image among the potential customers.

Does Wal-Mart's new neighborhood store format run counter to the cost-cutting emphasis that is at least partially responsible for the success of its traditional stores? Explain.

The new neighborhood store format runs similarly with the cost-cutting emphasis adopted by Wal-Mart which further performed better for the traditional stores. Similarly, within these neighborhood stores, the company still offer low-cost products and the only change made is that the company now offers groceries alongside other low-cost products. Setting up grocery style outlets in rural areas has made it possible for the customer to purchase products at lower prices as compared to other shops offering same products at higher prices. Hence, customers who purchase goods at Wal-Mart groceries in the rural areas would spend less than customers who purchase from other shops.

What challenges can Wal-Mart expect with its international expansion efforts?

Every company that seeks to expand its business from the mother country to international markets often encounters challenges. For Wal-Mart, the company would experience foreign laws and regulations. As an American company, Wal-Mart was built following the US laws and regulation. Therefore, expanding the company to other countries would require compliance with new laws and regulation. Language and cultural barriers are equally a challenge that the company had to face. Most Americans speak English, while other countries like Korea and Japan use different languages and respect various cultural norms, hence the company has to respect the language and cultures of such people, if established in such environments.

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