Walmart - the Creativity in the Field of Technology

QUESTION 1

Wal-Mart Goes South

Introduction

“Save money. Live better” is the slogan of the 1962 founded American multinational retailer corporation that runs chains of large discount department stores and warehouse stores around the world. Wal-Mart today is the world’s 18th largest public corporation according to Forbes Global 2011 list. In 1991 Wal-Mart opened its first stores in Mexico and the competition between the store and local supermarkets began. Wal-Mart being so large and worldwide gave the company an advantage in negotiating low prices with many suppliers. Nevertheless, other local supermarkets such as Comerci, Soriana, and Gigante, didn’t give up the market to Wal-Mart so easily. They took action and started to think about ways and methods in order to fight a retail war against Wal-Mart.

How has the implementation of NAFTA affected Wal-Mart’s success in Mexico?

The implementation of NAFTA had a huge affect on Wal-Mart’s success in Mexico because before they got involved Wal-Mart didn’t do so well down there because the company deviated greatly from its successful business model in the States. Before NAFTA the tariffs were more expensive and once NAFTA got involved they went from originally 10% down to 3%. The infrastructure was not as advanced and caused logistic problems for Wal-Mart which got resolved with the help of NAFTA. Additionally, the restrictions of foreign direct investments got eased as well which resulted in many foreign suppliers building plants in Mexico from which Wal-Mart could purchase products for better prices and thus offer lower prices to its customers. For example, Sony was allowed to locate operations in Mexico thanks to NAFTA and Sony was then able to offer lower prices on products to Wal-Mart. Prices of TVs dropped from $1600 to as much as $600. Customers

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