Why would Wal-Mart want strong centralized control of its stores? Why would Wal-Mart want strong local control of stores?
Strong centralized control is helpful for aligning local operations with the overall corporate objectives. Additionally, Wal-Mart’s years of domestic expertise in retail operations, e.g., distribution systems, can best be leveraged to improve distribution in South America if strong centralized control is implemented. On the other hand, it may be impossible to analyze customer preferences and understand cultural differences unless local managers control certain aspects of the business.
Strong centralized control is helpful for aligning local operations with the overall corporate objectives
it may be impossible to analyze customer preferences and understand cultural differences unless local managers control certain aspects of the business.
To understand cultural differences what customer needs by local managers control certain aspects of the business
The company relies on local suppliers and truck drivers who are new to the concept of timely deliveries. This means that instead of having less than 10 deliveries a day like the stores do in the US, the stores can have 300 deliveries a day.
What pitfalls and opportunities, other than those mentioned in The Wall Street Journal article would Wal-Mart face over the next few years?
In general, political instability is a major concern in South American countries. For instance, due to the recent downfall of the Argentine economy, Wal-Mart may experience difficulties if he Argentine government starts to employ policies that favor domestic producers rather than foreign companies. Also, if the dollar continues to gain in value against major South American currencies such as the Argentine Peso and Brazilian Real, American exports into these countries will be expensive compared to their local competitors, which will negatively impact Wal-Mart’s margins.
Wal-Mart should consider pairing up with existing companies when it is possible. This is because they will receive built-in experience and an existing structure. They can then take these companies and Wal-Mart-ize them in Brazil.
Additionally, they should build only a couple stores in a new country until their staff has learned enough about the idiosyncrasies of the country they're in. Once they learn about a new country, they'll be able to leverage their strengths to deliver low prices everyday
Wal-Mart will face a tremendous challenge in North America due to U.S. economy under recession
Wal-Mart may experience difficulties if Argentine government starts to employ policies that favor domestic producers rather than foreign companies.
As the largest retailer in the world, Wal-Mart had long been able to spot consumer trends before its rivals and adjust its merchandising accordingly