If Wal-Mart were a country, it would be China's eighth biggest trading partner, ahead of the UK.
US-based Wal-Mart, the most successful retail chain in history, began turning its attention to Asia earlier this decade. Affiliate Professor of Strategy and Technology Management Neil Jones and Professor Emeritus of Strategy and Asian Business Phillipe Lasserre describe the phenomenal commercial arsenal at Wal-Mart's disposal as it sought to outgun the mainly European rivals who had a longer established presence in Asia, but whose global sales combined could not approach those of the American behemoth.
The case illustrates the alacrity and determination with which Wal-Mart pioneered the application of IT to retailing, beginning in the 1960s. This is perhaps surprising, considering its famously frugal approach to most other operational matters. Having made some critical mistakes in its rather belated international expansion, particularly in Argentina and Germany, the corporation was looking to leverage the facets that had worked so well in its successful markets in Asia, beginning with China and Japan.
The authors offer concise, yet comprehensive insight into Wal-Mart's ability to export the key components of its wildly successful model to extremely different markets in Japan, China, South Korea, Taiwan, and Indonesia, with very mixed results. Key among these have been its focus on everyday low price (EDLP) and very tight focus on micro-managing internal operations and all aspects of its supply chains.
The case also considers Wal-Mart's much lauded ability to make quick decisions, and then execute them quickly and accurately. Unlike its rivals in almost any market - Asia, in particular - critical decision-making has always come down to relatively very few executives. The authors also offer insight into how other idiosyncrasies found in the world's largest corporation served it well, from its totally centralised headquarters, to its remarkably advanced data sorting systems.
As the case clarifies, Wal-Mart also showed a sound degree of aptitude in building confidence amongst its suppliers by including them in its larger operational initiatives. After devoting considerable attention to selecting suppliers, it concentrated volumes in its chosen operatives, thereby greatly helping them achieve favourable economies of scale. It also set clear targets for response time and quality. The corporation also chose its Asian operations to test drive pioneering radio frequency identification (RFID) technology, a move now widely emulated by its main competitors.
The case also reveals how Wal-Mart has so far successfully avoided many of the obstacles that have beset multinationals that have fallen victim to their own long-term success. In a firm that hired 600,000 new staff in 2003 alone, this was no mean feat. The impact of the retailing leviathan on the Asian economy could be doubly profound in such a robust market, if it can approach its success in its home market. A study by McKinsey and Co. estimated that one-eighth of American productivity improvement in the late 90s can be attributed to Wal-Mart.