Wal-Mart's Internalization Strategy (Essay Sample)

Wal-Mart’s Internalization Strategy Name Course Lecturer Institution City, State Date of submission Chapter 1- Introduction Internalization strategies aim at the increment of the corporation involvement in an international market. It applies to the shifting of assets of Multinational organizations between cross borders subsidiaries. Internalization strategies exhibit the ability to think globally and have an understanding that will influence international cultures. Wal-Mart is an American Multinational Corporation that orchestrates a large chain of warehouse stores and departmental stores globally. The paper will categorically focus on the internalization strategies of Wal-Mart Corporation. Research questions 1. What factors have made Wal-Mart successful? 2. What strategies does Wal-Mart use to enter international market? 3. How is Wal-Mart experience in internalization? 4. What are success and effectiveness of Wal-Mart’s internalization strategies? Chapter 2-Literature Review Key factors in Wal-Mart’s success The strengths Woolworth has at its disposal are product lines that have an array of products, and its logistic plan has a project refresh plan. The weakness is that it has a heavier cost in regards to human resource. Walmart has an advanced technology support while the changing purchasing behavior and consumer preference is its major threat (McDonald & Payne, 2006, 88). Wal-Mart success can also be attributed to its effective cost cutting strategies that reduce its costs and gives the corporation a competitive advantage (Cant, 2006, 65). Outsourcing is an efficacious cost-saving strategy, for instance, when appropriately applied. It is embedded in the logic that it is more convenient to purchase goods or services from those companies with comparative advantages as opposed to producing the goods internally. Outsourcing whence offers substantial flexibility and control of the budget by letting organizations pay for only those services they are in dire need of whenever they need them. Outsourcing encompasses both domestic and foreign contracting and sometimes entails offshoring or business function relocation to another country (Clark, 2007, 78). A big motivation for outsourcing is financial savings that stem from the lower international labor rates. Wal-Mart’s experience on internalization Internalization is a general principle that emphasizes on the boundaries of an organization. Its application towards the Wal-Mart strategies and business goals is just one of its spin-offs. For instance, the decision of Wal-Mart to outsource manufacturing to China was the predominant reason that led to the hollowing out of the manufacturing realm of US especially at the low end. Wal-Mart has roughly 600 suppliers worldwide while 80% are from China (Cummins & Mullin, 2006, 98). An example is Wipro, Infosys and TLS that is the largest television producer in the world and has it’s a huge chunk of their exports going to Wal-Mart. According to the institute of economic policy, the imports of Wal-Mart destroyed 200,000 manufacturing jobs In the U.S and placed China in a better position to become the a world superpower. It is up to the management to see to it that the aspired benefits of the entire internalization process have come to materialize (Mueller, 2011, 115). In ideal circumstances, the management would react to most events in a dynamic manner and decide in advance on how their reaction would be in different predicaments that may arise or seemingly pose challenges in any shape or form (McIvor, 2010, 76). However, practically, the attention devoted to these services is not enough for modeling, planning and monitoring dynamic actions of the management. Additionally, it is crucial to bear in mind the fact that management is not a set it and forget it environment for those managers that are deemed effective and most appropriate for the current tasks at hand (Frederking, 2010, 112). In order to be in a position to drive the workforce at its very best, managers that have been brought on board need always to see and feel the support that comes from the organizational leaders. In the quest of coming up with a choice of methodology and place, Wal-Mart finds it necessary to reward their employees accordingly so as to give them the impetus to push even more harder by making them feel empowered. They should come up with decisions on what is best for their employees that will give them the motivation that will ensure their teams work even harder. Strategies for entering International markets Wal-Mart’s fosters its internalization strategies through spending a significant part of his time in training the staff as well as the management in the quest of increasing the standards service of the customers and consequently increase the loyalty of its global customers (John & Kevin, 2007, 99). The strategy worked for the better as the customer reviews and accolades increased in the media outlets. The corporation also showcases features that were environmentally and socially conscious such as the vending machine that was branded. Additionally, internalization strategies that instigate customer segregation where different customers with varying needs are targeted and captured by being offered the hotel lodging packages that suits them most. Marketing research is essential as part of marketing and assists companies to always stay competitive and avoid the exorbitant cost of any poor decisions made as a result of unsound information. Success and effectiveness of Wal-Mart’s internalization strategies Strategies that Wal-Mart has embraced have seen the corporation through organizational prosperity and success. The cost reduction strategies, for instance, that emanate from outsourcing resulted in lower inflation and interest rates (Nargundkar, 2008, 123). This has been denoted by the Philip’s curve that shows that unemployment and inflation are inversely related such that the increase in one automatically leads to a decrease of the other. Increased unemployment therefore led to low inflation and interest rates that subsequently increased investments that heighten and revamps the level of economic activity. Chapter 4- Methodology The ...