Entry Strategy and Structure for Walmart to Expand To Vietnam
Executive Summary
There are several entry strategies that companies should utilize when expanding to fresh emerging markets such as strategic alliances, acquisition, joint ventures, franchising, licensing and so on. However, for Walmart when expanding abroad should assess whether the foreign Vietnam market where it intends to move to has the potential to grow. This report is mainly aimed at conducting a thorough evaluation of the suitable entry strategy and organizational structure for Walmart Corporation to get into the retailing market in Vietnam.
The report proposes that for Walmart’s expansion into Vietnam Joint venture and Joint marketing are the most suitable legal entry strategy along with a functional organizational structure which is all objected at creating a strategic positioning for the company. The report concluded that joint venture and functional structures of Vietnam are the most effective based on the high influence of government, economic and competitive influences in the market. Walmart’s entry strategies in foreign markets are mainly influenced by economic and governmental regulation. In that, the company tends to perform better in markets where governmental regulations are accommodative to its growth. More so, strategic marketing and operation, availability and availability of resources are the primary driving factors of the company’s decision when getting into fresh markets. The firm mainly expands its retailing operations in the markets characterized by high revenue potential and produces consistent retailing demand. From the analysis, it was concluded that the promotion of foreign investments by the government in Vietnam is an essential force that Walmart will consider while engaging in a joint venture.
Walmart being the retailing leader in the globe needs to retain its competitive advantage by expanding into other markets which are less exploited such as Vietnam. Since the company has already positioned itself as the cost leading leader it should extend this value to the Vietnam market. However, based on the intense competition in the market from the local and foreign firms it has been proposed that Walmart should also use diversification as its differentiation approach to attract more potential consumers. The target consumers being low to middle-class individuals demonstrates the need to be both different and strategic. In that, these consumers are highly sensitive to prices and quality and thus, the firm will focus on affordability, quality, and convenience as its primary values to entice its consumers. The retailing market is currently experiencing rapid growth, particularly in the emerging markets since most of the well-established retailing firms are seeking for more enhanced strategic positioning and stability. In this context, it is apparent that Walmart should strategically expand into Vietnam to capture the untapped market to fight against the increasing competition and retain their competitive position.
The report recommends the integration of a joint venture and Functional organizational structure to being the most potential approaches as compared to a joint venture. This strategic structures will mainly seek to generate an extensive market for the firm to affirm its position in the global environment. Join venture was particularly recommended as the suitable entry strategy into Vietnam over joint marketing based on its benefits. In that Walmart has no practical experience in Vietnam and thus focusing on joint venture will seek to create long-run inclusive benefits. In that rather than focusing on marketing operations ventures which will be for a short while the company can utilize joint ventures to strategically situate itself in the market. This strategy will not only offer the firm with adequate skills to operate in the market but it will be essential in mitigating the existing risks. This is because Walmart is focused on operating under minimal expenses and with the uncertainties in a new market this can be particularly hard for the company. This means that operating under joint venture will offer more operating resources, lead to increased revenue generation and high marketing ability which will be creating awareness and familiarity uniformly.
It cannot be denied that Walmart will need to invest more with respect to marketing but joint marketing will only seek to create awareness of the existence of the company without mitigating financial risks. Under the joint venture, Walmart will adequately divide its resources while supporting low expenses goal. In that in order for the affordability value to be achieved then the company need to operate under low expenses which cannot be achieved under joint marketing. The functional business structure was selected for this expansion because it is appropriate for small businesses or for those that are focused on a single product specialty. Since Walmart will be operating is a stable market then the functional structure will be effective. The specialty groups for Walmart will include Marketing, operations, account, IT and Purchasing and sales departments. This structure is essential in creating efficiency as well as focusing competitive positioning. This is because the operations will be conducted on departmental basis and staffs will be allocated based on their skills to avoid inconveniences and encourage innovation. Joint venture and functional organizational structures are the recommended entries for Walmart’s expansion into Vietnam electronic specialty market which will all seek to strategically position the company in the market.
