Wal-mart is built on being the best in retailer and customer service, it is the largest employer and generates most sales and most is diversified in the retail industry. Wal-mart operates stores outside of America however despite the resources it has, it has not been successful in establishing itself in all the markets it has moved to.
This essay will look at Wal-mart's relationship with the environment and their ability to influence the environment as well as how they react to the environment forces imposed on them.
Wal-mart has been seen as the largest retail giant globally and has stores across several countries. How does Wal-mart grew to the size it is now? While Wal-mart is successful in a number of countries they are not so in all the countries they tried to move into.
Environmental contingency theory
Hatch and Cunlife (2006) stated that organizational success is dependent on the organizational fit with the environment internally and externally. Wal-mart has the choice of three crucial strategies when they want to succeed abroad, especially in China, the three strategies are to go global, go native and go up-market (Gereffi & Christian, 2009).
Govindarajan & Gupta (2001) have stated the only way for Wal-mart to win local battles internationally is to adapt to the landscape and to balance customer demands with their core business models. The culture in China and their dynamics differ from America. The strategy of local adaptability in China is required for success. As a capitalist, Wal-mart has to shed its discount label and target the emerging middle class of China, therefore they have to change thyeir basic profile and go up-market (Gereffi & Ong, 2007).
To be successful Wal-mart has made adjustments for china markets, from the layouts to factory management practices (Gereffi & Ong, 2007). Although Wal-mart is robust in its supplier network it faces challenges in China distribution channels which limited its expansion. As the infrastructure in China is not well developed it has created much problem for distribution; and the Chinese suppliers had a hard time keeping up to Wal-mart's demanding supply chain standards. Despite the challenges Wal-mart received good feedback from Chinese shoppers who like their localization strategies and stores layout (Gereffi & Christian, 2009) and in China Wal-mart has come to symbolize modernization and globalization.