Wal-Mart, the mega-retailer, was founded by Sam Walton in 1962 in Bentonville, Arkansas. It started with $700,000 in its first year and scaled up to $5.4 million by 1974. The retailer continues to grow while others struggled with inflation and recessions. In 1980, Wal-Mart became the youngest US retailer to exceed $1 billion in net sales. During the 1980s, Wal-Mart began to further expand and thus pushing some retailers to closing some of their regional stores. The company engaged in diversification by creating membership-stores such as Sam’s Club, smaller, more conventional pharmacy/grocery stores called Neighborhood Markets, and finally Supercenters with a wide selection of consumer goods. And, in 1991, Wal-Mart became the world’s largest retailer. Wal-Mart had been able to implement its Every Day Low Price strategy by focusing on 1) developing a sophisticated logistics system with heavy information technology investments, 2) efficient distribution system by placing retail stores close Continue reading
International Business Strategies
Case Study: McDonald’s Business Strategies in India
McDonald’s The modest beginnings of McDonald’s at Illinois in USA, turned out to be among the main brand names in the international scene. It has been synonymous to what is widely-accepted the fast-food concept. The company operates over thirty one thousand stores all over the world to date. It was one of the first to perfect the concept of fast service in the food industry in its early days of operations in 1955. Given that the products of the company are mainly western in character; its operations have also expanded to the Asian region. The first Indian McDonald’s outlet opened in Mumbai in 1996. In the rest of the globe, it operates thousands of store franchises that functions autonomously. McDonald’s in India Around the world, McDonald’s traditionally operates with local partners or local management. In India too, McDonald’s purchases from local suppliers. McDonald’s constructs its restaurants using local architects, contractors, Continue reading
Evaluation of Subsidiary Performance in Multinational Operations
A parent company may employ several criteria to evaluate the performance of its foreign subsidiaries. Sales growth, market share, stability in output, asset growth and returns on investment are some of these criteria. Out of these, Return On Investment (ROI) is the most widely-used criteria-because the interest of the parent company ultimately lies in the Return On its Investment. The ROI as calculated on the basis of reported profit repatriation may however not show the true return from the subsidiary. This is because it may be grossly-distorted, due to the following reasons. (i) The subsidiary’s profits are taxed in the host country and repatriation of profit may be subject to further tax. Therefore, the parent company tries to transfer the money from the subsidiary in various other ways such as high royalty, high interest on loan, high expert fees, etc. As a result the, profit repatriation becomes a grossly understated Continue reading
Managing Political Risk in International Business
Political environment could involve a risk to businesses, domestic and foreign. Such risk is called political risk. Political risk is that perception by the businesses that their interests will get deteriorated when certain political upheaval happens. Political risk can occur in both democracies as well as in the totalitarian set ups as well. Political Risks are of different types. There are micro and macro political risks. Micro political risk is the one that affects a particular firm or class of firms. Usually firms owned by one class of businessmen, say, the foreigners from certain country, a particular business family or region/state. Micro political risk risk can be hedged. Macro political risk affects all. There is no sparing of any business, any nationality, any trade or industry. Formulating and Implementing Strategies to deal with Political Risk The following course of action, suggested by John D Daniels and Lee H Radebaugh will Continue reading
Advantages and Disadvantages of Mergers and Acquisitions
In 21st century businesses are the game of growth. Every business want the optimum market share (growth) over their competitors, so companies are trying to get optimum growth by using the most common shortcut i.e. Merger and Acquisition (M&A). The growth main motive is financial stability of a business and also the shareholders wealth maximization and main coalition’s personal motivations. Mergers and acquisitions (M&A) provides a business with a potentially bigger market share and it opens the business up to a more diversified market. In these days it is the most commonly use methods for the growth of companies. Merger and Acquisition (M&A) basically makes a business bigger, increase its production and gives it more financial strength to become stronger against their competitor on the same market. Mergers and acquisitions have obtained quality throughout the world within the current economic conditions attributable to globalization, advancements of new technology and augmented Continue reading
Case Study of Dell: Business Innovation and Success
Dell Inc. is an American multinational information technology corporation which is based in Round Rock, Texas, United States. The corporation being the largest technological corporations in the world develops, sells and supports computers and related products and services which employs more than 96000 people. The company bears the name of its founder, Michael Dell. The company sells personal computers, servers, data storage devices, network switches, software, and computer peripherals. The company is also popular for its HDTVs, cameras, printers, MP3 players and other electronics built by other manufacturers. The company is well known for its innovations in supply chain management and electronic commerce. Dell’s tagline is ‘Yours is Here’. Their Business/Corporate class represent brand where the company advertises emphasizes long life-cycles, reliability, and serviceability. Such brands include Optiplex, Vostro, N Series, Latitude, Precision, Power Edge; Power vault etc. Their Home Office/Consumer class emphasizes value, performance, and expandability. These brands include Continue reading