Walmart Company’s Expansion in Africa

Detail the growth of Walmart and its international experience

Walmart is a successful retail giant started in 1962 by Sam Walton. The founder had aimed at capitalizing on retail business ventures to take advantage of the small number of retail businesses in urban areas. In a period of five years, Walmart had a total of 24 stores in the U.S and annual sales of 12.6 million USD. Walton believed in customer satisfaction through quality services, respect for the customers, and unrivaled business excellence. The three principles, and other strategic business moves, led to the establishment and growth of the giant retail store. Walmart succeeded in venturing into international markets through strategic alliances. Its entrance into the UK, Germany, Canada, Argentina, and Mexico was successful because it replicated most of its retail business operations. However, its entry into Japan, Korea, and German was not viable due to different tastes among the potential customers. In all its domestic and international ventures, Walmart used the Every Day Low Price strategy.

Describe the growth strategies of Massmart in the African continent

Massmart was started in 1990 in South Africa to deal with consumer goods on retail and wholesale distributions. It was a successful venture, and it was listed on the Johannesburg Stock Exchange in 2000. Massmart used high trade volumes, small profits, and low-cost distribution strategies to grow in Africa.

Detail Walmart’s acquisition of Massmart will have to face in the African continent

Walmart hoped to acquire Massmart to take advantage of its large network of stores in South Africa and other African countries. Africa was viewed as a continent with significant potential for growth as evidenced by the rise in the middle class. Walmart hoped that it would penetrate the African markets and successfully use its Everyday Low Price strategy.

Analyze the challenges Walmart will have to face in the African continent

It was anticipated that Walmart would not easily get into the African markets. Cultural and infrastructural barriers would be the main barriers to the entrance of Walmart into African markets. In addition, insecurity and poor legal systems in the African continent would negatively impact the operations of Walmart.

What happened to Walmart’s operations after taking a 51% share in Massmart in 2011?

Walmart paid Massmart 2.32 billion USD for a 51% stake. The shareholders of Massmart and the labor unions were not affected by the acquisition. The operations of Walmart in Africa were officially started by the acquisition. The operations of Walmart were expected to borrow strongly from the overseas experience gained from other international markets like China, Germany, and Canada. The operations would also follow the low margin and huge sales strategies previously used by Massmart.