Walmart expansion in China carries multiple risks, identify and discuss. Refer to the case study information to support your discussion-

CASE STUDY IS BELOW

Walmart China

Managers tend to speak optimistically about the prospects of globalization, and for good reason. Globalization has fostered an increasingly interconnected world, with more than $30 trillion in goods and services traded and more than $1 trillion in corporate investment each year.

Advances in information technology and transportation have helped facilitate globalizationconnecting developed and developing worlds, lifting some 400 million people out of poverty along the way.

Nations are now inextricably linked through global trade and investment. There is no turning back. Accordingly, managers often view globalization as a powerful and inevitable force, and they tend to treat it with reverence speaking of it as if it were a breakthrough technology, the wave of the future that will change the world, if not their companies fortunes. And they tend to think of themselves as the champions of globalization, akin to explorers embarking on a mission to discover and conquer far-off, unexplored lands.

Managers express their optimism for globalization in terms of the profitability it can generate for their companies. They salivate at the potential for double-digit sales growth. They are seduced by opportunities that promise to slash costs by half or more, simply by shifting operations overseas. And they lead their companies on journeys to global markets in search of untapped and untold riches.

However, opportunity and reality do not always coincide. Although globalization certainly holds promise, it is also rife with hazards. It presents risks that managers fail to appreciate and that they often overlook. Sadly, in the high-stakes world of global strategy, companies regularly fail to convert potential into profits. Most companies are poorly

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positioned to capitalize on globalizations potential, and many are

spectacularly unsuccessful in their attempts to globalize.

China provides the setting for a classic cautionary tale about globalization. Given a population of more than 1.3 billion people and the market potential that goes hand in hand with a consumer base of that size, the prospect of expanding to China is enough to make any managers eyes light up. The potential is seemingly limitless.

But on further inspection, it becomes clear that China poses tremendous challenges for Western companies. The first obstacle is economic. Though China has made tremendous strides and enjoyed incredible growth since opening its markets to global trade and investment in 1979, the development of its economic institutions and its infrastructure has lagged behind that in the West. The second obstacle is cultural. Chinese consumers, for example, tend to be very different from those in the West, which makes it difficult for Western companies to appeal to local consumer tastes. The third obstacle is political. Western companies struggle to skillfully navigate Chinas complex web of local and national political organizations. All of these factors led G.E.s CEO Jeff Immelt to conclude: China is big, but it is hard.

Walmart has learned these lessons the hard way. Walmarts ongoing troubles in China, since opening its first superstore in Shenzhen in 1996, reflect a fundamental misunderstanding of Chinas political, economic, and cultural environments.

The American retailer has struggled to understand Chinese consumers and Chinese culture. Chinese consumers, unlike those in the U.S., differ widely from city to city in their needs. Walmart therefore struggles to find the right product mix to offer in the 117 cities and 25 provinces in which it operates. This makes it challenging to sell a core set of products nationwide.

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