Wal Mart Operation in Brazil: An Emerging Giant

Wal-Mart Operation in Brazil : An Emerging Giant

2007

Introduction

International expansion possesses challenging tasks , as there are many factors influence the success of any market expansion performed by multinational companies . Well-known brands do not guarantee the companies to succeed in foreign markets . This happens since each foreign market has particular characteristics that they must take into account in their business plans

In addition , the challenges also relates to the fast growing adoption of internet technology that helps corporations to provide attractive online offering . Another factor is the customer preferences

that determine the way customers want to be treated and be approached

The situation suggests that in any market expansion , corporations need to develop marketing plan carefully in to provide suitable entry strategy , attractive product and service offerings , and use winning risk management , to name a few

Carter (1997 ) says that marketing refers to a process of generating customers-providers relationship by conducting several initiatives including careful plan , aggressive execution , and periodical evaluation . Concerning the market expansion into foreign market and the evaluation of marketing plan of multinational companies , this will discuss about the assessment of Wal-Mart in conducting their expansion plan in Brazil . Some issues that will be elaborated are exchange risks , country risks , foreign direct investment , entry strategy , and customers preferences

Exchange Risks

The challenging issues in international business within the 20th and 21st century are currency and exchange rate risks . In the late 20th century , for instances , it has been clear that exchange rate risks considerations are critical for business survival . The economics crisis in Asian countries has displayed how the value of currencies in international business settings could alter the faith of millions of people , brought some to welfare and others to poverty

In the background article of Wal-Mart expansion into Brazil , the company 's plan to conduct market expansion is greatly influenced by economical factors such as the inflation figure of Brazil and the global economics crisis . The inflation figure is important since it influence the purchasing power of Brazilian . The global economic crisis also influences the country 's exchange rate of Brazilian currency that further influence the pricing of Wal-Mart merchandises

In the case study , it is found that Wal-Mart considers the 3-percent of inflation rate as moderate figure that the company can continue their expansion into the country . The company also sees that 5-percent growth becomes reasonable factor that underlies their decision to present in Brazilian market

In the light of this involvement , companies need to perform foreign currency risks assessments regarding the business activities . Most companies generally apply some of the financial tools that would protect them from foreign currency risk exposure , like futures , forward contract , etc

Foreign Direct Investment

The first analysis that Wal-Mart may take in expanding into foreign market is the country risk analysis . This is important factor that Wal-Mart should be taken into account since retail industry is low concentrated industry in which many local and multinational retailers already exist in the country . In addition , country risk analysis...