NMIMS
Global Access
School for Continuing Education (NGA-SCE)
Course: International Business
Internal Assignment Applicable for April 2022 Examination
1. “The
growth of Multi-National Corporations has had a major impact on the economic
and social
environment of a country.” Discuss this statement with example of a
Multinational Corporation doing business in an overseas country of your choice.
(10 Marks)
2. “The
whole world is increasingly behaving as a single large market having inter
dependent
production where people consume similar goods.”
In the light of above statement discuss the advantages and disadvantages of
Globalisation. (10 Marks)
3.
Walmart in Japan and Their Failure to Differentiate:
In 2018, Walmart brought in more than $500 billion in sales globally out of
which, 3/4 of those sales came from the U.S.
But,
overseas — particularly in Japan — things are not going so well for the
American retail giant.
Recent reports have shown that Walmart may be looking to exit Japan nearly 17
years after its initial expansion into the Japanese market. This expansion
involved purchasing a minority stake in Seiyu — a Japanese grocery store — in
2002, which then turned into a fully-owned subsidiary in 2008. Like Walmart,
Seiyu uses the “Everyday Low Prices” mantra to market to their consumers.
In between then and now, not much has gone right for Walmart in Japan. Aeon,
the top supermarket in Japan, owns
That may not sound terrible, but to put it into perspective, another U.S.
supermarket that has expanded into Japan with much more success — Costco.
Costco only has 26 stores in Japan, but in 2017 they brought in just over $3
billion in revenue. Seiyu, on the other hand, has 331 locations and brought in
$7.1 billion in revenue.
The low price strategy that both Walmart and Seiyu abide by is not nearly as
effective in Japan as it is in the United States.
While consumers in the U.S. appreciate the convenience of being able to find
great deals at one central location, Japan consumers are not as concerned with
this convenience, making it less of a differentiator in the Japanese market.
Michelle Grant, the Head of Retailing at Euromonitor International, outlines
this issue in a CNBC video, titled “Why Walmart is Failing in Japan.”
In the video, Grant describes how Japanese consumers “enjoy the treasure hunt
of pricing” and will go to multiple stores while shopping in search of the best
deals. Also, as this Bloomberg Businessweek article points out, Japanese
consumers often associate low prices with cheap quality.
In addition to all of that, Japan’s retail market was already so congested with
everything from your stereotypical supermarket to online retailers and
mom-and-pop shops by the time Walmart expanded into that region.
Now, this doesn’t mean that the barriers to entry were impenetrable. It just
means that to enter that market, you need to have a strong differentiator that
was effective to the market. This was something that Costco did well, while
Seiyu failed.Japanese consumers typically aren’t used to shopping in bulk, so
going to Costco offers them a totally new shopping experience. Meanwhile, Seiyu
was no different than any other supermarket that Japanese consumers were
already familiar with.
Last, Walmart also failed to recognize that Japanese consumers enjoy fresh,
locally sourced food — which is something Seiyu does not offer a lot of.
It remains to be seen whether Walmart will be able to turn it around or if
they’ll ultimately end up selling Seiyu. But, one thing is certain, the U.S.
supermarket’s lack of understanding their consumers in Japan has set them
pretty far back.
a. What
are the different views of Japanese people that Walmart should have taken into
consideration while entering Japanese market? (5 Marks)
b. What
are elements of an overseas country’s culture which are to be understood for making
entry
strategy in that market. Explain with reference to the case study above. (5
Marks)
