The Business Activities
Walmart is a large-scale company that sells various products at locations in many regions of the world. The organization’s headquarters is located in Bentonville, Arkansas, in the United States. The Walmart chain of stores is one of the world’s largest in retail outlets and e-commerce. Thus, competent financial planning and supply chains are mandatory for the organization. Walmart’s main commercial activity consists of services provided by retail stores (Micic et al., 2022).
Their number is large enough to cover the entire U.S. territory and some other countries. In addition to regular retail stores, Walmart has many discount stores and warehouse clubs. The company’s stores offer a large assortment that does not focus on products.
E-commerce is another aspect that accounts for a significant share of the organization’s profits since this area is highly developed at Walmart. Ensuring reliability and timely sales occurs due to many ground points where people can receive ordered products. The offer of online shopping dramatically simplifies the process for many buyers who would find it convenient to receive the necessary goods by delivery (Alsharari, 2021).
In the grocery segment, Walmart is one of the leading chains that supplies these goods. In addition, the list of aspects of the company’s activities also includes pharmacies and medical services, including prescription drugs. Thus, we can say that Walmart has a unique universal quality that makes it one of the leaders in retail sales.
Strategies in Walmart
To maintain many businesses, Walmart needs to provide them with sufficiently competent management and planning, which is impossible without a well-developed strategy. In this regard, the company has several main directions. One of the strategies is Everyday Low Prices (EDLP), which provides the company’s clients with constant discounts that help them save money (Alsharari, 2021). By doing this, the company creates attractiveness and increases people’s involvement.
Omnichannel Retail is also a helpful strategy that allows an organization to combine its physical retail stores with pickup points for products ordered through e-commerce. Due to such a supply chain organization, pickup and delivery services are much more optimized. In addition, it addresses constantly changing client preferences since, with the help of this strategy, essential changes can be implemented much faster.
Another supporting strategy for the company has been to partner with private-label brands. Walmart has expanded the portfolio of brands featured in its stores, which has helped provide customers with exclusive products sold at a much lower price than other products. The sustainability strategy is the basis for all Walmart plans as it can optimize all support systems in a way that is as environmentally friendly as possible (Alsharari, 2021).
The company’s impact on nature and society is strictly regulated in such a way as to maximally comply with the principles of social responsibility, reducing carbon dioxide emissions and other production waste. This positively affects the supply chain and regulates the business model as it will be more environmentally friendly. Implementing innovative technologies such as automation or artificial intelligence in various aspects of business also helps the company improve productivity.
Business Activities in South Africa
Walmart’s activities in South Africa are characterized by the fact that the company is present in this market through contracts with Walmart Holdings. Walmart controls the South African retail chain entirely, as the organization has a majority stake (Makhoba, 2021). This allows the firm to carry out many transactions and business activities.
First, this is represented by retail trade, which can consist of different formats and includes several types of stores presenting wholesale and regular goods. Walmart also impacted the supply chains established in South Africa, which positively impacted Walmart Holdings’ overall productivity in the region. This organization is also constantly recruiting new personnel, which helps to increase the country’s employment level (Makhoba, 2021). These activities are a priority for Walmart; the company carries them out through a subsidiary without being directly present.
Mode of Entry
Walmart used a specific system to enter the South African market by acquiring a majority stake in Walmart Holdings. In 2011, this strategic investment allowed the organization to begin managing the company and establish its regional market presence (Zhang, 2021). Moreover, this method is profitable since the organization does not need to expand from scratch.
Instead, Walmart acquired ready-made stores that were built and whose work was established. After a detailed analysis, we can say that there are special reasons for choosing this login method. First, by acquiring Massmart, Walmart received valuable information about the local market and the experience of employees who have worked in this organization for a long time. This allowed us to understand the market dynamics better and start making profits quickly instead of a long acclimatization period.
Another good reason for using this entry method is the speed parameter, which is much higher in the case of the acquisition of another company. Establishing a significant presence in a new region without support would take time to build buildings and hire specialists. At the same time, by making a quick purchase, Walmart could quickly enter a new market, which positively impacted the company’s competitiveness.
Moreover, the acquisition of Massmart helped reduce the risks associated with the organization’s entry into a new market (Makhoba, 2021). This relates to the various legal and regulatory requirements for entrepreneurs in South Africa, which could cause particular problems for new companies. Thus, using the strategy of buying another company, Walmart was able to overcome a significant number of dangers.
Advantages and Disadvantages
An essential advantage of entering the market through purchasing a controlling stake in another company is synergy and cost savings. Walmart’s global supply chain can reduce the cost of purchasing goods for Walmart stores (Zhang, 2021). In this way, simplified delivery can provide a more competitive environment for businesses otherwise facing bankruptcy risks. Another irreplaceable advantage is access to ready-made and customized sales channels regulated by Walmart. This enabled Walmart to manage logistics and transport goods for wholesale customers more efficiently. In addition, Walmart has clear brand recognition in the South African market, which gives it a distinct advantage over Walmart, which would have to rebuild its reputation. Based on this, Walmart does not need to invest seriously in marketing since the Walmart retail chain is popular among the population.
However, despite the range of aspects that have significantly impacted Walmart’s entry into the South African market, some points have constituted challenges. One of these problems is integration, which could arise due to the inconsistency of specific procedures and customary practices in the two companies (Bezuidenhout et al., 2020). In this case, the merger and gradual merger may be significantly delayed, which provides more significant opportunities for competitors. This can also lead to disruptions that impact productivity, as Walmart cannot catch up promptly.
Regulatory and legal difficulties can also form a significant part of the problems that arise during a takeover. Differences in the legal fields of the two countries can become a critical aspect that will lead to many formalities and bureaucracy. This could hurt how Walmart conducts business, as the company would suffer significantly from internal problems and confusion.
Key Differences
Among the cultural differences between the United States and South Africa, one significant aspect is the U.S. values of individualism, self-expression, personal freedom, and independence. In South Africa, monoculture can be characterized as more collectivist. Family and social harmony are significant success factors in the region under discussion, influencing consumers’ behavior (Bezuidenhout et al., 2020).
African philosophy emphasizes social unity, which is necessary for harmony and coherence. Language differences are another feature that can become an obstacle to full-fledged and high-quality management. English is widely spoken in Africa, but in the southern part of the continent, there are also many languages, including Zulu, Xhosa, and Afrikaans (Bailey et al., 2019). Thus, for full communication, specialists may require help from the local population or retraining.
Religion is another aspect that could potentially become an obstacle. People in South Africa practice different religions, which in some cases may differ significantly from what most Americans are accustomed to. Thus, considering the factors of religious differences is necessary to fully carry out communication and activities among the South African population. The changes also concern social norms, which in the United States differ significantly from those in Africa.
For example, dining etiquette and gift-giving involve different rules, creating difficulties in business negotiations (Bailey et al., 2019). South Africa has a wide range of cultural traditions that are important to consider to understand their relationship to different aspects such as dance, music, ceremonies, and the overall cultural landscape. A multicultural society is complex for foreigners and requires detailed study to establish the correct contact.
Differences in the political spectrum are also apparent between the United States and South Africa, as these regions have different governance principles. The United States has a two-party system with a presidential system of government. South Africa is a parliamentary republic with a multi-party system where the African National Congress (ANC) occupies a significant place (Bushe, 2019).
The United States has a federal system where each state can make its laws and has a high degree of autonomy. Economic policy, at the same time, is determined by the free market and the relations between people in it. Thus, the country provides everyone with sufficient self-determination in business. In South Africa, political regulation of business is also minimal, but with differences made by the prolonged presence of apartheid policies (Bushe, B. (2019). This has determined the main focus of the political program on eliminating inequality, which is a significant problem in the region at this time.
South Africa’s social policy aims to achieve the greatest possible economic empowerment of the population. To stimulate purchasing power as much as possible, the country implemented Black Economic Empowerment (BEE) (Motala & Menon, 2020). These policies are intended to correct historical racial imbalances that are not parallel to the political environment in the United States.
Affirmative action in the United States also aims to eliminate inequality but has a different specificity and form. In the context of social problems, the two countries also have profound differences, characterized by the fact that a unique history has led to original societal problems. Racial inequality in the United States and access to quality healthcare in South Africa are examples of differences in political aspirations.
Influence on Behaviors of an American Manager
When buying out management shares of a company in another distant country, an important step is sending personnel who can monitor the correct preparation of the organization. In the case of Walmart, the behavior of the manager whom the company sends to South Africa must be fully adapted to local customs and rules to have the proper influence and understanding of local workers (Dethine et al., 2020).
First of all, the behavior of an American manager can be influenced by a collectivist approach, which involves specific changes in communication between employees. Decision-making, for example, should become more focused on a group of people rather than on one person. Therefore, the manager must consider this to consult with the rest of the team and make informed decisions.
A relationship orientation may also modify an American manager’s leadership behavior. Building solid interpersonal communications is imperative when working in South Africa. Therefore, the manager must consider all the differences between the United States and South Africa. Adapting and changing the management style can go a long way toward making collaboration as seamless as possible. In addition, the manager will need to develop greater empathy to understand employees’ individual needs and the methods that exist to meet them (Alofan et al., 2020). This includes awareness of the country’s cultural heritage, which is vital for understanding the people’s traditions and adequately interacting with them.
As outlined above, achieving consensus in the context of decision-making is also essential because the collectivist principle of interaction prevails in South Africa. Thus, a manager from the United States will have to adapt to fully implement all the programs initially developed for the American market.
Other values mean that both employees and customers have certain expectations from the store. Balancing competing interests in this way should be one of the learned essential aspects of a manager(Mykhailichenko et al., 2021). This parameter is necessary to find compromises in joint decision-making, which is one of the critical features of doing business in South Africa. Managing political and cultural sensitivity can help make better decisions in this regard.
Promoting diversity and inclusion should be one of the crucial aspects that the manager assigned to run the business must adhere to. This includes learning local languages as some workers may not speak English, which will be a problem. This change needs to be made by the manager as learning the language is an important cultural aspect that will help show the South African population how responsibly the person has approached the task (Dethine et al., 2020).
Consistent with the country’s efforts to overcome historical inequities, the manager must accurately know all acts and regulations currently in force in South Africa. This will help to clearly understand which actions can be allowed and which cannot. In addition, differences in the legal code will require study.
Practical Recommendations
One of the main practical recommendations is building relationships through personal connections and setting them up. The manager will need to take the time to establish sufficient communication with South African colleagues. This way, it will be possible to carry out further activities since this aspect should be paramount (Kurpayanidi, 2021). A necessary skill for a specialist can be active listening, which will help both in this goal and in general constant communication with store employees in Africa. Encouraging open and transparent discussions can bring people closer together, making work more enjoyable.
Another crucial practical recommendation for a manager may be to achieve consensus. When making decisions, this aspect is paramount as it helps the manager look more for alternative points of view. This approach can help find a way out of a situation where staff are unsatisfied with the result.
An important recommendation is to use transformational leadership to motivate the team (Mykhailichenko et al., 2021). It can establish trust among the staff since the manager will have to reward employees more often if they deserve it. When communicating with clients, the manager must be culturally sensitive and respectful to resolve all issues as quickly as possible. Showing genuine interest in the client’s problems can help win them over.
Risk Factors
One of the significant risk factors in the United States is regulatory changes and tax policies. These aspects can cause significant problems if implemented incorrectly or interfere with the company’s functions in a specific way. Changes in legislation or the tax code may be associated with significant financial costs that may not be covered. Handling these risk factors is possible by monitoring changes and preparing strategies to address innovations. Risk factors in South Africa may include political instability and currency fluctuations. Elections, protests, and government changes may, in some cases, be accompanied by large-scale social movements that may disrupt the overall character of the business (Bushe, 2019).
In addition, the local currency has the opportunity to increase the inflation rate, which will further contribute to the deterioration of the situation. To address these factors and correct possible mistakes, the manager must develop a detailed plan for preserving capital during political destabilization. Regarding changes in the national currency’s exchange rate, it is essential to have a financial plan to help absorb losses for the company.
References
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