Challenges and Opportunities related to Frugal Innovation in Wal-Mart's E-Strategy

Executive Summary

The propensity for businesses to move beyond domestic markets into international markets is known as globalization. The ability to trade and operate in international markets has increased the profits and overall net income of these multinational corporations. McDonalds, Exxon and Wal-Mart are among many global companies that have been able to increase their revenues by operating in international markets. Wal-Mart's international ventures accounts for 20.1% of their total revenue which is estimated at $60 billion annually. The company considered throughout this paper is Wal-Mart. Wal-Mart's slogan “Saving people money so they can live a better life” is what Wal-Mart's business model is all about. Selling thousands of quality merchandise to low-income consumers at extremely low prices has been responsible for their success in the United States. Achieving success domestically is quite different from succeeding internationally. Doing business globally requires different business models. For a successful transition into the global environment, each business model must be designed to adhere to the preference or norms of each individual country. Both Wal-Mart and Ikea realized that success in the global market goes beyond offering low priced items when they moved into the global market. Its failure in Germany and South Korea made them realize that culture is a factor that must be considered when operating in international.

Table of Contents

Introduction4

Discussion4

History and International Markets4

What is your business model?5

How are you making money?6

Who are your customers?6

What are your “customers” willing to pay for?6

As stated earlier, Wal-mart promotes its products by offering everyday low prices (Mahmood 2012). Wal-marts prices are extremely low when compared to retailers such as Target, Kohl's, and K-Mart. Wal-mart was able to achieve its everyday low pricing through bulk inventory purchasing from thousands of suppliers (Jacques et al., 2003; Mahmood 2012).6

What is your economic model—low cost, vs. differentiation?6

Which part of the value chain do you operate?7

What aspects of your business model is most vulnerable to challenges from frugal innovation?7

What is your strategy to deal with that threat/ challenge?8

What kind of innovations do you need along the product dimension as well as in the way you configure your business model?10

Which resources and capabilities do you need to face that challenge?10

What kind of organizational changes do you need to have in order to implement that strategy successfully?11

Conclusion13

References14

Challenges and Opportunities related to Frugal Innovation in Wal-Mart's E-Strategy

Introduction

Globalization has been the corner stone of most large businesses around the world. Today many organizations engage in one or more form of business activities with foreign companies and countries. According to researchers, almost everything consumers see or use today is driven by globalization. The car we drive to work may be designed in Germany, assembled in Mexico from components made in the United States and Japan that were fabricated from Korean steel and Malaysian rubber. The desire for cost efficiency have led most US companies to employment outsourcing and building manufacturing plants in China and India. These types of business activities can be referred to as ...