Advantages and Disadvantages of Walmart’s Entry Mode in Brazil
Walmart’s entry mode of acquisition was fast and progressive in the Brazilian market. The business decided to capture an opportunity for rapid expansion in an area free of monopoly. The pros of this mode were presented by fast growth, commercial benefits, and profitability. Such an entry mode allowed Walmart to open multiple stores in a potentially profitable market.
On the contrary, the cons of this strategy were presented by poor assessment of the consumers’ shopping habits. The company was limited in time for better research because it was undertaking active expansion. Walmart’s managers did not consider the aspect of return on investments, which created problems in the long-term perspective.
Reasons for Walmart’s Failure in Brazil
There were many reasons why Walmart failed in Brazil. The most crucial ones were misunderstanding of local culture, misinterpretation of people’s shopping manners, poor store locations, and failure to adopt competitive pricing strategy. Consumers did not like the uncomfortable positioning of shops in their cities. It negatively impacted the frequency of visits to the stores. Poor elaboration of the pricing strategy of Walmart also played a significant role because the consumer’s habit of spending money was not estimated properly. Consequently, Walmart had to close multiple stores because the main competitors took a vast market share.
Strategies for Walmart’s Initial Market Assessment in Brazil
The business CEOs had to conduct an enhanced initial assessment to avoid such dramatic outcomes in Brazil. The specific action of considering cash and carry format for local consumers, who were price-sensitive after the economic crisis, had to be taken to increase the success rate. If the business knows consumers’ purchasing power, it tries to set a proper pricing strategy that motivates people to buy.
Turning to cash and carry format would allow Walmart to decrease operating costs and offer better prices to its customers. People had to plan their budgets thoroughly, cutting their spending, which made them choose other stores that offered more benefits. Discount card introduction as a bargain would have attracted more customers and increased the success rate.