Challenges Wal Mart Faces Expanding To China Management Essay

Business operations across national edges are becoming the trend in today's era. And this trend continuously expands because of globalisation and multinational procedure. In response to the globalisation concern, multinational organizations like Wal-Mart are likely operate far away to get excellent advantage. Matching to Amponsah (2001) globalisation and the eagerness of a certain business organisation to operate across borders requires two sizing i. e. change in economic operations of various countries, and change in the members of global economical operations. Numerous figures of people think that the globalisation of monetary activities of every country would hasten the fight poverty (Macarov 2003, p. 103).

But like others that are functioning in local size, Wal-Mart a multinational company also encounters different opportunities and obstacles in the foreign market. With this, this paper will be talking about the opportunities and challenges that Wal-Mart faces in venturing the Chinese language territory.


A business venturing to a international market creates good opportunities. As for Wal-Mart venturing in China, a fresh overseas market like China might provide opportunities for new growth. Aside from this, Wal-Mart uses global extension to lessen costs of goods, speed up speed to market, improve quality of products and of course to lower their overhead costs considering that China is an inexpensive country whereas the labour is cheap compared to other countries in the Western world (Walmartstores, 2010). The reason why most MNCs are extending their business through other nations was to cut costs. Basically, this is a good opportunity for MNCs like Wal-Mart as a result of cheap labour that growing countries offer. Like other MNCs, Wal-Mart can limit costs by sending some or most of its production facilities overseas. Although Wal-Mart are not saying that they using the ability of global enlargement to flee from the protectionist guidelines associated with an importing land, it is remains the motives of most MNCs. Fundamentally, a organization like Wal-Mart can evade high tariffs that thwart its goods from being competitively listed as they consider international direct investment. For instance, when the Western european Common Market put tariffs on things created by outsiders, U. S. businesses required action by putting up European lovers ('Multinational Firm' 1998). Venturing in China is also a good opportunity for Wal-Mart to avoid competition considering that one of the effective ways of avoiding actual or impending rivalry from international firms is to obtain those ('Multinational Company' 1998).

Despite of the opportunistic feat of global growth, Wal-Mart contains that they produce jobs, build prosperity, and develop machines in nations that are in dreadful need of such development.



Maddox (1993) asserts that business that strategies to contend in global market necessitate development of administrative skills learned at the house office to allow the administrators to do their job in a cross-culture environment. Companies that 're going global must be aware of the techniques of choosing and instruction managers to become well accustomed to diverse environment, chiefly in the environment of the united states in which they can be designated. For Wal-Mart case, their Panel of Directors should consider the political, economical, and spiritual factors rising in China. Aside form this, this will also consider the value systems and the personal references frame of Chinese consumers concerning the products and services that they offer. This may posed significant troubles in their spreading out to China. Thus, the similar facets value the interest of the administrators of Wal-Mart who'll be put at their section in China. The Chinese lifestyle, culture and environment was far away not the same as Wal-Mart's home country i. e. USA and other Traditional western countries where they handles.

In assessing the culture of China within Wal-Mart's business procedure, Hofstede's sizes culture was used. Actually, Geert Hofstede is a Dutch organisational anthropologist who divided culture into four measurements. Regarding to Dahl, (2004), the culture can be divided to ability distance, collectivism/ individualism, femininity/masculinity, and uncertainty avoidance. It is important to keep yourself updated and understand these cultural sizes for these offer an influence on the internal and exterior workings of organizations that operate on an intercultural level.

Power Distance. Ability distance is described as "the amount to which the less powerful associates of associations and administrations in just a country expect and notice that ability is disseminated unevenly (Hofstede 1991, p. 28); more simply, it is concerned with how identical, or unequal, the individuals are in a particular society or nation. In China, they have high ability distance i. e. 80 PDI, which means that there may be significant amount of inequalities in vitality and wealth within China. As a result, it is most probably that that culture utilizes a caste system and does not allow significant development for its people ('Geert Hofstede cultural measurements' 2010).

In the corporate-oriented context, firms with a high power distance employ a tall organizational structure because there is greater and higher rigidity in conditions of hierarchy. Also, you can find a large proportion of managerial employees to the overall human resource population, high job standing for white-collar work, large compensation differentials, and low requirements for entry-level positions (Earley, 1997, p. 147).

Individualism versus Collectivism. Individualism is how a society sees achievement and personal relationships, should it be individually or as a group. Furthermore, relating to Hofstede (1991), individualism is a set of values that matter the relationship of a person to his or her collectivity in the modern culture (as cited in Earley, 1997, p. 144). In China, the individualism was low i. e. 20 IDV which suggests that China is a nation with low individualism and has a collective character wherein close bonds are present among the people ('Geert Hofstede cultural sizes' 2010). Moreover, collectivistic people also perceive themselves in relationship a societal and cultural context. This is a great concern for Wal-Mart due to the fact their mother country USA has high collectivism as can be viewed through the type of their own families. People who reside in such locations are in nuclear family members, as oppose to highly collective Asian those who normally live with people of their expanded families.

Masculinity versus Femininity. This dimensions is about gender differentiation, or n particular, the quantity of how a society relates the conventional view of man as a kind of achievement, electricity, and influence. In countries with high masculinity, men deal with the most crucial area of the communal order and affect composition, while females are managed due to male domination ('Geert Hofstede social proportions' 2010). In China, they have high masculinity i. e. 66 MAS. Actually this is important for Wal-mart's operation since it pertains to achievement, industrial strife, high development, aggression, work stress, and issue. To become more specific, firms that are usually more masculine are fast-paced, hostile, and target more on development and expansion over harmony and steadiness (Earley, 1997). On the other hand, a feminine-oriented company is more worried on the public interaction and procedures among recruiting. Furthermore, such organisation has an understanding and nurturing figure, which indicates that the central is on interpersonal execution and synchronization over own interest (Earley, 1997). For this reason, the wellbeing of the members is the primary apprehension since the primary outcome of this is approximately the firm's capability to institute the probable of a person within social good in the group.

Uncertainty Avoidance. According to Hofstede, the degree to that your affiliates of an organization experience jeopardy by doubtful or unidentified environment is named doubt avoidance. As observed in the index, China has low uncertainty avoidance which suggests that the united states was less rigid when it comes to improve, could handle risks, and have less rules and regulations, since they could effectively go through diverse opinions ('Geert Hofstede ethnic sizes' 2010).

For Wal-Mart, doubt will come from the internal and external environment. An organization's respond to such ambiguities, by using guidelines, rituals, and technology, influences its image of high or low doubt avoidance. This may be a great challenge for Wal-Mart since China won't easily adopt the change they might bring in the country.

A Fifth Cultural Dimensions. After additional studies which were mainly centered on Chinese managers and employees, Hofstede unveiled a fifth cultural dimension, which is the long-term orientation. This centers on how countries apply, or do not apply, long-term devotion to standard, forward thinking ideas ('Geert Hofstede cultural dimensions' 2010). Countries with high levels of long-term orientation recommend a solid work ethics and anticipate long-term rewards because of today's effort. Thus, long-term commitments are emphasized and practices are respected ('Geert Hofstede cultural dimensions' 2010). That is a great problem for Wal-Mart given that they came from countries with low degrees of long-term orientation that have the capability to experience change because long-term customs and behaviours are lessened, and change is no longer hindered.


When it involves political factor, the primary disparity in the markets of West and China is the so-called orientation. As seen, most of the west countries are affluent as the China are practicing the Soviet Union economical strategy where their economic practices are usually mandated by their government. Basically, the neighborhood representatives of China have great control even though the market is available to foreign traders. As reported in Economy of China' (2010), it was argued that Chinese language firms must have at least 51% ownership and joint endeavors control with international traders. Ramsay (2003) mentioned that it normally takes 2-3 three months for business enrollment in China because their government authorities are putting up restrictions concerning overseas investment (p. 8). The difference in the monetary orientation of China and Wal-Mart's home country USA poses certain troubles to the market leaders of said company. Actually, the said leaders are usually more familiar in america free market in which the investors, suppliers and consumers are free to transact their business plus they also have the capablities to determine the currents stance of these economic activities. Subsequently, China's transitional economy. Relating to Alon & Shenker (2003) since the mid-1970s there are numerous international opportunities in China that heighted the growth of foreign investment and international joint venture. But despite of these opportunities, rising problems also arises to MNCs whereas their mangers experience conflicts with Chinese managers. Because of social diversity Wal-Mart's american manager will experience clash against Chinese language professionals. As an American, Wal-Mart's managers believe that future conditions can be contained in to the ready matrix which delivers as an investigative sculpt to channel decision making types of procedures. Regarding these diversities, the American managers that are positioned in China may face differing management approaches with their Chinese contemporaries. Thirdly, USA and China fluctuate in religious values ('Christianity-Protestantism' 2010). Chinese will be more philosophical and feel that humans must observe their fate by moving into harmony with the people and practicing interpersonal traditionalism ('Religion in China' 2001). Therefore, Western members would implement their functions predicated on their own decisions and choices while their Chinese language equivalents would constantly make an effort to stand by the rules and search for outlooks of other members because they are more susceptible to look for traditionalism. These distinctions in notion of freedom would make the leaders of Wal-Mart consider the outcomes and motivations of the manpower. Western associates would be activated to prosper if they are given sufficient liberty at the job while Chinese associates may alternatively work in categories and have way in to continuous control. Alon & Shenker (2003) argued that the value of personal interactions with subordinates and supervisors is important but organizational string of command shouldn't dictate their human relationships. Aside from this, the heads should have to know that the Chinese language culture consigns much admiration to heads while Traditional western natives have a preference to work by themselves most of the days.


The finest solution to determine triumph in international market is in the course of unvarying supervision and constant monitoring of the top office. Along with the said practice, the head office can determine the existing status of the business in the international land. With this, Wal-Mart must be able to execute frequent monitoring gauges in their operations and the performances of the employees and managers sent to China. As seen in usual cases, the failing of business enterprise may cause lost leads, trimmed down production, and smashed up relationships while business enterprise success indicates the success of the differing.

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