Types of Market and Legal Systems of the Countries Wal-Mart Operates
Research and choose one international corporation to discuss. You may use the Fortune Global 500 to help you choose a corporation (http://money(dot)cnn(dot)com/magazines/fortune/global500/2009/). The corporation you choose may be headquartered in either the United States or a foreign country.
1. Provide a company overview, and identify the countries in which the corporation operates.
2. Identify the types of market systems and types of legal systems that exist in the countries where the corporation operates. What effect do these have on the company's operations?
3. Discuss the possible sources of political risk for: (a) the countries in which the company has a presence and (b) the basic nature of their products and operations. If you were a political consultant for the company, how would you suggest the company approach its political risk given trends in international political systems?
4. Identify the stakeholders the company must satisfy. Why is this process more difficult for companies operating internationally?
5. Summarize the company's code of conduct. State the reasons why it is in the company's best interest to follow its code of conduct when operating in foreign countries.
6. Does the company have any social programs in the country/countries where it operates? If so, briefly describe one.
7. What are the indicators the company might monitor to guide their investment and actions in the future?
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Company Overview
Wal-Mart is the world's largest retail corporation which runs over 11,000 department and warehouse stores around the globe (Lichtenstein, 2012). According to the fortune global 500, the company stands first place as the world's largest employer with over 2 million workers employed by the company internationally. As of 2013, Wal-Mart brought in close to $477 billion in revenues (Lichtenstein, 2013). Running under the leadership of chief executive officer Doug McMillon, Wal-Mart operates in 27 different countries including: Argentina, Brazil, Canada, Chile, China, India, Japan, Mexico, South Africa and the United Kingdom (Lichtenstein, 2013). Furthermore, the corporation operates in the above countries and many others under 55 different names which the company creates in its numerous acquisitions. In fact, according to estimates in 2013, Wal-Mart's total assets worldwide amount over $205 billion (Lichtenstein, 2013).
Global Market Systems and Types of Legal Systems
Some of the markets Wal-Mart operates in are different to those in the United States and as a result the corporation is forced to adapt to local consumer demands rather than follow American values (Lichtenstein, 2013). For example, in China, people prefer to choose and buy sea food which is alive, secured inside the store and stored in see through tanks. Chinese people primarily consume sea food as compared to Americans who focus a lot more on livestock which is chopped, packaged, and ready to go. Another example of difference in markets can be exemplified by the German market which is characterized by oligopolies which have high competition (Mukoyama & Dawson, 2013). Consequently, these companies also use low price strategies. When Wal-Mart attempted to break into this market it was a very tough break because there was nothing unique the corporation was able to bring into the German market.
Furthermore, most market systems have different cultures which Wal-Mart has to be aware of. Before Wal-Mart left Germany, many Germans looked down on the corporation's strict corporate culture which did not allow its employees to have relationships. As a result, there was a public hearing to discuss the matter which consequently created a distorted public image for the company.
Legal systems are different around the world concerning multinational companies. For example China and India don't allow multinational companies to freely establish business in the country (Matusitz, 2013). Multinational companies which want to do business in these countries have to partner up with local companies as Joint Venture partners in order for them to be allowed to carry out their operations. The problem with Joint Venture projects is that Wal-Mart is forced to share its business strategies as well as profits with the prospective partner. Partnership also slows things down since the local companies usually take a huge part of delegating duties regarding the operations on the ground (Matusitz, 2013).
Political Risks
* Sources of political risks for countries...