GLOBAL MARKETING CHANNELS AND PHYSICAL DISTRIBUTION CASE IN WAL-MART By Tri Marheni 053728 Mega Puji Indrawati 053800 Riana Setya Permana 053824 Dewi Shinta Sirait 057266

A. INTRODUCTION Wal-Mart Stores is an American public corporation that runs a chain of large, discount department stores. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business, as well as the largest toy seller in the U.S. Wal-Mart also owns and operates the North American company of Sam's Club. Wal-Mart operates in Mexico as Walmex, in the UK as ASDA, and in Japan as Seiyu. It has wholly-owned operations in Argentina, Brazil, Canada, Puerto Rico, and the UK. Wal-Mart's investments outside North America have had mixed results: its operations in South America and China are highly successful.

B. Incorporation and Growth The company was incorporated as Wal-Mart Stores on October 31, 1969. In 1970, it opened its home office and first distribution center in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million During the 1980s, Wal-Mart continued to grow rapidly, and by its 25th anniversary in 1987 there were 1,198 stores with sales of $15.9 billion and 200,000 associates. At the time, it was the largest private satellite network, allowing the corporate office to track inventory and sales and to instantly communicate to stores.

Also in 1988, the first Wal-Mart Supercenter opened in Washington, Missouri. Thanks to its superstores, it surpassed Toys "R" Us in toy sales in the late 1990s. Wal-Mart also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying ASDA in the UK for $10 billion. In 1998, Wal-Mart entered the grocery business, introducing the "Neighborhood Market" concept with three stores in Arkansas. By 2005, estimates indicate that the company controlled about 20% of the retail grocery and consumables business. In 2005, Wal-Mart had $312.4 billion in sales, more than 6,200 facilities around the world-including 3,800 stores in the United States and 2,800 elsewhere, employing more than 1.6 million "associates" worldwide.

C. Global Marketing Channels Global Retailing Categories A C B D Fewer Categories Many Categories Manufacturer Brands Focus Own-Label Focus

Global Retailing Market Entry Strategy Framework D Organic A Chain Acquisition C Franchise B Joint Venture Culturally Close Culturally Distant Difficult to Enter Easy to Enter

Strategy Framework in Wal-Mart America Wal-Mart expanse to many country in America Continent such as Canada, Mexico, Argentina, Brazil, and Puerto Rico. This is Table about Wal-Mart Retail Operations in America, 2003 : Discount Stores Supercenters Sam’s Clubs Neighborhood Markets Argentina 11 Brazil 12 8 2* Canada 213 Mexico 472** 75 50 Puerto Rico* 9 1 33 Total 694 99 67 35 Wal-Mart has different market entry strategy to go into one market in one country. In Mexico, Wal-Mart established a 50-50 joint venture with Cifra SA, Mexico’s largest retailers. In Canada (1994), Wal-Mart entered by acquisitions the 122 store Woolco Chain. In Brazil, Wal-Mart teamed up with Lojas Americanas SA (open five store). But in Argentina, Wal-Mart opened four stores without a partner.

Strategy Framework in Wal-Mart Europe Wal-Mart expanse to two country in Europe such as Germany and United Kingdom. This is Table about Wal-Mart Retail Operations in Europe, 2003 : Discount Stores Supercenters Sam’s Clubs Neighborhood Markets Germany 94 United Kingdom 248 10 Total 104 In Europe, both Germany and UK, Wal-Mart use acquisitions as a strategy to enter new markets. Wal-Mart purchase of 21 hypermarkets from Wertkauf GmbH and acquired 74 additional hypermarkets from Spar Handels AG in Germany. And then, Wal-Mart offering more than $ 10 billion for Britain’s third largest supermarket chain, Asda Group PLC.

Strategy Framework in Wal-Mart Asia Wal-Mart is also targeting Asia. With China now a member of World Trade Organization, Wal-Mart executive intend to capitalize on the coming economic expansion. This is Table about Wal-Mart Retail Operations in Asia, 2003 : Discount Stores Supercenters Sam’s Clubs Neighborhood Markets China 20 4 2 Korea 15 Total 35 Wal-Mart earliest foray into China, a joint venture launched in 1996 with Thailand’s Charoen Pokphand Group. Wal-Mart executives have made a point of building relationships with government officials.

Development of Wal-Mart Distributions Channels Wal-Mart's international operations currently comprise 2,980 stores in 14 countries outside the United States (Argentina, Brazil, Canada, Puerto and the UK) With 1.8 million employees worldwide, the company is the largest private employer in the US and Mexico, and one of the largest in Canada. Wal-Mart has operated in Canada since its acquisition of the Woolco division of Woolworth.

In December 2006, the conversion of Wal-Mart in December 2006. Sales in 2006 for Wal-Mart's UK subsidiary, ASDA, accounted for 42.7% of sales of Wal-Mart's international division. In contrast to Wal-Mart's US operations, ASDA was originally and still remains primarily a grocery chain, but with a stronger focus on non-food items than most UK supermarket chains other than Tesco. At the end of 2007, ASDA had 340 stores, some of which are branded ASDA Wal-Mart Supercentres, as well as ASDA Supermarkets, ASDA Living, George High Street and ASDA Essentials stores.

In addition to its wholly-owned international operations, Wal-Mart has joint ventures in China and several majority-owned subsidiaries. Wal-Mart's majority-owned subsidiary in Mexico is Walmex. In Japan, Wal-Mart owns about 53% of Seiyu. Additionally, Wal-Mart owns 51% of the Central American Retail Holding Company (CARHCO), consisting of more than 360 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. Wal-Mart bought the 116 stores in the Bompreço supermarket chain in northeastern Brazil. As of August 2006, Wal-Mart operates 71 Bompreço stores, 27 Hiper-Bompreço stores, 15 Balaio stores, and three Hiper Magazines (all originally parts of Bompreço).

It also runs 19 Wal-Mart Supercenters, 13 Sam's Club stores, and two Todo Dia stores. With the acquisition of Bompreço and Sonae, Wal-Mart is currently the third largest supermarket chain in Brazil, behind Carrefour and Pao de Acucar In November 2006, Wal-Mart announced a joint venture with Bharti Enterprises to open retail stores in India. As foreign corporations are not allowed to directly enter the retail sector in India, Wal-Mart will operate through franchises and handle the wholesale end. The partnership will involve two joint ventures; Bharti will manage the front end involving opening of retail outlets, while Wal-Mart will take care of the back end, such as cold chains and logistics.

D. Physical Distribution in Wal-Mart SUBSIDIARIES Wal-Mart Stores Division U.S. Wal-Mart Discount Stores Wal-Mart Discount Stores carry general merchandise and a selection of food. Many of these stores also have a garden center, a pharmancy, Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, and a fast food outlet. Some also have gasoline stations. Wal-Mart Supercenter The first Supercenter opened in 1988 in Washington, Missouri. A similar concept, Hypermart USA, opened in Garland, Texas a year earlier. All of the Hypermart USA stores were later closed or converted into Supercenters.

3. Wal-Mart Neighborhood Market They offer a variety of products, which include full lines of groceries, pharmaceuticals, health and beauty aids, photo developing services, and a limited selection of general merchandise. 4. Sam's Club Sam's Club is a chain of warehouse clubs which sell groceries and general merchandise, often in large quantities. Sam's Club stores are "membership" stores and most customers buy annual memberships.

Supply Chains Wal-Mart not only use business-to-consumer marketing (b-to-c or B2C) but also business-to-business marketing (b-to-b or B2B). In B2C marketing, Wal-Mart use The Alternative Distribution Channels of Consumer Goods, like this : Producer Wholesaler Retailer Consumer In B2B marketing, Wal-Mart use The Alternative Distribution Channels of Business Goods, like this : Producer Wholesaler Consumer

Wal-Mart Innovations Supply Chains A vertical marketing system (VMS) is a distribution channel structure Wal-Mart. Type of VMS in Wal-Mart is Corporate VMS and Administered VMS. Wal-Mart Innovations Supply Chains During the past 20 years, Wal-Mart has grown to immense proportions. The entire conglomeration of Wal-Mart stores consists of retail stores, both national and international, websites, and other acquisitions and partnerships which have contributed to its global success story.

Transportation (Remixing the Inbound Channel) Remix is Wal-Mart’s name for a vendor transportation consolidation program on a colossal scale, the sort of scale that only the world’s largest single retailer can create with a strategy that will echo across the country’s logistics pipelines.

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