Walmart In South Africa Essay

742 words - 3 pages

Walmart’s African Expansion
Case Study 2

Case Study Author: Karen Robson, Stefanie Beninger

Presented to: Dr. Doreen Sams

Analyst Name: Joe Slade

Date Submitted: September 28, 2014

Contents

Introduction 1
The Eclectic Paradigm and African Expansion 2
Conclusion 3
References: 4

Introduction

Walmart had humble beginnings. The first store was opened in Rogers Arkansas in 1962 by Sam Walton. Sam Walton wanted to have a store that provided as many items as possible but doing so in a low price way. By 1967 the Walton family owned 24 stores, ringing up $12.7 million in sales. During 1970, Walmart went public. In 1972 the company was listed on the New York Stock ...view middle of the document...

The country was developing well and apartheid had been defeated in the early 90’s. South Africa had a good stable government and had an excellent regulatory system that was put in place by the Companies Act of 1973 (Robson, Beninger 2013).

The issue for South African expansion for Walmart was the countries big push on unions. The one that caused problems with the Walmart expansion into South Africa was the Congress of South Africa Trade Unions (Cosatu). Cosatu immediately went into boycott mode when the Walmart-Massmart decision was announced. Walmart was able to continue their purchase of Massmart by honoring a two year ban on layoffs and a three year term of the union’s collective bargaining agreement. Walmart also agreed to purchase local produce (Robson, Beninger 2013). With these agreements, Walmart succeeded in acquiring a 51 percent purchase of Massmart in 2011.
The Eclectic Paradigm and African Expansion

Walmart had a comparative advantage by going into Africa and buying Massmart. By purchasing a controlling interest in Massmart, Walmart was able to leverage their outstanding ability to deliver goods to the people of Africa. There was also the fact that Walmart is able to sustain their growth in Africa versus a country like Germany where...

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