Growth Strategy Recommendations for Africa (IA06 - Case Study: Wal-Mart in Africa)

Case Study: Wal-Mart in Africa

IA06 - Case Study: Wal-Mart in Africa

The purpose of this assignment is to develop and demonstrate and understanding of the strategies that need to be followed by companies when entering a foreign market of which they have little experience. The point is to explore the policies that Wal-Mart, through its subsidiary Massmart, should follow in order to maximize the probability of success and to avoid future controversies that it might face regarding its business practices in Africa.

In addition to being available in the Deresky text in the JPL, the case study materials may be purchased for $5.25 (I receive no part of this payment) at: https://www.thecasecentre.org/students/course/registerForCourse?ucc=C%2D3910%2D348958%2DSTU

A. Assignment – Individually write and submit on Blackboard a 1-page memo to the VP of Growth Strategy (Africa) recommending in which of three African countries Wal-Mart/Massmart should next focus its expansion efforts. In separate paragraphs, summarize your conclusions based on the CAGE analysis and Lessons Learned from Wal-Mart’s prior expansion initiatives. Include the supporting tables in your submission (Graded):

 Using Table 1 (provided below), perform a CAGE analysis for three potential ‘next-step’ countries for Wal-Mart’s expansion beyond South Africa, with comparison to the current countries where Wal-Mart has a presence: US, Mexico, and South Africa.

 Using Table 2:

A. Note the lessons learned from Wal-Mart’s previous failed entries into Germany and South Korea, as well as the struggles to enter South Africa.

B. Analyze how lessons learned in the experiences in Germany and South Korea have been applied (or not) with the Massmart acquisition in South Africa.

C. Then consider what lessons from all three market entries may be important for the alliance with Massmart when pursuing further expansion in each the 3 potential African countries.

 You only need to discuss aspects of prior efforts that are relevant to the particular country based on your assessment of similarities between the country and prior experiences.

Case Study: Wal-Mart in Africa

 The memo should be formatted as follows:

From: [Your Name], Growth Strategy Analyst To: VP of Growth Strategy Africa (Massmart)

Growth Strategy Recommendations for Africa

Recommendation: [10 pts: A succinct paragraph giving your recommendation for the next African nation in which Massmart should focus its efforts. Briefly summarize the justification for that recommendation.]

CAGE Analysis: [20 pts : Summarize the results of the CAGE analysis (Table 1), including which factors were most important in your analysis and why.]

Lessons Learned: [10 pts: Summarize the key Lessons Learned applicable to the country you selected (Table 2).]

Sincerely,

[Your name – Doesn’t have to be signed]

 Additional grading criteria:

o Use of English sentence structure, grammar, spelling, and punctuation will be included in the above sections.

 Total: 40 pts

Single Spaced, with 1 blank line between paragraphs. Arial or Times New Roman 12pt

Case Study: Wal-Mart in Africa

Table 1. CAGE Analysis:

US Mexico S. Africa Nigeria Botswana Malawi Cultural: a. Language b. Religion c. Colonizer(s)

N/A N/A

Cultural Summary

Based on Cultural factors,

Administrative: a. Corruption (CPI) b. Political Structure c. Restrictions on

Foreign ownership c. Union Strength

Administrative Summary

Based on Administrative factors,

Geographic: a. Distance b. Transportation to

and within country

N/A N/A Reference from

S. Africa

Geographic Summary

Based on Geographic factors,

Economic: a. GNI/capita b. Population c. Literacy % d. Unemployment %

Economic Summary

Based on Economic factors,

For each country, list the predominant language(s), religion(s), and the colonizing nation. For countries with multiple languages or religions, only list the top few to cover 70 or 80% of the population.

For each country, provide the listed data. Since Wal-Mart has been successful in the US, Mexico, and South Africa, a target African country with administrative similarities with any one of those countries may be considered “close” in Administrative distance.

State your conclusion as to which country(ies) are the closest based on Cultural distance.

State your conclusion as to which country(ies) are the closest based on Administrative distance.

Discuss the Geographic factors, such as the distance and means of transporting products and people from South Africa to each target country. Assess the transportation infrastructure within each country.

State your conclusion as to which country(ies) are the closest based on Geographic distance.

State your conclusion as to which country(ies) are the closest based on Economic distance.

For each country, provide the listed data. Be sure to use the same units of measure for all countries (e.g. US$ GNI/capita; million population). Since Wal-Mart has been successful in the US, Mexico, and South Africa, target African countries with economic similarities with any one of those countries may be considered “close” in Economic distance.

Case Study: Wal-Mart in Africa

Table 2. Lessons Learned:

What Lessons Were Learned in Each

Country

How Lessons were Applied in

South Africa

How Lessons Learned Apply

to Nigeria

How Lessons Learned Apply to Botswana

How Lessons Learned Apply

to Malawi

Germany

South Korea

South Africa

N/A

A B C C C

See the instructions for guidance on what to note in sections A, B, & C.