Wal-Mart Essay Example | Topics and Well Written Essays - 4750 words

Wal-Mart - Essay Example Porter’s generic strategy provides a clear linkage between strategic management and strategic finance. Wal-Mart’s decisions had a clear linkage between strategic management and strategic finance. Even when entering a foreign country, a firm needs to assess which markets to enter, the timing and the scale of entry (Hill, p488).Whether the strategy is to maintain cost leadership or product differentiation, the ultimate strategy is to gain competitive advantage and enhance profitability. Wal-Mart focused on cost leadership and their low-cost model served them well within the US but the same strategy did not help them in their international operations. In the US they had achieved organic growth but when they decided to expand their ventures overseas, they did not look beyond the low-cost model. According to Mintzberg (1987), a strategy must essentially have two characteristics – it is made in advance of the action undertaken and it must be devised purposefully and co nsciously. Wal-Mart did not follow this principle of strategic management.Wal-Mart did none of these and merely tried to replicate the business model that had brought them success in the US. Another important factor when entering another country is the choice of entry mode which must be based on long-term growth and profit potential. There are four different modes of entries - exporting, contracts (licensing) joint ventures (JV) or wholly owned subsidiaries (WOS) and the choice depends upon the level of control required.