Introduction

Globalization is understood as the process of worldwide integration of technology, social, economic, political and cultural factors. This is associated with the constitution of the world unified market and it has been observed with increasing global trade levels. In the transformation of the multinational organization’s globalization and its impact is quite eminent increasing competition is there among the nations as now MNCs are expanding from both the developed to developing countries and even the emerging ones. Globalization has assisted organizations in developing their dales, minimization of production cost, increased competitiveness and widening the saturated home markets. In this essay integration responsiveness of one of the largest multinational retailers like Wal-Mart has been discussed (Walmart International, 2019). The organization’s internationalization strategy is the most significant interest as it has managed to pull out recently two of the international markets like South Korea and Japan. The success of the organization in Japan is quite questionable.

Current position of Wal-Mart

Wal-Mart is founded in the year 1962 by Sam Walton and this organization has opened its discount store in the USA as well. The company has incorporated in the year 1969 to emerge as Wal-Mart stores and these stores are responsible for featuring general merchandise like home appliances, clothing and electronics and this also completes its grocery units. The organization has employed more than 2 million associates and it is serving 176 million customers each year. It has been ranked in the year 2009 as the first among the retailers in the survey of Fortune Magazine’s Most Admired Companies and this has also appeared to be the largest retailer across the world (Meyer and Su, 2015). 

As the result of the American retail market’s situation, Wal-Mart has initiated international expansion into the foreign markets in the year 1990 initially into Mexico and expanded into the other thirteen countries like Great Britain, Canada, China and Japan. At present, the organization has almost 8,424 stores as well as club locations. The most successful foreign venture of the organization is located in the Mexican market. The low pricing strategy of the organization has appeared to be successful in one of the developing countries, Mexico. On the other hand, it is also perceived that such strategies are not at all welcome by the customers as it is revealed in Korean and German market expansions where they have been failed and needed to pull out. Still, the organization is struggling in the accomplishment of success in the Japanese market where the organization has invested already $1 billion (Kuchikomi, 2018). International expansions of the organization have permitted this in developing scale of economy, increasing the whole customer base and development of ideas as the layout of the new shop. 

Integration-responsiveness framework of Wal-Mart

Framework for integration-responsiveness is the very way of capturing the pressures of certain businesses and such framework is dependent on the local responsiveness and global integration pressures on the business as organizational managers have perceived (Qu and Zhang, 2015). Global integration pressures are the industry forces driving the organizations into products, procedures and policy standardization for reducing operational costs across the national boundaries though the local responsiveness pressures can drive the business into locally sensitive to the differences in preferences, tastes, general behaviours and culture of such international market in internationalization strategies. 

Based on the opinion of Verbeke and Asmussen (2016), cultural understanding and diversity are important features to the successful internationalization of an organization in any of the countries. This occurs as it has an impact on managerial ideology, attitudes of the workforce, business customs, consumer behaviours and technological forces. Organizations adopting global strategy have low responsiveness and high integrating and emphasize on standardization along with cost reduction with the restricted global control. Organizations with low responsiveness and low integration strategy focus on international strategy introducing existing expertise and competence into a new market. Transnational organizations, on the other hand, have high responsiveness and integration and they are quite flexible and integrate equal local responsiveness and global integration. Multi-domestic organizations on the other hand are inclined on high responsiveness and low integration responding more to the customization of the products. 

Expansion of Wal-Mart into Japan

Initially, the organization has made failed entry into the country of Japan in the middle of the 1990s and it has entered the market by selling the products in its local supermarkets. Such initial failure can be associated with the slow drift of the market by local supermarkets as Wal-Mart has almost no control over them. Entry of the organization into Japan has been conducted with the partnership with that of Seiyu Ltd that is the fifth-largest supermarket in Japan and at that time has been suffering from financial distress. Both parties at that moment have made a deal where the organization Wal-Mart has accomplished initially 6% of the shares of Seiyu and increase slowly the stake through getting at least 67% of that of Seiyu (Isac. and Remes, 2018). In the year 2005, Wal-Mart has made Seiyu its subsidiary by increasing its stake percentage which in the year 2007 has again increased to almost 95%. Partnership deal has the purpose of helping Wal-Mart in minimizing that risk of internationalization in Japan with strong price wars, strong suppliers and domestic competition and has also assisted in expansion and entry in the market. 

Integration-responsiveness strategy of Wal-Mart in Japan

The international strategy has been adopted by Wal-Mart in Japan for the global expansion as they have the core competencies which they are capable of capitalizing upon and hardly the rivals ha matched them. Organizations with the internationalization strategy have the most significant part to perform of value chains like expertise, international operations, new products and decision-making. Such centralized decision making is responsible for impeding on abilities of subsidiaries to cater to local demands. 

Disadvantages of the internationalization strategy of Wal-Mart in Japan

Low-cost strategy

Wal-Mart follows a cost-efficient structure and the food cost of the organization has been estimated as 20% lower than the competitors in the context of the United States (Walmart International, 2019). In the Japanese market as well the organization has tried to replicate such a strategy in Japan and the results have been utterly poor. In Japan success of such a strategy has appeared to be questionable as consumers in Japan has associated a low pricing strategy with low quality (Tulung, 2017). At the same time to obliterate such an idea, the organization has gain introduced more expensive products for certain customer segments preferring that of high cost yet at the same time maintaining that variants of low cost. This has further aggravated confusion of the customers who are incapable of understanding such disparity of price. 

Cultural misunderstanding

The organization has perceived failure in grasping the retail and consumer environment in Japan. In Japan, there has been a larger requirement for the customization of a local store. Buying behaviour of consumers is separate from the United States. They possess that tendency of purchasing smaller quantities in the regular intervals other than the American opinion of stocking up. Such culture tends to purchase more fresh produce than pre-packaged food (Son et al. 2018). As Wal-Mart cannot attain luxury-brand customers, cultural misunderstandings have resulted in taking the organization away from success. 

Inefficiencies of supply chain

In the country of Japan, there has been a close-knit and stronger supplier connection providing the retailers with their products. This country is responsible for putting high importance on local and close relationships making this quite difficult for foreign organizations for entering into the industry. With many of the product changes because of the specifications in local stores, it has made the organization dealing with many of the suppliers (Alon et al. 2016). This has not been favourable to the large retailers as they do not possess a national presence or time for making proper connections and relationships to perform business (Ralston et al. 2015). Difficulties of supply chain management are other substantial reasons Wal-Mart struggling in the country.

Pressure from competition

Different national and international competitors in Japan are 7-Eleven Japan Co. LTD., Ito-Yokado Co.LTD, AeonCo.LTD, Tesco and Carrefour.

Advantages

Technology-focused system

One of the most significant core competencies of Wal-Mart is an inventory of a technology-focused replenishment system connected with the suppliers. It assists them in managing and monitoring inventories. As people in Japan prefer that of personal communication while performing business and implementation of this strategy is not easy yet as the country possesses different distribution network layers being networked closely and quite tough to penetrate (Dobrzykowski et al. 2015). Thus it has made high discounting volume tough and merchandising appears to be quite expensive. Now the organization is trying to eradicate middle-man for implementing a successfully low pricing strategy. 

Conclusions and recommendations

Wal-Mart has appeared to be successful in the domestic market and some of the foreign markets like Mexico and China where it is responsible for Adjusting its strategy for responding well to the local pressures. Thus it is recommended that the organization must develop a strategy in Japan and better respond to capture such segment of the market and provide more o with fresh local products. Wal-Mart must recruit Japanese managers for assessing the market and make strategies better. Such measures can assist the organization in better succeeding where low price pressure has not been emphasized in the market. Still, the organization can maintain international strategy with responsiveness to the local demand as no single best strategy is there to embrace. This move can protect Wal-Mart from the withdrawal from the market where already it has invested USD 1 billion. Low sales value of the organization from the international operations in contrast to Tesco unleashing the fact that retail market is a quite viable industry for the organization to conduct. 

Reference List

Alon, I., Jaffe, E., Prange, C. and Vianelli, D., 2016. Global marketing: contemporary theory, practice, and cases. Routledge.

Dobrzykowski, D.D., Leuschner, R., Hong, P.C. and Roh, J.J., 2015. Examining absorptive capacity in supply chains: Linking responsive strategy and firm performance. Journal of Supply Chain Management, 51(4), pp.3-28.

Isac, F.L. and Remes, E.F., 2018. The Relationship between Culture and Strategy–A Managerial Perspective Approach. Studia Universitatis „Vasile Goldis” Arad–Economics Series, 28(3), pp.76-85.

Kuchikomi, K., (2018). Walmart prepares to pull out of Japan. Accessed: https://japantoday.com/category/features/kuchikomi/walmart-prepares-to-pull-out-of-japan, on: 10th August, 2019. 

Meyer, K.E. and Su, Y.S., 2015. Integration and responsiveness in subsidiaries in emerging economies. Journal of World Business, 50(1), pp.149-158.

Qu, R. and Zhang, Z., 2015. Market orientation and business performance in MNC foreign subsidiaries—Moderating effects of integration and responsiveness. Journal of Business Research, 68(5), pp.919-924.

Ralston, P.M., Blackhurst, J., Cantor, D.E. and Crum, M.R., 2015. A structure–conduct–performance perspective of how strategic supply chain integration affects firm performance. Journal of Supply Chain Management, 51(2), pp.47-64.

Son, J., Baek, J., Park, H. and Kim, C., 2018. The localized merchandising for international retailers: A study of Tesco’s failure in Japan. The Ritsumeikan Business Review, 56(5), pp.1-20.

Tulung, J.E., 2017. Resource Availability and Firm’s International Strategy as Key Determinants Of Entry Mode Choice. Jurnal Aplikasi Manajemen, 15(1), pp.160-168.

Verbeke, A. and Asmussen, C.G., 2016. Global, local, or regional? The locus of MNE strategies. Journal of Management Studies, 53(6), pp.1051-1075.

Walmart International, (2019). Walmart. Accessed: https://corporate.walmart.com/our-story/our-business/international/walmart-japan on 10th August 2019.