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ABSTRACT
This case is about Wal-Marts entry into the Africa and the challenges it faced when entering the African market. Wal-Mart started to put more emphasis on international markets since the financial crisis of 2008 to fuel its growth as the opportunities available in the domestic market dwindled. Wal-Mart had mixed results in global markets. Wal-Mart started to focus on Africa as other markets which offered good growth potentiality like India were still closed to foreign players. It decided to expand in Africa in the inorganic way by acquiring a local retailer. It made a preliminary offer to buy South African Retailer, Massmart in September, 2010. Massmart was the second biggest retailer in South Africa and had its operations spread across many African countries. The offer was accepted by the share holders of Massmart and South Africas Competition Tribunal in June 2011. Later, Wal-Mart ran into trouble when some trade unions and government departments alleged that Wal-Marts entry will lead to huge job losses and damage the domestic manufacturing sector of South Africa. The government departments who were opposed to the deal have filed a petition with the Competition Appeal Court of South Africa for a review of the ruling by South Africas Competition Tribunal. However, the Competition Appeal Court ruled that Wal-Mart could go ahead with its acquisition of Massmart. Some analysts were still skeptical of WalMarts fortunes in Africa. They warned Wal-Mart of committing similar mistakes it had committed in Germany and South Korea.
This case is meant for MBA/MS students as a part of the Strategy/Marketing Management curriculum.
Wal-Mart in Africa and the strategies that it should follow to succeed there. The moderator can take the discussion further with the help of the following questions. What were reasons for Wal-Mart to shift its focus on Africa? Do you think Africa offers good growth prospects for Wal-Mart in future? What strategies should Wal-Mart follow to succeed in a market like Africa with low income levels and high poverty incidence? Do you think its low cost model will be successful in Africa? Give reasons to support your answer. Why did Wal-Mart face opposition from trade unions and other government departments regarding its acquisition of Massmart? Do you think the opposition coalition had a valid point in opposing the deal by Wal-Mart? Justify your answer. Given the low income levels on many countries in Africa, should Wal-Mart first consolidate its operations in the countries where Massmart had operations or expand to new markets? Give reasons to justify your answer.
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