Internet Exercises


1			Wal-Mart, the American discount giant, is on the move again. This time the company is after Britain's Safeway, PLC. Wal-Mart sees the chain as an integral component in its quest to become the United Kingdom's market leader in discount retailing. Wal-Mart's experience in foreign markets has been mixed at best. In Germany for example, the chain failed in its bid to become the country's low-cost leader when local retailers undercut Wal-Mart's prices. Wal-Mart also experienced difficulty in Argentina and Brazil. Britain has been the bright spot in Wal-Mart's international record thanks perhaps to its acquisition of U.K. supermarket chain Asda. Wal-Mart has been able to successfully extend its buying power and logistical and merchandising expertise to the British chain. Still, experts question whether Wal-Mart's business model and skill base will work in other markets. It is also no secret that Wal-Mart's reputation has spawned a number of sites such as http://www.walmartsucks.org/ and http://forum.walmartsucks.com/ Discuss where Wal-Mart stands in the balance between pressures for local responsiveness and pressures for cost reductions. Why is the company having such a difficult time expanding into new markets? Go to Wal-Mart's web site (www.walmart.com) and examine the company's other international efforts. Which are successful? Which are not? Why? Next, find out whether Wal-Mart was successful in its bid for Safeway (www.safeway.co.uk). Is Safeway a good fit for Wal-Mart? What are the implications of either a failed bid or a successful bid for Wal-Mart and for retailing in Britain? Source: Wal-Mart's Offer for Safeway Comes With the Risks Built In," The Wall Street Journal, 1/15/03, p. B12.




2			Motorola is not only the biggest foreign investor in China, it is also one of China's top exporters. http://www.motorola.com.cn/en/about/inchina/china.asp Add to this Motorola's position as the leader in cellular phones in China and it quickly becomes clear how important China is to Motorola and how important Motorola is to China. China is the world's largest cellular market, a position that has not gone unnoticed by Motorola's rivals, which would all like to take a bigger piece of the action. Nokia is pouring money into the market hoping to unseat Motorola, and perhaps more frightening for the market leader, are the small local companies that are emerging as legitimate contenders in the market. To date, Motorola has chiefly relied on its technology to set itself apart from rivals, but now the company is also looking at design issues as a means of maintaining its market share. Some experts however are worried that the new competition will drive down prices as companies capitalize on scale economies and low cost labor. Further, because the rate of growth is slowing in the markets, local firms will have to seek markets outside of China, a strategy that could hurt Motorola's worldwide sales. Motorola is hoping that a three-pronged strategy http://www.businessweek.com/magazine/content/05_47/b3960009.htm will help it maintain its position as China's market leader. The company is boosting its R&D in China and cutting costs via local sourcing, expanding into new areas where there is less direct competition, and linking up with local competitors. The company is also making an effort to show Beijing that it is committed to the Chinese market. Go to www.motorola.com and explore the company's operations in China more closely. How would you characterize Motorola's international strategy? How have changes in China's market affected Motorola's strategy in China? What is the strategic significance of Motorola's experience in the Chinese market? Motorola is forming strategic alliances with some of its Chinese competitors as part of its new strategy in China. What are the advantages of forming such alliances? What are the disadvantages? What precautions should Motorola take before it agrees to work with other companies? How can Motorola get the most from its alliances? Source: "Winning in China," Businessweek, 1/27/03, p.98.

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