Understanding the Effective Entry Strategy into the Chinese Market: Wal-Mart - Dissertation Example

Growth opportunities are essential because the cost of entering a new market can be very high initially. Merely replicating models or transferring global know-how does not help in achieving economies of scale. International retailers have to look beyond the location and ownership advantages. The choice of entry mode should be based on long-term growth and profit potential. 5.2 Recommendations for further research This study was aimed at gaining insight into the entry mode decisions Wal-Mart in China.

It demonstrated the challenges the retailers face in China. Further research can be conducted to evaluate if Wal-Mart learned from its initial entry into China and amended its strategy as it expanded into other regions within China. Another area of research could be to evaluate if Wal-Mart success and failures in different markets have a set pattern. In other words, do the same factors account for success in all markets? To what extent Wal-Mart success/failure is dependent on the internal factors? . Overall international retailers face several challenges in foreign markets.

The retail sector is highly complex and fragmented. China has many cultures and sub-cultures and each region is a different business environment. Domestic retailers are given preference in site location over foreign retailers. Political tensions could arise if foreign retailers tend to grow big. Lack of infrastructure development and adoption of IT technology by suppliers poses other challenges for retailers from developed countries. The study concludes that there can be no single mode of entry that can be termed right for foreign retailers.

The choice of entry would have to consider several other factors such as the sub-cultures, consumer characteristics, the local infrastructure, and the regulations, past international experience, competitors in the host country, growth and sourcing opportunities. Growth opportunities are essential because the cost of entering a new market can be very high initially. Merely replicating models or transferring global know-how does not help in achieving economies of scale. Wal-Mart has to look beyond the location and ownership advantages.

Table of Contents Chapter One: Introduction 1.1 Background 1 1.2 Rationale for research 4 1.3 Aims and Objectives 5 1.4 Structure of the study 5 Chapter Two: Literature Review 2.1 Chapter Overview 7 2.2 Motives for internationalization 7 2.3 Internationalization theories 2.3.1 International market selection 10 2.3.2 Market challenges faced by international retailers 12 2.3.3 International Market Entry Strategy 12 2.3.4 Theories on market entry mode decision 15 2.3.5 The Uppsala Stage Theory of internationalization 19 2.3.6 Knowing the consumer 20