Hence the company decided to expand globally It also wanted to get ahead of other retailers who were also heading in the same direction. In addition to greater growth, by gaining international reach, Wal-Mart has been able to demand deeper discounts from the local operations of its global suppliers thus increasing its potential to lower customer prices , gaining market share and ultimately earning greater profits.(Charles W.L.Hill,2006).
Walmart is arguably as american a company as it can get.So when the decision was made to expand globally,there was plenty of skepticism to go around.Some of the major management decisions involved questions concerning where to begin , how to go about it and how to customize their products to a foreign clientele. While its retailing practices thrived in America ,there were a multitude of challenges it would have to face in other countries where infrastructure is different, government policies vary, and customer tastes and preferences are "foreign". Not to mention the competition in the form of established retailers already having the leading edge .After its successful venture into the foreign market in the border and neighboring countries of the United States notably Canada and Mexico(where it's the biggest private employer),it looked towards Europe for its next move.UK and Germany, countries with the biggest family incomes, became its next targets. By this time it had already developed a strategy of buying a competitor out as a mode of instantly capturing a target country's market share rather than starting from scratch. This modus operandi of corporate takeover proved advantageous for Wal-Mart in most countries, as in one stroke they succeeded in gaining critical mass(real estate and employees),wiping out its competitor, attaining massive presence in targeted location and avoiding community opposition to construction of huge supermarkets.(Andy Rowell, October 2003).While Wal-Mart met with unprecedented government support, media praise and public fanfare when it opened its first superstore outside of Bristol, UK in 1999,its entry into Germany in the words of Mr. Lee Scott, President of Wal-Mart was "somewhat embarrassing".
Wal-Mart executives held top level personal meet with UK prime minister Tony Blair before they took over ASDA, procuring the government's green signal for expansion in UK. Even before the acquisition, ASDA was a virtual devotee and ardent follower of Wal-mart's policies and strategies. It had tried to imitate Wal-Mart's aggressive price reduction schemes,takeovers of small towns, larger stores than rivals, aggressive price reductions and thrifty employment policies for years and quite successfully so too. So for Wal-Mart, ASDA was a very natural choice for acquisition as both companies were practically the same mind with two bodies. ASDA claims that it has acquired 1 million new customers under the ASDA-Wal-Mart banner. Owned by Wal-Mart, ASDA has become the second biggest supermarket chain in the UK with 17% of the market share. As of June 2004 ASDA operated 259 stores and 19 depots, mainly in Scotland and northern England, and employed 122,000 staff. In the first five years since being bought by Wal-Mart, Asda's grocery market share has increased