The Success Story of Wal-Mart in Mexico

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Case Details:

Case Code : BSTR264
Case Length : 14 Pages
Period : 1991 - 2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Wal-Mart de Mexico SAB de CV
Industry : Retail
Countries : Mexico, USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

However, the company was able to overcome these hurdles because of strong support from the Mexican government as well as common people, who were eager to benefit from Walmex's reputation as a company that offered quality products at affordable prices. Analysts said that in Mexico, protests against Walmex were led by small groups of traders who were affected by the competition on the price front, but these groups failed to mobilize the masses and other activists against the company.

Prior to Wal-Mart's entry into Mexico, people bought their regular requirements from informal street shops, where locally made and relatively cheap products were available.

More than the organized retailers, this unorganized sector posed tough competition for Walmex on the price front.

However, the street shops could not withstand the competition from Walmex as the products they sold were not of the same quality and of the same range as those at Walmex. Organized retailing in Mexico was confined to a few local players like Controladora Comercial Mexicana SAB de CV6 (Commercial Mexicana), Organizacion Soriana SA de CV7 (Soriana), Grupo Gigante SAB de CV8 (Gigante), etc. Wal-Mart's success in Mexico forced these local retailers to improve their operational efficiency. They started focusing on their database management, supply chain, store interiors, product pricing, and customer care in order to compete with Walmex (Refer to Exhibit I for a note on the retail market of Mexico)...

Excerpts >>

Business Strategy Case Studies | Case Study in Business, Management, Operations, Strategies, Case Studies

6]  Controladora Comercial Mexicana SAB de CV was a Mexican holding company that operated retail stores, as well as a chain of family restaurants under the brand name California. In addition, the company owned a 47.5% interest in the Costco Mexico joint venture with Costco Wholesale Co. of the US. As of December 2006, it operated 205 commercial units and 67 restaurants across Mexico.

7]  Organización Soriana SA de CV was founded in 1968. The company had around 235 hypermarkets and several smaller stores spread across cities in Mexico. Its stores were located primarily in northern Mexico, slowly spreading to central and southern Mexico as well.

8]  Grupo Gigante SAB de CV was founded in 1940. It operated about 265 outlets spread across Mexico that sold food, apparel, and general merchandise. It also had about 10 stores in Southern California, where it was expanding. The company also operated several restaurants in Mexico.


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