Under the vision of Sam Walton, founder, Wal-Mart has become the number one global retailer. Wal-Mart Stores, Inc. is headquarter in Bentonville, Arkansas. In 1975, Wal-Mart became the largest publicly held company when it began selling shares over the counter. In 1979, Wal-Mart stores introduced the pharmacy, auto service center, and jewelry center. It was the fastest growing retailer with stores 38 stores and 44. million dollars in sales. Throughout the decades,
Wal-Mart continued to add stores in different states across the U. S. and continued to dominate the retail industry. In 1990, Wal-Mart became the nation’s number one retailer and introduced Sam’s American Choice; a quality generic brand for many foods and drinks. The company stated, “Americans deserve to have quality alternatives to the rising prices of food. ” Also, during the 1990’s, Wal-Mart became an international company by opening the doors of Sam’s Club in Puerto Rico. During that same decade, Wal-Mart expanded to Canada and Hong Kong.
To present date, Wal-Mart has stores located in the following countries; United States, Argentina, Brazil, Canada, China, Costa Rico, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea, and United Kingdom. The types of market systems and legal systems that exist in the countries where Wal-Mart operates are: common law, civil law, theocratic law, customary law, or mixed legal systems. • Common Law – A common law system is based on tradition, judge-made precedent, and usage. It gives preeminence to existing case law in guiding dispute resolution. Civil Law – A civil law system is based on the systematic codification of laws and codes.
Civil law systems charge political officials – not government-employed judges – with responsibility for specifying accessible, detailed, and written law that applies to all citizens. International Business 2 • Theocratic Law – A theocratic law system relies on religious doctrine, precepts, and beliefs to define the legal environment. Ultimate legal authority is vested in religious leaders, who apply religious law to regulate business transactions and social relations. Customary Law –
A customary law system is anchored in the wisdom of daily experience or, in more elegant terms, local spiritual legacies and philosophical traditions. Customary laws play important roles in many indigenous, local, and other traditional communities. These laws define the rights and responsibilities of community members in many matters. • Mixed Legal System – A mixed legal system emerges when a nation uses two or more of the preceding legal systems (pgs. 109-111). Daniels, Radebaugh, Sullivan (2011). International Business 13e Environments & Operations, Upper Saddle River: Prentice Hall
The political risks for Wal-Mart in the international countries that it operates in are high. Many of the stores are operating in countries that do not have a strong middle class to support the “wholesale, buy in bulk” concept of the company. Therefore, the company had to make provisions to offer smaller packages. Also, the company had to offer in-store demonstrations and consumer education on many of their products and services. However, the political risks are the most important threat to Wal-Mart continuing operations in these countries. Although, ost of the countries practice democracy; there is a long-term risk of a socialist or military regime.
Also, there are import tariffs being levied on all merchandise trade import that will drive the overhead costs up. Another risk is the current taxes are based on current administrations; if and when there is a change in power, the tax system will change. Lastly, corruption and bribery is extremely common in these countries; there is a high cost to operate in these countries due to the high premium that must be paid in order to conduct business. If I was a political consultant, I ould suggest legal jurisdiction; whereas countries stipulate laws that set the criteria for litigation when agents (pg. 119).
The stakeholder Wal-Mart has to satisfy is the consumer. International Business 3 Wal-Mart’s Global Code of Conduct is based on three principles: Respect for individual, service to customer, and Striving for excellence. Wal-Mart believes that these three principles is globally acceptable and tries to govern all stores and employees by the same standard. However, the company recognizes that some local laws, practices, and customs are different from their global vision.
Wal-Mart has stated that these laws must be followed first, but it is their responsibility to be aware and in compliance of these circumstances. Wal-Mart has organized a Global Social Responsibility Program in six categories: environmental protection, community involvement, community involvement, health and wellness, educational support, and disaster relief. For example, in Japan Wal-Mart was the leading contributor to the disaster relief effort after the tsunami. Some of the indicators the company might monitor to guide their investment and actions in the future are the political risks.
The company must keep a close eye on the administration of the countries. Also, the environmental risks in countries where natural disaster in prevalent. Finally, concluding Wal-Mart has the leading retailer internationally, as their research has discovered what the consumer needs are and packaged this product to accommodate the retailers in various markets.