Walmart

GROUP 4
WALMART’S
EXPANSION
Target country: VIETNAM
GROUP MEMBERS:
01 LÊ XUÂN QUÝ 04 THI LÊ CÁT VY

02 LÊ THỊ ÁNH DƯƠNG 05 HỒ THỊ KHÁNH LINH

03 NGUYỄN PHÁT THỊNH 06 NGUYỄN ĐĂNG HIẾU

TABLE OF CONTENTS:

01 ABOUT WALMART

02 VIETNAM INDUSTRY ANALYSIS

03 ENTRY MODE
I. ABOUT
WALMART
1. COMPANY OVERVIEW

Walmart, Inc. (WMT): an American

multinational discount store
operator and one of the largest
corporations in the global retail
industry.
F ounded in : 1962 - Sam Walton in
Rogers, Arkansas.
The company headquarters :
located in Bentonville, Arkansas.
Statista's ranking in 2021
shows that Walmart is the
world's largest retailer by
revenue.
2. Business model
DISCOUNT RETAILER: LARGE STORES:

Offers a wide variety Warehouses and

Walmart expanded and of products at lower supercenters provide
prices than one-stop shopping for
innovated on the methods groceries, general
competitors.
and ideas that defined its merchandise, and more.
sector after emerging from
the "five-and-dime store"
business environment to ECONOMIES OF PRIVATE LABEL
SCALE: BRANDS:
become the worldwide
retailing powerhouse it is Bulk buying and Develops and sells its
today which include: efficient supply chain own brands alongside
management allows for national brands, often
lower prices. at a lower cost.
II. VIETNAM
INDUSTRY ANALYSIS
A. MARKET ANALYSIS
1 . Overview

The middle class in Vietnam

has expanded geographically
and become more diverse
over the past few years.

Vietnam's middle-class
consumers tend to be
optimistic, and this attitude
has continued as the country
emerges from a period of
economic recession and
repression.
 However, when it
comes to overall
optimism,
Vietnamese
consumers
McKinsey COVID-19 Consumer Survey 2022 conducted in Aug (For continue to rank
Australia, China, India, Indonesia, Japan, and South Korea), Oct
among the highest
(Philippines), and Dec (Vietnam); McKinsey research indicates no
significant changes in consumer COVID-10 sentiment between Aug and in the world.
Dec, except for China, where positive changes in sentiment were
expected due to the government lifting COVID-19 restrictions.
 Despite their optimism, Vietnamese customers are nevertheless

A. MARKET ANALYSIS growing more discriminating and value-conscious

Over 90% of them have noted price rises, inflation worries, gas
shortages combined with increased fuel costs, and rising interest
rates

Vietnamese consumers report the highest percentage of reduction in income spending,

and savings when compared with other Asia-Pacific countries.
 2. Consumer’s behaviors:

Vietnamese consumers are getting smarter and appear to be

changing in four areas: The "four zeros'' are a framework

Zero mainstream
Zero loyalty

Zero boundaries Net zero

 Value-conscious consumers save money on certain items yet overspend on others

mainstream 01 02
Spending is increasing Consumers are willing to spend
across categories due more on personal care
Zero

to inflation and products and domestic

customers moving to necessities but less on eating
premium goods out: vitamins, over-the-counter
medications, exercise products,
and personal healthcare items
 Customers want a "phygital" experience and prefer omnichannel purchasing.

boundaries
01 02 03 Social media, especially
The media and Groceries and vitamin YouTube, Instagram and Tik
Zero

technology supplements are two examples Tok, have a much greater

of specific products that buck influence on the purchasing
companies that are
this trend and are preferred by decisions of young
delivering
customers to purchase in- consumers.
omnichannel solutions
store, but these are exceptions. Customers are buying a lot
are what are driving
of remote and digital
this trend.
services, and they seem to
have no intention of
stopping at all service
categories.
 Customers want a "phygital" experience and prefer omnichannel purchasing.

boundaries
Zero

More than 65 percent of Vietnamese consumers intend to use alternative methods to in-store shopping post pandemic.
 Customers don't feel connected to a brand or retailer

Zero loyalty

Compared to other nations in Asia-Pacific, Vietnamese consumers are the least loyal to stores and brands.

Vietnamese consumers are still less loyal to

certain brands or retailers, and they are free to
change their shopping habits to maximize their
purchases.
 Customers make intentional purchases and choose local, sustainable and healthier
options.
Net zero
Consumers prioritize
health (75% using
telemedicine/apps) and
expect brands with
purpose (28% value shared
Few prioritize eco-friendly
values, staff well-being).
packaging (24%) but some
pay more for sustainable
brands (31%).
 PRICE SENSITIVITY:
Eighty percent of Vietnamese consumers are aware of price changes for products, making Vietnam one
of Southeast Asia's most price-sensitive marketplaces.

This indicates that

According to a
Vietnam's product Vietnamese
study by market
price elasticity is -2 consumers are
research firm
percent, which means more price-
Nielsen, price
sensitive than
promotions may that if a business
consumers in other
account for as raises a product's
Asian economies,
much as 56% of price by 1%, sales will like Malaysia (-1.9
sales in the decrease by 2% as percent), Singapore
nation. fewer people ( -1.7 percent), and
purchase it. Thailand (-1.6
percent).
B.COUNTRY
ATTRACTIVENESS
1 . CULTURAL DISTANCE
UNCERTAINTY AVOIDANCE
Vietnamese workplaces emphasize
authority and hierarchy, with top-
down decision-making.
American workplaces, like
Walmart, are more egalitarian with
open communication and employee
participation.
Hofstede's cultural dimensions
framework
POWER DISTANCE
Vietnamese workplaces are f lexible and
adapt to uncertainty, while Walmart
thrives on standardized processes.
This difference could be a hurdle f or
Walmart in Vietnam, requiring them to
find a balance between their structure
and Vietnamese flexibility.
 2. RESOURCES
Human resources

Large and relatively low-cost

labor force
Youthful and energetic
working force
Age: 15-54
Vietnam's labor expenses
are often less than those of
industrialized countries.
 2. RESOURCES
Agricultural Products: Coffee,
rice, cashews, fruits,
Natural resources
vegetables,...

=> I deal for Wal mart ' s gl obal

Vietnam is undoubtedly ahead
in terms of raw materials.
Walmart's global supply
chain and private label
manufacturing have access to
a diverse array of materials
due to this diversity.
suppl y chai n or pri vat e l abel
food processi ng.
Textiles and Apparel: Cotton,
silk, man-made fibers –
=> a potential hub for garment
manufacturing under Walmart's
private labels.
 2. RESOURCES
Infrastructure and support industry resources
Vietnamese government invested heavily in
transportation infrastructure (highways, airports,
Transportation seaports).
and Logistics => Allow businesses to move goods and people more
effectively.
Reduced transportation costs boosted Vietnam's
economic competitiveness.

Modern warehouses and distribution centers are

Warehousing popping up in major Vietnamese cities.
and Distribution => Offer efficient storage, order fulfillment, and
Centers: distribution services.
This infrastructure improvement can benefit
companies like Walmart by supporting their supply
chain operations.
 Vietnam generally offers a
peaceful environment for
investors:

Political stability

Relatively low
level of internal
3. Country ri sk conflict
3.1. Political risk
Shareholders’exposure
This might involve occurrences like
typhoons, floods, or civil upheaval
causing damage or destruction of
physical assets like buildings,
machinery, or goods.
Vietnam has improved its readiness
and reaction to natural disasters, but
it is still susceptible to them,
especially in its rural and coastal
regions.
Employee’s exposure
Gangsterism, crime, or kidnapping
in Vietnam's workplace is not
commonly reported or considered
a prevalent issue.
Vietnam generally maintains a
safe and secure environment for
businesses and investors, with low
crime rates compared to some
other countries in the region.
Operational exposure
There aren't many examples
of operational vulnerability in
Vietnam that cause
disruptions to the market. It
is not, however, impervious
to internal or foreign shocks
that can cause its markets to
collapse.
3.2. Economic risk
Low Economic
economic unstable:
growth
Vietnam has enjoyed External Pressures: Global
years of high economic factors like the war in Ukraine
and ongoing trade tensions are
growth, often exceeding
creating economic uncertainty
6%. However, due to a
worldwide.
global slowdown, experts
Domestic Challenges: Issues
predict a decrease to like high public debt from
around 4.7% in 2023. inefficient state-owned
enterprises (SOEs) and a fragile
banking system can also
contribute to domestic
economic instability.
Inflation:
The annual inflation rate
in Vietnam advanced to
4.4% in April 2024 from
3.97% in the previous
month. It was the
highest inflation rate
since January 2023
=> Put pressure on
household budgets and
potentially reducing
consumer spending.
3.2. Economic risk

Input
Costs Exchange
Rate:

A Strong Dollar: The price of

Global Squeeze: The cost of raw
USD on the date of 9/5/2024
materials and components used
increased in the global market,
in manufacturing, often imported,
the USD-Index rose by 0.2
has increased due to global
points to 105.5 points
factors.
Central Bank Balancing Act:
=> Put pressure on Vietnamese
The Vietnamese central bank
businesses, especially exporters,
needs to manage the exchange
who may struggle to maintain
rate to control inflation but also
profit margins.
avoid discouraging exports, a
crucial part of the economy.
3.3. Competitive risk
In Vietnam, the rate of corruption remains at a
relatively high rate, 45.6% in 2022
Corruption messes up how markets work,
making it harder for everyone to compete fairly
and scaring away investors.
Yet, Vietnam’s government has been making a
strong push against corruption in recent years
and there are seemingly no cartels in the
Vietnamese retailing industry for Walmart to
consider facing at the moment.
 There are still many competitors in the
country. Established players like
Saigon Co.op and Big C in the
supermarket sector, The Gioi Di Dong
THE G I O I D I D O N G
and WinMart in the convenience store
space, and Lotte Mart in the discount
arena would be formidable rivals.
BIG C
Walmart would also need to contend
with e-commerce giants like Shopee
and the enduring presence of
WINMA R T traditional wet markets to make a
name for itself here.

CO.OP M A R T

SHOP E E
3.4. Operational risk

Trade Remedies law:

Walmart will have to face Ensuring a level playing field for

certain regulations that both domestic and foreign
protect local goods and investors, providing a favorable
in return, receive environment for foreign
government incentives investment
3.4. Operational risk

Walmart might face increased

Walmart will have to face competition from domestic
certain regulations that players.
protect local goods and This could make it harder for
in return, receive Walmart to gain market share
government incentives and establish a strong foothold
in Vietnam.
4. INCENTIVES
Corporate Income Tax (CIT): Vietnam offers
preferential tax rates (reduced tax rates)
and tax holidays (tax exemptions) to both
foreign and local investors.

Import Duties: Exemption or reduction of

import duties or tax on goods imported as
fixed assets, raw materials, supplies, and parts
used for the project.
Foreign Direct
Investment
High-Tech: Information

01.
technology, biotechnology, new
material technology, automation

(FDI):
technology, and supporting
products for high technology.

Large-Scale Manufacturing: Projects

02.
with a minimum invested capital of
VND 6,000 billion (with annual
revenues of VND 10,000 billion by the
fourth year or employment of at least
3,000 workers).

03.
Social Importance Sectors:
Education, vocational training,
healthcare, culture, sports, and
environmental projects.
 SUBSIDIES

10% CIT for 15 years.

CORPORATE
INCOME TAX CIT exemption for 4 years..
(CIT)
INCENTIVES:
50% reduction on payable CIT
for 9 years.
 Land Rental

Investment projects are given a land rental fee

exemption in encouraged sectors or certain business
fields, varied from 3, 7, 11, 15 years of exemption or
exemption for the whole operational period
depending on particularly difficult socio-economic
conditions.
3. ENTRY MODE

3.1. Firm analysis

3.2. Market analysis
3.3. Implement analysis
3.4. Entry mode
 3.1. FIRM ANALYSIS

VISION
“Be THE destination for customers to save money, no
matter how they want to shop.”

The company’s vision is to be the first choice for

customers who are looking to save money, no matter
how they choose to shop.
The current vision, focused on being the preferred
shopping destination for customers seeking to
economize.
 3.1. FIRM ANALYSIS

MISSION

“to save people money so they can live better.”

Walmart’s business strategies and purpose

involve using price as a selling point to attract target
shoppers.
 3.1. FIRM ANALYSIS

CORE VALUE

Providing great customer service, showing respect

for the individual and striving for excellence.

SAM’S TEN RULES:

 3.1. FIRM ANALYSIS

POSITIONING

Offers the convenience of one-stop shopping

for everyday products at the lowest possible price.

This positioning is primarily targeted towards

price-sensitive customers.
 3.1. FIRM ANALYSIS

VALUE CHAIN

Logistics and Operations:

Marketing, Sales and Service:
Other supporting activities:
 3.1. FIRM ANALYSIS

BUSINESS MODEL

Offering products at the lowest possible

prices thanks to efficient supply chain
management, economies of scale, and
operational efficiencies.

From groceries to electronics, clothing, and

more.
 3.1. FIRM ANALYSIS

STRATEGIC OBJECTIVES

Omnichannel Digital Operation

 3.1. FIRM ANALYSIS

KEY PARTNERSHIP

Flipkart and Rakuten

Plug Power Inc.

Procter & Gamble

 3.1. FIRM ANALYSIS

COMPETITIVE ADVANTAGE

Optimal costs Private labels Adaptation

3.2. MARKET ANALYSIS

3.2.1. PESTEL
A) Political

Stability of the government:

Government policies:
3.2. MARKET ANALYSIS

3.2.1. PESTEL
B) Economical

Economic growth:
Inflation:
3.2. MARKET ANALYSIS

3.2.1. PESTEL
C) Social

Demographic trends:

Urbanization:
3.2. MARKET ANALYSIS

3.2.1. PESTEL
D) Technological

Technological advancements:

Transport
and logictics:
3.2. MARKET ANALYSIS

3.2.1. PESTEL
E) Environmental

The stability of
climate:
3.2. MARKET ANALYSIS

3.2.1. PESTEL
F) Legal

Labor laws:
Government supporting:
3.2. MARKET ANALYSIS
3.2.2. FIVE FORCE ANALYSIS
A) Rivalry among existing
competitors (High):

The number of competitors:

Similarities in what's offered:

Industry growth:
3.2. MARKET ANALYSIS
3.2.2. FIVE FORCE ANALYSIS
B) Threat of New Entrants
(Low):

Barriers to Entry:

Economies of scale:

Brand Recognition:
3.2. MARKET ANALYSIS
3.2.2. FIVE FORCE ANALYSIS
C) Bargaining Power of
Suppliers (Very Low):

Large number of suppliers:

Uniqueness:
3.2. MARKET ANALYSIS
3.2.2. FIVE FORCE ANALYSIS
D) Bargaining Power of Buyers
(Medium):

Large number of buyers:

Switching cost:
3.2. MARKET ANALYSIS
3.2.2. FIVE FORCE ANALYSIS
E) Threat of Substitutes
(Moderate):

Number of Substitutes:
 3.2.3. SWOT
Internal
Strong brand Recognition
Efficient supply chain management
Strengths Diverse Revenue Streams
Economies of scale
Strong customer base

Over dependence on the U.S. Market

Labor practices
Weaknesses Limited E-commerce presence
Inconsistent customer service
Thin profit margins
 3.2.3. SWOT
External
Global expansion
E-commerce growth
Opportunities Demand for environmental friendly products
Diversification
Technological advancements

Intense competition
Economic Downturns
Threats Changing Consumer Preferences
Increasing Regulatory Scrutiny
Ligitation
IMPLEMENTATION
ANALYSIS
Strategic solutions

Wholly owned
Joint Ventures Acquisition
subsidiary
Joint Ventures
What Joining in a business arrangement with another local retail company.

When After finding a company/ party agrees to cooperate.

Where Stores and supermarkets of the party.

Whom Those retail companies that have similarities to Walmart.

Walmart formed an alliance with a local retail company and both brought their
strengths to the joint venture. Walmart provides financial support, its globally
recognized trademark and experiences in information and distribution
How
management to manage its partner’s stores and supermarkets. If the strategy is
successful, Walmart will introduce its own brand to Vietnam later on.
 Can help Walmart gain
Joint Venture
access to new geographic
markets which provide cost-
effectiveness and also to
another company’s
customer base.
Can combine expertise and
their diverse pool of
resources such as suppliers,
manpower,…
Pros
High potential for conflicts
within the holding company
and the local one about
cultures and management
styles.
The exclusivity of joint
ventures can affect individual
partner growth because of the
clauses/concessions about
interest.
Cons
Wholly owned subsidiary
Setting up a new operation in Vietnam with 100% investment from the holding
What
company.

When After having a place of business whether by itself or through any of the agents.

Where Walmart’s stores.

Whom Middle class demographics, rural families, …

Walmart imports products from international suppliers, uses products also from
international brands but produced in Vietnam or from domestic suppliers to
How
supply the stores. Walmart also built a logistic and managing system from
warehouses and distribution centers to the stores.

Give Walmart the highest
level of control over business
Wholly owned
operations, manufacturing
subsidiary
quality, brand image, staffing
and sale of products.
Walmart can protect their
vision and core value from
those region-specific
conditions.
Pros
Require higher setup costs due
to additional cost for
researching the market,
managing supply chains,
branding and staffing.
There are challenges from
government regulations that
hamper direct investment like
this from a foreign company
like Walmart.
Cons
Acquisition
What Purchasing either a portion or all of another retail company’s shares.

When After finding a company/party that is suitable with Walmart’s system.

Where Stores and supermarkets.

Whom Middle class demographics, rural families, …

Walmart investigates and values promising targets. After the company is

selected, it’s time for the negotiation. If both companies reach an agreement, the
How
integration of them is necessary due to differences in many aspects: culture,
information systems, strategies,…

Acquisition
The biggest advantage of
this strategy is tax benefit
by making full use of tax-
shields, boost financial
leverage and take advantage
of alternative tax benefits.
Pros
Walmart will face difficulties
in managing staff of the
united companies which
easily lead to frictions and
internal conflicts.
In addition, merging two
firms with similar activities
means duplication and over
capability.
Cons
ENTRY MODE
JOINT VENTURES

Branding: 4/10
Low Expense: 7/10
Customer Satisfaction: 8/10
Controllable/Management: 3/10
Low Risk: 6/10
Quick: 6/10

Total: 34
ACQUISITION

Branding: 8/10
Low Expense: 3/10
Customer Satisfaction: 7/10
Controllable/Management: 6/10
Low Risk: 6/10
Quick: 4/10

Total: 34
WHOLLY OWNED
SUBSIDIARY
Branding: 9/10
Wholly owned subsidiaries
strategy helps Walmart bring their
brand directly into the
Vietnamese market, build a strong
brand identity to differentiate
themself from other competitors
more effectively than the
other two options.
WHOLLY OWNED SUBSIDIARY

Low Expense: 3/10

A wholly owned subsidiary
can be costly to establish and
maintain from the financial
point of view. Cost of physical
presence, legal and administrative
fees has to be considered when
Walmart joins an unfamiliar
market like Vietnam.
WHOLLY OWNED
SUBSIDIARY
Customer Satisfaction: 8/10
Wholly owned subsidiary strategy
can provide local expertise and
insights into the new market. This
helps Walmart decide the
appropriate marketing campaigns
to organize, the right
products/services to target to win
the customer goodwill .
WHOLLY OWNED
SUBSIDIARY
Controllable/Management: 8/10
Since the holding company has
complete control over the
subsidiary’s operations , Walmart
can make decisions about overall
company matters and strategies.
This avoids the conflicts that can
be met during cooperating or
partying.
WHOLLY OWNED
SUBSIDIARY

Low Risk: 5/10

There are many risks that Walmart
has to deal with while choosing
this strategy. The risk of
investment funds, loss of brand
equity, customer attitude towards
the brand are some to name.
WHOLLY OWNED
SUBSIDIARY

Quick: 3/10
Establishing a wholly owned
subsidiary requires considerations
and preparations which take a lot
of time. This strategy needs a
longer process to make it work out
than the other two options.
WHOLLY OWNED
SUBSIDIARY

36
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