Potentials for Walmart in Wider Africa
Does the wider African continent hold potential for Walmart? Yes it does. Africa (sub-Saharan Africa in particular) holds so many prospects because of its rapid economic growth, abundant natural resources, a relatively young population and an increasing literacy level. The International Monetary Fund (IMF) estimated that Africa grew twice as fast as it had been growing over the past two decades. It recorded a 6% growth rate per annum; a growth rate much faster than the developed world.
Furthermore, while the populations of developed world (e.g. US, Japan, China and Western Europe) are aging fast, the reverse is the case in Africa (i.e. a higher ...view middle of the document...
• Economic growth is set to spur spending, although national data for real GDP growth in 2012 saw a sharp slowdown, there is huge room for growth in both the economy and consumer spending.
• This we expect to be reflected in rising incomes and consumer spending, prompting our positive view for private consumption growth among a large population.
• With food and drink manufacturers (such as brewer SABMiller, the Coca Cola Company and Nestlé Ghana) investing here, we also believe domestic production advances could spill into the retail sector.
• Food consumption per capita is set to rise with a compound annual growth rate of 11.6% to 2017; growth likely to translate into greater demand for organized retail.
The country's business environment is also one of the most stable in the region offering reassurance for investors looking to establish presence in this immature sector.
In addition, considering the early signs of success currently enjoyed in South Africa, Walmart could leverage on this and make entry into markets bordering South Africa. The cultural distance between these countries is slightly small hence, have similar consumption pattern. Also the purchase of Massmart in South Africa provides them greater opportunity to increase the chain of stores using the Massmart brand which also have presence outside South Africa.
Cultural Challenges Walmart might face in Africa
Unlike South Africa with relatively similar cultural nature like the United States in terms of the Hofstede’s Cultural dimension, the wider African region consist of countries with entirely different cultural nature. Most African countries are averagely low on individualism (i.e. they are very collective), hence, there is a huge tendency for uprising of Unions, societies and communities if work conditions don’t favor a particular set. Also, the wider Africa, consist of countries high on power distance (high context in communication). If Walmart decides to use the same managerial style (in terms of how it...