On The Way Towards Transnational Organizations A Comparative Case Study Between Wal Mart And Tesco

2814 words - 11 pages

Group PartIntroductionThe 1990s witnessed an enormous wave of retail internationalization as leading retailers from Europe and the USA went global (Wrigley, 2000 and Coe, 2004) as a result of material and cultural developments (Kalhan and Franz, 2009). Wal-Mart and Tesco are two of them and they are becoming powerful global operators since then. Table 1 shows some key facts of the two companies.Table 1: Key Facts of Wal-Mart and Tesco

Wal-Mart

Tesco

Country of Origin

US

UK

Year Founded

1962

1919

International Coverage (countries)

16

14

Number of Employees

2,000,000

472,000

Total Revenue 2010

405 billion

62.5 billion

International Revenue 2010
(percentage of the total)

100.1 billion (24.7%)

19.4 billion (31.2%)

Total Net Profit 2010

23.9 billion

3.4 billion

International Net Profit 2010
(percentage of the total)

5.033 billion (21.1%)

0.749 billion (22.0%)

Main formats

Discount Centers
Sam' clubs
Supercenters
Neighbourhood markets

Extras
Superstores
Compact superstores
Metro stores
Express stores

Total Stores

8,416

4,811

International Stores

4,112

2,328

Source: Respective company annual report (Wal-Mart, 2010 and Tesco, 2010) and group's calculationsAccording to Bartlett and Beamish (2008) MNEs are evolving into transnational organizations with emerging requirement for them to become more flexible while achieving improved global efficiency, and also learning is of greater importance in this process. This is particular the case in international retailing for global companies like Wal-Mart and Tesco. This essay, therefore, seeks to evaluate the comparative transnational effectiveness of Tesco and Wal-Mart in pursuing efficiency, flexibility and learning. It begins with the discussion of motivations, means and mentalities of these two firms, and then it evaluates them in achieving the three goals separately. Finally it also explores the collaboration and social corporate responsibility (SCR) elements of these companies for comparison.Motivations, Means and MentalitiesRegarding motivations, market-seeking was a main motivation for both Wal-Mart and Tesco, their home market situation provided the "push" for them to enter new growth markets and the general attractiveness of the world markets provided the 'pull'. Wal-Mart, which dominates the U.S. market, in this sense was motivated by both domestic factors such as domestic market saturation, restrictions on domestic expansion, adequate domestic capital for expansion and global factors such as the presence of underdeveloped global markets, the ability to spread risks across various markets and the liberalization of retail policies in foreign markets (Brennan and Lundsten, 2009). Similarly, the saturation of the UK retail market and global potential for success also led Tesco, Britain's largest retailer in terms of market share, to venture into foreign markets.Regarding means, Tesco used a combination of multinational entry mode...

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