Wal-Mart

Wal-Mart in the NAFTA Market

Teaching Note

CASE SYNOPSIS

Wal-Mart is the world's largest retailer with fiscal 2003 revenues of $244.5 billion. The company's international division operates 1,500 units internationally employing more than 330,000 associates. Its Mexican operation (its earliest foray out of the United States) operates 671 units and had revenues of $10.6 billion. Wal-Mart entered Canada by acquiring 122 Woolco stores and today is the dominant retailer in that country. Wal-Mart entered both Mexico and Canada prior to the NAFTA. The company has retained much of its basic business model in these countries and therefore has capitalized on NAFTA, but has also made significant adaptations to match local tastes. The case outlines Wal-Mart's basic business model and describes how this model was successfully adapted in both Mexico and Canada.

TEACHING OBJECTIVES

The case has the following teaching objectives:

1. To introduce the concepts of a business model and the value chain to explain how a firm develops and maintains a competitive advantage.

2. To illustrate how NAFTA has shaped the strategies of a large successful United States company.

3. To describe how even a successful business model has to be adapted to meet local tastes in order to replicate its success.

4. To illustrate competitive market differences among the three NAFTA countries - the U.S., Mexico, and Canada - as it relates to retailing.

TEACHING PLAN

Because of its dominance in the market place, Wal-Mart evokes ambivalent feelings among people. They admire it for its success, but, at the same time, resent