The centralization approach from Walmart to its national divisions created problems for these national operations. The decision making process would be slow and tedious. Individual stores were not able to make changes without obtaining approval first from the headquarters. These businesses were also forced to have the same marketing strategy, structure of the stores and the same merchandise as the United States operation. However these approaches are geared towards a United States market. Individuals in China or South America do not buy the same products as Americans and may not be swayed by the same marketing strategies. Walmart’s approach to decentralize and allow individual nations to make their own decisions about business strategies was an appropriate choice as it allowed executives in their nation to make decisions that would be geared towards individuals in their own country.
Having an international division for an international business is a good approach for managing foreign operations. The structure allows executives to create a Walmart that would fit with the culture, ideals and language of its own country. Problems could arise if the separate nations decide to stray too far from the Walmart business model. They may make decisions that are not cost effective. Such as allowing Walmart employees in Spain to take the afternoon off as is common in the country. The country’s executive may also make decisions that could be harmful for Walmart’s image. They may produce marketing images that are acceptable in their country however they may be damaging to Walmart’s reputation. A structure in which the nations executives are allowed to make certain minor decisions without the strict approval from Walmart. A policy could be put in place where other decisions such as advertising or decisions that involve a large amount of money would need to first be approved by the main Walmart division. This type of structure would protect Walmart from any financial or marketing decisions that could affect the company as a whole.
Hill, C. H. (2012). International business: Competing in the global marketplace (9th ed.). New York, NY: McGraw-Hill Higher Education.