Strategic responses expected from retail organisations due to the acquisition of MassMart by Wal-Mart

Campbell, Graeme
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South Africa is classified as an emerging economy and emerging economies are perceived as being less risky than established first world economies in the current economic climate. This perceived low risk results in emerging economies attracting global organisations that are wishing to capitalise on this growing economy. Additionally many of these emerging markets have a large population base that have limited income, but the sheer size of this market makes it very attractive for organisations that wish to leverage economies of scale. As strategy deals with the future and the future is unknown, strategic planning and reaction time is critical in the current fast moving world of retail. This research report will investigate the strategic alternatives retail organisations will pursue based on the emergence of a new large international competitor in the market place, namely Wal-Mart. The strategic alternatives investigated are high level and revolve around choosing to react or wait for the uncertainty to disappear, how the chosen entry method affected their strategy and what resources will be deployed to overcome this new competitor. As the chosen entry method of Wal-Mart allowed the organisation to overcome the barriers to entry all the retailers investigated chose to react immediately and adopt a focused type of strategy, deploying their resources in carefully selected area’s to combat the strengths of the new competitor. Restructuring took place, supplier power increased and new resources were acquired. The local retailers acknowledged the greatest threat of Wal-Mart lay not in South Africa but on the rest of the African continent and this was where their primary focus would be. The study utilised qualitative research methods which involved semi structured interviews
MBA thesis
Retail organisations