Walmart and Mcdonald Economic Analysis
1.) Discuss how the two cases in this chapter illustrate the major theme of this text: Changes in the macro environment affect individual firms and industries through microeconomic factors of demand, production, cost, and profitability. Drawing on current business publications, find some updated facts for each case that support this theme.
When Wal- Mart entered Mexico, it faced a completely new set of macroeconomic factors where the average income level of most families was around $ 4000 a year. Mexico had just faced a currency crash and a massive economic collapse which resulted many competitors moving out of the country. In such a situation, when it entered the country, it ended up becoming the single largest retailer. In order to maintain its profitability, it was faced with the challenge of keeping costs at the lowest possible level.
In spite of facing protests from local retailers and grocery shop owners, Wal-Mart faced a large amount of demand. This was to the extentthat stores’ sales nearly doubled from its initial projections.
With the advanced technology that Wal Mart uses and the efficiency that it has achieved in supply change management, it was successful in bringing down the prices of most of the staple goods. This in turn helped in controlling the inflation rate that was plaguing the country’s economy.
2.) Compare and contrast McDonaldâs strategies in China with those of Wal-Mart in Mexico.
3.) What role did policies of various governments play in influencing the international expansion strategies of both McDonaldâs and Wal-Mart?
4.) What variables other than price appear to have the biggest impact on the demand products? How much influence does the company have over these variables?
The link is to Chapter 16 and any chapter and the Walmart case and also the link to McDonalds in China below.
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