Case Analysis of Wal-Mart Mexico

1. Introduction 1. 1 business relationship Wal-Mart beginning(a) stuck its toe into Mexico in 1991 through and through a spliff make with Cifra, Mexicos leading sell high society, initi both(a)y contain to demoteing surface-to-air missiles wholeiance w atomic number 18ho go for interjects in Mexico. The tremendous mastery of the first Sams Club stores and the impending passage of the North Ameri cig art Free Trade conformity (NAFTA) encouraged further collaboration, and Wal-Mart and Cifra expanded their joint ad casualty through the 1990s.Wal-Mart purchased a majority s carry away in Cifra in 1997. Prior to the joint venture, Cifras lineup included Aurrera autoservicios (superstores selling food, clo involvement, and a word form show of other items), Superama super foodstuff countersinks, suburban atomic number 18a department stores, and Vips restaurants. To this roster, Wal-Mart added Wal-Mart superstores (shifting Aurrera to a budget quoin and relabeling its st ores Bodega) and Sams Club w be syndicate stores, as well as introducing ii reinvigorated restaurant formats.Wal-Mart-Cifra had fewer food product stores (though much(prenominal) than stores of all(a) formats) than either of competitors Gigante and Comercial Mexicana as of 1993, nevertheless had overtaken them by 2000 and today has 326 Wal-Mart, Aurrera, Sams, and Superama stores. Wal-Mart roll out its e very(prenominal) day low footings (EDLP) policy in Mexico in 1999-2000. It controlled 49 part of Mexican supermarket gross sales in 2001. Wal-Mart excessively began to side price comparisons with other gyves, a practice that in 2002 got it expelled from ANTAD, Mexicos melodic theme field Association of Supermarket and Department Stores.Today, 62 part of Wal-Mart Mexicos administers atomic number 18 possess by the U. S. establish p atomic number 18nt, Wal-Mart Stores. 2. Vision The vision of the attach to summarizes their commitment to Mexico return toward impr oving the character reference of life sentence for Mexican families. Their basic belief is repute for the Individual, Service to Our guest, and Strive for Excellence, with rightfulness existence the underlying principle. 1. 3 The flush Statement The mission upholding the Companys permanence and achievement is think of creating. All their efforts, strategies and actions are aimed at this objective. . Organizational Chart Exhibit 1 Exhibit 1 2. Divisions of Wal-Mart Mexico Wal-Mart Mexicos size and geographic coverage overshadow those of its competition. It operates 694 stores in 73 Mexican cities. The Retail formats of Wal-Mart Mexico are Bodega Aurerra Wal-Nlart Supercenter Sams Club Superarna Suburbia and Vips Although 360 of these stores are self-service (the others are restaurants Vips and department stores Suburbia), Wal-Mart Mexico has 55 percent of the Mexican retail market.The three major formats (Aurerra, 30 percent Wal-Mart Supercenter, 27 percent and Sams Club, 29 percent) unneurotic set up more than 86 percent of its r n wholenessthelessues. 44 percent of the entire countries nation is concentrated in 25cities underground areas. A bit more than 18 percent live in the capital citys metro area. Mexicos arcadian population accounts for about 34 nonpareil million million or about 33 percent of the soils gibe population. The retail industry does not flummox a ingle outlet in the rural concentrations, which leaves the market to neighborhood Stores, public markets, or street vendors, which, as individual(a) businesses, do not deliver a world-shattering presence in the market as a whole. FORMAT NAME OF STORES IN 25 MOST IMPORTANT % IN 25 MOST IMPORTANT urban AREAS URBAN AREAS Warehouse Bodega Aurerra 161 117 73% Suparmarket Superama 50 50 ascorbic acid% Hypermarket Supercenter 86 74 86% Savings Club Sams Club 61 42 68% Resturant Vips 209 190 91% El Porton 46 42 91% Apparel Suburbia 53 53 100% Total 666 568 85% 3. Target Segments angiotensin-converting enzyme of the secret of Wal-Mart Mexicos success is that it has a clearly defined target market.The Aurerra format (162 stores) is targeted at lower- to lower- oculus income classes these Bodega stores tenderize 48,000 SKUs. Sams Club (61 stores) expands a much more ascertained variety of products (4,000 SKUs) and targets consumers and businesses buying in volume. The Wal-Mart Supercenter stores (89 units) offer the widest variety of goods (80,000 SKUs). Superama (48 stores) contri hardlyes provided 3 percent of the companys sales these stores offer a variety of goods (35,000 SKUs) al iodine are hardened in residential areas for convenience. Wal-Mart Mexicos Suburbia 50 department stores target the middle class, offering fashionable fit out at reasonable prices these stores moderate 6 percent of the companys sales.The Vips chain of restaurants (284 locations) represents 3 percent of the companys sales. The vast majority of Wal-M art Mexicos stores are rigid in the 25 climb up all important(predicate) metro areas in the country. 4. Geographic Coverage pic pic 5. Responsibilities To the Stakeholders The Customer The word always can be seen in virtually all of Wal-Mart Mexicos literature. Their belief is that the customer is always right, and the stores are close up driven by this philosophy. Their commitment to the customers is to Offer the right merchandise assortment, in the right amount, and at the right time at Everyday Low Prices, Always. they ensure and remedy the quality of their service to provide the outdo possible shopping experience.Shareholders ge distinguish after and grow the equity they bear been entrusted with, observing the highest standards of integrity and the in somaticd politics best practices is their commitment towards their shareholders. The actions include foster transparency, timely intromission of discipline to the shareholders and ethical company focal point, which in turn contributes towards increasing the think of of the Company, all at bottom a control surround and with Corporate Governance best practices. through and through the Statement of Ethics and Compliance course, they ensure that Integrity is an ever-present and global principle. They develop and each day instill a culture of compliance with beliefs, laws, standards and policies.The Employees Wal-Mart Mexico believed in listening to employees and challenging them to come up with ideas and suggestions to make the company better. Its first contribution as a corporate citizen is its employment of more than 109,000 tribe throughout the country and the extensive instruct programs (4. 2 million hours in 2004) it provides for those employees. The firm highlights its diversity since 48 percent of its employees are female. At each of the Wal-Mart stores, signs are displayed which read, Our People Make the Difference. One of Wal-Marts goals was to provide its employees with the a ppropriate tools to do their jobs efficiently.They provide a sound organisational culture (Integrity, Respect for the Individual, Service to Our Customers, and Strive for Excellence). Personal and professional information for their people is a priority, as well as providing job earnest for them and scotch stability for their families through continuous harvest-tide as a company and the diversity of our trading operations. They have too created programs to amend the quality of life for our Associates, promote gender equality, and benefit the Associates as well as their families. The club Wal-Mart is entangled in many community outreach programs and has launched several tribeal efforts through industrial kat onceledge grants.They create and foster programs that promote development and improve the quality of life for all families throughout Mexico. Their initiatives to do so are Through their programs and on-going jut of organizations, they contribute towards generating su stainable changes and creating solutions for malnutrition and food safety issues throughout the country. They convert community actions into local commitment, allowing each business unit of the Company to accommodate an agent of change. Wal-Mex to a fault provides direct financial assistance to attendant high impact projects regarding nutrition for communities in need. The Suppliers The commitment towards their supplier is to support their development, process and Consolidation.The purchasing agents of Wal-Mart are very much foc employ people. Their highest priority is making sure eachbody at all times in all cases k instantaneouslys whos in charge, and its Wal-Mart. Even though Wal-Mart was tough in negotiating for absolute rock-bottom prices, the company worked closely with suppliers to develop mutual respect and to forge long-run partnerships that benefited both parties. Actions include the take noteing They provide development opportunities to suppliers through eoni an growth. Through Regional Trade Fairs Wal-Mart Mexico develop local suppliers as a path of providing additional support for small and medium enterprises. They have created areas of development for the textile and garment-making industry, the production chain for perishables, and refreshful constituental products. Our information systems cooperate suppliers to plan production and buy of raw materials, on that pointby creating great(p)er operations efficiencies and market competitiveness. 6. Financial Analysis pic Financial Highlights 7. Strategic Analysis 7. 1 SWOT Analysis A scan of the internal and external environment is an important part of the strategic planning process. The SWOT digest provides information that is helpful in matching the firms resources and capabilities to the competitive environment in which it operates.Thus, it is slavish in scheme formulation and selection and simultaneously to develop a competitive advantage. Strengths ? beloved Corporate Cit izen Wal-Mart Mexico has a positive reputation in Mexico as a good corporate citizen, having received prestigious awards for its actions. It troublees an annual well-disposed responsibility report, highlighting its activities as a corporate citizen in Mexico. Wal-Mart Mexico has been certified as a Socially Responsible Enterprise since 2001, unmatchable of only a handful of companies in Mexico to receive such(prenominal) an honor. ? market place Leader It is by far the attracter in the Mexican retail industry after less than a ten dollar bill and a fractional of operations on that point providing low-price goods to everyone. ? bouffantst Private EmployerWal-Mart is Mexico s overlargest private employer, with 109,057 employees in worthy jobs in many local communities with 55 percent of the Mexican retail market. Wal-Mart argues that its first contribution as a corporate citizen is its employment of more than 109,000 people throughout the country and the extensive traini ng programs (4. 2 million hours in 2004) it provides for those employees. The firm highlights its diversity since 48 percent of its employees are female. ? Large Market Share Today, 62 percent of Wal-Mart Mexicos shares are owned by the U. S. based Parent, Wal-Mart Stores. ? Largest Foreign Subsidiary Wal-Mart Mexico is the largest inter subject field subsidiary of Wal-Mart Stores and provides near 25 percent of the parents foreign sales. Environmental forces operation Wal-Mart Mexicos environmental military operation includes investing over $8 million in 2003 and 2004 to centripetal 73 water treatment plants and a variety of recycling, energy conservation, and pollution-reduction activities. It likewise emphasizes that more than 90 percent of the products sold in its stores are supplied in Mexico. ? Local Suppliers Wal-Mart Mexico sources from local suppliers. It has leveraged its volume buying tycoon with its suppliers. It negotiates the best prices from its vendors and ex pects commitments of quality merchandise. So it can minimize the salute of the goods and can offer the customers a lower selling price as well. groovy promotion and sponsorship Wal-Mart Mexico also is involved in a number of freehearted activities, including programs focused on education, nutrition, homelessness, and health. In 2004, it sponsored a National Wal-Mart Mexico Volunteer Day, and 2,476 of its associates participated. ? Good Location Good location is one of the very important criteria for universe successful in the industry. The vast majority of Wal-Mart Mexicos stores are located in the 25 virtually important metro areas in the country. The retail industry does not have a single outlet in the rural concentrations, as these areas do not have a significant presence in the market as a whole. Increased sales Volume Wal-Mart Mexicos large volume of sales also advert its strength. The firms net income has change magnitude dramatically from 2002 to 2004, from $485 milli on to $702 million. the integral square meters of space have change magnitude mingled with 2001 and 2004, as have sales per square meter and net income per square meter. ? Proper air division Wal-Mart Mexico has a clearly defined target market. The Aurerra format is targeted at lower- to lower-middle income classes these Bodega stores offer 48,000 SKUs. Sams Club targets consumers and businesses buying in volume. The Wal-Mart Supercenter stores, Superama are located in residential areas for convenience.Wal-Mart Mexicos Suburbia department stores target the middle class, offering fashionable apparel at reasonable prices. Weaknesses ? Location though majority of the stores of Wal-Mart Mexicos location are very good, one of the stores has been located near a world historic site, the pyramids of Teotihuacan, has elicited global admonition from activist assemblys and is a public relations disaster drawing large local protests. For many, it is just any(prenominal) other example of Wal-Marts wishing of predisposition to community and humanity. ? Lack of clear Strategic plan Though Wal-Mart Mexico has a clear Vision, Mission and strategy they do not have an unified version of these. Thus, they need a clear strategic plan for the succeeding(a). ? slowly copied strategyCompetitors are learning to respond to Wal-Marts size, efficiency, and success. Wal-Mart stores operate concord to their Everyday Low Price philosophy. All of the important competitors are instantly competing with Wal-Mart now offers whatsoever version of its every day low prices (EDLP) formula. Wal-Marts competitors verify that there is now no significant price difference, and many Mexican consumers seem to have displace the aforesaid(prenominal) conclusion. Opportunities ? Scope of Diversification The convenience stores like corner stores, public markets, and street vendors business is relatively juvenile in Mexico, there is a scope of diversification in prospective for Wal-Mart Me xico. Joint ventures Through a 5050 joint venture with Office shop and a 5149 joint venture with Radio Shack, Grupo Gigante runs 98 Radio Shack stores throughout Mexico. Seems that Wal-Mart Mexico has an opportunity to follow such memory accesses to be more successful in future. ? Improved serve Like Soriana, another competitor of Wal-Mart Mexico it can provides discount specials, trueness visor programs, big-ticket item raffles and contests (e. g. , a BMW X5 automobile), outgoing employees, and mariachi band recreation in order to appeal to female middle-class consumers. ? Foreign sharpness Grupo Gigante is successfully penetrating foreign markets.Wal-Mart Mexico can also follow the same like its competitor in order to enter in a new era. ? Strategic Plan Though Wal-Mart Mexico does not have a clear strategic plan, there is a scope to make a good one to do better in future. Threats ? Aggressive belligerent moves of Competitors The competitors of Wal-Mart Mexico proved them selves as quick respondents. They took various desperate initiatives to response with Wal-Mart Mexicos approaches. As result shows that The Comercial Mexicana (CM) has slipped to third in terms of market share in the Mexican retail sector. Grupo Gigante rate of flowly has 13 percent market share in the Mexican retail industry.Sorianas sales have grown at an annual rate of 17 percent since 1994, and it has no debt. close to of their initiatives are i. Appealing logos of competitors Chedrauis corporate logo indicates Chedraui It Costs Less. Its mission is simply to provide the products that customers destiny at the best price. ii. Foreign Penetration Grupo Gigante is successfully penetrating foreign markets. iii. Joint Ventures Through a 5050 joint venture with Office Depot and a 5149 joint venture with Radio Shack, Grupo Gigante runs 98 Radio Shack stores throughout Mexico. iv. Superior Services Soriana provides discount specials, loyalty card programs, big-ticket item raffles a nd contests (e. g. a BMW X5 automobile), outgoing employees, and mariachi band entertainment in order to appeal to female middle-class consumers. v. Prices differences Comercial Mexicana and Soriana now rapaciously publicize price differences with Wal-Mart and Aurrera. Wal-Marts competitors insist that there is now no significant price difference and now many Mexican consumers seem to have drawn the same conclusion. ? ANTAD The Asociacion Nacional de Tiendas de Autoservicio y Departamentales (ANTAD) is the business connectedness that represents the retail industry in Mexico. Wal-Mart left ANTAD in October 2002 because the associations new ethics code explicitly kingdomd that members should not publish any type of promotions stating another members prices.Since Wal-Mart is not a member of ANTAD, all ANTAD members now publish their lower prices compared to Wal-Marts, when they have them. ? Sinergia Because of Wal-Marts huge purchasing forefinger, three other retailersComercial Me xicana, Gigante, and Sorianahave formed a purchasing cooperative. This cooperative, Sinergia, first introduced in 2002 to compete against Wal-Mart. The cooperative was first fancy of as a competitive-directed measure for purchasing imported goods, mainly electronics, where Wal-Mart has been tremendously successful, but it now has been extended to such other types of merchandise as groceries and packaged food. ? Specialized Retailers The Mexican retail sector is fragmented there are a wide variety of retail formats, many of which are informal.Because many shoppers in Mexico do not have access to automobiles, and whitethorn not have large refrigeration space to store perishables, very small independent grocery stores have thrived for decades throughout Mexico. This business is controlled by the two Mexican beer makers. Cerveceria Modelo, with the Extra stores and 7-Eleven and Cerveceria, Cuauhtemoc Moctezuma, with Oxxo (about 3,OOO stores). The concept is beginning to include splat ter stations, and many small entrepreneurs have a limited regional presence. major(ip) national chains exist in the department, pharmacy, and electronics store formats. ? Mexican frugality The Mexican parsimony is very volatile the retail sector is subject to this volatility.Throughout the latter half of the 1990s, inflation and interest rates still annually averaged well over 10 percent. The peso continues in change state in value relative to the dollar. The sparing volatility has a veto impact on consumers and business alike. Mexican consumers are very price sensitive because of the economic challenges that the country faces. ? Various Criticisms Despite extensive social responsibility activities and its record as the largest private employer in the country, the potential for check of its purchasing practices and supplier and employee relations, as well as its impact on local small businesses and communities, loom as a significant terror 7. PEST Analysis PEST Analysis The p urpose of PEST analysis is to analyze the external environment and identify the strategic opportunities and threats in the organizations direct environment that allow for affect to it pursues its mission. This analysis requires assessment of the environment in which the company operates. It also analyzes the country or national environment of the country and takes into account the wider socio economic and macroenvironment that may affect the company and the industry. governmental Factors Government Mexico is a federal republichence its ex officio name Estados Unidos Mexicanosoperating under a fundamentalized government.Governmental powers at the federal take aim are divided between executive, legislative, and judicial branches, but in political practice the executive, that is, the presidency, has had strong control over the legislative branch. Only in juvenile historic period has the legislative branch seen its power increase because of the strengthening of the multiparty sy stem. The chairperson is elect by public suffrage for a six-year period and is both the chief of state and head of government. The president appoints cabinet members. The legislative branch is a bicameral National coition consisting of the Chamber of Deputies and the Senate. The Chamber of Deputies has quint hundred members, elective for three-year terms the Senate has 128 members, elected for six-year terms.In the judicial branch the Supreme Court of Justice is the highest tribunal. The conspiracy is make up of thirty-one states and the federal official District (the capital). Each state has a governor, who serves a six-year term, and a unicameral legislature. both(prenominal) are elected by popular vote. Before 1997, the chief of the Federal District was appoint by the president, but has since been elected directly by popular vote. The Federal District also has an Assembly of Representatives. The local administrative direct is the municipality, which is governed by a pop ularly elected mayor and a municipal council for three-year terms. voting is universal and mandatory (but not enforced) for those over the age of eighteen.Leadership and Political Officials The modern presidency stands in a long tradition of pre-Columbian rulers (tlatoani), Spanish colonial viceroys, and nineteenth century and revolutionary caudillos. The president holds great discretionary powers. Power and leadership are attained through the care of personal relations, which are ruled by principles of loyalty, trust, and reciprocity. These informal networks are interconnected in a pyramidal way and form the real centers of conclusion making. Vertical patron-client relations can be found in all segments of society. Interactions between politicians, union leaders, top bureaucrats, and ordinary people also take place through these networks. In recent years, academic credentials and technocratic cognition have become more important than political and electoral experience. in like m anner being chief of state and head of government, the president has traditionally been the leader of the Institutional Revolutionary Party (PRI), which held power from 1929 to 2000. During much of the twentieth century, Mexico was a one-party democracy. The PRI emerged from the revolution and incorporated mass organizations of workers, peasants, and urban middle classes. Because of its occurrence origins, its longevity in power, and the influence of diverse interest groups, the PRI is difficult to sieve ideologically. There are two other significant parties in Mexico. The blimpish National Action Party (PAN) began enjoying electoral success at the state level in 1985.The social-democratic Party of the Democratic Revolution (PRD) emerged as a breakaway movement from the PRI in 1987 and began governing Mexico City in 1997. Both the PAN and the PRD aim at democratization, but the PRD also proposes a more equal dispersal of wealth. The dominance of the PRI in federal elections was finally crushed on 2 July 2000, when the candidate of the PAN won a immobilise victory with 43 percent of the vote. Social Problems and Control Both minuscule and organized crime increased in the 1990s. Muggings and burglaries, increasingly violent, became widespread. Drug-related violence comprise another serious cause of concern. Public security has thus become a key issue for ordinary citizens and the authorities.At the same time, the law of nature and the judiciary system are widely believed to be ineffective and lack public credibility, partially due to unresolved high-profile political assassinations and corruption. This has led to incidents of people taking the law into their own hands. Paid neighborhood watches are car park wherever people can afford them. Private security guards no longer patrol only at banks and government buildings but also at medium-sized offices and shops. In response, the government founded an additional police force in 1999, the National Prevent ive Police. Military Activity Mexico has had civilian presidents since 1946 and has not been involved in international disputes in recent decades. The primary role of the military is the maintenance of internal order.The Ministry of National Defense (the army and air force) and the marines together comprised an armed force consisting of al most(prenominal) 240,000 members in 1998. Military expenditures have increased substantially in recent years and amounted to $2. 5 million (U. S. ) in 1996, accounting for close to 1 percent of the GDP. In recent years the military has been involved in two serious problems the armed uprise in the state of Chiapas and the struggle against drugs. Mexico is a major supplier of marihuana and heroin to the U. S. market and is the primary transshipment country for cocaine from confederation America. In 1998 the government spent $147 million (U. S. ) to combat drug trafficking, an amount that has increased spectacularly in recent years. Economic Fact orsMexico City is a place to love and loathe, with everything one expects to find in the worlds third-largest metropolis (only Tokyo and NYC are bigger). Mexicos best and worst ingredients are magi-mixed in this polluted and bustling megalopolis of harmony and noise, brown air and green parks, colonial palaces and skyscrapers, world-renowned museums and ever-spreading slums. Mexico has been progressing economically since the Mexican cultivated War in 1939 when its deliverance was devastated. Today, touristry, industry and agriculture play a major role in the countrys economy. Mexico has seen the fastest economic development in Western Europe since the 1960s.Tourism has played a major role since the 1960s and in the uttermost(a) 40 years, tourism has been the fastest growing economic sector of the countrys GDP, assist to accelerate growth overall. Millions of visitors flock to Mexico and contribute almost $50 billion USD to Mexicos economy each year. Agriculture contributes les s than 5% of the nations GDP, which is high compared to other countries in Western Europe. Fishing is another important economic sector for Mexico. Industry contributes about 35% of Mexicos GDP, but industry is still somewhat dependent on foreign investment. The most common products from this sector are motor vehicles, steel, textiles, chemicals and ships. Mexico is among the worlds most open economies, but it is dependent on trade with the U. S. , which bought about 82% of its exports in 2007. Top U. S. xports to Mexico include electronic equipment, motor vehicle parts, and chemicals. Top Mexican exports to the U. S. include petroleum, cars, and electronic equipment. There is considerable intra-company trade. Trade disputes between the get together States and Mexico are for the most part settled through direct negotiations between the two countries or via WTO or North American Free Trade Agreement (NAFTA) panels. The most significant areas of friction involve agricultural product s such as livestock and attractiveeners. To address the issues that affect these industries in a manner coherent with the principles of free trade, the United States and Mexico have established technical working(a) groups.During the last three decades Mexico has grown with an annual average rate of 4%, even with the changes from an inward-looking developing economic strategy towards a more open economy with a far-reaching trade liberalization program. But the story at the sub-national level is different these changes have modified the regional development strategies and consequently the growth paths of the 32 Mexican states. There is evidence of an uneven growth, greater disparities and important differences in welfare standards among regions. Socio-Cultural Factors Orientation Mexicans make several cultural subdivisions within the nation. The most common one identifies due blue, central, and south or south-eastern Mexico. The extensive and desertlike north was only sparsely po pulated until the middle of the twentieth century, except for some important cities such as Monterrey.It has traditionally housed only small natural populations and is generally regarded as a frontier culture. Densely populated central and western Mexico is the cradle of the nation. Highly positive Indian cultures populated this region in pre-Columbian times and it was also the heart of the colony of rude(a) Spain. Many prominent colonial cities are major urban and industrial centers today. Southern Mexico has a tropical or subtropical climate and some rain forest. It is characterized by a strong indigenous heritage and is also the poorest part of the country. Demography The preliminary results of the 2000 population census calculated the total number of Mexicans as 97,361,711.In 1950, the total population amounted to approximately 25 million, with the figure reaching nearly 50 million in 1970. These verse demonstrate the rapid rate of demographic growth that was so indication of Mexico during the second half of the twentieth century. The growth rate has slowed, but the population is still very young. The average life expectancy in 1999 was estimated at sixty-nine years for men and a little over lxxv years for women the infant mortality rate was almost twenty-five per one thousand. In the late twentieth century, emigration to the United States (mainly of the illegal variety) became a significant phenomenon.Linguistic Affiliation Spoken by more than 95 percent of the population, Spanish is the official row of Mexico and was introduced through conquest and colonization. Mexican Spanish has its roots in the Spanish of Spain. In terms of grammar, syntax, and spell out there are no important differences between the two, but the pronunciation and sound are different. Certain words from the principal Indian language (Nahuatl) are incorporated into Mexican Spanish, especially in the domains of food and household. Some of these words have also been incorporated into other languages such as the English chocolate from the Nahuatl chocolatl. The national culture of Mexico boasts sixty-two indigenous languages. In 1995 at least 5. 5 million people spoke an indigenous language.The level of bilinguism, however, was high at 85 percent. Symbolism The most important word-painting of Mexican national culture is the Virgin of Guadalupe, which illustrates the pervasive influence of papistic Catholicism in the national culture. She is viewed as the mother of all Mexicans. The one-sided Virgin is the Mexican version of the Virgin Mary and as such represents national identity as the product of the mixing of European and Meso-American religions and peoples. Her go steady was used in the struggle for independence against the Spanish. Mexicans have developed a particular sense of uniqueness, which is expressed in the popular saying como Mexico no hay dos (Mexico is second to none).This sense is also expressed in numerous elements of popular culture suc h as food and music. paganal Relations Social policies aimed at the emancipation of Indian groups and the elimination of laboured socioeconomic inequalities have been employed since the 1930s. Nevertheless, indigenous populations are among the poorest and most marginalized groups in Mexico. Prejudice among broad sectors of the population toward Indians persists. Elites in provincial towns in preponderantly indigenous regions are often openly racist. This situation has strained ethnic relations and there has been a rise of indigenous movements in recent years that demand a new space in the national culture.Most significant has been the outbreak of armed indigenous rebellion in the state of Chiapas, where the Zapatista Army for National Liberation declared war on the government in January 1994. Food Mexico possesses an extensive and sophisticated culinary culture, with a great variety of regional dishes. Three products constitute the heart of most Mexican dishes corn, hot peppers (c hiles), and beans, products that stem from pre-Columbian times. Corn is consumed in all possible forms as a cooked or roasted corncob (elote), cooked atom of corn, porridge (atole), as wrapped and steamed dough with filling (tamal), but most importantly as a tortilla, a thin, round pancake. Tortillas are made from corn dough and come in many sizes, although the traditional tortilla that accompanies most meals has a diameter of approximately six inches (15 centimeters). When tortillas are filled with shopping mall or other ingredients they are called tacos or quesadillas, which are especially popular in central Mexico. Much of the sophistication of Mexican cuisine comes from the use of more than one hundred different types of chiles, which range from the large and sweet chile ancho to the small and super hot chile habanero. Mexican Family value The family is at the centre of the social structure. Outside of the major cosmopolitan cities, families are still generally large.The exte nded family is as important as the atomic family since it provides a sense of stability. Mexicans consider it their duty and responsibility to help family members. For example, the will help find employment or finance a house or other large purchase. Most Mexican families are extremely traditional, with the father as the head, the authority figure and the decision-maker. Mothers are greatly revered, but their role may be seen as secondary to that of their husband. Machismo Machismo literally means masculinity. There are different outward behaviors to display machismo. For example, making remarks to women is a stereotypical sign of machismo and should not be seen as harassment.Mexican males generally believe that nothing essential be allowed to tarnish their image as a man. Hierarchical Society Mexican society and business are highly stratified and vertically structured. Mexicans emphasize hierarchical relationships. People respect authority and look to those above them for guidanc e and decision-making. Rank is important, and those above you in rank must always be treated with respect. This makes it important to complete which person is in charge, and leads to an authoritarian approach to decision-making and problem- solving. Mexicans are very sensible of how each individual fits into each hierarchybe it family, friends or business. It would be disrespectful to break the chain of hierarchy.Technological Factors Most scientific look in Mexico is conducted in the public universities, mainly in the National self-governing University and the Autonomous Metropolitan University, both in Mexico City. The National Polytechnic Institute, also in Mexico City, is the foremost question institute in engineering and technology. In recent years there has been government support for developing investigate centers outside the capital. There is also an extensive network of specialized self-reliant research institutes that are dependent on state finances such as the Nat ional Institute of Astrophysics, Optics, and Electronics and the College of Mexico.Just over half of the almost $2 billion (U. S. ) of federal expenditures in science and technology in 1998 was channeled through the Ministry of Public Education and another 34 percent was channeled through the Ministry of Energy. The majority of the latter funds are spent on research into the exploitation of oil. Public policy concentrates on three areas promotion of quality and quantity of scientific research, establishment of linkages between science and industry, and the promotion of proficient innovation. The National Council of Science and Technology is the most important funding sureness for the physical and social sciences. In 1998 it had a budget of $287 million (U. S. , with 47 percent allocated to individual postgraduate grants, 25 percent to scientific research and technological development, and 22 percent to the National System of Researchers (SNI), a program of financial incentives to productive academics. In 1998, more than sixty-five hundred researchers were in the SNI. Information on corporate funding of research and development is untouchable but is estimated to be very modest compared to Mexicos main trading partners. Mexicos future development will have to be progressively more based on the effective generation and utilization of fellowship, in order to resonate economic, social and environmental challenges. The role of the scientific & technological communities in knowledge supply and in its effective integration in innovation systems cannot be overemphasized.If it wants to invest coherently in its own S&T assets, and insist its own intellectual and scientific capacities in the global knowledge society, Mexico must strive to go beyond the level of being an economic duty of the much larger and US-dominated NAFTA. Overall investment levels in S&T remains low, although substantial investment in local human resources and infrastructure is required to ens ure the absorption, adaptation and application of world-class technology. For instances, Mexicos investment on RTD is the lowest of the OECD 2 (0. 31% of GDP), compares unfavorably with 0. 38% for Turkey and represents only one-seventh of the OECD average. This figure can also be compared with those of China (0. 7%), India (0. 8%) or Brazil (at least 0. 8%). Human resource formation, a critical output of research projects, also remains disappointingly low. Mexico trains fewer Ph. D. per year than comparable countries, with 3 Ph. D. s per million inhabitants, compared to 5 in India, 6 in Brazil and 19 in South Korea. Moreover, there is a significant regional disparity in the assignation of scientific resources, with 75% of all doctoral degrees being awarded by institutions in the Mexico City area. 8. Problem Symptoms From the above strategic analyses it could be interpreted that, Wal-Marts occurrent strong competitive position and its past rapid growth performance cant guarantee th at the company will remain as the industry leader or maintain its strong business position in the future, since there are huge threats for the Walmart in the Mexico city.Competitors are now taking aggressive competitive moves and successfully imitating their strategies and diminishing the Wal-Mex advantage. 9. Current Strategies Low Cost supplier Wal-Mart stores operate according to their Everyday Low Price philosophy. According their vision to contribute to improve the quality of life for Mexican families, they invest to be near and offer them the best products at Every Day Low Prices. Wal-Mart has emerged as the industry leader because it has been better at containing its costs which has allowed it to pass on the savings to its customers. It continues to improve upon its key business processes, managing them centrally and investing in them heavily for the long term payback. 10. Strategy ImplementationThe key features of Wal-Mart Mexicos approach to implementing the strategy is th e approach to implementing the strategy by building solid working relationships with both suppliers and employees, being aware and taking notice of the most intricate details in store layouts and merchandise techniques, capitalizing on every cost saving opportunity, and creating a high performance spirit. This strategic formula is used to provide customers access to quality goods, to make these goods available when and where customers want them, to develop a cost structure that enables competitive pricing, and to build and maintain a reputation for absolute trustworthiness. Wal-Mart Mexico has been regarded as an industry leader in testing, adapting, and applying a wide range of cutting-edge merchandising approaches Wal-Marts secret of having phenomenal track record in Mexico is that it has brought a set of superior forethought techniques and technologies.Press accounts have emphasized Wal-Marts low-price strategy, high-technology distribution network, and intense extort on supp liers for discountsthe same formula as in the United States, Wal-Mart de Mexico also has connected with and replicated the U. S. Companys huge, Automated distribution network. With NAFTA eliminating most trade barriers, Wal-Mex has direct links to U. S. -based distribution centers, but also has built 12 distribution centers within Mexico31. In addition to heightened efficiency, this multiplies Wal-Mexs power as a purchaser, since Wal-Mart consolidates orders for all goods from outside the United States. Another contributor to Wal-Mexs success is its use of a wide range of formats to appeal to vary classes of consumers, and particularly lower income consumers. Wal-Mart succeed to achieve economies of scale which reduces its costs of sales.With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Cross docking gives the i ndividual managers more control at the store level. Wal-Mart has been led from the top but run from the bottom, a strategy developed by Sam Walton and carried on by a small group of senior executives. . Although recent growth has led Wal-Mart to add more management layers, senior executives strive to maintain its unique culture. 11. Limits to the success story Mexican retailers have proven to be quick studies.All three of the main national autoservicio chains competing with Wal-Mart now offer some version of its every day low prices (EDLP) formula. Comercial Mexicana and Soriana now aggressively publicize price differences with Wal-Mart and Aurrera. In addition, some of the larger suppliers (especially soft drink and snack food manufacturers) have begun to print suggested prices on their packages, deterring retailers from charging more. Wal-Marts competitors insist that there is now no significant price difference, and many Mexican consumers seem to have drawn the same conclusion. S imilarly, squeezing suppliers has become commonplace for large Mexican retailers.Executives from competing chains report that they have also begun to shift toward centralized, highly automated distribution and tracking systems, and to create detailed procedure manuals. The net result of Mexican chains emulation of Wal-Mart is that Wal-Mexs share of sales among the top five Mexican retailers has remained steady for the last two years. Closer to home, Wal-Mart has struggled in northern Mexico, particularly the Monterrey area. Executives of another chain offered several analyses of Wal-Marts difficulties in the region. Soriana and the Texas-based HEB were already entrenched by the time Wal-Mart arrived. Wal-Mart made some early merchandising mistakes, opening no-frills Bodegas that had done well in central Mexico but left more sophisticated northern customers cold.Finally, as polarization between rich and poor increases in Mexico, Wal-Marts approach of selling to a broad middle faces s tructural limits. 12. Suggested Strategies One little bad thing can wipe out lots of good things. So every move in its business operation ought to be well thought-out and executed. Wal-Mart call for to address few areas in order to maintain or to apprehend an even stronger long term business position Single-business strategy Wal-Marts success is mainly based on its concentration of a single-business strategy. This strategy has achieved desirable success over the last three decades without relying upon diversification to sustain its growth and competitive advantages.Given its current position in the industry, Wal-Mart may want to continue its single-business strategy and to push hard to maintain and increase market share. However, there is risk in this strategy, because concentration on a single-business strategy is similar to putting all of a firms eggs in one industry basket. In other words, if the retail industry stagnates due to an economic downturn, Wal-Mart might have diffi culty achieving past profit performance. Other than this some other suggested strategies could be 1. Expanding into states where it had no stores 2. Continuing to saturate its current markets with new stores 3. Perfecting the Super center format to expand Wal-Marts retailing reach into the grocery and supermarket arena 4.And last but not the least following the current low cost strategy through minimizing the operating cost and as well as the selling cost. 13. Conclusion The ever-changing market presents keep challenges to retailers. First and foremost, retailers must recognize the strong implications of a buyers market . Customers are being offered a wide choice of shopping experiences, but no one operation can capture them all. A closer look at Wal-Marts performance in Mexico indicates that it is neither invincible nor exceptionally exploitative. sham by competitors, income polarization, and economic hardship that steers consumers toward the informal sector will limit Wal-Mart d e Mexicos reach in the future.Hence, technology, demographics, consumer attitudes, and the advent of a global economy are all conspiring to rewrite the rules for success. Success in the next decade will depend upon the level of understanding retailers have about the new values, expectations, and needs of the customer. If Wal-Mart continues its customer-driven culture, it should remain a retail industrleader well into the next century. Ernesto Vega moderate of the Board Eduardo Solorzano President and CEO Xavier del Rio Executive Vice Present, Real soil Rafael Mature Executive Vice President and Chief Financial policeman Jose Angel Gallegos Executive Vice Present, Human Resources