Can an American company adapt and be successful in Latin America? – Focus on Walmart in Brazil and Chile

Nowadays the world is characterized by globalization and interconnectedness. Globalization began in the 1990s when the United States became a hegemonic power. With the influence of American culture, this phenomenon has led to a globalized economy with companies becoming international. 

We all know the success of multinational companies abroad such as McDonald, but what about Walmart and its attempts to set up in Latin America? Can an unbeatable-looking company such as Walmart be successful on the Latin American market or does it face particular challenges? It is interesting to look at Brazil and Chile and the two different strategies carried out by Walmart in both countries. 

https://cdn.1min30.com/wp-content/uploads/2017/04/Symbole-Walmart.jpg

Walmart is the world's leading grocery retailer with its stores in 28 countries. Walmart’s strategy is based on low prices as its “Everyday low prices” slogan testifies. The Latin American market is booming in particular owing to Brazil's growth. Consequently, Walmart decided to set up its activities in this country and also in Chile which is considered a developing country and one of the most stable economies among countries of South America. Walmart was a mixed success in both countries. 

The implementation and failure of Walmart in Brazil 

Brazil is a country characterized by structural inflation. In the 1980s, the country’s economy was on the rise with the GDP growing 1.5%. Walmart saw Brazil as an opportunity to expand their global development with such an emerging market. However by 2018, Walmart had closed 120 of its stores in Brazil, leading to substantial losses. 

The major reason for failure is the inadequacy of Walmart’s strategy in Brazil. On the one hand, its “Everyday low price” strategy represents its main competitive advantage, nonetheless in Brazil, it failed. Consumer behaviour in Brazil is very different from that in America. Brazilians are attracted to promotional sales but this strategy is effective only if it is occasional. On the other hand, Walmart did not adapt its one-stop-shopping business plan which was stymied by Brazilian consumers' behaviors looking for the lowest prices in different stores. Moreover, the unsteady inflation rate created uncertainty for Brazilians’ purchasing power. Another factor of the failure is that Brazil has a competitive and dynamic retail market with major competitors competing with Walmart. 

In a nutshell, Walmart failed to carry out its market research in Brazil which led to its failure. 

Walmart in Chile: a smart and successful adaptation 

In Chile, Walmart attempted to capitalise on its image and has adapted to Chilean values in order to be successful. In the country, the environment is significant and must be protected. Inclusivity, respect and tolerance are essential values within the society. 

Walmart implemented diverse methods in Chile. The company translated all its slogans in Spanish in order to adapt entirely the language to the targeted country. Furthermore, inclusive writing is promoted by the company using “@” which is neutral in Spanish as in “junt@s” which means “together”. 

Emphasis is less on shopping and the “Everyday low price” strategy than on the values of the company. Walmart has launched a campaign against violence against women since the pandemic when a growing number of women faced situations of violence. Similarly, Walmart supports same-sex marriage. Regarding the environment, the firm promotes sustainable development and work ethic which are part of Walmart-Chile’s commitments and values. 

The strategy of carrying out market research is a winning strategy for Walmart in Chile, adapting its image and commitments to the country. 

https://www.walmartchile.cl/

https://www.walmartchile.cl/

Is there a pattern to being successful abroad? 

As Walmart shows, even multinational companies can experience trouble implementing and developing their activities abroad. Nonetheless, a conclusion stands out – preliminary market research seems essential as well as an adaptation to the targeted country. Since culture and purchasing power for instance are different in a foreign country, knowledge related to the economic, cultural, social, political, environmental, legal environment is one of the key success factors. 

In Latin America, American companies have to cope with other obstacles. The language is different and translation into Spanish nowadays is mandatory owing to the booming influence of Spanish. Companies must take into account the diversity of markets and economic factors (such as the purchasing power, the inflation rate, purchasing power parity and so on) in their targeted countries in order to succeed. 

Estelle L.

Sources

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https://fortune.com/2015/06/04/walmart-ceo-doug-mcmillon/ 

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