Table of contents
- Walmart’s Company Structure
- The Actual Struggles Of Opening Walmart Chain in Russia
- Final Recommendation
American corporations currently hold leading positions in the world. This concerns both their size and their competitiveness and role in world markets and in the global economic system. The leadership foundation of the American companies in the global economy is a socioeconomic and institutional system formed as a result of many years of historical development based on liberal economic and democratic political principles. There are large and successful corporations in many developed countries, but nowhere else do they have such powerful and complex foundations for development and success, as in the United States.
A special role is played by the United States, which provides the legislative infrastructure for the operation of this complex system of interaction and pursues a very specific, often tough, policy aimed at preserving and developing an institutional environment favorable for social and economic development. At the same time, American corporations firmly rely on all types of the U.S. leadership in the world, and the basis of U.S. political and economic leadership is, in turn, the power of American corporations.
Walmart’s Company Structure
Walmart is an American company that operates the world's largest wholesale and retail chain operating under the Walmart brand. It is headquartered in Bentonville, Arkansas. The main regions of activity are the USA and Mexico, with a significant presence in Canada, South America, Great Britain (Asda), South Africa, China and Japan. Walmart is the world's largest retail chain with approximately 11500 stores in 27 countries. Among them both hypermarkets and supermarkets selling food and industrial goods. The chain's strategy includes such terms as the maximum assortment and the minimum, tending to wholesale prices (Schwartz, 2020). Walmart's main competitors in the U.S. retail market are Home Depot, Kroger, Sears Holdings Corporation, Costco, and Target. In addition, Walmart is a leader in the implementation of technologies related to the use of RFID tags in the trade.
Russia is a country where Walmart is not currently positioned, not anymore. Company representatives have repeatedly stressed the importance of the Russian market for the company. In September 2008, Walmart Stores registered a subsidiary legal entity in Russia called BM eastern europe holdings, LLK. This company joined the Association of Retail Companies, which is the main lobbyist for the interests of Russian retail chains. After opening an office in Russia, Walmart tried to create a joint venture with X5 Retail Group based on the “Karusel” hypermarket chain, but the deal did not materialize. At the same time, in 2008, the American retailer participated in a tender for the purchase of 89% of the St. Petersburg hypermarket chain “Lenta”, but the deal did not take place either. In 2010, Walmart stores negotiated the purchase of the “Kopeyka” chain. However, after the acquisition of “Kopeyka” by the Russian retailer X5 Retail Group for 51.5 billion rubles in early December 2010, Walmart decided to close the Russian representative office (Kiselyova, 2012). Nevertheless, the company remains interested in the Russian food market, but does not see partners for cooperation in the near future.
The Actual Struggles Of Opening Walmart Chain in Russia
As I mentioned earlier in my discussion posts, I am from Russia, so I know a lot about my country and the way businesses are done in Russia. International retailers operating in Russia today have numerous problems with corruption. Also there are many Western investors entering the Russian market who are disappointed after the acquisition of Russian companies, because of problems with the same corruption, as well as difficulties in financial and corporate governance. Walmart is renowned for its utter anti-corruption and extremely careful pre-sale appraisal of the acquired company. This is exactly the reason why Walmart's entry into the Russian market is not easy and requires a lot of time and preparation. Another vitally important factor is political risk. It is definitely a very significant parameter for Walmart's expansion. Moreover, Walmart already has a negative experience in this sense, when a few years ago the company suffered serious losses due to political instability in India (Berfield, 2013).But I think that in the case of Russia today, for Walmart, the main criterion for assessing the degree of risk will be economic and competitive factors. Relations between Russia and the United States over the past one and a half hundred years have been of key importance not only for Russia and the United States proper, but for the whole world. Nuclear weapons, control over huge hydrocarbon reserves and other factors give Russia enormous political weight in the world. Russia uses this weight to advance its interests, which often run counter to those of the United States. The President of the United States often says one thing and does another, which is why his words constantly contradict deeds, so it is difficult to comment on something here. Trump may say that it is necessary to improve relations with Russia, and the next day to sign another sanctions package.
Walmart is a leading global company, which is constantly improving and finding ways to open their chain in other countries. I believe that Russia would be a great market for Walmart. Unfortunately, there are few major obstacles Walmart is facing when it thinks about entering Russian market. Corruption is something that is associated with Russia, and sadly after all these years is still there. If you have money you can buy everything and everyone. When opening a business in Russia you will be forced to bribe most of the government representatives like the fire department in order to even open, even if you do everything perfectly, under the law and safety regulations. For an American company like Walmart corruption is illegal and can not be done under any circumstances. Therefore, I think it is almost impossible for Walmart to open their stores in Russia due to the current country's culture and politics.