Japan’s Pain Is Wal-Mart’s Gain

Current event

Issue:

Wal-Mart and other discounters are expanding as a Japanese recession looms and after household income has fallen three straight years.

Overview:

With Japan’s economy on the bottom of a third recession since 2008, and household incomes falling for the last three years, more and more Japanese customers shop at discount stores. Japan’s economy shrank at a pace of 0.9 percent in the three months through September as government data shown. The country’s famously picky and brand-fascinated shoppers are changing to bargain-hunting style. Discount stores are gaining and expanding.

Wal-Mart’s Japan business is operating in name of Seiyu supermarkets and there is no stores operated under the Wal-Mart banner. Wal-Mart acquired a 6.1% state in Seiyu in 2002. In 2005, Wal-Mart acquired a majority interest in Seiyu, making Seiyu a Wal-Mart subsidiary, and in 2007, Wal-Mart increased its ownership stake of Seiyu from 50.9% to 95.1%. After acquiring the remaining shares, Seiyu became a wholly owned subsidiary in 2008.

Wal-Mart’s Japan business saw net sales rise 2 percent during second quarter. Its Seiyu unit will open seven new stores this year and three more in 2013. Steve Dacus, the CEO of the Japanese unit of Wal-Mart Stores Inc, said Seiyu has built a successful business model for food-oriented supermarkets. By thoroughly implementing the “everyday low price” strategy, same-store sales increased 1.9% on the year in the July-September quarter. Sales and profits will exceed year-earlier figures for the full year as well, he added.

However, Wal-Mart faces hurdles in others parts of Asia. In China, as more and more local retail discount stores is opening, Wal-Mart is adding fewer stores than previously planned. And its strategy in India has been hindered by regulations that until September banned foreign companies from investing supermarkets.

Managerial implications:

Wal-Mart expansion in Japan not only improve its revenue, but also can serve more Japanese customers, who are under rapid socio-economic changes - such as lower annual income, aging population increase, food price hike and etc, which fit Wal-Mart’s global mission of “save money, live better”.

1.     “Wal-Mart Bets on Japan’s Falling Income in Soft Economy: Retail” http://www.bloomberg.com/apps/news?pid=webport_news&tkr=MCD:US,PFE:US,WMT:US&tkr2=WMT:US&sid=ash921Sey6dw

2.     “Walmart moves on in Japan with 10 new stores”

http://theasiacareertimes.com/2011/11/walmart-moves-on-in-japan-with-10-new-stores/

3.    “Walmart Japan to open 22 SEIYU supermarkets by end 2013”

http://packwebasia.com/packaging-business/brnding-retail/business-development/2119-walmart-japan-to-open-22-seiyu-supermarkets-by-end-2013

Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes

Present day companies put quite some emphasis on economic, social and environmental sustainability which is ultimately termed as the Corporate Social Responsibility of a company. It is relatively easier to make Corporate Social Responsibility decision for an independent company. But it gets tougher and more convoluted when there is partner heterogeneity, cross sector alliances, cross or same industry alliances, etc.

Now days we see more and more corporations using strategic alliances to address different social aspects and more importantly environmental issues. It is crucial for a company to strategically choose its alliance/partners and they are generally judged by their alliances and associations. This paper helps explain how partner heterogeneity moderates an alliance’s ability to advance corporate social responsibility goals.

Strategic alliances have been growing at a rate of 25% annually, over the past decade and are expected to increase as organizations grow globally and what will ultimately seem like a global village. The author finds that in an alliance, there tends to be more innovative orientation and the partner with the alliance experience tends to moderate the alliance’s Corporate Social Responsibility decisions. The paper also has supporting data to prove that strategic alliances have more access to varied resources and that they are attempting to address more complex social, environmental and of late political goals. The author develops a cross sector partner diversity index and also an environmental strategy typology index which helps show that cross sector partners are generally associated with more proactive environmental outcomes.

Corporate Social Responsibility through alliances helps foster innovation which is aligned in some way to societal needs. The paper helps provide a new mechanism by testing a theory and hypotheses, of finding the driving factors that will help motivate a company or firm to seek more heterogeneous partners to form an alliance and how this ultimately influences the overall alliance’s Corporate Social Responsibility. Alliances definitely help develop and ensure open coalitions of cooperation and an enabling environment for joint Corporate Social Responsibility.

Resources:

Article: “Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes.” 

Article Source: Journal of Business Ethics; Oct2012, Vol. 110 Issue 2, p219-229, 11p, 1 Color Photograph, 1 Diagram, 2 Charts

ISSN: 01674544             DOI: 10.1007/s10551-012-1423-2          Accession Number: 80235138

Database: Business Source Complete

 

Collaborative Strategic Management: Strategy Formulation and Implementation by Multi-Organizational Cross-Sector Social Partnerships

Qualitative Article

The point of this article was to create a conceptual model for dealing with cross-sector social partnerships (CSSP).  CSSP is a viable plan when an organization faces either a social, economic, or environmental problem that they can not handle themselves.  The authors claim that there are few other models available, but they are all lacking in some way.  They put together a 5 stage process of their own then tested this on 2 cases out of Canada.  Their 5 stages are:

1.       Assessing the context and forming the partnership

2.       Forming the collaborative plan

3.       Strategy implementation by the partnership

4.       Strategy implementation per the organization

5.       Realized collaborative strategy implementation outcomes

The authors found that their process was a more complete model of discovering value added to the two cases.  They also were the first to have feedback loops integrated within the processes.  They found that these were an integral part of each of the studies successfully implementing their CSSP.  The authors stress that in order to have a CSSP be successful, there needs to be feedback and adaptation at all levels of the process.

Manger implications:

If a firm is going to get involved in any sort of social partnership, then it needs to have some method in place to determine how they are doing at each step of their process.  This will be the only way that the firm will be able to tell if what they are doing will have a successful outcome or not.  Without any sort of feedback loop in place, a firm could be heading for a disaster of a relationship and not even know it.

Resource:

Amelia Clarke, Mark Fuller “Collaborative Strategic Management: Strategy Formulation and Implementation by Multi-Organizational Cross-Sector Social Partnerships”. Journal of Business Ethics, 2010: 85-101