In the modern world, large business corporations are expanding at a high rate across the nations’ boundaries seeking new business opportunities in the regions seemed to have unexploited business potential. Globalization of business and technology transfer has enabled the creation of harmonized world economies, thus easing the expansion of large business across their nation’s boundaries. In business management, every business opportunity presents a near equal challenge that when taken with little care causes huge losses to the business, and this scenario underscores what globalization does to business enterprises.
This assertion implies that there is a great need to analyze the challenges that global markets and opportunities present to a business before venturing into the new business environments. Most common challenges that business enterprises face in global markets include political challenges, information security, managerial challenges, and cultural diversity. However, each of the above challenges has with it various components, but this paper analyses information security as a main challenge facing Wal-Mart.
Strategies for Wal-Mart
Wal-Mart is a global business enterprise and a retail shop company founded by Sam Walton in North America and has since grown to over 8,700 stores across the world. According to business and financial analysts, Wal-Mart is the most successful enterprise in the retail industry in the world (Humes, 2011). It has grown to the extent of commanding the retail business in European countries such as United Kingdom and Germany. However, the majority of the company’s profits are made in the United States America (over 50%), while the rest of the world enterprises make about 49%. It has interests in over fifteen countries across Asia and Europe, but mostly it operates under other franchises and plans are underway to get into African markets that seem to have great potential for business (Dewhurst et al., 2012).
Interestingly, old business enterprises are slow in expanding to foreign countries unlike new business as observed by business analysts (Everett, 2011). The theory is proven by the reluctance of business managers of old businesses who in most cases are risk avoiders. Due to their fear of business risks, they opt to operate slowly, thus losing numerous opportunities to other business (Everett, 2011). They understand that a lucrative opportunity is a disastrous loss in disguise and one realizes after making a mistake in the exploitation. Hence, they find it prudent to analyze new business opportunities with great care while retaining great interest in the existing area of operations.
Risk avoidance nature of managers explains why Wal-Mart has retained great interests in the United States and achieved a slow growth in the international markets as compared to other businesses that came after it. Most of the world large enterprises have already gotten into African markets due to the high rate of growth in economies of some developing countries like Kenya. However, Wal-Mart is yet to exploit the opportunity, as the managers had to analyze the growth trend and rely on the forecasted future growth of such economies. In other words, Wal-Mart is interested in long-term investment opportunities because they are safer than their counterparts are, viz. short-term investment opportunities (Mossman, 2013).
In addition, some developing countries do not offer business permits for large foreign enterprises. Hence, Wal-Mart could not operate in such markets no matter how promising the business may be. Governments through business regulatory authorities prohibit the issuance of licenses to large enterprises in an effort to protect their local traders for large businesses have a higher competitive advantage than the local ones. However, the situations change due to the rising influence of globalization and growth of such economies. For instance, Kenyan market was hostile to global retail enterprises about two decades ago, but the situation has been reversed due to growth and development of the economy and nature of politics.
Information Security and Strategic Plans (Wal-Mart)
The decision by Wal-Mart to move into the African market seems prudent, but it needs critical analysis. There are some serious challenges that relate to the information security that need to be addressed before entering into the market. Before carrying out the problem analysis, it is prudent to begin by expounding the methods by which Wal-Mart can choose to enter the market.
Wal-Mart uses two main methods of entering into a global market, which are franchise method and direct method (Humes, 2011). Franchise method involves the issuing of rights to another company or an investor, to use the brand name and thereby operating as Wal-Mart. Franchise method is mostly common in gas companies and retail outlets. This method has both advantages and disadvantages to the Wal-Mart managerial functions.
The most common advantage is the decentralization of managerial function as franchise outlets are managed at their locations unlike direct business, which are managed at the headquarters (DePamphilis, 2012). Through the issuance of rights to the brand name, the most influential disadvantage is that a company operates as a shareholder and does not have full control over the business, though it enjoys the majority shares.
However, either of the method of entry poses information security to the Wal-Mart. Through globalization, competition has gotten tougher and global, and thus every business is aiming at acquiring competitive advantage over others that they operate in the same business all over the world (Klohs, 2012). Therefore, every competitor needs to acquire information relating to the business strategies applied by other businesses. Globalization gives a room for leakage of information especially when a company uses direct methods to enter into new markets and applies the same strategies over all outlets (Goldstein, 2011). This aspect enables the competitors to study the strengths and weaknesses of a business with ease, hence posing a great threat to a business.
Given the information security threats posed by globalization to Wal-Mart, it would be prudent for managers to change the business management strategies and structures, while at the same time decentralizing the management of the global investments (Gabriel, 2011). The change of management strategies and structures can be designed in such a way that they match with other businesses that operate in the region of an outlet location. For instance, when entering into the Ugandan market, it is more prudent to design the managerial functions in such a way that they are nearly similar to other businesses that operate in that market.
Business information is also threatened by inside jobs, especially in the businesses that are listed in the stock exchange markets. Unfaithful employees tend to please some investors who are interested in knowing the operations of a business. On the other hand, those investors share the information with other people, and that poses an information security threat to a business (Kagermann et al., 2011). Hence, it would be prudent for the Wal-Mart to keep away from being listed in the foreign stock markets, as that would offer threat to information security of the entire global enterprise.
In addition, in the modern world, business information network is threatened by Internet security threats. Wal-Mart, just like any other global enterprise, carries out electronic commerce in trading activities over the Internet. The Internet poses a threat to the business because of Internet hacking where secret information leaks to unwanted parties and in some cases, electronic money transfer occurs irregularly.
In the United States, businesses have confidence when using Internet transactions for the government, through Federal Bureau of Investigations (FBI), carries out cyber monitoring (Stenzel, 2011). The case is different for some developing countries in Asia and Africa. Hence, hacking can easily go through successfully without the trace of the hacker. In such a case, Wal-Mart will have to readjust its information architectural design to enhance greater security measures.
Information transparency is a crucial element for the business management strategies. According to legal requirements for the formation of companies in many nations across the world, description of information transparency mechanism is mandatory. Information transparency is essential for the employees, government, and other interested parties. Employees need to understand the behaviors and intentions of their employer as that enhances their contribution to the success of the business (Rothaermel, 2012). On the other hand, government is much interested in observing the performance of the business because it is a source of revenue and a crucial element for economic development.
In addition, other interested parties are crucial for the business and they include potential investors, interested job applicants, customers, and other stakeholders. Information transparency mechanism and requirements pose a huge threat to the success of a business (Bergdahl, 2010). Through information transparency, a competitor manages to analyze the business strategies that are being used and that enables the application of competitive advantage mechanisms by competitors, and hence threatening the business survival.
The most prudent method of ensuring that information transparency is well manageable is to avoid the decentralized form of management for some countries where information transparency would pose a great threat to the business. Intellectual property right is a very important element for the survival of a business in any given country all over the world (Everett, 2011). In the United States, right to an intellectual property is well guarded by the state, but it is not the case for some countries in the global market. For instance, Chinese market does not fully comply with the international intellectual property rights, and in such a case, some products are duplicated and given other brand names. Unfortunately, the duplicated products are sold as substitutes for lower prices, but are of inferior qualities.
This implies that global markets pose a threat of breaching the intellectual property rights, and affect the success of a business in the entire enterprise. The best strategy that could address the issue of intellectual property for the Wal-Mart would be avoidance of the economies that do not acknowledge intellectual properties. On the other hand, declaration between the government and the Wal-Mart should be made on the assurance of protection against such crucial rights.
Legal and political issues are relevant concerns for the global investment opportunities for each nation has a unique form of political and legal systems. Therefore, it is important for managers to consider the legal system of a country and assess whether the rights of the business shall be under legal protection. In addition, political environment poses a threat to the success of a business and thus needs to be analyzed to ensure that the environment is suitable for business survival. Wal-Mart faces the aforementioned security challenges, but it can embrace the suggested strategies to overcome the same.
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