Walmart is a large American retailing multinational corporation with an aggressive internationalization agenda. The company is eying the Taiwanese market to expand its East Asian operations and position it favorably in the Asia Pacific region. Walmart hopes to replicate its success in the American, Mexican and other foreign markets, in Taiwan. However, Taiwan is a complex market with a different cultural orientation from that of the United States and other western countries. Moreover, Taiwan has unique political, social, and legal characteristics that can complicate the entry of Walmart. Therefore, analyses of the political, economic, social, technological, and legal environments in the country are conducted using tools such as SWOT, PESLTLE, country screening tool, and porter’s five forces analyses to help create a global business plan for the entry of Walmart into Taiwan. The plan recommends the use of the glocalization strategy using a joint venture with R Mart or PX Mart, which have extensive retailing presence in the country (Salvi, 2020). This approach would help Walmart to navigate the market complexities in Taiwan.

Introduction

Taiwan presents a lucrative and enticing business opportunity to Walmart as it progresses in its aggressive internationalization strategy. Despite its longstanding troubled relations with the People’s Republic of China and struggles with international recognition as a sovereign country, Taiwan has a vibrant population and economy, that has embraces technology and modern ways of life. In this regard, Taiwan is a highly urbanized country whose populace has embraced technologically-enabled shopping as a modern lifestyle, despite its conservative patriarchal society.

Walmart has enjoyed enormous success in its home country, the United States, where the retail industry is fast approaching saturation. Similarly, the company is enjoying successful business in foreign markets, such as the United Kingdom, Mexico, Canada, and China, despite having failed in South Korea and Germany, and struggling in Japan (Geisler, 2012; Shurrab, 2014). The company has used several market entry strategies including establishing wholly-owned stores from scratch, acquisitions, joint ventures, and strategic partnerships, thus giving it a vast experience in entering different types of markets using diverse entry modes. Besides, its global expansion began in 1991, when it opened its first store outside the United States, in the neighboring Mexico, and has not looked back ever since.

Consequently, Walmart has grown to become the largest company in the world by revenues, after earning $517 billion on 2019. With this financial muscle and vast global expansion experience, Walmart has the money, motivation, and knowledge to venture into the most challenging foreign markets, including Taiwan. However, entry into the Taiwanese market must be well-planned and executed to avoid failures and challenges, such as those experienced in Germany, South Korea, and India.

This report presents a global business plan for the entry of Walmart into Taiwan. The company, the retail industry, and the destination country are analyzed using several tools such as the SWOT, PESLTLE, country screening tool, and porter’s five forces analyses. The findings from these analyses are used to come up with several market entry options from which the most viable foreign market entry approach for entering the Taiwanese market will be selected and justified.

Planning the Global Business Enterprise

Identification of Global Business Opportunity

Overview of factors that create the business opportunity for global retailing

Walmart Inc. (Walmart) is ranked as the largest retailer globally by the Institute for Real Growth (IRG) based on its turnover, when it earned $517 billion as revenue from its global operations in 2019 (Russel, 2020). The company’s vision statement is. “To be the destination for customers to save money, no matter how they want to shop.” Similarly, its mission statement is, “To save people money so that they can live better.” Therefore, availability of affordable consumer products that can be delivered conveniently to rapidly modernizing societies is in high demand in Asia, Africa and Latin America, where populations are growing fast and embracing new e-commerce technologies (Yoder, Visich, & Rustambekov, 2016).

Potential Markets

Low-priced consumer goods that can be accessed conveniently and on-demand are attractive to societies that are urbanizing quickly and embracing modern ways of life. Taiwan has a huge potential for the retail industry due to its high level of urbanization, high population concentration, and a taste for modern lifestyle, especially among its youth and young adults. In addition, Taiwan is centrally located in the Asia Pacific region. Therefore, having a retail presence in the country would open up more opportunities for Walmart in the Asia Pacific region as well as consolidate its presence in China and Japan.

Absolute and Comparative Advantages

Walmart can leverage its strengths to consolidate its presence in East Asia, having entered the Chinese and Japanese markets successfully. Specifically, Walmart can capitalize on its world-renowned brand, its health financial position, and its low-priced business model to avail affordable products to the Taiwanese market. However, the company may face difficulties if it insists on transferring its style of operations in America into Taiwan because the people in the country are suspicious of unfamiliar products and business styles.

Business Opportunity Analysis

Walmart can choose from several method of foreign market entry to penetrate the Taiwanese market. The company used acquisition to enter the United Kingdom and Canada, and joint venture model to enter the Mexican markets successfully, which makes these to entry models the most commonly used by Walmart in its internationalization strategy (Hitt, Ireland, & Hoskisson, 2016, p. 245; Nassauer, 2018). Both models allow Walmart to maintain its control on the operations in the foreign market. However, these market entry strategies have failed in markets, such as Germany and South Korea, where local competition and lack of localization of the operations overwhelmed the company (Geisler, 2012).

Recommendations for the Business Opportunities for Walmart in Taiwan

Since the Taiwanese retail industry is growing and the infrastructure in the country is still less developed compared to that of highly industrialized economies, Walmart should choose an entry model that allows it to grow alongside the industry in the country. The country should seek to use strategic partnerships with local retailers to take advantage of the government’s intention to stimulate economic growth in the country. A model that allows Walmart to position itself as a local retailer than a foreign one would improve its acceptability among the Taiwanese, who are sensitive towards foreign companies (Yoder, Visich, & Rustambekov, 2016).

Analysis of International Competitors

Potential Competitors

Walmart will be going against formidable international and local Taiwanese retailers that are likely to influence the performance of the company in the Taiwanese market by offering fierce competition. The major international competitors with a physical presence in Taiwan include Carrefour, Costco, and 7-Eleven. Alibaba and Momoshop have a significance online shopping presence, while Hi-Life, PX Mart, and RT-Mart are Taiwanese-based retailers that are expected to compete fiercely with Walmart.

Competitive Advantages

Carrefour is a hypermarket chain based in France, which has succeeded in the Taiwanese market. It has used a business model that combines the product variety of a department store and the convenience of a supermarket in its 24-hour supermarkets (Su, 2018). The retailing chain also has hypermarkets and an online platform. This hybrid approach appeals to the diverse shopping habits of the Taiwanese, who visit different shop formats in varying frequencies to fulfil their diverse shopping needs (Su, 2018). The 24-hour supermarkets provide the same services available in hypermarkets and other large store formats, only that they are located in neighborhoods where they can be easily accessed by customers. In this respect, Carrefour has understood its target market and glocalised its business model. Similarly, PX Mart, which is a Taiwanese supermarket chain that was once owned by the state, has also succeeded by adopting the small store format and acquiring struggling supermarkets in the country. This has enabled it to diversify into the small neighborhoods of the Taiwanese urban centers where customer can reach its stores easily. Contrastingly, Alibaba, though Taobao, has succeeded in gaining a solid footprint in the e-commerce segment of the Taiwanese retail industry. Alibaba uses the social investment approach by funding startups that become the company’s partners later, to endear its brand to the people of Taiwan. It also capitalizes on the increasing use of mobile technology and the internet to capture the increasing number of online shoppers in the country. In this respect, it entered into a joint venture with the Hong Kong-based Sun Art Retail Group Limited, which runs the Taiwan-based RT-Mart chain of supermarkets (Hsu, 2018). Through this arrangement, Alibaba has helped RT-Mart adopt digital technology and modernize its online retailing platform to enhance the shopping experience of Taiwanese customers.

International Strategies

The international strategies used by Carrefour and Alibaba are different because Carrefour focuses on physical stores although it has an online shop while Alibaba concentrated in e-commerce and extensive use of technology. However the two companies are similar in their international operations because they customize their services to the needs and preferences of the foreign markets. Therefore, their brands and services are localized to the market conditions and environment, which makes the brand more acceptable by the target customers. For instance, their success in Taiwan comes from the realization that Taiwanese customers prefer the small store format and online shopping.

Assessment of the Economic-Geographic Environment

Geographic Influences

Geographically, Taiwan is an island state of the southern coast of China in the East Asian region. The country, which is officially known as the Republic of China (ROC) occupies 35,808 square kilometers, which is largely dominated by mountainous features in the two thirds of the country toward its eastern end, which the western end consists of a plain that is highly urbanized. Therefore, over 60% it its 23.7 million people are found in the cities and urban centers of the western end of the country, making it one of the most densely-populated countries in the world. Many of these people are to be found in Taipei, which is the capital city, alongside others, like Taoyuan, Tainan, Taichung, and Kaohsiung.

The country is centrally located in the East Asia region, with its neighbors being Japan, the Philippines and the People’s Republic of China. In this respect, it is near the populous China, which produces much of the merchandise used in the country and also is a large market for Taiwanese exports. Therefore, this location is important to Walmart, which may source much of its inventory from China, as well as enable the country to venture into untapped markets in the region while strengthening its position in Japan and China.

Major Products and Industries

The major industries in the country include manufacturing, services, and agriculture. The manufacturing industry is highly developed as it contributed a quarter of Taiwan’s GDP. The country produces medical equipment, manufacturing robots, electrical machinery, plastics, electronics, and chemicals among many other items. Moreover, the country has one of the highest usages of manufacturing robots, which demonstrates the high level of automation in the industry. The service industry contributed about 62% of the country’s GDP and is concentrated around information technology innovations, food and beverage processing, hospitality industry, and financial services.

Current Economic Conditions

Taiwan is one of the four “Asian Tigers” that experienced rapid growth and speedy industrialization in the 20^th century. The country underwent the “Taiwan Miracle” alongside other countries, like Singapore, South Korea, and Hong Kong, which turned it into a highly developed, dynamic, export-driven, capitalistic country that sustained a gross domestic product (GDP) growth rate of about 8% for three decades. However, this growth slowed to 2.7% in 2019 due to reduced demand from its trading partners and the ongoing trading tensions between China and the United States. Nonetheless, the country’s GDP reached $605 billion in 2019 after increasing from $589.91 the previous year (Trading Economics, 2020).

Taiwan’s economy is driven by industrial manufacturing for export purposes. The country has developed industries that manufacture petrochemicals, machinery, and electronics, which it exports to countries in the Asia Pacific region, like China and Japan, who are also its main export competitors. It also exports its manufactured products to the United States and European countries. This has seen the country generate trade surpluses with countries like the United States and China, because it exports more to them than it imports from them. Currently, Taiwan is the 4^th largest producer of electronics in the world. This places the country in a strong financial position, considering that its current account stood at $67.02 billion and general debt at 33.6% of its GDP on 2019. In turn, the country has a high GDP per capita, which was $24,828 in 2019, thus providing the Taiwanese with disposable income to engage in chopping and other consumerism activities (Export Enterprise, 2020).

The export trade in the country has been greatly enhanced by the bilateral and multilateral agreements with other trading partners in the Asia Pacific region and around the world. For instance, Taiwan entered into a bilateral agreement with China in 2010 through the Economic Cooperation Framework Agreement (ECFA). Taiwan also made bilateral trade deals with Singapore and New Zealand in 2013, despite not having diplomatic relations with these two countries.

However, the high dependence on exports exposes Taiwanese economy to the uncertainties and variations in global demand. For instance, the ongoing coronavirus pandemic has lowered the demand for consumer electronics and other products that Taiwan exports, which will adversely affect the economy of the country. The international monetary fund (IMF) has forecasted that they Taiwanese economy would drop to -4% in 2020 due to the effects of Covid-19 outbreak. Moreover, the country has insufficient infrastructure, particularly in the provision of basics, such as water and public transport, which is causing companies to relocate out of the country in large numbers. Besides, the services sector is becoming uncompetitive, thus lowering employment.

The country has managed to maintain a low unemployment rate over time, which was steady through 2019 at 3.8%. In addition, 59.22% of the country’s population that is eligible to work participates in the labor force. However, the unemployment rate in the country is expected to rise to 4.4% in 2020 as people lose their jobs and labor force participation lowers due to the ongoing pandemic.

In this respect, some Taiwanese are relocating from China back to the country to avoid the high tariffs that have been imposed on Chinese manufactured goods by the United States (Tan, 2019). The Taiwanese government is currently promoting and initiative called “Invest Taiwan” in which it is giving cheap loans to facilitate the movement of the companies and finance the cost of relocation. These incentives are not available to foreign companies, making them to be disadvantaged in accessing credit. In the same vein, other companies are relocating from Taiwan to other locations with cheaper labor, such as Vietnam and Thailand due to the increasing wages and salaries in the country. The average minimum wage in Taiwan is currently at $796.32 dollars (NT$23,800) and has been on the upward trend for the last 10 years (Trading Economics, 2020). This is over 4 times higher than the minimum wages in Vietnam and twice that of Thailand, which are $189.41 (VND 4,420,000) and $310 (9,930 Thai Baht) per month respectively (Trading Economics, 2020).

Infrastructure

Despite having a modern capital in Taipei and a rapid rail transport system, Taiwan has some glaring infrastructure gaps, when compared to other advanced countries in the region. Most of the infrastructure development is concentrated in the cities, which are located in the western and northern ends of the island nation. For instance, the road and railway network is concentrated along the coastal areas where most of the population lives. However, despite having a high speed rail and urban transit systems serving the main cities in the country, motorcycles and scooters are the main mode of transport, which is preferred over passenger cars. The country also has four international airports, which are Taipei Songshan international Airport, Taichung International Airport, Kaohsiung International Airport, and Taiwan Taoyuan International Airport. These airports host seven airlines that are dominated by EVA Air and China Airlines.

E-Commerce Application

The electronic commerce market is expanding fast in Taiwan. The internet and smartphone penetration rates are 88% and 70.4% with the country having about 20.6 million and 16.6 million internet and smartphone users, respectively. In addition, the country has a social media penetration rate of 77%, with the most popular social networking sites being Facebook and Twitter, which are also used extensively for social media marketing. Because Chinese, Taiwanese, and Hakka are the commonly spoken languages in the country has to translate their e-commerce platforms to these languages. While the translation can be a tiresome task, artificial intelligence and machine learning can perform this task autonomously. In addition, online shoppers in Taiwan prefer paying using credit cards and cash.in the same vein, although the younger generations of people below 40 years prefer online shopping, the more mature Taiwanese are still hooked to the physical stores, although they are slowly embracing the use of mobile devices for shopping.

These economic trends can attract and deter foreign investments into Taiwan. On one hand, the relocation of companies back to Taiwan would bring suppliers closer to the Taiwanese customers, thus creating opportunities for retailers interested in linking Taiwanese products to the market. Specifically, this would lower the logistical costs of importing merchandise because it would now be sourced from within the country. On the other hand, the returning companies would increase competition in the labor market and push wages and salaries upwards. This would make operations of Taiwan more expensive due to the high overheads due high labor costs. From another perspective, exit of companies from Taiwan to other locations would create new opportunities foreign investors by reducing the number of competitors. However, in contrast, the exit of companies from Taiwan would take suppliers further from the country, thus increasing the cost of bring in products to the country. All in All, Walmart would have to balance the benefits and detriments of the movement of manufactures into and out of Taiwan. While relocation of suppliers would leave fewer local products for Walmart to sell in Taiwan, it would create an opportunity to introduce new products from foreign countries into the market. In this respect, American products would have less competition from local products, thus making them more acceptable to the Taiwanese market.

The increasing adoption of online shopping in Taiwan, along with the preference of physical shipping among the mature people in the country is promising for foreign retailers, such as Walmart, who use a combination of online and physical retailing outlets in their business model. However, the underdeveloped infrastructure outside the urban areas many pose a significant challenge in the logistical operations of retailers, such as Walmart. Notably, the high cost of land and rent in the major Taiwanese cities would increase the cost of locating physical stores. However, these costs may be offset by developing home delivery and distributorship networks because of the small area and high population density in the target market areas, combined with the extensive use of motorcycles, which can used to make home deliveries efficiently.

Assessment of the social-cultural environment

Demographic Trends

Taiwan has a population of about 23.6 million people, 78.5% of whom live in urban areas. The population of Taipei is about 7.8 million people, which is a third of the total population in the country. Kaohsiung and Taichung cities have populations above 1 million, with each registering about 1.5 million and 1 million respectively. Although the total fertility rate has dropped significantly from the high of 6.7 children per woman in the 1950s to around 1 child in the 2000s, this figure has remained stable for in the last decade, with the current rate being 1.2 children per woman. In addition, the population of the country is aging rapidly as the country maintains one of the lowest birth rates in the world for the last seven years. Consequently, the population of the country is expected to peak at 23.8 million people by 2021 before is starts declining, if the birth rate remains the same (Jennings, 2018).

Cultural Analysis

Taiwan has a highly conservative elderly population and a progressive and modern younger one. In this respect, Taiwan has a mix of ancient and modern cultures that are blended to produce a unique Taiwanese culture. Over 80% of the Taiwanese are Buddhists or Taoists, with a small minority being Christians and Muslims. Although the older generation is loyal to Confucianism and vegetarian diets, the younger Taiwanese are embracing Christianity because of the opportunities of learning English that it offers. Moreover, English is much sought after by the business community with the government encouraging the language to help integrate the country with the global economy. In this respect, many people in the urban centers, and especially in Taipei, can speak English as a second language to mandarin. Moreover, Tainan, which is a city in southern Taiwan, has an ongoing project for popularizing English to bridge the language gap between the north and south of the country.

Social institutions

The culture of the Taiwanese society has been highly influenced by China and Japan. In this respect, society is collectivistic, patriarchal, class-oriented, hierarchical, and family centered (Coisne, 2014). Education and profession determine the social status of the Taiwanese, following the industrialization of the country, which has seen the younger generation abandon many ancient Taiwanese traditions and beliefs. For instance, the culture of dining-out is spreading fast in the country, especially in urban areas, although the traditional ceremonies and activities, such as the Chinese New Year and the Dragon Boat Festival are still observed strictly.

Informal Trade Barriers

Although the Taiwanese have embraced entrepreneurship, they have retained many business characteristics from the Japanese and Chinese customs, considering that their culture has been heavily influenced by both countries. In this respect, guanxi, in which long-term friendships play a critical role in business engagements, remains central in Taiwan (Coisne, 2014). Likewise, organization hierarchy is respected, gifts are appreciated, and punctuality is valued, in business engagements. In turn, business meetings are often formal, with eye-contact being used sparingly to avoid being considered as rude and disrespectful. Indirect communication is preferred to being direct and candid to save face of the Taiwanese. In addition, dining can be extended for long periods and business of often not a welcome topic in such occasions. Therefore, investors from different cultures, especially western cultures, may be challenged by the oriental culture of the Taiwanese (Kanakaratne, Bray, & Robson, 2020).

Recommended actions of navigating the social and cultural environment in Taiwan

Companies that are interested in operating in Taiwan should be familiar with the oriental culture, especially that of the Chinese and Japanese. Walmart can succeed in overcoming the in social and cultural differences between the American and Taiwanese ways of doing business by learning more about the Taiwanese society and culture, which has significant Chinese and Japanese elements (Coisne, 2014). In this respect, the experience of Walmart in the Chinese and Japanese markets would be valuable because it would help the company to localize its operations, services, and product offerings in Taiwan.

Assessment of the political-legal environment

Government and Politics

Taiwan has experienced a troubled political atmosphere that continues to breed political tensions to date. The country has struggled to be independent of mainland china and become recognized as an independent state. In this respect, the island state experiences different international relations, with 18 countries recognizing it as a sovereign state and the rest viewing it as a constituent region of the People’s Republic of China. Notably, the Holy See, which is the seat of the Catholic Church and the Pope, and the country of the Vatican City, was the first to recognize Taiwan as a sovereign nation in 1942. Currently, 16 nations maintain formal diplomatic ties with Taiwan after the Solomon Islands and Kiribati chose to side with the People’s Republic of China in 2019 (O’Connor, 2019).

Taiwan is a member of several international organizations that help promote its economy on the global state. For instance, it is a member in Asia-Pacific Economic Cooperation (APEC), International Trade Union Confederation (ITUC) and the World Trade Organization (WTO). Taiwan also belongs to the Government Advisory Committee in the Internet Corporation for Assigned Names and Numbers (ICANN), Asian Development Bank (ADB), and Central American Bank for Economic Integration (CABEI), where it has an observer status in the Central American Integration System (SICA).

However, Taiwan is not a member of the United Nations (UN) or the World Health Organization (WHO), despite numerous attempts to join these organizations. These bodies consider Taiwan part of China and therefore recognize the country as such. It is notable that the People’s Republic of China replaced Taiwan in the United Nations back in 1971. It is claimed that Taiwan has illegally taken up the United Nations seat and permanent membership in the Security Council for 22 years, which was reversed by resolution no. 2758 of the UN General Assembly’s 26^th session in 1991. Subsequently, Taiwan lost its membership with the international agencies affiliated to the United Nations, despite maintaining a de facto relationship. While the United Nations has one seat for China, which is currently occupied by the People’s Republic of China, Taiwan is a proponent of two Chinas, while the PRC supports the one China idea. These different positions are a source of continuing tension between the two countries.

Taiwan has been ruled by authoritarian regimes for a long time, especially during the period it underwent rapid industrialization. During this period, especially in the 1970s and 1980s following its expulsion from the United Nations, Taiwan experienced intolerance and insecurity, when it was under a martial law. The martial law in Taiwan began after the Second World War, when the country was controlled by the Republic of China Military under the government that was led by the Kuomintang (KMT), following its return to Chinese control from Japan. After the 38 years of martial law when Taiwan was under a one-party dictatorship of President Chiang Ching-Kuo, the country began its democratization journey in 1987. Now the country is a constitutional democracy, having held its first elections in 1996 (Lim, 2011).

Formal trade barriers

Taiwan has several tariff-rate quotas (RQs) for various products, including agricultural produce. It also has country-specific quotas (CSQs), which sets ceiling prices of products entering Taiwan. Further, the country restricts foreign investments in sectors such as, agriculture, health, chemical manufacturing, education, water and sewerage, and other essential services. However, the country attracts foreign investments by removing approval requirements for investing $1million and below. In this respect, the main concern is that the government is not transparent with the pricing mechanisms or some details these tariff regimes, which places trade barriers with countries like the United States, which is the home country of Walmart.

Intellectual property

Taiwan is still developing its intellectual property rights protection regime by continuing to develop supportive legal frameworks. Notable developments are in the area of protection of digital intellectual property. For instance, along with agreeing to a digital anti-piracy work plan with the United States, Taiwan protects websites through the memorandum f cooperation between the Taiwan Intellectual Property Alliance (TIPA) and the Taipei Association of Advertising Agencies (TAAA) in 2017. In the same year, the country made amendments to the Copyright Act to prevent illegal streaming (United States Trade Representative, 2019).

Recommendations for addressing the political and legal environments

Walmart should work closely with the Taiwanese government to understand the political and legal environments in the country. Although the political atmosphere is relatively stable, with the country having conducted successful presidential elections in January of 2020 and the Progressive Democratic Party (DPP) having won, relations with the People’s Republic of China will continue to be strained, while those with the United States may improve in light of the ongoing trade disputes with China. Therefore, Walmart may be in a good position to interact with the Taiwanese government to understand its complicated and changing legal environment.

Organizing for global business activity

Selection of a global company structure

Strategic Objectives

Walmart’s strategic objectives are to provide everyday merchandise at an affordable rate and convenient manner to all customers. This strategy targets the average Taiwanese who shop regularly for their daily and regular needs, while being price-conscious, valuing good service, and seeking convenient shipping experiences. By entering the Taiwanese market, Walmart hopes to expand its global market share and consolidate its position as a global retailer. Moreover, this would expand its presence in the East Asian market, having successfully created a footprint in China and Japan. In turn, Walmart expects to grow its revenues and improve its financial health, while providing more earning to its shareholders.

Potential Business Entry Modes

Walmart is likely to enter into Taiwan using the joint venture or acquisition entry modes. These two modes of entry into foreign markets have worked well for Walmart in China and Japan, and therefore are likely to work in Taiwan as well. The joint venture entry mode helps in entry into a difficult, complex, and unknown market by leveraging the local knowledge provided by the local strategic partner. However, it forces the enterprise to cede some managerial and decision-making control (Hitt, Ireland, & Hoskisson, 2016). In turn, acquisition of existing local businesses allows the enterprise to maintain managerial control while gaining from local knowledge of the market. Notably, a joint venture would be cheaper that an acquisition because the joint venture partners would share the capital input for the new enterprise, while the foreign company would have to foot the entire cost of acquiring the local company and setting up operations in the foreign market (Hitt, Ireland, & Hoskisson, 2016).

Overview of Organizational Activities

Walmart is likely to use the decentralized organization structure so that it can deliver products and services that are customized to the unique needs of the different Taiwanese consumers. Walmart has learnt its lessons from the failures in South Korea and Germany where it insisted of imposing certain products, service provision styles, and managerial behaviors into these markets (Geisler, 2012). Unfortunately, the customers in these countries did not accept Walmart’s brand and preferred local brands instead. Therefore, Walmart is likely to adopt operations that infuse the Taiwanese culture, social preferences, and shopping habits, which differ across urban areas and cities across the country.

Recommended Strategic Alliances

Walmart could partner with PX Mart or RT Mart, which are local retailing chains in Taiwan. PX Mart has established itself as a small store retailer and therefore has managed to penetrate many neighborhoods in Taiwan cities with its 975 stores across the country (Blazyte, 2020). Therefore, its numerous stores across Taiwan would help Walmart to penetrate the Taiwanese market of consumers that prefer physical shopping. Moreover, PX Mart would help Walmart navigate the political and legal environments in Taiwan, having been a state-owned enterprise. Contrastingly, RT Mart makes a suitable strategic partner because of its extensive use of retailing technology. Walmart could benefit from the translation of its online offering into Mandarin and Hakka, which are the languages most used in Taiwan. It would also help Walmart refurbish its website so that it confirms to the preferences of the Taiwanese consumers.

Financing sources for global business operations

Economic Conditions Affecting Financing Alternatives

The cost of real estate in the different cities in Taiwan would influence the entry costs for Walmart. Notably, shop space is much more expensive in Taipei, which is very congested, compared to other cities in Taiwan. Moreover, the Taiwanese prefer traveling by motorcycle than cars and therefore may not need large parking spaces outside stores. Therefore, the need for large stores, which are the hallmark of Walmart’s brand, may not be tenable in Taiwan due to the expensive rent.

However, the proposed entry mode can enable Walmart to access the stores of the strategic partner as a fair cost compared to buying them and setting them up from scratch.

Recommended financing actions for Walmart in Taiwan

Walmart can use its financial reserves to access the capital needed to start the Taiwanese operations. Alternatively, it can approach commercial financiers for the funds needed to enter into a joint venture or acquire a Taiwanese business. RT Mart’s owner, Sun Art Retail Group, has a market capitalization of about $15.4 billion and RT Mart is likely to be worth several billions as well, considering that it has 400 stores. Similarly, PX Mart with over 900 stores is also likely to be worth several million dollars.

Creation of a global management information system

Information needs

Walmart would require information about the Taiwanese consumers and their shipping behavior. Specifically, information on the average amount spent and the frequency of shopping among different Taiwanese population segments is needed. In addition, the proportion of the Taiwanese consumers who buy from physical stores and through online outlets, and the types of merchandise preferred, is necessary. Further, the wage levels and labor practices in the country would help the managers make decisions on store location, inventory, pricing, remuneration of workers, and value-added services that are best for the Taiwanese operations.

Information sources and technology

Walmart can obtain valuable information from the Ministry of Labor in Taiwan, Taiwan Confederation of Trade Unions (TCTU), and market survey studies. Some information can be obtained from the governmental agencies directly or from their publications, which are available online.

Identification of human resources for global business activities

Employment positions needed in Taiwan

Walmart would need a country manager to be in charge its Taiwanese operations. Store managers, supervisors, and attendants, along with staff for fulfilling and delivering orders to the customers will be engaged. The prominent skill requirements include an intimate knowledge in retailing in Taiwan, customer relations, and driving and riding for delivery of orders, and multilingual skills (English and Mandarin). However, most of these will be filled by the staff from the partner company in the joint venture or acquisition.

Training topics and methods

Training on the vision, mission, and values of Walmart, efficient order fulfilment, and handling customer requests and concerns will be conducted for three months intensively. It is expected that the staff will already have the rudiments of working in a busy retail environment, and therefore their skills will only require updating. Walmart staff will undergo an intensive six-month course in mandarin and Taiwanese culture, while the Taiwanese employees will take an English proficiency course at the same time.

Performance appraisal and compensation guidelines for the Taiwanese operations

Walmart will apply the international standards of performance appraisal and remuneration. A mixture of full time and part workers will be engaged, with local employees being encouraged to aspire for upward movement in the company hierarchy and become part of the management team based on skill and performance. Salaries and perks will conform to the Taiwanese standards, with the minimum wage and working conditions stipulated by the Ministry of Labor in the country being used as a reference.

Management of International Financial and Business Risks

The main risks that Walmart faces include the possible change of policy from the newly elected government, whose elections were conducted in January of 2020. The trade disputes between China and the United States and the antagonism between China and Taiwan are likely to create an unpredictable import environment for Walmart. In addition, exchange rate fluctuations between the new Taiwanese dollar and the United States dollar, alongside the Chinese renminbi may present challenges in cost of importation of products into Taiwan.

However, these risks can be reduced by continued engagement and negotiations with the Taiwanese government, considering that Walmart will be partnering with a local company that has enjoyed preferential treatment from the Taiwanese government.

Product and Target Market Planning

Product Concept

The product and service offering by Walmart will be based on low-priced high quality every day products. Since the primary goals of Walmart is to enhance the shopping experience to improve the living standards of people in Taiwan, the company will seek to increase the consumers process of accessing their everyday groceries and utility products conveniently and cheaply. In turn, Walmart hopes to become the store of choice to every Taiwanese shopper and family.

Branding and Packaging Activities

Walmart will use social marketing strategies to create awareness and generate electronic word-of-mouth (eWOM) among the Taiwanese consumers. In addition, the branding messages and packaging should be in local Mandarin and Makka languages alongside English to overcome the language barriers of the majority of the Taiwanese people. In addition, the online platform should conform to the preferences of consumers in Taiwan, including the use of colorful visuals, artificial intelligence to visit stores and view products virtually, and technology-assisted checkouts using several payment modes available in Taiwan.

Recommendations for Product and Service Adaptation

Walmart should integrate its online and physical stores to allow accurate comparison and choosing of products. Although Walmart will procure most of the products locally, it will also introduce foreign products and ensure that they are packaged in a familiar manner to the Taiwanese consumers. Moreover, the physical stores will be convenient for whoopers using motorcycles, which is the popular transport mode in the country. Specifically, shoppers should be able to order online and collect their shopping conveniently over drive-through motorcycle counters.

Design for a global distribution strategy

Infrastructure Assessment

Taiwan is a small country whose infrastructure is concentrated in the major cities in the north and west of the country. Although cars are not many in the country, the rapid transport system and motorcycles are popular are efficient modes of transport. Due to the high population concentration, transportation distances would be short. Besides, internet infrastructure is satisfactory to support e-commerce.

Trade Barriers

Although most merchandise would be sourced locally, imported products will be subjected to importation tariffs, with agricultural products being price-controlled. In addition, the high cost of land and rent will increase the cost of warehousing.

Recommendations for a Distribution Channel

Walmart should capitalize on the existing distribution network of the strategic partner. Notably, the company should use small vans and motorcycles to deliver shopping to customers as short distances are to be covered. Moreover, the company should have drive-through counters that allow online shoppers to collect their shopping on scooters. High-speed rail can be used to deliver orders to far-flung cities in the west and south, thus eliminating the need for many warehouses and fulfilment centers across the country, in preference for collection points.

Plan for a global promotion strategy

Promotional Goals

The main objectives of the marketing strategy are to raise awareness of the Walmart brand in Taiwan and attract customers to the physical and online stores. Besides, the promotion will position the brand as being culturally appropriate to Taiwan and being supported by local suppliers it enhance its acceptability in the country. In this respect, Walmart will be projected as a Taiwanese brand rather than an American one.

Environmental factors that might affect promotional messages and media

Since Taiwan is intent on promoting local industries and products, the promotional messages will be influenced by this policy. In addition, the purchasing power of the Taiwanese shoppers will influence the pricing messages while their preferences will impact the product messages as well.

Recommended Promotional Strategy

An aggressive social media campaign is recommended for Walmart in Taiwan, considering many people in the country use social media and have smartphones. This method can reach many people cost-effectively. In addition, out-of-home advertising across the cities will attract the attention of city dwellers in the country, who form the majority of the targeted population. Moreover, Walmart should hold an official launch event of the brand in the country, which should be accompanied by discounts and loyalty programs to entice shoppers. However, the promotional messages should be conducted in Mandarin and Hakka alongside English. These approaches will reach a large number of consumers in the shortest time possible, while leveraging the Taiwanese communication culture.

Determination of financial results

Walmart would obtain its revenues for the markups on the merchandise it will sell. These include the profit margins in the products and customer delivery.

Measurement of International Business Success

Walmart is a global retailer that seeks to spread the benefits of economics of scale and operational efficiency to its customers through low prices. In this respect, Walmart expects to make a decent return on investments by expanding into Taiwan, while consolidating its presence in the Asian market. In turn, Walmart will benefit the Taiwanese retail industry by injecting professionalism and growth, in addition to increasing competition. It will also contribute to the growth of the Taiwanese economy through the taxes it will pay and employment opportunities it will create.

Apart from providing employment to many Taiwanese, Walmart will improve the quality and experiences of shopping in the country. It will also allow local people to rise to the managerial level in the company, thus building their professional competence in the retail industry. Besides, the company will provide an outlet for local suppliers, comprising of manufacturers and farmers. However, the company will experience fierce competition from rivals, which might create conflicts related to its American origin. The presence of the company might escalate the tensions between Taiwan and china and the United States, which might come in form of increased trade barriers.

Conclusion

Walmart can enter the Taiwanese market successfully if it localizes its brand, products and service offerings to fit the Taiwanese culture and society. Taiwan is in East Asia and therefore has a different cultural orientation from the American one. In this respect, Walmart would fail if it insists in using its centralized approach as it did in South Korea and Germany. While the low-priced model is appropriate for Taiwan, considering that the society is rapidly urbanizing and is price-sensitive, Walmart will experience pricing-pressures from established retailers like Alibaba. Therefore, rather than compete against the large retailers in the country, it is advisable that Walmart partners with RT Mart and PX Mart through joint ventures to leverage their large footprint, numerous stores, and local labor. Moreover, Walmart should use social marketing and out-of-home advertising to popularize its localized brand to support its glocalization strategy. This way, the company will be accepted by the Taiwanese rather than being rejected as a foreign brand, which is responsible for its failures in other markets across the world.

References

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