Wal-Mart in Africa

Wal-Mart in Africa
Case Code: BSTR428
Case Length: 15 Pages
Period: 2011-2012
Pub Date: 2013
Teaching Note: Available
Price: Rs.400
Organization: Wal-Mart
Industry: Retail
Countries: Africa
Themes: Globalization, International Business, Emerging Markets
Wal-Mart in Africa
Abstract Case Intro 1 Case Intro 2 Excerpts


On March 9, 2012, the Competition Appeal Court of South Africa ruled that US-based Wal-Mart Stores, Inc. (Wal-Mart), the world's biggest retailer, could go ahead with its US$ 2.4 billion purchase of stake in the South African retailer Massmart Holdings Limited (Massmart). By ruling in favor of the deal, the Competition Appeal Court upheld the 2011 ruling of South Africa's Competition Tribunal . Wal-Mart had started expanding into international markets in 1991. It experienced successes in international markets such as Mexico and bitter failure in markets such as Germany and South Korea.

The financial crisis of 2008 resulted in Wal-Mart putting even more emphasis on the international markets to fuel its growth as there were limited growth opportunities in the domestic sector. Wal-Mart started to focus on Africa as other markets with good potential like India were still closed to foreign players. Africa remained the last major market yet to be explored by big MNCs like Wal-Mart. Despite political instability and poor economic conditions plaguing the continent, some countries in Africa offered good potential for growth due to their stable political environment and rising disposable incomes.

Wal-Mart decided to expand its presence in Africa in the inorganic way and made a preliminary offer to buy South African Retailer, Massmart. Massmart was the second biggest retailer in South Africa and its operations were spread across many African countries. Wal-Mart's offer was accepted by Massmart's shareholders and South Africa's Competition Tribunal in June 2011. The deal was cleared with some conditions. But Wal-Mart quickly ran into trouble as the deal was opposed by some trade unions and government departments of South Africa. The coalition which was opposing the deal alleged that WM's entry would lead to huge job losses and adversely affect the domestic manufacturing sector of South Africa. Wal-Mart refuted the allegations and said that it was willing to create 15,000 new jobs within three years of the takeover...

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