Walmart Expansion to Thailand

Walmart Expansion to Thailand

Introduction

Walmart Incorporation is an American global retail company that operates a chain of grocery stores, discount department stores, and hypermarkets in different parts of the world (Carbonara, 2018). The company’s corporate strategy includes expansion in global markets and markets in the United States, controlling the retail market, branching out into new sectors in the retail industry, and creating positive company and brand recognition. The company is currently expanding to regions outside North America to increase profitability due to existing claims that it may not be successful in operating in American markets. Wilbert (2006) argues that the company may not be suitable for the American economy because it drives other companies in the retail industry out of business and forces manufacturers to move jobs to external markets to maintain low prices. One of the regions the company could consider in its global expansion is Thailand. Thailand is among the most economically successful countries in Southeast Asia, and thriving local businesses and modern retailers dominate the country’s streets. The retail industry in Thailand is also constantly changing and improving to respond to the increasing demand from consumers, for which convenience is an important factor.

Thailand’s Demographic and Economic Data

Thailand has a population of over 69 million residents. The population includes both young and elderly residents with a median age of 39 years. By December 2021, the country had a population of 11.7 million residents aged 15 years and above which was the highest population compared to residents from other age groups. During the past two decades, the country has been one of the most successful countries in reducing the fertility rate within a short time. The total fertility rate has reduced from more than six births per woman in the mid-1960s to less than two in the mid-1990s (Tuljapurkar et al., 2006). The country’s life expectancy at birth has also increased over the decade to an average of 74.9 years for females and 69.9 years for males. The current population of residents in the country is 38.63 million, with most workers being below 35 years old. Around 800,000 people are added to the workforce annually. Many standard labor practices regulate the workforce, including mandatory overtime payments and compensation packages. The minimum wage is currently 313 baht daily. A report prepared by the Thailand Board of Investment (2017) indicates that its workforce is among the most efficient globally because they have earned a reputation for adaptability and diligence. Most people in the workforce are educated, and the company’s literacy rate is also high due to the increased emphasis on education.

Thailand has the best economy in South East Asia. The economy is dependent on exports (Bangkok Post Public Company Limited, 2022). The county has also successfully changed its economy from agriculture to manufacturing goods for export while integrating primary manufacturing production into the regional value chain, especially in electronics and automobiles. The country has also established a regional hub for major logistics and transport with an excellent airport. In contrast, its economic foundation has been diversified in health care, tourism, and other services. The main sectors in Thailand’s gross domestic product are the service and industrial sectors, with the industrial sector accounting for 39.2%. The country’s agricultural sector contributes to 8.4% of the gross domestic product, which is lower than the logistics, trade and communications industries, accounting for 9.8% and 13.4% of the gross domestic product, respectively (Thailand Development Research Institute, 2022). The mining and construction sector contributes to 4.3% of Thailand’s gross domestic product, and other service sectors represent 24.9% of the gross domestic product. The emerging sectors gaining economic competitiveness and industrial expansion are the trade-in and telecommunications sectors.

Thailand’s economy is anticipated to continue growing, with an average growth rate of 3.5%. The economic growth is being attributed to the recovery of purchasing power and business activities as long as there are no extended lockdowns from the COVID-19 pandemic. Consumption spending is also expected to increase as the country continues recovering from the Covid-19 disruptions. Exports to major markets such as China, the United States, Japan, and the European Union will continue growing from last year as the demand from these countries gradually recovers from COVID-19. Private investment is anticipated to continue increasing his year with anticipated external and domestic demand recovery. Investment from foreign and local companies has also gradually rebounded, with the main sources of foreign direct investment resulting from the relocation of non-Chinese and Chinese companies from China, especially in the electronics, automotive and digital information cloud services (Thailand Development Research Institute, 2022). Various companies have also formed joint ventures with Thailand companies to manufacture bio-products and promote investment. Thailand’s government is also creating favorable regulations to attract foreign investors, thus creating opportunities for Walmart.

Walmart Leadership About the Country’s Culture Based Upon the GLOBE’s Nine Dimensions of Culture

Venturing into Thailand’s retail sector requires understanding Thai culture to create a good relationship with customers and important stakeholders in the business environment. Thailand’s culture is strongly connected to the Buddhist religion. The leaders should consider the country’s power distance, human orientation, uncertainty avoidance, performance orientation, future orientation, assertiveness, and collectivism. Thailand has a high power distance. According to Newburry (2013), power distance is the extent to which people in an organization consider the distribution of power to higher levels. The people from Thailand do not like power distance, and this is attributed to a long political history of practicing monarchy. The country has a medium score in uncertainty avoidance, indicating that the people in the country prefer long-term planning before implementing decisions. Uncertainty is defined as the extent to which people in an organization focus on avoiding uncertainty by relying on and looking for established norms to ease the unpredictability of future occasions. The country has a high score in human orientation because the people prefer helpfulness and kindness and ensure that their values are well-matched to how it is. According to Patel (2013), human orientation is the extent to which people within an organization encourage people in their environment because of their kindness or friendliness. Thailand has a low score in future orientations because people do not focus on planning future activities such as investing. Thailand also has a high score in performance orientation due to its high sympathy levels and often uses indirect language. Thailand also has a high score in institutional collectivism because they prioritize shared goals over individual goals. Triandis (2018) defines collectivism as the extent to which societal and organizational practices reward and encourage the collective distribution of resources and coordinated action. Thailand also has a high score in-group collectivism, characterized by valuing friends, family, and group relations. The country has a low score on assertiveness because the people do not prefer relations to be dominant and assertive. Biggs et al. (2019) define assertiveness as the extent to which people tend to act defensively and aggressively in relation to other people and their environment.

Based on GLOBE’s nine dimensions of culture, the best leadership style that Walmart should use in Thailand is the charismatic leadership style. This leadership style aligns with the cultural values of the Tai people because it emphasizes self-sacrificing, vision, inspiration, and integrity. According to (bb), charismatic leadership is the ability to motivate, inspire and anticipate high performance outcomes from other people based on core values in an organization. The main cultural values that leaders should consider in applying the charismatic leadership style are being patient, sacrificial, and honest with a positive attitude for the public’s common good, maintaining well-wishes and integrity upon others, and being sharing and generous and putting the national and public interest before personal interest. The charismatic leadership style also supports collaboration, thus reducing power distance and encouraging human orientation and performance orientation. Thai culture is also characterized by emphasizing community support and promoting loyalty. Charismatic leaders can use their charm, persuasiveness, and commutation skills to encourage others to work together to meet shared organizational goals. The organization may also consider a transformational leadership style at the initial stages of entering the Thailand market to understand the new market better and succeed. According to Northouse (2019), transformational leadership includes engaging with others and creating connections that increase morality and motivation in both the follower and leader. Walmart could motivate employees in Thailand to effectively complete tasks assigned to them to increase their success by adhering to required ethical procedures.

How Walmart’s Leadership Skills and Practices May Lead to Organizational Success

Research conducted by Yukongdi (2010) indicated that Thai workers and employees prefer leaders who are mindful of their feelings. They also prefer leaders who understand their cultural attributes, such as being paternalistic and benevolent, because they are consistent with the power distance and family-oriented behavior. Participative, team-oriented, and charismatic leaders are the most effective for organizations in Thailand. They can increase their organizational success by delegating responsibilities based on an employee’s strengths and weaknesses. Charismatic leadership can also effectively increase organizational success by creating open ideas and innovations from different sources and allowing every employee to contribute to decision-making. Thailand has also been at the forefront of promoting accountability and transparency to gain organizational effectiveness and stability. The government stresses establishing coordination and sharing relayed information with groups and individuals involved within organizations. Therefore, employees are likely to be loyal to a leader they can respect based on their appropriate actions and personality. The actions include non-aggressiveness and kindness. Leaders should thus focus on being open, transparent, and aware of inappropriate actions that could limit employee morale. Walmart should consider using a transformational leadership style to inspire, motivate and encourage employees to innovate and initiate change to help the company fit in and become successful in the new market. Transformational leadership will also effectively reduce resistance to change, especially for employees moving from other Walmart branches in other parts of the world to Thailand.

Walmart leaders’ main leadership skills to enhance organizational success in Thailand are interpersonal skills, self-awareness, social skills, communication skills, social competence, and self-regulation. Self-awareness includes emotional awareness characterized by recognizing emotions and how they affect the people around you, precise self-assessment, being aware of individual strengths and weaknesses, self-confidence, and a strong sense of individual capabilities and self-worth. Social skills include adeptness, including responding to others appropriately. It is characterized by good conflict management, initiating change, encouraging collaboration, and good leadership skills. Social competence includes how an individual handles relationships with others. It is characterized by being aware of other people’s feelings, empathy, and leveraging diversity. Self-regulation includes managing individual internal impulses, internal states, and resources, including trustworthiness, self-control, adaptability, conscientiousness, and innovation.

A Model of Cultural and Ethical Leadership as It Applies to Walmart at a Global Level

Walmart’s success in Thailand is dependent on maintaining a good reputation. One of the things that could affect the company’s reputation is unethical conduct. Therefore, Walmart needs to formulate a solid ethical and cultural leadership model. To begin with, the company needs to train its employees in Thai culture to ensure that they understand the cultural values of the customers in the country. Cultural awareness is also vital in maintaining good employee relations, thus contributing to good organizational performance. The training program also needs to include various cultural issues that may arise in the organization and how to deal with them without publicizing the issue because that would affect the organization’s reputation and create conflict with authorities, resulting in fines. Walmart should also ensure that the board of directors in charge of overseeing operations in the organization includes people from Thai culture to advise on operations within the organization to avoid cultural issues. Walmart should also create a communication model to facilitate communication among all employees in all branches worldwide for effective coordination in meeting shared organizational goals.

One of the critical steps that Walmart should take to create ethical compliance when operating in Thailand is setting policies and procedures that regulate employee conduct to prevent unethical conduct. The policies and procedures should include measures to punish any employee found acting unethically. The company also needs to ensure that every employee understands these policies and procedures by including them in the employee handbook. They should also be reviewed regularly to ensure that they align with the changes in the business environment. Despite their rank in the organization, every employee should follow the policies and procedures. Walmart should also create an ethics committee to review all complaints relating to unethical practices. The ethics committee should also be in charge of responding to any ethical complaints made against the company and monitoring the activities of top leaders, such as employee hiring and promotion, to ensure that the leaders do not misuse their position. Walmart should also train employees on ethical business conduct and common ethical dilemmas that they should be aware of when operating in Thailand.

Conclusion

Walmart has established a top position in the retail industry despite the stiff competition in the retail sector. The company is considering expansion to global markets to gain dominance in the retail sector and increase its competitive advantage. Thailand is an ideal market for Walmart in its global expansion endeavors due to its promising economic growth. The main economic factors that could favor the company’s growth in Thailand are the increasing purchasing power of the residents and favorable government policies encouraging private and public companies from other parts of the world to increase foreign direct investment. The success of Walmart in Thailand is also dependent on good leadership. One of the most important things that the company’s leaders should consider is understanding Thai culture and ensuring that the employees understand the resident’s cultural values. The leadership style also needs to be aligned with the most important cultural values. An ideal leadership style based on evaluating the company’s culture using GLOBE’s nine dimensions of culture is the charismatic leadership style because it accommodates integrity, collaboration, vision, and self-sacrificing. Walmart also needs to consider a transformational leadership style to encourage sharing ideas between employees from other countries and those from Thailand, hence promoting organizational success. Walmart also needs to create a cultural and ethical model to maintain a good reputation. The model should include clearly outlined policies and procedures, an ethics committee, training employees on ethical conduct and Thai culture, and including locals in the board of directors to maintain adherence to cultural values and standards.

References

Bangkok Post Public Company Limited. (2022, January 12). Thai economy to see uptick in 2022. https://www.bangkokpost.com. https://www.bangkokpost.com/opinion/opinion/2246063/thai-economy-to-see-uptick-in-2022

Biggs, H. P., Bussen, T., & Ramsey, L. (2019). Assertiveness. Shaping the Global Leader, 134-143. https://doi.org/10.4324/9780429275296-10

Carbonara, P. (2018). Walmart, Amazon Top World’s Largest Retail Companies. Forbes. https://www.forbes.com/sites/petercarbonara/2018/06/06/worlds-largest-retail-companies-2018/?sh=6e69b013e66a

Newburry, W. (2013). Hofstedes cultural dimensions. Management. https://doi.org/10.1093/obo/9780199846740-0069

Northouse, P. G. (2019). Chapter 16: Culture and Leadership. In Leadership: Theory and practice (8th ed.). SAGE Publications.

Patel, T. (2013). Cross-cultural management: A transactional approach. Routledge.

Thailand Board of Investment. (2017). ○ BOI: The board of investment of Thailand. https://www.boi.go.th/index.php?page=demographic

Thailand Development Research Institute. (2022). หน้าแรก – TDRI: Thailand Development Research Institute. https://tdri.or.th/en/2022/01/thai-economy-to-see-uptick-in-2022/

Triandis, H. C. (2018). Attributes of individualism and collectivism. Individualism and Collectivism, 43-80. https://doi.org/10.4324/9780429499845-3

Tuljapurkar, S., Pool, I., & Prachuabmoh, V. (2006). Population, resources and development: Riding the age waves – Volume 1. Springer Science & Business Media.

Wilbert, C. (2006, April 26). How Wal-Mart works. HowStuffWorks. https://money.howstuffworks.com/wal-mart.htm

Yukongdi, V. (2010). A study of Thai employees’ preferred leadership style. Asia Pacific Business Review, 16(1-2), 161-181. https://doi.org/10.1080/13602380903168962

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Prior to beginning work on this assignment,

Watch the Week 6 Assignment video above with Dr. Williams Woods of the Forbes School of Business and Technology.
Read the Walmart Expands Again in India—But Still Not Able to Open Consumer Stores to Consumer Detriment (Links to an external site.) article.
Read Chapter 16.1 in Northouse and review the GLOBE’s nine dimensions of culture located in the same chapter of your course text.
Read the MBA Program Case Study.
Review the Walmart Case Study interactive below.

In the first half of the assignment, you will prepare for Walmart to operate in a foreign market. You will need to analyze at least two leadership models and/or styles to determine which one will be more suitable for leading employees and for responding to stakeholders in a country outside of North America. Determine the leadership competencies that would be beneficial to you as a leader in the selected foreign market. You will choose either Peru, New Zealand, the Philippines, Egypt, the Czech Republic, or the United Arab Emirates for your analysis. You will also need to compare the concepts of cultural leadership according to how they can be applied in the country that you have selected. You must also determine the leadership skills and practices that should be used in order to foster team and organizational success.

In the second half of the assignment, you will conduct an analysis of the country that you have decided to expand operations into. The analysis must include the rationale for country selection based on demographic and economic data. Lastly, the analysis should inform leadership about the country’s culture based on GLOBE’s nine dimensions of culture, as argued in Northouse (2018). Incorporate each of the nine dimensions of culture in an analysis that will be hypothetically presented to Walmart leadership. When utilizing the nine dimensions, current information about the culture of the selected country must be utilized. The purpose of this preliminary analysis is to make sure that the leadership team understands the complexities of expanding into the country that you have selected. The paper should be eight to ten double-spaced pages and include five scholarly references.

In your paper,

Analyze the demographic and economic data of a country that Walmart is currently not operating in.
Conduct an analysis for Walmart leadership about the country’s culture based upon the GLOBE’s nine dimensions of culture.
Explain how Walmart’s leadership skills and practices may lead to organizational success.
Formulate a model of cultural and ethical leadership as it applies to Walmart at a global level.