ANALYZING FOREIGN MARKET ENTRY STRATEGIES: ThE CASE OF WAL-MART’S ENTRY INTO ThAILAND

The paper is devoted to foreign market entry strategies, particularly, studying the case of the entry of the US company Wall-Mart – the world leader in wholesale and retail trade – into the Thailand market. In terms of globalization, many firms are trying to expand their business by entering foreign markets which determines the relevance of the study. That brings many social and economic benefits. However, the process is related with big risks which requires developing proper strategies for business success. In the research it is analyzed the external business environment, and causes why Wall-Mart has decided to enter the Thailand market, taking into account macroeconomic characteristics, growing domestic consumer demand, purchasing trend, as well as positive forecasts of sales growth in the overall retail sector. Moreover, the entry modes of Wal-Mart entering the Thai market are considered. It is performed the risk assessment and risk management strategies developed, accordingly. The importance for international businesses to conduct an in-depth external business environmental and risk analysis is proved before entering into other markets, as it provides insightful information about the features of the host country, its culture, knowledge of the local market and consumer needs, competitive business strategies and etc.


Introduction
The Wal-Mart Incorporation is an American based multinational retail corporation, headquartered in Bentonville, Arkansas. It is currently operating in 28 countries, with approximately 11,600 stores worldwide. 'Everyday low prices' strategy has helped Wal-Mart in achieving success on a global scale. Wal-Mart is continuously expanding chain of supermarkets, hypermarkets, discount-department, and grocery stores in different European and Asian markets. It is also operating e-commerce channels in almost 11 countries. It has successfully sustained retail and wholesale businesses in many countries outside the US, which include China, the United Kingdom, India, Canada, and Japan. However, its operations failed in Germany, Brazil, and South Korea [1].

Main Provisions
Main Provisions of the given article are based on the analysis of foreign market entry strategies conducted, particularly, studying the case of the entry of the US company Wall-Mart. Thus, it is reflected in the key research results divided in two parts: the country industry and entry mode analysis (US and Thailand), the external business environmental analysis and risk assessment and management plan, accordingly.

Materials and methods
The research methodology of this paper is based on conducting the comparative analysis of existing patterns of macroeconomic development, political and social issues in the context of foreign market entry strategies, particularly the US and Thailand, considering the case of Wal-Mart entry into Thailand. It is implemented PESTEL analysis, defined the features of external business environment. Based on the PESTEL, the risk identification, risk assessment and risk management analysis conducted, as well as the causes and consequences analysis, and expert assessment.
The risk assessment, risk management and mitigation strategies have been developed based on indepth processing materials and respectful international research, macroeconomic and statistical data bases including Trade Economics, Reuters, World Bank, IMD and TMF group reports and etc.

Results
In this section it is included analysis of the US retail industry, analysis of entry modes and their motives and reasons. It is studied the features of external environment, and risk assessment and risk management, respectively.
Analyzing the US retail industry, the US retail chains comprising convenience stores, supermarkets, and hypermarkets are continuously expanding their global reach across the world. As per the 'Global Powers of Retailing' report in 2015, there are 76 largest retail corporations in the world that are based in the United States. Analysts estimate that the retail industry contributes two-third of GDP (gross domestic product) in the US economy. There are several retail giant leaders in the US retail industry, among which Wal-Mart is considered as one of the most valuable retail leaders. Other largest retail companies are Amazon, Target, The Kroger Co., J.C. Penny, and Costco, which shows that there is fierce competition in the domestic retail industry of the United States [2]. The overall U.S retail industry' success is also dependent on the online retail segment. As per analysts, total retail sales in the United States from the year 2012 to 2023 can be analyzed in the below graph (see Figure 1). The above statistics showed that total US retail sales have significantly increased to 5.46 trillion dollars in the year 2019 from 4.35 trillion dollars in the year 2012. Moreover, according to the analysts forecast, it is projected from the ongoing sales trend that retail sales can be further increased to 5.99 trillion dollars by 2023 [3]. It can be concluded that U.S retail companies can strengthen their international presence in upcoming years if they continue to meet consumer demands across the world by focusing on effective growth and expansion strategies.
Regarding the motives for Wal-Mart to have the proposed international engagement, it should be mentioned several possible motives for Wal-Mart to have more international engagements. Firstly, Wal-Mart is facing fierce competition from its competitors, and its growth process of internationalization is slower than other retail brands worldwide. Its competitors in the home country (Target Corporation and Costco) and in Germany (Aldi and Lidl) have started offering a wide range of products through digital channels, and they are continuously developing effective retail strategies to attract a broad range of customers. Online retailing is capturing share in the retail industry day by day, and companies are now using more online retail platforms to meet changing consumer needs. Although Wal-Mart has started partnering with digital brands like Jet.com and Bonobos to sustain competitive positioning, it is still facing tough competition in its home country because of Amazon's huge e-commerce platform for online retailing, which compels it to explore other growth opportunities that may include entering in new markets [4].
Secondly, ongoing trade wars and conflicts between the US and China are also impacting Wal-Mart's overall retail sales as its revenue's one major portion comes from the Chinese region. Wal-Mart's international-segment sale is declining over the past four to five years due to fierce competition and tensed international relations between countries. Analysts reported that Wal-Mart's international sales have dropped in third and fourth quarters by 2.3% in the year 2019 due to currency fluctuation and de-consolidation of operations in Brazil [4; p.12]. Wal-Mart's 'everyday low prices' and 'onestop-shop' strategies didn't work well in the Brazilian market, which led Wal-Mart to sell its 80% stake to private equity firm Advent International. However, this strategy worked well in the Indian market, which suggests Wal-Mart exploits other Asian markets by adopting a similar strategy. Thirdly, Wal-Mart can't further penetrate in its existing markets as it has already saturated most of its present markets domestically and internationally. All these factors can drive Wal-Mart to look for other markets that have high growth potential.
Speaking about reasons to enter Thailand, to fully exploit growth opportunities, Wal-Mart should opt for the Thailand market due to its high consumer purchasing power. In South-East Asia, Thailand is considered one of the most economically-stable countries. People in Thailand are inclined towards shopping at chain convenience stores, supermarkets, hypermarkets, and large scale shopping centers. An increasing number of tourists in Thailand are contributing a major part in the consumption of retail goods. Tourists' heavy expenditure on retail items has attracted many local and international retailers to invest in the Thai market. As per analysts, a significant rise in the number of supermarkets in  From the graphs above, it can be concluded that there is an increasing demand of consumers for retail goods in Thailand due to which domestic and international retailers have continued to increase retail chains supermarkets and hypermarkets. This also shows that the Thai retail sector has fierce competition. According to analysts' forecast, Thailand retail sale is projected to grow by 6.10% in 2021 [5]. The discussed findings and forecasts of analysts show huge growth potential for international retailers like Wal-Mart in the Thai retail industry.
As a next step of the research results, the PESTEL External environment analysis of Thailand Retail Industry is presented in Table 1 below. Thailand scored 25 th position in the world's largest economies. The nominal GDP rate has increased to $140.2 Billion in the 4 th Qtr of 2019 from $137.8 Billion in the 3 rd Qtr of 2019 and is projected to grow further in the future. As per the World Bank report (2019), the rapid shift from lower-income to the upper-income country has been observed in Thailand due to economic development. The lower unemployment rate was reported in Thailand at 0.90% in 2019. The growth rate of the Thai economy has been temporarily slowed down due to lowering exports and increasing trade conflicts between the US and China. Thailand's currency (Baht) volatility can pose a threat to retail investors like Wal-Mart.
The total Thai population has increased by 0.28%, i.e., from 69.4 Million (2018) to 69.6 Million (2019), which is a positive indication of an increase in domestic demand. The rapid change in consumers' behaviour is observed in recent years as people are now more likely to spend on luxury items. Thai people are mostly seen as brand-conscious, which can benefit Wal-Mart due to its strong brand reputation. Based on the PESTEL analysis provided, defining the features of external business environment, it is moving to the next part of the given research, regarding risk identification, risk assessment and risk management plan, respectively.
The successful operations in Thailand require Wal-Mart to firstly conduct a detailed risk assessment and devise mitigation strategies for each identified risk so that it could avoid failure due to some unexpected circumstances.
Thus, in Table 2 below, it is presented the types of risks identified, their description provided, risk intensity assessed, and the risk management strategies proposed those could be implemented, in terms of mitigation possibility.

Moderate
Political risk cannot be controlled. However, Wal-Mart can somehow reduce its effect by increasing its readiness towards operating in an uncertain environment and making a contingency plan to cope with unexpected situations.

Economic-Taxation
The Thai government is likely to increase the taxation burden that may affect customer spending. An increase in corporate tax in the future can also affect Wal-Mart's profitability.

Low
Wal-Mart should try to control this risk by minimizing its costs so that lower prices could be charged if consumer spending declines. Some business practices could be standardized to avail the economies of scale. Lower costs will also reduce the effect of the increase in corporate taxation. Note -Source -Compiled by authors.

Discussion
In addition, in the discussion section, it is interesting to consider possibilities for entry modes within Thai grocery retail industry. Multinational companies consider various entry modes to enter into other countries, which include contractual and investment modes. In the case of Wal-Mart entry in the Thai retail industry, contractual modes are not preferable as they are relatively less profitable as compared to investment modes. Other issues include franchisee/ licensee's lack of international experience and high risk of disloyalty. While investment modes are more profitable and can help in building a strong image in the local market [6]. Amongst investment modes, Wal-Mart is suggested to choose joint-venture as Thailand's institutional and cultural environment is significantly different from the US, due to which Wal-Mart has inadequate knowledge of the local Thai market. Wal-Mart can also face tough competition from local and international retail companies like Tesco Lotus and Big C that have captured huge market share in the Thai market.
In order to handle this competition and increase local market knowledge, Wal-Mart should make a joint venture with Big C or any other strong local player. Joint venture mode will allow Wal-Mart to share risks and benefit from its partner's extensive local market knowledge. The combined knowledge of both Wal-Mart and local partners would ultimately boost the synergy effect. A wholly-owned subsidiary is less preferable in the short run due to-high risk, high entry cost, and comprehensive procedure for registration. But, after successfully gaining extensive knowledge and exposure to the Thai market, Wal-Mart can shift to Wholly-owned subsidiary mode.

Conclusion
The purpose of this paper is to consider how an international business like Wal-Mart can successfully enter into other countries such as Thailand, and what factors should be considered before going to have international engagements. The overall analysis revealed that Wal-Mart is facing tough competition from its competitors worldwide, and to handle this competition, Wal-Mart needs to pursue more internationalization. Wal-Mart should concentrate on the Asian region and choose Thailand for its rapid growth and expansion. It is suggested that Wal-Mart should opt for joint-venture entry mode as it can help in gaining cultural knowledge and get exposure to the local retail market and consumption patterns. External environmental and risk analysis of the Thai retail market showed that Wal-Mart can face several potential risks, which include control, culture, expropriation, legal, political, currency volatility, and currency inconvertibility. It is, therefore, important for Wal-Mart to make effective risk mitigation strategies to successfully operate in the Thai market.