Entry of Wal-Mart into South Africa : a stakeholder management perspective

Abstract

The growing importance of emerging markets in the global economy leads many multinationals (MNEs) to explore and expand into them. Saturation and slow growth in home markets, coupled with rising incomes in emerging markets, has also accelerated retail internationalisation. These markets are generally unfamiliar to the predominantly western firms, and they come with intractable social problems, where resultant stakeholder activism abounds.The purpose of this study was to investigate stakeholder management during entry of a retailer, Wal-Mart, into an emerging market, South Africa, in order to draw lessons that could be of use to other MNEs seeking to enter similar emerging markets. The method used for the study was a qualitative archival analysis that relied on publicly available sources, namely the regulatory bodies, parliament, press releases and the print media.The research found that the key stakeholders during the entry of Wal-Mart into South Africa were the government and trade unions. Government and trade unions were concerned that Wal-Mart’s entry would lead to an increase in imports and displace local producers, in turn worsening South Africa’s unemployment crisis. It was also feared that Wal-Mart would seek to change the existing labour regime in order to marginalise trade unions and lower labour standards. The research found that stakeholder management was poor and highlights the importance of integrating stakeholder management strategy into the broader entry strategy into developing markets.