Video: Target Pulling Stores Out of Canada [2:39 min]

There are a number of ways to enter global trade, so organizations must carefully select the most appropriate method of entering the world marketplace.

As explained in the text, a company has a variety of ways to enter global trade, including Exporting, Licensing and Franchising, Contract Manufacturing, Joint Ventures, and Direct Foreign Investment. Direct foreign investment is described in Section 3.5 as having at the same time both the greatest potential reward and risk of all the various methods to expand a business beyond the shores of the home country. One example provided of the potential risks in this Section was the failure of Walmart in Germany.

View the video link, below which reports on a similar failure of Target to expand from the USA to Canada. Compared to Walmart, which has over 6,000 stores outside the U.S., Target was new to global expansion since Canada was the first global location attempted. Evaluate the challenges Target faced related to those Walmart had to overcome in Germany that were described in Section 3.5.

In relation to difficulties in Germany such as legal limitations on operating hours, would you agree or disagree that entering Canada should have been easier for Target? After all, English is one of two official languages in Canada and is widely spoken, and transportation of inventory could be accomplished via truck or railroad, whereas Walmart needed to either use water or air methods to move products to Germany from the USA? After watching the video, and perhaps doing some additional research on your own, would you think that Target had lower risk expanding to Canada than Walmart’s direct investment in Germany?