Discuss how comparative analysis, trade restrictions, tariffs, and exchange rates of your chosen country will impact the decision to expand. You need to take these macroeconomic concepts and apply them directly to the Walmart expansion decision.
The Czech Republic is the country I chose for my Walmart case study. For enterprises wishing to expand into the Czech Republic, there are few trade impediments. The Czech Republic is part of the European Union’s customs union. The Czech Republic has an open economy with low trade and investment obstacles. Because the country is a member of the European Union, its tariffs, standards, and many other procedures must adhere to EU guidelines. Tariffs will not be an issue for Walmart, and they will aid in the company’s ability to maintain its cheap prices. “Most imports from non-EU nations are subject to duty rates ranging from zero to fifteen percent, with an average rate of roughly five percent” (Australian Government, 2021, pp. 3).
Every item brought into the nation must be declared at the customs office.
Walmart will need to ensure that they are well-versed in EU legislation, standards, and regulations. However, Walmart should not face too much opposition when it comes to imports and exports. The currency rate is reasonable. One Czech Koruna is equal to 0.046 US Dollars. Walmart, on the other hand, will have to plan for market swings and how they might both assist and hinder the company financially. “The Czech crown (CZK) is entirely convertible, and goods trade is unaffected by foreign exchange regulations” (International Trade Administration, 2019, pp. 1). Foreign cash is freely available to companies operating in the country, and the banking system has never failed to provide hard currency on demand. Overall, the expansion has a good chance of succeeding, but it will take time and thought, as with any significant business move.
Considering the topics you have studied throughout this course, what other economic factors may impact the decision to expand?
The country’s overall economic health is another economic aspect that should influence Walmart’s choice to grow into the Czech Republic. According to the 2021 index, the Czech Republic is the 27th most free country. “The Czech Republic is placed 14th out of 45 countries in Europe, with an overall score that is higher than the regional and global averages” (Heritage, 2021, pp. 1). According to the data, the Czech Republic has a solid economy that is still growing.
Australian Government. (2021). Doing business – Tariffs and regulations Czech Republic for Australian exporters. Austrade. https://www.austrade.gov.au/australian/export/exportmarkets/countries/czech- republic/doing-business/tariffs-and-regulations
Heritage. (2021). Czech Republic Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. Heritage.Com. https://www.heritage.org/index/country/czechrepublic
International Trade Administration. (2019). Czech Republic – Foreign Exchange Controls. International Trade Administration | Trade.Gov. https://www.trade.gov/knowledge-product/czech-republic-foreign- exchange-controls