Wal-Mart de MexicoComercial Mexicana SA (Comerci), one of Mexico's largest retail chains, found itself faced with a serious dilemma. Since Wal-Mart's aggressive entry into the Mexican retail market, Comerci has found it increasingly difficult to remain competitive. Wal-Mart's strong operational presence and low prices since the abolition of NAFTA tariffs have put pressure on Comerci, and now management must decide whether it can improve Comerci's competitive position by remaining independent or merging with a local or foreign retailer. This raises a question that needs to be answered: what has caused this intense competitive pressure on Comerci and what is its future likely to be? The retail sector in Mexico has benefited greatly from the government's increasing trade liberalization. After decades of protectionism, Mexico joined the GATT in 1986 to help open its economy to new markets. In 1990, with the Mexican economy recovering and further free trade negotiations with the United States and Canada underway, Wal-Mart founder Sam Walton met with the president of Cifra, Mexico's leading retail store. Their meeting led to a 50/50 joint venture that led to the opening of Mexico's first Sam's Clubs, a subsidiary of Wal-Mart, in 1991 in Mexico City. It only took a couple of months after opening to demonstrate the success of the store. Sam's Club in Mexico City began breaking all U.S. records for Sam's Club. The joint venture evolved to incorporate all new stores, and in 1997 Wal-Mart purchased enough stock to have a controlling interest in Cifra . In 2000, it changed its name to Wal-Mart de Mexico, SA de CV and its stock symbol to WALMEX. Before 1990, Wal-Mart had never made moves to enter Mexico or any other country... ...customers are so angry that they have gone to Mexico's Federal Competition Commission with complaints of unfair pricing practices. Unable to compete with Wal-Mart using its current strategy, Comerci faces extinction. In 2001, Comerci's sales at new stores fell 3.3 percent and Wal-Mart's sales increased 5.7 percent. Wal-Mart is the largest retailer in Mexico and has approximately 50% of the market share in the Mexican supermarket sector. Comerci can look for possible foreign buyers, such as France's Carrefour, or it can turn to suppliers and make another attempt to obtain lower prices. The government could give Comerci a break if it speaks out against Wal-Mart's aggressive pricing. Comerci could continue to lose its customers if something doesn't change. Bibliographywww.walmartstores.comwww.wright.edu/~tdung/Walmart_in_mexicowww.shibuimarkets.com/company/walmart_de_mexico