Case Study Walmart In Germany

1. Why Walmart engaged in globalisation strategies and risks associated with such moves

Reasons

• Facing a major slowdown in growth in the United States and sales started stabilizing.

• Walmart needed high levels of growth to continue to survive.

• Walmart thought High levels of growth possible only through globalization.

• Domestic markets moving towards saturation

• Domestic market (US) accounts for a small percentage of world’s population.

• Walmart perception was discount retailing is essential for the developing economies and hence they achieve the double digit growth rates

Advantages

• Leverage local buying power with US based MNC’s.

• Utilize competencies of efficient store management, technology & logistics.

When Walmart expanded

Using appropriate theories critically analyse the role of culture in International Business. Support your answer by quoting relevant examples from the case study.

The reasons behind the failure of Walmart in Germany. Major issue was culture-related issues with country. Firstly, some of the American employee management practices just didn’t fit in the German context. For example, each employee before the shift had to participate in a morning exercise. If in America such practice could be used to boost morale and inspire loyalty, then in Germany it was looked upon with annoyance, to put it mildly. Secondly, Walmart’s ethical code caused much frustration as well. For example, the practice of actually spying on your co-workers and reporting any misconduct may be acceptable in the U.S. However, in Germany it is not the case. Thirdly, the feedback of the employees was ignored. Top management apparently didn’t listen to anything the lower employees and subordinates had to say. The second set of factors is related to the lack of analyses of the local market and the specifics of local customers’ demands. Firstly, store merchandising was wrong. Walmart put all premium products at eye level, while all the discount products were stored either at the bottom shelve or on the top one. This irritated German customers a lot. Secondly, as strange as it sounds, habits of the average German customer weren’t taken into account. Germans are known to be efficient and spend as little time in the shops as possible. However, Walmart’s stalls were placed in such a way that the customer will have to spend more time shop. In Mexico particularly items like meat, tortillas and pan Dulce which didn’t keep well overnight (many Mexicans lacked large refrigerators). Many consumers also lacked cars, and did not buy in large volumes as consumers in the United States