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Case “Wal-Mart in Europe”

The main challenges faced by Wal-Mart in Germany are:

Germany has a strict planning and zoning regulation designed to
protect traditional retailers. This planning legislation prohibited the
construction of stores with more than 800m2 sales area in locations
not designated for retailing
The Law prohibited any retailer from selling a product more than 5
percent below its posted price, only that policy would be legal if WalMart lowered the cost of the product for everyone at the time of the
first claim.
Germany has no legal minimum wage. Wage levels are set instead
through a process of "coordinated" bargaining, in which state-level
retail unions negotiate with employers' associations over the terms of
employment contracts. Retailers who are members of the employers'
associations are bound to the negotiated wages.
Store Closing Law that limited store hours to a 6:30pm closing on
weeknights and a 2pm closing on Saturdays. Stores could not open at
all on Sundays, although each state was allowed to grant four
exceptions each year. The law was designed to protect workers for
exploitative working hours. It also had the effect of protecting
traditional retailers from larger competitors, who could afford to keep
their stores open longer with lower expenses.
Wal-Mart's German competitors possessed greater penetration within
Germany and utilized "zone pricing strategies," matching Wal-Mart's
prices in areas where it was a direct competitor. One study found that
certain products sold at Wal-Mart in Germany were 11%- 25% more
expensive than those of its competitors.
Unlike many of its German rivals, Wal-Mart offered credit card
payment and free bags for goods purchased, improved store interiors,
and friendly customer service. At first, it appeared that German
consumers responded positively, though they were also skeptical.
German shoppers quickly complained of a stranger approaching them
when they entered the store. As one industry observer noted: "The
shopping culture is different. The Germans say that it can't be real the friendly atmosphere. The serviceorientation is new. Germans
don't want this. They think it costs more. The service culture in
Germany is not well developed."
Wal-Mart encountered difficulties setting up supplier contracts upon
its entry into Germany. Part of the problem was the lack of
infrastructure. In the United States, Wal-Mart relied on information
provided by suppliers; in Germany, these relationships were not
mature. Wal-Mart lacked leverage with suppliers to buy goods at low
cost and did not have a reputation of low prices with customers in
Germany.
German retailers such as Metro, Aldi, Lidl, and Rewe were deeply
entrenched, with a loyal customer base, and were not willing to give
in easily to a foreign competitor.89 With low overheads, the
advantage of enduring relationships with suppliers, and an

Walmart need to look for built new hypermarkets although Europe is the most land-use-restrictive country. & Gay. July 20).understanding of the retail regulatory environment. Wealthy families or cooperatives have historically owned the majority of retail companies in the German market. Bibliography Trumbull. 2015. Understand better the German culture and with this improve the selling strategy. G. or to buy existing stores from other companies. but the Germany culture is very different beside de American culture so they need to adapt to the local practice. to improve the timing and the efficient of the suppliers. Walmart in Europe. The strategies I recommend for addressing these challenges and succeeding in Germany: Walmart has introduced many global standards that in the majority of the countries has succeeded. these retailers proved stiff competition for Wal-Mart. respecting the actual laws in Germany and get more competitive advantage. Also they need to help the suppliers to improve their lack of infrastructure. In Harvard Business School.. (2004. L. Retrieved January 19. QB5yR/JRAQBhadk3R1lHhUYlNd/EzMvdqzYE5xfBMs0b54IaIAuIl7iTqcbNsCVQ2NpVPs+r6haN 83aDqFeKyxvIh/11xXnNTzNwYAJ98+CpOYDeyfmMk9AdTldfoSMsRZQkbD5aZkPAJEwc/M0Fb904 V9ZtIKLDzvqFshTpAUY= .