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Case

Analysis
Course Name International Business [INB 372]
Section 13

Industry: Retail
Business
Report ON
Wal-Mart Standard Case

Assigned BY:
Mahmud H. Zaman [Mhz]
Faculty Member
Department of Marketing & INB
School of Business and Economics
North South University

Prepared BY:
No Name: ID:
01 Syed Atabur Rahman Tuhin 142 0296 030
02 Md. Saiful Islam 142 1724 030
03 Nabila Hafiz 141 0545 030
04 Rifat Hossain Khan 141 1038 030
Answer To the Question-1
Following are the attributes to cultural differences that Wal-Mart lacked in
entering the German market:

Wal-Marts central value plan every- day low prices was a hollow assurance
to the consumers.

Wal-Mart Germany also did not prosper in providing excellent customer


service. Overall consumer satisfaction was below the line.

German shoppers are tough to please. They are used to bagging their own
groceries and did not accept the idea of clerks doing that which is common is
USA.

In USA Wal-Mart provides 24/7 shopping facilities but Germany has restrictive
shopping hours regulation which was not in their favor.

Rather than relocating executive employees, Wal-Mart Germany had to let


them go when it combined the two retail headquarters together in one city
as they follow he head-quarter centric approach in USA.

Strict worker protection regulations make surplus workers redundant became


a complex, extensive, and expensive affair for Wal-Mart. Strong unions
helped employees file lawsuits against the policy against romantic
relationships between employees and supervisors.

Answer To the Question-2


Wal-Mart is considered world largest retailers founded in 1962 by sam Walton
and after a flourishing start and good innovative management strategy make
them successful in USA. Their Everyday low price strategy and show stealing
retail strategy is well renowned. So after a blast in USA they are looking on to
go for international. In late 1997 they expanded in Europe basically in
Germany which is a Euro zone country then and considered as world third
largest Economy and Europes largest retail spenders and the literacy rate
was 98% and their income of female was 74% by this time. They thought
EDLP worked in Germany with of advanced IT, logistics, Supply chain
Management, and a strong customer service and highly qualified personnel.
They go for an acquisition with Wartkauf and Intersper. But Wal-Mart entry
was not that Lucrative and noisemaking in Germany and they are not that
impressive in look with their strategy which should be based on Germany
points of view. Now we will critic Wal-Marts Entry Strategy below:
Location: Their selection to expand in Germany was not a bad in a
sense by considering their market share and economy. But there is a strong
competition in Germany Wal-Mart was faced which may be reduced if
Germany expanded themselves in other Europe Countries like- France, Italy
or Netherland.

Acquisition process: their acquisition strategy was poor in looking. They


make acquisition with wertkauf and interspar which cost them much and
their stores and supply chain was not fit up with Wal-Mart stores theme and
the impression of that chain was not that much in Germany. And the stores
are not located in good places so after the acquisition it gives Wal-Mart only
1.1% share which is not enough to create market hype for expansion.

Lack of Proper Homework: they are not coming with a proper


homework when they enter German market. They just launched with their
same strategy as they get success in USA without any kind of modification
based on Germanys Points of view.

They are thinking that their USA success was giving them an edge to
create market hype among the German people. But it is not strategically fit
in Germany because of the cultural, political, social difference between two
countries. There is a lot of loopholes was seen in the Wal-Mart strategies that
they are not fit with the German tradition and internal politics they are not
much aware about the rules and regulation in Germany(like-Labor Union)

Making strategy based on Competitor: they are not much aware about
their competitor and substitutes.

Wal-Mart German Failure Story is just Express their lack of Experience by that
time. Their Entry strategy in Germany was just immature in look which is
about to a source of learning for them for the future expansion.

Answer To the Question-3:


Wal-Mart has started it business in Germany through acquisitions in Werkauf
and this acquisition of Werkauf and Intersper gave Walmart only 1.1
percentage share of their profit which is too low for Wal-Mart. Another thing
the company can't make progress properly because of its flawed entry-by-
acquisition strategy, unable to cope up with cultural differences, ignoring the
customers purchasing power strategy and the arrogance of Wal-Mart
Germany's management team. These factors are the reasons for Wal-Marts
failure.
Wal-Mart should analyze the whole market of Germany before entry. They
should arrange their stores according to the demand of German customers.
But Wal-Mart is apparently ignoring its competitor and also labor union
regulations which are not a good sign for a company. Consequently, it
happens that Wal-Mart is continuously losing their power of upgrading their
stores. Moreover German shoppers are shown very demanding and the
discount retailer offer very low prices. Thats why Wal-Mart can't cope up
with the current market economy. Which results their fundamental value
proposition "every- day low prices" and "excellent customer service" are only
a dialogue and nothing else. For that reason their offering additional
convenience and superior shopping comfort is totally fruitless. They are
losing their market.

Then Wal-Mart started centric approach which has created a problem in the
management level. Moreover, Wal-Mart has faced enormous problem in
political sphere. Also ethical caused much trouble in the germen market
economy. Wal-Mart has experienced four presidents in eight years business.
So, Wal-Mart has internal problems. That's way, people consider this
company as a weakest company in the Germany industry environment. The
national trade union also warned Wal-Mart to comply with law. This fact is
threat for Wal-Mart. In 2006, at the Berlin Film Festival, a movie was released
about Wal-Mart makes the high cost of low prices. Those facts backfired
the Wal-Mart marketing strategy.

So, the industry environment was critical in Germany for Wal-Mart to perform
better in this scenario with their poor strategy and flawed entry-by-
acquisition strategy, unable to cope up with cultural differences, ignoring the
customers purchasing power strategy and the arrogance of their top
management team are the specific aspects of the industry environment
which played key roles.

These effects have been anticipated prior to market entry because Wal-Mart
didn't started its first business on Germany. It should aware the facts that
this situation can be created. So, it can easily said that if they started their
business after analyzing the market segmentation and the nature of market
and how to dominate in the German market economy, they didn't fall this
problems.

Answer To the Question-4


Wal-Mart, Considered as the worlds largest retailers in terms of sales. But
their expansion in Germany chapter was not coming through a pleasant
experience for them. But from this failure they can take something important
learning measures for the future Expansion. Below we points out some key
points that Wal-Mart can drew from its German experience to entry into big
emerging markets:

they should educate themselves on the customs and business


etiquette of the international market. They should have to ensure that they
know the countrys history, the proper way to communicate with them, their
basic needs, specific time for vacation and break for prayer or lunch. they
have to make sure about their communication skills in terms of the host
countries expected way within their society.

They should have to do a proper home study and comes up with the
new and innovative strategy compared to its competitors. They have to find
what has done in the industry by their competitors and question them about,
how many the competitors are already entered into this market before? What
obstacles they face? How did they cope up with the new market? And most
importantly, what would we go to do business there in different way than our
competitor?

they have gather information regarding the historical data on the


countrys currency, economy, and export/import timelines.

If they want to go for acquisition they have to consider how much they
get benefit from this acquisition and have to consider its alternatives and
comparing the alternatives and choose which is fit in terms of companys
value delivery Chain and its theme.

Study about countrys Rules and regulation. Wal-Mart faces a lot of


problem in Germany regarding lack of rules and law related knowledge in
Germany. So to expand in future they have to become an expert in countrys
rules and regulation.

conducting with focus groups to test the waters in the prospective


international market.

Answer To the Question-5


Wal-Marts ethical code created a mess for them in Germany. Monitoring and
snooping on employees and reporting misbehavior is not tolerable to the
Germans.
Wal-Mart fired many of their senior executives when it acquired several
German retailers.

It also faced bad publicity during its operation. Wal-Mart failed to comply with
the law and the national trade union organization issued warnings to all
union members about it.

A film named Wal-Mart the high cost of low price exposed Wal-Mart for
behaving unethically towards employees and suppliers and for its corrupt
dealings with local politicians.

US involvement in Iraq formed anti-American sentiments within Germany.