GERMANY

Part 1

Wal-Mart entered Germany through two acquisition. According to Phoebe Jui, in

1997, Wal-Mart moved into the German market through acquiring the failing German
retail chain Wertkauf of 21 stores from the Mann family of Germany, and in 1998, the
unprofitable Interspar chain of 74 stores. The Interspar stores were in poor repair and in
poor locations. The two chains made up only less than 3% of the market. As a result,
Wal-Mart became the fourth biggest operator of supermarkets in Germany.

The objective of the company was to expand to 500 stores in the country.
However, the number of stores never exceeded the 95 stores that were originally
purchased in the first two years. Wal-Mart’s position in the market decline over the
years. At the end of 2006, Wal-Mart was bought out by Metro, one of Germany’s largest
retail groups [ CITATION Man06 \l 1040 ].

Part 2
1.
According to the article, Failure of Wal-Mart in Germany, one of the reason why
Wal-Mart select acquisition as an entry mode to Germany is because the company
wants to replicate it’s United States success in Europe using the same strengths of
Everyday Low Price or EDLP. Everyday Low Price  is a strategy that offers low prices to
customers throughout the year instead of offering these low prices only on sales events.
This strategy increases both sales and customer loyalty [ CITATION Aad17 \l 1040 ].

Furthermore, at that time, entry barriers were not high in retailing industry due to
increasing globalization so Wal-Mart did not hesitate to make an expansion in the
country. According to David Needle, the German market was attractive as the world’s
third-largest economy with 80 million people, who were Europe’s largest retail spender.

2.
Through acquisition of local firms in Germany, Wal-Mart had a fast access to
the market since the firms Wal-Mart has acquired are already known in the country. In
addition, although the company failed in Germany because of bad acquisition strategy
and failure with cultural integration and of Everyday Low Prices strategy, the cost of
acquiring a failing and unprofitable firms is lower than acquiring a successful and
profitable business.
Bibliography
Jui, P. (2011, May 16). Journal of International Management. Retrieved from
https://journalofinternationalmanagement.wordpress.com/2011/05/16/walmarts-
downfall-in-germany-a-case-study/
(2011, October). Retrieved from Assignment Box:
https://www.assignmentsbox.co.uk/wp-content/uploads/2011/10/Failure-of-Wal-
mart-in-Germany.pdf
Manager Magazin. (2006, August 15). Retrieved from https://www.manager-
magazin.de/unternehmen/artikel/a-431873.html
Needle, D. (2010). Business in Context: An Introduction to Business and Its
Environment. In D. Needle, Business in Context: An Introduction to Business and
Its Environment (p. 159). Cengage Learning EMEA.
Jayasy, A. (2017, December 5). Retrieved from Linked in:
https://www.linkedin.com/pulse/pricing-strategy-walmart-aadil-jayasy