Lê Thu Hà - 18071072

Homework: How culture affect Walmart’s business when going oversea?

Answer
As globalization facilitates trading beyond national borders, cultural differences are inevitable.
Walmart, a multinational retail corporation based in America, was said to have attempted to
export its corporate culture around the world as its international business strategy [1]. This essay
will discuss some controversial mistakes of such ethnocentric application.
Amongst the countries proved the failure of this approach, Germany and Korea are two typical
examples indicating how Walmart really messed up its business opportunities there. The
company’s formula for success was offering the lowest price with excellent customer service [2].
In Germany, this packaged formula did not go well for three reasons. First, it was the way
Walmart treated its German employees. It brought its domestic corporate work rules to Germany
which resulted in an expensive cost for its reputation there. For example, its code of conduct
forbid relationship between employees and furthermore, provided a hotline for co-workers to
report employees violating rules [3]. This caused not only frustration of workers whose culture
was valuing the privacy of personal life, but also severely damaged Walmart’s image in
consumers’ eyes [3]. Second, its lack of cultural knowledge about German people discouraged its
consumers. Walmart believed that the “legendary focus on enthusiastic customer service and
display of employee devotion” would help it win over German [1]. However, this friendly tactics
gone terribly wrong for Walmart. Different to American, German found the company’s way of
greeting and employees suggesting helping consumers within their ten foot intrusive to
consumers’ privacy [3]. In addition, Walmart didn’t understand its consumers’ merchandising
taste. As said by a German, “they tried to sell packaged meat when Germans like to buy meat
from the butcher” [2]. Third, Walmart penetrated Germany with its cultural ethnocentricity. Its
first chief executive in Germany was American and as a result, Walmart in Germany was
embodied with many traits of American culture [3].
In the case of Korea, the most notable factor directly beating against Walmart’s positioning as
“Every Day Low Prices” is that South Koreans didn’t distinguish between discounts and normal
prices [4]. In fact, according to Marshall, Koreans worked a lot and when they didn’t work, they
wanted the best [5]. Although this discounting model might work very well under recession
period, it just wasn’t the right time for Walmart to enter Korean market yet.
In addition, though the company’s formula ruined many of its investment oversea, Walmart’s
business activities in some foreign countries proved the opposite. Indeed, in Latin American
countries, Mexico in particular, Walmart’s corporate culture and its strategic positioning worked
[6]. Consequently, this was a partial reason for Walmart taking aggressive move to Germany and
Korea without conducting proper consumer due diligence (CDD).
To wrap up, Walmart’s failure has become a so-called template for how not to enter a country for
many companies as well as itself. Because no business formula fits every country, organizations
must understand national culture and how their corporate culture must adjust to fit and
communicate well in oversea markets.
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References
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[2] Landler M. & Barbaro M. (2006). Wal-Mart Finds That Its Formula Doesn’t Fit Every
Culture. Available at:
https://www.nytimes.com/2006/08/02/business/worldbusiness/02walmart.html (Accessed 5
October 2020).
[3] Napiersky U. (2006). Giant Lessons for Wal-Mart Behemoth. Available at:
https://www.translationdirectory.com/article1122.htm (Accessed 5 October 2020).
[4] Strach P. & Gandolfi F. (2009). Retail Internationalization: Gaining Insights from the Wal-
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https://www.researchgate.net/publication/46567722_Retail_Internationalization_Gaining_Insights
_from_the_Wal-Mart_Experience_in_South_Korea (Accessed 5 October 2020).
[5] Marshall S. (2009). Walmart Failed in Korea Because of a Lack of Walking Around. Available
at: http://www.sebastianmarshall.com/why-walmart-failed-in-korea (Accessed 5 October 2020).
[6] Lee M. & Yazdanifard R. (2012). Walmart Success in Mexico, Canada and China: Global
Expansion, Strategies, Entry Modes, Threats and Opportunities. Available at:
https://www.researchgate.net/publication/234167019_WALMART_SUCCESS_IN_MEXICO_C
ANADA_AND_CHINA_GLOBAL_EXPANSION_STRATEGIES_ENTRY_MODES_THREAT
S_AND_OPPORTUNITIES (Accessed 5 October 2020).