Walmart
Wertkauf-was a German retail group that had 21 markets until its takeover by The Us
supermarket chain Walmart in 1997. So, in 2006 when Walmart failed in Germany the entire
German branch of Walmart was sold to the Metro Group which is German multinational
company.
Germany--If you’re the boss, your team will defer(show respect) to your decision, yet desire
and expect to be part of the decision-making process. Once a group decision begins to form, take
special care to listen to those with dissenting opinions. Focus on the quality and completeness of
inform tion gathered and the soundness of the reasoning process. Once decisions made can’t
easily changed.
USA--In decision-making process an employee might not be asked explicitly to involve in
decision-making but you can demonstrate your initiatives to tell your opinion. If you show
disagreement so you may be seen as a difficult employee to work. Unlike German team in USA
team the decision made can be flexible or easily changed later on.
Power distance- Organizations within a country expect and accept that power is distributed
unequally. A direct and participative communication and meeting style is common, control is
disliked and leadership is challenged to show expertise and best accepted when it’s based on it.
So it is similar in both countries, the level of inequality is less observed
Individualism- In Individualist societies people are supposed to look after themselves and their
direct family only. There is a strong belief in the ideal of self-actualization.
So, in our case both countries are individualist societies, however Germany is a truly
Individualist one.
MASCULINITY- A high score (Masculine) on this dimension indicates that the society will be
driven by competition, achievement and success, with success being defined by the winner / best
in field – a value system that starts in school and continues throughout organizational life.
Uncertainty avoidance- As we see Germany has high uncertainty avoidance that they avoid to
take risks and rely on laws or regulations and strongly believe the power of expertise however
USA intend to take more risks.
Long-term orientation - which score low on this dimension, for example, prefer to maintain
time-honoured traditions and norms while viewing societal change with suspicion. Those with a
culture which scores high, on the other hand, take a more pragmatic approach: they encourage
thrift and efforts in modern education as a way to prepare for the future. Such as Germany.
Indulgence- The extent to which people try to control their desires and impulses. weak control is
called “Indulgence” and relatively strong control is called “Restraint. Restrained societies do not
put much emphasis on leisure time and control the gratification of their desires-Germany so,
In USA-Work hard and play hard. The States has waged a war against drugs and is still very
busy in doing so, yet drug addiction in the States is higher than in many other wealthy countries.
There were several factors that contributed to Wal-Mart’s Failure in Germany.
Amazing management blunders have plagued Wal-Mart’s German operation from the very start.
Wal-Mart’s major mistakes on the German market may be summarized as follows.
All the mentioned cultural difference rises the issue of cultural insensitivity
Besides the other reasons the most important reason is cultural insensitivity led Walmart fail in
Germany
Most of the Global mergers and acquisitions failed to produce any benefit for the
shareholders or reduced value, which was mainly due to the lack of intercultural
competence
Lack of sensitivity and understanding of language barriers, local traditions, consumer behavior,
merchandising, and employment practices irreversibly damaged Wal-Mart’s image in Germany.
----One of the main reasons that failed Wal-Mart in Germany is when it attempted to transport
the company’s unique culture and retailing concept to the new country. The top management
refused to even acknowledge the differences in customer behavior and culture in Germany when
compared to its US customers, and the top management failed to listen to the feedback from its
employees. The mistake of exporting its culture wholesale, rather than adapting to local market,
leads Wal-Mart failed in Germany market.
----Wal-Mart’s ambitions to position itself profitably in European markets through Germany
have been hit badly by their inability to fully understand and to adapt to the specific conditions
of doing business in other countries. This exposed their obvious lack of intercultural competence
and management skills. Mostly because of lack of language and culture bridging skills. And led
them intercultural competence.
-----Result of lack of intercultural competence and management skills arises mutual distrust, De-
motivation Negatively impacts the merged companies’ competitiveness, profits and shareholder
value.
1)Specific Difference in German Consumer behavior and Culture in comparison with US
consumers
2) Inefficient Top Management which ignored the relevance of local Culture
3) Alternative Courses of Action (ACA)- Step by step
4) Suggestions and Recommendations
v Political, Social, Economic and Cultural Analysis of the Country
Before expanding its business operations to a new country, the Company should understand the
Political, Social, Economic and cultural aspects of the Country in depth. Wal-Mart’s case,
Germany was selected primarily because of a central European location and economic
attractiveness. But a serious research would have shown that Germany had strong national
values resistant to change; possibly the most deeply rooted retail traditions in Western Europe.
v Go global and think they are local-The Company should be ready to modify its own
identity to suit itself to the cultural differences without compromising much on
its Corporate Mission
v Employment of Cross-Cultural Management approaches-Germans degree of
communitarianism is on the higher side mainly because Germans prefer participating on
a team. Most Germans see business as a group of related persons working together.
But, most of Americans see their company as a set of functions, tasks, people, machines
and payments in which individuals compete.
This difference in Cultural dimensions between the 2 countries has resulted in inside
management conflict among the employees, which also resulted in resignation of efficient
German executives from Wal-Mart post integration.
Continuous Updation of Strategies to successfully withstand the local competition-It is very
important for a Global firm to continuously analyse the impact of their various strategies on the
local market. It is always better to scrutinize the strategies adopted by them with a panel of local
experts, as they will be having a better picture about the local consuming behavior and culture.
