Walmart Debacle of Germany
Wal-Mart in Europe
Table of Contents
Executive Summary 2 Wal-Mart Background 2 Wal-Mart’s Culture 2 Wal-Mart’s Strategy 3 Problems/Criticism faced by Wal-Mart 3 Wal-Mart in Germany 4 Key Issue: Wal-Mart’s Failure in Germany 4 Situation Analysis 5 Porter’s 5 Forces Model 5 Wal-Mart: Germany vs. Britain 6 Challenges in Germany 7 Evaluation of Alternatives 10 Recommendations 10
Executive Summary
The world economy has undergone a drastic revolution in the last three decades through globalization. This has made the world economy more efficient and competitive, by enhancing product quality, increasing the product variety and lowering price. With successful expansion in locations like Mexico and Canada, in 1997, Wal-Mart entered German retail market by acquiring Wertkauf chain (24 stores) and Interspar chain (74 stores). Wal-Mart attempted to replicate the company’s proven US success strategy, which resulted in by Wal-Mart’s mistake of misunderstanding Germany’s competitive retail sector. Their failure to distinguish the cultural differences between US and Germany combined with their inability to communicate properly with the German suppliers and customers led to a poor image and low market share in Germany. Moreover, they broke certain German laws and regulations which damaged their reputation. Unlike USA, they were unable to attract local customers with their innovative approach to retailing. Walmart did not seem to be able to offer customers any compelling value proposition in comparison with the local competitors in Germany.
Wal-Mart Background
Wal-Mart was founded by Sam Walton in 1962 in Bentonville. 1970 marked the opening of the first Wal-Mart distribution centre and in the 1980s, it transformed from into a national discount retailer by adopting an aggressive diversification strategy. In 1991, Wal-Mart became the world’s largest retailer with net sales of 43.9 billion. In 1997, it entered the German retail market by
Table of Contents
Executive Summary 2 Wal-Mart Background 2 Wal-Mart’s Culture 2 Wal-Mart’s Strategy 3 Problems/Criticism faced by Wal-Mart 3 Wal-Mart in Germany 4 Key Issue: Wal-Mart’s Failure in Germany 4 Situation Analysis 5 Porter’s 5 Forces Model 5 Wal-Mart: Germany vs. Britain 6 Challenges in Germany 7 Evaluation of Alternatives 10 Recommendations 10
Executive Summary
The world economy has undergone a drastic revolution in the last three decades through globalization. This has made the world economy more efficient and competitive, by enhancing product quality, increasing the product variety and lowering price. With successful expansion in locations like Mexico and Canada, in 1997, Wal-Mart entered German retail market by acquiring Wertkauf chain (24 stores) and Interspar chain (74 stores). Wal-Mart attempted to replicate the company’s proven US success strategy, which resulted in by Wal-Mart’s mistake of misunderstanding Germany’s competitive retail sector. Their failure to distinguish the cultural differences between US and Germany combined with their inability to communicate properly with the German suppliers and customers led to a poor image and low market share in Germany. Moreover, they broke certain German laws and regulations which damaged their reputation. Unlike USA, they were unable to attract local customers with their innovative approach to retailing. Walmart did not seem to be able to offer customers any compelling value proposition in comparison with the local competitors in Germany.
Wal-Mart Background
Wal-Mart was founded by Sam Walton in 1962 in Bentonville. 1970 marked the opening of the first Wal-Mart distribution centre and in the 1980s, it transformed from into a national discount retailer by adopting an aggressive diversification strategy. In 1991, Wal-Mart became the world’s largest retailer with net sales of 43.9 billion. In 1997, it entered the German retail market by