2. Introduction
• The case focuses on the retailing giant Wal-Mart and
its experience in Germany
• The case discusses the problems faced by the
company in Germany due to its lack of understanding
of the German retailing and regulatory environment.
• The case discusses in detail the various problems
faced by Wal-Mart in Germany :
• Entry strategy problems
• Operational environment problem
• Regulatory problems
• Cultural problems
3. Comparison between
UK and Germany
UK Germany Learnings
Acquisition of ASDA which Acquisition of Wertkauf and While acquiring companies,
was having 8.4% market Interspar which was having study its market share and
share less than 3% market share its competitors
Took advantage of the Replicated the USA Consider the implications of
established technology technology the radical technology
change
Refurbishment of stores Refurbishment of stores Infrastructure conditions
was not required was required and locations should be analyzed
were not favorable beforehand
Retained the local brand Did not retain the local Leveraging on the
name brand name established brand
Did not get the “Wal-Mart They deployed the “Wal- Local connect is important
troops” from USA Mart troops” from USA
4. Entry Strategy Problem
• During acquisition Wal-Mart did not study the
market share of the to-be acquired companies.
• They did not consider the infrastructure of the
to-be acquired companies.
• They did not consider competitor analysis :
Strengths and Brand Value.
5. Operational Environment
Problem
• Lack of supply chain infrastructure.
• Lacked leverage with suppliers & customers to
trade goods at lower price.
• Experimented with introduction of CDS
Central Distribution System (Suppliers were
slow to adjust with CDS causing losses).
• They had an ethnocentric outlook with
respect to their supply chain strategies.
6. Legal & Regulatory
Problem
• Walmart’s pricing strategy violated the
German pricing regulation.
• They did not recognize the labor dynamics of
Germany.
• They did not anticipate the zoning policy.
7. Cultural Problems
• Wal-Mart failed to understand the local
cultural outlook and perception of customer
service.
• Due to emphasis on family life, the store
timings were controlled. This led to losses in
revenue.
8. Gist
• Management Orientation
– Wal-Mart entered the German retail market with
an ethnocentric view
• Restraining forces
o Organizational Culture
o Large domestic market
o National controls & barriers
