Wal-Mart failed in Germany for several cultural, institutional, and strategic reasons. Culturally, Wal-Mart's American-style corporate culture did not align with German culture. Institutionally, German government restrictions limited Wal-Mart's ability to operate. Strategically, Wal-Mart acquired weak brands in poor locations and faced strong competition. Its entry also occurred during an economic recession. Overall, Wal-Mart lacked sufficient research, preparation, and understanding of the German retail market.

2. ObjectiveWal-Mart’s Failure in GermanyWal-Mart going global

3. To understand the business model of Wal-Mart in Germany

4. The underlying reasons for its failure, and

5. Our suggestionsIntroductionIndustry RetailingFounded Rogers, Arkansas (1962)Founders Sam WaltonHeadquartersBentonville, ArkansasArea Served WorldwideProducts Discount StoresSupercentersNeighborhood MarketsRevenue US$ 408.21 billion (2009)Operating Income US$ 23.95 billion (2009)Total AssetsUS$ 170.70 billion (2009)Employees 2,100,000 (2009)Website www.walmart.com

6. Business Model

7. Going Global

8. Why Germany?Robust consumer spendingThird largest economy of the world$370 billion German retail market was hugely lucrativeGood transportation infrastructure, easy stock replenishmentCentralized location of Germany to expand business into EuropeGermany was price sensitive and perfect for Wal-Mart’s EDLP (Every Day Low Pricing)

9. Setting UpSetup a centralized distribution systemTop management from US, hired rest from GermanyAcquired 21 stores of Wertkauf and 74 Interspar storesInterspar and Wertkauf controlled 19% of the German retail marketReconstructed Interspar’s stores, initial investment of US$150 millionGerman govt. denied licenses for food and grocery retailing so they had to enter through an acquisition

10. Reasons for Failure

11. Cultural Issues Corporate culture of Wal-Mart and staff expectations

12. Amalgamating 2 stores and 3 corporate cultures

13. Sharing of rooms during meetings

14. English being made the official language

15. USA versus German cultures particularly public versus private space explaining: ‐ German resistance to baggers and greeters ‐ German issues of company control over private life of employees