Project report on why Wal-mart closed German operations

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

4. The underlying reasons for its failure, and

6. Business Model

7. Going Global

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

9. Setting Up Setup a centralized distribution system Top management from US, hired rest from Germany Acquired 21 stores of Wertkauf and 74 Interspar stores Interspar and Wertkauf controlled 19% of the German retail market Reconstructed Interspar’s stores, initial investment of US$150 million German govt. denied licenses for food and grocery retailing so they had to enter through an acquisition

10. Reasons for Failure

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

17. Govt. restrictions limited Wal-Mart to acquisition option

18. Prevention of Greenfield site development

19. Employee representation in Germany not understood by Wal-Mart

20. Legal limitations on operational hours

22. Long established competition operated with similar goals

23. Low market share and less ability to complete on price

24. Poor management decisions

25. Entry during recession

26. Lack of research and preparationGerman Retail Market Share

27. Our Ideas

28. “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money some where else.” -Sam Walton

29. References

30. THANK YOU Presenters (Group 6) AlokMishraAnuragYadavHimanshu Chopra Manu V Nikhil Kumar SinhaSahil Goel Vidur Pandit