Group 2Section A

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

Comparison between UK and Germany

UK Germany LearningsAcquisition of ASDA which was having 8.4% market share

Acquisition of Wertkauf and Interspar which was having less than 3% market share

While acquiring companies, study its market share and its competitors

Took advantage of the established technology

Replicated the USA technology

Consider the implications of the radical technology change

Refurbishment of stores was not required

Refurbishment of stores was required and locations were not favorable

Infrastructure conditions should be analyzed beforehand

Retained the local brand name

Did not retain the local brand name

Leveraging on the established brand

Did not get the “Wal-Mart troops” from USA

They deployed the “Wal-Mart troops” from USA

Local connect is important

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.

• 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.

Operational Environment 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.

Legal & Regulatory Problem

• 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.

Cultural Problems

• Management Orientation– Wal-Mart entered the German retail market with

an ethnocentric view

• Restraining forceso Organizational Cultureo Large domestic marketo National controls & barriers

Gist