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Wal-Mart: Germany Failure

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Provided below is an article link describing Wal-Mart failure in Germany. Do you think that culture had a direct impact on the success/failure from organizational change? Is there anything they could have done to prevent the problems that arose?

Explain why.


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Culture has direct impact on the success or failure from organizational change. In Germany, Wal-Mart tried to impose its company culture on employees. This led low motivated workforce and contributed to failure. The other problems were that habits of German customers were not taken into account. They want to spend as little a time as possible in a tore but the Wal-Mart stores were arranged in such a way that customers would have to spend more time. The greeters smiled and the checkout clerks were trained to smile. ...

Solution Summary

This solution explains how Wal-Mart failed in Germany because of cultural mismatch. The sources used are also included in the solution.

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Why did Wal-Mart invest in Germany?


You are a middle-level manager with a company that markets a line of personal and fabric care products. The American market for soap and detergent has always been dominated by name brand manufacturers, such as Procter & Gamble (TideTM), Colgate-Palmolive (AjaxTM) and CloroxTM. In fact, your market research shows that the American market is saturated with these products. You are convinced that, if your company is to grow in the future, it must aggressively seek international markets.

The company will be sending representatives to a trade conference in Hong Kong in several weeks. You see the conference as an opportunity for your company to expand into the rapidly growing Southeast Asia market. At the very least you hope to be able to identify the countries that have adopted policies that make them receptive to foreign trade and investment; with a little luck, you may even be able to find a good location for a detergent plant that your company wants to build in the region.

In addition, your company is considering plans to purchase an interest in retail store chains in one or more of the European Union (EU) nations. But before senior managers are prepared to consider the investment, they would like to look at how other American companies have fared when buying European retail chains.

You asked senior management to allow you to assume the role of international marketing strategist and they granted your request. Now, you need to research, analyze and present international marketing opportunities for your company.

Task needing assistant -

Your company is considering plans to purchase an interest in drug store chains in Germany and the UK. But before senior managers are prepared to consider the investment, they would like to look at how other American companies have fared when buying European retail chains.
In December 1997, Wal-Mart took over 21 Wertkauf stores in Germany followed by 74 Interspar stores in 1998. In the U.K. Wal-Mart has purchased ASDA, a supermarket/discount chain that now advertises itself as "part of the Wal-Mart family."

Investigate the recent FDI by Wal-Mart into the United Kingdom and Germany. Gather press releases, articles in the business press, and search the Library and the Internet for published sources of information.

Describe why Wal-Mart undertook the investment, why the British and German governments allowed it, and the extent of its success or failure.
Identify the types of management decisions that needed to be made.
Identify any political or cultural problems that have occurred.
Would it have been better for Wal-Mart to build a subsidiary "from the ground up" rather than buying existing chains? If so, why didn't Wal-Mart pursue this option?
Cite at least three sources

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