CCM Group Presentation 11125391 Moon

In addition to the problems of entry strategy of Wal-Mart in Germany, there are some mistakes made by Wal-Mart when dealing with the problems in operating environment. First, Wal-Mart did not pay enough attention to the seriousness of competition in Germany. The reason is that Wal-Mart overestimated its comparative advantage to other competitors. The manager of Wal-Mart has paid too less attention to assessing competitors (course book, p.197). As the result of the manager's carelessness, when Wal-Mart lowers its products, Wal-Mart's competitors, such as Real, also slash their product price. Therefore, not only can Wal-Mart improve little market share in German market, the profit of each product decreases as well because of the price war. The second problem of Wal-Mart is the lack of close relationship with suppliers. According to Hofstede's Value Dimensions (course book, p.79), suppliers in Germany seem to be collective and are more willing to do business with those who have strong relationship with them. Therefore, Wal-Mart cannot have the same supplying system as they have in America and this directly causes the inefficiency of supplying and selling process of Wal-Mart. Because of the inefficient system, Wal-Mart also meets the inventory problems, which means there are a great number of products that cannot be sold in time. Another reason for this problem is the low investment on salary payment. Wal-Mart does not have money to employ enough workers to manage its stockrooms. The final problem of Wal-Mart is the uncertainty of its employees. Because the level of salary in Germany is quite high, Wal-Mart was accused of its low salary and bad working environment. However, Wal-Mart fired some employees in order to decrease its cost in 2002. German union started a two-day strike in Wal-Mart due to the unethical behavior of Wal-Mart(course book, p.34) To solve the first problem, Wal-Mart should choose another strategy rather than price war. According to the case about Wal-Mart in Japan(course book, p.240), providing other services may be much better. Secondly, it will takes a long time to build strong enough relationship with suppliers to work out the second problem. To solve the last two problems, the best approach is increase the investment in Germany to hire more employees to manage Wal-Mart's stockrooms, provide a higher level of salary and give a better environment to employees. In addition, Wal-Mart should take some action, for example, charity, in order to earn more frame and reputation.