North South University

Course: INB372
Section: 9
Course Instructor: MehreeIqbal (Mei)
Group Case: 5
Date of Submission: 20thMarch, 2016

Submitted by:
Name

ID

1. Nadia Afrin Bintu

1311114030

2.KaziNafisaTabassum

1310202030

3. SanjidaAlamShanta

1320931030

4. NasifurRahman Sharif

1410148030

5. TanzilaMahzabin

1310253630

6. Nabil Shahriar Ahmed

1410596630
7. IshratBayazidNisha

1411334630

1. What aspects of this case can be attributed to cultural differences between the
USA and Germany?
Ans: There are some cultural differences between Germans and Americans which lead
to a failure of Walmart business in Germany. A number of cultural issues came up
often when Walmart started expanding their business in Germany. German shoppers
showed that they can be very demanding, frugality, accustomed to buying based
primarily on price, willing to split their shopping activities among various retailers.
But the Americans are completely opposite. Germans are accustomed to putting their
own groceries in shopping bags. But they were alienated by clerks who bagged
groceries. Germanys restrictive shopping hour regulations prevent Walmarts ability
from offering its customers the additional convenience shopping comfort associated
with 24/7 operations.
2. Critically analyze Walmarts entry mode in German market.
Ans: Walmart entered into German market through acquisitions strategy. In December
1997, it took over Wertkauf chain which was well known in Germany. They obtained
their 21 stores. Afterwards, they also acquired Interspar. However, this acquisition of
Wertkauf and Interspar gave Walmart only a 1.1% share, which many argued was too
small to create a mass for expansion. With the 1.1% of share of these companies,
Walmart couldnt apply the companys proven US success formula in an unmodified
manner to the German market.
3. The industry environment of Germany has proven to be critical to company
performance for Walmart; what specic aspects of the environment have played
key roles? Could these effects have been anticipated prior to market entry?
Ans: Walmart entered into Germany with the formula of low costing system that they
were successful in USA. The decision of entering with similar market strategy has
proved to be the major cause of Walmarts failure in Germany because of the cultural
difference, rules and regulation and labor union issues. The higher authority is also
responsible for the failure as they were too ignorant, arrogant and had lack of
experience in entering foreign markets. The German people preferred buying goods
from retailers after analyzing different shops, which clearly opposes the concept of
Walmart business that is to find everything in one place. Another major problem of
Walmarts approach to doing business is their level of service. Their service to satisfy

their customer has always been poor which differs from German way of business and
lifestyle as the local retailer has always been careful of their service to the customers.
The German people preferred having someone from the retailers who could pack their
groceries rather than picking themselves which wasnt available in Walmart. Along
with these, the restrictive policy of the governments shopping hour acted as a huge
barrier to Walmarts most famous 24/7 convenient and superior shopping. After the
merger the shifting of headquarters in one place caused a lot of experienced
employees to leave their job. The Germans give a lot of priority to their labor union
whose thoughts have enormous influence in the office structure which is completely
opposite in case of America. Lastly, the spying attitude of one employee over another
in USA demotivated the employees of Germany which affected their productivity.
Yes, these effects can be predicted before entering, by doing a research on the
countrys market, culture, conditions, rules and regulation.
4. What lessons can Walmart draw from its German experience as it
contemplates entry into other Big Emerging Markets?
Ans: The lessons Walmart can draw from is German experience as it contemplates
entry into other big emerging markets are given below:

Walmart should not underestimate the ferocity of any countries competitors,

the frugality of shoppers, and the extent to which regulations, cultural

differences, and labor unions would impede its ability to apply in any country.
Walmart should have alternative formula along with main formula.
Wal-Mart Germany has to make sure good delivery of its value proposition.
Before entering in any country should take time for thinking which entry mode

will bring to the success.

Ignorance, lack of experience, and arrogance of WalmartGermanys original

top management team should be reduced.

The head-quarter centric approach should not be used in all country.

5. What ethical challenges does Walmart have to face while operating in

Germany?
Ans: While operating in Germany Walmartdidnt have proper research about the
employee culture of Germany. They came into Germany and implemented rules and
regulations they used to follow in the US. But the situation was different there in
Germany. Few of the ethical challenges that Wal-Mart faced while operating in
Germany are listed below

According to code of conduct, Walmartforbids its employees from receiving

gifts from customer which wasnt friendly in the German culture.

Employees cant have romantic relationship or cant fall in love.
German customers prefer to put their own shopping in bags, but

Walmartinstructed their cashier to do so

After loss, Walmartstarted to cut off its employee

Besides, Walmartbehaved with its customers and employee in an unethical way and it
was engaged in corrupt dealing with the local politicians