With Wal-Mart being one of the biggest retailers in the world, serving customers in more than 8,650 retail units in 15 countries, as stated by the company (Wal-Mart, 2010), it makes the perfect example to look at in terms of globalisation and the impacts and strategies that relate to it. A very brief explanation by Holm and Sørensen (1995, p. 12) defines globalisation as “The intensification of economic, political, social and cultural relations across borders”. In my opinion this phrase is too superficial to actually explain all the outcomes and interrelations of the complexity of globalisation. It is also unknown regarding how to measure the degree on relations across the world and also their intensification as well as whether relationships exist between the economic, political, social and cultural relations. I believe that a definition should also be addressed about the technological and financial transformation that is currently taking place, the geographical reallocation of production and the emerging of a „powerless nation state“.
Others see the phenomena of globalisation rather simple. Levitt (2006, p. 133) stated that “The world’s needs and desires have been irrevocably homogenised”, which leads one to believe that consumer tastes around the world appear to merge. While this is also referred to as the ‘simultaneous theory of internationalisation’, it means that standardised products, services and strategies can be used around the globe.
Keeping in mind of Levitt’s thesis, this paper first gives a general overview of the impacts of globalisation on Wal-Mart as this is important to understand ongoing argumentation. Later, it will concentrate on Wal-Mart’s presence in Germany, explaining the market entry into the country while concurrently focusing on strategies used and outcomes of the company’s actions in Germany.
Table of Contents
1. Introduction
2. Globalisation – A Theoretical Overview
2.1. The Reasoning of Going Global
2.2. The CAGE Theory
3. General Impacts of Globalisation on Wal-Mart
4. Wal-Mart Operating in Germany
5. Conclusion and Future Strategies
Objectives and Topics
This paper examines the global expansion strategies of the retail giant Wal-Mart, specifically analyzing the theoretical frameworks of internationalization and the subsequent failure of the company to successfully establish its business model within the German market.
- The theoretical underpinnings of globalization and international business strategies.
- Application of the CAGE distance framework to assess international market entry.
- Analysis of Wal-Mart’s operational processes, supply chain management, and global policy standardization.
- Case study of Wal-Mart's market entry in Germany, identifying key strategic failures.
- Evaluation of cultural friction points between American management practices and German retail culture.
Excerpt from the Book
4. Wal-Mart Operating in Germany
In the following this paper analysis Wal-Marts expansion into the German market, how they entered it, why they struggled and the way this relates to Levitt’s theory.
This quote efficiently concludes six years of Wal-Mart Germany, a project that can be stated as a fail. Wal-Mart started internationalising in the early 1990’s but had not stepped into Europe till 1998 when they first entered Germany. They had chosen the west European market because it is populous and known to be low in risk. Germany has the biggest national economy in Europe and holds out the prospect of immense growth potential into the east European states (Senge, p. 8). Nevertheless they managed to fail this challenge.
„Wal-Mart entered Germany, the third-biggest retail market after America and Japan, in 1997-98 by buying two local retail chains...Wal-Mart has lost money in Germany ever since. Problems have included price controls, which prevent below-cost selling, rigid labour laws and tough zoning regulations, which make it extremely difficult to built big stores...But there is more to it than that. Wal-Mart’s entry was ‘nothing short of a fiasco’...“ (Economist, 17.4.2004, p. 68)
Summary of Chapters
1. Introduction: Presents the scope of the study, defining globalization and the limitations of standardized retail strategies when applied internationally.
2. Globalisation – A Theoretical Overview: Reviews the history of Wal-Mart’s growth and applies the CAGE framework to categorize the challenges of international market expansion.
3. General Impacts of Globalisation on Wal-Mart: Explains how global market liberalization and supply chain integration have shaped Wal-Mart’s operational and communication strategies.
4. Wal-Mart Operating in Germany: Provides a detailed analysis of the company's failed market entry, emphasizing cultural misalignment, labor issues, and strategic management errors.
5. Conclusion and Future Strategies: Synthesizes the lessons learned from the German failure and outlines the company's adjusted approach to future global expansion.
Keywords
Wal-Mart, Globalisation, International Strategy, Germany, Retail, CAGE Theory, Market Entry, Expansion, Supply Chain, Cultural Differences, Consumer Satisfaction, Management, Localization, Standardization, Competition
Frequently Asked Questions
What is the primary focus of this document?
This document analyzes Wal-Mart's global expansion, with a specific focus on the operational and strategic factors that led to its unsuccessful attempt to enter and sustain a presence in the German retail market.
What are the central thematic fields discussed?
The core themes include globalization theories, international business strategies, the CAGE framework (Cultural, Administrative, Geographic, and Economic distance), and the importance of adapting management practices to local cultural contexts.
What is the primary research objective?
The goal is to determine why Wal-Mart’s standardized global business model failed in Germany and to provide a critical evaluation of whether Levitt’s theory of global product homogenization is applicable to diverse retail cultures.
Which scientific methods are utilized?
The paper utilizes a qualitative case study approach, conducting a comparative analysis of corporate strategy, economic performance data, and cultural management practices contrasted with existing international business theories.
What content is covered in the main section of the paper?
The main section investigates Wal-Mart’s international growth trajectory, the application of the CAGE theory, the company's specific supply chain and communication systems, and a comprehensive post-mortem of its German market operations.
Which keywords best describe the publication?
Key terms include: Wal-Mart, Globalisation, International Strategy, Retail, CAGE Theory, Cultural Differences, and Market Entry.
Why did the "Ten-Foot-Rule" fail in German retail?
The "Ten-Foot-Rule" conflicted with German consumer expectations of anonymous, self-service shopping and was perceived as an intrusive and unnecessary behavior by staff, ultimately failing to improve customer satisfaction.
How did Wal-Mart's logistics contribute to its failure in Germany?
Wal-Mart's logistics were hindered by geographically dispersed stores, poor location choices, and an inability to efficiently manage staff and inventory to the standards required by the highly competitive German low-price retail sector.
- Quote paper
- Anonym (Author), 2010, Wal-Mart Going Global, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/214009
