Walmart In China Case Study

As mentioned in the case in Mexico, China, and the U.K. the company’s efforts to offer the lowest price to customers backfired because of resistance from established retailers. However, still by their efforts Walmart became successful in Mexico and China; it had 889 stores and was planning to open 125 more. In China domestic Chinese rivals also have built their business in order to compete with Walmart. China Resources Enterprise had hired away managers for foreign chains and cut staff in order to increase profitability. Walmart faced high entry barriers in China because of china’s cultural, linguistic and geographical distance from the US so Walmart decided to use two beachheads as learning vehicles for establishing an Asian presence. In Germany, Walmart could not seem to fit its model to local tastes and preferences. In Japan, its joint venture had a series of setbacks, many related to buying habits for which the Walmart model did not respond well. In Mexico, three of the largest domestic retailers constructed a joint buying and operational alliance solely to compete with Walmart. Its presence in Hong Kong ended after only two years during the 1990s, and it shuttered operations in Indonesia in the mid-1990s after rioting incidents in Jakarta. Walmart also owned approximately 16 stores in South Korea and 85 in Germany; however, it sold off these operations in 2006 after merchandise failed to match consumer tastes, distribution and re-bagging problems arose, and strong loyalties to other brands made attracting customers difficult and expensive.

Walmart’s failure: Walmart failed in several countries like Germany, Japan, Hong Kong, Indonesia and South Korea mainly because they did not understand the culture of these countries comp...

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... cultural values followed in Africa. They should also study the behavior of people before entering any country, meaning how people respond to certain things as we have seen in an example for German people it was awkward if someone greets them with a smile as they prefer to shop in peace without any disturbance.

Recommendations: My recommendation for the companies is that they should provide jobs to the unemployed people and pay high wages to workers and provide good facilities. Also one of the main aspects before entering to a new market is that they should learn about the cultural aspect of the country as this was the main reason a failure of Walmart in few countries. They should study the local culture and should remain sensitive for that, also they to adapt the main aspects of the culture and should embed it into the company’s policy/approach for that country.