10.

Case: Wal-Marts German Misadventure

Question (a)
The question intends to examine whether it was correct for Wal-Marts decision to enter
the German market.
The answer describes an overview of the German economy. It explains that Wal-Marts
decision to enter the German market was not correct. It was supported by arguments such
as wrong acquisition of German store chains such as Wertkauf and Interspar, nonconsideration of operational, regulatory and cultural mismatches between US and
Germany etc.
However, the answer could have discussed other factors such as slow growth of German
retailing industry, high labor costs, high real estate prices, existence of very inflexible
business environment, powerful trade unions etc. which Wal-Mart could have considered
before entering the German market.
Question (b)
The question intends to analyze the reasons for Wal-Marts problems in the German
market and to what extent did the lack of understanding of German culture affect the
companys performance.
The answer explains that the problems in operating environment such as unscientific
everyday low prices (EDLP), Lack of strong vendor relations, employee unrest, legal
problems, inflexible business environment etc. The answer also discussed the cultural
factors such as making English as an official language affected employee morale with
employees starting to feel like outsiders and getting increasingly frustrated.
However, the answer could have discussed other factors which would affect the
companys performance such as Wal-Marts employment of the ten-foot rule whereby
employees would offer support to shoppers, greeting to customers by employees,
appointing a CEO of a British origin,