When in Rome

Topics: Retailing, Wal-Mart, Supermarket Pages: 5 (1867 words) Published: March 7, 2013
When in Rome, do as the romans do. In this time old adage the reader is reminded to be polite and to abide by the customs and culture of a society when they are guests there. Nowhere is this phrase more important to remember than in the business world. With the world becoming ever more interconnected, managers, when thinking about expanding their operations should always think about how their actions can negatively impact their business in that foreign market. There is no better example of a costly intercultural mistake than those that have been committed by the world’s largest retailer Wal-Mart. As expressed in the Wall Street Journal’s Article “Lower Tariffs, Retail Muscle Translate into Big Sales for Wal-Mart in Mexico” by David Luhnow, Wal-Mart’s expansion into neighboring country Mexico was seamless and yielded extensive profits, while the expansion into the Eur-Asian continent have been met every step of the way with innumerable drawbacks. These drawbacks have occurred due to the fact that Wal-Mart has a “one size” fits all mentality. In trying to advance into South Korean and German markets, Wal-Mart committed costly intercultural mistakes. Instead of trying to meld the culture of the foreign nation with that of their company, they imposed their mid-western folksiness, anti-union mindset and hyper bulk buying strategy onto cultures that are not accustomed to that strategy.

Wal-Mart is a multinational American retailor that runs chains of large discount departmentalized stores and warehouse stores. These large stores allow the shoppers to enjoy a “one stop shop for everything.” According to Wal-Mart's website corporate.walmart.com “Sam Walton opened the first “Wal-Mart store in 1962 in Rodgers, Arkansas” (pg. 1). Its headquarters have not mover to far from there, they are in Bentonville, Arkansas. Wal-Mart later became the nation’s largest retail store. With the turn of the century Wal-Mart began to focus on expanding abroad, Wal-Mart hoped for promising international growth. What compelled Wal-Mart to expand were that domestically profits where stagnating and they had found themselves not being able to expand anywhere else. While companies like Starbucks can add a kiosk within a store, Wal-Mart is not able to do that to continue to grow. Positive growth in their expansion into Mexico has left Wal-Mart's managers wanting more international expansion. According to David Luhnow’s article “Low Tariffs, Retail Muscle Translates into Big Sales for Wal-Mart in Mexico” Wal-Mart’s local unit, Wal-Mart de Mexico S.A., has annual sales of nearly “$9 billion and rings up about a third of its parents $1.1 billion in annual operating income” (pg. 1). They believed that they would receive positive expansion elsewhere because they saw that in Mexico they didn’t have to change any part of its operation. That assumption hurt them in the long run. The organizations problem that Wal-Mart faced was just that, they believed that they would be successful in any country that they would go too, without having to accommodate their host’s countries culture. Many of Wal-Mart's problems stem from hubris, they thought that they would be able to go into a nation and establish themselves by just throwing their weight around. At first the problem was not apparent. As the years went by and they saw that they weren’t establishing a foot hold in the host country, their missteps where starting to become apparent. Problems started to arise in 1998 in Germany states Mark Landler of The New York Times. In the article “Wal-Mart finds that its Formula Doesn’t Fit Every Culture” he remarks that the problems faced by Wal-Mart in Germany were that they were “impos[ing] Wal-Mart's corporate culture on non-American employees, sales clerks were required to smile to customers and had to participate in the morning chant”(pg. 1). These requirements lead to problems because of the disparity between cultures; male shoppers interpreted these gestures as flirting and...
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