Wal-Mart Case

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Wal-Mart Case

What are some of Wal-Mart’s FSAs? To what extent are these FSAs location-bound or internationally transferable? Wal-Mart’s FSAs are the things which they have been so successful with in the US. These include their ‘every day low price’ (EDLP) philosophy, which is based on efficient distribution systems, low prices negotiated with suppliers, very innovative technology and efficient processes with suppliers. Another FSA is its so-called ‘exceptional service’. This includes smiling at customers, helping them and exceeding their expectations. The EDLP philosophy is internationally transferable to the point where it is being hindered by foreign laws, like in Germany. If the environmental conditions are suitable, EDLP has proven that it is a successful strategy, but the conditions vary per country. The ‘exceptional service’ that Wal-Mart offers can be seen as internationally transferable, but its success also depends on the conditions within foreign countries. If the customers are not used to such extensive aid while shopping, they might find it annoying, intimidating or even harassing. What distance components (relative to the US) do American retailers face in Germany? Give examples. How did these distance components affect the exploitation of Wal-Mart’s FSAs transferred to Germany? First of all, the location of Wal-Mart Germany’s warehouses and the distance between the headquarters of the two former chains brought problems. Furthermore, the German zoning laws are a distance component which American retailers have to face with. The two warehouses that Wal-Mart had in Germany, located in the western part, were almost 500 kilometres away from its eastern and southern stores, which made managing very hard and complicated. The German zoning laws required that Wal-Mart’s huge stores’ impact had to be assessed. This made Wal-Mart unable to expand rapidly and because the relatively small size of its German stores negatively influenced its operating costs,...
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