December 6, 2011
Instructor: Dr. Daniela Portuese
Wal-Mart has successfully expanded its operations from Bentonville AK to countries around the world. They are the largest retailer in the world and also the largest employer. Their first expansion into a foreign country was into Mexico with a Sam’s Club in 1991. Today they operate over 53,00 stores in more than 25 countries. They have had great success in expanding into new markets with the original Wal-Mart practices. They have also had their share of growing pains and made mistakes when entering some countries. The most notable of their mistakes comes from their poor performance in Germany. Their mistakes eventually led led to their exit from the country altogether.
Wal-Mart entered into Germany in 1998. Their plan was to mirror their proven U.S. operations into Germany and hopefully get the same fantastic results. Unfortunately for Wal-Mart it didn't turn out that way. From the very beginning Wal-Mart was met with challenges and did not get the results they expected. Wal-Mart ended up losing about $1 billion in their retreat from the German expansion. Michael Duke stated “As we focus our efforts on where we can have the greatest impact on our growth and return on investment strategies, it has become increasingly clear that in Germany's business environment, it would be difficult for us to obtain the scale and results we desire” (Schaefer, 2006). Wal-Mart encouraged German managers to enforce practices similar to the practices in the U.S. One such practice was for sales clerks to smile at customers. In the U.S. this greeting is seen as friendly and demonstrated the employee’s willingness to help the customer. In Germany male shoppers interpreted it as flirting. Another U.S. failed policy was the morning chant by Wal-Mart employees. Employees would often do whatever they could to miss this uncomfortable daily event including...