Wal-Mart Case
1. What are some of Wal-Mart’s FSAs? To what extent are these FSAs location-bound or internationally transferable?
Some of the FSAs of Wal-Mart are its ‘every day low price’ (EDLP) philosophy and its so-called ‘exceptional service’. The EDLP and the service seem to be internationally transferable FSAs, because they can be copied to other countries. The EDLP is based on efficient distribution systems, very innovative technology, low prices negotiated with suppliers and efficient processes with suppliers. Those strategies are developed in the USA and can be transferred across borders. Just like the ‘exceptional service’, which includes smiling at customers, assisting them and exceeding their expectations, which are a set of rules for the employees, does not seem to give any problems when they are transferred across borders. But although those FSAs can be transferred to other countries, they are not working in Germany, due to cultural differences. So therefore the FSAs are location-bound, because they are efficient in the culture of the USA but not in the culture of Germany. The FSAs are location-bound when they cannot be implemented in the local culture of the host country.
2. 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?
American retailers in Germany cannot only rely on their suppliers in the US, some products need to be sourced locally. For instance, vegetables and local products need to be bought from local suppliers, because vegetables need to be fresh, they do not improve in quality when they are transported from the USA, and local products are not produced in the USA, like Bratwurst, so they have to be bought locally. Also Wal-Mart had to source locally or regionally for some of its products offering, but because of this and the small size of Wal-Mart Germany and its inability to expand rapidly made it
Some of the FSAs of Wal-Mart are its ‘every day low price’ (EDLP) philosophy and its so-called ‘exceptional service’. The EDLP and the service seem to be internationally transferable FSAs, because they can be copied to other countries. The EDLP is based on efficient distribution systems, very innovative technology, low prices negotiated with suppliers and efficient processes with suppliers. Those strategies are developed in the USA and can be transferred across borders. Just like the ‘exceptional service’, which includes smiling at customers, assisting them and exceeding their expectations, which are a set of rules for the employees, does not seem to give any problems when they are transferred across borders. But although those FSAs can be transferred to other countries, they are not working in Germany, due to cultural differences. So therefore the FSAs are location-bound, because they are efficient in the culture of the USA but not in the culture of Germany. The FSAs are location-bound when they cannot be implemented in the local culture of the host country.
2. 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?
American retailers in Germany cannot only rely on their suppliers in the US, some products need to be sourced locally. For instance, vegetables and local products need to be bought from local suppliers, because vegetables need to be fresh, they do not improve in quality when they are transported from the USA, and local products are not produced in the USA, like Bratwurst, so they have to be bought locally. Also Wal-Mart had to source locally or regionally for some of its products offering, but because of this and the small size of Wal-Mart Germany and its inability to expand rapidly made it