What does Walmart own

Wal-Mart. Why the US giant failed in Germany

Table of Contents

1 Introduction
1.1 Problem definition of the work
1.2 Structure of the thesis
1.3 Objective of the work

2. Wal-Mart Company Profile
2.1 Wal-Mart, Inc.
2.2 Wal-Mart Germany
2.3 Wal-Mart Company Culture

3. Theoretical foundations
3.1 Culture and corporate culture in an international context
3.2 The activating process of recruitment
3.2.1 Classification of the recruitment process
3.2.2 Definition of the recruitment process
3.2.3 The three-component theory

4. Critically examine the reasons why Wal-Mart failed
in Germany
4.1 Disregarding cultural and corporate culture differences
4.2 The attitude of German consumers towards Wal-Mart
4.3 Recommendations for action

5. Critical appreciation
5.1 Conclusion
5.2 Outlook

bibliography

1 Introduction

1.1 Problem definition of the work

Only in the rarest of cases do companies operate exclusively on their home market because they hope for growth opportunities through internationalization.1 For this reason, the US company Wal-Mart decided in 1997 to enter the highly competitive German retail market with the help of acquisitions, after it had already successfully expanded on the two American continents.2 In doing so, the company wanted to gain access not only to the German but also to the entire European market.

However, Wal-Mart failed to gain a foothold in Germany. After about nine years in the “red”, the world's largest retailer had to cease operations in Germany and withdraw completely from this market.3

In view of this fact, the present work addresses the causes and consequences of the failure of Wal-Mart in Germany.

1.2 Structure of the thesis

Following this introduction, a comprehensive overview of the Wal-Mart company is given in order to obtain important information about the company's activities in America and Germany, as well as the corporate culture of the group. The next part is then devoted to the theoretical basics. First, an overview of the culture and the corporate culture in an international context is given. The theory of the activating process of attitudes is then presented and explained in detail because it provides a fundamental explanation for the behavior of German consumers towards Wal-Mart.4

With the help of the critical analysis, the question of why the US company Wal-Mart failed in Germany should finally be answered. Following this, basic recommendations for action are also made. A conclusion and a brief outlook conclude the work.

1.3 Objective of the work

The aim of this work is to understand and explain the behavior of German consumers towards Wal-Mart in order to understand the reasons for the failure of the US group in Germany. Furthermore, the work aims to derive appropriate recommendations for action for the American group to influence this consumer behavior.

2. Wal-Mart Company Profile

2.1 Wal-Mart, Inc.

The first Wal-Mart branch was founded in 1962 in the US state of Arkansas by Sam Walton.5 The US company went public in 1970 and used the proceeds to finance a steady expansion of the company.6 What began with a single discounter and the simple idea of ​​selling more for less has become the largest retailer in the world over the last 50 years through numerous international expansions.7 However, the United States remains at the heart of Wal-Mart's business.8

Every week, almost 270 million customers visit the 11,700 branches in 28 countries worldwide. With total sales of around $ 500.3 billion in fiscal 2018, Wal-Mart is the world's number one company in terms of sales.9 Wal-Mart has approximately 2.3 million employees worldwide and continues to be a leader in sustainability, charity and employment opportunities.10

Permanent low prices, an enormous selection of goods, exceptional service and long opening times11 are at the core of Wal-Mart's corporate strategy.12 The company's goal is to open up opportunities and create added value for customers and communities around the world.13

Company founder Sam Walton attributed Wal-Mart's rapid growth to its low cost, which attracted not only its customers but its employees as well. He trusted in providing customers with a great shopping experience that drove them to return to Wal-Mart. Walton shared his corporate vision with his employees in a way that was unique in the industry. He made his employees partners in the company's success and firmly believed that this partnership was responsible for the success of Wal-Mart.14

2.2 Wal-Mart Germany

In December 1997, Wal-Mart gained access to the highly competitive German retail market by acquiring 21 run-down Wertkauf stores.15 A year later, the group took over 74 Interspar stores and at that time had a total of 95 branches in Germany. In 1999, the first modernized Wal-Mart “Superstore” opened in Dortmund, which was designed based on the American model.16

The basic strategy of Wal-Mart in Germany was to renovate the branches it had bought in order to improve the overall appearance and to maintain price leadership through cost leadership, as in the American market.

As a result, Wal-Mart triggered an intense price war in Germany.17 However, Wal-Mart's concept of dominating the market with huge stores and competitive prices could not be implemented in Germany. The group underestimated the tough competition, because competitors such as Lidl or Aldi could keep up with Wal-Mart in terms of price and also rely on its regular customers.18

Almost the entire management team at Wal-Mart in Germany has been replaced by Americans.19 Following the American model, the German employees were trimmed to be customer-friendly through a sense of community and enjoyment of their work.20

In contrast to many German competitors, Wal-Mart offered credit card payments and free bags for the goods purchased, optimized the interiors of the branches and had, by German standards, exceptionally friendly customer service. The German consumers, however, were not used to this customer-friendliness, such as the greetings at the entrance or the “bag packers”, and felt rather annoyed by these gestures and with these additional services higher costs for the goods in Ver - bonded.21 As a result, the Wal-Mart brand was unable to arouse sympathy among German consumers.22

In 2006, the US group finally ceased all of its operations in Germany and withdrew completely from the German market after Wal-Mart had incurred heavy losses year after year.23 At that time, the Metro group took over the entire German business from Wal-Mart, which had sales of around two billion euros in 2006.24

At that time, Germany was the third largest retail market after the USA and Japan and was also considered the gateway to Eastern Europe. This is why it was so crucial for Wal-Mart not just to enter this market, but to control and dominate it.25

2.3 Wal-Mart Company Culture

By German standards, Wal-Mart has a very special corporate culture.26 The US group tried its concept, which is very popular in the US, to implement in Germany. However, Wal-Mart paid no attention to the local conditions and did not try to adapt its own corporate culture to German standards.27

Singing the Wal-Mart anthem, for example, is part of the corporate culture. Wal-Mart employees must begin their shifts with group chants and stretches to increase morale and loyalty. For the singing, the employees have to be in formation and say “WAL-MART! WHALE MART! WAL-MART ”sing. However, this form of corporate support was met with incomprehension and embarrassment among German employees.28

Another element that is intended to strengthen the communalization of the employees at Wal-Mart are barbecues with the families. This is intended to create and promote emotional rather than rational working relationships between employees, as is usually the case in German corporate culture.29

Customer friendliness is also an essential part of WalMart's corporate culture and requires a high level of commitment from employees. It is expected that the employees create a pleasant shopping atmosphere for the customer.

This includes, for example, that the customers are greeted by a Wal-Mart employee at the entrance, a shopping cart is pushed or small talk is held with them.30 Furthermore, the cashiers are required to smile at the customers after they have packed their purchases. However, this caused confusion for many consumers in Germany because they are not used to being smiled at so openly by strangers in this country.31

So that an absolute customer orientation can be made possible, the employees, according to the then CEO David Glass, should be “whalmatized” and thus completely focused on the customer.32

Wal-Mart's corporate culture also includes a code of conduct that is to be applied worldwide. This code prohibits relationships of love among Wal-Mart employees. This applies primarily to relationships between superiors and subordinates. In this context, the Group demands that employees report any misconduct by their colleagues immediately - there is a specially set up and anonymous telephone hotline for this purpose.33

In conclusion, it can be summarized that the Wal-Mart corporate culture pursues four central goals. This includes service to the customer, respect for the individual, the pursuit of perfection and acting with integrity.34

3. Theoretical foundations

3.1 Culture and corporate culture in an international context

Consumer behavior is influenced by numerous factors. Culture is an essential factor in this context.35 This is not a static state36 and is, according to Trommsdorff and Teichert, “the sum of all collectively shared, implicit and explicit behavioral norms, patterns, expressions and results that are learned by the members of a social group and passed on over generations”37 Are defined. The decisive components of a culture include language, values ​​and norms, gestures, symbols, religion and national awareness.38

The culture influences and shapes the behavior of consumers39, however, this influence of culture on consumer behavior is largely barely perceived. The reason for this is that the culture is anchored in the subconscious of the consumer.40

[...]



1 See Meffert, H., Burmann, C., Becker, C .: (2010), Internationales Marketing-

Management, A brand-oriented approach, Stuttgart, p. 17.

2 Cf. Bergmann, Jens: (2000), Wal-Mart in Germany: Augen zu und durch, in: Brand eins, 6, o.S.

3 See Price Waterhouse Coopers: (2007), Food for thought, Expanding Frontiers: Gearing up on New Opportunities, p.2.

4 See Trommsdorff, Volker and Teichert, Thorsten: (2011), Consumer behavior, Stuttgart, p. 126.

5 See Walmart: Our Story, Our Locations, undated, undated

6 See Walmart: Our Story, Our History, undated, undated

7 See Walmart: Our Story, About Us, undated, undated

8 See Walmart: Our Story, Our Locations, undated, undated 2

9 Cf. Statista: (2017), Walmart Dossier, ranking of the largest companies worldwide by turnover in 2016/2017 (in billion US dollars), p. 8.

10 See Walmart: Our Story, About Us, undated, undated

11 Cf. Bergmann, Jens: (2000), Wal-Mart in Germany: Augen zu und durch, in: Brand eins, 6, o.S.

12 See Walmart: Our Story, Our Business, undated, undated

13 See Walmart: Our Story, Our Locations, undated, undated

14 See Walmart: Our Story, Our History, undated, undated

15 Cf. Bergmann, Jens: (2000), Wal-Mart in Germany: Augen zu und durch, in: Brand 3 eins, 6, o.S.

16 See Manager Magazin: (2006), Wal-Mart in Germany, n.p.

17 See Jorunal of International Management: (2011), Walmart’s Downfall in Germany, no p.

18 See Stern: (2006), Retail, Wal-Mart fails in Germany, no p.

19 Cf. Bergmann, Jens: (2000), Wal-Mart in Germany: Augen zu und durch, in: Brand eins, 6, o.S.

20 See Spiegel Online: (2006), Wal-Mart in Germany, Chronology of a Failure, n.p.

21 See Manager Magazin: (2006), Wal-Mart in Germany, no p.

22 See Welt: (2006), fortress Germany, no p.

23 See Price Waterhouse Coopers: (2007), Food for thought, Expanding Frontiers: Gearing up on New Opportunities, p.2.

24 See Manager Magazin: (2006), Wal-Mart in Germany, n.p.

25 See Price Waterhouse Coopers: (2007), Food for thought, Expanding Frontiers: Gearing up on New Opportunities, p.2.

26 See Zeit online: (2006), Wal-Mart gives up, no p.

27 Cf. Wiener Zeitung: (2006), Inflexible corporate culture causes Wal-Mart to fail in Germany, n.p.

28 Cf. Huffingtonpost: (2017), Why Did Walmart Leave Germany ?, o.S.

29 See Zeit online: (2006), Wal-Mart gives up, no p.

30 Cf. Köhnen, Heiner: (2000), The Wal-Mart system, strategies, personnel policy and corporate culture of a retail giant, Düsseldorf, pp. 18f.

31 Cf. Huffingtonpost: (2017), Why Did Walmart Leave Germany ?, o.S.

32 Cf. Köhnen, Heiner: (2000), The Wal-Mart system, strategies, personnel policy and corporate culture of a retail giant, Düsseldorf, pp. 18f.

33 Cf. Huffingtonpost: (2017), Why Did Walmart Leave Germany ?, o.S.

34 See Walmart: Working at Walmart, Culture, o.J., o.S.

35 See Roemer, Ellen: (2014), Internationales Marketing Management, Stuttgart, p. 87.

36 See Solomon, Michael: (2016), Consumer behavior, Hallbergmoos, p.75.

37 Trommsdorff, Volker and Teichert, Thorsten: (2011), consumer behavior, Stuttgart,

P. 187.

38 See Roemer, Ellen: (2014), Internationales Marketing Management, Stuttgart, p. 88.

39 See Kroeber-Riel, Werner and Gröppel-Klein, Andrea: (2013), Consumer behavior, Munich, p. 631.

40 See Trommsdorff, Volker and Teichert, Thorsten: (2011), Consumer behavior, Stuttgart, p. 187.

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