Walmart in Germany Case

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Walmart tried entering the market in Germany but approached this market with many faults. Firstly,  Walmart’s customer profile had many faults and the company did not properly analyse the environment. They also  failed to integrate in the German society.  The company renovated their store in order to upgrade the main appearance of the company and to also sustain Walmart’s main position as price leaders through cost leadership, which is the strategy that Walmart uses in the America. Since Walmart is so successful in USA, they assumed it would be a ‘piece of cake’ to simply enter the German market with the same routines as used in the US, without properly analysing the German market. This lead too many difficulties and obviously showed Walmart that they did a mistake by not doing prior research.  Price protocols and Restricted company hours were some of the problems that Walmart faced in Germany. Also, Unions played a bigger role in Germany than in the US and this caused some problems for Walmart. Walmart should have done prior research about all of this in order to avoid certain problems.  Germany came up with a law in 1977 that prevented companies from creating a building that was over 800 square meters. Germany and The United States of America clearly have some culture differences and this law that was built in 1977 clearly shows one of the bigger difference in the American/German cultures.

Walmart’s price strategy is to sell products at a very cheap price, which is sometimes cheaper than anywhere else. In Germany, it is restricted to sell a product in the market at a lower price than the original cost of the item. This caused problems for Walmart, because Walmart is known for doing this and this is the method Walmart was using to gain customers. Walmart still tried to pursue this strategy and was later on accused of breaking this law. This resulted in Walmart being penalised with a fine and forced Walmart to approach the German market with a different strategy. Walmart works with a system where the wage of the employee is decided on each 2 years. This resulted in Walmart being penalised, due to the fact that they did not file their end of year figures in the year 1999-2000.

Walmart is known for having long opening and working hours in the United States, But in Germany there is a regulation that forces all businesses to close down after 18:30 during the week days. On Saturday they should be close down prior to 14:30 and on Sunday they should be completely closed. Walmart did not take this well, because they are known for having long opening hours and now cannot benefit from this method due to German regulations. Walmart’s Competitors in Europe caused many problems for Walmart, because these competitors used strategies that made their products cheaper than Walmart’s products. This would hit Walmart hard, because they are known to have the cheapest products and to now enter the European market and have more expensive products than their competitors is devastating