Item Pageno.1.General Management, 12.DecisionMaking, 1
3.Dealing with Government, 2
5.Legal Problems, 3
6.Labor Unions, 3
Thefollowing text is an evaluation of Wal-Mart’s operations in theEuropean market and specifically in Germany. The venture took aperiod of 9 years from Wal-Mart’s entrance in the year 1998 andexit in 2007. The world largest retailer found out that it approachto conquer the American market did not work out in the German market.Wal-Mart faced constant competition from other stores in Europe. Inaddition, there was constant disagreement between the management andthe employees (Schaefer).
First,Wal-Mart adopted a general management strategy that entailedappointing of American bosses in Germany. The appointment of Americanmanagers further contributed to the failure as the managers could notspeak the German language. Besides, Wal-Mart insisted that theirmanagers should speak English and consequently, there was the failureto communicate to the German consumers and employees. Second, theresolve on American management style caused the managers failure toindoctrinate the German traditions in running of the Wal-Mart storesin Germany. For instance, the administration insisted that the Germanemployees had to apply the American wish style. It includes brightlysmiling to the customers and helping them pack their items. Besides,the management ruled that employees should not date colleagues inpositions of influence. Besides, the employees were cautioned not toflirt with one another. The approach caused equal discomfort for boththe employees and the customers (Schaefer).
Market-relatedpreconditions curtailed Wal-Mart`s management. For example, themanagement made decisions to install a German chief as a strategy toincrease the appeal of the local tastes. Besides, they decided tooffer a special on fresh carp as an Easter specialty.The decisionswere curtailed by the failure of Wal-Mart’s 95 stores to matchAldi’s 400 stores regarding convenience. Similarly, the decision toattack the market by offering low prices was counteracted by a lowerprice offered by competitors that resulted in little margins tomotivate customers to travel an extra distance to the less convenientWal-Mart stores (Landler).
3.Dealingwith the government
Germany’sgovernment regulations partly contributed to the failure of Wal-Mart.First, the Germany’s shopping hours are very short compared to the24 hours of shopping provided in the United States. Consequently,Wal-Mart could not afford to provide 24 hours shopping services.Besides, the stores had to close on Sundays, and this furtheraffected the operations of the store resulting in more losses(Landler).
Wal-Martventured into Germany’s market in 1998. The market is lucrative andis worth 370 billion US Dollars. Wal-Mart started by acquiring twoGerman store chains: WertKauf and Inters par. The competitorstrembled due to Wal-Mart’s formidable competition emanating fromits super low-cost competition strategy. Soon the competitors wereglad to find out that Wal-Mart was getting everything wrong. Due tolack of experience in dealing with European shoppers, Wal-Mart had tostart learning from scratch it was unable to flex its strategicmuscles. Besides, it faced fierce competition from Aldi and Lidl thatare Germany’s two aggressive discount chains. Specifically,Wal-Mart was faced with a dilemma between improving the sales by itsstores and building new stores that amounted to time wastage andrelated high costs. In the year 2007, Wal-Mart sold its stores to itsGerman rival Metro for an undisclosed amount (Landler).
Wal-Martrepeatedly failed to comply with the provisions of German laws.Consequently, the store faced heavy fines for breaching severalimportant German laws and regulations. The Germany market classifiedWal-Mart as a superior market power and consequently, the store wassubject o the country’s antitrust laws. The first in complianceincidence was against the “Act against restraints of competition”. The law is a part of the German antitrust legislation that bans allthe undertakings of superior market powers. Specifically, the lawprohibits the sale of a given range of goods below their cost price.To sell a product below the cost price, Wal-Mart was obliged toprovide a justifiable reason. Such a law was a hindrance for Wal-Martto exercise its low-cost strategy in the market. The secondnoncompliance issue was against section 335 of the “CommercialAct”. The law requires that corporations should disclose thenecessary financial information such as the balance sheet and theprofit and loss statement. Wal-Mart severally failed to produce itsfinancial statements for the German Empire probably it did notintend for the investors to know the financial status in Germany.During the nine-year period, the store only produced its financialstatement once in the year 2003 that indicated losses ofapproximately United States dollars 550 million (Schaefer).
Germany’slabor environment is highly monitored and regulated. Although theunions initially prompted Wal-Mart to hire more staff initially, thesituation changed when Wal-Mart began to incur losses. When Wal-Martattempted to close off some unprofitable stores and fire someworkers, the German worker protection laws curtailed it. The Germanworker protection laws are strict and complicated consequently itimplied that firing workers took more time and served as additionalrelocation costs (Landler).
Landler,Mark. “Wall-Mart decides to pull out of Germany.” TheNew York Times.28July 2006. Web.6 November 2015
Schaefer,Louisa. “World’s biggest retailer Wal-Mart closes up shop inGermany.” DWMade for minds.29 July 2006 .Web. 6 November 2015.