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The failure of the introduction of Wal-Mart in Germany: Analysis and reasons

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  1. Case study Wal-Mart
  2. Introduction
  3. The reasons for internationalization
    1. Reasons for Wal-Mart's international expansion
  4. Decision taken by Wal-Mart: Go Global
    1. Benefits of international expansion
  5. Wal-Mart's decision to enter the German Market
    1. Positives
    2. Negatives
  6. Reasons for the failure of Wal-Mart in Germany
    1. Method of entry
    2. Suppliers
    3. Stocks
    4. Employees
    5. Perception of client
  7. Wal-Mart's prospects in Germany

In 1962, Sam Walton opened the first Wal-Mart Store in Rogers, Arkansas, in a rural area. After one year of operation, the store had sales exceeding one million U.S. dollars. With this success, the supermarket chain grew at an increasing pace. In 1967, there were 24 stores in eleven U.S. states with a total annual sale of 12.6 million U.S. dollars. Then in 1980, 276 Wal-Mart stores realized a total annual sale of 1.4 billion U.S. dollars. This growth continued over the years along with internationalization of Wal-Mart in the 1990s.

[...] Reasons for the failure of Wal-Mart in Germany Inability to apply the business model and create value as on their domestic market. Method of entry: Entry into the German market through the acquisition of two supermarket chains (Wertkauf and Interspar), which represents a significant investment. Both the chains purchased (Wertkauf and Interspar) were not popular in Germany. Location of supermarkets in urban areas. Inability to manage the alliance of the two different corporate cultures Suppliers: Poor relationship with suppliers Difficulty of implementation of automated dispensing system (inventory) Less bargaining power Stocks: Delays in the process of storage due to lack of motivation of employees (the result of low wages) Employees: The inappropriate corporate culture Poor communication between employers and employees due to language barrier Non involvement of employees. [...]

[...] Objectives of going global To increase market share To increase revenues, turnover and profitability To benefit from economies of scale To reduced costs Benefits of international expansion 1st stage of global expansion: Canada, Mexico, Brazil, Argentina Reasons for expansion Canada Mexico Brazi Argentin l a Similarities of lifestyles and X X consumption Same-way of doing business X X NAFTA Economic Alliance X X High economic growth rate: Emerging X X Markets Low cost labor X X X Wal-Mart's decision to enter the German Market Wal-Mart decided to enter the German market in the year 1997. [...]

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