Word
count: 803
Company:
Wal-mart Stores, Inc.
An epitome of how humble beginnings
bear great things, Wal-mart Stores, Inc., otherwise known as Walmart by avid
grocery store patrons, has had a progressive success story of over 52 years. Founded
by Sam Walton in 1962, today the company boasts with over 11,000 retail units
in 27 countries under a total of 71 different names, acquiring a substantial
degree of international coverage and emerging as the world’s largest retailer (Wal-mart
Stores, Inc. 2014).
In spite of Walmart’s considerable successes
within the foreign market, the company still grapples with a number of setbacks,
particularly in Germany (Landler and Barbaro 2006). Unlike its profitable
operations in UK, Asia and Latin America, Walmart Germany had occupied the tail
end of the financial spectrum with a “turnover of £2.9 billion, […] a
stagnating share of just 1.1 percent, […] [and] accumulated losses of more than
£1 billion,” (Knorr and Arndt 2003, p.9). Resultantly, the company had no
choice but to call off its German operations and sell all 85 of its
hypermarkets in 2006 to German retail giant, Metro AG (The Economist 2006).
With much inquisition over Walmart’s
withdrawal from the lucrative $370 billion German retail market, there
certainly has been no shortage of explanations either. Most of which seem to
suggest that the company’s downfall in Germany was a result of “a fundamentally
flawed internationalization strategy” and an “incredible degree of ignorance of
the specific features of the extremely competitive German retail market” (The
Tim Channel 2012). The following
recounts several of such instances.
In the wake of its initial presence,
Walmart Germany’s organizational management operated on the basis of cultural
hubris. Such is noted when US citizen and former Walmart, Inc. senior vice president,
Rob Tiarks was appointed as Walmart Germany’s first CEO (Knorr and Arndt 2003).
Tiarks at the helm was not to employees’ liking however, as he did not speak
German and was unwilling to learn the language. By the same token, Tiarks had
also exhibited a rather startling degree of ignorance over the complexities along
with the legal and institutional framework of the German retail market, and
insisted that all business operations be communicated via English (Knorr and
Arndt 2003). Such display of pride and insensitivity calls to question
Walmart’s internationalization and one-size-fits-all strategy; as it “expose[s]
[a] profound lack of intercultural competence and management skills” by the
executive, himself (Knorr and Arndt 2003, p.20).
Apart from the former are the
occasional instances of cultural clashes between Walmart’s dominant culture and
that of the Germans that emerged as another determinant for its downfall.
Stemming from the company’s failure in identifying the differences in behavior
and communication styles, several employee practices that were unsuited to the
German context were absentmindedly culminated. For instance, Walmart’s chanting
exercises that insisted upon employees to begin their shifts engaging in group chants
of “WALMART! WALMART! WALMART!” (Kwintessential n.d.). Such “corporate boosterism did not go over
particularly well with the Germans,” as employees found it embarrassing, oddly
aggressive and too reminiscent even of Germany’s infamous Nuremberg Rallies –
extensive propaganda events that were carried out amidst the Second World War (Macaray
2011).
In a similar manner is Walmart’s
smiling service, requiring all cashiers at checkout desks “to flash smiles at
customers after bagging their purchases” (Macaray 2011). Oddly enough, Germans
do not usually smile at strangers and if any attempt was made to elicit a
response, it was one of agitation and bewilderment simply because “Germans […]
don’t behave that way,” Verdi union secretary Hans-Martin Poschmann points out (Landler
and Barbaro 2006). The simple American gesture of smiling may indicate
friendliness to most but in highly conservative Germany smiling to a stranger
may come off as being simple-minded and is usually frowned upon (Helm 2000).
In as much as Walmart’s cultural
shortcomings had taken a severe blow to the company’s pocketbook and pride,
premeditated steps in reference to Gudykunst’s (2003) Anxiety/Uncertainty
Management Theory could have been initiated to prevent such weighty
repercussions. Adequate uncertainty management could have materialized if
Walmart had taken the effort in carrying out cultural assessments of the German
market and its idiosyncrasies before and after its acquisition of the foreign
operations. On the other hand, Walmart Germany’s executive Tiarks should also
have been conscious of his incompetence in embracing the German culture and in
turn indicated a willingness to learn both the language and culture, as part of
the company’s notion of being mindful.
With all things considered, the analogy
of Wal-mart Stores, Inc. aptly presents a clear reminder that even the most
successful retail operations will not be exempted from failure, as
cross-cultural blunders will inevitably have its way of impinging on a
company’s success and its retail market’s receptivity. As such, the company
should reassess its current internationalization strategy if it wishes to
secure a promising forecast in its future foreign investments.
Reference
List:
1. Gudykunst,
W.B. 2003. Understanding Must Precede Criticism: A Response to Yoshitake’s
Critique of Anxiety/Uncertainty Management Theory. Intercultural Communication Studies, [online]. Available at: <http://www.uri.edu/iaics/content/2003v12n1/03%20William%20B.%20Gudykunst.pdf>
[Accessed 24 September 2014].
2. Helm,
T. 2000. Service with a smile frowned on by Germans. The Telegraph, [online]. Available at: <http://www.telegraph.co.uk/news/worldnews/europe/germany/1372243/Service-with-a-smile-frowned-on-by-Germans.html>
[Accessed 24 September 2014].
3. Knorr,
A. and Arndt, A. 2003. Why did Wal-mart fail in Germany? Materials Science of Gravity Globalization of the World Economy,
[online]. Available at: <http://www.iwim.uni-bremen.de/publikationen/pdf/w024.pdf>
[Accessed 23 September 2014].
4. Kwintessential,
n.d. Walmart in Germany: Cultural
Problems. [online] Kwintessential. Available at: < http://www.kwintessential.co.uk/resources/walmart-germany-cultural-problems.html>
[Accessed 25 September 2014].
5. Landler,
M. and Barbaro, M. 2006. Wal-mart Finds That Its Formula Doesn’t Fit Every
Culture. The New York Times,
[online]. Available at: <http://www.nytimes.com/2006/08/02/business/worldbusiness/02walmart.html?pagewanted=all&_r=1&>
[Accessed 23 September 2014].
6. Macaray,
D. 2011. Why Did Walmart Leave Germany? The
Huffington Post, [online]. Available at: <http://www.huffingtonpost.com/david-macaray/why-did-walmart-leave-ger_b_940542.html>
[Accessed 23 September 2014].
7. The
Economist, 2006. Heading for the exit. The
Economist, [online]. Available at: <http://www.economist.com/node/7253227>
[Accessed 24 September 2014].
8. The
Tim Channel. (2012). Why Walmart Failed in Germany. [online]. 18 November 2012.
Available from: wordpress.com http://thetimchannel.wordpress.com/2012/11/18/why-walmart-failed-in-germany/.
[Accessed 23 September 2014].
9.
Wal-mart Stores, Inc. 2014. Our Locations. [online] Wal-mart Stores,
Inc. Available at: <http://corporate.walmart.com/our-story/our-business/locations/>
[Accessed 23 September 2014].
