Question: OF THE FOLLOWING TEXT, REWRITE/ WRITE A BETTER HYPOTESIS

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Walmart fails in attempt to reach the German market

As known, Walmart is one of the largest and strongest retailers in the world, it is a multinational retail corporation that has presence in 24 countries that has approximately 10,500 stores and approximately 220 million customers each week, and Walmart employs over 2.3 billion people worldwide, so it continues competing, growing and improving, but that does not mean, that they don't have problems with different important factors when entering a new territory, for example, the culture, the food, products, prices, among others.

• Environmental Context of the problem

In 1997, Walmart decided to head for Germany and bought two German retail chains (Wertkauf, for 750 million) and Interspar, for a whopping (Deutsche Mark) DM 1.3 billion.

But Walmart's global fame and aggressive entry into foreign markets didn't work out well in Germany. In 2006, after losing around $1 billion, Walmart had to leave Germany.

In this project, we are going to discuss the failure of entering the German market and the type of factors that Walmart overlooked and which led it to leave Germany.

• Problem Definition

Management decision problem.

The lack of information about german law and regulations on the market, caused WalMart multi-million dollar losses:

In 1997 it bought 21 subsidiaries of the Verkauf consortium. However, the German legislation stopped this expansion, to the point that in 1998 it only managed to acquire only one place.

On the other hand, Walmart acquired 75 Spar supermarkets for which it paid 560 million euros. (Spar had bought them for 85 million just a couple of years earlier.)

Walmart paid a high price for supermarkets and did not take into account that most of Spar's stores were poorly located or in places that were difficult to access.

Human Resources politics also had a negative impact on the company.

First, the code of conduct was exactly the same as the one in the United States, it wasn't well translated. Also German culture wasn't considered and this caused outrage from staff, such was the outrage that they took Walmart to court:

--Walmart wanted to enable a telephone for employees to report colleagues who did not comply with the code and prohibited romantic relationships between employees.

Walmart didn't know that in Germany the work system is based on trust and results. The superior is not aware of what people do, because each employee knows that the job has to be done in the best possible way because it is a matter of honesty and professional prestige.

German companies care about productivity and performance of their employees, not their love / sexual life.

The courts prohibited the implementation of this code for violating the individual freedom of people.

Also, Walmart is used to hiring senior citizens to carry out certain activities, for example, helping to put the purchase in bags or give information about the location of a product within the store. This is an offense to German society, which views its elders with great respect for their knowledge and experience.

Marketing research problem: 4P's, product, price, promotion, place.

Another huge mistake that Walmart committed was their price policy.

Walmart uses a strategy named Dumping in which it consists of selling products under the price of the market (basically "stealing" clients from competitors), this was tried to be implemented on the German market.

However, 2 important things were not studied or considered: First, German regulations are strongly regulated and this strategy is prohibited and secondly, Walmart also did not take into account that for Germans, products made in Germany are much better and of higher quality than those from other countries. They prefer brands that are not willing to lower the quality of their products to match Walmart and sell cheaper.

• Approaching the problem.

Determine unit of analysis

The unit of analysis is Walmart's failed attempt to reach the German market. Five key components are the result of this American retail chain failure in Germany. 1. Walmart's low pricing was better than local German stores. This didn't sit well with Germans, the chain's predatory pricing tactic was not well received. Due to their tactics Walmart was ordered by Germany's high court to raise their prices. Walmart later concluded that the German market won't accept their dominces. 2. Walmart failed to understand this country's culture. Western culture was not accepted in Germany. Walmart officials trained its employees to create small talk and smile at check out. This didn't sit well with customers; it was not an integral part of German culture. Customers found it to be "non-German" and inauthentic. 3. Mandatory Unconventional Activities, employees were forced to take part in light exercise to bust morale and chant "Walmart!" This was due to efforts to get the employees excited. Employees were also forbidden to date within the staff. Walmart also made it mandatory for employees to report one another if one broke the rules. At this point the German courts intervened once again and ordered Walmart to stop these practices at work.4. German Unions were not welcomed by the American chain, mutual respect was non-existent and micromanaging its employees was a huge no for the union. 5. Resentment, all of Walmart's errors were growing and led to the fall of Walmart in the German market.

Hypothesis

There is a relationship between the failure of Walmart and the outdated Global framework of aggressive entry into foreign markets.