Kevin Wu

Economics

May 13, 2015.

WALMART
Why do the expansions of some successful companies, such as Walmart, into countries,
like Germany, result in a financial failure or bankruptcy?
1. Why were the German employees of Walmart, the German populace and the
German government all dissatisfied with the operations of Walmart in their country?
They were all dissatisfied with Walmarts One-size-fits-all business model where Walmart
thought its methods of operation in North America would work in Germany as well. Walmart was
highly against unions and attempted to disband and prevent them in North America but
Germany was pro-union and thus there was a conflict between Walmart and its German
employees. Many protests arose and slowed Walmart operations in Germany.
Walmart were not well aware of the cultural differences between Germany and North America
and thus they were unable to appeal to German consumers and drive them away. One example
of Walmarts cultural insensitivity was when they forced their employees to smile at customers
when they were near them. Germans are not comfortable with strangers arbitrarily smiling at
them and they found it to be inappropriate.
Walmart had an ethics code that all employees had to abide by. (Requirement of employees to
spy on each other and report any misconduct, disallowing employees to form romantic
relationships) The German government ruled that Walmarts ethics code was a violation of their
employees freedom and right and they were forced to stop which changed Walmarts methods
of operation.
2. What were some traits of a psychopath that Walmart had exhibited as a corporation?
Since corporations are considered as legal persons (which means they they can have
ownership over assets, make decisions and be liable to crimes), they can be compared to a
psychopath, a characteristic often associated with humans.
One trait would be the corporations impulsivity and failure to plan ahead. Walmart began
business in Germany in 1998 with the intention to take advantage of the lucrative German 370
billion dollar retail market. Since North America and Germany share similar cultural and political
antecedents, they did not research adequately enough about the German market to appeal to
German consumers.
Another trait would be Walmarts inability to follow social norms. (though this trait of Walmart
only applies in certain countries) One example to prove it is Walmarts heavy use of plastic bags
which goes against the social norms and ideals of recycling in Germany.

3. Why was Walmart unable to compete with local and domestic competitors in Germany
even though it dominates most of its competition in North America?
There are strict laws in Europe that prevents large corporations from monopolizing smaller
businesses such preventing the sales of products below its market value. This means Walmart,
though with its billions of dollars, cannot drive out its German competitors by lowering their
prices to a point where its competitors cannot match. This was how Walmart was able to
dominate small towns and cities around North America but not in Germany. Another notable
reason why Walmart wasnt able to compete were that many Germans preferred smallneighbourhood stores rather than large and impersonal supercentres such as Walmart.
4. What could have Walmart done better to have been successful in Germany or at very
least, ?
Though Walmart had the right to form its own laws and policies within its stores, its ethics code
was deemed too restrictive to be enforced in Germany and thus they were not allowed to
implement it like they do in other countries. If Walmart did not try to enforce it in the first place,
the employee protests may not have lasted as long as they did which halted much of Walmart's
operations in Germany.
Walmart should have researched more about the culture, ideals, morals and values of German
consumers before starting operations so that they could attract more customers away from its
local and domestic competitors since laws restricted them from monopolizing
MLA Citations
Macaray, David. "Why Did Walmart Leave Germany?" The Huffington Post.
TheHuffingtonPost.com, 29 Aug. 2011. Web. 14 May 2015.
Foly, Stephen. "Mighty Walmart Admits Defeat in Germany." The Independent. Independent
Digital News and Media, 29 June 2006. Web. 14 May 2015.
http://www.independent.co.uk/news/business/news/mighty-walmart-admits-defeat-in-germany409706.html
http://www.huffingtonpost.com/david-macaray/why-did-walmart-leave-ger_b_940542.html