Wal-Mart in Ghana

In America, Wal-Mart has been known for its competitive advantage of low

prices and wide selection of products since its founding in 1962 (corporate). The

implementation of this competitive advantage has led to Wal-Mart having a great deal of

success. Success for an international corporation like Wal-Mart is characterized by the

company dominating the market and continually growing. In 2014, Wal-Marts sales

increased by 1.9 percent from the previous year (walmart). Additionally, Wal-Marts total

sales, which were $482.2 billion in 2014, were significantly higher than any other

comparable retailer (forbes).

Based on this success in America, Wal-Mart then tried to expand internationally,

which has had mixed results. Despite the great success of Wal-Mart in America, it cannot

be assumed that the same business strategy will work in other countries, no matter how

similar they may seem to America. This is due to cultural and administrative differences

that exist among every country. Cultural differences include variations in social norms,

religious preferences, and shopping habits of the people in different countries.

Administrative differences are variations in federal laws regarding business practices or

differences in the way that organizations are structured in different countries.

The most successful case of Wal-Marts international expansion is that of Mexico.

Not only was the case in Mexico arguably the most successful of Wal-Mart, but it was

also Wal-Marts first international venture. In 1991, Wal-Mart opened its first store

outside of America in Mexico City, which was a Sams Club store. Six years later, Wal-

Mart acquired Cifra, an already established retail chain in Mexico, which was already a

market leader (walmart mexico).

 The reason that Wal-Mart was so successful in entering the market in Mexico is

because Wal-Mart was prepared for and addressed both the cultural and administrative

differences between Mexico and Wal-Marts home country of America. This was in part

because of the similarities between Mexico and America, which are mostly due to the fact

that they two nations share a border.

One aspect of Mexican culture that is similar to American culture and therefore

contributed to Wal-Marts success in Mexico is that many Mexicans live in rural areas.

Although Wal-Marts first store in Mexico was in a large city, many of the now 2,306

Wal-Mart retail units in Mexico are in more rural areas where there were not an

abundance of retail options available. This cultural aspect is similar to that of the rural

Southern United States, where Wal-Mart has its roots. When there are not many stores to

choose from, it is more convenient to do all of your shopping in one place, in the opinion

of Americans and Mexicans.

From an administrative standpoint, Mexico and the United States are also very

similar. Both countries are democracies with bi-cameral legislators and with governments

that can be influenced by business interest groups, but businesses do not run the

government or control how things in the country are done. This combination of cultural

and administrative similarities between America and Mexico is the main factor that led to

Wal-Marts success in Mexico.

In contrast to the positive experience that Wal-Mart has had and continues to have

in Mexico, Wal-Marts expansion into Germany did not go as smoothly. When Wal-Mart

first entered the German market in 1997, they did so by acquiring Wertkauf, a German
retail chain, which was already failing at the time (journal of). This was their first

mistake.

The next series of problems that Wal-Mart faced in Germany were administrative

differences from the United States that Wal-Mart did not properly prepare for. The first of

these was the issue of German zoning laws. In Germany in 1977, a series of laws had

passed restricting where large retail stores could be located. These laws specified that a

store in an area not originally zone as a retail space could not be larger than 800 square-

meters (journal of). This is a large difference from the American Wal-Mart stores, which

average a size of 178,000 square feet (reuters). Without large retail space, Wal-Mart could

not sustain their competitive advantage of having a wide variety of items and having

large stocks of these items in order to keep the prices low.

A more severe and ultimately fatal administrative issue in Germany was the

strong presence of unions. In America, unions are no longer a staple in the business

world; however in Germany they are. In fact, Germany is home to the largest union in the

world, Ver.di, which filed lawsuits and organized strikes against Wal-Mart during Wal-

Marts time in Germany (Harvard article). In the end, Wal-Mart found that the presence

of the unions in Germany was not something that they were able to deal with, so they had

to pull out of the country.

Another factor in Wal-Marts departure from the German market was the cultural

differences that it faced. In Germany, as in much of Europe, customers prefer to buy their

food from smaller local shops, where they will be able to ensure the quality of the

products because they will actually know where it came from. For example, Germans

prefer buying meat from a Butcher Shop and their bread from a Bakery rather than
buying all of their products from the same place. This led to a catastrophic failure in the

grocery section of German Wal-Marts (Harvard article).

The administrative and cultural failures of Wal-Mart in Germany and success of

Wal-Mart in Mexico taught the corporation about what should and what should not be

done when entering a new market. It has been established that the cultural and

administrative aspects of the country must be well investigated in order to have success in

that country. As Wal-Mart looks to expand its international presence in Ghana, these

aspects also need to be evaluated. Currently Wal-Mart has one retail store present in

Ghana, which is part of the Game brand. Game is operated by Massmart, which is a

South African corporation that Wal-Mart acquired a majority stake in in 2011 (corporate

Ghana).

In order to secure success in Ghana, Wal-Mart will need to address the cultural

difference in the level of infrastructure in Ghana compared to America. Since Ghana is

still a developing country, it does not already have the infrastructure necessary for Wal-

Mart to enter at the same scale that they operate at in America and other more developed

countries. Other than in the few larger cities, there are not necessarily consistent roads or

trains in Ghana to support the elaborate logistics system that gives Wal-Mart a

competitive advantage in other countries. For this reason, Wal-Mart will need to partner

with the Ghanaian government to improve the infrastructure in the country. Just two years

ago, the Ghanaian government moved to open the country to private-public partnerships

specifically in an attempt to strengthen the nations infrastructure (worldfinance). This

would be mutually beneficial for the two parties involved and would give Wal-Mart a

positive image from the very beginning of their time in Ghana.

 In terms of culture, Wal-Mart would need to make several adjustments to their

normal strategy as well, including not selling such large items. In Ghana, there are only

30 cars per 1,000 people, whereas in America there are 809 cars per 1,000 people

(worldbank). Because of this, Ghanaians would not prefer to have as large of items,

because they would need to carry them back to their homes themselves rather than

transporting them in cars.

There are also cultural aspects of Ghana that align with those in parts of America

and in Mexico, including the large number of people who live in more rural areas. It was

seen in Mexico that this was an advantage that Wal-Mart had there, because they

originated in the rural South of the United States, in which there was not necessarily

another retail store for miles and miles. This is where Wal-Mart first gained success, and

this could also help lead to Wal-Marts success in Ghana as well.

As Ghana continues to emerge as a developing nation, Wal-Mart can be very

successful here, if they implement the correct strategies. This means appealing to the

cultural differences and similarities present in Ghana, as well as the administrative ones.

Wal-Mart taking a large presence in Ghana could not only be financially beneficial for the

corporation, but could also be a large factor in Ghanas overall economic growth in the

years to come.
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