Walmart in Europe Case Study

Wal-Mart in Europe case analysis largely explores Wal-Mart’s struggles in the German market. Wal-Mart had found success in many other countries using an approach that consisted of low pricing, inventory control, and proficient distribution. From the inception, this strategy quickly morphed the business into a national discount retailer leading Wal-Mart to become the youngest U.S. retailer to exceed $1 billion in net sales. By 1991 Wal-Mart became the worlds largest retailer. However, this tried and trued approach was difficult to implement as a late arriver in the German market. This paper will discuss the underlying critical problem, secondary problems, alternative solution, analysis of alternatives, recommended solution and implementation.

Critical Problem

Wal-Mart entered the German retail market in 1997 with aspirations to increase international sales by operating a U.S. business approach. They purchased 98 stores from Interspar and Wertkauf, most of which were unprofitable, in poor locations and in need of repair and updating. Wal-Mart’s goal was to remodel the stores and begin using the successful U.S. approach. This consisted of setting up a new supply chain, adding new scanning systems, and maintain high quality customer service. However, by 2003 the stores Wal-Mart had acquired and reshaped using this approach were still operating at a loss.

Secondary Problems

Prior to entering a new market it is imperative that an organization complete a comprehensive scanning of the potential market’s environment. This includes gathering and analyzing information on the market’s social, governmental, competitive, infrastructure, economic and technological make-up in order to make decisions on overall market strategy.

From a social perspective, Wal-Mart either missed or ignored several unique characteristics of German consumers. First, Wal-Mart in Germany used American managers and American brands. German consumers did not respond well to the mostly foreign...