Wal-Mart

Paper Summary:

This paper explains that Wal-Mart failed in Germany because, unlike its U.S. customers, German consumers found the highly aggressive pricing strategy of the retailer's "low price every day" (LPED) value proposition awkward and difficult to comprehend. The author points out that Wal-Mart's lean supply chain performance, which requires a very high level of virtual network synchronization to work effectively, was difficult under the Balkanized environment of Germany and the E.U. The paper also cites the failure of the integration of operational systems with its German merger partners. In contrast to the failure in Germany, the author discusses the success of Wal-Mart in China.

Table of Contents Executive Summary
The Wrong Value Proposition in the Wrong Market
Figure: Core Psychographic Wal-Mart Segments in the U.S.
Wal-Mart Strays Away from Key Organizational Resources
Purchasing Process Differences Not Taken Into Account
Mergers Gone Wrong
Summary

From the Paper:

"When Wal-Mart's global expansion strategies in Germany are compared to UK-based global competitor Tesco, the extent of strategic errors are clearly seen. While Wal-Mart relies on the aggressive build-out of their supply chain at the local level and relies on their low price every day (LPED) value proposition, Tesco relies on market knowledge learned in smaller, more niche-oriented markets to minimize risk. As Palmer has stated, there is often a "shock" of a failure or market correction that leads retailers to mature out of a myopic view of the market and embrace more of a learning-based approach to managing risk."

Sample of Sources Used:

• "Business: Heading for the exit; Retailing" The Economist 5 Aug. 2006: 54. ABI/INFORM Global. ProQuest. 13 May 2008 www.proquest.com
• Peter N Child 2002. Taking Tesco global. The McKinsey Quarterly no. 3 (January 1): 134-144. http://www.proquest.com (accessed May 2, 2008).
• Susan Christopherson 2007. Barriers to 'US style' lean retailing: the case of Wal-Mart's failure in Germany. Journal of Economic Geography: Transnational Retail, Supply Networks, and the Global 7, no. 4 (July 1): 451-469. http://www.proquest.com (accessed May 4, 2008).
• Charlotte Dennis-Jones 2007. Retail with detail. Supply Management, May 24, 18-23. http://www.proquest.com (accessed May 3, 2008).
• Daniel T Jones, Alan Mitchell. 2002. Sustaining the thirst for knowledge. ECR Journal : International Commerce Review 2, no. 1 (April 1): 9-14. http://www.proquest.com (Accessed May 6, 2008).

More papers on Wal-Mart:

• Research Paper # 91854 : "Wal-Mart and Supply Chain Management"
• Case Study # 102381 : "Wal-Mart Stores, Inc."
• Case Study # 148411 : "Wal-Mart's Positive Influence on Chinese Consumers"
• Case Study # 148452 : "A History of Walmart's Globalization Strategy: Strategic Wins in China, Major Struggles in Germany"

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