Executive Summary This paper aim to compare the National Business systems (NBSs) of Germany and USA and

to critically analyse the cultural and institutional factors between Germany and USA that attributed to the failure of Wal-Mart in Germany and their ability to transfer their practices. Leading the US market for a long time, Wal-Mart spread its business to Germany in 1997. In spite of having success, in all over the world why Wal-Mart was in failure in Germany. It is a provocative question and this study will scrutinize it here. It is a burning question that why Wal-Mart was in failure in Germany. It was just because of not adapting with the regional culture and not paying heed to local values, beliefs and tradition. However, Wal-Mart can be the top one in United States but it does not ensure to be the top one anywhere in the World. Giving importance to the local market and doing business according to the needs and desires of the local people is very important for making success in Business that Wal-Mart couldnt follow that.

Table of Contents Contents Introduction: Company Profile: Wal-Marts entry and operation in Germany: National Business systems (NBSs) of Germany and USA: A Critical Analysis of Reasons for Wal-Marts failure in Germany: Wal-Marts failure in Germany- A Case of cultural insensitivity: Conclusion: Suggestions and Recommendations: References Page No. 03 03 04 04 05 06 08 09 11

Introduction: This assignment is related to the business operation of Wall-Mart in Germany. In the retail market, the name Wal-Mart is placed like a legend that stated its first business in nine countries all over the world. In the earlier the idea of expanding their business in all over the world, they faced lots of difficulties and challenges. Wal-Mart as its market strategy purchased two retail chain shops in Germany for $1.6 billion in 1997. Without making profit for eight years, Wal-Mart sold its entire retail outlets to Metro AG and moved from Germany in July 2006. Leading the US market for a long time, Wal-Mart spread its business to Germany in 1997. In spite of having success, in all over the world why Wal-Mart was in failure in Germany. The objectives of this paper are to compare the National Business systems (NBSs) of Germany and USA and to critically analyse the cultural and institutional factors between Germany and USA that attributed to the failure of Wal-Mart in Germany and their ability to transfer their practices.

Company Profile: In all over the world Wal-Mart is such a market that it is the largest in retail business and the second largest company in the world that is the largest too in nations nongovernmental employer. Primarily it serves with three segments includes super shops, discount stores and Neighborhood market in US. In US, the warehouse membership clubs is included by Sams club segment. The food service and distribution service to retail industry are provided by McLane Company Inc, a subsidiary company of Wall mart. In every week Wal-Mart serves 200 million times, 8,416 retail units over 15 countries and under 53 different banners. By the end of the 2010, it was seen that WalMart employs 2.1 million, sales was $405 billion all over the world. Though majority of its stores is located in United States but it is also operating its business internationally in Argentina, Brazil, Candida, Japan, Puerto Rico, UK, China and India.

Wal-Marts entry and operation in Germany: In 1997, Wal-Mart came in Germany to operate its retail business with 21 stores and $1.04 billion. After lots of striving efforts, Wal-Mart became fourth largest group in Germany. But unfortunately after that instead of spreading it outlets in Germany, WalMart compelled to shrink its business operations and offset its personnel as the business was not lucrative in Germany. With extensive pressure of maintaining business, the higher personnel of Wal-Mart could not flourish their business and expand their market in Germany. Though they were making good profits all over the world but could not see the face of profits in Germany and had to loss $1 billion to run the business. And the number of outlets in Germany was being reduced by the decision maker of Wall mart.

National Business systems (NBSs) of Germany and USA: The business market of German is much complicated to flourish in the market of German some issues are to be considered first. Firstly, in the business market of German two vital influencing forces is trust and power. To win and to gain in the business, trust matters. And in the German business culture to sustain and to grow in the market that institution has to be trust worthy. Customer and employee interaction in the German business is very important. To make a customer loyal to that company the company has to have some techniques and strategy. For business operation in Germany, one needs to be very influential who can attract customer and enhance the customer retention. In-depth communication and knowledge about German market is must for the successful business operation in Germany. The customer behavior is also a learning issue for the employer of a company. To increase the sales and promotion of a company, a company must know about the market demand and what a customer really wants and desires to have. The people of German have some certain characteristics that are unique from elsewhere of world. So their desire of shopping is also might be different. So having that power to operate business in the market of German is really a pre-required fact. Having strong knowledge and forecasting power
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about the market is essential and having sufficient knowledge about customer and their behavior is similarly predominant issues. Germany has some own rules and regulation for the business people and business policy so having adequate knowledge and being powerful to sustain the business market is very important for the successful business operation in Germany. USA runs Liberal market economies whereas German runs coordinated market economies.

The next factor is that better communication develops the mutual understanding and business growth. Intra department communication and exchanging mutual thoughts and programs are must for developing the business as a successful one. Networking helps the business promote. And it also helps to move forward and it makes the business resourceful by solving so many problems to be immerged. Making the best use of ICT is equally important for being successful and leader in the market. ICT drives the business to grow and develops the relationships in the business process. For maximizing the profit of a company the wide spread use of ICT has to be ensured. Thus better communication and best usage of ICT helps to promote trust. And trust promotes the business as a market leader. Thus these interaction and dissemination of information can make the business grow and can bring a good future and portfolio for the company. A Critical Analysis of Reasons for Wal-Marts failure in Germany: Some factors are responsible for the being failure of Wal-Mart in business market of Germany. Some Managerial mistakes and faults and their unskilled operation lead the business Unsuccessful. The prime factors behind the failure of Wal-Mart can be constructed by as follows Understanding of Cultural issues was not up to the mark that was major blunder of Wall Mart It was not appropriate strategy to enter in German Market by acquisition. It failed to deliver every-day low prices and excellent service

 The publicity and promotion of the company was not standard that did not abide by the law of Germany. Wal-Mart first entered in Europe market by the acquisition of Wertkaufhypermarkets in Germany. Later Wal-Mart got another acquisition inters par in Germany that was a wise decision for the company as for that it got some competitive benefits such as good earnings, excellent locations and very strong management. But in 1998, Wal-Mart upgraded some deal for 74 hypermarkets with spar that was considered as the very unwise and unskilled decision for the Wall Mart. As in German Market, Spar is observed as the poor operating business organization for its unskilled business policy and most of the outlets of it were not located in the attractive place. Wal-Mart also was not well concerned of the cultural tradition of German. This study focuses on the mistakes made by Wal-Mart for what it was driven to failure. Wal-Marts failure in Germany- A Case of cultural insensitivity: Many business experts could not lead the company well in Germany as for language problems, unskilled management, and for the want of adequate knowledge market operation in German. Wal-Mart could not understand the culture and the long tradition of the Germany. For a country, its culture, norms, values and beliefs are very important and people firmly follow that. Wal-Mart when started its business in Germany it did not keep in mind that it is a new country so the business strategies and techniques will not be same USA. In USA what Wal-Mart applies as its business operation could not be same in Germany. Top management of Wal-Mart even didnt follow the desire and needs of Wall Mart. Germany has totally different people who have some different buying and customer behavior that Wal-Mart didnt keep in mind. Wal-Mart was trying to practice its global market operation in Germany that was a big impudence of Wal-Mart a good understanding could not be developed between Wal-Mart and German People because of the Language barrier. And Wal-Mart did not focus on to lessen the gap of language problem. So Wal-Mart could not attract the market and could not reach to the mass people of Germany. Different business policy did not have been initiated for thriving the business in Germany.
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Following are the main two factors that Contributed to the Wal-Marts unsuccessful efforts in Germany: 1) Wal-Mart could not figure out that the Customer of US and Germany and their behavior and culture are not the same. It was mistake for Wal-Mart to apply their US culture in Germany. Wal-Mart did not give the customers much time to shop in their outlets bur German customers like to spend their more time while they are shopping. The outlets of Wal-Mart did not open in weekend for a long time rather ends time was 5 pm in the evening that German people did not like. German people like their shopping in the weekend. Another thing Wal-Mart did not understand the feelings of German People that German people prefer their shopping by their own and they do not need any assistant while they are shopping. But Wal-Mart appointed assistant in their outlets and any product promotion and discounted price of the product was not available in the outlets. And for the discounted price offer, the German customer needed to ask for the assistant. Wal-Mart did not focus on the food item rather they stored more clothes and hardware item. This really reduced their revenue as the other German like Metro always stored much food item compared to other item and German people liked that. And Wal-Mart revenue generation would come from the non-food item but other retail shops income was more from food item. And German people love to purchase food rather than other item. And Germans spend more of their money in food item but Wal-Mart did not understand and care for this. While other retail shops income from food item were more than 75% there Wall Marts income from food would come less than 50%.And the other important fact this that German are very introvert while they are shopping but the American personnel and top management of Wal-Mart didnt care for that. Top Management along with lots of personnel of Wal-Mart was American and they could not understand the feelings of German People. German people did not the display of personal item display in publicly in their outlets. German people loved to get the discounted item near their hand but Wal-Mart policy was not good enough in this case as the discounted products were displayed either in the very top of the self or very bottom of the rack that really made the German customer irritate. The cultural gap made
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the misunderstandings between Wal-Mart and German People. And for these reasons, German people did not gather in the outlets for shopping in the Wall Mart.

2) Inefficient Top Management, which ignored the relevance of local Culture: There was a sheer flaw of Wal-Mart in case of understanding the culture of German People. In four years there four CEO in Wal-Mart had been changed. The first CEO Rob Tiaras was appointed in German who operated more than 200 retail outlets in American but did not have any knowledge about German market. He did not exchange and interact with the customers and did not try for promoting the business of War Mart to grow in a way that German people want. He did not know the German language and did not try to know even that made him away from German people. German people are used to speak in German language even in the office they usually speak to in German language but the top management of Wal-Mart did not focus on learning German language. Thus, Wal-Mart could not reach to the mind of customer in Germany.

Conclusion: It is obvious that Wal-Mart can be the business leader in the US Market but to achieve success in Germany market the Wal-Mart needed to follow the German style. Without understanding the culture, custom and the living style of a certain country a company never can sustain there. That American style did not work in the German market.

Suggestions and Recommendations: Doing business in another country is always challenging and the company has to be more careful to make step and to make decision. To operate a successful business in a country, the culture, norms, values and tradition of the people of that country has to be kept under consideration. The language and the local people living habit should be high lightened. Without considering that certain country in which the business is operated, a company can never go a long way with success. So some indications and consideration for WalMart could be 1. Local Recruitment The company can be from other country but the personnel and stuffs should be from local country. Local recruitment helps the company to sustain and to understand the local people feelings and emotion. And it increases the integration between the company and local People. 2. Understand the local anthropology and social structure and local Politics Wal-Mart did not understand the local politics and did not communicate well with the local people. Even their social facts were not been considered. 3. Offer more Corporate Social Responsibility(CSR) Corporate social responsibility is very important thing for a foreign national company to promote their image in the local country. 4. Better Understanding through better Communication Better understanding can be established by better communication. Use of ICT use and focus on local language can be a stronger weapon for a successful business. 5. Attractive advertisement of sales and promotion
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Attractive discounted offers of sales and promotion can be another way to expand business. Attractive offer makes the customer rush and draw their attention to visit the outlets. So understand the local culture and try to understand what the local people want from you. It may lead you to success.

References: Books:
Hollinshead, G. (2010). International and Comparative Human Resource Management, London: McGraw-Hill.

Trompenaars, Fons (2000) Riding the waves of culture: understanding cultural diversity in business, London: Nicholas Brealey. Schneider, Susan C (2003) Managing across cultures, 2 nd ed, Harlow: Financial Times Prentice Hall

Websites: 1) http://Wal-Martstores.com/AboutUs 2) http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article 694345.ece 3) http://www.geert-hofstede.com/hofstede_germany.shtml 4) http://www.iwim.uni-bremen.de/publikationen/pdf/w024.pdf

5) http://walmartwatch.com/international/country/germany

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News Papers:

Times Online (2006) Wal-Mart pulls out of Germany at cost of $1bn, 2012 November g/article694345.ece) 10

(http://business.timesonline.co.uk/tol/business/industry_sectors/retailin

The Atlantic Times This Is Not America. Why Wal-Mart left Germany, 2012 November 10 recordID=615) (http://www.atlantictimes.com/archive_detail.php?

The New York Times Wal-Mart Finds That Its Formula Doesnt Fit Every Culture html) 2012 November 10 (http://www.nytimes.com/2006/08/02/business/worldbusiness/02walmart.

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