German employees are used to working long hours for higher minimum wages and do not expect to receive bonuses or commissions. In contrast, Walmart bases employee wages on how much they sell and offers incentives like bonus pay and commissions. This did not sit well with German employees who were used to receiving a fixed salary.
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Organizational Practices For example, Walmart does not allow employees to have union representation. This policy led to protests by German employees when the company entered the country. Salary and wages also played a role in Walmart's failure in Germany.
A number of factors that resulted Wal-Mart's failure in Germany are such as different corporate culture, political influence, stiff competition and inefficient management and marketing strategies.
The world's largest retailer, Wal-Mart, has made a rare admission of failure by selling its hypermarket chain in Germany at a loss of $1bn (£530m) after failing to convert the country's shoppers and regulators to its low-price, American-style trading.
The American Company Didn't Get Along With German Unions The German unions didn't like Walmart's organizational culture. They were like oil and water and never really got along. “They didn't understand that in Germany, companies and unions are closely connected.
The retail giant has struggled in countries like South Korea and Japan as it discovered that its formula for success — low prices, zealous inventory control and a large array of merchandise — did not translate to markets with their own discount chains and shoppers with different habits.
2006Walmart, which abandoned the German market in 2006 after nine troublesome years, also would appear to benefit from a better understanding of the American consumer, based on how it handled the Sam's Club closings.
In 1997, Wal-Mart moved into the German market through acquiring the Wertkauf chain (24 stores) and unprofitable Interspar chain (74 stores). The two chains made up only less than 3% of the market. The Interspar stores were in poor repair and in poor locations.
What ethical challenges does Walmart have to face while operating in Germany? There are serious issues why Wal-Mart 's business methodology fizzled in Germany. Social aptitudes, Customer Service, and Cultural self-importance all added to what one market analyst alluded to as a disappointment.
Walmart failed the endeavor because they attempted to apply their proven US success formula in an unmodified manner to the German market, and through the process, they failed to offer German customers any compelling value proposition in comparison with its local competitors.
Other cases where culture caused difficulties include Wal-Mart's failure in Germany, which was attributed to their unwillingness to embrace egalitarian German wage-setting practices (Knorr & Arndt, 2003) , and Lincoln Electric's initial failure in expanding beyond the USA.
Big stores (similar to Walmart) are e.g. Real, Toom, Globus, Marktkauf and Famila. But some stores can not be found in all parts of Germany. 2.
Analysts perceived that the company failed to adapt its business model to both countries, failed to understand the customers of the respective countries and therefore struggled to grab a significant market share in the competitive German and South Korean retail market.