Cultural barriers to expansion of multinationals: A case study of Wal-Mart
Global corporate success is determined by the interplay of socio-political and cultural factors. Failure to understand the unique cultural identities of the employees and customers could lead to cultural conflicts. Cultural conflicts are a serious problem in the management of multinational enterprises. For example, many western multinationals find it hard to operate in the Asian markets that are particularistic as opposed to western markets that are universal. They also find it hard to adapt to the demand for maintaining existing social structures and power hierarchies, personal connections and the preference for informal, compromising ways to avoid confrontation and conflicts. A good example of an organization that found the going hard in Asia due to cultural differences is Wal-Mart.
Wal-Mart had tried with little success penetrate the Asian markets. The company established its business in South Korea and Japan but faced setbacks. The real problem was that the company had faced some degree of mistrust from the employees and faced resentment from customers. Wal-Mart had failed to understand the cultural habits of their local customers. The supermarkets chain failed grasp the cultural nuances in those places.
In order to gain a foothold in Japan, Wal-Mart bought and revamped a local supermarkets chain called Seiyu. However, customers did not warm up to the business as it had been anticipated. The introduction of gifts whose prices were discounted did not go down well with many Japanese customers. According to the Japanese culture, buying a low cost gift is likely to be interpreted as a demeaning by the receiver of the gift.
Moreover, the “everyday low prices” idea was quite confusing to the customers. The customers had been used to ads in the newspapers and moving, around the town, to get the best buy. The employees were also not motivated to sell goods in this new concept. The employees also hesitated at the idea that they should offer help to customers within ten feet. This prompted the management to carry out trainings to encourage employees to be upbeat, goal oriented and to speak their minds out (Guffey, 2007). The problem was that Wal-Mart’s strategy was not flexible to adapt to the local demands.
This prompted a change in strategy when the Wal-Mart opened its business in China. Unlike in the other countries where they had faced considerable setbacks, business started to boom in China. The company offered portable cots, closets and folding chairs to its customers. The Chinese customers like such incentives from supermarkets. Wal-Mart also realized that the Chinese prefer live fish. This prompted them to set up large tanks in the seafood section, fitted, with a net, to catch the fish whenever a customer wanted to buy. In order to take care of the local taste of the consumers, Wal-Mart also bakes sweets and green tea tastings. It is also common for the supermarkets chain to carry customers’ goods home using a bike or by a bus (Guffey & Loewy, 2010, p. 88). This change of strategy in China has endeared Wal-Mart to its customers and it could all be attributed to appreciation of the unique culture.
In conclusion, it is important for multinationals to learn and appreciate the cultural values of a specific region in order to penetrate those markets. Corporate culture should be localized to fit the local markets situation. The organization gets the first feel of the cultural values of a place through its employees. Research into the culture of people in a particular region is also vital before making a decision on what services and goods to offer to the target market.
References
Guffey, M. E. (2007). Business communication: Process and product. Stamford: Cengage
learning.
Guffey, M. E., & Loewy, D. (2010). Business Communication: Process and product. Stamford:
Cengage learning.
