Wal-Mart in Germany was a subsidiary of the Wal-Mart international. Wal-Mart international is a segment of the Wal-Mart incorporation. Wal-Mart has three segments, namely the Wal-Mart U.S., Wal-Mart International, and The Sam’s club. Wal-Mart ventured into Germany’s market in 1998. The reasons Wal-Mart chose to venture into Germany’s market was based on some interesting features about Germany. Germany is among nations in Europe with the largest economies. In addition, the country has a retail market bigger than any other countries in Europe. Consumers in Germany spend almost thirty percent of their total incomes in retail stores.
Wal-Mart employed several marketing strategies when opening the subsidiary doors to consumers in Germany. The most prominent entry strategy was through acquisitions. Wal-Mart acquired 21 retail units of Wertkauf Hypermarkets. It also acquired 74 units on Interspar hypermarkets in Germany. The major reason that led Wal-Mart into entering the retail market of Germany through acquisitions is because the retail store had been denied operating licenses. Nevertheless, Wal-Mart decided to acquire already existing ventures so as to get access to one of the biggest economies in Europe, as well as the largest retail market hub in Europe. Upon the acquisition of the two already existing retail chains in Germany, Wal-Mart opened its doors to the Germany retailers.
However, Wal-Mart had to position itself so as to attract the attention of customers. The other market entry strategy was to come in handy at this stage of the business. Wal-Mart embarked on renovations and refurbishments. The repairs were aimed at introducing better and spacious premises that would enhance the freedom of customers. Wal-Mart introduced supercentres where all the needs of the consumers were taken care of at a particular centre. Wal-Mart in Germany was focused in offering the best deals to its customers.
It lowered its prices by collecting its merchandise direct from the manufacturer, with its numerous warehouses in Germany, storage costs were well addressed. However, customers in Germany still thought that the retail chain store was not offering them the best deal in prices. Wal-Mart has its sale slogan as “everyday low prices.” This too was a market entry strategy for Wal-Mart. Improved customer delivery, by being friendly to customers was a market entry strategy for Wal-Mart in Germany. The retail store introduced friendly relations between its staff and the customers. This was to be achieved through smiling and warm greetings to the customers who frequent in the retail store. Though this was one of the causes of its failure in Germany, the retail store has hoped to use it to enter the market and win over customers.
The strengths, weaknesses, opportunity and threat analysis for Wal-Mart was clearly evaluated before the firm entered the Germany market. Wal-Mart has the high information systems that they use to monitor the operations in the subsidiaries. This was a strength in the Germany’s market as a retail chain would monitor all transactions with all the stakeholders in the business. Wal-Mart’s ability to always generate new business ideas was strength as it ventured into a new market. The weakness that Wal-Mart has in Germany was mainly in the low pricing strategy. This was among the reasons why the venture failed terribly in the country.
Germany offered numerous opportunities for Wal-Mart. Expansion and high profitability were some of the opportunities Wal-Mart viewed before it ventured into Germany’s market. The threats that Wal-Mart faced was in terms of completion from other existing retail chain stores in Germany. Nonetheless, the retail chain was determined to battle for a market niche despite the level of competition.
References
Berg, B. R. &. N., 2014. Wal-Mart. Pearson: Kogan Page.
Bobby, S., 2012. SWOT Analysis for Wal-Mart. MBA Posts, p. 1.
FAO Corporate Document Repository, 2014. Market Entry Strategies. [Online] Available at: http://www.fao.org[Accessed 9 April 2014].
Jui, P., 2011. Walmart Downfall in Germany. Journal of International Management, p. 1.
Knorr, A., 2003. [Online] Available at: http://www.agcc.de[Accessed 9 April 2014].
Kwinetessential, 2014. Walmart in Germany: Cultural Problems. Kwinetessential, p. 1.
Stewart, S., 2008. A SWOT Analysis of Walmart- The Worlds Largest Company. Rapid Business Intelligence Success, p. 1.
