1) Walmart struggled when entering the German market in the late 1990s due to stringent regulations around store size and development. German competitors like Metro and Aldi were already well-established with loyal customer bases.
2) Porter's 5 forces analysis showed high bargaining power for suppliers and customers in Germany. Competition was also intense from dominant German retailers.
3) While Walmart's entry provided some benefits like jobs, it made mistakes by imposing an American approach and not adapting to the local market. To succeed, Walmart needs to create goodwill and develop European suppliers.
1. Wal-Martin Europe Presented by: BakulSanakal Fenella Andrade Sarah Choudhary Masters in European Studies and Management (MESM) 2010-2012 Manipal Centre for European Studies Manipal University, Karnataka, India
2. Wal-Mart: Background Founded by Sam Walton in 1962 in Bentonville, USA 1970s marked the beginning of significant growth-opening of the first Wal-Mart distribution centre 1980s- transformed from regional to national discount retailer-aggressive diversification Late 1990s Wal-Mart became the largest private employer in the world Entered German market in 1997,followed by UK -acquiring ASDA in 1999 Present:8,986 retail units under 55 different banners in 15 countries
9. Consequences US economy experienced boost in productivity (late 1990’s) Increased employment Growth in labor productivity Technological innovations Raised the standard of living of average Americans
22. Wal- Mart into Europe Britain: Entered in 1999 by acquiring U.K ASDA retail chain 8.4% market share at the time of acquisition 3 supercentres and 247 stores Introduced Wal-Mart IT systems, investment resources, buying power, low prices Price margin increased 13% over competitors Introduced low-cost George apparel line
31. Bargaining Power of Supplier Very high Poor suppliers network German suppliers were slow to adjust to Wal-Mart system- centralized distribution centre Strong connection with already established players Low switching cost since abundance of retail companies
32. Bargaining power of Customers Very high German customers not accustomed to friendly atmosphere American culture imposed on them Presence of strong German competitors Switching cost low
33. Competitive Rivalry Huge competition from Metro, Aldi, Lidl, Rewe Established in European market in many years Loyal customer base Strong suppliers and distribution network Hard-discounters Same strategies as Wal-Mart “low cost”