Intercultural Management Case Study Walmart

Walmart’s failure in Germany

1. How would you have advised the company to better approach the German market?

Walmart, as being the number one retailer on a global level, failed to establish its hypermarkets in Germany due to various reasons. I separated their failure into eight different sections, which the company should have improved in, in order to approach the German market.

When trying to put oneself into the position of a Walmart manager, one might think that they were familiar with certain theories and studies about how to do business in Germany, before establishing a subsidiary there.The theories from  Hofestede, Trompenaar, GLOBE, are just a few to mention here. Certainly the managers of Walmart were aware of the importance of intercultural management and of adjusting some management practices to the differences in these cultures, when approaching a different market. However, if one has a closer look at the above mentioned studies, one can find many similarities between the US and Germany. And these similarities were the biggest challenge for the establishment of Walmart in Germany. This means Americans and Germans are similarly pragmatic in the way they do business. Both cultures are monochronic, concentrating on one activity at a time. Both value punctuality and are results-oriented. Because of these common traits, Germans and Americans expect each other to think and behave the same. Except they don't.

This is what what intercultural trainers call the "trap of similarity".^[1]

In theory, it is much easier to quantify different habits in cultures. On a scale from 0 to 100 one can find that Germany and the USA have quite similar characteristics in Power Distance, Individualism, Masculinity and Long-Term Orientation.^[2] However, in reality these small differences are essential when doing business with the other culture, the conception of theses dimensions might vary and be interpreted differently. Hence there is no reference manual to follow, the only way to get sensible for these small differences is by observing and experiencing the other culture.

1.  As far as the cooperate culture of Walmart is concerned, there are many similarities between the German culture and the U.S. culture. Keeping Hofestede’s and Tromepnar’s cultural dimensions in mind, as seen „Ardichvili and Kuchinke: Leadership styles (1999)“, you can find that Power distance, masculinity and individualism are praised high in Germany, as well as in the US. However, uncertainty avoidance is much higher in

Germany. Consequential, Walmart should have given its employees more strict rules and guidelines, they could have followed. It should have been clear who is responsible for which task. Germans expect a manager to distribute tasks, then take a hands-off approach. It is the employees pride to solve the problem on his or her own and the feel insulted, if the manager wants to „motivate“ them. This is a different approach of doing business, as in the US it is more common motivating workers, controlling quality and making sure a job is done properly.

 2.  Moreover, long time orientation is a more important factor in Germany than in the US. „Higher and fire“, a typical saying of the American business does bureaucratical rules in Germany. They should have advertised their in-house career development, maybe given the opportunity of adapting new skills and changing the job position within the company. As Walmart promotes on its website, they have different career options in nearly all sectors, reaching from pilots to pharmacists. The career can be developed rapidly and even young women can achieve leadership in no time. This might sound as a perfect way to attract employees, also in Germany. However, in Germany, equality between men and women is not as advanced as in the US. Many people find it difficult to follow the rules spoken from a young leader, or a woman. The role of a leader is still guided by the stereotype, of middle-aged men, who epitomize strength, experience and knowledge. Walmart should therefor have positioned experienced men in the role of the managers in their stores, in order to give their employees someone to look up at.

3.  As seen in the four different models of cooperate culture, German workers have a strong emphasis on hierarchy and orientation towards the task. In the US however the Guided Missile Culture is dominant. Thus, one can also find some problems, the Germans might have had with the cooperate culture of Walmart. The company emphasizes that being an employee at Walmart means being a member of the „Walmart family“. They stress their collaborative thinking by various activities within the daily working process, which a German employee is not familiar with. Their employees start their working day with a song; it should feel like home and Walmart should be their family.

Germans attach great importance on family values, however they distinguish heavy between family and work. Thus a family-like approach of working together does not fit with the German habits of working. Even though it is important that the employee feels comfortable at his working place, Walmart should have abandoned some of its habits, such as starting the day together by singing a song. They should have given their German employees more guides to distinguish life at work from life at home.

4.  The American habit of „spinning the wheel“ and „time is money“ is not that famous in Germany. There is much more emphasize on free time with the family, hence another working routine has to be invented, Walmart should have given in on the typical German working contracts. Walmart as being a global company emphasizes its diversity within the company. It stresses out how different cultures and nationalities all work hand in hand and accomplish together what Walmart is proud of: The nice, happy and friendly customer service, with hearty greetings from the staff.^[3] First of all, this kind of customer service does not fit with the German culture. Germans prefer to do their shopping on their own, they have a clear image of what they want to buy and draw a clear line between what is their own property and who is allowed to touch it.

Secondly, the cultural diversity, which Walmart is so proud of, is not approved of the same way in Germany. The Germanic cluster has a long, rich heritage that goes back thousands of years. Germanic Europe, {including Germany} is a relative tight culture that is slow to change.^[4] Even though Germans tend to focus on integrity, their understanding of integration is different from the American one.

The proof is given when looking at the governmental approach of integration of these two countries: While the US even has a law, that prescripts integration of minorities at the working place, the German government started a “selective integration plan“, in order to integrate different - but selected -nationalities in Germany. Keeping these differences in mind, one can see that the Germans are unfamiliar with having many different characters together at one place. They prefer it to be uniform.

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