Globalization
Literature Review
According to Jui (2011), the problems of Wal-Mart begun right after the company acquired the collapsing German retail chain store, the Wertkauf. Prior to entering the German market, Wal-Mart was one of the thriving retails stores in America since its inception in 1962 in Rogers, Arkansas. As one of the most triumphant retail chains, Wal-Mart expansion progresses rapidly affected other retail stores following its high competitive merit of low price and quality products. By 1991, Wal-Mart was the largest retail chain store globally (Jui, 2011).
Globalization
However, its entry in the German market faced a severe operational crisis because the company had a bad relationship with suppliers and this affected its supply chain and the ability to build a competitive advantage (Jui, 2011). With globalization, the company opened many stores across the world, and it triumphed in the new markets because it was able to sustain low prices. However, Wal-Mart lacked the bargaining power to purchase goods from German suppliers at a relatively low price to maintain its low price competitive advantage in all its stores (Jui, 2011).
Globalization
Jui(2011) adds that unlike its competitors, Wal-Mart suffered several blows because the company failed to establish a better working relationship with suppliers. Competitors such as the Metro and Rewe Groups had a better relationship with suppliers in the Germany market (Jui, 2011). Although Wal-Mart had penetrated in other markets with ease, the company did not succeed in building a friendly relationship with suppliers, a clear indication of German-America cultural difference (Jui, 2011).
Globalization
Cultural variation in business hindered Wal-Martin’s penetration in Europe’s large market, and this affected Wal-Mart’s prices. Although there are some cultural similarities about America and German businesses, there are a lot of differences that were under looked in the supply chain management. Wal-Mart competitors had an upper hand in business since they had established a positive reputation with customers, and had a better logistics system than Wal-Mart (Jui, 2011). Wal-Mart had been the leader at low prices in America, but German competitors applied the very strategy Wal-Mart had been using to conquer other markets (Jui, 2011).
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