German culture
Without a thorough understanding of the German culture, Walmart imposed American values on the Germans. For instance, the company hired sales clerks to smile and greet the German shoppers (Landler and Barbaro, 2006 n.p). Since the Germans are not accustomed to friendly gestures, they perceived this behavior as strange. This issue should have been addressed by thoroughly understanding the German culture to avoid annoying German customers. More so, Walmart’s top executives adopted English, the corporate language, even though Walmart’s old managers in Germany did not speak English (The Open University of Hong Kong, 2016 n.p). As such, there were communication issues, and Walmart’s suppliers declined to conduct business with the retailer. The situation could have been improved by implementing strategies to effectively communicate with the German managers as they know the local market. Walmart tried to integrate the German culture into its business model, although it was too late to leverage the company due to the huge losses.
Walmart Inc. failed to establish good relations with the German labor unions. The poor relations were caused by the retailer’s lack of understanding that the German companies and labor unions have close connections (Landler and Barbaro, 2006 n.p). Walmart Inc. did not want to have any relations with the German unions, and they perceived the Germans as communists due to the close collaborations with the unions. Americans are highly individualistic compared to the Germans who tolerate a certain degree of teamwork. However, Walmart changed their perception about the German unions, and they fostered excellent relations with the unions’ leaders. Also, the American based retailer modified its policies to suit the needs and concerns of its employees. The situation could have been enhanced through understanding why the German companies have close relations with labor unions. Knowing the close connection could have helped Walmart Inc.to make an informed decision earlier.
The American based retailer was successful in its native country compared to Germany due to diverse cultural values, beliefs, and preferences. For instance, Americans value-creating friendships with strangers, while the Germans dislike close contact with strangers (Landler and Barbaro, 2006, n.p). Also, Americans prefer spending their cash heavily, unlike the Germans, who limit their spending habits. American shoppers value additional services and gift hampers for purchasing items. In contrast, Germans disregard extra services and gifts. Additionally, Germany is a cash culture, while the US is a credit card culture. The Germans do not engage in small talk, and they prefer officially structured meetings. On the contrary, Americans participate in small talks, and they are not strictly official in business meetings. Therefore, Walmart’s efforts to impose American values on the Germans failed due to the disparate cultures. While the friendly gestures, credit card systems, gifts, and additional services worked in the American culture, the adoption of these American standards failed to work in Germany.
Recommendations
Walmart Inc. should modify its business model to incorporate the needs and interests of all its workers at the local and international levels. For instance, the company should adopt a common language to conduct business but offer exceptional alternatives for employees who do not speak English like the Germans. Such an approach ensures a steady flow of communication, and it avoids misunderstandings in the workplace. Also, this practice makes foreign employees have a sense of belonging in the organization. Additionally, companies should change their policies to align with different cultures (Nizam and Hamza, 2016, p.6). For example, Walmart’s policies should not have incorporated sales clerks to greet customers as this practice was considered unusual by the German shoppers. Organizations should avoid forcing their employees to work against the cultures of a given society as it hinders performance and revenue generation.
As Walmart seeks to venture into other foreign markets, it should try to understand the relationship between the local companies and labor unions. The American based retailer should have conducted research to have background information about the connection between labor unions and local firms (Landler and Barbaro, 2006 n.p). Implementation of such a strategy would help avoid poor relations with labor unions from different nations. Establishing excellent ties with trade unions enhances the ease of doing business. For multinational companies that plan to expand in foreign territories, they should create excellent relations with trade unions and form partnerships with local partners to gain insights on market access and local regulations.
Walmart Inc.’s managers and leaders should effectively control cultural diversity by acknowledging that different cultures have diverse values, attitudes, behavior, and preferences. The retailer can achieve this by formulating customized policies that suit different cultural contexts (Nizam and Hamza, 2016, p.6). For instance, in the German context, the company should have incorporated the German values and preferences into their policies. Understanding the German culture would have helped Walmart to avoid imposing American values on the Germans. Companies that intend to venture into foreign markets should avoid forcing foreign nations to accept and adopt their values. Instead, the firms should learn and understand different cultures before venturing into new markets.
Walmart Inc. should change its business model to incorporate the cultural diversities in Germany and other foreign nations. The firm should be willing to disregard uniformity and avoid making assumptions about what would work for a specific culture without having a clear understanding of the culture (Pereira et al., 2002 p.32). For instance, Walmart Inc. should not have assumed that high prices, additional services, and friendly smiles and greetings could appeal to German shoppers. In other overseas markets where the retailer plans to expand, it should seek to learn and understand their culture by researching to gain insights on their attitudes, values, behavior, and preferences. Background knowledge of foreign cultures can then be integrated into the company’s business model. Organisations that intend to extend overseas should learn from Walmart Inc.’s experiences and missteps. The companies can use the lessons learned to device better strategies to enter new markets.
Walmart Inc. should have adequate knowledge about the market structure and key political and cultural issues of Germany and any other new markets it plans to expand. Walmart should have united with local partners in Germany to obtain insights on the best store locations (The Open University of Hong Kong, 2016, n.p). Also, the partnership could have helped them learn the connection between local companies and trade unions. They could have used this knowledge to develop negotiation tactics to deal with the German labor laws and zoning regulations. With excellent negotiation techniques, the retailer can have a strong influence on political decision making in Germany and other foreign countries. Multinational companies that intend to expand overseas should garner sufficient knowledge on the market structure and the major political and cultural issues of foreign nations.
Conclusions
International intercultural management is an important concept that all organizations seeking to expand into new markets should incorporate in their business models. Diversity in cultural values, attitudes, behavior, language, and preferences can significantly impact business operations. Therefore, company managers and leaders should look for the best strategies to effectively manage cultural diversity to enhance communication and simplify business activities. Germany and the US have different cultural values, attitudes, behavior, and preferences. For instance, Americans prefer friendly relations with strangers and value human relations while the Germans place less importance on human relations. Walmart Inc. failed in Germany because it did not understand the German culture, and it had poor relations with the German trade unions. The retailer also assumed that the American values could work in the German context, such as friendly smiles and extra services on purchased items. Additionally, Walmart Inc. had limited knowledge of the German market structure, political issues, and regulations.
In the future expansion plans, Walmart Inc. should adopt the glocalisation concept in its business model. It should also understand the nature of the relationship between labor unions and local companies. The retailer’s top executives and managers should effectively manage cultural diversity. More so, the company must seek to understand the local market structure and the political and cultural challenges of a given culture before entering into a new market. The retailer should also modify its business model and policies to incorporate the needs and interests of disparate cultures. Organisations that plan to venture into foreign markets should learn from Walmart Inc.’s experiences and missteps and seek to manage different cultural issues amicably. They should also learn the local market structures and the political and cultural issues of a given nation. Partnerships between international companies and local businesses can help multinational organizations to strategize on the best store locations.