COMPARATIVE MANAGEMENT

Comparative Management

Comparative Management

Introduction

Wal-Mart is a retailing company founded by Sam Walton and his brother in 1962 (Deresky, 2006). With its first store in Arkansas (Deresky, 2006), focusing "... on the small-town backwaters of America" (Slater, 2003, p.5), Wal-Mart has now grown into a billion-dollar international enterprise (Slater, 2003).

However, being successful in the Mexican, Canadian, Argentinean and Brazilian markets (Deresky, 2006) did not help Wal-Mart's venture into the German market. Since their initial entry in 1997 through the acquisition of two other German hypermarkets, Wal-Mart has been making losses annually (Deresky, 2006). They now hope to penetrate the East European retail market, and have selected US as the initial country of entry.

The purpose of this report is thus to analyse Wal-Mart's sub-optimal operating performance in UK, then, making use of the experience gained there, recommend a best way and strategy of making a successful impact in US, and subsequently, other parts of the East European market.

With this objective in mind, Wal-Mart's analysis of their "misadventure" in UK will have to focus on the cultural differences, both market-wise and people-wise. The same kind of research also needs to be done on the US retail market, to find out the preferences and likes or dislikes of Hungarian consumers, as well as the operating styles and procedures of all parties involved in the retail industry.

Walmart's Subsidiaries

One of the most significant factors that resulted in Wal-Mart's sub-optimal performance in UK was a lack of understanding for UK's retailing culture (Deresky, 2006), which involves a complex set of interrelating beliefs and ways of living" (Bennett, 1996, p.27). UK's retail industry has different characteristics, styles and preferences from those of the United States (US), due to the differences in the two country's culture (Deresky, 2006). Because of this, some of the things that contributed to the success of Wal-Mart in other countries could not be implemented in UK (Deresky, 2006), and that reduced their success rate in the German retail industry.

In the US, Wal-Mart used a centralised distribution system with its suppliers, where they could control the price of the goods. They "... relied on inputs from suppliers to decide on [product] assortments" (Deresky, 2006, p.477), which they sold to Wal-Mart shoppers accordingly. But for such a way to work out well, the relationship between Wal-Mart and its suppliers needed to be strong and mature.

Unfortunately, the suppliers in UK were not sued to the centralised distribution system, and thus were not comfortable using it (Deresky, 2006). Moreover, being a price-sensitive market (Deresky, 2006), the suppliers would not be willing to let Wal-Mart be able to control the prices of the goods either, especially when Wal-Mart is a discount retailer that sold their products at low profit margins (Slater, 2003). Such discount retailing might indirectly affect the German suppliers adversely in the long run.

Besides its low prices, Wal-Mart was also known for its customer-focused service (Slater, 2003). These are all part of Wal-Mart's corporate culture, but "... to integrate its corporate culture into its international operations" (Slater, 2003, ...