Walmart, the world’s largest retailer, has failed and pulled out its operations in two countries in 2006. This is a good case to discuss about how regional dynamics may affect internationalization as Walmart is successful in countries like Mexico, Canada and UK while it faced a failure in South Korea and Germany.
Walmart entered South Korea in 1998 when the South Korean Government opened up retail markets to foreign investments (Ramstad, 2006). This unrelenting action was probably because of Walmart’s desire of being primal international retailer in the market; but the point that Walmart overlooked was, there were already big local players on the market. Walmart was not able to compete with the domestic South Korean retailers as they were already well established in the minds of people for their quality and low price (Jeyachandran & Yasmeen, 2011).
The major mistake which brought Walmart to the failure was inability to understand and respond to the South Korean consumer. Even tough Walmart had a proven business model in countries which were influenced by American lifestyle, trying to apply the same model in South Korea instead of adapting to local requirements caused an end with failure. Analysis of key marketing decisions made by the firm reveals missteps in distribution, product mix, and promotion strategies that could not be overcome even by an advantage in pricing (Gandolfi & Strach, 2009).
Walmart has experienced that world is not living in only American like lifestyle and every region has different customer behavior. As a conclusion, internationalization is a serious process and companies must take actions in accordance with in-depth researches of what local customers want and desire.
Ramstad, E. (2006). South Korea’s E-Mart is no Wal-Mart, which is precisely why locals love it. Wall Street Journal (Eastern Edition). New York, NY. Aug, 10, 2006. pp. 1.
Jeyachandran, H. and Yasmeen H. (2011). Aa evolutionary outlook of Wal-Mart’s growth in a global scenario. International Journal of Research in Commerce & Management. Vol. 2 No. 8, pp. 92-96.
Gandolfi, F. And Strach P. (2009). Retail internationalization: Gaining insights from the Wal-Mart experience in South Korea. Review of International Comparative Management. Vol. 10 No. 1, pp. 187-199