Wal Mart's Failure in Korea

1166 Words Dec 6th, 2012 5 Pages
Wal-Mart’s Failure in Korea
This case will present Wal-Mart’s unexpected failure to conduct local market research and conform to Korean consumers’ needs and wants.
Introduction:
There are many frameworks that help characterize the differences between different cultures and the way people communicate across different cultures. In our paper we will focus on the differences between Korean and American cultures and what effect these differences might have on conducting business between both sides. We will concentrate on a failure business case of Wal-Mart entry and withdrawl for the Korean market to explore these differences.
Literature Review:
Cultural orientations can be view as lying on a continuum with high – context cultures on one
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(Gandolfi & Štrach, 2009).
Wal-Mart had a very sophisticated IT infrastructure in place to help integrated its suppliers into its supply chain. This IT system was a source of competitive advantage for Wal-Mart in the US allowing it to be a top notch negotiator and lower prices from vendors (Kim R. B., 2008). In Korea, however, Wal-Mart met with resistance from its distributors regarding integration into the IT system and ultimately did not create a nation-wide distribution network. (Kim R. B., 2008) The managerial style of Wal-Marts executives, especially their direct demands for lowering prices while negotiating and having distributors pay to have their wares displayed in good shelf space were direct causes for the soured relations between Wal-Mart and its vendors in Korea (Chang, 2008).
Wal-Mart strategy in the US was to have price dominance. In Korea, not only could they not achieve consistent price dominance due to soured vendor relations, price dominance is not a very good strategy. Koreans cared more about service and convenience and the warehouse look did not convey saving to them. (Gandolfi & Štrach, 2009)

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Works Cited
Chang, D. R. (2008). The case of Wal-Mart and E Mart in the Korean discount retailing industry. In J. I. Ki, Corporate Competitive Strategy in

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