Did Walmart have Walmart stores in Germany, or they simply purchase a chain that was not...

Did Walmart have Walmart stores in Germany, or they simply purchase a chain that was not doing well? Why do you think Walmart did not anticipate the problems that stores in poor condition and in poor areas would have major profitability issues?

Expert Solution

yes, Walmart had stores in Germany. Walmart has entered to Germany with acquisition but the reason behind the failure is not only the poor condition of the stores or areas where the store was stabilised but also there were many reasons.

There are several reason why Walmart failed in Germany. First of all it seemed to be a good idea for them to enter an European market in the EU powerhouse Germany to establish themselves as a strong name. But, if you think twice, it was clearly not as simple as they thought.

The management of Walmart underestimated the work environment differences.

Germany has strict and higher minimum wages - more costs
strict vacation time (30 days a year + overtime + holiday) - more cost
higher management salaries -more costs
stores have to close at 8, and are not allowed to open Sunday’s -less income

So just by the wages you see their potential income shrinking already compared to the US.

The building costs are higher because in Germany, at least in areas where lots of people live and Walmart wants to be, has limited space and extremely high costs to buy. To have the building permit and follow all laws is also more complicated than in the US.

The next difference is taxes. They are at least 45% or higher.

Rahul Sunny answered 2 years ago

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