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section 4 case studies cases 4.1 Wal-Mart’s German Misadventure 4.2 Handl Tyrol: Market Selection and Coverage Decisions of a Medium-sized Austrian Enterprise 4.3 Blair Water Purifiers to India 4.4 A Tale of Two Tipples 4.5 Kellogg’s Indian Experience 4.6 Strategic Alliances in the Global Airline Industry: from Bilateral Agreements to Integrated Networks 4.7 GN Netcom in China 4.8 IKEA: Entering Russia 4.9 The ‘David Beckham’ Brand 563 571 574 583 586

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case 4.1 Wal-Mart’s German Misadventure
I don’t think that Wal-Mart did their homework as well as they should have. Germany is Europe’s most pricesensitive market. Wal-Mart underestimated the competition, the culture, the legislative environment.
— Steve Gotham, retail analyst, Verdict Retail Consulting, October 20021

We screwed up in Germany. Our biggest mistake was putting our name up before we had the service and low prices. People were disappointed.
— John Menzer, head of Wal-Mart International December 20012

‘Don’t look now:’ low prices all year round! With thanks to Walmart

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section 6 case studies section 4

German blues
For the world’s largest retailing company, Wal-Mart, Inc., the German market was proving difficult to crack. By 2003, even after five years of having entered Germany, Wal-Mart was making losses. Though Wal-Mart did not reveal these figures, analysts estimated losses of around $200–300 million per annum in Germany over the five-year period. According to analysts, the main reason for Wal-Mart’s losses was its failure to understand German culture and the shopping habits of Germans. Though Wal-Mart was famous the world over for its Every Day Low Pricing (EDLP),3 which turned it into the world’s No. 1 retailer, it could not make an impact in