How Global is Wal-Mart?
June 11, 2008 by Jean Mercedes
Filed under Business
Wal-Mart is one of the largest companies in the world, so it did not surprise me when I read a short article in the Sueddeutsche Zeitung, a German newspaper, about speculation that Rob Walton, son of founder Sam Walton, may be passing the reins to his son-in-law, Gregory Penner. What did surprise me is that the Sueddeutsche spent about 25% of the small article pointing out the shortcomings of Wal-Mart’s global strategies.
Is Wal-Mart a successful global player or not? Has this American icon made it into the hearts and wallets of consumers around the world? Or is Wal-Mart a case study for how not to go global?
Back in February 2008, Marek Fuchs over at TheStreet.com argued that Wal-Mart’s overseas business is growing, profitable and therefore successful. “Stores in 13 countries outside the U.S. accounted for about 25 percent of total company sales in the (fourth) quarter (2007), up from 23 percent a year earlier.” (Associated Press.)
Wal-Mart, based in cosmopolitan Fayetteville, Arkansas, has had a shaky track record when it comes to going global. South Korea was the first failure, with the company pulling out of the market in 2006. Two months later, after a nine-year attempt, they pulled out of Germany, taking a $1 billion hit. Business Week asked “Want to know how not to do business in Germany? Ask Wal-Mart.” In 2007, Wal-Mart piled up losses in Japan, although the unit was run by Gregory Penner, the same son-in-law who is being groomed to take over from Rob Walton.
In general, journalists are being positive (kind?) towards Mr. Penner, who at 38 could potentially bring new ideas and a cultural shift to the conservative style at the company. If so, he will have a lot to deal with. (Check out walmartwatch.com just to get a glimpse of the rage.) In Germany, most of the old employee manual was determined by a court to be against the law. Hopefully, Mr. Penner was smarter when he wrote the employee manual for Japan.
Like Reds and Blues, Americans are often divided over Wal-Mart. What is your perspective?
Image from quartermaster.army.mil
