On May 22nd, 2006, a massive super store firm, Wal-Mart, withdrew from South Korea. Before Wal-Mart, another massive super store firm, Carrefour, also removed itself from South Korea. However, both firms are successfully operating in other countries, and they are a very big global brand (NY Times, pars. 1-2).
But in Korea, these superstores were replaced with a firm called “E-Mart.” E-Mart has a similar operation system with Wal-Mart, which pursues a low price orientation to dominate the discount retail sector. Then, what are the reasons of their failure in Korea? Another dubious question comes to mind: Can Wal-Mart get any bigger? Unfortunately, yes.
Before stating the reasons of failure, we should know the characteristics of Wal-Mart in the United States, which is successful. The tactic that Wal-Mart used to expand in the United States was building a huge, warehouse look store in rural areas, and then, spread out its store to nearby cities to form retail clusters. So, Wal-Mart used the same tactic in Korea, making huge stores in suburbanized areas. The places Wal-Mart chose to make stores did not match with Korean consumers’ life style and shopping habits. Korean consumers prefer to purchase small amounts frequently instead of buying large volumes at once, because they want fresh food and beverages other than dry goods (Renee B Kim vol. 3). So, Korean consumers prefer to go to a department store, where it has good accessibility. This means that people like to go to department stores which have a convenient transportation system. And urbanized areas do have good transportation systems. Wal-Mart did not learn the shopping customs of Korea.
Not only the tactic but also bad timing made Wal-Mart to choose bad locations in Korea. Other major retailers, E-Mart and Homeplus, had already built their stores in urban areas. They blocked Wal-Mart to build their stores in commercial areas. This situation is also seen in Germany, where Wal-Mart also failed to succeed. In Germany, the Aldi chain occupied favorable places for department stores; eventually, Wal-Mart could only earn undesirable places. Wal-Mart purchased Wertkauf and Interspar, but saddled those stores in unfavorable locations. For example, one of outlets was located nearby couple of sex shops (NY Times, pars. 7-9). James Bacos, a director of the consumer goods at Mercer Management Consulting, said “These were some of the least attractive of the big-box retailers out there.” Also, Wal-Mart does not care much about its foreign stores carry the name derived from its founder. For example, in Japan, Wal-Mart took over Seiyu, but keep using name Seiyu, instead of using Wal-Mart. Over all, Wal-Mart is still expanding outside the United States (Times Magazine, pars. 12).
Bad timing was a problem for Wal-Mart in Korea and Germany; but, we could also know that Wal-Mart was only interested in expansion without having enough information on each market.
Wal-Mart failed in Korea, because it did not concern about differences in each countries’ cultures. The vice chairman of Wal-Mart said, “As we continue to focus our efforts where we can have the greatest impact on our growth strategy, it became increasingly clear that in South Korea’s current environment it would be difficult for us to reach the scale we desired.”
When we see the cases of Korea and Germany, it seems that Wal-Mart can’t expand anymore. However, actually, it can. Wal-Mart can expand their industry in China, Mexico and Brazil, which have big markets. For example, there are 295 stores in Brazil which is ranked third in the market of Brazil. This shows positive effect of a Wal-Mart policy which doesn’t change names of the stores that are integrated into Wal-Mart (NY Times, pars. 23-25). Not only in Brazil but also in China, Wal-Mart has been successfully operating.
Wal-Mart’s changes came too late for Germany, but they could help it crack other markets, like China, where it already has 60 stores and 30,000 employees. Far from being chastened by its setbacks, Wal-Mart is forging ahead with an aggressive program of foreign acquisitions
(NY Times, pars. 10).
Wal-Mart is a huge retailer. It has become a main topic in social, economic and political debates. But in this essay, expansion of Wal-Mart is a main topic. Although Wal-Mart failed to succeed in South Korea and Germany, it expands its foreign market. According to NY Times, Wal-Mart has been successfully operating in Brazil, Mexico and China. Base on these facts, Wal-Mart can expand its economical territory until Wal-Mart occupies all world markets.
Works Cited
“Can Wal-Mart get any bigger?” Time. 5 January 2003.
Cho Sang-Hun. “Wal-Mart selling stores and Leaving South Korea.” NY Times. 23 May 2006
Mark Landler and Michael Barbaro. “Wal-Mart finds that its formula doesn’t fit every culture” NY Times. 2 August 2006
Pretty good. At least one hyperlink and you seem to have a grasp of MLA format (though not needed in the online version).
답글삭제The pictures often add context, but in some cases they are distracting and unrelated to the essay content. I like visual cues, but encourage you guys to be selective and place them appropriately. Most of these don't achieve much.
All in all, good effort. You followed directions better than most.