How culture influences internationalization of firms: a case of Walmart

 As noted by Bird and Fang (2010), culture does play a significant role in the internationalization and management of foreign firms. The authors based this statement on the cultural dimensions created by Hofstede. Other researchers, such as Chevrier (2009), have also made it known that the understanding of cultural features in any given market is the beginning of success for such a brand and vice versa. The influence of culture in international business cannot be overemphasized because numerous managers are viewing the world as a simple community where standardized approaches can be adopted in order to reap the benefits of economies of scale, but the fact remains that even the basic elements of human lives are different due to differences in culture. Not just what is consumed, but also how it is consumed, when it is consumed, and who consumes it are all part of what managers need to understand when creating new goods and services. This is because what might be welcomed in a given society can be a taboo in another society. For instance, men don’t sell female lingerie in Saudi Arabia as opposed to the American setting where such is possible, the majority of Indians are vegetarians as opposed to other countries where consumption of meat is highly welcomed, and Muslims don’t eat pork as opposed to the Chinese Buddhists who enjoy such at any given point in time. Therefore, understanding these little but sensitive elements of culture is very important for creating peaceful coexistence as well as ensuring the profitability of businesses in international markets.

The issue of culture and its influence on international business is not something that has kicked off in the present day as it has been accounted for in previous literature (for instance, Ouchi, 1981; Pascale and Anthony, 1981; Rossi and O’Higgins, 1980; Smircich, 1983). Thus, culture is something that has influenced businesses in the past, is influencing businesses now, and will continue to influence businesses in the future. In that regard, understanding how such influence occurs is critical for the success of any given business because it will assist managers in perfectly aligning their objectives with market expectations (needs and wants).

The case of Wal-Mart is a clear demonstration of the fact that culture can have a huge impact on the success of any given firm. At first, the brand was conscious of the need to internationalize but didn’t take time to understand the culture of their first international market. Thus, the starting stage was very difficult for Mexico as the Mexican culture is built around smaller quantities of food because of a lack of electricity to store large volumes of food. This contradicted the American culture that Wal-Mart entered the country with, and it inevitably led to initial failures. However, the brand was quick to identify this issue and subsequently beefed up its system with Mexican employees who better understood the market. Thus, the right solution was provided, and Wal-Mart switched from not being welcomed to actually changing the shopping culture of Mexicans.

In Germany, they also have issues as to how to go about the management process, but Wal-Mart was ignorant of their first case in Mexico as the brand hired American managers that were not very aware of the German business approach. The outcome was the acquisition of the wrong brands, differences in corporate cultures, a lack of an effective supply chain system, and the inevitable failure of the brand in the country. Thus, they were forced to exit Germany with huge losses.

Still high on the desire to make more profits through internationalization, Wal-Mart also entered the South Korean market and was also faced with a number of challenges. First, the market has already been dominated by other brands, and they made a similar mistake with the German market, and the brand was also forced to exit the South Korean market as well.

Basically, the above discussions are a clear representation of the fact that culture does play a significant role in the success or failure of international brands. The significance of such a role is reflected in the fact that huge differences exist in terms of what consumers want and how they make their demands.

The concept of "glocalization" has also been discussed in this research, and it was defined as "internationalizing with a focus on the local market." Thus, it is in support of the idea that there is no generalization of the world as occasionally viewed because differences still exist across cultures down to minute elements that managers might view as insignificant but yet have a significant impact on consumers’ overall decision-making processes.

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