Wal-Mart Failure in German Essay

10243 Words Jul 8th, 2013 41 Pages
Journal of Economic Geography 7 (2007) pp. 451–469 Advance Access Published on 14 May 2007

doi:10.1093/jeg/lbm010

Barriers to ‘US style’ lean retailing: the case of Wal-Mart’s failure in Germany
Susan ChristophersonÃ

Abstract
Wal-Mart’s exit from the German market in 2006 after 10 years of attempting to achieve sustainable competitive advantage contributes an interesting case to the small but expanding literature on ‘failure’ in international investment. The work on the disinvest decision in all its forms has been critical to a re-conceptualization of the international investment process as dynamic rather than static, linear and inexorable. An important segment of the work on investment and disinvestment as dynamic processes
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Wal-Mart had been losing approximately $200 million every year of its operation in Germany and the transaction to divest itself of its German chain cost the company approximately $1 billion (US). The Wal-Mart pullout from the German market also caused shockwaves because it raised questions about the globalization ‘project’, as it takes shape in the retail sector. The premise of trade liberalization is that the entry of foreign competitors into inefficient markets will drive out poorly performing firms and more efficient markets will produce not only super-profits but also gains for consumers. If Wal-Mart, an exemplar of best-practice because of its technological prowess and market dominance, could bring efficiency and low prices to German retailing, that success would legitimate the agenda of trade liberalization.

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Department of City and Regional Planning, Cornell University, U.S.A. email 5smc23@cornell.edu4

ß The Author (2007). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

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Christopherson

Wal-Mart was an excellent candidate to demonstrate the gains to be achieved by trade liberalization. It is among the world’s largest firms and represents best practice in supply chain management. It also has been effective in moving into

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