Cross-Cultural Perspectives of Wall-Mart - Essay Example

? Wal-Mart was founded by Sam Walton in 1962 (Frank, 2006). The firm since then has become a global leader in the retailing industry. Sam was a charismatic leader that was deeply involved in the day to day operations of the company. The business model used by the firm is cost advantage. The company has some of the lowest prices in the retail industry. The culture of the firm was positively influenced by its leader. Sam empowered his employees to achieve higher performance and great customer service. Despite the company’s tremendous culture in the U.S states the managers of the company today did not realize that the American Wal-Mart culture cannot be replicated in foreign marketplaces. Corporate culture can be defined as ethical and behavioral standards and how they are communicated and reinforced (Corporatecomplianceinsights, 2012). Cultural issues can be detrimental to a company because they create friction, morale problems, and interpersonal conflicts. The company in Germany had disastrous results due to the poor leadership and incompetence of its managerial staff. During the nine years that Wal-Mart operated in Germany the company loss billions of dollars as a consequence of its ill advice expansion of 85 stores in a market that the company was not penetrating adequately due to its lack of cultural adaptation. Some of the reasons that Wal-Mart failed in Germany were strong competition, poor store locations, and ill-conceived acquisitions, cross-cultural mistakes, and miserable planning (Nipiersky, 2009). It is often tough for companies to accept that what worked in one marketplace may not easily transfer into another market. The ethical perspectives of Wal-Mart in other countries were put into question by its actions in Germany. In Germany the unions hold a lot of power, thus retailers have to work with them to become their allies instead of their enemy. “Germans generally see a closer link between labor unions and democracy” (Nipiersky, 2009). Wal-Mart intruded into the personal lives of its workers by forbidding fraternization among the employees. In the United States this policy was accepted by American workers, but in Germany is viewed as anti-democratic and as an invasion of privacy. The labor practices of Wal-Mart infuriated the Workers Council in Germany which led to bad press and a deterioration of the corporate image of the firm (Nipiersky, 2009). Ethics involves decisions between right and wrong. The problem with operating in multiple foreign markets is that what is perceived as right by one culture may be viewed as wrong in others. The firm also did a terrible job in identifying the consumer habits in Germany. An example of a customer relations blunder was bagging the bags of the customers. Germans perceive bagging goods as an invasion of privacy. If the manager had performed their due diligence, Wal-Mart would have never bagged merchandise since the action is a waste of labor time. The firm is one of the most cost conscious companies in the world. Wal-Mart has to re-evaluate its cultural polices by performing better research and planning prior to penetrating a market. The firm must avoid automatically exporting U.S. policies into other markets because doing so can lead to cultural conflicts. The human resource and marketing departments of the company must receive cultural training. These two departments are instrumental in the handling of internal and external human relations. The company also has to provide cultural training to the managers of the company at all levels. Diversity in the workplace is a variable that cannot be disregarded by the employees of the company. The labor laws of a new country must be carefully studied by the managers of the company to ensure full compliance. A strategy that Wal-Mart must incorporate into its strategic planning is corporate social responsibility. Corporate social responsibility refers to the actions of companies that protect the environment and enrich the lives of the community around them. Donating money to social causes such as hunger is an example of a good action that is aligned with the principles of corporate social responsibility. Wal-Mart has donated over $2 billion in hunger relief through the actions of the Wal-Mart Foundation. “Executives are repeatedly informed that by demonstrating concern for the environment, human rights, community development and the welfare of their employees both in the U.S. and abroad, they will make their firms more profitable” (Noer, 2008). In the United States Wal-Mart has used corporate social responsibility in a strategic manner to improve the reputation of the company as a good corporate citizen. The company currently has an initiative in Facebook to vote for 1 of 200 communities in need to donate $1 million with the next 20 communities in the voting receiving $50,000 to fight poverty and hunger (Walmartstores, 2012). The firm is also a strong supporter of the military. The organization must utilize corporate social responsibility as a tool to aggressively attract foreign customers. Upon entrance into a new marketplace Wal-Mart has to obtain a list of all the non-profit organizations near its community. The firm should get involved in social causes. An example of a simple way to provide a helping hand is by instituting policies to donate their employees’ time in registered non-profit organizations. Donating money and merchandise is another great way to get involved in the well-being of the community. Some policies that Wal-Mart can use to protect the environment are recycling programs, green packaging, and renewable energy. Wal-Mart must utilize better cultural practices in its operations to improve the effectiveness of its operations abroad. The firm learned some tough lessons in Germany of what a lack of cultural understanding can do to a company. The billions of dollars in losses the company incurred in Germany could have been prevented if the firm had done a better job of studying the market and adapting its policies to comply with the culture of the country. The firm has to also apply ethical practices that are aligned with the country they are doing business with. Success in the 21st century is highly dependent on the ability of the company to adapt to the behavior and culture of customers worldwide. References Corporatecomplianceinsight.com (2012). Global Corporate Culture Definition, Issues, Impact. Retrieved May 16, 2012 from http://www.corporatecomplianceinsights.com/global-corporate-culture-definition-issues-impact-rick-steinberg/ Frank, T.A. (2006). A Brief History of Wal-Mart. Retrieved May 16, 2012 from http://www.reclaimdemocracy.org/walmart/2006/history.php Napiersky, U. (2009). Giant Lessons for Wal-Mart Behemoth. Retrieved May 16, 2012 from http://www.albaglobal.com/article1049.html Noer, M., Ewalt, D., Weiss, T. (2008). Corporate Social Responsibiity. Forbes. Retrieved May 16, 2012 from http://www.forbes.com/2008/10/16/corporate-social-responsibility-corprespons08-lead-cx_mn_de_tw_1016csr_land.html Waltmartstores.com (2012). Hunger Relief. Retrieved May 16, 2012 from http://www.walmartstores.com/CommunityGiving/9599.aspx Read More