Furthermore, the premise of national cultures is also another mainstream driver of success in international businesses. Another conceptual framework for understanding the drivers behind foreign investment was proposed by Hofstede (1997), which focuses on national cultural differences in order to determine a suitable foreign market. This model differs from Dunning’s (1988) framework which lacks an emphasis of cultural dimensions. Hofstede’s (1997) Five Dimensions of National Culture Differences consist of five dimensions; Power Distance, Uncertainty Avoidance, Individualism/Collectivism, Masculinity/Femininity and Long-Term Orientation (Hofstede, 1997). In terms of Hofstede comparison scores factors such as Power Distance, Individualism and Uncertainty Avoidance between the US and Germany scored vastly different (Hofstede, 2001), potentially explaining why Walmart significantly underperformed in these areas.
In terms of Uncertainty Avoidance, which is a vital dimension in the visualisation of cultural differences (Bialas, 2009), US employee-management practices did not align accordingly within German domain. One instance of this was Walmart’s policy whereby all employees were forced to attend a morning ritual and chant “Walmart” in order to supposedly increase employee-loyalty and boost their morale. This was taken as an annoyance in Germany (Christopherson, 2007), in addition to asking employees to spy on each other for misconduct which is not accepted in Germany (Shurrab, 2014). Additionally, Walmart caused further annoyance by ordering their employees to smile at customers, which made both parties unsettled and stressed as smiling to strangers was not commonplace in their culture (Nazir et al, 2014). This could be explained by Germany’s significantly high Uncertainty Avoidance score (Hofstede, 2001), as compared with the US’ lower score. Thirdly, German consumer habits were not adequately assessed before entry, because German consumers prefer to shop in several places when making purchases, not purchasing everything from one location (Govindarajan and Gupta, 2002). Also, Walmart opted to place their higher-cost items on shelves at eye-level and place cheaper ones towards the bottom (as they do in the US/UK), causing further annoyance among consumers (Landler and Barbaro, 2006). Furthermore, Walmart structured their stores in a way which encouraged customers to spend a significant amount of time shopping, which again did not align with German values which consider themselves to shop quickly and efficiently, causing further exasperation (Javid, 2015). Another Uncertainty measure not recognised by Walmart was its use of plastic carrier-bags and packaging which did not align with German’s “land of the green” ideology (Macaray, 2011). Insufficient analysis of cultural-norms and not adapting to customer preferences lead to poor customer retention and constrained financial performance with Walmart in Germany (Jui, 2011). Additionally, Power Distance is another key indicator of Walmart’s failure. In Germany, it is not common to have an authoritarian employee-structure, whereby employees are constantly required to seek knowledge from employees above. Instead, they work in clusters to achieve targets, which Walmart did not accommodate (Clark, 2006). Also, a reduced salary than that of the equivalent UK market frustrated employees, leading to a high staff-turnover (Christopherson, 2007). Finally, Individualism factors also explain reasons for their demise. Germany scores significantly lower than the US on this (Hofstede, 2001), as they prefer to work collectively within teams. However, Walmart failed to facilitate this due to forcing employees to use English as the stores official language, resulting in communication breakdowns among the employee hierarchy (Schmidt,
In terms of Uncertainty Avoidance, which is a vital dimension in the visualisation of cultural differences (Bialas, 2009), US employee-management practices did not align accordingly within German domain. One instance of this was Walmart’s policy whereby all employees were forced to attend a morning ritual and chant “Walmart” in order to supposedly increase employee-loyalty and boost their morale. This was taken as an annoyance in Germany (Christopherson, 2007), in addition to asking employees to spy on each other for misconduct which is not accepted in Germany (Shurrab, 2014). Additionally, Walmart caused further annoyance by ordering their employees to smile at customers, which made both parties unsettled and stressed as smiling to strangers was not commonplace in their culture (Nazir et al, 2014). This could be explained by Germany’s significantly high Uncertainty Avoidance score (Hofstede, 2001), as compared with the US’ lower score. Thirdly, German consumer habits were not adequately assessed before entry, because German consumers prefer to shop in several places when making purchases, not purchasing everything from one location (Govindarajan and Gupta, 2002). Also, Walmart opted to place their higher-cost items on shelves at eye-level and place cheaper ones towards the bottom (as they do in the US/UK), causing further annoyance among consumers (Landler and Barbaro, 2006). Furthermore, Walmart structured their stores in a way which encouraged customers to spend a significant amount of time shopping, which again did not align with German values which consider themselves to shop quickly and efficiently, causing further exasperation (Javid, 2015). Another Uncertainty measure not recognised by Walmart was its use of plastic carrier-bags and packaging which did not align with German’s “land of the green” ideology (Macaray, 2011). Insufficient analysis of cultural-norms and not adapting to customer preferences lead to poor customer retention and constrained financial performance with Walmart in Germany (Jui, 2011). Additionally, Power Distance is another key indicator of Walmart’s failure. In Germany, it is not common to have an authoritarian employee-structure, whereby employees are constantly required to seek knowledge from employees above. Instead, they work in clusters to achieve targets, which Walmart did not accommodate (Clark, 2006). Also, a reduced salary than that of the equivalent UK market frustrated employees, leading to a high staff-turnover (Christopherson, 2007). Finally, Individualism factors also explain reasons for their demise. Germany scores significantly lower than the US on this (Hofstede, 2001), as they prefer to work collectively within teams. However, Walmart failed to facilitate this due to forcing employees to use English as the stores official language, resulting in communication breakdowns among the employee hierarchy (Schmidt,