WALMART’S FAILURES 1
Walmart’s Failures in Entering Three Developed Markets: A Critical Analysis
Alejandro Cuervo
Department of Business, Liberty University
BMAL 710: Understanding the Organization (B08)
Dr. Keith Pelletier
June 08, 2025
WALMART’S FAILURES 2
Abstract
This paper critically analyzes the failures of Walmart's international expansion in Germany,
South Korea, and Japan by using organizational and leadership theories. Despite its dominance
in the U.S. retail market, Walmart's global misadventures are a lesson on the risks of
ethnocentrism, lack of cultural sensitivity, and deficient strategic fit. The analysis reveals how
Walmart's strict use of its U.S. business operations model breeds cultural problems, regulatory
dilemmas, and disconnect with consumers using Hofstede's cultural dimensions, institutional
theory, Porter's generic strategies, and the Uppsala internationalization model. Failures in
leadership, where transactional rather than transformational and servant leadership was used,
worsened such cases. The paper also incorporates a biblical perspective, demonstrating
concepts from scriptures like Philippians 2:3-4 and Mark 10:45 to stress the significance of
humility and moral practices and the importance of servant leadership in an organizational
strategy. These scriptural perspectives provide timeless lessons for global business and suggest
caring, justice, and service to others.
Keywords: Walmart, international strategy, cultural misalignment, organizational
leadership, institutional theory, servant leadership.
Walmart’s Failures in Entering Three Developed Markets: A Critical Analysis
Walmart Inc., the world's biggest retailer by revenue, has been known for its aggressive
approach to growth, sophisticated logistics, and business model aimed at everyday low prices
(EDLP). Although domestic performance in the U.S. has not been matched, its excursion into
Germany, South Korea, and Japan is one of the most significant setbacks in Walmart's existence.
These failures illustrate serious holes in the international strategy, adaptation to culture, entry
into markets, and integration of operations. At the heart of these failures are several
WALMART’S FAILURES 3
organizational problems. These are the misfits with the local consumer taste, excessive
dependence on the U.S.-centric retail model, inadequate acquisition decisions, lack of cultural
sensitivity, and neglect of competitive and regulatory environments. However, the case gives us
valuable lessons on the complexities of international business and how one must be
strategically agile in exploring divergent markets. Key leadership roles, such as top executives
who handled the global strategy, regional managers in charge of local operations, and corporate
cultural advisors, played key roles in influencing Walmart's entry and exit strategies. Knowing
how these roles contributed to the failures can help highlight the blind spots of the
organizations and provide future cures for multinational corporations' expansions.
Evaluation of Problems and Application of Organizational and Leadership Theories
Walmart did not consider the enormous variation in consumers' cultural habits and
business practices. German customers wanted hard-discounters like Aldi and Lidl, reflecting
their mindset of frugality and an efficiency-oriented approach. According to Hofstede's
framework, Walmart's approach to following the practices in the U.S. took a collision course
with cultural dimensions such as high uncertainty avoidance and low indulgence (Vos &
Boonstra, 2022). In South Korea, Walmart's bulk product displays and utilitarian store layouts
were not attractive to customers who cared about beauty, individual service, and fresh food.
South Korea's high-context approach to culture, where harmony in relations/non-verbal
communication was prominent, applied in contrast with Walmart's transactional, price-driven
model. Likewise, in Japan, a country with high power distance and collectivism, Walmart's focus
on standardization and price-cutting ignored the subtle requirements for quality, brand trust,
and long-term relations.
WALMART’S FAILURES 4
Institutional Theory and Regulatory Environment
Institutional theory provides a powerful lens to understand Walmart's lack of
adaptation. This theory theorizes that organizations must obey regulative, normative, and
cognitive pressures within a given institutional environment to become legitimate and
functional (Risi et al., 2023). Walmart's EDLP (Every Day Low Pricing) in Germany was a violation
of laws prohibiting predatory pricing (Daft, 2020). The company would not let up on its loss-
leader tactics, which were resisted by regulators and rivals, resulting in fines and public outcry.
Complex and rooted supply networks in Japan made it impossible for Walmart to force its
centralized logistics model without alienating the local suppliers. In South Korea, well-seated
consumer expectations and established domestic competitors (such as E-Mart) placed
normative pressures that Walmart overlooked and thus failed to achieve market purchase.
Porter’s Generic Strategies and Competitive Analysis
According to Michael Porter's model, companies must choose cost leadership,
differentiation, or focus to maintain a competitive advantage (Islami et al., 2020). Walmart's
inflexible adherence to cost leadership flopped in those markets where the differential aspect
mattered a lot. In Japan and Korea, consumers were not prepared to pay less for poor service or
inferior quality at their convenience; Walmart could not provide value propositions because of
its cost-conscious strategy. In addition, Walmart underestimated local competition. In Germany,
Aldi and Lidl dominate the discount segment with a superior price advantage and market
knowledge (Daft, 2020). In South Korea, E-Mart and Home Plus were founded, and the locally
sensitive players presented a more involved shopping experience. The assumption of Walmart
as a dominant giant by its size and scale turned out to be fiction.
WALMART’S FAILURES 5
Uppsala Model of Internationalization
The Uppsala model implies gradual international development, which depends on
accumulated knowledge about the market and resources (Gao et al., 2022). Walmart violated
this principle by entering Germany and South Korea via massive acquisitions (e.g., Wertkauf and
Interspar) despite not understanding local consumer behavior and retail dynamics well enough
(Daft, 2020). The outcome was not only about money lost but also a damaged brand and
befuddlement within the organization. In Japan, its collaboration with Seiyu could not respond
to the delicate pangs of Japanese consumers; thus, Walmart did not change rapidly enough to
overturn its slumping sales.
Personal Perspective and Application of Theoretical Concepts From my
standpoint of strategic management, ethnocentrism was the main mistake committed by
Walmart: ethnocentrism (the fact that the business model used in the U.S. would be effortlessly
duplicated around the borders). This overconfidence about its brand and operating model
destroyed its capacity to learn and adapt. I would have predicted that Walmart would have
been better off taking a polycentric approach, which would give more leeway to local managers
when adapting strategies in their cultural and competitive environments (Lofthouse & Herzberg,
2023).
In addition, Walmart exhibited a poor understanding of strategic fit, aligning internal
capabilities with external demands. Despite the overwhelming logistical and procurement
advantage, Walmart cannot reconcile these strengths with the local shopping cultures and
regulatory backdrops of Germany, South Korea, and Japan. The company's lack of systems
thinking, in that it did not carry out environmental scanning and cultural intelligence
WALMART’S FAILURES 6
assessments before committing resources, is shown by its failure to perceive connected
relationships between the company and the external ecosystem (Lansing et al., 2023).
The other leadership weakness was in the change management process. For example,
Walmart brought its U.S. work culture, discouraged unions, and focused on long hours and
aggressive performance metrics. This led to tension in Germany, where the workers were
unionized and culturally opposed to such practices. If only Walmart had exercised
transformational leadership (which promotes adaptability, vision-sharing, and local
empowerment), it would have better coordinated its corporate objectives with local realities.
Lastly, Walmart's rigid application of transactional leadership, which was based on
metrics, pricing, and efficiency, overlooked the human aspect so crucial in serving
consumeroriented societies, especially collectivist societies. In markets such as Japan and Korea,
successful companies practice servant leadership, whereby they focus on customer needs,
community integration, and relational trust (Meuser & Smallfield, 2023).
Biblical Perspective on Organizational Issues
Scripture provides deep insights that strike a stringent chord with the issues that
Walmart encountered in its international expansion. One key biblical principle is humility, and it
is exemplified in Philippians 2:3-4, "Do nothing out of selfish ambition or vain conceit. Rather, in
humility value others above yourselves, not looking to your interests but each of you to the
interests of the others," which asks to consider other people better than yourself. Walmart's
strategy, based on applying its U.S. retail formula overseas without paying attention to local
tastes, was indicative of the absence of cultural humility. A more Christ-like posture would have
insisted on understanding and serving German, South Korean, and Japanese customers' unique
needs (Merida, 2015). Also, the ethic of stewardship is presented in Proverbs 16:8: "Better a
WALMART’S FAILURES 7
little with righteousness than much gain with injustice." Walmart's aggressive pricing methods
did not spare Germany, which interfered with the local fair-trade laws and prioritized profit at
the expense of local norms of fairness and justice. Without ethical alignment, this struggle for
market share ultimately made them the victim of a public and joint attack.
Strategic missteps also reveal a failure to observe the Biblical principle outlined in Luke
14:28-30, "Suppose one of you wants to build a tower. Won’t you first sit down and estimate
the cost…?" which affirms the virtue of wise planning and counting the cost. The hasty
acquisitions made by Walmart and the lack of due diligence resulted in failures that would have
been prevented with a less reckless plan. Finally, Mark 10:45, "For even the Son of Man did not
come to be served, but to serve..." encourages business leaders to put on the mindset of a
servantleader, aiming at serving others rather than the other way around (Merida, 2015). With
a centralized approach and rigid policies, Walmart antagonized the local stakeholders, who
could have been linked to building trust, inclusion, and long-term success under a servant
leadership model.
Conclusion
Walmart's events in Germany, South Korea, and Japan are a cautionary tale of what a
multinational company can get if it does not respect local culture, regulatory environments, and
consumer needs. With its operational strengths and global brand recognition, poor acquisition
decision-making and failure to adapt to different cultures have caused Walmart huge financial
losses and brand setbacks. The failures of these companies' analyses through Hofstede's
cultural dimensions, institutional theory, Porter's strategies, and the Uppsala model give an in-
depth knowledge of what went wrong with Walmart. Individual reflection and biblical ideas
confirm the role of humility, ethical leadership, and servant-oriented strategy in global business.
WALMART’S FAILURES 8
References
Biblestudytools.com. (2011). The new international version (NIV) Bible - Read online.
https://www.biblestudytools.com/niv/
Daft, R. L. (2020). Organization Theory & Design 13th Edition.
Gao, R., Gao, Q., Zhuang, X., & Sun, K. (2022). Extending Uppsala model with springboard
perspective in emerging multinational’s sequential internationalisation—evidence from
a construction company’s expansion in Africa. Journal of Risk and Financial
Management, 15(1), 16. https://doi.org/10.3390/jrfm15010016
Islami, X., Mustafa, N., & Topuzovska Latkovikj, M. (2020). Linking Porter’s generic strategies to
firm performance. Future Business Journal, 6, 1-15. https://doi.org/10.1186/s43093-
020-0009-1
Lansing, A. E., Romero, N. J., Siantz, E., Silva, V., Center, K., Casteel, D., & Gilmer, T. (2023).
Building trust: Leadership reflections on community empowerment and engagement in a
large urban initiative. BMC Public Health, 23(1), 1252.
https://doi.org/10.1186/s12889 023-15860-z
Lofthouse, J. K., & Herzberg, R. Q. (2023). The continuing case for a polycentric approach for
coping with climate change. Sustainability, 15(4), 3770.
https://doi.org/10.3390/su15043770
Merida, T. (2015). Exalting Jesus in 1 & 2 Kings. B&H Publishing Group.
https://books.google.co.ke/books?
id=lrPVCgAAQBAJ&printsec=copyright&source=gbs_pub_info_r
Meuser, J. D., & Smallfield, J. (2023). Servant leadership: The missing community component.
Business Horizons, 66(2), 251-264.
WALMART’S FAILURES 9
https://doi.org/10.1016/j.bushor.2022.07.002
Risi, D., Vigneau, L., Bohn, S., & Wickert, C. (2023). Institutional theory based research on ‐
corporate social responsibility: Bringing values back in. International Journal of
Management Reviews, 25(1), 3-23. https://doi.org/10.1111/ijmr.12299
Vos, J. F., & Boonstra, A. (2022). The influence of cultural values on Enterprise System adoption,
towards a culture–Enterprise System alignment theory. International Journal of
Information Management, 63, 102453. https://doi.org/10.1016/j.ijinfomgt.2021.102453
