Walmart Failures 1
Week 4 Assignment
Walmart Failures
School of Business, Liberty University
BUSI 735: Strategic Organization Design and Theory
Walmart Failures 2
Abstract
Walmart began entering global markets in 1991, with Mexico being the first country the
company expanded to internationally. Since then, the company has expanded to 30 countries
with more than 11,000 stores. This work explores Walmart's expansion to three nations:
Germany, Japan, and South Korea. Initially, these expansions were carried out smoothly, but
challenges arose when entering these countries. A series of assumptions and cultural missteps
hindered Walmart's expansion, as the company did not thoroughly plan for these issues or
adequately assess the needs and expectations of customers in these nations. Additionally,
supply chain tactics and the ability to acquire goods also posed challenges, with the assumption
that maintaining well-stocked warehouses similar to those in the United States (US) would
suffice abroad. Other issues included the types of packaging used in the stores from a
customer’s perspective and the store aesthetics, which were unfamiliar and not always
appreciated by shoppers. While some stores became profitable, others closed down, forcing
Walmart to reevaluate its approach to international expansion.
Introduction
As a global leader and one of the most financially successful companies in the world,
Walmart has been a significant force in retail since its founding in 1962. The company is
headquartered in Bentonville, Arkansas, and holds the title of the largest retailer worldwide
(Walton, 2020).
Walmart experienced quick success. After opening its first store in 1962, its focus on
rural markets and small towns proved to be a successful strategy, as the stores not only offered
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lower prices than mom-and-pop stores but also provided these communities with jobs. The
lower prices were estimated to save American families around $2,500 annually (Walton, 2020).
Recognizing measurable success, the desire to expand globally was explored and acted
upon with the opening of its first international store in Mexico in 1991 and in Canada in 1994
(Volpe & Boland, 2022). Initially, these stores were very successful internationally, but they
came with costs. First, when Walmart opens a new store internationally, it competes with small
retail businesses. Second, because they require large floor space, Walmart typically locates away
from historic centers, contributing to urban sprawl (Cissé & Dubé, 2024).
With global expansion comes a set of unique challenges that must be considered not
only to achieve success at the outset, but also to sustain this success and provide the services
intended to enhance the community by offering jobs and products at a lower price than the
competition. According to Joseph (2024), “Understanding the dynamics of target markets,
including cultural nuances, consumer preferences, regulatory frameworks, and competitive
landscapes, is imperative” (p. 1). Assumptions about the shopping habits and what international
customers prefer from a retailer must be thoroughly researched and only hypothesized once the
research is complete. Lastly, local partnerships are crucial and must be established and
maintained throughout the process. This research examines Walmart’s overseas expansion to
Germany, Japan, and South Korea, as well as the assumptions made and challenges the
company encountered with its suppliers, target customers, and their communities.
Advantages and Disadvantages: Foreign Markets
Expanding a company globally has numerous advantages, particularly when growing a
business, as it not only increases sales but also expands its brand globally and boosts revenue.
For instance, Tesla entered the global market, and its sales experienced a significant increase
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from $7 billion in 2016 to $31.5 billion in 2020, indicating its successful global expansion (Ghar,
2024). While the products produced by Tesla and Walmart may differ, the goal remains the
same: to enhance market access and increase revenue.
Another major benefit of expanding into foreign markets is gaining access to new
customers. Although the United States currently has the largest economy in the world, it makes
up less than 5 percent of the global population (Edwards, 2021). That leaves a potential market
of 95% of new customers, which is especially attractive when the U.S. market has become
saturated, with more than 90 percent of Americans now living within 15 miles of a Walmart, and
one in four dollars Americans spend on groceries is spent at Walmart (Alam & Morshed, 2021).
While these advantages aim to promote global expansion and provide compelling
reasons to pursue it, there are some disadvantages to be aware of and prepared for. Without a
detailed expansion strategy, these disadvantages can be amplified, leading to serious
challenges. Pegan et al. (2020) emphasize the importance of the country of origin in shaping
perceptions of products in foreign markets, both positive and negative. Specifically, imported
goods can be negatively affected by stereotypes that are hard to change, causing them to be
excluded from the set of purchasing options from the start.
Logistics in a global market can also be complex, especially when expanding a company
internationally. Global logistics issues include not only international cooperation and
crossborder challenges but also intermodal transportation, analysis of global shipping networks,
supply chain integration and coordination, intelligent transportation systems and information
technologies, as well as green and reverse logistics (Shibasaki et al., 2021). Accounting for
storage and supply/resupply in a foreign market is an important consideration that must be
addressed prior to expansion.
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Assumptions: Foreign Markets
Walmart’s assumptions during its expansion into the German, Japanese, and South
Korean markets proved detrimental to the company. While they had hoped to duplicate their
dynamic business model seamlessly in other high-potential markets by building robust supplier
networks due to their gargantuan size and proven ability to influence pricing similarly to the US,
they experienced significant logistical challenges by assuming they would have the same supply
strategy as they did in the US (Daft, 2021). Some of the particulars included the inability to
negotiate low prices with suppliers in Germany, entry barriers due to competition to purchase
products in South Korea, and a complex supplier network that is difficult to penetrate in Japan
(Daft, 2021).
Also plaguing the company was the lack of local citizens in management roles at their
foreign locations. The company placed US citizens in these roles, and after acquiring two
German retailers and renaming them Walmart, it faced significant operational differences
between the two companies. Applying the Walmart template of operations management to the
stores did not yield positive results.
In South Korea, the assumption was that the citizens would like bulk packaged goods and
boxed products. They did not account for South Koreans’ smaller homes and their preference
for smaller packaged items due to space limitations, as well as the availability of beverages and
fresh food in stores (Daft, 2021).
The Japanese market was equally affected by assumptions from the Walmart
management team. First, their unique shopping styles did not align with the big-box store style.
The Japanese people possess a minimalist mindset and prefer smaller, convenient neighborhood
stores close to their homes (Daft, 2021). Another assumption that proved useless was the
Walmart Failures 6
production and distribution of weekly circulars, which is not the typical marketing style in Japan.
The Japanese people desire higher-quality goods that are not generally advertised in weekly
circulars. This method fed the assumption that Walmart’s products are of lower quality, causing
them to shy away from them.
Assumption Mistakes: Foreign Markets
Entering a foreign market is not an easy task, but the process can be made smoother
with proper planning, thorough research, and a well-defined entry strategy. While there are
many specific factors to consider when entering a foreign market, there are certain aspects that
must be precisely executed to ensure mistakes are avoided and the entrance is successful.
Shopper behavior is critical and is influenced by a myriad of factors. A company must not
assume that shoppers abroad share the same tastes and desires as those in the company’s
country of origin. Cultural differences significantly influence consumer behavior, preferences,
and perceptions of brands, necessitating tailored marketing and branding approaches (Joseph,
2024). For example, shoppers in Japan tend to seek out high-end items, scrutinizing packaging,
the product itself, and its marketing when making purchasing decisions.
Another mistake companies often make during expansion is relying on managers from
their own country to run the organization abroad without considering the inclusion of local
leadership. Numerous articles have been written about the success of companies that have
effective communication strategies. This strategy serves an international company in the same
capacity. Organic management, teamed with local management from the newly expanded
country, has proven to be successful. Expatriate managers, as well as local managers who have
had the opportunity to work in corporate headquarters, will enable you to establish information
and knowledge flow channels (Annushkina & Regazzo, 2020). More importantly, this allows
Walmart Failures 7
information that influences the foreign aspect of the business to be included in the leadership’s
purview, which is vital during the initial stages of expansion.
International Entry Modes
Walmart employed a similar entry strategy that it had previously used in other countries.
Unfortunately, this would prove detrimental in certain countries due to the local culture and the
placement of their stores within these countries.
In Germany, the assumption was made that due to similarities in culture, language, and
the legal environment, they would be successful. Add in the acquisition of multiple stores from
two already established German retail companies (Daft, 2021). South Korea’s entry was
motivated by the country’s 15th-ranked economy globally. While this was a fair strategic tactic,
and many companies employ it, the failure to understand local conditions hindered this strategy
and caused considerable consternation and anguish, ultimately leading to the sale of most of
the previously acquired stores (Daft, 2021). Finally, in Japan, Walmart entered through a joint
venture with Seiyu Ltd., Japan’s fifth-largest supermarket chain (Daft, 2021). The issue here is
that Walmart did not account for the unstable economy and the pitfalls of historically high cost
structures.
The most likely effective approach is the joint ventures Walmart has previously
undertaken. Although it has not succeeded in all expansion areas, it remains the most viable
option. Joint ventures can provide essential consumer and market insights in these markets,
especially if the venture is with the dominant player in the area Walmart aims to expand into
(Rai, 2025).
The Merida (2015) readings suggest that the “vegetable garden” in which Walmart seeks
to acquire, in the form of foreign land and profit, may not be the fruit-bearing paradise they
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envisioned. Deuteronomy 11:10 states, “For the land you are entering to possess is not like the
land of Egypt, from which you have come, where you sowed your seed and irrigated by hand as
in a vegetable garden” (King James Bible Online, 2025).
Conclusion
Walmart has experienced significant global growth. It has also learned that expanding
into foreign countries is not always easy and requires careful planning and research to give it the
best chance at success. Despite the challenges and consumer rejections that large retail stores
often face when entering new markets, Walmart remains committed to its mission of being the
world’s largest and most profitable retailer. 1 Corinthians 15:58 reminds us, “Therefore, my
beloved brethren, be ye steadfast, unmovable, always abounding in the work of the Lord,
forasmuch as ye know that your labor is not in vain in the Lord” (King James Bible Online,
2025).
References
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Annushkina, O.E., & Regazzo, A. (2020). Entry modes: How to enter a foreign market. In: The art
of going global. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-
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Cissé, I., & Dubé, J. (2024). Survival of new and small retail businesses facing mega retailers in ‐
non metropolitan areas—The case of Walmart in the province of Quebec. ‐Growth and
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Daft, R. L. (2021). Organization theory & design (Thirteenth ed.). Cengage.
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Edwards, J. (2021). Advantages and disadvantages of competing in international markets.
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Joseph, C. (2024). International business expansion strategies: Entering new markets. Estaga
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King James Bible Online (2025). Corinthians 15:58. https://kingjamesbible.me/1-Corinthians-15-
58/.
King James Bible Online (2025). Deuteronomy 11:10.
https://kingjamesbible.me/Deuteronomy-11-10/.
Merida, T. (2015). Exalting Jesus in 1 & 2 Kings. B&H Publishing Group.
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