Question 3: Provide an example of MNEs that have failed their international expansion due to cultural differences or government demands. 

For example, Walmart's in the US force their employees to begin Walmart group chanting in the morning. They also ask their staff to smile at every customer while Germans interpret it as flirting.
 

Q2: Walmart should take time to perform in-depth research on the foreign markets it wishes to enter, and study the political environments and cultural values thoroughly.

Q3: It was until the U.S.-headquartered DIY giant Home Depot opened 12 stores in China that they realized the Chinese didn’t really like to do it themselves. Unlike the Western world where renovating your home is considered a bit of a hobby, developing countries have a tendency to see DIY as a sign of poverty. By 2012, Home Depot had shuttered its stores and taken a US$160 million after-tax hit in the process.

Q2:
-  Sell more items that customers want.

Foran credited Walmart's apparel and seasonal goods teams for doing a good job in meeting consumer needs and demands over the past year. But he stressed improvements need to happen in the food business, where Walmart has disappointed consumers with its selection and stock levels.

Q3:
Tesco fails to whet U.S. appetite. For U.K.-based grocery chain, convincing American consumers to shop at its Fresh & Easy seemed like a done deal. And a few years earlier, the brand could have found success selling its fresh supermarket meals to the growing local and organic consumer base. But Tesco’s Fresh & Easy opened the doors in 2007, on the edge of a recessionary cliff when American consumers appetite for food spending was heading south. Five years later, Tesco announced it was abandoning its American dream and closing its nearly 200 stores on the west coast. The failure cost the British chain nearly US$1.8 billion.

Question 2:
In my opinion, I think Walmart should do research and analyse the PEST of the foreign market before expanding. "Think globally, act locally." Do some adjustments for local preferences.

Question 3:
Best Buy's expansion towards the UK.

German - Walmart is known for its low prices. However, those low prices found them in Germany’s high court for what officials called predatory pricing. German has strict laws on below-cost pricing to protect the local business.

Cultural issue:

They tried to sell the American lifestyle to the other counties without knowing the cultural difference and consumers’ purchasing behaviors.

E.g

Korea - Many people rely on public transit. Therefore, people tend to buy smaller packages. On the other hand, American people tend to buy a lot because they go shopping by car.

Question 2:
Walmart should know the cultural difference and also do more research before expanding their market.

E.g. 

Product / Service Lineup: Products and services may need to be customized to cope with different customer needs by region and market.

Advertising: Coordinating approaches to customers using social media and partnering with local partners to smoothly develop.

Question 3:
Tesco exited the Japanese market in 2012 due to changing customer preferences. Tesco entered Japan in 2003 and invested approximately 100 billion pounds. After that, they opened small stores, convenience stores, and supermarkets. However, the company’s format did not suit the taste of Japanese consumers. Commuters preferred the local convenience store over Tesco’s stores. Eventually, Tesco sold 50% of Tesco japan to Aeon Co. which is the largest retail group in Japan. in conclusion, it can be said that  Tesco’s failure in the international market is because it failed to understand the retail industry elsewhere in the world.

Instead of understanding and adjusting to the culture of its clients, Walmart tried to impose their Culture on to the Customers. For example, Walmart stores are designed for customers who are willing to spend lot of time shopping. But in Germany, the shopping hours are shorter, Germans will no shop on Sundays. Plus, Germans prefer to see the advertised discount products upfront without having to ask the store assistant. However, Walmart chose to use its US style merchandise display strategy where discount products are kept at higher shelf or in the bottom racks.

 

Walmart that notorious for playing low wages and suppressing unions in its home country, United States, refused to join Germany’s Union which very much a part of the culture and have broad support amongst the government, the community, and even businesses, has later on being accused and revolted by the Germans. This gave them a bad reputation in the community and affected their sales.

 

The basis of Wal-mart's success in most of the markets has been its strategy of everyday low prices where the company offers below-cost price to buyers than its competitors to gain market share. Essentially, Wal-mart initially penetrate the market with lower prices, then raise them slightly or intensely once they have a base of customers built up and they’ve driven out local competition. German regulations prohibit strategies like below cost from destroying local chains. Ultimately, Germany’s high court ordered Walmart to raise its prices above cost.

 

Q2. 

First of all, to be open-minded in terms of mentality, MNEs must realize that the operation of overseas markets and the psychology and habits of individuals is very different with their home country. Walmart shall not fully copy the local business operation model and paste it in other country market, but to constantly and critically analysis the political, social, economic and cultural before entering the new market.

 

Second, MNEs must continuously take action in learning and analyzing the impact of their various strategies on the local market over a long period of time. Understand the shortfalls, and modify it in such a way as to cater the local market in a much better way than the competitors. It is always better to scrutinize the strategies adopted by them with a panel of local experts, as they will be having a better picture about the local consuming behavior and culture.
 

Third, MNEs can appoint local employees in some important positions. In this case, MNEs must find the best fit between local culture and local culture. With this, the global enterprise are able to understand the local culture, adapting to the local culture, and finally leading the local culture.

 

Q3.

McDonald’s had great success with its line of American-style burgers when expanded to Japan and other Asian countries. They stubbornly decided to roll out the same line of product that worked in nearby countries. The difference between those countries and China is that the latter had no frame of reference for burgers. The country was closed of for so long that burgers seemed too strange and fore. KFC, meanwhile, had the advantage of offering fried chicken, which is a familiar food for people in China. They also took active steps to localize their menus for the Chinese market, and their wildly successful breakfast menu featuring staples like congee is a testament to their localization efforts.

Government Demands: Germany has strict laws on below-cost pricing, Walmart in this case is against their law by providing low-cost pricing. Hence, they are required to increase their price for the basic goods as they are accused of undercutting prices to lure new customers into their stores.

Question 2:
As a recommendation, Walmart can consider looking into the three stages of Cross-cultural Management to reach a mutual understanding to benefit from the differences. Firstly, the recognition stage is where Walmart has to recognize the difference between Germany and America. They have to ask themselves if they actually know about the German culture before expanding their business into the nation. This will help them to avoid having misunderstandings the German culture. 

Secondly, the respect stage is where Walmart has to appreciate the cultural differences. By doing that, Walmart will get to find common positives and differences between themselves and the German employees to adapt to their culture better. 

Lastly, the reconciliation stage demonstrates that Walmart has to increase its awareness of cultural differences. With that said, they will be required to apply knowledge and cultural empathy in order to create an agreement from the differences, which will avoid possible misunderstandings.

Question 3:
An example of MNEs that has failed in international expansion is Mattel. The company planned to expand its business into China in the year of 2009, aiming to introduce fashion Barbies to the kids in China. However, due to a lack of studies on cultural differences, they did not meet the expectations of China toys. In China’s cultures, they stress toys that are educational or have skill-building. However, Barbie is not in any of that categories, Hence, they are forced to close down their stores after two years.

That’s exactly what Walmart did. They dropped their prices lower than the local German stores. Well, the German business owners didn’t like Walmart’s predatory pricing tactic, and the American giant was ordered to raise their prices by Germany's high court.

Cultural Issue
For some reason, a few American businesses have this false belief that every western country has the same culture as theirs — but it’s simply not true. 

In America, it’s not uncommon for retail assistants to get all chatty and friendly with the customers. Walmart decided to train its German employees to do the same. The cashiers were told to smile at customers during checkout. For example, Smiling at random strangers and acting like you know them isn’t really German but America. It might happen every once in a while, but it’s certainly not an integral part of the German or other countries' culture.

Question 2:
Walmart need to apply the strategy of localization if the company want to expand globally and successfully. For example, Walmart need to realize that each country has different culture and preferred lifestyle even management regulation, and start to improve on it.

Question 3:
Two companies that failed internationally due to cultural differences are Pepsi and Coca Cola. Both beverage giants had issues when first moving into the China market. Coca Cola, named their product a Chinese phrase that would sound like the original name. However, this new phrase translated to “Bite the Wax Tadpole” This didn’t go over well. Pepsi brought a new slogan to the Chinese market. It was “Pepsi brings you back to life”. Unfortunately the phrase translated to “Pepsi brings your ancestors back to life” Both companies had to revamp their Chinese campaigns.

 

In conclusion, Walmart failed in Germany due to a variety of factors including an inability to adapt to German retail market conditions and a lack of competitive prices against German stores. Somehow Walmart underestimated the local competition.

Question 2:

Before expansion, Walmart needs to conduct extensive research into the foreign markets and analyse the PEST of the international market. To perform well, Walmart should practice thinking globally, act locally where they can make minor changes to account for local preferences. To better grasp the cultural value of each market, Walmart should focus on conducting in-depth study on the behaviour and cultural differences in the foreign market before expanding.

 

Question 3: 

Tesco, fails to stand their brand in both the China and US market. Based on the analysis, Tesco fails to establish their brand due to lack of demographic understanding on the local buying behaviour and Tesco has a behavioural act of supplying similar items across the UK to China and the US. Tesco only focuses on international standardization without considering local adaptation as the shopping habits of Americans are largely different from British consumers. In China, a larger substantial cultural difference exists between the Chinese and British consumers. Price is becoming a determining factor for the Chinese and Tesco has constantly focused on the price cut rather than the service. In conjunction, Tesco still struggled to crack the Chinese and American market.

Question 3: example of MNEs that have failed their international expansion due to cultural differences or government demands
- Home Depot, a DIY giant in China
> Chinese didn't really fancy doing things themselves, compared to the westerners who would take renovating their home as their hobby
- Wendy's in Japan
> fail to provide localized menu to Japanese customers who expect variety
> traditional diet promotion in Japan

Question 3:

ebay
Customers wanted to be able to see a seller’s online status and communicate with them easily — a function not seamlessly incorporated into eBay’s China system. Moreover, Chinese customers prefer to develop trust through their own interactions with sellers rather than acting on other users’ ratings. On the other hand, eBay also struggled in expanding to Japan, as it did not adjust its strategies and purchasing methods according to local preferences. For example, buyers had to input their credit card information in order to make a purchase, a practice that was not popular in Japan at the time. The company did not offer a cash-on-delivery service, which Finance Elements asserts would have made a significant difference in how it was received.

Cultural Differences: American and German consumers have different lifestyles, consumer behaviour, and spending pattern. The failure for Walmart comes from the act of applying the American work style or lifestyle to the German culture. For instance, German employees required to smile at the customers but this behaviour is being interpreted as flirting in Germany. 

 

Pricing issue – Walmart’s value proposition, “every-day low prices”, was not applicable in Germany because it was against Germany laws. 

 

 

Q2

They should practice thinking globally, act locally by doing comprehensive research and plan before expanding into Germany. They should understand well the country’s laws and regulations, German lifestyle and purchasing behavior prior venturing into it to succeed. 

 

Q3

Starbucks failed to expand to Australia as they brought the American style coffee culture, where coffee is essentially a product or a commodity into Australia that contradicts with the local coffee culture. Besides that, Starbucks charged higher than local cafes thus the Australians instead opted to pay less for coffee they liked from a local barista they trusted.

Taco Bell made a valiant return to South Korea in 2010, after a poor performance there in the 1980s. The fast food chain was opened in Itaewon and Hongdae  — a strategic move, as these are two popular nightlife areas frequented by foreigners who are likely familiar with the brand.