Increasing isomorphism in the organisations of same domain in the form of tools, approaches and commodities in all countries is known as Convergence (Yoshikawa and Rasheed, 2009; Needle, 2004). After investigating Wal-marts German plan from convergence point of view, we came to know some good points that pressed Wal-mart to choose convergence. The reason we found during investigation are mentioned below: Cost leadership is a result of encouragement that is given to economies of scale due to globalization in world-wide market.
Wal-mart pilots the retail market in different countries and it also wanted to lead the German retail market by obtaining benefit from these economies of scale through its dependable international practices. * Wal-mart is an American company with Universalistic perspective and as we all know they tend to be ethnocentric. They tend to control their subsidiaries centrally by sending expatriates and they work to standardize their best practices (Kelly, 2009).As Wal-mart was having good reputation and named in one of the top world retailers, it was considered that company will like to adopt the same practices as they have been using successfully in other countries and gaining more success. All over the world US organisation are considered to be deeply ‘nationally embedded’. Americans always have a strapping country-of-origin effect and this help them to move in the direction of convergence.Senior management believe that the best practices they have made can be applied almost in every country in the world and they think that management problems are also same everywhere, that’s all because of their ethnocentric attitude (Needle, 2010).
Resource based view generally states that company’s continuous competitive advantage can only be obtained from those exceptional, capable, substantial and non-substantial resources and measurable skills that are under company’s control (Barney, 1991).Wide collection, classy distribution network, accounted management practices, good customer service, low prices and highly enthused staff tends to prove the success formula of Wal-mart in America (Fernie and Arnold, 2002). This formula was considered as ideal formula for many countries because of its success rate before entering into German market and it was considered as reliable. The reasons mentioned above are required for the convergence of strategies.
The things upon which Wal-mart looked at during its German operations are that they critically evaluated the conflicting sources which become strong enough and played decisive part in Wal-mart’s exit. Anglo-Saxon managers are considered to less loyal than German managers who are technically specialists, accept the efficient labour relation and respect capability. It can be seen from statistical data that Americans ignore unions completely, change their jobs more regularly and prefer proper learning over competence (Glunk et al., 1997).
It can be seen that there is a noticeable difference between primary thinking of German and American administrative patterns, therefore US executives suddenly out dated German management in order to apply Wal-mart best practices as they are using these in other countries successfully but this decision conflicted with the vision of German management (Fernie and Arnold, 2002).Everything went wrong for Wal-mart in Germany as managing through expatriates also proved unsuccessful in this case which was considered as important tool to manage oversees operations by MNC’s. It clearly signals the lack of ability of Wal-mart’s top management that’s why company changed four CEO’s during the starting years of it business which indicates American were not able to accommodate themselves in different cultural environment (Anderson, 2005).Difference in nature of workers, education and intensity of guidance also become hindrance in Wal-mart’s convergence attempts. According to the German culture people do like shopping privately and they don’t like anyone to help them so they don’t welcome the roles ‘baggers’ and ‘greeters’. This created negative impact on customers but Wal-mart was not aware of this fact and they trained them according to their corporate policy. * Wal-mart was clearly astonished by the consumer’s behaviour in German market.
The idea of baggers and greeters proved to be failed in order to introduce new shopping practices for Germans. They are mostly loyal to their national products and they prefer no embellishments, very less customer service and low price. There are three best promotion tools for brands in Germany and those are affordable price, low price and suitable price (Fernie and ARNOLD, 2002). But in comparison with its competitors Wal-mart’s techniques were expensive for customers and corporation in the long run.