Walmart in South Korea

In: Business and Management

Submitted By vpekelis
Words 1141
Pages 5
In May 2006, Wal-Mart decided to leave South Korea by selling its 16 stores to a major local discount chain, Shinsegae Co., at $882 million. Wal-Mart’s stores in Korea lost approximately $10 million in 2005 on sales of $720 million. Wal-Mart’s failure in the South Korean market was due to many reasons but the main issue was the ability to adapt to a new culture which Wal-Mart failed to do on many different levels. Although its’ strategy of low costs is a great competitive advantage in numerous markets, its’ ability to perceive a new foreign market was blurred and therefore Wal-Mart was not able to recognize the different expectations and market conditions that South Korea encompassed.
Wal-Mart’s strategy fits well in North America where consumers are willing to compromise service and quality for low price however it had critical shortfalls in enabling Korean consumers to see the value in this approach to shopping because of the different tastes and preferences in their culture. Compared to Americans, who would rather make fewer frequent trips to supermarkets and purchase bulk sized products for longer storage, Koreans consider the freshness of food products very seriously and are willing to make frequent trips to the markets and buy in small volumes. Korean’s hypermarkets have live seafood, local delicacies, and on site packaging services that have the same features as outdoor markets and their merchandise mix is heavily focused on food and beverages. They have mastered their localization strategy which fits well with their consumers’ tastes. Wal-mart’s merchandising mix differs which has uniform merchandising and distribution strategies that limit differentiation which hinders its adaptation to local preferences. Koreans’ shopping behaviors did not match with Wal-Mart’s retail format which was set up to serve infrequent bulk shopping whereas Korean’s went to their…...

Similar Documents

Walmart in South Korea

...In May 2006, Wal-Mart decided to leave South Korea by selling its 16 stores to a major local discount chain, Shinsegae Co., at $882 million. Wal-Mart’s stores in Korea lost approximately $10 million in 2005 on sales of $720 million. Wal-Mart’s failure in the South Korean market was due to many reasons but the main issue was the ability to adapt to a new culture which Wal-Mart failed to do on many different levels. Although its’ strategy of low costs is a great competitive advantage in numerous markets, its’ ability to perceive a new foreign market was blurred and therefore Wal-Mart was not able to recognize the different expectations and market conditions that South Korea encompassed. Wal-Mart’s strategy fits well in North America where consumers are willing to compromise service and quality for low price however it had critical shortfalls in enabling Korean consumers to see the value in this approach to shopping because of the different tastes and preferences in their culture. Compared to Americans, who would rather make fewer frequent trips to supermarkets and purchase bulk sized products for longer storage, Koreans consider the freshness of food products very seriously and are willing to make frequent trips to the markets and buy in small volumes. Korean’s hypermarkets have live seafood, local delicacies, and on site packaging services that have the same features as outdoor markets and their merchandise mix is heavily focused on food and beverages. They have mastered...

Words: 1141 - Pages: 5

South Korea:

...South Korea: Korea regained its independence following Japan's surrender to the United States in 1945. After World War II, a Republic of Korea (ROK) was set up in the southern half of the Korean Peninsula while a Communist-style government was installed in the north. During the Korean War (1950-53), U.S troops and UN forces fought alongside soldiers from the ROK to defend South Korea from DPRK attacks supported by China and the Soviet Union. An armistice was signed in 1953, splitting the peninsula along a demilitarized zone at about the 38th parallel. Thereafter, South Korea achieved rapid economic growth with per capita income rising to roughly 14 times the level of North Korea. South Korea today is a fully functioning modern democracy. Korea is home to a set of large firms, so called chaebols, which can be classified as multinational enterprises (MNEs) In the list of the world’s largest 500 companies, ranked by sales for2001 found 12 Korean firms. In 2004, there were 11 Korean firms in the list of the world’s largest 500. These large firms are analyzed here as the basic set which will determine the success of Korea in developing MNEs. The literature in international business analyzes the growth and foreign expansion phase of MNEs. The starting point of this theory of the MNE is the proposition that an MNE goes abroad to further expand on its firm-specific advantage (FSA).These can be technology based, knowledge based, or they can reflect managerial and/or marketing...

Words: 619 - Pages: 3

Walmart Goes South

... passengers to the Caribbean take shore excursions to such sightseeing attractions as the Mayan ruins in Belize. Passengers on Carnival’s Princess Lines, which serves Alaska, can helicopter to a glacier for a little dogsledding. What It Takes to Operate a Cruise Line Ship Shopping Not surprisingly, ships constitute the biggest investment in the cruise- line industry. Shipyards in several countries— including Finland, France, Germany, Italy, Japan, and South Korea— are capable of building ships that meet cruise- industry needs, and to add to its global fleet, Carnival secures bids from all over the world. Because shipbuilding employs so many people and uses so much locally produced steel, governments often subsidize the industry— a practice that works to the benefit of the cruise- line industry by offering less expensive prices for ships. Recently, for instance, the Italian government awarded the shipyard Fincantieri about $ 50 million in subsidies to build five ships for Carnival for $ 2.5 billion for a 2010 and 2011 delivery. Where to Find Able- Bodied Seamen Shipping companies— including those that operate container vessels and other cargo ships as well as cruise lines— scour the world for able- bodied sailors who can not only perform specialized tasks but who are properly certified ( by international agreement, a registered crew member can enter virtually any port in the world). Cruise lines, of course, have special staffing needs— notably, crew who can interact with...

Words: 2191 - Pages: 9

South Korea

...REGIONAL STUDIES PAPER ON SOUTH KOREA 1. Have you ever sat back and wondered what it would be like to live in another country. What is the first thing that comes to mind when you think of South Korea? Most likely it will probably be the Korean War or maybe even the 1988 Olympics. You may even, some day, be stationed there. I personally experienced the country first hand through a tour between 1988 and 1989. Korea is one of our major theaters of operation so it is very important for us to understand a little about their culture and where they came from to prepare for any future missions or tours in their arena. In order to introduce us to this fascinating country we will initially talk about their rich history. We will then cover a little about the people and their culture and finally, we will discuss their economy. Now that we have a vector, let’s start by discussing South Korean history. 2. Many historical events following World War II have culminated to shape the South Korea that you and I know today. The country came into being immediately following World War II, as a result of a 1945 agreement which made the 38th parallel the boundary between them and neighboring North Korea. The new republic was proclaimed on Aug. 15 and was recognized as the legal government of Korea by the United Nations (UN) on Dec. 12, 1948. On June 25, 1950, North Korean Communist forces launched a massive surprise attack on South Korea, quickly overrunning Seoul, the capital...

Words: 1087 - Pages: 5

South Korea Business

...Doing Business in South Korea South Korea has to be classed as one of the world’s great economic success stories. Along with Taiwan, South Korea is the only country which has recorded five consecutive decades of economic growth in excess of 5%. This is an amazing achievement which is the result of careful governmental macro-engineering, sound business practice and sheer hard work from the population at large. Economists feel that, given the lengthy stagflation seen in Japan, that it will not be too long before South Korean levels of prosperity are at a par with Japan. Both South Korea and Japan are intensely conformist societies (one of the many similarities between the two countries) but they differ in one fundamental thing. When faced with hardship or adversity the Japanese tend to turn inwards and backwards towards the familiar and comfortable whereas the South Koreans are absolute masters of change and rebuild. If things aren’t working, they just change them and they have proved adept at doing this very quickly and very effectively – you only need to look at the contrasting reactions to the crisis that hit Asia in the 1990’s. Japan is, arguably, still recovering while South Korea has long been in rude health. South Korea has also re-invented itself as the cultural epicentre of Asian culture. Korean pop music, or K-pop, has been exported with great success all over the continent and Korean TV dramas are watched from Tokyo to Beijing. South Korean films...

Words: 3076 - Pages: 13

South Korea

...Country report South Korea – Electronic Yu Ming Lin Country Profile In February 1945 the end of World War II, Korean Peninsula divided into North and South Korea. South Korea also name Republic of Korea, 99,392 sq. km, has a population of almost 50 million, and has its capital at Seoul, the largest city in Korea. The second largest city is Busan, which is the country’s main port, has wonderful nature harbor beside the delta of Nakdong River. The major industrial prior 1948 was agriculture in Korea peninsula, South Korea was in a sever environment of economic. The war damage and the refugee from North Korea keep South Korea inflation and unemployment. Korea is full of mineral source, however, most minerals concentrated in the North such as gold, coal, ore, iron and graphite. There are some tungsten, amorphous graphite, coal, and iron in South Korea and the distribution percentage is North 80%~90% to South 10%. International trade Balance Of Payment The table above is the South Korea’s balance of payments account and this table can track the payments to and the receipts from other countries from 2006 to 2010. As we can see the current account surplus in all five years and it means that these five years South Korea exports more goods, services, and income than it imports. (Data from world databank) The Current Account In October 2011, South Korea’s current account surplus US4000 Million. South Korea’s growing economy relies on exports, and the most important...

Words: 4979 - Pages: 20

South Korea

...South Korea Raises $250 Million in Policy Bank Share Sale i) Summary: The South Korean government managed to sell down its stake in Industrial Bank of Korea by 4.2%. The sale raised around $250 million, which is double of what was originally expected. This sale is good news for the government of President Park Geun-hye because he has pledged to help individuals who are financially troubled as well as small businesses. This sale is expected to help secure budget revenue in addition to furthering stake sales in the following year. It also helps by releasing more liquidity into the market. In mid-2011, the government had failed at its attempt to lower the governments stake in IBK from 68.9% to 60.5%. In total, the government sold 23.2 million shares at a fixed price of 11,400 won ($10.75) per share. The finance ministry stated both local and foreign investors evenly shared the offering. IBK was established as a bank policy to support small and midsize businesses in 1961 and went public in 2003. ii) Background: Industrial Bank of Korea has contributed to facilitating the economic activities of SMEs and enhancing their economic status. IBK has proven itself during challenging times such as the 1997 Asian financial crisis and the 2008-2009 global financial crisis. IBK started with only 200 million capital stock but is now a powerful bank that competes globally with the world’s best banks. As the world’s seventh largest exporter, South Korea has...

Words: 1320 - Pages: 6

Walmart in South Africa

... expansion, they continued to expand into other countries and found success in Japan, and Chile (Walmart Corporate Site, 2014). During late 2010 Walmart started negotiations with one of the leading retailers in South Africa, Massmart. While the bulk of Massmart’s stores were in South Africa, they did own 313 wholesale and retail stores in 13 African countries (Robson, Beninger 2013). South Africa held promise for Walmart. The country was developing well and apartheid had been defeated in the early 90’s. South Africa had a good stable government and had an excellent regulatory system that was put in place by the Companies Act of 1973 (Robson, Beninger 2013). The issue for South African expansion for Walmart was the countries big push on unions. The one that caused problems with the Walmart expansion into South Africa was the Congress of South Africa Trade Unions (Cosatu). Cosatu immediately went into boycott mode when the Walmart-Massmart decision was announced. Walmart was able to continue their purchase of Massmart by honoring a two year ban on layoffs and a three year term of the union’s collective bargaining agreement. Walmart also agreed to purchase local produce (Robson, Beninger 2013). With these agreements, Walmart succeeded in acquiring a 51 percent purchase of Massmart in 2011. The Eclectic Paradigm and African Expansion Walmart had a comparative advantage by going into Africa and buying Massmart. By purchasing a controlling interest in...

Words: 720 - Pages: 3

Politics of South Korea

...Economy of South Korea By Henry Graves Dr. Davis September 27, 2014 South Korea is known as one of the emerging economies of the entire world. The South Korean economy has been growing at a steady pace for the past 15 years; this is being accomplished with a dangerous situation with their northern neighbor. When the Korean War ended in 1953 by an armistice that defined the international boundaries between North and South Korea. However, these boundaries are merely a line of truce and hostilities continue between both sides as a search of a just reunification is sought by both countries, but by differing visions on the political future of the Korean peninsula. The question that must be addressed is how does South Korea continue to maintain their dominance in the economy of East Asian nations. The answer can be found by looking into the past history of Korea starting after the end of the Korean War, the present economic policies of the current government of South Korea, and what might the nation need to address in order to maintain their competitive advantage in the region. However, before I begin to look at the past history of South Korea's economy, I must state the present statistics of what has been accomplished in the country. Currently, South Korea is the fifteenth largest economy when measured by GDP and is twelfth in the purchasing power parity. The country has been experiencing economic growth starting from the 1960s until the...

Words: 1823 - Pages: 8

Business Etiquette of South Korea

...Business Etiquette of South Korea The environment of the large American corporation is an extreme, complicated, and dynamic place. The corporate structures of the vast majority of these substantial companies are mainly quite similar: they each contain departments such as marketing, finance, human resources, and information technology. Compare any two major companies, such as Microsoft and Exxon, and one will see these similar departments working towards their own goals, but in completely different ways and in a myriad of styles. Differences such as dress code, management techniques, moral values, business strategies, and even location can make each company a unique world unto itself. American employees are trained and experienced in dealing with one another in order to obtain a mutually beneficial outcome. But in today’s global economy it is virtually impossible to succeed as one of these large companies without extreme contact with other cultures and familiarity with their business etiquette. South Korea is a prime example for cross-culture training and understanding of foreign business practices. With South Korean based companies such as Samsung, LG Electronics, and Hyundai/Kia, and the country’s incredible record of growth over the past few decades, Forbes Magazine has rated South Korea the 30th best country in the world for business. (www.forbes.com) In order for a U.S. company to make progress with a corporation, or even attempt to enter the South Korean market...

Words: 959 - Pages: 4

South Korea

...OVERVIEW OF SOUTH KOREA WOOD, WILLY 09, JULY, 2015   Introduction This paper is an analysis of the country of South Korea. Using the operational variables of PMESII-PT this paper will identify the current situation in South Korea and the countries current issues. The overall objective is to understand the motives of South Korea. Political The Republic of Korea has a liberal democratic political system. South Koreas political foundation resides in the sovereignty of the people and the responsibility to maintain every citizen’s welfare. Currently the president of South Korea is Park Geun-hye. The 11th and first female president was elected on February 25th, 2013. With Korea’s limited 5 year presidency she has until 2018 to implement her current goals. President Park’s main goals are to maintain the prosperity and safety of her country. She believes that one day tensions will cease with North Korea and continually pushes for a peaceful unification despite the constant threats and military provocations of North Korea. As long as the United States and South Korea maintain their strong relationship, Park said, "You may rest assured, no North Koreans provocation can succeed."(1) North Korea is a shared enemy of the US and the Republic of Korea. The ROK relies on the US for protection against a possible invasion of North Korea and in return the US maintains a strategic hold in Southeast Asia. Military The ROC currently has the 7th strongest military...

Words: 2085 - Pages: 9

Business Expansion Into South Korea

...Introduction Doing business overseas is often difficult for western businesspeople, we are used to a fast-paced environment in which decisions are made quickly, there is little or no time for "chat," and business life is kept strictly separate from personal life. In South Korea, all that changes. This paper examines some of the cultural practices that will affect a westerner trying to penetrate the South Korean marketplace. Overview of Korea South Korea is "a very modern, advanced country with an excellent transportation infrastructure, modern architecture, highly advanced telecommunications and excellent hotels" (Doing business in South Korea). Though the country seems to be westernized, it is in fact very traditional; with respect for age, family and hierarchy all coming into play in business transactions (Doing business in South Korea). While Western business people are largely "exempt" from social constraints, they should be prepared to answer "rather probing questions" with regard to age, marital status, educational level and position within the company (Doing business in South Korea). The South Koreans ask such questions in order to establish a "social hierarchy," since business relationships there are largely based on personal ones (Doing business in South Korea). Confucianism is "still the strongest ethic in South Korea and reinforces thinking on behalf of the group" (Doing business in South Korea). Individualism is seen as selfish...

Words: 1613 - Pages: 7

Power Distance in South Korea

...Context Page Introduction 1 Power Distance 1 Power Distance in South Korea 2 Comparison with UK and China 2 Conclusion 2 Reference 3 Introduction “South Korea is located on a peninsula of Asia. The location is on the northeastern side of the continent. It’s equally known for its green, hilly countryside dotted with cherry trees and centuries-old Buddhist temples, plus its coastal fishing villages, tropical islands and high-tech cities such as Seoul, the capital” (Yun, 2015). “Geert Hofstede defines culture as “the collective programming of the mind distinguishing the members of one group or category of people from others”. The six dimensions of national culture are based on extensive research done by Professor Geert Hofstede, Gert Jan Hofstede, Michael Minkov and their research teams” (Hofstede, n.d.). The model of national culture consists of six dimensions: Power Distance Index (PDI), Individualism versus Collectivism (IDV), Masculinity versus Femininity (MAS), Uncertainty Avoidance Index (UAI), Long Term Orientation versus Short Term Normative Orientation (LTO) and Indulgence versus Restraint (IND). Power Distance The definition can be stated: “the extent to which the less powerful members of institutions and organizations accept that power is distributed unequally” (Hofstede, 1980, p.149). More specifically, it is the expectance and acceptance of unequal distribution of powers amongst the people in institutions (family, school, work) within a...

Words: 769 - Pages: 4

Emerging Markets South Korea

... Government, after the financial crisis in 1997, decided it needed to make its country attractive for foreign direct investment, which resulted in the release of the Foreign Investment Promotion Act in 1998. This opened up a passage for 99.8% of Korea’s industry for direct investment. This report looks at the successes and failures of FDI’s in South Korea referred to as Korea from hereon, and what business factors influence these outcomes. Global Business Project Lecturer: Enda Murphy Student: 1063289, 1602617, 1728607 No of Words: 6198 Contents Introduction 2 Section 1: Market Indicators 4 market entrant #1: STARBUCKS 8 market entrant #2: WALMART 13 market entrant #3: TESCO HOMEPLUS 16 market entrant #4: GROUPON 19 market entrant #5: GOOGLE 22 Section 2: High-Level Pestel summary for 2025 24 Political: 24 Economic: 26 Socio-Culture: 29 Technological: 31 Environment: 32 Legal: 34 Conclusion: 35 Bibliography and References 36 Appendix 1: Hofstede’s Cultural Dimensions: South Korea 40 Power-Distance 40 Individualism 40 Masculinity 41 Uncertainty Avoidance 41 Long Term Orientation 42 Indulgence 42 Appendix 2 The Foreign Investment Promotion Act (FIPA) 43 Assignment Meeting Minutes for Global Business Environment 44 Note on contribution……………………………………………………………………………………………………………………….46 Introduction Korea is based in the southern half of the Korean Peninsula bordered on one side by the Sea of Japan and the other by......

Words: 9441 - Pages: 38

Political of South Korea

...POLITICAL South Korea is a Republic with powers shared between the president, the legislature, and the courts. They were liberated on August 15, 1945 and the constitution was created in July 17, 1948. They have the following governmental bodies: Branches: Executive--President (chief of state) elected for a single 5-year term; Prime Minister (head of government). Legislative--unicameral National Assembly elected every 4 years. Judicial--Supreme Court and appellate courts; Constitutional Court. Subdivisions: Nine provinces, seven administratively separate cities (Seoul, Busan, Incheon, Daegu, Gwangju, Daejeon, Ulsan). The Republic of Korea (commonly known as "South Korea") is a republic with powers nominally shared among the executive, the legislature, and the judiciary, but traditionally dominated by the president. The president is chief of state and is elected for a single term of 5 years. The 299 members of the unicameral National Assembly are elected to 4-year terms; elections for the assembly were held on April 11, 2012. South Korea's judicial system comprises a Supreme Court, appellate courts, and a Constitutional Court. The judiciary is independent under the constitution. The country has nine provinces and seven administratively separate cities--the capital of Seoul, along with Busan, Daegu, Daejeon, Gwangju, Incheon and Ulsan. Political parties include New Frontier Party (NFP), Democratic United Party (DUP), Liberty Forward Party (LFP), Unified...

Words: 774 - Pages: 4