The Walmart Japan Saga: What Went Wrong?

ANKITA SHRIKRISHNA JAWALKAR
Blog
3 MINS READ
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08 July, 2024

Venturing into a global market for an international business starts with making the most of its operations in a new economy. Operations that are built over a period of time, which purely mean success and growth. Multinationals manage to survive the structural paradox of the business world. May it be retail, real estate, manufacturing or services. One such case study is the Walmart - Japan. Expansions, Investment, Strategy and Survival seemed easier for a business that made its presence as the top businesses in the Fortune 500 List. Lack of research, failure to adapt to local market culture and regional trends made the company exit from Japan in 2020.

Walmart being America’s top chain in hypermarket retailing, has recorded the largest revenue growth. It successfully operates in the USA, Mexico, Canada, China and India.  The stores consist of supercenters, discount centers, pharmacy stores etc. dealing in everything from electronics, home goods to health and beauty and online stores. Retail is not just a mere purchase of goods but a unique shopping experience when it comes to Walmart.

After a careful review and analysis of the organisation structure of Walmart, we see that the mixture of the functional and hierarchical features of the matrix are an effective blend of delegation and authority. Directives in the structure come from the CEO, whose at the top of the matrix, whereas as the structure gets more elaborate, functional specialistion creates an extensive way to manage and handle responsibilities by way of added skills and expertise. Competitor Retailers also follow a similar organizational structure making their position stronger in the global market. This proves that Walmart has an upper hand in whatever they choose to do. 

Ever wondered, why a chain that impresses a consumer with innovation failed to thrive? Walmart entered Japan in 2002, as foreign strategic retail investor collaborating with local supermarket chain SEIYU purchasing large stakes. The company eventually started growing by making huge investments for maximum ownership. The company experienced a decline in 2004, due to bad public response and reported a loss of $66 million. By the end of 2008, the company gained 100% ownership and had closed 20 outlets, laying off 6% of its workforce.

What went wrong with Walmart in Japan? 

  • Cultural Misunderstanding: Lack of adaptability to Japan’s buying behaviour
  • Low Cost Strategy:  “Everyday Low Prices” didn’t work for the Japanese Market
  • Supply Chain Inefficiency:  Excessive cost cutting
  • Pressure from competition:  Existence of local and  international market players
  • Seiyu’s Pre Walamrt Conditions: Unsuccessful Business of Seiyu

External Environment is an inevitable element for a business wanting to establish itself in the global market. Effective assessment of these factors is conducted with extensive PESTLE analysis. Once this is well managed a business tends to thrive and be better off in long run. Walmart had to exit the Japanese market in 2020 by selling the majority holding and transferring the ownership to local retail chain. Businesses sustain or fail, it’s all a game of win or win, never lose. Many more issues to address for Walmart, strategically position itself and win.

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