Cultural Differences and Need For Adaptation from Walmart's Failure in China

LESSONS TO BE LEARNED REGARDING CULTURAL DIFFERENCES AND THE NEED FOR ADAPTATION FROM WALMART'S FAILURE IN CHINA
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“Lessons to Be Learned Regarding Cultural Differences and Need For Adaptation from Walmart's Failure in China”
1.0. Introduction
1.1. Background
Founded in 1962 by Sam Walton, Walmart is a large chain of retail stores having its headquarters in the United States. After considerable success stretched over more than three decades, Walmart opened its maiden store in China in 1996 in Shenzhen. The company replicated its standardized business model in China and witnessed significant success during the initial years, creating an impetus to expand its chain. The company kept expanding its network in China to carry forward the momentum of success flowing from its success in other international markets (Halan, 2021). However, after a few years of growth, the company entered a phase of persistent decline that continued through to 2021, when it eventually started withdrawing from China by closing its store at a pace of closure of four stores per week (Halan, 2021). From 2005-2006, the company has never been able to gain its foothold and compete against its nearby competitors in China (Shin et al., 2020). It failed to create the same impression as it did in western and a few other Asian markets.
1.2. Rationale for the study
The cultural contrast between the western world, where Walmart experienced tremendous growth, and China warrants a significant debate since it coincides with the difference in Walmart's performance across these markets. Hence, it is hypothesized that the failure is considered attributable to the cultural clash between two markets, and the idea gains much of its strength from the fact that Walmart proceeded with a standardized business model (Abal Medina et al., 2020). The insights into the role of cultural differences in Walmart's fiasco in China hold significant implications for entrepreneurs dealing with and the learners of international business (IB).
1.3. Aims and Objectives of the Study
The study is aimed to evaluate the extent to which cultural differences between the US and China contributed to Walmart’s failure in China. This broad aim is crunched down into the following key objectives:
* To assess the critical aspects of cultural differences between the US and China
* To identify the aspects that closely relate to the operations of Walmart in China
* To assess the role of each aspect in contributing to the failure of Walmart in China
* To produce a set of recommendations based on the insights gleaned from the study
1.4. Conceptual Framework
The study is underpinned by Hofstede's model of cultural dimensions, which helps build an understanding of the cultural landscape of each country. The study leverages Hofstede Insights, a platform that compares any two (or more) countries based on their score for each cultural dimension within Hofstede's model. The study has focused only on the dimensions most relevant to the case.
2.0. Data Collection-Literature Review
The discussion about the failure of Walmart to materialize its plans in China surround...