FINAL

PRESENTATION
-Group 4-

Failure of Walmart in Japan:

An Analysis of International Business Challenges
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Overview of Walmart
Walmart Inc., founded in the US in 1962 by
Sam Walton, is one of the largest retail
corporations globally.

IN 11,000 stores
27 countries.
Primary business segments include retail
operations, e-commerce, and financial
services.
 VISI N
"Be the destination for customers to save money,
no matter how they want to shop."

MISSI N
"We save people money so
they can live better."
Walmart's business situation in the world
GLOBAL OPERATIONS
> 11000 stores in 27 countries
REVENUE AND PROFIT

o n in re ve n u e
$5 72 b ill i
f $13 .7 billio n.
n et pro fi t o
in 2023
 E-COMMERCE

investing in e-commerce to compete directly with Amazon

Walmart’s Marketing Segmentation,
Targeting, and Positioning in Japan
SEGMENTATION
Based on demographic, geographic, and behavioral factors.

families & middle-aged consumers

lifestyle segmentation
targeting customers seeking
good value products & convenience.
TARGETING
Middle-income and family segments
Emphasizing cost-conscious customers shopping at large supermarkets.
Also attracting younger customers with competitively priced technology
and fashion products.
POSITIONING
A retailer providing quality products at affordable prices

Create an image combining EDLP

with high quality products to
attract consumers.
 OVERVIEW OF
JAPANESE MARKET AND CULTURE
MARKET
Japan is the third-largest economy in
the world, characterized by a high GDP
and significant per capita income.
The Japanese retail market is highly
competitive, with consumers favoring
high-quality and domestically produced
goods.
 CULTURE
We use Hofstede’s cultural dimensions to explain why Walmart struggled in Japan
POWER DISTANCE INDEX
U.S.: 40 | Japan: 54

Japan’s higher score means they accept

hierarchy more than the U.S. Walmart’s
equal approach didn’t fit well with Japan’s
structured expectations.
 INDIVIDUALISM
VS. COLLECTIVISM
U.S.: 91 | Japan: 46

The U.S. is highly individualistic, whereas

Japan is more collectivist, making it
difficult for Walmart to build loyalty
 MASCULINITY VS.
FEMININITY
U.S.: 62 | Japan: 95

Japan’s high masculinity score indicates a

strong emphasis on competition and
achievement, which translates to high
expectations for quality and service.
Walmart’s focus on low prices may have
fallen short of these expectations.
 UNCERTAINTY
AVOIDANCE INDEX
U.S.: 46 | Japan: 92

Japan’s high UAI reflects a preference for

clear rules and structure, while the U.S. is
more comfortable with ambiguity. Walmart’s
more flexible approach might have clashed
with the Japanese preference for stability and
predictability.
 LONG-TERM ORIENTATION VS.
SHORT-TERM NORMATIVE ORIENTATION
U.S.: 26 | Japan: 88

Japan’s long-term orientation values perseverance

and thrift, while the U.S. has a more short-term focus.
Walmart’s strategies may not have resonated with the
long-term planning and cautious spending habits of
Japanese consumers.
INDULGENCE VS. RESTRAINT
U.S.: 68 | Japan: 42

The U.S. leans towards indulgence, favoring free

gratification of desires. Japan’s restraint culture
regulates gratification of needs through strict social
norms. Walmart’s marketing strategies focusing on
consumer spending might not have resonated well with
the more restrained Japanese culture.
 THE CASE
Walmart's failure in Japan
Walmart entered the Japanese market in 2002 by acquiring a
6.1% stake in Seiyu, a major local supermarket chain. Over the
years, Walmart increased its stake, fully acquiring Seiyu by
2008. Despite efforts to adapt its business strategies to the local
market, Walmart faced significant challenges in understanding
and meeting consumer demands, ultimately failing to compete
with domestic retailers. In 2020, Walmart decided to sell the
majority of its stake in Seiyu and withdraw from the Japanese
market after nearly two decades of underperformance.
Why this case
is related to IBM
Expansion from the U.S. to Japan:

Segmentation, targeting, and positioning

Foreign direct investment (FDI)

Case analyse
WAL-MART
Attempted takeover but failed

Reason:
Fail to apply operation
strategy and culture
adaptation in Japanese
Market
WAL-MART
Attempted takeover but failed

Walmart attempted to apply

its global standardization
strategy with minimal
customization for Japan.

Comparative advantage: low

price => Core competencies
⇒ leveraging economies of
scale to maintain cost
leadership.
Issue: Limited Understanding of
the Local Market
Entry strategy: a strategic alliance with Seiyu
Aim: dominate the wholesale and retail
market.

⇒ Strength: Establish a quick presence.

⇒ Weakness: Inability to fully integrate

Walmart’s cost-driven model with Seiyu’s
operations.
⇒ Restructure
⇒ Failed to translate into long-term success.
Issue: Culture Misassignment

Business philosophy:
"Everyday Low Price"
 Issue: Culture Misassignment
Hunting for items with
Emphasis on Quality
frequent sales and
EDLP = lower-quality goods
discounts.

=> Not efficient, even counterproductive

 Issue: Culture Misassignment Freshness and
Import to
reduce costs Local Products

Seasonal
food

Varied
product Packaging
portfolio aesthetics

=> Cultural Disconnect

=> Limited Appeal for Fresh and Local Products
 Issue: Culture Misassignment Buy in small
quantities
Bulk warehouse-
Attention to
products style setups.
Details

Prefer small
specialized
stores
Invested in inventory
management systems
and streamlined supply ⇒ This approach did not resonate
chain operations with Japanese consumers.
 ISSUE
A celling labour-standards effect
 LABOR
WALMART STANDARDS

Feasible to adapt countries lower “ Freedom of association and

than in its domestic market. collective bargaining rights
and higher wages ... contribute
Difficult to adapt with higher labour to the informalization of
standards, like Japan, than in its employment ”
domestic market. (Galli, 2004)
 APPROACH
Restructuring Introduction
Resulted in involuntary early New IT-based supply chain
retirement of 25% of its full-time system, which Walmart
employees and raising the share facilitated from one of the
of part-time employees to 85% Drivers of Globalization is
(Aoyama, 2007) Technology, placed more
workload on part-time
The CEO of Seiyu was also employees.
forced to resign.
Evaluation
Reduce the cost of Human Resources,
conduct a lay-off and apply the role of
technology

The lay-off reportedly had a negative

impact on the morale of Seiyu
employees

Seiyu’s stock price fell to a third of its

peak by mid-year 2005.
What could have been done
different ?
Culture understanding

Having a deeper research

in the Japan market

Avoid some unintentional

problems
Changing Strategy
Instead of sticking with its Global Standardization
Strategy

They can choose to move to the Localization Strategy so

they can align with the “Special” Business Culture of this
market.

Not only focus on delivering a group of products for

low-cost segmentation but also others
segmentation, especially for premium ones.

Diverse Product portpolio

Implications for other firms
Companies must take steps Exploring ways to connect the retail
to gain awareness of host store to the local culture through
country culture and social product selection, customer service,
norms and community participation

Adapt to Host Culture and Market

Hiring highly qualified local talent and then actually listening to and
learning from this labor resource
 Attain Competitive Advantages in the New Market

Closely examine their existing market advantages that are critical to

their success and plan for developing the exact strategy so they can
achieve similar results in the new market
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Thank You