Walmart has entered several international countries but has not been able to duplicate its prior performance in some of them, an issue that might be ascribed to the company failing to adapt the purchase process to the local way of life. When Walmart first established a presence in Germany, it neglected to consider cultural differences, particularly those relating to personal space. However, the industry proved to be more difficult to penetrate than the American retail behemoth had anticipated due to complex labor rules, constrained office hours, and mountains of governmental red tape. Walmart’s attendants and their willingness to bag clients’ goods for them, both unique habits in Germany, slightly frightened away the shoppers. This work considers the problem of the development of the Walmart brand in Germany.
The worth that each employee generates per unit of their input is known as worker productivity. A lengthy adaptation to a new fundamental labor equilibrium point occurred in Germany, which is considered a labor market miracle. Germany ranks sixth in terms of productivity and is one of the most technically sophisticated nations in the world (Bundesbank, 2020). Even after integration, Western Germany had much more maximum performance than Eastern Germany. This factor suggests that Germany is an attractive country for development and has every opportunity for the arrival of new brands or such global giants as Walmart.
Utilizing an ATM, often referred to as a Geldautomat, is the most effective approach to obtaining a reasonable exchange rate in Germany. Producers and consumers render the US dollar worth less and the Euro value more since the US is pushing dollars into the US industry while Europe is not and honestly cannot push euros into the European economy. The European market is financially stable; in particular, the German economy is one of the most stable and fastest-growing in the world (Bundesbank, 2020). This makes the arrival of Walmart in this country an attractive investment.
Finding intangible resources is the first step in calculating transfer pricing. Identification of intangible things frequently poses significant challenges because there is no general, abstract concept of “intangible assets” in German law or management. Only intangible assets are listed in the applicable regulations and standards. Although financial assets are immaterial, they also have a financial value and support the business financially. In comparison, the operational category of services and goods use intangible assets. It is crucial to differentiate between the economic and legal owners of derivative instruments under German transfer-pricing procedures because only the latter can economically be disposed of the rights against licensees or the purchaser of the licensed or moved commodities.
Political risk is a crucial unaccounted-for transaction cost that inhibits world commerce. Political risk also proves to be a significant barrier to exports and should be considered in any real significant influence on the economy (Bundesbank, 2020). The older population and reliance on exports pose the most significant challenges to the German state. Although these concerns have less of an impact on the Walmart business, there are indications that a growing number of prospective older workers are entering the workforce.
Germany is the economic engine of Europe, with the fourth-largest economy in the world, a sizable home market, and simple access to emerging countries within the expanded European Union. With its world-class institutions, highly skilled workers, and abundance of chances for international research and innovation collaboration, Germany provides the perfect foundation for this. Furthermore, Germany itself provides a sizable market for both business-to-business and business-to-consumer transactions. This factor suggests that the arrival of Walmart in Germany will potentially be simple and not the most expensive.
Large firms are required to adhere to strict ethical and environmental criteria in their supply chains under Germany’s new Supply Chain Due Diligence Act. Corporations are obligated to globally evaluate their own operations as well as those of their distribution centers and take corrective action when necessary. According to the Supply Chain Due Diligence Act, these businesses must establish procedures to detect, evaluate, prevent, and address threats to human rights and fundamental freedoms in both their operations and products (Bundesbank, 2020). They must also guarantee that they offer means for indirectly vendors’ staff to report concerns about abuses of human and ecological rights. The arrival of Walmart in Germany should be done with the help of local specialists who will help deal with the new legislation in order to avoid trouble.
By comparing pricing and production levels, Germany has improved its “competitiveness.” German salaries would have been relatively low compared to Germany’s prominent trade team members in order for Germany to be considered appropriately “uncompetitive” worldwide. Furthermore, compared to its trading partners, Germany’s quality of life must also have declined. In summary, it is challenging to see how Germany is not “competitive” in a reciprocal manner, whether “competitive” is defined in terms of minimum standard of living, comparative labor productivity, or relative pricing. However, for Walmart, it should be understood that when entering the German market, the company should analyze the market in such a way as to be able to attract employees to their stores.
Bundesbank, D. (2020). The German Economy. Monthly Report, 72(11).