Wal-Mart Korea: Challenges of entering a foreign market

Abstract

Wal-Mart entered South Korea in late 1990s for its international expansion; however, IT had a major failure in this market and left Korea in 2005 as the American way of marketing did not translate well in Korea. Wal-Mart had critical shortfalls in enabling value exchange with the Korean consumers as the Korean consumers had significantly different taste and preferences compared to American consumers. Wal-Mart's Every Day Low Price (EDLP) strategy was not perceived to have the "value" in the minds of the Korean consumers, while its store locations were not strategically well positioned to create sufficient customer traffic. Wal-Mart's competitive advantage of low cost and low price was not suitable in the Korean competition and consumption context. Wal-Mart was not prepared to develop an effective localization strategy that might have stemmed from not having a clear projection of how much it was willing to invest and grow in this market. This Wal-Mart Korean case shows the importance of the compatibility of a corporate unique value proposition and strategic fit with the local market conditions. © 2008 by The Haworth Press. All rights reserved.