From the course: Global Strategy
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Industry economics matter
- Walmart entered Germany in 1997 by acquiring two small companies with a 5% market share. Its competitors included Metro and Aldi, two local giants, with a combined share of over 50%. On a global basis, Metro and Aldi were much smaller than Walmart, yet Walmart found that it was no match for Metro and Aldi in Germany. After struggling for years, it withdrew from Germany in 2006. Contrast Walmart's experience, with that of Google. Barely five years after its birth in 1998, Google had become the leading search company in over 70 countries, including Germany. The difference between Walmart and Google's experiences has little to do with either company's skill at global expansion. Instead, the explanation lies in stark differences in the economics of the two industries. In discount retailing, over 90% of the cost structure is purely local. Since stores have to be local, the cost of furnishing and operating them, the cost of…
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