65 how did wal mart manage the main stakeholders when

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Unformatted text preview: . This may also confirm the weak position these stakeholders are as against the key stakeholders. The reaction of these stakeholders clearly reflects the extremely low levels of trust between the firm and its stakeholders. The non-acceptance of an informal commitment on the one hand, and the insistence of a legally-binding commitment regarding future behaviour on the other hand, illustrate this low level of trust. 6.5 How did Wal-Mart manage the main stakeholders when entering South Africa? As observed by Griseri and Seppala (2010) and discussed in Chapter Two, stakeholder management involves the process by which managers reconcile the objectives of a firm with the claims and expectations of various stakeholders. In this case, there is no evidence of a serious attempt to reconcile the ‘claims and expectations’ of the stakeholders with Wal-Mart’s objectives. Wal-Mart displayed no discernible stakeholder engagement strategy during its entry into South Africa. Elg et al (2007) propose matching as an engagement strategy when entering new markets, and illustrate how a Swedish retailer, IKEA, successfully entered the Chinese and Russian markets by strategic engagement with key stakeholders though matching. Their research reveals high-level meetings between the home country and new market leaders, including meetings between the retailer and the political leadership to address specific issues relating to the entry. In South Africa, Wal-Mart and the government were on opposing 74 sides. What may have contributed to this situation was Wal-Mart’s leaving stakeholder engagement to the target, Massmart. Business and government in South Africa are notoriously suspicious of each other, a legacy of apartheid and the post-apartheid sociopolitical discourse. Though Massmart can be hardly described as a MNC, and lacks the skills and experience of managing entry, Wal-Mart obviously thought they would be capable of handling negotiations, being a “home” company. Having said this, much of the anxiety surrounding the merger had to do with the entry of Wal-Mart and the changes that would emanate from this. Wal-Mart’s reputational issues were also an important factor that was not shared with Massmart. None of these factors could be addressed by Massmart – they required Wal-Mart to be bold and outline how it was going to operate in South Africa. Massmart management was (wrongly) seen as the implementing agent for Wal-Mart policies. It was not enough for Wal-Mart to claim to respect local laws and culture. Wal-Mart’s engagement with stakeholders was very formalistic and not dynamic. It seemed to conflate the legal process with the strategic questions that respond to the social environments. The approach was in contrast to the ‘generative stakeholder conversations’ proposed by Cooperrider and Fry (2010). 6.6 What were the outcomes of Wal-Mart’s management of the main stakeholders on entry into South Africa? The outcome thus far has been acrimonious, with litigation between Wal-Mart on the one hand and trade unions and government on the other hand. The question remains for Wal-Mart, whether or not it wins the litigation, is can this be regarded as a successful entry? The answer has to be a resounding no, for even if it wins and enters the South African market on its own terms, it will still be required to work with the stakeholders, 75 particularly trade unions and the government. Government still possesses the power to prescribe and change the rules of the game. With respect to trade unions, Wal-Mart had an ideal opportunity to demystify all perceptions, rightly or wrongly, that suggest that it is anti-union. Had it studied the South African environment carefully, it would have been aware of the dynamic power of the unions – there is a federation of unions that organises workers throughout the value-chain, and legislation allows for secondary strikes. South African trade unions enjoy a good deal of legitimacy, being part of COSATU and the broader mass democratic movement that fought apartheid and now forms part of the ruling alliance. This amongst other things means that the unions’ voice in South Africa is an important one – and one that is ignored at ones peril. Wal-Mart’s stated intention of using South Africa as a springboard into Africa necessitates it having a good relationship with, and support from, the South African government. Entering African markets will be complex and will carry legal and political risk, and South Africa is better placed to deal with these than Wal-Mart or the US government. In Africa, Wal-Mart needs the South African government. Wal-Mart appears to have fallen into the trap that most companies, according to Ghemawat (2001), fall for, that of underestimating just how far removed they are culturally from the markets they seek. Companies need not only pay attention to the economic outlook of potential markets, but to the social and political outlooks too. 76 CHAPTER 7: CONCLUSION AND RECOMMENDATIONS 7.1 Introduction This chapter highlights the main find...
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This document was uploaded on 01/24/2014.

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