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Unformatted text preview: onsumers, in so far as their members are also consumers. It would have been
interesting to hear the opinions and thoughts of consumers, although it is expected that
they would be essentially positive towards the merger, given the likelihood that it would
have led to lower prices.
The lack of consumer group action could be explained by the generally weak consumer
movement in South Africa. Additionally, the political lobby opposing the merger could
have been so strong that consumer groups may have feared political consequences for
Massmart made use of the media to communicate the benefits of the merger to the
public. However, much of this communication was aimed at countering its detractors as
opposed to proactive engagement. Media as a stakeholder it its own right is was found
by Uusitalo & Rokman (2004) as a stakeholder with two attributes, making it a
dangerous stakeholder. There is no reason to conclude otherwise in South Africa. 71 6.3 What were the stakeholders’ roles and motives? While the motives of government and trade union are the same in so far as they are
about preserving jobs in the value chain, there are also important differences. The
government sought binding commitments on local procurement, and only if these could
not be made, then a prohibition of the entry, whereas the unions objected to the entry
itself in the first instance, and would only accept commitments as a compromise. The
fundamental difference lies in the fact that government’s interest is in the preservation of
economic activity and jobs, while for the unions the entry of Wal-Mart threatens their
very existence at Massmart. The government’s approach was to first achieve its
objectives through dialogue, which would also entail a compromise between the unions
and the firms. These outcomes of the dialogue could then be made binding conditions
The entry occurred through the purchase of privately-owned shares and, interestingly,
more than 70% of Massmart shareholders were foreign anyway. However, the issue
here was not just a change in the shareholding of the target, but the entry of Wal-Mart.
The government sought concessions from Wal-Mart that would protect some local
manufacturing capacity. However, government battled to identify what capacity really
existed, and part of their argument was based on the yet-to-be-created capacity. Even
though the government case is weak in this sense, Wal-Mart should have recognised
these aspirations and seriously considered how it could contribute towards their
attainment. For example, Wal-Mart could commit to developing local suppliers in certain
sectors that could, in turn, become globally competitive and benefit from, rather than
being harmed by, Wal-Mart’s global sourcing capability. Wal-Mart and Massmart’s denial
that they would exploit Wal-Mart’s global sourcing capabilities to aggressively compete
is South Africa was not just disingenuous, but was also strategically flawed. It was
72 premised on the assumption that this global sourcing power is necessarily harmful local
producers. What was overlooked in the debate was the opportunity for the government
and the world’s largest retailer to partner in positioning local suppliers to take advantage
of Wal-Mart’s entry and its planned growth into the African continent.
The research reveals the need for all corporations to have a dynamic global strategy that
is flexible enough to respond to the market dynamics of the country being entered.
There is no one-size-fits-all strategy, particularly in emerging markets, and Elg et al
(2007) argue that before entering such markets, it is important to examine the role of,
and relationships with, various socio-political stakeholders and to understand how these
relationships interact with the corporation’s activities. Wal-Mart came to South Africa
with a reputation for being anti-trade union, and this set the tone engagement with
stakeholders. 6.4 How did the stakeholder groups react to the entrance of Wal-Mart into South Africa?
Trade unions were hostile to the merger, while government required some concessions.
Despite this posture, it is also clear that both unions and the government were willing to
talk to Wal-Mart and Massmart about some commitments regarding future behaviour.
However, the main difference between the key stakeholders and the firm was on the
nature of these commitments – key stakeholders wanted binding commitment while the
firm insisted that it was under no legal obligation to enter into such. While Wal-Mart
could not control the reaction of stakeholders, there was always an opportunity for WalMart to enter the fray and commit to a process of addressing stakeholder concerns
outside the courts. 73 Investment analysts were positive about the entry of Wal-Mart, and there were some
support for the entry from Business Unity South Africa. However, this support did not
lead to much action. Despite that these groups were concerned about uncertainty in the
investment climate caused by the government’s position on this matter, there was nor
much reaction from them...
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This document was uploaded on 01/24/2014.
- Winter '14