Walmart Plans to takeover Massmart: Good or Bad?
Oct 2nd, 2010 by monicamoran
Recently, it has been announced that Walmart, one of the largest retailer stores, is planning to take over its equivalent in South Africa, Massmart with a $40 billion deal. Why? Walmart has been experiencing a rapid decline in sales in the United States but have been thankfully aided by strong sales of Walmart’s in China, Mexico and Brazil. According to Andy Bond, vice president of Walmart, “South Africa presents a compelling growth opportunity for Walmart and offers a platform for growth and expansion in other African countries.” (1)
One advantage of the expansion is that it will indeed help Walmart increase its sales and thus improve its financial problems. This will be a significant advantage in the long term as it will create financial stability for Walmart. In addition, expanding to different markets could help boost Walmart’s market share. Massmart will also benefit financially as they will have more support through Walmart.
Nonetheless, it may mean making redundant the workers of Massmart, and may put most of them out of jobs, which may create conflict with trade unions throughout South Africa. Since Walmart is a relatively western company, it could be a change in practices and working environment, thus creating culture clashes between employees from Massmart and Wallmart. In fact, the article states that Walmart have already run into problems with local trade unions, and people fear that it may happen again in South Africa.
Therefore, what may influence Walmart’s decision to takeover Massmart may be based on their corporate culture. Financially, the expansion will be beneficial for Walmart, however they may also need to analyze the non-financial factors that may impede their success, such as employee satisfaction. Based on what I learned in my OB (Organizational Behavior) class, the workplace environment (such as job satisfaction, interaction, is highly crucial for a large organization, such as Wallmart to succeed in.
(1) “BBC News – Wal-Mart in Talks to Buy South Africa’s Massmart.” BBC – Homepage. 27 Sept. 2010. Web. 03 Oct. 2010. <http://www.bbc.co.uk/news/business-11418762>.