Analyzing Intercultural Communication Challenges for Walmart in Africa

This report delves into the critical issue of intercultural communication challenges within the context of international business, using Walmart's expansion into Africa as a central case study. The report begins with an executive summary highlighting the significance of effective cross-cultural communication for global business success, particularly in light of differing languages, communication styles, and cultural nuances. It then provides an overview of Walmart, its global presence, and the author's personal interest in the topic. The core of the report involves an analysis of the intercultural communication model, the FSA/CSA matrix, and decision-making frameworks to evaluate the challenges Walmart faces in Africa. The analysis includes a discussion of factors such as cultural and racial identity, language barriers, and ethnic considerations. The report also examines past failures, such as Walmart's exit from Germany due to intercultural conflicts. Recommendations are provided, including the importance of cultural competency training, language diversity, and adapting business etiquette to local customs to avoid business failure. The report concludes with an integrated summary of the findings and their implications for Walmart's strategy in Africa, and references relevant literature.

OPTION A1
The option chosen is A; Focus on a current international business problem or opportunity,
conduct the appropriate analysis and develop scenarios as probable solutions.
Author’s Name
Institutional Affiliation
Professor Name
Course Name
City and State
Date

OPTIONAL A 2
Contents
ISSUE: Intercultural communication as a challenge on international business.............................3
Executive summary.........................................................................................................................3
INTRODUCTION...........................................................................................................................5
Overview of the organization.......................................................................................................5
My relationship with the organization chosen.........................................................................5
Relevant international business concepts/models............................................................................9
Analysis and Evaluation................................................................................................................10
Models and frameworks of analyzing factors related to the problem........................................10
Models and frameworks of decision making.........................................................................12
The interpretation of the results and conclusion............................................................................14
Integrated Summary.......................................................................................................................15
Recommendations and implications..............................................................................................16
Reference list.................................................................................................................................18

OPTIONAL A 3
ISSUE: Intercultural communication as a challenge on international business
Executive summary
As businesses internationalize, they face several intercultural communication challenges.
However, communication is at the center of any international business strategy because each
business transaction entails effective communication. Communicating effectively across cultures
at international level is a great challenge for organizations seeking to dominate the international
market1. This is a challenge because different countries speak different languages, have different
communication styles and also have unique cultures that impact how they communicate or
interpret information. As a result, many organizations find it difficult to adapt their business
etiquette to different consumers in the international market. Hence, there is a need to develop
strategies that can help harmonize communication across cultures in the international market for
most business to succeed. At the same time, going global has forced many organizations to adapt
to the diverse taskforce. The diversity in taskforce means that the organizations must also put in
place necessary measures of communicating with all its employees internally without offending
their cultures2.
The approach taken to analyze the challenge of intercultural communication on
international business is intercultural communication model. This model was created in 1997 by
Porter and Samovar. The model proposes that just like our cultures differ from one another in
society, the way we communicate to one another is also likely to vary since people from different
1 Buckley, Peter J., Jonathan P. Doh, and Mirko H. Benischke. "Towards a renaissance in international
business research? Big questions, grand challenges, and the future of IB scholarship." Journal of
International Business Studies 48, no. 9 (2017): 1045-1064.
2 Bengtsson, Maria, and Sören Kock. "Coopetition—Quo vadis? Past accomplishments and future
challenges." Industrial marketing management 43, no. 2 (2014): 180-188.

OPTIONAL A 4
cultural background perceive the world differently3. This model further argues that
communication can be sufficiently modified by cultural awareness of a person. This is so
because the meaning of a message that has been encoded by a person from a particular culture
has been found to change completely when it’s decoded by a person from a different culture.
From the international business point of view, this model portrays the existence of different
cultures in the international market arena that pose a challenge of communicating across cultures.
That is why this paper recommends that before any business goes international or expands to
other foreign markets, it is paramount for that business to equip its employees with effective
communication (cultural competency) skills and encourage language diversity which will enable
its employees to communicate across cultures. By doing this, it will be easy for that organization
to communicate with all its stakeholders globally, understand what their needs are and find
measures of responding to the same needs. However, equipping the employees with cultural
competency skills comes with a cost. This is so because the organization has to spend resources
on training its employees for a period of time. The organization will therefore incur training cost.
At the same time, the organization will have to hire experts that will train its employees on
cultural competency and language diversity and all this will come with costs.
INTRODUCTION
Overview of the organization
3 Brannen, Mary Yoko, Rebecca Piekkari, and Susanne Tietze. "The multifaceted role of language in
international business: Unpacking the forms, functions and features of a critical challenge to MNC theory
and performance." In Language in international business, pp. 139-162. Palgrave Macmillan, Cham, 2017

OPTIONAL A 5
Walmart is an international company that operates discount department stores and a chain
of hypermarkets as well as grocery stores. Currently, the company has a total of 11,368 stores
that are located in 27 different countries around the world. Even though the company operates as
Walmart in the US and Canada, the company operates under 55 names globally. In South Africa,
Argentina and Chile, the company owns wholly owned operations while in Walmart Brazil; the
company holds a minority stake as of august 2018. By revenue, Walmart is ranked first globally
having US$500 billion4. The company has a total of 2.2 million employees globally making it the
largest private employer in the world. In 2019, Walmart has been listed as the largest grocery
retailer in the US with 65% of its revenue coming from the US operations. Even though the
company’s operations in the UK, China, and South America have seen major success, its
ventures in South Korea and Germany have failed while outside North America, the company’s
investments have seen mixed results.
My relationship with the organization chosen
As a student studying international business, I am interested in finding ways that can
harmonize communications across cultures in the international market for international
corporations like Walmart to expand their business globally at ease. This entails coming up with
strategies that can be used by these corporations to deal with challenge of intercultural
communication. This is so because there are different countries marketing their products around
the globe. These countries speak different languages and also have unique cultures. For example,
Walmart Company is expanding its business in Africa. Currently the company owns Massmart in
South Africa which is doing very well, following their merger. This is because the economies of
4 Dunning, John H. The Globalization of Business (Routledge Revivals): The Challenge of the 1990s.
Routledge, 2014.

OPTIONAL A 6
most of the African countries are growing stronger. As Walmart seeks to expand its operations
on the African continent especially in countries such as Ghana and Nigeria, it has to strategize on
how its going to manage its communication. Being an American company, Walmart is known to
impose American culture in countries it expands its business to. However, lifestyles, and
communication styles in African countries are totally different from the US5. Therefore, Walmart
is likely to encounter challenges when exploring the African market. If the challenge of
intercultural communication will not be fixed, these businesses are likely to fail.
Problem to be solved in relation to the organization chosen
Walmart Company is expanding its business in Africa. Currently the company owns
Massmart in South Africa which is performing well. By all accounts the economies of most of
the African countries are growing stronger and Walmart can explore the Ghanaian and Nigerian
markets. However, Walmart is likely to face some intercultural communication challenges in the
event it continues to impose the American way of doing things6. Walmart needs to understand
that as it seeks expansion into new markets either through acquisition or opening a new store, it
will encounter intercultural challenges. This is so because Walmart had earlier been greatly
affected in different parts of the world due to the challenge of intercultural communication. For
example, Walmart pulled out of Germany 2006 due to intercultural conflicts. This is because the
company introduced policies that went against the culture of the Germans. For example, in
Germany, Walmart required all its employees to start their daily duties by having stretching
5 Reiche, B.S., Stahl, G.K., Mendenhall, M.E. and Oddou, G.R. eds., 2016. Readings and cases in
international human resource management. Taylor & Francis.
6 Reiche, B.S., Stahl, G.K., Mendenhall, M.E. and Oddou, G.R. eds., 2016. Readings and cases in
international human resource management. Taylor & Francis.

OPTIONAL A 7
exercise followed by group chants7. The company believed that by engaging in group chants and
exercising, employees will be motivated throughout the day. However, these practices were not
received well by German employees in the company because group chants were considered an
embarrassment in German culture. In addition, Walmart also allowed its employees to spy on
their colleagues something that the law in Germany was against. Another reason that Walmart
failed in Germany is different in the way of living between Germany and the US. Walmart
introduced a smiling policy where all its employees were required to smile at the customers as a
means of attracting them to shop with the company8. In essence, this is an intercultural
communication challenge that Walmart is likely to encounter even as it seeks expansion into
Africa. The fact that Walmart had to close shop in Germany on intercultural conflicts implies
that it has a role to play in correcting its intercultural communication.
Evidence of the problem
As a result of globalization, intercultural communication has become a powerful tool for
international businesses9. This is so because in the modern world, people from different cultural
backgrounds come into contact on a regular basis. This also means that most of the customers in
the global market come from different cultural backgrounds. Therefore, to avoid or reduce the
risk of failure, it is important for every business to incorporate the concept of cultural
competency in its corporate culture10. This is principal because for any business to gain a
7 Öberg, Christina. "Customer relationship challenges following international acquisitions." International
Marketing Review 31, no. 3 (2014): 259-282.
8 Reiche, B.S., Stahl, G.K., Mendenhall, M.E. and Oddou, G.R. eds., 2016. Readings and cases in
international human resource management. Taylor & Francis.
9 Shenkar, Oded, Yadong Luo, and Tailan Chi. International business. Routledge, 2014.
10 Sarasvathy, Saras, K. Kumar, Jeffrey G. York, and Suresh Bhagavatula. "An effectual approach to
international entrepreneurship: Overlaps, challenges, and provocative possibilities." Entrepreneurship
Theory and Practice 38, no. 1 (2014): 71-93.

OPTIONAL A 8
competitive advantage in the global market, it has to effectively adapt its business etiquette to its
customers globally. Incorporating cultural competency in the corporate culture of a business will
equip the employees of a particular business with knowledge about different cultures and the
ability to adapt to the behaviors. Failure to have knowledge of customer needs from different
cultural backgrounds and to adapt to their behaviors will lead to the automatic failure of the
business. This is because that business will not be able to respond to the cultural needs of its
customers. For example, because Walmart could not adapt to the intercultural communication of
Germans, the company failed in Germany and had to pull out. Therefore, it is justifiable to
investigate the effects of intercultural communication on international business to avoid the cases
of business failure in the future.
Factors contributing to the problem
The factors contributing to intercultural communication can be analyzed through
FSA/CSA matrix. There are different factors at the international level that contribute to the
success or failure of communication across cultures which can negatively impact the business.
Country specific advantage (CSA) reflects the advantages of host countries such as Nigeria and
Ghana that Walmart is seeking to expand to. These countries have their unique cultural and racial
identities that influence their communication styles. Hence, one of the factors that is likely to
contribute to intercultural communication problem is cultural identity. Culture can be defined as
the way people live characterized by their attitudes and values. The attitude and values that a
person was brought up with can impact intercultural communication because dissimilar people
have different attitudes and practices which can clash11. Another factor is racial identity. People’s
racial identity can affect how they interact with workmates from different races. For example,
11 Shenkar, Oded, Yadong Luo, and Tailan Chi. International business. Routledge, 2014.

OPTIONAL A 9
mots Africans are fond of using their vernaculars in the workplace while communicating with
their fellow African employees. The American in the same office will feel adrift by the
communication of the two Africans in their vernacular. Another factor is ethnic identity which
outlines the role that ethnicity will play when two workers from different cultures interact with
each other in the workplace. For example, in the United States, it’s very rare for the white
Europeans to take into account their ethnicity while interacting with one another. Therefore, to
enhance dynamics in the workplace, it is vital to address the issues of different ethnicities in the
workplace. All in all, Walmart has a foreign specific advantage (FSA) that is embracing
diversity. The company is likely to hire local and English speaking foreigners to run its
operations in host countries. However, the challenge is how Walmart overcome the liability of
foreignness and train its employees on workplace diversity to have a workforce with a common
goal.
Relevant international business concepts/models
There are three different levels or areas under which the need for management of
international business arises12. The first level or area is the international framework which
comprises of two organizations namely international institutions and organizational institutions.
These two organizations that aim to improve the world market sales. The international
institutions such as the World Bank do not support the individual companies directly, but rather,
they do so indirectly by supporting different countries financially. The organizational institutions
on the other hand function to create a healthy competition in the global market13. The second
12 Story, Joana SP, John E. Barbuto Jr, Fred Luthans, and James A. Bovaird. "Meeting the challenges of
effective international HRM: Analysis of the antecedents of global mindset." Human Resource
Management 53, no. 1 (2014): 131-155.
13 Stahl, Günter K., and Rosalie L. Tung. "Towards a more balanced treatment of culture in international
business studies: The need for positive cross-cultural scholarship." Journal of International Business

OPTIONAL A 10
level is the impact of globalization on both national and international policies. The third level is
the national framework. This level has proved to be the most complicated of all the levels
because of the multiple factors and strategies that are involved in it. Even though the factors,
strategies and goals that are involved in this level are conflicting, it is expected that all of them
work to create a conducive atmosphere for international trade and business.
Analysis and Evaluation
Models and frameworks of analyzing factors related to the problem
The challenge of intercultural communication that Walmart is experiencing in attempt to
expand its business in Africa can be identified and analyzed using the four strategic questions.
The four strategic questions include: why a company intends to enter a foreign market (strategic
goal), where the company intends to expand its business internationally, when the company
intends to enter a foreign market, and how the company intends to enter a foreign market.
Regarding the reason why companies enter international market, there are many reasons that
various authors have proposed. For example, Walmart initiated its businesses in Africa by
merging with Massmart with the aim of exploring the African market. There are many African
countries with strong economy, for example, South Africa, Nigeria and Ghana. Walmart sees an
opportunity of dominating market in the growing economy of these African countries. Hence,
Walmart the major reason why Walmart is expand into Africa is to seek markets.
The second question is where the company intends to expand its business. The ideal
location of a business can be analyzed using the PESTLE framework. The PESTLE framework
suggests factors such as political, economic, social, technological, legal and environmental
Studies 46, no. 4 (2015): 391-414.

OPTIONAL A 11
factors that organizations should consider when locating their businesses in different countries.
One such factor is the strength of the economy. According to GDP, Nigeria and South Africa are
ranked first and second wealthiest countries in the Africa14. Ghana on the other hand is among
the top ten wealthiest countries in Africa. This justifies the reason why Walmart is intending to
expand its business in Ghana and Nigeria. The second factor is political climate. The last election
of Nigeria and Ghana were held in 2019 and 2017 respectively15. Both elections were peaceful.
Walmart is interested in exploring this peaceful political climate that exist in these two countries
because it’s conducive for business. The third factor is technology. Both Ghana and Nigeria
embrace the developments as a result of technology. The fourth factor is laws under which the
business will operate in. In both Nigeria and Ghana there foreign companies are allowed to
operate by law. However the foreign laws in Nigeria require the foreign companies to register
with CAC which is a body that regulates companies in Nigeria16. The fifth factor is social
environment. Both Nigeria and Ghana have English as their official language. Walmart being an
American company, it will be easy to advance its business in these two countries because it’s
easy to communicate with the customers and other clients17. However, it should also embrace
14 Spieth, Patrick, Dirk Schneckenberg, and Joan E. Ricart. "Business model innovation–state of
the art and future challenges for the field." R&d Management 44, no. 3 (2014): 237-247.
15 Spieth, Patrick, Dirk Schneckenberg, and Joan E. Ricart. "Business model innovation–state of
the art and future challenges for the field." R&d Management 44, no. 3 (2014): 237-247.
16 Spieth, Patrick, Dirk Schneckenberg, and Joan E. Ricart. "Business model innovation–state of
the art and future challenges for the field." R&d Management 44, no. 3 (2014): 237-247.
17 Spieth, Patrick, Dirk Schneckenberg, and Joan E. Ricart. "Business model innovation–state of
the art and future challenges for the field." R&d Management 44, no. 3 (2014): 237-247.

OPTIONAL A 12
language diversity because not all citizens of these countries speak English since it is a preserve
for only those who have formal education.
The third question is when to initiate the business internationally. A business can
internationalize a business as a first mover or late mover. The first mover takes short time before
internationalize a business while late movers take a long time before internationalizing a
business. The main reason why some businesses take long time to internationalize is because of
the barriers involved in internationalizing a business. Businesses which have already strategized
in overcoming the international barriers will take a short time to internationalize. This is because
there is no already established solution to intercultural communication that exists in international
market; it will take time for Walmart Company to initiate its business in Africa.
Models and frameworks of decision making
The appropriate model that will provide strategic insights on the challenge for sound
decision making is a seven stage model. This model proposes seven steps that an organization
can use to make a decision. For example, Walmart having failed in Germany can use this model
to get insights into why it failed and then make a sound decision afterwards. Intercultural
communication has proved to be the greatest barrier to international business. With the seven
stage model, we can get insights on how intercultural communication affects international
business and then make a decision that will provide a solution to this problem. The first step in
the seven stage model is listing all the possible solutions to the problem. Currently there are five
ways that a business that is expanding globally can use to overcome the challenge of intercultural
communication. These solutions include learning new phrases, learning the cultures of different
clients that a business is serving, promoting and appreciating the cultural difference, open