Carla I. Koen. Comparative International Management
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MULTINATIONAL CORPORATIONS: COMPARATIVE CORPORATE STRATEGY 461
2002). These ties are much stronger in Germany. It is common practice that firms have
large stock interests in other firms and that their officials have positions on each other’s
supervisory boards. Ties are especially tight between firms in the same industry. These ties
are maintained with the support of trade and employer organizations (Grant, 1986). In
Japan, inter-firm ties are also tight; there are several kinds of network between firms, of
which the keiretsu is the best known.
It is quite clear that the institutional environment differs between these three coun-
tries. Based on the influence on corporate strategy of the various institutional factors we
discussed in Section 10.3, and the way these institutional factors function in each
country (as discussed above) we formulate different expectations about the level and
direction of diversification in the three countries. The distinction in level and direction
was made in Section 10.2. In Table 10.1 we have summed up the factors that influence
the level of diversification in a country, and labelled each factor for the USA, Germany and
Japan with a plus () if a factor indicates a higher level and a minus () if a factor indi-
cates a lower level of diversification.
Table 10.1 indicates that:
the highest level of diversification is expected in the USA
Germany and Japan seem to have a similar environment, but due to the weaker
Japanese boards a slightly higher level of diversification is expected in Japan than in
Germany.
In Table 10.2, the institutional factors that influence the direction of diversification
are summed up for each country and labelled in the same manner as in Table 10.1.
However, this time a plus () indicates a preference for unrelated diversification and a
minus () a preference for related diversification.
According to Table 10.2:
US firms are expected to favour unrelated diversification
German and Japanese firms are expected to favour related diversification.
Table 10.1 The expected influence of institutional factors on the level of diversification
USA Germany Japan
Anti-trust laws
Strict anti-trust
policy ()
Lenient anti-trust
policy ()
Lenient anti-trust
policy ()
Financial system
Capital-market-
based ()
Credit-based () Credit-based ()
Ownership
Dispersed () Concentrated () Concentrated ()
Boards
Dominated by
executive
management ()
Influential,
independent
supervisory board ()
Dominated by
insiders ()
Inter-firm networks
Weak () Strong () Strong ()
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462 COMPARATIVE INTERNATIONAL MANAGEMENT
The expectations regarding level and direction of diversification in the USA, Germany
and Japan are tested for firms in the automobile and steel industry. The three biggest US,
German and Japanese companies in the two industries are selected on the basis of produc-
tion data (number of cars and tons of steel in the year 2001 for both industries). Their
strategy development is measured for the period 1985–2000. The firms selected in the
automobile industry are General Motors, Ford, DaimlerChrysler, Volkswagen, BMW,
Toyota, Nissan and Honda.
Some remarks have first to be made about DaimlerChrysler and Nissan.
DaimlerChrysler is the outcome of a merger between German-based DaimlerBenz and US-
based Chrysler in 1998 (see the case in Chapter 3). Therefore, the strategy development
before 1998 is measured for the two separate companies. Since 1999, Nissan has been
under the control of the French company Renault, so the strategy of Nissan is measured
until 1999. Our aim is to investigate the national, institutional effects on corporate
strategy. This aim makes it important that strategy is developed in the country, the insti-
tutions of which are taken into account. Therefore, in Nissan’s case, this would be Japan
and not France.
The firms selected in the steel industry are US Steel, Bethlehem Steel, Nucor,
ThyssenKrupp, Nippon Steel, NKK and Kawasaki Steel. ThyssenKrupp is the outcome of a
merger between Thyssen and Krupp in 1999. Krupp had taken control of another
German steel manufacturer, Hoesch, in 1992. The strategies of the different companies
are measured separately until the last year of their independence. This means that the
strategies of Thyssen and Krupp are measured until 1999 and the strategy of Hoesch is
measured until 1992.
Strategy development is measured using the scheme developed by Rumelt (1974).
According to this scheme, firms are assigned to nine different diversification categories,
depending on their scores on a number of quantitative and qualitative criteria. Each
company is assigned to a category, first in 1985 and then every five years until 2000. In
addition, for each company and each industry in a country a pattern is established that
indicates whether the level of diversification is higher or lower than in the period before.
The level of diversification is measured with the help of the diversification categories of
Rumelt (1974), where single business is the lowest possible level of diversification and
unrelated business the highest.
The results for the two industries are mixed. In the automobile industry, all
companies, except for one, stay in the same diversification category for the whole of the
period 1985–2000 and they all end in this category in 2000. This category is dominant-
vertical. This means that the automobile companies earn 70–95 per cent of their total
revenues from the sale of cars, trucks and semi-finished products like spare parts. The
Table 10.2 The expected influence of institutional factors on the direction of diversification
USA Germany Japan
Government’s
willingness to share
business risks
Low () Moderate () High ()
Management
development
Generalist () Technical ()
Generalist within one
company ()
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remaining part of the total revenues is earned with other activities; one of these activities,
which all automobile companies have in common, proves to be automotive financing.
Other activities, further, include, for example, the sale of motorcycles in the case of BMW
and Honda, and the car-rental business, Europcar, of Volkswagen.
The only exception in this pattern appears to be DaimlerBenz. Until 1995, this
company seemed to be developing into an industrial conglomerate, with interests in the
aircraft industry, the market for domestic appliances and even the market for mobile com-
munications. After 1995, however, the company refocused on the automobile industry
and sold most of its interests in other industries. As already mentioned, in 1998
DaimlerBenz merged with Chrysler to form DaimlerChrysler.
These results illustrate that our expectations regarding the level and direction of
diversification did not come through in the automobile industry. All companies seemed to
have developed similar strategies. These results suggest that national institutional
environments have a very limited influence on corporate strategy in global industries like
the automobile industry. Forces of international competition may compel companies in
the automobile industry to adopt similar strategies.
Other theories, especially industrial organization, could be used to explain the results
found in the automobile industry. As indicated in Section 10.3, the paradigm used in
industrial organization states that the market structure determines the conduct of firms.
According to this line of reasoning, the results can be explained as follows. Due to the
global structure of the automobile industry, firms cannot afford to adopt a radically dif-
ferent strategy from those of other firms because this can give them a competitive
disadvantage. The large multinational firms making up the automobile industry have to
deal with different national institutional environments, of which the national environ-
ment of the country of origin is only one. The global structure of this industry enables it
to arbitrate between the different institutional environments.
Also, results in the steel industry do not confirm our expectations based on the dif-
ferent national institutional environments in the USA, Germany and Japan. It is not the
US but the German companies that have reached the highest level of diversification. The
German steel companies seem to favour unrelated diversification instead of related diver-
sification, a result completely opposite to our expectations. Differences remain in
strategies between companies in the three countries, but in the period 1995–2000, the
overall level of diversification drops in all three countries. This suggests some convergence
to less diversification, although the convergence is not as strong as in the automobile
industry. The results seem to indicate that the steel industry is less of a global industry
than the automobile industry, which leaves more room for divergence of strategies
between countries. A further interesting note is that most companies defend their diversi-
fication efforts by pointing out their poor results and perspectives in the steel market.
Conclusions to this section
The results suggest that national institutional environments have a very limited influence
on corporate strategy in global industries like the automobile industry. Forces of inter-
national competition may compel companies in the automobile industry to adopt similar
strategies.
Although our expectations regarding diversification strategies based on the national
MULTINATIONAL CORPORATIONS: COMPARATIVE CORPORATE STRATEGY 463
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464 COMPARATIVE INTERNATIONAL MANAGEMENT
institutional environments in the USA, Germany and Japan did not come through, we did
find some striking results that seem to indicate that there might still be country-specific
influences on corporate strategy. In both the automobile and the steel industry, we found
some typical diversification moves within a country. For example, in one period, all the
Japanese steel companies are active in the market for semiconductors, while the US and
German steel companies are not. German steel companies all diversify in machine con-
struction and automotive parts, while US and Japanese steel companies do not. In the
automobile industry, Toyota and Nissan are both producers of lift trucks, while other
companies in other countries are not. The US automobile companies General Motors and
Ford both start to develop satellites at a certain moment, while other automobile
companies in other countries do not. These examples seem to indicate that, despite the
general tendency to converge, there are still some country-specific factors influencing
firms to diversify in a specific direction.
To sum up, the studies in this section have produced different results.
Based on earlier research, primarily from the 1970s, Kogut et al. (2002) found a
strong influence of national institutions on strategy.
Mayer and Whittington (1999, 2000) found small differences in strategy between
firms in different European countries, but these differences could not be explained by
reference to national institutions.
The research in the car and steel industry in the USA, Germany and Japan indicates
an influence of industry characteristics on strategy development. Firms in more
global industries, like the automobile industry, seem to be less influenced by national
institutional environments than firms in less global industries like the steel industry.
10.5 Model
The previous section shows thatinstitutional theory isnot always able to help us explaincross-
national differences and similarities in corporate strategy. Obviously, then, if we want to come
to more precise explanations of cross-national corporate strategies, we have to move beyond
institutional analysis and consider variables other than institutions. In Section 10.3, we have
presented universalistic explanations.These explanations point to variables such as corporate
resources, industry-specific variables,and soon, thatcan helpus toexplain corporatestrategy.
In this section, we develop a model that can be used to order these factors and, as such, can be
helpful in generating new insights regarding the convergence or divergence question. The
section is divided into three subsections: strategic planning, the model and expectations.
Strategic planning
The model is based on the well-known strategic planning process.
3
The process is used by
many firms to develop their strategy. The starting point of the process is the definition of
a firm’s mission and goals. The mission indicates why the firm exists and what it should be
3
The strategic planning process is described in almost any handbook on strategy. A detailed description can be
found in, for example, Hill and Jones (2001).
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doing. As such, the mission expresses if, how and also in what order the firm tries to look
after the interests of its stakeholders, such as shareholders, customers, employees and
society in general.
The mission of Tyco (see the case at the end of this chapter), for example, is ‘We will
increase the value of our company and our global portfolio of diversified brands by
exceeding customers’ expectations and achieving market leadership and operating excel-
lence in every segment of our company’. Therefore, Tyco seems to give priority to
increasing its value and thus the interests of its shareholders, while the satisfaction of
customer needs only seems instrumental in this purpose.
The goals indicate what the firm wants to achieve in the long term. For example, one
of Tyco’s goals was to attract and retain, at every level of the company, people who repre-
sent the highest standards of excellence and integrity.
After the definition of the mission and goals, the next steps of the strategic planning
process are the internal analysis and external analysis. The internal analysis refers to an
analysis of the firm itself in order to identify its strengths and weaknesses. The external
analysis entails an analysis of the firm’s environment to discover the opportunities and
threats it presents to the firm. Next, in the SWOT analysis, the Strengths, Weaknesses,
Opportunities and Threats are brought together to support the identification of alterna-
tive strategies that build on the strengths, eliminate the weaknesses, take advantage of the
opportunities and avoid the threats. Subsequently, a strategy is chosen that matches the
firm’s mission and contributes to the achievement of its goals. Finally, the chosen strategy
can be implemented.
The strategic planning process has been criticized for a number of reasons. For
example, it assumes the predictability of the future, whereas, in reality, even the most
thoroughly prepared strategic plans are often thwarted by unexpected developments.
4
A
criticism that is perhaps more relevant in the context of this book is that the approach
may be culturally biased. Its main contributions originate from the USA. Elsewhere, the
strategic planning process may not be a very relevant approach to strategy development.
Nevertheless, it can still be used to order the factors that underlie corporate strategy,
according to the previous sections.
The model
Figure 10.2 shows the underlying factors, together with the main elements of the stra-
tegic planning process.
Mission and goals
Both agency theory and institutional theory can explain the mission and goals a firm
adopts. According to agency theory, top managers have personal motives to diversify, such
as increase in compensation, managerial entrenchment and risk reduction (Jensen, 1986;
Hoskisson and Hitt, 1990; Montgomery, 1994). In the absence of powerful countervailing
mechanisms or institutions, like strong boards and concentrated ownership (Kogut et al.,
MULTINATIONAL CORPORATIONS: COMPARATIVE CORPORATE STRATEGY 465
4
For a thorough discussion of the various approaches to strategy formation and their weaknesses see, for
instance, Mintzberg et al. (1998).
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466 COMPARATIVE INTERNATIONAL MANAGEMENT
2002), the personal motives of the top managers become the firm’s explicit or implicit
mission and goals, and this is expected to result in diversification.
This line of reasoning assumes that shareholders are the firm’s chief stakeholders
and that diversification is not in their interests, since it destroys value. However, diversifi-
cation can also be attractive for shareholders. Diversification, in particular if it is of the
related kind, could lead to synergies and thus increase firm value. Also, shareholders may
not always be in a position to ‘diversify away’ their risks by holding an efficient stock port-
folio, which makes firm diversification to reduce risks an appealing alternative. This could,
for instance, be the case in regions where the capital market does not offer a large number
of good investment opportunities or in situations in which the main shareholder is a
family that wants to remain in control of the firm. Furthermore, besides shareholders, the
firm has other stakeholders, like employees, suppliers, customers, debt providers and gov-
ernment agencies. These stakeholders might also benefit from a firm that diversifies to
reduce risks, since it is usually difficult for them to diversify away their risks.
To sum up, if shareholders are the principal stakeholders, and if they do not have a
special stake in the firm but plenty of investment alternatives in the capital market, then
conglomerate diversification to reduce risks is not a good strategy and will only emerge if
moves to rein in management are weak. In contrast, when the interests of other stake-
holders are taken into account, or when shareholders do not have sufficient investment
alternatives in the capital market at their disposal, risk reduction as mission or goal of the
firm, and the accompanying strategy of unrelated diversification, would be attractive for
the firm. The influence of stakeholders, institutions and the capital market (as part of the
factor markets) is shown in Figure 10.2.
Figure 10.2 Model of corporate strategy development
Stakeholders
Mission and goals
Dominant logic
Resources
Learning
Other internal
contingencies
Internal
analysis
Institutions
Factor markets
Industry
Other external
contingencies
External
analysis
Corporate strategy
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Internal firm-specific factors
Figure 10.2 also shows the influence of several internal, firm-specific factors, which are
suggested by dominant logic, the resource-based view, organizational learning and stra-
tegic contingency theory.
According to the first perspective, the dominant logic(s) of the top managers,
instead of their personal motives, drive(s) a firm’s corporate strategy (Prahalad and Bettis,
1986). If the top management team possesses a single dominant logic, then the firm
should stick to one business or a number of related businesses that require a similar domi-
nant logic. Diversification into strategically dissimilar businesses only makes sense if the
top management team has multiple dominant logics.
The resource-based view argues that each firm constitutes a unique bundle of
resources. Excess resources that meet certain characteristics can be used to diversify into
new industries. The type of resources determines the direction of diversification
(Mahoney and Pandian, 1992).
According to the organizational learning perspective, learning by firms from pre-
vious diversification experiences facilitates further diversification (Bergh, 2001). Similar
to the resources, this factor is unique to every firm.
The final internal factor is a reservoir of various internal contingencies that shape
a firm’s corporate strategy (Venkatraman, 1989). For example, diversification could be
the response of a firm to low performance in the current activities.
External factors
The external factors that influence corporate strategy are derived from institutional
theory, transaction cost economics, industrial organization and, again, strategic contin-
gency theory.
Institutional theory offers a number of institutions that contain a rather wide
range of more specific factors. A political system that includes flexible anti-trust laws, no
willingness to share economic risks with the private sector, and tax laws that encourage
firms to retain and reinvest cash flows encourages firms to diversify (Hoskisson and Hitt,
1990; Whitley, 1997). Diversification is also stimulated in a financial system that is
capital market based (as opposed to credit based) (Whitley, 1992).
5
Another aspect of the
financial system that promotes diversification is the absence of strong boards and concen-
trated ownership (Kogut et al., 2002). This has already been mentioned in the mission and
goals part of the model, because it facilitates the adoption of the personal motives of the
top managers as the firm’s explicit or implicit mission and goals. A final factor that is part
of the financial system is the presence of a highly developed market for corporate control.
Such a market offers an opportunity for firms that want to diversify through acquisition.
MULTINATIONAL CORPORATIONS: COMPARATIVE CORPORATE STRATEGY 467
5
In combination with the remarks we made in the mission and goals part of our model, an interesting situation
emerges. In a capital-market-based system, the inability to share risks with financial institutions poses a threat to
the firm, which can be countered through diversification. However, in a highly developed capital market, the then
presumably dominant shareholders have no need for diversification to spread risks and will oppose attempts to
make this part of the firm’s mission and goals. In a credit-based system, there is no need for a firm to diversify to
reduce risks, since firms can share risks with financial institutions. However, managers face less opposition from
shareholders when they set the firm on a diversification course for other, personal, motives.
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At the same time, it poses a serious threat to firms that have followed a value-destroying
diversification strategy. The third institution is the labour system. The type of manage-
ment development enables or disables specific directions of diversification (Mayer and
Whittington, 1999).
6
The final institution that encourages diversification is the absence
of strong networks that help incumbent firms to retaliate against diversifying newcomers
in an industry.
The latter institution is strongly related to industrial organization, the next theory
that provides external incentives for a firm’s corporate strategy. In general, industrial
organization stresses the importance of the industry for the strategies firms adopt. More
specifically, it has been worked out as a number of opportunities to reduce competition
that firms can take advantage of through diversification.
The third theory is transaction cost economics. Firms diversify in response to inef-
ficient markets. The conventional markets that have been used as examples are the capital
market and the markets for unused resources, like physical equipment and know-how.
However, other factor markets, like the labour market, could also be included.
Strategic contingency theory is the final perspective we mention here. Again, it is
a reservoir of various contingencies that influence corporate strategy. However, here it
includes contingencies that are external to the firm, like government policy and market
failure. These aspects have been dealt with already.
Expectations
The model shown in Figure 10.2 indicates that the corporate strategy a firm adopts is
unique. The internal factors, like dominant logic, resources and learning, in particular,
tend to be firm specific. The other factors apply to more firms, but it is still unlikely that the
same constellation of factors will be relevant to multiple firms. The upshot is that any
strategy can be found among the firms in a country. So perhaps the institutional environ-
ment in the USA has become less beneficial to conglomerates, although there are still
flourishing conglomerates.
One example is Illinois Tool Works, which successfully ran 600 different business
units. According to Forbes, somebody forgot to tell CEO W. James Farrell that the conglom-
erate went out with the trilobite.
7
The firm owed its success mainly to a unique dominant
logic, or capability, involving the instilment of the ‘80/20 process’ at each acquired unit.
This process implied focusing exclusively on the 20 per cent of customers or products that
provide 80 per cent of sales, and methodically getting rid of smaller buyers and lesser
product lines. Although the concept seems straightforward, the implementation in prac-
tice is very hard. Apparently, it took the firm ten years to work it out, making imitation by
competitors difficult.
Nevertheless, despite this ‘anything goes’ principle, the factors firms face might be
more similar within countries than across countries. Consequently, in general, the cor-
porate strategies adopted within a specific country might display more similarities than
those adopted in different countries. This would support the expectation of divergence of
468 COMPARATIVE INTERNATIONAL MANAGEMENT
6
This institution actually seems to be translated into a firm’s strategy through its dominant logic.
7
www.forbes.com, 15 April 2002. A trilobite is a hard-shelled, segmented creature that existed over 300 million
years ago in the earth’s ancient seas. More information on Illinois Tool Works’ dominant logic can be found in
Business Week, 24 September 2001.
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corporate strategies across countries. So, for example, in one country a larger percentage
of firms might adopt a single business strategy than in another.
To decide whether this kind of divergence can be anticipated we have to look again at
the factors of the model presented in Figure 10.2. For the sake of convenience, we divide
these factors into three, sometimes overlapping, categories:
1. factors that pertain to countries (including the institutions, like the political system,
the financial system, the labour system and networks)
2. factors that pertain to collections of firms (like factor markets and industry)
3. firm-specific factors (like stakeholders, dominant logic, resources and learning).
Factors that pertain to countries
Many elements of the institutional environment differ from country to country (Kostova
and Roth, 2002). For example, the market for corporate control is highly developed in the
USA, while in many other countries, such as the Netherlands, firms are protected by take-
over barriers, making hostile take-overs an exception. The institutional differences enable
divergence of corporate strategies across countries. However, there are many trends that
reduce the differences between countries. For instance, the demise of communism and its
centrally planned economies, the rise of free-trade zones like NAFTA, and even more
extensive integration in other regions like the European Community, together with the
large political, military and economic influence of the USA have led to more harmoniza-
tion among the national institutions. Anti-trust law, for example, had, in comparison
with the USA, always been very relaxed in most European countries. Under the influence
of European Community regulations, anti-trust law and its enforcement have become
much stricter across the board. The European Committee even successfully blocked a
merger between General Electric and Honeywell, two US-based companies. This provides
a uniform incentive for unrelated diversification to firms that seek external growth, both
in Europe and elsewhere.
Factors that pertain to collections of firms
The factors of the second category, involving industries and factor markets, are less obvi-
ously tied to countries. Levitt (1983) even foresaw the emergence of huge global markets
for standardized consumer products, due to the convergence of customer preferences
across countries. As examples, he mentioned the worldwide acceptance of standardized
products from Levi’s, McDonald’s and Coca-Cola. However, all these firms have been
forced to adapt their products to different local circumstances. Coca-Cola, for example,
traditionally had not performed many activities outside the USA, besides bottling. After
lower financial results and an erroneous response to a crisis in consumer confidence in
MULTINATIONAL CORPORATIONS: COMPARATIVE CORPORATE STRATEGY 469
8
See Business Week, 3 July 2000. Similarly, Unilever had to adapt the washing powder it offers in various coun-
tries for a number of reasons. For example, US consumers prefer liquid detergents, while Europeans prefer powder
and, increasingly, tablets and sachets. Washing powder in India has to be able to cope with curry stains, while it
has to clean tomato and barbecue stains in South America. Phosphates are forbidden in Scandinavia, while they
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Belgium, however, it switched to locally adapted advertising campaigns, packaging, prod-
ucts, organization, Internet sites and press relations.
8
In general, a multinational corporation may face pressures for responsiveness to local
or national circumstances, such as differences in customer needs, in distribution chan-
nels, in the presence of local competitors and in a host government demands. On the
other hand, the corporation may face pressures for more global integration or coordi-
nation of activities, such as universal customer needs, the demands of multinational
customers, the presence of multinational competitors and cost reductions (Prahalad and
Doz, 1987). Taken together, these pressures lead to the distinction between global indus-
tries, in which the pressures for global integration prevail, versus multidomestic
industries, in which the pressures for local responsiveness prevail (Hout et al., 1982).
Of course, the distinction between global and multidomestic industries is somewhat
simplified. For example, in some industries, both responsiveness and integration are highly
important (Bartlett and Ghoshal, 1989). An important implication for our purposes,
however, is that more global industries possess few country-specific features that firms have
to take into account when they develop their corporate strategy. If they still follow deviant
strategies, they run the risk of punishment by global competitors, which are able to realize
large cost savings through their more integrated strategies. On the other hand, the strat-
egies of firms active in more multidomestic industries have to be more responsive to
country-specific conditions, otherwise more adaptive competitors corner them. To sum up,
more convergence of corporate strategies can be expected in global industries, whereas
more divergence should be the outcome in multidomestic industries. Given the huge
number of different industries, it is very difficult to tell whether the number of global indus-
tries exceeds the number of multidomestic industries. As suggested earlier, Levitt’s (1983)
claim of the emergence of global markets seems to be hyperbole. Nevertheless, it also seems
to be increasingly difficult to find examples of industries that are purely multidomestic.
Retail, for example, used to be a rather multidomestic industry, due to different customer
preferences. However, retailers are increasingly active on a global scale. Carrefour (from
France), Wal-Mart (from the USA) and Tesco (from the UK) have even entered Japan, which
had always been difficult to access for foreign competitors.
9
Obviously, they need to adapt
their activities to local differences. Wal-Mart found out the hard way, when its ‘cookie
cutter’ approach did not go down well in Germany.
10
At the same time, the worldwide
players give the industry a more global character – for example, through their global
sourcing policies and worldwide application of best practices.
Similar observations can be added for factor markets. Some markets are already very
global, stimulating convergence of corporate strategies across countries. An example is
470 COMPARATIVE INTERNATIONAL MANAGEMENT
are still allowed in the UK. With respect to washing machines, US consumers prefer top loaders, whereas front
loaders are preferred in Europe. Also, in India, washing machines have to be closed at the bottom to prevent rats
and cockroaches from creeping in. In rural China, the machines are also used to wash vegetables. US consumers
prefer short programs and cold water, while in Europe longer programs and warm water are generally used.
Finally, advertising campaigns for washing powder in India can emphasize a superior’s appreciation for an office
worker’s stainless white shirt, whereas they can emphasize erotic aspects in Europe. See NRC-Handelsblad, 8 April
2002.
9
See NRC-Handelsblad, 11 June 2003.
10
See Business Week, 3 September 2001. German customers did not like all the products and the pricing policy.
Suppliers had problems delivering their products to Wal-Mart’s central warehouses. Government regulations con-
cerning permission to open new stores were very time-consuming, compared with the USA.
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