Trade Union and International Labor
Relations
“Do It the Wal-Mart Way”
Presented by group 5:
Shady Ismail
Michael Shumyater
Michelle Robertson
Ann-Kristin Hocke
Fanny Voluer
1
Agenda


US Country Profile
Germany Country Analysis
Social
Political
Cultural
Economic
Labor regulations
Expatriation


Wal-Mart Case
Recommendations
2
The US Industrial Relations

Not as politically entrenched as in Germany

15.5 million labor members

Men more likely to join than women

The public sector has higher members than the
private sector
3
The US Labor Union Membership
Union Members per Industry
41.30%
24.90%
14.70%
12.90%
14.20%
2.00%
3-D Column 1
local
governm
major
privat e
41.30%
24.90%
cont ruct io manufact
uring
n
informat i
on
financial
act ivit ies
12.90%
14.20%
2.00%
14.70%
Industry
Source: Adapted from data obtained from the Bureau of labor and Statistics; www.bls.gov
4
The US Labor Union Demographic
The Demographics of the U.S. Union Members
Whit es 12.2%
25%
Blacks 15.1%
31%
Asians 11.4%
23%
Hispanics 10.1%
21%
Source: Adapted from data obtained from the Bureau of labor and Statistic; www.bls.gov
5
Germany Country Analysis
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Social Structure

Population peak at 82 million

Various cultures

Diverse religions
7
Social Structure (Cont’d)

The Elite

The Self-employed

Salaried employee

The Workers
8
Political Stages

Federal Republic

Parliamentary system based on constitution

Three bodies to check and balance
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Culture

Entrepreneurship and open
competition is not encouraged

Labor unions are extremely powerful

Capitalism is not favored
10
Culture (Cont’d)

Open competition is crucial for economic
growth

Cooperative economy

Use of consensual business model
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Culture (Cont’d)

No capitalism – social market economy
instead

No strong CEO

Job security and stability for years

Protection Against Dismissal Act
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Economy

One of world’s most important economic
powers

Fluctuation in GNP

Heavily export oriented
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Industrial Relations

Organized at the industry-level

Forbid “employment at will”

Require at least 1 labor representative or
work council per company

German culture more rigid than the
American culture
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Trade Unions

Constitute a political force

Union density: 42%

Most unionized: employees in the public sector
manual workers
white-collar workers
Largest unions: ver.di (3 million members)
IG Metall (2.4 million members)

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Expatriate Profile

American PCN

Working within the company in Germany

Staying in the host country for 2 years
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Becoming an Expatriate

Apply for Visa
 Residence visa

Obtain a Work Permit
 Self-Employed
 Employee of a Company

Apply for Insurance
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Adjusting in Germany

Applying for housing

Obtaining a driver’s license

Understanding the language

Creating social networks
18
American vs. German:
Work Ethics
Americans
Germans

Strong work ethics

Strong work ethics

Impersonal employeremployee relationship

Good employeremployee relationship

Informal communication

Formal communication

Work importance

Family importance
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US Responsibilities for Expatriates

US Taxes

Voter Rights

Social Security
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Repatriate Issues

Emotional

Social

Occupational
21
Wal-Mart
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Wal-Mart Enters Germany

1997: acquisition of Wertkauf

1998: take over of Interspar

Appointment of US citizen, Rob Tiarks, as CEO


Ethnocentric approach unsuccessful
Turnover rate of $ 2.3 billion
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“Do It the Wal-Mart Way”

Failure in the expatriation process
No adaptation to the German culture
 No pre-departure training


Denial of differences between Germany
and the United States
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Why Wal-Mart failed

Low price strategies did
not work

Poor product qualities

Dirty stores

Disrespecting employees

Weak service
Wal-Mart in Berlin
25
Wal-Mart and Labor Unions

Refuses to have labor unions

Does not comply with local labor laws

Faces huge strikes

Ver.di forced Wal-Mart to respect the collective
agreements for commerce
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Can Wal-Mart Recover?

2001: appointment of German CEO Kai Hafner

Management tries to make efforts to satisfy
employees

New ethics code
 Ban on sexual relationships between staff
 Creation of an informer hotline
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Recommendations

Recognize the cross-cultural ability of the
expatriate

Learn the host-country language

Common assumption:
‘"Don't worry," the departing employee is told,
"they all speak English over there!“’
(Schmidt, 2004, p.3)
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Recommendations (Cont’d)

Provide pre-departure training
(Dowling & Welch, 2005, p. 122)
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Concluding Comments

Wal-Mart’s ethnocentric approach was a failure

Human resources failed to recognize cultural
differences

Wal-Mart survival only possible if labor is
allowed to organized in Germany

Good employee-employer relationship is the key
to success
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References
www.bls.gov
http://ssa-custhelp.ssa.gov
http://www.irs.gov/businesses/international/
http://www.overseasdigest.com/country/germany.htm
www.eurofund.gov.int
www.expatexchange.com
Dowling, P. J.& Welch, D. E. (2005). International human resource management (4th ed.). Mason, OH: Thomson/
South Western.
htt://www.ebusinessforum.com/index.asp?doc_id=4968&layout=rich_story
http://www.commondreams.org/views04/0615-10.htm
http://geogate.geographie.unimarburg.de/vgt/english/brd/module/m1/u10.htm
http://www.sietareuropa.org/about_us/Newsletter/Jun04/BridgingtheInterculturalGap.html
http://www.usembassy.de/germany/working_in_germany.html
http://www.germany-info.org/relaunch/business/trends/basics_system.html
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Thank You For Your
Attention
Questions?
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