Media Markt's Exit from China
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Case Code: BSTR434 Case Length: 11 Pages Period: 2010-2013 Pub Date: 2013 Teaching Note: Not Available |
Price: Rs.300 Organization: Media Market Industry: Electronic Retailer Countries: Germany, China Themes: International Business, Globalization |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
The case discusses the entry of the Germany-based electronics retailer Media Markt into China and its subsequent exit from the country. Media Markt entered China in 2010 after performing a feasibility study. Media Markt opened a huge store in Shanghai in November 2010 to mark its entry into China. The store, spread over five floors, displayed and sold a wide range of electronic appliances of various brands. The products came with price tags attached. The store gained huge popularity and experienced high traffic.
In China, electronic retail stores usually consisted of vendor representatives who promoted their own products. Customers could bargain and get the product at a lower price. This led to a highly chaotic environment in the stores. Media Markt refrained from using this model and positioned itself differently from the local vendors. It did away with the vendor representatives and had its own salespeople manning the stores. The salespeople did not interfere with the customers and provided assistance only when asked for.
To keep up the momentum, Media Markt planned to open a second store in Shanghai. It inaugurated this store just a couple of days after the exit of US-based electronics retailer BestBuy from China. Though Media Markt's first two stores were successful, it could not sustain the momentum. It could not open stores as rapidly as it planned to. Though customers appreciated the modern shopping experience at Media Markt, they still preferred to shop at local stores as they could bargain and buy products at a lower price. Faced with high competition and high costs of operations, Media Markt decided to exit the Chinese market in March 2013.
The case discusses in detail Media Markt's entry into China, the strategies it adopted, and the circumstances which led to its exit from the country.
Issues
The case is structured to achieve the following teaching objectives:
- Understand the nature of problems faced by retailers like Media Markt in emerging markets like China
- Study and analyze Media Markt's pre-entry and entry strategies
- Examine the reasons that prompted Media Markt to exit the market
- Analyze the retail industry in China
Contents
Keywords
Media Markt, China, Media Markt China Ltd, Retail in China, Foxconn Technology Group, Metro Media Saturn, Huai Hai road, Shanghai, Suning, Gome, e-commerce, Store management, Pre-entry strategy, Entry and expansion, Exit China
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