Walmart The Nation Of Domination WAL mart strategies in china
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Walmart The Nation Of Domination WAL mart strategies in china Presentation Transcript

  • 1. We Are the NATION , the NATION OF DOMINATION !!!! NEWS
  • 2.  
  • 3. COMPANY’S MISSION: “ Saving people money so they can live better ” LEADERSHIP : Sam Walton “ Save Money Live Better ,"
  • 4.
    • 1962 - 64
    • 1964 - 81
    • 1968 - 81
    • 1981- 92
    • 1992- 2008
    • 2008 onwards
  • 5. WAL-MART : EVOLUTION
    • 1962 : 1 ST Store in Rogers , Arkansas , USA
    • : sales of over $ 1 million
    • : early success rapid expansion
    • Oklahoma & Missouri
    • 1970 : WALMART STORES INC
    • Bentonville , Arkansas .
    • 1972 : Listed in NYSE
  • 6. WAL-MART : EVOLUTION
    • 1972 - 80 : developing years of super power
    • - Everyday low price
    • - Increasing numbers of stores
    • - Customer Centric approach
    • - Wal-mart cheer
    • - Increasing Sales , profits
    • - Increasing employees
    • - Hutchison shoe co.
    • - Starting of diversification
    • - Use of technology
  • 7. WAL-MART : EVOLUTION
    • 1987 Wal-Mart Satellite Network (largest private satellite communication system in the U.S.)
    • 1988 David Glass named chief executive officer of Wal-Mart Stores, Inc.
    • 1988 First Supercenter opened in Washington
    • 1990 McLane co.
    • 1992 Made in America
    • 2002 Sales $ 218 Billion
    • Record sale of $ 1.43 billion in a day.
    • Medals of Honorssssssssss…………….
  • 8. WAL-MART : BUSINESS SEGMENTS
    • RETAIL DIVISION
    • - WAL MART Stores
    • - SAM’s Clubs
    • - Neighborhood markets
    • - Wal-Mart International
    • - Wal-Mart . Com
    • SPEACILITY DIVISION
    • - Tire & Lube Express
    • - Wal-Mart Optical
    • - Wal-Mart Pharmacy
    • - Wal-Mart Vacations
    • - Wal-Mart Used Fixture Auctions
  • 9. WAL-MART : CONCEPTS
    • SAM’s Ten Rules
    • Respect for the Individual
    • Service to the Customer
    • Strive for Excellence
    • The Sundown Rule
    • Exceed Customers' Expectations
    • The "Ten-Foot Attitude"
    • branded products at low cost
    • open door policy
  • 10. MISSION CHINA
  • 11. Wal-Mart’s International Operations
    • Reason…..
    • stiff competition from K-mart and Target,
    • becoming difficult to sustain its double digit growth rate,
    • to tap vast markets elsewhere,
    • opportunities for discount stores.
  • 12.
    • Ground work started in 1994 and opened its first super center in August 1996 in association with Shenzhen International Credit Investment Company
    • The plan for Shanghai was cancelled due to government issues
    • But within the year of opening sales touched $120.8million
    • In 1998 sales climbed by 10%
    • With that encouragement they open development centers in
    • In 1999 Wal-Mart ranked ninth among china’s retailers.
    • In April 2000 opened its first super mart in north China, in association with Dalian Human Group Co. ltd.
    • By the end of 2000 Wal-Mart’s investment in China was more than RMB 900 million ($108.7 million).
    • In April 2001 opened its second super mart in Dalian and ninth store in china, with floor space of 21000 square meters biggest in the world
    Now in China Supercenters 97 SAM'S CLUBs 3 Neighborhood Markets 2 Trust-Mart 100 Associates More than 1.9 million Development center Northeast Development center North Development center Southwest Wall-Mart South Super center Apr. 2000 1 st Super center Apr. 2001 2 nd Super center Oct. 2002 Super center July 2005 its 48 th store
  • 13. Wal-Mart’s International Presence in 2005 Country Mode Of Entry Year of Entry JV partner/ Company Acquired No. of Stores Mexico Joint Venture 1991 Cifra 679+ Puerto Rico Wholly owned subsidiary 1993 Wal-Mart Puerto Rico,Inc. 54 Canada Acquisition 1994 Woolco Stores 262 Argentina Greenfield operations 1995 - 11 Brazil Joint Venture 1995 Lojas Americans’ 149 China Joint Venture 1996 Shenzhen international Credit Investment Company 45+
  • 14. Cont…. Country Mode Of Entry Year of Entry JV Partner/ Company Acquired No. of Stores Germany Acquisition 1997 Wertkauf and Interspar 91 South Korea Acquisition 1998 Makro Stores 16 United Kingdom Acquisition 2000 Asda 282 Total - - - 1587
  • 15. Wal-Mart’s Division Wise Operating Results 2005 2004 2003 Division Net sales ($ mn) % of Total % Increase Net sales ($ mn) % of Total % increase- Net sales ($ mn) % of Total Wal-Mart’s stores 191,826 67.3 10.1 174,220 68.0 10.9 157,120 68.4 SAM’s Club 37,119 13.0 7.5 34,537 13.5 8.9 31,702 13.8 Internati-onal 56,277 19.7 18.3 47,572 18.5 16.6 40,794 17.8 Total net sales 285,222 100 11.3 256,329 100 11.6 229,616 100
  • 16. Operating Income from International Operations Fiscal year Operating Income (in $ million) 2005 2,998 2004 2,370 2003 1,998
  • 17. Governance Practices
    • high degree of transparency in relation to career growth,
    • three months training to all new employee,
    • “ standards training” to suppliers,
    • employed 100 auditors to conduct surprise inspections at supplier factories.
  • 18. Charitable contribution by Wal-Mart
    • Between 1997 and 2004, Wal-mart’s charitable contribution was around RMB 19.44 million.
    • In November 2004, it donated 1 million RMB (US$ 120,482) to help establish the China Retail Research Center at Tsinghua University.
  • 19. List of honors received by Wal-Mart in China Prize- winning Company/store year Honorary Title Award- giving Official Unit 1998 Advanced Food Sanitation Enterprise Shenzhen Public Health Bureau Lakeview Wal-Mart Supercenter (shenzhen) 2000 No Fake products Store Shenzhen quality & Technology Supervision Bureau 2001 Good Reputation Store Shenzhen quality & Technology Supervision Bureau 2000 Advanced Food Sanitation Enterprise Shenzhen Public Health Bureau
  • 20. Cont……. Prize- winning Company/store year Honorary Title Award- giving Official Unit Zhongshon Wal-Mart Supercentre (shenzen) 2000 No Fake products Store Shenzhen quality & Technology Supervision Bureau, STDB 2001 Good Reputation Store Shenzhen quality & Technology Supervision Bureau 2000 No Fake products Store Shenzhen quality & Technology Supervision Bureau, STDB
  • 21. The Approach to maintain EDLP
  • 22.
    • GPC (GLOBAL PROCUREMENT CENTER)
    • FINALIZATION OF SUPPLIER BASED ON
          • PRODUCT QUALITY
          • PRICES
          • SERVICE STANDARDS
  • 23. STORE MANAGEMENT
    • Combination of 95% Chinese goods with Chinese workforce gave strong feel to Wal-Mart .
    • Store had wider aisles and smaller check out counters.
    • Local Chinese delicacies .
    • Retail-tainment.
  • 24.
    • Wal-Mart's Supply chain
    • operations is not as efficient.
    • Competition was very high from
    • both local Chinese retailers and
    • foreign retailers.
    • Wal-Mart’s EDLP practice was
    • replicated by other retailers.
  • 25. Wal-Mart’s golden strategy was not fully successful . Transportation cost for wal-mart in china was high due to long distances. In 2003, Wal-Mart’s distribution center opened in “Tianjin” was not utilized properly. Suppliers were unhappy with the company’s sudden price reduction practice.
  • 26.  
  • 27.  
  • 28. VS
  • 29. Wal-Mart entered china in 1994 First store in 1996 at Shenzhen In a year sales touched $120.8 million April 2001 9 stores with investment of $108.7 million 2004 Wal-Mart invested 1.6 billion RMB in china and established 45 stores 1 3 9 16 22 25 1999 2003 2004
  • 30. Carrefour in china
    • Entered and started in 1995
    • They studied the market differently
    • Entered into direct deal with the local government assuring developments
    • They even acquired other retailers which is against the governance
    • Expand there operations rapidly by 2001 they had 27 hyper market and 3 rd largest retailer in china
  • 31. Comparison Table Context Carrefour Wal-Mart Start 1995 1996 Strategies Unethical Ethical Localized approach Localized Approach Simple procurement process Complex procurement process Decentralization Centralization Joint Venture 8 Local Retailers With investment company GPC 10 6 Growth Inorganic Organic
    • Freedom is given to each store manager
    • Store manager is responsible for any decision
    • He takes the decision on Product, Price, and Promotion of it
    • Freedom is not given to any employees to take a decision
    • They follow the ten foot rule and Wal-Mart cheer
    • Pricing decided by Wal-Mart after conducting market survey
    • 85% of the products wear from the local market
    • Suppliers are instructed to negotiate with store manager for price and stocks
    • 90% of the products wear from the local market
    • They believe in controlling the suppliers
  • 32.
    • supplier relationship
    • suppliers are unhappy with sudden reduction in price
    • Suppliers were made to bear the losses caused by the reductions
    • Buyers Power
    • There is no concept of Brand loyalty
    • They bargain for the lowest price
    • Give importance for the culture
    Thereat from competitors Carrefour plan of 300 discount stores Thereat of new entrance Home world group in northern china Revelry Strong competition from the local players as the copy the EDLP strategy, and get supplies for low cost Porter’s 5 Factor analysis
  • 33.
    • They opened stores in places like Shanghai, Beijing, Chongquing, Qingdao, Shanyang and Wuhan by convincing the local government like they generate taxes, provide employment and help in overall development
    • Acquired small retailers
    • By the time SETC finding out these violation of laws, Carrefour grown to a position where they cant be stopped so SETC forced for an agreement.
    • As follows
    • 35% ownership transferred to the local retailers
    • The number of holding companies where reduced to 13
    • Government restriction Bijing, Shanghai, Tianjin, Guangzhou, Dalian, Quingdao, Hainan, ShenzenShantou, Xiamen
  • 34.
    • 4 Key Strategies used in Second tier Cities and Rural China :
    • Choice and Convenience
    • Price Leadership
    • Logistics Technology
    • Localized and training
    WAL  MART Strategies adopted in China
  • 35. WAL  MART Future Of Walmart
  • 36. Expansion in Asian Markets Expected Surge in Global sales-20 % India’s Entry Strategy- Joint venture with Bharti Enterprises
  • 37. Home World Group Statement made by Du Sha Owner Home World Group In any country you go to the world, it’s a local company which that leads the industry such as Walmart in the U.S. and Carrefour in France. In China it won’t be different.
  • 38. WAL  MART Disadvantages to Walmart
  • 39.
    • Competition from local players, Home world Group
    • Advantage to Domestic retailers
    • Established supply chain network
    • Knowledge of local tastes and preferences
    • Support from Govt. of China
  • 40.
    • 1700 Supermarkets and Hypermarkets
    • Improvement in overall functionality
    • Poaching of trained workers from foreign chains
    • Launch of loyalty programs
    • Private-label products
    Local Competitor’s Strategy
  • 41.