Wal-Mart's overall business strategy is to provide Every Day Low Prices (EDLP) to customers. Aside from every day low prices, a complementary element to their strategy is the variety of product offerings at Wal-Mart retail outlets. a very important element to their business strategy is product availability when products are demanded by customers
Wal-Mart makes it a priority to give its vendors the tools and the incentives they need to continuously improve, through demanding more out of their suppliers than most retailers. Although Wal-Mart competitors have similar relationships with their vendors, the scale and the depth of Wal-Mart vendor collaboration is greater than the collaborative relationships that Wal-Mart competitors have with their vendors
Wal-mart has a cost advantage because 1. Having it’s own transportation system: which results in faster replenishment and lower costs. 2. Usage of IT in Supply Chain management ex: POS scanning, RFID tags
The case says 12 million retailers in 2006
Threat of Rivalry : High since all the Indian Players along with some foreign retailers such as Carrefour, Target, Tesco, etc. have ventured into India with huge expansion plans and financial backing. Threat of new entrants : High since all the major retailers from across the globe are venturing into India. Also, all major Indian conglomerates are opening up a variety of retail stores to tap the huge market potential. Threat of Suppliers : Low to medium since the shear economies of scale (demand) of these organized retailers will not allow any major supplier to dictate terms to the industry. Threat of Substitutes : Medium to High This is high due to the protectionist policies of the government and limit on the FDI (currently 50%) and the unorganized sector still poses a threat to these chains. It will be very difficult for the organized retail sector to tap the rural market due to constraints such as poor infrastructure (both roads and internet penetrations). However, with improvement in infrastructure this will be minimized with due course of time. Threat of Buyers: Medium to High The consumers will be spoilt for choice with so many options available (both in unorganized and organized space). They switching costs will be minimal (until there are v. good loyalty programs in place).
Political e.g. West Bengal, UP and Bihar witnessed huge resistance to chains such as Reliance Fresh. Metro Cash & Carry in Kolkata.
WAL-MART AND BHARTI: TRANSFORMING RETAIL IN INDIA Presented To: Prof. Presented By:
Describe how Wal-Mart’s supply chain works and comment on how it has helped create competitive advantages for the firm. Will Wal-Mart be able to generate the same advantages in India? Why or why not?
Wal-mart Supply Chain Flow Chat Manufacturer Manufacturer Manufacturer Retail Store Retail Store Retail Store Point of sale terminal Satellite system Bar code, RFID Radio, headphone Distribution center Company Headquarter
Through continuous supply chain cost control, Wal-Mart is able to maintain low prices for customers.
Asset utilization is another goal for Wal-Mart, but facility, private fleet, and information technology utilization are again primarily focused on lowering costs.
Information technology investments are directed towards improving efficiencies across the extended supply chain from vendors to stores, and thus the use of information technology supports the EDLP business strategy
Resulted in cost savings and ability to deliver products in to various stores within 48 hours
Usage of IT in Supply Chain management
Inventory tracking using information available in barcode.
POS scanning: Which helped in managing the products at supplier’s end.
RFID tags: Enabled to keep track of the inventory throughout the supply chain.
Advantage in the Cost performance matrix Wal-Mart's Perceived Value w.r.t. to competitors Lower Almost the same Higher Wal-Mart's Input costs w.r.t. to competitors Higer Disadvantage Disadvantage Depends Almost the same Disadvantage Parity Advantage Lower Depends Advantage Advantage
Retail: Porter’s Five Force Analysis Threat of Entry High both in unorganized and organized space Threat of Rivalry High Threat of Substitutes Medium to High Threat of Suppliers Low Threat of Buyers Medium to High Level of Threat in the Industry