Walmart – Competing In The Global Market

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Walmart – Competing In The Global Market

  1. 1. Wal-Mart – Competing in the Global Market Anjana Singh (07EP-010) Raj Kumar Kesarwani(07EP-035) Anshul Agarwal (07EP-011) Ravinder Singh(07EP-037) Kanishk Chhabra(07EP-022)
  2. 2. What is Wal-Mart <ul><li>World’s biggest retailer </li></ul><ul><li>Sells Grocery & General Merchandise </li></ul><ul><li>One Hour Photo Studio </li></ul><ul><li>Pharmacy & Optical Centre </li></ul><ul><li>Tire & Lube Express </li></ul><ul><li>Gasoline station </li></ul><ul><li>Fast Food Outlet </li></ul><ul><li>Garden Centre </li></ul><ul><li>Pet Shop </li></ul><ul><li>Also feature hair and nail salons, a video rental store, a family fun center, a branch of a local bank </li></ul>
  3. 3. Wal-Mart Subsidiaries <ul><li>Wal-Mart Stores Division US </li></ul><ul><ul><li>Wal-Mart Discount Store </li></ul></ul><ul><ul><li>Wal-Mart Supercenter </li></ul></ul><ul><ul><li>Wal-Mart Neighborhood Market </li></ul></ul><ul><li>Sam’s Club </li></ul><ul><li>Wal-Mart International </li></ul><ul><li>Private Labels (Sam’s Choice , Great Value , Equate ,Smart Price) </li></ul>
  4. 4. Key Statistics on Wal-Mart <ul><li>Founder Sam Walson & Family – owns 40% of Wal-Mart </li></ul><ul><li>Headquartered at Bentonville , Arkansas , US </li></ul><ul><li>Total No. of Stores – 6775 Stores </li></ul><ul><ul><li>Stores in US – 4065 Stores in US </li></ul></ul><ul><ul><li>Outside US – 2701 Stores in 14 Countries </li></ul></ul><ul><li>Total Employees – 1.9 Million </li></ul><ul><li>Total Sales – 348.6 billion in 2006 </li></ul><ul><li>Net Income – 11 billion in 2006 </li></ul>
  5. 5. Wal-Mart’s growth in last 25 yrs <ul><li>Click the Video </li></ul><ul><li>Diversified into Food & Grocery , Private Labels and online store. </li></ul><ul><li>Wal-Mart online is the e-commerce website. </li></ul><ul><li>Has started selling online Music and Movies. </li></ul>
  6. 6. Some interesting figures <ul><li>First Store opened at Rogers , AR in 1962 </li></ul><ul><li>World’s largest Private Employer , fourth only to China’s Army ,NHS of UK, and Indian Railways </li></ul><ul><li>Wal-Mart sells 20% of retail grocery in US and 45% of total Toys sold in US. </li></ul><ul><li>Its bigger than Europe’s Carrefour , Tesco & Metro AG combined. </li></ul>
  7. 7. Wal-Mart International <ul><li>Present in 14 countries </li></ul><ul><li>Walmax in Mexico </li></ul><ul><li>ASDA in UK </li></ul><ul><li>The Seiyu Co. Ltd in Japan </li></ul><ul><li>Wholly owned subsidiaries in Argentina , Brazil , Canada ,Puerto Rico </li></ul>
  8. 8. Wal-Mart – Market Share / Competitors <ul><li>Wal-Mart is three times big than its nearest competitor Carrefour SA </li></ul><ul><li>z </li></ul>
  9. 9. Wal-Mart Marketing Strategy
  10. 10. Wal-Mart Corporate Values <ul><li>Constant Improvement </li></ul><ul><li>Shared Passion, Vision & Organization Culture </li></ul><ul><li>Customer Focus </li></ul><ul><li>Speed </li></ul><ul><li>Execution </li></ul><ul><li>Improvements In Basic Operations </li></ul><ul><li>Community Involvement </li></ul>
  11. 11. What Wal-Mart does to achieve those values <ul><li>Competitively Reduced Cost (Puts All Gains & Savings Into Reducing Prices) </li></ul><ul><li>Consumer-centric Sales </li></ul><ul><li>Localization </li></ul><ul><li>Co-operated Suppliers </li></ul><ul><li>Retail-tainment & Shop-ability: Aisles, Lighting & Signs </li></ul><ul><li>Store-manager Autonomy </li></ul><ul><ul><ul><ul><ul><li>Cont. </li></ul></ul></ul></ul></ul>
  12. 12. What Wal-Mart does to achieve those values (Cont.) <ul><li>One- Stop Shopping </li></ul><ul><li>Keep Customer Shopping: Added Food & Services </li></ul><ul><li>Full Stock Register </li></ul><ul><li>Full Product Line </li></ul><ul><li>Merchandising Ladder </li></ul><ul><li>Private Branding </li></ul>
  13. 13. Co-branding with McDonalds Co-branding Personalized customer service Intangibles 1. Food retail 2. Non-Food retail 3. On-line food retailer Activities Consistent positioning- “Always low prices” Positioning middle-class, lower middle Segmentation 1. Respect for the individual 2. High standards of service 3. Constant strive for excellence Service Strategy <ul><li>1. Lowest prices across-board the product lines </li></ul><ul><li>2. Product USP: core competency </li></ul><ul><ul><li>Low prices , In-stock positions , Customer service </li></ul></ul>Product Strategy To give ordinary folk the chance to buy the same thing as rich people . Mission/ Vision Wal-Mart
  14. 14. Sector Strategy: Diversification 12 international locations 5 . Expansion abroad Sam’s Club 4 . Wholesale WalMart.com 3. E-commerce Wal-Mart Stores, 2. Discount format Tire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy, Wal-Mart Vacations, Wal-Mart's Used Fixture Auctions 1. Non-food Wal-Mart Diversified into
  15. 15. Penetration/ Strategy <ul><li>Advertising Expenditure : 0.3% Of Sales Rev. Only </li></ul><ul><li>- By Word-of-mouth, In-store Promos </li></ul><ul><li>Folksy Facade -Friendly Image </li></ul><ul><li>Brick & Click Retailing Model </li></ul><ul><li>Competitive Strategy: </li></ul><ul><li>- Pre-emptive Expansion </li></ul><ul><li>- Local Retailing Monopoly </li></ul><ul><li>- Mkt Penetration By Selecting </li></ul><ul><li>Most Convenient Locations </li></ul><ul><li>Acquired Or Constructed </li></ul><ul><li>Global Buying For Relentless Pressure On Prices </li></ul><ul><li>Logistic Efficiency: Speed To Market </li></ul>
  16. 16. Potential Development strategy <ul><li>Re-positioning: Complete Shopping Experience & Value-for-money Deptt Store “Way Beyond Just Low Prices” </li></ul><ul><li>Enhancing Product Range: Full-line Deptt Store </li></ul><ul><li>Differentiation: Price-based - Best Quality At The Charged Price </li></ul><ul><li>Merchandising: Max. In-store Merchandise Display </li></ul><ul><li>Market-broadening: Store-type Adaptations To Local Culture </li></ul><ul><li>Self-branding: Brand-name Is Extended To Popular Items </li></ul><ul><li>Ancillary Business: Hair-cuts, Optics, Hearing aids </li></ul>
  17. 17. Consumer Global Brand Opportunities: Wal-Mart
  18. 18. SITUATIONAL ANALYSIS—GOING GLOBAL <ul><li>WHY GLOBAL - To survive … </li></ul><ul><li>Why was growth so important? </li></ul><ul><li>Capital market expectations-continuous sales and profits. </li></ul><ul><li>Expectations of its own employees-ESOPS. </li></ul><ul><li>Saturated domestic market. </li></ul><ul><li>U.S. just 4% of world's population-(rest 96% -already dented) </li></ul><ul><li>Emerging markets-tremendous opportunities. </li></ul><ul><li>What were its strengths? </li></ul><ul><li>Tremendous buying power-P&G,Kelloggs,Nestlé,Coke,Pfizer,etc </li></ul><ul><li>Domestic knowledge bases & competencies. </li></ul>
  19. 19. STEP 1-DECIDING COUNTRY-specifics of the business, competitive and economic environments Acquiring an existing player (GM,CN,UK,SK,PR,JP) Starting new stores on own Joint Ventures(MX,BZ) STEP 2-DECIDING STRATEGY Start greenfield* operations .(AG,CH) SITUATIONAL ANALYSIS—GOING GLOBAL *A new operation that is built from “the ground up”.  `
  20. 20. SITUATIONAL ANALYSIS—GOING GLOBAL ** no.of stores operating as on Jul2007 Three successes out of ten….Successes 3/10 SUCCESSFUL.(50% of the market) Competition by Carrefour Entered in 1997 JV with Cifra Local market knowledge Overcame cultural barriers Joint Venture Mexico (**919) SUCCESSFUL. Competitors-Tesco’s and Sainsburys Acquired ASDA’s operations(232 stores)1999 Acquiring UK(**337) Cashing on the M&A synergies VERY SUCCESSFUL Wiped out T.Eaton Company, a major player Woolco 122 stores in 1992 Acquiring a weak player       Canada   (**290)     Operated in areas that have high brand recognition Operated in areas requiring minimum cultural adaptation Emphasised on customer service & store design Strategy Fate of the deal Mode of Entry Country
  21. 21. SITUATIONAL ANALYSIS—GOING GLOBAL Three successes out of ten…….. ** no.of stores operating as on Jul2007 3/10 -Wrong anticipation of the Argentine - Competition by Carrefour Gained experience from Mexico & Brazil Greenfield Operation   Argentina   (**15) Economies of Scale FAILED. Entered in 1997(21+74 stores); Exited in 2007 -American Style Working practices -High Labor Costs. -Management-- Staff Rifts -Competitors: ALDI and LIDI (cheap) . Acquired largest players Wertkauf and Interspar Acquiring   Germany     (**0-88) Similar business and HR models Met EU guidelines for business Utilised Discount tactics Developed economies of Scale Emphasised on Customer service Leveraged experience of Mexican mkts Strategy When entered in 1995 Already Carrefour,P de A, and Sendas So very tough competition(Pi was eaten) What was the fate of the deal 60-40 JV       Brazil     (**298)   Mode of Entry Country
  22. 22. SITUATIONAL ANALYSIS—GOING GLOBAL ** no.of stores operating as on Jul2007 Three successes out of ten …. … 3/10 Met government trade & business laws Sourced from local manufacturers who understand local tastes Sourced stocks from international suppliers who manufacture in China -Took much time -Biggest Walmart Supplier. -Forced to allow unionization of workers. -Gender Discrimination -Immigration law-suit Merchandising & store designs suiting the consumers Greenfield Operations     China (**184)   <ul><li>-Entered in 2002 - stake in Seiyu Ltd </li></ul><ul><li>Competitors were Daiei,Sogo,Mycal </li></ul>Entered in 2003 by acquiring Supermercados Amigo(31 stores). Entered in 1998 . Acquiring majority shares in KOREA MAKRO Strategy -Continuing losses every year ( US marketing model) -Faced a strong revolt from local small players. FAILED. no personalization, quality first) -Exited in 2006,like NOKIA,NESTLE GOOGLE and CARREFOUR. (unfair labor standards, wages) What was the fate of the deal Acquiring Japan-(**392) Acquiring a major player Puerto Rico (**54) Acquiring majority shares S.Korea(**0-16) Mode of Entry Country
  23. 23. LATEST GLOBAL ENTRIES…(5nos)…… ***** India September 2005 September 2005 September 2005 September 2005 September 2005 Date of Entry CARHCO CARHCO La Fragua(CARHCO) CARHCO CSU(CARHCO) Firm partner/acquired 40 44 137 63 140 Retail Units as on Jul2007 Nicaragua Honduras Guatemala El Salvador Costa Rica Country
  24. 24. Supply chain integration in developing countries
  25. 26. Strength in supply chain <ul><li>Efficient consumer response </li></ul><ul><li>Vendor-Managed Inventory </li></ul><ul><li>Enterprise resource planning </li></ul><ul><li>Customer relationship management </li></ul><ul><li>Sales force automation </li></ul>
  26. 27. SWOT ANALYSIS (GLOBAL) <ul><li>Strength </li></ul><ul><li>Efficient supply chain management </li></ul><ul><li>Targeted marketing </li></ul><ul><li>Service innovation and technology </li></ul><ul><li>Growth through adaptability. </li></ul><ul><li>E-tail’s continued development </li></ul><ul><li>Least cost of packaging </li></ul><ul><li>strong penetration strategies </li></ul><ul><li>Infrastructure (financial strength) </li></ul><ul><li>Weakness </li></ul><ul><li>Poor public image </li></ul><ul><li>Late entrant in international market. </li></ul><ul><li>Unable to adapt to different countries </li></ul><ul><li>Ununionised & Strict labor laws </li></ul><ul><li>Were unable to handle media </li></ul><ul><li>High law suits against the company. </li></ul><ul><li>Low penetration in European union </li></ul><ul><li>Opportunity </li></ul><ul><li>Many countries are still left </li></ul><ul><li>Unorganized retail </li></ul><ul><li>Globalization (diminishing trade barriers) </li></ul><ul><li>Cold Storage market </li></ul><ul><li>Increase in consumer purchasing power </li></ul><ul><li>E-business </li></ul><ul><li>Unemployment </li></ul><ul><li>Threats </li></ul><ul><li>Terrorism </li></ul><ul><li>Competitors </li></ul><ul><li>Negative publicity </li></ul><ul><li>International laws against anti dumping </li></ul><ul><li>Campaign against anti competitive practices </li></ul>
  27. 28. Wal-Mart in India
  28. 29. What brings Wal-Mart to India? <ul><li>A tremendous market </li></ul><ul><li>Emergence of middle class – 300 million </li></ul><ul><li>Consumer class of 105 million growing at rate of 10% & with an annual avg household income of $3000 </li></ul><ul><li>Demographics – 60% of Indian population is in age group of 20-30 & is more inclined towards modern shopping. </li></ul><ul><li>Consumer spending growing rapidly –credit card </li></ul><ul><li>Sales on per sq. ft. basis lowest in world </li></ul><ul><li>GDP growing about 6-8% </li></ul>
  29. 30. Opportunities in India <ul><li>India’s retail trade is estimated at $206 billion & growing at 5% annually </li></ul><ul><li>Only 3% of market organized – shopping malls </li></ul><ul><li>India as fastest growing sourcing market </li></ul><ul><li>India’s vast market for food retailing </li></ul><ul><li>Cold chain - Refrigerated distribution of fruits n vegetables </li></ul><ul><li>Can add value to customers by means of low price and wide range of merchandise </li></ul>
  30. 31. Challenges in India <ul><li>Protests from small businesses (kirana ) </li></ul><ul><li>FDI restrictions. </li></ul><ul><li>India’s poor infrastructure </li></ul><ul><li>Poor public image – predatory pricing , unemployment </li></ul><ul><li>India’s diversity and heterogeneity </li></ul><ul><li>Competition from Indian Retailors includingPantaloon,Shopper’s Stop ,Piramals </li></ul><ul><li>Regional governments are very strong politically </li></ul>
  31. 32. Present Scenario <ul><li>Wal-Mart joint venture with Bharti </li></ul><ul><li>15 large wholesale outlets over the next seven years </li></ul><ul><li>Entering as a wholesaler, because Indian law does not allow multi-brand foreign retailers to sell directly to consumers </li></ul><ul><li>Govt. of U.P forced several top retailers to shut shop after local kirana stores triggered unrest. </li></ul><ul><li>Other foreign retailers : Carrefour - Wadias ,Debenhams - Future group </li></ul><ul><li>ICRIER study – 12 million stores </li></ul>
  32. 33. Recommendation <ul><li>Understand Consumer behavior </li></ul><ul><li>Market Segmentation </li></ul><ul><li>Format of stores– super centers or hypermarkets </li></ul><ul><li>Wal-Mart to adopt a blended model of its traditional format tweaked to fit the reality of Indian real estate </li></ul>
  33. 34. Q & A Session
  34. 35. Web References <ul><li>www.walmartfacts.com </li></ul><ul><li>www.gartner.com </li></ul><ul><li>www.forrester.com </li></ul><ul><li>www.hoovers.com </li></ul><ul><li>www.wikipedia.com </li></ul><ul><li>www.tsmg.com (Tata Strategic Management Group) </li></ul><ul><li>www.finance.yahoo.com </li></ul><ul><li>www.ficci.com </li></ul>
  35. 36. Thank You

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