INSTITUTE FOR INTERGRATED LEARNING IN MANAGEMENT
GSM
Competitor Analysis Report on Wal-Mart
and Bharti: Transforming Retai...
Wal-Mart and Bharti’s Joint Venture
India being one of the emerging economies is at the very center of global economic
act...
Procurement where it was able to provide the best price to its customers by
procuring goods directly straight from the man...
had led a push in an industry to adopt this technology by the suppliers to
common labeling and gradually shifted the power...
3. The transportation system of India is very poor and would pose a major
challenge for Wal-Mart to implement its superior...
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Mikail walmart

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Mikail walmart

  1. 1. INSTITUTE FOR INTERGRATED LEARNING IN MANAGEMENT GSM Competitor Analysis Report on Wal-Mart and Bharti: Transforming Retail in India By: Mikail Mohammed Salim Roll no. FT-12-160 Group A
  2. 2. Wal-Mart and Bharti’s Joint Venture India being one of the emerging economies is at the very center of global economic activities. The Indian Retail industry is a promising sector and has caught the attention of many of the major international retail giants. The Indian Retail industry is valued at $320 billion dollars and is expected to grow to $637 dollars by 2015. India has strong growth opportunities in the retail industry but it is dominated by small independent local retail stores which amount to 98% of all trade with 2% being only organized retail. The Indian industry is a complex industry as it is spread over different geographies and the consumer preferences also vary from one area with another. Bharti has a strong presence in the country and has a deep understanding of the Indian consumer behavior while Wal-Mart has superior supply chain management and as such it was an obvious step to start a joint venture by Wal-Mart with Bharti to tap into the growing Indian retail industry through its cash and carry business. It was a 50-50 joint venture which included management of back end supply management and management of cash and carry operations and also included a contract between the two that included Wal-Mart of franchising itself in return of sharing of technology and expertise by Wal-Mart with Bharti to manage its stores. The entrance of Wal-Mart in India marked the first entrance of a retail giant in the country beating rivals Tesco PLC and Carrefour SA. Wal-Mart’s joint venture with Bharti enabled it to bypass the strict Indian laws towards foreign businesses setting up in India. The Joint venture would have to change the nation’s unorganized and inefficient retail industry and one of the critical components involved was to develop India’s back end infrastructure. Wal-Mart’s competitive advantage Wal-Mart expertise in supply chain management had helped it in becoming a major retail player in the North America and in many other parts of the world providing superior service to its customers with minimum expenses. Wal-Mart has been strong in implementing every cost saving and efficient supply chain strategy and this has provided Wal-Mart unparalleled competitive advantage in the retail industry. Some of the strong points of Wal-Mart supply chain management involved,
  3. 3. Procurement where it was able to provide the best price to its customers by procuring goods directly straight from the manufacturers and had removed all the intermediaries thereby driving down costs. Its bulk purchases also involved low costs and high volume sales by giving huge discounts to its customers which gave it a strong competitive advantage over its competitors such as Target and K-Mart. Transportation where it was able to reduce costs by having its own transportation fleet and not did it only reduce costs but it was able to replenish its stock four times than its competitors by delivering goods within 48 hours. The pricing of its product would vary on a daily basis offering great prices to its customers. Wal-Mart’s huge success was also because of its very competitive pricing strategy over its competition. Its low cost strategy enabled it to have a slogan of “Everyday lowest prices” although as competitors grew, it eventually came to the slogan of “Always low prices”. A part of its low pricing strategy involved in offering 10% discount on four key items per category for a period of 75 days. This strategy resulted in a huge $10 billion in sales for Wal-Mart. Another part of its low pricing strategy involved pricing its general products by first carefully observing what the competition such as K-Mart and Target were offering on the same products. Wal- Mart would then analyze their offerings and would come to decide that it can offer discounts ranging from 4% to 10% on those products. Concerning edible products, Wal-Mart would price it as per the different distribution centers in different zones. Its store managers were allowed to offer up to 5% discounts over what its competitors would provide. Wal-Mart’s competitive advantage in terms of IT technology Wal-Mart had a major competitive advantage with its extensive use of IT tools in its supply chain management. It had implemented a bar code technology where it would be able to keep track of its inventory. It adopted the usage of satellite technology to keep better track of its supply chain. The bar code technology enabled it to keep track of sales of any goods sold in its stores and this helped it by making it easy to restock its shelves at a much faster pace than its competitors. This
  4. 4. had led a push in an industry to adopt this technology by the suppliers to common labeling and gradually shifted the power from the suppliers to the retailers. Implementation of strong IT technology internally and externally had improved planning, accurate merchandising, better customer experience, improvement in supply chain, strengthened store operations and in turn returned high profits. It later on moved to implement electronic purchase management system which enabled its associated to scan shelve labels which resulted in better and efficient inventory management system. Wal-Mart had moved on from Bar code technology to more advanced technology, RFID or Radio Frequency Identification. Wal-Mart made it mandatory for customers to implement chips in their products which could be read by nearby radio frequency readers. The improvement of RFID over bar codes was that they were able to offer more information about the product such as the sales pattern of the product. The adoption of such a technology boosted Wal-Mart by having the knowledge about which product to order from its suppliers. The RFID tags also allowed it to not know the stock of each product in a store but also across its stores. Wal-Mart was gradually implementing sophisticated technology to further better its supply chain and overall business. Challenges faced by Bharti - Wal-Mart Joint Venture in India The joint venture of Bharti- Wal-Mart included, 1. The diverse choice of products bought by Indian consumers varies from one geography landscape with another. To increase efficiency in this environment would involve comprehending what individual consumer wants which would be a challenging task for Bharti - Wal-Mart. 2. They would have to face the social challenges in order to change the Indian retail industry landscape and tackle aggressive local mom and pop stores which were actively protesting against the presence of Wal-Mart in their localities. Wal-Mart would have to get a deep understanding of the Indian business and consumer environment and show a degree of humbleness before the people
  5. 5. 3. The transportation system of India is very poor and would pose a major challenge for Wal-Mart to implement its superior and internationally successful supply chain method in India. 4. Political challenges lie ahead as refusal of individual states to allow Wal- Mart to operate in their areas and organization of strikes by political parties and local people. 5. Challenges would also be from domestic competition, for example The Future Group, Spencer, etc have a major share of the organized Indian retail industry and do not face challenges from political and social problems.

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