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Walmart in India


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Its about walmart in India. Its swot analysis, joint ventures and lot more.

Published in: Business

Walmart in India

  1. 1. Wal-Mart  World’s biggest retailer.  Largest Public corporation by revenue.  First store opened at Arkansas in 1962 by Sam Walton.  One of the World’s largest Private Employer.  Wal-Mart has different types super stores, super markets, and Wal-Mart discount stores.
  2. 2. Cont’d  Today, Wal-Mart operates more than 10,000 retail units under 69 banners in 27 countries. It employs 2.2 million associates around the world — 1.4 million in the U.S. alone.  Wal-Mart offer a one-stop shopping experience for electronics, apparel, toys and home furnishings with the added convenience of a grocery store with fresh produce, bakery, deli and meat and dairy products.
  3. 3. Wal-Mart Wal-Mart Mission To give ordinary people the chance to buy the same thing as rich people. Product strategy 1. Lowest prices across the product lines 2. Product Core competencyLow Prices, In-stock positions, Customer service. Service strategy 1. Respect for the individual. 2. High standards of service 3. Constant strive for excellence. Segmentation Middle-class, Lower middle class Positioning Consistent Positioning through “always low prices”
  4. 4. SWOT Analysis  Strengths: 1. Wal-Mart has grown substantially over recent years, and has experienced global expansion. 2. Deal with Suppliers - Cost Leadership 3. Efficient Supply Chain. 4. Strong IT backup The company has a core competence involving its use of IT to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance.
  5. 5. Cont’d  Weakness: Unable to adapt to different cultures/countries. Eg:Germany. 2. Heavily dependent on ‘bulk sales’. 3. No success beyond Americas. 4. Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility as compared to its competitors. 1.
  6. 6. Cont’d  Opportunities: Enter New Economies - India/ China/ Brazil. To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets. 2. Rising disposable incomes. 3. New Channels- Marketing / Internet based models. 4. J.V with some leading players. 1.
  7. 7. Cont’d  Threats: 1. 2. 3. 4. 5. Restrictions on FDI in India. International law against dumping. Regional competitors. Law against “Monopoly” –anti thrust policies. Political Problems.
  8. 8. Wal-Mart Expansion: Past Track Record Country Mode Strategy Results Canada Acquired a Weak Player •Operating in markets which required min. adaptation. •High Brand Recognition Segment. Very Successful UK Acquired ASDA M & A Synergies Successful Competition from Tesco. Germany Acquired a Big Player ‘Werkauf’ Leveraged Acquired Network Failed-cultural & operational issues. China Greenfield Operations Sourced from Chinese suppliers; focused on need gaps. Neutral Labour Union and Law Suit issues.
  9. 9. JV of Bharti-Walmart  On November 2006, Wal-Mart Stores Inc. and Bharti Enterprises Ltd. signed a (MoU) to explore business opportunities in the Indian retail industry.  Bharti's JV with Wal-Mart is for cash-and-carry stores (wholesale) --- which sell products in bulk to other retailers.  Bharti manages the front end, involving opening of retail outlets, while Wal-Mart takes care of the back end operations, such as cold chains and logistics.  Bharti-Walmart operates stored in India under the brand name "Best Price Modern Wholesale".
  10. 10. Cont’d  90 per cent of sourcing would be from the local market and going forward this joint venture would help in in-creasing Wal-Mart’s global sourcing from India.  Products- are food, FMCG, vegetables, general merchandise and electronics.  Members/cust.- are small kirana shop owners, hotels, restaurants, schools, colleges, the police force and even the Indian Army.
  11. 11. Cont’d  50:50 joint venture: In India, Wal-Mart has a 50:50 joint venture with Bharti Enterprises in the wholesale cash-and-carry segment.  Direct Farm Program: Partnership with 110 small and marginal farmers encourages cultivation of safe, highquality, seasonal vegetables.  Training centers: Bharti-WalMart (Best Price Modern Wholesale) intends to set up its own training centers to train less-privileged youth to work in retail stores.
  12. 12. Key Challenges in India  FDI Restrictions – FDI Restrictions of 51% on Multi-brand Retail.  Social & Political Resistance – A strong opposition from certain political parties is certainly expected in some parts of society – local retailers, dealers would protest.  Countering deep penetration of ‘Mom & Pop’ Stores Especially in Tier-II & III cities, the network of ‘ Kirana Stores’ is extensive. Also sales on credit facility is available which Wal-Mart cannot do.
  13. 13. Cont’d  Poor Infrastructure will cause friction – Indian standards of roads, ports & freight facilities are way below global benchmark. It will lead to inefficiency in the value chain.  Regional Diversity amd heterogenity– Challenge to have tactics according to regional/ ethical requirements.
  14. 14. What brings Wal-Mart to India?  Retailing in India is emerging as one of the largest industries, with a total market size of $450 billion in 2012 and growing at a grwth rate of 5%.  A tremendous market Emergence of middle class.  Consumer spending growing rapidly - 60% of Indian population is in age group of 20-30 & is more inclined towards modern shopping.  With the opening up of Indian Retail sector for FDI up to 51% Findings in multi-brand retail, India is set to become hub of Multinational Retailers from across the Globe.
  15. 15. Cont’d  India's position as the world's second-largest producer of fruits and vegetables- so, refrigerated distribution of fruits and vegetables can add value to customers by means of low price and wide range of merchandise.
  16. 16. Competitors of Wal-Mart in India NAMES CATEGORY TARGET SEGMENT Big Bazaar (Future Group) Diversified Merchandise Middle Class Pantaloons (Future Group) Apparels, Accessories Upper Middle Class + Lower Middle Class Shopper’s Stop Apparels, Accessories Mostly Upper Class Star Bazaar(Tata Group) Diversified Merchandise Upper Middle Class + Lower Middle Class Spencer’s More D mart Merchandise Middle Class +Upper Middle Class Lifestyle
  17. 17. Strategic Gaps of Wal-Mart.  Wal-Mart is limited mainly to Metros, Tier-I cities. Huge potential lies in sub-urban, rural markets, Tier-II & Tier-III cities.  Geographical Gaps – Markets like North East of India are yet to be explored.  Truly Global Shopping Experience missing in Indian Retail Stores.  ( Wal-Mart has to incorporate Indian Values & preferences while designing the business model. Focus on strategic gaps critical for its eventual success.)
  18. 18. Negative effects due to Wal-Mart’s entry in the Indian retail industry  Loss of Business Many of the small scale department stores in India are the major contributors to the Indian economy, the entry of Wall- Mart into Indian market may lead to loose the business to many of the middle and small scale people.  Low price products Wall- Mart in order to capture the Indian market is trying to introduce low price strategy on their products which in turn affect the other local businesses. Local traders later also should implement this pricing strategy which may affect their profit margin.
  19. 19. Cont’d  Creates excess competition Due to the entry of Wall –Mart into the Indian market the competition may increase between local retailing businesses like Pantaloon, Reliance etc. we can see a tough competition between these business units in future .  Local traders Local traders from the major of the cities were opposed the entry of retail giant Wal-Mart especially in Delhi because it will affect the local traders or business man and also for small retail shops.
  20. 20. Positive effects due to Wal-Mart’s entry in the Indian retail industry  Win-Win situation for farmers- The profit realization for farmers selling directly to the organized retailers is expected to be much higher than that received from selling in the mandis.  Improvement in supply chain/infrastructureIncr. in invst. in both forward and backward infrastructure such as cold chain and storage infrastructure, warehousing and distri.n channels thereby leading to improvement in the supply chain infrastructure in the long run.
  21. 21. Cont’d  Inflow of massive capital Wal-Mart would bring in needed invst that would spur the further grwth of retail sector. High invst would be important for the sustenance during economic slump, otherwise co. would be out of market. Such as the case with Vishal, Subhiksha and Koutons, which couldn't arrange for funds.  More jobs across the supply chain. It would lead to the creation of millions of jobs as massive infrastructure capabilities would be needed to cater to the changing lifestyle needs of the urban India who is keen on allocating the disposable income.
  22. 22. Cont’d  Wal-Mart's entry in India would bring with itself the       technical know-how, global best practices, quality standards and cost competitiveness Reduction in losses of agriculture produce. Removal of unnecessary intermediaries in retail value chain. World class stores with good customer service Everyday Low Prices Quality assortment of merchandise Increased govt. revenue.