Case Study on Walmart Essay Example

suppliers, and efforts to enhance Wal-Mart's reputation. Furthermore, this aims to make beneficial changes in the retail industry for the Indian populace.

Wal-Mart and India's Retail Industry: India's retail industry is still a largely untapped gold mine for international corporations looking for increased market dominance and future earnings. Various firms are attempting to make inroads into this promising Indian retail market.

Wal-Mart, a leading U.S. retail corporation, aims to widen its global impact and has targeted entry and growth within the Indian market. As one of the world's largest and most prosperous retail entities, Wal-Mart intends to apply its proficiency in organized retail, logistical supply chain management, and pricing strategies to revolutionize India's retail landscape. At present, the Indian market is in a phase where there is a demand for more diverse products and retail models.

India's traditional retail systems primarily consisted of Kiranas and Mandis among others. Mandis are marketplaces for the direct sale of agricultural products from farmers, established by the state government. Kirana stores are predominantly independently owned and managed, specializing in the sale of essential items and groceries. Unique to India are other retail formats such as kiosks, public distribution systems, pavement shops, streetcars, and weekly markets which have been in existence for a considerable period. With time, India has experienced the introduction of contemporary larger-scale retail outlets like chain stores, supermarkets, specialty stores, hypermarkets, discounters, department stores, and factory outlets into the retail industry.

India's business environment has undergone significant transformation due to the advent of new retail outlets and shopping malls. This shift in retail culture has instigated reforms in customer purchasing and consumption behavior (Srivastava, 2008). The Indian Market: A Challenge for

Wal-Mart

The Indian market, while potentially profitable for Wal-Mart, presents numerous challenges. These difficulties encompass market entry, sustainable operation within the market, and alliance with Bharti in their joint venture. Multinational corporations often encounter these obstacles when attempting entry into the Indian marketplace. Wal-Mart will have to overcome the task of integrating their effective business practices into a country laden with various hurdles to overcome.

The store-based retail landscape of India, steeped in tradition, presents Wal-Mart's first hurdle. India's retail industry has historically been dominated by small, independent stores or unorganized vendors that specialize in specific types of goods. These local businesses, often family-run, have a loyal customer base built over years of personalized service. Among other services they offer, they provide delivery which allows them to establish personal relationships with their customers. This way of trading varies greatly from Wal-Mart's approach and the typical practices of structured retailing.

The public demand requires the provision of a diverse range of commodities that will cater to the tastes and preferences of the Indian populace, in the same way small stores have managed for many years. A challenge Wal-Mart is encountering is determining which items to peddle in different regions across the nation. This variety would differ based on factors like differing dietary habits, textiles, and everyday items. Another aspect posing a hurdle for the corporation is the geographical location. India is home to a myriad of cultures along with both rural and urbanized locations. As India continues to develop as a nation, its population will grow accordingly. There has been a significant surge in the population size of earners.

The transition in culture from old to new also equates to

shifts in consumer buying habits. The ever-evolving trends pose a challenge for Wal-Mart as they try to adapt the successful supply chain strategies they used in the US. Wal-Mart must understand these changing consumer patterns and align them with the ongoing cultural transformation. Another hurdle Wal-Mart faces is executing efficient supply chain management without the necessary supporting infrastructure. Such infrastructure might encompass roads, pre-established distribution systems, and refrigerated storage for groceries. These are essential elements that Wal-Mart needs for both starting and maintaining their operations.

The text discusses the numerous obstacles that encompass the need for vendors to manufacture products for sale within retail outlets. To achieve this, they must form partnerships with both farmers and manufacturing companies for the provision of various goods. Once such alliances are formed, supplying Wal-Mart's massive demand becomes another hindrance.

Wal-Mart's primary strategy is to ensure timely delivery of appropriate goods to their locations. However, poor road conditions and underdeveloped logistics infrastructures across the nation may complicate supply processes.

A significant hurdle to overcome will be the alliance between Wal-Mart and Bharti that was strategically enacted to bypass India's regulation on Foreign Direct Investment (FDI). According to the agreement, both Wal-Mart and Bharti will oversee the supply chain while Bharti would franchise retail operations.

However, this joint venture poses critical complexities concerning ownership and internalizations dimensions of the model. Therefore, it is crucial for Wal-Mart to precisely outline its operational model while harmonizing with Bharti.

The model of collaboration that Wal-Mart has adopted to penetrate the market represents another challenge that requires successful implementation. Conventionally, joint ventures often culminate in failure. As a result, Wal-Mart must closely monitor and manage this alliance

to assess Bharti's effectiveness as a partner.

Remember to keep content within same without or unifying it. Wal-Mart simultaneously needs to safeguard its intellectual property related to supply chain management, while also cultivating collaboration to increase profitability (Halepete, 2008).

Evaluating the Company: Wal-Mart has achieved remarkable success in the retail industry over time. The following SWOT analysis assesses the strengths, weaknesses, opportunities, and risks of implementing Wal-Mart's retailing principles in the Indian market. Wal-Mart enjoys global recognition as the largest retailer. Throughout its history, Wal-Mart has refined its product sourcing through sophisticated inventory management using IT. The company excels in monitoring product sales by specific locations.

By employing universal UPC coding and RF tracking, they've established themselves as industry experts. This proficiency in inventory tracking has empowered the company to prosper and increase profits via logistics and supply chain strategies. This expertise will give Wal-Mart a distinct advantage as they expand their business in India. Another significant asset of Wal-Mart is their strong retail branding. Moreover, Wal-Mart is renowned for offering superior value for money and unparalleled convenience due to the widespread product range available under a single roof.

The presence of an orderly structure would present a significant edge in the Indian marketplace. Currently, buyer outlets are dispersed across the market, with small-scale individual stores offering restricted or niche items. Customers often have to visit several places to fulfill their shopping needs. However, with Wal-Mart's retail model, the provision of a broad spectrum of products will create a one-stop shopping experience that is unfamiliar to the Indian market. This key advantage will surpass any competition Wal-Mart faces. Another strong suit of Wal-Mart is their dedicated

approach towards human resource management and development. The company consistently puts effort and resources into training its staff.

The company's crucial business approach will enable them to recruit and keep the essential workforce in India, allowing for the successful operation of their new stores. At present, India is becoming more influenced by western lifestyles. Factors such as the increasing middle class, higher disposable income and rising urbanization, along with Wal-Mart's HR management business practices could be key to their success in India. However, weaknesses also exist. Though Wal-Mart possesses several strengths, there are areas within their operational framework that need improvement for them to succeed in the Indian market.

The company's susceptibility lies in its scope of influence in the global market, particularly in countries like India. Its successful business strategies in the US may not be as effective when brought to foreign soil. Confronted with different legal constraints, suppliers, and infrastructure, the company is bound to face challenges. The methods that have proven effective in the US may not be applicable in India. Hence, the company will need to innovate and adapt their supply chain management and logistics to thrive in the Indian retail sector. Despite Wal-Mart's proficiency in locating suitable suppliers in the US, it might be more challenging in India given unfamiliarity with the country.

Another challenge that Wal-Mart confronts within the Indian retail industry is demonstrating the capability and adaptability to offer a wide range of products across various sectors like clothing, food, health and beauty supplies, and more, similar to their specialized competitors. The purchasing behaviors of customers in America are considerably different from those of Indian consumers. Kirana stores, as previously mentioned,

are what Indian customers are used to. As a provider of over 1000 diverse items in its stores, Wal-Mart promises a new shopping experience for Indian consumers. However, whether or not Wal-Mart will succeed in supplying appropriate goods for the areas they serve remains to be seen. In the US, it's common for patrons to buy the same items from Wal-Mart regardless of the store location.

Various purchasing behaviors and goods are influenced by climate and geographical location. These factors also affect India, but additionally, the cultural diversity prevalent in every region of the country needs to be considered. India has a caste system encompassing thousands of distinct groups, which Wal-Mart must investigate to understand their purchasing habits and preferences. This complexity could potentially pose a challenge for Wal-Mart as they expand their global presence into India.

In order to succeed in India, they must adapt the strategies that were successful in the US. Wal-Mart's potential opportunities in India are immense, given the vast extent of India's retail sector, valued between $300-400 billion. Currently, only 2% of India's entire trade is structured retail, leaving 98% unorganised. This vast majority consists of private or family-owned businesses of varying sizes (Bose, 2009). With their robust financial support, Wal-Mart is well-equipped to dominate, form alliances with or merge with other worldwide retailers operating within the Indian market.

The burgeoning urbanization and the underdeveloped market offer significant business expansion prospects for corporations. Bharti will leverage these opportunities to collaborate with the world's largest retailer. With its capability to introduce new sites, diverse retail formats, and product lines, Wal-Mart can effectively tap into the market expansion. The corporation can branch out from major

supercenter models to community shopping center locations. However, a crucial aspect of the SWOT analysis includes potential threats that Wal-Mart could face in India.

Wal-Mart will continually face the challenge of competitive rivalry, both locally and globally. Additionally, it may also encounter political issues within various countries. The strategies that the company employs successfully in the US might not yield the same results in India. Over time, India has made multiple attempts to halt foreign Direct Investment (FDI), which could potentially pose challenges to Wal-Mart, despite its strong financial support. Another issue might be leveraging manufacturing benefits in a country that already operates and generates goods at a low cost.

The option to outsource to economical regions won't be identical in India compared to the US. This could result in heightened price competition among retailers. The severe price rivalry may jeopardize Wal-Mart's ability to enhance its net profitability and maintain its retail dominance in India. Company Review: Bharti Enterprises: Identified as one of the most successful large business conglomerates in India, Bharti Enterprises has similarities with Walmart in the US. The company has evolved over the years by amalgamating and developing from acquired companies. This strategy has greatly benefitted Bharti, providing opportunities to access key sectors, as well as operate and yield profits from successful businesses. Bharti has acquired extensive consumer market knowledge over the years. A perfect example would be

Bharti's operations in the cellular sector. The following SWOT analysis outlines the positive and negative impacts Bharti and Wal-Mart may face due to their joint venture. Strengths: Bharti has established a strong presence across India, boasting 70+ million customers to whom it sells products and services. The

company has effectively permeated every corner of the Indian nation with its cellular business.

Bharti's sizable and increasing client base, resulting from facing and conquering significant challenges, is an impressive attribute that will prove advantageous in its partnership with Wal-Mart on retail projects. Another strength that Bharti provides for the success of this joint venture are the relationships it has fostered with business partners and suppliers. These established relationships will grant Wal-Mart the ability to construct supply chains and logistics similar to its operations in the US, thereby facilitating the supply for new outlets throughout India.

The Bharti company's well-established brand name is a significant advantage that will prove beneficial to the venture. Consumers in India will be able to associate Wal-Mart with a brand they have been dealing with due to the brand realignment. Weakness: Bharti, having significant experience in nurturing businesses from scratch, has flourished through acquisition and outsourcing industry experts. This could pose a challenge within the joint venture and potentially hinder the partnership with Wal-Mart. Bharti's lack of extensive knowledge in the retail sector could become an issue. However, Wal-Mart brings to the table over 30 years of successful retailing experience. Meanwhile, Bharti, being fairly new, may not hold as much value to Wal-Mart.

Potential Advantages: Bharti Enterprises presents a number of beneficial possibilities for Wal-Mart, enabling it to prosper in India. Bharti will have the support of one of the world's largest corporations in their retail endeavour. Concurrently, the Bharti group's expansion into rural markets presents a conduit for Wal-Mart's entry. Both corporations would have the capability to learn and evolve together, ranging from comprehending the Indian consumer to managing fruitful retail outlets.

Both

companies' aspirations might pose obstacles to their joint project. In this undertaking, Bharti plays a significant role (in the India Retail Sector) as the gateway for Wal-Mart's expansion in India. The establishment of cash and carry stores by both Bharti and Wal-Mart presents excellent profit potential. This framework will enable Bharti Wal-Mart to conduct wholesale, business-to-business transactions. The launch of such stores will pave the way for Bharti Wal-Mart's business operations in the country. Simultaneously, as these stores materialise, there will be an amplified enhancement in the supply chain to back up the operations.

Bharti Wal-Mart said in a recent statement that establishing a supply chain would enable local suppliers to sell products in Bharti WalMart stores. The traditional business model of Wal-Mart, which focuses on offering value and low prices, will still be implemented, favoring business owners buying products from the store. Most of the products and services will originate from local manufacturers, significantly reducing costs and stimulating local economic growth. This approach of initiating cash and carry stores is an ideal strategy for Bharti WalMart's entrance into the Indian retail market. It also provides an opportunity for Bharti Wal-Mart to set up retail outlets and develop a regional supply chain. Through partnerships with local producers and benefitting local economies, Wal-Mart will foster positive public perception. Additionally, WalMart can gain good PR through these efforts.

The firm intends to create employment opportunities in the communities where it sets up its stores, as well as locally through the construction process of new establishments. The Bharti Wal-Mart group stands to gain significantly from the cash and carry service. These advantages are expected to positively impact their profit margins

and enhance brand recognition and loyalty - factors that are essential for growth in the present Indian retail industry.

The Porter's Five Forces model provides a methodical approach for evaluating and understanding an organization's competitive advantage and standing. By using this model, we can gain insights into India’s retail landscape and Wal-Mart’s competitiveness. This is done by evaluating potential market entry barriers, power of suppliers, substitute availability, power of buyers, and the intensity of competitive rivalry.