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Group 11:António Baião (11718)
Florian Flo (1668)Inês Lampreia (11214)Maria Santos (11534)
Ryan Aimers (1695)Stephanie Rodrigues (10789)
Sofia Barbeiro (11461)
April 2, 2014
Transforming Retail in India
AgendaWAL-MART
WHAT IS IT?
SWOT
MARKET
RETAIL
INDIA
FUTURE?
BHARTI
PARTNERSHIP
SOURCES
• Established in 1962 by Sam Walton• World’s largest public corporation by revenue• Mission: “Saving people money so they can live better”
What is Wal-Mart?
“If we work together, we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save
and have a better life.”
• Industry: Retail & Discount stores• Products: Supercenters, Neighborhood markets• Employees: More than 1.9 million• Corporate Philosophy: strengthening its relationships
with employees, suppliers and customers.
WAL-MART
WHAT IS?
SWOT
INDIA
MARKET
RETAIL
BHARTI
FUTURE?
What is Wal-Mart?
Wal-Mart InternationalSam's ClubWal-Mart Stores Division US
WAL-MART
WHAT IS?
SWOT
INDIA
MARKET
RETAIL
BHARTI
FUTURE?
• Structure: Three primary subsidiaries
Image 1- Wal-Mart StructureSource: Wal-Mart Case
What is Wal-Mart?
Reta
il Fo
rmat
s
Restaurants
Cash-and-carry Stores
Membership Warehouse Clubs
Apparel Stores
Soft Discount Stores
Bodegas (small markets)
Supercenters
Food and Drug Stores
General Merchandise Stores
WAL-MART
WHAT IS?
SWOT
INDIA
MARKET
RETAIL
BHARTI
FUTURE?
Image 2- Retail Formats for Wal-Mart BusinessesSource: Wal-Mart Case
• Strengths– Scale of operations; The major market player – Low pricing strategy (discounts)– Wide range of products– Leader in technological development– Employs IT for supply chain management
SWOT Analysis
• Weaknesses– Labor lawsuits over gender-discrimination– Reliant on price changes for differentiation– Negative publicity over “predatory pricing”
WAL-MART
SWOT
INDIA
MARKET
RETAIL
BHARTI
FUTURE?
WHAT IS?
• Opportunities
– A global strategy, with local focus• Previous experience entering foreign markets • Obvious efforts to become involved in local
communities and adapt to local cultures
SWOT Analysis
“Wal-Mart has become the most powerful, most influential company in the world”
WAL-MART
SWOT
INDIA
MARKET
RETAIL
BHARTI
FUTURE?
WHAT IS?
SWOT Analysis
Germany
South Korea
Problematic
Markets Africa
Chile
United Kingdom
Japan
China
Other Markets Canada
United States of America
Mexico
Puerto Rico
Argentina
Brazil
Successful Markets
WAL-MART
SWOT
INDIA
MARKET
RETAIL
BHARTI
FUTURE?
WHAT IS?
Image 3 – Markets in which Wal-Mart is presentSource: Wal-Mart Case and Company Information
• Threats– Problems in adjusting to local cultures
• (e.g. South Korea and Germany)– Difficulties in dealing with different countries economic policies
and regulations– Resistance from local communities
• Faced with protest from locals put out of work
SWOT Analysis
How will India react?
WAL-MART
SWOT
INDIA
MARKET
RETAIL
BHARTI
FUTURE?
WHAT IS?
Global Supply Chain
FUTURE?
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
Whole configuration of Wal-Mart all over the world; the network linking the activities of the value chain until the final consumer:
• Own transportation systems:- Enjoys transportation cost savings- Helps to deliver products to its various stores within 48 hours- 4 times faster than competition in replenishing its merchandise
• Gained competitive advantage:- Economical pricing of its products- Prices allowed to vary daily- Offered better discounts- Strong bargaining power due to huge volume of purchases
FUTURE?
WAL-MART
INDIA
Global Supply Chain
FUTURE?
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
FUTURE?
WAL-MART
INDIA
Logistics – Wal-Mart is effective in the way it transfers its products and in the flow of information between the units integrating the supply chain.
Image 4 - Movement of the materials and information through the supply chain
Global Sourcing
FUTURE?
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
FUTURE?
WAL-MART
INDIA
Wal-Mart chose to:• Purchase its products from suppliers and sell them in its stores instead of producing
its own goods• Seek local sourcing of goods in addition to sourcing globally through international
operations• Integrate and coordinate worldwide sourcing
Local sourcing avoids language differences, distance, currency, tariffs and politics problems.
Why Global Sourcing?- Reduce costs and improve quality- Increase exposure to world wide technology- Improve delivery-of-supplies process- Establish presence in foreign markets- Satisfy offset requirements- React to competitors’ sourcing practices
Global Supply Chain
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
• Information Technology in Supply Chain Management- Bar codes for inventory tracking- Satellite communication system to coordinate supply chain activities- Electronic Data Interchange (EDI) to place orders electronically to suppliers- Microchips used for radio-frequency identification (“RFID”) put in the products
to identify individual items
• E-Commerce- Customers have access to great products at low prices, anytime, anywhere -
personalized shopping experience - Website Walmart.com- Mobile apps- Moved its EDI-based infrastructure from traditional (and expensive) value-
added networks (VANs) to the Internet.
How does Wal-Mart use technology?
WAL-MART
INDIA
FUTURE?
Global Supply Chain
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
• Wal-Mart is a leader in employing information technology (IT)
- leaner supply chain- improved planning and enhanced customer experience- efficient inventory management- accurate merchandising- improved workforce management and store operations- low inventories, high inventory turnover ratios, reduced
costs- increased profitability
How does Wal-Mart use technology?
WAL-MART
INDIA
FUTURE?
Global Strategies
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
• Value of Knowledge in Global Supply Chains
Characteristics of top-performing supply chains:- AGILITY: React readily to sudden changes in demand or supply
- ADAPTABILITY: Adapt over time as market structures and environmental
conditions change
- ALIGNMENT: Align the interests of all members of the supply chain to
optimize performance
These networks focus on understanding customer needs (present and future)
and building supply chains based on actual demand levels.
WAL-MART
INDIA
FUTURE?
The Indian Market
INDIA
SWOT
WAL-MART
MARKET
WHAT IS?
BHARTI
FUTURE?
• Indian Attitude– Traditional: “Save and Buy” deeply rooted in culture
• Time of Significant Change– Increasing number of working youth, median age 24– Growing percentage of working women– Boom in opportunities in the service sector
• Result:– Increased consumer purchasing power
• 7.1% yearly growth of consumption spending
RETAIL
The Indian Market
INDIA
SWOT
WAL-MART
MARKET
WHAT IS?
BHARTI
FUTURE?
• Changing attitude in consumer buying behavior
• The New Millennium (2000)– Global brands flood the marketplace– Provide more organized retail experience– Able to offer quality and provide variety
RETAIL
Retail in India
INDIA
RETAIL
SWOT
WAL-MART
MARKET
WHAT IS?
BHARTI
FUTURE?
• Retail Sector is the largest industry in India– Market size US$320 billion (2006)– Compound annual growth, 5%
• Provides stability– 21% of GDP– 7% of labor force
Image 5 – Main Industries in India
Retail in India
INDIA
RETAIL
SWOT
WAL-MART
MARKET
WHAT IS?
BHARTI
FUTURE?
• Change of industry dynamic– From: unorganized, family owned retail– To: organized, foreign owned retail
• Large scale investments in retail infrastructure– Real estate– Transportation networks
• Change in the marketplace format– Specialty stores, hypermarkets, supermarkets
An Indian Mall culture• Food, entertainment, shopping all in one location
The Indian Market
INDIA
SWOT
WAL-MART
MARKET
WHAT IS?
BHARTI
FUTURE?
• Regulation: Foreign Direct Investment– FDI only permitted on wholesale– Goal: Protect the 15 million small-store owners
• 2006: Change– Allowance of up to 51% FDI in multi-brand retailers– Impact: Immediate revenue growth increases
RETAIL
Image 6 – Growth Trend in Indian Retail IndustrySource: Wal-Mart Case
Why choose Bharti?
INDIA
BHARTI
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
FUTURE?
• Bharti Enterprises– Founded in 1976, Indian business
conglomerate• Market leader in telecom• Top 10 Biggest Indian companies
– Experience in international partnerships• Del Monte (United States)• Axa Financial (France)
– Have necessary liquid capital to invest• CEO Sunil Mittal worth US$6.6 billion
• 2007: Wal-Mart needs to form a joint venture– In reaction to 2006 FDI legislation– Begin search for an Indian partner to own other 49%
Why choose Bharti?
INDIA
BHARTI
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
FUTURE?
• August 2007, two separate partnership agreements:
- 50:50 venture for back-end supply chain management and wholesale cash-and-carry operations
- Share expertise and technology with Bharti
Information sharing and knowledge integration between Wal-Mart and Bharti.
Bharti-WalMart
INDIA
BHARTI
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
FUTURE?
• Opportunities1. Wal-Mart Stores Inc. gains exclusive first-mover advantage into India2. Ability to transform the industry, low prices and increased quality3. Fast-growing economy, 2nd largest population base
• How it worked?1. Wal-Mart brought in global supply chain capabilities and expertise 2. Customization to the unique requirements of the Indian market3. Bharti responsible for managing the retail store operations4. Wal-Mart focused on logistics capabilities and building the supply
chain5. Leverage of our global resources to meet local needs
Bharti-WalMart
INDIA
BHARTI
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
FUTURE?
Channel Structures before Wal-Mart operations in India:
Image 7 – Channel Structures for Consumer Goods
• Establishing the Supply Chain
Bharti-WalMart
INDIA
BHARTI
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
FUTURE?
Supplier
• Local Producers
Walmart
• Retailer
Distribution
• Transportation System
Customer
• Final Consumer
• New Supply Chain (cutting out the middleman)
Image 8 – Wal-Mart Supply Chain in India
Bharti-WalMart
INDIA
BHARTI
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
FUTURE?
• New Supply Chain (cutting out the middleman)
Benefits:
- More control over packaging and quality management
- Enhance productivity
- Reduce inefficiency of the industry’s traditional supply chain
Problems:
- Increased pressure from local civil right groups
- Aggressive demonstrations and protest of traditional owners
- Low quality of India’s transportation network
- Uncertainty on how to implement the supply chain management in
India.
Bharti-WalMart
INDIA
BHARTI
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
FUTURE?
• Challenges1. Adapting to Indian cultures
• Inability to meet Indian needs will result in protest, riots2. Supply Chain management
• Current poor roadway infrastructure, quality of trucking3. Strict government legislation
• Minimum 30% domestic suppliers4. Partnership agreement
• Bharti will play a role in decisions5. Threat to small-businesses
• Reality is Wal-Mart will displace millions of business owners6. Establish a solid supply chain
• Facilitate the growth and success of India’s retailers
Looking forward
INDIA
FUTURE?
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
• Suggestions to overcome the challenges1. Empower franchisees
• Create community feeling• Develop local leaders who believe in Wal-Mart
2. Improve supply chains• Use of inventory management• Work with Indian government
3. Understand the consumer needs• Work with locals to meet cultural expectations• Provide products that are desired
4. Reinvest in India• In the short-term, ensure profits are developing for the future
Looking forward
INDIA
FUTURE?
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
• Did it change the Indian market?
• How was the supply chain effected?
• Positive or negative impacts for small business owners?
• In which future markets can Wal-Mart enter?
Looking forward
INDIA
FUTURE?
SWOT
WAL-MART
MARKET
WHAT IS?
RETAIL
BHARTI
Image 9 - Current locations of Wal-Mart around the worldSource: Company information
• “Wal-Mart and Bharti: Transforming Retail in India” case by University of Hong Kong
• Daniels, John D., Radebaugh, Lee H. and Sullivan, Daniel P.; International Business: Environments and Operations;
• Pearson Prentice Hall; 13th edition, 2013, Ch. 17.• “Sharing Global Supply Chain Knowledge”; Matthew B. Myers; Mee-Shew
Cheung Internet Sources:• http://www.walmart.com/• http://www.forbes.com/sites/walterloeb/2013/10/16/walmart-what-
happened-in-india/• http://www.strategicmanagementinsight.com/swot-analyses/walmart-swot-
analysis.html• http://www.sensormatic.com/instore/2009_Q1/fands.asp• http://timesofindia.indiatimes.com/business/india-business/Wal-Mart-sets-
up-new-company-in-India/articleshow/29061973.cms
Works Cited
Thank you very much for your attention!