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Wal-Mart Competing in the GlobalMarket
Anjana Singh (07EP-010)
Raj Kumar Kesarwani(07EP-035)Anshul Agarwal (07EP-011)
Ravinder Singh(07EP-037)
Kanishk Chhabra(07EP-022)
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What is Wal-Mart
Worlds biggest retailer
Sells Grocery & General Merchandise
One Hour Photo Studio
Pharmacy & Optical Centre
Tire & Lube Express Gasoline station
Fast Food Outlet
Garden Centre
Pet Shop Also feature hair and nail salons, a video rental store, afamily fun center, a branch of a local bank
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Wal-Mart Subsidiaries
Wal-Mart Stores Division US
Wal-Mart Discount Store
Wal-Mart Supercenter
Wal-Mart Neighborhood Market
Sams Club
Wal-Mart International
Private Labels (Sams Choice , Great Value ,Equate ,Smart Price)
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Key Statistics on Wal-Mart
Founder Sam Walson & Family owns 40% of Wal-Mart
Headquartered at Bentonville , Arkansas , US
Total No. of Stores 6775 Stores Stores in US 4065 Stores in US
Outside US 2701 Stores in 14 Countries
Total Employees 1.9 Million
Total Sales 348.6 billion in 2006 Net Income 11 billion in 2006
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Wal-Marts growth in last 25 yrs
Click the Video
Diversified into Food & Grocery , Private Labels
and online store. Wal-Mart online is the e-commerce website.
Has started selling online Music and Movies.
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Some interesting figures
First Store opened at Rogers , AR in 1962
Worlds largest Private Employer , fourth only to
Chinas Army ,NHS of UK, and Indian Railways Wal-Mart sells 20% of retail grocery in US and 45%of total Toys sold in US.
Its bigger than Europes Carrefour , Tesco & Metro
AG combined.
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Wal-Mart International
Present in 14 countries
Walmax in Mexico
ASDA in UK The Seiyu Co. Ltd in Japan
Wholly owned subsidiaries inArgentina , Brazil , Canada ,Puerto
Rico
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Wal-Mart Market Share / Competitors
Wal-Mart is three times big thanits nearest competitor CarrefourSA
z
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Wal-Mart Marketing Strategy
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Wal-Mart Corporate Values
Constant Improvement
Shared Passion, Vision & Organization Culture
Customer Focus Speed
Execution
Improvements In Basic Operations
Community Involvement
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What Wal-Mart does to achieve thosevalues
Competitively Reduced Cost (Puts All Gains &Savings Into Reducing Prices)
Consumer-centric Sales Localization
Co-operated Suppliers
Retail-tainment & Shop-ability: Aisles, Lighting &
Signs Store-manager Autonomy
Cont.
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What Wal-Mart does to achieve thosevalues (Cont.)
One- Stop Shopping
Keep Customer Shopping: Added Food & Services
Full Stock Register Full Product Line
Merchandising Ladder
Private Branding
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Wal-Mart
Mission/
Vision
To give ordinary folk the chance to buy the same thing as rich people.
Product Strategy1. Lowest prices across-board the product lines2. Product USP: core competency
Low prices, In-stock positions, Customer service
Service Strategy
1. Respect for the individual
2. High standards of service
3. Constant strive for excellence
Segmentationmiddle-class, lower middle
PositioningConsistent positioning- Always low prices
Activities
1. Food retail
2. Non-Food retail
3. On-line food retailer
Intangibles Personalized customer service
Co-branding Co-branding with McDonalds
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Diversified into Wal-Mart
1. Non-food
Tire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy, Wal-Mart Vacations, Wal-Mart's Used Fixture Auctions
2. Discount format Wal-Mart Stores,
3. E-commerce
WalMart.com
4. Wholesale Sams Club
5. Expansion abroad 12 international locations
Sector Strategy: Diversification
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Penetration/ Strategy
Advertising Expenditure : 0.3% Of Sales Rev. Only
- By Word-of-mouth, In-store Promos
Folksy Facade -Friendly Image
Brick & Click Retailing Model Competitive Strategy:
- Pre-emptive Expansion
- Local Retailing Monopoly
- Mkt Penetration By SelectingMost Convenient Locations
Acquired Or Constructed
Global Buying For Relentless Pressure On Prices
Logistic Efficiency: Speed To Market
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Potential Development strategy
Re-positioning: Complete Shopping Experience & Value-for-money Deptt Store Way Beyond Just Low Prices
Enhancing Product Range: Full-line Deptt Store
Differentiation: Price-based - Best Quality At TheCharged Price
Merchandising: Max. In-store Merchandise Display
Market-broadening: Store-type Adaptations To LocalCulture
Self-branding: Brand-name Is Extended To Popular Items
Ancillary Business: Hair-cuts, Optics, Hearing aids
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Consumer Global Brand Opportunities: Wal-Mart
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SITUATIONAL ANALYSISGOING GLOBAL
WHY GLOBAL - To survive
Why was growth so important?
Capital market expectations-continuous sales and profits.
Expectations of its own employees-ESOPS. Saturated domestic market.
U.S. just 4% of world's population-(rest 96% -already dented)
Emerging markets-tremendous opportunities.
What were its strengths?
Tremendousbuying power-P&G,Kelloggs,Nestl,Coke,Pfizer,etc Domestic knowledge bases & competencies.
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STEP 1-DECIDING COUNTRY-specifics of the business,competitive and economic environments
Acquiringan existing player
(GM,CN,UK,SK,PR,JP)
Starting new storeson own
Joint Ventures(MX,BZ)
STEP 2-DECIDING STRATEGY
Start greenfield*operations .(AG,CH)
SITUATIONAL ANALYSISGOING GLOBAL
*A new operation that is built from the ground up. `
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Country Mode of
Entry
Strategy Fate of the deal
Canada
Acquiring aweakplayer
VERY SUCCESSFULWiped out T.Eaton Company, a major player
Operated in areas that have highbrand recognition
Operated in areas requiringminimum cultural adaptation
Emphasised on customer service &store design
UK(**337) Acquiring Acquired ASDAs operations(232stores)1999
SUCCESSFUL.Competitors-Tescos and Sainsburys
Cashing on the M&A synergies
Mexico(**919)
JointVenture
Entered in 1997 JV with Cifra
Local market knowledge
Overcame cultural barriers
SUCCESSFUL.(50% of the market)
Competition by Carrefour
SITUATIONAL ANALYSISGOING GLOBAL
** no.of stores operating as on Jul2007
Three successes out of ten.Successes 3/10
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Country Mode ofEntry
Strategy What was the fate of the deal
Germany
Acquiring Acquired largest players Wertkauf andInterspar
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) .
Similar business and HR models
Met EU guidelines for business
Brazil
60-40 JV Leveraged experience of Mexican mkts When entered in 1995
Already Carrefour,P de A, and Sendas
So very tough competition(Pi was eaten)Emphasised on Customer service
Developed economies of Scale
Utilised Discount tactics
Argentina
GreenfieldOperation
Gained experience from Mexico & Brazil -Wrong anticipation of the Argentine
-Competition by CarrefourEconomies of Scale
SITUATIONAL ANALYSISGOING GLOBAL
Three successes out of ten..
** no.of stores operating as on Jul2007
3/10
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Country Mode ofEntry
Strategy What was the fate of the deal
S.Korea(**0-16)
Acquiringmajorityshares
Entered in 1998 .
Acquiring majority shares in KOREA MAKRO
FAILED. no personalization, quality first)
-Exited in 2006,like NOKIA,NESTLEGOOGLE and CARREFOUR. (unfair laborstandards, wages)
PuertoRico
(**54)
Acquiring amajor
player
Entered in 2003 by acquiringSupermercados Amigo(31 stores).
-Faced a strong revolt from local smallplayers.
Japan-(**392)
Acquiring -Entered in 2002 - stake in Seiyu Ltd-Competitors were Daiei,Sogo,Mycal
-Continuing losses every year ( USmarketing model)
China
GreenfieldOperations
Merchandising & store designs suiting theconsumers
-Took much time-Biggest Walmart Supplier.
-Forced to allow unionization of workers.-Gender Discrimination-Immigration law-suit
Sourced stocks from international suppliers
who manufacture in China
Sourced from local manufacturers whounderstand local tastes
Met government trade & business laws
SITUATIONAL ANALYSISGOING GLOBAL
** no.of stores operating as on Jul2007
Three successes out of ten . 3/10
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LATEST GLOBAL ENTRIES(5nos)
CountryRetailUnits as on Jul2007
Firmpartner/acquired
Date ofEntry
Costa Rica140 CSU(CARHCO) September 2005
El Salvador 63 CARHCO September 2005
Guatemala137 La Fragua(CARHCO) September 2005
Honduras44 CARHCO September 2005
Nicaragua40 CARHCO September 2005
India*****
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Supply chain integration in developingcountries
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Strength in supply chain
Efficient consumer response
Vendor-Managed Inventory
Enterprise resource planning Customer relationship management
Sales force automation
SWOT ANALYSIS (GLOBAL)
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SWOT ANALYSIS (GLOBAL)Strength
Efficient supply chain management
Targeted marketing
Service innovation and technology
Growth through adaptability.
E-tails continued development
Least cost of packaging
strong penetration strategies
Infrastructure (financial strength)
Weakness
Poor public image
Late entrant in international market.
Unable to adapt to different countries
Ununionised & Strict labor laws
Were unable to handle media
High law suits against the company.
Low penetration in European union
OpportunityMany countries are still leftUnorganized retail
Globalization (diminishing tradebarriers)Cold Storage marketIncrease in consumer purchasingpowerE-business
Unemployment
ThreatsTerrorism
CompetitorsNegative publicityInternational laws against antidumpingCampaign against anti competitivepractices
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Wal-Mart in India
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What brings Wal-Mart to India?
A tremendous market
Emergence of middle class 300 million
Consumer class of 105 million growing at rate of
10% & with an annual avg household income of$3000
Demographics 60% of Indian population is in agegroup of 20-30 & is more inclined towards modern
shopping. Consumer spending growing rapidly credit card
Sales on per sq. ft. basis lowest in world
GDP growing about 6-8%
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Opportunities in India
Indias retail trade is estimated at $206billion & growing at 5% annually
Only 3% of market organized shopping
malls India as fastest growing sourcing market
Indias vast market for food retailing
Cold chain - Refrigerated distribution of
fruits n vegetables Can add value to customers by means of
low price and wide range of merchandise
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Challenges in India
Protests from small businesses (kirana )
FDI restrictions.
Indias poor infrastructure
Poor public image predatory pricing ,unemployment
Indias diversity and heterogeneity
Competition from Indian RetailorsincludingPantaloon,Shoppers Stop ,Piramals
Regional governments are very strong politically
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Present Scenario
Wal-Mart joint venture with Bharti
15 large wholesale outlets over the next seven
years
Entering as a wholesaler, because Indian law does
not allow multi-brand foreign retailers to sell directly
to consumers
Govt. of U.P forced several top retailers to shut
shop after local kirana stores triggered unrest.
Other foreign retailers : Carrefour - Wadias
,Debenhams - Future group
ICRIER study 12 million stores
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Recommendation
Understand Consumer behavior
Market Segmentation
Format of stores super centers or hypermarkets Wal-Mart to adopt a blended model of its
traditional format tweaked to fit the reality of Indian
real estate
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Q & A Session
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Web References
www.walmartfacts.com
www.gartner.com
www.forrester.com
www.hoovers.com
www.wikipedia.com
www.tsmg.com (Tata Strategic ManagementGroup)
www.finance.yahoo.com
www.ficci.com
http://www.gartner.com/http://www.forrester.com/http://www.hoovers.com/http://www.wikipedia.com/http://www.tsmg.com/http://www.finance.yahoo.com/http://www.ficci.com/http://www.ficci.com/http://www.finance.yahoo.com/http://www.tsmg.com/http://www.wikipedia.com/http://www.hoovers.com/http://www.forrester.com/http://www.gartner.com/7/29/2019 WALMART the next big thing
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Thank You