Walmart Bharti- Final

Case Analysis WAL-MART AND BHARATI: TRANSFORMING RETAIL IN INDIA

Submitted To:

Submitted By:

Dr. Mayank Dhaundiyal

Rahul Yadav

Prof. Vivek Bajpayee

PGDM 20140109

ACKNOWLEDGEMENT This work is done as a project, as a part of course titled "Competitor." We are really thankful to Dr. Mayank Dhaundiyal and Prof. Vivek Vajpayee, for their valuable guidance and assistance, without which the accomplishment of this project would have never been possible. We also thank him for giving this opportunity to “ANALAYISE CASE- WAL-MART AND BHARTI”. This project is a success with your support and guidance.

THANKING YOU

Indian Retail Market India has become epicenter of economic activities in today’s global world. India’s retail market is the most promising sector in the world and it caught attention of players across globe. Indian retail market is very fast growing industry with changes in shopping format and consumer buying behavior. India’s retail market s valued around $5900 billion dollars and is expect to become $637 billion by the year 2015. Contributing 14% to India’s national gross product and providing jobs for 7% of its workforce. While India presents a large market opportunity given the number and increasing purchasing power of buyer, there are important trials as well given that 90% of trade is conducted through independent local shop. Indian retail market is highly convoluted in terms of a geographic spread and consumer preferences which varies by each region requiring strong need for localization across the length and breadth of India. The high growth rate of retail market in India followed by immense opportunity in retail market, many global players are attracted and trying hard to capture the market. In order to capture the market Wal-Mart and Bharti entered in 50:50 ventures with Bharti for cash- and –carry retail enterprises. Wal-Mart and Bharti need to undertake huge challenges to be successful. It ranges from huge culture diversity, lack of infrastructure, political resistances, social resistance, and lack of use of technology in supply chain management. The analysis that follows in the document and identities various challenges faced by the joint ventures along with some questions asked in the assignment.

MAJOR PLAYER IN THE INDUTRY Pantaloon planned to have 30million square feet by 2010. Reliance planned to invest US$5.8 billion on multiple retail formats by 2010, likewise Lifestyle intended to invest more US$87.6 million over five year period in retail. Other players are RPG’s Spencer, Aditya Birla Group, TATA Group. Spencer was of the oldest multi-brand retail player in the country.

THE INDIAN POLITICAL AND BUSINESS ENVIORMENT       

Lack of efficient supply chain and third-party logistics. Lack of skilled employees Inadequate quality control Variation in policy across different states Stringent labour laws Lack adequate infrastructure Violent protest by the domestic unorganized retails

COMPANY PROFILE WAL-MART The enterprise that belongs to Sam Walton established in 1962, is one the major Retail Giant in US that operates majority in North America. On Oct 31, 1969, it was incorporated and by 1972, it obtained listing in NYSE. It is multinational retail corporation that runs chain of large discount departments’ stores and warehouse stores. It is trying to make its mark all over the world through its expansion programs via orgainsed retail supply chain management and its pricing strategies. And therefore its enterprises procedure encompasses 14 countries with 2980 stores outside America. The most well liked detail about Wal-Mart is that- its sells its merchandise “Always at low prices”. Wal-Mart operates in many countries, namely  

Wal-Mex in Mexico Asda in Uk Seiyu in Japan

However in Germany and South Korea they have to sell their stores as they are going through heavy losses. As it decided to enter in Indian market the situation was critical because weak Indian economy, lack of retail market, infrastructure and supply chain management.

BHARTI ENTERPRISES It was founded in 1976 by Sunil Bharti MIttal. It is an Indian business conglomerate headquartered in New Delhi. It operates in 20 countries across and Asia and Africa. It has grown over years by acquiring and building partnership. Bharti has managed to build partnership very well. As Bharti is one of the pioneers of Indian telecom revolution over the period of time it has gained good knowledge of Indian consumers. However retail is new business for Bharti, catching previous record of Bharti, Wal-Mart decided to have joint venture so to enter in Indian market.

ISSUES 1. How did Wal-Mart plan to tackle the challenges that lay ahead? 2. Would this marriage of titans really transform Indian retail?

SOLUTION 1) 

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Wal-Mart decided to use two different formats for their stores; a franchised retail company and a wholesale cash-and-carry joint venture. With the proposed joint venture, Wal-Mart and Bharti had found arrangement that allow the US retail giant to enter the Indian retail market Wal-Mart is well known for its well-organised structure and for Indian market which was unorganized at that time Wal-Mart will give a good shopping experience. Wal-Mart’s strength is its supply chain management system, now to gain suppliers support it should develop a strong supply chain network. Wal-Mart should continue its expanding programs to cover the important part of the growing Indian Market. Prominence of middleman in the retail and wholesale industries had been a key characteristic of India’s retail market. Wal-Mart should cutout the middleman and connects producers directly with the retailer. Linking directly who reducing the inefficiency. Wal-Mart must keep diversity as important point of consideration in India, as it is failed in some countries due to lack in adjustments in culture of respective countries.

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Wal-Mart has opportunity to introduce its experience in supply chain management and logistics to India. Using its IT technology in supply chain management it can enhanced the India’s supply chain management along with Indian retail market. Introduction of cold chain logistics. Joint venture was seen as a great opportunity for foreign retailers to get a foothold in a market that was expected to double in size to US$ 637 billion by 2015. Indian buyer’s power is moderate. With the consumers power the unorganised sectors are transforming into organised ones. Retail commerce provides the value-added goods and services which are favoured by the customers.