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!