Transforming Retail in

April
2, 2014
India

Group 11:
Antnio Baio (11718)
Florian Flo (1668)
Ins Lampreia (11214)
Maria Santos (11534)
Ryan Aimers (1695)
Stephanie Rodrigues (10789)
Sofia Barbeiro (11461)

Agenda
WAL-MART
WHAT IS IT?

SWOT
INDIA
MARKET

RETAIL

BHARTI
PARTNERSHIP

FUTURE?
SOURCES

What is Wal-Mart?
WAL-MART
WHAT IS?
SWOT
INDIA
MARKET
RETAIL

BHARTI
FUTURE?

Established in 1962 by Sam Walton

Worlds largest public corporation by revenue
Mission: Saving people money so they can live better
If we work together, well lower the cost of living
for everyonewell give the world an opportunity
to see what its 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.

What is Wal-Mart?
Structure: Three primary subsidiaries

WAL-MART
WHAT IS?
SWOT
INDIA
MARKET

Wal-Mart
International
Wal-Mart
Stores
Division US
Sam's Club

RETAIL

BHARTI
FUTURE?

Image 1- Wal-Mart
Structure
Source: Wal-Mart Case

What is Wal-Mart?
Restaurants
Cash-and-carry
Stores

WHAT IS?
SWOT
INDIA
MARKET
RETAIL

BHARTI
FUTURE?

Image 2- Retail Formats for Wal-Mart

Businesses
Source: Wal-Mart Case

Retail Formats

WAL-MART

Membership
Warehouse
Clubs

Apparel Stores
Soft Discount
Stores
Bodegas (small
markets)

Supercenters
Food and Drug
Stores
General
Merchandise
Stores

SWOT Analysis
Strengths
WAL-MART
WHAT IS?
SWOT

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

INDIA
MARKET
RETAIL

BHARTI
FUTURE?

Weaknesses
Labor lawsuits over gender-discrimination
Reliant on price changes for differentiation
Negative publicity over predatory pricing

SWOT Analysis
WAL-MART
WHAT IS?
SWOT
INDIA
MARKET

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

RETAIL

BHARTI
FUTURE?

Wal-Mart has become the most powerful, most

influential company in the world

SWOT Analysis
Problema
tic
Markets
WAL-MART
WHAT IS?
SWOT
INDIA
MARKET

Other
Markets

Africa

Successf
ul
Markets

Germany
South
Korea

Chile

Canada
United
States of
America

United
Kingdom

Mexico

Japan

Puerto Rico

China

Argentina

RETAIL

BHARTI
FUTURE?

Brazil
Image 3 Markets in which Wal-Mart is
present

SWOT Analysis
Threats
WAL-MART
WHAT IS?
SWOT

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

INDIA
MARKET
RETAIL

BHARTI
FUTURE?

How will India react?

Global Supply Chain

WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

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

Global Supply Chain

WAL-MART

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.

WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

Image 4 - Movement of the materials and information through

the supply chain

Global Sourcing
Wal-Mart chose to:

WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

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

How does Wal-Mart use technology?
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

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.

Global Supply Chain

How does Wal-Mart use technology?
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

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

Global Strategies
Value of Knowledge in Global Supply Chains
WAL-MART
WHAT IS?

SWOT

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

INDIA
MARKET

RETAIL
BHARTI
FUTURE?

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.

The Indian Market

Indian Attitude
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET
RETAIL

BHARTI
FUTURE?

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

The Indian Market

WAL-MART

Changing attitude in consumer

buying behavior

WHAT IS?

SWOT
INDIA
MARKET
RETAIL

BHARTI
FUTURE?

The New Millennium (2000)

Global brands flood the
marketplace
Provide more organized retail
experience
Able to offer quality and provide
variety

Retail in India
Retail Sector is the largest
industry in India
WAL-MART

Market size US$320 billion (2006)

Compound annual growth, 5%

WHAT IS?

SWOT
INDIA
MARKET

RETAIL

Provides stability
21% of GDP
7% of labor force

BHARTI
FUTURE?

Image 5 Main Industries in

India

Retail in India
Change of industry dynamic
From: unorganized, family owned retail
To: organized, foreign owned retail
WAL-MART
WHAT IS?

SWOT
INDIA

Large scale investments in retail infrastructure

Real estate
Transportation networks

Change in the marketplace format

Specialty stores, hypermarkets, supermarkets

MARKET

RETAIL
BHARTI
FUTURE?

An Indian Mall culture

Food, entertainment, shopping all in one location

The Indian Market

Regulation: Foreign Direct Investment
FDI only permitted on wholesale
Goal: Protect the 15 million small-store owners
WAL-MART
WHAT IS?

SWOT
INDIA

2006: Change
Allowance of up to 51% FDI in multi-brand retailers
Impact: Immediate revenue growth increases

MARKET
RETAIL

BHARTI
FUTURE?

Image 6 Growth Trend in Indian Retail

Industry

Why choose Bharti?

2007: Wal-Mart needs to form a joint venture
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

In reaction to 2006 FDI legislation

Begin search for an Indian partner to own other 49%

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

Why choose Bharti?

WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL

August 2007, two separate partnership

agreements:
- 50:50 venture for back-end supply chain
management and wholesale cash-andcarry operations
- Share expertise and technology with
Bharti

BHARTI
FUTURE?

Information sharing and knowledge integration

between Wal-Mart and Bharti.

Bharti-WalMart
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

Opportunities
1. Wal-Mart Stores Inc. gains exclusive first-mover
advantage into India
2. Ability to transform the industry, low prices and
increased quality
3. 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 market
3. Bharti responsible for managing the retail store
operations
4. Wal-Mart focused on logistics capabilities and building

Bharti-WalMart
Establishing the Supply Chain
WAL-MART

Channel Structures before Wal-Mart operations in India:

WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

Image 7 Channel Structures for Consumer Goods

Bharti-WalMart
New Supply Chain (cutting out the middleman)
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

Suppl
ier

Local
Produce
rs

Walm
art

Retail
er

Distribut
ion

Transportatio
n System

Image 8 Wal-Mart Supply Chain in India

Custo
mer

Final
Consum
er

Bharti-WalMart
New Supply Chain (cutting out the middleman)
Benefits:
WAL-MART
WHAT IS?

SWOT

More control over packaging and quality management

Enhance productivity

Reduce inefficiency of the industrys traditional supply

INDIA
MARKET

RETAIL
BHARTI

chain

Problems:
-

Increased pressure from local civil right groups

Aggressive demonstrations and protest of traditional

FUTURE?

owners
-

Low quality of Indias transportation network

Uncertainty on how to implement the supply chain

Bharti-WalMart
Challenges
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

1. Adapting to Indian cultures

Inability to meet Indian needs will result in protest,

riots

2. Supply Chain management

Current poor roadway infrastructure, quality of
trucking

3. Strict government legislation

Minimum 30% domestic suppliers

4. Partnership agreement

Bharti will play a role in decisions

5. Threat to small-businesses

Reality is Wal-Mart will displace millions of

business owners

6. Establish a solid supply chain

Looking forward
Suggestions to overcome the challenges
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

1. 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
WAL-MART
WHAT IS?

Did it change the Indian market?

How was the supply chain effected?

SWOT
INDIA

Positive or negative impacts for small business

MARKET

RETAIL

owners?

BHARTI
FUTURE?

In which future markets can Wal-Mart enter?

Looking forward
WAL-MART
WHAT IS?

SWOT
INDIA
MARKET

RETAIL
BHARTI
FUTURE?

Image 9 - Current locations of Wal-Mart around the

world

Works Cited
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/walmartwhat-happened-in-india/
http://www.strategicmanagementinsight.com/swotanalyses/walmart-swot-analysis.html
http://www.sensormatic.com/instore/2009_Q1/fands.asp
http://timesofindia.indiatimes.com/business/india-business/WalMart-sets-up-new-company-in-India/articleshow/29061973.cms

Thank you very much

for your attention!