Walmart GroupG

8/9/2019 Walmart GroupG

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WAL-MART AND BHARTI:TRANSFORMING RETAIL ININDIA

Presented To: Prof. Ajith Kumar

Presented By: Group 7


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Q. 1

Describe how Wal-Marts supply chainworks and comment on how it hashelped create competitive advantagesfor the firm. Will Wal-Mart be able to

generate the same advantages in India?Why or why not?


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Wal-mart Supply Chain Flow Chat

Manufacturer

Manufacturer

Manufacturer

RetailStore

Retail Store

Retail Store

Point ofsale

terminal

Satellite system

,Bar code RFID

,Radioheadphone

Distributioncenter

Company Headquarter


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Wal-Marts BusinessStrategy


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Business Strategy

Through continuous supply chain costcontrol, Wal-Mart is able to maintain lowprices for customers.

Asset utilization is another goal for Wal-Mart,but facility, private fleet, and informationtechnology utilization are again primarilyfocused on lowering costs.

Information technology investments are

directed towards improving efficienciesacross the extended supply chain fromvendors to stores, and thus the use ofinformation technology supports the EDLP

business strategy


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Vendor Collaboration

Level of collaboration depends upon Investment Capabilities Product Volume

Value to Wal-Mart

Vendor Managed Inventory (VMI)


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IT Capabilities

BarCode

Satellite Communication System

RFID

Point of Sale Scanning System

Retail Link Information available to vendors on time

Vendors can thus improve supply chainand lower costs


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Process Differentiation

Two types of products (Fisher, 1997) Functional:

Predictable Demand

Low Margin Supply Chain is efficient and low cost

Innovative Unpredictable Demand

High Margin Cost and probability of stocking out are

higher

Supply chain should be flexible and

responsive


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Sources of Cost advantages

Own transportation system: Resulted in cost savings and ability to deliver

products in to various stores within 48 hours

Usage of IT in Supply Chainmanagement

Inventory tracking using information availablein barcode.

POS scanning: Which helped in managing theproducts at suppliers end.

RFID tags: Enabled to keep track of theinventory throughout the supply chain.


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Advantage in the Costperformance matrix

Wal-Mart's Perceived Valuew.r.t. to competitors

Lower Almost the same Higher

Wal-Mart's Inputcostsw.r.t. to

competitors

Higer Disadvantage Disadvantage Depends

Almost the same Disadvantage Parity Advantage

Lower Depends Advantage Advantage


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CL strategies of Wal-Mart inIndian context

Having its own transportationsystem:

Valuable

Yes Helps to reduce the costs and generate profits

Rare No Other domestic players like Reliance also have their own

transportation system Inimitable

No Exploitation by the Organization

Yes In West this is the major differentiating factor


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CL strategies of Wal-Mart inIndian context

Usage of IT in Supply Chainmanagement:

Valuable Yes Helps to reduce the costs and generate profits, ease in

operations Rare

No

IT is no longer a differentiating factor Inimitable

No Exploitation by Organization

Yes

Had short lived First mover advantage in the west


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Conclusion

Wal-Mart might not be able to generatethe same advantages in India


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Q. 2

Analyze the structure of the retail sectorin India at the time of the case


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Potential of Retail Sector inIndia Repeatedly named amongst Asias most

promising sectors.


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Key Highlights

Contributing 14% to Indias NGDP.

Providing employment to 7% of its

workforce.

Crucial mainstay of Indian economy

Highly regulated Indian Retail Market


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Fragmentation

Highly fragmented sector

Unorganized Retail: 98% of Indias Total

Trade.

Organized Retail: 2%

Labeled as A Nation of Shopkeepers


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Structure: UnorganizedRetail Referred to more traditional, small scale

and low-cost 11 million retailers*. Theseinclude: -

Pavement & Hand-cart vendors

Convenience Stores

Paan/Beedi Stores

Owner-manned general stores

Local Kirana shops

*Source: Datamonitor report, 2006:


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Retail: SegmentalPerformance

Performance 2006Segment Unorganized Organized Total worth in

Billion USD

Food & Organized 99% 1% 144.8

Clothing, Textiles, &Fashion Accessories

81% 19% 22.1

Consumer Durables &Home Appliances 90% 10% 9.36

Pharma 97% 3% 8.2


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Retail: Porters Five ForceAnalysis

hreat of EntryHigh both in unorganized and organized space

1.

hreat of RivalryHigh

hreat of SubstitutesMedium to High

hreat of SuppliersLow

hreat of BuyersMedium to High

evel of Threat in the Industry


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PESTEL Analysis

Retail industry is operating in a highlyprotectionist environment - government islimiting the FDI into the retail segment

Increase in consumer spending Demographic change ( 67 % < 35 years of

age)

Large number of working men and women Paradigm shift in consumer mindset,

Changing consumer preferences varietyseeking buying behaviour.

Burgeoning Middle Class


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Q.3

Analyze the merits and demerits of theWalmart Bharti JV in India fromdifferent perspectives. You can use aSWOT framework. What is its currentpositions (July 2010). Comment on its

future.


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SWOT Analysis

Strengths Walmarts supply chain capabilities Bharti experienced in local markets

Bharti brand in India Weaknesses

Opportunities

Booming retail sector with increasedconsumption

Threats Competition from other Indian groups

Government policy may slow down growth


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Current Scenario

Bharti Wal-Mart operates wholesale storesunder the Best Price Modern Wholesalebrand 2 stores

10-12 cash-and-carry stores in the next 12months

The company now operates around 80stores

Slowed down by policy uncertainty anddownturn

Planning to open 140 retail stores by year

end


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Future Position

New policy may limit investment fromWalmart in wholesale cash and carry

Optimism on relaxation of FDI norms in

retail Government Policy dependent

Aggressive Push for expansion in retail by

Bharti Walmart Wait and Watch

Long term Beneficial with rapidexpansion

Short Term Reduced investments

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