Walmart Ppt

Wal-Mart – Competing in the Global Market

Anjana Singh (07EP-010)Raj Kumar Kesarwani(07EP-035)

Anshul Agarwal (07EP-011)Ravinder Singh(07EP-037)

Kanishk Chhabra(07EP-022)

What is Wal-Mart

• World’s 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,

a family fun center, a branch of a local bank

Wal-Mart Subsidiaries

• Wal-Mart Stores Division US• Wal-Mart Discount Store• Wal-Mart Supercenter• Wal-Mart Neighborhood Market

• Sam’s Club• Wal-Mart International• Private Labels (Sam’s Choice , Great Value ,

Equate ,Smart Price)

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

Wal-Mart’s 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.

Some interesting figures

• First Store opened at Rogers , AR in 1962• World’s largest Private Employer , fourth only

to China’s 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 Europe’s Carrefour , Tesco & Metro AG combined.

Wal-Mart International

• Present in 14 countries• Walmax in Mexico• ASDA in UK• The Seiyu Co. Ltd in Japan• Wholly owned subsidiaries in

Argentina , Brazil , Canada ,Puerto Rico

Wal-Mart – Market Share / Competitors

• Wal-Mart is three times big than its nearest competitor Carrefour SA

• z

Wal-Mart Marketing Strategy

Wal-Mart Corporate Values

• Constant Improvement• Shared Passion, Vision & Organization

Culture• Customer Focus• Speed• Execution• Improvements In Basic Operations• Community Involvement

What Wal-Mart does to achieve those values

• 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.

What Wal-Mart does to achieve those values (Cont.)

• One- Stop Shopping • Keep Customer Shopping: Added Food &

Services• Full Stock Register• Full Product Line• Merchandising Ladder• Private Branding

Wal-Mart

Mission/Vision

To give ordinary folk the chance to buy the same thing as rich people.

Product Strategy

1. Lowest prices across-board the product lines

2. 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

Diversified into Wal-Mart

1. Non-foodTire & 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 Sam’s Club

5. Expansion abroad 12 international locations

Sector Strategy: Diversification

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 Selecting Most Convenient Locations Acquired Or Constructed• Global Buying For Relentless Pressure On Prices• Logistic Efficiency: Speed To Market

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 The

Charged Price• Merchandising: Max. In-store Merchandise

Display• Market-broadening: Store-type Adaptations To

Local Culture• Self-branding: Brand-name Is Extended To

Popular Items• Ancillary Business: Hair-cuts, Optics, Hearing aids

Consumer Global Brand Opportunities: Wal-Mart

SITUATIONAL ANALYSIS—GOING GLOBALWHY 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?

• Tremendous buying power-P&G,Kelloggs,Nestlé,Coke,Pfizer,etc

• Domestic knowledge bases & competencies.

STEP 1-DECIDING COUNTRY-specifics of the business, competitive and economic environments

Acquiring an existing player

(GM,CN,UK,SK,PR,JP)

Starting new stores on own

Joint Ventures(MX,BZ)

STEP 2-DECIDING STRATEGY

Start greenfield* operations .(AG,CH)

SITUATIONAL ANALYSIS—GOING GLOBAL

*A new operation that is built from “the ground up”.  `

Country Mode of Entry

Strategy Fate of the deal

Canada   (**290)   

Acquiring a weak player      

Woolco 122 stores in 1992 VERY SUCCESSFULWiped out T.Eaton Company, a major player

Operated in areas that have high brand recognition

Operated in areas requiring minimum cultural adaptation

Emphasised on customer service & store design

UK(**337)

Acquiring

Acquired ASDA’s operations(232 stores)1999

SUCCESSFUL.Competitors-Tesco’s and Sainsburys

Cashing on the M&A synergies

Mexico (**919)

Joint Venture

Entered in 1997 JV with Cifra

Local market knowledge

Overcame cultural barriers

SUCCESSFUL.(50% of the market)

Competition by Carrefour

SITUATIONAL ANALYSIS—GOING GLOBAL

** no.of stores operating as on Jul2007

Three successes out of ten….Successes 3/10

Country Mode of Entry

Strategy What was the fate of the deal

Germany     (**0-88)

Acquiring  

Acquired largest players Wertkauf and Interspar

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     (**298) 

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   (**15)

Greenfield Operation 

Gained experience from Mexico & Brazil

-Wrong anticipation of the Argentine

-Competition by CarrefourEconomies of Scale

SITUATIONAL ANALYSIS—GOING GLOBAL

Three successes out of ten……..

** no.of stores operating as on Jul2007

3/10

Country

Mode of Entry

Strategy What was the fate of the deal

S.Korea(**0-16)

Acquiring majority shares

Entered in 1998 .

Acquiring majority shares in KOREA MAKRO

FAILED. no personalization, quality first)

-Exited in 2006,like NOKIA,NESTLEGOOGLE and CARREFOUR. (unfair labor standards, wages)

Puerto Rico(**54)

Acquiring a major player

Entered in 2003 by acquiring Supermercados Amigo(31 stores).

-Faced a strong revolt from local small players.

Japan-(**392)

Acquiring -Entered in 2002 - stake in Seiyu Ltd-Competitors were Daiei,Sogo,Mycal

-Continuing losses every year ( US marketing model)

China (**184) 

Greenfield Operations    

Merchandising & store designs suiting the consumers

-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 who understand local tastes

Met government trade & business laws

SITUATIONAL ANALYSIS—GOING GLOBAL

** no.of stores operating as on Jul2007

Three successes out of ten ….… 3/10

LATEST GLOBAL ENTRIES…(5nos)……

CountryRetailUnits as on Jul2007

Firm partner/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*****

Supply chain integration in developing countries

Strength in supply chain

• Efficient consumer response• Vendor-Managed Inventory• Enterprise resource planning• Customer relationship management• Sales force automation

SWOT ANALYSIS (GLOBAL)Strength

• Efficient supply chain management• Targeted marketing• Service innovation and technology• Growth through adaptability.• E-tail’s 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

Opportunity•Many countries are still left•Unorganized retail•Globalization (diminishing trade barriers)•Cold Storage market•Increase in consumer purchasing power•E-business•Unemployment

Threats•Terrorism•Competitors•Negative publicity•International laws against anti dumping•Campaign against anti competitive practices

Wal-Mart in India

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 age

group 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%

Opportunities in India

• India’s retail trade is estimated at $206 billion & growing at 5% annually

• Only 3% of market organized – shopping malls

• India as fastest growing sourcing market• India’s 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

Challenges in India

• Protests from small businesses (kirana )• FDI restrictions.• India’s poor infrastructure• Poor public image – predatory pricing ,

unemployment• India’s diversity and heterogeneity• Competition from Indian Retailors

includingPantaloon,Shopper’s Stop ,Piramals• Regional governments are very strong

politically

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

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

Q & A Session

Web References

• www.walmartfacts.com• www.gartner.com• www.forrester.com• www.hoovers.com• www.wikipedia.com• www.tsmg.com (Tata Strategic Management

Group)• www.finance.yahoo.com• www.ficci.com

Thank You