By: Raymond Vucetic MBA 602 International Business Fall Quarter 2010
Executive Summary This paper is an analysis and evaluation of Wal-Mart and the future venture into the retail sector of India. The challenges that Wal-Mart needs to resolve to become successful range from the cultural differences to problems with supply chain management in India. The analysis below identifies the challenges of many factors dealing with the Wal-Mart, Bharti and the Indian retail sector. These factors for Wal-Mart would deal with the ability to operate in India efficiently as they do in the US. In addition, Wal-Mart to be successful will have to sort out problems with the government, culture differences and the partnership with Bharti. These factors for Wal-Mart and Bharti will be presented in more specific detail through a SWOT analysis. The analysis will evaluate Wal-Mart as a company in relation to the future operation in the Indian market. Then the Bharti Company will be analyzed using a SWOT to pin point how the company will fit into the overall plan of Wal-Mart operating in India. The report will further evaluate the Indian retail sector through a competitive industry analysis using the Porter’s 5 forces model. This model will detail the threats to the market entry, supplier power, buyer power, availability of substitutes and competitive rivalry as they relate to the India retail sector. The report will then offer alternatives for the Wal-Mart company. These alternatives would include not progressing forward within India, chose a global market with less regulation, focus business to become s specialized retailer and collaborating with a different company other then Bharti to expand in the Indian retail sector. The analysis will close with recommendations to focus changes on the culture, consumer behavior, collaborating with current vendor and suppliers and work to improve the image of Wal-Mart and how the company can make positive changes in the retail sector for the people of India.
Wal-Mart and the Indian Retail Sector: The retail sector in India remains one of the best-untapped sources for international companies to grow market share and future profit. The retail market in India is one that many companies are trying penetrate. One major U.S. retail company, Wal-Mart, has been trying to enter and succeed in expanding the organization’s global footprint. Wal-Mart is one of the largest and most successful retail companies in the world. Wal-Mart is planning to use their business expertise in the areas of organized retail, pricing strategies and logistics in supply chain management to change the retail scene in India. Currently, India’s market is at a stage where customers need more variety in products and retail formats. The old systems of retail outlets in India have consisted mainly of Kiranas and Mandis to name a few. Mandis are types of markets set up by the state government for the sale of agricultural produce directly from the farmers. Kirana stores, which are independently owned and operated primarily, sell necessities, and groceries. Other retailing formats such as streetcars, pavement shops, public distribution systems, kiosks, and weekly markets are unique to India and have been around for a long time. India has seen an emergence of modern large-scale stores such as supermarkets, specialty stores, chain stores, department stores; hypermarkets, factory outlets and discounters enter the retail sector. Shopping malls and new retail outlets with more shops have transformed the business environment in India. The changes in the retailing culture have pushed this business sector to make changes in how customers are buying and consuming goods (Srivastava, 2008). Challenges for Wal-Mart in India
While the Indian market may look very lucrative for Wal-Mart, they will be faced with many challenges. These challenges will range from entering the...