Walmart in India

Topics: Retailing, Wal-Mart, Discount store Pages: 10 (3130 words) Published: September 28, 2008
Market Selection

Cultural Analysis

There are several cultural factors that will be affected by Wal-Mart’s entrance into India. If a giant corporate retail company, such as Wal-Mart, enters India it will have a direct impact on millions of farmers and people employed in small businesses. India is a land of retail democracy with hundreds of thousands of bazaars located across the country. In India, main streets are called bazaars as they are lively, vibrant and a source of livelihood for millions of people. Many citizens believe it is part of Indian culture to have crowded lanes with people selling shoes, toys, clothes, and much more. There are cafe owners making coffee and frying potatoes for people on the road sides. Moreover, organized retail shops are often run by the same family for generations and Wal-Mart’s entrance into India may affect welfare of these small family-owned businesses. The tradition of these bazaars and small businesses may be affected by the entrance of Wal-Mart into India.

Wal-Mart has already experienced resistance in the form of demonstrations and protests in regards to it entering the Indian market. According to the February 23, 2007 issue of The New York Times, there were over 100 protestors in New Delhi shouting things such as “Go back Wal-Mart” and waving placards reading “Save Small Retailers.” This is an example of the resistance Wal-Mart is receiving from farmers and small business owners.

Wal-Mart’s entrance into India, although facing some resistance, would actually be able to help small farmers and business owners. According to the article, “Wal-Mart enters India”, on average 30 to 60 percent of produce spoils before it even reaches the farms. With Wal-Mart’s superior knowledge of distribution, they may actually be able to prevent some of the food from spoiling by speeding up the shipping process. This will help improve Wal-Mart’s reputation with the lower class.

Although India is deeply rooted in the tradition of street markets, consumer behavior is slowly changing. With discretionary spending increasing, India is projected to surpass Germany as the world’s fifth largest consumer market in less than two decades (“Next Big Spenders”). With the average income growing in India, consumer habits are evolving. For instance, the number of Indians who use credit cards has quadrupled since 2001 (“Next Big Spenders”). As India’s economy continues to progress, consumer culture will continue to adapt to large retailers such as Wal-Mart.

Political and Legal Analysis

India is presently the largest democracy in the world. India has the largest number of people and the largest number of political parties, which take part in election campaigns. Elections are held at different levels. The two major election levels are at national level, after which the national government is established and at state level after which the state government is established. Elections are also held for city, town and village councils.

The international trade in India is largely impacted by politics. The Indian budget and especially its foreign policies affect the way international trade is done in India. One of the big political issues India faces is the large deviation among income levels. There are high class, middle class and low class people. One of the concerns about the entrance of Wal-Mart is whether low class people will be able to shop at the single price of Wal-Mart as they are used to bargaining before their purchases. In order to be successful, Wal-Mart’s pricing must be low enough to attract the low class market, but also high enough to remain in competition with other businesses.

After decades of strain political relations between India and the United States, the two governments are pursuing a “strategic partnership”, based on several shared economic interests. In order to continue improving trade relations, India is continuing economic reforms aimed at...
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