The failure of Walmart in Germany and its

future in India

Presented By :Mayank Sen

Manvendra Pal Singh Raavi

KatyayanRinku GuptaSubhasinee Choudhary

Introduction-Walmart:

• The company was founded by Sam Walton in 1962, incorporated on October 31, 1969.

• It is headquartered in Bentonville, Arkansas.• Walmart has 8,500 stores in 15 countries,

under 55 different names.• Is an American multinational retail

corporation that runs chains of large discount department stores and warehouse stores.

• Retail industry of the emerging markets has been growing in geometric progression.

• A couple of decades ago it was less than 5% of their total turnover.

• This trend is undergoing a dramatic change as the multinationals are beginning to recognise the global appeal.

• At a time when businesses the world over have been reeling under global economic meltdown, the Wal-Mart’s international sales was registering significant growth .

Research Background:

First part secondary data has been used from different studies, research papers, journals and websites .

The second First part secondary data has been used from different studies, research papers, journals and websites .

• When retail giants of the developed nations decided to expand their operations into the markets of the developing countries .

• The concept was first introduced by Hollander (1970)

• US retailer Wal-Mart and Staples, Home Depot were the pioneers who decided to going global.

Evolution of Retail Industry :

• Saturated Domestic Market• Emerging Markets with lower disposable

income offer huge platform for growth to retailers

• Growth • Revenues .

Go Global …

Managemant Risk ( Culture , Language , Customer , Preferences ,Distribution System).High Investment Political and Economic RisksExchange Rate Risks.

Risks Involved while going Global …

• Supply Chain with Integrated technology

• An ability to generate large sales volume.

• Every Day Low Prices• Superior logistics systems• Decentralized operation • A strong and unique culture

(In U.S)

Wal-Mart Success Factors :

Overview of the external environment prevalent in Germany at that time :

Political: The policies in Germany were not conducive to the entrance of big retailers in the country .

Economic: Germany is the biggest retail market in Europe and the GNP of the country in 2000 was 2 trillion Euros with the total population of 80 million people.

PEST Analysis:

Social: People in Germany were very price

conscious when it came to the retailing industry.Technological: The technology used by German

retailers was among the best in the world. They used the available technology such as IT systems and RFID to improve the efficiency of their businesses.

Continued …..

The retail market in United States was getting saturated without much growth.

The population of US was not much. Entry barriers were not high in the retailing

industry.The competition amongst retailers was

intense in US. It wanted to leverage its successful strategy

of everyday low pricing in other countries as well.

Why Wal-Mart Entered Germany:

Bad Acquisitions Strategy Failure with Cultural IntegrationFailure of Everyday Low Prices StrategyLack of Customer Satisfaction

Entry Strategy of Wal-mart and Reasons for failure :

Sampling Unit : Consumers from different age groups, gender, locations, income levels and educational backgrounds.

Sampling Method : Convenience Sampling. Method of data collection : Personal interview with

respondents. Type of Questionnaire : Structured questionnaire Type of questions: Open ended, close ended and

multiple choice questions

Sampling

Sample questionnaires

Q. Why do you think Wal-Mart wants to enter into India ?

• Due to large customer base.• India is in fast growing

economy phase in the world.• Opening of FDI in Multi Brand

Retail sector.• To expand their presence

outside USA and Europe.Response -a-15% , b-40% , c-40%

, d-5%

Response

Option AOption BOption COption D

Sample Questionnaires contd…• What are the challenges faced by

Wal-Mart while entering in India ?• Poor Infrastructure• Unstable Political Environment• Unfriendly Regulatory Framework

and Policies• Excessive Bureaucracy• Lack of support from Government• Supply Chain Bottleneck• Hostile Response by many traders

and similar organization• b-20% , c- 30% , f-50%

Response

Option AOption BOption COption D

Discussion and Analysis

• With all its problems and limitations, the India offers a number of opportunities, such as follows, to Wal-Mart and other retailers to establish large chain stores in the country-

To Diversify Supply Sources To Participate in a Huge Market• There are several reasons, some fundamental and some

superfluous, against Wal-Mart and other large international retailers establishing shops in India-

Calamity for Kirana Merchants Threat to Large Indian Retail Firms Unions Oppose the Anti-Union Retailer

Conclusion

Wal-Mart faces many ownership as well as locational disadvantages while expanding in India. These significant challenges need to be well-understood and suitably addressed for success in the Indian market.

Conclusion