walmart groupg
TRANSCRIPT
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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