A REPORT ON ANALYSIS OF WAL-MART AND BHARTI: TRANSFORMING RETAIL IN INDIA

SUBMITTED TO PROF. VIVEK BAJPAI PROF. MAYANK DHAUNDIYAL

SUBMITTED BY BISHAL TIWARI-20140081

ACKNOWLEDGEMENT
It is great pleasure to express our sense of gratitude to Prof. Mayank Dhaundiyal and Prof. Vivek Vajpayee, IILM-CMS, without whose valuable guidance generous help and constant enthusiastic inspiration this report analysis of Wal-Mart and Bharti: Transforming Retail in India would have never been a success.

The case helps us to know the change in market in global world; how the new technologies and services make the difference in this sector for positioning the company and segmenting the customer. However as we started working on the case we found that India is growing rapidly in Retail Sector.

We thank Sir for giving us all the valuable inputs all along and guiding us to once again explore some part of IT sector and process of analyzing the case.

WAL-MART AND BHARTI ENTERPRISES On 27 November 2006, Bharti Enterprises Ltd, one of the Indias principal business groups, and American retail giant Wal-Mart entered into a joint venture with equal partnership in having a expectation of accessing into the highly regulated Indian retail market valued of $ 320 billion for Wal-Mart whereas for Bharti, it would own retail shops under the Wal-Mart franchise and the companies would jointly operate in areas of the Indian retail industry accessible for FDI, such as logistics and cash-and-carry. The partnerships between both companies were now expected to bring changes in Indian retail landscape but however the question arises are: How Wal-Mart would cope-up with the opposition it faced from local shop owners and civil rights groups given its poor reputation with regard to social responsibility? How Wal-Mart will plan to implement its supply chain management model in India?

THE INDIAN RETAIL SECTOR India now has become a centralized point for every country as it is rapidly growing its economy in global world. India is one of the most promising sectors for retail industry although it has expected slow growth but surely will boom its market changing in both the shopping format as well as consumer buying behavior. The Indian retail industry was valued around US$ 320 billion, by 2010 it was forecasted to be US$ 427 billion and in 2015 it was expected to US$ 637 billion. According to Indias Centre for Policy Alternatives, the Indian retail sector can be split into two part; Organized and Unorganized. Unorganized retailing referred to traditional, usually small-scale and low-cost retailers like convenience stores, paan/beedi shops and kirana-shop etc. while organized retail sector referred to officially licensed retailers who compiled various requirements for register like private own retail companies. While India provide large market potentiality there is increment in purchasing power of consumer, the organized retail sector comprise 2% of Indias total trade and unorganized comprises 98%. Indian retail market is highly dependent in geographic factor, demographic factor, cultural factor and social factor. The consumer preferences vary in each region depending on their different background. The change in Indian market made the revolution and consumer were more conscious towards brand. They started to demand organized retail experiences similar to developed economies. Global retailers were more than happy to fulfill this desire but due to Indias strict regulation they were not able to enter in Indian market. As of 2006, the government of Indian

permitted 51% FDI in multi-brand retailers and 100% FDI in wholesale cash and-carry and back-end logistics. These events triggered huge investment by FDI as well as Local organized players. The penetration of organized retail was increasing rapidly and growing number of players were making footprint in the hope of graving the opportunity.

MAJOR PLAYER IN THE INDUSTRY Reliance Bharti Group Pantaloon RPG Lifestyle Raheja Subhiksha Trent Trinethra Vishal group Aditya Birla Group Tesco Carrefour Shop Rite Metro AG

THE INDIAN POLITICAL AND BUSINESS ENVIRONMENT The advantage of bringing in international player in Indian marker was that they brought expertise in finding consumer taste, shaving margins and building supply chains. Lack of an efficient supply chain and third party logistics as well as absence of proactive channels put serious pressure on Indian retailers to deliver the quality and meet consumer demand. Lack of skilled manpowers, inadequate quality control, variation in policy across different region, stringent labor laws, inadequate infrastructure, and violent protest by local unorganized retails made the Indian retail industry more difficulty and run its business in a structured way.

WAL-MART Wal-Mart is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. According to fortune global 5oo list of 2012, Wal-Mart is the third largest public corporation in which every week, more than 200 million customer and members visit its 10700 stores under 69 banners in 27 countries. It is familyowned business and is controlled by Walton family owning 48% stake in it. In 2013 it made the revenue more than $466 billion associating more than 2.2 employees worldwide. The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the NYSE in 1972. Wal-Mart is also the largest grocery retailer in the United States. Wal-Mart has 8500 stores in 15 countries, under 55 different names. The success of Wal-Mart depends on its research methodology in which it research about its competitor based on their pricing strategy and ultimately implements the best alternative through which it can attract the large consumer based on their taste, income, geography etc. Wal-Mart retailing activities were operated by three primary subsidiaries: businesses. Wal-Mart International Sams Club Wal-Mart stores Along with this Wal-Mart had nine different retail formats for its

PRICING STRATEGY OF WAL-MART Wal-Mart had been extremely successful in differentiating it from its competitors because of its low pricing strategy. Wal-Mart always had been operated its business in low prices and model with the slogan Always the lowest price. As a part of pricing strategy, it adopted approaches offering 10% discount on four key items per category for an average of 75 days. The pricing strategy of Wal-Mart depends on its competitor price. It offer average up to 4% and, in some cases, up to 10% pricing differentials compared with its competitors, and in the food WalMart determined its price based on zones corresponding to food distribution centers.

INFORMATION TECHNOLOGY AND SUPPLY CHAIN MANAGEMENT Among retailers, Wal-Mart had been one of the most effective users of technology and had always been among the front-runners in employing information technology for managing supply chain processes. The technologies used by Wal-Mart are: Barcode for inventory tracking.

Satellite communication system for co-coordinating supply chain management. Electronic data interchange and a computer terminal network. Universal Product Code. Wal-Mart advanced conveyor system. Point-of-sale scanning system. Electronic purchase order management system. Radio frequency identification system.

WAL-MART AND BHARTI ENTERPRISES As of Wal-Mart started the partnership with Bharti Enterprises it has expected to bring a dose of modernity to the Indian retail landscape. But due to regulatory environment in India WalMart and Bharti planned to open two different formats of their stores. Franchise retail company Whole-sale cash and carry joint venture The joint venture was to change the countrys inefficient and scattered retail industry.

CHALLENGES FACED BY WAL-MART Local protestors criticized Wal-Marts operations. Criticism from labor unions, grassroots organizations, womens rights groups and community groups for not being as a part of socially responsible company. Dealing with the Indian consumer based on their different factor like social, cultural, demographic and geographic factor. Supply Chain management.

ISSUES: 1. 2. Solution: 1. How did Wal-Mart plan to tackle the challenge that they lay ahead? Would this marriage of titans really transform Indian retail?

Deciding to use two different formats for their stores; a franchised retail company and a whole sale cash-and-carry joint venture. Signing two separate agreement for managing back-end supply chain management and wholesale-cash-and carry operation; allowing Wal-Mart to franchise itself while sharing expertise and technology with Bharti to support the retail stores. Managing supply chain operations which would link farmers and small manufacturers with limited infrastructure and distribution capabilities. Cutting out the middleman and connecting directly to the producer so that company will be able to provide good at lower cost. Updating its system based in diversification of technology.

2. Yes this marriage of titans will really transform Indian retail because Wal-Mart is one of the largest retail industries having huge experience in supply chain management. Through its experience it can easily cope-up with the challenges faced in supply chain operation. Also having good technology and uses of it, it can enhance the Indias supply chain management along with Indian retail market. Along with this Wal-Mart running its retail stores in various part of world, the Indian investor can get a huge opportunity so that it can stand itself in global market.