Wal-Mart Competing in the Global Market

Anjana Singh (07EP-010) Raj Kumar Kesarwani(07EP-035) Anshul Agarwal (07EP-011) Ravinder Singh(07EP-037) Kanishk Chhabra(07EP-022)

What is Wal-Mart
Worlds biggest retailer Sells Grocery & General Merchandise One Hour Photo Studio Pharmacy & Optical Centre Tire & Lube Express Gasoline station Fast Food Outlet Garden Centre Pet Shop Also feature hair and nail salons, a video rental store, a family fun center, a branch of a local bank

Wal-Mart Subsidiaries
Wal-Mart Stores Division US
Wal-Mart Discount Store Wal-Mart Supercenter Wal-Mart Neighborhood Market

Sams Club Wal-Mart International Private Labels (Sams Choice , Great Value , Equate ,Smart Price)

Key Statistics on Wal-Mart

Founder Sam Walson & Family owns 40% of WalMart Headquartered at Bentonville , Arkansas , US Total No. of Stores 6775 Stores
Stores in US 4065 Stores in US Outside US 2701 Stores in 14 Countries

Total Employees 1.9 Million Total Sales 348.6 billion in 2006 Net Income 11 billion in 2006

Wal-Marts growth in last 25 yrs

Click the Video Diversified into Food & Grocery , Private Labels and online store. Wal-Mart online is the e-commerce website. Has started selling online Music and Movies.

Some interesting figures

First Store opened at Rogers , AR in 1962 Worlds largest Private Employer , fourth only to Chinas Army ,NHS of UK, and Indian Railways Wal-Mart sells 20% of retail grocery in US and 45% of total Toys sold in US. Its bigger than Europes Carrefour , Tesco & Metro AG combined.

Wal-Mart International
Present in 14 countries Walmax in Mexico ASDA in UK The Seiyu Co. Ltd in Japan Wholly owned subsidiaries in Argentina , Brazil , Canada ,Puerto Rico

Wal-Mart Market Share / Competitors

Wal-Mart is three times big than its nearest competitor Carrefour SA z

Wal-Mart Marketing Strategy

Wal-Mart Corporate Values

Constant Improvement Shared Passion, Vision & Organization Culture Customer Focus Speed Execution Improvements In Basic Operations Community Involvement

What Wal-Mart does to achieve those values

Competitively Reduced Cost (Puts All Gains & Savings Into Reducing Prices) Consumer-centric Sales Localization Co-operated Suppliers Retail-tainment & Shop-ability: Aisles, Lighting & Signs Store-manager Autonomy
Cont.

What Wal-Mart does to achieve those values (Cont.)

One- Stop Shopping Keep Customer Shopping: Added Food & Services Full Stock Register Full Product Line Merchandising Ladder Private Branding

Wal-Mart
Mission/ Vision To give ordinary folk the chance to buy the same thing as rich people.

Product Strategy

1. Lowest prices across-board the product lines 2. Product USP: core competency
Low prices, In-stock positions, Customer service

Service Strategy

1. Respect for the individual 2. High standards of service 3. Constant strive for excellence middle-class, lower middle Consistent positioning- Always low prices 1. Food retail 2. Non-Food retail 3. On-line food retailer Personalized customer service Co-branding with McDonalds

Segmentation Positioning

Activities

Intangibles Co-branding

Sector Strategy: Diversification

Diversified into

Wal-Mart
Tire & Lube Express, Wal-Mart Optical, WalMart Pharmacy, Wal-Mart Vacations, WalMart's Used Fixture Auctions

1. Non-food

2. Discount format 3. E-commerce 4. Wholesale 5. Expansion abroad

Wal-Mart Stores, WalMart.com Sams Club 12 international locations

Penetration/ Strategy
Advertising Expenditure : 0.3% Of Sales Rev. Only - By Word-of-mouth, In-store Promos Folksy Facade -Friendly Image Brick & Click Retailing Model Competitive Strategy: - Pre-emptive Expansion - Local Retailing Monopoly - Mkt Penetration By Selecting Most Convenient Locations Acquired Or Constructed Global Buying For Relentless Pressure On Prices Logistic Efficiency: Speed To Market

Potential Development strategy

Re-positioning: Complete Shopping Experience & Valuefor-money Deptt Store Way Beyond Just Low Prices Enhancing Product Range: Full-line Deptt Store Differentiation: Price-based - Best Quality At The Charged Price Merchandising: Max. In-store Merchandise Display Market-broadening: Store-type Adaptations To Local Culture Self-branding: Brand-name Is Extended To Popular Items Ancillary Business: Hair-cuts, Optics, Hearing aids

Consumer Global Brand Opportunities: Wal-Mart

SITUATIONAL ANALYSISGOING GLOBAL

WHY GLOBAL - To survive

Why was growth so important? Capital market expectations-continuous sales and profits. Expectations of its own employees-ESOPS. Saturated domestic market. U.S. just 4% of world's population-(rest 96% -already dented) Emerging markets-tremendous opportunities.

What were its strengths? Tremendous buying power-P&G,Kelloggs,Nestl,Coke,Pfizer,etc Domestic knowledge bases & competencies.

SITUATIONAL ANALYSISGOING GLOBAL

STEP 1-DECIDING COUNTRY-specifics of the business, competitive and economic environments

STEP 2-DECIDING STRATEGY

Joint Ventures(MX,BZ) Acquiring an existing player (GM,CN,UK,SK,PR,JP) Start greenfield* operations .(AG,CH)

Starting new stores on own

*A new operation that is built from the ground up. `

SITUATIONAL ANALYSISGOING GLOBAL

Three successes out of ten.Successes
Country Mode of Entry Acquiring a weak player Strategy

3/10
Fate of the deal

Canada (**290)

Woolco 122 stores in 1992 Operated in areas that have high brand recognition Operated in areas requiring minimum cultural adaptation Emphasised on customer service & store design

VERY SUCCESSFUL Wiped out T.Eaton Company, a major player

UK(**337)

Acquiring

Acquired ASDAs operations(232 stores)1999 Cashing on the M&A synergies

SUCCESSFUL. Competitors-Tescos and Sainsburys

Mexico (**919)

Joint Venture

Entered in 1997 JV with Cifra Local market knowledge Overcame cultural barriers

SUCCESSFUL.(50% of the market) Competition by Carrefour

** no.of stores operating as on Jul2007

SITUATIONAL ANALYSISGOING GLOBAL

Three successes out of ten.. 3/10
Country Mode of Entry Acquiring Strategy What was the fate of the deal

Germany (**0-88)

Acquired largest players Wertkauf and Interspar Similar business and HR models Met EU guidelines for business

FAILED. Entered in 1997(21+74 stores); Exited in 2007 -American Style Working practices -High Labor Costs. -Management-- Staff Rifts -Competitors: ALDI and LIDI (cheap) . When entered in 1995 Already Carrefour,P de A, and Sendas

Brazil (**298)

60-40 JV

Leveraged experience of Mexican mkts

Emphasised on Customer service

So very tough competition(Pi was eaten)

Developed economies of Scale Utilised Discount tactics Argentina (**15) Greenfield Operation Gained experience from Mexico & Brazil Economies of Scale -Wrong anticipation of the Argentine -Competition by Carrefour

** no.of stores operating as on Jul2007

SITUATIONAL ANALYSISGOING GLOBAL

Three successes out of ten . 3/10
Country S.Korea( **0-16) Mode of Entry Acquiring majority shares Strategy Entered in 1998 . Acquiring majority shares in KOREA MAKRO What was the fate of the deal FAILED. no personalization, quality first) -Exited in 2006,like NOKIA,NESTLE GOOGLE and CARREFOUR. (unfair labor standards, wages) -Faced a strong revolt from local small players.

Puerto Rico (**54) Japan(**392) China (**184)

Acquiring a major player Acquiring

Entered in 2003 by acquiring Supermercados Amigo(31 stores).

-Entered in 2002 - stake in Seiyu Ltd -Competitors were Daiei,Sogo,Mycal Merchandising & store designs suiting the consumers Sourced stocks from international suppliers who manufacture in China Sourced from local manufacturers who understand local tastes Met government trade & business laws

-Continuing losses every year ( US marketing model) -Took much time -Biggest Walmart Supplier. -Forced to allow unionization of workers. -Gender Discrimination -Immigration law-suit

Greenfield Operations

** no.of stores operating as on Jul2007

LATEST GLOBAL ENTRIES(5nos)

Retail Units as on Jul2007 140 63 137 44 40 ***** Firm partner/acquired CSU(CARHCO) CARHCO La Fragua(CARHCO) CARHCO CARHCO Date of Entry September 2005 September 2005 September 2005 September 2005 September 2005

Country Costa Rica El Salvador

Guatemala
Honduras Nicaragua

India

Supply chain integration in developing countries

Strength in supply chain

Efficient consumer response Vendor-Managed Inventory Enterprise resource planning Customer relationship management Sales force automation

SWOT ANALYSIS (GLOBAL)

Strength Efficient supply chain management Targeted marketing Service innovation and technology Growth through adaptability. E-tails continued development Least cost of packaging strong penetration strategies Infrastructure (financial strength)
Opportunity Many countries are still left Unorganized retail Globalization (diminishing trade barriers) Cold Storage market Increase in consumer purchasing power E-business Unemployment

Weakness Poor public image Late entrant in international market. Unable to adapt to different countries Ununionised & Strict labor laws Were unable to handle media High law suits against the company. Low penetration in European union

Threats

Terrorism Competitors Negative publicity International laws against anti dumping Campaign against anti competitive practices

Wal-Mart in India

What brings Wal-Mart to India?

A tremendous market Emergence of middle class 300 million Consumer class of 105 million growing at rate of 10% & with an annual avg household income of $3000 Demographics 60% of Indian population is in age group of 20-30 & is more inclined towards modern shopping. Consumer spending growing rapidly credit card Sales on per sq. ft. basis lowest in world GDP growing about 6-8%

Opportunities in India
Indias retail trade is estimated at $206 billion & growing at 5% annually Only 3% of market organized shopping malls India as fastest growing sourcing market Indias vast market for food retailing Cold chain - Refrigerated distribution of fruits n vegetables Can add value to customers by means of low price and wide range of merchandise

Challenges in India
Protests from small businesses (kirana ) FDI restrictions. Indias poor infrastructure Poor public image predatory pricing , unemployment Indias diversity and heterogeneity Competition from Indian Retailors includingPantaloon,Shoppers Stop ,Piramals Regional governments are very strong politically

Present Scenario
Wal-Mart joint venture with Bharti 15 large wholesale outlets over the next seven years Entering as a wholesaler, because Indian law does not allow multi-brand foreign retailers to sell directly to consumers Govt. of U.P forced several top retailers to shut shop after local kirana stores triggered unrest. Other foreign retailers : Carrefour - Wadias ,Debenhams - Future group ICRIER study 12 million stores

Recommendation

Understand Consumer behavior Market Segmentation Format of stores super centers or hypermarkets Wal-Mart to adopt a blended model of its traditional format tweaked to fit the reality of Indian real estate

Q & A Session

Web References
www.walmartfacts.com www.gartner.com www.forrester.com www.hoovers.com www.wikipedia.com www.tsmg.com (Tata Strategic Management Group) www.finance.yahoo.com www.ficci.com

Thank You