Professional Documents
Culture Documents
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)
Total Employees 1.9 Million Total Sales 348.6 billion in 2006 Net Income 11 billion in 2006
Diversified into Food & Grocery , Private Labels and online store. Wal-Mart online is the e-commerce website. Has started selling online Music and Movies.
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
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
Wal-Mart
Tire & Lube Express, Wal-Mart Optical, WalMart Pharmacy, Wal-Mart Vacations, WalMart's Used Fixture Auctions
1. Non-food
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
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.
Joint Ventures(MX,BZ) Acquiring an existing player (GM,CN,UK,SK,PR,JP) Start greenfield* operations .(AG,CH)
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
UK(**337)
Acquiring
Mexico (**919)
Joint Venture
Entered in 1997 JV with Cifra Local market knowledge Overcame cultural barriers
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
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
-Entered in 2002 - stake in Seiyu Ltd -Competitors were Daiei,Sogo,Mycal Merchandising & store designs suiting the consumers
-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
Guatemala
Honduras Nicaragua
India
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
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