The failure of Walmart in Germany and its future in India

Presented By : Mayank Sen Manvendra Pal Singh Raavi Katyayan Rinku Gupta Subhasinee

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.

Research Background:
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-Marts international sales was registering significant growth .

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 .

Evolution of Retail Industry :

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.

Go Global
Saturated Domestic Market Emerging Markets with lower disposable income offer huge platform for growth to retailers Growth Revenues .

Risks Involved while going Global

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

Wal-Mart Success Factors :

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)

PEST Analysis:
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.

Continued ..
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.

Why Wal-Mart Entered Germany:

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.

Entry Strategy of Wal-mart and Reasons for failure :

Bad Acquisitions Strategy Failure with Cultural Integration Failure of Everyday Low Prices Strategy Lack of Customer Satisfaction

Sampling
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

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 A

Option B
Option C Option 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 A

Option B
Option C Option 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