Presentation by

Pratibha Dhir
Roll no PGDFM 06
INTRODUCTION
Walmart store inc. the largest retailer and
the largest company in terms of revenue.
Sam Walton ,the founder of Wal-Mart,
opened the first Wal-Mart store in Rogers,
Arkansas in 1962. The company is publicly
traded at the New York Stock
Exchange under the symbol WMT and has its
headquarters in Bentonville, Arkansas.
 Outline
• History Overview
- Vision, Mission and Goals

• Interna & External Analysis

-Value Chain
-SWOT & Pestel Analysis
-5 Forces Model
-Main Competitors

•Internationalization
-Driving Forces
-Entry decisions
-Examples of success and failure

•Suggestions
 History Overview
• 1962: Walten Brothers opened fist Walmart in
Arkansas
• 1970: Walmart became public
• 1990: 1st National retailer
• 1991: International Expansion
• 1993: Creation of “Great Value”
• 2003: Largest corporation in the world
• 2012: 50th Anniversary
Mission Statement, Vision, Goals, & Purpose
Mission Statement:
To help people save money so they can
live better

Goal:
Becoming in an international brand

Vision:
“If we work together, we’ll lower the Advertising slogans:
cost of living for everyone…we’ll give
Save Money. Live better
the world an opportunity to see what
it’s like to save and have a better life.
 Customer Target
• “Wal-Mart's targeted demographic:
– Modest incomes
– Shoppers interested in prices
• But the customer base is changing
Internal & External
Analysis
 Firms’ Value Chain

General administration

Human resource management

Technology development

Procurement

Inbound Outbound Marketing

Operations Service
logistics logistics and sales
 Support Activities
Firms infrasctructure: close connection between headquarter and local stores.

Human resources:
- Based on Interaction practices between company and employees
-Low pay but other benefits (health care plans, retirement plans, or promotion opportunities)
-2.2 million associates globally.
-Every time we open a supercenter, we provide roughly 300 jobs
-Women57% of our U.S. workforce, 27% of corporate officers, and 20% of our Board of directors.
Techonology development: It is the key factor of the company. It constitutes a competitive advantage
against competitors.
- Computer-based technology
POS (Point of sales)
system Satellite System
Procurement:
-Wal-Mart deals directly with manufacturers, by passing all intermediaries.
- EDI : Electronic data interchange

MANUFACTURER – WALMART - CUSTOMERS

 Primary Activities
Inboun Operations Outboun Marketing Service
d d and sales
Logistic Logistics
s
-VMI system 3 business segments: -Hub and spoke - Word of -accepting
distribution mouth returned goods
a)WalMart stores system. communication
- Super centers .
(Vendor managed - CROSS DOCKING:
- Discount centers
inventory) logistic technique -focuses on everyday -Satisfaction
- Neighborhoo
to make the low prices guarantee
d markets
continuous distribution
b) SAM’S process more “Save money, live - Opening
replenishment
efficient better” hours(24/7)
Club
-EDI (Electronic
-Sales are on a self-
Data Interchange c)WalMart service, cash-and-
international carry basis.
 Business Formats
1) Walmart Stores
• Walmart Discount Stores 629 in the US

• Walmart Supercenter: Walmart Discount Stores + Full Service

Supermarket. 3,029 in the US.

• Walmart Market: Previously branded as Walmart Neighborhood

Market. 199 in the US.

2) Sam’s Club. Buy in large quantities. 611 opened

in the US.
Walmart in the US
 Distribution Channels
• “Saturation Strategy”
• The company owns a fleet of more than 3,000 trucks and
12,000 trailers.
• The Wal-Mart Way – Cross Docking.
 Resource - Based View Of The Firm

Difficult Difficult
Competency Valuable Rare to to Conclusion
imitate substitut
e

Integrated technology of supply chain Yes Yes Yes Yes Sustainable Compt. adv

Ability to generate large sales volume Yes No No Yes Comp. Parity

Superior logistics system Yes Yes Yes Yes Sustainable comp. adv
Operation decentralization Yes Yes Yes No Temp. comp. adv

Strong culture Yes Yes Yes Yes Sustainable comp. adv

Human resources (management team

and employee autonomy) Yes Yes Yes No Temp. comp. adv
 SW
Helpful Harmful

STRENGTHS WEAKNESSES
INTERNAL FACTORS

• Diversity in products & services

•Brand image-weak
• Convenient prices & locations
reputation
• Strong market presence
• Low global presence
• Customer loyalty
•Behind rivals in e-
• Strong financial performance
commerce
• Cost and pricing advantages over
rivals
• Good supply chain
EXTERNAL FACTORS

• Global Expansion: new geographic • Intense Competition

areas • Laws and Regulations:
• Increasing online sales Trade policy
• Strategic alliances • Cultural barriers
Acquiring rival firms • Current economy
• Slow market growth
• Transport of distinctive
comptency
OPPORTUNITIES THREATS
 PESTEL Analysis
• Political: Policies on economy, trading
agreements (NAFTA…) .
• Economical: Unemployment Rate, slightly
increase in consumption.
• Socio Cultural: Faster pace of live- Efficiency is
key.
• Technological: Use of IT technologies. Online
shopping.
• Environmental: Recycling, Contamination issues.
• Legal: More laws and more complex.
The Five Forces Model
1. Bargaining Power of
Customers: Low
I. Customers usually make small purchases.
II. A large number of customers.
III. Wal-Mart’s main customers are
individuals.
2. Bargaining Power of Suppliers:
Medium-Low
I. Wal-Mart purchases huge quantities of
products from its suppliers.
II. Low switching costs from one supplier to
another.
III. Products have a lot of substitutes.
IV. Almost all the products are not critical for
Wal-Mart.
 The Five Forces Model
3. Potential entrants / Barriers to entry:
Medium-High
I. Economies of scale.
II. High capital requirements.
III. Customers mainly look for products with low prices and
standard quality.
IV. Low switching costs among companies for customers.
V. Requires a precise distribution system.
4. Power of Substitutes: High
I. Prices and quality of substitute products are very competitive.
II. Performance of substitute products are similar.
III. Consumer switching costs are low.
 The Five Forces Model
• 5. Potential Competitors/ Rivalry: High
I. Wal-Mart represents the 25% share of the U.S. Supermarket
business.
II. Competitors have similar sizes.
III. Industry growth is slow.
IV. Exit barriers are high.
V. There is a high production capacity

WAL-MART main competitors:

Retailer Industry: Supermarket Industry:

• Target • Dollar General
• K-Mart • Lowe’s Food.
 Strategic Group Map
High
Customer service/ Price

Low

Low Number of Product Categories High

 Main Competitors
Retailer Industry: Target Supermarket Industry:
Dollar General
I. Target is the main competitor of Walmart I. One of the main competitors, pursuing
low prices.
II. ranked #33 in the Fortune 500.
II. Good location in smaller communities is
III. Target offers very similar products.
the main competence advantage.
IV. Target went abroad in January 2011.
III. Strategy: Save time, save money
IV. Many items per $1

Mission: to Make Target your preferred

shopping destination in all channels by
delivering outstanding value, continuous Mission: to best serve others by keeping it real
innovation and exceptional guest experiences. and simple.
 Business-Level Strategy:
Combined Strategy
Walmart combines a Cost-Leadership
and Differentiation strategies because:

I. Allowed to achieve a large scale and an

efficient supply chain.
II. Has its own low-cost brands, like Great Value.
III. A unique cost structure that allows Walmart to
establish the lowest prices and achieve
competitive advantage. (best value/price
combination )
IV. Present in many different industries and
markets with efficient distribution channels.
V. Very difficult strategy to imitate by offering a
broad quantity of products at a low price.
Internationalization
 Internationalization
• Reasons for expanding abroad
• Risks
• International Strategy
• Success
• Key issues
 Forces Favoring Globalization
• 3 main reasons
– Saturated domestic market
– United States represents only 4% of world’s
population (missing of 96% of potential customers)
– Emerging Markets with lower disposable income offer
huge platforms for growth in discount retailer.
• Economies of Scale
• Growth
• Revenues
• Reduce political risk
 Risks of Expanding Abroad
• Management Risk
– Culture, language, customer
preferences, distribution systems.
• High investment

• Political and Economic risks

• Exchange Rates risk

 Entry Decisions
• Important decisions any company needs to
face when going international:

– What markets to enter, when and what size.

– What strategy to follow.
– What mode of entry.
 What markets to enter?

Europe:
•Mature Markets

•High Rivalry

•Lack of strong
costumer relationship
What markets to enter?
Asia:
•Most distant
geographically

•Most different culturally

and logistically

•Required high financial

and managerial resources
 What markets to enter?
Latin America:
• Closest markets

• Large population

•Emerging Markets
Walmart International
What Strategy to follow

Trans
Global
National

Inter Multi
national domestic

Low High
Local Responsiveness
Mode of entry of International Expansion
 Mode of entry of International Expansion
Year Country Mode of Entry
1991 Mexico 50% Joint Venture Cifra
1994 Brazil 60% Joint Venture Lojas Americana
1994 Canada Acquisition Woolco (weak player)
1995 Argentina Wholly owned Susbidiary
1996 China New opening, JV, Acquisition
1998 South Korea Adquisition
1999 U.K. Acquisition of ASDA
2002 Japan Acquisition Seiyu
2002 Germany Acquisition of Wertkauf and Spar
2007 India Joint Venture With Bharti Enterprise
2011 Southern African Countries Acquisition of Massmart Holding Limited
 Examples of International Success
• Mexico:
– Largest Walmart’s foreign presence (68%)
– 38% Retail Market Share in Mexico
• Canada
– One of the most successful international expansion
– Acquired Woolco Stores and changed structure

• Both countries are close and were exposed to

Walmart.
 Examples of International Success
• China:
– Most populous country
– Lower income in middle-class families
– Adaptation to market
– 85% of products from local suppliers.
 Examples of International Failure
• Germany
– Walmart was not able to benefit from economies of scale
– Unable to become cost leader
– Mode of entry:
• Wertkauf (right move)
• Spar (wrong move)
– Culture differences
– Low profitability market
– Lost $1 Billion
 Examples of International Failure
• India
– Political and legal barriers:
• Foreign companies are not allowed to set up big stores
unless they sell only one brand.

• South Korea
– Very demanding customers
– Did not customized to market
– Big companies also fail in South Korea
 Key Success Factors
• A supply chain with integrated technology

• An ability to generate large sales volume (economies of scale)

• Every Day Low Prices

• Superior logistics systems

• Decentralized operations

• A strong and unique culture (in U.S.)

Suggestions
 “Think local, act global”
• Locally leveraged:
– Shared knowledge between units.

• Worldwide learning:
– Advantages of interconnected economies.

• Adaptation:
– To locally customize processes and services
 We Save People Money So They Can Live Better

Service to the Respect for the Strive for Act with

customer individual excellence Integrity

Make every day easier Change how Deliver results and Be the most
for busy families we work operate with discipline trusted retailer

Customers Associates Communities Shareholders

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 Flipkart Group Investment Fits within Walmart’s International Strategy

Active portfolio management High Growth, Attractive Market

Opportunity with the Local Leader

Strong North Key Growth Diversified Portfolio

American Core Markets Markets
 Mexico  China  Africa  Chile
 Canada  India  Argentina  Japan
 Central America  Brazil  UK

Disciplined growth Be the lowest Build strong

through differentiated cost operator foundations
customer proposition

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 Flipkart Group Transforms Our eCommerce Opportunity in a Critical Growth Market

Attractive Market & Growth Opportunity One of the world’s largest and fastest growing markets
Market

Accelerating eCommerce Environment eCommerce growing 4x faster than retail industry

The Local Leader $7.5 billion1 annual GMV and 54 million active customers

Experienced & Committed Management Team Management with strong in-country expertise
Flipkart

Strong Partnerships Strong shareholder partners with successful track records of investments in Asia

Creating Value for all Stakeholders Long-term value for shareholders, associates, Indian economy & communities

1. Gross Merchandise Value or GMV as defined by Flipkart represents the total dollar value of orders processed on its marketplaces in the period without reduction for returns.

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 India Is a Compelling Growth Market with Long-term Potential

9.4% 443M 35%

GDP CAGR over Millennials plus Percentage of population
past 10 years1 393M Generation Z, using internet3; 2nd largest
or 66% of the population2 internet market globally

79% 58%
Mobile percentage of internet Estimated smartphone
traffic, vs. global average of penetration by 2020 vs.
50%4 30% in 20175

1. Source: CAGR calculated from WorldBank reported historical GDP data 2006 to 2016 (last reported) 4. Source: Statcounter 2017 data in PlanetRetail RNG “Ecommerce & Digital Ecosystem Management”
2. Source: Goldman Sachs “India` Consumer Close-up” which cites Euromonitor; UN population estimates 5. Source: Deloitte “Digital Media: Rise of On-Demand Content”
3.Source: Internet Live Stats 2016 data in PlanetRetail RNG “Ecommerce & Digital Ecosystem Management;” India market size defined
by number of users

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 India eCommerce Projected to Grow 4x Faster Than Total Retail over Next Five Years

India’s eCommerce vs. Total Retail Growth1

Total Retail: eCom:

’18-23E
CAGR ~9% 4x ~36%
7%
6.2%

6%

5%

4%
eCommerce Penetration

2.1%
3%

1.8% 1.8%
2%
1.0%
1% 0.4%
0.2% 0.3%

0% //
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY23E

Sources: Bain & Company estimates based on primary and secondary sources, and shall not be construed as definitive predictions or forecasts
1. Excludes services

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 Flipkart Group Is the Local Leader in India eCommerce

India’s Retail Landscape Derives

Flagship Flipkart Businesses Support from Flipkart’s Ecosystem

Flipkart
Leading India’s Technology that digital
consumers trust
eCommerce transformation

Logistics arm Ekart - 500k

deliveries every day
Myntra and Jabong
India's leading online
fashion destination

PhonePe app facilitates

seamless payments

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 Flipkart Group Is Positioned for Significant Growth

Gross Merchandise Value ($M)1 Active Customers (M)2

$7.5B
$7.5B1
Annual GMV
54M

54M
Active customers

261M
Units sold in FY18

FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18

Myntra and Jabong

Flipkart

Note: Exchange rate $ / INR 65; Fiscal year ends 31-Mar; FY2015 has 8 months of Myntra & FY2016 has 8 months of Jabong. FY 2018 does not include eBay
1. Gross Merchandise Value or GMV as defined by Flipkart represents the total dollar value of orders processed on its marketplaces in the period without reduction for returns.
2. Active customers are customers transacting at least once in the last 12 months. Total does not exclude customer overlap between enti ties

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 Flipkart Group Maintains Leading Position in Fast Growth Categories with
Significant Upside

Fashion Mobile Electronics Large Appliances

Flipkart Group
Category Rank by
GMV Share
#1 #1 #2 #1

Source: Wall Street analysts and Bain & Company estimates based on primary and secondary sources
and shall not be construed as definitive predictions or forecasts

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 Experienced and Committed Management Team with Strong Market and
eCommerce Expertise
Binny Bansal
CEO, Flipkart Group and
Co-Founder of Flipkart
 2017 CEO of FlipkartGroup
 2016 CEO of Flipkart
 2007-2016 COO of Flipkart
 B. Tech in Comp. Engineering from IIT-
Delhi
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Kalyan Krishnamurthy
CEO Flipkart
 2017 CEO of Flipkart
 2016 key positions with Flipkart
 2006-2016 key positions with Tiger
Global Management and
eBay Asia-Pacific
 MBA from AIM, Philippines
Ananth Narayanan
CEO of Myntra and Jabong
 2015-2017 CEO of Myntra
 2000-2015 Director, Managing Partner,
McKinsey Chicago, Shanghai, Taipei,
India
 MS from University of Michigan
Sameer Nigam
Founder and CEO of PhonePe
 2014-2017 Founder and CEO of
PhonePe
 2011-2014 VP and SVP at Flipkart
 2009-2012 Founded Mime360 as digital
distribution platform
 MBA from Wharton BusinessSchool
 Walmart Is Working with Strong Shareholder Partners

53
 Walmart and Flipkart Group Create Value for Everyone
Customers
• Quality, affordable goods
• Easier and quicker ways
to shop
• Broad product assortment
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Associates Communities Shareholders
• Better opportunities • Job creation • Attractive growth market
• Stronger business • Support farmers and • Strengthens global
develop supply chains portfolio
• Supports women • Generates long-term
entrepreneurs value
• Executes on committed
international strategy
 Transaction
Details and
Guidance

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 Transaction Overview and Financial Highlights

• Walmart’s approximately $16 billion investment includes $2 billion of new equity funding, which will help Flipkart achieve
its growth potential.
• Walmart initial ownership stake of approximately 77%.
• Remainder of ownership held by Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent
Transaction Holdings Limited, Tiger Global Management LLC, and Microsoft Corp.
Structure • While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition
to transition into a publicly-listed, majority-owned subsidiary in the future.
• Closing expected later in FY19, subject to regulatory approval.

• Finance the investment with a combination of newly issued debt and cash on hand.
• Flipkart’s financials will be reported as part of Walmart’s International businesssegment.
• Assuming the transaction closes at the end of the second quarter of this fiscal year, Walmart expects a negative impact
to FY19 EPS of approximately $0.25 to $0.30, which includes incremental interest expense related to the investment.
• In FY20, as we look to accelerate growth in this important market, Walmart anticipates an EPS headwind in total of
around $0.60 per share, comprised of:

Financing and
o Operating losses of approximately $0.40 to $0.45 per share, assuming minimal tax benefit for the losses in the near to
EPS Impact mid term. This amount includes about $0.05 per share related to amortization of intangible assets and depreciation of
short lived assets resulting from purchase accounting, which will only last for a few years post-closing.
o Interest expense of approximately $0.15 per share.

• In the mid to long term, as the business scales and efficiencies are realized, we expect losses to decline and returns to
improve.
• Given Walmart’s financial strength, we anticipate the continuation of our current share buyback program, while
maintaining our strong credit profile.

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 Creates Significant Long-Term Value for Shareholders

Critical growth A leader in Local talent with Long-term

market eCommerce global expertise growth

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