Supply Chain Management at Wal-Mart

Submitted By :- Group 10 Abhra Majumdar - 2010063 David Vaz 2010194 Deenbandhu Mishra 2010075 Gourav Kumar 2010078 Pamela Chandra - 2010215 Puneet Kapoor - 2010160 Ruhshaad Daroga - 2010163 Sonam Doshi - 2010048

Q1. What should be the business model for Wal-Mart Retail Chain? What is its penetration strategy?
Wal-Mart's business model is based on a low price strategy and

low transportation costs allow it to sell its products at the lowest possible prices.
Wal-Marts everyday low prices were built on leveraging

economies of scale, low-price Chinese suppliers, advanced satellite-based IT systems for inventory and shelf management, and float paying suppliers in 90 days, while selling their goods within 7.
Wal-Mart employs a combination of two Business Models viz. B2B Single firm network Business Model SAMS CLUB

segment of Wal-Mart supports small businesses. Its main focus in this segment is to create its own network of trusted partners to coordinate supply chains and provide exceptional value on brand-name merchandise at Members Only prices.
B2C E-Tailer Business Model Wal-Mart uses clicks and bricks

methodology to provide millions of its customers online version of its retail store, where customers can shop at any hour of the day or night without leaving their home or office.

Business model
Business model revolves around Discount

Retailing and Bulk Purchase Merchandising. -driving high volume of products through low cost retail outlets This gave over to everyday low pricing strategy
Lower price

Minimize expenses

Maximize sales volume and industry turnover

Q1. What should be the business model for Wal-Mart Retail Chain? What is its penetration strategy?
Penetration Strategy

Most Convenient Locations

Global Buying For Relentless Pressure On Prices Logistic Efficiency: Speed To Market Complete Shopping Experience & Value-for-money

Department Store Way Beyond Just Low Prices Full-line Department Store Price-based - Best Quality At The Charged Price Maximum in-store Merchandise Display

Improvements brought into operation to enable business expansion worldwide

RFID system Hub and Spokes (Satellite Network) model for efficient distribution distribution

based expansion
Retail link, CPRF, VMI
Remix (reducing %ge of OOS merchandise in stores)

The latest expansion strategy is for the company to gain entry into a nation by corporate takeover of a national retailer.
Once the company is bought, Wal-Mart converts the stores into Wal-Mart stores.

This particular strategy, of corporate takeover, puts the company at an advantage when it enters into a new market. In one stroke, a large competitor is eliminated, and at once, Wal-Mart has real estate and employees, and a massive presence in its targeted location.
This is an effective use of the company's size and wealth, as few if any competitors are able to do this effectively. The company builds up brand familiarity, while retaining the old familiar outlets. Gradually, as the local Wal-Mart stores begin to make money, and local management assess their competition environment, the company begins to redesign the acquired stores to look like "Wal-Mart's, it then begins to build new and larger stores in that new market.

Causes for Failure in Germany

A fundamentally flawed entry-by-acquisition strategy. Acquisition of Wertkauf stores and Spar stores. Heterogeneous store size, already defamed reputation. a management by hubris and clash of cultures-approach to labour relations, - Unionised labour structure was not respected. Strict worker protection regulation struct upon profitatbility. Customers used to self service format, additional assisstant added to costs

 Blatant failure to deliver on its legendary we sell for less always, everyday low prices and excellent service value proposition. Already existing players played at even lower prices. Even lower prices was difficult to attain. Germanys restrictive shopping hour regulations, 24/7 shopping facility could not be de livered
Bad publicity due to its repeated infringement of some important German laws and regulations. Act Against Restraints of Competition- undertakings with superior market power - restrictions from selling a range of goods not merely occasionally below its cost price, unless there is an objective justification for this. Commercial Act(Handelsgesetzbuch or HGB)- disclose basic financial information including a balance sheet and an annual profit or loss statement

Wal Mart Struggle in UK

Government laws- Planning laws currently make it difficult to develop

hypermarkets and Wal-Mart style supercentres in the UK Increased farm subsidy provides low cost to the retail industry Competitors like Tesco takes away the price advantage and merchandise mix Everyday low pricing strategy does not work as consumers are ready to pay a premium for high quality food. Culture differences- UK customers like the convenience of small stores. Shopping in little quantities and shopping often . Store location closed ot public transport facility is convenient . Wal mart ASDA had big stores in far off places, inaccessibility. The concept of "Green Business is Good Business" is more prevalent in UK/Europe than in the US. Tendency towards, green food, public transport eco friendly measures are popular.

Walmarts exit from Korea

Sold its 16 South Korean outlets to Shinsegae, a local top-

discount chain, for $882 million

Failed to localize its operations in South Korea tastes and

culture warehouse hypermarkets

Put off South Korean consumers by sticking to Western

marketing strategies that concentrated on dry goods, from electronics to clothing, while its local competitors focused on food and beverages the main segment that attracts South Koreans to hypermarkets also to build the kind of market share that would allow them to press suppliers on pricing
Ex. - For EDLP competitive prices can only be achieved in markets where Wal-Mart opens at least 100 profitable stores

slow in opening stores not only to win more customers, but

Thank You