Wal-Mart is one of the largest grocery chains globally. The company was established in 1962 by Samuel Walton and J.L Walton. In this report, proper analysis will be made of Wal-Mart.
Political factor plays a great role for the brands like Wal-Mart who are trying to conduct the activities on an international level. It is seen that the rules and regulations in India are strict and it is important to consider proper rules and regulations so that entry can be easy for the company. In India there is high level of stability in politics so it is an opportunity for the company to enhance the market share and conduct the activities in India. In India there is political support for globalization and it is seen that it is one of the opportunity for the company to enhance its market share in a proper manner. It is also seen that India give opportunity to the foreign investors so that business can be conducted with a local companies. At the timing of entering into the market it is seen that the company faced many rules and regulations related with currency and tax system (Joseph, 2015).
It is important for the company to take into consideration proper rules and regulations so that activities can be conducted smoothly. In India there is high political pressure for higher wages and it is one of the biggest threats for the company. It is seen there are many taxation policy like VAT which is important to be considered by the company. There are also many rules and regulations related to FDI in India.
In the Retail industry sector there are various factors that give direct impact on the overall performance of the Wal-Mart. It is seen that in India the economic downturns are seen and also the currency exchange will give direct impact on the performance. In India, the company is facing issues related to unemployment and also inflation rate. These factors give direct impact on the overall profitability and growth of the company. It is seen that the company has invested a lot in 2008 on lobbying to increase the market access for investment (Selmi and Tsakos, 2015).
There are various challenges that are faced by the company like people of India prefer to buy fresh vegetables and grocers as compared purchasing from supermarkets. In India, it is seen that due to a shortage of the resources standing in a queue is one of the major disadvantages for the company. It is seen that Indian firms are more hierarchical if a comparison is made with the western companies. (Dholakia et al., 2017).
To be competitive in India, the company should focus on considering latest technologies so that growth can be achieved. The company should focus on promoting digital means of business through introducing the applications in the market. It is seen that company also conducts the activities through applications. So it is important to promote the application system in India so that growth can be achieved effectively.
The company should also focus on giving paper bags so that environment can be secured in a proper manner. In India, the ban is also imposed on the usage of plastics so the company should emphasize to use paper pages.
It is important for the company to consider the Wages act so that activities can be conducted properly and effectively. In India, the company has the opportunity to consider food safety regulations so that the satisfaction level of the customers can be enhanced.
The bargaining power of the buyer
It is seen that the company has less power in the retail sector. The company has to face pressure because of many suppliers in the industry. Also, it is seen that a large number of buyers have a strong force on the company and also weak force is seen on the individuals who purchase the product in a small quantity.
In the retail sector, it is seen that there is less power on the bargaining power of the suppliers. The products can be supplied easily by many suppliers. The big companies like Wal Mart can easily give impact on the suppliers.
In the retail sector, the rivalry is strong. There are large numbers of companies in the retail sector and also it is seen that company can remain aggressive so that competitive advantage can be achieved.
In the retail sector, the threat of substitution is weak as it is not possible for every business to conduct the activities on large scale. It is also seen that many substitutes are costly if a comparison is made with the low-cost goods offered by Wal Mart (Hwang and Park, 2015).
The company has to face high risk from the new entry of the companies. It is seen that to develop new brand can be a costly process. It is also seen that new entrants can become a threat to the big companies like Wal Mart (Matusitz, 2015).
It is seen that company focuses on purchasing the products in bulk from the suppliers so that prices can be managed. The company emphasizes on proper supply chain management and inventory management so that supply chain cost can be managed (Laszlo and Cescau, 2017).
The company conducts the activities in more than 28 countries and it has more than 11500 retail units globally. The company takes into consideration the technique of inventory management which is cross docking.
The tagline of the company is “SAVE MONEY AND LIVE BETTER”. The company offers low-cost products which have given impact on the image of the company. The company gives advertisements on social media and through banners (Priyanka and Srinivasan, 2015).
The company takes into consideration extensive use of technology as it has good supply chain and customer service. The company also introduces smartphone applications which enhance the sales (Waller et al., 2015).
The company has many problems with the poor human resource practices. Wage policy is one of the issues and it is seen that company has given good ages to promote the people.
The company focuses on procurement. It is seen that the company have managed good relationships with its suppliers so that cost can be less. The suppliers offer good products to the company.
Wal Mart has a good infrastructure that takes into consideration management, human resources, and overall supply chain. Also, it is seen that company manages the employees in a proper manner.
In the starting phase of its entry to the India Wal-Mart has a great expectation due to its diversified and such a large population (Matusitz and Reyers, 2010). In the later stage of its establishment it was noted that company has failed significantly in its business. It was due to various reasons that existed in the market of India. By watching India’s growth rate company has announced to open around hundreds of stores inside the nation. This had proved to be wrong in the longer run. Some of the reasons that resulted in its failure in India are:
Its future strategy of diversification teaches the by adding a number of products in the portfolio company can easily expand their reach in the market. Wal-Mart is planning on adding non-food items in its stores. This is due to the fact that non-food products have higher profit margins as compared to that of food products.
This company has chosen to enter the market of India with the help of Partnership. This is an equity mode of entry where the company had a joint venture with the Conglomerate Company Bharti. In this Joint Venture, Wal-Mart has the share of 51 % (Cohen, 2013). This mode of entry helped them in reaching to the local suppliers as the government of India has restricted the firm that they have to take a major part of their products from the local suppliers. This was also due to the fact that there are many 100% FDI in the retail market is not permitted in India (Shah and Pore, 2014). This has forced the companies to choose this entry mode in India.
The suggested mode of entry for this company would have been licensing. This kind of licensing strategy could have helped the company in making least amount of investment. In the country like India where the larger part of the grocery market is controlled by Kirana stores. In the licensing strategy, the products that are sold by licenser in their host country can be sold by the licensee in the market where the company wants to entry. The franchiser company can train the employees; provide technology that will help them in making their operations smoother. As an alternative, this can be an option for the company to enter the market of India. This will also be supported by the government of India as the total purchase of the raw materials will be from the country itself. This will reduce the cost of the operations of the company as they will not have to invest a huge amount of money in lobbying which has been a serious challenge for the company in the past (Haiven, 2013).
Wal-Mart is a bigger brand and hence they have to properly apply their marketing mix. This will help the company in reaching the larger part of the market and achieve the strategies they have made for themselves (Kapoor, 2014). The company needs to apply the marketing mix according to the internal and external environment it is facing.
Conclusion
So, by evaluating the report it is seen that company should focus on proper marketing in India so that goals and objectives can be accomplished effectively. Also, proper management will help to enhance the market share in an effective manner.
References
Bhandari, N.C., (2017) Walmart-bharti joint venture: formation, breakup, & strategies. Academy of Strategic Management Journal, 16(1).
Bose, T.K., (2012) Advantages and Disadvantages of FDI in China and India. International Business Research, 5(5), p.164.
Cohen, A.J., (2013) Supermarkets in India: Struggles over the organization of agricultural markets and food supply chains. U. Miami L. Rev., 68, p.19.
Dholakia, R.R., Dholakia, N. and Chattopadhyay, A., 2017. Indigenous marketing practices and theories in emerging economies: Consumer behavior and retail transformations in India. Journal of Business Research.
Foster, A., (2014) Multinational firms in India: Conducting ethical business (Doctoral dissertation).
Gopalakrishna, P., Subramanian, R. and Fleischmann, D., (2016) Walmart in India. Journal of the International Academy for Case Studies, 22(3), p.99.
Haiven, M., 2013. Walmart, Financialization, and the Cultural Politics of Securitization. Cultural Politics, 9(3), pp.239-262.
Hwang, M. and Park, S., 2015. The Impact of Walmart Supercenter Conversion on Consumer Shopping Behavior. Management Science, 62(3), pp.817-828.
Joseph, L., 2015. A Geographic Perspective on the Walmart Neighborhood Market. Papers in Applied Geography, 1(4), pp.348-355.
Kamboj, R. and Kalia, S., (2011) July. Walmart-India vs. China. In PRIMA (Vol. 2, No. 1, p. 19). Publishing India Group.
Kapoor, M., (2014) Redefining progress and ushering in the fourth revolution. Procedia-Social and Behavioral Sciences, 133, pp.203-210.
Laszlo, C. and Cescau, P., 2017. Sustainable value: How the world’s leading companies are doing well by doing good. Routledge.
Matusitz, J. and Reyers, A., (2010) A Behemoth in India: Walmart and globalization. South Asia Research, 30(3), pp.233-252.
Matusitz, J., 2015. Bharti-Wal-Mart: A Glocalization Experience. Journal of Asian and African Studies, 50(1), pp.83-95.
Prabhakar, R. and Raj, S., 2013. A study of food retailing system in india: a conceptual study. International Journal of Retailing & Rural Business Perspectives, 2(3), p.520.
Priyanka, P.V. and Srinivasan, P., 2015. From a plan to generating revenue: how is social media strategy used to generate business in the retail industry in India?. International Journal of Marketing and Technology, 5(4), pp.62-74.
Selmi, M. and Tsakos, S., 2015. Employment Discrimination Class Actions After Wal-Mart v. Dukes. Akron L. Rev., 48, p.803.
Shah, G. and Pore, A., (2014) Is Walmart Good for India? A Humanistic Perspective on Opening Up FDI in Multi-Brand Retail in India. In Humanistic Perspectives on International Business and Management (pp. 165-178). Palgrave Macmillan, London.
Trebbin, A., (2014) Linking small farmers to modern retail through producer organizations–Experiences with producer companies in India. Food policy, 45, pp.35-44.
Waller, M.A., Fawcett, S.E. and Johnson, J.L., 2015. The Luxury Paradox: How Systems Thinking and Supply Chain Collaboration Can Bring Sustainability Into Mainstream Practice. Journal of Business Logistics, 36(4), pp.303-305.
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