Wal-mart in India.ppt

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By Divakar Badola 1 Ratan Global Business School

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“ The secret of successful retailing is to give customers what they want… And really if you think about it from your point of view you as a customer want every thing : a wide assortment of good quality, comparatively low price, guaranteed satisfaction, friendly convenient hours, pleasant shopping experience.” ---- SAM WALTON 2 Ratan Global Business School

Introduction: 

Introduction Founded by Sam Walton In 1962. The world's largest public corporation by revenue, according to the 2008 Fortune Global 500. The largest private employer in the world and the third-largest utility or commercial employer. The largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business. 3 Ratan Global Business School

Products and Services Offered: 

Products and Services Offered Family apparel Automotive products Health and beauty aids Home furnishings Electronics Hardware Toys Sporting goods Lawn and garden items Pet supplies Jewelry Housewares, etc. Vision centers Health clinics Fast food restaurants Hair salons Portrait studios one-hour photo centers Banks Pharmacies, etc. 4 Ratan Global Business School

Wal-mart’s SUBSIDIARIES: 

Wal-mart’s SUBSIDIARIES Discount stores Neighbourhood market Sam’s Club Super center 5 Ratan Global Business School

Operations Strategy at Wal-Mart: 

Operations Strategy at Wal-Mart 6 Ratan Global Business School

Business Mantra: 

Business Mantra Wal-Mart operated according to 10 rules : 1. Commit to the business; 2. Share the profits with all associates; 3. Motivate your partners, vendors, and suppliers; 4. Communicate everything about the business to everyone in the company; 5. Appreciate the associates and let them know they are appreciated; 6. Celebrate success; 7. Listen to everyone; 8. Exceed expectations; 9. Control expenses; and 10. Swim upstream. 7 Ratan Global Business School

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Critical Success Factors 8 Ratan Global Business School

Flexibility: 

Flexibility Wal-Mart use highly automated handling systems and carefully coordinate cross-docking to move goods through the system with a minimum of inventory and operate 24 hours a day. The distribution network is based on the hub-and-spoke concept with warehouses in the center of a trade area where no store is more than one day's drive from its distribution center. Serving this distribution network is one of the largest private fleets in the country. 9 Ratan Global Business School

Dependability: 

Dependability “Wal-Mart has an on-time delivery record well in excess of 99%, and the opinion within the company is that it is not good enough. The only acceptable delivery record is 100% on-time, and if they could get better than 100%.” 10 Ratan Global Business School

Cost: 

Cost “The focus of Wal-Mart is that cost-cutting can co-exist with a moral center, which operates on the principle that it can be the cheapest place to shop and the best place to work at the same time.” 11 Ratan Global Business School

Cost factor cont……: 

Cost factor cont…… A culture based on profit derived, not from the pricing end, but from the cost end of every transaction. The plan, always, has been to drive costs out of the system in the stores, from the manufacturers' profit margins, and from merchandise brokers and other middlemen, all in the service of driving down prices at the retail level. Wal-Mart tried to keep constructions costs and rent at a minimum. For that reason, Wal-Mart continued to house several of their early stores in primitive facilities. 12 Ratan Global Business School

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Saving a penny in operation is as important as generating a penny from sales : 

Saving a penny in operation is as important as generating a penny from sales Driving out costs has evolved into seven basic rules of operation : Forming partnerships with vendors Keeping expenses low Proper selection of store locations Company ownership of the distribution fleet Knowing the numbers (detailed sales figures ) Knowing its own business Knowing its competition Taking care of customers 16 Ratan Global Business School

Speed: 

Speed Sundown Rule Ten feet attitude rule 17 Ratan Global Business School

Quality Of Design: 

Quality Of Design "Every Day Low Price" one-stop family shopping Annual Membership fee ($35 businesses & $40 individuals) Offer Groceries, pharmaceuticals and general merchandise 18 Ratan Global Business School

Quality Of Performance: 

Quality Of Performance Customer focused Employees Aggressive hospitality displayed by employees Rule for employees : Customer is always right 19 Ratan Global Business School

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Service Quality 20 Ratan Global Business School

Three Basic Beliefs: 

Three Basic Beliefs Company officials say the aim is always to serve the consumer by filling gaps. 1 Respect the Individual Every customer and employee deserves to be treated with respect and dignity. 2 Service to Our Customers Offer the lowest prices with the best possible service 3 Strive for Excellence Find new and innovative ways to constantly improve 21 Ratan Global Business School

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Problematic Issues at 22 Ratan Global Business School

Employees’ Issues: 

Employees’ Issues UNSUSTAINABLE WAGES: Business Week quoted from a recent report from consumer group for a New Economy, stating that “Wal-Mart employees earn 20% less than the average U.S. retail worker, and some $10,000 less than what the average two-person family requires to meet its basic needs.” “Wal-Mart’s profit per associate is $6,400.If they will pay two dollars more per hour to associates, that would cut $4,000 out of our per-employee profit.” 23 Ratan Global Business School

Shareholders’ Issues: 

Shareholders’ Issues SPYING ON SHAREHOLDERS: Surveillance of Shareholders on the part of Wal-Mart has caused investors much concern. According to The Wall Street Journal, Wal-Mart security units were asked to “do some preliminary background work on the potential threat assessment” of those submitting proposals to a shareholder meeting, particularly those whose resolutions the company was trying to block. Wal-Mart eventually apologized to shareholders after the article appeared, particularly for referring to them as potential threats. 24 Ratan Global Business School

Other Issues: 

Other Issues Wal-Mart has a poor record of locating stores on environmentally sensitive sites, especially wetlands. Wal-Mart received criticism for the construction of a store near the 2000-year old pyramids of the Teotihuacán Empire. WAL-MART STORES INC., WHICH GOT ITS REPUTATION FOR LOW PRICES BY OFFERING BRAND NAME PRODUCTS FOR LESS, IS AGGRESSIVELY EXPANDING ITS PRIVATE LABEL BUSINESS 25 Ratan Global Business School

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Examples1 : A lady went to Wal-Mart to buy a thermometer. She looked around for a reasonable priced thermometer, but the thermometer she saw were priced $44.00 and $99.00. She was searching for the traditional ones that cost $10.00 or so. So She went and asked a Wal-Mart employee. The employee looked at her, and then said, "I don’t know. Have you asked someone from that department?" She kept silent for a few seconds, though I just wanted to scream at her. She calmly said, "Well, if I had found someone from that department, why would I be here asking you?". She got nobody there to ask with so She went to another store in town. Customers Problems……. Source: http://goinside.com 26 Ratan Global Business School

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Lowest prices Availability of different Merchandise Lower & Middle Class Porters 3 Generic strategies 27 Ratan Global Business School

Wal-mart’s Value Chain: 

Wal-mart’s Value Chain 28 Ratan Global Business School

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Inbound logistics Operations Outbound logistics Marketing Sales & services 29 Ratan Global Business School

Crafting Strategies: 

Crafting Strategies Acquisitions & Join Ventures Agreement with Berkshire Hathaway, Inc. acquired McLane Company, Inc. Expansions Wal-mart is looking for Global positioning 30 Ratan Global Business School

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Wal -mart in India 31 Ratan Global Business School

The Indian counterpart: 

The Indian counterpart In August 2007, Walmart announced an agreement with Bharti Enterprises to establish a joint venture, Bharti Walmart Private Limited, for wholesale cash-and-carry and back-end supply chain management operations in India. Our first BestPrice Modern Wholesale opened in May 2009. The president and CEO of Walmart India is Raj Jain . 32 Ratan Global Business School

Major Competitors: 

Major Competitors Shoppers' Stop Westside (Trent) Pantaloon (Big Bazaar) Lifestyle RPG Retail (Food world, Music world) Crossword Wills Lifestyle More 33 Ratan Global Business School

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SWOT Analysis: 

SWOT Analysis Strengths…. Demographic favor. Changing consumer habits and lifestyles. Plastic card revolution. Greater availability shopping space. Weakness…. Numerous license , permits and registration Limited consumer insight lack of detailed region specific customer data. Inadequate human resources Underdeveloped supply chain and underdeveloped logistics infrastructure. 36 Ratan Global Business School

SWOT Analysis: 

SWOT Analysis Opportunities……… Potential for investment. Sectors with high growth potential. Fastest growing formats. Rural retail. E-retailing. Retail franchising. Threats…… Political issues. Social issues. Inflation. Taxation hurdle. Poor inventory turns and stock availability . 37 Ratan Global Business School

Suggestions': 

Suggestions' Indian retailers has to gear up for more competition from wal-mart Make their supply chain stronger Train their human resources Technology upgradition Cost reduction New formats 38 Ratan Global Business School

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