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And many more reasons were there why Wal-Mart chose Bharti. Bharti enterprises have entered into a deal with Wal-Mart agreed to form of 50:50 joint venture to roll out retail outlets in India. The two companies have an equal partnership in wholesale business where Indian partner is hopeful of replicating itself in the retail business, following government's decision to allow up to 51 % FDI in multi-brand retail. Bharti and Wal-Mart planned to use two different formats for their stores, a franchised retail company and a whole sale cash and carry joint venture. The joint venture will change the countrys inefficient and scattered retail industry dramatically. The two companies still hope that Indian government lift restriction from FDI so that Bharti-Wal-Mart can open more and more stores in India.
SWOT ANALYSIS
Strengths Bharti is a well-known name to the Indian consumer. Organized retail is growing rapidly in India. Wal-Mart already is best known for global best practices in retailing. Bharti has strong experience with retailing to a large number of customers both in rural and urban areas. Due to its Pan India presence Bharti can replicate the efficiencies of scale which Wal-Mart is known for. Opportunities Wal-Mart has the best practices of a globally successful retailer. Booming economy of India. Huge market which is still untouched by competitors. Weaknesses The Indian retail industry is still mostly unorganized and is widely fragmented. The Government has severe restrictions on retail which can impact this Joint Venture Inadequate distribution channel.
Threats Rising strength of big local competitors. Increasing real estate cost in India Insufficient infrastructure for retail industry
Threat of Substitutes:
Traditional Indian retail outlets are the main substitutes. Unorganized small scale vendors, hawkers are all substitutes for the organized retail. This threat in turn increases the bargaining power of the customers.
Suppliers with huge warehouses and storage spaces can be more advantageous for efficient supply chain management for the retailers
Maintain a mutually understanding, effective and efficient working partnership with Bharti Enterprise. Give more importance in market research to understand the domestic market and Indian consumer type to fulfill their needs and demand accordingly. Set up stores all across India in such a location which is convenience to the local consumers. Build a effective and reliable supply and distribution system Always follow the rules and regulation of local governing body.