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COMPETITOR ASSESSMENT

CASE ANALYSIS OF WAL-MART AND BHARTI

Submitted To : Dinesh Kumar

Submitted By : Kalpit Jain PG20125301

Indian Retail Market


India has become center of economic activities in todays global world. Indian retail is the most promising sector in the world and it has caught the attention of players across globe. While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well. Indian retail market is highly complex in terms of a geographic spread and consumer preferences. In order to capture Indian market Wall-Mart entered in 50:50 venture with Bharti for cash-and-carry retail business. Wal-Mart and Bharti need to tackle huge challenges to be successful. It ranges from huge cultural diversity, lack of infrastructure, political resistance, social resistance, lack of use of technology, to supply chain management.

Wal-Marts efficiency in supply chain management


The Supply chain management forms the heart of Wal-Marts business. Its reliability and efficiency is unmatched in the word of retail. Wal-Mart always seeks to improve and explore possible ways to give customers superb quality service without an additional expense. All aspect of supply chain from the purchasing to transporting and then finally to selling are wellcoordinated and systematic which ensures the success of the entire supply chain, which in turn benefits and satisfies Wal-Marts customers. Wal-Mart has been very successful in finding means to capitalize on every cost saving opportunities and the adoption of efficient logistics system enable Wal-Mart to earn unrivaled intangible competitive advantage and edge to the rest of the business world which is made possible also in the use innovative technology.

Wal-Mart to maintain supply chain as a competitive advantage


Wall-Mart and Bharti may face some issue in implementing a robust supply chain management due to lack of infrastructure, socio-cultural diversity, and socio-political resistant and various other challenge. However given the extensive use of technology and robust knowledge of supply chain management which Wall-Mart has there is no reason why Wall-Mart and Bharti will not be able to maintain supply chain as competitive advantage.

Wal-Marts use of innovative IT tools and IT


Wal-Mart leverages technology to help support their supply chain and business strategy of EDLP. Wall marts operational excellence has helps Wall-mart to reduce its cost and bargain better with supplier to offer EDLP to it s customers.

BHARTI ENTERPRISES PRIVATE LTD


Bharti Enterprises is an Indian business conglomerate headquartered in New Delhi, India. It was founded in 1976 by Mr. Sunil Bharti Mittal and it operates in 20 countries across Asia and Africa. Bharti Enterprises owns various businesses spanning across telecommunications, retail, financial services and manufacturing. Bharti is at present in various sectors with the largest revenue contribution coming from telecom industry. BHARTI ARITEL BHARTI RETAIL BHARTI AXA GENERAL INSURANCE BHARTI TELETECH And many more. Bharti Enterprises was founded by Sunil Bharti Mittal in the year 1976. As we know this is one of the largest enterprises in India, It started with manufacturing bycycles before diversifying into varios sectors. Bharti Enterprises tied-up with Wal-Mart for opening a chain of retail stores all over India. The two companies, in August 2007, made a surprise statement that they have signed a wholesale cash-and-carry deal. The first Best Price Modern Wholesale opened in Amritsar in May 2009. On 27th Nov 2006 Wal-Mart announced that he is entering into the Indian market with Bharti enterprises as a joint venture. The selection of Bharti Enterprises for joint venture by Wal-Mart was due to various reasons: Bharti was one of the leading business group in India well-known name in telecom industry. It was one of the 10 largest companies of India, employing over 3000 people. Its market capitalization was worth more than US$25 billion.

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

PORTERS FIVE FORCE MODEL

Competitive Rivalry within industry:


The retail Industry in India is still more than 90% unorganized. There is a huge market potential for the growing Indian retail Industry market. Currently there are multiple foreign retailers vying for local partners to enter into the India retail market but none of them have yet gone fully operational. Local biggies like Reliance and RPG groups have setup huge network of retail outlets and have started to expand and grow along with the Indian retail market.

Bargaining Power of Customers:


Customers are already buying through the unorganized small retail shops to satisfy the needs. Organized retail showrooms need to attract customers by either providing a cost advantage or differentiating with their collection of products under one roof. Customers have choice to both go for the small shops or to the retail outlets and hence have a very good amount of bargaining power.

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.

Threat of New Entrants:


New market entrants from foreign locations need a local partner to enter into the market according to the government regulation. The market is growing and hence can accommodate more players very easily. Local competition and brand building of local companies like Spencers would also be a threat for the new entrants.

Bargaining Power of Suppliers:


Competitive products vying for shelf space reduces the supplier power as the retail outlets with their huge networks have choices with them with the private players also coming into picture.

Suppliers with huge warehouses and storage spaces can be more advantageous for efficient supply chain management for the retailers

Challenges faced by Bharti and Wal-Mart in their partnership


Cultural differences in Indian retail way and the wal-mart way, while unorganized retailer in India build a long lasting relationship with their customer, Wall-Marts relationship is mainly transactional. The diversity of products bought by Indian consumers varies significantly in length and breadth of India and optimizing operation while ensuring that consumer get what they want in Wall stores would be a daunting task. Wal-Mart will have to make sure it has its logistics functions up-to-date with the diverse demands the market will pose Wal-Mart has so far had most of its experience in countries with minimal diversity and handling operation in one of the most diverse country would be very difficult for Bharti Wall-Mart venture. The booming infrastructure sector in India has already sent the prices for land and rental to sky-high coupled. Unlike US or Europe Indian prefer to buy from nearest retailers .Wall-marts strategy of having outlets in outskirts of cities will not work and the cost of land and rentals in prime place in Indian cities have sky rocketed. Wall-Mart needs to understand the local environment, both corporate and consumer, and come with a certain amount of humility or humbleness and not an attitude of "we will show you how this is done. Infrastructure in India is still developing and managing supply chain in India would be for more challenging due to lack of proper infrastructure, socio political activities like strikes and resistance against organized retails etc

CONCLUSION AND RECOMMENDATIONS


Consumers are the key for the success of any business, and the taste and preference of customers varies from one country to another one religion to another and one culture to another. It is most important to be successful for all companies to completely understand the needs and demand of each and every customer. Wal-Mart believes in standardization approach in their global operation. To be successful in India where cultural difference is a major factor, Wal-Mart has to make suitable change in their business strategies to meet the demand of the consumer of India. A joint venture with an Indian company like Bharti is a positive strategy towards the direction of success. In addition to be successful in India, apart from low prices Wal-Mart has to concentrate on few other key issues which can lead them to achieve its desire goal in India. Those are:

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.