BHARTI A

ND

WALMART

Group A

Global Retail Development Index (GRDI) window of opportunity analysis

GRDI country attractiveness

Describe how Wal-Mart’s supply chain works and comment on how it has helped create competitive advantages for the firm

Will Wal-Mart be able to generate same advantages in India. Why or why not?

QUESTION 1

HOW WALMART’S SCM WORKS?• SCM Benefits derived due to IT• Owned Transportation Networks• Bulk Orders

INFORMATION TECHNOLOGY AND SCM 1975 - IBM computer systems to track

inventory 1979 - Started using barcodes 1987 – Set up its own private satellite

network 1992 – 125,000 square foot data center 2000s - Usage of RFID Walmart’s e-business venture ‘walmart.com’

similar to Amazon.com

Source: Screenshot From a video on Walmart

HOW IT HELPED THE COMPANY?• Better Demand Forecasting• Increased Responsiveness of the Supply

chain• Huge datawarehouse helped in “data

mining” – A concept used to understand the analytics of movement of products.

• Leaner Supply Chain

TRANSPORTATION & BULK ORDERSTransportation

Networks – Faster

Replenishment

Bulk Orders – Higher

Bargaining Power

Higher Inventory Turnover

SCM - VRIO ANALYSISResource Valuabl

e?(15%)

Rare?(15%)

Inimitable?(30%)

Exploited?(40%)

Weighted Score

Bargaining Power With Suppliers

4 3 4 4 385

IT Resources

4 2 3 4 340

Innovative Inventory Mgmt

3 4 2 4 325

Scale: 0- Very Low 1 – Low 2 – Medium 3- High 4 – Very High

Sustainable Competitve Advantage

CAN THIS BE REPLICATED IN INDIA?Problems in Indian Retail Sector:Cold ChainsWarehousing abilitiesLack of Infrastructure.What can be replicated? IT Infrastructure

It can invest significantly to build up the infrastructure

Experience in Managing IT Systems

CAN THIS BE REPLICATED IN INDIA?What cannot be replicated?Bargaining Power with suppliers

Squeezing out higher margins Initially scale advantages wont be available

Innovative Inventory ManagementCross docking may not be possible Frequent replenishment may not be possible

Hence Higher Inventory Turnover may not be possible

QUESTION 2

Analyse the structure of the retail industry at the time of the case (2006)

SCP MODEL – RETAIL INDUSTRY IN INDIA

1st store in Amritsar Punjab in2009 as Best Price Modern Wholesale

2nd- Zirakpur, Mohali opened April 2010

Performance-As of 2006 – Yet to be seen -Expected above normal –

EBITDA 10-11% (CRISIL)

ConductCost Leadership

Industry StructureMonopolistic competition Fragmented

BHARTI -

WALMART

THE SPECTRUM OF COMPETITION

Barriers of entry : LOW

Bargaining Power of buyers : HIGH

Bargaining power of suppliers : MODERATE

Degree of competition :

MODERATE but INCREASING

Threat of Substitutes : MODERATE

Bargaining power of Buyers • Volume and ticket size for each customer is low• Customer is the focus• Importance on variety, quality and good ambience• Loyalty programms important• Promotions and discounts to attract• Geography dependent tastes and preferences

Threat of substitutes• Internet retailing

• Internet penetration picking up• But touch and feel missing

• Unorganized retails – Kiranas• Better choice• Convenience• Personal touch• Ease of Credit• Location advantage

Bargaining power of suppliers

• Volume game –size and type dependent• Retailers dictate terms with small suppliers• Large retailers dictate terms even with large FMCG

players

• Fragmented – large no. of suppliers available in most verticals• Low differentiation in value segment, hence low

bargaining power• Forward integration

• Manufacturers entering retail

Barriers of entry

• New players entering• Low capital expenditure cost• Govt. policy

• Restriction on FDI – opportunity for Indian players

• Superior Supply Chain Management• Access to inputs at low cost• Amendment of APMC act :

retailers develop proprietary supply chain

Degree of competition • Large untapped market

• Fragmented market – very few large players• Regional domination

• Competition intensifying• Large untapped potential – entering new products,

markets and formats• Ease on FDI policy• International players

• Strong back-end strength

Analyze the merits and demerits

of the WalMart – Bharti JV in

India from different perspectives.

Use a SWOT framework.

What is its current position (July

2010). Comment on its future.

QUESTION 3

SWOT - BHARTI – WALMART Strength• 2 giants coming together• SCM/ technology• Partnership with Bharti – Brand

name, local focus• One- stop- shop• Global approach –

global(Walmart)+ Local (Bharti)

Weakness• WalMart lacks proven cultural

adaptability• Low level of

internationalisation• Only 16% revenues comes

from International operations• Poor CSR reputation

Opportunity• Organized retail – 2% of tot.

retail• Opening up of FDI• High future demand- AC

Nielsen

Threat• Govt. regulation in retail• NGO, social pressures• Poor infrastructure• Lack of skilled manpower+

poaching• Other Indian conglomerates –

Strategic convergence

SWOT

CURRENT POSITION• Amritsar - Completed 1 yr in June 2010• Zirakpur – April 2010

50,000 square feet35,000 members• Customers - restaurant owners, hoteliers, caterers, fruit and

vegetable resellers, kiranas, retail store owners, offices and institutions

• Mera – Kirana – “win-win” -> kirana shop owners

Format name Format Type VerticalBest Price Modern Wholesale

Cash & Carry Food & Grocery, General Merchandise

Source : http://www.bharti.com/media-centre/wholesale-cash-and-carry-store-1.html

FUTUREPlanning to open 140 stores and hire 1100

employees by E.O.Y.CAGR 22 % Indian organized retail- 939 bn (2008-

09) to 2570 bn (2013-14)Success factors Location Verticals Geographic penetration

REFERENCE• The 2010 A. T. Kearney Global Retail Development Index• CRISIL research May 2010• India Brand Equity Foundation – April 2010.

THAN K

YO U