S.P.

MANDALIS

R. A PODAR COLLEGE OF COMMERCE AND ECONOMICS MATUNGA, MUMBAI-400 019.

A PROJECT REPORT ON Joint Venture of Bharti Walmart

SUBMITTED BY Rishab Sharma M.COM (SEM. I): Strategic Management

SUBMITTED TO UNIVERSITY OF MUMBAI 2013-2014 PROJECT GUIDE Prof. Dr. (Mrs) Vinita Pimpale Vasudevan

R. A PODAR COLLEGE OF COMMERCE AND ECONOMICS MATUNGA, MUMBAI-400 019.

CERTIFICATE

This is to certify that Mr. _______________________________________ of M.Com (Business Management) Semester I (2013-2014) has successfully completed the project on __________________________________________________under the guidance of Prof._______________________________

Project Guide/Internal Examiner Prof. _______________________

External Examiner Prof. ________________________

Dr. (Mrs) Vinita Pimpale Course Co-ordinator

Dr.(Mrs) Shobana Vasudevan Principal

Date:

Seal of the College

ACKNOWLEDGEMENT
I acknowledge the valuable assistance provided by S.P. Mandalis R.A. Podar College of Commerce & Economics, for two year degree course in M.Com. I specially thank the Principal Dr.(Mrs) Shobana Vasudevan for allowing us to use the facilities such as Library, Computer Laboratory, internet etc. I sincerely thank the M.Com Co-Ordinator for guiding us in the right direction to prepare the project. I thank my guide Prof. Dr. (Mrs) Vinita Pimpale Vasudevan who has given his/her valuable time, knowledge and guidance to complete the project successfully in time. My family and peers were great source of inspiration throughout my project, their support is deeply acknowledged.

Signature of the Student

DECLARATION

I, Rishab Sharma of R.A. PODAR COLLEGE OF COMMERCE & ECONOMICS of M.Com SEMESTER I, hereby declare that I have completed the project Joint Venture of Bharti Walmart in the Academic Year 2013-2014 for the subject Strategic Management. The information submitted is true and original to the best of my knowledge.

Signature of the Student

INDEX
SR. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Joint Venture Advantages & Disadvantages Case Study Walmart Bharti Enterprises Joint Venture of Bharti Walmart Issues & Solutions Conclusion Bibliography PARTICULARS

Joint Ventures Definition

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.

Meaning
A joint venture is a mechanism for combining complementary assets owned by separate firms. These assets can be tangible, such as machinery and equipment, or intangible, such as technological knowhow, production or marketing skills, brand names, and market-specific information. In an equity joint venture the partner firms transfer all or part of their assets to a legally independent entity and share the profits from the venture. Contractual arrangements that do not involve shared equity control are sometimes referred to as non-equity joint ventures; examples include licensing and management contracts, as well as supply and distribution agreements. Shared ownership and contractual arrangements are also frequently grouped together under the term alliances. In what follows the focus will be on equity joint ventures, specifically international joint ventures involving partners from different countries.

From a world economy perspective there are at least two reasons for examining international joint ventures. First, international joint ventures represent a form of foreign direct investment (FDI).

Multinational enterprises often have to decide whether to wholly own a foreign affiliate or to share equity control with a local partner. This decision is a key element of the foreign investment strategy. Second, the ownership structure of a foreign-investment project affects host country welfare. A direct effect comes from the sharing of profits between the multinational and the local firm. Indirect effects arise because ownership influences investors incentives to commit resources to the project, such as capital and technology. Some host countries impose local ownership requirements that limit the equity stake foreign investors can take in local companies. This raises the question of what the economic effects of such requirements are. Probably the most comprehensive data on international joint ventures come from the U.S. Department of Commerce benchmark surveys. While they are not representative for the world as a whole, these data still offer information on long-run trends in international joint venture activity for one of the most important source countries of FDI. According to Desai, Foley and Hines (2004) who have examined these data, about 80 percent of all U.S. affiliates abroad in 1997 were wholly owned, with the remaining 20 percent equally divided between minority- and majority-owned affiliates. The ownership share is positively correlated with host country gross national product (GNP). In the richest quartile of host countries, partially owned affiliates accounted for only 15.5 percent, whereas in the poorest quartile they made up more than half of all U.S. foreign affiliates. The data exhibit considerable variation in ownership shares across industries and over time. In the last 20 years there has been a downward trend in minority-owned and an upward trend in majorityand wholly owned affiliates, partly due to changes in U.S. tax laws.

Profit-Maximizing Joint Ventures

Consider a multinational firm contemplating a foreign investment project that requires a combination of its own assets and those of a local firm in the host country. What is the appropriate ownership structure of the project? The extensive literature on this issue starts from the premise that the ownership structure is a response to the presence of market failures (or high transaction costs) in asset markets. This can best be understood by assuming counterfactually- that there are no such failures. This is the case, if (i) all assets and other inputs to and outputs from the project are observable and verifiable by third parties, such as courts; (ii) it is possible to write contracts specifying the provision of each input, and the distribution of output and profits under all possible contingencies; and (iii) these contracts can be enforced at no cost. Under these ideal conditions, the ownership structure is indeterminate, since the firms can simply use contracts to coordinate the use of their assets. Such ideal conditions are unlikely to prevail in practice. Suppose, for example, that the project requires a combination of the multinationals production technology and the local firms marketing know-how. It may be very difficult to specify what these assets entail, to assess how valuable each asset will be for the project, and hence to write a contract on what each party has to contribute and how profits are to be shared. Even if the two parties both knew how important the technology and the marketing know-how were, it would be next to impossible for a third party to verify this and hence to determine whether both parties have fulfilled their contractual obligations. It may also be impossible through contractual means to prevent spillovers of the technology to the local firm which could then use it for its own purposes. Specifying appropriate management contracts to ensure that profits from the project are maximized may be difficult especially if monitoring costs are high. In short, contracts will generally be insufficient to prevent opportunistic behavior. Retaining (partial) ownership of assets,

and hence residual rights of control over them, may then be preferable because it ensures that a firm will obtain at least some return from the project and hence have an incentive to contribute assets to the project and provide effort in running it.

Shared ownership of an investment project is only a second-best solution. First, it may be impossible to guarantee each party the full return from the use of its assets. Hence there may be too little provision of assets or insufficient investment in tailoring the assets to the project. Second, joint ventures require significant management resources due to the need to coordinate decisions between the partners. Why then would one of the partners, say the multinational, not simply acquire the other and assume whole ownership of the project? One obvious advantage of shared ownership is that it requires less capital than a complete take-over. Moreover, the multinational may only be interested in some of the assets of the local firm. If these are hard to disentangle from the local firms other assets, a joint venture may be the better option. Incomplete information about the value of the local firms assets provides another reason for shared ownership, since letting the local firm choose how much ownership to retain may reveal information to the multinational.

Empirically it is difficult to distinguish between different explanations for shared ownership, since the information on which firms base their decisions is often confidential. In addition, the ownership decision may be made simultaneously with other decisions concerning the firms operations. Desai, Foley and Hines (2004) therefore use changes in U.S. tax laws affecting ownership and the liberalization of local ownership requirements to identify possible interactions between these decisions. They find a complementary relationship between the ownership share of the multinational and the amount of intra-firm trade between the affiliate and the parent company.

Firms that trade more internally are more likely to have whole or majority ownership, whereas affiliates selling more of their output or buying more of their inputs locally are more likely to be organized as joint ventures. Possible reasons for this are that whole ownership reduces the cost of coordinating intra-firm transactions and makes it easier to set internal transfer prices to avoid taxes.

Host Country Policy

Local ownership requirements are most frequently imposed by developing and transition countries, although some high-income countries also put limits on foreign ownership in certain sectors. Possible economic rationales for requiring local equity participation in low-income countries are that they might facilitate spillovers of technology and management know-how to local firms, and may secure a share of the projects earnings for the host country when the fiscal system is too inefficient to do this directly through taxes. Some authors argue that multinationals, too, may have an interest to take on a local partner to smooth relations with the host-country government and reduce the risk of expropriation.

Advantages & Disadvantages of Joint Ventures :

There are many good business and accounting reasons to participate in a Joint Venture (often shortened JV). Partnering with a business that has complementary abilities and resources, such as finance, distribution channels, or technology, makes good sense. These are just some of the reasons partnerships formed by joint venture are becoming increasingly popular.

A joint venture is a strategic alliance between two or more individuals or entities to engage in a specific project or undertaking. Partnerships and joint ventures can be similar but in fact can have significantly different implications for those involved. A partnership usually involves a continuing, long-term business relationship, whereas a joint venture is based on a single business project.

Parties enter Joint Ventures to gain individual benefits, usually a share of the project objective. This may be to develop a product or intellectual property rather than joint or collective profits, as is the case with a general or limited partnership. A joint venture, like a general partnership is not a separate legal entity. Revenues, expenses and asset ownership usually flow through the joint venture to the participants, since the joint venture itself has no legal status. Once the Joint venture has met its goals the entity ceases to exist.

What are the Advantages of forming a Joint Venture?

Provide companies with the opportunity to gain new capacity and expertise

 Allow companies to enter related businesses or new geographic markets or gain new technological knowledge Access to greater resources, including specialized staff and technology Sharing of risks with a venture partner Joint ventures can be flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business' exposure. In the era of divestiture and consolidation, JVs offer a creative way for companies to exit from non-core businesses. Companies can gradually separate a business from the rest of the organization, and eventually, sell it to the other parent company. Roughly 80% of all joint ventures end in a sale by one partner to the other.

What are the Disadvantages of forming a Joint Venture?

It takes time and effort to build the right relationship and partnering with another business can be challenging. Problems are likely to arise if: The objectives of the venture are not 100 per cent clear and communicated to everyone involved. There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners. Different cultures and management styles result in poor integration and co-operation. The partners don't provide enough leadership and support in the early stages.

 Success in a joint venture depends on thorough research and analysis of the objectives.

Embarking on a Joint Venture can represent a significant reconstruction to your business. However favorable it may be to your potential for growth, it needs to fit with your overall business strategy.

It's important to review your business strategy before committing to a joint venture. This should help you define what you can sensibly expect. In fact, you might decide there are better ways to achieve your business aims.

You may also want to study what similar businesses are doing, particular those that operate in similar markets to yours. Seeing how they use joint ventures could help you decide on the best approach for your business. At the same time, you could try to identify the skills they use to partner successfully.

You can benefit from studying your own enterprise. Be realistic about your strengths and weaknesses - consider performing strengths, weaknesses, opportunities and threats analysis (SWOT) to identify whether the two businesses are compatible. You will almost certainly want to identify a joint venture partner that complements your own skills and failings.

Remember to consider the employees' perspective and bear in mind that people can feel threatened by a joint venture. It may be difficult to foster effective working relationships if your partner has a different way of doing business.

When embarking on a joint venture its imperative to have your understanding in writing. You should set out the terms and conditions agreed upon in a written contract, this will help prevent misunderstandings and provide both parties with strong legal recourse in the event the other party fails to fulfill its obligations while under contract. A written Joint Venture Agreement should cover: The parties involved The objectives of the joint venture Financial contributions you will each make whether you will transfer any assets or employees to the joint venture Intellectual property developed by the participants in the joint venture Day to day management of finances, responsibilities and processes to be followed. Dispute resolution, how any disagreements between the parties will be resolved How if necessary the joint venture can be terminated. The use of confidentiality or non-disclosure agreements is also recommended to protect the parties when disclosing sensitive commercial secrets or confidential information.

CASE STUDY
This paper examines how Wal-Mart, the worlds largest retailer reconfigured traditional agricultural supply chains in India to develop a unique Cash and Carry model of Wholesale business. The focus of this paper is to understand What is the rationale behind the tie-up between Wal-Mart and Bharti? How is the newly configured supply chain by Wal-Mart different from traditional agricultural supply chain in India? What are the benefits of newly configured supply chain to the various stake holders?

This paper also touches upon the regulatory compulsions which led to this reconfiguration.

Rationale behind Bharti-Wal-Mart Tie-Up

Bharti Enterprises is one of Indias leading business groups with interests in telecom, agricultural business, financial services, retail and manufacturing. Bharti Airtel, a group company, is one of Asias leading providers of telecommunications services with operations in India and Sri Lanka, spanning mobile services, telemedia services and enterprise services. It is one of Indias 10 biggest companies, with an excellent track record of joint ventures.

Wal-Mart is the US based retail giant operating in 14 countries outside United Sates, serving millions of customers world wide.

Wal-Mart USA 2010 Sale 2010 Operating Retail Units Income Total square Footage (In Millions, except Units) $258,229 $19,522 3,708 602.9

Wal-Mart $100,107 International $5,033 4,112 269.9

Sams Club $46,710 $1,512 596 79.4

Clearly any entry into a new market requires a certain degree of tailoring to its specific needs and conditions. But for some companies entry into India has forced a fundamental rethinking of product offers, cost structures, distribution systems and management teams. Companies that successfully tap into the promising Indian market often ignore the conventional wisdom, including the need for joint venture (McKinsey, 2005).

The joint venture between Wal-Mart and Bharati, which was announced in 2006, is a win-win situation for both the organizations. Bharti have a deep understanding of Indian market as well as political and business environment, Wal- Mart on the other hand has a history of innovations in retailing and Supply Chain domain. It is important to note that Wal-Mart has chosen a joint venture route for their entry in to Indian market. At present, Foreign Direct Investment (FDI) is not allowed in India in multi-brand retail, which is dominated by the neighbourhood mom and pop stores known in India as Kirana stores and is a politically-sensitive topic. However, foreign players are permitted in wholesale trade as also in single-brand retail. Since FDI is not permitted in retail, world's number one retailer Wal-Mart has settled for a cash-n-carry (wholesale) joint venture with the Bharti Group (The Economic Times, 2010).

There are in fact two agreements between these two companies. The first agreement is to create a 50-50 joint venture for Cash and Carry wholesale operation and to manage its supply chain, by creating sustainable supply base to ensure guaranteed availability of high quality products at competitive prices. The second agreement is to allow transfer of retail know-how and technology by Wal-Mart to Bharti to establish a retail operation in India. In this case, Bharti Retail Limited, a wholly owned subsidiary of Bharti would establish a retail chain all over India using the retailing expertise of Wal-Mart. It offers food and grocery categories, fresh fruits and vegetables, meat and poultry, dairy products, staples, FMCG and processed foods, electronics and appliances, clothing and footwear, furniture and furnishing, and other household articles.

Reconfiguring the distribution channel

India's current food-distribution system is a legacy of the 1940s and '50s, when chronic food shortages led the government to crack down on hoarding of produce by unscrupulous cartels. In 1966 the government introduced a new law that banned farmers from dealing directly with retailers and forced them to sell through licensed middlemen, called mandis. The law, which also aimed to give farmers a fair and consistent price, "was initially done with a good purpose," But over the years it grew into a monster, gaining layer upon layer of intermediaries, none of whom added any value to the fruits and vegetables they traded even as they added on their own margins. The result: a grossly inefficient system in which farmers are divorced from market feedback and often must wait months to be paid (Robinson, 2007). Figure 1 shows a typical supply network in Indian agricultural sector, with a number of

intermediaries between the farmer and the consumers. A typical retailer in India has a small area from 100 to 500 square feet and does not always have a storage space. He is totally dependent on the wholesaler for the storage space as well as transportation from the warehouse to the retail store.

As can be seen, there are inherent inefficiencies in this distribution network in terms of mark ups added by each intermediary, damages and delays due to repeated handling, transportation and storage of the products which benefit neither farmers nor the consumers. It is therefore imperative that to be successful in the Indian market, a multinational corporation needs a strategy which will benefit both; the farmer as well as the consumer. The Strategy-Structure-Performance (SSP) paradigm predicts that a firms strategy created in consideration of external environmental factors drives the development of organizational structure and processes (Galunic et al.,1994).The strategy adopted by Bharti-Wal-Mart was to reconfigure the supply chain in order to remove the various intermediaries, thereby creating a lean supply chain. Lean is about the elimination of waste and the increase of speed and flow. Although this is a high-level oversimplification, the ultimate objective of lean is to eliminate waste from all processes (Goldsby et al., 2005). The presence of middlemen in the retail and the wholesale industries had been a key characteristic of Indias retail sector. Wal-Mart has made the supply chain lean by reducing the number of middlemen and connecting producers directly with the retailers. The idea was to bring down the prices in order to boost the consumption; which in turn will further drive down the prices. Alignment between Supply Chain strategy and

structure will enhance organisational performance through revenue enhancement, operating expense reduction, working capital efficiency and fixed capital efficiency (Defee et al., 2005). With the new reconfigured supply chain (Figure 2), in addition to reduction in the cost of products due to elimination of intermediaries, following additional benefits are observed1. Bharti-Wal-Mart helps the farmers with getting bank finances at lower interest rates, thereby helping supply chain financing. Banks are more comfortable financing the farmers due to the introduction made by Bharti-Wal- Mart. 2. Bharti-Wal-Mart helps the farmers with technology to improve the quality and yield of

their products. 3. Bharti-Wal-Mart provides re-usable packages to farmers which reduce use of packing

material. 4. The Cash and Carry stores are located in strategic areas away from city centres, thereby reducing the cost of rent. Also it provides ample parking space to the customers. 5. Low prices at Bharti-Wal-Mart stores provide great publicity, thereby eliminating the

advertisement costs. 6. Lean logistics is being adopted by many companies seeking to cut costs, improve profitability and remove kinks from their supply chains (Gilligan 2004). Considering the inefficient logistics infrastructure in India, which leads to high logistics cost, Bharti-Wal-Mart source their products within 200 kilometres of their wholesale stores. By avoiding to source from long distance suppliers, it is possible to reduce the transit time, delays, and damage to the goods. This in turn translates into reducing waste and cutting costs. For outbound logistics, customers bring their own vehicles to carry the goods.

7. Unique Mera Kirana and Business Solutions Centre created to share solutions with small and medium retailers on best practices in assortment planning, layout & fixtures, displays, licenses, hygiene, customer retention, accounting and value added services. 8. My Partner program launched by Bharti-Wal-Mart includes seminars on taxation for Kirana owners, food safety and hygiene workshops and live demonstration for hotels, restaurants and caterers.

Transforming Retail in India

Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people. India's retailing industry is essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population). The Indian retailing trade is at an inflection point, and set to enter a brand new growth mechanical phenomenon attributable to rising household consumption and therefore the entry of company entities. About four hundred new malls, 1,500 supermarkets and 350 department shops are presently being built in various Indian cities. With quite US$ thirty billion in investments slated within the modern retail sector of India, it becomes imperative to develop a much better understanding of the key challenges of talent management, provide chain / logistics and real

estate and identify the next steps to facilitate this exponential growth and alter the policy manufacturers to formulate applicable methods. India has stepped within the exuberant age of retail. It ranks second after Russia as the most demanding destination for retailers among thirty rising markets. The 10-12% increase within the economys income will be seen clearly by the method product and services area unit being brought and sold-out. Retail Trade contributes 10-11% of Indias value. The Indian retail sector that primarily consisted of fashion accessories, textiles, clothing, and food and grocery had been extremely fragmented. This fragmented nature had attained it the uncomplimentary label, a nation of shopkeepers. According to the Indias Centre for Policy Alternatives, the retail market has been grouped under two categories: 1) Organized Retailing 2) Unorganized Retailing

Organized Retailing
Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses.

Unorganized Retailing
Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local corner shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.

A big shift within the Indian shopper mental attitude started in 2000 and accelerated before long once world brands started flooding Indian markets. The Indian trade was taken by total surprise once shoppers embraced this type of alternative and commenced perceiving variations in quality among competitive merchandise. Consumers were getting down to demand organized retail experiences the same as those in developed economies. International retailers were quite happy to fulfil these wishes. However, Indias strict regulation excluded foreign players from the retail business, denying retailers like WalMart individual entry into the market. So as to guard the sustenance of around fifteen million smallstore homeowners that were a lot of nearer to the buyer finish of the availability chain, foreign direct investment (FDI) was solely permissible within the wholesale business. As of 2006, the government of Republic of India permissible fifty one FDI in multi-brand retailers and 100 percent FDI in wholesale payment and back-end supplying.11 Single-brand retailers like Toyota, Nike, Lladr, Fendi and Louis Vuitton were allowed to control as they weren't seen as having an on the spot impact on the preponderantly native, tiny stores.

Wal-Mart
Wal-Mart Stores, Inc., branded as Walmart, is an American multinational retail corporation that runs chains of enormous discount shops and warehouse stores. The company is the world's third largest public corporation, per the Fortune world five hundred list in 2012, the most important nonpublic leader within the world with over 2 million workers, and is the largest retailer within the world. Walmart remains a family-owned business, because the company is controlled by the Walton family, who own a 48% stake in Walmart. Its also one amongst the world's most respected corporations. Walmart has 8,500 stores in fifteen countries, under fifty five completely different names. The corporate operates under the Walmart name within the United States, including the fifty states and Puerto Rico. It operates in Mexico as Walmex, in the united kingdom as Asda, in Japan as Seiyu, and in India as Best value. Its whole owned operations in Argentina, Brazil, and Canada. Walmart's investments outside North America have had mixed results: its operations within the United Kingdom, South America, and China are extremely successful, whereas ventures in Germany and South Korea were unsuccessful. The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and first distribution center in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million. It began trading stock as a publicly held company on October 1, 1970, and was soon listed on the New York Stock Exchange. The first stock split occurred in May 1971 at a market price of $47. By this time, Walmart was operating in five states: Arkansas, Kansas, Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and Kentucky and Mississippi in 1974. As it moved into Texas in 1975, there were 125 stores with 7,500

employees and total sales of $340.3 million. Walmart opened its first Texas store in Mount Pleasant on November 11, 1975.

Bharti Enterprises
Bharti Enterprises is an Indian business conglomerate headquartered in New Delhi, India. It was founded in 1976 by 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. The company was founded by Sunil Bharti Mittal along with his two siblings in 1976. The company started with manufacturing bicycles before diversifying into various sectors. It entered into telecommunications industry in 1995. Bharti is present in various sectors with the largest revenue contribution coming from telecom industry. Following are some of those:
1) 2) 3) 4) 5)

Bharti Airtel Bharti Infratel Bharti Retail Bharti Walmart Bharti AXA General Insurance and Life Insurance, etc.

BHARTI WALMART JOINT VENTURE

Bharti Walmart Private Limited is a joint venture between Bharti Enterprises, one of India's leading business groups with interests in telecom, agri-business, insurance and retail, and Walmart, the worlds leading retailer, renowned for its efficiency and expertise in logistics, supply chain management and sourcing. The joint venture is establishing wholesale cash-and-carry stores and back-end supply chain management operations in line with Government of India guidelines. Under the agreement, Bharti and Walmart hold 50:50 stakes in Bharti Walmart Private Limited. The first Wholesale Cash-and-carry facility named "Best Price Modern Wholesale" Opened in Amritsar in May 2009 and subsequently in Zirakpur (Near Chandigarh), Jalandhar, Kota, Bhopal, Ludhiana, Raipur, Indore, Vijayawada, Meerut, Agra, Lucknow, Jammu, Guntur, Aurangabad, Bathinda, Amravati, Hyderabad and Rajahmundry.

Porters Five Forces Analysis of Wal-Mart Substitute Products Walmart ensures that the customers get what they what under one roof. There are very less layers in the market who provides products with this convenience and at this good prices. Also, the development of the online store gave an advantage to the customers of varieties and the price comparisons. Potential Competitors Watching the entry barriers in market, entry barriers area unit relatively elevated. This is often because Wal-Mart has set-up exceptional distribution systems. This is often supported by the companys locations, sturdy brand, and an assets that competitors and potential

competitors might realize laborious to interrupt.

Industry Rivalry Among time-honored Companies In the consumer retailers sector, there are 3 giant corporations that are presently operational within the same market as Wal-Mart. These corporations include Sears, Target and K mart. Among these firms, Target is the main company within the retail business. Target has mature over the years in their domestic market; the company has clearly outlined its niche and is extremely effective in implementing its business model. On the opposite hand, Sears and K-Mart do not present a serious challenge to Wal-Mart. watching the business generally, it's clear that the retail market is mature. In general, contender rivalry is medium.

The Bargaining Power of Buyers Wal-Mart is a well established company with store placed in major places of the globe. The individual buyer doesn't have much negotiation power on Wal-Mart. within the past, consumer lobby teams have expressed their anger regarding WalMarts pricing methods. The company has also faced criticism relating to its workplace practices. As a result, customers would prefer to shop at alternative stores, however, by doing so; they lose the convenience of Wal-Mart stores. Bargaining Power of Suppliers: The power is Low to Medium Wal-Mart enjoys a major part of the market share, their business is wide and therefore they provide an oversized range of companies to manufacturers and suppliers. this provides the company an upper hand over its suppliers. If the company simply threatens to modify to an

alternate provider, it might leave the present provider in panic mode. In addition, Wal-Mart has the chance of vertically integrating. The company doesn't deal with major suppliers like Coca-Cola and Proctor & Gamble who could have more negotiation power as compared to tiny suppliers.

SWOT Analysis of Walmart Strengths 1) Joint Venture with Bharti 2) Located at different parts of the world 3) A new innovative service Weakness 1) Spread in various sectors like food, clothing, stationary etc. so might not be flexible enough to focus on all of its competitors 2) Lack in home consumer sales Opportunities 1) Can spread more in international market 2) Merge with many other companies like merged with Bharti in India Threats 1) Being the number one can mean the target of the competition 2) Its a global retailer so can face some political issues

ISSUES
1. How did Wal-Mart plan to tackle the challenges that lay ahead? 2. Would this marriage of titans really transform Indian retail?

SOLUTION
1. Wal-Mart decided to use two different formats for their stores; a franchised retail company and a wholesale cash-and-carry joint venture. With the proposed joint venture, Wal-Mart and Bharti had found arrangement that allow the US retail giant to enter the Indian retail market Wal-Mart is well known for its well-organised structure and for Indian market which was unorganized at that time Wal-Mart will give a good shopping experience. Wal-Marts strength is its supply chain management system, now to gain suppliers support it should develop a strong supply chain network. Wal-Mart should continue its expanding programs to cover the important part of the growing Indian Market. Prominence of middleman in the retail and wholesale industries had been a key characteristic of Indias retail market. Wal-Mart should cutout the middleman and connects producers directly with the retailer. Linking directly who reducing the inefficiency. Wal-Mart must keep diversity as important point of consideration in India, as it is failed in some countries due to lack in adjustments in culture of respective countries.

2. Wal-Mart has opportunity to introduce its experience in supply chain management and logistics to India. Using its IT technology in supply chain management it can enhanced the Indias supply chain management along with Indian retail market. Introduction of cold chain logistics. Joint venture was seen as a great opportunity for foreign retailers to get a foothold in a market that was expected to double in size to US$ 637 billion by 2015. Indian buyers power is moderate. With the consumers power the unorganised sectors are transforming into organised ones. Retail commerce provides the value-added goods and services which are favoured by the customers.

CONCLUSION
Regulatory constraints are the primary reason for Wal-Mart to enter Indian market as a wholesaler rather than a retailer. This the first time, Wal-Mart has assumed the role of an up-stream supply chain partner. Regulatory environment is also the reason for Wal-Mart to consider a joint venture with an Indian company. The change in the organization structure in the Indian arm of Wal-Mart is the result of this joint venture. In Latin America, the rapid proliferation of Wal-Mart and its unprecedented success have come largely at the expense of national and international supermarket chains, rather than small-scale and informal retailer, provoking a widespread process of expansion and consolidation (Biles, 2006; Coleman, 2003). It can therefore be expected that the small retailer at the end of supply chain is not going to be affected due to the presence of the largest retailer in the world, despite the wide spread criticism and opposition to Wal-Marts, backdoor entry into Indian market. Infrastructural deficiencies have forced WalMart to consider near sourcing rather than sourcing from the most competitive suppliers. Indian market will have an opportunity to learn from the best supply chain practices adopted by Wal-Mart, which in turn may trigger supply chain innovations by Indian firms to overcome the logistical challenges which they presently face. Lastly, the operations of Wal-Mart and other national and international retailers in India may bring about an improvement in transportation, warehousing, port and airport infrastructure to facilitate a smooth and cost effective movement of cargo.

BIBLIOGRAPHY

www.bharti-walmart.in/ Best Price Brochure from Best Price, Kota, RJ Wal-Mart 2010 Annual Report Concept papers on retail, Economic Times, April 16th, 2010 Globalization of Food Retailing: the case of Latin America, by Coleman, Richard Investopedia Supply Chain Management Strategy, Planning and Operation by Chopra, Sunil & Meindl, Peter, under Pearson Education, India