: Around the world

Presentation by
| Group 1 | Section A |

Saranya Maniyan M055-20

Himanshu Mandal M272-20
Kunal M038-20
Kamalla Puneeth M228-20
Aviral Tripati M212-20
Pranathi Dharmapuram M236-20
Aswath Boopathy
 Q1 The Global Story
Where did the retailer struggle?
❖ The retailers could not estimate the demand and
the strategic location in many of the geographies
like Asia.
❖ Another central area of struggle for the retailers
was local laws that were cumbersome in
managing and bringing the stocks to the store.
❖ It faced enough competition from early-mover
foreign retailers such as Carrefour, K-Mart, Metro,
Tesco.
❖ Lastly, the competition was able to adapt to
Walmart, and the existing superstores were able
to offer a wide variety of products initially.
Where did it do well?
❖ Walmart did well in advertisement campaigns, and the hype
created around the brand drew the crowd towards the store
since its opening.
❖ It did pretty well to maintain a tough competition to other
giant retailers as if and when required by announcing to
invest a massive amount of money.
❖ They were demonstrating aggressive pricing techniques to
take over the competition.
❖ It is placing more advertisements in local newspapers to
maintain its brand presence.
❖ It did very well in countering the competition by offering
niche products and necessities at a very competitive price.
What were the major reasons for success or failure in Can location characteristics explain the difference in
each country? performance?

❖ Walmart had to face its share of success as well as
failure in different countries.
❖ The new stores achieved success in some countries
including Canada, Mexico & UK but the company had to
exit Germany & South Korea.
❖ In Australia, the store was successful because
technology and store structure made it easy for the
customer to pick and choose things easily.
❖ Yes, the location will decide the kind of public that
comes in, its purchasing power & its economic
necessities.
❖ The above factors will decide the sales and the
product that the store has to sell, ultimately
determining the margins and revenues.
❖ Hence we see that location plays a very critical role
in the performance of the store.

❖ Due to price differentiation strategies, it did suffer some

failures there.

❖ Similarly, in China, the main reason for success was the

compilation of products and retailer margins.

❖ The initial problems were there because of local product

sourcing issues.
Q2. Best entry mode greenfield investments or acquisitions?

Acquisition is the best entry mode for Walmart

● Walmart gained success mostly ● Acquisition is lot more

throught the acquisitions.
● Ex: JV with Cifra(WALMEX),
Woolco stores in Canada and
Asda in England
● Failed to capture asian markets
● Greenfield investment failed in
Brazil lead to slower growth rate.
easier than greenfield
investments.
● Research cost reduced and
less cultural restraints.
● Same management team
(Executive level)
● Time saved through
acquisitions.
Q2. Did local characteristics drive mode of entry? Why?

➢ Yes because different countries have

different cultures and tastes.
➢ Failed to understand Japanese
consumers.
➢ EDLP model failed in China
➢ Previous mishaps: Large parking lot in
Mexico.
➢ Lot of R&D is required.
➢ Time constraint is also deciding factor
 Q3 Was Walmart’s FDI in India a good idea?

O Ownership
L Location

India’s growing retail sector

I Internalisation

Walmart had a lack of

understanding of customer needs/
cultural differences
Walmart had a strong brand name
and reputation
High cost of rent in Indian metro
cities
Low-cost labour Expertise in national &
international retail management,
The Indian laws allow FDI in retail J-I-T Inventory management,
industry only in cities with a retail information &
population of a million or more, it is transportation management
not easy to find suitable real estate
in these large urban areas
Most source 30% of their products
from Indian MSMEs

Was JV with Bharti enterprises the right form of entry?

Q4 Finding the best strategy to expand:

Cultural
Cultural Differences:
Indian consumers assumed
low price = low quality
Geographical
C A
Administrative
Indian laws are considered
unclear and uncertain - It allows
FDI in retail industry only in cities
with 1M+ population
Economic

High rent in metro cities, Huge G E Low income group - purchases

area for car parking - Indian usually from kirana stores
customers came by bus.

Firm can gauge the degree of difference in these parameters and choose among
● Greenfield : when the degree is minimal and have similar parameters
● Joint Venture: when the combined degree of difference is moderate
● Acquisition: when the combined degree of difference is high