R T

A
M
AL
W
ND
A
T I
A R
BH

p A
o u
G r
Global Retail Development Index (GRDI) window of opportunity analysis
GRDI country attractiveness
 Describe how Wal-Mart’s
1 supply chain works and
O N comment on how it has
TI helped create competitive
E S advantages for the firm
QU
Will Wal-Mart be able to
generate same advantages
in India. Why or why not?
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 ORDERS

Transportation Bulk Orders –

Networks – Faster Higher Bargaining
Replenishment Power

Higher Inventory
Turnover
 SCM - VRIO ANALYSIS
Resource Valuable Rare Inimitable Exploited Weighted
? ? ? ? Score
(15%) (15% (30%) (40%)
)
Bargaining 4 3 4 4 385
Power With
Suppliers
IT Resources 4 2 3 4 340
Innovative 3 4 2 4 325
Inventory
Mgmt

Sustainable Competitve Advantage

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

CAN THIS BE REPLICATED IN INDIA?
Problems in Indian Retail Sector:
 Cold Chains
 Warehousing abilities
 Lack 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 Management

 Cross docking may not be possible
 Frequent replenishment may not be possible
Hence Higher Inventory Turnover may not be possible
 2
O N
TI
E S
QU Analyse the structure of the
retail industry at the time of
the case (2006)
SCP MODEL – RETAIL INDUSTRY IN INDIA
Industry Structure
Monopolistic competition Fragmented

Conduct
Cost Leadership

Performance
-Expected above normal –
-As of 2006 – Yet to be seen
EBITDA 10-11% (CRISIL)

1st store in Amritsar Punjab in2009 as Best Price

Modern Wholesale

2nd- Zirakpur, Mohali opened April 2010

THE SPECTRUM OF COMPETITION

BHARTI
-WALMA
RT
 Bargaining power of suppliers
Bargaining Power of buyers : HIGH
• Volume game –size and type dependent
• Retailers dictate terms with Barriers
smallofsuppliers
entry
Degree of competition
Threat• • of
Large
Large retailers market
untapped
substitutes dictate terms
• Newevenplayers
with large FMCG players
entering
• Internet • retailing
Fragmented market –• very Low few large expenditure
capital players cost
• Regional
• Internet domination
penetration picking up policy
• Govt.
• Fragmented
• But touch – large no. missing
and feel of suppliers• available in most
Restriction on verticals
FDI – opportunity for
• of Degree of competition : Threat of
Barriers • Competition
Bargaining Low power
entry of intensifying
Buyers in value segment,
differentiation MODERATE Indian players
hence
but low bargaining power
• : LOW • Large
Unorganized untapped
retails – potential
Kiranas • – entering
Superior new Chain
Supply products, markets Substitutes
Management and :
• • Volume and ticket size for each customer INCREASING is low
Forward
• Better integration
formats
choice • Access to inputs at low cost MODERATE
• Customer • Ease
is theon
•• Convenience FDI policy
focus
Manufacturers entering retail • Amendment of APMC act : retailers
• International
• Personal touch players develop proprietary supply chain
• Importance on variety, quality and good ambience
• Ease of • Credit
Strong back-end strength
• Loyalty programms
• Location important
advantage
• Promotions and discounts to attract
• Geography dependent tastes and preferences
Bargaining power of suppliers :
MODERATE
 3
O N
T I  Analyze the merits and demerits of the

E S
QU
WalMart – Bharti JV in India from

different perspectives.

 Use a SWOT framework.

 What is its current position (July 2010).

Comment on its future.

SWOT - BHARTI – WALMART
Weakness
Strength
• WalMart lacks proven cultural
• 2 giants coming together
adaptability
• SCM/ technology • Low level of internationalisation
• Partnership with Bharti – Brand name, • Only 16% revenues comes from
local focus International operations
• One- stop- shop • Poor CSR reputation
• Global approach – global(Walmart)+
Local (Bharti)

SWOT
Opportunity Threat
• Organized retail – 2% of tot. retail • Govt. regulation in retail
• Opening up of FDI • NGO, social pressures
• High future demand- AC Nielsen • Poor infrastructure
• Lack of skilled manpower+ poaching
• Other Indian conglomerates – Strategic
convergence
 CURRENT POSITION
• Amritsar - Completed 1 yr in June 2010
• Zirakpur – April 2010

Format name Format Type Vertical

Best Price
50,000Modern
square feet Cash & Carry Food & Grocery, General
Wholesale
35,000 members Merchandise
• Customers - restaurant owners, hoteliers, caterers, fruit and vegetable resellers,
kiranas, retail store owners, offices and institutions
• Mera – Kirana – “win-win” -> kirana shop owners

Source :
http://www.bharti.com/media-centre/wholesale-cash-a
nd-carry-store-1.html
FUTURE
Planning 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.
Y O
U