walmart competing in the global market 1213243685415916 8
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Wal-Mart Stores, Inc. (NYSE: WMT), branded as Walmart, is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. The company is the world's third largest public corporation, according to the Fortune Global 500 list in 2012, the biggest private employer in the world with over two million employees, and is the largest retailer in the world. Walmart remains a family-owned business, as the company is controlled by the Walton family, who own a 48 percent stake in Walmart.[5][6] It is also one of the world's most valuable companies.[7] The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas. Walmart is also the largest grocery retailer in the United States. In 2009, it generated 51 percent of its US$258 billion sales in the U.S. from grocery business.[8] It also owns and operates the Sam's Club retail warehouses in North America.[9][10] Walmart has 8,500 stores in 15 countries, under 55 different names.[11] The company operates under the Walmart name in the United States, including the 50 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 Price. It has wholly owned operations in Argentina, Brazil, and Canada. Walmart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful. Contents [hide] 1 History 1.1 Early years (1945–1969) 1.2 Incorporation and growth (1969–2005) 1.3 Initiatives (2005–present) 2 Operating divisions 2.1 Walmart Stores U.S. 2.1.1 Walmart Discount Stores 2.1.2 Walmart Supercenter 2.1.3 Walmart Market 2.1.4 Supermercado de Walmart 2.1.5 Walmart Express 2.2 Sam's Club 2.3 Walmart International 2.4 Vudu 2.5 Private label brands 2.6 Entertainment 3 Corporate affairs 3.1 Finance and governance 3.2 Competition 3.3 Customer base 3.4 Economic impact 3.5 Employee and labor relations 3.6 Gender and sexual orientation 4 See also 4.1 Television and film 4.2 Other 5 References 6 Further reading 7 External links History Main article: History of Walmart Early years (1945–1969) Sam Walton's original Walton's Five and Dime store in Bentonville, Arkansas, now serving as the Walmart Visitor Center In 1945 a businessman and former J. C. Penney employee, Sam Walton, purchased a branch of the Ben Franklin Stores from the Butler Brothers.[12] Sam's focus was on selling products at low prices to get higher-volume sales at a lower-profit margin. He portrayed it as a crusade for the consumer. He experienced setbacks, because the lease price and branch purchase were unusually high, but he was able to find lower-cost suppliers than the ones used by other stores. He passed on the savings in the product pricing.[13] Sales increased 45 percent in his first year of ownership to $105,000 in annual revenue, which increased to $140,000 the next year and $175,000 the year after that. Within the fifth year, the store was making $250,000 in revenue. When the lease for the location expired, he couldn't reach an agreement for renewal, so he opened a new Ben Franklin franchise in Bentonville, Arkansas and called it "Walton's Five and Dime."[13][14] On July 2, 1962, Walton opened the first Walmart Discount City store located at 719 Walnut Ave. in Rogers, Arkansas. The building is now occupied by a hardware store and an antique mall. Within five years, the company expanded to 24 stores across Arkansas and reached $12.6 million in sales.[15] In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma.[16] Incorporation and growth (1969–2005) The company was incorporated as Wal-Mart StoreTRANSCRIPT
Wal-Mart – Competing in the Global Market
Sagun Shrestha
What is Wal-Mart
• World’s biggest retailer• Sells Grocery & General Merchandise• One Hour Photo Studio• Pharmacy & Optical Centre• Tire & Lube Express• Gasoline station• Fast Food Outlet• Garden Centre • Pet Shop• Also feature hair and nail salons, a video rental store,
a family fun center, a branch of a local bank
Wal-Mart Subsidiaries
• Wal-Mart Stores Division US• Wal-Mart Discount Store• Wal-Mart Supercenter• Wal-Mart Neighborhood Market
• Sam’s Club• Wal-Mart International• Private Labels (Sam’s Choice , Great Value ,
Equate ,Smart Price)
Key Statistics on Wal-Mart
• Founder Sam Walson & Family – owns 40% of Wal-Mart
• Headquartered at Bentonville , Arkansas , US• Total No. of Stores – 6775 Stores
• Stores in US – 4065 Stores in US• Outside US – 2701 Stores in 14 Countries
• Total Employees – 1.9 Million• Total Sales – 348.6 billion in 2006• Net Income – 11 billion in 2006
Wal-Mart’s growth in last 25 yrs
• Click the Video• Diversified into Food & Grocery , Private
Labels and online store.• Wal-Mart online is the e-commerce website.• Has started selling online Music and Movies.
Some interesting figures
• First Store opened at Rogers , AR in 1962• World’s largest Private Employer , fourth
only to China’s Army ,NHS of UK, and Indian Railways
• Wal-Mart sells 20% of retail grocery in US and 45% of total Toys sold in US.
• Its bigger than Europe’s Carrefour , Tesco & Metro AG combined.
Wal-Mart International
• Present in 14 countries• Walmax in Mexico• ASDA in UK• The Seiyu Co. Ltd in Japan• Wholly owned subsidiaries in
Argentina , Brazil , Canada ,Puerto Rico
Wal-Mart – Market Share / Competitors
• Wal-Mart is three times big than its nearest competitor Carrefour SA
• z
Wal-Mart Marketing Strategy
Wal-Mart Corporate Values
• Constant Improvement• Shared Passion, Vision & Organization
Culture• Customer Focus• Speed• Execution• Improvements In Basic Operations• Community Involvement
What Wal-Mart does to achieve those values
• Competitively Reduced Cost (Puts All Gains & Savings Into Reducing Prices)
• Consumer-centric Sales• Localization• Co-operated Suppliers• Retail-tainment & Shop-ability: Aisles, Lighting
& Signs• Store-manager Autonomy
Cont.
What Wal-Mart does to achieve those values (Cont.)
• One- Stop Shopping • Keep Customer Shopping: Added Food &
Services• Full Stock Register• Full Product Line• Merchandising Ladder• Private Branding
Wal-Mart
Mission/Vision
To give ordinary folk the chance to buy the same thing as rich people.
Product Strategy
1. Lowest prices across-board the product lines
2. Product USP: core competency•Low prices, In-stock positions, Customer service
Service Strategy
1. Respect for the individual
2. High standards of service
3. Constant strive for excellence
Segmentationmiddle-class, lower middle
PositioningConsistent positioning- “Always low prices”
Activities
1. Food retail
2. Non-Food retail
3. On-line food retailer
Intangibles Personalized customer service
Co-branding Co-branding with McDonalds
Diversified into Wal-Mart
1. Non-foodTire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy, Wal-Mart Vacations, Wal-Mart's Used Fixture Auctions
2. Discount format Wal-Mart Stores,
3. E-commerce WalMart.com
4. Wholesale Sam’s Club
5. Expansion abroad 12 international locations
Sector Strategy: Diversification
Penetration/ Strategy
• Advertising Expenditure : 0.3% Of Sales Rev. Only - By Word-of-mouth, In-store Promos• Folksy Facade -Friendly Image• Brick & Click Retailing Model• Competitive Strategy: - Pre-emptive Expansion - Local Retailing Monopoly - Mkt Penetration By Selecting Most Convenient Locations Acquired Or Constructed• Global Buying For Relentless Pressure On Prices• Logistic Efficiency: Speed To Market
Potential Development strategy
• Re-positioning: Complete Shopping Experience & Value-for-money Deptt Store “Way Beyond Just Low Prices”
• Enhancing Product Range: Full-line Deptt Store• Differentiation: Price-based - Best Quality At The
Charged Price• Merchandising: Max. In-store Merchandise
Display• Market-broadening: Store-type Adaptations To
Local Culture• Self-branding: Brand-name Is Extended To
Popular Items• Ancillary Business: Hair-cuts, Optics, Hearing aids
Consumer Global Brand Opportunities: Wal-Mart
SITUATIONAL ANALYSIS—GOING GLOBALWHY GLOBAL - To survive…
Why was growth so important?
• Capital market expectations-continuous sales and profits.• Expectations of its own employees-ESOPS.• Saturated domestic market.• U.S. just 4% of world's population-(rest 96% -already dented)• Emerging markets-tremendous opportunities.
What were its strengths?
• Tremendous buying power-P&G,Kelloggs,Nestlé,Coke,Pfizer,etc
• Domestic knowledge bases & competencies.
STEP 1-DECIDING COUNTRY-specifics of the business, competitive and economic environments
Acquiring an existing player
(GM,CN,UK,SK,PR,JP)
Starting new stores on own
Joint Ventures(MX,BZ)
STEP 2-DECIDING STRATEGY
Start greenfield* operations .(AG,CH)
SITUATIONAL ANALYSIS—GOING GLOBAL
*A new operation that is built from “the ground up”. `
Country Mode of Entry
Strategy Fate of the deal
Canada (**290)
Acquiring a weak player
Woolco 122 stores in 1992 VERY SUCCESSFULWiped out T.Eaton Company, a major player
Operated in areas that have high brand recognition
Operated in areas requiring minimum cultural adaptation
Emphasised on customer service & store design
UK(**337)
Acquiring
Acquired ASDA’s operations(232 stores)1999
SUCCESSFUL.Competitors-Tesco’s and Sainsburys
Cashing on the M&A synergies
Mexico (**919)
Joint Venture
Entered in 1997 JV with Cifra
Local market knowledge
Overcame cultural barriers
SUCCESSFUL.(50% of the market)
Competition by Carrefour
SITUATIONAL ANALYSIS—GOING GLOBAL
** no.of stores operating as on Jul2007
Three successes out of ten….Successes 3/10
Country Mode of Entry
Strategy What was the fate of the deal
Germany (**0-88)
Acquiring
Acquired largest players Wertkauf and Interspar
FAILED.Entered in 1997(21+74 stores);Exited in 2007-American Style Working practices-High Labor Costs.-Management-- Staff Rifts-Competitors: ALDI and LIDI (cheap) .
Similar business and HR models
Met EU guidelines for business
Brazil (**298)
60-40 JV
Leveraged experience of Mexican mkts
When entered in 1995
Already Carrefour,P de A, and Sendas
So very tough competition(Pi was eaten)
Emphasised on Customer service
Developed economies of Scale
Utilised Discount tactics
Argentina (**15)
Greenfield Operation
Gained experience from Mexico & Brazil
-Wrong anticipation of the Argentine
-Competition by CarrefourEconomies of Scale
SITUATIONAL ANALYSIS—GOING GLOBAL
Three successes out of ten……..
** no.of stores operating as on Jul2007
3/10
Country
Mode of Entry
Strategy What was the fate of the deal
S.Korea(**0-16)
Acquiring majority shares
Entered in 1998 .
Acquiring majority shares in KOREA MAKRO
FAILED. no personalization, quality first)
-Exited in 2006,like NOKIA,NESTLEGOOGLE and CARREFOUR. (unfair labor standards, wages)
Puerto Rico(**54)
Acquiring a major player
Entered in 2003 by acquiring Supermercados Amigo(31 stores).
-Faced a strong revolt from local small players.
Japan-(**392)
Acquiring -Entered in 2002 - stake in Seiyu Ltd-Competitors were Daiei,Sogo,Mycal
-Continuing losses every year ( US marketing model)
China (**184)
Greenfield Operations
Merchandising & store designs suiting the consumers
-Took much time-Biggest Walmart Supplier.
-Forced to allow unionization of workers.-Gender Discrimination-Immigration law-suit
Sourced stocks from international suppliers who manufacture in China
Sourced from local manufacturers who understand local tastes
Met government trade & business laws
SITUATIONAL ANALYSIS—GOING GLOBAL
** no.of stores operating as on Jul2007
Three successes out of ten ….… 3/10
LATEST GLOBAL ENTRIES…(5nos)……
CountryRetailUnits as on Jul2007
Firm partner/acquired
Date ofEntry
Costa Rica140 CSU(CARHCO) September 2005
El Salvador 63 CARHCO September 2005
Guatemala137 La
Fragua(CARHCO)September 2005
Honduras44 CARHCO September 2005
Nicaragua40 CARHCO September 2005
India*****
Supply chain integration in developing countries
Strength in supply chain
• Efficient consumer response• Vendor-Managed Inventory• Enterprise resource planning• Customer relationship management• Sales force automation
SWOT ANALYSIS (GLOBAL)Strength
• Efficient supply chain management
• Targeted marketing
• Service innovation and technology
• Growth through adaptability.
• E-tail’s continued development
• Least cost of packaging
• strong penetration strategies
• Infrastructure (financial strength)
Weakness
•Poor public image
•Late entrant in international market.
•Unable to adapt to different countries
•Ununionised & Strict labor laws
•Were unable to handle media
•High law suits against the company.
•Low penetration in European union
Opportunity•Many countries are still left•Unorganized retail•Globalization (diminishing trade barriers)•Cold Storage market•Increase in consumer purchasing power•E-business•Unemployment
Threats•Terrorism•Competitors•Negative publicity•International laws against anti dumping•Campaign against anti competitive practices
Wal-Mart in India
What brings Wal-Mart to India?
• A tremendous market• Emergence of middle class – 300 million• Consumer class of 105 million growing at rate of 10%
& with an annual avg household income of $3000• Demographics – 60% of Indian population is in age
group of 20-30 & is more inclined towards modern shopping.
• Consumer spending growing rapidly –credit card• Sales on per sq. ft. basis lowest in world• GDP growing about 6-8%
Opportunities in India
• India’s retail trade is estimated at $206 billion & growing at 5% annually
• Only 3% of market organized – shopping malls
• India as fastest growing sourcing market• India’s vast market for food retailing• Cold chain - Refrigerated distribution of fruits
n vegetables• Can add value to customers by means of low
price and wide range of merchandise
Challenges in India
• Protests from small businesses (kirana )• FDI restrictions.• India’s poor infrastructure• Poor public image – predatory pricing ,
unemployment• India’s diversity and heterogeneity• Competition from Indian Retailors
includingPantaloon,Shopper’s Stop ,Piramals• Regional governments are very strong
politically
Present Scenario
• Wal-Mart joint venture with Bharti • 15 large wholesale outlets over the next seven years • Entering as a wholesaler, because Indian law does
not allow multi-brand foreign retailers to sell directly to consumers
• Govt. of U.P forced several top retailers to shut shop after local kirana stores triggered unrest.
• Other foreign retailers : Carrefour - Wadias ,Debenhams - Future group
• ICRIER study – 12 million stores
Recommendation
Understand Consumer behavior Market Segmentation Format of stores– super centers or
hypermarkets Wal-Mart to adopt a blended model of its
traditional format tweaked to fit the reality of Indian real estate
Q & A Session
Web References
• www.walmartfacts.com• www.gartner.com• www.forrester.com• www.hoovers.com• www.wikipedia.com• www.tsmg.com (Tata Strategic Management
Group)• www.finance.yahoo.com• www.ficci.com
Thank You