Wal-Mart and the Indian Retail Sector
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Case Details:
Case Code : BSTR257
Case Length : 15 Pages
Period : 2006
Pub Date : 2007
Teaching Note : Available
Organization : Wal-Mart Stores Inc., Bharti Enterprises
Industry : Retail
Countries : India
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Will It, Won't It… Contd...
Wal-Mart, one of the most successful retailers in the world, was known for its
low prices, which it achieved through its sourcing and supply chain
efficiencies. Bharti had no presence in retail, but expected to grow in the
Indian retail sector by partnering with a major global company.
The retail sector in India, which had hitherto been dominated by small local
players and mom-and-pop stores, witnessed a boom in the early 2000s, with
several large companies entering into organized retail.
Analysts said that the growing disposable incomes of the large Indian middle
class and their increased exposure to western shopping habits, in addition to
the availability of a greater variety of products, were responsible for the
Indian retail boom.
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By 2006-2007, several Indian corporate houses like the
Reliance Group (Reliance), the ITC Group, the Tata Group, and the Aditya Birla
Group (Aditya Birla) among others, had invested in, or were planning to invest
in the retail sector.
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This was in addition to the Future Group, the RPG
Group (RPG), and others, who already had a strong presence in Indian
retail.
However, the entry of Wal-Mart was expected to
significantly change the Indian retail sector. Because of the expected
effect of Wal-Mart on the sector, the company's proposed entry met with
vehement opposition from the Communist Parties and retail groups in
India. However, as of early 2007, Wal-Mart and Bharti continued to
maintain that Wal-Mart was definitely coming to India. But analysts
wondered whether political pressures would prove to be an insurmountable
impediment to the company's plans. |
Background Note - Wal-Mart
Wal-Mart was set up in 1962 in the US state of Arkansas by Sam Walton (Walton). Before opening Wal-Mart, Walton operated a franchise of the Ben Franklin variety store5 in Newport, and later, another franchise called Walton's 5 & 10. His retail ventures proved quite successful, and most of the success came from his innovative business ideas. He bought products in bulk directly from manufacturers and offered them at lower prices to customers, which allowed him to gain a significant advantage over the competition. Walton also kept the stores open for longer hours than his competitors...
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