Wal-Mart Drops
Ambitious Expansion
Plan for India
By: Lorena Araujo
Imelda Reyes
Kimberly Leal
Demetrio Ramirez
Jie He
Noman Qureshi
SWOT Analysis
●
Strengths
○
The ability to scale at a fast pace, the capital to move into new markets, the product base, the organization that supports
expansion.
● Weakness
○
The ease of substitutes when it comes to their products and the fact that many of the stores that include what Wal-Mart
sells are already established businesses in respected countries they try to expand in.
● Opportunities
○
●
Getting better deals with new suppliers in their market and price competition. They are able to negotiate and bring price
down by buying in bulk and lowering their price point.
Threats
○
They face are new entrants into the markets or existing companies that offer the same products that favor government
regulations and favor the Indian economy.
How does SWOT apply to the news?
Question
In this regard, what would be the appropriate way to go for Wal-Mart Company
given the contribution of India’s weaknesses and threats towards dropping its
expansion strategy?
Wal-Mart needs to capitalize on the strengths and opportunities available in this situation because the Indian market share is
after all worth their while especially due to the firm’s large size and reputation that is likely to give it a competitive edge against Indian
firms.
Porters 5 Forces and Wal-Mart’s Failure
● Threat of New Entrants
○
Is India’s economic market friendly to new market entrants?
■
●
No, the government has strict regulations on foreign investments that do not favor big
corporations overtaking small mom and pop stores and taking them out of business.
Threat of Substitute Products or Services
○
Does Walmart offer anything new and innovative to India’s economy?
■
No, there are many small and medium sized companies that offer the same
products and services.
● Rivalry Among Existing Competitors
○
Does India have existing competitors that would rival the massive competitor, Wal-Mart?
■
Yes, the government has taken measures to make sure small and medium sized
companies stay in business in order to keep unemployment to a minimum.
Porters 5 Forces and Wal-Mart’s Failure
● Bargaining Power of Supplier
○
Does India have a good supply chain model that Wal-Mart would require to build supplier relationships?
■
No, India has a low capability of storing inventory and does not have warehouses due to
a challenging environment…. ie. bad roads, poor electricity
● Bargaining Power of Customers
○
Do Customers enjoy the power of price competition in India?
■
■
Yes, India’s consumers favor price competition, more choices and better demand when
shopping.
The primary movers, the customers, were not enough to keep Wal-Mart competitive in
India’s economic market.
Institution-based view
●
The Indian government is highly involved in the entrance of foreign companies in India
●
Wal-Mart was required to the Indian government to buy up to 30 percent of its products from small
and medium-sized retailers
●
Corruption and bribery are illegal for Wal-Mart to do but it appears that it is the only way to get
business in India.
●
The Indian culture may still not be fully embracing of a huge retail stores and may still prefer momand-pop shops
VRIO Framework
● Value
○ Competitive price
○ Logistics
○ Operation
○ Marketing and sales
○ Services
○ Ethics
● Rarity
○ One stop Shop
○ Alliances
○ Systems- Inventory Management
● Imitability
○ Products - International Products.
● Organization
○
The organizational structure is very strong and hard to imitate therefore this
company has made strategic steps and alliances and has a great internal structure
that makes it hard for other companies to do what wal mart does
Recommendations
●
Hold off for a while to see if laws and regulations change.
●
Consider entering the market with smaller stores.