India: Anticipating the Opening Up of a Billion-Person Market Although it is the world's eighth-largest retail...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
India: Anticipating the Opening Up of a Billion-Person Market Although it is the world's eighth-largest retail market at more than $350 billion and has 400 million people with disposable income, the inefficiency of the Indian retail sector is well known. More than 95 percent of retail sales are made through nearly 15 million tea stands, newspaper stalls, and mom-and- pop stores. Strict government barriers have prevented foreign- owned retail businesses, although that situation is changing. "Many smart people-much smarter than 1-believe that India could be the next China," said John Menzer, the former head of Walmart's international operations and current vice chair of the company's U.S. stores. "So, certainly, as a retailer it's a place where we'd like to be." However, exploiting the potential of India could be a major challenge, particularly given the country's notoriously frustrating bureaucracy and poor infrastructure. Walmart will have to learn to manage highly protectionist and anti-capital- ist political parties, a bad road system, frequent power out- ages, difficulties acquiring appropriate plots of land, and lack of adequate distribution and cold-storage systems, among other concerns. One industry participant said, "Where will they run their Volvo trucks here? They will probably have to have bullock carts and handcarts in their supply chain. The diversity of the country could also prove problematic, with 18 official languages, 6,000 castes and subcastes, and widely varying regional consumer cultures. Savvy new Indian chains, such as Provogue and Shoppers' Stop, are starting to emerge, and nationalistic sentiments may produce much con- sternation for expansion efforts of foreign companies such as Walmart. In preparation for an eventual opening of the market, Walmart began building a foundation by establishing rela- tionships with Indian suppliers, distributors, and consumers. "What we found in China as we get stores on the ground and get more mass, we get to know a lot more of the suppliers. And when we know the suppliers, it gives us the opportu- nity to learn the product of the suppliers and actually export them," said Mr. Menzer in 2007, Walmart established Bharti Walmart, a 50-50 joint venture with Bharti Enterprises, a leader in mobile telecommunications. The venture's first store opened in 2009. Due to the constraints on retailing, this i venture is technically focused on the wholesale market, sell- ing only to large institutional or wholesale buyers while the company builds up its infrastructure and skills for an even- tual liberalization of the retail market. However, due to limited restrictions, more than 30,000 members joined this first sto to shop from the broad selection of products. By mid-2011, the venture had opened six Best Price Modern Wholesale stores, and it planned to open another 20 stores in the subsequent two years. As stated by Raj Jain, Bharti Walmart's chief executive, "In the next one or two years we do anticipate we will be in a market leadership position." Clearly, Walmart will need to understand the political and market dynamics and exploit the lessons it has learned from entering other emerg- ing markets in order to achieve success when the Indian market finally opens up. Questions: 1. Why has Walmart viewed international expansion as a critical part of its strategy? 2. What did Walmart do to enable the company to achieve success in Canada and Latin America? Why did Walmart fail to achieve similar success in Europe? 3. What should Walmart do-or not do to help ensure that the company achieves success in China and India? India: Anticipating the Opening Up of a Billion-Person Market Although it is the world's eighth-largest retail market at more than $350 billion and has 400 million people with disposable income, the inefficiency of the Indian retail sector is well known. More than 95 percent of retail sales are made through nearly 15 million tea stands, newspaper stalls, and mom-and- pop stores. Strict government barriers have prevented foreign- owned retail businesses, although that situation is changing. "Many smart people-much smarter than 1-believe that India could be the next China," said John Menzer, the former head of Walmart's international operations and current vice chair of the company's U.S. stores. "So, certainly, as a retailer it's a place where we'd like to be." However, exploiting the potential of India could be a major challenge, particularly given the country's notoriously frustrating bureaucracy and poor infrastructure. Walmart will have to learn to manage highly protectionist and anti-capital- ist political parties, a bad road system, frequent power out- ages, difficulties acquiring appropriate plots of land, and lack of adequate distribution and cold-storage systems, among other concerns. One industry participant said, "Where will they run their Volvo trucks here? They will probably have to have bullock carts and handcarts in their supply chain. The diversity of the country could also prove problematic, with 18 official languages, 6,000 castes and subcastes, and widely varying regional consumer cultures. Savvy new Indian chains, such as Provogue and Shoppers' Stop, are starting to emerge, and nationalistic sentiments may produce much con- sternation for expansion efforts of foreign companies such as Walmart. In preparation for an eventual opening of the market, Walmart began building a foundation by establishing rela- tionships with Indian suppliers, distributors, and consumers. "What we found in China as we get stores on the ground and get more mass, we get to know a lot more of the suppliers. And when we know the suppliers, it gives us the opportu- nity to learn the product of the suppliers and actually export them," said Mr. Menzer in 2007, Walmart established Bharti Walmart, a 50-50 joint venture with Bharti Enterprises, a leader in mobile telecommunications. The venture's first store opened in 2009. Due to the constraints on retailing, this i venture is technically focused on the wholesale market, sell- ing only to large institutional or wholesale buyers while the company builds up its infrastructure and skills for an even- tual liberalization of the retail market. However, due to limited restrictions, more than 30,000 members joined this first sto to shop from the broad selection of products. By mid-2011, the venture had opened six Best Price Modern Wholesale stores, and it planned to open another 20 stores in the subsequent two years. As stated by Raj Jain, Bharti Walmart's chief executive, "In the next one or two years we do anticipate we will be in a market leadership position." Clearly, Walmart will need to understand the political and market dynamics and exploit the lessons it has learned from entering other emerg- ing markets in order to achieve success when the Indian market finally opens up. Questions: 1. Why has Walmart viewed international expansion as a critical part of its strategy? 2. What did Walmart do to enable the company to achieve success in Canada and Latin America? Why did Walmart fail to achieve similar success in Europe? 3. What should Walmart do-or not do to help ensure that the company achieves success in China and India?
Expert Answer:
Answer rating: 100% (QA)
The image youve shared contains a piece of text discussing India Anticipating the Opening Up of a BillionPerson Market with a focus on the challenges ... View the full answer
Related Book For
Global Marketing management
ISBN: 978-0470505748
5th edition
Authors: Masaaki Kotabe, Kristiaan Helsen
Posted Date:
Students also viewed these general management questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
The estimated times (in weeks) and immediate predecessors for the activities in a project are given in the following table. Assume that the activity times are independent. (a) Calculate the expected...
-
Why do accountants use a Purchases account when inventory items are acquired in a periodic inventory system?
-
In what specific ways might the presence of a union raise productivity within a firm? Use the exit mechanism and voice mechanism concepts in your response.
-
The 10 -ft wooden rectangular column has the dimensions shown. Determine the critical load if the ends are assumed to be pin connected. \(E_{\mathrm{w}}=1.6\left(10^{3} ight) \mathrm{ksi},...
-
The following account appears in the ledger prior to recognizing the jobs completed in June: Work in Process Balance, June 1 .......... $ 40,000 Direct materials .......... 270,000 Direct labor...
-
A media personality argues that global temperatures are not rising, because every year an increase is reported, such as 0.09 degrees C. The difference from the previous year is less than the margin...
-
You are a lead auditor from ABC Auditors Pty Ltd. Your client is Cassey's Quality Cars Ltd who are a large car dealership with branches across Queensland. ABC Auditors have performed audits for past...
-
Anything for which a separate measurement of costs is desired is known as Question 1 options: a fixed cost item. a cost driver. a cost item. a cost object. a variable cost object. Question 2 (1...
-
1) A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among three sources. Source A will sell the silicon wafers for $2.50 per wafer,...
-
You have created a pizza company that focuses on very fast pizza availability for customers. You have made this happen by only providing 5 "flavors" of pizza. An inexpensive pizza oven (container)...
-
What is the approximate forecast for May using a two-month weighted moving average? Use 4 and 2 for the weights of the most recent and the earlier months, respectively. (Round off to the nearest...
-
The implementation of the following programs should be done in Python without the use of deep models learning. Inside the file you can enter comments and in top of the code, the address of the data...
-
A balloon with a radius of 16.0 cm has an electric charge of 4.25 10- C. Determine the electric field strength at a distance of 40.0 cm from the balloon's centre.
-
Juno, who files single, holds several crypto wallets with large account balances. Her adjusted gross income (AGI) is expected to be around $450,000. If she decides to sell off some holdings, which of...
-
The overall reaction and equilibrium constant value for a hydrogenoxygen fuel cell at 298 K is 2H 2 (g) + O 2 (g) 2H 2 O(l) K = 1.28 10 83 a. Calculate E cell and G 8 at 298 K for the fuel cell...
-
In his book, The End of the Nation State (New York: The Free Press, 1995), Kenichi Ohmae makes the following observations about country-based organization structures: One of the prime difficulties of...
-
How does language complicate the tasks of global marketers?
-
How will a weakening of the euro versus the Japanese yen affect German carmakers such as MW and Volkswagen in Japan? What measures do you suggest German carmakers might consider taking to cope with a...
-
A stepped bar, fixed at \(x=0\) and free at \(x=l\), has a cross-sectional area of \(2 A\) for \(0 \leq x
-
Estimate the fundamental frequency for the longitudinal vibration of a uniform bar fixed at \(x=0\) and free at \(x=l\) by assuming the mode shapes as (a) \(U(x)=c_{1}(x / l)\) and (b) \(U(x)=c_{1}(x...
-
Estimate the fundamental frequency of a fixed-fixed string, assuming the mode shape (a) \(W(x)=c_{1} x(l-x)\) and (b) \(W(x)=c_{1} x(l-x)+c_{2} x^{2}(l-x)^{2}\).
Study smarter with the SolutionInn App