Retailing in india is one the most important pillars of the Indian economy, as it has a share of 12% in the

GDP. Indian retail market is the 5

th
largest in the world and 2
nd
most attaractive emerging market in the
world, Vietnam being the first. According to the McKinsey report 2008, Indian retail market was valued
at US$ 511Mn and is likely to grow by 4 times by 2025.
Indias retail industry mainly consists of owner manned small shops such as kirana stores, mom and pop
stores and the larger format convenience stores and supermarkets accounts holds a share of meager 5%
in the industry. To increase this share of organized sector, India introduced FDI in retail sector keeping
in mind the effects that can help prevent the small shop owners from going jobless as they wont be
able to match up to the big retail units such as Carrefour and Walmart.
Walmart
It is the largest departmental store chain in the world and the 3
rd
largest employer in the world. The
corporations philosophy is to strengthen its relationships with employers, customers and suppliers. It
follows a low pricing strategy and becoming a cost leader is its core competency. Another core
competency which walmart focuses on is the robust and efficient supply chain network which is
strengthened by its own transportation network. They have leveraged IT to enhance their supply chain
network and they have been very successful till date.
Another reason which has helped WALMART to do well in most of the international locations in which it
has started business is GLOCALIZATION. It has involved itself in local communities and adapted to their
local culture. Also, on an average WALMART sources 90% products locally hence it helps in improving
the local economy.
BHARTI
Bharti enterprises, a leading group in india which has its business spread across different sectors has
been rightly shortlisted by walmart to open up its joint venture in India. Bharti has attracted US$ 1.2 Bn
in foreign equity which is the highest in India and hence we can say that it has a good history of
partnering with overseas companies. It is rated No. 1 in telecom business in India and has partnered
with alcatel lucent to achieve this. Bharti has a deep knowledge of indias fast growing consumer market
and hence can be a good partner to WALMART as they both complement each other I terms of their
strategies
BHARTI WALMART JV
Analysing BHARTI WALMART JV by using the porters diamond model has led to the following results:
DEMAND
1. A basic difference which exists in the mindset of Indian and American people is that American
people focus more on BUY & PAY whereas Indian people focus on SAVE & BUY. This mentality
observed a change in the year 2000 as there was a steep increase in the consumer spending as
the youth population in india has seen a considerable growth in their disposable income. This
increase has led to opening of more and more outlets of global brands as the consumer today
wants better quality, variety and lifestyle products. This led to a demand in the organized retail
sector.
2. With stiff competition from reliance, RPG, TATA, Aditya Birla group etc, Buyers have the
ultimate power to bargain and hence get the product at the cheapest price possible.
3. the FDI policy in India states that min 30% of the products are to be procured from Indian SMEs
hence it creates a demand for their products as well. Therefore it is a win win situation for both
walmart and the Indian small and micro industry.
4. Often this high consumer demand leads to innovation because ultimately Walmart and Bharti
focus on strong customer and supplier relationships and to maintain the relationships you have
to be innovative in your approach. The ever increasing competition makes this factor even more
important.
FACTOR ENDOWMENTS
factor endowments is defined as the amount of land, labour capital etc that a country possesses and
can exploit them to its use. It is of two types, firstly the basic factor endowments which includes the
natural resources, the climate, the geographical condition etc and the secondary factor endowments
which includes technology, infrastructure etc or in simple words those resources which are obtained by
the investment of people, companies, government etc.
1. Walmart, a follower of glocalization focuses on the local area to improve its business rather than
replicating the same business plan in every country that it ventures into. It has a great ability to
apply its unique culture and successful retailing concept despite daunting business and cultural
challenges. India has the second largest population in the world and has a vast resource of
skilled labor which can be utilized by Bharti-walmart JV to its best of use.
2. Cheap and good quality Agricultural products being another important contributor to the Indian
GDP and an important product to WALMART (if it wants to target small businesses such as fruit
and vegetable vendors and the kirana stores) can actually help walmart to procure products
direct from the farmers at cheap rates and hence they will be able to retain their cost leadership
status. On the other hand it will be great for the farming industry as well because they will be
able to sell their produce at good rates to the distributor directly.
3. Another area which Walmart focuses on is the supply chain management and for that it has its
own transportation as well. Walmart invests heavily in IT and transportation infrastructure so as
to retain its core competency in the same area.
4. India with 2
nd
largest no. of mobile users and very cheap telecommunication prices can be a
great advantage for BHARTI-WALMART. Partnering with BHARTI, Indias major telecom
operator and telecom networks provider will be a great help to WALMART.