(SM9632) International Business and Innovation

Name: Tennakoon Mudiyanselage Sachintha Bandara Tennakoon
Student Number: 19038286
Module Name: International Business and Innovation
Module code: SM9632
Word count: 3290
Date of submission: 24.01.2020
Contents
1

Introduction.................................................................................................................................................3
External Environment Factors influence on the Acquisition........................................................................4
The PESTEL Analysis.................................................................................................................................4
Analysis through Five Forces...................................................................................................................7
Internal Benefits identification through SWOT............................................................................................9
Value Chain Analysis................................................................................................................................9
VRIO Test...............................................................................................................................................10
Risk Associated with the Acquisition.........................................................................................................12
Financial Risk Assessment......................................................................................................................12
Cultural Risk Assessment.......................................................................................................................13
Sustainability and Stakeholder Management............................................................................................14
Impact of Digital Disruption on the Acquisition.........................................................................................16
The 1st Loop of Disruption....................................................................................................................16
The 2nd Loop of Disruption.....................................................................................................................16
Disruption in the market.......................................................................................................................17
Conclusion.................................................................................................................................................18
Introduction
This report contains an examination on a US-based multinational retail corporation which has
entered the electronic business industry. Walmart a reputed organization in a chain of
2

hypermarkets and discount department stores has acquired Flipkart. This is one of the largest
companies when considering revenue, it has been listed as the most profitable retailer in the
stock exchange. Walmart is a very profitable retailer, has selected to enter the E-business
sector by acquiring Flipkart an e-commerce company based in India. This report has been based
upon this acquisition in which the decision has been analyzed using various tools to identify the
factors which have driven to the acquisition and the consequences of it. Additionally, it includes
the risks behind Walmart’s shift to e-business industry and the influence of the decision to the
Indian economy. Finally, in conclusion, the decision has been analyzed to distinguish the
favorability of moving into the e-business sector by Walmart and the impact created by it to the
digital market.
3

External Environment Factors influence on the Acquisition
The PESTEL Analysis.
The external environment analysis can contribute to distinguish the opportunities and threats
of a firm and develop a sustainable advantage, there are various macro-environmental analysis
tools used for this purpose (Lynch, 2009). PESTEL analysis (Political, Economic, Socio-cultural,
Technological, Environment and Legal) is such a tool that generates a general background on
the macro-environmental factors which influence the businesses (Yüksel, 2012). Given below is
an analysis using PESTEL to ascertain the decision to acquire Flipkart. There are several
definitions given for PESTEL analysis like PEST (Dale, 2000), to analyze the external environment
using the opportunities and threats.
Dimension India USA Global/Regional
Political  Instable government
(threat)
 Political support for e-
businesses (opportunity)
 Trade union influence on
government (Threat)
 Government initiative to
promote E-business
(Opportunity)
 Stable government
(Opportunity)
 High influence on
e-businesses by
the government
(Threat)
 A future market if
gained a proper
foothold.
 The political factors
influence the business
depending on the
government
viewpoint about e-
businesses.
Economical  Continuous growth in
the economy
(Opportunity)
 100% FDI allowance for
e-business (Opportunity)
 Continuous growth
in the economy.
(Opportunity)
 The
unemployment
 The growth of an
economy is a vital
factor considered for
the success of
4