International Marketing Report for Walmart: Environment Analysis

This report provides an environment analysis of Walmart's entry into the Indian market. It includes a PESTLE analysis, Porter's Five Forces analysis, and an internal business environment analysis. The report also evaluates Walmart's entry strategy and provides alternate strategies for increased penetration.

Walmart
International Marketing Report
Environment Analysis
Table of Content

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Brief Introduction..................................................................................................................................3
Macro Environmental Forces.................................................................................................................4
PESTLE Analysis......................................................................................................................................4
Political..............................................................................................................................................4
Economic...........................................................................................................................................5
Social.................................................................................................................................................5
Technological Force...........................................................................................................................5
Legal Force.........................................................................................................................................6
Environmental Force.........................................................................................................................6
Porter Model of Analysis.......................................................................................................................6
Competitive Rivalry............................................................................................................................7
Bargaining Power of Buyers...............................................................................................................7
Bargaining power of suppliers...........................................................................................................7
Threat of Substitutes.........................................................................................................................8
Threat of New Entrant.......................................................................................................................8
Internal Business environment analysis................................................................................................8
Porter Value chain.................................................................................................................................8
Inbound Logistics...............................................................................................................................9
Operations.........................................................................................................................................9
Outbound Logistics............................................................................................................................9
Marketing & Sales..............................................................................................................................9
Service.............................................................................................................................................10

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Infrastructure..................................................................................................................................10
Human resource Management........................................................................................................10
Technology development................................................................................................................10
Procurement....................................................................................................................................10
Reasons for Success or Failure in the Indian Market...........................................................................10
Lessons to be learnt.........................................................................................................................11
Evaluation of Entry strategy of Walmart in India Market....................................................................11
Alternate Strategy for Walmart.......................................................................................................12
Marketing Mix of Walmart..................................................................................................................12
Conclusion...........................................................................................................................................13
References...........................................................................................................................................14
Appendices..........................................................................................................................................16
Appendix 1.......................................................................................................................................16
Appendix 2.......................................................................................................................................17
Appendix 3.......................................................................................................................................17

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Brief Introduction
Walmart is the brain child of Sam Walton who founded the company back in 1962 and incorporated
in 1969. The American MNC operates a large chain of hypermarkets, discount departmental stores
and grocery stores all across the globe. The giant retail corporation has around 11,718 stores and
clubs operating in 28 countries. Walmart is the world’s largest company by revenue ($480 Billion)
according to Fortune Global 500 list in the year 2016(Wynne, 2016). India is one of the fastest
growing economies in the present day and Walmart never ceases to assess the opportunity for
growth. The first store in India was opened way back in 2009 in joint collaboration with Bharti
enterprises. Ever since, the company owns and operates around 21 best price Modern Wholesale
stores with 5000 items as product offering in the format of cash & carry wholesale format for Indian
mom and pop grocers(Greenspan,2015). Walmart solved the problem of around millions of such
small retailers by being one stop solution for their grocery needs. The driving values for the Walmart
stores are; best prices with unmatched convenience, choice, quality and hygiene (Lukic, 2016).
However, due to onerous regulation, FDI regulation the company is unable to sell to big retailers and
the consumers directly. This is affecting the company’s growth prospect significantly.
The purpose of the assignment here is to present a consultancy brief to the Board of directors. On
Indian market analysis and recommend a suitable strategic and operational marketing programme
for increased penetration. The brief will analyse the organization’s micro and macro environmental

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features and create a suitable entry mode for the company in the Indian market as a part of its
international marketing strategy.
Macro Environmental Forces
As the name suggest Macro environment is the condition which exist in the entire economy and is
not subjected to a particular sector or a region. It encompasses the analysis of all the macro
environment trends in the GDP, Inflation, Politics, employment, fiscal spending, monitory policy,
technological advancement and socio –cultural factors which has an impact on the industry
environment(Hu, Chopra & Chen,2017)
PESTLE Analysis
PESTLE analysis is a macro environmental analysis which focuses on analysis of the environment in
terms of political, economic, social, technological, legal and environmental forces.

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Political
India is the largest democracy encompassing over 1.32 billion people. Indian political scenario is
extremely stable, with two major political parties; the political parties have managed to keep the
country united due to vast cultural and religion differences in the country. Walmart first forayed in
the year 2009 in conglomeration with Bharti enterprises. Presently the American MNC has just 21
best prices stores which are selling to the members only. The political stability in the country is a
positive factor for companies looking to make a dent in the Indian consumer market. However, the
country is yet not fully open to brands like Walmart as it can hurt the sentiments of small retailers
and Kirana stores of the country (Hu, Chopra, Chen, 2017). (Appendix 1)
Economic
The Indian economy has shown a lot of growth and strength post liberalization in 1991, the country
ever since has opened up its borders to facilitate investment in different sectors and give impetus to
the Indian economy. The present economy is growing at a rate of 7.3 % annually and the GDP stands
at 2.26 lakh crore USD (2016). India is the fifth largest economy and the future prospects of the
economy are extremely overwhelming. Over the last decade, the income of people has risen
significantly which in turn has increased their purchasing power parity. Moreover with the
penetration of digital media, people have become more and more aware of the changes in the retail
sector. The earning of the labour sector has also improved which means more disposable income in
the hands of the people. Thus, the economic situation looks extremely favourable for Walmart
(Frynas & Mellahi, 2015).
Social
Social factors play an important role in the development and growth of retail sector. With the
growth in technology and digital communication more and more people are getting aware of best
prices, best companies to buy product from or the company. India is a young population, with the
average age as 27 years; it is primarily one of the youngest nations in the world. Millennial are the
key drivers of the industry, who are now focussed on value for money products. E-retail has grown
by leaps and bounds in India, the opening of multiple e-stores like Flipkart, Big Basket, Grofers and
Amazon retail possess trouble for Walmart which does not have an online presence in the country
(Alon, Jaffe, Prange & Vianelli, 2016).

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Technological Force
Development of technology in the last decade has given a big impetus to the retail industry. India
has been at the front runner of technology implementation in the sector. Whether it is the online
model of Brick and mortar model, technology plays a pivotal role in every business model.
Marketing, customer service, billing, supply chain and all other department heavily use IT to improve
customer service. Walmart has been highly effective in implementing technology in its stores, thus
India and Walmart together can develop positive synergies to further boast the sector (Pereira &
Kalakoti, 2014).
Legal Force
India is determined to protect its domestic economy and the local manufacturers, thus it has made
strong laws to ensure the same. Every organization has to comply with CCI(Competition commission
of India) in the business practices. India’s labour market is clouded by number of unions, which can
potentially cause trouble for Walmart. Other policies like FDI regulation and many more makes legal
force highly challenging for Walmart, who has not been able to make a difference in the Indian
market as of no due to high regulations.
Environmental Force
Environmental sustainability has become an important business concern globally. Retail sector has
to focus on waste management, energy consumption, packaging and recycling. Walmart has been a
very cordial citizen for India. The company has been very cautious in its business practices and
ensures that it does not harm the environment. Thus, environmental forces are conducive for the
company (Javaid, 2014).
Porter Model of Analysis
Porter 5 force model was first introduced by Michael E Porter in the year 1979; the model helps to
ascertain the competitive force and the attractiveness of the industry In terms of market profitability
(Dobbs, 2014).(Appendix 2)

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Competitive Rivalry
The competitive rivalry in the Indian retail sector is massive. The sector is dominated by millions of
mom and pop stores, big retail stores, super markets, hyper markets, online stores and so on. The
Indian retail industry has an estimated market size of 672 billion USD, thus one can imagine the
extent of competition in the industry(Appendix 3). The factors significant for Walmart are:
Huge number of forces in the retail market (A strong force for Walmart)
Large variety of retail firms in India (Strong force)
High aggressiveness of the firms (Strong force) (Dobbs, 2014).
Thus, it can be seen that all the forces are strong in respect to Walmart, thus the company has to
come up with a resolute strategy to stay ahead of the competition curve.
Bargaining Power of Buyers
Walmart and Indian retail sector has overall a high bargaining power. The country as vast and
diverse as India gives power in the hands of consumers to switch from one player to another, thus
giving the control in their hands (Rothaermel, 2015). The factors affecting Walmart thus are:
Huge population of Buyers (Strong Force)
Higher density of Buyers (Weak Force)
Small size of Individual Purchase (Weak force)

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Bargaining power of suppliers
India with a population of over 1.32 billion people have plethora of suppliers in the ecosystem.
These suppliers in large number try hard to take advantage of the growing sector thus focussing on
the maintaining relationship with the big players (Prasad & Warrier, 2016). Walmart being the Retail
giant can significantly influence suppliers and exert strong force on them. Supplier thus has a weak
bargaining power. The factors responsible are:
Big population of suppliers (Strong force)
Tough competition among suppliers (Weak force)
High availability of supply (Weak force)
Threat of Substitutes
The threat of substitution is for Walmart in the retail sector is absolutely weak. The company has the
widest range of products offering in the Indian market. Moreover, some of the products are highly
exclusive and limited to Walmart inventory. Thus, it can be easily said that the threat of substitute is
a weak force in the Indian market for Walmart (Ghosh, 2015).
Availability of substitutes (Moderate force)
Low variety of substitutes (Weak force)
Higher cost of substitutes (Weak force)
Threat of New Entrant
Threat of new entrant in the Indian retail sector is high; this is primarily due to the size and
complexity of the stores. In India it is real easy to open up a convenient or a retail store, thus
catering to a small community or a market segment. Furthermore, the growth and penetration of
digital media has pushed Indian consumers to buy groceries online (Baral, 2017).
Low cost of doing business (Strong force)
Moderate capital cost (Strong force)
Moderate cost of Brand development (moderate force)

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Internal Business environment analysis
Internal business environment analysis helps the company to identify its position of strength and
work towards the weakness. It also helps the company to understand its primary and secondary
activities and improve on the business operation for increased efficiency
Porter Value chain
Value chain analysis is a strategic framework which helps in identifying the business activities which
can create value and competitive advantage for the business.
Inbound Logistics
Walmart has its own warehouse to store the goods which they buy in volume at a very low price.
Walmart uses “cross platform” technique to transfer goods from vehicle to vehicle entrance to the
store. The company has electronic data exchange for all of its suppliers (Christopher, 2016).
Operations
The company uses handheld unit scan bar code for the prices of the goods. The company is covering
over 80,000 square feet of space with new feet’s of about 100,000 square feet. In most of its
business operation the company uses a blueprint followed by carefully calculated SLA’s with the
vendors and retailers (Stadtler, 2015).

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Outbound Logistics
The outbound logistic starts from truck bringing in the goods to a distribution centre. The system is
comprised of two steps; concentrate and distribute. More than 2000 trucks are in the company’s
fleet. The stores have option of choosing from four delivery slots (Ghosh & Shah, 2015).
Marketing & Sales
Walmart believes in offering “Everyday low prices” for its customers. The company does no advertise
much to promote it, as the people are already aware of its low prices. Walmart has long working
hours for high sales of its product offering (Johnson, 2016).
Service
Walmart focuses on its customer service, being customer centric company works for it big time.
Majorly almost all the stores at Walmart are self-service; however, the service staffs are always
ready to help the customers (Mudambi & Puck, 2016).
Support activities
Infrastructure
The management team is fairly experienced at Walmart who have previous experience in the retail
industry. All the departments have a fairly advanced infrastructure to support the activities of the
company.
Human resource Management
The company is one of the largest employers, employing over 700,000 people at Walmart stores.
Walmart calls all its employees as partners to give them a sense of ownership with the company. All
the new joinees receive training and induction to make them adapt to the culture of the
organization.
Technology development
Walmart has installed a satellite which tracks sales from all its stores. An electronic barcode system
is used to mark all the goods. Walmart invests heavily in technology infrastructure to expedite its
business process.

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Procurement
Walmart procures its goods form a large number of suppliers which have been associated with the
company for long. The company has opened plethora of distribution centres to meet the need of the
local stores.
Reasons for Success or Failure in the Indian Market.
Walmart’s journey since the year 2009 until now can be seen as moderate as compared to other
markets or USA. The company opened its 1st store in the year 2009 and now it has 21 cash and carry
stores. This can be not termed as a success, and more of a failure. Some of the reasons for its failure
in the Indian market are:
 Not thorough understanding of the Indian market.
 Inability to take the leverage of cheap labour.
 Inability to work in accordance with the FDI rules.
 Absence of e-commerce website.
 Government of India not allowing 100% FDI in retail
 Inability to sell directly to retail consumerism
 Weak marketing and promotions
 Inability to develop the Indian Kirana stores
Lessons to be learnt
India with a spawning population of 1.32 billion is one of the largest markets for Walmart, having
said that it becomes extremely important to understand the business model which works in India.
Every MNC operating in India adopts the strategy of “Go global and think Local”, Walmart failed to
do so. Moreover, the company completely failed to ascertain the lost opportunity cost by not selling
to retailers directly, this was the major flaw. Futher, Walmart’s poor analysis of the FDI regulation in
India are some of the lesson the company should learn from.
Evaluation of Entry strategy of Walmart in India Market
Walmart entered the Indian subcontinent in the year 2007 and opened its first store in the year 2009
with joint partnership with Bharti. Bharti which was in telecom was not a good partner, despite have
tremendous assets in the telecom industry. The company broke its partnership with Bharti in the

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year 2013. At present it holds around 21 cash and carry stores in India. The strategy to move in India
was slightly distorted, the company should have gone into a joint venture with an already
established big player or a small player, or could have gone for acquisition. Further, Walmart
completely failed to acknowledge the fact that small grocery stores are the ones which supply 98%
of grocesry in the Indian market. Thus, it can be seemed that Walmart’s intial strategy to enter into
the market was terribly wrong.
Alternate Strategy for Walmart
India was a growing economy during 2009 when the company opened its first cash and carry store in
India. The company should have focussed on the model of Amazon, enter the Indian e-commerce
market and create number of distribution centres to distribute products all over the country. The
same could have been done easily by acquiring any small internet company and thus taking
advantage of the growing digital landscape in India. Further, the company could have easily opened
brick and mortar stores after 5-10 years to cover the entire Indian sub-continent. Another thing,
Walmart could have done is by providing free trainings and workshops to smaller kirana stores and
retail stores to help them in optimum utilization of space and inventory, thus winning their support
and confidence. A large number of fulfilment centres and warehouse all across the country can
continuously cater to the rising demand of consumer goods.
Marketing Mix of Walmart
Marketing mix can be understood as the set of marketing tools which the firm uses to pursue its
marketing objectives in the Target market.
Product Indian consumers likes to shop consumer
goods, grocery, everyday products they use,
toys, outdoor living, home appliances,
jewellery, home decor, video games, grocery
and many more.
Price Walmart’s strategy of Everyday best prices works
absolutely fine with the price sensitive Indian
market. The company can also offer lowest
prices by using its economies of scale and put to
its leverage. Further, large number of
distribution and fulfilment centres around the
country can bring the costs down.
Place Launch the company’s outlet in tier 1 & 2 cities
and eventually move to tier 3 cities as well. The
stores should be in a location which is easily

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accessible to the population.
Promotion Walmart has spent very little towards its
marketing budget. The company has to use both
traditional and web 2.0 tools of marketing to
promote its exclusive range and huge discount
offering to the wholesalers and retailers. The
company should also promote its training
workshop programme for small scale retail shops
and kirana stores.
Physical Evidence Walmart’s physical evidence can be drawn from
its Logo, which should be across all the high
streets, the employee’s uniform and the
packaging of its material should demonstrate its
physical evidence.
Process The company has great operational process and
uses 6 sigma in its operation process to achieve
high operational efficiency. The company can
further use big data analytics to get more
information in the consumers spending pattern
to boast its product offering in the Indian
market.
People People are the most valuable asset of any
organization. Walmart has to co-ordinate with
the existing union in Indian market and provide
quality training for its employees. These
employees represent the company, thus making
the training highly relevant and important.
Conclusion
Walmart began its journey in the year 2009 in the Indian market in conglomeration with Bharti.
However, the company got a lukewarm response due to number of FDI regulation and other legal
norms. The company has the opportunity to re-evaluate its marketing strategy, in order to do so; an
e-commerce business model is advised to the company. The model will focus on low price, wide
range of product offering, excellent customer’s service and extensive sales promotion to increase
the brand penetration in the Indian Market.

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References
Alon, I., Jaffe, E., Prange, C. and Vianelli, D., 2016. Global marketing: contemporary theory, practice,
and cases. Routledge.
Baral, S.K., 2017. A Critical Study on Corporate Social Responsibility (CSR) Models in India. Splint
International Journal of Professionals, 4(5), pp.74-85.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis
templates. Competitiveness Review, 24(1), pp.32-45.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.
Ghosh, D. and Shah, J., 2015. Supply chain analysis under green sensitive consumer demand and cost
sharing contract. International Journal of Production Economics, 164, pp.319-329.
Ghosh, S., 2015. To identify the industrial protential of the 4 South Indian states in accordance to the
needs of decathlons processes. NIFT.
Greenspan, R., 2015. Walmart: Five forces analysis (Porter’s model). Panamore Institute.
Hu, K., Chopra, S. and Chen, Y., 2017. Macro-Environmental Forces that Drive Carmakers to
Misconduct: Intense Competition and Stringent Standards.
Javaid, J., 2014. Marketing Research & Innovative Product Launch in Indian Sanitation Industry. GRIN
Verlag.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Lukic, R., 2016. The Analysis of the Efficiency of Capital Investments in Trade of Serbia. Revista de
Management Comparat International, 17(1), p.12.

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Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies, 53(6), pp.1076-1093.
Pereira, V. and Kalakoti, R., 2014. Liberalisation of the Indian retail sector–an examination of macro
level HR implications and challenges. International Journal of Indian Culture and Business
Management 12, 9(4), pp.468-486.
Prasad, A. and Warrier, L., 2016. Mr. Porter and the New World of Increasing Returns to
Scale. Journal of Management Research (09725814), 16(1).
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Wynne, H.S., 2016. 4 Wynnes Boating Manufacturing Company: A Market Analysis and Business Plan
for Northwest Arkansas.

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Appendices
Appendix 1
The last three years have been really great for the Indian retail sector, the projection for the sector is
expected at around $ 28 trillion which is jaw dripping for any retail organization. However, the
industry is highly clouded by increasing competition, other than US and non US brands foraying into
the market, e-retail is significantly on a rise. Apart from the economic forces, technological and legal
forces play a very critical role in the establishment of the business entity.
Political environment
The political environment is not extremely welcome for the international retailers. India as a country
wants to be self-reliant and give a boast to its domestic economy, thus Walmart has a position of
disadvantage here .Moreover, India has two major National political parties, and with the change in
the government there can be a possible turn around in the situation of walmart.
The PESTLE analysis can be summarized as:
Political Stable Politics (Opportunity)
Increased support for Globalization
(Opportunity)
Extensive pressure from Unions for higher
wages (Threat)
Economic Growth of the Indian economy (Positive Sign)
Increasing PPP (Opportunity)
Increase in e-commerce activities (Threat)
Social Growing trend in lifestyle ( Positive sign)
High cultural diversity (Strength and
opportunity)
Migration of Urban population (Opportunity)
Technological Rise Business automation (Opportunity)
Big data (Opportunity)
High penetration of smart phones and mobile
technology (Opportunity)

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Legal FDI regulation (Threat)
Tax Law reforms (Threat)
Food regulation (Opportunity)
Environment Trend in Business and environmental
sustainability (Opportunity)
Environment friendly product and practices in
business operations (Opportunity)
Appendix 2
Porter 5 force Model
Walmart is the most valued company in the world in terms of revenue, the company has been
successful because it of its correct strategic direction in all its business decision. The strategic
direction of Walmart is influenced by the analysis of Porter model. The company is strongly advised
to deploy strategies to mitigate the effect of high bargaining power of customer and suppliers, at the
same time company has to put efforts to withstand the threat of substitutes and entrant in the
Indian market.
The Porter 5 forces can be summarized as:
Fierce competitive rivalry or competition
Fierce bargaining power of buyers
Low bargaining power of suppliers
Low threat of substitution
Very strong threat of new entrant
The company has to develop new strategies to create a position of competitive advantage in India.
The company can do so by investing in automation in its business process along with the
development of human resources.
Appendix 3
Key Challenges in the Indian market
 FDI restrictions of 51% in the Multi-Brand retail. There is an on-going bill in the parliament
for increasing the FDI cap, but only time can tell the failure or success of the bill.

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 Strong social and political protest against the big Multinational Corporation to protect the
interest of small local stores all across the country.
 India is an emerging economy and is doing extremely good in the world in terms of business
and creating infrastructures across the country. However, the value chain in terms of
infrastructure, freight facilities are still way below the benchmark.
 A number of trade unions have existed in India for a long period of time, these unions
forcibly protest against MNC’s to increase the wages of the labour.
Competitors in India
Name Category Target Segments Competition
Big Bazaar
(Future Group)
Diversified
merchandize
Middle and upper
lower class
Main competitor
Pantaloons
(Future Group)
Apparels and
Accessories
Higher Middle
and lower upper
class
Main competition
Star Bazaar (Tata
Group)
Merchandize,
highly diversified
Higher middle
class and lower
upper class
Limited reach,
strong backing of
Tata Group
Spencer’s, More
& DMart
Merchandize Middle to Higher
middle class
Smaller outlets
and limited
growth
Shoppers stop
and lifestyle
Apparels and
accessories
Higher class Strong presence
in metro cities

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