International Marketing Report: Analyzing Wal-Mart India's Strategies

This report provides a comprehensive analysis of Wal-Mart India's international marketing strategies. It begins with an overview of the company and its operations in India, followed by an in-depth examination of the external environment using PESTLE analysis and Porter's Five Forces to assess political, economic, social, technological, legal, and environmental factors, as well as competitive forces. The report then delves into the internal environment, utilizing Porter's value chain to evaluate primary and support activities. A key section addresses the reasons behind Wal-Mart India's challenges and failures, drawing lessons learned from its experiences. The report also explores different modes of entry and proposes an alternative marketing strategy. The report's structure includes an introduction, overview of the company, external and internal environment analysis, the reason behind the failure, lessons learned, mode of entry, marketing mix, conclusion, references, and appendices containing detailed supporting analyses. The report is a valuable resource for understanding the complexities of international marketing and the specific challenges faced by a major retailer in a dynamic market like India.

International Marketing
3/31/2018
Wal-Mart India

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Contents
Introduction......................................................................................................................................4
Overview of the company............................................................................................................4
External environment analysis.........................................................................................................5
PESTLE Analysis........................................................................................................................5
Political factors........................................................................................................................5
Economic factors.....................................................................................................................5
Social factors...........................................................................................................................5
Technological factors...............................................................................................................6
Legal factors............................................................................................................................6
Environmental factors..............................................................................................................6
Porter’s five forces.......................................................................................................................7
Bargaining power of suppliers- HIGH....................................................................................7
Bargaining power of customers- HIGH...................................................................................7
The threat of substitutes of products or services- HIGH.........................................................7
The threat of New entrants- Medium.......................................................................................8
Industry rivalry- High..............................................................................................................8
Internal environment Analysis.........................................................................................................8
Porter’s value chain.....................................................................................................................8
Primary activities.....................................................................................................................9

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Support activities.....................................................................................................................9
The reason behind the Wal-Mart India's Failure...........................................................................10
Lesson learned...........................................................................................................................11
Mode of entry................................................................................................................................11
Initial mode of entry..................................................................................................................11
An alternative mode of entry.....................................................................................................12
Marketing mix...............................................................................................................................12
Product.......................................................................................................................................12
Price...........................................................................................................................................13
Place...........................................................................................................................................13
Promotion..................................................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
Appendix........................................................................................................................................19
Appendix 1 External environment analysis...............................................................................19
Appendix 1.1 Pestle analysis.................................................................................................19
Appendix 1.2 Porter’s five forces..........................................................................................21
Appendix 2 Internal environment Analysis...............................................................................22
Appendix 2.1 Porter’s value chain.........................................................................................22
Appendix 3 Reason behind the Wal-Mart India’s Failure.........................................................25

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Appendix 4 Mode of entry.........................................................................................................25
Appendix 5 Marketing Mix.......................................................................................................26

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Introduction
The objective of the report is to suggest suitable strategic and operational international marketing
program for the Wal-Mart India. The report includes the thorough analysis of the market which
is essential for the company before proceeding with the future strategies of the company. The
analysis includes both external and internal study along with the competitive factors analysis that
might create the impact on the working of the company in the Indian market. Moreover, the
report also includes the details related to the obstacles faced by the Wal-Mart India and the
lessons that the company learned from these obstacles. In the end, the report includes the details
related to the mode of entry for the company in Indian Market. Along with this, it includes the
proposed marketing strategy.
Overview of the company
Wal-Mart India owns and operates around 21 Best Price modern wholesale stores in India. These
stores offer approximately 5,000 items in Cash & Carry format. The stores of best price ensure
that they are offering the unmatched convenience, choice, quality along with hygiene. The
company came into existence in India in the year 2009 in Punjab. Currently, the company is
present in approx. 9 states out of 28 Indian States (Wal-Mart India, 2018).

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External environment analysis
It is a process to determine all the external and internal elements that can create the effect on the
organization performance (Chernev, 2018). Below given is the macro and competitive forces
analysis of the Wal-Mart India.
PESTLE Analysis
This analysis helps the company in understanding the external factor that influences the business.
Wal-Mart India also faced some issues because of these factors (Grant, 2016). Please refer
Appendix 1.1 for the further analysis of the Wal-Mart India.
Political factors: - The political factors include the influence of the government on the
particular industry. India is one of the largest democracies in the world and it runs on a federal
form of the government along with this the government is unstable (Pratap, 2017). Indian
government’s regulations say that all the foreign wholesalers should be able to source at 30% of
products from small and medium Indian businesses. Similarly, they want Wal-Mart to source
30% of products (Lutz, 2013).
Economic factors: - The economic factors include GDP, inflation rate, unemployment and
many other aspects. GDP of the country is improving year by year after the liberalization of the
foreign capital which is attracting foreign investors. The company registered a GDP of $5.07
trillion in the year 2013 following a further improvement GDP growth rate of 5% in the year
2014. Similarly, Wal-Mart opened their stores in India with the partner Bharti Enterprises with
the motive to generate profit by offering customers products of different choice with quality.

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Social factors: - The social factors include the beliefs and values of the citizen of India. Most of
the people in India don't like to visit stores for purchasing products as they generally visit the
nearby Kirana stores from where they can purchase the essential products. This affected Wal-
Mart India as they were not able to generate the sales and revenue. Moreover, in India, there are
6, 49,481 villages so these people don’t visit the place to buy the products and generally prefer
kiranas.
Technological factors: - The technology factor includes the use of the advanced technology in
the business. The availability of the software and the use of 3G and 4G are available which is
one of the benefits for the company as they can offer the products through online medium. The
best price store offers online services but before browsing the customer has to prepare the
account which was one of the issues as most of the people don’t want to prepare the account
before browsing the sites (Best Price, 2018).
Legal factors: - The legal factors include the strict rules and regulations introduced by the
government that can affect the foreign investors. Wal-Mart got affected because of the policy of
foreign direct investment rules of India. The Indian government didn't give permission for the
FDI in the multi-brand retail (Bengali, 2015). Moreover, the company faced the allegations
related to the violation of rules and bribery in India.
Environmental factors: - The environmental factors include the concern related to the waste
management, energy consumption, packaging and many others. In India, the company faced
obligations related to the minimum wage increase, disability discrimination, recycling which
created the impact as the company was not able to generate the profit out of Indian stores then
they have to pay high wages to the workers.

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Porter’s five forces
Porter’s five forces is a tool that is used for the analysis of the competitors of the business in the
market (Hollensen, 2015). Below given is the analysis of the Wal-Mart competitor’s forces in the
Indian Market. Please refer Appendix 1.2 for the further analysis of the Wal-Mart India.
Bargaining power of suppliers- HIGH
Wal-Mart exported all the products from their manufacturing units because the company is a
well-known wholesaler. Moreover, they also formed tie-ups with the companies who can offer
them other products considering the requirement of the Indian people (Lovelock, 2011). But they
have to pay a high amount for same because suppliers in India generally charge from new
companies. Though, the company believes in forming the sustainable relationships with the
suppliers.
Bargaining power of customers- HIGH
The bargaining power of the customers is high in the market because they can switch to other
customers easily. The price is the only factor that is the concern of the most of the people in
India. Wal-Mart tried to offer the best price in the market but through the customer can find the
product at the low price in small retail shops they bargain.
The threat of substitutes of products or services- HIGH
Wal-Mart faced the high threat because the grocery items were easily available at Kiranas and
small retail shops (Chernev, 2018). Apart from it, there are some reliance stores who offer all the
products in one place. Indians mainly rely on Kirana store because they get daily wages from
which they daily purchase the products from the nearest store.

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The threat of New entrants- Medium
Most of the companies are getting attracted towards Asia region considering the growth in the
economy of the regions due to which the companies face the threat of new entrants. Though, on
the other hand, while evaluating the market of India they found that many international
companies are facing issues in the market of India which might make them move towards the
other markets.
Industry rivalry- High
There are numerous department stores, grocery stores available in the market that might make
the competition intensive. The major competitors of the Wal-Mart include Big Bazaar, D-Mart,
Reliance fresh and many others. The industry rivalry is high because these companies are
offering the best price to their customers with the best quality and along with this these
companies are well-known in the Indian Market.
Internal environment Analysis
The internal environment is composed of the elements within the organization that include
employees, management, culture, and many others (Lamb, Hair & McDaniel, 2011). The proper
management of Wal-Mart India is essential for the success of the business in the Indian market.
Below given is the porter’s value chain analysis of the Wal-Mart India.
Porter’s value chain
The porter’s value chain is an analytical framework that provides the assistance to the company
in identifying the activities that can create competitive advantage and value for the business
(Armstrong, Adam, Denize and Kotler, 2014). Please refer Appendix 2.1 for the further analysis
of the Wal-Mart India.

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Primary activities
The main component of the primary activity is inbound logistics- Wal-Mart inbound objectives
include the supply chain (David, 2011). There is very less number of traders involved in the
supply chain of the company as the company believes in dealing with manufacturers directly due
to which the company believes in saving the cost of distribution (Dudovskiy, 2016).
Another component of these activities is operations; Wal-Mart Company has its operations at
different locations in the form of their stores with the name Best Price which state that they offer
the product at best price. Outbound logistics; In the Indian market, the company opened stores in
different states so they have to ensure that they are effectively able to maintain the stock in every
store.
Along with this, the marketing and sales component is also included in the primary activities of
the company. Wal-Mart marketing and sales strategy were not so effective for the market of
India due to which they were not able to grab the attention of the customers (Ho, 2014).
Service is one of the crucial elements in each and every market. Wal-Mart believes in providing
effective services to improve the customer service. Best price stores of the company were able to
provide the effective prices to the customers but there is a need for the improvement.
Support activities
The components that are included in the support activities are Firm infrastructure, human
resource, technology development and procurement. Firm infrastructure; In Best price stores the
company tried to manage the products in their stores so that it will become convenient for the
customers.

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Human resource; In India there are many people who are skilled but many are unskilled labors
due to poverty. The effective human resource can contribute to the helping the organization to
establish a strong customers base. Though, Wal-Mart Company was not able to attract the
talented employees who can actually work for the company.
Technology development; the company can make use of effective technology in their products
and services with the help of which they can grab the attention of the customers. Moreover, to
conduct the primary activities effectively there is a need for the technology development (Frynas
and Mellahi, 2015). Procurement of the goods is one of the essential components that are
essential for every company as this is one of the ways through which the company can easily
make the goods available at its stores.
The reason behind the Wal-Mart India's Failure
The company faced many issues due to which they were not able to cope up in the market of
India. Initially, the major issue was the policy of the government which is needed to be fulfilled
by the company. This policy states that the company has to source at least 30% of the products
from small and medium Indian businesses (Lutz, 2013). Apart from it, the culture and social
influence of the people on the purchase decision was one of the factors due to which they were
not able to establish a strong customer base. Most of the villagers were not able to visit the best
price stores as the villagers generally work on the daily paid wages and they make a purchase of
necessity products from the nearest stores. Apart from this, the people who live in the urban
areas prefer different stores to make a purchase (Heimken, 2014). These stores include Reliance
fresh, big bazaar and any small retail outlets nearby home. These were the major problems which

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were faced by the company in the Indian market. Please refer Appendix 3 for the further analysis
of the Wal-Mart India.
Lesson learned
The partnership of the company was not so effective due to which the company had finished its
partnership with the Bharti Enterprises as the company was Conglomerate Company who offers
the products and services related to the telecommunication. It is suggested to the company to get
involved with the company who deals in the same industry because Wal-Mart might be able to
grab the details related to the suppliers and investors of the company.
Another important decision which was made by the company was suspending the chief financial
officer and the other executives in the year 2013-2014. The company brought their new chief
executive Krish Iyer (Thomas, 2017). He shifted its focus from retail outlets to the wholesale
industry. The company learned that their target is wholesaler buyers instead of the retail
consumer. The motive of the company is to get involved in the wholesale industry where they
can provide their products directly to the wholesale buyers.
Mode of entry
Initial mode of entry
The company initially made use of joint venture in which the company formed the partnership
with the Bharti Enterprise which was not successful as both the company belongs to the different
industry so Wal-Mart was not able to take the advantage of the benefit of a joint venture (Yan,
and Luo, 2016). The company was not able to share any details related to suppliers, technology,