PM305 - Walmart's International Marketing Strategy in Global Market

This report provides a consultancy brief to the Board of Directors regarding Walmart's Indian market analysis and recommends a strategic and operational marketing program for increased penetration. It analyzes the organization's micro and macro environmental features using PESTLE and Porter's Five Forces, creating a suitable entry mode for the company in the Indian market as part of its international marketing strategy. The report also delves into Walmart's internal business environment, utilizing the Porter Value Chain to assess inbound and outbound logistics, operations, marketing & sales, service, infrastructure, human resource management, technology development, and procurement. Furthermore, it discusses reasons for success and failure in the Indian market, lessons learned, and evaluates Walmart's entry strategy, suggesting alternate strategies and a suitable marketing mix.

Walmart
International Marketing Report
Environment Analysis
Table of Content

Running Head: International Marketing P a g e | 1
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