And its growth is completely homegrown. Unlike many other companies, Wal-Mart has not bought up existing retail chains in order to preserve control over its corporate culture, experts say, which has helped Wal-Mart stay ahead of its rivals.
As an illustration of its productivity-driven corporate philosophy, Wal-Mart began an internal "survival of the fittest" competition among individual stores. By building more stores than necessary, store managers felt a strong incentive to "crack down on workers and improve the efficiency of their store to stay alive," Lichtenstein said.
This aggressive growth strategy -- with its potentially negative implications for workers in the U.S. and abroad -- has forced other retailers to follow suit, or fall behind, Lichtenstein said.
Retrenchment Strategy
During fiscal 2007, the Company entered into definitive agreements to dispose off operations in South Korea and Germany, which were included in International segment. Consequently, the net losses related to these operations, gain on the disposition of our
South Korea operations, and the loss on the disposition of German operations are presented as discontinued operations in our Consolidated Statements of Income and our Consolidated Statements of Cash Flows for all periods presented. Additionally, the asset groups disposed of are reported as assets and liabilities of discontinued operations in the co’s
Consolidated Balance Sheet as of January 31, 2006. In May 2006, the Company announced the sale of its retail business in South Korea, which operated 16 stores, to Shinsegae Co., Ltd., for Won 825 billion, subject to certain closing adjustments. This transaction was approved by the Korea Fair Trade Commission in September 2006 and closed during the third quarter of fiscal 2007. The Company recorded a pretax gain on the sale of $103 million, and tax expense of $63 million during fiscal 2007. In determining the gain on the
Disposition of South Korean operations, the Company allocated $206 million of goodwill from the reporting unit. The transaction continues to be subject to certain indemnification obligations. In the event there are any additional charges associated with this divestiture, we will record and report such amounts through discontinued operations in future periods.
In July 2006, the Company agreed to dispose of its German operations, which operated 85 stores, to Metro AG, and recorded a pretax loss of $918 million during fiscal 2007. The transaction was approved by the European competition authorities and closed during the third quarter of fiscal 2007. In addition, the Company recognized a tax benefit of $126 million related to this transaction in fiscal 2007. The transaction continues to be subject to a post-closing adjustment and other indemnification obligations. In the event there are any additional charges associated with this divestiture, we will record and report such amounts through discontinued operations in future periods.
BUSINESS STRATEGY FOR
WAL-MART
Though Wal-Mart's low-price, low-wage, globally sourced model is not necessarily unique in the retail industry, the Arkansas-based company has become the most powerful retailer in the world. Its rapid and widespread growth strategies have transformed the retail industry, prompting other companies to emulate it and generating a series of social and economic changes.
Wal-Mart is a unique company in terms of its impact and its influence on changing corporate business and labor practices.
But experts -- even Wal-Mart's toughest critics -- dismiss suggestions that it is the only corporation to rely on low-wage labor by discouraging the unionization of its employees, import cheaper merchandise from foreign nations, or demand manufacturers and suppliers lower their prices.
Size Matters
As the largest retailer on Earth, Wal-Mart is most conspicuously unique in terms of its size. With nearly 3,550 stores visited by roughly 100 million people each week, Wal-Mart is a convenient shopping mecca for American consumers.
Reporting sales of $344,992 million in 2007 as compared to $308,945 million in 2006 shows increase of only $36047 million which can be attributed to saturation of US market. Wal-Mart ranks as the world's largest corporation by sales.
In year 2007, the first quarter saw increase of 7-8% increase in sales volume and for the next two quarters sales volume kept on decreasing alarmingly. The fourth quarter however registered a slight increase of 3% as compared to quarter three.
In first two quarter operating income increase at consistent rate of 13% and third quarter it fell down to 5%. However it again registered an increase of 16-17% in fourth quarter.
Wal-Mart's revenues are greater than the combined sales of its top competitors Target, Sears Roebuck, Costco Wholesale, Home Depot and The Kroger Co.
Many retailers -- such as Kroger's, Toys "R" Us, The Sports Authority -- focus their business around a specific merchandise category, rather than selling a wide range of consumer goods. But, Wal-Mart's strategy of selling a variety of products at discount prices has enabled the company to gain greater control of the retail industry and to demand manufacturers lower their prices, says Peter Solomon, founder and chairman of the investment banking advisory firm that bears his name.
Wal-Mart dominates numerous sales sectors, selling everything from sports products, office supplies to clothing apparel and groceries. It claims at least 20 percent of the country's retail toy business -- and now sells more groceries than any other U.S. supermarket chain, having overtaken Kroger.
Despite its apparent behemoth size in the United States, Wal-Mart, as a matter of perspective still controls only a small piece of the retail industry, accounting for roughly 4 percent of global retail sales.
Added to this breadth of products, Wal-Mart has also demonstrated an ability to expand at a rapid clip, increasing by 55 percent since 2000.
As the dominant discount retailer, Solomon said that Wal-Mart has transformed the standard retail marketplace, making it more difficult for traditional retail businesses to compete against the Wal-Mart superstore model. While there are other "big box" mass retailers, Wal-Mart's success has forced other retailers to change the way they do business if they want to survive.
"It has trail-blazed the discount business, brought down prices for the average consumer, making it very hard for others to compete against. Because it is an extremely effective company at delivering low prices consistently, Wal-Mart has consequently forced other retailers to lower their prices as well,".
Wal-Mart's Innovative Business Strategy
Wal-Mart's uniqueness comes from a business strategy as radically innovative as those of the Pennsylvania Railroad, Standard Oil and General Motors of the 19th and early 20th centuries, according to Nelson Lichtenstein, a labor historian at the University of California at Santa Barbara.
Like Wal-Mart, those companies, all titans of their time, boosted efficiency and productivity far ahead of their rivals by creating a new management paradigm for their particular industry,.
Wal-Mart's sophisticated distribution system and information technology to track inventory has significantly improved its efficiency and productivity -- making it far more profitable than other retailers.
As a result of Wal-Mart's profitable strategy, many other retail companies, such as Kmart Corp., are trying to emulate Wal-Mart's distribution system and telecommunications structure.
Operations
Wal-Mart operations are comprised of three business segments:
- Wal-Mart Stores
- Sam’s Club
- International.
Wal-Mart Stores segment is the largest segment of our business, accounting for 65.6% of our fiscal 2007 net sales. This segment consists of three different traditional retail formats, all of which operate in the United States, and Wal-Mart’s online retail format, walmart.com.
Traditional Wal-Mart Stores retail formats include:
• Supercenters, which average approximately 187,000 square feet in size and offer a wide assortment of general merchandise and a full line supermarket.
• Discount stores, which average approximately 107,000 square feet in size and offer a wide assortment of general merchandise and a limited variety of food products.
• Neighborhood Markets, which average approximately 42,000 square feet in size and offer a full-line supermarket and a limited assortment of general merchandise.
Sam’s Club segment consists of membership warehouse clubs, which operate in the United States, and the segment’s online retail format, samsclub.com. Sam’s Club accounted for 12.1% of our fiscal 2007 net sales. Our focus for Sam’s Club is to provide exceptional
value on brand-name merchandise at “members only” prices for both business and personal use. Our Sam’s Clubs average approximately 132,000 square feet in size.
At January 31, 2007, International segment consisted of retail operations in 12 countries and Puerto Rico. This segment generated 22.3% of our fiscal 2007 net sales. The International segment includes several different formats of retail stores and restaurants, including discount stores, supercenters and Sam’s Clubs that operate outside the United States. For certain financial information relating to our operating segments.
Retail Industry
Wal-Mart operates in the highly competitive retail industry in both the United States and the countries we serve internationally. It faces strong sales competition from other discount, department, drug, variety and specialty stores and supermarkets, many of which are national, regional or international chains, as well as internet-based retailers and catalog businesses. Additionally, it competes with a number of companies for prime retail site locations, as well as in attracting and retaining quality employees (“associates”). Wal-Mart, along with other retail companies, are influenced by a number of factors including, but not limited to: cost of
goods, consumer debt levels and buying patterns, economic conditions, interest rates, customer preferences, unemployment, labor costs, inflation, currency exchange fluctuations, fuel prices, weather patterns, catastrophic events, competitive pressures and insurance costs. Sam’s Club segment faces strong sales competition from other wholesale club operators, catalogs businesses, internet-based and other retailers.
WALMART DIFFERENTIATION STRATEGY
In-store communications is an ironic opportunity because Wal-Mart has long had the best internal communications (Bentonville to the stores) in all of retailing. Without having to rely and spend on advertising, they've also had the best communications with the consumers, because their message has been so consistent and so simple over such a long period of time: We've got the merchandise and we've got it at a lower price. The magic of that message goes beyond its obvious appeal. As one of the shoppers quoted above says: "Most people don't want to have to think when they go to the grocery store. They have been over worked all week." Because of the overriding power of Wal-Mart's basic message, most consumers find it unnecessary to think while they are there. All they have to do is buy what they need in the amount they need because whatever they buy will be a good buy! Even if they can't find the price on the shelf or the item. At the supermarket, many of the same shoppers feel they have to think and have to find the price or they'll be had.
Even magazines like Woman's Day and Family Circle, once the supermarkets' marketing partners, now remind their readers to be on guard. In an article called "Spend Less & Eat Better, the 8/3/03 issue of Woman's Day advises its readers to "purchase your fruits and vegetables at the farmers' market.... (At the supermarket) produce is front and center since store make 30 percent of profits there."
ENVIORNMENTAL SCANNING OF
WAL-MART
External Environment
Socio-cultural
Throughout the world there is a large shift in our demographics. There currently is a larger aging population than ever before, and at the same time the birthrate in developed countries is decreasing, as it is increasing in underdeveloped countries. Due to advances in medicine individuals are living longer and longer, as it seems we can beat any disease. Health is becoming more and important to individuals as they exercise and eat better; everyone wants to stay healthy longer. At the same time in the United States in particular the population is getting fatter and fatter, preschool age children are being labeled as obese. Shopping has turned into a favorite pastime for the whole family, and when buying big-ticket items, everyone has a say. Increasingly there are more single-parent households, which does not leave much disposable income. Most two-parent households have both parents working and earning more, living in bigger houses, taking more vacations, and owning more cars. On the other hand we are currently experiencing a great deal of the American public has been downsized, and may be unemployed, starting a new career, or back in school.
Technological
Due to the current recession the government has been looking for any way possible to save money, and unfortunately research and development, non-military that is, was one of the first things to go. However many of the suppliers to retail are forced to continue their R&D programs as competition is stiff and their product line needs to continually be updated. Technology is growing at an incredibly rapid pace that no one can keep up with it. There have been amazing growths in the areas of health, consumer goods, and food due to technology. As consumers are used to the ever-growing technology they are not as wary of it as in the past, but do not buy the newest thing, as quickly because the item it replaces is less than a year old. Production is becoming more and more automated which is pushing individuals out of jobs. The Internet is widely available in the United States, but that is not the case in the rest of the world. Even in parts of Europe many houses do not have computers much less access to the Internet. Telecommunications structures continue to be improved upon or even built.
Politico-Legal
USA has democratic form of government. In fact it is the one of the world’s oldest democracy of more than 200 years where everyone has a saying in the government. Pressure groups play a vital role in US democracy, a retail chain giant like Wal-Mart have their representatives in congress and senate. Hence , they keep a keen eye on all the policies and laws so that it is conducive with the Wal-mart’s future plans In case of any blockage lobbying is used by them.
Economic
US has capitalist system of economy, the mode of production is controlled by private enterprises. The economic conditions are favorable for operation of private firms. In fact big retail chains like Wal-mart has revolutionized the US economy “ Always Low Prices- ALWAYS ”.With trends of globalization Wal-mart is able to spread it’s wings in Asia-Pacific region where the economy is liberalized . Globalization, Liberalization and Privatisation gives economic policy that are is consonance with growth and expansion strategies of Wal-mart.
Internal Environment
Being the largest non-government employer and corporation in the world, Wal-Mart is bound to have an interesting internal structure put in place. So what exactly is the method to all the madness? Let's look inside Wal-Mart's Internal Environment.
Corporate Structure
Wal-Mart is a public corporation, however the majority of the stock is still held by Walton family members. Therefore, there is lots of family involvement at the top level. The headquarters are in Bentonville, Arkansas, along with the control and decision making ability of the organization. There is a very hierarchical structure in place which only fuels the "good old boys club" for top management. The other unique element in Wal-Mart's corporate structure is a strong culture that is fueled by the Wal-Mart way of doing things, which as far as they are concerned is the only way.
WAL-MART ANALYSIS
INTERNAL ANALYSIS – ANALYZING RESOURCES
Financial Resources
Wal-Mart is the world’s largest and most profitable retailer. Wal-Mart’s pre tax return on sales was 8% during 1989 which was double the industry standard and it continues to be the front runner till today. Wal-Mart commands market value 10 times more than its book value.
Human Resources
Wal-Mart promotes internal staff development and over 60% of its store managers are promoted internally then direct recruits. Wal-Mart believes in recruiting people with a flair for customer service and trains them accordingly to its strong company values. Employees are treated as owners as more than 70% of employees have shares of the company and incentives are paid in stock options too.
Physical Resources
Wal-Mart developed its computerized inventory system way back in 1970 that decreased check-out and reordering times and built highly automated distribution centres, reducing shipping cost and time. Wal-Mart has continued to be an innovator and has this has led it to create and sustain its competitive advantage by being the first and to be continuous to replace systems and processes replicated by competitors.
Intellectual or Intangible Resources
Wal-Mart’s core resources are its customers which total over 40 million per year. Wal-Mart has over 1.3 million associates (employees) at its stores, worldwide. The author feels this itself is unique which helps Wal-Mart get 1.3 million unique, hardcore loyal customers. Wal-Mart uses its technological capabilities to sustain its cost leadership in distribution and superior inventory systems.
Culture Analysis
Wal-Mart’s culture is as unique and distinctive as possible considering the mammoth that it has grown into today. Usually firms even of a small and medium company find it hard to maintain and build good customer service but Wal-Mart has always had it as its foundation and till today preaches and practices exemplary customer service. Wal-Mart’s Corporate Citizenship actively helps development of the community with programs spread across education, health, and environment. Wal-Mart’s Code Adam, a
tribute to a lost child in a retail store helps prevent children getting lost in stores today which make it a safer place for families to shop. Wal-Mart’s Ten Foot Rule and Sundown Rule all promote the employees to treat the customer right, first time, always. Employees are treated as Associates inspiring their status. The everyday morning cheers act as a ritual and cheer and energize the associates making
them part of the organization. Associates acting as ‘greeters’ at the entrance of every store worldwide is unique and makes the customer more welcome and special.
BCG Growth Share Matrix for
Wal-Mart
Although the BCG Matrix is used traditionally for particular product types within an organization’s product portfolio, the author tries to represent the different formats of retail stores adopted by Wal-Mart using the BCG Matrix. This analysis helps analyze the growth potential of different formats of stores adopted by Wal-Mart and helps allocate necessary resources.
It briefly appears the new store format ‘Neighborhood Markets’, is exceeding expectations and this format is being rolled out successfully in new markets, thus placing itself under the ‘star’. The traditional ‘Discount Store’ continues to be Wal-Mart’s core concept although it’s being slowly converted into other formats with the changing shopping patterns but is still highly profitable and makes most of the revenue. The ‘Supercenter’ and ‘SAM’S CLUB’ have established themselves as successful formats with growth opportunities. Internationally the focus has been on the ‘Discount Store’ and ‘Supercenter’ format with modest trials in the SAM’S CLUB format .
P.E.S.T. ANALYSIS FOR WAL-MART
P.E.S.T. Analysis
Political Influences
The political influences in this industry is probably the most burning concern with organizations going global and many countries restricting the growth of companies by many countries. European Customs and Regulations heavily hamper expansion plans. FDI in many countries are still heavily regulated and global companies are yet to set foot into emerging markets like India.
Economic Influences
War on Iraq has had a negative impact on consumer spending and outlook. Disproportionate levels of income and consumer spending in developing countries like India and China will impact growth of global companies. Exchange rates affect global sourcing and pricing policies on a day to day basis. Recent developments with Wall Street have helped foster a better relation and helped in Wal-Mart’s listing and ratings.
Social Influences
Developing countries are not used to push type marketing and aggressive selling. Bulk buying patterns predominantly present in USA, is non-existent in Asian countries. Language and cultural factors is a barrier to globalisation. Anti-Globalisation movements in the recent past has affected growth of global companies, especially companies originated USA.
Technological Influences
Development in technology and satellite systems has given a boost to Wal-Mart. Basic infrastructure still lacks for effective warehousing and distribution, the lifeline of a retail chain.
Summary
There appears to be legal and social hurdles ahead for global companies Expansion into growing and emerging markets throws in tremendous growth opportunity though localisation would be a critical success factor. Infrastructure needs to be developed to support activities of a global distribution channel to achieve global competitiveness.
PORTER’S 5 FORCE’S ANALYSIS FOR WAL-MART
:-Porter’s 5 forces BASIC MODEL
Porters Analysis
Horizontal Forces Mature markets
Vertical Forces Growth Markets
Vertical and Horizontal Competitive and changing markets
Competitive Environmental Analysis
1. Potential rate of growth of industry (in real terms)
0-3%......3-6%......6-9%......9-12%.....12-15%......15-18%..... 18-21%......>21%
2.Ease of entry of new firms into the industry
No barriers:___:___:___:___:___:___:___:___:___Virtually impossible to enter
3.Intensity of competition among firms
Extremely Competitive:__:__:__:__:__:__:__:__:__:___:__Almost no Competition
4.Degree of product substitutability
Many substitutes available:__:__:__:__:__:__:__:__:__No substitutes
5.Degree of dependency on complimentary or supporting products and services
Highly dependent__:__:__:__:__:__:__:__:__:__:__:__Virtually independent
6. Degree of bargaining power buyers and customers possess
Buyers dictate terms__:__:__:__:__:__:__:__:__:__:__Selling firms dictate terms
7. Degree of bargaining power suppliers and vendors possess
Suppliers dictate terms:__:__:__:__:__:__:__:__:__:__:__Buying firms dictate terms
8.Degree of technological sophistication in the industry
High level technology __:__:__:__:__:__:__:__:__:__:__Very Low Level technology.
9.Rate of innovation in the industry
Rapid innovation __:__:__:__:__:__:__:__:__:__:__Almost no innovation
10. General levels of management capability
Many very capable managers:__:__:__:__:__:__:__:__:__:__Very a few capable managers
WAL-MART COMPETITIVE CAPABILITIES
Strategic Map – Industry
Competitive capability
LOW HIGH
HIGH
LOW
LOW HIGH
As we can see in the figure above the diversification and competitive compatibility is high in the case of Wal-Mart as compared to other competitors like Sears, K-mart etc.
Porter Competitive Analysis----Wal-Mart
WAL-MART SUPPLIER’S POWER
Wal-Mart enjoyed a 50 percent market share position in the discount retail industry.
Procter & Gamble, Clorox, and Johnson & Johnson were among its nearly 3,000
suppliers. Though Wal-Mart may have been the top customer for consumer product
manufacturers, it deliberately ensured it did not become too dependent on any one
supplier; no single vendor constituted more than 4 percent of its overall purchase
volume. Further, Wal-Mart had persuaded its suppliers to have electronic “hook-ups”
with its stores.
About 85 percent of all the merchandise sold by Wal-Mart was shipped through its
distribution system to its stores. (Competitors supplied to their retail outlets on
average less than 50 percent of the merchandise through their own distribution
centers.) Wal-Mart used a “saturation” strategy for store expansion. The standard
was to be able to drive from a distribution center to a store within a day. A
distribution center was strategically placed so that it could eventually serve 150-200
Wal-Mart stores within a day. Stores were built as far away as possible but still
within a day’s drive of the distribution center; the area then was filled back (or
saturated back) to the distribution center. Each distribution center operated 24 hours
a day using laser-guided conveyer belts and cross-docking techniques that received
goods on one side while simultaneously filling orders on the other.
The company owned a fleet of more than 3,000 trucks and 12,000 trailers. (Most
competitors outsourced trucking.) Wal-Mart had implemented a satellite network
system that allowed information to be shared between the company’s wide network
of stores, distribution centers, and suppliers. The system consolidated orders for
goods, enabling the company to buy full truckload quantities without incurring the
inventory costs.
SUMMARY
The competitive environment for Wal-Mart definitely looks competitive Although Wal-Mart uses its clout around and bargains at the best possible lowest prices stretching suppliers beyond the limit, it still has a lot of pressures from the market outside.
The bargaining power of suppliers and buyers is low with Wal-Mart having established a near monopoly in its home market and increasing its market-share in its overseas operations. Wal- Mart is already Canada’s and Mexico’s top retail chain and in UK is at the third position.
Threat of entry remains low in the home market and globally. The entry scene is limited to existing retail chains as the cost of setup is substantial. Regulatory restrictions are also a concern here.
Threat of substitute products is low to medium with consumers having a choice from different stores to buy the same product at highly competitive prices. A sixth force, called the complementors enable the firm whose products or services work in conjunction with enabling a synergistic effect .Wal-Mart sees
more customers than the banks do these days. Recent antitrust lawsuits over Visa and MasterCard by retailers, headed by Wal-Mart, alleging the use of expensive debit cards and the costs borne by the retailers may upset the market .The intensity of competitive rivalry can be classified low to medium The
power obtained by the low bargaining power of suppliers and buyers is offset by the threat of substitutes and threat of entry. Overall a substantial amount of power still lies with Wal-Mart considering the scale of operations and maturity in its industry.
FACTORS CAUSE EFFECT
KEY SUCCESS FACTORS – WAL-MART
[Contribution of different factors in the success of Wal-Mart in US on a scale of 1-15]
WAL-MART S.W.O.T. ANALYSIS
S.W.O.T. ANALYSIS
Strengths
Wal-Mart is the largest corporation in the world giving it enormous status and recognition in the industry and new markets. Wal-Mart is great at building and maintaining relationships with suppliers. Wal-Mart is a continuous learning organization with integrated systems and frequent meetings with store and aisle managers and systems that receive 8.4 million updates every minute on transactions from its stores. More than 70 million customers roam Wal- Mart aisles each week (Fortune, 2003). Wal-Mart’s distribution centre and logistics capabilities are a key strength adding value to its entire system. Wal-Mart’s cross-docking and effective inventory managements gives it’s a 3% cost advantage which helps sustain its Every Day Low Price strategy .
Weaknesses
Wal-Mart shows little adaptability to its formats in overseas expansions. Wal-Mart is still to develop its expertise in international marketing. Shows weakness in its expansion by not fulfilling expansion plan of opening 50 new stores in Germany during 2001.
Opportunities
Growing middle class of consumers in emerging markets like China and India, gives Wal- Mart a tremendous opportunity for global expansion. There is growing consolidation in the market with the weak economy which is also leaving many competitors up for sale at below book value. Growth of e-commerce enables a new business channel and Wal-Mart has aggressively trying to capture and create its presence in this medium too.
Threats
Recent years have witnessed anti-globalisation movements affecting global companies and American companies in general and Wal-Mart can face stiff resistance from consumers in new markets. Recent wars and outbreaks have affected sales globally. Increased competition in mature markets like Germany and U.K. with established retail chains dominating despite Wal-Mart’s entry. Growing trade blocks and zoning regulations hamper Wal-Mart’s expansion plans.
VALUE CHAIN ANALYSIS FOR
WAL-MART
VALUE CHAIN ANALYSIS
Inbound Logistics
Wal-Mart’s primary activity of receiving inventory is planned right from the point of production, which Wal-Mart is not involved with. Wal-Mart has integrated systems with key suppliers which communicate in real time data with sales information and stock status so it can replenished in time. Shipments are timed and slotted and planned in an orchestral way.
Operations
Wal-Mart maintains a lean approach to inventory. Wal-Mart innovated a technique of replenishment called the Cross-Docking where incoming goods are offloaded into outgoing trucks directly without stocking them even for a few hours. Most goods pass through the warehouses within a span of 48 hours, enabling minimum idle time and lowering excess inventory possibilities. Most of thegoods never touch the floor of the warehouse, as goods are passed on 24 miles length of conveyor belts between incoming trucks to outgoing trucks.According to Ananth Raman of Harvard Business School, “Wal-Mart will rather extract fat from the process than extract from the supplier’s profit” . This statement reaffirms the working style of Wal-Mart of working together with vendors enabling a winwin situation for all concerned, the vendors; the organization (Wal-Mart); and the customers eventually.
Outbound Logistics
Goods are transferred within 48 hours of receipt from suppliers. The replenishments are also done twice weekly, which is double the industry’s standard.
Marketing and Sales
Wal-Mart maintains a simple and effective marketing strategy which it has managed to replicate globally apart it being the focus of its strategy. The Every Day Low Price (EDLP) is simple and eliminates unnecessary advertising trying to push sales, as Wal-Mart has successfully sold the concept to the customers, that it sells its products at the lowest prices, everyday. This is one of the most interesting
attributes of Wal-Mart.
Service
Wal-Mart’s aggressive yet subtle ‘People Greeters’ and in its own fashionable and proud way ‘Aggressive Hospitality’ are the foundations for Wal-Mart’s success in the highly competitive market
Infrastructure
Wal-Mart maintains its own fleet of 2000 plus trucks which have scheduled deliveries between warehouses to stores minimizing delays and over reliance from suppliers
Human Resource Management
Wal-Mart is the only retailer to be in Fortune’s 100 Best Places To Work .Wal-Mart’s empowerment of Associates is laudable with instances such as allowing its Associates to get on the network and lower its prices, nationwide if its found to be higher than its competitors, all this done without any consultation or permission requests from superiors
Technology Development
Wal-Mart’s technology and inventory management systems and software are better than the
best in the world and also the lifeline of the organization. Wal- Mart’s early innovations and experimentation apart from investments light-years ahead of its time into VSAT capabilities have boosted its success.
Procurement
Wal-Mart’s satellite communication and electronic data interchange links all its stores to over
4000 suppliers creating the finest procurement co-ordinated scenario. Wal- Mart integrates its supply chain management activities with key suppliers like P&G with direct shipments from P&G’s warehouses to Wal-Mart’s stores and warehouses.Wal-Mart inventory management is so effective that over 70% of its merchandise is purchased and paid for by customers, even before Wal-Mart has actually paid for the same to its suppliers. Wal-Mart has outsourced a substantial activity to USSO enabling Wal-Mart to maintain its logistics costs.
Summary
The beauty of Wal-Mart’s Value Chain is the scale of operations and the control it exercises over each activity. Wal-Mart takes care of all the activities internally except partially outsourcing its logistics requirements. Its systems integration from inventory, to stores, to headquarters to suppliers is the lifeline of its success. Transportation undertaken by its own fleet of trucks is an added advantage. The core activity remains in its bulk buying and inventory management which supports Wal-Mart’s competitive advantage of pricing and every element shows traces of cost leadership. Total integration is key here. Wal-Mart located its discount stores around regional warehouses allowing a streamlined and low cost
physical distribution .
STRATEGIC ANALYSIS FOR
WAL-MART
GENERIC STRATEGY
Analysis of Wal-Mart’s global generic strategy is complex and mystifying .To redefine that, does Wal-Mart have a global strategy is the argument. Analysis of the value adding activities supporting the generic strategy shows clear elements of cost focus.
Porter’s Generic Strategies
TRANSNATIONAL MODEL
A transnational strategy combines global and local strategy features in order to gain competitive advantage according to the indications of globalisation driver analysis. Analysis of Wal-Mart applied with the transnational model framework reveals us the true picture of Wal-Mart .Considering the changes in the macro-environment and the globalisation drivers, we can understand the following pressures for globalisation and localisation. There are strong globalisation forces with the concentration key value adding activities and the emergence and presence of global brands and advertising. Centralised decision making and global sourcing also add to the pressures of globalisation. Acting on the localisation force which is significantly weaker compared to the globalization forces are the local variations to the marketing strategy and local product variations. Both signify the importance of localisation despite the globalization of markets. The global core competence / distinctive capability, global generic strategy, integration and co-ordination of global activities, differentiated architecture and participation in key markets are all elements of Wal-Mart’s global strategy.
On the basis of the Transnational Model, Wal-Mart appears to be a transnational company.
Wal-Mart’s Transnational Strategy
CONCLUSION
Wal-Mart considering its scale and scope of operations has given a dynamic perspective in analysis of the many frameworks analyzed with. Strategists like Govindrajan and Gupta, who specialize in globalisation, endorse and acknowledge Wal-Mart as a global organization and highly lauding Ironically, Rugman, argues, Wal-Mart as a regional player with regional strategy considering that Wal-Mart has only 9.6% of its stores outside its home region and only 16.3% of revenue is generated from stores outside its home country.
Again considering classification such as the NAFTA and the TRIAD, large economies (Countries) are clubbed together and treated as one which the author disagrees to justify as one. Arguments such as only a certain percentage of business is generated outside the TRIAD making a business less global are arguments the author disagrees with. With the EU becoming as one then soon, the world will become large chunks of amalgamations. The simple definition or presence in different markets should be taken into consideration of being global. Many strategists do not give concessions for the time the business has started to expand globally. Wal-Mart for instance has grown to such a strong position over 40 years,
this would take considerable time to replicate and adapt in international markets. Analysis using Yip’s Globalisation / Localisation Drivers shows the industry and Wal-Mart in general moving towards globalisation but yet maintaining key aspects to localisation. This could be the way ahead. The Transnational Model illustrates the same key aspect. Marketing strategy and product variation though it can be global, it needs to be tuned to the local market catered considering the emergence of localisation preference in consumers. The market has gone too global, that consumers place an emphasis of localisation.
Acknowledgements are made that the industry is maturing far greater than Internationalisation but it’s yet to be seen as a global player. But it’s a matter of time before it expands it to new markets and creates a foothold.
COMPETITIVE ADVANTAGE FOR
WAL-MART
Analysis of the generic strategy and the supporting value chain, gives us a good insight into sources of Wal-Mart’s competitive advantage. When two or more firms compete within the same market, one firm possesses competitive advantage over its rivals when it earns a persistently higher rate of profit .
Wal-Mart’s capability to outperform its rivals is achieved with its ability to outperform its competitors quickly and effectively. Supporting this is its, highly integrated systems, technological advances, highly efficient inventory management skills, few markdowns and few stock-outs. This is supported also by its corporate culture encouraging and rewarding initiative and innovation.
Low cost leadership helps the firm above average returns in the industry despite strong competitive forces . Traces of cost leadership are noticeable in the value chain. Wal-Mart saves costs by holding stocks for less than 48 hours in its inventory. Wal- Mart is known to negotiate with suppliers for the lowest cost of the product without any frills and marketing expenses which adds to the cost later. Wal-Mart’s purchase by the truckload saves costs again by bulk purchasing. Wal-Mart’s inventory handling and logistics distribution with its own fleet of 2000 plus trucks help attain a cost effective distribution channel than relying on unreliable suppliers networks which costs in delays. But is Wal-Mart’s strategy based solely on cost or does it have any other attributes based on its characteristics. Wal-Mart appears to have a differentiation strategy.
The differentiation strategy is one of differentiating the product or service offering of the firm, creating something that is perceived industry-wide as being unique. It can be design or brand image, technology, features, customer service, dealer network or other dimensions High degree of customer service with store greeters and ‘no questions asked’ policies reaffirms Wal-Mart’s differentiation from its competitors. ‘Every Day Low Price’ strategy helped reinforce Wal-Mart was the lowest price.
The third generic strategy advocated by Porter is the focus strategy. The focus strategy is focusing on a particular buyer group, segment of the product line or geographic market as with differentiation, focus may take many forms .Wal-Mart right from its foundation located its stores to out of town areas with small populations. This was a segment ignore by its competitors giving Wal-Mart an edge over competition by locating itself in a low competitive environment before it creates competition. Wal-Mart’s focus on the segment of people targeted as well as its location of stores, does give it an attribute of the focus strategy.
Effective implementation of any of these generic strategies usually requires total commitment and supporting organizational arrangements that are diluted if there is more than one primary target .Arguably Porter termed organizations attempting cost leadership and differentiation together as ‘stuck-in-the-middle’ and it does not lead to competitive advantage and its sustainability. Academic criticism is not new and Porter has received his share of it. Most strategists feel low cost leadership alone, does not lead to competitive advantage unless there is an element of differentiation. A strategy combining elements of low cost, price and leadership is known as hybrid strategy .Mintzberg advocated the hybrid strategy for it combines both elements of low cost leadership with differentiation. However, the fact can not be denied that Wal-Mart has a focus strategy as well as a differentiation strategy. Overall the company thrives on cost leadership.
The global validity of these are tested with Wal-Mart’s core strategy in every market it operates, it maintains cost leadership in all activities as well as it maintains its differentiation by having exemplary service. The adoption of the focus strategy globally can be critiqued as Wal-Mart is unable to expand into most markets like UK and Europe with tight zoning regulations and its entry into these markets have been through mergers and acquisitions. But the focus of the segment of customers targeted remains undiluted though the focus of location geographically is understood to be compromised considering the market conditions.
SUSTAINABLE COMPETITIVE ADVANTAGE
Wal-Mart’s sustainable competitive advantage can be attributed to its cost advantage supported by its ‘inventory management skills and processes’ and expertise in ‘supply chain management’ (which can not be replicated considering the scale of operations) and its culture which promotes aggressive customer service and satisfaction through satisfied and happy associates.The ability to build and maintain relationships with its customers, suppliers, and its associates and its speed in innovation and initiative ness is also a source of sustainable competitive advantage.
CORE COMPETENCIES FOR
WAL-MART
Prahalad and Hamel (1990) define core competencies as the collective learning of the organization, especially how to co-ordinate diverse production skills and integrate multiple streams of technologies. The cumulative learning acquired with experience in an industry enhances a firm’s competence.
Wal-Mart’s core competence can be said to be its knowledge achieved by its inventory management skills with its supply chain management facilitated by its innovations like the cross-docking techniques and its innovation in information technology and in relationship strategy maintained with its customers, suppliers, and associates and its cost strategy achieved with its scale of operations.
This passes the three tests whereby it’s providing added value to customers and is difficult for competitors to imitate considering the scale of operations to achieve such economies and provides access to wider markets.
Wal-Mart’s achieves competencies from:
• Cross docking
• Supply chain management
• Communication strategy with suppliers and associates
• Relationship strategy with suppliers and associates
• People strategy
• Cost strategy
• Location and market strategy
• Ability and inspiration from Sam Walton
• Customer service strategy
• Knowledge management
• Innovation in I.T. and warehousing and inventory management
Although an exhaustive list, Wal-Mart does achieve and maintain the above in proportions unseen in its industry. Although they are imitateable, competitors have been unable to replicate the entire series and sustain it.
DISTRIBUTION AND INTEGRATION FOR WAL-MART
CONFIGURATION AND CO-ORDINATION
Configuration
Wal-Mart’s configuration can said to be of ‘concentrated’, understanding its distribution and warehousing facilities within the USA. The goods are sourced from within as well as globally; with over $240 billion worth of goods to sell, the sourcing is not limited to one country or a few countries alone. The main reason for sourcing externally is for cost advantage. Although Wal-Mart doesn’t manufacture the products it retails, it retails its store branded products which are sourced from private label manufactures. Most dry groceries and clothing apart from hand made products are sourced from Asian countries.
As a case in point, Wal-Mart sources goods from China for more than 20 years with growth every year. During the last fiscal year, Wal-Mart sourced about $10 billion in Chinese made merchandise, directly from manufacturers in China and from other suppliers that source their goods from China (World Bank, 2002).
Although the transport costs are usually marginally high, Wal-Mart undertakes its own distribution and warehousing activities with its strong fleet of 2000 plus high end trucks which have a turnaround in cycle time better than within the industry. The complexities of the global value change differ from the traditional value chain.
Co-ordination
Co-ordination involves sharing information, allocating responsibility and aligning efforts. Wal-Mart couldn’t have been more successful if it didn’t fulfill this. Wal-Mart realized in its early years, the ultimate source of its competitive advantage of cost can only be supplemented and supported by the effective co-ordination of its value chain activities. Technological advances were done light years ahead of its time. Unattributable sources, part of the industries talk is, Wal-Mart has more technology capabilities in its head-office than NASA. Wal-Mart has linked all its stores globally with VSAT technology which relays sales and product and any other information tracked by its systems to its head-office. This helps it source the right product at the right time to the right place helping minimize excess inventory apart from having the most ideal scenario of real time information. Sounds more like Sci-fi
but Wal-Mart has state of the art technologies in place supporting the co-ordination of its activities.
Pressures for Co-ordination and Integration
Pressures for co-ordination and integration are need for cost reduction and real time information apart from the need for optimum responsiveness to changes in the market, globally. Presence of multinational competitors is also key. Pressure for local responsiveness is the differences in customer’s needs and preferences apart from the cultural diversity to be taken into account. The shopping habits and lifestyles of the customers make a total difference. In USA, customers buy in bulk to save costs apart from
time, although this sound ideal to any value conscious customer, in Asian countries, consumers have limited credit means and purchases are made on a need basis and more frequently with financial constraints to be accounted for. Even small factors like storage facilities in Asian countries are a limiting factor. Host government like in China place a lot of restrictions and demands like timing and employee benefits and in Germany, price has to be maintained for 2 months to be declared lowest price. Distribution channels are not very reliable in many countries and need for local responsiveness arises with such instances.
Analyzing the co-ordination and configuration activities of Wal-Mart using Porters (1990) framework, shows us Wal-Mart has a global strategy with the high co-ordination of activities with its configuration geographically concentrated.
WAL-MART RECENT DEVELOPMENT
Corporate affairs
Wal-Mart's is based on selling a wide variety of general merchandise at "always low prices."The company refers to its employees as "associates". All Wal-Mart stores in the US and Canada also have designated "greeters", who welcome shoppers at the store entrance.
In June, 2007. Wal-Mart announced it was retiring the blue vest its 1.5 million associates wear, and replacing it with khakis and polos. The replacement was to help Wal-Mart increase sales.
Unlike many other retailers, Wal-Mart does not charge a to suppliers for their products to appear in the store. Instead, it focuses on selling more popular products and often pressures store managers to drop unpopular products, as well as asking manufacturers to supply more popular products. More than 70% of the goods sold in Wal-Mart are manufactured in China.
On , , the company announced that it would phase out its program, citing declining use and increased costs. Layaway ceased to be offered on , , and required merchandise pickup by , . Wal-Mart now focuses on other payment options, such as increased use of six- and twelve-month, zero-interest financing. The layaway location in most stores is now used for Wal-Mart's Site-To-Store program, which was introduced in March 2007. This enables walmart.com customers to buy goods online with a free shipping option, and have goods shipped to the nearest store for pickup.
Financial
In 2006, Wal-Mart was 67th most profitable corporation (profits divided by total revenue), behind retailers , , and , and ahead of and . For the ending , , Wal-Mart reported a of $12.178 billion on $344.992 billion of sales revenue (3.5% ). For the fiscal year ending , , Wal-Mart's international operations accounted for about 20.1% of total sales. As of , , net sales for the 48-week period ending Jan 04, 2008 was $348.1 billion, up 8.6% from the previous year's results.
Governance
Wal-Mart is governed by a fifteen-member , which is elected annually by . , the eldest son of founder , serves as . , the , serves on the board as well. Other members of the board include , James Breyer, M. Michele Burns, , , , , Roland A. Hernandez, Allen I. Questrom, Jack C. Shewmaker, , Christopher J. Williams, and Linda S. Wolf.
Notable former members of the board include (1985–1992) and (2003–2004), the latter having served as Vice Chairman. Clinton left the board before the , and Coughlin left in December 2005 after pleading guilty to wire fraud and tax evasion for stealing hundreds of thousands of dollars from Wal-Mart. On , , he was sentenced to 27 months of home confinement, five years of probation, and ordered to pay 411,000 in restitution.
Competition
In North America, Wal-Mart's primary competition includes like , , , , and Canada's , , and . Competitors of Wal-Mart's Sam's Club division are , and the smaller chain operating mainly in the eastern US. Wal-Mart's move into the business in the late 1990s also set it against major chains in both the United States and Canada. Several smaller retailers, primarily , such as and , have been able to find a small niche market and compete successfully against Wal-Mart for home consumer sales. In 2004, Wal-Mart responded by testing its own dollar store concept, a subsection of some stores called "Pennies-n-Cents." Wal-Mart also had to face fierce competition in some foreign markets. For example, in Germany it had captured just 2% of German food market following its entry into the market in 1997 and remained "a secondary player" behind with a 19% share. In July 2006, Wal-Mart announced its withdrawal from Germany. Its stores were sold to German company . Wal-Mart continues to do well in the UK, and its subsidiary is the second largest chain after In May 2006, after entering the South Korean market in 1998, Wal-Mart withdrew and sold all 16 of its South Korean outlets to , a local retailer, for $882 million. Shinsegae re-branded the Wal-Marts as stores.
Wal-Mart struggled to export its brand elsewhere as it rigidly tried to reproduce its model overseas. In China, Wal-Mart hopes to succeed by adapting and doing things the Chinese way. For example, it found that Chinese consumers preferred to select their own live fish and seafood; stores began displaying the meat uncovered and installed fish tanks, leading to higher sales. In addition, under heavy pressure from the Chinese government, Wal-Mart accepted a form of organized labor in China. Chinese labor unions do not negotiate contracts but simply pay dues to the government, "to secure the social order." However, Chinese consumers may be more open to than shoppers in Europe.
Customer base
Each week, about 100 million customers, nearly one-third of the US population, visit Wal-Mart's US stores. Wal-Mart customers give low prices as the most important reason for shopping there, reflecting the "Low prices, always" advertising slogan that Wal-Mart used from 1962 until 2006. The average US Wal-Mart customer's income is below the national average, and analysts recently estimated that more than one-fifth of them lack a bank account, twice the national rate. A Wal-Mart financial report in 2006 also indicated that Wal-Mart customers are sensitive to higher utility costs and gas prices. A poll before the indicated that 76% of voters who shopped at Wal-Mart once a week planned to vote for , while only 23% planned to vote for When measured against other similar retailers in the US, frequent Wal-Mart shoppers were rated the most politically .
In 2006, Wal-Mart took steps to expand its US customer base, announcing a modification in its US stores from a "one-size-fits-all" merchandising strategy to one designed to "reflect each of six demographic groups – African-Americans, the affluent, empty-nesters, Hispanics, suburbanites and rural residents." Around six months later, it unveiled a new slogan: "Saving people money so they can live better lives". This reflects the three main groups into which Wal-Mart categorizes its 200 million customers: "brand aspirationals" (people with low incomes who are obsessed with names like ), "price-sensitive affluents" (wealthier shoppers who love deals), and "value-price shoppers"
(people who like low prices and cannot afford much more). Wal-Mart has also made steps to appeal to more customers, for example, by rejecting the 's recommendations and carrying the , a love story between two gay cowboys in Wyoming.
Employee and labor relations
, religious organizations and environmental groups have criticised Wal-Mart for its policies and/or business practices. In particular, several labor unions blame Wal-Mart workers' unwillingness to join their organizations on the company's anti-union stance. Others disapprove of the corporation's extensive foreign product sourcing, treatment of employees and product suppliers, environmental practices, and , and the impact of stores on the local economies of towns in which they operate.
In 2005, labor unions created several websites and front organizations defaming Wal-Mart's public image. These included () and (). By the end of 2005, Wal-Mart launched , an operation managed by Wal-Mart to tell the company's side of the story. Additional efforts to counter criticism included a campaign in 2005, managed through its PR website walmartfacts.com as well as several television commercials. The company retained the PR firm to respond to negative media attention, and started interacting directly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit its corporate headquarters.
Critics decry Wal-Mart's employee and workforce relations, low , , and inadequate . They also denounce what they call the company's anti- policies, and claim that Wal-Mart's high rate (about 70% of its employees leave within the first year) shows that workers are dissatisfied with the lack of recognition and inadequate pay. In response, of argues that Wal-Mart is attacked simply because it is a leader of the Fortune 500 list or the largest employer in America, and a "free-market success story". devoted an episode of to an analysis of Wal-Mart criticism as a social movement. They theorized that despite the noble rhetoric, the real motivation of "Wal-Mart haters" was rooted in human psychology. They suggested that hating Wal-Mart permits a person "to feel better about themselves" for three main reasons: They "don't run a greedy international conglomerate", they aren't Wal-Mart workers, widely considered "low-skilled, minimum wage drones", and they aren't Wal-Mart customers thought of as "toothless, welfare-getting hillbillies.
Diversity
Wal-Mart is currently facing a lawsuit, , which alleges that female employees were discriminated against in matters regarding pay and promotions. In February 2007, the issued a 2–1 ruling which affirmed a lower court ruling to certify the case as a ; plaintiffs estimate that about 1.6 million women could be included in the suit. According to a consultant hired by plaintiffs in a sex discrimination lawsuit, in 2001, Wal-Mart's EEOC filings showed that female employees made up 72% of Wal-Mart's workforce, but only 30% of its management (a 15% difference from the population ratio, 4% higher than the rest of the industry). The consultant claims this ratio was typical in 1975. On , , Wal-Mart reported that female employees were now 61% of its workforce and 40% of its management.
A similar lawsuit, , was filed on , . It accused the retailer of discriminatory hiring practices at its Distribution Center, dating back to 1995. charges that the company's denial of health insurance coverage for is unfair to female employees. In 2002, the lawsuit was granted status, allowing all female employees after March 2001 to file claims if they were using contraceptives.
From 2002 through 2006, Wal-Mart received steadily increasing scores on the 's , a measure of how companies treat employees and customers. The company's rating increased from 14% in 2002 to 43% in 2004, due to an expanded antidiscrimination policy to protect gay and lesbian employees. The score increased to 57% in 2005, because of the company's new definition of family that included same-sex partners, and increased again in 2006 to a high of 65%. However, the rating for the 2008 edition dropped back to 40%, attributable to losses in two key areas: not renewing its membership in the National Gay and Lesbian Chamber of Commerce (which it joined in 2006), and a discrepancy from last year's study that was discovered in this year's answers and resulted in another 10-point loss. (By comparison, scored 80% and 100%.) In January 2006, Wal-Mart announced that "diversity efforts include new groups of minority, female and gay employees that meet at Wal-Mart headquarters in Bentonville to advise the company on marketing and internal promotion. There are seven so-called Business Resource Groups: women, African-Americans, Hispanics, Asians, Native Americans, Gays and Lesbians, and a disabled group."
WALMART IN INDIA
Deal facts
It comes with no surprise that in an era of rampant globilisation that the Wal-Mart retail planning to launch an ambitious strike into the Indian sub-continent, they are planning to come with Bharti retail ltd. , a subsidiary of Bharti enterprises Bharti Retail Ltd, a subsidiary of Bharti Enterprises, will kick off its operations in March next by setting up its first small format retail store in North India, while the cash and carry business, in association with Wal-Mart, will commence in the third quarter of next year.
Bharti will open their first store, a small format one, mostly convenience store, by March next year. However, they will only go to States that are friendly. The us retail giant announced plans with Bharti retail for 50:50 joint venture that would see the Bharti operating the front end of retailing business. Multi-brand foreign retailers are only allowed to operate in India with a local joint-venture partner. Bharti plans to invest $2 to $2.5 billion by 2015 to build approximately 10 million square feet of stores, employing 60,000 across 30 Indian cities each with a population greater than 1 million. It is not clear whether the Wal-Mart brand will be used, but Bharti will own the stores. Wal-Mart has not said how much it plans to invest. At this stage Wal-Mart's role seems focused on providing supply-chain and technology management to the venture.
PESTL ANALYSIS for Wal-Mart in India
Political environment:
For wal-mart in India political environment is quite conducive in general . India is a democratic country where everyone has got a say in the formulation in the government and government works for the welfare of the people as the world is becoming globalised al the MNC’s are grabbing this opportunity. In the last year there is dramatic improvement in the us – indo relationship which is good for both India and wal-mart.
Economic environment
Till last year FDI norm in India was quite stringent which was restricting the foreign companies to invest in India .but in the annual report 2007 the Indian government has make relaxation in the FDI norms-it has increased FDI investment up to 100 % in single brand retailing. They are providing the opportunity to establish the special economic zones which gives companies various tax benefits. Moreover the economic growth of India is more than 8.5% an annum and is growing steadily , the middle class is becoming more and more financially stronger that is making the retail stores within their reach.
Social- cultural environment
Indians are becoming more and more open to the mall culture since already many Indian players like big bazaar, more , reliance fresh, vishal-mega mart operating in India with all the success.
But again the dark side of this is that the mostly affected segment is the local Kirana stores and the hawkers , the farmers and vendors , distributor and dealers, who all are protesting to restrict the entrance of US gaint wal-mart in India.
Technological environment
Wal-mart is very efficient in technology and is famous for the same world wide. it is the first company to use the RFID (radio frequency and identification device) technology for its products.
Legal environment
The legal environment is not so fruitful for the wal-mart in India so far. There are so many cases going on against the wal-mart and also the public welfare petitions, which is making the road ahead difficult for the wal-mart.
Industry view
Talking about the ground realities, we approached to one of the sr. real estate agent Mr. Shailendra who deals in allotting the floor space for various companies in Ahemdabad
and across India. He gave a different perspective about retail in India. He talked about the break even point for various retailers in India. According to him the cost of operating a convienience store ia retail in India is very high. The initial property cost is rs. 150 / sq. feet to rs. 10000/sq. feet. Which is quite high. More over the CAM which is composite area maintenance cost, which is minimum at rs.8/sq. feet. which contribute to the overall cost of a retail store. And the approximate cost of the store is around Rs.2 lacs to Rs 500000 even in towns and cities. And above all the companies are operating entirely on the cost and low price factor which means low profit margins for the companies. That is forcing companies to diversify their business. The companies are unable to achieve their break even point and this make the path all very difficult for the the foreign companies in India where the already existing players are finding difficult to attract the customers attention .
BIBLIOGRAPHY
This project has been completed with reference to the following sources-
- Suggestions by Mr. Shailender Kumar , real estate agent
- “Economic Times” newspaper