Wal-Mart in India
As one of the largest companies in the world, Wal-Mart had etched a name for itself in the retailing business. Many critics such as Frank (2006) voiced out that customers say they don’t like its service, and they don’t like the conditions of its stores. Wal-Mart customers don’t like the congestion of its parking lots. However, customers come back at Wal-Mart for just one thing: the prices. No doubt, Wal-Mart’s success is built on the customers’ perception that it delivers good prices on everything from lawn mowers to dish detergent to blue jeans.
Through a combination of logistical efficiency and technological prowess, Wal-Mart is able to move shelf-stable goods to customers at a low cost. Wal-Mart came into existence in 1962 when Sam Walton strived to create a “retail empire”. Walton’s efforts came as trailblazing because in the years ahead Wal-Mart actually landed in the Fortune 500 list, with sales of $244. 5 billion in fiscal 2003. The company prided its high levels of service, strong inventory management, and purchasing economies.
Although after a rapid expansion during the 1980s and 1990s, Wal-Mart had faced limits to growth in its U. S. market in the 21st century and has been forced to look internationally for opportunities. Although many skeptics claimed that Wal-Mart’s business practices and culture could not be transferred internationally, in its first decade of operations outside the United States, the company’s globalization efforts progressed at a rapid pace. As of 2004, Wal-Mart had over 1,480 retail units outside the United States, employing over 340,000 associates in nine countries as well as having a 37. 8 percent ownership in Seiyu, Ltd., a leading Japanese retailer with 400 supermarkets and 30,000 associates. (Wal-Mart Takes On the World).
Wal-Mart already has over 2,000 stores worldwide, including 45 stores in China. Unfortunately, its only presence in India is through its sourcing office located in Bangalore. This is why, presently, it is looking into a possibility of taking steps in investing in the second most populous country of the world. In fact, Wal-Mart was one of the first international retailers in China when it set up operations in 1996.
Problem for Wal-Mart only arose when the Chinese government became wary about the potential impact of Wal-Mart on their local firms. This is why Beijing restricted the operations of foreign retailers. These restrictions included requirements for government-backed partners and limitations on the number and location of stores. Wal-Mart adjusted with the Chinese market. Operationally, Wal-Mart’s initial attempts to achieve high levels of efficiency was diminished because their companies lacked large suppliers in China.
Also, bar coding was not standardized in China, and retailers had to either recode goods themselves or distribute labels to suppliers, procedures that increased costs and hindered efficiency (Wal-Mart Takes On the World). In investing to India, Wal-Mart might face similar problems and they must stringently try to penetrate the Indian market effectively and efficiently to succeed in this venture. In a recent Euromonitor International report (12 November 2006), India is expected to have the world’s third largest economy by 2020.
By 2010, Indian economists expect the country to have around 450 million inhabitants with middle-class incomes. This is why Wal-Mart president and CEO John Menzer signified his utmost interest in investing in India last year. In his report, he said, “India represents a $250 billion retail market, growing 7. 2 percent a year, but modern retailing is just starting to emerge. This shows us that India is a huge organic growth opportunity for Wal-Mart” (Bhatnagar, 6 June 2005).