Wal-Mart and the Indian Retail Sector
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : BSTR257
Case Length : 15 Pages
Period : 2006
Pub Date : 2007
Teaching Note : Available
Organization : Wal-Mart Stores Inc., Bharti Enterprises
Industry : Retail
Countries : India
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Bharti Enterprises
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Bharti Enterprises was set up in 1976 by Sunil Mittal (Mittal), son of an Indian
politician. Initially, the company manufactured crankshafts for bicycles. By the
end of the 1970s, the company had set up two more plants - one to manufacture
yarn and the other to make stainless steel sheets for surgical utensils. In the
early 1980s, Mittal sold two of his plants and set up a new company in Mumbai
dealing with imported stainless steel, brass, plastics, and zip fasteners.
Although his business was doing well, Mittal was not satisfied. In 1982, he
ventured into another business, becoming the Indian agent for a Japanese
manufacturer of electric power generators...
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The Proposed Wal-Mart- Bharti Deal
Wal-Mart, which operated in most of the major markets around the world with
considerable success, had been looking to enter the Indian market for a long
time, but had been thwarted by the FDI rules relating to the retail sector in
the country. In 2005-2006, India ranked among Wal-Mart's top ten suppliers. From
its successful experience in China, Wal-Mart felt that having a retailing
presence in India would provide the company access to a market with huge
potential, as well as allow it to improve its sourcing function there...
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The Indian Retail Scenario
The retail segment in India was estimated to be worth $200 billion in
2005. Organized retail accounted for around three percent of this
market. Organized retail was expected to be worth $23 billion by 2010.
The entire retail sector was expected to be as large as around $300
billion by 2010. India was also ranked as the retail market with the
greatest potential by the AT Kearney Global Retail Development Index of
2006 (Refer to Exhibit II for a partial list of the AT Kearney rankings
of 2006)... |
The Pros and Cons of Wal-Mart in India
From the time Wal-Mart's proposed entry into India came into the news, there
were widespread protests from small retailers' groups and the Left parties
against allowing the company into India. Opposition also came from business
groups and companies which were already operating in the organized retail
sector. All of them, perhaps rightly, feared Wal-Mart's formidable competitive
strengths. The protesters argued that Wal-Mart was notorious in all its markets
for trying to monopolize the retail sector. The company would sell products at
such low prices that it would put the small retailers and the kirana stores out
of business...
Exhibits
Exhibit I: Wal-Mart's Annual Income Statement
Exhibit II: A.T Kearney's Global Retail Development Index 2006 - RANKS
Exhibit III: Major Food and Grocery Retail Formats in India 2005-2006.
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