Growth and progress of an internationally acclaimed conglomerate is largely measured in terms of its successful operation overseas. Any business giant operating only in its own homeland is not graded much high, hence the need for international expansion is self evident. While choosing to expand globally, a company needs to evaluate a host of factors and determinants. Geographical location of the host country, the market trends, the nature and buying power of the consumer in the host country and geographical constraints of the target market can be a few determinants to name.
Recent past has witnessed substantial growth of multinational companies beyond the borders. Local and regional economic conditions, growing international influence of multinational conglomerates over countries and economies, building of trading blocks and establishment of industries which are co-located geographically have been instrumental for other companies to follow suit.
Geography and competition strategy is one of the most important aspects to be deemed by a company while planning to operate beyond borders. The facets of geographic scope of competition, the geographic scope of competitive advantage and geographic scope of strategy must be differentiated and mastered by a conglomerate before plunging into an international business venture. Walmart when decided to enter the market of India in order to liberalize it, the aspects of geographical competition and strategy governing it were perhaps paid the less than needed deliberation.
The geographic scope of competition entails considering the prevailing economic conditions, political and institutional conditions and strategic considerations. Walmart established its partnership with Bharti Enterprises in 2007 which aimed at building and operating a chain of cash and carry stores in entire India. 20 superstores were built in width and breadth of the country to include almost all major cities by the collaboration of Walmart and Bharti enterprises under the name of Best Price Modern Wholesale. The joint venture having an initial success, however, has come up to dissolution within a span of 6 years only. Political and institutional aspects in the host country resulted in limiting the success of the joint venture. Hence, trade restrictions as imposed by the business laws in India have forced the Walmart to break out of the partnership with Bharti enterprises and operate the 20 superstores independently which were built since 2007.
India has a peculiar business environment suiting its own needs. They have combined set of restrictions affecting trade and foreign investments which reduce the scope of international investments in a number of industries. For example in case of Walmart - Bharti conglomeration, the prevailing law requires retailers to source some 30 percent from small local suppliers, a binding condition which is detrimental to the business interests of Walmart and hard to comply with.
The geographic scope of competitive advantage entails viewing of the facets like factor conditions, demand conditions, related and supporting industries and finally the firm strategy, structure and rivalry. Bharti enterprises in India proved to fall short of the expectations of
Walmart as a supporting firm in the joint venture. Advanced and specific factors, demand conditions and Firm strategies did not give desired benefits and Walmart has parted its ways from Bharti Enterprises.
Disregard of the rivalry and competitive business environment in India rendered Walmart - Bharti’s joint venture useless as it happened to the former in Germany. The choice of cities and specific areas for construction of their stores in India proved inefficient. Perhaps the factor of geographical location of the assets fell short of the required homework at grass root level. The supporting local firm Bharti enterprises failed to apply its geographical knowledge of the local market, the local business environment in specific cities and the consumer demands, to the advantage of the joint venture.
Global Competition for Walmart Faced In India
The recognition of brand isn’t the only important thing to enter into a market of specific region as giant retailing Walmart has faced in India. The day when the partnership deal was signed with the Bharti Enterprise to get entry in the market of India, the protest go against this agreement with Walmart by several thousand retailers across the country.
However, the retailers who were protesting with the hope of joining with several number of majority couldn’t get successful in achieving it. A few 100 more people were only showed up in the rally that took place in Mumbai. The similar case was recorded in the other major cities of India. Suburbs vendors of vegetable present in Mumbai responded that they weren’t knew about this protest had taken place and said if they would have known about this protest they won’t be joining it for the sake of demonstration and leaving their daily business behind.
The joint venture between Walmart and Bharti Enterprise based in New Delhi are the India’s biggest mobile service provider named as Airtel. The target of this venture is to have 15 wholesale outlets with a supply chain coverage countrywide for the coming next seven year’s period. However, the Walmart was not allowed to open their own stores in country where 51% retailers are the ones selling their own brands in the local market.
This venture provides a great opportunity for the Walmart similar as what A.T. Kearney that was known as world’s most attractive destination for retailers.
Global Strategy for Walmart Presence in India
The India retail Facts are total retail takes place is up to Rs.2, 000,000 i.e. 20,000 billion. The main strategy of Walmart is to save people’s money so that they can live a better life.
Work Cited
Loeb, Walter. "Walmart: What Happened In India?." Forbes, 2013. Web. 8 Apr 2014. <http://www.forbes.com/sites/walterloeb/2013/10/16/walmart-what-happened-in-india/>.
