Internalization Of Walmart In India

Walmart India Private Limited is a wholly owned subsidiary of Walmart Inc. Walmart India owns and operates 21 Best Price Modern Wholesale stores in 9 states across India. The company also operates 1 Fulfillment Centre in India. The mission of Best Price is to “Enable small businesses to prosper”.

Introduction

The study deals with the internationalization strategy of Walmart in India and how it has helped the company to grow internationally. The retail store giant of America entered into a joint venture with Bharti Industries in India to open up several cash and carry stores in India. The joint venture did not work out to be successful due to a lot of political and social reasons. It has again tried to enter in India market by merging with Flipkart, India’s largest online retail store. This merger is again a subject of speculation based on what happened with Wal-Mart and Bharti JV.

To understand the reasons for failure of Walmart Bharti deal certain data regarding different factors involved in an internationalization strategy has been taken and the analysis has been done accordingly. The project also outlines the different thesis provided on an internationalization strategy that should be considered before going for an international market.

The Walmart entry strategy in any country has always been carefully evaluated by critics because the company holds the position of being one of the best retail stores in America and for it to enter into any international market, it means creating an extra pressure on the existing retail chain players in the market. This gives rise to many factors to be taken care of before entering in an international market. A few of which can be the existing level of saturation in the market which determines whether there is any scope of growth in the market; the policies and governmental regulations- as in India the Government was not very supportive of Walmart and Bharti JV which became an important reason for why the JV failed; also the different already existing players like Big Bazaar and Easy day were threatened by this JV and now again with its Flipkart merger the online retail stores like amazon is threatened. The industry of online retail store is going through mergers and acquisitions leaving the industry in the hands of a few major players. Using the Walmart Bharti JV analysis, a few of what is going to happen with Flipkart and Wal-Mart merger can be predicted.

Methodology

The methodology used is descriptive wherein observations regarding several data has been taken to analyze the result.

The data is secondary data taken from Walmart’s annual report, online articles, newspapers and other relevant sources. The research mostly includes Quantitative research and a certain part of analysis also includes Qualitative analysis of information provided.

Literature review

While much is known about Wal-Mart, many of its economic effects remain unquantified. Wal-Mart’s effect on jobs is modest, and likely to be positive, but its effect on wages — controlling for workers’ characteristics — requires further investigation. Only anecdotal evidence exists about Wal-Mart’s effects on product selection, and its impact on upstream industrial structure and the location of production are only beginning to be explored. WalMart’s effects on local government expenditures, urban sprawl, traffic, crime, and social capital, have received some attention in popular discourse. Hicks (2005a,b) takes a first look at Wal-Mart’s impact on government expenditures, but there are no systematic studies establishing Wal-Mart’s effect on these outcomes. Retail markets differ in important ways across countries, and Wal-Mart’s impact is likely to vary with industrial structure, regulation, and consumer tastes, but no studies have yet quantified the local impact of Wal-Mart’s international stores. In this context, Wal-Mart’s anticipated entry into Indian and Russian markets, and its recent exit from the South Korean and German markets, could serve as useful case studies.

The bleak pecuniary situation in the US, Walmart is increasingly dependent on the success of its embattled international division. If no transformative upsurge in foreign investment takes place, Walmart may experience relative stagnation or even differential decline. What is more, the significance of these findings may extend way beyond the future of one company. Given the fact that inequality is reaching historic highs in many advanced capitalist countries and given the seemingly ever more frequent eruptions of unrest in many of the global major manufacturing centers, the long arc of Walmart’s accumulation of power may offer interesting clues about the future trajectory of all dominant corporations. In short, the exemplar of rapid business growth in the late twentieth century may become the harbinger of the limits to corporate power in the twenty-first century.

Findings

Based on the above available data we have conducted a linear regression model for India taking GDP, Inflation rate and Exchange rate as variables.

Summary output

Here we can see that significance F value is 2.37141E-14 which is greater than 0.05, this shows that percentage change in India Exchange Rate does have any significance with percentage change in India GDP.

Conclusion

Walmart entry to Indian market shall prove a success. We have seen acceptable significance in all the situations. India’s GDP with relation to India’s exchange rate and Inflation. Also Walmart venture shall bring more variety and create a diverse product basket at low prices, this shall benefit the Indian consumers.

R&D: For greater market penetration across the country, efficiency is the key which comes with more R&D. Walmart is known for its culture of innovation and service. This can help in scaling up Walmart’s business scale in India which can generate more revenue and create technological spillovers and learning effect for domestic firms as well. The improved sophisticated nature of the products will create external demand for Indian goods.

The Indian e-commerce market space was drying up as funding ebbed following liquidity issues due to Demonetization and GST bottlenecks. Walmart’s entry will usher fresh funds and rejuvenate e-commerce ecosystem as more foreign firms and venture capitalists enter India.

Backdoor entry for Walmart: FDI in India allows 100% FDI in single brand retail. Walmart is a multi-brand retail chain where 100% FDI is not allowed, so it focused only on cash and carry business. Flipkart has already circumvented such restrictions in direct selling which will be used by Walmart.