In November 2006, Wal-Mart and an Indian business group Bharti Enterprises Ltd decided to enter the Indian retail market that was highly regulated for foreign companies. Under that partnership, Bharti owned retail outlets using Wal-Mart franchise. The two companies planned to operate jointly in the sphere of cash-and-carry and logistics. The main issues of the partnership were the competition with local retailers and protests of civil rights groups. Nevertheless, the partnership was expected to be successful as the Indian retail market was valued at $320 billion, and it continued growing. The retail industry was a very promising sector. It boomed due to the changes in the shopping format and people’s buying behavior. The Indian retail market was ranked as the most attractive one among 30 markets in the world. However, it was not always like this. Traditionally, the retail market of India was mostly unorganized, forming “a nation of shopkeepers” (Bose et al.1-2). Small shops were the most popular retail shops in India, accounting for 98% of total trade (Bose et al. 1-2). Later, the urbanization, population growth, and increase of consumer income led to the growth of the organized retail sector.

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A large shift in the consumer retail market started in 2000, and many foreign brands entered the Indian market. Buying habits changed too. The growing income led to the higher demand for expensive and luxury goods and the habit to save before buying became less popular. Organized trade began growing. In 2006, rules for the foreign direct investment in the retail sector were liberalized, and foreign companies could invest 51% in multi-brand retailers and 100% in cash-and-carry and logistics. As a result, the organized retail market and presence of foreign companies grew significantly. The mall culture boomed, and in 2006, the Indian retail market included 325 department stores, 1,500 supermarkets, and 300 malls (Bose et al. 3-4). The largest Indian retailers such as Reliance, Bharti, Pantaloon, and some others focused on massive expansions. At the same time, the entrance of foreign retail giants was problematic because of some issues: bad transportation network, lack of qualified employees, and many regulations, especially local ones (Bose et al.).
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In 2006, Wal-Mart started a joint venture with Bharti. The initial investment was $100 million, and $450 million were expected within a short period (Bose et al. 8). Since foreign multi-brand retailers were not allowed to sell directly to customers, a franchise was used. As a result, Wal-Mart entered a fast-growing and promising market and avoided regulatory problems. In order to operate efficiently, Wal-Mart had to change the existing organized retail market and traditional supply chain that did not use cold chain logistics and spoiled about 30-60% of food products. Some challenges were met by Wal-Mart. Previously, it had some issues with employees such as low wages or discrimination of women. The same challenges could happen in India, and some civil rights groups protested. In India, many cultures existed, and it could be problematic to manage such a workforce diversity in Wal-Mart. The bad roadways of India could cause problems with logistics and timely delivery. Thus, Wal-Mart had to overcome those challenges in order to succeed (Bose et al.).

Wal-Mart could have used several alternative solutions to succeed on the Indian retail market. The first solution is to change its product profile in stores to be more profitable and attract more customers. It is possible to focus more on the traditional and cheap products that are likely to be bought often. Moreover, Wal-Mart could focus on more products that do not spoil and abandon products that could spoil quickly. It would help to increase the revenues and cut losses as the supply chain is not adapted to selling perishable products, and roads are bad for fast delivery. This solution has some advantages and disadvantages. The first advantage is that using traditional Indian systems and products is cheaper than adapting the local market to Wal-Mart’s innovative strategies. The second advantage is the ability to enter the market quickly as it is not needed to create something new. The third advantage is the easiness for both Wal-Mart and Bharti to operate jointly. The first disadvantage of such a solution is that the traditional system may not be good for Wal-Mart as it is used to other systems. The second disadvantage is that the company may have losses because the delivery is slow and many types of products are not offered. The third disadvantage is that Wal-Mart may face strong competition of local retailers that offer the same products.

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The second alternative solution is to use Wal-Mart technologies and systems, which are used all over the world, in India, too. In such a case, the company would sell the same products and use the same logistics systems. It may take some time to adapt the new system to the Indian traditional market. This solution has three main advantages: it will allow making high sales and high revenues as a wide range of products is sold, it will allow competing successfully with local retailers who do not sell such products, and it is beneficial for Wal-Mart because this system is traditional for it. Three main disadvantages are high cost of implementing the system, much time required to implement it in India, and a possible failure to implement the system because of bad roads, lack of workforce of high qualification, legal regulations, etc.

The third solution is to combine two previous ones to some extent. Wal-Mart should discuss it with Bharti or other experts who know the local market well. Advantages and disadvantages would be the same as for previous strategies, depending on the decisions that are selected from each solution.

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In my opinion, the best solution for Wal-Mart is the third one. I consider it the most beneficial one because it implements the advantages of both innovative strategies of Wal-Mart that are used all over the world and traditional strategies that are adapted well to the Indian market. The main challenge in this strategy is to choose which strategies from each solution are beneficial and which ones should not be used. It is possible to use different combinations of strategies. However, Wal-Mart should focus on the most beneficial combination. It is possible to use the advice of experts who know Indian retail market well to take the most beneficial decision.

I think that Wal-Mart should focus on products that are sold in other countries in its networks. They may include both common products for India and products that are not traditional for its market. It is better to sell different products as the retail market grows quickly, and customers are likely to demand a wider range of products. Moreover, a wide choice of products will make sales and revenues higher. In terms of the pricing strategy, it is also better to use strategies that are common for Wal-Mart and offer low prices. It is beneficial for the market with low average income, and it will allow competing efficiently with local retailers. At the same time, in terms of supply chain, it is better to focus on the traditional Indian techniques. As the roads are bad, Wal-Mart should shift to longer delivery and abandon selling perishable goods. Such goods can be delivered from local areas. Such a strategy would help to avoid large losses because of spoiled goods, and thus raise efficiency.

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