Retail India Business - News, Views and Much More

Bharati-Airtel Retail Preview

Although the recent Ad for Airtel's Music wherein there is a bunch of smartly dressed store-personell in a supermarket making music out of the store merchandise and directly relates to Airtels Music Downloads. But is this a sneak-peak of Airtel's entry into grocery retailing? Something to think about. Although Bharati-Airtel denies the same, there is no denying its rather obvious to put the two together. The world is not just full of coincidences.

Reliance Retail + Prime Minister's Comments on Agriculture

It should be recalled that when Dr. Manmohan Singh, Prime Minister of India, made comments about Indian Agriculture and expectation of companies like Reliance getting into, that one should expect a huge relation between that and Reliance's plans in Retailing. The recent news splash of Reliance investing Rs. 4000 Crores in agri business in Punjab and Harayana is all part of Reliance grand entry into retailing and the major thrust of Grocery Retailing.

Getting into direct contract farming in such large scale initiatives, proposed building of an airstrip and purchase / lease of 25 aircrafts (as some have reported) just to transport the produce to different hubs is all mind-boggling for a country that has just started to see retailing in such frenzy in the last couple of years.

For the moment whilst Reliance keeps everyone guessing and releasing news like these, its anyones guess that its building a fort before FDI can really be opened up in the country. Reliance has already started to build its entry barriers to International Players like Wal-Mart and Tesco who are very keen on entering India as soon as the government opens up this sector. Reliance's tactics of absorbing the best talent, high salaries, multi-product, multi-format, all only show that its creating the entry barriers for others. Whilst some are wondering how Reliance is going to achieve this, it should be recalled on how Reliance went about in setting up its Reliance Infocom and Reliance Cafe outlets throughout the country in less than 18 months with a speculated investment of 15000 crores+ With atleast double the amount in its kitty now, its anyones guess now what can be achieved.

Retail India: Customer Service

The customer is the King! Customer is your Boss!

Tired of those phrases? Well be ready for more threats from your boss (customer). With increased awareness and as the population gets better educated, globally aware and advanced in thier own careers, apart from their aspirations and purchasing power going up, they also appear to have very high expectations in terms of delivery and service.

Well there is nothing wrong expecting great service but we still live in a mass market and not a niche market. The customer still wants the price benifit and not quality and service. Although world over we have different classes of consumers and retail formats serving each, India is a complex one. Indian's want the best of both worlds. They want the lowest price and yet expect unbelivable quality and service. Well not that they should be directly unrelated. Not that strategists advocate high prices and high quality and low prices with low quality, but they do have a correlation. And in a price sensitive market where margins are eroded due to competition and consumers purchasing even expensive home furnishings and electronics only through bargaining then the customer is to be blamed for poor service.

India is probably the only place where you would not find any difference how customers purchases grocery in the street markets (by arguing and negoitiating for the lowest price) and at organized retailers be it jewellery, durables, etc.

Well anyways to get to the point, customers who experience bad service usually expect to be treated like kings. And any organization would have experienced this. While in most other countries there is a certain protection from customer abuse, verbal or otherwise, India lacks any such protection. Its a growing phenomenon being experienced by many companies and retailers especially. For every other simple thing, the customer threatens they would go to Consumer Court. Wonder when retailers and others could shoot back against customers resorting to violence, threats and abuse in any form from the customer.

Retail India: Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Attached is the full report of Analysis and Evaluation of Nature of Change and Leadership Employed at Asda.

Download leading_strategic_change_asda_full_report_locked.pdf

Name Vijay Kodandaraman Bysani

Student I.D.Number 02913971

Course Master of Business Administration

Unit Title Leading Strategic Change

Unit Code SM 446

Unit Tutor Walter Fraser

Analysis and Evaluation of Nature of Change

and Leadership Employed at Asda

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

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Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

Table of Contents

Particulars Page

1 List of Figures 3

2 List of Appendices 4

3 Executive Summary 5

4 Introduction 7

5 Introducing Change 8

6 Brief Introduction of Asda 10

7 Crisis Situation 11

8 Strategic Directions of Archie Norman 12

9.1 Theories and Frameworks in Relation to Asda 13

9.2 Theory E And Theory Y 13

9.3 Top-Down Transformation or Bottom-Up Change 14

9.4 The Change Cube 14

10.1 Change Elements 16

10.2 Cultural Change 16

10.3 Store and Policy Change 16

10.4 Mission Change 17

10.5 Company Values Defined 17

11 Classification of Change 18

12 Cultural Web 19

13 Leadership 23

14 Conclusion 25

15 Limitations of Report 27

16 References 41

17 Bibliography 46

18 Declaration 51

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1

Figure 9.1.: The Change Cube 15

1. List of Figures

Particulars Page

2

Figure 12.1.: Asda Cultural Web - Before Change Initiatives (1991) 21

3

Figure 12.2.: Asda Cultural Web - After Change Initiatives (1996) 22

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

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Appendix 1

Asda's Business Philosophy in 1965

28

Appendix 2

Organization Chart Prior to Archie Norman's Reorganization (1991)

29

Appendix 3

Organization Chart Subsequent to Archie Norman's Reorganization (1992)

30

Appendix 4

Comparing Theories of Change

31

Appendix 5

Archie Norman's Speech

32

Appendix 6

Top-Down Transformation

33

Appendix 7

Bottom-Up Change

34

Appendix 8

Achieving The Asda Way of Working

35

Appendix 9

The Three Year Plan

36

Appendix 10

Asda's Strategy - 10 Change Objectives

37

Appendix 11

Asda's Company Values

38

Appendix 12

A typology of change strategies and conditions for their use

39

Appendix 13

Asda Group Financial Summary

40

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

2. List of Appendices

Particulars Page

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3. EXECUTIVE SUMMARY

A successful strategy is one where it is designed to work with the current and future

environment. Strategic Change is not a crisis solution. Organizations can not rely on a

successful strategy for long. Organizations need to revitalize its competitive advantage

continuously as new market players enter and current competitors imitate the offerings.

However change is not always successful and the reasons may be abundant.

RESEARCH AIMS AND OBJECTIVES

The author attempts to apply theory to practise by applying relevant theories and frameworks

in analyzing the short-listed organization and its change in strategy. This report has three

main aims. First, it attempts to identify and discuss the nature of change. Second, it aims at

evaluating the way in which the change was managed. And finally, it explores the nature of

leadership in the change.

STRUCTURE OF THE REPORT

This report consists of parts, each of which is further divided into sub-sections covering

relevant areas to the topic under discussion.

The first part introduces the reader to the report and also outlines the structure and topics of

discussion.

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

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Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

The second part introduces theoretical background on change and change management.

The third part gives the reader background of the short-listed organization and leads into the

causes of change in strategy.

The forth part introduces the new changes in strategy and attempts to compare them with

relevant theories and frameworks. It furthermore attempts to provide insight into the

organization’s new changes and evaluate its effectiveness using frameworks like the cultural

web.

The fifth part dwells in the area of leadership employed by the CEO and how effective was

the CEO’s skills in the success or failure of the change initiatives.

The sixth part presents the highlights of this report and expresses the researcher’s limitation

to this report, along with the significance of the change initiatives and the author’s own

views.

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4. INTRODUCTION

This report is an attempt to investigate one company, Asda, to gain an insight into how

change management is implemented and how it’s dealt with.

It’s a contribution to the understanding of change management and leadership in general, and

to the understanding of practical application in an international company in particular.

This report is divided into three main parts:

The first part is concerned with literature review. The literature review explains change

management and leadership in context to the organisation in addition to discussing the

theories relevant to each of the areas.

The second part consists of sub parts. The organization of discussion is introduced and

background information leading to the change initiatives is discussed. It ends with the

research findings and comments on the change initiatives and leadership displayed.

The final part summarises the outcome and limitations and explores future directions.

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

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5. INTRODUCING CHANGE

Mintzberg (1998) quote ‘no intended strategy can ever be so precisely defined that it covers

every eventuality, realised strategies have emergent as well as deliberate characteristics’.

History has witnessed no organization being able to sustain its competitive edge for long

(Peters, 1989).

Daft (1983) discusses four types of change which affect organisations, i.e. technology,

product or service, administrative changes and people attitudes (culture). The author feels

any of these changes would affect the other and lead to a total change encompassing the

organisation. Although change is present everywhere and in every form, resistance to change

is not surprising (Kotter and Schlesinger, 1979).

The author finds organizational change like a cube but with innumerable sides to it.

Organizational change can be described as strategic or non-strategic change (Pettigre, 1987),

incremental or quantum change (Greenwood and Hinings, 1993), planned or emergent

change (Wilson, 1992), and change in relation to scale (Buchanna and Boddy, 1992). Change

typically touches upon process, design, culture, and politics (Cao, Clarke and Lehaney,

1999).

The key issues are participation, involvement and commitment (Thompson, 2001).

Management of change exhibits four key features, dissatisfaction with the present strategies,

vision of the better alternative, a strategy for implementing change and resistance to the

proposals at some stage (Margerison and Smith, 1989). Changes result from the impact of a

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

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Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

set of driving forces upon restraining forces. The extent to which change takes places is a

result of which force is stronger, the driving forces or the restraining forces (Lewin, 1951).

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6. BRIEF INTRODUCTION OF ASDA

Asda had its modest beginnings in 1920 by a group of diary farmers in Yorkshire County for

a means to sell milk (Weber and Beer, 1998a). Asda expanded by acquiring and diversifying

into bakeries, meat processing plans, and non-food businesses before finally going public in

1949. Asda Stores Ltd. business philosophy was to be the lowest price with the customer in

mind always (Appendix 1). With this Asda pursued setting stores in out-of-town corners and

targeted value-conscious customers.

In 1981, Asda initiated to increase profits by reducing costs and offering higher-priced valueadded

products. With this change, Asda lost the price-leadership position and eventually

started to loose its customers. The managing director was replaced following a series of

change initiatives. Along with store refurbishment programs and customer service

improvements, the company diversified and acquired businesses like Gateway Stores, Allied

Retailers, MFI and Maples a chain of furniture and carpet retailers (Weber and Beer, 1998a).

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

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7. CRISIS SITUATION

In 1991, the £4.5 billion chain had a debt over £1 billion and Asda’s stock price had crashed

from over 100 pence to below 30 and the organization had become highly bureaucratic and

hierarchical (Appendix 2). Archie Norman was offered the position as the chief executive

(Weber and Beer, 1998a).

Asda had engulfed into a wide speculation of takeovers and rumours of survival. One article

stated, “In a decade of unparalleled prosperity for supermarkets, Asda has managed to make a

series of blunders which have weakened it to the point where its survival must be in doubt”

(The Daily Telegraph, 1991). Another subtitled The Rise and Fall of the Asda Group, stated,

“Critics blame one thing for Asda’s current difficulties – bad management for more than 10

years” (The Financial Times, 1991).

Analysis and Evaluation of Nature of Change and Leadership Employed at Asda

Leading Strategic Change – SM 446 – Assignment May 2003

Vijay Kodandaraman Bysani

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8. STRATEGIC DICECTIONS OF ARCHIE NORMAN

Organizational change has been defined as the ‘process of adjusting the organisation to

changes in the environment’ (Michael, 1982). Three dimensions used are depth of the change,

the pervasiveness of change and the complexity of the change (Ledford et al, 1989). The

changes implemented at Asda, in relative terms to dimensions of change, were deep, wide

and complex. Norman’s change initiatives involved change in the management starting with

recruitment of key personal and firing of personal related to previous failures including the

chief financial officer (Appendix 3).

One of the important highlights of Archie Norman’s strategy was to get to the bottom of the

issue. Norman didn’t attempt to buy support, but rather just got to the big picture which

helped in effective regeneration (Pascale, Millemann and Gioja, 1997).

Retail India: Analsis and Evaluation of Wal-Mart's Global / Transnational Strategy

Attached is the Full Report of my Report - Analysis and Evaluation of Wal-Mart's Global / Transnational Strategy.

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Download global_and_transnational_strategy_walmart_full_report_.pdf

 

Name Vijay Kodandaraman Bysani

Student I.D.Number 02913971

Course Master of Business Administration

Unit Title Global and Transnational Strategy

Unit Code SM 448

Unit Tutor Ron Phillips

Assignment Topic Analysis and Evaluation of Wal-Mart's Global /

Transnational Strategy

Newcastle Business School

University of Northumbria

Newcastle

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Table of Contents

Particulars Page

1 List of Figures 4

2 List of Tables 5

3 List of Images 6

4 List of Appendices 7

5 Executive Summary 8

6 Introduction to Globalisation & Transnational Strategy in relation to Retailing 12

7 Introducing Wal-Mart 14

8 Wal-Mart and International Expansion 16

9 Internal Analysis - Analyzing Resources 18

9.1 Financial Resources 18

9.2 Human Resources 18

9.3 Physical Resources 18

9.4 Intellectual or Intangible Resources 19

10 Culture Analysis 20

11 The Pyramid of Organizational Development 21

12 BCG Matrix 24

13 P.E.S.T. Analysis 26

13.1 Political Influences 26

13.2 Economic Influences 26

13.3 Social Influences 26

13.4 Technological Influences 27

13.5 Key Summary 27

14 Five Force's Analysis 29

15 S.W.O.T. Analysis 32

15.1 Strengths 32

15.2 Weaknesses 32

15.3 Opportunities 32

15.4 Threats 33

16 Value Chain Analysis 34

16.1 Inbound Logistics 34

16.2 Operations 34

16.3 Outbound Logistics 35

16.4 Marketing and Sales 35

16.5 Service 35

16.6 Infrastructure 35

16.7 Human Resource Management 36

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

16.8 Technology Development 36

16.9 Procurement 36

16.1 Key Summary 37

17 Generic Strategy 38

18 Yip's Globalisation Drivers 42

18.1 Market Drivers 42

18.2 Cost Drivers 42

18.3 Country Drivers 42

18.4 Competitive Drivers 43

18.5 Key Summary 43

19 Competitive Advantage 46

20 Core Competences 48

21 Sustainable Competitive Advantage 49

22 Kay's Distinctive Capabilities 50

22.1 Architecture 50

22.2 Reputation 50

22.3 Innovation 50

22.4 Strategic Asset 51

23 Configuration and Co-ordination 52

23.1 Configuration 52

23.2 Co-ordination 53

24 Pressures for Co-ordination and Integration 54

25 Dicken's Framework 55

26 Transnational Model 56

27 Conclusion 58

28 Limitations of Report 60

29 References 67

30 Bibliography 72

31 Declaration 78

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Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

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1. List of Figures

Particulars Page

1 Figure 11.1.: The Pyramid of Organizational Development 22

2 Figure 11.2.: Comparative Analysis of K-Mart and Wal-Mart 23

3 Figure 12.1.: BCG Growth Share Matrix for Wal-Mart 25

4 Figure 17.1.: Porter's Generic Strategies 41

5 Figure 18.1.: Visual Representation of Yip's Drivers 45

6 Figure 26.1.: Wal-Mart's Transnational Strategy 57

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

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2. List of Tables

Particulars Page

1 Table 6.1.: The Blind Men and The Elephant 10

2 Table 13.1.: P.E.S.T. Analysis 28

3 Table 14.1.: Five Force's Analysis 31

4 Table 18.1.: Yip's Drivers 44

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

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3. List of Images

Particulars Page

1 Image 7.1.:Fortune Magazine Front Cover Featuring Wal-Mart 15

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

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4. List of Appendices

Particulars Page

1 Appendix 1: Wal-Mart Income Statement 61

2 Appendix 2: Wal-Mart Balance Sheet 62

3 Appendix 3: Growth Rate Analysis (%) 63

4 Appendix 4: Wal-Mart Store Details 64

5 Appendix 5: Wal-Mart International Store Details 65

6 Appendix 6: Photographs of Wal-Mart Stores 66

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

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5. EXECUTIVE SUMMARY

Globalisation in retailing is being driven by several factors, including low growth in domestic

markets, information technology, global consumer and shopping patterns, and the opening up

of new markets. However it is not easy for retailers to become global. Performance in foreign

markets depends on careful adaptation of the home formula, since there are still regional

differences and mostly local sourcing

RESEARCH AIMS AND OBJECTIVES

The author attempts to apply theory to practise by applying relevant theories and frameworks

in analyzing the short-listed organization and evaluate the firm’s global / transnational

strategy in accordance of its global drivers. This report has three main aims. First, it attempts

to identify and discuss the relevant frameworks. Second, it aims at applying these

frameworks in analysis to the short listed organisation. And finally, it concludes the direction

and nature of the firm’s global / transnational strategy directions. .

STRUCTURE OF THE REPORT

This report consists of parts, each of which is further divided into sub-sections covering

relevant areas to the topic under discussion.

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

The first part introduces the reader to the report and also outlines the structure and topics of

discussion.

The second part defines and set the context to global / transnational strategy in relation to the

retail industry before setting the context to the short listed organization and giving the reader

a good background of current status of the organization with market forces.

The third part identifies key strategic issues with detailed analysis involving the external

environment and internal environment covering the near and far environment extending itself

into the culture and resources of the organization before exploring in greater analysis the

value chain.

The fourth part extends into the generic strategies adopted the organization and then explains

in detail the Yip’s globalisation drivers before concluding the competitive advantages and

core competencies and the sustainable competitive advantages.

The fifth part introduces Kay’s distinctive capabilities with greater analysis and extending

itself with the configuration and co-ordination of activities concluding with the pressures for

co-ordination and integration.

The sixth part introduces in analysis the transnational model. The final part sets the final

context linking all the key frameworks and analysis with the author’s own conclusions and

future directions and expresses the author’s limitation to this report.

Introduction to Globalisation and Transnational Strategy in relation to

Retailing

Globalisation refers to growing economic interdependence among countries as reflected in

increasing cross-border flows of three types of entities: goods and services, capital and knowhow

(Govindrajan and Gupta, 2001). The term globalisation can relate to any of several

levels of aggregation: the entire world, a specific country, a specific industry, a specific

company, or even a specific line of business or functional activity within the company

(Govindrajan and Gupta, 2001).

Transnational strategies although global in nature incorporate a global configuration and a

high degree of co-ordination allowing the business to retain local responsiveness

(Stonehouse, et. al., 2000)

The two most strategic expansion routes for international retail expansion are global and

multinational strategies (Sternquist, 1997). Global retailers replicate a standard format

throughout their expansion worldwide while multinational strategies result in adaptation of

their retail offering (Sternquist, 1997). Multinational retailer’s expansion is generally slower

than global retailers and the management is decentralized. Multinational target markets in

closer proximity. International expansions of retailers are challenging and unpredictable, and

a slow approach is healthy (Voyle, 2003).

Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

As markets evolve, differentiation becomes more important. It’s interesting to note, most of

the industries, practically all the industries are attempting to globalize today like the

automobile industry has done over the last few decades. Automobile industry peaked during

the 1950s and since then there has been a decline and ever since it’s been growth of the major

players and consolidation of the smaller ones. Success in the motor industry comes not from

size and scale but from developing competitive advantages in operations and marketing these

advantages internationally (Kay, 2003).

Global brands are a recent phenomenon. Until 10 to 15 years there weren’t any global brands,

many companies were multinationals tending to function as a collection of individual

enterprises with separate factories and different products in each country. The manifesto of

global brands emerged in 1983 when Theodore Levitt published “The Globalization of

Markets”. It was the emergence of homogenisation. Enabling this was technology with mass

transport and communication and the disappearance of national tastes and preferences. The

multinational corporation operates in a number of countries and adjusts its products and

practices in each at high relative costs. The global corporation operates with resolute

constancy at low cost, as if the entire world were a single entity; it sells the same things in the

same way everywhere (Tomkins, 2003)

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Analysis and Evaluation of Wal-Mart’s Global / Transnational Strategy

Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

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7. Introducing Wal-Mart

Wal-Mart is the world’s largest corporation (Fortune, 2003; Yoffie and Wang, 2002; Image

7.1.). Wal-Mart is also the largest private employer in the United States of America (Yoffie

and Wang, 2002).

Wal-Mart is U.S.A.’s biggest seller of DVDs, diamonds, groceries, toys, guns, CDs, apparel,

dog food, detergent, jewellery, sporting goods, videogames, socks, bedding, and largest film

developer, optician, private truck fleet operator, energy consumer, and real estate developer

(Fortune, 2003).

Americans save about US$10 Billion by shopping at Wal-Mart (Buffet, 2003). Wal-Mart’s

revenue accounted for 15% of the entire U.S. retail market in 2002, excluding automobiles

(Yoffie and Wang, 2002; Appendix 1). Sales globally have been affected over the recent

weeks. International sales increased 14.3% to $10.3 billion (Buckley, 2003; Appendix 1;

Appendix 3).

Wal-Mart’s revenues are forecast to approach $700 billion in 2010 (Fernie and Arnold,

2002). Wal-Mart has four large scale retail formats; Wal-Mart Stores, SAM’s Club, Wal-Mart Supercenters and Neighbourhood Markets

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Global And Transnational Strategy – SM 448 – Assignment May 2003

Vijay Kodandaraman Bysani

Retail Jobs

Finally the industry gets its bit of recognition. Below is a good write-up on the Indian Retail Industry and its employment creation.

Presently, the Indian retail business employs nearly 21 million people, which is around 7 per cent of total employment.Although the country has around 12 million retail outlets, which is the largest in the world, the share of organised retailing is merely 2 per cent. This compares quite poorly with USA where it is as high as 80 per cent, West European countries where it is 70 per cent, and Brazil where it is 40 per cent. Thus, there’s huge scope for the growth of the organised sector in India. Surprisingly, in China which opened its economy not much earlier than India,the share of organised retailing now stands at 20 per cent, though it too has a very large number of small shops and the distribution system is as fragmented as India’s.

However, the good news is that in India too the trend towards organised retailing and setting up of large outlets is gaining momentum. Retail sales in India in 2002 amounted to about Rs.7400-8400 bn (USD 160-180 bn). Between 1999 and 2002 organised retailing grew at an average annual rate of 7 per cent.As the economy grows at a faster pace, sales through organised retailing are also expected to expand at a faster pace - of nearly 10 per cent. Between 2003 and 2008, retail sale in real terms is predicted to grow more rapidly than consumer expenditure across the country. The forecast growth in real retail sales during 2003 to 2008 is 8.3 per cent per year, compared to 7.1 per cent for consumer expenditure. According to KSA Technopak, a leading consulting firm will grow to almost Rs. 30, 000 crores by 2005, representing 6 per cent of the total retail market. The top six cities in India will account for 66 per cent of total organised retailing. Overall, there is good prospect for job creation.

Consultants feel that growth in 2005 will come from volume as price rationalization will drive demand. Retail space prices are likely to firm up because of supply constraints. Because of limited supply of space in high-street retail locations, rentals wil continue to be steady. According to a C&W report, approximately 3 mn sq. ft of mall space had become operational in the NCR by 2004.

Moreover, due to its correlation with other industrial and service sectors, organised retailing would generate a great deal of indirect employment -security, electrical and mechanical maintenance, property management services, parking, sorting, packaging, etc. If both direct and indirect employment are taken together, organised retailing will create more and better-paid, better-quality jobs.

Organised retailing in India has the potential of creating over 2 million new (direct) jobs within the next six years, assuming an 8 to 10 per cent share of organised retailing in the total retail business.

For the retail sector to achieve its potential both as a major contributor to national GDP and as an employment generator, it is important that the spread of organised retailing be given major thrust through appropriate legal, regulatory and financial reforms. Specific issues like FDI in retailing, allocation of government controlled land on fast and favourable terms, strong political leadership, transfer of ownership, etc need to be addressed.

Although organised retailing in India is in its nascent stage, the employment potential can be appraised from the expansion plans of just one retailer, Chennai-based Vivek’s, a leading consumer durable retailer. Vivek’s plans to expand beyond the southern markets within three years. According to a company source, in 2004-05 alone Vivek’s will add 20 stores to its current network of 43. In terms of employment generation, an additional 20 stores mean requirement of 200 personnel for frontline and 100 for backend operations. In addition, a large number of indirect jobs will be created.

Similarly, Pantaloon Retail India plans to add 22 Big Bazaars,23 Food Bazaars, 8 Pantaloons and 3 Central Malls over the next two years. In several countries, organised retailing is also a source of forex earning. Highly developed retail formats in countries like Singapore, Hong Kong, Malaysia, Dubai, etc have made them important shopping destinations and bolstered tourism. Thus the growth of organised retailing in India will mean new jobs, higher incomes, better and healthier economy.

Source: Times of India / Indiatimes

VAT FAQ

Well for all those who want to know more about VAT, there is quite a bit of info in simple terms on what is VAT and the Accounting Impact.

You could read more about it at: http://www.tallysolutions.com/vatinfo.shtm

2005: Flood of the DVD

I guess DVD discs and players have yet to see the rock bottom compared whats forecast for the year 2005. With the release of HD-DVD promoted by Toshiba and the 3 Hollywood majors deciding to go with the new format HD-DVD discs from 2006, the market would see the dumping of the regular DVD discs and players this summer.

With the recent death of the VCR which has lived for about 26 years, its something to think of the times we live in where a new technology overtakes the market worldwide and gets replaced in less than 5 years.....

I guess DVD discs and players have yet to see the rock bottom compared whats forecast for the year 2005. With the release of HD-DVD promoted by Toshiba and the 3 Hollywood majors deciding to go with the new format HD-DVD discs from 2006, the market would see the dumping of the regular DVD discs and players this summer.

With the recent death of the VCR which has lived for about 26 years, its something to think of the times we live in where a new technology overtakes the market worldwide and gets replaced in less than 5 years.....

The Attack of Retail Malls India in your neighbourhood

Definitely most have already been smitten by the malls in your neighbourhood and its changing the way people shop. There seems to be a mall being conceived everyday and for quite sometime I've been thinking if we are going to have an overload of malls from the present state where malls are yet to be significant in size. The dilemma is only due to the speed at the transition from a totally unorganized market to a 5% organized market in a span of 15 years but spreading across all retail formats. We may not have the 5,00,000 Sq.Ft. Hypermarkets which in reality is the real size but we have our own 50,000 Sq.Ft. Hypermarkets or atleast the remodeled and adapted hypermarket suiting our country.

Not many are aware how retail shops, malls, and hypermarkets, no matter the format chosen, is changing the way people live. A true test is the European or the Amercian markets where this has evolved over a period of 5 decades. Life has changed in every town Wal-Mart or a Carrefour has step foot in. The way people live, eat, and socialized gets totally changed.

Shall continue this later in the day. Need to get back to work :(

Definitely most have already been smitten by the malls in your neighbourhood and its changing the way people shop. There seems to be a mall being conceived everyday and for quite sometime I've been thinking if we are going to have an overload of malls from the present state where malls are yet to be significant in size. The dilemma is only due to the speed at the transition from a totally unorganized market to a 5% organized market in a span of 15 years but spreading across all retail formats. We may not have the 5,00,000 Sq.Ft. Hypermarkets which in reality is the real size but we have our own 50,000 Sq.Ft. Hypermarkets or atleast the remodeled and adapted hypermarket suiting our country.

Not many are aware how retail shops, malls, and hypermarkets, no matter the format chosen, is changing the way people live. A true test is the European or the Amercian markets where this has evolved over a period of 5 decades. Life has changed in every town Wal-Mart or a Carrefour has step foot in. The way people live, eat, and socialized gets totally changed.

Shall continue this later in the day. Need to get back to work :(