Dilpreet

The Bharti Group History The Bharti Group was built by the Mittal brothers – Sunil, Rakesh and Rajan. Bharti Enterprises was established in 1986 when Sunil Bharti Mittal incorporated Bharti Telecom Limited (BTL). The companies included in Bharti Enterprises are Bharti Airtel, Bharti Teletech Ltd, Telecom Seychelles Ltd, Bharti Telesoft Ltd, TeleTech Teleservices (India) Ltd, FieldFresh Foods Pvt Ltd, Bharti Retail Pvt. Ltd, Bharti AXA General Insurance Company etc.Bharti Enterprises is one of India’s leading business groups with interests in telecom, agri business, insurance and retail. . Bharti has recently forayed into retail business under a company called Bharti Retail Pvt. Ltd. It also has an MoU with Wal-Mart for the cash & carry business. Working Model Bharti Retail Pvt. Ltd is a wholly owned subsidiary Of Bharti Enterprises. Bharti Retail operates a chain of multiple format stores that offer consumers affordable prices, great quality and wider choice. The company’s neighborhood format stores operate under the quot;
Easydayquot;
brand and the compact hypermarket format under the “Easyday market” brand. Wal-Mart History The history of Wal-Mart can be traced back to the 1940s when Sam Walton began his career in retailing. After being interviewed by recruiters from both Sears Roebuck and J. C. Penney just before graduating from the University of Missouri in Columbia, Sam accepted a job offer from J. C. Penney. In September 1944, Walton acquired, from George Scharlott, the franchise and lease on a Ben Franklin in Newport, Arkansas. The variety store was part of a chain operated by the Butler Brothers, a regional retailer. After three years, Walton increased annual sales from $80,000 to $225,000 by 1948. Working Model Wal-Mart's business model is based on selling a wide variety of general merchandise at quot;
always low prices.quot;
The company refers to its employees as quot;
associatesquot;
. All Wal-Mart stores in the US and Canada also have designated quot;
greetersquot;
, who welcome shoppers at the store entrance. In June 2007, Wal-Mart announced it was retiring the blue vest its 1.5 million associates wear, and replacing it with khakis and polos. The replacement was to help Wal-Mart increase sales.Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear in the store.Instead, it focuses on selling more popular products and often pressures store managers to drop unpopular products, as well as asking manufacturers to supply more popular products. http://www.iloveindia.com/economy-of-india/top-50-companies/bharti-enterprises.html http://www.bharti.com/129.html?&tx_ttnews[tt_news]=203&tx_ttnews[backPid]=128&cHash=61a6210dc5 http://www.bharti.com/ourcom Retail Scene in India ,[object Object]

India is being touted as the next big retail destination with an average CAGR of 40% to 45%

The sheer size of the population demands attention from retailers worldwide and the potential for growth in this nascent industry is tremendous.

As per AT Kearney’s GRDI for 2008, India ranks second to Vietnam. It topped the list in 2007.

India is the world’s 4th largest economy in terms of Purchasing Power Parity, after USA, China and Japan; it is expected to move to the third position by 2010.

India is rated ahead of China on the Foreign Direct Investment Confidence Index (FDICI) making it an attractive retail market among other emerging economies in the world.

According to a study conducted by the Associated Chambers of Commerce and Industry (ASSOCHAM), the annual retail sale that was close to US$ 6 billion in 2007, is expected to reach USD 17 billion by 2010.

The ICRIER study found that total Indian retail business would grow at 13%, from US$ 322 billion in 2006-07 to US$ 590 billion in 2011-12. The unorganized retail will grow 10% from US$ 309 billion 2006-07 to US$ 496 billion in 2011-12.

India is rated in the highest category of the Aspirational Index in Asia as per the AC Nielsen Online Omnibus Survey 2005

According to NCAER, only 14% Indian households will have annual household incomes less than US$ 921.66 by 2012.Of late, there has been a lot of innovation seen in the retail format in India. One of the latest retail formats making a grand entry in this game of guts and guile is ‘Wedding Malls’. An unheard of entity in the advanced global retail markets like the United States and Europe; it has become a big hit in India. These malls stock the whole list of items and products that are required in a typical Indian wedding, ranging from jewelry to apparels. The Bharti WalMart Joint Venture Though India is the world's second-fastest growing major economy, organized retail accounts for just 6 percent of industry sales. Although the trend is slowly changing, Indian consumers have an inclination to make most of the retail purchases from small roadside shops popularly known as ‘Kirana’ stores. This discourages global retail giants from setting shop here. Indian laws at that point of time of the joint venture (Nov 2006) did not allow 100 per cent foreign direct investment (FDI) in retail. Foreign direct investment regulations did not permit global multi-brand retailers to enter India directly. Thus in November 2006, Wal-Mart announced a 50:50 joint venture with HYPERLINK quot;
http://en.wikipedia.org/wiki/Bharti_Enterprisesquot;
quot;
Bharti Enterprisesquot;
Bharti Enterprises to open retail stores in India. As foreign corporations are not allowed to directly enter the retail sector in India, Wal-Mart decided to operate through franchises and handle the wholesale end. Bharti handles the front end involving opening of retail outlets, while Wal-Mart takes care of factors as, such as cold chains and logistics. The joint venture planned to source 90 per cent of the goods from India, while the rest was to be imported. In May 2009, the first Bharti Walmart store, called Best Price Modern Wholesale was opened in Amritsar. The joint venture of both the firms could be described as a horizontal alliance. It can also be said to be a Synergistic Strategic Alliance. It is characterized by the following features: Both the partners might combine resources and skills to create value in the same stage of the value chain: Bharti may be looking at increasing its portfolio of products, WalMart may be looking to establish enough credibility to procure a supply chain and a distribution system. Such an alliance allows risk sharing by reducing financial investment due to sharing between both the partners International alliances can be difficult to manage due to differences in management styles, cultures or regulatory constraints. The solution could be equal sharing of costs and profits by both the companies. Otherwise a battle of one-upmanship will be inevitable in the long run Benefit to Wal Mart: Wal-Mart went ahead with its plans for India at a time when its competitors Tesco and Carrefour decided to wait for FDI norms to be relaxed .Its decision to enter India through the franchise route reflected its eagerness to capture a share of the market when it is at a nascent stage. One of its major motives was to get its logistics and supply chain in order before the industry opens up to foreign investment. Thus through an alliance with Bharti WalMart wanted to gain the benefit of being the first mover (one of the first foreign players) in the Indian retail market. Benefit to Bharti : At the time of the joint venture, Indian corporate houses as Reliance had already ventured in the attractive organized retail market. The Aditya Birla group had also made clear of its intentions of becoming a major player in this sector. In order to counter these two major competetitors Bharti needed a partner with strong financial strength. This, along with its relative inexperience could have been a reason why it chose to enter the industry through a tie-up with a foreign retailer, rather than go alone. In the short term, the Bharti-Wal-Mart joint venture was confronted with problems due to the opposition by the Left parties as they insisted that the government should look into the matter to stop the quot;
backdoor entryquot;
of Wal-Mart into India. These parties opposed the joint venture stating that foreign direct investment in retail trade was not allowed under the existing policy and that it would impact the vast number of unorganized retailers, domestic manufacturers, and farmers in India. Competitor Analysis RELIANCE Reliance Retail Limited (RRL), a subsidiary of Reliance Industries Limited (RIL), was set up to lead Reliance Group’s foray into organized retail. Since its inception in 2006, Reliance Retail Limited (RRL) has grown rapidly and has catered to millions of customers, thousands of farmers and vendors. Based on its core growth strategy of backward integration, Backed by the Reliance group, one of the most successful corporate groups in India, RRL has made rapid progress towards building an entire value chain starting from the farmers to the end consumers. RRL has increased its footprint to more than 900 stores in 80 cities across 14 states in India. Keeping in sync with its multi-format store strategy, RRL added new formats to its spectrum. RRL operates in formats such as Reliance Fresh (neighbourhood store), Reliance Mart (all under one roof supermarket) & Reliance Super (mini-mart), which offer a range of products for daily household usage. They also have specialty formats, such as Reliance Digital (consumer durables & information technology), Reliance Trends (apparel & accessories), Reliance Wellness (health, wellness & beauty), iStore (Apple products), Reliance Footprint (footwear), Reliance Jewels (jewellery), Reliance TimeOut (books, music & entertainment), Reliance AutoZone (automotive products & services) and Reliance Living (homeware, furniture, modular kitchens, furnishings). ADITYA BIRLA GROUP The Aditya Birla group bought regional supermarket chain Trinetra..In june 2007 the Aditya Birla group launched its first retail store under the brand name More in Pune . The stores offer a wide range of product categories including fruits and vegetables, staples, personal care, home care, household general merchandise, poultry, dairy products, a pharmacy and a well-stocked bakery. METRO With a global turnover of 33.1 billion euro, Metro is present in 30 countries with over 650 stores. Metro which is headquartered in Germany and has entered India in 2003, has so far opened five outlets across Bangalore, Mumbai, Hyderabad and Kolkata. Looking for expansion opportunities, Metro has recently signed a Memorandum of Understanding (MoU) of Rs 900 crore with the Punjab Government to open six more centers in Punjab. TESCO Tesco Plc from UK has 814 stores in other Asian countries (China, Japan, Malaysia, South Korea and Thailand). Tesco has announced plans to set up a wholesale cash & carry business in India. Tesco is also planning a deal with Tata Group’s retailing subsidiary Trent. For the development of the cash & carry business, Tesco is planning to invest around £60 million (Rs 480 crore) in the first two years. The first cash & carry outlet would be set up in Mumbai, at the end of 2011. The deal with Tata, Tesco will provide retail expertise and technical capability to support the development of Trent’s hypermarket ‘Star Bazaar’. Tesco wants to set up a 100% subsidiary, and to get access to the retail business through Trent. panies.html ANALYSIS USING PORTER’S FIVE FORCES THREAT OF NEW ENTRANTS BARGAINING POWER OF SUPPLIERSINTENSITY OF RIVALRYBARGAINING POWER OF BUYERS THREAT OF PRODUCT SUBSTITUTES THREAT OF NEW ENTRANTS : Although the organized retail sector of India is very small, the growth potential of this market has made it attractive for foreign players. As already mentioned players like Carrefour and Tesco are planning to enter into this market by getting into alliances with already established Indian corporate. Product differentiation: These new players own a large number of firm brands most of which are successfully sold throughout its stores. The product differentiation they bring to the table is enormous Capital requirements: Although entering an alliance with a major Indian corporate and establishing new stores through the country may require sufficient capital investments, these players have deep pockets and have previously also established their presence in a number of countries. Access to distribution channels: A joint venture or a partnership with retail giants as the Future Group in case of Carrefour or a reputed corporate house as the Tata Group will give these companies a very strong supply chain capacity. Carrefour understands the distribution business better than most, and Future Group is a leader in India Government policy: A policy released recently states that, “companies cannot sell more than 25% of their cash and carry business to ‘Group’ Companies and that too the use should be internal. This will prove a major discouragement to the foreign entrants as they will have to reduce their 100% stakes in Indian companies. This will reduce their control over the retail model followed BARGAINING POWER OF SUPPLIERS Historically, suppliers enjoy a strong position of control in the retail industry. However with the growth of organized retail, many large retail players are going for vertical integration and manufacturing products under the firm brand. Since these products also give them more margin they are more inclined to promote these firm brands. This recent trend has somewhat decreased the bargaining power of suppliers in the recent past. BARGAINING POWER OF BUYERS In retail, consumer loyalty is the most important ingredient for success. But the industry is so characterized that there are very few switching costs. Also, documented transactions in retail are very less, and hence even proper data is not available. Thus repurchase is not predictable Price of competitor products can be lowered all too easily in this industry, leading to a price war. Since both the companies being analyzed specialize in discount and bargain selling, a price war is inevitable. Unless the discount selling is utilized to lock customers in loyalty programs etc, the customers would just buy from where it is cheaper THREAT OF PRODUCT SUBSTITUTES Since the retail industry is considered over here the threat of product substitutes does not essentially come into the picture. INTENSITY OF RIVALRY AMONG COMPETITION This may be a lesser deterrent for new entrants as the industry of organized retail itself is growing, even though actual existing figures are very low The number of firms competing for a share of the pie is also low. Apart from Indian firms, there are very few foreign players large enough to maintain sustainability over some years, that have chosen India’s dense and fast growing Retail industry However with more number of foreign as well as domestic players trying to venture into the sector this scenario might change very quickly and the industry may become very competitive. ENTRY OF FOREIGN COMPETITORS AS CARREFOUR The entry of major foreign players as Carrefour will have substantial impact on Bharti-WalMart joint venture. DRIVERS OF COMPETITIVE ABILITY 176847555245 Shaded Area = Market commonality between firms. The rectangle = Resource endowment A. The triangle = Resource endowment B. Walmart and Carrefour both specialize in cost saving shopping for daily needs. Both are cost leaders in their respective geographies. They both are strong distribution system leaders. In India, both the firms will be facing the same fast growing middle class with increasing disposable incomes. The supplier market and procurement channels may overlap to a large extent. AWARENESS The information available in the industry is symmetric to both the firms. The government impositions are the same, the native retail players are themselves competing for the same resources. The question to be asked is this: Will demand drive the growth story of such joint ventures by foreign conglomerates with Indian Business houses. MOTIVATION Carrefour, when the joint venture with Indian firm Future Group becomes a reality, is going to compete on the same national level almost on the same geographical, cultural and ethnic demographics as Walmart. There is more than enough motivation for Walmart to predict and prevent future bad performance brought about by a competitor as strong as Carrefour. ABILITY Carrefour has the sourcing for whatever resources it requires. It already has a very good relationship with suppliers in the countries it is present in. if it decides to source materials from India as well, it needs to establish its credibility and build relations with suppliers from scratch. Instead, if it sells its existing portfolio of products after determining suitability to Indian markets, it will have to utilize Future Group’s existing logistics network which itself is very strong. Although WalMart has been present in the Indian market, It has not been able to develop a huge first movers advantage which would keep it far ahead of the competition. MARKET COMMONALITY Since Carrefour and Walmart will be competing for the same resources and courting the same customers, Carrefour may be looking at newer markets where its competitor is not present yet. It may be the rural grocery format that it has successfully implemented in France and other parts where it sells dairy, meat and other products on a daily basis to its rural customers. This is one market that is potentially huge in India, whose population lives mostly in villages. However along with this Carrefour will also scavenge WalMart’s current market. RESOURCE DISSIMILARITY Walmart may face certain issues with the suppliers in the Indian context as relationships should be built with them. Bharti is strong with its logistics, so that will not be a major concern. Carrefour enjoys the advantage of having a partner who is respected both for its supplier relations and its distribution channel. So it is difficult to say which firm will be the weaker when it comes to obtaining resources as of now, though there are indications that it could be Walmart. FUTURE OF RETAIL It is one of the fastest growing industries in India. The change in preference and habits of customers is leading to an evolved organized retail format. Industry is expected to grow at a pace of 25-30% annually as per several growth predictions. It has been ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney. According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India retail industry is the most promising emerging market for investment. In 2009, the retail trade in India had a share of 8-12% in the GDP (Gross Domestic Product) of the country. The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%. The retail sector would generate employment for more than 2.5 million people by the year 2010, says an analysis by Ma Foi Management Consultants Ltd. PEST framework ,[object Object]

FDI - in retail has been a topic for discussion for quite some time now. Some of the areas in retailing that will be affected by FDI are as follows: -

Diminution of Kirana Shops and Retail Stores

Access to Larger Financial Resources

Dilpreet

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (19)

Similar a Dilpreet

Similar a Dilpreet (20)

Último

Último (20)

Dilpreet