The Bharti - Wal-Mart Retail Joint Venture | Business Strategy Case Studies

Details

Case Code : CLBS078
Publication date : 2009
Subject : Business Strategy
Industry : -
Length : 03 Pages
Price : Rs. 100

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Key words:

Wal-Mart, Bharti, Reliance, Pantaloons Retail India Ld, WM Global Sourcing India, Tesco Plc, Carrefour SA, MoU, Joint venture, India, Retail industry, Cash-and-carry, Logistics, Franchise, Acquisitions, Hypermarkets, Supermarkets, Grocery stores, Discount stores, Neighborhood markets, Real estate, Lease rentals, Anchor tenants, Competitive pricing, Multi-brands, Licencees, Foreign direct investment, Reliance Fresh, Big Bazaar, Backdoor entry, Monopolize, Cheap labor, Competitor, Left parties

Note

* This caselet is intended for use only in class discussions.
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Abstract:

On November 27, 2006, Wal-Mart signed a MoU with Bharti for exploring the scope in India's retail industry. This 50:50 joint venture would operate in areas in which government permits foreign direct investment in retail like cash-and-carry and logistics. Together they would set up hypermarkets, supermarkets and grocery stores. The Bharti-Wal-Mart group would not own any real estate and would just pay lease rentals as anchor tenants for the space which they would take for their stores. However, Wal-Mart may face competition from Reliance and also from Pantaloons Retail India Ltd who are trying to gain a strong foothold in the country's retail sector. Apart from competition, Wal-Mart is also facing problems from political parties. According to them, Wal-Mart's back door entry in India would adversely affect the unorganized retail sector in India.

Introduction

On November 27, 2006, Wal-Mart Stores, Inc (Wal-Mart), the world's largest retailer, and Bharti Enterprises Ltd. (Bharti), a leading business group in India, signed a Memorandum of Understanding (MoU) to explore business opportunities in the Indian retail industry. This joint venture marked the entry of Wal-Mart into the Indian retailing industry.

According to Sunil B. Mittal (Mittal), chairman and managing director, Bharti, "The joint venture with equal stakes will operate in areas where the government allows foreign investment in retail like cash-and-carry and logistics. The retail shops will be owned by Bharti Enterprises under the Wal-Mart franchise. The idea is to give Indians the lowest price everyday."...

The Bharti - Wal-Mart Retail Joint Venture*