Wal-Mart in India

The importance of expansion for any organization cannot be gainsaid as
far as the profitability and overall sustainability of an organization
both in the long-term and short-term is concerned. Indeed, business
entities engage in expansionary moves in an effort to enhance their
profitability and competitiveness through reaching a greater number of
customers. In most cases, business entities concentrate on expanding in
local markets or in the countries of origin as these are the areas where
they are most known and where they stand immense chances of success.
However, recent times have seen an increased attention on international
markets especially in Asia. Countries such as China and India have
become fertile grounds for business expansion especially considering
their high population growth rates and the increased availability of
materials that would be used in businesses. The high population growth
rates assure the company of immense markets for their products, not to
mention the availability of cheap labor. Of course, these would come
with immense saving and increased levels of sales, which consequently
results in increased profitability levels. However, expansion into other
countries or the international markets comes with varied challenges.
This is especially with regard to cultural variations between the
country of origin and the countries to which they are expanding.
Needless to say, businesses are required to align their production
strategies, marketing and other operational strategies to the existing
cultures in the countries. Indeed, this is the only way they can attract
customers in those countries, as the customers would be identifying with
the business entity, thereby thinking of it as their own. This is the
information that Wal-Mart would need in its expansion into the Indian
market.
Cultural differences between India and the United States
There are fundamental differences between the Indian and United States
cultures, with regard to work ethics, family ties, or even ideas
pertaining to living. One of the key differences between the two
cultures revolves around family ties. Scholars and researchers have
underlined the fact that Indians are primarily family oriented, while
their American counterparts are individual oriented. Indeed, Indian
cultures give more prominence to family values that individual values,
while the opposite is true for American culture (McMillan, 2002). This
may be interpreted as Indians being more family- or people oriented
while Americans are more goal oriented. Indeed, Indians are known to
forsake individual dreams, happiness and wishes for the sake of their
families, a trend that is rare or even inexistent in the United States.
In the marketplace, this may undoubtedly be related to the increased
presence and dominance of entities referred to as STS (Small Traditional
Stores), which are shaped by the cultural habits of the individuals that
take part in them including shoppers and shopkeepers (McMillan, 2002).
While these roadside Small Traditional Stores are deficient of large
managerial hierarchies, they have rules and regulations that are
enforced via verbal interactions between shoppers and shopkeepers, with
loyalty playing an immense role in their success.
In addition, Indians are different from Americans with regard to their
planning strategies. Indeed, Americans are more adept at planning things
ahead, while Indians cater for issues when they arise. This makes
Indians some of the most innovative individuals as they always come up
with strategies to tackle issues at hand (Fontanella-Khan, 2011). The
American culture is also more inclined towards the domination of nature
and the control of the world in which they live. This is quite different
from Indian culture which primarily advocates for living in harmony with
nature.
On the same note, there are marked differences between American and
Indian cultures with regard to their reliance on each other especially
as far as decision-making is concerned. The American culture is
primarily built around individual independence and self-reliance
(Fontanella-Khan, 2011). This, however, is not the case with Indian
culture as individuals are taught to be more reliant on other people in
their circles especially those with whom they share familial or societal
ties. This behavior traverses the decision-making sphere, where
individuals make decisions mostly on the basis of their elders and
people of influence.
Distribution of goods in the Indian market
Trade or distribution channels are the routes or paths along which
goods are transferred from manufacturers and producers to the ultimate
consumers. They are distribution networks through which the producers
would put their products in the market and remit or pass them to the
ultimate users.
Considering that Wal-Mart would primarily be concentrating on groceries
and mostly perishable goods, there would be a marked difference in the
distribution channels that would be appropriate in the business and
those that would be appropriate in other industries such as car and
electronic industries. Scholars have underlined the importance of
physical distribution in the case of perishable products (Joseph et al,
2008). In India, a large component of distribution is undertaken
intermediate marketers and sub-marketers of companies, who make up the
distribution channels. These are composed of wholesalers, retailers,
selling agents, showrooms and authorized representatives. In most cases,
the distribution channels for particular products would be made of
manufacturers, distributors, wholesalers, retailers and the end-users.
Wal-Mart is in the category of wholesalers and retailer, in which case
it can obtain its products from the manufacturers directly or from the
distributors (Fontanella-Khan, 2011). Nevertheless, it may contract
other individuals to deliver items to the small traditional stores
(other retailers), which may not have the capacity to purchase in
volumes.
Product positioning in India
The selection of a target market makes up a component of market
strategy formulation, with product positioning being another fundamental
component. It would be impossible to come up with an effective strategy
without appropriate targeting, product position and the formulation of
marketing mix. Positioning revolves around the things that are done to
the minds of the prospects (Joseph et al, 2008). Any brand would be
valued by the perception that it has in the customers’ or prospects’
mind, which necessitates that every brand be positioning in a certain
segment and class. Considering the market situation in India and the
operational strategy of Wal-Mart, it is imperative that the products
primarily target the expanding middle-class in India (Joseph et al,
2008). This, however, has to be customized to the specific locations
within which the branches of the company are situated, especially
considering that there are variations in the cultural inclinations of
different people in different areas.
Pricing in India
In instances where companies are expanding into emerging markets such as
India and China, it is always the case that they use skimming technique
to determine the amount that they would charge for their products. In
this case, they often determine the exchange rates and convert the
amounts to the local currencies, taking care of other costs (McMillan,
2002). This is always counterproductive as there are always other
channels that may be used to obtain the items at a lower price. In the
case of Wal-Mart, it is evident that a large proportion of its items and
products would be manufactured in the local economy, in which case the
skimming technique would be inappropriate. In this case, the company
would be aiming at becoming a low-price leader, in which case it should
research on the amounts that its competition is charging and set the
price of its products at a considerably lower position.
References
McMillan, J. (2002). Reinventing the Bazaar: A Natural History of
Markets. New York, NY: W.W. Norton & Company.
Joseph, M., Soundararajan, N., Gupta, M., & Sahu, S. (2008). Impact of
Organized Retailing on the Unorganized Sector. Indian Council for
Research on International Economic Relations. Working Paper No.222.
Fontanella-Khan, J. (2011). India Opens Doors to Foreign
Retailers. Financial Times Online. Asia-Pacific section.
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