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INB 205 Wk 6 Assignment - Reference 3 - ICMR Case Studies and Management Resources

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http://www.icmrindia.org/business%20Updates/micro%20casestudies/Business
%20Strategy/MCBS0008.htm
Case Studies and Management Resources
Asia's Most Popular Collection of Management Case Studies
The Bharti - Wal-Mart Retail Joint Venture
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."
Many analysts opined that both the parties in the venture had their own strengths and
would complement each other. Viswanathan Vasudevan, an equity analyst at the
Singapore-based Aquarius Investment Advisors Pte, said, "It's a great fit for Wal-Mart as
Bharti knows the rules of the game and will save Wal-Mart a lot of time and energy to
overcome the system.
For Bharti, you can't get a better partner than Wal-Mart in retail." Gajendra Nagpal,
director, Unicorn Investments, said, "This joint venture is a winning combination. Wal-
Mart's logistics skill and Bharti's execution capability will create a potent force in the
Indian market."
This franchise strategy with Bharti was a deviation from Wal-Mart's usual way of
entering countries. This was because the policy restrictions on foreign direct investment
(FDI) in the Indian retail sector. As part of the agreement, Bharti was expected to pay a
royalty between 2 percent and 3 percent of sales to Wal-Mart for using the latter's brand
name. The Bharti-Wal-Mart joint venture was expected to open its stores in India from
August 2007.
Though the parties did not disclose the financials of the deal, according to retail industry
sources, the Bharti-Wal-Mart venture would make an initial investment of US$ 100
million, which could further increase to US$ 1.46 billion. Wal-Mart had reportedly
brought in two veteran executives, Andy Guttery and Lance Rettig, to implement its
operations in India under the joint venture. Wal-Mart had also roped in Raj Jain,
Emerging markets president & CEO, Wal-Mart, to head the cash-and-carry business in

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http://www.icmrindia.org/business%20Updates/micro%20casestudies/Business%20Strategy/MCBS0008.htm Case Studies and Management Resources Asia's Most Popular Collection of Management Case Studies The Bharti - Wal-Mart Retail Joint Venture 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 ...
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