Essay Title: 

Strategic Management

March 24, 2016 | Author: | Posted in management, mathematics and economics

Strategic Management

Wal-Mart ‘s five years at the top of fortune 500 list has confirmed that the retailing giant is all powerful and unstoppable . Its revenue today is in excess of 300 billion dollars and the behemoth is looking for new markets to continue the growth trend . According to Wharton Business School marketing professor Xavier Dreze , Wal-Mart has expanded to the point where it can ‘t expand in the U .S . anymore (Knowledge Wharton 2006 . To foster the growth Wal-Mart today is looking outside the US market . One of the important markets [banner_entry_middle]

Wal-Mart has identified is India Recently Wal-Mart global operations CEO met Indian Prime Minister regarding the investment opportunities and operations in India

Each foreign market is new and different in its own ways and Wal-Mart has to develop its strategy keeping the new environment in mind . Before entering the new market the company has to analyze the economic environment , industry structure and operating environment (Jody Evans 2001

Economic environment

Analyzing the economic environment is the key in determining the present and future potential of the market . What is the market size , how fast it is growing , what are the measures government and related agencies taking to foster growth

On purchasing parity terms India is the fourth largest economy in the world and growing at 7-8 percent annually . It has one of the largest pools of young people with 64 of the population aged between 15 -45 years (CIA , 2006 . With inflation rate of around 3-4 percent and large pool of working population there will be a sustained rise in the income of people and so be the demand of products . Increasing infrastructure development in roads and communication with the help of World Bank will go a long way in creating a business friendly environment

Industry Structure

Before venturing into a new market it is very essential to understand the industry structure as well as rules and regulations the industry is operating in

At present direct retail investment in India is not allowed . A foreign company has to collaborate with a domestic company and still can ‘t hold more than 26 percent stake . This cap on foreign direct investment in retailing has kept the industry highly fragmented , consisting over half a million small to medium retailers

Another important industry structure factor is the geographical concentration of the market . At present the most of the companies business is concentrated around just 5 big cities namely New Delhi Mumbai , Banglore , Chennai and Calcutta (CIA , 2006 . The distance between these cities on an average is around 1000 km so the retailing company has to have an efficient supply chain network to deliver value

Operating Environment

As only 2-3 percent of the industry is organized in India so it provides huge opportunity for technology and supply chain driven Wal-Mart in good stead . Other important factors which can help Wal-Mart entering the market are –

Wal-Mart already has number of vendors in India who are supplying to international operations and won ‘t find any problems… [banner_entry_footer]

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