Walmart in India: Crafting competitive advantage using joint venture and acquisition

Abstract

Walmart has a global reputation for building robust Information Technology driven infrastructure for modern retail. However, its Indian operations were constrained by the government’s Foreign Direct Investment policy in multi-brand retail that allowed entry only through the Business2Business route for protecting small retailers. The policy restriction limited the scope of value capture for Walmart in the growing Indian retail market. Walmart used partnerships and creative tweaking of its business model to adapt to the business environment in India. It used a joint venture with Bharti Retail, a local partner, to enter the Indian market. Walmart acted as suppliers to small retailers and also invested in a focused program to improve their efficiency. Further, the joint venture allowed Walmart to generate additional revenue sources (royalty and other fee incomes) to recover its investments in supply chain development. The tweaks in the business model to improve value appropriation were however evaluated unfavorably by the stakeholders in India prompting dissolution of the joint venture. Later, with online retail becoming prominent, Walmart acquired majority stake in Flipkart, a leading e-commerce player in India, to renew its capabilities and evolve a business model for the new era of omni-channel retail.