Week 4 Assignment

Part A
The Indian retail market offers good prospects for Walmart to consider for several reasons. India
has the world’s second-largest population, estimated at 1.4 billion as of 2020 (Statista 2021). This
population provides a large target for Walmart’s marketing activities to focus on. Walmart is
already a well-established retailer, number one globally, that has been operating for decades.
They have gained valuable experience that can help them achieve success in India. However, the
first must navigate the political, social and economic environments.
The Indian political environment has changed to readjust and remain stable in the pandemic.
India has a stable government and has undergone significant development in infrastructure and a
stable GDP over the years. The country has also risen several places in the ease of doing business
index and currently sits in 63 rd (The World Bank Group 2021). This demonstrates that the
government offers international investors more support to encourage foreign direct investment.
As a result, foreign direct investment in India has increased significantly. The Indian tax regime
(corporate income tax) for foreign companies like Walmart is 40% . The Indian government has
also made it easy to trade across borders which could work to the advantage of Walmart.
The high population in India means that Walmart can bank on available labor and negotiate for
cheap labor to keep expenses low. The world bank classifies the country as a lower-middle-
income country, and as such, Walmart would have to select a pricing strategy that is applicable
in such an economy. (Green & Keegan 2019) hold that when a company such as Walmart
venture into a developing country, they often offer lower prices. Infrastructural support could
provide a challenge. Though India has an elaborate transport network for a third-world country,

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its high population means congestions could hamper that road, rail and air distribution networks.
Getting electrical power in India has also been ranked as difficult in the ease of doing business
index (The World Bank Group 2021). The main challenge with electricity is the reliability of
supply and transparency of tariff index (The World Bank Group 2021).
India has a multicultural setting. It has maintained most of its cultural practices to date. Walmart
would need to appeal to the local culture if they were to succeed there. Walmart can adopt a few
strategies such as cultural considerations with recruitment. Walmart can recruit locals to help
with cultural integration (Nardon & Steers 2014). Walmart can also plan its activities to conform
to the culture, such as having offers on important days like Diwali.
The biggest challenge facing Walmart and other foreign retailers is conforming to local laws.
New investors in India must overcome legal hurdles in obtaining key licenses and approvals to
operate. Walmart would require to get operational permits depending on the type of investment
they decide is fit for the Indian economy. The tax regime is also not favorable to foreign
ventures, especially Walmart’s size. Additionally, India has stiff competition in the retail sector
presented by departmental stores, supermarkets and hypermarkets, specialty and cash and carry
stores (Gootam & Kumar 2014).
The licensing global market strategy would work well for Walmart’s operations in India. Such an
arrangement would allow Walmart’s operations in India to be run by a local retailer. This would
benefit Walmart in reducing set-up costs, eliminating risks of cultural conformity, and reducing
some tax and legal liabilities. A license arrangement would allow Walmart to choose the local
retailer to license or enter into a joint venture with.

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Part B
Walmart’s expansion into the Philippines requires considering the cultural, economic and
political environment. The Philippines ranks 95 th in the World Bank ease of doing business index
as of 2019. This is an improvement from the previous survey, with the country jumping 29
places. The ease of doing business survey also found that starting a business is the most
challenging out of all the other metrics considered due to complexities in the bureaucratic
processes of registration (The World Bank 2021). The country has an unfavorable corruption
index which could affect the settling activities of Walmart in the Philippines. Culturally, the
Philippines is not too distant from the United States. The Philippines culture borrows heavily
from other Asian cultures such as the Chinese, but there are traces of different cultures such as
Spanish and Western. English is spoken widely in the Philippines, being the language of
instructional delivery in schools, although Filipino is also widely spoken. Therefore, cultural
implications may not be as restrictive in the Philippines as in India. However, Walmart would
still have to ensure that its expansion strategies are compatible with the Filipino culture.
The Gross Domestic Product (GDP) is an accurate measure of the Philippines ‘ economic
environment. Statistics from the World Bank show that the country’s GDP as of 2020 was US$
361.6 billion. The biggest contributor was the service industry. The GDP is impressive for a
country ranked as a third-world country. Considering the political, social and economic
environment, the Franchising strategy would be applicable for Walmart to expand into the
Philippines. This strategy is ideal considering the cultural differences between the Philippines
and the United States. Through this strategy, Walmart can give a franchise deal to one of the
established retailers in the Philippines, and this would help with cultural assimilation and cement
market share.

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Walmart can maximize on-time utility. Time utility is the value that a business creates when it
can conveniently deliver products or services to its customers. Walmart can do this by ensuring
efficiency in distribution and ensuring that their stores are well stocked. Walmart already has an
elaborate distribution network from its activities in other parts of the world. Therefore, it can use
that experience to make turn time utility into a competitive advantage. Walmart can also create
place utility by setting up stores in convenient locations. Place utility is created when customers
can access products when they need them.
The SWOT analysis for Walmart expansion activities has been summarized below.
Strengths  Walmart is experienced in global
operations, having been in business for
many years.
 Walmart has an elaborate distribution
network globally

Weaknesses  Walmart has bad publicity regarding its
staffing, remuneration and human
resources policies.
 The company thrives on low-profit
margins.

Opportunities  The large population of a developing
country offers a large target market for
marketing activities to focus on.
 Walmart is well placed to form

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glocalization alliances with new
partners.

Threats  Walmart faces competition from new
entrants such as AliExpress, e-bay,
Amazon, and Target.
 Walmart faces competition from other
established retailers in the Philippines
 Political and economic uncertainties
presented by the COVID-19 pandemic.

References

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Gootam, S., & Kumar, K. S. (2014). Indian Retail Sector-Recent Trends, Changes and
Challenges. Asian Journal of Management, 5(2), 133-139.
https://www.indianjournals.com/ijor.aspx?target=ijor:ajm&volume=5&issue=2&article=
006
Green, M. C., & Keegan, J. W (2019). Global Marketing (10th edition) [E-book]. Pearson.
Nardon, L., & Steers, R. M. (2014). Managing cross-cultural encounters. Organizational
Dynamics, 43(2), 138–145. https://doi.org/10.1016/j.orgdyn.2014.03.008
Statista. (2021). Population of India from 1800 to 2020. Retrieved December 15, 2021, from
https://www.statista.com/statistics/1066922/population-india-historical/
The World Bank Group. (2021). Ease of Doing Business In India.
https://www.doingbusiness.org/en/data/exploreeconomies/india
The World Bank Group. (2021b). Ease of Doing Business In Philippines.
https://data.worldbank.org/indicator/IC.BUS.EASE.XQ?locations=PH
The World Bank Group. (2021c). GDP Growth Annual % (Philippines).
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=PH