JOINT VENTURE CASE STUDY ON

JOINT VENTURE CASE STUDY ON Presented By:Devendra RaiMahima BhatnagarGokul Raj

WAL-MARTWal-Mart is a US based public corporation, headquartered inBentonville,ArkansasEstablished in 1962Ran large discount department storesRanked 2nd biggest public corp. in the Global fortune 500 list, with revenues of US$469 billionBiggest private employerin the world with over two million employeesWas publicly traded on theNew York Stock Exchangein 1972Has over 11,000 stores in 27 countries, under 55 different names

BHARTIBharti Enterprisesis an Indian business conglomerate, headquartered in New Delhi, IndiaFounded in 1976 bySunil Bharti MittalGrown from being a manufacturer of bicycle parts to one of the largest business groups in IndiaOperates in 20 countries across Asia and AfricaOwns various businesses spanning across telecommunications, retail, financial services and manufacturing

BHARTI- WALMARTBharti- Walmart is a 50:50 joint venture between the two groups Formed in 2007 for cash-and-carry and back-end infrastructureOperates in India by the name Easyday Presently has 220 stores across 13 statesThree kinds of format stores- The standard neighborhood stores are called Easyday, in over 190 locationsthe compact hypermarkets are termed Easyday Market, function in 22 marts large hypermarket style stores are named Easyday Hyper, with just one store so far

TERMS OF THE VENTUREWal-Mart had proposed an initial investment of US$100 millionWal-Mart and Bharti planned to use two different formats for their stores: a franchised retail company and a wholesale cash-and-carry joint ventureThe companies signed two separate agreements:The first was to manage the 5050 venture for back-end supply chain management and wholesale cash-and-carry operationsThe second agreement allowed Wal-Mart to franchise itself while sharing expertise and technology with Bharti to support the retail stores that would be built by Bharti Retail Ltd, its wholly owned subsidiary

REASONS FOR COLLABORATIONBharti, with its deep knowledge of Indias fast-growing consumer market and Wal-Mart, with its extensive global retail experience, share the same commitment to building relationships with producersBhartis prior experience in dealing with FDI and international businessesBharti saw an opportunity to turn around the infrastructure, supply-chain and IT through a strategic alliance with retail-giant Wal-MartREASONS FOR COLLABORATIONWALMARTStrengths:Supply chain expertiseInternational infrastructureLeverage with producers

Weakness:No access to Indian market without partnerInability to establish presence outside Americas

BHARTIStrengths:Existing presence in IndiaExperienced with Indian cultureStrong reputationTrack record of retail/working with FDIWeakness:Needs multi-brand experienceSupply chain inexperiencePROBLEMS IN THE VENTUREForeign GoodiesBrand nameLocal protesters criticized Wal-Marts operations.Dealing with Indias unique cultural factors.Criticized for not being socially responsible company.

SUCCESS OF THE VENTUREStrong reputation of Bharti in India and the international infrastructure of Wal-Mart.Supply chain expertise of Wal-Mart and Bhartis track record of retail/working with FDI.Business-to-business wholesale cash-and-carry joint venture to set up world-class modern supply chain and back-end logistics infrastructure.Driving efficiencies across the supply chain will help minimize wastage and provide small retailers quality merchandise at competitive wholesale prices

FALL OF THE VENTUREOn October 9, 2013 the company made public the news of the fallBharti will acquire the $100 million worth Compulsory Convertible Debentures (CCDs) held by Wal-Mart in Cedar Support Services, a company owned and controlled by BhartiWal-Mart acquired Bhartis stake, giving Wal-Mart 100 per cent ownership of the Best Price Modern Wholesale cash and carry business

REASONS FOR THE FALLGovernment's stringent foreign investment regimeSourcing 30% of the goods from domestic companiesInvestment issueCorruption scandalsConclusionEmergence of organised retail sector.Wal-Marts joint venture with Bharti aimed at capitalizing growing middle class.Bharti ideal partner for Wal-Mart.Many unique challenges in India to overcome.If challenges tackled , this partnership could transform Indian retail