Yet another example of how India is a tough market for Western companies

Walmart decides to buy out Indian partner

Entering a foreign market is challenging for the best of companies.  But when a company like Walmart fails, it is time to sit up and take a look.  There will be detailed analyses of what went wrong, but I can speculate on one reason - cultural difference.  It is quite likely that the Indian partners were not a good cultural fit for Walmart.  In a 50/50 relationship (which is what is mandated by the Indian retail laws for entering the Indian market), it is often difficult to tell who is the decision maker.  Either the Indian partner was not aligned with Walmart decision making process, or Walmart was perhaps seen to want to control the key decisions in the partnership.

When Walmart has done well, as it does in many countries including Mexico, it has full control of the operations.  Walmart was forced into a 50/50 business ownership model created by Indian government at the behest of local businesses and given Walmart's penchant for strict cost controls and inventory management, the partnership was ripe for conflict.  I'm sure many are surprised that the partnership lasted as long as it did (~6 years), but it probably did as Walmart didn't really have a choice.  But perhaps a point was reached where Walmart decided that the cost of doing business with a partner was too high for them, and they would be better off keeping the business they have at the moment and walking away from the rest of the opportunity.

Another factor, some have speculated, may be perhaps it was the investigation into the investment made by Walmart in an investment vehicle created by local partner launched by Indian Government that precipitated this dissolution of partnership.  Walmart is smarting with investigations of its business methods in Mexico, and the last thing they need is for the US Government breathing down its neck for corrupt practices in another market.
Post a Comment

Popular posts from this blog

Rafting down Colorado river

Learning from your mistakes