IT Strategy for Walmart

Submitted to Dr.Sanjay Mohapatra

in fulfilment of the requirement of the course

IT Strategy Design and Implementation

Date: 18th August, 2013
Batch
Section
Group

PGDM 2012-14
X
2

Name
Bineet Mishra
Kaushik Padhy
Meet Nalin Mehta
P.Santosh Rao
Pragyan Mishra
Pratik Mishra
Srusti Dash

Roll No
U112019
U112032
U112035
U112041
U112042
U112043
U112052

Xavier Institute of Management,

Bhubaneswar

Contents
ACKNOWLEDGEMENT.............................................................................................
CERTIFICATE...........................................................................................................
Xavier Institute of Management Bhubaneswar..................................................
1.

EXECUTIVE SUMMARY...................................................................................

2.

INDUSTRY ANALYSIS......................................................................................
2.1.

PORTERS FIVE FORCES.............................................................................

2.1.1. BUYER POWER........................................................................................

2.1.2. SUPPLIER POWER...................................................................................
2.1.3. THREATS OF SUBSTITUTE.......................................................................
2.1.4. THREATS OF NEW ENTRY........................................................................
2.1.5. COMPETITION.........................................................................................
2.2.

PESTEL ANALYSIS.......................................................................................

2.2.1. POLITICAL...............................................................................................
2.2.2. ECONOMIC..............................................................................................
2.2.3. SOCIO-CULTURAL..................................................................................
2.2.4. TECHNOLOGICAL..................................................................................
2.2.5. LEGAL...................................................................................................
2.2.6. ENVIRONMENTAL..................................................................................
3.

ORGANISATION...........................................................................................
3.1.

VMG FRAMEWORK...................................................................................

3.1.1. VISION..................................................................................................
3.1.2. MISSION................................................................................................
3.1.3. GOALS..................................................................................................

4.

3.2.

STRATEGY................................................................................................

3.3.

BUSINESS METRICS.................................................................................

3.4.

STAKEHOLDER ANALYSIS.........................................................................
FUNCTIONS.................................................................................................
2

4.1.

PROCESSES.............................................................................................

4.1.1. MARKETING DEPARTMENT....................................................................

4.1.2. COMMUNICATION DEPARTMENT...........................................................
4.1.3. OPERATIONS DEPARTMENT...................................................................
4.1.4. HUMAN RESOURCE DEPARTMENT.........................................................
4.1.5. SUPPLIER MANAGEMENT DEPARTMENT................................................
4.2.

FACTORS AFFECTING IT STRATEGY..........................................................

5.

PROCESS INTEGRATION..............................................................................

6.

APPLICATION INTEGRATION.........................................................................

7.

TECHNOLOGY INTEGRATION.......................................................................
7.1.

CLOUD STRATEGY....................................................................................

7.2.

CLOUD ARCHITECTURE............................................................................

7.3.

BENEFITS TO STAKEHOLDERS THROUGH CLOUD STRATEGY...................

7.4.

ROI FROM CLOUD STRATEGY...................................................................

7.5.

SENSITIVITY ANALYSIS.............................................................................

7.6.

ROADMAP FOR CLOUD.............................................................................

8.

DEPARTMENT SCORE CARD........................................................................

8.1.

BUSINESS GOALS AND ASSUMPTION.......................................................

8.2.

BUSINESS METRICS.................................................................................

8.3.

ORGANISATION STRUCTURE....................................................................

8.4.

DEPARTMENT (FUNCTIONAL GOALS AND METRICS).................................

8.5.

WEIGHTAGE BASED DEPARTMENT SCORE CARD.....................................

9.

CHANGE MANAGEMENT FOR CLOUD STRATEGY..........................................

9.1.

BUSINESS REQUIREMENT........................................................................

9.2.

PROJECT OBJECTIVE.................................................................................

9.3.

BUSINESS PROCESSES.............................................................................

9.4.

ROADMAP................................................................................................

9.5.

MILESTONES AND CRITICAL SUCCESS FACTORS......................................

9.6.

SENIOR MANAGEMENT REVIEW...............................................................

9.7.

STEERING COMMITTEE............................................................................

9.8.

ROLES AND RESPONSIBILITIES : STEERING COMMITTEE..........................

9.9.

STAKEHOLDERS.......................................................................................

9.10.

REWARDS AND RECOGNITION..............................................................

3

9.11.

TRAINING..............................................................................................

9.12.

PILOT STRATEGY...................................................................................

9.13.

COMMUNICATION STRATEGY................................................................

10.

MANAGERIAL IMPLICATION FOR CLOUD STRATEGY.....................................

11.

RISK MANAGEMENT....................................................................................

11.1.
12.

RISK IDENTIFICATION, ASSESSMENT AND MITIGATION PLAN

50

CONCLUSION..............................................................................................

List of Tables
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table

1: Assumption and facts of Walmart...........................................................

2: Capacity Requirement of Walmart..........................................................
3: Server facts............................................................................................
4: Facts of Cloud.........................................................................................
5: ROI calculation........................................................................................
6: Road Map for 2014..................................................................................
7: Road Map for 2015..................................................................................
8: Road Map for 2016..................................................................................
9: Business goals and assumption..............................................................
10: Departmental Score Card of Inventory Department.............................
11: MIS for Inventory Department..............................................................
12: Departmental Score Card of HR Department........................................
13: MIS for HR Department.........................................................................
14: Milestones and CSF...............................................................................
15: Pilot Strategy........................................................................................
16: Risk Assessment and Mitigation............................................................

List of Figures
Figure
Figure
Figure
Figure
Figure
Figure
Figure

1:
2:
3:
4:
5:
6:
7:

OLC of Walmart India.............................................................................

Diagrammatic Representation of Level 0..............................................
Process Integration................................................................................
Application Integration..........................................................................
Cloud Architecture-I for Walmart...........................................................
Cloud Architecture-II for Walmart..........................................................
Cloud Services.......................................................................................
4

Figure
Figure
Figure
Figure
Figure
Figure
Figure

8: Deployment Model Strategy for Cloud Strategy....................................

9: Service Model Category for Cloud Strategy...........................................
10: Roadmap of Cloud Strategy.................................................................
11: Organisational Structure.....................................................................
12: Senior Management Review................................................................
13: Steering Committee............................................................................
14: Stakeholder.........................................................................................

1. EXECUTIVE SUMMARY
Walmart forayed into the Indian market with a joint
venture with Bharti Enterprises with its first retail outlet
opening in 2009. With change in FDI policies, Walmart has an
expansionary plan for the growing retail market in India. An
attempt to design an IT strategy for Walmart for its India
operations is detailed out.
As with all strategy, a detailed industry analysis with
Porters five forces and PESTEL Analysis is carried out. Next the
organization i.e. Walmart in this case is analysed. The vision,
mission and goals keeping the Indian perspective in mind is
defined. The corporate strategy and the stakeholder involved
and outlined a business metrics are identified. The functional
processes involved different business processes vertically from
a process group to sub process level are defined. These
processes helped in identifying the various factors that could
affect the IT strategy.
For any IT strategy to be successful it is essential to
understand the process integration needs and come up with a
plan for both process and application integration. Technology
integration both within and outside the organization is essential
for operational efficiency. The cloud strategy as the technology
5

to be utilized in Walmart India operations is identified. The

cloud architecture is laid down and clouds ROI is calculated. A
roadmap for the successful implementation of cloud technology
is defined. The organizational changes required for cloud and
the managerial implications that come along with its
implementation is well understood and critically examined.
Merely defining the roadmap and implementing will not suffice.
The performance must be quantified and measured. The
department scorecard to measure the business performance
and align it with the organizational goals and objectives is
defined.
Finally the risk involved is identified; the risks are
quantified by providing risk mitigation plan and validated the
feasibility of the plan by conducting a cost benefit analysis.
Identifying these steps helps in negating any complications that
may arise and in successful project implementation.

2. INDUSTRY ANALYSIS
2.1. PORTERS FIVE FORCES
2.1.1.
BUYER POWER
The buyer power is the bargaining power that the
customers have over any organisations. It can also be defined
as the ability of the customers to out the firm under pressure. In
case of Walmart, the customer has very less bargaining power
around 2% to 3% approximately. The customer has very little
say or influence in the Walmart functioning. Walmart operates
6

on a huge scale and provide value to the customer by providing

every day cheap prices. Customers can shop at competitors but
they will lose out on the pricing advantage and also on the
convenience.
2.1.2.
SUPPLIER POWER
Since Walmart holds so much of the market share, they
offer a lot of business to manufacturers and wholesalers. This
gives Walmart a lot of power because by Walmart threatening
to switch to a different supplier would create a scare tactic to
the suppliers. Walmart is known to drive very hard bargains
with its suppliers for its low pricing strategy and most of the
suppliers comply with their demands. Walmart could also
vertically integrate its operations to put further pressure on the
suppliers. However Walmart does deal with some large
suppliers like Proctor & Gamble and Coca-Cola who have more
bargaining power than small suppliers.
2.1.3.
THREATS OF SUBSTITUTE
The threat of substitute products and new entrants
average around a low 3%. Walmart focus has been on ensuring
that its customers are happy and their suppliers are delivering
quality products at a low cost. This ensures that Walmart
remains ahead of their competitors thus making it difficult for
new entrants and competition to match their prices. The
customer has the choice of going to many specialty stores to
get their desired products but they are not going to find
Walmart low pricing. Online shopping proves another
alternative because it is so different and the customer can gain
price advantages because the company does not necessarily
have to have a brick and mortar store, passing the savings onto
the consumer.
2.1.4.
THREATS OF NEW ENTRY
The number of independent retailers has been decreasing
over the years; most of the retailers are chain stores nowadays.
The vertical structure and centralized buying of the existing
chain retailer established a competitive advantage that stops
independent retailer to enter the industry. Also the difficulties
for independent retailer to find favourable suppliers, rents and
be competitive block the road for new entrants. Super centres
7

and hypermarkets, such as Walmart, benefit from significant

economies of scale. In order to set up a hypermarket a large
amount of capital is required in order to purchase merchandise,
buy or lease property, and to hire and train employees. You will
also need to consider the costs involved with advertising. Legal
and administrative barriers may also affect the start-up of a
new entrant. Small companies are able to compete by instilling
new technology for growth. Over all, there is a moderate
likelihood of new entrants to this sector.
2.1.5.
COMPETITION
Walmart makes up for about a quarter of the global
revenue. Hypermarkets are beginning to compete with local,
national, and international
discount, department, drug, and
specialty stores. Rivalry remains moderate because of Walmart
ability to diversify its operations and products. Many companies
selling the same products will always end up having a price war
that has the potential to severely hurt the companys profits.
Walmart low priced and good quality products have made it
difficult for competitors to make a profit.

2.2. PESTEL ANALYSIS

2.2.1.
POLITICAL
The key components of Walmart (The Value Chain), that
result in it offering cheap prices than its competitors include
firm infrastructure like frugal culture, no regional offices and a
good work environment. Political analysis of the retail industry
also included parameters such as environmental regulations
and protection, interest rates & monetary policies, tax policies,
contract enforcement law, employment laws, consumer
protection, government organization/attitude, political stability,
competition regulation and safety regulations.
2.2.2.
ECONOMIC
A free trade zone is an available opportunity for the retail
industry. It caters to increased market size availability to the
retailers when the government enters into new trade
agreements with foreign countries, as businesses gain the
ability to offer products from these countries in their stores.
8

In 2009, Walmart awarded approximately $2 billion

to U.S. hourly associates through financial incentive via
including profit sharing and 401(k) contributions, bonuses, and
hundreds of millions of dollars in merchandise discounts and
contributions to the associate stock purchase plan. In the U.S.,
Walmart Stores, Inc. operates more than 4,300 facilities
including Walmart supercentres, neighbourhood markets,
discount stores and Sams Club warehouses. Walmart had
reported sales growth despite the uncertain environment and
the general weakness in the world economy. The company's
associates were indeed doing the Walmart cheer in faraway
places like Germany, South Korea, China and United Kingdom.
In three decades, it had grown from its rural Arkansas roots to
become the world's largest company, and quite possibly the
most powerful retailer.
The economic factors relevant to the retail industry are
economic growth, interest rates & monetary policies, taxation,
exchange rates, inflation rates, government spending,
unemployment policy, stage of the business cycle and
consumer confidence.
2.2.3.
SOCIO-CULTURAL
Walmart stores were geared toward the low-income
customer segment as they were structured in warehouse style
buildings with minimal decor reflecting the company's tendency
to be tight-fisted. Frugality was a central tenet at the company,
and every associate was expected to fully adopt this value in all
its manifestations. It was also said that the company is
homogenizing the marketplace by letting smaller towns dictate
popular culture.
The factors important from a social perspective are
income distribution, labour/social mobility, demographics,
population growth rates, lifestyle changes, work/career and
leisure attitudes, education, fashion, hypes, entrepreneurial
spirit, age distribution, health consciousness & welfare, feelings
on safety and living conditions.

2.2.4.
TECHNOLOGICAL
Walmart is a leader in the maximization of operational
efficiency via the use of technology. From the beginning, the
company knew the importance of proactive investments in
technology and so deployed a private satellite network. It
managed most of its own logistics (over million loads each
year) through a central hub-and-spoke system of distribution
centres and warehouses. The companys core competence
involved its use of information technology to support its
international logistics system. When it comes to sustainability,
Walmart is dedicated to providing its customers the best value
for their money. Selling sustainable merchandise involves
examining the entire life span of the product from the materials
used in making them, to the factories or farms where they are
made, to how they are used as an end-product. By bringing a
wide variety of products within the reach of the 176 million
strong customers who shop in Walmart stores, it believes that it
can play a powerful role in protecting the environment and in
shifting the behaviour of the marketplace.
The other technologically relevant factors are industry
focus on technological effort, rate of technology transfer, new
inventions and development, life cycle, energy use and speed
of technological obsolescence and costs, (changes in)
information technology etc.
2.2.5.
LEGAL
Currently Walmart faces about 38 state and federal
lawsuits in 30 states filed by hourly workers, accusing the
company of forcing them to work for long hours off the clock. A
complaint among social responsibility organizations and
corporate watchdogs is that Walmart discriminates against
women employees. Reportedly, just 35% of the company's
hourly employees are men, but they earn 37 cents an hour
more than their female counterparts. An internal audit in July
2000 of 128 Walmart stores found that almost 127 of them
were "not in compliance" with the company policies concerning
workers not taking break.

10

2.2.6.
ENVIRONMENTAL
To provide the ease of shopping the industry guarantees
that the customers will find what they want when they want it
by convenient presentation and the right level of service every
time the customer shops. Customer theft is a major issue.
Manufacturers are fighting back against it by embedding
paper clip sized antitheft tags, called electronic article
surveillance labels, inside products and packaging called source
tagging. It also reduces the time spent in the storeroom in
applying the labels.
Another social, cultural, demographic, and environmental
threat is employee theft. To curb this, there are radio-frequency
circuits that are hidden in packages and go unnoticed. The only
time they will go off is when the bar code scanner does not
deactivate the circuit, which means they stole it. This helps
to prevent the two forms of employee theft, which are sweat
hearting and sliding. Sweat hearting is when the employee
charges the customer less than the actual price and sliding is
when the employee covers the barcode at the point of sale.
Walmart has been known for their customer oriented
approach maintaining one of the best satisfaction guaranteed
programs, which promotes customer goodwill. Any product can
be returned to Walmart without any problems. They simply take
the product back and promptly refund the price of the product,
without posing too many questions. One of the strongest
aspects of Walmart is in its access to distribution networks.
Walmart uses a system known as cross-docking. This is simply
the process of continuously delivering goods to warehouses
where they are sorted then distributed to their respective stores
within one day. This enables Walmart to take advantage of
the economies of scale with shipping trucks with full loads
giving Walmart the ability to increase the speed of deliveries, a
faster response to market demands, and a low inventory. This
system has allowed Walmart to decrease its sales cost by 2 to 3
per cent over the industry.

11

3. ORGANISATION
3.1. VMG FRAMEWORK
The Walmart global VMG is modified keeping in view the
upcoming operations of Walmart India.
3.1.1.
VISION
To become the leader in the Indian retail industry keeping
stockholders, customers, and the communities happy.
3.1.2.
MISSION
Save people money so that they can live better
3.1.3.
GOALS
To dominate the retail market wherever the company has
a presence
To grow by expanding in the metro and other upcoming
cities of India
To create brand recognition-relating low prices with the
Walmart name and customer satisfaction with the brand
To expand into other areas of merchandise segments
Making sure the company has the best retail talent at
every level of the organization by recruiting, developing
and retaining the best associates
Delivering on the productivity loop that enables Walmart
to operate for less so the company can drive prices even
lower for its customers
Being even more disciplined about operating expenses
and capital spending
Investing to serve more customers and accelerating the
vision of anytime, anywhere access by bringing together
best-in-class online, mobile and social capabilities and
retail stores and
Benefiting our communities and having a world class
compliance organization

3.2. STRATEGY
The main business strategy of Walmart is Overall Cost
Leadership, offering their customers great quality service and
products at a lower price than their competition. In order to
achieve this objective, they focus on supply chain
management. The way the company replenishes its inventory,
is the centerpiece of their strategy, which relied on a logistics
technique known as cross docking. Using cross docking,
12

products are routed from suppliers to Walmart warehouses,

where they are then shipped to stores without sitting for long
periods of time in inventory. This strategy reduced Walmart
costs significantly and they passed those savings on to their
customers with highly competitive pricing.
Walmart has been able to assume market leadership
position primarily due to its efficient integration of suppliers,
manufacturing, warehousing, and distribution to stores. Its
supply chain strategy has four key components: vendor
partnerships cross docking and distribution management,
technology, and integration.
Walmart supply chain begins with strategic sourcing to
find products at the best price from suppliers who are in a
position to ensure they can meet demand. Walmart establishes
strategic partnerships with most of their vendors, offering them
the potential for long-term and high volume purchases in
exchange for the lowest possible prices.
Suppliers then ship product to Walmart distribution
centers where the product is cross-docked and then delivered
to Walmart stores. Cross docking, distribution management,
and transportation management keep
inventory
and
transportation costs down, reducing transportation time and
eliminating inefficiencies.
Technology plays a key role in Walmart supply chain,
serving as the foundation of their supply chain. Walmart has the
largest information technology infrastructure of any private
company in the world. Its state-of-the-art technology and
network design allow Walmart to accurately forecast demand,
track and predict inventory levels, create highly efficient
transportation routes, and manage customer relationships and
service response logistics.

3.3. BUSINESS METRICS

13

Figure 1: OLC of Walmart India

Walmart plans to open its retail outlet in India. Hence it is
in the Phase I or Introduction Stage of the Organisational Life
Cycle. At this phase the business metrics that Walmart should
closely track periodically are: Turnover, First customers, First
business partners and employee attrition/retention rate.
Brainstorming and SWOT analysis will help in prioritisation of
the metrics .The tools that can be used to tap these business
metrics are Pareto Analysis(Prioritisation),Cause and Effect( Fish
Bone Diagram),Flow Chart and Scatter Chart.

3.4. STAKEHOLDER ANALYSIS

CUSTOMERS

Customer satisfaction has a pivotal role to play to make a

business successful. It has to be ensured by Walmart that steps
are taken for engaging customers. Daily engagement with the
customers in the stores or in select media outlets can be
arranged. Blogs can be maintained to ensure customer
engagement that can discuss a variety of topics like
sustainability etc. It is also important to conduct customer
satisfaction surveys on a regular basis. Walmart India also has
to develop a strong presence in Facebook, Twitter and other
14

social media. The Facebook group could help the customers

locate nearest stores and announce the new stores in pipeline.
EMPLOYEES

In the past Walmart has been plagued by various lawsuits

regarding issues relating to employee satisfaction. These are
cases that corroborate low wages, inadequate health insurance
and other benefits. There have been instances where the
management has been accused of gender discrimination. In
India, Walmart has to ensure to steer clear of such issues. The
performance evaluation process of the employees could be
made very transparent. Various forums could be created in the
website to encourage employees involvement. Monthly
employee surveys should be conducted to have a clear picture
of the needs and opinion of the workforce.
INVESTORS

Walmart is entering India as Bharti Walmart Private

Limited as a result of a joint venture with Bharti Enterprises.
Walmart has been in talks with JP Morgan Chase, Deutsche
Bank, Citigroup Inc. and BNP Paribas to raise funds for its
expansion plans. These funds are going to be used by Bharti
Walmart to roll out stores in India. For keeping its investors in
loop, quarterly and annual financial reports have to be shared
with the investors. Regular conference calls and periodic
mailings between the senior management and investors will
also ensure that the investors are aware of the major
management decisions. In addition interactive meeting with the
investor community should be conducted to discuss the
company strategies.
BUSINESS PARTNERS

The biggest partner for Walmart in India will be Bharti

Enterprises followed by suppliers, manufacturers, logistics,
banks and other financing institutions. Walmart must identify
the best fit for both the companies to leverage each others
competencies. Thus finding the correct business partner
becomes very vital. It is also essential to maintain this
relationship. Walmart has had a turbulent relationship with
15

Bharti till date which has delayed the growth of the retail chain
in India. For suppliers, manufacturers and logistics Walmart
should go with collaborative supply chain management and
ensure that the operations are aligned with the retail sales to
minimize costs. Such measures can be taken up with suppliers
like FMCG goods manufacturers (HUL, P&G), groceries etc.
ENVIRONMENT

Earlier corporations used to ignore natural environment

when it comes to stakeholders analysis but with increasing
pressure on environment, rapid degradation of flora and fauna
it is imperative that they design their policies to benefit nature.
Also increasing awareness among the world governments and
rising public opinion has forced the companies to consider
environment as an important stakeholder. The importance of
environment can be highlighted by the delay in various sand
mining and stone quarries in India.
Walmart has taken many initiatives for environmental
sustainability. It has established Live Greener Working Group
(LGWG) The LGWG is a group of NGOs that Walmart
collaborates with monthly to make progress in areas including
climate change. Walmart is proud of its part in this new
movement
of
cooperation
between
companies
and
environmentalists.
SOCIETY AT LARGE

Corporations and companies operate within the society

hence society at large is a key stakeholder for any strategic
decision. The ultimate aim should be to create and improve
value for the society and not just maximize profits.
Walmart
has
developed
My
Sustainability
Plan
(MSP).Through MSP; associates make voluntary commitments
to improve their health, environment, communities and lives,
which often inspire solutions toward its corporate sustainability
goals. Walmart provides structure and resources to help
associates achieve their sustainability goals. The Walmart
Foundation recently announced a $1 million commitment
to Winrock International, a non-profit organization that works
with people in the U.S. and around the world to empower low16

income communities to increase their economic opportunity

and sustain natural resources. Our partnership with Winrock is
designed to help small-scale Delta region farmers succeed by
giving them access to resources, information, and financial
investment.
In addition to supporting rural farmers, The Walmart
Foundation also works directly with farmers in big cities to
support urban farms that are growing healthy food in
sustainable ways.
ECONOMY

There is vigorous debate whether or not Walmart will be

good for India. Advocates say Walmart will help India modernize
its food supply chain, eliminate waste and reduce prices for
millions of impoverished people. But critics warn that benefits
of having Walmart will not offset the retailer's devastating
impact on the millions of shopkeepers who make up 14 percent
of the Indian economy. However others say small store owners
benefit from low rent, desirable locations, low labour costs and
the ability to offer their customers highly personalized service.
There are two primary ways farmers could benefit from
Walmart higher prices and improved yields. Walmart model is
to buy directly from farmers; they can afford to pay higher
prices. By doing so they believe it is possible to increase
farmers income by 20 percent in five years.
If Walmart wants to make money, theyll need to invest in
roads, refrigeration units and storage facilities. Hausman, A MIT
Economist found that shopping at Walmart for groceries can
provide a poor family the equivalent of a 6.5 percent boost in
income. However the cost of real estate in urban areas is also
astronomical, another cost the customer will end up swallowing.
With these multi-faceted and complex issues it remains to be
seen how Walmart entry in India will impact its economy.

17

4. FUNCTIONS
4.1. PROCESSES
The following diagram depicts the department and
stakeholder relationship in the broad manner. This is defined to
be Level 0.
INVESTORS

CUSTOMERS

ENVIRONMENT

EMPLOYEES

HR

MKT

COMM

OPER

18

FIN

Figure 2: Diagrammatic Representation of Level 0

The As-Is process or Level 1 of each department is identified
below.
4.1.1.
MARKETING DEPARTMENT
The marketing department of any company caters to the
process of communicating the products and services offered by
any company to its customers. Walmart marketing department
follows many processes for the same.
FORMULATE AND IMPLEMENT MARKET RESEARCH

This begins by finalising the research objective,

identifying the research methodology and the targeted
customer base. Research is conducted after identifying the
internal and/or external resources to be used and the
communication channel to be adopted. The data collected is
analysed and the results are finally communicated to the
concerned departments.
ANALYSING MARKET CONDITIONS

This requires an understanding of the macro-economic

scenario, the regulatory norms and identifying the change. It
also necessitates monitoring the development in technological
trends, keeping track of the sales figures and customer loyalty
and identifying newer market opportunities.
INTERNAL PRODUCT ANALYSIS

It requires determination of the target product and the

product lifecycle. Analysing the product portfolio and
performing a comparative study between products is also a part
of this process.
COMPETITOR PRODUCT ANALYSIS

It involves identifying the competitors, competitor

products in the target segment, determining competitors sales
against company sales and performing a comparative study
between company and competitors products.
19

FORECASTING FUTURE SALES

It involves identifying the products for which forecast is to

be done, identifying the target customer segment, determining
the geography, collecting historical data, selecting a suitable
forecasting model, determining the service level strategy and
finally, doing the forecast for the product.

4.1.2.
COMMUNICATION DEPARTMENT
Communication department in any organisation looks
after effective communication between the stakeholders within
the organisation. The various processes followed by Walmart for
the same are described as follows:
DEVELOPING COMMUNICATION STRATEGY

It involves developing communication goals, quantifying

objectives, creating strategic timelines for communication,
determining rules and regulations governing communication,
identifying the stakeholders and preparing the message for
different
stakeholders,
allocating
responsibilities
for
communication, allocating budget, establishing a feedback and
improvement plan
MANAGING
COMMUNICATION
REGULATING AUTHORITY

TO

GOVERNMENT

AND

It requires identifying the appropriate governing

authority, selecting the proper communication medium,
reporting to the government agency, consulting and modifying
phase out policy and getting the final approval.
MANAGING INTERNAL COMMUNICATION

It involves determining the communication level, the

message to be communicated at different levels, the
communication network and the complexity of the message. It
also requires identifying a suitable communication channel,
assigning roles and responsibilities, communicating the
message, tracking informal communication channels and taking
feedback.

20

MANAGING COMMUNICATION TO SUPPLIERS AND DEALERS

It necessitates identifying the target stakeholders and

analyzing their relationship, developing varied communication
plan, defining the message and the timelines for
communication, selecting appropriate communication channel,
discussing and modifying phase out strategies, validating the
communication and establishing communication evaluation
metrics and improvement plans.
MANAGING COMMUNICATION TO CUSTOMERS

It involves compiling the customer base and analyzing the

customer data, selecting appropriate communication channels
and timelines for the same, preparing the message, assigning
responsibility for communication, validating communication and
taking feedback.

4.1.3.
OPERATIONS DEPARTMENT
The operations department in any organisation ensures
smooth functioning of the business. It caters to employees
throughout the entire span of the organisation, from
management level to the assembly line workers. Walmart
follows the following processes in its business.

DEFINING ORGANIZATION GOALS

It includes defining the mission, vision and values of the

organization, quantifying organizational goals, defining
functional goals, individual objectives and time frames for
achieving goals. Further sub-processes include creating an
action plan, implementing it, defining performance parameters,
evaluating it and redesigning the action plan.
DEALER MANAGEMENT

It involves managing dealer relationships, ensuring good

customer relation management (both internal and external),
21

managing data analytics, sales, inventory, order, service and

workshop and warranty and claim.
INVENTORY MANAGEMENT

It includes defining inventory strategy, developing an

approved stock list via product identification, tracking and
numbering, classification of inventory , managing inventory lay
out, defining appropriate inventory tracking method, managing
supplier and dealer inventory, managing incoming inventory for
reengineering, selecting suitable replenishment strategy via
safety stock level, service level, inventory costs and early
warning system. The process also involves developing
inventory
maintenance
process,
managing
inventory
outsourcing, liquidation of stock, calculating inventory costs
and reviewing and implementing cost optimization techniques.
MANAGING END OF LIFE PROCESSES

It includes formulating a strategy via economic

assessment, managing regulations compliance, managing
strategic tie ups via pricing strategy, managing Communication
channels, process planning, managing and tracking inventory,
managing logistics, defining remanufacture strategy, managing
human resources and determining effective disposal channels.
LOGISTICS PLANNING

It includes defining a logistics strategy, defining material

handling , managing transportation, receive and put away
product, receive material from non-suppliers, managing
inventory, storage and movement, managing material disposal
and waste, developing and assemble kits and managing
logistics performance.
SUPPLIER MANAGEMENT

It includes defining sourcing strategy via choice of

supplier (single/multi), identifying correct vendor (through
quotation methods/otherwise) and outsourcing current items,
managing supplier relations via pricing strategy, service
obligations and payment procedures, employing alternate
sourcing strategy with technical assistance (if necessary),
22

managing
inventory,
production
scheduling,
quality
management by communicating quality standards, process
validation, conducting routine inspection and process
documentation (APQP, FMEA), managing delivery chain and
supplier inventory disposal.
4.1.4.
HUMAN RESOURCE DEPARTMENT
Irrespective of the type of organisation, the human resource
(HR) department is common to all and the work is generally
administrative. Following processes are followed by Walmart in
the HR department.
FORMULATING HR STRATEGIES

This involves identifying business objectives, core values

and long term vision of the organization, identifying current HR
practices, determining gaps between current practices and best
industry practices, redesigning the HR strategies, implementing
new HR policies and tracking the effectiveness of new policies
and make changes.
MANAGING REORGANIZATION

This process involves identifying employees to be

redeployed, defining a rationale for a change, identifying the
current skill set and develop a reorganization proposal based on
time frame, job descriptions of new positions, before and after
organization chart, managing compensation due to change in
job description and impact assessment. This process also
includes identifying the new structure to support goals via
function distribution, vertical and horizontal relationship and
communication channels resign. Identifying training needs and
conducting it, implementing reorganization plan and finally
review of employee performance form the various subprocesses of market reorganization.
TRAINING AND DEVELOPMENT

This includes identifying the business objectives and

existing competencies, determining need for training, budget
allocation, designing an appropriate training program,
identifying employees to be trained, determining internal
/external instructors, conducting training and verifying its
23

effectiveness. Taking employee feedback and improvement

planning and evaluating the performance after training form
the other sub-processes of the department.
EMPLOYEE RETENTION

This process in an organisation includes identifying

turnover trends, calculating turnover costs, benchmarking of
external and internal turnover rates, assessing external and
internal need, developing retention goals, conducting internal
and external surveys, identifying industry best practices,
identifying gap, formulating and implementing retention
strategies and finally, evaluation and feedback.

SUCCESSION PLANNING

It involves identifying long term vision of the organization,

analyzing future requirements, identifying the competencies
required, determining skill set and talents required, identifying
the gaps in manpower (in case of no retain existing manpower),
recognizing internal talent pool against development of
positions, searching for external sources of talent, formulating
development programs, implementing development programs
and monitoring and evaluation.
MANAGING EMPLOYEE DATA

It involves reviewing job/employment data change,

processing
employee
personal
data
change
and
job/employment data change.
MANAGING COMPENSATION

It requires identifying the need for compensation change,

job analysis, defining a job rating system, conducting industry
comparison, reviewing government regulations, determining
the
compensation
structure,
performing
compensation
structure analysis, defining incentives and bonus, establishing
performance measures, evaluating employee performance,

24

approving and documenting salary changes and informing

employee of the same.
4.1.5.
SUPPLIER MANAGEMENT DEPARTMENT
This department looks after the suppliers and sourcing methods
and inventory management. Following processes are employed
for the same.
DEFINING SOURCING STRATEGY

It involves defining organizational requirements, deciding

on the make versus buy option, developing the supplier list,
enlisting
alternate sources for
spare part production,
establishing production volume distribution, determining the
quality requirements and finally, managing supplier contracts.
QUALITY MANAGEMENT

It involves developing quality standards and quality

strategy, defining quality metrics and communicating it,
performing process validation, scheduling periodic quality
assessment and managing quality improvement measures.
Monitoring and analysis of quality performance and managing
contracts also form an important part of this process.
MANAGING ALTERNATE SOURCING

This process involves defining and identifying the need

for alternative sourcing strategy, defining component
requirements and identifying metrics for supplier evaluation.
Assessing the suppliers, defining their selection criteria and
finally selecting them are also an important part. Managing
supplier contract, defining the collaboration scope and
monitoring supplier performance are the other sub-processes
performed.
MANAGING SUPPLIER RELATIONS

This requires defining the product requirement and

communicating it to suppliers, managing supplier negotiations
and agreements, defining service obligations, product pricing,
payment procedures and cost sharing parameters.
MANAGING SUPPLIER INVENTORY DISPOSAL
25

This involves defining product disposal strategy and cost

sharing strategy, identifying regulatory norms, determining and
communicating disposal standards. Tracking current disposal
procedures, benchmarking it against industry standards,
standardizing it and documenting the disposal related activities
also form an important part.
MANAGING DELIVERY CHAIN

It is linked to manage logistics.

MANAGING PRODUCTION

This process involves forecasting the demand for

component, tracking the available inventory, defining the order
quantity and managing production scheduling.
INVENTORY MANAGEMENT

It involves identifying the product, defining its inventory

strategy and tracking the inventory.

4.2. FACTORS AFFECTING IT STRATEGY

PRIORITIZATION OF ISSUES

Before forming an IT strategy, it is very important to take

into account the various issues faced by the company. Similar is
the case for Walmart. When Walmart launches its operations in
India, it will face a multitude of issues such as logistics issues,
managing the warehouses, storage facilities and other
infrastructure. It will also face other issues such as how to
collaborate with suppliers and 3PL providers, how to position
themselves in the Indian retail stores market, customer
relationship management, supplier relationship management as
well as financial supply chain management. So before forming
an IT strategy, Walmart must decide out of all these issues
which are the ones which are most critical for its success and
then only close in on an IT strategy. In India, Walmart should
particularly focus on its supply chain operations and customer

26

relationship management so as to better understand the

behaviour of the Indian consumers.
OLC

Organization lifecycle plays a very critical role in

determining the IT strategy of a company. When Walmart starts
its operations in India, it will be in the first stage of its OLC and
thus it is very important for the company to focus on two key
parameters namely, customer satisfaction and employee
retention. Customer satisfaction would hold the key as the
initial response and feedback of the customers would pave the
way for Walmart subsequent strategies in India. Employee
retention is also very important because when Walmart starts
its operations in India, it would be like foraying into an unknown
territory for the company and thus the presence and
commitment of its experience and skilled employees would be
very critical.
ROI

ROI is a metric that gives an idea about the viability of

any strategy. In selecting the IT strategy for an organization like
Walmart, the ROI calculations are pivotal to understand the
financial viability of the strategy. The NPV analysis of the
various possible IT Strategies, which is calculated taking into
account the various costs expected to be incurred and the
various returns expected, will give the financially most viable
strategy.
In case of Walmart, India will be a new market and the
cost and tax structure is expected to be significantly different
from the other areas of operations for the organization. The
expected rates of returns are also expected to vary significantly.
So, no decision can be taken from Walmart perspective on the
Indian investments keeping in reference markets of other
operational areas. Hence, a fresh ROI calculation is imperative
in deciding on an IT strategy.
REAL TIME
MOVEMENT

DATA:

INVENTORY/STOCK

27

TRACKING

AND

Walmart is an organization that relies heavily on

operational efficiency. Its stock tracking and inventory
management systems are state of the art in the geographies
that it is presently operational in. Its system is that of
continuous replenishment of the inventory once the stock level
goes down. For that, it requires proper tracking of stock and
stock levels. This is in a sense, a core competency of the
organization that makes it a leader in its segment.
Once it enters India, it would obviously like to capture the
new market using the same principles and strategies of
operational effectiveness that has served it in good stead
elsewhere. Hence, IT strategy addressing particularly to the
continuous stock tracking and movement is imperative for the
company.

SCALABILITY

Scalability and flexibility of operations is a must for any

company which wishes to diversify, grow and penetrate into the
market capturing a large market share. So, for a company like
Walmart which wishes not only to set up huge retail outlets but
also to enter into E-commerce business, scalability and
seamless integration capabilities of its IT infrastructure is of
utmost importance and would prove to be game-changer for
Walmart to achieve its goals and objectives. As Walmart sets up
stores in Tier-2 and Tier-3 cities, it will entail a greater amount
of work, huge volumes of data, increased load of additional
resources and hence its systems must be scalable so as to
accommodate for growth.
WORKFLOW INTEGRATION

Workflow integration refers to the smooth transition of

data and information from one work sphere to another within
any organization. Proper workflow integration is important as it
eliminates the various levels of information and data processing
and provides a one stop processing method wherein the various
work domains are integrated to provide a holistic output that

28

takes into consideration the inputs from all work domains

simultaneously.
For example, in Walmart, an input from the inventory
management work domain that the inventory levels are down
automatically should trigger an order for replenishment stock in
the order procurement work domain. Thus, high levels of
workflow integration are required for Walmart to keep up its
efficiency in operations and an IT strategy catering to these
needs is a must.
ONE POINT OF DATA

Walmart has different department that closely work

together. Hence it is highly essential for Walmart for seamless
data integration of the logical process across different process.
The centralization of the data will not only improve the
operational efficiency but also remove redundancy. To example
the inventory department and sales department of Walmart are
so tightly coupled that it requires process, maintenance and
updating of common data process. Hence one point data will
largely useful to achieve process integration across
departments of Walmart.
DATA INTEGRITY

Data Integrity refers to proper and robust methods of

maintaining static as well as real time data. Data integrity has
become important in recent times due to the growing
automation of processes and because of the growing need for
efficiency for business processes within and across industries.
Walmart is an organization that is heavily dependent on
operational effectiveness as mentioned earlier. It relies heavily
on advanced inventory management systems to achieve
operational efficiency. So, for the purposes of maintaining a
credible inventory management system, proper data
management on the levels of stock, etc have to be there. And,
a robust system that prevents the duplication and error in data
recording is a must so as to maintain the efficiency of the
process.
AVAILABILITY

29

Availability refers to the total amount of time that the

server is available for use of the stakeholders. It is an important
reliability metric along with the downtime of the system.
In case of Walmart, the system is required to capture the
real time transactions for the proper and efficient functioning of
operations. Hence, the availability of the Information
Infrastructure becomes a critical factor in choosing any systems
installations.
DOWNTIME

The term downtime or outage duration is used to refer to

periods when a system is unavailable or is unable to provide
service. The consequences of downtime can be loss of revenue,
loss of customer, loss of brand value. Therefore, minimisation of
downtime is an important parameter for Walmart for evaluating
its possible options for selecting its IT Strategy.
The level and speed of operations is very fast for an
industry leader like Walmart. Walmart model of business is
based on high volumes leading to high sales. Therefore, an
outage of a small duration may lead to a high loss of volumes
and revenues. Hence, downtime is undoubtedly a critical factor
in evaluating any strategy for Walmart, including its IT Strategy.
TOTAL COST OF OWNERSHIP

Total Cost of Ownership includes the cost of hardware,

software, training, up-gradation and maintenance.
Walmart corporate strategy is based on Cost Leadership
and thus Total Cost of Ownership is a very important factor to
consider before forming its IT strategy. In order to keep the
prices of its products low and transfer the benefit of low prices
to its customers, supply chain operations of Walmart are critical
for its success. Walmart is highly dependent on its Information
Infrastructure for effectively managing its supply chain. It needs
to ensure that the cost of maintaining its systems, hardware
costs, scalability and up-gradation costs of software are kept
low. Hence, total cost of ownership needs to be given due
consideration before forming an IT strategy.
30

5. PROCESS INTEGRATION

Figure 3: Process Integration

Different process of department is identified and the
process which has logical coherence with other process is
integrated. Point of sales, billing and sales are the sequential
process of the marketing department which has linkage
between them. The sales process of marketing can be
integrated with the financial analysis process of finance.
Similarly the pricing and promotion of the marketing can be
coupled with budgeting process of the finance. The forecasting
process in the marketing will largely impact the process of
purchasing and payment process of finance, logistics
management of operation, recruitment process and training
31

development process of the human resource. The purchasing

and payment process of finance will affect the inventory
management process of the operation. The working capital
management process of finance has relationship with the
supplier management process, logistics management and
dealer management of operation. The performance appraisal
process will internally affect the compensation management
process of HR which is integrated with the budgeting of finance.

6. APPLICATION INTEGRATION

Figure 4: Application Integration

Since the process across the department can be
integrated hence it is very evident that the application that is
used to manage the process of the department can be
integrated.It is understood that Sales entry by POS operator will
be reflected in the POS system of marketing .Due to impact of
Sales in inventory the POS system data can be used as a input
paarmeter for the ineventory management application system
of the operation.The inventory management application in turn
is integrated to the supplier management application.There is
dual side integration of the finnacial mangement application
system of the finance with the inventory management of
operation, HRIS application of the human resource.The HRIS
application is integrated with the knowledge management
system of the human resource department.the Project
32

management application will have integration with financial

management application and HRIS of human resource.Hence
there is a chain of the application integration.The data format
of each application is different hence deployment of Electronic
Data Interface and Appication Programming Interface is
necessary.

7. TECHNOLOGY INTEGRATION
7.1. CLOUD STRATEGY
This background for following cloud strategy is the
proposed entry of Walmart on the Indian retail scene.
Walmart is the worlds largest retailer. It is an industry
leader in brick and mortar retail model. Processes area also
stabilized, has a proprietary Vendor Managed Inventory model,
huge IT infrastructure and vast repository of valuable customer
data. This is the competitive edge of Walmart.
For the Indian market Walmart is planning to work in
collaboration with Bharti group.
Some points can be said of this setup:
a) Walmart has no IT infrastructure in India.
b) Walmart is also not present in the e-Commerce business
sector of India.
c) The processes are stabilized at Walmart. But in the Indian
scenario many of them have to be customized. It will try
to leverage the competitive advantages mentioned
above.
New ventures of Walmart may be a roadway for cloud
implementation.
Apart from bringing its brick and mortar retail business to
India Walmart is also planning

To start up an E-Commerce service to counter the likes of

Amazon.
This is bringing the store to the web
To start mobile self shop service. It also plans to leverage
its existing stores for this purpose. This is bringing the web
to the store

33

In the case of mobile self-shop service, Walmart will now

have a deluge of customer data (Personal info, product choices,
purchase pattern etc.) to handle.
For the cloud strategy identification of some of the critical
processes is done, which can be deployed on cloud. This is
explained the next sections architecture and roadmap.

7.2. CLOUD ARCHITECTURE

Figure 5: Cloud Architecture-I for Walmart

34

Figure 6: Cloud Architecture-II for Walmart

The business and operational support services for Walmart

cloud architecture are as follows:

35

CRM
Transportation mgmt

Audit

Warehouse mgmt

Marketing
Spend analysis

Figure 7: Cloud Services

Following are the deployment and services categories for the
identified business processes:
DEPLOYMENT MODEL STRATEGY

36

P r iv a t e
HR
Fu n c t io n
Fin a n c ia l
m anagem
ent
A u d it
PO S
m anagem
ent
O rd e r
m anagem
ent
P ro d u c t
a n a ly s is

P u b lic

H y b r id

eC o m m e rc e
W e b s it e
Fe e d b a c k
m anagem
ent

CRM
C a te g o ry
m anagem
ent
In v e n t o r y
p la n n in g
D a ta
a n a ly t ic s
PLM
M a r k e t in g
spend
a n a ly s is

C o m m u n it y
P ro c u re m e
nt
Ve n d o r
/ S u p p lie r
m anagem
ent
Change
m anagem
ent
W a re h o u s e
m anagem
ent
C o n tra c t
m anagem
ent
Tr a n s p o r t a
t io n
m anagem
ent

Figure 8: Deployment Model Strategy for Cloud Strategy

PRIVATE
Some of the business processes such as Order
management, Product analysis and POS management
should be hosted on a private cloud so as to standardize
Walmart cloud service management processes and ensure
complete control over the applications and infrastructure
configurations. It also helps in addressing the security,
compliance and other risks associated in a much better way.
PUBLIC
Business processes such as feedback management
and e-commerce websites should be hosted on a public
cloud so that the general public can openly access the cloud
infrastructure. It would also ensure low capital cost with
enormous scalability, leverage and flexibility. Walmart would
only pay to the cloud provider for the time, bandwidth and
storage.
HYBRID
Business processes such as CRM, Product Lifecycle
management and Data analytics should be hosted on a
37

hybrid cloud so as to ensure optimum flexibility and security at

the same time, which is utmost essential for such processes.
COMMUNITY CLOUD
Processes such as Procurement, Supplier
management and Warehouse management should be
hosted using a community cloud so as to ensure better
collaboration with suppliers and a highly efficient supply chain
by minimizing costs incurred by each stakeholder and at the
same time offering a high level of security and compliance to
standards.

SERVICE MODEL CATEGORY

38

Ia a S
In v e n to ry
p la n n in g
Pro c u re m e n t
C a teg o ry
m anagem ent
H R Fu n ctio n
Fin a n c ial
m anagem ent
A u d it
Ve n d o r /S u p p lie r
m anagem ent
C h an g e
m anagem ent
W a re h o u se
m anagem ent
O rd e r
m anagem ent

Pa a S
Pro d u c t a n a ly sis
Fe e d b a c k
m anagem ent
CRM

SaaS

D a ta a n a ly tic s
PLM
P O S m a n a g em e n t
e -C o m m e rc e
W e b site
C o n tra c t
m a n a g em e n t
M a rke tin g sp e n d
a n a ly sis
Tra n sp o rta tio n
m a n a g em e n t

Figure 9: Service Model Category for Cloud Strategy

IAAS
Business processes such as Inventory Planning,
Procurement, Supplier Management, Warehouse
management, etc, can be implemented using IaaS so that the
consumer has complete control over the operating systems,
applications, etc while the resources such as processing
capabilities, storage and network are offered by the cloud
service provider.
PAAS
For Product analysis and Feedback management, PaaS
could be used so that Walmart can use its own applications
created using various tools and languages on to the cloud
environment provided by the cloud service provider.
SAAS
For functions such as Data analytics, PLM, CRM, POS
management and e-commerce website management SaaS
would be useful as it would ensure that the cloud service
providers completely take responsibility to manage the
applications as well as the infrastructure.
39

7.3. BENEFITS TO STAKEHOLDERS THROUGH CLOUD

STRATEGY
The benefits to the stake holders through cloud strategy can be
as follows.

CUSTOMER
The cloud solution will provide a highly available system. The eCommerce solution will enable customers in remote areas to
buy products. They will also gain from the uniform and low
pricing of goods.
EMPLOYEES
The new solution will focus on streamlined and standardised
processes. This will result in lesser redundancy and higher
efficiency. Cloud solution has very little setup time so the time
taken to start business at any centre will be reduced.
INVESTORS
Investors will be able to realise their ROI faster. The scalability
of the system will help in faster growth of Walmart India.
BUSINESS PARTNERS
Centralized collaborative environment on the cloud system
reduces the cost of the total chain.

7.4. ROI FROM CLOUD STRATEGY

The sales figure for Walmart for last 4 years is collected.
The CAGR of sales revenue is calculated and it is assumed to be
the growth rate of the sales from Walmart without cloud
implementation. Due to the benefits reaped in the cloud
implementation the growth rate for sales revenue with cloud
implemented will be 5% more than the growth rate without
cloud.
Walmart
(in000USD)

Data
2012
40

2011

2010

2009

Sales
469.162 446.95
421.849 408.085
CAGR_Sales (Without
Cloud)
4.76%
CAGR_Sales
(With
Cloud)
9.76%
Table 1: Assumption and facts of Walmart
It is assumed that Walmart will require 10 TB of space to
manage its large database in the initial year. It is assumed that
the space requirement for increase by 10% every year.
Year
1

Year 2 Year 3 Year 4 Year 5

Capacity
Requirement
10
10.50 11.03 11.58 12.16
Table 2: Capacity Requirement of Walmart

Year
6
12.7
6

There are two ways to meet the requirement of the space.

1) Lease the 10 server of 1TB.The Set up cost of the Server and
annual lease rent for 1 TB server is given below.
Server
$)
Set Up
Yearly
Lease

(in
Space
1556.43
44

1 TB

568.176
Table 3: Server facts

The useful life of the server is taken to be 10 years and

the depreciation is assumed to be 20% yearly. An important
conjecture to calculate the maintenance cost of the server is
that the 75% of the depreciation every year will be the
maintenance cost incurred by Walmart. Hence there are two
operating expenditure consisting of maintenance cost and the
lease rent.
According to the capacity requirement the 1.5 TB is purchased
in the 3rd year and 7th year.
2) Avail the cloud facility. There will just a meagre of $1000 as
the cloud setup cost in the initial year. There after cloud

41

Year 7
13.40

services provide pay per use facility according to the following

rate.
Monthly Usage

Standard Storage
per month)

First 0-1 TB

$0.085

Next 9TB

$0.076

Next 90TB

$0.067

Next 400TB

$0.063

Next 4500TB

$0.054

(per

GB

Table 4: Facts of Cloud

Source:
storage

https://cloud.google.com/pricing/cloud-

The sales due to technology use is assumed to be 20% of

the sales figure recorded in the year 2012 and it is then
increase according to the CAGR calculated above.

All
Values
in
thousan
ds
Dollars

Non-

Assumed

Yea
r0
15.5
42

Yea
r1

Yea
r2

Yea
r3
4.67

Yea
r4

Yea
r5

Yea
r6
4.67

Yea
r7

Cloud

With
Cloud

Benefit
NPV

CAPEX
Assumed
OPEX
Total
Expenses
Sales
Profit
Assumed
OPEX
Cost Incurred
(Set Up)
Total
Expenses
Sales
Profit

15.6
9.4
-6.2

8.0

7.5

7.2

8.4

8.1

7.7

9.1

8.0
9.8
1.8

7.5
10.3
2.7

9.23

9.63

11.8
10.8
-1.1
10.0
5

8.4
11.3
2.9
10.5
0

8.1
11.8
3.8
10.9
6

12.4
12.4
0.0
11.4
5

9.1
13.0
3.9
11.9
6

9.63
11.3
1.7
-1.1

10.0
5
12.4
2.4
3.4

10.5
0
13.6
3.1
0.3

10.9
6
14.9
4.0
0.2

11.4
5
16.4
5.0
5.0

11.9
6
18.0
6.0
2.1

1.00
1.00
9.4
8.4
14.6

9.23
10.3
1.1
-0.7

19.32

With the above calculation the benefit is calculated as

difference of Profit with Cloud and profit without Cloud. The
Benefit over the years is discounted at a rate of 7%, which is
the opportunity cost close to the bond rate, to calculate the
NPV. The NPV is $19320.Hence the cloud provides more profit
and more value to the stakeholder investment.

7.5. SENSITIVITY ANALYSIS

The previous calculation is based on the assumption that
the sales growth rate with cloud implementation will be 9.76%
which is 5% more than sales growth rate without cloud
strategy.Now the NPV is calculated at different level of sales
growth rate which may be possible after the implementation of
the cloud.The sensitivity analysis is done by changing the sales
growth rate with cloud implementation but the sales growth
rate without cloud implementation is kept at same level(4.76%)
Sales Growth Rate with
NPV(in thousand dollars)
Cloud(in %)
0.82
0
Table
5:
ROI
calculation
1.76
1.74
2.76
3.66
43

3.76
4.76
5.76
6.76
7.76
8.76
9.76
Table 6: Sensitivity Analysis

5.65
7.72
9.87
12.10
14.42
16.83
19.32

So with cloud implementation if the sales growth is just

0.82% then the benefits matches the benefits without cloud
implementation where sales grows at 4.76%.Even with same
sales growth of 4.76 in both cases the NPV is found to be $
7720 hence cloud implementation is beneficial.

NPV changes with sales growth changes in cloud implementation

25
20
15
10
5
0
0

10

12

NPV changes with sales growth changes in cloud implementation

Figure 10: Service Model Category for Cloud

Strategy

7.6. ROADMAP FOR CLOUD

Walmart has plans to open stores in all metros by 2014
and enter into tier I cities by 2016 and start setting up shops in
Tier II cities by 2017.The IT strategy needs to be coherent to
this strategy.

44

Year 2018
Year 2017
Year 2016

Year 2015

Year
2014
Tech
partner
selection
Consultin
g phase
for metro
cites

For select
metro cities
Application
development
Deploym ent
Support and
maintenance

Entry into Tier I

cities
Application
deplyment and
support

Entry into Tier

II cities
Application
deplyment and
support

Figure 11: Roadmap of Cloud Strategy

The year wise planning is done as follows:

Table 7: Road Map for 2014

45

Design for all

offices and all
features
deploym ent

Table 8: Road Map for 2015

Table 9: Road Map for 2016

8. DEPARTMENT SCORE CARD

8.1. BUSINESS GOALS AND ASSUMPTION
Walmart is its first phase of OLC. Hence sales turnover is
the most important goal for Walmart to maintain the foothold in
India Market. The business goal of Walmart India is to Achieve
sales revenue of Rs 300 Crore in the year 2018 with a growth
rate of 10% per year.
GOAL

ASSUMPTI
ON

Sales
Revenue(Rs Cr)
in 2018
Growth/year
Standing Sales
Revenue(Rs Cr)
in 2013

300
10%
Walmart Opened in 2013 in India
0
46

CALCULAT
ION

Year

2013

Sales(Rs Cr)

2014
204.9
0

2015
225.3
9

2016
247.9
3

2017
272.7
3

2018
300

Table 10: Business goals and assumption

8.2. BUSINESS METRICS

The overall business metric at the strategic level will be the
sales revenue at the end of the each year tracked from the year 2014
till 2018.Every department of Walmart has to be in line with the

business goal and should set its departmental goal in order to

achieve the overall business goal. The MIS of each department
is designed to facilitate the progress of the department towards
achieving the goal periodically.

8.3. ORGANISATION STRUCTURE

The three levels of the organisation are broadly classified
into Strategic Level, Functional Level and Operational Level.
The Strategic Level will be headed by CXO. The Functional Level
will be represented by the Departmental Managers and
Operational Level will be represented by line manager and
executives of each department.

Board of
Directors

CXO

Operation
Manager

Inventory
Executives

Supplier
Executive

HR
Manager

HR hiring
executives

HR Training
Executives

Figure 121: Organisational Structure

47

Marketing
Manager

Finance
Manager

Sales
Executive

Asset
Allocation
Executive

8.4. DEPARTMENT
METRICS)

(FUNCTIONAL

GOALS

AND

The functional goals and business metrics of two of the

department i.e. Inventory Department and Human Resource
Department is described.
Inventory department serve as the critical department for
the operation of the Walmart. The functional goal of the
Inventory department is to maintain an appropriate and
sufficient inventory level through the year in order to achieve
sales target as defined in the business goal. The metrics of the
inventory department are identified as safety stock level,
service level, lead time, inventory turnover, probability of the
stock out, inventory cost, design capacity, effective capacity,
utilisation percentage and efficiency percentage.
Human Resource Department play a critical role in
managing employees. The functional goal of the Human
Resource Department is to maintain employee level and
provide training and development to achieve the sales target as
mentioned in the business goal. The metrics of human resource
department are listed as cost per hire, turnover cost, time to fill
the position, length of employment period, number of net
added employees, turnover rate, time to fit, average number of
training hours, increase in deliverables, average salary change
across roles.

8.5. WEIGHTAGE BASED DEPARTMENT SCORE CARD

INVENTORY DEPARTMENT
Inventory Department
Department
Weightage
Functi
onal
goal

Strate
gy

0.3
Strateg
y
Weight
age

Strat
egy
Impo
rtanc
e

Metric

48

Weigh
tage

Relativ
e
Importa
nce

KP
I

Actu
al
Perfo
rman
ce

Perfor
mance
Pay

Standa
rdised
Invento
ry
Manag
ement
Strateg
y
In
order
to
maintai
n an
annual
sales
growth
of 10%

Invento
ry
Trackin
g
Strateg
y
Cost
Optimi
sation
Strateg
y
Capacit
y
Utilisati
on
Strateg
y

0.30

0.20

0.25

0.25

0.000

0.000

0.000

0.000

Safety Stock
Level

0.30

0.0000

K1

AP1

Service Level

0.25

0.0000

K2

AP2

Lead Time
Inventory
Turnover
Ratio=Sales/I
nventory
Probability of
Stockout=(1No.Of Actual
units/No.of
Predicted
units)

0.20

0.0000

K3

AP3

(AP1/K
1)*P1
(AP2/K
2)*P2
(AP3/K
3)*P3

0.25

0.0000

K4

AP4

(AP4/K
4)*P4

1.00

0.0000

K5

AP5

(AP5/K
5)*P5

1.00

0.0000

K6

AP6

0.25

0.0000

K7

AP7

0.25

0.0000

K8

AP8

0.25

0.0000

K9

AP9

0.25

0.0000

K1
0

AP10

Inventory
Cost(TC=HC
+Ordering
Cost)
Design
Capacity
Effective
Capacity
Utilisation
Percentage
Efficiency
Percentage

(AP6/K
6)*P6
(AP7/K
7)*P7
(AP8/K
8)*P8
(AP9/K
9)*P9
(AP10/
K10)*P
10

Table 11: Departmental Score Card of Inventory

Department

MIS for Inventory Department

Metric
Safety Stock Level
Service Level
Lead Time
Inventory Turnover
Ratio=Sales/Inven

Variable(s)
Safety Stock
Level(T1)
Service
Level(T1)

Data

Lead Time(T1)
Sales(T1)

49

Periodi
city

Tool

SS

Weekly

Record

SL

Weekly

Record

LT
S

Weekly
Monthly

Record
POS,RFID

Role
Inventory
Executive
Inventory
Executive
Inventory
Executive
Marketing
Executive

MIS for Inventory Department

Metric
tory
Probability of
Stockout=(1-No.Of
Actual units/No.of
Predicted units)
Inventory
Cost(TC=HC+Orde
ring Cost)
Design Capacity
Effective Capacity
Utilisation
Percentage
Efficiency
Percentage

Variable(s)

Data

Periodi
city

Inventory(T1)
#Actual
Units(T1)
#Predicted
Units(T1)
Holding
Cost(T1)
Ordering
Cost(T1)
Design
Capacity(T1)
Effective
Capacity(T1)
Actual
output(T1)
Design
Capacity(T1)
Actual
output(T1)
Effective
Capacity(T1)

Monthly

AU

Monthly

PU

Monthly

Record
Sampling
Record
Sampling
Record

HC

Monthly

Record

OC

Monthly
Quarterl
y
Quarterl
y
Quarterl
y
Quarterl
y
Quarterl
y
Quarterl
y

Record

DC
EC
AO
DC
AO
EC

Tool

Role
Inventory
Manager
Inventory
Executive
Inventory
Executive
Inventory
Manager
Inventory
Manager
Production
Manager
Production
Manager
Production
Manager
Production
Manager
Production
Manager
Production
Manager

Plant Manual
Plant Manual
Production
Record
Production
Record
Production
Record
Production
Record

T1:Variables are measured in T+1 year and T0:Variables are measured in T year

Table 12: MIS for Inventory Department

HUMAN RESOURCE (HR) DEPARTMENT

HR Department
Department
Weightage
Functi
onal
goal
HR
strateg
y for
annual
sales
growth
of 10%
for next
5 years

Strate
gy
Recruit
ment/R
etentio
n

0.3
Strateg
y
Weight
age
0.5

Strat
egy
Impo
rtanc
e
0.15

Weigh
tage

Relative
Importa
nce

KP
I

Actu
al
Perfo
rman
ce

Cost per hire

0.20

0.0300

K1

AP1

Turnover cost

0.10

0.0150

K2

AP2

Time to fill
Length of
employment
No. of net
added
employees(=
No.of Hires-

0.20

0.0300

K3

AP3

0.10
0.20

0.0150
0.0300

K4
K5

AP4
AP5

Metric

50

Perfor
mance
Pay
(AP1/K1
)*P1
(AP2/K2
)*P2
(AP3/K3
)*P3
(AP4/K4
)*P4
(AP5/K5
)*P5

HR Department
Department
Weightage
Functi
onal
goal

Strate
gy

0.3
Strateg
y
Weight
age

Strat
egy
Impo
rtanc
e

Metric
No.of
layoff+No.of
left)
Turnover
rate(=No.of
Hires/(No.of
layoff+No.of
left))
Time to fit

Trainin
g and
develo
pment

0.3

Perfor
mance
apprais
al

0.2

0.09

0.06

Avg. no. of
training
hours
Increase in
deliverables
Avg salary
change
across roles

Weigh
tage

Relative
Importa
nce

KP
I

Actu
al
Perfo
rman
ce

0.10

0.0150

K6

AP6

0.10

0.0150

K7

AP7

0.25

0.0225

K8

AP8

0.25

0.0150

K9

AP9

0.25

0.0150

K1
0

AP10

Perfor
mance
Pay

(AP6/K6
)*P6
(AP7/K7
)*P7
(AP8/K8
)*P8
(AP9/K9
)*P9
(AP10/K
10)*P1
0

Table 13: Departmental Score Card of HR Department

KPI
40,000
20000
10
3.5

Actual
Performance
44,000
20500
8
2

Variabl
e Pay
10000
5000
7500
5000

Performan
ce Pay
9090.91
4878.05
9375
2857.14

15

10000

6000.00

Turnover rate (=No.of Hires/(No.of

layoff+No.of left))(#)
Time to fit (Months)

2
3

1.3
3.5

2500
2500

1625.00
2142.86

Avg. no. of training hours(Hours/3

Months)
Increase in deliverables (#)

30
10

30
10

9000
5000

9000
5000

10000

7500

8000
64500.
00

6000

Metric
Cost per hire (Rs)
Turnover cost (Rs)
Time to fill (Months)
Length of employment (Years)
No. of net added employees(=No.of
Hires-No.of layoff+No.of left)(#)

Avg salary change across roles

Total

Table 13: Departmental Score Card of HR Department

51

55968.96

Here all the KPIs and Actual Performance of every metric of the
HR department is calculated by brainstorming and scenario
analysis.Each is then mapped to the Variable pay structure of
the HR executive responsible for achieving the metric.This
serves two purpose.The deviation between the actual
performance and KPI can be determined and the variable pay of
the executive can be quantified according to his actual
performance.

MIS for Human Resource Department

Metric
Cost per hire

Turnover cost
Time to fill
Length of
employment
No. of net added
employees(=No.of
Hires-No.of
layoff+No.of left)
Turnover
rate(=No.of Hires/
(No.of
layoff+No.of left))

Time to fit
Avg. no. of
training hours
Increase in
deliverables
Avg salary change
across roles

Dat
a

#Hires(T1)

#Layoff(T1)

La

#Left(T1)

Le

#Hires(T1)

#Layoff(T1)

La

#Left(T1)
Time to be start
take
ownership(T1)

Le

Periodic
ity
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual
SemiAnnual

To

SemiAnnual

Training Hours

Th

Monthly

Tool
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Recruitment
planning Record
Training and
Development
record
Training and
Development
record

Deliverable(T1)

D1

Monthly

Weekly Reports

Line Manager

Deliverable(T0)
Salary(T1)

D0
S1

Monthly
Monthly

Weekly Reports
Department
Cost Report

Line Manager
Line Manager

Variable(s)
Recruitment
Cost(T1)

RC

#Hires(T1)
Replacement
Cost(T1)
Time to fill
vacant post(T1)
Time in the
position(T1)

52

H
ReC
Tv
Tp

Role
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Recruitment
Manager
Training and
Development
Manager
Training and
Development
Manager

MIS for Human Resource Department

Metric

Variable(s)

Dat
a

Salary(T0)

S0

Periodic
ity
Monthly

Tool
Department
Cost Report

Role
Line Manager

T1:Variables are measured in T+1 year and T0:Variables are measured in T year

Table 14: MIS for HR Department

Since Walmart India is in first phase, hence inventory
department and human resource department plays a crucial
role .Hence both of them are given a weight age of 30% each.

9. CHANGE MANAGEMENT FOR CLOUD STRATEGY

9.1. BUSINESS REQUIREMENT
The objective is to reach a goal of Rs. 300 Cr in sales
revenue by the year 2018 with an estimated annual growth rate
of 10% starting from year 2013.

9.2. PROJECT OBJECTIVE

Walmart India wants to roll out its operations in India in
phase.
The idea is to divide the whole plan in three phases
with three rounds in each phase. The first phase is for the
metro cities, second for the tier I and third phases for the tier II
cities. The three rounds are business process development,
solution deployment and support phases respectively. Few cities
in each phase are selected.
Since Walmart India is in first stage of OLC, it plans to go
for a Some office, Some features pilot strategy. After reviewing
the progress of the project the decision to go for All office, all
features deployment will be taken by year 2018.

9.3. BUSINESS PROCESSES

Walmart in its pilot strategy plans to launch certain
critical applications in select metros initially. After successful
implementation the same will be replicated in tier I and II cities.
The processes to be deployed initially are financial, HRIS,
Inventory and Supplier management. In addition to these
Walmart India also plans to launch its e-Commerce website and
also tie up with a data analytics vendor.
53

9.4. ROADMAP
The roadmap is explained in the previous section of cloud
strategy.

9.5. MILESTONES AND CRITICAL SUCCESS FACTORS

Table 15: Milestones and CSF

9.6. SENIOR MANAGEMENT REVIEW

The review will be divided into various categories. The
most frequent ones which act as the input for the less frequent
ones is devised.

54

Steering committee
meet
Dashboard review
Monthly

Prog. mgr. and CFT

meet
Daily for task allocation
Weekly review

Project task team

meet
Daily for task allocation and
review

Figure 12: Senior Management Review

9.7. STEERING COMMITTEE

The steering committee keeps a birds eye view on the
course of the project and has a final say on the proceedings.
This group consists of the head of all the functional committees.
This group in turn works under the directive of the top
management as shown below. The project task force will be
responsible for implementing the project the site metro or tier I
or II cities and the data flows from this level to the top group.

55

National

CEO and
board of
directors

National

Steering
committee

National

Program
manager

Cross

Functional

team

(external)

National andfunctional
Regional consultants

Auditors

Project task
Project task
Project task
Regional
force 1 (Location
force 2 based)force n

Figure 13: Steering Committee

9.8. ROLES AND

COMMITTEE

RESPONSIBILITIES

STEERING

Since this is a pan India project, the scope of work

of the steering committee also increases. This project will be
implemented in phases and in different locations so there
will be diversification and changes in sizes of the
committee.
There will some part of the team at the national
level. This will consist of the CEO and board of directors.
People from this will be part of the steering committee.
There will be a program manager for the whole India
operations. Under him cross functional teams, external
functional consultants and auditors will be working at
national and regional level. At each project site there will be
a project task force who will be chosen from different
departments and will be mostly based out of that place.
The roles of steering committee will be that of an over seer
and a monitoring and controlling one. They will be appraising
the board of directors about the progress of the project. The
steering committee will be getting this information in turn
from the program manager. The data flows in both ways. The
56

receivables to the steering committee will be in the form of

periodic reports and dashboards. The steering committee
has the major function of constantly checking whether the
project is going as per plan, is meeting the CSFs, taking
decision about the funding requirements and it timely
disbursements, resources and continuation of the project.
They can also decide to discontinue the project if required.
The steering committee will be assisted by local teams of
project task forces. These task teams objective is also to act
as change agents and bring in customer buy in of the new
implementation at their level.

9.9. STAKEHOLDERS

Suppliers
Distributors
Technology partners : Cloud service
providers,Auditors and data analytics service
providers

Business
partners
Employees

Employees with direct (e.g. POS agents)

and indirect interaction (e.g. Stores
worker) with the IT system

Customers

Customer to the regular brick and mortar

retail and to the online market.

Figure 14: Stakeholder

9.10. REWARDS AND RECOGNITION

The reward and recognition system will be performance
based and will be linked to the progress made vis--vis the
overall roadmap and individual goals.
9.11. TRAINING
The executors of the program will be the local project task
force. These teams will have the representations of all the stake
holders. A process of train the trainers program will be followed.
57

This will also ensure the buy in the new implementation by the
company stakeholders and the project task teams involved in
this will be regarded as the change agents for this.

9.12.

PILOT STRATEGY

Walmart India would be stage 1 on the OCL curve. The

pilot strategy of some offices and some features will be most
suitable. This is because many changes during the course of
implementation are expected.
Offices
All
Some
All
Some

Features
All
All
Some
Some

Table 16: Pilot Strategy

After successful implementation of the above strategy at
selected Metro, tier I and II cities planning is done for All
offices and All features starting year 2018 and proceed
sequentially for the cities as in the roadmap.

9.13.

COMMUNICATION STRATEGY

There will be two type communication strategies.

POLICY COMMUNICATION
This is intended to send across the organisation the unified
vision, mission, objectives, benefits and directives. The project
implementation setup as described in the previous section will be
instrumental in passing on this message across the organisation.
OPERATION COMMUNICATION
This will address the escalation and issue resolution across all
levels. Since Walmart will be in the inception stage it is expected to
have a lot of rework in processes before they are stabilised. This
system will specify the tasks assigned, deadlines associated,
resolutions in case deadlines are not met and review mechanisms.
This system will also specify the change management process i.e. the
problem report, change request, change review and change notice
mechanism. This will be the escalation system.

58

10.
MANAGERIAL IMPLICATION FOR CLOUD
STRATEGY
The impact of cloud strategy will revolutionise the way
the business process is been conducted by Walmart. The
implication of cloud strategy on the different strata of the
organisation is huge.
The cloud implementation will lead to consolidation of the
smart report across departments. This will facilitate the CXO to
develop and track the progress of the business goal periodically.
The impact analysis and roadmap of the success of the
business objectives will be continuously monitored by CXO.
The seamless integration of the business process and
data integration of the process across department will help the
department manager to streamline their functional goal. The
real time availability of the information and efficiency of the
cloud strategy will lead to effective decision making capabilities
of the departmental manager.
The cloud strategy will drastically impact the line
managers and executives. It will lead to quick response time,
faster adaptability and smooth change management. The easy
handling and availability of the needed reports and information
will lead to hassle free operation of the executives. The
dependency level of the executive across the department will
be reduced to a great extent.

11.

RISK MANAGEMENT

11.1.
RISK IDENTIFICATION, ASSESSMENT AND
MITIGATION PLAN
Walmart has many inherent risks involved in its business.
It is important to identify these risks, analyze and prioritize
them and come up with plans to mitigate the risks. A cost of the
mitigation plan should be less than the cost incurred but to the
risk; it makes no sense to have a plan which is dearer than the
risks involved. However there are some essential functions
where carrying risks is fatal to the business. In such cases,
management must take every step to ensure the risk is
59

completely eliminated. Thus, the management must judiciously

analyze the business, identify the risks involved and identify the
risks which can be carried and which have to be eliminated and
come up with a suitable mitigation plan for the latter.
GOVERNMENT POLICIES (FDI POLICIES)

Operating in countries outside US requires the approval of

the home country. A weak and unstable political environment
will result in policy paralysis. The FDI policy will be held up by
the opposition and the ruling party will not be able to clear the
bill in the parliament. Lack of conviction from the part of the
government and the ambiguity in the FDI policies carries a big
risk for Walmart. The project gets delayed and there is no
definite timeline defining when the project will be approved.
This results in huge escalations in cost. The probability and
impact of such an occurrence is high, making it necessary risk
(with a risk index factor of 560) to mitigate. Walmart should
have better terms and conditions with the government and also
with the opposition. They should negotiate favorable operating
terms and conditions within the country and unsure that their
interests are not curtailed while trying to ally the reservations
that the government and the opposition has against the
approval. Such a plan is likely to cost around Rupees 100 crore.
PARTNERSHIP ISSUES

Most companies venturing into a new country look for

joint ventures as they dont have the market knowledge.
Walmart has also followed the same approach in India. It has
tied up with Bharti Enterprises to take advantage of Bhartis
understanding of the Indian market. Both the companies should
identify each others core competencies and strategic gaps and
work together towards a seamless integration. An important
issue in the partnership is the legality of the procedures and the
conformance to the anti corruption laws. The anti corruption
laws are strict and any allegations can either delay the project
or worse; put the project in jeopardy. The operations in India
have been stalled due to bribery charges against its Indian
operations. The risks are moderate with a 15% probability of
occurrence. The risks can be easily mitigated by followed
ethical business practices and creating cross functions teams
60

between both organizations to have strategic fit. The costs

incurred will be 50 crores which is less compared to the risk
index factor of 105.
LAND ACQUISITION

Land acquisition is a very sensitive issue in India. Private

land acquisition especially agricultural land acquisition is a very
contentious issue and is fraught with controversies. Acquisition
faces a lot of resistance from the private owners and the same
issue is taken up by the political parties and the national media.
The public opinion is always divided when it comes to land
acquisition for corporate companies as they feel that land is
taken forcibly from the common man to serve the rich and
mighty companies. Strong resistance has seen the Tata Nano
plant move from Bengal to Gujrat. Walmart should create an
effective relocation plan; provide adequate compensation and
alternate jobs for the displaced people. The compensation
should be in lieu with the market prices. The acquisition plans
must be shared with the government and the public and the
media should be informed to influence public opinion. The risk
against acquisition is very high in India at 40% and its impact is
very high. The mitigation cost is also high but this is an
essential risk which has to be eliminated else the project will
not take off.
FRAGMENTED SUPPLY CHAIN

In India Walmart faces the problem of fragmented supply

chain. There are many companies in India with high volume
products where IT systems are not well established. One of the
core competencies of Walmart is its integration with its
suppliers in sharing real time sales data and making accurate
forecasting for the entire supply chain. This is not possible with
many suppliers as their IT systems are currently inadequate for
the level of integration required. The risk is carried by around a
quarter of Indian manufacturers. It will result in poor synergy
between the two companies and cause operational costs to
rise. This can be removed by providing adequate IT support and
helping
such
companies
to
improve
their
systems
infrastructure. They can also help arrange for training and
development of their employees. Identifying and implementing
61

IT overhaul in a selected few companies will cost approximately

Rs. 180 crores. Compared to the cost of risk carried, the
mitigation plan costs less. Hence Walmart should implement
the plan.
INFRASTRUCTURE

Infrastructure is a major worry for Walmart in India. With

poor roads, lack of proper storage facilities and proper
protection from sunlight, temperature and rainfall will result in
loss of perishable goods. Lack of good roads results in longer
lead times for the goods to reach the retail store from the
distribution centre. The competitive advantage of Walmart is
lost in this process. Also lack of proper storage facilities for
perishable items like medicines and vegetables are wasted in
storage. There is a very high probability of poor infrastructure in
India i.e. 45% and the cost impact amounts to a risk impact
factor of 1080. Walmart can outsource the storage and tie up
with local supply chain networks. However if it tries to build its
own warehouses it must tie up with the real estate and
construction companies for land acquisition. Special steps can
be taken by Walmart for its logistics. It can go for a
collaborative tie up with vehicle manufacturers where in
vehicles can be exclusively designed and manufactured to suit
Walmart needs. The total cost for such a plan is estimated to be
Rs. 650 crores.
CLOUD SERVICE UNAVAILABLE

Using cloud services comes with its own risks especially

in terms of unavailability. The unavailability of cloud services
can lead to a compromise in SLAs. Technical issues with the
servers that host data and applications important to the
business can cause substantial losses. This risk of service
unavailability is high with a 14% probability of occurrence. The
risk mitigation measures include having a satellite back up to
deal with service failure. The mitigation costs are also on the
higher side and can be pegged at approximately Rs 200 crores.
But the mitigation costs are less as compared to a risk factor of
274.4. However, unavailability of cloud service can cause
serious damage to the very basic ground rule of Walmart
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business hence
measures.

making

it

important

to

take

mitigation

SUPPLIER INTEGRATION

Supplier integration is an important and critical part for

any retail chain. A strong partnership is essential to develop a
competitive edge in the market. Asymmetry in information and
lack of information sharing leads to different demand and order
forecasting at retail and manufacturer level. Walmart should
identify the partners with the practices that best fit its own
practices. It should also generate a level of trust and
collaboration among suppliers that helps in correct and
responsive data sharing and collective decision making. This
helps in maximizing the benefits from the partnership. The
integration can be done by creating cross functional teams to
identify the pain points and creating a structured plan for
integration at strategic, divisional and functional level. The
benefits reaped far outweigh the cost which is at Rs. 130 crores
compared to other risk mitigation plans.
HR ISSUES

Walmart has faced several lawsuits and issues with

regards to its workforce. The employees have had complaints
about low wages, inadequate medical benefits, poor working
conditions and also the strong ant-union policy. In 2007,
Walmart also faced a gender discrimination suit with complaints
of bias against female employees with regards to pay and
promotions. Walmart has to deal with such taints when in India
as well. It is important to have full cooperation of employees
and also ensure that these issues do not crop up again in
future. A host of problems like attrition, employee lay-off costs,
low employee morale etc. could surface due to HR issues. This
also poses a risk associated with adequate training of
employees. In India, the employees will be dealing with an
entirely new environment. Walmart has to ensure that the
employees morale, mindset and work culture is aligned with its
international operation standards. The mitigation measures can
include better promotions, bonuses and better wages which
lead to better working conditions and increase in employee
satisfaction .The risk associated with HR issues is at a moderate
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level with a 10% probability of occurrence. The mitigation costs

can amount to Rs. 35 crores which is less than the risk index of
50.
MARKET RISK (DEMAND RISK)

Perhaps one of the biggest any business carries is

estimating the market for its product or service and Walmart
business is no different. Based on the estimations the scale of
operations, purchase of assets, the marketing plan and the
personnel recruitment is done. So it is vital to get the
estimation as accurate as possible. Any appreciable difference
between the estimated and the actual business will huge
losses. Having a higher estimation will lead to excess spending
causing capital block in unutilized assets. A lower estimation
will lead to lower revenues due to loss of sales. The probability
of erroneous estimation is around 20% and the risk index factor
is 350. This can be mitigated by making extensive market
surveys and demand analysis. Walmart should have an in depth
study of the Indian market and come up with accurate
forecasting models. The models used should have some
credibility i.e. prior to this the method should have shown
results with acceptable levels of variation either in the Indian
market or in similar markets. The approximate cost of
conducting research and using techniques to come up with the
market demand is around Rs. 65 crores.
FOREX RISK

Forex risk is characterized by high unpredictability.

However it is important to have mitigation plans in place. Forex
risk arises from the changing valuation of the Indian rupee in
the international market. It will result in a loss in projected
profitability and a deviation planned profits. The depreciating
rupee will lead to a situation where the actual profits are less
than the planned profits. Swift measures have to be taken as
per the market scenario to lower the impact of depreciating
value of the Indian rupee. To mitigate this risk it is important to
ensure a balanced mix of domestic and external loans. The
forex risk is moderate with a 10% probability of occurrence. The
mitigation costs can be pegged at Rs 10 crores which is less in
comparison to a risk index of 30.
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65

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Table 17: Risk Assessment and Mitigation

12.

CONCLUSION

Wal-Mart India wants to roll out its operations in India in

phase.
The whole plan in three phases with three rounds in
each phase will help in successful establishment of Walmart
India operation. The first phase is for the metro cities, second
for the tier I and third phases for the tier II cities. The three
rounds are business process development, solution deployment
and support phases respectively.
Wal-Mart has plans to open stores in all metros by 2014
and enter into tier I cities by 2016 and start setting up shops in
Tier II cities by 2017.
Walmart plans to reach 300 crore revenues by 2018, that
is, within 5 years of starting operations, at a growth rate of
10%. For all these plans, IT strategy that is compatible and
feasible is required. For identifying the proper IT strategy that
can address these plans, cloud strategy is the best fit. To test
the viability of a cloud model in this specific scenario, an NPV
analysis is conducted, which gave the inference that the NPV of
implementing a cloud strategy over a simple non-cloud model
is $19320. From this positive NPV that obtained for the cloud
strategy, it can be safely concluded that it is a viable model in
this scenario, and hence, decision for cloud strategy
implementation is taken.
A host of other factors like prioritization of issues,
availability, downtime and stock tracking requirements have
influenced decision of considering the cloud strategy as fit
Walmart that enhance its Operational Effectiveness.
The whole round involvement of all departments of
Walmart clearly defined by Departmental Score card will align
the entire organisation to meet the business objectives of
Walmart India. The holistic analysis of risk and its mitigation

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strategy will keep an understanding and awareness of the

future risk.
With such structured, planned, step wise and well defined
strategy lay down and timely execution of the strategy will lead
to strong hold of Walmart in India and soon grow its prominence
to leadership position in India market.

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