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Walmart in Turkey

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Denitsa Yanatchkova

on 2 May 2013

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Transcript of Walmart in Turkey

Strenghts: Internationalisation Strategy Walmart into Turkey Company Profile: the world's largest retailer
'Saving people money so they can live better' USP: low prices 8,500 stores in 15 countries Financial performance: revenue growth of 4.97% from 446.95bn to 469.16bn in 2012 Group: Will Shields Denitsa Yanatchkova Chenyuan Liu Feirouz Forecast: will outperform the market main competitors: Carrefour, Target and Tesco Why Turkey? Weaknesses: Opportunities: global operations and brand recognition
wide range of products
low cost leadership
excellent logistic and inventory management
has grown significantly over recent years, experiencing global expansion facing changes in customer demand and taste
huge span of control
reliance on saturated developed markets
difficulties to remain competitive in mid-market Expansion prospects in developing economies Growth in Internet retailing Threats Volatility in commodity prices, labour costs and inflation Internet retailers, dollar stores and discounters GDP growth of 8.5% in 2011
diversified economy and an accumulation of entrepreneurial talent
strategic geographical location
government provides tax and non-tax incentives to foreign investors
retail sales to reach 448 bn Turkish Lira in 2013
consumer expenditure to rise to 948 bn Turkish Lira in 2013
59 out of 142 in the Global Competitiveness index
M&A has increased significantly
Strong financial sector 'the commercial hub of the region' Turkey: But also consider... Risks! ease of doing business - rank 71st Internationalisation Strategy? Acquisition: Marketing Mix Product •EU standards eg, labels. – Eg, The operator being responsible for what the information says. It must not mislead or misguide the consumer, or pretend to cure human disease (except mineral water and nutritional foodstuff)
-The mandatoryinclude:
•the name;
•the list of ingredients;
•substances causing allergies or intolerances (peanuts, milk, mustard, fish, cerealscontaining gluten, etc.).
•the quantity of certain ingredients or categories of ingredients;
•the net quantity of the food;
•the date of minimum durability or use-by date;
•the special conditions of storage and / or use;
•the name or business name and address of the operator or importer;
•the country of origin or place of provenance for certain types of meat, milk or whenits omission islikely to mislead the consumer intoerror;
•instructions for use, whenits absence wouldmakeitdifficultappropriate use of the foodstuff;
•for beveragescontaining more than 1.2% alcohol by volume, the actualalcoholic strength; Modifications to packaging Local Preferences What’s selling in Turkey? (type of product) – different image and tastes Competition: local international Tesco Kipa (localised tesco) – 513 stores, plans for a stronger growth

Carfour - likely to leave Turkey due to bad results across 9 countries Promotion Recommend new branding, central European feelings towards western brands? Each brand slightly adapted to suit local prefferences. Eg, new coke recipe or KitKat packaging change. Eg, green kitkat.

Mass media, blanket advertising, across all platforms to raise awareness of new walmart entry into Turkey. Acquisation of brands will also help.

Sales promotions to gain market share. Eg, BOGOF and half price offers on brands. Also can start as market research to see the price elasticity of some of the products in a new market. •Flagship stores through acquisition of Migros
-different types of stores (already mentioned large network of hyper stores through to local shops)
-fast growing emerging market with an increasingly wealthy consumer (as shown in company profile)

• Distribution networks already in place through the Migros supply network.

Knowledge transfer has already allowed Walmart to copy an affective network for Turkey.

•Retail stores and distribution networks (already in place from acquisition of Migro’s)

• Fresh produce – need storage and affective management (again through Acquisition) Place Price yourself into the market with competitive pricing and offers to boost initial market share.

Taxes - KDV (18%)

Import tariffs – no import taxes as Migros already set up and free trade within the EU (very little produce from further a-field as local tastes are distinctive) Price •Cultural Implications – changing from the local shopping and retail experience. Eg, nth firm concentration ratio, to the more hyperstore approach. (everything in one place)
•Unemployment? Closing down of corner shops, but employment by larger firm.
•Location advantages? Eg, Dunning – expertise and knowledge of area
•Managerial Implications – different company culture and change management
•Problems with hostile takeovers? How shareholders and boards react. Conflict of interests.
•Morel Problems – putting local business out of business
•Language barrier issues? – Turkish. English is relatively uncommon however by affective management and employment of local workers, the language issue will be able to be overcome. Cultural and managerial Implications Thank you! Any questions? Importance
Relationships market share bribery & corruption IPRs international conflicts volatility of energy prices role of the government Walmart has the fiscal solvency to do acquisition.

Can enter the market and get a big entry scale in a short time.

Can get the know-how from the target company quickly and deal with the culture issues better.

Strategic - Eliminates a competitor Target Company: Migros Türk One of the biggest chain of supermarkets in Turkey with 888 across all formats: supermarkets, hypermarkets and discount stores.
7 million customers holding Migros Club Cards
Can also help Walmart's business in Azerbaijan, Kazakhstan, Macedonia and Kyrgyzstan Conclusion: Walmart has the fiscal solvency to do an acquisition.

Can enter the market and get a big entry scale in a short time.

Can get the know-how from the target company quickly and deal with the culture issues better.

Strategic – eliminates a competitor Supply Chain Procurement Management

Logistics Management

Inventory Management
We adopted a bottom up appraoch to this task.

Why Walmart? - a huge brand name with vast amount of financial resources, but also challenging due to past failures.

Why Turkey? - a favourable political, economic and legal environment in combination with increasingly wealthy consumers, good future industry trends - reflects Walmar't market seeking strategy.

Why Acqusition? - Turkey is culturally distant so it needs a local partner. Therefore, adopting a geocentric/polycentric approach rather than ethnocentric approach when will be the best. Acquisation of Migros should help us combat the risks - eg, already implimented business networks and workers acustomed to the Turkish business culture. Also language of branding into Turkish Cut out wholeseller - time (fresh produce) and cheaper, JIT mechanisms

USP - cost leader Keep the name of the acquired firm • European design of products
a member of the EU Customs Union and EU membership negotiations GNI per capita $16,940 Upper-middle income FDI regulatory restrictive index lower than the average for OECD cost efficient and productive labour force rich in natural resources large domestic market of 74 million people, young and well-educated the fastest growing economy of Europe and OECD Careful planning +
due diligence +
patience =
key to success in Turkey
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