Question

Conduct internal analysis utilising relevant academic literature and discuss the areas of expected internal benefits and synergies for both companies. walmart by filpkart

Answer 1

                        Walmart is an American multinational retail corporation that runs a chain of hypermarkets, grocery store, discount department store. It is the world’s largest company by revenue with a turnover of nearly $515 billion and the largest private employer in the world with about 2.2 million workers across the globe. It’s operations are mainly divided in to four divisions Walmart US, Walmart International, Sam’s club and Global e-commerce. With a collection of supercentres, supermarkets, hypermarkets, warehouse clubs, restaurants, home development etc, the following are the ways how they flourish with their internal structure

· The internal structure of Walmart has a hierarchy and function-based format with a vertical control of the organisation wherein every employee has a direct superior which allows for a vertical command structure

· The function-based approach makes sure that every employee would have a certain function to satisfy in an organisation

· Human resource management has a separate department which makes sure that the performance of the employees are always efficient by imparting proper training for them.

· All the above are management hierarchy which along with the variety in the operation is an added advantage to the firm

· The presence of a variety of firms makes sure that the revenue potential of the firm is always satisfied and the profit-making potential would be there even if there is a failure of one or two firms.

                     Flipkart is a Singaporean online based firm that is located in India. Though it was initially focused on book sales, then it turned to consumer electronics and today it is the leading online market firm that sells almost all of the products across the globe. It has a revenue of $6 billion and has an employee strength of more than 40,000. It has a complex business structure with various attached firms in many locations across the globe. The following is how the structure helps the firm in its business.

· It has an online structure which means that there is no need for many firms and thus the initial investment in establishment is less

· The godown management is based on cloud method which means that proper communication is being made which would result in less losses in terms of product quality

· The access to the products are available online which makes sure that the firm has access to more consumers across the globe.

Recently, Walmart acquired 81% of stake in Flipkart for US $16 billion. The following are the ways in which the merger would provide synergy for the two firms.

· The merger with Walmart made sure that Flipkart was not falling out of money in its competition with Amazon in the domestic market.

· India’s e-commerce standing at a modest $38 billion is expected to grow to around $200 billion by 2027 which gives Walmart a huge retail market to focus on

· The consumer base that has been gathered by Flipkart would help Walmart in expanding without having to establish a base from the beginning

· Flipkart has been on constant struggle with domestic e-commerce retailers and the merger would give them enough revenue to carry out the same at some reduced costs and thus would be able to regather the lost consumer base in the process.

Thus, all the above features makes sure that both the firms stand at an advantageous position with the merger.