Question

By using evidence from your research, discuss the possible effects of the digital disruption that has contributed to the acquisition. Speculate on the impact of digital disruption on this ‘acquisition’ of Flipkart by Walmart.

Answer 1

Hey.

The answer of the following question is given below as follows :

According to Gartner, digital disruption is "an effect that changes fundamental expectations and behaviors in a culture, market, industry or process that is caused by, or expressed through, digital capabilities, channels or assets."

The most important factor that defines digital disruption is change. It's about redefining things and changing things so that the status quo is eliminated. Digital disruption leads to evolution and growth, and companies using digital disruption can reap the benefits of new opportunities that digital disruption brings.

Digital disruption is not only good for businesses, it is also good for customers. The move towards a more digital and technologically enabled operation and workflow is inevitable, so those who adopt it have seen a remarkable improvement in their operations across the board. The three important aspects why digital disruption matters:

1.Effect on growth:

No one really achieved anything by remaining in their status quo. Change is a phenomenon that never changes, be it human evolution or business. With more and more customers becoming more digitally enabled, and with digital technology constantly increasing its influence and integration into our daily lives, business and service providers should keep up. With digital disruption comes growth.

Lemonade, an insurer that is based on A.I. to calculate insurance premiums. Now, with the help of a few questions, Lemonade technology can accurately calculate the correct insurance premium to charge. With the middleman removed and the other efficiencies offered by A.I. Technology is a factor in the whole process. With all these factors, Lemonade can also significantly reduce the premiums it offers. The A.I. Technology also simplifies what used to be a very complicated process, which is another strong selling point with many of Lemonade's customers.

2.Effect on customers:

Today customers are totally different from those of the past, now they are more informed, more demanding and fully aware of what they really want. Many customers have low brand loyalty and are looking for the company that suits their needs. Brands that are able to predict customer trends and behavior, as well as provide an outstanding customer experience before and after the sale, are seeing massive success. in customer behavior and other trends. That is why companies like Amazon, despite not having a physical store, have had explosive success over the years, which is why we generally see greater customer satisfaction.

3.Effect on the workplace:

Digital disruption has greatly affected the workplace, it provides opportunities for workers to evolve and perform better, now we can see that the workforce and the workplace are much more harmonious and work like a well-oiled machine. With the help of the latest workflow management tools, for example, empower teams and leaders to better use time and resources, making things more efficient. Tools like the ones provided by Runrun.it are a good example of this. Leaders can now step in. to improve perceived weaknesses or give credit for a job well done. And efficient time management means less overtime and a healthier work-life balance.

Impact of digital disruption on this acquisition of flipkart by walmart

For starters, the Walmart-Flipkart deal brings with it much-needed capital investment in the Indian economy that would boost the investment prospects of other players interested in investing in the country. Furthermore, the agreement ensures that the Indian government could look favorably towards allowing multinationals to enter the Indian retail sector, which is a long-pending demand.All companies in the Indian e-commerce sector are suffering losses for many years, as their deep discount business models mean that profits are a distant priority. Furthermore, even the Indian e-commerce sector is based on the Glocal model, in which companies have to adapt to Indian conditions, thus localizing their strategies, although they may have a global global strategy.

In other words, both e-commerce and the retail sector in India rely on purely local last-mile connectivity for their success, which is one of the reasons Walmart takes the route of acquisition rather than direct entry. in the sector. deep discounts where consumers are offered deals with discounts of up to 80% (on the extreme and around 50% on average). This business model works only when players can afford to lose money to profitability. In addition, such profitability is also not assured even in a few years and this is the reason why some experts are puzzled as to why a company would want to continue to make losses for years.

Of course, the main driver of investments in India's e-commerce sector is the promise to scale and reach a critical mass that would allow companies to reach profitability sooner or later. Also, the incidence of cross-subsidies where companies like Amazon and Walmart sell some products at a low price and others at a high price is another reason they like to offer discounts on the former.

Perhaps the most important factor here is the longevity of the players who, in one voice, often insist that they are longer term and this is why they are willing to incur losses now.

Whatever the motivations, all stakeholders should consider the implications discussed so far when studying the Indian e-commerce and retail sectors. In our view, in the coming years, these sectors will witness increased competition from foreign players, either directly or indirectly, and therefore it makes sense for them to strategize accordingly.

Lastly, India's e-commerce sector offers investors the salivating prospect of accessing a huge market estimated at around 500-600 million middle-class consumers. This is the reason why all players, national or foreign, want to get into the pie.

I hope I have served the purpose well.

Thanks.