Walmart and Flipkart Deal: Impact on Indian Economy

Add Review

close
MBA ADMISSION ALERT! LAST DATES FOR TOP CAT, XAT COLLEGES
Welingkar Mumbai & Bengaluru Admission 2024 Open   | Apply Now
S P Jain Global GMBA & MGB Admission Open   | Apply Now
JAGSoM Bangalore (Avg. Salary Rs. 13.3 LPA) Open   | Apply Now
BIMTECH Greater Noida (Avg. Salary Rs. 11.24 LPA) Open   | Apply Now
IFMR GSB Krea University (Avg. Salary Rs. 13.5 LPA) Open   | Apply Now
Woxsen University Hyderabad MBA Admission 2024 Open   | Apply Now
SDA Bocconi Asia Center (Avg. Salary Rs 14.4 LPA) Open   | Apply Now
Jaipuria Noida, Lucknow, Indore and Jaipur Open   | Apply Now
Sri Balaji University Pune MBA Admission Open   | Apply Now
NDIM New Delhi Admission 2024 Open   | Apply Now

Register now for latest MBA Exam & Admissions Updates

Recently, Walmart an international e-commerce giant has struck a deal to acquire  Flipkart Pvt Ltd,  an Indian e-commerce company based in Bengaluru. The acquisition has become one of the major topics of Group Discussion (GD) round in B-schools. To help the participants in GD round, MBAUniverse.com has prepared and shares the key facts about the acquisition, pros and cons on how the deal will impact Indian economy and key tips how to improve your chances in GD round. 

Alert! MBA Admissions 2024 Closing for Top CAT, XAT Colleges | Apply Now 
IFMR GSB Krea University | Closing Soon | Apply Now BIMTECH Greater Noida|Last Date: Feb 29 |Apply Now
Welingkar Mumbai & Bengaluru | Closing Soon | Apply Now Jaipuria Noida, Lucknow | Closing Soon | Apply Now
S P Jain Global Mumbai | Closing Soon | | Apply Now JAGSoM Bangalore | Closing Soon | Apply Now
SDA Bocconi Asia Center | Closing Soon | Apply Now VBS Mumbai | Closing Soon | Apply Now
Woxsen University | Last Date: March 02 | Apply Now       Jaipuria Noida, Lucknow | Closing Soon | Apply Now
SOIL Gurgaon | Closing Soon | Apply Now Mahindra University HYD | Closing Soon | Apply Now
IBA Bangalore | Closing Soon | Apply Now JIMS Rohini Delhi | Closing Soon | Apply Now

Key Facts

  • Walmart, the largest e-commerce giant acquired a controlling stake of 77% in Flipkart ( India’s largest e-commerce company by market share) by investing $16 Billion.
  • With the deal India will now have Walmart, Amazon and Paytm Mall as the key players to compete in the Indian e-commerce market
  • The deal will help Flipkart leverage Walmart’s omni-channel retail expertise and general supply chain knowledge. Walmart aims to extend their B2B sales across India through this acquisition. 
  • Walmart has a strong global physical presence in retail space but lacks in e-commerce. This deal can spur their online presence in Indian markets.
  • Both Flipkart and Walmart shall maintain separate brands and operating structures.  

Why did Walmart acquire Flipkart?

Positive Impact of Acquisition on Indian Economy: Pros

  • Low prices, more variety: With the e-commerce giants competing for the top spot, product differentiation and localization will bring more variety and create a diverse product basket at low prices, this shall benefit the Indian consumers.
  • R&D: For greater market penetration across the country, efficiency is the key which comes with more R&D. Walmart is known for its culture of innovation and service. This can help in scaling up Walmart’s business scale in India which can generate more revenue and create technological spillovers and learning effect for domestic firms as well. The improved sophisticated nature of the products will create external demand for Indian goods.
  • Collateral Benefits: As the world’s largest retail giant pours funds, it will lead to more such investments in e-commerce. The Indian e-commerce market space was drying up as funding ebbed following liquidity issues due to Demonetization and GST bottlenecks. Walmart’s entry will usher fresh funds and rejuvenate e-commerce ecosystem as more foreign firms and venture capitalists enter India .
  • With e-commerce giants revamping their business models, Indian e-commerce market is expected to see broad based growth with better productivity.
  • Economic Growth: Walmart will expand across their verticals which will boost output growth and increase employment opportunities.  With positive business sentiments, it will be an impetus to economic growth and capitalism. The deal will be subject to tax in India so revenue gains shall add to domestic revenue receipts
  • Efficient Supply Chain: Expansion of e-commerce requires efficient supply chain and logistics which require infrastructural development. This will give a fillip to Indian agriculture and infrastructure and benefit farmers as they would be able to cater to more demand as Walmart shares its extensive experience in retailing, logistics and inventory and supply chain management. This can especially help the perishable goods industry which is Walmart’s forte.
  • JOB CREATION:  With more investment flowing in Indian economy especially in retail space, capacity utilization shall improve . Output and productivity growth can create new employment opportunities for both skilled and unskilled labor .
  • ESOPS( Employee stock options): Many existing employees will make windfall gains through this deal from their stock options. This will incentivize the entry of more workers in e-commerce who had earlier fled the sector due to the downturn in the sector and can also absorb workers from old brick-and-mortar and traditional industries which can help in formalization of more of Indian labor force.
  • PREMJI INVEST is expected to gain up to 4 times from this deal as its share in Myntra (bought by Flipkart in 2014) is also being acquired by Walmart. The gains are expected to be more than $130 million on the $25 million investment. This will lead to inflow of more funds pouring in Indian economy as gains attract more investors from India and abroad.
  • Mom and Pop stores:  Walmart is looking to extend its supply chain arm through partnerships with around 60 lakhs kiranas. This can increase the market presence of small stores. 
    BBA Admissions 2024 Open | Apply Now
    TAPMI Bengaluru | IPM/BBA(Hons.) | Apply Now  Sri Balaji University Pune BBA  | Apply Now
    IFMR GSB KREA University BBA | Apply Now NSB Bangalore BBA Admission | Apply Now

Deal Against the Interests of Indian Economy: Cons

  • Brick and Mortar Stores may shut down: Walmart is known for scrapping small businesses which are selling at ultra low prices through Flipkart. Walmart may bring in its own labels with hyper-competitive prices and replace the domestic MSMEs which can be a threat to brick and mortar stores as they fear shut down due to competitive pressures.
  • Small Players (Mom and Pop stores) will be hurt by this as market spaces shrink due to cut throat competition which force small firms to exit. In an attempt to survive in the market, firms practice excessive price cutting at the cost of viability and profitability which leads to inefficiency.
  • Threat of Pan India Protests:Tamil Nadu Vanigar Sangankalin Peramaippu federation of traders has already warned the government of pan India protests. Many more trade unions may call for such protests which can hurt our economy, create social chaos and cause infrastructural damages.  
  • Backdoor entry for Walmart: FDI in India allows 100% FDI in single brand retail. Walmart is a multi brand retail chain where 100% FDI is not allowed, so it focused only on cash and carry business.  Flipkart has already circumvented such restrictions in direct selling which will be used by Walmart.
  • Big Data Mining: Large data of Indian shoppers will be shared with the US retail giant which may give large controls to a foreign firm can use it to control our domestic value chain in consumer goods space and buying patterns. Real time data analysis can help in identifying the consumers & their needs better than domestic players. Therefore, there is a need to keep a system of checks and balances to avoid any instance of data breach of Indian customers.

Tips to improve your participation in GD round
This topic in GD round is one of the hot probable topics and has been carefully chosen and solved with the sole aim to help you succeed in GD round. If you follow the few key tips, you can improve your chances to get through the GD round

  1. If you are clear and know the topic well, it is good to be the first to start the Group Discussion
  2. If you are not well versed with the topic and fee a bit confused on it, try to gather information from first 1-2 speakers and then place your view point.
  3. Use the quote and data; if you are sure of the source else leave it. You may encounter volley of questions on the economic statistics, trade data or historical facts from your fellow participants. Unless very sure, don’t use it.
  4. Make multiple entries using the opportunity to speak. Take clue from your predecessor and turn it to your benefit. 
    Latest GD Topics: Read 200+ Group Discussion Topics 2024 for MBA Admissions  
    India Vs Maldives: How Lakshadweep Can Become A Major Tourist Destination
    One Nation One Poll’: Benefits are More for India
    Viksit Bharat@2047: A Timely Program for India's Transformation
    The Deepfake Dilemma: Unravelling the World of AI-Generated Content
    Narayana Murthy's Call for a 70-Hour Workweek: A Debate on Pros and Cons 
    Peer Pressure and Family Pressure - Can it make or break your future?
    Aim for the Moon, if you miss, you may hit a Star
    Foreign Universities in India: Will it raise academic standards and benefit Indian students, parents?
    World War 3: Will Russia Ukraine Conflict result in Third World War?
    Union Budget 2023-24: Expectations & Key Highlights
    Digital Public Goods (DPG): India’s approach and opportunities for the World
    Tech Layoffs: Top Tech Layoffs At Big Tech Companies In 2022
    India as the world’s 5th largest economy: Set to Become 4th by 2022
    Indian Digital Rupee: A landmark financial initiative?
    Moonlighting in India - What, Why and Should of this HR nightmare
    5G Telecom Services in India – Benefits and Impact
    Buy Now Pay Later (BNPL): A convenience or a trap
    National Logistics Policy: Will it Reduce Costs & Improve Competitiveness of India
    Agnipath: Will it Prove a Military Transformation Scheme?
    Union Budget 2022: Key Highlights; will it propel post pandemic Economic Growth?
    Crypto Currency: A bright future or just a fad
    Privatization of Public Sector in India: A right step or selling family silver?
    Social Media: A boon or a bane for society and individuals
    E-Learning: A substitute for Classroom Learning?
    Farm Laws Repealed: PM MODI withdraws the three farm laws
    Central Bank Digital Currency (CBDC): Impact on Indian Financial System & Cryptocurrency