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Analysis of External Environment Factors

Discuss about the Analysis Of Transformation Process.

Flipkart Pvt Ltd. is an ecommerce based organization of Indian origin that has its base in Bengaluru. The company was founded by Binny Bansal and Sachin Bansal in the year 2007. The initial business focus of the organization was mainly on the sales of books. The company later expanded its operations in many other fields which includes the sales of the various other products like, fashion accessories, lifestyle based products and consumer electronics as well. The major competition of the company in the international market is Amazon and in the domestic field the rival of Flipkart is Snapdeal. The company is dominant in the Indian market with a share of 39.5% share. The apparel department of the company is the most dominant part of the entire sales of Flipkart in India and rest of the world (Flipkart.com. 2018).

The report will be based on the analysis of the transformation based process that gas started in Flipkart after the company has been acquired by American retail giant Walmart. The company has gone many changes after the process of joining operations has taken place. The operations and based of the company has changed from an internet based company to a retail company.

The analysis of the transformation based process that has taken place in Flipkart can be analysed with the help of external environment in which the company has its operations.

Political factors – The regulations and the rules that dominate the area in which the company operates affects the various areas. The sale related announcement that has been made by the company is also affected by the regulations that are formed by the government. The speed of the internet in the country also affects the successful operations of Flipkart.

Economic factors – The economic viability of the business operations that have been made by Flipkart is important for the purpose of operating in the country in an effective manner (Sen and Sen 2018). The issues are also faced by Flipkart due to the lack of sufficient stock of the products that are to be offered to the customers. The organization has faced issues related to the prices that they offer to the customers. Flipkart has tried to retain the loyal customers with the help of the loans that are offered by associating with the banks and other financial institutions.

Strengths and Weaknesses of Flipkart

Social factors – The company has planned to extend its delivery options to the other areas of the country which include the rural parts as well. The logistics and other necessary funding will be set up so that it is able to provide its products and services to the customers in the rural areas. The organization has taken initiatives to improve the balance between the work life and the personal life of the employees in an effective manner.

Technological factors – The changes that take in the external technologies that are used by the various individuals has affected by work process of Flipkart. The mobile revolution that has taken place in the environment has made many changes in the operations of Flipkart. The sales of the smartphones have increased in a huge manner in the last few years. This has thereby enabled Flipkart to take advantage of the entire situation (Online 2018).

Legal factors – Flipkart has faced many legal issues in the process of its operations in the industry. The main issues have been faced in the process of handling the sellers and the sales of the counterfeit products that can affect the reputation of the company in a negative manner. The ways by which sellers increase the demands for their products can lead to legal issues for the company.

Environmental factors – The company and its operations have not affected the environment as it provides the services and products to the customers with the help of ecommerce platform. The manufacture of products that are offered by the website are mainly based on the various sellers and the partners of the company in the industry (Businesstoday.in. 2018).

Strengths – Flipkart is considered to be the largest e-commerce based organization in India. The founders of the company have enough experience in the field of ecommerce as they are ex-employees Amazon. The organization has also made many acquisitions in the term of its operations in the ecommerce industry from the year 2007. Flipkart has been successful in creating a strong name for its brand in the minds of the consumers. The range of products that are offered to the customers is huge.

Weaknesses – Flipkart does not have an efficient process of distribution which acts as a weakness for the successful operations of the company in the industry. The costs that have been incurred by the company based on the acquisition of various companies has been quite high due to the high competition levels in the industry. The entire power related to profits and loss of the company and the products that are offered by them is in the hands of customers or the buyers of Flipkart (Fortuneindia.com. 2018).

Opportunities and Threats

Opportunities – The company has huge opportunities for the expansion of its business based operations. The product categories of the company can also be expanded for the purpose of creating a customer base in various area. The changes that have taken place in the mentality of the customers can affect the profitability of the company in a positive manner. The supply chain of Flipkart can be optimized for the purpose of providing the appropriate products to the customers.

Threats – The competition that is faced by Flipkart in the market is high from the domestic and the international organizations. The domestic competitor of the company is Snapdeal and the international competitor is the subsidiary Amazon in the country. The regulations that are formed by the government and the changes that occurred in these policies can pose a threat to the operations of Flipkart (Inc.com. 2018).

Power of the suppliers – The suppliers of Flipkart include, the companies which provide the products that are offered to the customers. The products that are sold on the platform include cosmetics and computer accessories as well. The power of the suppliers in this industry is low as there are many companies which provide the products to Flipkart.

Power of the buyers – The power of the buyers in this industry is high as they are able to affect the prices that are decided for different products. The demands and needs of the customers are important for the company and its various products and services (Firstpost. 2018).

Threats of the new entrants – The threats that are related to the entry of new organizations in the online industry is high. The major reason being that the industry has grown quite fast in past few years and has many prospects in the future as well.

Threats of the substitutes – The main substitutes of the products that are offered by Flipkart are the physical stores that offer similar products to the customers. The threats that are posed by the substitutes is however low as the customers are more inclined towards the online transactions as compared to the physical stores.

Rivalry in the industry – The company is facing competition and rivalry in the industry from various organizations. The major rivals of the company including Amazon have been able to provide tough competition to Flipkart. The growth of industry is the main the reason behind the increase of rivalry in the industry (Malhotra and Hinings 2015).

Impact on Leadership and Culture

The transformation process had started in Flipkart after the company was acquired by the American retail giant named Walmart. Flipkart is an organization which has led the ecommerce industry in India. Walmart had decided to invest in the company and purchase 77% stake in the organization. Walmart has invested more than 2 billion dollars in the organization. The acquisition has been considered to be a huge step in the retail and ecommerce industry. Walmart has not been successful in the various ecommerce based activities in the past. However, the decision that was taken by the company to invest in Flipkart is has been quite different from the past operations of Walmart (Gollenia 2016).

The culture that has been followed by Flipkart has been entrepreneurial in nature. However, Walmart has a reputation of imposing the culture and policies on the organizations that have been acquired by them. This has been a major concern for the employees after the entire process has taken place. The Indian ecosystem of start-ups has also been affected in an effective manner by the joining of forces between the largest retailer of the world and the biggest ecommerce platform of India. Flipkart has been provided with better sourcing and supply based facilities so that it is able to compete with the American retail giant named Amazon. The most important change that has taken place after the transformation had started was the exit of one of the co-founders of the company. Sachin Bansal had left the company after the announcement by made by Walmart about acquiring Flipkart (Canterino, Cirella and Shani 2018). The leadership of the organization was now in the hands of Binny Bansal and Kalyan Krishnamurthy. The leaders of Flipkart had joined forces with the employees who were in the leading position in Walmart for creating an effective leadership in the merged operations. The employees who were a part of the operations of Flipkart had continued in the company even after it was acquired by Walmart. The major area where the company had faced challenges was in the building of second tier of the leadership. The changes have been implemented in the different parts of the company are thereby based on the leadership and ways by which Flipkart planned to face the competition (Gollenia 2016).

The transformation based process had started in Flipkart right after the company was acquired by Walmart. The leadership of the company was most important part of the transformation based process. The transformation of the operations has not stopped and it is a continuous process which is still going on. The employees and the operations of the company are still going through changes which are also related to improvements in the different services and the products (Arce and Araujo 2017).

Conclusion

The report can be concluded by stating that the transformation process of an organization is continuous in nature. The comp any that has been taken into consideration for this analysis is Flipkart, which has gone through many changes after it has been acquired by the American retailer Walmart. Flipkart has gone through many changes in the last year and is still experiencing many changes in the different processes.

References

Arce, E. and Araujo, A., 2017, June. Key Factors in an Organizational Culture Transformation Process for Innovation During a Merger. In ISPIM Innovation Symposium (p. 1). The International Society for Professional Innovation Management (ISPIM).

Businesstoday.in. 2018. Walmart buy of Flipkart will change Indian start-up ecosystem. [online] Available at: https://www.businesstoday.in/current/corporate/walmart-buy-of-flipkart-will-change-indian-startup-ecosystem/story/276310.html [Accessed 12 Jun. 2018].

Canterino, F., Cirella, S. and Shani, A.B., 2018. Leading organizational transformation: an action research study. Journal of Managerial Psychology, 33(1), pp.15-28.

Firstpost. 2018. Walmart's looming acquisition of Flipkart will be a game changer for e-commerce in India; merger to boost job creation - Firstpost. [online] Available at: https://www.firstpost.com/business/walmarts-looming-acquisition-of-flipkart-will-be-a-game-changer-for-e-commerce-in-india-merger-to-boost-job-creation-4453375.html [Accessed 12 Jun. 2018].

Flipkart.com. 2018. Online Shopping Site for Mobiles, Fashion, Books, Electronics, Home Appliances and More. [online] Available at: https://www.flipkart.com/ [Accessed 12 Jun. 2018].

Fortuneindia.com. 2018. Employees cautiously optimistic about Flipkart-Walmart deal. [online] Available at: https://www.fortuneindia.com/enterprise/employees-cautiously-optimistic-about-flipkart-walmart-deal/101822 [Accessed 12 Jun. 2018]. Business transformation management methodology. Routledge.

Inc.com. 2018. The Surprising Walmart Acquisition of Flipkart Could Forever Change E-Commerce and Much More. [online] Available at: https://www.inc.com/peter-economy/this-surprising-walmart-acquisition-could-forever-change-e-commerce-much-more.html [Accessed 12 Jun. 2018].

Malhotra, N. and Hinings, C.B., 2015. Unpacking continuity and change as a process of organizational transformation. Long Range Planning, 48(1), pp.1-22.

Online, F. 2018. Will Walmart change Flipkart’s name to ‘Walkart’ after acquisition? Here’s CEO Doug McMillon’s take. [online] The Financial Express. Available at: https://www.financialexpress.com/industry/will-walmart-change-flipkarts-name-to-walkart-after-acquisition-heres-ceo-doug-mcmillons-take/1162195/ [Accessed 12 Jun. 2018].

Sen, S. and Sen, S. 2018. Flipkart after Walmart: Inside the near future of India’s largest e-tailer | FactorDaily. [online] FactorDaily. Available at: https://factordaily.com/flipkart-after-walmart-inside-the-near-future-of-indias-largest-e-tailer/ [Accessed 12 Jun. 2018].

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