Directions(1-5): Read the passage and answer the questions that follow:
Business news does not repeat itself but it sometimes rhymes. In 2007 Walmart, America’s biggest grocer, crowed that it would crack the coveted Indian market by being the first global retailer to set up shop there, pipping envious rivals in the process. On May 9th it announced much the same thing: its time in India has come, this time by virtue of paying $16bn for a majority stake in Flipkart, India’s largest ecommerce outfit, which had also been coveted by its vast online rival, Amazon. The sense of déjà vu owes to the fact that its original foray proved a disappointment. Walmart’s hopes of somehow circumventing rules to protect local shopkeepers, which have long prevented most foreign retailers from opening stores, have been repeatedly dashed. A decade on it has a meagre 21 wholesale stores in India, generating just 0.1% of its $500bn in global revenues and a small loss to boot. Somehow that has not dissuaded the beast of Bentonville from undertaking the biggest foreign acquisition in Indian history.
The Indian e-commerce market is as different from America’s brick-and-mortar retail landscape as Walmart’s Arkansas home is from Bangalore. Walmart probably has too many stores in its mature home market. Flipkart operates online and in quasi-virgin commercial territory: 95% of Americans shop at Walmart at least once a year, but only 5-10% of Indians have ever bought anything online. The deal is a departure in other ways, too. Walmart has already swooped on companies it thinks will help it grow its ecommerce presence. In 2016 it paid out $3bn for Jet.com, a putative rival to Amazon in America; it has also bagged Bonobos, a purveyor of tailored trousers. But Flipkart, which was founded in 2007 by two former Amazon employees, is in a different league in terms of price tag.
Walmart will own around 77% of the company, which is valued at over $20bn in total. Even for Walmart, that is a lot of money: $20bn is roughly the cash it generates every year net of capital expenditure, say, or 8% of its market capitalisation. Connoisseurs of the Indian tech scene have raised eyebrows at the price tag, given that Flipkart raised money at a valuation of under $12bn just a year ago. SoftBank, a Japanese telecoms and internet giant which became its biggest shareholder after investing $2.5bn just nine months ago, stands to walk away with $4bn. Walmart’s new acquisition will not produce quick returns. Analysts reckon Flipkart loses money on each shipment. Margins are unlikely to improve soon given Amazon’s incursion into the market (having committed $5bn to India, it probably ranks a close second to Flipkart, which is thought to account for just under half of India’s online sales). Paytm Mall, a newish rival backed by Alibaba of China, is also ambitious.
1. How would Walmart’s business in America be different from its Indian venture?
I. The business is America is mostly brick and mortar while it is online in nature in India.
II. Walmart owns about 88% of the market share in America but hardly any in the Indian market.
III. The market is vastly under penetrated in India.
Only IIOnly I and IIOnly II and IIIOnly I and IIIAll of the aboveOption D
Refer to: ‘The Indian e-commerce market is as different from America’s brick-and-mortar retail landscape as Walmart’s Arkansas home is from Bangalore. Walmart probably has too many stores in its mature home market. Flipkart operates online and in quasi-virgin commercial territory: 95% of Americans shop at Walmart at least once a year, but only 5-10% of Indians have ever bought anything online.’
- Which of the following is/are true about Walmart’s performance in India before it bought stake in Flipkart?
I. Its revenues from India form a very minuscule proportion of its total revenues.
II. It has been successful in establishing a small number of retail and wholesale stores.
III. Its brick and mortar business model was running in losses from the past 3 years in India.Only IOnly I and IIOnly II and IIIOnly IINone of the aboveOption A
Refer to: ‘A decade on it has a meagre 21 wholesale stores in India, generating just 0.1% of its $500bn in global revenues and a small loss to boot. Somehow that has not dissuaded the beast of Bentonville from undertaking the biggest foreign acquisition in Indian history.’
- What does the line- ‘Business news does not repeat itself but it sometimes rhymes’ refer to?
It refers to Walmart beating rivals in the e-commerce space.It refers to Walmart entering India via e-commerce to avoid getting caught up in the huge number of regulations India has imposed on retailers.It refers to Walmart’s entry in India via a majority stake buyout in Flipkart in 2018 after being unsuccessful in 2007.It refers to Walmart being the first global retailer to set up shop in India.None of the aboveOption C
This line refers to the fact that Walmart had plans to enter the Indian retail space n 2007 which did not see light of the day. However, it has fulfilled its ambition of foraying into India’s e-commerce space via a majority stake buyout of Flipkart in 2018.
- Which of the following is/are true as per the passage?
I. Softbank is the largest shareholder of Flipkart.
II. India’s e-commerce market as a whole is worth about $15bn only.
III. Indian regulations dictate that e-commerce sites must sell stuff mainly from third-parties rather than from their own inventory.Only IIOnly IOnly I and IIIOnly II and IIIAll of the aboveOption B
‘SoftBank, a Japanese telecoms and internet giant which became its biggest shareholder after investing $2.5bn just nine months ago, stands to walk away with $4bn.’
- As per your understanding of the passage, which of the following shows that the decision by Walmart to enter Indian e-commerce may not be as lucrative as it appears to be?
I. Analysts reckon Flipkart loses money on each shipment and at one point it was thought to guzzle $2m a day subsidising shipping and using discounts to lure buyers.
II. Venture capitalists in India complain about the lack of exits from dozens of investments in the Indian e-commerce industry.
III. The entire sector was flat in 2016 and grew at perhaps only 10% last year.Only IIOnly I and IIOnly I and IIIOnly II and IIIAll of the aboveOption E
- Directions(6-10): Some words have been given below along with a statement where they have been used in a certain context. You have to find the word from the options which is the most opposite to the given context and mark that as your answer.
INADVERTENT: The company argued the breach was inadvertent and it was unaware of the court order when the automatically generated email went out.UnintendedDeliberateUnpremeditatedUnwittingAll are incorrectOption B
Inadvertent: not resulting from or achieved through deliberate planning.
‘Deliberate’ means ‘on purpose’
- ANTAGONIZE: Canada has decided to not antagonize India in spite of its dismal human rights record.
PlacateEstrangeHostileProvokeAll are incorrectOption A
Antagonize: cause (someone) to become hostile.
Placate means to calm/pacify/soothe something/someone. This is the most opposite in meaning. The rest are synonyms of antagonize.
- FORTHCOMING: The minister asked its coalition partner to treat regional parties well before striking an alliance for the forthcoming Lok Sabha elections.
ImminentComingUnavailableCandidAll are incorrectOption C
Forthcoming: about to happen or appear/ willing to divulge information/candid.
- HAPLESS : Hapless farmers are committing suicide after government gave them paltry compensation for acquiring acres of land for a solar power plant.
UnluckyDigressExploitedFortunateAll are incorrectOption D
Hapless means unfortunate.
- PECULIAR: People go trekking and wander in the adjacent forest witnessing some of the peculiar flora and fauna of the Himalayas.
StrangeUncannyNormalDubiousAll are incorrectOption C
Peculiar: different to what is normal or expected; strange.