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PURPOSE: The purpose of this report is to see how different aspects of an organization namely Design and Structure, Environment, Values and Culture and Technology contribute to its success by taking PRIL as an example. PRIL is a successful organization in the organized retail sector and hence this study can serve to help other organizations in this sector to visualize their drawbacks as compared to PRIL and decide on the future course of action. 2. OVERVIEW: The report has been organized into different sections which describe different aspects of the organization design. Section 3 gives a brief introduction of PRIL; its origin and growth with the help of its business model. Section 3.1 describes the evolution of Pantaloon in terms of its growth phase and learning phase. Section 4 describes different factors behind the success of PRIL. Section 4.1 describes the influence of Organizational Design and Structure on its success; under this section 4.1.1 describes Differentiation vs. Integration, section 4.1.2 discusses Centralization vs. Decentralization, and 4.1.3 describes Organic vs. Mechanistic dimension of the structure. Section 4.2 discusses the influence of Environment on its success. It covers organized retail sector in section 4.2.1, unorganized retail in 4.2.2 and PRILs Strategy in this dynamic environment. Section 4.3 takes up the issues of Values and Culture of an

organization and describes the four core values (described in Section 4.3.1 through 4.3.4) and their effect on its success. Section 4.4 defines the technology adopted and its impact on the success of PRIL. Section 4.4.1 describes Project execution and operations capabilities, section 4.4.2 describe the effect of Strong focus on systems and processes and section 4.4.3 describes its technology in terms Strong distribution and logistics network and supply chain. Section 5 concludes the study and Section 6 gives the references. 3. INTRODUCTION: Pantaloon Retail (India) Limited is Indias leading retailer with a turnover of Rs. 1,073 crore (US$242 million) for the financial year ended June 2005. The company has a retail presence across various segments including food, fashion and footwear, home solutions and consumer electronics, books and music, wellness and beauty, general merchandise, telecom and IT, E-tailing, leisure and entertainment and financial products and services. The company operates multiple retail formats catering to a wide cross-section of the Indian society. In the Lifestyle retailing segment it has Pantaloons (department store), Central (seamless malls), Blue Sky (fashion accessories) and aLL (fashion apparel for plus size individuals). The companys value retailing ventures include Big Bazaar (hypermarket), Food Bazaar (supermarket) and Fashion Station (popular fashion).

Figure 1: Business model of PRIL. Headquartered in Mumbai (Bombay), the company operates through 3.5 million sq ft of retail space and has over 100 stores across 25 cities in the country. Till date, PRIL has secured about 10 million sq ft of retail space that will be operational by end of 2008. PRIL employs over 12,000 people and has a customer base of over 12 crore Indians. Pantaloon Retail (India) Limited (PRIL) was incorporated on October 12, 1987 as Manz Wear Private Limited under the leadership of Mr. Kishore Biyani. The Company was converted into a public limited company on September 20, 1991. On September 25, 1992 the name was changed to Pantaloon Fashions (India) Limited and the same time it went public. It later changed its name to Pantaloon Retail (India) Limited on 7th July 1999. 3.1. Evolution of PRIL: The evolution of PRIL over the years has bee n quite phenomenal. From a humble beginning in 1987, Pantaloon as today evolved as a leading manufacturer-retailer in the country with 21 Pantaloon stores and 30 hypermarkets(Big Bazaar), 44 Food Bazaars, 3 Central Malls, 5 Fashion Station, 4 aLL and 1 MeLa store operational across the country. It has been a remarkable journey for PRIL as it has evolved from a manufacturing to a completely integrated player controlling the entire value chain. Figure 2. Evolution of PRIL

Pantaloon registered a 95.37% increase in the net profit in the last quarter a compared to the same quarter the previous fiscal. It plans to multiply its retail space by 5 times by 2009. According to the annual report 2004-05, it is targeting total revenue of Rs90bn by 2008. Other major objectives include its prioritizing of home solutions segments, as it plans that home solutions segment should contribute almost 20% to its revenues by 2008. It expects more than 8 times jump in turnover by 2009. It also plans an aggregate 70% revenue growth CAGR \over the next 4 years. So as per the financial goals, a strategy of expansion and product diversification is most suited to the needs of the organization. 4. SUCCESS FACTORS: There are a number of reasons for the success of PRIL located under the following factors: 4.1. Organizational Design and Structure: The structure at Pantaloon resembles that of a product team. The organization groups all the functions as per the similarities and dissimilarities between different products (services). The support functions are centralized at the top of the organization so as to enable all the product divisions access these support functions as per the requirements. The support functions are centralized because it is very expensive to create separate support functions for each product division. Each support function is divided into a number of teams, each of which focuses on one particular product division. This serves two purposes at the same

times. Because each team of the support function caters to the need of one and only one product division, it becomes specialized in managing the needs of the specific product group. On the other hand, because the support functions are centralized, knowledge and information sharing becomes relatively easy across all the teams in the support functions. Such skill and resource sharing increases the organizations ability to create value across all the product divisions. F igure 3. Organizational Structure of PRIL.

Organization structure of PRIL is described along different dimensions below: 4.1.1. Differentiation vs. Integration: The level of vertical differentiation in the organization is very less. This flat structure minimizes communication and control problems, and lowers bureaucratic costs. A relatively lower degree of vertical differentiation is however accompanied by a high degree of horizontal differentiation since Pantaloon groups its organizational tasks on the basis of different product divisions. Since Pantaloon has diversified into a large number of different businesses, the level of horizontal differentiation has increased and this has helped it take up new challenges and succeed in them. Pantaloon follows an inverse pyramid structure and as a result decisions are taken to closer to the point of customer action.

Figure 4: Inverse Pyramid Structure at PRIL. 4.1.2. Centralization vs. Decentralization: The structure at Pantaloon is an ideal mix of centralization and decentralization of authority. Minimum number of hierarchy levels and a team culture ensures decentralization of authority and responsibilities among the different product divisions. Because retailing is a business where constant customer interaction is absolutely imperative, it is very important for Pantaloon to delegate some decision making authority to the lower level managers so that there can be last minute adjustments as per the changing consumer needs. The different product divisions, such as food business, restaurant business, communication products, apparels, home solutions, investment advisory companies, etc. have therefore been endowed with a large degree of decentralization. The team culture at Pantaloon also ensures a large degree of decentralization in the sense that much decision making authority is vested in these teams. However the support functions like finance, marketing, supply chain, HR, etc. are more centralized. Since all the product divisions access these support functions, it was very important for Pantaloon to centralize these activities to ensure maximum control and coordination among the different product divisions. 4.1.3. Organic vs. Mechanistic: Taking into consideration the low level of vertical differentiation and decentralization

of authority and responsibility in the different product divisions, the organization is very much organic. Keeping in mind the ever-changing environment in which Pantaloon operates and the fact that customer-oriented approach should always be the main focus, an organic structure is the most ideal one and it has been one of the major factors of its success.

4.2. Fit with the Environment: PRIL is a part of highly dynamic organized retail industry. The retail sector (organized) in India has not grown completely; it is still in nascent stage, though there is considerable pushing & pulling happening between the local kirana stores which constitute about 97% of the market. It faces stiff competition from both domestic as well as international players. It also competition from local kirana stores. 4.2.1. Organized Retail: There are a lot of domestic players in the organized retail sector such as Lifestyle, Shoppers Stop, Spencer, Westside. Also presently there is a restriction on FDI in retail but there is always a threat of International big players like Walmart, Shoprite and Metro etc. 4.2.2. Unorganized Retail: There is a co-existence of both the organized and unorganized sector in the Indian

markets. Eventually there will be some migration from the unorganized sector as the value proposition sharpens and the share of organized retail will grow at a fast pace but at the moment the unorganized sector dominates overall retail. The organized outlets are organizing the front-end markets, but the back end still remains vastly fragmented. The organized retail formats do not see any major problems on the front end of the supply chain but for them the real challenges lie in the back end. 4.2.3. Strategy: Pantaloon has succeeded in the everchanging dynamic sector by adopting the various strategies to adjust with the environment: Core Competency: Though Pantaloon adds value to many levels of the apparel retail business, its core competency is retailing. To succeed in the retailing business and add substantial value to the stakeholders, supply chain is the most integral part. Pantaloon has therefore continuously tried to refine and upgrade its supply chain. Backward integration with the suppliers for better and cheaper inputs is a step in this direction and the overhaul of the IT/Systems division of the organization is yet another step. Pantaloon has stated a completely separate centralized Systems department. All the different product divisions access this function for their respective use. The Systems division has made its first movement toward the integration across the entire supply chain by implementing ERP in all the Pantaloon facilities.

First Mover Advantage: Pantaloon was the first to come out with a concept of a Central Mall. It is a unique concept where customers have the opportunity of choosing from amongst the best brands in apparel, toys, books, music, sports, lifestyle accessories and more. Pantaloon Retail (India) Limited opened a new retail division Communication Products, to offer communication solutions via products and services. This is the first time an Indian retailer is offering consumers bundled communication solutions under one roof. The company through this new division will offer Products like mobile phones, landline instruments, computers, peripherals and Services like mobile airtime, broadband, etc., to its customers. The new division is being represented through independent stores as well as a part of Centrals and Big Bazaars. All the above initiatives have been implemented mainly because of the flexible design, decentralized decision making and an organic structure. These processes have enabled PRIL not only to survive but grow at a stupendous rate. 4.3. Values and Culture: There are four major shared values of Pantaloon which have developed its culture and contributed to its success in big way. 4.3.1. Indian-ness: The core value of company is Indianness. The company has developed Indian model of retailing. Since India is a unique country and the Indian customers

have unique culture and value systems, the company has been targeting family as a single customer rather then each individual. It also offers a range of products of Indian taste, and carries a mix of big retailer partnering with small time shop keeper. Indian-ness has given it an added advantage over its competitors, international as well as domestic. 4.3.2. Introspection: Introspection is the key corporate value. The company has passed through the strategic points of inflection in the short life spun so far and came out well at all the times. The company is a living organization and always looks to itself first before turning to others. The introspection has helped the company to move over times, from smaller format to big & multiple formats of retailing and has enabled them to target all sections of society. 4.3.3. Respect all customers: Pantaloons respects every individual whomsoever it may be and thats why even employees in PRIL are considered as internal customer. Suppliers and vendors are always treated as partners in the progress of the company. PRIL believes in relationships to deliver value to its customers rather than concentrating on mere business transactions 4.3.4. Building long-term relationships: To further enhance and build long-term-relationships with its customers, Pantaloons offers membership of the "Privilege Club" to its select customers.

4.4. Technology: 4.4.1. Project execution and operations capabilities: They have created a project team which enables them to identify and roll out properties quickly and seamlessly. This has allowed them to grow from 5,61,000 Sq. ft. in 2003 to 21,07,608 Sq. ft. Operations team facilitates new stores to be opened quickly and integrated into the system and provides the customers with the similar experience across all their stores, and also enables the stores to quickly scale up to meet growing customer requirements. 4.4.2. Strong focus on systems and processes: PRIL focuses on systems and processes. They are in the process of revamping their current IT setup to implement more advanced applications. Automated core transaction systems have been developed in house and have evolved with the business. Existing business applications handle all store operations such as billing, customer loyalty programmes, store inventory, management. Back office processes are also computerized which support procurement, supply chain logistics, ware house management and inventory control. All the locations are connected through company-wide VPN (Virtual Private Network). Business planning happens through a high end planning tool called Cognos Planning. Oracle financials form the backbone of accounting functions and gives online real-time access to the Companys overall financial position at any given point in time. This has helped them embark on their growth strategy and enhanced reach to customers and helped provide

customers a consistent brand experience across all stores. 4.4.3. Strong distribution and logistics network and supply chain: A strong distribution and logistics network, with 13 Distribution Centers covering 2,60,000 Sq. ft, handling over 1,00,000 SKUs, and working 24 hours a day and 7 days a week is in place. The distribution and logistics set up is networked and are on-line allowing them to deliver merchandise to the store within 24 hours of receipt / generation of auto replenishment order, which has helped to optimize in- store availability of merchandise. The above initiatives have helped them in improving the efficiencies of their supply chain, which is critical for any retailer.

5. CONCLUSION: Thus looking at different aspects of organizational design, we have seen different factors of success of PRIL. The entire organized sector has been growing at a CAGR of 25% and this growth is expected to persist in future, taking the share of organized retail to 10% levels by 2010. Pantaloon has the basic infrastructure and logistics in place to make use of this tremendous opportunity. Given its enormous potential in the organized retail, "Growth through expansion" is the logical expansion route and that is exactly what they are following. The experience and expertise gained in recent years should help PRIL manage their extensive expansion plans. The initial successes have made funding for expansion easier. By keeping the organizational design in consideration and adapting to the

dynamic environment PRIL is expected to elevate itself far higher than its competitors in terms of retail space as well as revenues in the near future.

6. REFERENCES: http://www.pantaloon.com/html/annualreport04_05.pdf http://www.pantaloon.com/html/fin_result_31march2005. pdf http://www.sebi.gov.in/dp/pantaloon.pdf http://www.pantaloon.com/html/aboutus_new.html http://www.3isite.com/articles/pantaloon.html http://www.retailasiaonline.com/magazine/archive/2005/ mar2005/story01.html http://www.myiris.com/shares/company/financial.php?ic ode=PANTEXIN#ratio