Pantaloon - Pril

1. 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 PRIL's 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 India's 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 company's 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 organization's ability to create value across all the product divisions.

Figure 3. Organizational Structure of PRIL.

Organization structure of PRIL is described along