Organizational structure design In 2007, Pantaloon Retail has made major changes in its organizational structure, giving more

impetus on the verticals and zones. It has created five verticals retail, incubation and innovation, products, JV and partnerships and zonal strategy. Due to increasing complexity and increase in its size over the period of last 10 years, Pantaloon is shifting from Functional organizational structure to divisional structure.

Store Manager

Dept Mgr

Mkt. Mgr

HR Mgr

Asst. Store Mgr

CSD

Visual Merchandising

Asst Dept Mgr

Cashier

Info

Administration

Asst. D M

Team Leader

Security

Maintenance

House Keeping

With the functional structure in place, the coordination among departments was lacking and new structure was to build and promote scenario planning, design thinking and innovation. With this in mind, they moved towards a system of divisional structure to promote decentralization and geographical changes coupled with empowerment of product line managers.

Technology Pantaloons ERP in retail

1. More than eight years after it forayed into the retail business, Pantaloon Retail decided to implement SAP to keep itself competitive in the rapidly growing Indian retail market. In-store operations have never been as important to retailers
as they are now. Successful retailers are those who know that the battle for customers is only won at the frontline, which in the case of a retail chain is at its stores. Pantaloon was regularly opening stores in the metros and there was an

urgent need for a reliable enterprise wide application to help run its business

effectively. The basic need was to have a robust transaction management system and an enterprise wide platform to run the operations, says Rakesh Biyani, Director, Pantaloon. The company was looking for a solution that would bring all of its businesses and processes together. After a comprehensive evaluation of different options and software companies, the management at Pantaloon decided to go in for SAP. 2. 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. 3. 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. 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.

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. 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. Formalization: There is high level of formalization across the organization with policies in the written format. The structure of communication is written across the headquarters and stores and within the stores the communication is verbal with regular meetings.

Objectives of Study The study aims at understanding Pantaloons strategic purpose, organizational goals and operational goals. Furthermore, it is aimed at relating Pantaloon to the theoretical organization designs and contingencies like organizational culture, core technology and environment. The analysis of organizational culture would detail the Human Resources Department and its policies. The study would also focus on identification of symptoms of structural deficiency like low profitability, and analysis of the aforementioned challenges. The other aspects covered during the study would also include the ecosystem in which Pantaloon operates and the inter-organizational relationships. 1. Study the organizational structure and changes in the organizational structure with increasing size and culture. 2. Diagnose the problems of decreasing profit margins for the company. 3. Study the organizational culture, impact of technology and size of the company. 4. Changes required in the organization due to acquisition by Aditya Birla Nuvo. 5. Impact of changing environment on the organized retail industry and ways to counter this. Scope of the Study The scope of the analysis on pantaloons is categorized into following: 1. Rapid increase in manpower, both employees and unorganized labor, has been posing tremendous pressure to respond quickly and decisively to environmental changes.

2. Intense competition in the form of other retail chains and Ecommerce is putting pressure on the bottom-line and requiring firms to resort to cost cutting measures. 3. Shifting consumer expectations has resulted in extremely dynamic environment for Pantaloon. Also employee turnover has been a worry especially with increased opportunities and increasing wages.