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BEHAVIOURAL SCIENCES - II Case Study: Understanding Organizational Environment of

Group: M Kartick (0195/48) Meikanda Tamilmani (0210/48) Ameya Mhasalkar (0211/48) Neerav Verma (0235/48) Nitin Lakhara (0244/48) Patil Ashish Eknath (0253/48) Sarvesh Patil (0254/48)

INTRODUCTION The environment of Big Bazaar, in the retail sector, shall be analysed. Indian Retail industry is the largest industry in the country with an employment of around 8% and contributing to over 10% of the countrys GDP. Retail sector in India represents the second fastest growing economy in the world and Big Bazaar leads the organised retail sector. Big Bazaar is also the fastest growing hypermarket chain in the world. It has grown from just 4 stores to a chain of 150 large stores in a span of just 10 years. The Analysis shall be based on the following structure: 1. 2. 3. 4. 5. General Environment : Comprising of Social, Political, Technological, Economic, & Environmental forces Specific Environment : Interaction with Customers, Distributors, Suppliers, Competitors and the Govt. Uncertainities facing the industry and the organization Opportunities and Risks in the Current Environment Strategies adopted by Big Bazaar in response to its Environmental Challenges

GENERAL ENVIRONMENT Factors influencing the general environment of Big Bazaar are as illustrated below: Economic forces: Provides relatively cheaper goods; hence increases customer benefits to the middle income group segment of the population Provides employment in the form of store personnel, cashier and inventory managers etc. Increased revenue for the suppliers; providing bulk supplies to a single location reduces transportation costs Control of prices unlike common unorganised retails where merchandise price inflates to a great extent till it reaches the end user as it is controlled by wholesalers and distributors Technological forces: Use of computerised payment counters speed up the process of billing multiple items Probability of occurrence of error is minimum because of automated systems & minimum human intervention Facility to purchase products through its official webpage Political, ethical and environmental forces: Better tax collection from the retail sector when compared with the unorganised sector- Since every transaction is recorded, it helps in increased income visibility Initiates the power of one campaign to help raise funds for the save the children India fund. Initiates maha annasantarpane program at its stores in south India- a unique initiative to offer meals to visitors and support local social organisations Demographic and cultural forces: Providing readymade food for bachelors enables them to save considerable amount of time used up in cooking Incorporated a new trend of shopping in a mall, with increased variety even for groceries, which was absent in the unorganized retail buying Products segregated according to various age groups attract the specific members and provides for an exciting shopping experience International forces: A joint venture of Walmart with Bharti can pose a serious threat to the operations of Big Bazaar in a city where they both share the retail market

SPECIFIC ENVIRONMENT Specific Environment Parameters: - In case of Big Bazaar, the entities determining the environment are as shown in the diagram below.

Interests of shareholders The future group has leveraged well from the success of the Big Bazaar with shareholders showing positive feedback.



Consumer centric policies Big Bazaar creates value for customers by having Indianness, respect and humility and valuing and nurturing relationship with customers.

Value chain efficiencies Big Bazaar is involved with a wide gamut of wholesale suppliers to distributors, manufacturers and retail partners.

Supply Chain Partners

Regulations in theretail industry Government has yet not allowed FDIs to invest in Indian retail market which protects the interest of domestic players.

Parameters of Big Bazaars Environment & Their Impacts Involved in the Retail Sector, Big Bazaar carries out thousands of transactions with its customers on a daily basis. The retail consumers thus form the most influential parameter with regard to the specific environment.
Along with above parameters, the competition in the industry is another major contributor in determining the organizational environment.

Competitors: - The competition in todays retail industry can be from two different types of players. a) Modern/Organized retail stores e. g. Reliance fresh, Spencers Daily etc & b) Unorganized retailing like locally operated Kirana shops. The retail market, due to lucrative nature of business margins, is attracting lot of new entrants in market, and as a result competition pressure keeps increasing. In order to tackle the competition effectively and create the value for customer, it is necessary that the workforce of the organization is well trained in job and is satisfied about the employee policies of the organization. Big Bazaar is Employee oriented in its decisions.Employee engagement initiative which is called Fun Zone is implemented in all big bazaars [the place in stores where employees take lunch and relax]. They have a well trained staff with good appearance. Staffs are encouraged to think out of the box.
UNCERTAINTIES FACING THE COMPANY Big Bazaar, a giant modern retail industry accounts for almost one third of food and grocery products sales in the country. It offers variety of stuff under single roof increasing customer time and available choices. In order to

maintain the market share there exists steady and abundant supply of resources to compete with plethora of hypermarkets, supermarkets, departmental stores, shopping malls etc. The set of interconnected forces involved affect 3 major things in the environment: Complexity, Dynamism and Richness increasing the Uncertainty. Complexity increases with increase in number of dependents (suppliers) and invariable increase in the variety of products offered. The complexity of increasing number of suppliers is addressed by maintaining a strong supplier relationship in a partnership mode, avoiding the exploitative supplier and also IT enabled back-end operations and supply chain management increases the reliability and efficiency of the business. Big Bazaar offers more than 170000 products; the complexity of offering new products is addressed by massive infusion of information before inception of any new ones. Dynamism is the degree to which forces in the specific and general environment change quickly over time and thus increasing the Uncertainty faced by the organization. Many potential competitors in the market and India being a democratic country consists of a number of separate linguistic communities each of which share a common language and different culture which seems to be very dynamic and unstable. But it is tackled by monitoring the Consumer behavior of those people using very well defined parameters thereby the strategy is kept in place across the service centers resulting in convenience to predict and control the Environment. Richness is the amount of resources available to support an organization domains. While other retailers and marketers spent billions of rupees on market research, Re-engineering and in giving their outlets an international appeal, Big Bazaar experts decided to study Indias history and Indian consumers evolution. The CEO hired experts from backgrounds in sociology, anthropology, psychology, arts and design and asked them to come up with ideas that will result in less Uncertainty with the culturally-rooted Indian consumer favoring the rich environment. OPPORTUNITIES AND RISKS FOR BIG BAZAAR In the current environment, the various opportunities and risks presented to Big Bazaar along with its approach towards addressing them are as illustrated below: Environmental Uncertainties Big Bazaar tries to address the situation of Environmental Uncertainity through holding stock. Being in the retail business, it controls price variation through keeping large quantities of stock and thus maintains an inventory ensuring instant availability of products to the customers. They thus save on inventory carrying costs. Staying within a bounded rationality, it thus gains a competitive advantage while addressing the issue. Risks Big Bazaar faces minimal risks associated with specific assets such as skills, machinery and information. Relying solely on inventory as its business driver, it has positioned itself clear of any prospect of being trapped or blackmailed due to large investment in any specific asset. For mitigating demand risks, it provides services to make it convenient for consumers to buy and use products. These include guarantees, after sales services and complaint dealing. Opportunism Big Bazaar plays a major role as a linkage between manufacturers, wholesalers, suppliers and consumers. Thus it could easily become a victim of inferior supply of goods as a result of opportunism at any level of the supply chain. Their brand positioning is thus a trade-off between affordability and quality of goods. Their mission statement is also a reflection of the same: providing quality at low prices. External Relations Outflow: While delivering products to the end consumers, Big Bazaar neatly repacks the products in small units according to customers convenience - a process called breaking the bulk. Inflow: Similarly, while purchasing of products from the suppliers, Big Bazaar carefully selects an assortment including suitable items of multiple brands, SKUs and price points. Their assortment size is determined by the location, size and image of their stores.

STRATEGIC ALLIANCES USED AS A RESPONSE TOOL Strategic alliances are formed to share resources to develop joint new business opportunities. The groups joint venture partners include Italian insurance major, French retailer ETAM group: US-based stationery products retailers, Staples Inc. and UK-based Lee Cooper and INDIA-based Talwalkars, Blue Foods and Liberty Shoes. Future Groups vision is to, Deliver Everything, Everywhere, Every time to every Indian consumer in the most profitable manner. The group considers as a core value and its corporate credo is- Rewrite rules, Retain values. Future Group moved beyond retail by acquiring stake in Galaxy Entertainment with an eye for exponential growth in the leisure and entertainment business all set for take-off in the country. Future General India Life Insurance Company Limited (FGILICL) was incorporated to establish and conduct the business of life insurance in India, which comprises of whole life insurance, endowment insurance, double benefit and multiple benefits insurance. Conceptualized around a unique positioning of a financial services business, integrated with a retail chain, Future Capital is establishing financial superstores within the Retail stores such as Big Bazaar. Staples Future Office Products Private Limited (SFOPPL) is involved in the business of dealing in all kinds of office supplies, office equipments and products. SFOPPL is a joint venture between the Company and Staples Asia Investment Limited. It aims to make it easy for Indian customers to run their offices by providing over 7000 products covering the entire gamut of technology, stationery, furniture. CONCLUSION Big Bazaar derives its business thrust from the rise of the Indian Consumerism. With a vision statement that essentially captures the Indian Markets needs for quality products at cheap prices, it has positioned itself well ahead of the competition. Its operations are characterised by a dense quantum of interactions with its specific environment. Displacing its market predecessors consisting of retail shops, it has reconfigured the way retail sector has been interacting with the environmental forces and responded well to the newer challenges faced.