2015

ORGANIZATION
THEORY
AT
FUTURE RETAIL
LTD

GROUP 8
1

15/3/2015

Acknowledgement
A Project usually falls short of its expectation unless guided by the right person at the right time. Success of a
project
is an outcome of sincere efforts, channeled in the right direction, efficient supervision and the most
valuable professional guidance.
This project would not have been completed without the direct and indirect help and guidance of such luminaries.
They provide me with the necessary recourses and atmosphere conductive for healthy learning and training.
At the outset I would like to take this opportunity to gratefully acknowledge the very kind and patient guidance I
have received from my project guide Prof Rajesh Without his critical evaluation and suggestion at every stage of
the Project this report could not have reached its present form.

TABLE OF CONTENTS

Purpose of the project3

Introduction of the organisation.4

Form / Design of the organisation..6

Contextual factors..9

Structural configuration.12

Conclusion.15

PURPOSE
To understand the dimension of organizational structure, organizational strategy, contextual factors such as
environment, technology, size and structural configuration of future group in the special context of retail.

INTRODUCTION ABOUT THE ORGANISATION

Future group is an Indian private conglomerate, headquartered in Mumbai and it is founded by Kishore Biyani
(MD

& CEO) .Future Groups businesses focus on developing and operating modern retail, brands and

distribution networks for the consumption sector in India. Built over more than two decades, the groups flagship
companies

focus on three distinct businesses

Hypermarkets business operated by Future Retail Limited,
An integrated lifestyle fashion business operated by Future Lifestyle Fashion Limited and
An FMCG and food distribution business operated by the Future Consumer Enterprise Limited.

Retail is the core business activity of future group, but groups subsidiaries are present in consumer,
insurance, brand development, real estate development, retail media and logistics. It is a corporate group and
nearly
all of its businesses are managed through its various operating companies based on the target
sectors.Net income of company is 960.18 crore (US$150 million) as of March 2013.

Future Group's operating companies sorted by targeted market:Retail

Future Retail Ltd
Future Lifestyle Fashion Ltd
Future Consumer Enterprise Limited

Financial Services
Future Capital Holdings
Future Generali
Future Ventures

(for internal financial services)

Other Services
Future Innoversity
Future Supply Chains
Future Brands
Future Learning

Future Group retail services sorted by operating companies:Future Retail Ltd

Big Bazaar
Food Bazaar
Fashion @ Big Bazaar
HomeTown
E Zone
Foodhall
FutureBazaar.com (e-retailing)

Future Lifestyle Fashion Ltd

Central
Brand Factory
Planet Sports

Future Consumer Enterprise Limited

KB's FairPrice
Aadhaar
Big Apple

Products brands under Future Group in India:7

Fashion and Lifestyle

Indigo Nation
Scullers
John Millers
Lombard
All
Rig
Urban Yoga
Nothing Fits like Jealous
Bare
Urbana
Holii
Converse
Spalding
Manchester United
UMM

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FORM / DESIGN OF THE ORGANISATION

Mintberg argues that there are five basic parts to any organization.

1. Operating core employees who perform the basic work related to the production of
products and services.
2. Strategic apex Top level managers, who are charged with the overall responsibility for
the organization.
3. The middle line Managers who stand in a direct line relationship between the strategic
apex and the operating core.
4. The techno structure - The staff analysts who design the systems by which work
processes and outputs are standardized in the organization.
5. The support staff - The specialists who provide support to the organization outside of its
operating workflow.

Five Organizational Structures

Simple Structure
Machine Bureaucracy
Professional Bureaucracy
Divisionalized Form
Adhocracy

Simple Structure

Strategic Apex, direct supervision, vertical and horizontal centralization

simple and dynamic, sometimes hostile
Entrepreneurial firm generally follow simple structure.

Machine Bureaucracy

Techno structure, standardization of work process, limited horizontal decentralization

simple and stable
Mass-production firms, service firms with simple, repetitive works

Professional Bureaucracy

Operating core, standardization of skills, vertical and horizontal decentralization

Complex and stable.
School systems, social-work agencies, accounting firms

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Divisionalized Form

Middle line, limited vertical decentralization, standardization of outputs

Relatively simple and stable; market diversity
Large corporations, government

After analyzing the structure of FUTURE GROUP, we can say that it has a DIVISIONAL
STRUCTURE. In future group, there are several divisions like retail, financial services,
entertainment, real estate and media and within these divisions; there is also sub-division like in
retail Future Retail Ltd,
Future Lifestyle Fashion Ltd and Future Consumer Enterprise Limited. And each major division
is headed by a president or vice president. And the power lies in middle management. For e.g.
retail divisions president or vice president has full authority to take decision for retail division
and they are also responsible for performance. Future group can be represented as a set of little
companies. And each division can be organized into functional groups, with high division of
labour, high formalization and centralized authority in the division managers.

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CONTEXTUAL FACTORS
ORGANIZATIONAL SIZE
Organizational Size generally measured in terms of number of employs. There is no clear cut
criteria dividing organization between big and small criteria but there is a common consensus
that the organization which has more than 2000 employee is considered as big organization.

Size is directly proportional to complexity.

Size is directly proportional of formalization.
Size is inversely proportional of centralization.

Number of employees in future group is approx 35000 it means that it is a giant organization. So
its organizational structure is highly complex, highly formalized, highly decentralized.

HIGHER COMPLEXITY: As a company is expanding its product variety or moving into

new markets, managers are likely to add organizational complexity. For example, they may try
both to maximize scale and to stay close to the customer. Pursuing both these objectives often
leads to complex matrix structures, duplicated costs at different levels, and a lack of clear
accountabilities. Each decision to add an organizational layer may make sense, but few
companies in good times assess the overall impact of these decisions on organizational
complexity.
In a downturn, however, the performance burden of future group which is an overly complex
organization becomes a major disadvantage. We have found three specific areas that provide a
quick payoff in terms of nimbleness and the ability to focus.
1. They should increase span and remove layers: necessary hierarchy contributes to a
number of ills, including excessive head count, inflexibility, slower decisions, and a lack
of accountability. "De-layering" can help address all these issues. Companies typically
begin by determining the average span of control (the number of employees assigned to
any one manager) and the number of layers between the CEO and front-line employees
(or between the head of a function and the lowest-level person in the group). They then
compare those figures to the competition.
2. Eliminate decisions complexity: Decision paralysis is another pitfall of complex
organizations. We'll address this point in greater detail in a subsequent installment on
strengthening the organization in a downturn. In brief, however, many companies suffer
from unclear decision roles and processes. This is bad in any economic climate, but can
be particularly damaging in a downturn. A tool we call RAPIDfor Recommend, Agree,
Perform, Input and Decidecan help cut through the mess.

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HIGHLY FORMALIZED: To cater to such a high complex structure, it is very important

that the organization should be highly formalized. As company is growing larger, a certain
amount of formalization is inevitable. Employees require some direction in their job
responsibilities and in the procedures required for consistency within the organization's
production schema. When organizing, however, managers should be aware of the costs of
excessive formalization, which may include stifling employee creativity and innovation as well
as slowing the organization's responsiveness to critical issues and problems.

DECENTRALIZATION: These rules and regulation allow top management to delegate

decision making while at the same time ensure that the decision are made in accordance with
desire of top management. But research is mixed in demonstrating that size leads to
decentralization .so future group is larger size organization having highly formalized and highly
complex but decentralized.

TECHNOLOGY
Technology refers to the information, equipment, techniques and process required to transform
inputs into outputs in the organization. There are four type of technology in any organization
based on problem analyzability and task variability.
TASK VARIABILITY

C
E
N
T
R
A
L
I
S
A
T
I
O
N

P
R
O
B
L
E
M
A
N
A
Z
I
A
B
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L
I
T
Y

CRAFT

NON ROUTINE

(Training and meetings)

(Group)

ROUTINE

ENGINEERING

(Planning and rigid rules)

(Reports meetings)

FORMALISATION

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If we evaluate future group in the context of technology then we can say that there is CRAFT
technology in future group because the core business of future group is retailing and retailing has
very less task variability because employees perform same task from day to day they do
repetitive activities such as ordering the stock, receiving the stock, arranging the stock on
display, billing etc so task is less variable and but problem analyzability is very less because
problem analyzability means to what extent is there a clearly known way to do the major types of
work you normally encounter? To what extent is there an understandable sequence of steps that
can be followed in doing your work? So in retailing there is problems which are not easy to
analyze for example how much to order it is very difficult to analyze it depends upon market
demand fluctuations , when you receive your order it is not in your hand it depends upon
supplier, transportation and many other things. So problem is not easily analyzable so we can say
that Future group follows CRAFT TECHNOLOGY.

ENVIRONMENT
Everything outside organizational boundaries is environment.
Environment has two types.
1. General the environmental factors that may have an impact on the organization but their
relevance is not overtly clear.
2. Specific the environmental factors that is directly relevant to the organization in
achieving its goals. Ex: customers, suppliers, government, competitors.
Environment and structure
*Environmental uncertainty is directly proportional to complexity.
*The organization working in stable environment has highly formalized similarly the
organization working in dynamic environment is low formalized.
*The organization working in simple environment is highly centralized and the organization
working in complex environment is low centralized that is decentralized.
If we evaluate future group in the context of environment then we can say that future group has
mainly in retail business and in retail sector lot of environmental uncertainty such as market
demand and supply of goods, consumer taste and preferences all are changing very frequently.
So we can say that future group has complex organizational structure.
Also future group is working in stable and complex environment because the components of
specific environment such as customers, suppliers, competitors are almost stable but complex.
Because it may possible that future group ordering goods from the supplier each time but it is not
possible that they supply goods each time in a fix period of time the quality of goods also may
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vary from time to time so it is stable and complex environment. So according to environment
perspective too future group has high formalized and centralized organization.
Future group is MECHANISTIC STRUCTURE.

STRUCTURL CONFIGURATION
COMPLEXITY
Complexity refers the degree of differentiation that exists within an organization. Its types:
Horizontal Differentiation It considers the degree of horizontal separation between units.
Specialization (division of labour) and departmentation is the best example of horizontal
differentiation.
Vertical Differentiation Vertical differentiation refers to the depth in the organization
structure. It depends upon span of control.

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Spatial Differentiation This differentiation arises due to working in different locations. Future
group is generally working in India but retail sector is very diverse sector it depends upon
culture, demography and income level of people so state to state there is differentiation arises in
retail business.

FORMALIZATION
Formalization refers to the degree to which jobs within the organization are standardized.
Future group is highly formalized organization here every employ follow the decision and
working direction of their superior and it is also theoretically right because where there is more
complexity there is greater need of formalization.

CENTRALIZATION
Centralization refers to the degree to which decision making is concentrated at a single point in
the organization. Future group has decentralized culture for this purpose they create three
separate division of group.
Future Retail Ltd
Future Lifestyle Fashion Ltd
Future Consumer Enterprise Limited

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Conclusion
After viewing future group in the entire context we can say that future group is highly complex,
highly formalized, decentralized organization that is working under simple and stable
environment and follow DIVISIONAL STRUCTURE.

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