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ECONOMIC

S
PROJECT
WORK

Faculty:- Submitted By:-


Mrs.Arpita Sharma Akshay
Agarwal(0713466)

R
omit Bhatia (07103472)

S
hashank Gupta(07103473)

Is
han Rastogi(07103476)

S
aurabh Aswani(07103480)

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CONTENTS :

S.No Topics Covered Page.No

1) Introduction about the BIG BAZAAR 3-5

2) Competitors of BIG BAZAAR 6-9

3) Methods for forecasting 10-13

4) Projected sales and profit for next 14-21


year with the table and graph and
explanation

5) Conclusion 22-23

6) Bibliography 24

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INTRODUCTION ABOUT THE BIG BAZAAR :

Type Subsidiary of
Pantaloon Group
Founded 2001
Headquarters Jogeshwari, Mumbai,
India
Key people Vinay
Industry Retail
Products Department store
Owner Sandy
Parent Pantaloon Group
Website
http://bigbazaar.com//

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Big Bazaar is a chain of department stores in India, currently
with more than 100 stores. It is owned by the Pantaloon Retail
India Ltd, Future Group. It follows the business model as Wal-
Mart and has considerable success in many Indian cities and small
towns. The idea was pioneered by entrepreneur Kishore
Biyani, the CEO of Future Group. Currently Big Bazaar stores are
located only in India. It is the biggest and the fastest growing
chain of department store and aims to have 150 by June 2009,
and 350 stores by the end of year 2010

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CITIES WHERE STORES ARE LOCATED IN INDIA::

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COMPETITORS OF BIG BAZAAR :
1) RELIANCE FRESH

Reliance Fresh is the convenience store format which forms part of the
retail business of of Reliance Industries of India which is headed by Mukesh
Ambani. Reliance plans to invest in excess of Rs 25000 crores in the next 4
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years in their retail division. The company already has in excess of 560
reliance fresh outlets across the country. These stores sell fresh fruits and
vegetables, staples, groceries, fresh juice bars and dairy products.

A typical Reliance Fresh store is approximately 3000-4000 square. feet and


caters to a catchment area of 1-2 km.

Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, Reliance


Footprint, Reliance Wellness, Reliance Jewels, Reliance Timeout and
Reliance Super are various formats that Reliance has rolled out.

2)SPENCER’S RETAIL:

Spencer's Retail is one of India’s fastest growing retail stores. It has multiple
formats for retailing food, apparel, fashion, electronics, lifestyle products, music
and books.

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It is owned by the RPG Group, a major business house.

Established in 1996, Spencer’s is one of the popular destination for shoppers in


India with supermarkets, hypermarkets and dailies spread all over India.

3)SUBHIKSHA :
Subhiksha is an Indian retail chain with more than 1400 outlets
selling groceries, fruits, vegetables, medicines and mobile
phones. It was started and is managed by R Subramaniam, an IIM
Ahmedabad alumni. Subhiksha plans to open 1000 outlets by
December 2008.[1] He also plans to invest Rs.500 crore to
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increase the number of outlets to 2000 across the country by
2009.

The name Subhiksha means prosperity in Sanskrit. It opened its


first store in Thiruvanmiyur in Chennai in March, 1997 with an
investment of about Rs. 5 lakhs. The retail chain has seen a
considerable growth by offering goods at cheaper rates and there
by increasing its customer base.

4) Trent (Westside) :
Trent is the retail arm of the Tata group. Started in 1998, Trent
operates Westside, one of the many growing retail chains in India.

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The foresight of the Tata group, which invested in retail relatively
early is paying high dividends as retail is one of the booming
sectors in India.

The company has a turnover of Rs. 357.6 crores (FY 2005-2006)


and currently operates 22 stores in the major metros and mini
metros of India. An international shopping experience, a
perception of values, and offering the latest styles, has created a
loyal following for Westside's own brand of merchandise.

Westside operates stores in Mumbai, Ahmedabad, Bangalore,


Delhi, Chennai, Kolkata, Hyderabad, Pune, Surat, Vadodara,
Indore, Noida, Gurgaon, Ghaziabad, Mysore, Jaipur, Lucknow,
Nagpur.

METHODS FOR FORECASTING :

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Trend Projection: One of the most commonly used
forecasting techniques is trend projection. As the name suggests,
this approach is based on the assumption that there is an
identifiable trend in a time series of data. Trend projection can
also be used as the starting point for identifying seasonal and
cyclical variations

We used statistical curve fitting for trend projection which


involved estimating the parameters of the equation

St = So + bt
where

St = value of time series to be forecasted for period t

So = estimated value of time series in the base period

So = [( ∑ S )( ∑ t ) − ( ∑t )( ∑ S * t )] / d
2

b = is the absolute amount of growth per period

[
b = n∑ S * t − ( ∑t )( ∑ S ) / d ]

t = time period for which series is to be forecasted

d = n∑t 2 −( ∑t ) 2

We have used this technique to forecast the sales(both annually


and quarterly) for GM.

For forecasting the profit we have used the LEAST SQUARES


REGRESSION METHOD as it is widely used in economics.

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Regression Technique: which helps to predict the value of
one variable for the given value of the other variable.

In Managerial Economics, regression analysis helps for estimating


the demand of a commodity in different conditions.

Y = a + bX
where

a = vertical intercept

b = marginal slope

Y = dependent variable

X = independent variable

Regression Line minimizes the sum of the squared vertical


deviations (et) of each point from the regression line.

n n
Thus ∑y i =1
i = na + b∑ x i
i =1

n n n

∑ xi yi = a ∑ xi + b∑ xi2
i =1 i =1 i =1

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Moving Averages :: Moving averages rank among the most popular
techniques for the preprocessing of time series. They are used to filter random
"white noise" from the data, to make the time series smoother or even to
emphasize certain informational components contained in the time series.

What one does is to take the data from the last n periods,
average the data, and use that as the forecast for the next period.

However this method gives equal weightage to all observations in


computing the average.

To decide on the better moving average forecast calculate the


root-mean-square error(RMSE) of each forecast and use the
moving average which results in the smallest RMSE.

Exponential smoothing : It is the a techniques of time


series forecasting that gives more weightage to recent data

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whereas Trend projection is actually just regression analysis
where the only independent variable is time . One characteristic
of this method is that each observation has the same weight that
is the effect of the initial data point on the estimated data co-
efficient is just as great as the last data point. However ,in some
cases, more recent observation will contain more accurate
information about the future than those at the beginning of the
series.

Ft +1 = wAt + (1 − w) Ft
0 ≤ w ≤1

FORECASTING OF ANNUAL SALES :


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Year Time Sales (S)** T2 (S*T)*
*
period(T)
2003 1 155445 1 1554
45

2004 2 176558 4 3531


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2005 3 184632 9 5538


96

2006 4 185837 16 7433


48

2007 5 195451 25 9772


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∑ T = 15 ∑ S = 897923

∑ T2 =55 ∑ S*T = 2783060

d = 50 b = 8929.1

So = 152797.3

St = 152797.3 + 8929.1 * T
Sales for 2008 : :
S6 = 206371.90
As b is the amount of growth and it is positive, it shows that the
annual sales would increase in the upcoming years.
**
All the sales figures are in millions.

The graph shows the above conclusion::

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**
All the sales figures are in million

Moving Averages:

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Year Sales(A) 2 Year A-F (A – F)2
Moving
Average(F)

200 155445
3
200 176558
4
200 184632 166001.5 18630.5 347095530.3
5
200 185837 180595 5242 27478564
6
200 195451 185234.5 10216.5 104376872.3
7
200 190644
8

∑ (A-F)2 = 478950966.6

n=3

RMSE = 12635.28

**
All the sales figures are in million.

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Year Sales(A) 3 Year A-F (A – F)2
Moving
Average(F)

200 155445
3
200 176558
4
200 184632
5
200 185837 172211.7 13625.3 185648800.1
6
200 195451 182342.3 13108.7 171838015.7
7
200 188640
8

∑ (A-F)2 = 357486815.8

n=2

RMSE = 13369.49

Since the RMSE of 2 year moving average is less than the RMSE of
3 year moving average, therefore 2 year moving average would
give a better forecasting.

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**
All the sales figures are in million

FORECASTED ANNUAL PROFIT:

Time Period X 1 2 3 4 5

Profit** Y 237 324 281 455 622

∑xi = 15

∑yi = 1919

∑xi2 = 55

∑xi * yi = 28785

a = 3906.7

b = 46.3

y = 3906.7+46.3X

Profit for 2008 = 4184.5


The positive sign shows that the company is gaining profit and as
x(time period) would increase the gain would increase.

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**
All the profits figures are in crores.

The graph shows the above conclusion::

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**
All the profits figures are in million.

EXPONENTIAL SMOOTHING ::

Year Profit (A) Forecast A–F ( A- F)2


with w =
0.3 (F)

2003 3049 4045.6 -996.6 993211.56

2004 4876 3746.6 1129.4 1275544.3


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2005 4452 4085.4 366.6 134395.56

2006 4265 4195.4 69.6 4844.16

2007 3586 4216.3 -630.3 397278.09

2008 4108.2

∑ (A – F)2 = 2805273.73

n=5

so,

RMSE = 749.04
**
All the profits figures are in million

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Year Profit (A) Forecast A–F ( A- F)2
with w =
0.5 (F)

2003 3049 4045.6 -996.6 993211.56

2004 4876 3547.3 1328.7 1765443.6


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2005 4452 4211.6 240.4 57792.16

2006 4265 4331.8 -66.8 4462.24

2007 3586 4298.4 -712.4 507513.76

2008 3942.2

∑ (A – F)2 = 3328423.41

n=5

RMSE = 815.90

As we observe RMSE that the RMSE of weight=0.3 is less than the


RMSE of weight=0.5, therefore w = 0.3 is a better way to
forecast profit.

**
All the profits figures are in million.

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CONCLUSION ::
Using the above data we conclude that the company will probably
incur profits as the forecasting shows gain in annual profit and as
well as in annual sales.

In the following graph , the actual sales and the forecasted sales (
through trend projection , 2 year moving average, 3 year moving
average) are shown.

Since the forecasting through trend projection is closer to actual


data as compared to the other two forecasting methods, therefore
it is a better method for forecasting sales.
**
All the sales figures are in million.

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In the following graph , the actual profits and the forecasted
profits ( through Regression Technique , Exponential Smoothing
with w=0.3,Exponential Smoothing with w=0.5) are shown

**
All the profits figures are in million.

BIBLIOGRAPHY ::
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 www.google.com

 finance.yahoo.com

 msn.money.com
 www.nseindia.com

 www.wikipedia.com

 www.futuregroup.in

 www.futurebazaar.com

 www.foxnews.com

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