A Project Report on Organisational structure of Future group

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ORGANIZATION

THEORY AT FUTURE RETAIL

LTD

2015

GROUP 8 15/3/2015

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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.

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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

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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.

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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 (for internal financial services)

Future Generali

Future Ventures

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:-

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Fashion and Lifestyle

Indigo Nation

Scullers

John Millers

Lombard

All

Rig

Urban Yoga

Nothing Fits like Jealous 21

Bare

Urbana

Holii

Converse

Spalding

Manchester United

UMM

FORM / DESIGN OF THE ORGANISATION

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

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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.

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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

FORMALISATION

CRAFT

(Training and meetings)

NON ROUTINE

(Group)

ROUTINE

(Planning and rigid rules)

ENGINEERING

(Reports meetings)

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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.