The Working Culture of Big Organizations - Case Study Example

 The Working Culture of Big Organizations Introduction: The working culture of big organizations has changed over the last two-three decades and it has changed for the better. Technological innovations have played their part in it and the customer gets better support in every detail related to a transaction. Now it is not only commission (profit motive), but mission! When one mentions the name of MIGROS, many issues related to this organization become obvious. Light is bright, and it is evident; milk is white and it is evident. So, simply say MIGROS, and many issues are evident. All that makes an organization extraordinary can be seen in the working culture of MIGROS. When MIGROS thinks of expanding abroad, I would strongly suggest India, not because it is my country, but because of the very favorable economic situation prevailing in this country, notwithstanding the depression that has engulfed most of the global markets. The mention of the name MIGROS kindles many expectations about this organization for its quality products and its philanthropic attitude towards business. MIGROS wish to serve the community. A bird’s eye view of the current economic situation in India and why I choose this country for MIGROS expansion plans: The 15th Parliament Elections have brought about the stunning victory for the Indian National Congress Party that has been pursuing the policy of liberalization in the economic front, under the leadership of Dr. Manmohan Singh, Prime Minister. He is an economist of international repute and former Governor of Reserve Bank of India. During last five years this country has attained rapid economic growth. He can feel the pulse of the Indian economy in the global context. Corporate performance has been stunning under his leadership. During his speech in Parliament while presenting the Budget 1994-95, as the Union Finance Minister, he quoted Victor Hugo: "No power on Earth can stop an idea whose time has come." True to his vision, the productivity in the Indian industry grew like never before…now, we have a very different economy as compared what it was 10 years ago. Far from close to defaulting on its international debts, the economy is sizzling, and has posted 10.4 percent GDP growth last quarter. More economic reforms, liberalization and corporate friendly policies are on the cards. So, I feel this is the right time for an international retail giant like MIGROS to make entry in the Indian Market in a big way. The location plan: The city of Faridabad is known all over India. The managements of top commercial establishments of any country must know Faridabad. It became the 12th District of Haryana State, an important State of India, from the point of view of both industry and agriculture. The distance between Faridabad and New Delhi, the capital city of India, is just 25 kilometers. Delhi-Mathura Highway No.2 that passes through Agra and further, bisects the District. It is also an important Railway Junction on the broad-gauge line. Products like tractors, motorcycles, refrigerators, shoes and tyres, switch gears are some of the top industrial products manufactured on a large scale in Faridabad. The tourists will be attracted to the places like Badkhal Lake, Suraj Kund, Raja Nahar Singh Palace and Aravali Golf Club. Its population according to the 2001 census was about 2.2million. The river Yamuna flows through its entire eastern boundary. The District has 388 revenue villages out of which 40 have been urbanized. Uninterrupted supply of plenty of agricultural products can be expected in Faridabad. Every village in Faridabad can be reached by metal road. All villages are electrified. It is also well connected to all parts of the country through Rail and Road. It has excellent infrastructure viewed from any angle. The nearest domestic/international airports are about 35-40 kilometers form the city. With 15,000 small, medium and large scale industries, it provides direct and indirect employment to half a million people and it is the 9th largest industrial estates in Asia. Many international giants like Whirlpool, Larsen & Toubro, Asia Brown Boveri, Goodyear, Escorts, GKN, Eicher, Cutler Hammer, Nuchem, and Hyderabad Asbestos have their production centers and corporate offices in the city of Faridabad. Viewed from any angle, this is an ideal city to establish the national headquarters of MIGROS in India. Distribution centers and shops location: The main distribution centre can be at Faridabad. Since this is the All-India launch, lots of pre-launch work is involved. Whenever a big multinational makes an entry in the distribution system of the consumer articles, fruits and vegetables and food products, such moves are likely to meet resistance from the local traders, who have been in business, some of them for generations. The MIGROS management should be ready to face such eventualities, by carefully drafting a public relations strategy to win over the local population, wherever the main distribution centers are going to be established. To begin with, contact centers will be established in the State Capitals and Union Territories and public relations officials will man those centers to do pre-launch work. Such persons have gone through the initial training course and are well versed with the MIGROS culture of conducting business. The proposed centers are Agartala (Tripura),Aizawl (Mizoram),Bangalore (Karnataka) Bhopal (Madhya Pradesh),Bhubaneshwar (Orissa),Chandigarh,Chennai (Tamil Nadu) Daman (Daman & Diu),Dehradun (Uttarakhand),Delhi,Gandhinagar (Gujarat),Gangtok (Sikkim),Guwahati (Assam),Hyderabad (Andhra Pradesh),Imphal (Manipur),Itanagar (Arunachal Pradesh),Jaipur (Rajasthan),Kavaratti (Lakshwadeep),Kohima (Nagaland) Kolkata (West Bengal),Lucknow (Uttar Pradesh),Mumbai (Maharahstra),Panaji (Goa) Patna (Bihar),Puducherry, Port Blair (Andaman & Nicobar Islands),Raipur (Chhattisgarh) Ranchi (Jharkhand),Shillong (Meghalaya),Shimla (Himachal Pradesh),Silvassa (Dadra & Nagar Haveli),Srinagar (Jammu & Kashmir),Thiruvananthapuram(Kerala.) MIGROS are well known to carryout their social responsibilities in areas like social assistance, healthcare, education, culture-art, sports, environment etc. Today’s enlightened management concepts make it very clear. Sensitivity towards society, the individual and environment are the essentials. The customer, before patronizing any particular brand, looks out for all these positive aspects. Rightly, “sensitivity” is adopted by the Management, all MIGROS employees and practiced as a core corporate value in its activities and practices. Retail Management- the human aspect: I must say, with all their strength and experience for five decades, MIGROS are taking the calculated risk with their plans to open a large number of outlets all over India. This needs to be done in a phased and time-bound manner. The current recessionary trends are not highly encouraging for new ventures and adventures! Many well-known retailers are facing the problem of falling sales and as such they are faltering. But MIGROS are exceptional market strategists. They can do it! For a new outlet to survive, the retailer must adopt to the realities of the marketplace. The management team must understand the local conditions well and the marketing staff should be those specializing in strategy and analysis of consumer trends. Managing the existing store is one thing; a new store development requires extra initiative and expertise. Strategic planning must go hand in hand with creative development of new retail concepts. The business of retail is getting tougher, with every technological development, and worldwide expansion of the internet facilities. ‘The customer is King,’ is no more a platitude; it is the reality of the retail business, as consumers have abundant choices than ever and are knowledgeable about their rights, far more selective about where they shop. A winner in Switzerland or Turkey need not be the winner in India, by using strategies that took one to the threshold of success in those countries. Winning in the game of retail means setting themselves apart from the pack! What separates winners from the losers? The retailer must understand the current mood of the market and the retail buyers. It is not an exaggeration to say that one fully satisfied customer is equivalent to an insertion of advertisement regarding the shop and products in a local newspaper. Willard N. Ander says, “As you may recall form high school physics, a black hole is a region in space where the gravitational pull is so strong that not even light can escape. That is also an apt description for retailers that have not established themselves as the best store for customers looking to fulfill a specific need. Once they are in the Retail Black Hole, it’s next to impossible to get out.”(Ander, 2004, p.5) MIGROS, like all other top retailers, need to have one thing in common. They must establish a defined market position for them, and carve out a niche in the customer’s mind. They need to be the best in something. They must defend that advantage and position at all costs. In a country like India, where the cultural diversities, customer-preferences and demographics vary from State to State, this area will need lots of study and research. Ander elucidates about the EST model for retail success. This model speaks about making the company best in one of five critical areas: Assortment (biggest), price (cheapest), fashion (hottest), customer service (easiest) and speed of service (quickest). This is the winning formula of the currently established retailers like Wal-Mart. In the ultimate analysis everything boils to customer-satisfaction, the permanent king and patron of retail business! So, stay in tune with the customer’s moods and preferences. Winning requires thoughtful approach to retail differentiation. The courageous choices of MIGROS will make it the leader and once there, Herculean efforts are required to strive to maintain that position. If you do not have the right product at the right place and at the right time, the customer will not take more time to move to the next outlet. Therefore, stay relevant to the customer. It is not sufficient that you stay alive; you need to thrive. Today’s customers are fickle; they know their rights. Internet has provided them lots of information about products and their competitive values. The marketplace has turned digital. “Now, because of the Internet, extraordinary access to capital, and nearly instantaneous worldwide communications, retail change is happening faster than ever.”(Ander, 2004, p.6)Suddenly a new retailer will establish the outlet next-door, and jolt you of believing that you are doing everything possible to keep the customers coming back to you and you only. I would like to caution MIGROS about one important traditional aspect of Indian retail scene. The conventional retail stores (especially kirana stores that sell practically everything related to customer’s daily requirements), are toughest of the competitors, for those trained in ‘Harvard Business Schools.’ Their experience, adaptability to the changing conditions is unbeatable. The meritorious players in the Indian retail scene like Reliance Retail, Bharti-Wal-Mart, etc. have a tough time in competing, and they are not able to make a dent in the sales and earnings of these conventional shops, where such trading has been going on for generations. These facts have been revealed according to a study by the Indian Council for Research on International Economic Relations (ICRIER). “The biggest weapon in the traditional small retailers' arsenal has been the thus far non-replicable door-to-door delivery. According to ICRIER, better display, provision of monthly credit and personal interaction with customers has been an effective tool at their hands to ward-off competition from the larger organized sector.”(Domain-b. com….) When the large organized retailers arrived in the market with a bang, initially the unorganized traditional retailers did experience a slowdown, but soon the trends stood reversed. The negative impact was to the tune of 8-10 percent but it has now worn off. The small retailers answered the challenge effectively. As initially expected, the shops in the unorganized sector did not pull down the shutters due to competition, on a big scale. The closure ratio was as low as 1.7% per annum. “The ICRIER report also suggests that a simplification of government procedures for large retailers could help boost this sector. Kumar indicated that there are on an average 22 clearances and approvals needed presently to open a big retail outlet, varying in number form state to state.” (Domain-b.com….)The MIGROS need to take special note of this and appoint liaison officers at different levels at States, to sort out these hurdles. Two stunning revelation of the study should encourage the MIGROS—that both consumers and farmers (from whom direct purchases are made by the organized retail) benefited. Somewhere, the middlemen were eliminated and this is the welcome feature in any trade, because the middlemen do not serve any useful purpose, other than hoarding and profiteering. The farmers welcomed selling directly to big retailers and they got as much as 60% higher prices as compared to those secured via government-regulated wholesale markets. Retail Management-the technical aspect: Managing the sale in this internet age is as competitive and important as the actual counter sale. Microsoft Retail Management System is one of the most advanced and efficient systems that has found acceptance with the Retail Managements and I suggest MIGROS adopt this software application system. This system, among others, has: Control customer tracking and inventory management, integrates with leading financial applications, and comprehensive reporting tools for store operations. The system has everything that the Retail Management needs. Operations: Andreas Münch, Migros Logistics Director, said: "The goal of a sustainable supply chain is very difficult to achieve. It takes time and stamina.” The past success of MIGROS in other countries is the ability of its system to self-distribute merchandise from a large network of modern distribution centers served by a private truck fleet. In India, practically any part of the country can be commercially connected through Railways and trucks. Private truck fleet seems to be the most ideal choice for movement of goods. The objective to restrict inventory growth, at the same time maintain a strong in-stock position and fill the shelves of new stores is possible through such a system. Stores hold the key to success factors. Every supplier has some original ideas which can contribute to the improvement of the Retail Link. What is theory after all? It is other man’s experience. Inputs from the suppliers are invaluable. MIGROS during the initial stages of its operation in India should regularly call for the meetings of the suppliers and such participants will be able to give tips and strategies for increasing the effectiveness and functionality of the system. Even before the pre-launch, such interaction/meetings need to be held with the potential suppliers. When news spreads about opening of such retail outlets, many suppliers will contact the MIGROS officials. Operations system-Headquarters The city of Faridabad will be the nerve-centre of MIGROS. The happenings and developments taking place here, will affect the entire marketing system all over India. To manage such a mammoth network concerning all the States, MIGROS will have to invest heavily in strategies and technologies. The operating motto shall be selling more, grow rapidly and cut operating expenses. Operational efficiency means survival, instant access to retail information monitors growth. No use owning a technically perfect strategy, fool proof in procedures, but difficult to implement well in time, as per the demand of the situation. Retail industry changes at the shortest intervals. One sees novel merchandises every season, one that was selling hot last season may no be seen or in demand this season. Competition intensifies, and the mutually competing retailers require immediate access to correct information, as they are answerable to the customers. The customers will no more be enchanted by the word ‘may be.’ One prefers either ‘yes’ or ‘no’ as for the merchandise that one intends to purchase. It has become practice with the customers to take the decision for the final purchase after trying out at three-four retail outlets. The best retail outlets face the toughest competition. Financial: Financial aspects of setting up a large number of stores are important part of retail management. India is such a big country, to cover all the States at the District Headquarters level, is a Herculean task. There are about 700 districts in India. The issue is how to derive high profitability in retail stores situated in market areas possessing dissimilar competitive conditions and in far-flung areas. Hill districts will have special problems. Financial management principles in retail need to be based on different cluster of stores, formed as per local competitive conditions. Generally, four clusters are identified taking into consideration the local competitive conditions and they should hold well in Indian markets, except those in large metropolitan cities, where different yardsticks apply. They are monopoly, fleet market, venue and duopoly. The profitability scale depends much on these factors. In monopoly conditions the gross profits are high. As for fleet market, the key points are low cost, large number of shoppers and high productivity. In venue and duopoly, the gain is from high-average transactions per shopper. Local competitive conditions matter much as for profit margin and the concerned retail outlet must develop its own strategy and get it approved by the headquarters. As for the financial management, the latest software available is so competitive, for laymen, it looks as if one beats the other. MIGROS is an established organization and the software that it uses must have world-wide application. Only necessary modifications may be carried out depending upon the recommendations by the district level officials, and this will happen over a period, by experience gained. No cut-and-dry formula can be enforced. When business conditions are flexible, accounting procedures also will be responsive to those conditions. The RayMedi HQ is one such software. “RayMedi HQ gives you the Real-time business status at HQ from about every point of sale. From the head office, you can monitor sales & inventory position at each one of your store. The software helps you in consolidating the data from your various branches into one system and does an integrated analysis of sales, inventory and purchase. RayMedi HQ primarily focuses on managing your branch wise sales, purchase, inventory, receivables and profits. It helps you in controlling expenses, decreasing costs and increasing your profits.”(Supply Chain….) The key benefits of the system from the point of view of financial control are, lower inventory investment, (stock can be shifted the point of sale at short notice) increase in ROI, lower pilferage, (as continuous stock audit helps lower pilferage), cheapest and best purchase, lower operating cost, centralized financial control, fraud prevention, prevent poor practices from becoming bad habits by providing appropriate training to the personnel at the point of sale, item normalization, etc. The key feature of the financial/account system envisaged must contain the following features. Additions to the software can be done as per the local conditions and needs. Summary of Key Features Each outlet may need special type of support, without which it can not do full justice to its customers and to the goal of optimum turnover. There could be three situations for an outlet. The outlet is support dependent, where no local purchases are allowed; when it is independent, local purchase is allowed, and thirdly franchise, where configurable level of independence prevails. Web based platform to enable the designated authorities to access business from anywhere. Confidentiality is maintained. All data is sent over a secure, encrypted connection. Appropriate authorization, access control and authentication: The user has the control to view the data that he is authorized to view in the area of his operation, pertaining to any outlet. For example, an Area Manager of Faridabad District can view the data pertaining to the outlets under his control. He has no access to the data of other districts. Consolidation of all data is done at the head office level. Synchronization is done for all operations for the purpose of comparison and further research. This will felicitate the appropriate authority to formulate policy decisions. The loophole in a particular outlet can be identified and necessary action taken to remedy it well in time. The software has comprehensive facility to upload all transaction data from the point of sale. The head office has up-to-date knowledge about sales, purchases, stock transfer and account transactions. For example, if a 42” shirt is sold at a particular outlet, the head office can know it at will—the color of the shirt, the time of sale, the price, whether the payment is made by cash, or credit card—in fine, the entire history related to the arrival of the shirt at the outlet to the point of sale, is known to the head office. Additions, modifications and deletion can be made to the data, as per the demands of the security settings. Time-bound data is uploaded automatically, as per the configuration settings. Access configuration as per the demand and necessity-- can be horizontal, access to all data for one/collection of retail stores, or vertical, access to only sales or inventory purchase data for all stores. It can as well be the combination of both. Configuration settings means, show/hide columns and reorder column position and the like. Reporting features are comprehensive. Take one outlet at a time, a group of outlets or all outlets. Detailed report available on status data from every outlet; audit report on each and every operation done at the outlet. For detailed analysis at the Head Office level, business intelligence reports related to every area that concerns the running and development of a particular outlet available. Such reports relate to business health, top 200 sales, transactions, profit repots, move inventory, business velocity payable and receivable details etc. For better financial management, the head office can send notice and general circulars to all staff members in all outlets. It serves the purpose of a corporate notice board. Notices or memos can be sent to the specific staff at the specific outlet. The software does the complete jobs of a Chartered Accountant. Financial control is centralized. The appropriate authorities can peruse the data both outlet-wise or as a consolidated view. Has Cash Book, Bank Book, Ledger, Group Ledger List, statistics related to every area, Day Book, Purchase Register, Bills Pending Register, Sales Register, Credit Note Register, Debit Note Register, Journal Register etc. Functions related to Personnel: Audit Viewer-monitors workforce activity, staff schedule management, outlet staff management. Marketing: The corporate values of MIGROS are Customer orientation, Trustworthiness, Sensitivity, Leadership Efficiency and Innovativeness. The Powerful Chairs (the business magnates like MIGROS) need to do trade for the benefit of Chair less Powers (the common consumer). The business establishments are supposed to work for commission (profits) with a mission. At a time when financial slowdown has made most of the retailers to be extremely careful about their expansion plans, the determination of MIGROS to go ahead with its entry and expansion plans in India is laudable. That shows the confidence of the company to explore the overseas market. Economic slowdown has not affected the food industry as such, everyone must take food and that is one’s priority. Luxuries can be cut down, but not the expenses on food. The food items of MIGROS are varied and strong. The food chain market is clearly dominated by the unorganized sector in India. This country is one of the major food producers in the world but it accounts for less than 1.5% of international food trade. The processed food export has a very poor showing and this market has not been exploited. This means the investors have a big scope in his area. This country is the world’s second largest food producer, after China. This is the beauty of India. Different climatic conditions prevail in different regions of India. Extreme heat to extreme cold! Heavy rainfall to desert areas with scanty or no rains! This country is endowed with a large production base, and a variety of raw materials of food crops, commercial crops and fibers. The varied agro-climatic conditions make this possible. The patronage for food in the unlicensed food outlet or street foods in India is heavy for two reasons. Experience has made such stall owners provide tasty food at cheap rates. Building a brand and offering food at competitive rates will be a tough marketing exercise for the organized food chain stores like MIGROS. Such stores will have to tackle the vagaries of the climatic conditions in India first. A lot of risk is involved in food items with the fear of perish. Every minor detail of a particular food item needs to well-studied. The food offered for consumption to the customers needs to be fresh, healthy and tasty. This issue scores the greatest numbers in the marketing concepts. Its shelf life, the preservation methodologies that may vary from item to item, temperature etc. need consideration. A good co-ordination, optimum level of efficiency and vigilance are needed to be successful in this trade. Each outlet is the goodwill ambassador of the chain as a whole, and even a small lapse in a particular outlet, may bring a bad name to the marketing strategy of the organization. Conclusion: Equipped with al the theory knowledge, and practical experience in the retail management for over 50 years, yet every launch in a new geographical area is a unique experience. I would strongly recommend, MIGROS conduct a test launch by creating a sample outlet at Faridabad itself, where it is going to establish the headquarters. Many issues will be sorted out, say within a period of six months. Once the retail outlet gets going, it will also generate wide publicity. In the initial stages, it is desirable to take on rent the premises for each district level outlet. Business location is a matter of conjecture. You need not have the outlet in a congested locality, in the old well-established market area. When the customer is assured of quality supply, one does not mind traveling some distance, park one’s vehicle at the appropriate parking place and do shopping leisurely. My suggestion to MIGROS is to build a premier, upscale outlet shopping center in Faridabad. Vast tract of land is available, at a reasonable price, as compared to other big cities in India. A 50-100 acre tract should provide a very decent set-up. Latest concepts like opening air outlets with both covered and uncovered walkways will make shopping a pleasure-giving exercise. The outlets need to be a visual delight. All these issues are presumably known to the interior design experts of MIGROS. Just to remind, the interiors of the stores need to conform to the brand’s identity as for color, elegance as well as the rich and exquisite experiences that MIGROS aims to offer to its customers. The contemporary Indian woman who dominates the shopping scene (as women do most of the shopping) has independent and experimental in her choices. Whether it is vegetable or the latest fashion product, she has her opinions. The products offered by MIGROS need to be the reflection of her lifestyles and her cherished values. Works Cited: Ander, Willard, N, (Author) Stern, Neil Z (author): Winning At Retail: Developing a Sustained Model for Retail Success Hardcover: 272 pages Publisher: Wiley (June 10, 2004) Language: English ISBN-10: 047147357X ISBN-13: 978-0471473572 domain-b.com : Small stores survive the large retailers27 May 2008 ... Kumar indicated that there are on average 22 clearances and approvals needed presently to open a big retail outlet, varying in number form ... www.domain-b.com/industry/Retail/20080527_small_stores.html - 12k -Retrieved on May 30, 2009 Supply Chain Management (SCM) | Retail Chain Shops Management ... RayMedi HQ primarily focuses on managing your branch wise sales, purchase ... Centralized Financial Control : As your business moves to a model of depositing the ... Supports any type of chain outlets : Supports dependent [no local ... gofrugaltech.com/chainshops/ - 64k - Cached – Retrieved on May 30, 2009 Read More