Tetra threat framework for big bazaar


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Tetra threat framework for big bazaar

  1. 1. TETRA THREAT FRAMEWORK FOR SUSTAINABILITY ANALYSIS <br />We have used tetra threat framework for sustainability analysis of Big Bazaar. Tetra threat framework explains the four threats to sustainability as well as responses to them. Big Bazaar’s competitive strategy has been to outperform its competitors by achieving lower operating costs and higher asset returns. They focus on buying in bulk, pricing low, measuring sales per square foot. They have achieved economies of scale in India. There are 120 Big Bazaar stores, 170 Food Bazaar stores, among other formats, in over 70 cities across the country, covering an operational retail space of over 6 million square feet. They have very strong bargaining power. They have positioned big bazaar as a ‘value for money’ stores in customer minds. Big Bazaar has been sustained its competitive advantage so far because of better responses to threats.<br />Responses to Imitation: Big Bazaar has built many barriers to imitation in India.<br />Learning/Private information: <br />Big Bazaar’s owner Kishore Biyani has analyzed Indian retail market and Indian consumer. He knows behaviour of Indian consumer. Big Bazaar has spread in all over India. They know India from depth. They know how to get best employees and how to manage them. <br />Switching costs/Relationships: <br />Big Bazaar has good relationship with many big companies like HUL. Big Bazaar gets products at lower cost and facilities because of good relationship with suppliers. Suppliers get good sale from Big Bazaar. Suppliers have to make good relationship with Big Bazaar.<br />Scale economies: <br />Big Bazaar operates 120 stores in all India, in over 70 cities, covering operational retail space of over 6 million square feet. It gives scale economies to big bazaar. They buy products in bulk. Big bazaar gets low cost product because of bulk buying. Future group has formed Future Logistics for getting scale economies in logistics. <br />Future Group is working on the vendor network as well as the logistics network. The company has identified up to 40 anchor vendors, each with turnovers of US$45 million, to achieve economies of scale. The group is also keen to ensure that its smaller vendors are able to reach turnovers of around US$1 million and a growth rate of 40% annually, to be able to pass on the benefits of scales. The company is also working towards bringing its 1,200 vendors online, like Wal-Mart.<br />Upgrading: <br />Big Bazaar is continuously upgrading its capabilities. Big Bazaar has upgraded its information technology time to time. Now Big Bazaar is developing RFID technology. It already has implemented RFID in some of stores and warehouses. Future group has formed Future Logistics for getting scale economies in logistics. They are developing supply chain by adding trucks and warehouses.<br />Design management:<br />Design-led thinking helped Big Bazaar to achieve ‘customer-first’ objective and ultimately lead to better financial performance. Big Bazaar strategy to focus on design led to creation of Idiom, an independent design and consultancy firm, based in Bangalore. They are one of the few organizations in India having economist, ethnographers and sociologists working across various teams as a part of Design management team. Back-end operations, supply chain Harvard Business School just did a case study on Pantaloons' supply chain and it says that Pantaloons' is the most cost-effective supply chain in the world. India may not have a modern supply chain but it definitely has a cost-effective one. Retailers have made use of the existing supply chain.<br />Real Estate Game:<br />For a retailer, location is one of the most important things. According to KB, real estate cost should be less than 5 % of total sales of store in order to provide maximum benefits to customer. The strategic decisions to secure spaces before other retailers join in have resulted in cost-saving. <br />Responses to Substitution:<br /> Big Bazaar has been given good responses to threat of substitution. Big Bazaar has threats from new formats. Big Bazaar has many products under one roof. It had threat that other retailers can open speciality stores for each category. This speciality stores can be substitute for Big Bazaar. Future group has been launched many new retail formats like central mall, food Bazaar, staples, Furniture bazaar, Home town, E zone etc for responding threat of speciality stores.<br />They have tied up with Carrefour for cash and carry format that is reported to have secured properties for cash-an-carry outlets in New Delhi, Bangalore, Chennai, Hyderabad and Mumbai.<br />Staples Future Office Products Private Limited (SFOPPL) was incorporated on January, 2007 and 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 (a subsidiary of Staples Inc USA). The company’s first retail outlet opened in Bengaluru in December, 2007.<br />Winner Sports Pvt. Limited caters to the Sports and Lifestyle consumer space. Winner Sports is the exclusive India Licensee for retailing and marketing leading international brands including Converse, Speedo, Wilson, Prince, Spalding and Callaway. It has over 57 stores across 23 locations.FootMart Retail is a joint venture between Liberty Shoes and the group and operates the Shoe Factory format.<br />A subsidiary company, Indus League Clothing owns and manages the brands Indigo Nation, Scullers, Urban Yoga, Urbana and their retail formats.<br />The company has entered into a 50:50 joint venture with Axiom Telecom LLC, UAE on July 20, 2007 to do sourcing and wholesale distribution of mobile handsets, accessories and setting up service centres and authorized after sales service centres for mobile handsets in India.Talwalkars Pantaloon Fitness Private Limited (TPFPL) was incorporated on December 19, 2006 and is involved in the business of setting up gymnasiums and dealing in fitness equipments and other health products. TPFPL is a 50:50 joint venture between the Company and Talwalkars Better Value Fitness Private Limited.Futurebazaar India Limited (FBIL) is set up as the e-Retailing arm of the Future Group for providing on-line shopping experience. Futurebazaar.com was launched on January 2, 2007, and has emerged as one of the most popular online shopping portals in India. It was awarded with the “Best Indian Website” award, in the shopping category, by the PC World Indian Website Awards.<br />Responses to Holdup:<br /> KB follows strategy to develop trust and nurture relationships with suppliers. This trust led to strategically correct decisions most of the time. Whoever works with Future Group, either leaves in initial deals or continues forever.<br />Contracting: <br />Big Bazaar has contracts with many FMCG companies. They contract on the basis of shelf space like HUL has paid for 40% shelf space in non food category. Nestle has paid for 20% shelf space in food category. With more than 170000 products, the company maintains a strong supplier relationship in a partnership mode, avoiding the exploitative supplier – buyer transactional philosophy.<br />Integrating:<br /> Big Bazaar has launched many in-house brands in each category for responding to hold up. It’s in house brands are Tasty Treat in food, Clean mate in non food, future agro in staples, Rig, Bare denim etc in fashion. They have formed future logistics for providing logistics services.<br />Bargaining power:<br /> Big Bazaar has highest bargaining power in Indian retail industry because it is biggest retail company in India. Every company wants to put its products into Big Bazaar. Companies get good sale through big bazaar. Big Bazaar’s in house brands also give it bargaining power.<br />Responses to Slack:<br /> Kishore biyani is the managing director of future value retail ltd. He considers Indianans as the core value driving the group. Big Bazaar has more than 30,000 employees. <br />Monitoring behaviour: <br />Big Bazaar has very strong SOP. Each and every employee has to follow SOP. Store manager ensures that all employees are following SOP. Area manager also audit time to time stores which come under him. Big Bazaar is very strict for discipline.<br />Offering performance incentives: <br />Big Bazaar doesn’t give high performance incentives. If a team member achieves his monthly target he gets only Rs. 400 as incentive. Employees are not motivated by incentives.<br />Shaping norms:<br /> Big Bazaar provides training to its employees very frequently. They have formed future knowledge for providing training and information. Big Bazaar’s most employees are graduates so they focus highly on training. Employees are motivated to think out-of-box. Retail sector is in growth stage, so staffs are empowered to take innovative steps.<br />Governance: <br />Future group is the business of biyani family. Many family members are in the post of board of directors so they don’t face any problem in decision making. They take decisions very fast thus growing very fast. Growth rate of future group is more than Wal mart.<br />