IGNOU Study Notes BRL-003 | CH-3 [ RETAIL ORGANIZATION STRUCTURE ]

Chapter-3
Retail Organization Structure

3.2 ORGANIZATION STRUCTURES

Organization is the prcess of identifying and grouping the work to be performed. defining and delegating responsibility and authority and establishing relatinships for the purpose of enabling people to work most (effectively) together in accomplishing objectives.
Organization structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met. raditional organization are line, line-and-staf matrix.

3.2.1 Line Structure

The line structure is defined by its clear chain of command, with final apporval on decision affecting the operations of the company still coming from the top down. The line structure is most often used in small organization such as small accounting offices and law firms, hair salons, and "mom" and "pop" store, the president or CEO can easily provide information and direction to subordinates, thus allowing decision to be made quickly.

3.2.2 Line-and-Staff Structure

It helps to identify a set fo guidelines for the people direclty involved in completing the organization's work. This type of structure combines the flow of information from the line structure with the staff departments that service, advise, and support them. Line departments are involved in making decision regarding the operations of the organization while staff areas provide specialized support. Line-and-staff structure generally have a centralized chain of command. The line-and-staff organizational structure is generally more formal in nature and has many departments.

3.2.3 Matrix Structure

A variation of the line-and-staff organizational structure is the matrix structure. Organization arranged according to project are referred to as matrix organization. Matrix organization combine both vertical authority relatinships (where employees report to their functional manager) and horizontal, or diagonal, work relationships (where employees reprot to their project supervisor for the length of the project). Workers are accountable to two supervisor-one functional manager in the departments where the departments where the employees regularly works and one special project manager who uses the employee's services for a varying period of time.

3.3 CENTRALIZATION, DECENTRALIZATION AND DEPARTMENTALIZATION OF ORGANIZATION STRUCTURES

Centralization means that decision authority is located near the top of the organization. Dercentralization, decision authority is pushed to lower organization levels. Departemntalization, which is the basis for grouping positions into departments and departments into total organization.

3.3.1 Centralized Structure

With a centralized structure, line-and-staff employees have limited authority to carry something out without prior approval. This organizational structure tends to focus on top-down management, whereby executives at the top communicate by telling middle managers, who then tell first-level managers, who then tell the staff what to do and how to do it. Since this organizational structure tends to be fairly bureaucratie, employee have little freedom. Centralized organization are known for decreased span of control-a limited number of employees report to a manager, who then report to the next management level, and so on up the ladder to the CEO.

3.3.2 Decentralized Structure

Decentralization seeks to eliminate the unnecessary levels of management and to place authority in the hands of first-line managers. Because more employee are reporting to a single manager than before, the managers are forced to delegate more work and to hold the employees more accountable. Quick decision can be made in decentralized organization because approval usually has to come only from the manager one level higher than the person making the decision. The chain of command involves line-and-staff employees, where the staff's job is completing the actual work and the line fucntions to oversee the staff.

3.3.3 Departemntalized Structure

Organization can be divided into various departments, or units, with individuals who specialize in a given area, such as marketing, finance, sales, and so forth. Each unit perform specialized jobs is known as departmentalizaion. Departmentalization us done according to five major categories (1) Product, which requires each department to be responsible for the product being manufactured; (2) Geographic, which divides the organization based on the location of stores and offices; (3) Customer, which separates department by customer type-for exaple, textbook companies that cater to both grade schools and community colleges; (4) Functional, which breaks departments into specially areas; and (5) Process, which creates departments responsible for various steps in the production process.

3.4 DESIGNING ORGANIZATION STRUCTURE OF A RETAIL FIRM

Organizational design is the process of developing or changing an organization's structure. The organizational structure of a retail store will vary by the size and type of the business. Small or independent retail stores may combine many sectors together under one division, while larger of management. In order to define the store's organization, start by specifying all tasks that need to be performed. Then divide those responibillites among various individuals or channels. Group and classify each task into a jon with a title and description. The final step is to develop an organizational chart.

3.4.1 Issues in Designing of Retail Organization Structure

While desinging an organizational structure some important considerations needd to be kept in mind which are discussd below:

1. Scope of Operations: With such difference in volume of transactions the job requirements are also it's essential that the manpower is well qualified to handle such large scale operations.

2. Nature of Merchandize: The type of merchandize a store deals with has direct implications on the type of skill sets sets needed. For instance a retailer selling ready made clothes needs people who are proficient in understanding customer's clothing needs and offer the best possible alternatives. However in a leather shoes and leather accessories outlet such persons will be needed who have at least preliminary knowledge abut leather especially footwear.

3. Type of Organization: Depending upon the organizational structure, requirement for human resource changes. A retail organization can have a host of department like Sourcing, Marketing, Accounts Warehousing on a functional basis. It can also have division based on various porducts it deals with.

3.4.2 Retail Organization Functions

When the number of stores that a retailer opertes incerease from one to more, the management becomes complex. Retail store chains may operate at a regional, national or an international level.

The following four fucntions can be seen in retail store:

1. Owner/CEO, or President
2. Store Operations: Management, Cashier, Sales, Receiving, Loss Prevention
3. Marketing: Visual Displays, Public Relations, Promotions
4. Merchandizing: Planning, Buying, Inventory Control
5. Human Relations: Personnel, Training
6. Finance: Accounting, Credit
7. Tehnology: Information Technology

As the store grows and the retail business evolves; the dynamics of the organization's structure will change too. Therefore it is paramount to redesign the store's organizational chart to support the decision-making, collaboration and leadership capabilities that are essential during and after a growth period.

3.5 HOW TO BUILD A LEARNING ORGANIZATION FRO RETAIL BUSINESS

Learning Organization can be built on the following dimensions:-

1. Organizational Design: An important value in a learning organization is collaboration and communication across departmental and hierarchical boundaries. People on the team are given the skills, information, tools, motivation, and authority to make decision central to the learn's performance and to respond creatively and flexibly to new challange or opportunities that arise.
2. Organization Culture: It is the set of key values, beliefs, understandings, and norms taht members of an organization share. It creates the good relatinships, trust among employees to care for each other to achieve organizational objectives.
3. Leadership: An important value in a learning organization is collaboration and communication across departmental and hierarchical boundaries. People on the team are given the skills, information, tools, motivation, and authority to make flexibly to new challanges or opperotunities that arise.
4. Information Sharing: A learning organization is flooded with information. If the accurate information is shared across people, department timely, then managers can take effective decisions which lead to customer satisfaction.

3.6 LET US SUM UP

The organization structure is a formal system wherein the various activities to be preformed by specific employee are identified and delegated clearly indicating their lines of authority and responsibility. In the present highly competitive enviroment, it is imperative to have right and efficient organizational structure for achieving success in the market.

The retail stores chain operating at international level requires skilled managerial personnel. Normally the management of a retail store includes four types of fucntions, namely control, publicity, operations and merchandizing. An ideal retail organization structure consists of owner/CEO or persident, store operations, marketing, merchandizing, human relations, finance and technology. Depending on the expansion and extension of the retail business, the organizational structure may undergo necessary restructuring or modifications.
The building of a learning organization of retailing is actually an integral part of the whole setup.