Answer

1. Introduction

   This paper explores India’s Retail Industry with a focus on Pantaloons Fashion & Retail. According to Chari & Madhav (2014), Pantaloons Fashion & Retail Ltd is one of the key players in India’s retail industry. This chain business focuses on the production of premium clothing. Pantaloons was first launched in 1997, in Graiahat, Kolkata. In 2013, this business had expanded to approximately 76 chains/outlets, which were spread in 44 cities (Chari & Madhav, 2014). This business was formerly managed by the Future Group, but is currently regulated/controlled by ABNL (Aditya Birla Nuvo Limited). Having a chain of about 105 fashion stores, which are spread across 40 towns and cities, Pantaloons is continuously extending its footprint into other parts of modern India. Chari, A., & Madhav, A. (2014) point out that Pantaloons spans a retail space of approximately 1.7 million square feet, which exists amongst the largest retail store space in India. . The table below shows the competitive landscape of the industry in which Pantaloons operate:

   Adapted from: (Lahiri,& Tian, 2015).

   Pantaloons’ subsidiary companies are Galaxy Entertainment, Indus League Clothing, Home Solutions Retail India Ltd. It also possesses joint venture firms with other partners such as Etam group, Manipal Healthcare, Lee Cooper, Liberty Shoes, and Gini & Jony.

   Chari & Madhav (2014) claim that Pantaloons retails an estimate of 200 brands that comprises a mixture of licensed brands, private labels, and more accessories and brands. It also provides a range of executive/luxurious brands that satisfy various occasions for kids, women, and men. Some of these brands include Honey, Trishaa, Akkriti, Chalk, Ajile, mini klup, san frasico jeans, and Annabelle (Lahiri,& Tian, 2015). Pantalolons faces stiff competition from other large businesses that dominate the industry. Some of these organizations are Shopper’s Stop, Lifestyle International, RPG Retail, Vivek Ltd, and Trent.  These competitors offer similar products to those offered by Pantaloons, but have different brands.

   India’s retail sector is categorized into two groups that include unorganized and organized retail. Organized retail comprises systematized traders that are registered for trading activities and licensed to pay taxes to the government. On the other hand, unorganized retail comprises unauthorized small shops such as the general stores, conventional Kirana shops, and corner shops among others(Lahiri,& Tian, 2015). Despite being unorganized, these retailers still act as radiating force within India’s retail industry.

   Considering the nature of the industry in which pantaloons operates, it can be argued that this is an oligopoly market structure. This market is dominated by small number of large businesses such as Shopper’s Stop, Lifestyle international, and Pantaloons that exist within the organized retail segment. Moreover, these organizations are associated with a high level of interdependence. This observation can be seen in the number of partnerships that Pantaloons has formed. Many firms (i.e. particularly small businesses) are unable to join the organized retail segment due to the legal formalities involved. Moreover, the goods sold within this market are highly standardized or differentiated, which is a characteristic of an oligopoly market structure.

   In this industry, firms do not compete with each other in terms of price. According to (), price wars often result into lower gains. These firms charge reasonable premium prices and engage in competition via adverts and other promotional mechanisms. Since firms in this market do not compete with each other based on price, Pantaloons is likely to witness a relatively inelastic demand curve. When increases the prices of its goods, it can witness a small change in the quantity of goods that buyers demand.

   Production Cost and Scale

   Firms often employ various services and goods known as inputs or factors of production during the process of production. These services and factors include machinery and plant, tools and equipment, factory premises, labor, raw materials, and land. Some of the inputs are fixed in terms of size. For example, a manger or machine has to be used in its full potential regardless of the output volume. Other factors such as raw materials and labor can be used in large or small units according to the differing quantity of outputs, and are considered variable production factors. While variable production factors can be divided into small units, fixed factors of production are indivisible.

   Chari & Madhav (2014) assert that fixed factors of production are supplementary. For instance, machines ensure more efficiency and convenience in production activities. On the other hand, even when machines are absent, output of a given volume can still be realized. Variable factors are known as prime factors without which no production of output can be attained. The law of return and the cost analysis basis act as a distinction between these two categories of production factors (Lahiri,& Tian, 2015). In case all the production factors were perfectly variable and divisible, the production cost would have risen in the same output proportion. Since this is not an ideal case, a special cost evaluation becomes significant.

   Examples of fixed costs associated with Pantaloons are the expenses of purchasing or leasing capital equipment such as machinery and plant, rental expenses of buildings, yearly business rate charged by local authorities, expenses of employing full-time contracted salaries staff, expense of meeting interests expenditures on loans, expenditure on business insurance, and the downgrading of fixed capital. Variable costs include expense on components and raw materials, wages of part-time employees deployed in various stores, cost of gas and electricity consumers in the business premises, and reduction of capital inputs due to tear and wear. Since Pantaloons has a significant capacity, its fixed costs are higher than variable costs. This business has several stores spread across India’s cities and towns.

   Macro-business Environment

   Stability of the Political System/Government in India

   India boasts a stable political environment, thereby favoring smooth execution of business activities. Indian government has been stable for the last ten years, as seen in the absence of war or adverse political conflicts. India is considered one of the largest democracies in the world.

   In India, various national parties including BJP (Bharatiya Janata Party), CPI (Communist Party of India), INC (Indian National Congress), and other regional parties dominate the state politics. In the Indian elections of 2009, the INC won the largest number of Lok Sabha positions and established a government with a coalition known as the UPA (United Progressive Alliance) (Lahiri,& Tian, 2015). This alliance obtained support from different left-leaning parties and members divergent from the BJP. Currently, India has an alliance led government.

   The political climate of India is characterized by individual interest on politicians, party forum influence, and ideological inclination of political organizations. For instance, Banglore reinstated itself as India’s most significant IT centre due to political support. Many political issues impact the business environment in India (Lahiri,& Tian, 2015). Examples of these factors are vote bank issues and political pressure from the ruling administration/government.

   India’s taxation policy is also favorable. The Indian taxation structure is well-developed and comprises a three-tier federal structure including urban & rural local agencies, union government, and the state government. The mandate to levy and duties and taxes is distributed among these three tiers of Indian government. The principal duties/taxes that the union government is mandated to levy are income tax. This nation has a federal republic type of government.

   The union government is in charge of levying Service and Sales Tax, Central Excise, and Custom duties. The key taxes that the State Government levies are Stamp Duty, Sales, State Excise, Duty on Entertainment, Land Revenue, and Tax on Callings and Professions. According to (Lahiri & Tian, 2015). The local bodies are in charge of levying tax on properties, User/Tax Charges for utilities such as drainage and water supply, Octroi Tax on Market.

   Privatization is also highly embraced by the Indian government. This approach is undertaken to minimize the political interface within the management of enterprises, thereby leading to improved productivity and efficiency. Most of government companies often undergo privatization when they experience financial crises. Deregulation is also a characteristic of the Indian political environment, and it involves the establishment of Acts that permit free execution of business activities in India. The Indian government is also involved in constant international trade regulations, making this nation flexible for foreign exchange.

   Level of Inflation, Unemployment, and Average Interest Rates in India

   Economic factors affecting smooth execution of business activities in India are taxation changes, interest rates, economic growth, exchange rates, and inflation. Economics impacts significantly on the behavior of a business. High rates of interest hinder investments because borrowing is associated with high costs. Inflation can provoke higher demand of wages from workers, thereby increasing costs of production. On the other hand, higher growth of national income may enhance the demand for a company’s products.

   The Indian government has adopted several measures to enhance its economic climate/environment. Some of these measures include regulation of the condition of certain industries, reduced significance on the private sector, and central planning. The principal objectives of the nation’s development plans were (Lahiri & Tian, 2015):

   • Triggering rapid economic advancement to enhance the living standards, reduce poverty and unemployment.
   • Becoming self-reliant and establishing a robust industrial foundation with emphasis on basic and heavy industries.
   • Reducing inequalities of wealth and income
   • Adopting a social pattern of advancement, which is founded one equity and prevention of exploitation of human-by-human.

   India’s new industrial policy has also favored the execution of business activities in the country. Some of the features associated with these polices are (Lahiri & Tian, 2015):

   • Reduction of the numbers of industries existing under the mandatory licensing to six
   • Execution of disinvestment in situations involving numerous public sector industrial enterprises
   • Liberalization of the foreign capital policy, which allowed for 100% foreign direct investment
   • Issuance of automatic permission for technology agreements with foreign firms
   • Establishment of the FIPB (Foreign Investment Promotion Board) to channelize and promote foreign investment in India

   According to Lahiri,& Tian, (2015), India’s economic factors are continuously improving. The purchasing power parity was approximated at US$3.965 trillion in 2009. In the same year (i.e. 2009), the real growth rate of GDP was estimated to be 6%. Considering the aspect of Purchasing Power parity, India possesses the third highest GDP after China, U.S, and Japan. The figure below reveals some information on the economic aspects of India:

   Adapted from: (Lahiri,& Tian, 2015).

    

   Currency Exchange Rates, Current Level, and Recent Changes

   As an element of economics, currency value significantly affects the operations of a business, particularly when the business focuses on the exportation of goods/services to other countries. Lahiri,& Tian (2015) argue that a robust currency may complicate the process of exportation, as it may increase the price in terms of foreign currency. Currently, I US dollar is equivalent to 65.0700 Indian rupees (Lahiri & Tian, 2015).

   Considering the above information, it can be argued that Pantaloons has several opportunities for development at its disposal. Firsts, the company’s products are likely to improve in value, particularly the clothing, whose production is based on the emerging trends/fashion.  Besides, the India’s currency is relatively weak against the U.S$ strong, thereby favoring the execution of international business, specifically the exportation of goods. Being located in India, Pantaloons will benefit from the strength of India’s currency by obtaining more raw materials for its production processes. The nation’s GDP is also high, indicating that the market has the financial capability to consume the goods/services that Pantaloons offers.

   Sustainability Practice of Pantaloons

   Amid the increasing awareness on the effects organizations can have on the surrounding/environment, businesses of various sizes and types have begun adopting initiatives aimed at environmental sustainability (Vinodh et al, 2012). Many companies have launched recycling interventions and implemented measures that are focused on minimizing their carbon emissions as a means of mitigating the adverse impact of their business operations. On the contrary, these are not the only methods that organizations employ to make a difference. Some businesses focus on the bigger picture strategy by investigating every process involved in their product lifecycle, and integrating methods of green supply chain management across the board. According to Vinodh et al (2012), businesses can embrace environmental sustainability and employ to it their benefit through many ways.

   Shonbrun (2014) asserts that sustainable business measures can relate to corporate, social, and environmental sustainability. These initiatives collectively involve the examination of business practices and processes in terms of individuals, profit and planet, and pursuing mechanisms of creating positive impact in every area. While protecting the environment and improving conditions of living, are undoubtedly admirable objectives, they have also been justified as appropriate business approaches. For instance, implementing green supply chain management and environmentally sustainable actions has the ability to generate cost saving and eliminate waste, thereby leading to a robust bottom line. Furthermore, with numerous consumers dedicated to “going green,” environmentally-friendly businesses always gain from positive public view and greater customer loyalty.

   Creating sustainable business practices is not only essential for the future of an organization, but to the benefit of the future generations Vinodh et al (2012). Sustainable practices are driving Pantaloons to sustainable development, bot responsibly and profitably. The organization focuses on minimizing its carbon footprints at its facilities. Pantaloons’ workers are governed by robust set of ethical codes/doctrines. The company’s management designs sustainability into its manufacturing processes and products, and assisting suppliers and customers to do the same (i.e. embrace sustainability). These undertakings ensure that Pantaloons creates a significant impact in the industry/marketplace, while abandoning a smaller/insignificant footprint on the world.

   Being managed by the Future Group, Pantaloons embrace inclusive growth, sustainability, and corporate social responsibility. These three elements form the core of the organization’s business practices and strategy. The organization is dedicated to the environment, community, and stakeholder, and focuses on establishing a robust foundation for its long-term, sustainable development/growth.

   Pantaloons’ management believes that modernized organized retail possesses the potential to brace the economy, develop social inclusion, and establish grass root employment. Vinodh et al (2012) state that, as India’s principal retail player and one of the nation’s leading home-grown business premises, the Future Group (i.e. Pantaloons) is available across the value chain of consumption. Pantaloons is conscious of the social, economic, and environmental effects of its activities via thousands of suppliers and millions of consumers.  The organization believes that the challenges of inequity within its strong and that the growing domestic economy should be tackled via sustainable development.  Therefore, the organization’s principles aim at streamlining two key areas that include incorporation of sustainable development into the activities of the business and enhancing sustained economic progress for the nation.

   According to Vinodh et al (2012), climate change happens to be one of the enormous challenges that the world faces today. Pantaloons via Future Group endeavor to minimize environmental impact and enhance the consumption of energy within its store and reinforce green considerations within logistics activities.  The company’s focus on the production of eco-friendly commodities and create awareness on issues of environment is external and internal. As a component of the organization’s sustainable development initiatives, Pantaloons’ management has made a commitment to conserve the environment (Future Group, 2015). The organization aims at making a considerable impact on the surrounding and ecology in which it executes its activities. Through innovation and investment, Pantaloons leads the way in offering a greener means of doing business. Besides, the organization’s management fulfills its role for offering high quality service in environmentally sustainable and responsible way. The organization accomplishes this goal through the following ways (Future Group, 2015):

   • Minimizing the environmental effect of store operations and construction
   • Enhancing energy efficiency for significant environmental gains and limiting operating expenses.
   • Supporting environmental concerns within the design of green packaging and products, as well as establishing green product lines adhering environmental concerns
   • Strengthening environmental concerns in logistics

   Shonbrun (2014) adds that Pantaloons is also involved in community-driven development. In relation to this, the organization focuses on fostering associations with Indian entrepreneurs in communities to establish an enhanced self-employment opportunities. According to Vinodh et al (2012), the grassroots nature/form of community-driven growth enhances individuals’ participation in decisions related to development that are often decided within a top-down way. Economically disadvantaged women and ethnic minorities are among those who stand to gain the most through our community-driven development initiatives. Our approach is to help and collaborate with different communities in the rural pockets of our country to achieve harmonious growth. Embracing the capability to address economic disparity/inequality and achieve other goals contributing to inclusive growth/development, Pantaloons has extended its coverage deep into the remote parts of India. The organization engages capacity building and community mobilization, and assists to establish measures to address the needs of remote communities. The company’s engagements offer it a suitable platform on which the management can design and build on community-drive activities, and offer them (i.e. remote community) an enabling and all-encompassing model.

   In relation to the above information, it can be argued that the sustainability practice of Pantaloons will positively impact its future viability. The company expresses its concerns about the environment via many activities such as partnering with the urban and rural communities, and embracing green technologies to production. Considering the increasing awareness on environmental safety, these initiatives will lead to immense gains in the company, in the future, particularly by capturing the new type of consumers/emerging consumers (i.e. green consumers)