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Use of Management Accounting Tools

for the Measurement and Comparison of Performance of

Organized Retailing Systems in India and at the Global Level

CHAPTER 3

RESEARCH METHODOLOGY

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3.1 Introduction

The literature review helped the researcher in understanding the scope

and the depth of research that has taken place at the global level. The

researcher aimed at comparing the research conducted in India as against

the developed markets. It was found that very little research has been

done on the emerging markets like India.

A lot of research has taken place worldwide on various performance

measurement frameworks that organisations use to effectively measure,

monitor and compare their performance. Various aspects of Performance

Measurement like use of financial and non-financial parameters, financial

accounting tools, Management Accounting tools, possibility and

feasibility of international benchmarking have been studied in detail.

The last decade has seen impressive growth in the retail sector in India;

particularly the organised retail sector has been growing at a very high

rate. More and more Indian companies are entering the market, the

existing companies are acquiring more and more real estate and the

leading players are experimenting with a number of formats. Global

retailers have shown keen interest in the Indian market not only from the

sourcing point of view but also for opening stores in India. The current

FDI rules allow single brand global retailers to set up shop in India, but

the multiple brand retailers can only come through a tie up with an Indian

company. The Indian companies have to run the front end and their

global partners can provide back end support. The global retailers are

allowed to open Cash and Carry outlets in India. Wal-Mart has a tie up

with Bharti, Tesco with Tata and M&S with Reliance.

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Sooner or later the market is going to open up further and there will be

more competition for the Indian players. The international retailers come

with vast experience, state of the art technology and huge investments.

The Indian retailers would have an advantage over them in terms of

„understanding the Indian consumers‟ and on the real estate front.

But as the market saturates, the competition will get tougher and margins

will get thinner. It would then be survival of the fittest. The industry has

already experienced tough times due to recession in the global markets.

How the companies measure, monitor and evaluate their performance

would be a key factor in determining who survives in the long run. The

researcher decided to look at the performance Measurement practices of

leading Indian retailers and compare that with those of the globally

operational retailers. The current performance measurement practices of

retailers may indicate their commitment to setting up of the systems and

processes to ensure productivity and efficiency.

It was clear from the literature review that the retailers have a wide

variety of Performance Measurement Frameworks to choose from. There

is, however, not much discussion on the selection, designing and revision

of these frameworks by retailers in India and abroad. Barring a few

examples, the researcher could not locate any comparative study,

qualitative or quantitative, on performance Measures used by retailers.

The literature review also provided a sound basis for designing the

methodology of the current research and helped in formulating the

research problem.

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3.2 Problem Formulation

3.2.1 Purpose and Objectives of the Study

The need and importance of Performance measurement Systems has been

very well researched. Keeping in mind the importance of Performance

Measurement Systems, the fast growing organised retail sector in India

and a gap in literature in terms of study of the actual performance

measurement practices of retailers: the researcher arrived at the following

research questions

5. How do the Indian retailers perceive the Indian market vis-à-vis the

more developed markets

6. What are the factors affecting performance of retailers in India and

at the global level?

7. Is the pattern of significance of these factors the same irrespective

of the company and the market in which it operates?

8. What kind of tools are the Indian retailers using as part of their

Performance Measurement Systems?

9. Are they using standard frameworks or have they modified those to

suit their specific requirements?

10. Are the Performance Measurement practices of Indian retailers at

par with the international standards?

11. What are the important issues related to designing and

implementing of the PMS?

12. What are the enablers and obstacles in the process of Performance

Measurement?

The researcher decided to primarily look into the contemporary practices

of Indian retailers as far as their Performance Measurement Systems were

concerned and compare those with globally operational retailers. The

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researcher wished to look at the substantive and technical aspects of

Performance and Performance Measurement Systems. The substantive

aspects would include the determinants of business performance or the

factors affecting performance of retailers and various parameters used by

the retailers to measure and evaluate their performance. The technical

aspects would include the designing, implementation and revision of

Performance Measurement System. The substantive aspects would thus

answer the “What” of performance and the technical aspects would look

at the “How” of Performance Measurement Systems.

To seek answers to the research questions and to provide a framework for

the present study, the following objectives were formulated.

1. To enumerate the factors influencing the overall performance of a

retailer in India and at the global level

It was necessary to first enumerate all important factors that would

affect the performance of retailers in general and Indian retailers in

particular. The researcher wanted to classify the factors on the

basis of the level of operation. The next step was to understand the

perceptions of Indian retailers about this set of factors and their

pattern of significance.

2. To study contemporary practices in Performance Measurement

Systems among Indian Retailers

This objective deals with empirical data on the performance

Measurement Frameworks used by Indian retailers. The researcher

wanted to find out how many Performance Measurement

Frameworks are used by Indian retailers and which among them

are more commonly used

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3. To evaluate the effectiveness of the Performance measurement

Systems used by Indian retailers

The researcher wanted to understand the perceptions of the top

Management officials of Indian retail companies on the

effectiveness of their performance measurement practices.

4. To look at the obstacles, if any, in designing and implementing a

Performance measurement System

An important aspect of this study is to look at the technical aspects

of Performance Measurement Systems. The objective is to

understand the process of designing and implementation of the

PMS and to look at the enables and obstacles in the process.

5. To compare the Performance measurement practices of Indian

Retailers with globally operational retailers.

Looking at the global scenario and the possibility of all leading

global retailers entering the Indian market, it was necessary to

compare the Performance Measurement Systems of Indian retailers

with those of the global retailers. The comparison was carried out

for both, the substantive and technical issues.

3.2.2 Hypotheses

While carrying out the literature review, the researcher first studied the

pattern of evolution of the Performance Measurement Frameworks. The

researcher particularly looked for international research on performance

measurement practices in general and in retail and related industries in

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particular. Preliminary discussion was carried out with retail experts,

consultants and practitioners to gain important insights into the retail

sector and its operational aspects. The literature review and discussions

with experts helped the Researcher to arrive at the following Hypotheses.

1. Both Financial and Non-financial Measures are widely used for

measuring performance of retail organisations

2. Factors influencing performance of retail organisations would vary

from market to market and from company to company.

3. Retail companies use more than one approach to measure their

performance

4. Information Technology plays an important role in designing and

implementation of Performance Measurement Systems of retail

organisations

5. Performance Measurement systems of retail organisations are

continuously being monitored and modified.

6. The Performance Measurement Systems used by Indian Retailers

are at par with those used by global retailers

These hypotheses helped the researcher in conducting a systematic study

with respect to the objectives stated above.

3.2.3 Information to be collected

Given the objectives of study and the hypotheses, the researcher needed

the following information.

a. A list of major retail players in India and at the global level.

b. A list of Indian retail companies that fulfilled the selection criteria

c. A profile of these companies

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d. Various operational aspects of retailing and facets of business

performance

e. Factors affecting performance of retailers as perceived by senior

managers of Indian companies

f. Factors affecting performance of retailers as perceived by senior

managers of global companies, retail experts and consultants.

g. The performance measurement systems used by retailers in India

and global retailers

h. Information about designing, implementation and revision of the

Performance Measurement Systems

i. Information about the challenges faced by the retailers while

setting up and implementing the Performance Measurement

Systems

As can be seen from the above list, a lot of quantitative and qualitative

information was required to be collected. Some information was factual

in nature whereas some was based on perceptions of survey respondents.

To ensure the collection of accurate information, the researcher had to

clearly define the scope of this research in terms of the place of study,

target population and the reference period.

3.3 Scope of the Study

3.3.1 Place of Study

The purpose of the study was to compare the contemporary Performance

Measurement practices of Indian retailers with the global retailers. The

research was thus carried out at two levels, Indian retail companies and

global retail companies. As far as the Indian companies are concerned,

their corporate headquarters were contacted either by phone or email. The

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researcher visited retail stores of the selected companies in different parts

of India and interacted with the store staff. Major part of work was

carried out from Mumbai and Pune.

As far as the global retailers are concerned, their headquarters are located

in United Sates of America or Europe. They were contacted by emails.

The researcher interviewed some officials and international consultants

while they visited India. Others were interviewed by emails. The

researcher also visited some stores in USA and interacted with the store

staff.

3.3.2 Target Population

The target population for this study was organised retail companies in

India and abroad. To further explain the target population, we need to

look at various types of retailers. Retailers can be classified in various

ways:

1. Store-based retailers and non-store based retailers

Store based retailers have a physical set up whereas the others will have a

virtual setup. Non store based retailers include catalogue retailers and

e-tailers. This study was restricted to store-based retailers only.

2. Organised Retailers and unorganised retailers

The organised retailers are the retailers that issue bills and are registered

with the government and pay sales tax. Unorganised retailers are all the

small neighbourhood retailers popularly known as Kirana stores in India

and Mom and Pop stores around the globe. The present research was

limited to the organised retailers and did not cover the unorganised

retailers.

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3. Single store retailers and chain stores.

Single store retailers may fall into the organised retail sector if they fulfil

the registration, billing and tax criteria. But the way a company runs a

single store is very different from the way it would run a chain of stores.

The difference would be substantial in terms of the operational aspects.

The current study looks at only those retail organisations that run multiple

stores.

4. General merchandise retailers and speciality stores

General merchandise retailers have a wide range of products like grocery,

toiletry, provisions, home utility, cosmetic, apparel etc. Speciality

retailers would restrict their product range to a specific category, e.g.

jewellery, footwear etc. It is difficult to compare the Performance

Measurement Systems of these two types of retailers, e.g. PMS of Bata

and Wal-Mart or Gitanjali and Subhiksha can not be compared easily.

The researcher thus decided to focus on general merchandise retailers to

ensure meaningful inter company comparisons of PMS.

Hence, the present study would be confined to the Store-based retailers

with a chain store format with a fairly wide merchandise base.

In other words, the researcher has not included the speciality retailers,

single store retailers and the small unorganised retailers in this study.

It was decided that companies would be selected from the two groups

namely, the retailers in India and retailers at the global level.

The companies that fulfilled the following criteria were listed first:

a) A company should follow the store based format of retailing

b) A company should run a chain of stores i.e. multiple stores

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c) It should offer a fairly wide range of merchandise

d) It should be listed on the Stock Exchange

The last criteria were important from the point of view of data collection.

Availability and accuracy of data was a key concern and the researcher

believed that the probability of collection of such data was very low in

case of companies that are not listed.

3.3.3 Reference period

In order to ensure that the study remains focused, it was necessary to

decide the time frame of the study. Too short a time frame would have

affected the reliability of the study. Further, too long a timeframe would

have resulted in a loss of the focus and difficulties in the data collection.

The researcher undertook a preliminary research about the major Indian

retailers in the year 2005. The researcher studied the journey of the major

retail companies from 2000 to 2005. Organised retail started gaining pace

in India in the late nineties. The early growth was scattered and was

marked by a few players expanding fast. The years 1999-2000 and 2000-

01 were distressing years for the Indian retail industry. Hasty and

incorrect decisions, ill-planned expansion and excessive investments

resulted in large financial losses and serious operational inefficiencies for

many retailers. 2001-02 was the year of consolidation for the industry.

Most of the retailers took several tough measures; they cut out the extra

flab, refurbished their stores and consolidated the number of outlets. All

these efforts paid off in 2001-02 as reflected by the financial results of

major retail companies. Shoppers' Stop, Trent, Pantaloon Retail (India),

Food World all made profit in the year, most of them for the first time.

Year 2002 was thus taken as the starting year for the current study.

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The period of study as far as the Performance Measurement Systems are

concerned was 2002 to 2007. The time frame was discussed with retail

professionals, academicians and experts in research methodology. The

retail companies that started their operations after 2002 were not included

in the present study.

The interviews were conducted in the year 2007-08. The respondents

mostly discussed their current practices, but also gave references to their

practices in the preceding 5-6 years. The reference period for the study

therefore was fixed as 2002 to 2007.

3.3.4 Sources of Data

Data was collected from various sources. The researcher depended

heavily on primary as well as secondary sources of data.

The sources for secondary data were as follows:

1. Books on Retailing and Retail Management

2. Websites of the selected companies

3. Other websites

4. Annual Reports of the selected companies

5. Analyst Presentations

6. Documents prepared by organisations, made available to the

researcher

7. Presentations made by company officials at various conferences

8. Reports and Publications by International management and Retail

Management Consultancy Firms

Primary data was collected from Top Management officials from Indian

retail companies, middle level and store level employees of the Indian

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retail companies, managers of the global retail companies and

independent retail consultants who have worked with global retailers.

The researcher visited number of retail stores in India and abroad, spoke

to a number of store level employees and observed the operational

aspects at various stores.

3.3.5 Key Terms

Following are some of the key terms that are used in the title of the study

and are significant from the point of view of understanding the scope of

the study.

i) Retail

Retailing is the set of business activities that adds value to the product

and services sold to the consumers for their personal or family use.

Retailing is the last stage in the movement of goods and / or services from

the manufacturer to the consumers. The word „retail‟ is derived from the

French word „retaillier‟, which means „to cut a piece‟ or „to break bulk‟.

Retailer can be defined as „a dealer or trader who sells goods in small

quantities‟. Retailers perform the following important functions in the

distribution process:

1. Providing an assortment of products and services

2. Breaking bulk i.e. selling in small quantities

3. Holding inventory

4. Providing services

ii) Organised retail:

This term is used very widely in India. But it is not discussed in

international literature at all. There is no standard definition of the term.

What is generally understood by the term organised retailing is „trading

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activities undertaken by licensed retailers‟, that is, those who are

registered for sales tax, income tax, etc. These include the corporate-

backed hypermarkets and retail chains, and also the privately owned large

retail businesses. Some experts suggest that this category should be called

„Corporate Retailing‟ rather than Organised Retailing.

Unorganized retailing, on the other hand, refers to the traditional formats

of low-cost retailing, for example, the local kirana shops, owner operated

general stores, paan/beedi shops, convenience stores, hand cart and

pavement vendors, etc.

iii) Indian Retailers: Indian retailers would include retail companies that

are set up in India.

iv) Globally operational retailers: Globally operational retailers would

include retail companies established outside India and operating in

multiple continents and countries.

v) Management Accounting

Management accounting is the process of identifying, measuring,

reporting and analyzing information about economic events of

organisations. The process should be driven by the informational needs of

individuals internal to the organisation and should guide their operating

and investment decisions.

Management Accounting Systems provide information to assist managers

in their planning and control activities. Management Accounting

activities include collecting, classifying, processing, analysing and

reporting information to managers. Unlike the Financial accounting

information prepared for external constituencies, such as investors,

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creditors, suppliers, and tax and regulatory authorities, management

accounting information should be designed to help decision making

within the firm. Management accounting offers a variety of performance

measurement and management techniques ranging from Financial Ratios,

ABC Analysis and Economic Value Added (EVA) to Balanced

Scorecard.

vi) Performance Measurement:

Performance Measurement is the process whereby an organization

establishes the parameters within which programs, investments, and

acquisitions are reaching the desired results

Financial Performance, although important, is only one aspect of an

organisation‟s performance. Performance Measurement system should be

a blend of financial information with non-financial information.

The goal of Performance Measurement Systems is to implement strategy.

In setting up such systems, senior management selects measures that best

represent the company‟s strategy. Performance Measurement System is a

mechanism that improves the likelihood that the organisation will

implement its strategy successfully

The discussion about Performance Measurement Systems in the present

study is restricted to the overall performance of an organisation or what

can be called as „Business Performance‟ or „organisational Performance‟.

The present study does not include the use of Performance Measures for

individual employees. In other words, the Human Resources Management

aspect of Performance Measures is not studied here.

With a clear understanding of the scope of the study, we now move on to

the research design.

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3.4 Research Design

3.4.1 Final Selection of units

After defining the scope of the study and fixing the target population, it

was necessary to select the units for detailed analysis. It was important to

decide the method of data collection and design suitable tool/s for data

collection.

It was proposed that companies would be selected from two groups

namely, retailers in India and retailers at the global level. As already

stated, the companies that fulfil the following criteria as on 31st March

2002 were listed first:

a) A company should follow the store based format of retailing

b) A company should run a chain of stores i.e. multiple stores

c) It should offer a fairly wide range of merchandise

d) It should be listed on the Stock Exchange

When the above mentioned criteria were applied, the researcher found

that there were only three Indian companies that fulfilled all four criteria.

The following table shows major retail players in Indian market, with

their retail formats. It can be clearly seen from the table that only three

companies qualified to be included in the population.

Table 6: Key Retail players in India and selection of the units under study

Retailer Formats In/Out Reason

RPG Retail Supermarket (Foodworld)

Hypermarket (Spencer's)

Specialty Store (Health &

Glow)

Not

selected

Not listed

Piramal's Department Store (Piramyd

Megastore)

Discount Store (TruMart)|

Not

selected

Incorporated in 2005,

Indiabulls acquired

majority stake in 2007

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Pantaloon

Retail

Supermarket (Food Bazaar)

Department Store (Pantaloon)

Hypermarket (Big Bazaar)

Mall (Central)

Speciality(Depo, E-zone,

Planet Sports)

Selected Fulfils all selection

criteria

K Raheja

Group

Department Store (Shopper's

Stop)

Supermarket (Hypercity)

Specialty Store(Crossword)

Selected Fulfils all selection

criteria

Tata/ Trent Department Store (Westside)

Hypermarket (Star Bazaar)

Seciality (Landmark)

Selected Fulfils all selection

criteria

Landmark

Group

Department Store (Lifestyle) Not

selected

Lifestyle International

Pvt Limied

Reliance

Group

convenience store (Reliance

Fresh), hypermarket (Reliance

Mart) specialty stores

(Reliance Trends, Reliance

Footprints, Reliance Jewels,

Reliance Timeout)

Not

selected

The Retail company is

not listed, started

operations in 2007

Aditya

Birla

Group

supermarkets (MORE),

hypermarkets.(MORE

Megastore)

Not

selected

The Retail company is

not listed, started

operations in 2007

Vishal

Retail

Mega Mart Not

selected

Incorporated as private

limited company in

2001, converted into a

public limited company

in 2006.

Others

Discount

stores

Subhiksha, Margin Free, Apna

Bazaar

Not

selected

Not Listed

Specialty

Retailers

Vivek's, Vijay Sales, Next,

Bata, Gitanjali, Nally‟s,

Bombay Dyeing, Raymond etc

Not

selected

Specialty stores

Source: Industry information

As can be clearly seen, there were only three Indian retail companies that

made it to the target population. As the population size was small, the

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researcher decided to study all three companies. Profiles of these three

companies are presented in the next chapter.

In order to conduct a detailed research, the researcher contacted these

three companies. Positive response was received from two companies.

No response or information was offered by the third organisation. The

researcher thus decided to undertake a detailed analysis of the

Performance Measurement systems of two Indian companies.

These two companies represented the organised retail general

merchandise sector in India very well. Together they had a variety of

formats. They also had a good geographical spread. The two companies

thus represented the Indian organised retail sector in terms of

merchandise base, geographical spread, store formats and retail practises.

The two companies are the industry leaders and thus their case studies

would provide valuable insights into performance measurement practices

in the Indian organised retail sector.

The researcher had a preliminary talk with middle level managers of

these two companies and then conducted a detailed interview with top

management. The interviews were conducted on the basis of an interview

schedule designed as part of research.

As the number of companies was very small the researcher decided to

follow the case study method and undertake an in-depth analysis of the

Performance Management Systems and the relevant issues for the two

companies.

As far as the second group of companies, i.e. the global organisations, is

concerned, the researcher first referred to the list of leading retailers in

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the world.

A publication by Deloitte Touche Tomahatsu and Store

Magazine; “Feeling the Squeeze: 2009 Global Powers of retailing”, that

listed top 250 retailers in the world, was referred for this purpose.

Companies were shortlisted for preliminary study on the basis of the

following criteria:

1. They reflected the entire spectrum of General Merchandise Retail at

the global level.

2. They were comparable to the Indian companies with respect to the

retail formats

3. Together they covered all continents of the world

From the shortlisted companies, two companies were selected for detailed

analysis. This selection was based on the following criteria

1. These companies were closest to the two Indian companies in terms of

merchandise base and store formats

2. These companies have initiated some dialogue with Indian companies

about their entry in the Indian market

3. These companies are already sourcing a number of products from India

The researcher thus had four organisations selected for in-depth study and

analysis.

As mentioned before, a case study approach was selected for the purpose

of analysis. This approach would enable independent study of each of the

company as well as a comparative analysis. The two Indian companies

would be compared with each other and together they would be compared

with the global companies. A case study approach would also enable

qualitative and quantitative comparisons among various companies and

the two groups of companies.

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The case study approach was most suitable as the focus of the study was

to compare the contemporary practices of Indian retailers vis-à-vis

globally operational retailers. Case study approach would facilitate

effective comparison of general trends in both the groups.

3.4.2 Method of Data Collection

Given the objectives and scope of the study, and keeping in mind

information to be collected, the basic strategy was to start with the

secondary data.

The information about various retail companies in India and at global

level was gathered from various secondary sources. Information about the

company profiles and performance was also available in published data.

Secondary sources were used for collecting information on points „a‟ to

„d‟ from 3.1.3. Secondary data was tapped from various sources:

1. Books on Retailing and Retail Management

Library research was used for studying various aspects of retailing, trends

in retailing in India and abroad. Books and publications were also

referred for identifying the factors influencing the performance of

retailing businesses.

Information about Performance Measurement Systems and various

operational aspects of retail was also obtained from books and journals.

The researcher mainly referred to books and publications on Retail

Management, Financial Management, Management Accounting,

Performance Measurement and Management Systems, etc.

2. Websites of the selected companies

Historical data and information about companies was taken from the

websites of the respective companies. The websites were a good source of

information for historical landmarks and achievements of the companies.

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The websites also provide links to various press releases, media coverage,

and transcripts of analysts‟ presentations/conference calls. Annual

reports, financial summaries are also made available on most of the

company websites

3. Other websites

Websites of retail associations, Institutes specialising in Management

Accounting, consultancy firms were useful for obtaining a wide range of

perspectives on retail sector, performance measures in general, sector

performance, important issues related to performance of retail sector.

4. Annual Reports of the selected companies

Annual reports of the companies provided vital information about the

financial performance of the companies, their future plans, the

management style, major policies, performance measures used and major

achievements during a particular year.

5. Analyst Presentations

This has been an important source of information with respect to financial

performance of the companies and their future plans. Analyst

presentations gave insights into the management thinking and policies.

6. Documents prepared by organisations, made available to the

researcher

The organisations provided the researcher with some of their

publications, presentations, performance summaries etc to supplement the

information furnished during the interview.

7. Presentations made by company officials at various conferences

Various presentations made by company officials at various conferences

are available with the companies or on internet. These were also referred

to wherever relevant.

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8. Reports and Publications by International management and Retail

Management Consultancy Firms

The researcher referred to reports and research publications by

consultancy firms like McKinsey and Company, KPMG, and A.T.

Kearney etc.

The information on various operational aspects of retailing and facets of

business performance, factors affecting performance of retail companies

as perceived by senior managers of Indian companies, Factors affecting

performance of retail performance as perceived by senior managers of

global companies, retail experts and consultants; and the performance

measurement systems used by retailers in India and global retailers was

not available in published data or any of the above sources. Hence,

primary data was collected from officials of selected companies, in

addition to the secondary data. Interviews were sought with top

management of the selected Indian companies. Questionnaires were sent

to the global retailers by email. The data obtained from the company

officials was supplemented by interviewing retail experts and

independent consultants. Phone interviews were conducted with global

retail experts and consultants. So the information came from four main

sources

1. Personal interviews with Indian Retailers

The researcher interviewed very senior managers form Indian retail

companies. The respondent included the CEO of a leading retail company

and the HR Head of a retail group. Personal interviews were also held

with retail practitioners who had, sometime in the past, worked with the

selected global retailers.

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2. Information sent by the retailers by email in the form of answers to the

questions in the interview schedule.

The interview schedule was sent to the respondents in advance. Some

data was collected through emails in the form of answers to some of the

questions.

This was particularly very useful in case of global retailers.

3. Phone interviews

This method was used for global retailers and international retail

consultants. After receiving the answers to the interview questions via

email, the researcher interviewed them on phone. Independent retail

consultants were also interviewed on phone.

4. Unstructured interviews and observation

The researcher visited a number of retail outlets during the period of

study. Unstructured Interviews with the store staff were conducted

informally. The researcher also recorded her observations about certain

operational aspects at the store level. Hence, observation method was

used wherever appropriate and feasible.

Designing of the Interview schedule

A questionnaire was designed to collect the data relevant to the following

objectives of the study

1. To enumerate the factors influencing the overall performance

of a retailer in India and at the global level

2. To study contemporary practices in Performance Measurement

Systems among Indian Retailers

3. To look at the obstacles, if any, in designing and implementing

a Performance Measurement System

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The interview schedule was to cover various aspects of Performance

Measurement systems such as

1. Significance of Performance Measurement Systems

2. Performance Measurement Systems used by the organisation from

time to time

3. Designing the Performance Measurement Systems

4. Various components of the Performance Measurement Systems

5. Factors affecting performance and Performance Measurement

Systems and their relative importance

6. Revision of Performance Measurement Systems

7. Importance of back end and front end operations and Performance

Measurement Systems

8. Use of Information Technology in the design and implementation

of Performance Measurement Systems

9. Obstacles in designing and implementation of Performance

Measurement Systems

The following steps were undertaken in the process of designing the

interview schedule/ Questionnaire:

i) Identifying the objectives of the study

ii) Finalising the Hypotheses relevant for attaining the Objectives

of the study

iii) Analyzing the statements of the Hypotheses to determine a set

of factors. This step further led to the classification of the

factors.

iv) Discussions with experts in Research Methodology and Retail

Management were held before finalising the Questionnaire. The

discussion with retail expert helped the researcher to gain

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certain valuable insights about operational aspects of retail

business.

v) A pilot test of the first draft of the Interview

Schedule/Questionnaire was conducted by administering it to

store level staff and managers from various retail companies in

India, and interviewing some middle level retail managers from

the selected Indian retail companies.

vi) The pilot test results were analysed and minor changes in the

Questionnaire were carried out after consulting the research

guide and other experts.

vii) The Questionnaire was sent to the selected companies

viii) The researcher conducted detailed interviews with senior level

retail professionals from the selected companies

ix) The answers given by the respondents from the selected

companies were analysed

The interview schedule/Questionnaire has been included as part of the

annexure.

Features of the Interview Schedule

i. The same tool was used as a questionnaire and interview

schedule wherever appropriate.

ii. The questionnaire was specially designed to cover two aspects

a. Factual information about the company, it‟s performance and the

Performance Systems in use.

b. Opinions and perceptions of the senior managers about various

aspects of the Performance Measurement Systems

iii. The Questionnaire consisted of number Multiple-choice

questions. Some of the questions were close-ended and some

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were multiple response questions. Multiple response questions

also had „any other‟ as one of the options to extract all possible

answers, or answers beyond the normal range.

iv. There were a few open-ended Questions. These were designed

so as to tap valuable data based on opinions and perceptions of

the respondents. The responses to open ended questions were

carefully studied to arrive at suitable categorization of the

responses.

v. Questions on similar issues were mixed, some were rephrased

and repeated in order to check the consistency of answers and

thus enhance the reliability of the survey.

3.4.3 Problems and Difficulties faced in Data collection and analysis

The researcher faced a number of challenges in the data collection

process. Some important challenges have been discussed in the following

paragraphs

1. The researcher found it extremely difficult to find definitions of

some important terms. The terms “Organised Retail” and

“Performance” are not very clearly defined in literature.

2. Defining the Population: For the purpose of research, the

researcher needed a list of companies that fulfilled the selection

criteria. Such list was not readily available in any publication. The

researcher failed to get the information from Retailers Association

of India, various consultancy firms, books and journals on Retail.

The stock exchange provided a list of companies in the general

merchandise retail business. The researcher had to rely on the

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Stock Exchange list and the information obtained from retail

practitioners to define the population of the study.

3. Primary Data: In the initial phase of research. a request for

interview was sent to 8 companies, of which four responded

positively. A questionnaire was sent to these four companies. After

repeated reminders, two of them responded positively. The other

two companies refused to give information about their Performance

Measurement systems stating that it was a very sensitive area and

they would not be able to share anything for reasons of

confidentiality.

4. Global Retailers: The researcher had to collect most of the primary

information about the global retailers from global consultants and

ex-employees as the existing employees and managers were not

willing to provide any information. International retail consultants

shared considerable amount of data but were reluctant to disclose

their identity.

3.4.4 Data Analysis

This study was based on the case study method. Two Indian and two

global retail companies were studied in detain with respect to their

Performance Measurement Practices. The focus of the study was on

contemporary practices of Indian retailers and the comparison of those

practices with global retailers. Two types of comparisons were thus

important. One, inter-company comparisons, i.e. comparing practices of

all four selected companies on certain parameters and two, inter-group

comparisons, i.e. comparing the Indian trends with global trends.

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Data was collected from primary and secondary sources. Data obtained

from the questionnaires and in-depth interviews was quantitative to some

extent. Such data was tabulated and used for inter-company and Inter-

group comparisons. Statistical tools like averages, graphs and charts were

also drawn from the data. Certain data was available in terms of rankings

given by the respondents. Spearman‟s Rank Correlation Coefficient was

calculated and used for inter-company and inter-market comparisons

A lot of data was qualitative in nature. It was in the form of opinions and

perceptions of top management and experts. Some data was in the form

of procedural details like methods used or time taken. Such data was

tabulated and compared across companies and groups. The qualitative

data was extremely important for the purpose of comparing the

perceptions of Indian retailers with each other and as against the global

retailers. Analysis of the qualitative data led to some valuable insights

and important findings.

3.5 Presentation of Research

The scheme of presentation of research is as follows:

Chapter 1: Introduction

This chapter includes a discussion on the history of organized retail. It

takes a review of retail sector in India and at the global level. The chapter

looks at the key concepts like Management Accounting, Performance

Measurement Systems, etc. It also outlines the need and utility of the

study.

Chapter 2: Review of Related Literature

Books, reports, articles and research papers were reviewed with respect to

the following topics

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Management Accounting tools for Performance Measurement

Performance Measurement practices in Retail industry

Factors affecting performance of retailers

Chapter 3: Research Methodology

The chapter included the following sub-sections.

Problem formulation

Scope of study

Research Design

Data Analysis and Presentation

Chapter 4: Profiles of Companies

Profiles for all four Indian retail companies, along with four global

retailers are discussed in the first part of this chapter. In the second part,

certain aspects of the two selected Indian companies and two global

companies are discussed. Keeping the nature of the data in mind, the

names of the four companies and respondents are not disclosed anywhere

in the thesis.

Chapter 5: Performance Measurement Systems: Analysis of

Substantive Factors

This chapter covers the analysis of the substantive issues. The issues

covered in this chapter are concerned with the various performance

measures used by the companies under study and the perception of the

respondents about various factors affecting the performance of their

respective companies. This chapter covers the inter-company and inter-

group comparisons of the substantive factors. The chapter also covers

discussion on the linkages between the factors affecting performance and

the various performance measures used by the selected companies. This

chapter deals with hypothesis number one and two.

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Chapter 6: Performance Measurement Systems: Analysis of technical

Factors

This chapter covers the analysis of the technical issues related to the

Performance Measurement Systems. The various aspects discussed in this

chapter include selection, designing and revision of Performance

Measurement systems, operational Aspects of Performance Measurement

Systems, Impact of Performance Measurement systems on the

organisation and the future expectations about Performance Measurement

Systems as expressed by the respondents. This chapter covers hypothesis

number three, four, five and six.

Chapter 7: Summary of Findings, Conclusions, recommendations and

areas for future research

This chapter brings together the highlights of the chapter four to six and

draws conclusions therefrom. It proposes certain recommendations based

on the research findings and suggests area for future research.

The next chapter focuses on the substantive issues and presents the

findings on the same.