CHAPTER - 1

INTRODUCTION

The retail sector is among the most dominant industries worldwide and highly competitive. The
retail industry encompasses companies that design and sell clothing, footwear and accessories
for men, women, and children. Influential factors to the growth of apparel retailers revolve
around fashion trends and consumer income. As consumer spending is the key to the viability
of any economy, the health of the retail industry becomes an important economic indicator.
(Zachs Equity Research, 2013). A number of major players have saturated the market, but there
are also countless niche stores that cater to specific demographics. Consequently, companies
rely heavily on effective marketing and merchandising techniques for profitability.

Moreover, the retail industry‘s success is dependent on market forces that make it experience
more fluctuations than perhaps any marketplace. This report attempts no only to answer the
areas mentioned below, but also to explore the economic factors and their implications to the
retail industry such as: an increase of cautious consumer spending, increased competition,
varying consumer fashion taste, and the global financial crisis. Although clothing is a basic
need, people have wide discretion as to when they update their wardrobes and how much they
spend. When times are good, apparel sales are usually brisk, but during periods of economic
uncertainty and contraction, clothing is an area where people can easily trim outlays. (Spencer,
2013)

―Fashion and quality at the best price.

In order to analyze the retail apparel industry four comparable-stores were chosen; some with
foreign operations and others with only domestic operations. Hennes & Mauritz (H&M) based
in Sweden was selected as the foreign company with U.S. operations. Marks & Spencers
(M&S) based in the United Kingdom was selected as the foreign company without U.S.
operations. Abercrombie & Fitch (A&F) and Pacific Sunwear of California (PacSun) are U.S.
companies, but only PacSun doesn‘t have foreign operations. The analysis is divided into five
parts. Foremost, an overview of each company is provided, along with their operations, and
economic environment. Secondly, a comparison of all four financial presentations are made
including reasons for their similarities and differences. Third, a comparison of the companies‘
financial footnotes disclosures are analyzed. Fourth, a review of overall disclosures and
presentations. Finally, the companies‘ financial statement impacts are analyzed.

Hennes & Mauritz (H&M) is engaged in the sale of clothing and cosmetics in Sweden and
internationally. H&M is a Sweden-based company operating under such brand names, as H&M,
H&M Home, COS, Monki, Weekday, Cheap Monday and & Other Stories. It is engaged in the
design, manufacture and marketing of clothing items and related accessories. The Company‘s
product range comprises clothing, including underwear and sportswear, for men, women,
children and teenagers, as well as cosmetic products, accessories, footwear and home textiles.
The Company offers its products in a number of branded stores spread across over 40 markets.
Additionally, the Company offers online and catalogue sales in Sweden, Norway, Denmark,
Finland, the Netherlands, Germany, Austria and the United Kingdom. In August 2013, it
launched an online store in the United States.

The company fist opened a women‘s clothing store; Hennes (Swedish for ―hers‖) and later
acquired a men‘s clothing store Mauritz Widforss. The company offers fashionable apparel
tailored for women, men, teenagers and children. The clothes range from updated classics and
basics to clothes that reflect the latest international trends. H&M‘s main concept is fashionable
clothes at a functional price. It currently holds 3000 stores in 52 countries including the United
States. Germany is its #1 market accounting for more than 20% of sales. The company doesn‘t
own any factories but its goods are acquired from Europe and Asia. H&M is the number one
user of certified organic cotton in the world. "Being one of the biggest fashion companies puts
high demand on our sustainability work and we take this responsibility seriously. There are a
number of things that stand out such as being the biggest user of organic cotton in the world,
being the first fashion retailer to launch a garment recycling initiative globally and promoting
transparency by disclosing our supplier factory list," says Helena Helmersson, Head of
Sustainability at H&M.

The company is focused on fashion, quality and best practices, most recently following a high
sustainability development practice. By embracing the environment, and promoting ethical
behavior, H&M has been able to change the way it engages with the community and business
partners around the globe. H&M‘s focus on sustainability applies to everything from using
sustainable materials, responsible water management, use of renewable energy and most
notabily the ability for customers to trade in old clothes for reuse or recycling purposes. H&M
sustainable efforts have not gone unnoticed. In 2012, H&M once again qualified for the Dow
Jones Sustainable Index World, which lists the companies leading the drive towards more
sustainability. H&M‘s supply chain also contribute the economic growth of developing
countries by providing over 1 million jobs worldwide. H&M is able to provide quality apparel
by conducting business transactions with only the most qualified and experience suppliers,
primarily in Asia and Europe.

Furthermore, H&M works closely with suppliers to train and educate both suppliers and
employees on important areas such as workers‘ rights, health and safety. H&M prides itself in
taking a global initiative to increase working conditions and it has been a very successful agent.
For example, in 2010 CEO Karl-Johan Persson urged Bangladeshi Prime Minister Sheikh
Hasina to increase minimum wage levels in the textile industry and were implemented the
same year. The initiative exemplifies the transfer of the company‘s Swedish labor market
model to foreign suppliers. There are multiple activities H&M practices in order to provide
sustainable and ethical commodities to its market base such as: fashion for conscious
customers, selecting and rewarding responsible business partners, practicing ethical principles,
being climate smart, reducing waste, and committing to natural resources. Above all, H&M is
able to offer high fashion at low prices with efficient methods such as in-house design, large
purchasing volumes and no middlemen.

H&M‘s affordable chic fashion apparel have awarded them as one of the most profitable retail
companies in 2013. Nevertheless, the retailer has suffered from the faltering global economy
just as many others in the industry. The Euro. Performance earlier in the year was hit by a chilly
spring in Europe. The company reported an increase in sales. Maybe because of its expansion
into China and Japan and the Asian consumers rising income and heightened demand for style.
Although the Euro crisis and a global economic downturn has affected retail consumption in
several European countries, Sweden‘s H&M‘s expansion is not deterred. In fact, they are
projected to launch 350 new stores by the end of 2013. ―H&M is expanding globally and will
have more than 3,000 stores before the end of 2013,‖ said Karl-

Johan Persson, CEO.

In 2012 the Group stepped up the rate of expansion and opened 304 new stores net compared
to the originally planned 275 stores. By the end of the financial year 2012, H&M had a total
of 2,776 stores in 48 countries. New stores opened in markets around the world. Most new
stores were opened in China and the US but Russia, Italy, Poland, France, Spain and the UK
were also large expansion markets. According to their Annual Report 2012 Five new
markets are planned also for

2013: Chile, Estonia, Lithuania, and Serbia and (via franchise) Indonesia. With the
opening in Santiago de Chile H&M takes the first step into the southern hemisphere. The
two-floor

store is situated in the very best business location, in the Costanera Center shopping mall, and is
the first H&M store in South America. Just as in other parts of the world, there is great potential
for continued expansion in this fashion-conscious region.

The strong pace of expansion continues into 2013 with a planned 350 new stores net. The
highest rate of expansion will be in China and the US. There is also great potential for
expansion in other markets such as Russia, Germany, the UK, Italy, Poland and France. Before
we move into a new country or city an assessment is made of the market‘s potential. Factors
such as demographic structure, purchasing power, economic growth, infrastructure, political
risk, human rights and

environmental sustainability are analysed. (H&M Expansion Strategy).

H&M does not only interact with customers on a brick and mortar basis but it also has
expanded its online presence in 2012. The company invested heavily on information technology
sector in order to provide customer with trendsetting and appealing website. Fashion
enthusiasts flock to hm.com for the latest fashion forward apparel and actively interact with
H&M‘s social media accounts. H&M is one of the leading fashion companies on Facebook,
Twitter, Instagram, Google+ and YouTube with hundreds of active followers. Since January
2013, H&M shop online is completely mobile-adapted and tech-user friendly. Investments in
online sale and IT are projected to bring higher profits by expanding on the company‘s product
range. H&M quickly adapted to the increasingly growing online market via smartphones and
tablets. And although profits for 2012 were hindered by strong technology investments the
company still reported a profit growth of 7 percent after tax and currency translation.

The company trades on the NASDAQ OMX Nordic Exchange Stockholm, Sweden under the
name H&M B. H&M gained as much as 5.4 percent to 262.70

Swedish kronor in Stockholm trading. (Gustaffson, 2013). The company is also present in
online market in order to meet the rapid expansion. The company has

invested heavily on online marketing and computerization for online shopping like smart phone
and tablet compatibility. H&M‘s shop online is available in 9 European markets and the US.
The easily navigated digital store is fully mobile-adapted since January 2013 and already very
popular with our customers. Roll-out of shop online to other markets of the H&M Group will
follow. COS, Monki, Weekday and Cheap Monday offer sales online in 18 European markets
while & Other Stories is available online in 10 European markets.

H&M's business concept is to provide its customers with high value by offering fashion and
quality at a low price. The clothes are created with the intention of satisfying a broad spectrum
of customers, with different tastes and needs. The company does not manufacture the products
by itself, but rather buys the clothes from independent suppliers who are located primarily in
Asia and Europe. Also, H&M rents the stores where the products are sold. (OMX NASDAQ,
2013).

While there has been great success abroad, H&M has faced struggles in the U.S. market. While
the company‘s scattered presence diminishes the importance of the U.S., the region still is
H&M‘s second-largest in terms of sales and locations. The problem with that is twofold: One,
there has been lots of chatter about weak consumer sentiment here in the states, especially in
the wake of weak second- quarter numbers from Walmart, Macy‘s and others. Secondly, H&M
was late in establishing an e-commerce presence in the U.S. The move was delayed several
times and just launched last month. While it‘s indeed a case of better-late-than-never and could
be a boon to its business now, some have suggested the delay had already sent many
fashionistas to e-commerce rivals. (Oursler, 2013).

Nevertheless, H&M has become one of Europe‘s fastest growing retailers by following unusual
sales approach. The company specializes in offering fashionable and hip clothing, but with
pricing intended to attract discounted shoppers. As a result, of its strategy, it has been dubbed a
purveyor of ―fast-food fashion.‖ (By, 1999).
H & M Hennes&Mauritz AB (H&M) is a Swedish multinational retail-clothing company,
known for its fast-fashion clothing for men, women, teenagers and children.

H&M exists in 53 countries and as of 2013 employed around 116,000 people. The first store
was opened on the high street ofVästerås, Sweden in 1947. It had 2,325 stores at the end of
2011 and 2,629 stores at the end of August 2012. It is ranked the second largest global clothing
retailer, just behind Spain-based Inditex (parent company of ZARA), and leads over third
largest global clothing retailer, United States based GAP Inc.

The design team in the company‘s Sweden office controls the steps of production, from
merchandise planning to establishing specifications, and production is outsourced to
approximately 800 factories in Europe and Asia. These facilities are used for horizontal division
of labour, rather than being integrated.
HISTORY

In 1946 the company's founder ErlingPersson was on a trip to the United States and came up
with the business idea of offering fashionable clothing at attractive prices. In 1947 he opened
his first shop Västerås, Sweden "Hennes", which exclusively sold women's clothing. "Hennes"
is Swedish and means "for her" and/or "hers". In 1968 the hunting apparel retailer
MauritzWidforss was acquired, which led to the inclusion of a menswear collection in the
product range and the name change to "Hennes&Mauritz" (H&M). In 1998, the company
successfully gained control over the initials "HM" for its Internet domain HM.com.

2012
H&M opens in Bulgaria, Latvia, Malaysia and Mexico, and via franchise in Thailand. COS
opens in Finland, Italy, Poland, Hong Kong and Austria, and opens via franchise in Kuwait.
The Monki brand grows in China and Weekday opens in the Netherlands.

2013
The first H&M store in the southern hemisphere opens in Chile. H&M also opens in Estonia,
Lithuania and Serbia. Indonesia becomes a new franchise market. H&M introduces online
shopping in the US. The H&M Other Stories brand is launched in several European countries.
COS, Monki, Weekday and Cheap Monday also open in new markets. Weekday and Cheap
Monday launches online shopping. A global clothing collecting initiative starts in selected
stores.
MARKETING MIX

PRODUCT PLACE
• Clothing products is very fashionable • 2500 hundred store worldwide in 43
• Offer clothing concept for men, market
women and children • Aim is to open store in busy area such
• Also sell women footwear and home as popular mall and big cities
decor. • Soon will sell products online
• Known for style and high quality
worldwide

PRICE
• Known for chic, stylish clothing for
low price
• Business concept: fashionable and high
quality clothing with BEST PRICE.
• It is quite cheap, rarely you will see in
item over $100.00.
PROMOTION
• Main way of getting their clothing out
in main market is through the H&M
magazine
• Also showcase their clothing through
social networking sites like Facebook
and twitter
• Target audience 18-24 (mostly young
women)
• It attracts that target audience because
it attracts budget minded customers
ORGANISATIONAL STRUCTURE

HEAD
OFFICE
(Stockolm)

Finance Account Expansion Interior Advertising

Design IT Community Investor Logistics

Human Security CSR

Production Country
Offices Offices
(16) (16)
LOCATIONS

 Asia  Thailand
 Europe
 Turkey  Ireland
 Middle East  Lithuania
 Serbia
 Philippines  Croatia
 China  The Americas
 Canada
 Hong Kong
 United States
 India  Mexico
 Brazil
 Indonesia
 Chile
 Japan
 Malaysia
 Singapore
 South Korea
 Oceania
 Australia
 H&M world map

300+ stores
200+ stores
100+ stores
50+ stores
20+ stores
10+ stores
1+ store
Upcoming stores
H&M SUPPLY CHAIN
Their approach is to use their influence wherever possible to promote good practice and raise
awareness, not only among their suppliers and their employees as well as others along their
value chain. H&M believe that working together in partnership is the best way they can make a
positive difference.

H&M supply chain involves a number of processes and people

Buyers
H&M‘s buying office is based in Stockholm, Sweden. Here, their designers, pattern makers and
buyers, together with merchandisers in their production offices, create, plan and purchase
theircollections.

Merchandisers
Based in one of their 15 production offices in Asia and Europe, merchandisers are the link
between H&M‘s buying office and their suppliers. They identify which suppliers to place
orders with.
Auditors
Based on their production offices and sustainability team – consisting of more than 80 people –
they monitor suppliers‘ compliance with their Code of Conduct through their Full Audit
Program (FAP) and support progress with actions that go beyond monitoring.

The code of conduct includes issues such as:

 Legal Requirement
 A ban on child labour
 Health and safety
 Worker‘s right
 Housing Conditions
 The Environment
 Systems approach
 Monitoring
 Enforcement
Suppliers
H&M‘s first-tier suppliers sign their Code of Conduct before producing for H&M and they
monitor their compliance with it. They aim for their suppliers to take more and more ownership
for ensuring good working conditions and environmental performance themselves. They
support them in a number of ways, including the provision of training and capacity building.
They also help them to develop and improve management systems that will avoid non-
compliance on an on-going basis.

H&M‘s primary focus is on their strategic suppliers. Strategic suppliers are their best suppliers
in terms of the balance between price, lead-time, and compliance with their Code of Conduct,
quality and sampling.

A supplier may own different factories. In some cases, suppliers may also subcontract other
factories for certain tasks. All factories in which production for H&M takes place, no matter if
directly contracted or subcontracted must comply with their Code of Conductand are subject to
our Full Audit Program.

Second-tier suppliers
These are the suppliers of their suppliers. They might include fabric or yarn manufacturers for
example. In general, H&M has no direct relations with these companies. Accordingly, they
have less direct influence. However, they work in various ways to contribute to improvements
at this and other stages upstream in their value chain for example through our Mill
Development Programme.
Factory employees
Hundreds of thousands of people work in their supplier factories. They think that factory
employees should know their rights and be able to claim them. As a buyer, they have a
responsibility and an opportunity to contribute to better workplace conditions and to work
to raise awareness of rights at work among both factory employees and managers.

Designing
Manufacturing

• The actual dyeing and cutting of the garments can then be

decided at a later stage in the production.
• The later an order can be placed on suppliers, the less the risk
of buying the wrong thing.
• Sub-contractors are used for most labor intensive operations
like sewing.

Distribution

• It stock management primarily handed internally, physical distribution is subcontracted.

• A large part of the production of the flow of goods is routed from production side to the
retail country.
• Then the goods are inspected and allocated to the stores or to the centralized store stock
room. It call as ‗Call-off warehouse‘

Retail

• Average Size of store is 1300 m2

• Aim of their stores is ‗create a comfortable and inspiring atmosphere in the store
that make it simple for customers to find what they want and to feel at home‘
FACTS ABOUT H&M

 H&M‘s business concept is to offer fashion and quality at the best price.

 H&M was established by Erling Persson who opened the first store in Västerås, Sweden
in 1947. Today there are 3,100 stores in 53 countries.

 H & M Hennes & Mauritz AB comprises six independent brands: H&M, COS, Monki,
Weekday, Cheap Monday and & Other Stories.

 116,000 dedicated people, all passionate about fashion, are employed by H&M.

 H&M offers everything from the hottest trends to the best in basics for women, men,
teenagers and children complete with shoes, accessories, cosmetics and a home interiors
concept.

 The collections are created by 160 in-house designers and 100 pattern makers.

 Sustainability is an integral part of H&M‘s operations and we work actively to ensure a

more sustainable chain of design, manufacturing and product handling for both people
and the environment.
 H&M does not own any factories, but instead works with 800 independent suppliers,
mainly in Asia and Europe.

 In 2013, the turnover including VAT increased to SEK 150 billion.

 H&M‘s growth target is to increase the number of stores by 10–15 per cent per year and
at the same time increase sales in comparable units. The growth is entirely self-financed.

 Online shopping is available in several European countries and in the US. H&M sees
potential for online sales in all markets.

 Quality is key for H&M – from initial idea to final product.

 Strong, clear values guide the teamwork at H&M. These values comprise the H&M
Spirit, which is rooted in a fundamental respect for the individual and a firm belief in
each person‘s ability to show initiative
 CHAPTER-2

COMPANY PROFILE

Fab India was established by John Bissel in 1960 in order to amalgamate the best aspects of
East/ West collaboration. He was determined to showcase Indian handloom textiles while
providing equitable employment to traditional artisans and also to develop India‟s export
potential in its emerging textile industry. Over the years the focus of Fab India's marketing
shifted from exports to the local Indian retail market. What started as an export house has today
become a successful retail business presenting Indian textiles in a variety of natural fibers, and
home products.
LOCATION

Fabindia has 172 retail stores across India, 3 stores in Mauritius, 2 stores in Dubai and 1 store
each in Italy, Nepal and Singapore.

India:

• Agra
• Ahmedabad
• Delhi
• Amritsar
• Chennai
• Bangalore
• Coimbatore
• Goa
• Imphal
• Dehradun
• Mumbai

Foreign countries

• Italy
• Mauritius
• UAE
• Singapore
• Italy
The FabIndia Ecosystem

 Fabindia enjoys a Network of 167 stores across India‘s 35 top towns.

 Its supply chain is based on Supply chain based on inclusive capitalism: co-option of
22,000 artisans and making them into shareholders through an elaborate community-
owned model.
 Designers and business experts are directly employed by Fabindia. Few of the designers
work with the artisans while others form the product selection committee. The key
responsibility of this committee is to select new artisans and weavers and ensure that the
quality standards are met before ordering the products.
 Fabindia created a fund, Artisans Micro Finance Private Limited (AMFPL), a fully
owned subsidiary of Fabindia that would bring these artisans into regional supplying
companies spread across the country. By creating private limited companies it became
easier for these companies to borrow money from banks against orders from Fabindia.
 Over the years, Fabindia has added several new product lines to its business — from
apparel to furniture, jewellery and personal care products and even organic food. But it
kept adding new SKUs (stock keeping units) in the existing space with the result that
many of its stores are now packed to the brim.
SUPPLY CHAIN: FABINDIA

FabIndia‘s suppliers are predominantly fromrural India. The supplychain has 2 suppliers, the
artisans and the fabricators. The artisans are the weavers or painters from a rural background so
the designers are the ones who are responsible for communicating with the artisans and making
them aware of urban needs and trends. The designers have a deep knowledge of textiles as well
as the urban sensibilities.

Since most of the FabIndia artisans are poor and illiterate there are few written contracts that
existand govern supplier behaviour. Each potential supplier comes through a reference from an
existingsupplier. Initially the supplier is given a trial order and based on the performance of the
supplier,they get regular orders.
The FabIndia supply chain has moved on from a centralized warehouse model to a
moredecentralized model. To shorten the supply chain and incorporate the artisans within the
process ina greater way, FabIndia introduced the concept of community owned companies. The
weaver approaches the Supply regional company i.e. SRC with. At the SRC level the designer
steps in to help artisans produce something relevant to the target market. The design is then
approved by the PSC or the product selection committee. Here the fabrics and the quality of
factors like colour fastness are determine and compared to the company set benchmarks. One
the product is selected by the PSC the order is placed after price negotiation with the weaver.
The orders are completed by the weaver and brought to the company warehouse. The fabric is
delivered in the form of thaans. However there is no uniformity in terms of the length of
fabricincorporate in each of the thaan. It varies from 20m to 50m. The stock then moves from
the SRCwarehouse to the regional warehouse. The issue that FabIndia faced in the initial stages
wasorchestrating the supply chain which would cater to the large volume of supplies as well as
maintain quality. To resolve this, the model of SRC s was introduced. The SRC are in direct
contact with the artisans and serve as interfaces to the urban markets. The SRCs are also
responsible for getting the artisans credit and capital that they require. 17 SRCs have been setup
in different parts of the country to deal with suppliers across the length and breadth of the
country. The artisans have a 26% stake in the SRCs and the rest is owned by the investors and
the FabIndia.
Once the order has been received at the SRC warehouses it becomes a part of the FabIndia
onlineinventory system. The levels of stock and orders for a particular product can thus be
monitoredonline by the retailer. As and when the retailers place their orders the products are
moved fromthe SRC warehouses to the regional warehouses and distributor points. At each
regional warehousea continuous review model for inventory of products is followed. On the
retailer side, each retailerorders as a single entrepreneurial entity. For various kinds of products
bins or wallet sizes aredefined and the retailer is allowed to stock up only up to a given wallet
size.
SRCs have evolved the supply chain of Fabindia from a centralized model to a regional supplier
companies. Benefits of this novel approach:
 Enabling it to create 100,000 sustainable rural jobs across India
 Access to working capital – the main hurdle to capacity building
 Direct interface with artisans
 Closer to sourcing – shortening the supply chain, better quality and pricing
 Enables the purchase of materials in bulk so as to get the best price
USE OF TECHNOLOGY IN FABINDIA’S SUPPLY CHAIN
In 2005, FabIndia decided to transform and strengthen its Supply Chain with the goal to
increase monthly revenues from 8 crores per month to 20 crores per month. A major step in this
effort was to automate a major portion of the ordering process. As a result two distinct modules
were created.
B2C Module
This was nothing but the website www.fabindia.com which was transformed to an online
shopping website where the entire range of products in Fabindia was contained. This website
was linked with domestic and international courier companies who would pick up the ordered
item from the warehouse in Delhi and deliver it to the e-customer. The B2C module served
domestic‗click‘ customers and international customers, who wanted Fabindia products but did
not have access to a store.
B2B Module
This was the software developed to connect Fabindia stores to the SRC warehouse. This
allowed
store managers to independently order from each of the SRCs. This would allow for
streamlining of order and delivery. The B2B module would also help to project future growth
by also acting as a forecasting tool.
INVENTORY MANAGEMENT FOR AN INDIVIDUAL STORE

Wallet
To understand how an individual store manages its inventory, it is vital to understand the
concept of the ‗Wallet‘which is unique for each store. This is the maximum amount of
inventory a store is allowed to own at any given time. The maximum value of the Wallet is a
function of the monthly sales. For example N-14 in New Delhi, which is FabIndia‘s largest
store, has a wallet size of 1.5crores (monthly sales) * 3 months = 4.5 crores. That is N-14 is
allowed to hold only 3 months ‗worth of inventory. When the store manager places an order to
the SRC through the B2B module the walletdecreases by that amount. As the stock is sold and
invoiced by the store, the wallet opens up andmore stock can be ordered. Seasonal items need to
be ordered 3 months in advance because of large volumes that are required whereas perennial
items need only a month‘s lead time.

Dual order process flow for perennial items

The distinction between FabIndia and other garment retail chains is that FabIndia does not
return
excess inventory to its supplier. This is due to their philosophy of uplifting rural craftsmen and
artisans. To prevent overage, FabIndia stores follow a dual order strategy – Bulk Order and
BackupOrder.

Bulk Order
 Between the 1st and 5th of a month the store manager prepares an excel sheet with
expected demand for each item. This is calculated form previous sales. This excel sheet
represents 70% of the next month sales. The store manager then mails this sheet to the
SRC.
 By the 20th of the month, the SRC returns this sheet with the available products
highlighted as per the order. It also mentions alternatives for items which are stocked
out.
 On the 21st the store manager specifies her final order on the B2B depending on product
demand and availability. The store‘s wallet then decreases by this amount.
 The order is delivered by the SRC from the SRC warehouse to the market
regionwarehouse. From there it is transported to the store by the 1st of the next month.
Backup Order
Meanwhile on the 15th of the same ordering month after selling a percentage of the month‘s
stock, the store manager calculates how much inventory is required for the rest of themonth.
She uses the remaining 30% of the wallet to place the back-up order on the B2Bafter checking
the availability with the SRC. As the order is a much smaller one, it is deliveredto the Store by
the 25th of the same month. The back-up order is only placed in times whenthe demand is high
and cannot be served by the initial bulk order.
The dual order system allows for a greater accuracy in ordering as the demand for the first 15
days isnoted and is used to place the backup order. This system allows the store to reduce
overage anddecrease inventory holding costs especially since individual stores do not have
large storage space.

FUTURE SUPPLY CHAIN

As has been mentioned, the primary reason as to why FabIndia has been so successful has been
itsability to draw in the artisan community into the supply chain by making them joint owners
in the of the networks. This not only gave them a constant source of income through
consistency of orders but also gave them a market for their products and dividends from the
performance of the suppliercompanies.
However, FabIndia has come a long way since its William Bissel took over in 1999. FabIndia
currentlyhas a turnover of c. Rs. 500 crore and plans to double this number in another 4 years.2
Fabindiacurrently runs around 170 stores in India and it plans to add another 25 - 30 every year,
focusingprimarily on smaller cities. The current structure of the supply chain will be
insufficient to cater tothe growth requirements of the firm. This is especially important since the
supplier companiesfunction as independent entities who are free to supply to other companies.
On the off chance thatdemands become too high, there is a chance of supplier migrating to
other retailers.

Some of the key issues being faced right now which would require a revamp of the supply
chain are:
1. Scaling
The present set of supplier companies are ill equipped to handle the increase in revenues
beingtargeted by FabIndia. This is all the more important given that FabIndia maintains a large
set ofSKUs (2.5 lakh on average). Since a large number of these require a large processing
time(products like silk scarfs go upto six months), it would require significant amount of
flexibilityand speed to produce. Also, since the networks are localised there are issued related to
logisticssince multiple products go through various hubs before they get delivered to the
requiredoutlet, which again increase go to market time.
2. Standardisation
FabIndia has been known to be historically focused on quality of its products. This
usuallytranslates into issues related to standardisation of products across suppliers at various
nodes.Since the material and competency in handiwork can change significantly across various
parts of
India, maintaining the same level of quality has become increasingly difficult for FabIndia. This
has also related in suppliers competing with each other for the FabIndia‘s nod more
aggressively.
There are also issues related to lack of modern equipment which governs standardisation of
products. This restricts the extent to which supplier companies can rectify issues related
tostandardisation. Lack of standardisation has further repercussions as repeat purchases
usuallyhappen when a benchmark quality is guaranteed.
3. Capacity and capital constraints
The scale of operations of supplier companies has increasingly become a huge bottleneck
sincethe above issues require investment in new age infrastructure. Since the cost of most
machinesrun into a few lakhs, most supplier companies find it difficult to find the capital
required toincrease capacity significantly.
This lack of capital has already resulted in a couple of supplier companies merging together
with
larger companies in order to justify the capacity increases. This merger has resulted in
theavoidance of middlemen and has significantly reduced delivery times at stores. This is
important
in order to maintain low levels of inventories which otherwise will need to be offered
atdiscounted prices.
4. Future product launches
FabIndia has acquired Organic India, a small firm which provide organic foods in order to
furthergrow in this segment. In the coming months the company plans to launch these products,
usingits supply chain network, in standard retail outlets. However, this might present issues
ofcompatibility since the current supply chain is not build to handle the pinpoint accuracy
andperishability of products required in organised retail of foods.
5. Tax issues
The changes in tax laws have dealt a body blow to the existing warehousing and supply
chainsystem of FabIndia. Not only have transfer pricing guidelines become more complicated
but so has the tax calculation and maintenance of the supply chain network.
In order to overcome these issues, the company is pursuing a strategy of integration through
themerger of the upstream entities in which case stakeholders of the SRCs will be given shares
of theparent entity at a pre-determined swap ratio. There are several advantages of this
integrated modelas opposed to their existing supply chain.

SUPPLY CHAIN OPTIMIZATION

The integrated supply chain has been proven to be superior capabilities as opposed to
standalone supplier and retail entities. AS we already know, some of this has been already built
in throughFabIndia‘s stakes in SRCs. A complete integration of the SRCs will lead a greater
degree of controlover the supply chain and better align the motives of FabIndia with those of
the artisans. This willlead overall greater order quantities and hence a greater amount of profits
 Ease of expansion: Bringing the SRCs under its gamut brings with it the advantage of
ease ofaccess to company capital and also helps artisans raise money much more easily.
This leads to an easier expansion of capacity
 Quality Control: The integration of the supply chain results in controlling delivery
times more easily through centralized processes using technology and also helps in a
greater degree of standardisation and defects in the raw material procured and used. It
also helps ensure a benchmark quality which ensures that a problem of non-repeat of
purchases does not occur In 2012 with more than 160 stores across India. Fabindia is
planning to expand its overseas operations. Fabindia has already emerged as one of the
leading exporters in ready to wear segment with the image of Indianbrand. The
segments belowwould try to answer the questions pertaining to Fabindia‘s expansion
strategy to leave a global footprint and whether the Indianbrand can gain significant
attention in international market at a time when it is becoming a fashion element in the
elite customer segment.
 Typical Order Flow between Stores, SRC and Artisans / Producers

CASE STUDY: Corporate Social Responsibility at FabIndia

GFJMR Vol. 3 July-December, 2011

Jeswal Ruchika, Asst. Professor, Institute of Management Studies, Gaziabad

Corporate Social Responsibility (CSR) can be defined as the "economic, legal, ethical, and
discretionary expectations that society has of organizations at a given point in time". The
concept of corporate social responsibility means that organizations have moral, ethical, and
philanthropic responsibilities in addition to their responsibilities to earn a fair return for
investors and comply with the law. Fab India works closely with artisans by providing various
inputs including design, quality control, access to raw materials and production coordination.
Fab India is trying to work with its artisans closely and is trying to maintain a supplier base.
Today Fab India has a number of retail outlets selling several products and trying to pass the
benefits to its artisans. CSR can be viewed as the key to not only overcoming competition but to
ensuring sustainable growth.

This case study aims to explore the concept of CSR at Fab India Pvt. Ltd and how it has been
turned to the strategic advantage of the same.

CSR-Asia defined Corporate Social Responsibility as a concept whereby companies integrate

social and environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis. Howard Schultz, the CEO of Starbucks once described
corporate social responsibility as ―trying to achieve a fragile balance of creating the necessity of
profitability and the balance of having a social conscience". Social responsibility is an
organization‘s obligation to engage in activities that protect and contribute to the welfare of
society. Social responsibility is a matter of intense debate. At one extreme, there are those who
strongly believe that organizations are in business solely to produce goods and services that
societies want –be they atomic weapons, legal advice, or lifesaving drugs – and that they are
entitled to make profits in return. For these people, social responsibility is, simply not an issue.
At the other extreme, there are those who believe that organizations should be allowed to do
business only if they do not harm, help solve social problems, and put some of the profits they
earn back to work for society. CSR is becoming a complete business strategy that aims to
ensure the long-term viability of the business, by assuming an active role in the development of
the community, the economy, and the environment through good business practices. The key
drivers of corporate responsibility in Indian companies tend to revolve around ethical
considerations and aim to strengthen the brand, as opposed to economic considerations, which
drive corporate responsibility investments globally.

CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) may be defined as the "economic, legal, ethical, and
discretionary expectations that society has of organizations at a given point in time". The
concept of corporate social responsibility means that organizations have moral, ethical, and
philanthropic responsibilities in addition to their responsibilities to earn a fair return for
investors and comply with the law. A traditional view of the corporation suggests that its
primary, if not sole, responsibility is to its owners, or stockholders. Corporate Social
Responsibility is the responsibility of the business towards the society that it takes from. It is
the management of the business in a manner such that it produces a positive impact on society.
However, CSR requires organizations to adopt a broader view of its responsibilities that
includes not only stockholders, but many other constituencies as well, including employees,
suppliers, customers, the local community, state, and federal governments, environmental
groups, and other special interest groups‟ .

Today, in this competitive business environment, it is viewed as the key to not only overcoming
competition but to ensuring sustainable growth. CSR initiatives by organizations have become
tools to pass the message of sustainable consumption among consumers, employees and society
at large. It is gradually becoming a complete business strategy that aims to ensure the long-term
viability of the business, by assuming an active role in the development of the community, the
economy, and the environment through good business practices.

COMPANY PROFILE

Fab India was established by John Bissel in 1960 in order to amalgamate the best aspects of
East/ West collaboration. He was determined to showcase Indian handloom textiles while
providing equitable employment to traditional artisans and also to develop India‟ s export
potential in its emerging textile industry. Over the years the focus of Fab India's marketing
shifted from exports to the local Indian retail market. What started as an export house has today
become a successful retail business presenting Indian textiles in a variety of natural fibers, and
home products.

CASE BODY

Fab India was founded with the strong belief that there was a need for a vehicle for marketing
the vast and diverse craft traditions of India and thereby help fulfill the need to provide and
sustain rural employment. They blended indigenous craft techniques with contemporary designs
to bringaesthetic and affordable products to today‘s consumers.

Their endeavour was to provide customers with hand crafted products which help support and
encourage good craftsmanship. Their products were sourced from villages all over India. Fab
India works closely with artisans by providing various inputs including design, quality control,
access to raw materials and production coordination. The vision continues to be to maximize
the handmade element in their products, whether it is hand woven textiles, hand block printing,
hand embroidery or handcrafting home products.

Fab India‘s managing director William Bissel, who conceived and steered the model, says that
unlike many Indian companies he doesn‘t believe in setting up a department to promote
corporate social responsibility(CSR) .He created an air of hope ,anticipation and excitement in
the sleepy village of Chanderi in the Ashok Nagar district of Madhya Pradesh .The local people
include about 1000 –odd weavers who were disappointed not just by no rain or no water but by
disappearance of the demand of their cherished fabric –Chanderi. They were then introduced to
the concept of becoming owners of shares in a community owned company .They were unsure
but bought shares because they thought that it could change their lives in some ways. That way
has been paved by Fab India, a retail outfit that has grown from one store in mid-1990‟ s to 85.
Dabbling in fabric, apparel, handicrafts and other products, it began an experimentwith
community –owned companies nine years ago in an attempt to include artisan in the wealth
creation process. Fab India had created a fully owned subsidiary Artisans Micro Finance, a
venture fund .It was owned 49 per cent by the fund, 26 per cent by the artisans, 15 per cent by
private investors and 10 per cent by the employees of the community –owned company .The
investment by these four categories of investors provides the paid up capital .The company
promotes the sales of its artisan community to Fab India, which is the principal buyer. Walk
into any of Fab India‘s high end retail outlets in major cities across India, and around the world
- the unique clothing and furnishing collections seem to be tempting, surprised by the store‘s
relentless focus on the customer and anybody would probably walk out with a big bag in hands.
However, one would never guess that the profits made from that store and many others across
the country are partly distributed among the weavers, about 20,000 of who are ‟ shareholders‟
of subsidiary companies floated by Fab India. The artisans gain in many ways .The value of
their shares goes up .They earn dividends when the company is in a position to declare them.
Eventually the company will try and offer loans to the artisans, arranged through banks. The
loans can be used to buy new looms or expand production of other products. Although the
villagers see it as a gamble they are convinced that it would work.

William Bissel is convinced that involving artisans and sharing benefits of growth with them is
the most sustainable of all models. The shares offer the artisans a divisible asset class and
community owned companies help convert FabIndia's artisan base into an asset. But the model
is not desirable from a social point of view alone. Fab India has moved from being a primarily
export house in the 1960‟ s to a turnover of Rs 300 crore, of which 90 per cent is domestic
sales. Its aim is to be a ―lifestyle alternative to mass produced ―

Artisans Microfinance Director Smita Mankad Quit ABN Amro to do something she believed
was worthwhile. „If you want grow at the pace we have grown, you have to carry your supplier
base with you,‖ she says, emphasizing that Fab India‘s growth will be hampered unless the
artisans grew with it. If FabIndia is changing the way the artisans work, the new model is
changing the way FabIndia works .The typical central warehouses owned by community –
owned companies from which goods travel directly to stores across India, This reduces logistics
costs and minimizes the role of Middlemen. While the system seems to be working for all
concerned, challenges remain .One of them is developing secondary markets so that the
companies can stand on their own feet. Critical to that will be introducing a consciousness of
the design element in the artisans so that their products have a wider appeal. Bissel says the
model will depend on the artisans beginning to understand the benefits of joining together in
something that‘s not cooperative‖. A cooperative imposes many restrictions upon them and
doesn‘t give them much in return, if you get together, you must create something that‘s bigger
than the sum of its parts. Fab India‘s entry made the biggest difference as it began to source
fabric worth Rs 1 crore a year from Chanderi.

Fab India sources its products from over 15000 craft persons and artisans across India. They
support the craft traditions of India by providing a market and thereby encourage and sustain
rural employment. Today they have retail outlets in all major cities of India - 85 at last count -
in addition to international stores in Rome, Italy; Dubai, UAE and Guangzhou, China.

Today FabIndia has expanded beyond textiles into furniture, stationery, pottery, organic foods
and body care products. All merchandise is sold under the single FabIndia brand and the
company owns all its stores as Bissell feels this helps the brand to maintain its identity.
FabIndia works closely with artisans and villagers to develop designs and colour palettes and to
optimize production techniques and raw material inputs. For the textiles, mostly natural fabrics
and vegetable dyes are used.

"We attract a specific type of customer and decided we want to give that customer the spectrum
of products," Bissell says of the product diversification strategy, adding that Fab India's
customers do not fit an age or demographic profile, but are a loyal base of people who want to
support craft.

But Bissell is also candid in admitting that some of the diversifications have had unexpected
problems. For example, Fab India's range of organic foods, which it launched in 2004, has a
limited audience and as it is perishable has a shorter shelf life than other FabIndia products.
FabIndia recently forayed overseas and has had some early success. For example, its store in
the Gulf has been quick to take off. But this has only reinforced Bissell's conviction that it is the
Indian Diaspora that makes FabIndia a profitable business. Penetrating overseas markets is a
"focus but not a large focus", says Bissell, who sees customers in India as the mainstay. The
business derives 90% of its revenues domestically. "Our global expansion will be targeted at
places where there are a large number of Indians," clarifies Bissell.
Bissell is clear that it is the firm's decision to stay focused over the decades of its existence that
is responsible for its success. "We have consistently operated in the niche we identified
initially," sums up Bissell, explaining the firm's philosophy. "We are like a restaurant which
serves only one kind of cuisine." And with takers abounding for that one type of cuisine, it is
clear Bissell is on to a good thing.
 CHAPTER-3

RESEARCH METHODOLOGY

'Research A way of examining your practice Research is undertaken within most professions.

More than a set of skills, it is a way of thinking: examining critically the various Aspects of
your professional work. It is a habit of questioning what you do, and a systematic
examination of the observed information to find answers with a view to instituting
appropriate changes for a more Effective professional service.

DEFINITION OF RESEARCH METHODOLOGY

According to Clifford Woody "research comprises defining and redefining

problems, formulating hypothesis or suggested solutions; collecting, organizing and
evaluating data; making deductions and reaching conclusions; and at last carefully testing
the conclusions to determine whether they fit the formulated hypothesis.

OBJECTIVES OF RESEARCH

The purpose of research is to discover answers to questions through the application of

scientific procedures. The main aim of research is to find out the truth which is hidden and
which has not been discovered as yet. Though each research study has its own specific
purpose, we may think of research objectives as falling into a number of following broad
groupings:

1. To gain familiarity with a phenomenon or to achieve new insights into it (studies with
this object in view are termed as exploratory or formulative research studies);

2. To portray accurately the characteristics of a particular individual, situation or a group

(studies with this object in view are known as descriptive research studies);

3. To determine the frequency with which something occurs or with which it is associated
with something else (studies with this object in view are known as diagnostic research
studies);
 4. To test a hypothesis of a causal relationship between variables (such studies are known
as Hypothesis-testing research studies.

RESEARCH DESIGN

Research Design is a systematic planning, organizing and executing a research project

within specified time limit and resource allocation. Research design tells the type of
data to be collected, the sources of data and the procedures to be followed in data
collection. Research design provides suitable framework that guides the collection and
analysis of data.

There are two types of research design:

1. Exploratory Research.

2. Descriptive Research.

1. EXPLORATORY RESEARCH

Exploratory Research is a method used when gathering primary information for a market
survey where targeted consumers I customers are asked very general questions geared toward
eliciting a lengthy answer.

2. DESCRIPTIVE DESIGN

Descriptive research, also known as statistical research, describes data and characteristics
about the population or phenomenon being studied. Although the data description is factual,
accurate and systematic, the research cannot describe what caused a situation. The description is
used for frequencies, averages and other statistical calculations. Often the best approach, prior to
writing descriptive research, is to conduct a survey investigation.
 RESEARCH PROCESS
The research process has four distinct yet interrelated step for research analysis It has a logical
and hierarchical ordering:

a. Determination of information research problem

b. Development of appropriate research design

c. Execution of research design.

d. Communication of results.

Each step is viewed as a separate process that includes a combination of task, step and
specific procedure. The step undertaken are logical, objective, systematic, reliable, valid
impersonal and ongoing.

SOURCES OF DATA

a. Primary Data

b. Secondary Data

a. Primary data- The Primary Data for the report will be helpful in research analysis.
For collection of primary data following methods were used:

Questionnaire survey:

Data based on questions related to various aspects of After Sales and Services such as
delivery process, services provided by the company, satisfactory rate services provided by
the company to the customers etc.
a. Secondary data- The secondary Data has been collected through: News Paper

1) Magazines

2) Books

3) Internet

Basically secondary data gives the information about past or sometimes present of the topic
even but it is not necessary that the information will be beneficial for project and its specific
topic.

Instruments Used For Research: I prepared a questionnaire containing 9 questions and

filled it up by 15 employees of H & M City Centre Mall,Raipur and employees were of
higher, middle and lower level and thus, started my data analysis.

SAMPLE DESIGN:-

Sampling is a method of selecting experimental units from a population so that we can

make decision about the population.

Sampling design is a design, or a working plan, that specifies the population frame, sample
size, sample selection, and estimation method in detail. Objective of the sampling design is
to know the characteristic of the population

SAMPLE TECHNIQUES

Sample designing was done on the basis of RANDOM SAMPLING and CLUSTER
SAMPLING techniques.

Random Sampling gives every unit of the population a known and non-zero probability of
being selected. Since Random sampling implies equal probability to every unit in the
population, it is necessary that the selection of the sample must be free from human
judgment and biasness

Cluster Sampling implies that instead of selecting individual units from population, entire
 groups or clusters are selected at a random.

SAMPLE SIZE

In order to decide the Sample size, practical approach was applied to the field surv eys
and investigations would be worth for a research if only a small sample is chosen.

Tools and Techniques:

Various tools and techniques are used but the most important one used is the Pie chart. All the
diagrams are presented through Pie Charts.
 FINDING

1. On the basis of research it has been found that employee are very much
happy in the working style of the leader.
2. Girls gave more response for their safety with compare to boys.
3. Rules made by the organization are partially followed.
4. Gender ratio of male and female used by H & M for employment purpose
is 2:1.
5. Salary structure is not quite enough to retain the employee in organization for
a longer period.
6. While taking the sampling it has been observed that the employee
turnover ratio is quite high which show that employee are not so much
happy in the H & M.
7. Necessary authority to complete their responsibility is provided to
employees.
8. Working environment is participative.
 CHAPTER-4
DATA ANALYSIS

1. Since when have you been working in this company?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A 0-1 10 17%

B 1-3 18 30%

C 3-5 25 42%

D MORE THAN 5 YEAR 07 11%

A
B
C
D
2. Are you satisfied with the position that you are working at
present?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Highly satisfied 29 48%

B Satisfied 30 50%

C Average 01 2%

D Dissatisfied 0 0%

E Highly dissatisfied 0 0%

A
B
C
D
E
3. How would you say about the working conditions at this
restaurant?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Excellent 40 67%

B Good 20 33%

C Average 0 0%

D Poor 0 0%

E Very poor 0 0%

A
B
C
D
E
4. What are your views about the management and employer
behavior towards you?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Excellent 43 72%

B Good 17 28%

C Average 0 0%

D Poor 0 0%

E Very poor 0 0%

A
B
C
D
E
5. Is there any stressful aspect on your job?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Yes 0 0%

B No 60 100%

A
B
6. Does your organization organize any counseling programs for
the employees?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Yes 60 100%

B No 0 0%

A
B
7. Are you satisfied with the other facilities provided to the
employees by the organization?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Yes 55 92%

B No 5 8%

A
B
8. Do you feel the organization provide satisfactory
compensation structure according to the work?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Yes 60 100%

B No 0 0%

A
B
9. Do you feel there is any communication barrier between you
and management?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Yes 15 25%

B No 45 75%

Yes
No
10. Does job security existing in this company?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Yes 50 84%

B No 10 16%

A
B
11. If you get a chance to join again this organization?
would you like to Join?

S.NO PARTICULAR NUMBER OF PERCENTAGE

RESPONDENTS
A Yes 50 84%

B No 10 16%

A
B
 Bibliography

1. Kothari C.R, Research methodology, 2 nd edition.

2. W. Creswell, Research designe.

3. Mamoria CB, A Handbook of Human Resource Management 2004.

4. Your rights in the workplace, Barbara kate Repa.

5. How to deal with manager, Monmohan joshi.

Webliography;-

1. www.scribd.com

2. www.g1 obusstores.com

3. www.academia.com

4. www.h&m.com
QUESTIONNAIRE

I am ………………. student of M.COM (4th semester) of ………………..

College Raipur (C.G) and my research topic is ―A study of job
satisfaction of employees at globes with reference to city centre mall ’’.

Name –

Age-

Gender – Male [ ] Female [ ]

Q1.How many years have you been working with Globus?

a. 0-3 year.

b. 3-5 year.

c. 5-7 year.

d. More then 7 year.

Q2. Why choose Globes ?

a. Salary.
b. Time.

c. Near To Home.

d. Security.

Q3. Grade of salary ?

a. 5000-10000

b. 10000-15000

c. 15000-20000

d. 20000-25000

Q4.Are you satisfied with salary ?

a. satisfied.

b. Unsatisfied.

Q5.How much year he and she can work ?

a. 1-2 year.

b. 2-3 year.

c. 3-5 year.

d. 5-7 year.
Q6.Salary as per as your expectation ?

a. Yes.

b. No.

Q7.Are you happy with your leader?

a. Yes.

b. No.

Q8.How is working environment ?

a. Good .

b. Average.

c. Bad.

Q9.Which of the following factors motivates you most ?

a. Salary Increase.

b. Promotion.

c. Leave.

d. Motivational Talks.
e. Recognition.