IBSAR® Institute of Management Studies

Presentation
On
Management Control System
In
Retail Management

Submitted To ,
Prof. Manish Sharma
Submitted BY
Mahendra Dhenak – 17 ,
Amol Kulkarni – 40 ,
Rakesh Acharekar – 06 ,
Santosh Jaiswal –
Amir Ansari - 36

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Meaning of Retail Management
Retail management can refer to the way business is conducted in the retail sector : the
very stage in which goods and services are delivered to their end users.

As a job sector, Retail Management offers positions with names like Retail Store
Manager, Retail Area Manager or Retail Assistant Store Manager.

Depending on the business model, management can be conducted local or central

whereby the approach (how do we approach the customer?) is local, national or global.

It is the way business is lead in the retail sector - with retail being the delivery of goods
and services to end user (the last station in the production process).retail management is
the sale by seller in small quantities to customer not for resale

I prefer to understand "Retail Management" as: The process of bringing the ultimate user
to the main producer, through a series of stages, where retailing is the last one. It is not
limited to quantities, but limited to the exact requirement of the ultimate user. Therefore,
bringing about operational efficiency at this last stage, and creating an environment so
compelling that he looks nowhere else, is "Retail Management".

RM- is an art, and necessitates employing several tools of logistics management for a
complete end user satisfaction. RM - is getting to know the final user on behalf of the
producer. RM - is a process of facilitation.
It aimed at improving the performance of retail outlets.Retail Management System targets
small and midsize retailers seeking to automate their stores. The package runs on
personal computers to manage a range of store operations and customer marketing tasks,
including point of sale; operations; inventory control and tracking; pricing; sales and
promotions; customer management and marketing; employee management; customized
reports; and information security.

Top Retailers in India

. Shoppers' Stop
•Westside (Trent)
•Pantaloon (Big Bazaar)
•Lifestyle
•RPG Retail (Foodworld, Musicworld)
•Crossword
•Wills Lifestyle
•Globus

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•Piramals( Pyramid & Crosswords)
•Ebony Retail Holdings Ltd

Top Retailers in World

Retail Formats in India

Malls:
The largest form of organized retailing today. Located mainly in metro
cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and
above. They lend an ideal shopping experience with an amalgamation of product,
service and entertainment, all under a common roof. Examples include Shoppers Stop,
Pyramid, Pantaloon.
Specialty Stores:
Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer
Crossword, RPG's Music World and the Times Group's music chain Planet M, are
focusing on specific market segments and have established themselves strongly in their
sectors.
Discount Stores:
As the name suggests, discount stores or factory outlets, offer discounts on
the MRP through selling in bulk reaching economies of scale or excess stock left over

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 at the season. The product category can range from a variety of perishable/ non
perishable goods.
Department Stores:
Large stores ranging from 20000-50000 sq. ft, catering to a variety of
consumer needs. Further classified into localized departments such as clothing, toys,
home, groceries, etc
Department Stores:
Departmental Stores are expected to take over the apparel business from
exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers
Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq.
ft) across India and even has its own in store brand for clothes called Stop!.
Hypermarts/Supermarkets:
Large self service outlets, catering to varied shopper needs are termed as
Supermarkets. These are located in or near residential high streets. These stores today
contribute to 30% of all food & grocery organized retail sales. Super Markets can further
be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large
supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food &
grocery and personal sales.
Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near residential
areas. They stock a limited range of high-turnover convenience products and are usually
open for extended periods during the day, seven days a week. Prices are slightly higher
due to the convenience premium.
MBO’s :
Multi Brand outlets, also known as Category Killers, offer several brands across
a single product category. These usually do well in busy market places and Metros.

Meaning of Management control system

It is plan assuring that resources are obtained and used effectively and efficiently in the
accomplishment of the organization's goals .It include the plan of organization, methods
and procedures adopted by management to ensure that its goals are met .
Is the process of evaluating, monitoring and controlling the various sub-units of the
organization so that there is effective and efficient allocation and utilization of
resources in achieving the predetermined goals
Management control is a process of assuming that resources are obtained and used
effectively and efficiently in the accomplishment of the organization’s objectives. It is a
fundamental necessity for the success of a business and hence from time to time the
current performance of the various operations is compared to a predetermined standard or

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ideal performance and in case of variance remedial measures are adopted to confirm
operations to set plan or policy.

MANAGEMENT CONTROL SYSTEM is an important process in which accounting

information is used to accomplish the organizations objectives. Therefore the scope of
control is very wide which covers a very wide range of management activities.

Functions of Management control system in Retail Management

Sales generation
A store manager must meet monthly , quarterly, or annual sales goals, depending on the
company's fiscal cycle. This involves setting individual sales goals (quotas), holding
contests for employees, or offering sales promotions. The manager may also receive a
monetary incentive (or "bonus") tied to financial performance over a specific period. This
incentive may be based on net sales, profitability, or both. Thus, the store manager may
be forced to reduce payroll expenditures by decreasing employees' hours, or otherwise
reducing operating costs.
Safety and security
The Store manager is the store's primary key-holder and may be called to the store
before, during, or after business hours in the event of an emergency. They are also
responsible for the safety of all customers and employees on store premises. Store
managers may be required to hold safety meetings, especially as dictated
by union practices in cases where store employees belong to a union.
Division of responsibility
A store manager may have several subordinates who have management-level
responsibility. These employees may be called assistant managers, supervisors,
keyholders, shift leads, or leads.
Hiring, training and development
The store manager is responsible for hiring, training, and in some cases, development, of
employees. The manager must ensure staffing levels are adequate to effectively operate
the store, and ensure employees receive training necessary for their job responsibilities.
Managers may be responsible for developing employees so the company
can promote employees from within and develop future leaders, potentially for
employment at other locations.
Visual merchandising and inventory control
In retail locations, store managers are responsible for visual merchandising. Many
companies communicate how to merchandise their stores using direction such
as planograms to indicate product placement. While managers have a varying degree of
autonomy in deviating from corporate direction, it is important to ensure that stores are
compliant with the company's brand image. Managers must ensure that the proper

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amount of inventory is displayed for customers to purchase, by ensuring that shelves and
racks remain stocked and that product is frequently rotated out of storage areas. Managers
are also concerned with shrinkage, and must ensure that merchandising techniques and
customer service skills minimize the possibility of product being stolen.
Responsibility Centres in Retail Management
A responsibility centre is an unit that is headed by store manage who is responsible for
its activities.A responsibility centre is an autonomies business unit for which a manager is
responsible for Cost, Revenue and Aquisation and disposals of an assets.A well-designed
responsibility accounting system should clearly define responsibility centers in order to
collect and report revenue and cost information by areas of responsibility .
A responsibility centre is an unit that is headed by store manager who is responsible for
its activities.A responsibility centre is an autonomies business unit for which a manager is
responsible for Cost, Revenue and Aquisation and disposals of an assets. A well-designed
responsibility accounting system should clearly define responsibility centers in order to
collect and report revenue and cost information by areas of responsibility.
a responsibility center in which the manager has the authority to incur costs and is
evaluated on the basisof how well costs are controlled

 delegation of responsibility for specific to successive lower levels of

organisation.
 motivation of the level of management to which a certain task has been
delegated.
 measurement of the achievement of specified objectives.

The key consideration in determining the responsibility centre is

 ability to control cost or revenue

 determining the question of controllability
 evaluation of responsibility centre as per predetermined criteria

The responsibility centres may be classified as

A -Revenue Centres
B- Expense Centres
I - Profit Centres
II - Investment Centres

A- Revenue Centres

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a responsibility center for which a manager is accountable only for the generation of
revenues and has no control over setting selling prices, or budgeting or incurring costs
The main focus of management control system will be on revenue generated by
it.Distinctly identifiable department, division, or unit of a firm that
generates revenue through saleof goods and/or services. Sales budget are prepared for
revenue centre and budgeted figures are compared with actual sales.
A revenue center is a profit center since for all practical purposes there is no revenue
center that does not incur some costs during the course of generating revenues. A
favorable variance occurs when actual revenue exceeds expected revenue. A center
devoted to raising revenue but with no responsibility for costs

B- Expense Centres
A cost center is part of store that does not produce direct profit and adds to the cost of
running a company. Examples of cost centers include research and development
departments, marketing departments, help desks and customer service.
Distinctly identifiable department, division, or unit of firm whose managers are
responsible for its all associated costs and for ensuring adherence to its cost-budgets.

 It is the lowest level of responsibility centre in an organization.

 Its manager is basically responsible for production of a product or service; his
decision authority relates to how human resource, machinery and materials should
be used to produce the product or service.
 Expense centre manager has no control over revenues, profits or investment.
 He has no control over marketing decisions or investment decisions.
 Total performance of an expense centre manager depends on how effectively and
efficiently an expense centre is operated.

I- Profit Centres
A store or department which is treated as a
distinct entity enabling revenues and expenses to be determined so that profitability can
be measured. A store or department which is treated as a
distinct entity enabling revenues and expenses to be determined so that profitability can
be measured.A profit centre is an organizational unit responsible for both revenues and
costs.Profit centre’s performance measured in terms of profit. It enhances profit
consciousness

 A profit centre is an organizational unit responsible for both revenues and costs.
 Profit centre manager has no control over the investment in the centre’s assets.
 Managers are concerned with both the production and marketing of the products.
 Activities of the manager is much more broader than that of a revenue centre
manager because of the responsibility to produce the product most efficiently.
 Profit centre’s performance measured in terms of profit.

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  It enhances profit consciousness
 Example:division of a company that produces and markets different products.

II- Investment centre

An investment centre is responsible for the production, marketing and investment in the
assets employed in the dept. Department or an area of responsibility, where
a manager controls revenues and associatedcosts, assets, and liabilities. His or
her performance is assessed largely on the basis of return on investment
(ROI) achieved .store manager responsible for profit in relation to amounts invested in
the division.

 An investment centre is responsible for the production, marketing and investment

in the assets employed in the dept.
 An investment centre manager decides on aspects such as the credit policies,
inventory policies, and within broad framework.
 Investment centre manager responsible for profit in relation to amounts invested
in the division.
 Financial performance of the manager of the division is measured by comparing
the actual with projected rate of return on investments of the centres

responsibility center within an organization that has control over revenue, cost, and
investment funds. It is a profit center whose performance is evaluated on the basis of the
return earned on invested capital.

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Auditing in Retail Management
Audit is the activity of examination and verification of records and other evidence by an
individual or a body of persons so as to confirm whether these records and evidence
present a true and fair picture of whatever they are supposed to reflect. Audits are most
commonly used in the accounting and finance functions .

1. An examination of records or financial accounts to check their accuracy.

2. An adjustment or correction of accounts.
3. An examined and verified account

To audit means to go through the process of examining and verifying a store's financial
records and supporting documents.Auditing is the examination and evaluation of
financial statements to check financial accuracy.

periodic, independent examination and verification of the assets and liabilities and
financial transactions and controls of a company to determine the reliability of
itsaccounting records. The objective is to enable the auditor to express an opinion on the
financial information provided. Auditing is a branch of the accountancy profession,
carried out by professionals qualified to form an independent opinion about the accuracy
of a company's accounts.

The audit aims to ensure that the company's financial statements provide relevant and
reliable information, although it cannot be assumed that an auditor's opinion is
an assurance about the future viability of the company or about the efficiency of
management in running it.

The benefits of an audit:

• Analyse and understand your company’s financial records.

• Identify key areas for improvement in your company.
• Assess risks, economy, efficiency and quality.
• Evaluate new technology.
• Uncover fraudulent or other illegal activities within your company.
• Reinforce and strengthen internal contro

Transfer Pricing in Retail Management

deciding on the price of goods or services that are exchanged between various divisions
of a decentralized organization. A major goal of transfer pricing is to enable divisions
that exchange goods or services to act as independent businesses. Various transfer pricing
schemes are available, such as market price , cost-based price , or negotiated price .

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Unfortunately, there is no single transfer price that will please everybody-that is, top
management, the selling division, and the buying division.
Usually the best transfer price is the outside market price less costs saved by dealing
within the company (e.g., transportation costs, advertising, salesperson salaries). If the
two division managers-buying division and selling division-cannot agree on a price, one
will be arbitrated by upper management. When an outside market price is not
available, budgeted cost plus profit markup may be used so that cost efficiencies at the
selling division are still maintained.A transfer is referred to the movement of goods from
a store to another, within the same company

The price that is assumed to have been charged by one part of

a company for products and services it provides to another part of the same company,
in order to calculate each store's profit and loss separately.The price a division of a
company charges a different store of the same company for a good or service. Transfer
prices are important especially for large, decentralized corporations where each store
reports its own profitsand losses separately

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