srm management digest - 2011

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SRM MANAGEMENT DIGEST - 2011
April - 2011
Volume: 9
ISSN 0973-6905
EDITORIAL
Greetings and wishes from the editorial forum of SRM
Management Digest to the readers. I am very happy to inform
you that this present issue of the Digest – 2011 is a special
publication and this comprises the selected research papers of the
“International Conference on Business Research (ICBR)2011”.
Editor:
Prof. Dr. R. Velu
SRM School of Management
SRM University
Email: [email protected]
Mobile No: 09884091724
The ICBR was held in our SRM UNIVERSITY at Kattankulathur
campus. It was held for two days ( January 20 & 21, 2011). In this
conference various international research papers were presented
on functional areas of management, viz., finance, marketing,
operations, human resource and general management. From
these research papers, selected papers are published in this digest
– 2011. And moreover, The SRM Management Digest, 2011 is
available to you online. You can access it through the web site of
SRM University. The address of web site is www.srmuniv.ac.in
in which when you select school of management you can notice
on the right hand side SRM Management Digest issues of three
years. You can down load the research papers and be benefitted.
Editor
Associate Editor:
Prof. Dr. Oliver Linton
London School of Economics
SRM University
SRM Nagar, Kattankulathur - 603 203
Kancheepuram District
Telephone No:. +91-44-27453901 / 27453903
SRM MANAGEMENT DIGEST
Volume: 9, April 2011
Annual and Blind Referred Digest of SRM School of Management
ISSN 0973-6905
Editor
Dr. Velu
© 2011 by SRM School of Management
Kancheepuram District, Tamil Nadu, India
© All right reserved
A Note to Readers:
The views expressed in articles are the author’s and not necessarily those of SRM Management Digest,
SRM School of Management or SRM University, Authors may have consulting or other business
relationship with the companies discuss.
All right reserved. No part of the publication may be reproduced or copies in any form by any means
without prior written permission. The articles originally published in other magazines / journals are
reprinted with permission.
Published by
SRM University
Kancheepuram District, Tamil Nadu, India
April - 2011
Volume: 9
E
Chief Editor
D
Dr. R. Velu
Economics
I
Associate Editor
T
Dr. Oliver Linton
London School of Economics
O
ISSN 0973-6905
R
Referees
I
Dr. Jayashree Suresh
Dean, Strategic Business Management
A
L
B
O
A
R
D
Dr. R. Krishnaraj
General Management
Dr. T. Ramachandran
Financial Management
Dr. Ravi Lochanan
Operations Management
Dr. A. Chandra Mohan
Human Resources Management
Dr. V.M. Shenbagaraman
Systems Management
Dr. Shanthi Venkatesh
Marketing Management
April - 2011
Volume: 9
ISSN 0973-6905
Contents
A study on Consumer’s behaviour on purchase pattern of food products in Salem District of Tamilnadu 10
Dr. S. Mahalingam & P. Arun
An empirical study : Farmers’ perception towards contract farming
18
S. Arunkumar , S. Gugananthan & N. Kaarthik
An ethnographic approach to understand conversations using exploratory research for better brand communication
30
Prof. Prasanta Parida
Applicability of SERVEQUAL scale in Indian retailing
N. Udaya Bhaskar & Dr. B. Raja Shekhar
37
Consumers’ perception on Matching quality of celebrity and brand features in advertisement
42
P. Raja & Dr. N. Mahesh
Customer loyalty on Telecom mobile
47
P. S. Rajeswari & Dr. P. Ravilochanan
Customer shopping experience in malls with entertainment centers in Chenni
52
D. Anuradha & Dr. Rangarajan
Drivers of new product success
59
Prof. K. Viayan & Dr. Jayshree Suresh
E-marketing in Pharmaceutical business
66
Ms. Sheeja, V. S., Indumathi & Dr. R. Krishnaraj
Emerging trends in the life style of apparel consumers in India
71
Ram Mohan, A., & R. R. Krishnaraj
Factors influencing retail investors attitude towards investing in equity stocks : A factor analysis
78
Bennet, E & Dr. M. Selvam
Impact of social media on Global business
84
Dr. Sankaran & Ravikumar, T
Influence of children advertisements on Consumer decision making
89
Raghuram, J.N.V. & Prof. P. Ravilochanan
Customers’ attitude, satisfaction and potentiality of online shopping in Chennai
Dr. N. Mahesh & K. Sadasivan,
93
Rural producer and urban buyer
100
D. Subramaniam
Service quality gap in healthcare services in India – a bird’s eye view analysis
105
Dr, Y. Lokeswara Choudary & Dinesh Doha
The impact of FDI in retail, more advantageous
110
Rabi Jayakumar
A study of paradigm shift in management of capital in flows in Indian financial system in the post-liberalization era
118
Anli Suresh
An empirical study – Consumers’ preference towards Unit linked Investment Plan [ULIP]
123
Arunkumar, S, Murali, R & Bharath, S
A comparative study between ANN - Arima and Hybrid of ANN and
Arima for predicting the Gold rates
134
Priyadarshini, E & Dr. A. Chandra Babu
Mutual funds – motivating factors behind investment
142
Rabika Begum & Dr. P. S. Valarmathy
Impact of Financial crisis on Indian economy – A strategic route map to future
148
Dr. Y. Lokeswara Choudary & Mr. Yaseen Masvood
Estimation of appropriate Lambda value for Indian markets (money, sovereign debt, forex and interest rate swap market)
154
Natarajan, R & Dr. V. Balasubramanian
A study on cultural intelligence in Cross-cultural leaders
159
Kalailakshmi & Dr. S. S. Rau
The Impact of IT governance practices & human resources on business – IT alignment – with reference to selected IT industries
163
Dr. Mu. Subramanian & Lakshmi Vishnu Murthy Tunuguntla
Monthly effects in Indian stock market
169
Nageswari, P & Dr. M. Selvam
Mutual fund investor education program – a study on the awareness, response and impact among individual investors
176
Anila Mathews &Dr. P. Ravilochanan
Qualitative research in Vamana industries limited
181
Divakaran, N
An impact of knowledge management in IT industry
185
Shanmugam, R & Dr. K. Kalpana
Challenges and learning in human resource Management – a study on customer service and employee
engagement in the Indian healthcare industry
191
Dr. B. Shivraj, Bharath, C & Dr. B. Rose Kavitha
Emotional recognition readiness and leadership
Kavitha Sethuraman
197
Human resource management socio-economic factors influencing
the success of women entrepreneurs in network marketing industry
201
Manjula Pattnaik & Balachandra Pattanaik
Impact of strategic HRM implementation on firm performance : an empirical study on the Indian IT sector
206
Prof. Shameem, A
Analysis and awareness of IPR in India – a study among the graduates in Chennai city
211
Alfred Benjamin, Y. & Dr. Y. Lokeswara Choudary
Will transactional form of interdependence improve group effectiveness?
215
Dr. V.L. Narasimham
An overview of support services to women entrepreneurs
219
Sindhu, K.
Competencies required by entrepreneurs in emerging economies :
some research propositions
226
Manisha Karia
Determinants of income generation of women entrepreneurs through SHGs
233
Ms. Revathi Pandian & Karthick, D
Forecasting of land price at Madhavaram in Chennai metropolitan area
240
Sampathkumar, V &Helen Santhi, M
Predictive model for success of ERP implementation
247
Dr. K. Santhosh Kumar & Dhinakaran Samuel, R
A study on stress and anxiety among the two wheeler riders in Chennai city
254
Dr. G. Rajesh Kumar & Rajan Daniel
Vertical integration – emerging trends and challenges
271
Madhavi Latha Kanniganti & Dr. Ravilochanan, P.
A study on sources of fruit wastages in cold storage and fruit processing industries in Tamilnadu
277
Arivazhagan, R. & Dr. Ravilochanan, P
An instrument for the measurement of vendor perceptions of software quality in off-shoring
282
S.Sankaran, K. & Kannabiran, G
Factors contributing to perishability in traditional fresh produce distribution system – a study on Tomato and Banna chains in Andhra Pradesh
290
Dr. G.V.R.K. Acharyulu
Panorama of a strategic alliance on arbitrator logistics – a peep into the Chennai Port trust
296
Venkatachalapathy, R &Dr. B. Balamurugan
Analysis of Quality work life and perceived public image among the Teachers of Dindigul, Tamilnadu
Sabarirajan, A, Geethanjali, N. & Lavanya, D.
303
Creating ecological value : an evolutionary approach from business to business
309
Dr. G. Vijaya Kumar & S. G. Balaji
Exit interviews & their empanelment : the current scenario
315
Dr. M. Sureesh Baabu, Radha Mohan Chebolu & Balaji, S. G.
Mental health among private and public sector employees – a comparative study
320
Narayanan, R. & Dr. M. Syed Zafar
An empirical study on impact of demographics on buying behaviour of food and grocery consumers in Punjab
324
Anupama Prashar
Brand valuation : an empirical study with special reference to Indian car industry
334
Dr. P. Natarajan & U. Thiripurasundari
Online performance appraisal system : an empirical study at BHEL piping centre, Chennai
340
Prof. Ponnaiah, V.M., Ms. Bala, R & Ms. Jonisha S. Jones
Knowledge management in ICICI bank and Bank of Baroda
345
Dr. Pulidindi Venugopal, Dr. P. Vijayakumar & Gandadhar, R
An empirical analysis on e-procurement for construction projects using e-RAs
349
Baladhandayutham, T &Dr. Shanthi Venkatesh
Chaotic behaviour of financial time series – an empirical assessment
367
Dr. Ravindran Ramasamy & Mohd. Hanif Mohd. Helmi
Eco system impacting entrepreneurial youth
376
Ramaraj, R & Raghava Simha, D
Effect of emotional intelligence intervention among software professionals
385
Nithya sankar & Dr. S. S. Rau
Emerging HR competencies
390
Dr. Mu. Subramanian & O. Sivaramakrishnan
Impact of activity based learning in Chennai city schools
398
Nandini Nagarajan & Dr. R. Krishnaraj
KPO as an emerging sector in India – Challenges, opportunities and the way out
402
Satheesh Babu &Dr. Lokeswara Choudary
Cloud computing trend to eco-friendly business
409
Vijayakumar, S & Saravanakumar, S. G.
Role of E-business in business
413
Asha Mathew
ERP solutions and hospitality industry
419
Dr. S. Govindarajan & Sandeep Mohanty
HGRID : An economical model for mass-health care system using latest technology [GRID computing]
Kanchana Devi, S, Dr. S. Govindarajan & Uma Maheswai, K.M.
426
The influence of factors affecting repeat buying intentions : a study with reference to super market
432
Joseph Mary Rahila & Ms. Vaishnavi
Emerging trends in IT / ITES markets
436
Dr. S. Govindarajan &F. Ezhil Mary Arasi
A study on Work life balance among service sector
442
Ms D. Maria Angelin Jayanthi & Dr. N. Santhi
Economic analysis of highway projects in India
449
Siva Kumar, T
The strategic role of corporate boards in organizational decision making
456
Hanoku Bathula & Sanjaya S. Gaur
NPA Management in public sector banks – a Case study with reference to State Bank of Travancore
463
R. Balaji & Dr. Lokeswara Choudhury
MSME’s in hospitality sector – a study on problems and prospects of rural tourism
474
Dr. Lokeswara Choudhury, Chithra & Malar Vizhi
A study on supply chain operational performance of coconut oil industry.
480
Jacob Prathapraj and Reeves Wesley, J
Total quality management in single sampling for sequentially inspected manufacturing processes that exhibit Markovian character
487
Dr. Nagajyothi & Krishnakumar
Impact of emotional intelligence [EI] on individual job performance : am empirical study at selective BPO
492
Dr. Ramakrishnan
A study on cultural knowledge needed in cross-cultural environment
Savitha, L & Dr. Sheela Rani
500
A case study on best practices in management education with reference
to Karpagam University, Coimbatore
Sudhagar,
Dr. Mahesh Narasimhan & Vetrichelvi
503
Back to Basics
Dr Jeyaraman & Ponnuswamy
510
Optimized multi-criteria decision in Supply chain organizations using AHP model – a review
Balaji & Dr. Lokeswara Choudhury
515
A STUDY ON CONSUMER’S BEHAVIOR ON PURCHASE PATTERN OF
FOOD PRODUCTS IN SALEM DISTRICT OF TAMIL NADU
Dr. S. Mahalingam
Reader, BSMED, Barathiar University, Coimbatore
P. Arun
Research Scholar, BSMED, Barathiar University, Coimbatore
I.Introduction
on food products goes up to 52.3%where as in urban
area it declines to 39.4% .So there is a large change in
consumer expenditure on purchasing behavior of food
products in rural vs. urban area. Online purchasing is
dramatically increased in the most of the urban areas.
Consumers in India especially in urban area people like
to purchase some of the food products through online
because consumers are feeling that while purchasing
food products in online time will be saved. One more
important factor that consumer feels is that while on
purchasing through online we can buy products in other
country that may not be got in India
In the present scenario, purchase behavior of consumers
in India is different from one consumer to another
consumer due to their change in personal, cultural,
social, environmental factors. These factors influence
the consumers while purchasing the food products. Due
to the influence of technology like print and TV media
advertisement, the behavior of consumers in India
with respect to purchasing pattern of food products is
dramatically changing. Consumers are so concerned
on price and then quality while purchasing the food
products. According to NSSO (National Sample Survey
Organization) in the year 2004-2005 report monthly per
capita expenditure on food products for rural consumers
goes up to 5.3% where as it is only 39.4% for the urban
Indian consumers. So there is a dramatic fluctuation
on purchase behavior of consumers in purchasing food
products as rural consumer vs. urban consumers because
of their cultural and economic changes According to
NSSO (National Sample Survey Organization) in the
year 2004-2005 report monthly per capita expenditure
on food products for urban consumers have fallen down
to 42.5% a and it shows a drop of 5% since the year
2000.
2. Research Objectives
To study overall profile of the consumers
To analyze factors influencing the purchase decision
To assess the store selection process of the
consumers.
To evaluate brand preference, brand loyalty among
the consumer
To identify the major promotional tools attracting
the consumers on purchasing
To identify the overall individual attitudes of the
consumers towards purchase decision
3. Statistical Tools
According to NSSO year 2006-2007 report (63rd
round) MPCE (Monthly Per Capita Expenditure)
Percentage analysis
ANOVA-test
Table 1: General profile of the respondence
Gender
Occupation
Place
Male
Female
Total
Profes
sional
Worker
Others
Total
Salem
Omalur
Kolathur
Mettur
Total
37
27
64
34
02
28
64
15
01
19
29
64
57.8%
42.2%
100%
53.1%
03%
43.8%
100%
23.4%
1.6%
29.7%
45.3%
100%
10
Interpretation of gender: From the data it is revealed
Secondary data were collected from journals, text books
that 57.8% of Consumer are male. Remaining 42.2%
and internet.
of respondents are female. It could be concluded that
percentage of male respondents is higher than the
Primary data
female respondents.
Primary data were collected from survey in Salem Dt.
Sample data of 64 respondence were selected for the
Interpretation of occupation: From the data it is
survey.
revealed that 53.1% of Consumer is professional.
3.1% of respondents are Workers. Remaining 43.8%
Statistical tools applied
of consumers are others. It could be conclude that
Chi square and ANOVA test were measured for
percentage of professional respondents is higher than
measured above objectives
the workers and others.
Table: 1 sample profile of the respondents (N=64)
Interpretation of place: Consumer purchase pattern is
Interpretation of gender: From the data it is revealed
different from one consumer to another consumer .From
that 57.8% of Consumer are male .Remaining 42.2%
the above table it clearly shows that in total sample
of respondents are female .It could be conclude that
of 64 respondents 23.4% of respondents were from
percentage of male respondents is higher than the
Salem area, 1.6.% of respondents were from Omalur,
female respondents
29.7.% of respondents were from Mettur dam,45.3%
of respondents were from Kolathur. Interpretation of
Interpretation of place: Consumer purchase pattern is
marital status: From the data it is revealed that 95.4%
different from one consumer to another consumer .From
of respondents are married. 3% of respondents are un
the above table it clearly shows that in total sample
married. Remaining 01.6% of consumers are widow.
of 64 respondents 23.4% of respondents were from
It could be conclude that percentage of married
Salem area, 1.6.% of respondents were from Omalur,
respondents is higher than the unmarried and widow.
29.7.% of respondents were from Mettur dam,45.3% of
respondents were from Kolathur
4. Research methodology
Secondary data
Interpretation of occupation: From the data it is
Secondary data were collected from different sources.
revealed that 53.1% of Consumer is professional.
5. Analysis and interpretation
I percentage analysis
Table 2: Purchase pattern of food products
Percen
tage
Regu
larly
Purchasing
27
42.2
Sauce
46
Soup
Atta
Food
Products
Not
purch
asing
Jam
Percen
tage
Mostly
Purc
hasing
18
28.1
71.9
14
56
87.5
3
4.7
Perce
ntage
Occation
Nally
purcha
sing
Percen
tage
6
9.4
7
10.9
2
3.1
0
0
Percen
tage
Frequently
purch
asing
6
9.4
21.9
2
3.1
4
6.3
2
3.1
11
17.2
6
11
9.4
2
3.1
0
0
6
9.4
38
59.4
3.1% of respondents are Workers. Remaining 43.8%
3.1% of respondents are mostly purchasing sauce.0%
of consumers are others. It could be conclude that
of respondents are occasionally purchasing sauce, 3.1
percentage of professional respondents is higher than
% of respondents are frequently purchasing sauce .in
the workers and others.
total of 64 respondence.
Interpretation of jam: From the data it is revealed that
Interpretation of soup: From the data it is revealed
that 87.5% of Consumer is not purchasing soup. .6.3%
of respondents is regularly purchasing soup. 3.1%
of respondents are mostly purchasing soup.3.1% of
respondents are occasionally purchasing soup, 0%of
respondents are frequently purchasing .in total of 64
respondence.
42.2%% of Consumer are not purchasing jam. .28.1%
of respondents is regularly purchasing jam. .9.41%
of respondents are mostly purchasing jam.9.4% of
respondents are frequently purchasing jam, 10.9% of
respondents are occasionally purchasing jam in total of
64 respondence.
Interpretation of atta: From the data it is revealed that
4.7% of Consumer are not purchasing atta .17.2%
of respondents are regularly purchasing atta. .9.4%
of respondents are mostly purchasing atta.9.4% of
respondents are occasionally purchasing jam, 59.4% of
Interpretation of sauce: From the data it is revealed
that 71.9% of Consumer is not purchasing sauce.
.21.9% of respondents is regularly purchasing sauce.
6. ANOVA
Table no 3: Ranking of factors that influencing consumer purchase behavior
respondents are frequently purchasing jam. In total of
64 respondence
Factors
Mean
Rank
Cultural factors influence on purchase
3.52
5
Life partners influence on purchase
3.67
3
Children’s influence on purchase
Parents influence on purchase
Friends influence on purchase
Easy product identification in the store influence on purchase
Shopping space available inside the store influence on purchase
2.83
2.09
1.94
3.92
3.36
8
9
10
1
6
Active checkout counters inside the store influence on purchase
3.84
2
Broad casting media’s influence on creating awareness
3.63
4
Print media’s influence on creating awareness
3.00
7
Gender & influence of various factors on buying behavior
Hypothesis 1:
Ho: There is no significant difference between gender & influence of various factors on buying behavior
H1: There is a significant difference between gender & influence of various factors on buying behavior
α =0.05%L.O.S
Table No 4: Gender & influence of various factors on buying behavior
Influencing Factors
Cultural factors
influence on purchase
F-ratio
ANOVA table
value (Sig. value)
Significant/not
significant
3.404
.070
Not significant
12
1.533
.220
Not significant
.355
.553
Not significant
.792
.377
Not significant
.073
.788
Not significant
Easy product identification inside the store
.035
.853
Not significant
Shopping space available inside the store
.057
.812
Not significant
Active checkout counters inside the store
.296
.589
Not significant
Broad casting media’s influence on creating
awareness
.001
.979
Not significant
.042
.838
Not significant
Interpretation: gender and all 10 factors
i)
From the above table, since, F (1, 62) = 3.404,
p > 0.05, the null hypothesis is accepted. Hence there is
no significant difference between gender and influence
of cultural factor on buying behavior. From the above
table, since, F (1, 62) = 1.533, p > 0.05, the null hypothesis
is failed to be accepted. Hence there is no significant
difference between gender and influence of life partner
on buying behavior. From the above table, since, F (1,
62) = 0.355 p > 0.05, the null hypothesis is accepted.
Hence there is no significant difference between gender
and influence of children on buying behavior. From the
above table, since, F (1, 62) = 0.792 p > 0.05, the null
hypothesis is accepted. Hence there is no significant
difference between gender and influence of parents
62) = 0.073 p > 0.05, the null hypothesis is failed to
be rejected. Hence there is no significant difference
between gender and influence of friends on buying
behavior. From the above table, since, F (1, 62) = 0.035
p <0.05, the null hypothesis is accepted. Hence there is
significant difference between gender and easy product
identification on buying behavior. From the above table,
since, F (1, 62) = 0.057 p > 0.05, the null hypothesis
is accepted. Hence there is no significant difference
between gender and shopping space availability on
buying behavior. From the above table, since, F (1, 62)
= 0.296 p > 0.05, the null hypothesis is accepted. Hence
there is no significant difference between gender and
active checkout counter on buying behavior. From the
hypothesis is accepted. Hence there is no significant
difference between gender and broad casting media on
= 0.042 p > 0.05, the null hypothesis is accepted. Hence
there is no significant difference between gender and
print media on buying behavior Occupation
Hypothesis 2:
Ho: There is no significant difference between
occupation & influence of various factors on buying
behavior
H1: There is a significant difference between gender &
influence of various factors on buying beaviour
α =0.05%L.O.S
13
Table No 5: Occupation & influence of various factors on buying of various factors on buying behavior
Influencing Factors
F-Ratio
ANOVA table value
Significant/not significant
(Sig.
1.566
.217
Not significant
.337
.715
Not significant
.787
.460
Not significant
.769
.468
Not significant
.444
.644
Not significant
.977
.382
Not significant
3.703
.030*
significant
3.683
.031*
significant
awareness
.955
.391
Not significant
.213
.808
Not significant
Interpretation:
Occupation and all 10 factors
From the above table, since, F (2, 61) = 1.566 p >
0.05, the null hypothesis is failed to be rejected. Hence
there is no significant difference between occupation
and cultural factor on buying behavior. From the
above table, since, F (2, 61) = 0.337, p > 0.05, the
null hypothesis is failed to be rejected. Hence there
is no significant difference between occupation and
life partner on buying behavior. From the above table,
is failed to be rejected. Hence there is no significant
difference between occupation and children on buying
p > 0.05, the null hypothesis is failed to be rejected.
Hence there is no significant difference between
occupation and parents on buying behavior. From the
hypothesis is failed to be rejected. Hence there is no
significant difference between occupation and friends
between occupation and easy product identification on
= 3.703 p < 0.05, the null hypothesis is accepted Hence
there is a significant difference between occupation and
shopping space availability on buying behavior. From
the above table, since, F (2, 61) = 3.683 p < 0.05, the
null hypothesis is accepted. Hence there is a significant
difference between occupation and active checkout
counter on buying behavior. From the above table,
is failed to be rejected. Hence there is no significant
difference between occupation and broad casting media
between occupation and print media on buying behavior
Place of residence
Hypothesis 3:
Ho: There is no significant difference between
place of residence & influence of various factors on
buying behavior
H1: There is a significant difference between
place of residence & influence of various factors on
buying behavior
α =0.05%L.O.S
14
Table No 6: Place of residence & influence of various factors on buying behavior
Influencing Factors
F-Ratio
ANOVA table
value (Sig.
Significant/not significant
.119
.948
Not significant
1.048
.378
Not significant
.117
.950
Not significant
2.668
.056
Not significant
5.090
.003
significant
2.898
.042
significant
1.660
.185
Not significant
1.687
.179
Not significant
3.021
.037
significant
1.830
.152
Not significant
awareness
Interpretation:
Place and all 10 factors
From the above table, since, F (3, 60) = 0.199 p
> 0.05, the null hypothesis is accepted. Hence there is no
significant difference between place and cultural factor
60) = 1.048, p > 0.05, the null hypothesis is accepted.
Hence there is no significant above table, since, F (3,
60) = 0.117 p > 0.05, the null hypothesis is accepted.
Hence there is no significant difference between place
and children on buying behavior. From the above table,
since, F (3, 60) = 2.668 p < 0.05, the null hypothesis
is accepted. Hence there is a significant difference
between place and parents on buying behavior. From
the above table, since, F (3, 60) = 5.090 p <0.05, the
null hypothesis is accepted. Hence there is a significant
difference between place and friends on buying
p <0.05, the null hypothesis is accepted. Hence there is
a significant difference between place and easy product
identification on buying behavior. From the above table,
since, F (3, 60) =1.660 p > 0.05, the null hypothesis
is accepted. Hence there is no significant difference
between occupation and shopping space availability on
=1.687 p >0.05, the null hypothesis is accepted. Hence
there is no significant difference between occupation
and active check out counter. From the above table,
since, F (3, 60) = 3.021 p<0.05, the null hypothesis
is accepted. Hence there is a significant difference
between occupation and broad casting media on buying
p > 0.05, the null hypothesis is accepted. Hence there is
no significant difference between occupation and print
media on buying behavior
15
1. Findings and suggestion
Followings are the findings of the study
i)
With reference to the gender & all influence
of 10 factors findings suggest that none of
the 10 factors are significantly related
ii)
With reference to the occupation & all
influence of 10 factors findings suggest
that shopping space available inside the
store with occupation of the consumer is
significantly related
iii)
that active check out counter inside the
iv)
that easy product identification inside the
v)
With reference to the place of residence &
all influence of 10 factors findings suggest
that place of residence of consumers and
influence of friends on purchase on
purchasing food products by the consumer
is significantly related
vi)
With reference to the place of residence &
all influence of 10 factors findings suggest
that place of residence of consumers and
influence of broad casting media on
purchase of the consumer is significantly
related
vii)
From the data it is revealed that 42.2%% of
Consumer are not purchasing jam. 28.1%
of respondents is regularly purchasing
jam. 9.41% of respondents are mostly
purchasing jam.9.4% of respondents
are occasionally purchasing jam, 10.1%
of respondents are mostly purchasing
jam 9.4% of respondents are frequently
purchasing jam. In total of 64 respondents
viii)
From the data it is revealed that 71.9% of
Consumer is not purchasing sauce. 21.9%
sauce. 3.1% of respondents are mostly
purchasing sauce. 3.1 %of respondents are
ix)
x)
frequently purchasing sauce in total of 64
respondents.
Consumer is not purchasing soup. 6.3%
soop respondents are mostly purchasing
soup 3.1% of respondents are occasionally
purchasing soup,
Consumer are not purchasing atta 17.2% of
respondents are regularly purchasing atta.
9.4% of respondents are mostly purchasing
atta 9.4% of respondents are occasionally
purchasing atta, 59.4% of respondents are
frequently purchasing atta.
7. Suggestion
The research study suggest that by reducing
the cost of advertisement & giving to the consumers in
affordable price it will be helpful for consumers at the
time of purchasing food products. It is also suggest that
promotional activities are giving only at season time
(deepavali etc).if it giving by the company to maximum
times it is also be helpful for the consumers to purchase
more food products.
8. Conclusion
In broad conclusion about buying behavior among
the consumers indicated that consumer’s preference
plays important role in the final purchase as for as
food product is concern. In store purchase behavior
of consumers like identification of food products
easily while on purchasing food products in shopping
malls , active check out counter inside the shopping
malls for the consumers to finish the checking and
billing perspectives quickly because in the busy world
consumers in Tamil nadir especially Salem dt .Next
consumers prefer space inside the shopping centers .
Most of the Consumers raked active check out counter
is very important and it influencing high to select and
purchase the particular store. Above study also conclude
that easy product identification got highest mean value
of 3.92.Least is shopping space available inside the
store that got mean value of 3.32. With respect to
media creating awareness about the food products on
16
pre purchasing behavior consumers raked broad casting
“Believes & purchasing practices of cape town
media as high since it got 3.63 as mean value compare
consumers reg: organic produced food”
to print media as it got mean value of 3.Domestic factors
influencing consumers as for as the above study states
“Journal of family ecology and consumer
science volume 31, 2003”
that life partner influencing consumer high since it got
the mean value of 3.67. As for as food product is concern
2.(Egay 1989,ott 1990,Huang et al 1990, Huang
42.2% of consumers not purchasing jam of neither
et al 1993,Misra et al 1991,jolly et al 1989,jolly
HUL nor any other company Jam item which means
1991,Goldman
only 28.1% of consumers are purchasing jam of neither
1990,Baker and Crosbe 1993,Swanson and
HUL nor any other company jam item as regularly,
Lewies
9.4% of consumers are purchasing jam of neither HUL
1993,The Parker 1998,Oystein et al 2001,jolly
nor any other company jam item as occasionally. 10.1%
2001,the
of consumers are purchasing jam of neither HUL nor
and
1993,Groff
parker
Clancy
et
al
1991,Ekeland
1993,Sylvander
2001,Demeritt
2002,wold
2002) ”Organic and Conventional food: A
any other company jam item as frequently. Next sauce
literature review of the economics of consumer
71.9% of consumers not purchasing sauce of neither
perception and preference
HUL nor any other company sauce items which means
only 21.9% of consumers are purchasing sauce of
3.Aguirre(2001)” Organic And Conventional
neither HUL nor any other company sauce items as
food: A literature Review of the economics of
regulerly.3% of consumers purchasing mostly.14%
consumer perception and preference”
percentage of consumers occasionally. 3.1 % of
“Marketing
and
consumption
of
organic
consumers purchasing frequently. Next soup neither
products in Costa Rica, Working paper no 5,
87.5% of consumer’s not purchasing soup of neither
the school for field studies, center for sustainable
HUL nor any other company sauce items means only
development-Atenas, Costa Rica”
6.3% of consumers are purchasing soup of neither HUL
4.Fotopoulos and Kryskallis, 2002; Larue et
nor any other company sauce items as regularly.3.1%
of consumers are purchasing soup of neither HUL nor
al., 2004; Wier and Calverley, 2002)“Organic
any other company sauce items as mostly. 3.1% of
food consumer purchase pattern willing to pay
consumers are purchasing soup of neither HUL nor any
premium price”
other company sauce items as occasionally
“Purchasing motives and profile of Greek
9. Reference
1.
Fotopoulos, C., and Krystallis, A. (2002),
organic consumer: a countrywide survey”,
Lane & Bruhn(1992) ,“Believes & purchasing
practices of cape town consumers reg: organic
produced food”
“Journal of family ecology and consumer
science volume 31, 2003”
Sunders(1999),Hutcines & Green halgh(1997)
“British Food Journal, 104 (9), 730-764.”, Wier,
M., and Calverly, C. (2002),
“Market potential for organic foods in Europe”,
British Food Journal, 104 (1), 45-62.
17
AN EMPIRICAL STUDY: FARMWDS CONTRACT FARMING
S. Arun Kumar
Asst. Professor, Department of Management Studies, Saranathan College of Engineering,
Trichy, Tamilnadu, India
S. Gugananthan, N.Kaarthik
II MBA, Saranathan College of engineering, Trichy, Tamilnadu , India.
1. Introduction
arrangements are attractive to farmers seeking capital
and new technology and other inputs and production
services as generally new crops with modern technology
or existing crops with new seeds and other inputs are
promoted under such arrangements. On the other hand,
food processors can minimize their overhead costs per
unit of production by operating their plants at or near
fully capacity by obtaining assured, stable and quality
raw material supplies from farms under contracts. For
a processor, contracts are more flexible in the face of
market uncertainty, make smaller demands on scarce
capital resources and impose less of an additional burden
on management. They also overcome land constraint
for corporate firms, reduce Production risk, and are
politically more acceptable than corporate farming [7].
Baumann, P., (2000) said that contracting can give a
positive image to the company as it may be perceived
as progressive especially if it works with small farmers,
and can help it get access to state or donor funds [1].
Singh, S., (1998) describe that the entry of large businesses
into agribusiness sector has led to a new arrangement
in raw material production and procurement in India,
known as contract farming. This is happening as good
quality, timely and cost effective raw material is a prerequisite for any successful agribusiness firm, whether
operating in the domestic or the international market.
Given the Land Ceiling Act in India, agribusiness firms
cannot own and cultivate land for their raw material
requirements. Also, most of the times, it is not a Viable
option[22]. Vyas, V. S., (2001) stated that therefore, the
only option for them to procure raw materials is to have
contractual arrangements with the primary producers
which are also suggested as an alternative to corporate
farming or liberalisation of land ceiling laws [26]. Key, N.
and D. Runsten (1999) prescribed that contract farming
refers to the production and supply of agricultural
produce under advance contracts, the essence of such
contracts being a commitment to provide an agricultural
commodity of a type, at a time and a price, and in the
quantity required by a known buyer. It basically involves
four things - pre-agreed price, quality, quantity or
acreage (minimum/maximum) and time. The contracts
could be of three types; (i) procurement contracts under
which only sale and purchase conditions are specified;
(ii) partial contracts wherein only some of the inputs are
supplied by the contracting firm and produce is bought
at pre-agreed prices; and (iii) total contracts under
which the contracting firm supplies and manages all the
inputs and the farmer becomes just a supplier of land
and labour. The relevance and importance of each type
varies across products and over time, and these are not
mutually exclusive [15].
Gill, S. S., (2004) & Grosh, B., (1994) stated that at
more macro economic level, contracting can help to
remove market imperfections in produce, capital, land
and labour markets, remove intermediaries and therefore
make upstream value chain (agricultural marketing)
more efficient, and can help in better co-ordination of
local production activities as it often involves initial
investment in processing, extension etc. [11&12].
Haque, T. and P. S. Birthal, (1998) provide that from
an institutional economics perspective, contract farming
could be looked upon as a way of creating positive
externalities, created better by private sector instead of
the state, which can result in overall rural development.
Contracting can lead to more employment opportunities
for farm and non-farm labour as generally it deals with
labour intensive high value crops requiring labour for
harvesting, grading, and packaging at the farm level, and
in processing, transportation, packaging and marketing
As according to Eaton, C. and A. W Shepherd, (2001)
a contract reduces price risk for a farmer and can be
terminated at reasonably short notice. Also, contractual
18
at the post-farm stage, reducing the seasonality
of employment and giving higher wages through
Competition in the labour market. There can also be
larger developmental effects from the improvement in
infrastructure and other amenities due to contracting
and general expansion of demand due to higher incomes
under contracting [13].
and Haryana of Cucumber in Andhra Pradesh and
cotton in Tamil Nadu found that the net returns from
those crops under contract being much higher than those
under non contract situations though production cost in
tomato was much higher than the contract system.
3. Research Problem
Indian agriculture is expected to take three main
challenges in time ahead. First, the area under cultivation
is estimated to come down from 170 million hectares to
100 million hectares by 2020. There will be a shortage
of irrigation water. The number of people will decline
in Agriculture. Hence to overcome these forecasted
pitfalls contract farming practices are highly welcome
in our Indian agricultural practices.
Little, P. D. and M. J. Watts (eds.), (1994) given that
the failure of government mechanisms for support to
agriculture, there is wide support for contract farming
under the Structural Adjustment Programme (SAP) and
liberalisation. Given the enthusiastic promotion of this
mechanism by the international development agencies
like the World Bank, the United States Agency for
International Development (USAID), the International
Finance Corporation (IFC) and the Commonwealth
Development Corporation (CDC) [17], Hayami Y. and
A. Damodaran, (2004)reveal that it is inevitable that
new forms of contracts will be tried by the agribusiness
firms. This is the only way to ensure good quality and
timely availability of raw material for processing,
especially when, in India, captive farming is not allowed
at present under the Land Ceilings Act. Besides, captive
farming means putting large resources in raw material
production which may not be the best economic option
for many agribusiness firms in India, especially small
firms, or may not be a viable practice any more in
competitive markets like in the case of tea plantations
in south India[14].
4. Research Objectives
To understand the farmers’ perception towards
contract farming Practices.
To understand the Socio-demographic and
Rational profile of farmers with reference to rice
bowl of Thanjavur, Tamilnadu , India.
To identify the important underlying dimensions
of contract farming among farmers.
To identify the dominant variables, which is
a strong predictor of contract farming among
farmers in Thanjavur ,Tamilnadu , India.
5. Scope of the Research
2. Contract Farming in India
This study is confined to the farmers in Thanjavur. This
study creates awareness about contract farming among
farmers. This study will help to overcome the future
food insecurity problem.
Contract Farming is fast evolving as a mechanism of
alternative marketing in the country. Punjab, Karnataka,
Maharashtra, Madhya Pradesh, and Tamil Nadu have
been the front runners in this regard. The experience of
contract farming in India shows that there is considerable
saving in consumption of inputs due to the introduction
of improved technology and better extension services.
Contract farming has usually allowed the farmers some
form of credit to finance use of production inputs. In
some cases, viz. Appache Model of contract farming for
cotton in Tamil Nadu, there are arrangements for loans
from commercial banks. Contract farming has been
successful in effecting crop diversification in many
states. Studies of Tomato contract production in Punjab
6. Review of Literature
Sunanda S. (2005) has stated that contract farming
is a form of vertical integration where the farmer
is contractually bound to supply a given quantity
and quality of product to a processing or marketing
enterprise. The buyer agrees in advance to pay a certain
price to the farmer and often provides technical advice
and inputs (the cost of the inputs being deducted from
the farmer’s revenue once the product has been sold to
the buyer). All inputs were provided on credit through
19
7. Advantages of Contract Farming
cooperatives, groups, or middlemen. Contract farming
usually involves the following basic elements -preagreed price, quality, quantity or acreage (minimum/
maximum) and time. The key to the success of this
venture lies in building up a healthy trust between
grower and buyer. The finance extended by the private
banks for contract farming are termed as corporate
linked agri finance. Neither the corporate nor the farmer
is interested in fixing the price upfront. Banks have
adopted the market price as the relevant price on the
date of the procurement [27].
Erappa, S., (2006) describes that experiences showed
that farmers are benefited from technical guidance,
supply of quality farm inputs and assured purchasing
at remunerative price[9]. Da Silva, C., (2005) It
was argued that the private firms, with their profit maximising motive, would invest heavily in the input
segment, which coupled with their technical advice
during pre- and post-harvest period, would come useful
for farmers. Economically it makes more sense for the
corporate to go for the large farmers rather than the
small and marginal farmers as tenants [5].
Debashis Chakraborty, (2009) reveals that a major
precondition for agricultural investment in rural areas
is the existence of an adequate communication system
that includes roads, transport, telephones and other
telecommunication services. Reliable power and water
supplies are particularly vital for agro-processing and
exporting of fresh produce. The availability of suitable
educational and medical services is also important for
those who participate in contract farming, whether
they be direct employees of the sponsor or the farmers
themselves. Sponsors need to be assured that they will
be able to organize the supply of all necessary inputs
for the farmers and for their own processing needs. All
inputs should be identified and ordered well in advance,
either from local sources or from overseas. Provision
of inputs and production services Many contractual
arrangements involve considerable production support
in addition to the supply of basic inputs such as seed and
fertilizer. Sponsors may also provide land preparation,
field cultivation and harvesting as well as free training
and extension. This is primarily to ensure that proper
crop husbandry practices are followed in order to
achieve projected yields and required qualities.
Contract farming usually allows farmers access to some
form of credit to finance production inputs. In most
cases it is the sponsors who advance credit through their
managers. However, arrangements can be made with
commercial banks or government agencies through crop
liens that are guaranteed by the sponsor, i.e. the contract
serves as collateral. When substantial investments are
required of farmers, such as packing or grading sheds,
tobacco barns or heavy machinery, banks will not
normally advance credit without guarantees from the
sponsor [6].
A look at history displays that the principles of contract
farming existed way back to the 19th century when the
mechanism was used in the United States for processing
crops such as sugar, beets and peaches, and in Taiwan,
for sugar production under the Japanese colonial rule
[27].
Chen, K., Shepherd, A. and Da Silva, C. (2005)
have enumerated that these transformations, and the
government responses thereof, are creating challenges
and Opportunities for producers, processors, wholesalers,
retailers and other supply chain actors. Small farmers in
developing countries, in particular, are perceived to be
especially vulnerable to changes. Modern organisational
arrangements in agro-food systems might promote the
emergence of power imbalances and unfavourable terms
of trade in the transactions between smaller-scale chain
actors and the larger players which typically exercise the
leading coordination role in a managed supply chain[2].
Da Silva, C., (2005) argues that not withstanding,
contract farming is being promoted by governments and
development agencies as a coordination mode that can
facilitate the integration of small farmers into supply
chains[5].
According to Agricultural produce market committee
act (APMC) the basic objective of setting up of network
of physical markets has been to ensure reasonable gain
to the farmers by creating environment in markets for
fair play of supply and demand forces, regulate market
practices and attain transparency in transactions. [21]
According to Erappa, S., (2006) the main objective is to
increase crop production, improve quality farm produce
and possibly minimize cultivation cost [9].
20
The major benefits accruing to the farmer are – quality
inputs, technical guidance, assured market and price.
There is an enhanced farm productivity & income [3].
in the chosen area, their historical production data, soil
fertility and, sometimes, field trials. Once estimates are
compiled and production costs known, the sponsors
are in a sounder position to calculate a realistic pricing
structure that is mutually profitable. Guaranteed, regular
and attractive incomes should encourage farmers to
make a long-term commitment both as a facilitator and
guarantor in the event of crop failure [6].
As per Debashis Chakraborty, (2009) Guaranteed and
fixed pricing structures sponsors indicate in advance
the price(s) to be paid and these are specified in the
agreement. On the other hand, some contracts are not
based on fixed prices but are related to the market prices
at the time of delivery. In these instances, the contracted
farmer is clearly dependent on market volatility. If either
the sponsors or their contracted farmers fail to achieve
consistent and attractive financial benefits a venture
will collapse. A further precondition, therefore, is that
the sponsor needs to be sure that farmers will obtain
higher net incomes from entering into a contract than
they could from alternative activities with the same, or
less, risk. Sponsors should calculate realistic yields in
order to forecast whether production by farmers can be
profitable at prices the sponsors are able to pay. These
estimates should be based on the experience of farmers
Sukhpal Singh ,(2003) has said experiences showed
that farmers are benefited from technical guidance,
supply of quality farm inputs and assured purchasing
at remunerative price[24].In case of any lapses from
companies, the government should intervene and come
to rescue of farmers. Motivating private insurance
companies to participate in the contract farming may be
considered to act as a liaison authority [8]. In the words
of Singh, S., (2005), technological progress in farming
can help the rural poor by raising farm productivity,
lowering food prices, increasing employment, and
reducing farming risk[23].
Figure 1 : Research Model
21
8. Research Methodology
Inference
A test of reliability is an important test of sound
measurement. A reliability test score of 0.6 and above is
said to be reliable. Cronbach’s alpha reliability test for
the study was done and the score was found to be 0.722
which rendered the study reliable.
Here in this research study descriptive type of research
used. Sampling method is Non probability purposive
sampling with a sample size of 127 respondents taken
for the study. Content validity is tested by showing
the variables to farmers ,agricultural scientist &
academicians and then subjected to pilot testing with
a total of 30 farmers and they were asked to comment
on any perceived ambiguities, omissions or errors
concerning to the drafted questionnaire. The feedback
received was rather ambiguous thus only minor
changes were made. For instance, technical jargon was
rephrased to ensure clarity and simplicity. Reliability
refers to the confidence we can place on the measuring
instrument to give us the numeric value. If the same set
of objects are measured again and again with the same
or comparable measuring instrument and the results
obtained are the same or similar, then the measuring
instrument is said to be reliable. Here, a Cronbach’s
Alpha value of .722 has obtained which seems to be
having higher reliability coefficient. Data were collected
by means of a structured questionnaire comprising three
Sections namely A, B and C. Section A , contained
thirteen questions pertaining to farmer’s demographic
and rational profile, Section B, on the other hand, is
composed of 17 items for contract farming, a scale
uniquely developed to embrace different aspects of a
contract farming procedure and offering of consumer
perceptions and finally Section C, to provide an overall
rating of the contract farming. In the subsequent fullscale survey, data were collected from farmers in
Thanjavur, the rice bowl of Tamilnadu, for the period
of May, 2010 to June, 2010. The data collected will be
analysed using Simple percentage analysis, Chi-square
test, ANOVA, Factor analysis, multiple regression and
interpreted using statistical package for social sciences
(SPSS).
The Financial Analysis reveals that the above table , 118
(93%) of the respondents are male and 9 (7%) of the
respondents are female, 71 (56%) of the respondents are
in the age group of 21-30, followed by 28 (22%) of the
respondents are in the age group of 31-40, and 16 (13%)
of the respondents are in the age group of 41-50 and
12(9%) of the respondents are in the age group of more
than 50 year , 3 (2%) of the respondents are 2 dependents,
17 (13%) of the respondents are 3 dependents, 28
(22%) of the respondents are 4 dependents, 31 (24%)
of the respondents are 5 dependents and 48 (38%) of
the respondents are above 5 dependents , 28(22%) of
the respondents’ income is below Rs 25000, 60(47%)
of the respondents’ income is below Rs 25000-50000,
27 (21%) of the respondents’ income is below Rs
50000-100000 and 12(9%) of the respondents’ income
is above Rs 100000, 17(13%) of the respondents are
above 10 acre land holders, 34(27%) of the respondents
are 5-10 acre land holders,40(31%) of the respondents
are 3-5 acre land holders,33(26%) of the respondents
are 2 acre land holders and 3(2%) of the respondents are
below 2 acre land holders, 28(22%) of the respondents
are primary education, 45(35%) of the respondents are
middle class, 30(24%) of the respondents are higher
secondary and, 24(19%) of the respondents are college
education , 29(23%) of the respondents are below 5
years experience, 20(16%) of the respondents are 5-10
years experience, 27(21%) of the respondents are 10-15
years experience, 17(13%) of the respondents are 1520 years experience and 34(27%) of the respondents
are above 25 years experience , 72 (57%) of the
respondents are river irrigation system, 23(18%) of the
respondents are bore well irrigation system 10 (8%)
of the respondents are lake irrigation system and 20
(16%) of the respondents are well irrigation system ,
90(71%) of the respondents have own land, 6(5%) of
the respondents have contract land and 31(24%) of the
respondents have own and contract land , 62(49%) of the
respondents have wet land, 30(24%) of the respondents
9. Empirical Analysis Interpretation And
Findings
Table1: Reliability Statistics
Cronbach’s Alpha
N of Items
.722
17
Source: Primary data
22
have dry land and 35(28%) of the respondents have wet
and dry land , 8(6%) of the respondents produce cash
crops, 47(37%) of the respondents produce food crops,
6(5%) of the respondents produce fruits and 66(52%)
of the respondents produce cash and food crops ,
27(21%) of the respondents getting loan from banks,
52(41%) of the respondents are getting loan from
primary agriculture co-operative bank, 35(28%) of the
respondents are getting loan from private moneylenders
and 13(10%) of the respondents are getting from bank
and PACB.26(21%) of the respondents are using
chemical fertilizers,11(9%) of the respondents are using
organic fertilizers ,90(71%) of the respondents are using
other type of fertilizers.
10. Factor Analysis
KMO and Bartlett’s Test
Bartlett’s test of sphericity indicates whether your
Correlation matrix is an identity matrix, which
would indicate that your variables are unrelated. The
significance level gives the result of the test. Very small
values (less than .05) indicate that there are probably
significant relationships among your variables. A value
higher than about .10 or so may indicate that your data
are not suitable for factor analysis.
Table 3: KMO and Bartlett’s Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
.506
Bartlett’s Test of Sphericity
Approx. Chi-Square
683.354
Df
136
Sig.
.000
Source: Primary data
Inference
The significance .000 is lesser than the assumed value
.05. This means that factor analysis is valid. We look at
the KMO coefficient which is .506. The value is more
than 0.05. So this implies that the factor analysis for
data reduction is effective.
Communalities indicate the amount of variance in each
variable that is accounted for. Initial communalities are
estimates of the variance in each variable accounted for
by all components or factors. For principal components
analysis, this is always equal to 1.0 (for correlation
analyses) or the variance of the variable (for covariance
analyses. Extraction communalities are estimates of the
variance in each variable accounted for by the factors
(or components) in the factor solution Small values
indicate variables that do not fit well with the factor
solution, and should possibly be dropped from the
analysis.
11. Rotated Component Matrix (a)
Table 5:
Component
1
2
3
4
5
6
Willingness to give land for contract.
-.085
.031
.158
.707
.251
-.373 -.025
Mentally prepared for long term lease.
.129
.121
-.020
.838
-.077 .117
-.188
Abide by the rules and regulation of
.466
corporate.
.022
-.263
.568
.225
.181
Remuneration based on crops yield.
.085
.275
.158
-.105 -.134 .169
.687
23
.272
7
Fixed lease amount as Remuneration.
.836
.055
.019
-.031 .004
.248
.076
Freedom to produce any type of crops.
Freedom to use all kind of pesticides
.132
.457
.038
.029
.814
.377
.092
.054
.291
.346
-.076
-.526
Preference to grow short term crops
Preference to grow long term crops.
Use of Contract bonds for availing loans.
.192
.118
.492
.034
.047
.118
.190
.140
.190
-.132 .012
.022 .146
.248 .160
.100 .744
.812 .024
-.445 -.303
Advance payment from corporate.
.172
.635
.004
.054
.086
.114
.184
.170
.441
Contract farming increases employment
opportunities.
Mandatory Government intervention
.105
.067
.763
-.070 .116
.066
.727
.060
.211
Aided with agriculture equipments.
.375
.625
-.333
-.066 .055
-.290 -.320
Facilitation for crop insurance.
-.075
.841
.152
-.005 .092
.068
.172
Stipulation to protect soil fertility.
-.013
.090
.195
.004
.753
.258
.114
.035
.115
.822
-.074 -.092
Protection of the environment.
.017 -.033
Extraction Method: Principal Component Analysis.
-.200 -.006 -.271
0.687 and 0.836. In Factor 2 Advance payment from
companies, Government intervention, Aided with
agriculture equipments and crop insurance with the
factor loading value of 0.635, 0.727, 0.625, and 0.841.
In Factor 3 Freedom to produce of crops and Contract
farming increasing employability contributes with the
factor loading value of 0.814 and 0.763. In Factor 4
Willingness to give land for contract, long term lease
and Abide rule and regulation of corporate companies
contributes with the factor loading value of 0.707,
0.838 and 0.568. In Factor 5 protected soil fertility
and Protected environment contributes with the factor
loading value of 0.753 and 0.822. In Factor 6 Favour to
grow long term crops contributes with the factor loading
value of 0.812. In Factor 7Freedom to use pesticides
and Favour to grow short term crops contributes with
the factor loading value of -0.526 and 0.744. `
Rotation Method: Varimax with Kaiser Normalization.
a Rotation converged in 9 iterations.
This table (called the Pattern Matrix for oblique
rotations) reports the factor loadings for each variable
on the components or factors after rotation. Each
number represents the partial correlation between the
item and the rotated factor. These correlations can
help you formulate an interpretation of the factors or
components. This is done by looking for a common
thread among the variables that have large loadings for
a particular factor or components
Inference
Hence from the above table it is inferred that the
following factors namely Remuneration based on
crop yield and Remuneration based on fixed leased
amount for Factor 1 with the factor loading value of
12.Multiple Regression analysis:
-.117 .198
Table 6:
Model
1
R
R
Square
Adjusted R Square
Std. Error of the
Estimate
.601(a)
.361
.356
.81029
2
.660(b)
.436
.427
.76438
3
.684(c)
.468
.455
.74523
4
.704(d)
.495
.479
.72903
24
a
b
c
d Predictors: (Constant), Protected environment
Predictors: (Constant), Protected environment,
Contract bonds availing for loans
Predictors: (Constant), Protected environment,
Contract bonds availing for loans , Favour to grow long term crops
Predictors: (Constant), Protected environment, Contract bonds availing for loans , Favour to grow long term crops, Remunerated based on fixed leased amount.
procedure range from 0 to 1. Larger values of
R indicate stronger relationships. R squared is
the proportion of variation in the dependent
variable explained by the regression model.
The values of R squared range from 0 to 1.
Small values indicate that the model does not
fit the data well. The sample R squared tends
to optimistically estimate how well the models
fit the population. Adjusted R squared attempts
to correct R squared to more closely reflect the
goodness of fit of the model in the population.
Here we use R squared to help us to determine
which model is best. Here we choose a model
with a high value of R squared that does not
contain too many variables. Models with too
many variables are often over fit and hard to
interpret.
This table displays R, R squared, adjusted R
squared, and the standard error. R, the multiple
correlations co-efficient, is the correlation
between the observed and predicted values
of the dependent variable. The values of
R for models produced by the regression
13. ANOVA(e)
Table: 7
Model
Sum of Squares
Df
Mean
Square
Regression
46.385
1
46.385
Residual
82.072
125
.657
Total
128.457
126
Regression
56.007
2
28.003
Residual
72.450
124
.584
Total
128.457
126
Regression
60.146
3
20.049
Residual
68.310
123
.555
Total
128.457
126
Regression
63.616
4
15.904
Residual
64.841
122
.531
Total
128.457
126
F
Sig.
70.647
.000(a)
47.928
.000(b)
36.100
.000(c)
29.924
.000(d)
1
2
3
4
25
a Predictors: (Constant), Protected environment
b Predictors: (Constant), Protected environment,
Contract bonds availing for loans
c Predictors: (Constant), Protected environment,
Contract bonds availing for loans , Favour to
grow long term crops
d Predictors: (Constant), Protected environment,
Contract bonds availing for loans , Favour to
grow long term crops, Remunerated based on
fixed leased amount.
e
Dependent Variable: Overall encouraging
contract farming
This table summarizes the results of an analysis
of variance. The sum of squares, degrees of
freedom, and mean square are displayed for two
sources of variation, regression and residual.
The output for Regression displays information
14. Coefficients(a)
2
3
4
The output for Residual displays information
about the variation that is not accounted for
by our model. And the output for Total is the
sum of the information for Regression and
Residual. A model with a large regression sum
of squares in comparison to the residual sum
of squares indicates that the model accounts
for most of variation in the dependent variable.
The mean square is the sum of squares divided
by the degrees of freedom. The F statistic is the
regression mean square divided by the residual
mean square. If the significance value of the F
statistic is small (smaller than say 0.05) then the
independent variables do a good job explaining
the variation in the dependent variable.
Table : 8
Unstandardized
Coefficients
Model
1
about the variation accounted for the model.
Standardized
Coefficients
B
S t d .
Beta
Error
(Constant)
1.435
.187
Protected environment
.510
.061
(Constant)
.785
.239
.477
.058
.222
.055
1.173
.507
Contract bonds availing for crop
loans
(Constant)
loans
Favour to grow long term crops
(Constant)
loans
Favour to grow long term crops
t
Sig.
7.660
.000
8.405
.000
3.292
.001
.562
8.244
.000
.276
4.058
.000
.272
.057
.597
4.304
8.822
.000
.000
.196
.054
.244
3.615
.000
-.141
.738
.519
.051
.316
.056
-.185
.611
-2.730
2.334
9.194
.007
.021
.000
.159
.055
.198
2.903
.004
-.187
.054
-.246
-3.492
.001
.075
.178
2.555
.012
Remunerated based on fixed leased
.192
amount.
26
.601
a Dependent Variable: Overall encourage and welcome
of contract farming
govt support, autonomy abiding corporate requirements,
concern about environment, long term crops , allowing
pesticides usage and short term crops are responsible for
affecting the choice of farmers towards contract farming.
With the emergence of the free market economy in the
wake of liberalisation, globalisation, privatisation, the
fast expansion of agri-business and climate changes,
small farmers may find it difficult to cope up with the
resultant volatility in the economy. Hence, to improve
contract farming practices from these research study the
necessary recommendations are suggested.
Multiple R=0.704, F-Value =29.924, d.f (122,126),
p-value <0.01, R Square =0.495
Ŷ = 0.738+0.519x1+0.159x2-0.187x3 + 0192x4
Where, Ŷ is the estimated value of Overall contract
farming.
The above equation shows the impact of the variables
of contract farming aspects such as protected
environment, fixed yearly contract cost and getting
loan through contract bonds. On an average, if the
protected environment change by 1 unit, there will be
0.519 units increase in the overall service quality when
other variables are kept constant. Moreover the result of
the t-test confirms that the calculated partial regression
coefficient such as (0.519), (.192) and (.159) are highly
significant at 1 percent level and 5 percent level.
Companies should come out with strategies like
Educative Advertisement on contract farming, Contract
farming Awareness programs focused towards farmers
Government and corporate should tie-up in their
operational and promotional Activities to achieve
credibility among farmers. Companies should create
awareness about advance payment policy from
companies for agriculture and insist on that to benefit
the low income farmers and to encourage initiation
from the farmers end towards contract farming.It is
inferred from the conclusion that, there seems to be a
significant difference observed between Low income
farmers with that of government support. Hence, to
Nullify those Opinion differences government should
come forward and take strong initiative by bringing in
stringent policy & measures for small farmers to built
trust and credibility among small farmers. Fertilizer
subsidies should be extended to farmers through
corporate bodies’ initiatives.
From the above analysis, it is concluded that the
variables of contract farming namely protected
environment, Remunerated based on fixed leased
amount and Contract bonds availing for crop loans
were the dominant variables that predict the overall
encourage and welcome of farmers towards contract
farming.
15. Conclusions
By this study, only 18% of farmers are willingness to
give land for contract farming. It is inferred from the
study there observed to be significant difference between
demographic variables like gender, annual income, area
of land, education qualification, and experience with
that of willingness to give land for contract, long term
lease, and crop insurance and abide company rules
and regulation. From the multiple regression analysis
protected environment, remuneration based on fixed
leased amount and contract bonds availing for crop loans
were the dominant variables that predict the overall
encouragement and welcoming of contract farming by
the farmers. From the factor analysis ,it is concluded
that seven factors namely remuneration, corporate and
From regression analysis, it is observed that the attributes
namely to protect the environment and fixed lease
amount are the dominant variables which encourage
corporate farming among farmers, hence to support
these Corporate should provide organic fertilizer to
farmers in order for them to protect the environment
and fixed lease amount to be given to farmers by
through government insurance arrangements even
during uncertainty caused due to natural calamities.
It is inferred that significance difference observed
between education of farmers and crop insurance
awareness, hence Companies should educate the
benefit of crop insurance to farmers irrespective of their
education to manage uncertainty in returns.
27
16. References
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2.
Contract Farming in India’ in K T. Chandy and
O S Tyagi (eds.),Future of Farming in India:
Contract or Co-operative Farming, Indian Social
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Baumann, P., (2000) Equity and Efficiency in
Contract Farming Schemes: The Experience of
Agricultural Tree Crops, ODI Working paper No.
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14.Hayami Y. and Damodaran A. , (2004) ‘Towards
an Alternative Agrarian Reform –TeaPlantations
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17.Little, P. D. and M. J. Watts (eds.), (1994) Living
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Chambers, W., Dimitri, C., Key, Nigel, Nelson,
K., and Southard, L. (2004). “Contracts, Markets
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of
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Commodities”,Agricultural
Economic Report Number 837, USDA, November
2004.
7.Eaton, C. and A. W Shepherd, (2001)Contract
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8.Economics’, Journal of African Economies, 3(2),
October, 231-261.
19. Morrison, P.S., Murray, W.E. and Ngidang , D.
(2006.) “Promoting Indigenous
Entrepreneurship through Small-scale Contract
Farming: The Poultry Sector in Sarawak,
Malaysia”,
9.Erappa, S., (2006) “contract farming in
karanataka : A Boon or bane” Agriculture and
rural development,1-62.
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ac.in/currsci/dec252007/1661.pdf
20. Sarvesh Shah Contract Farming : The new face
of traditional farming. Retrieved August 7,
2010 from http://www.renege.com/contract%20
farming-the-new-face-of-traditional-farming/
11.Gill, S. S., (2004) ‘Small Farmers and Markets’
(a book review), Economic and Political Weekly,
39(23), June 5, 2356-2358.
21. Md. Salleh Hassan, Hayrol Azril Mohamed
Shaffril, Musa Abu Hassan and Jeffrey Lawrence
D’ Silva Developing Agriculture in Malaysia:
Internet Utilization among
Malaysian Youth
Agro-Businessman . European Journal of Social
12.Grosh, B., (1994) ‘Contract Farming in Africa: an
Application of the New Institutional
13. Haque, T. and P. S. Birthal, (1998) ‘Prospects of
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http://www.scribd.com/doc/7760414/APMC-act.
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Marketing: Term paper “Contract Farming”.
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com/contract%20farming-the-newface-oftraditional-farming/
23. Singh, S., (1998) ‘Should Indian Farming Go
Corporate?’,Business India, Aug.24
24.Singh, S., (2005). “Contract Farming for
Agricultural Development; Review of Theory and
Practice with Special Reference to India”, New
Delhi, India: New Concept Information Systems
Pvt. Ltd.
28.Vyas, V. S., (2001) ‘Agriculture: Second Round
of Economic Reforms’, Economic and Political
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25.Sukhpal Singh ,(2003). Contract Farming in India
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29.Warning , M and Hoo , W. (2000).
“The Impact of Contract Farming on
Income Distribution: Theory and Evidence”,
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Meetings, June 2000.
26.Sunanda S.(2005),Farm - Firm Linkages
Through Contract Farming In India Retrieved
29
AN ETHNOGRAPHIC APPROACH TO U N D E R S TA N D
CONVERSATIONS USING EXPLORATORY RESEARCH FOR BETTER
BRAND COMMUNICATION
Prof Prasanta Parida
Asst. Professor at KiiT school of Rural Management, KiiT University, Bhubaneswar, Ordisha
1. Introduction
first phase the respondents were all relatively
young (mostly in their mid-twenties) and had grown
up together in a fairly affluent middle-class. The
respondents were settled into a comfortable room,
provided with ample refreshments and asked merely
to ‘get on with it’ with unknown recording. Analysis
of the recordings yielded a preliminary insight into
how females and males talk about products, services
and brands. Significantly, it appeared to suggest
that conversational interaction differs between the
sexes. With no guidance from moderator the topics
was discussed. Women in this study were much more
inclined than men to speak about their personal
lives. Males seemed more inclined to focus on
what they regarded as deeper issues such as religion
or business s t r a t e g y. We found that the depth
of information given on specific products or
services varied significantly between the sexes. It
was expected that the topics were discussed widely.
However, the themes covered by males were quite
dissimilar to those discussed by females. While males
tended to speak about these things in general terms,
females were inclined to place great emphasis on
specific brand and company names.
What do people mean when they talk about products,
services or brands? In Lewis Carroll’s Through the
Looking Glass, points: ‘When I use a word … it
means just what I choose it to mean – neither more
nor less.’ In 21st century marketing research have
often wondered w h e t h e r
our respondents mean
what they say or even say what they mean. In 1990
bestseller book You Just Don’t Understand, by the
respected sociolinguist Deborah Tannene argued that
the language women use is designed to make
connections and to reinforce intimacy but men, by
contrast, use words to establish status and to delimit
their independence. We wondered, that when a set
of words is used to describe a product or service in
a particular way, it can mean one thing as spoken by
a woman and something totally different coming
from a man.
2. The Research Studies
We needed a set of tools that would enable us
to identify the key points of contact between
interpersonal communication and goods, services
and brands. Our interest was very much in studying
the relationship between people, and the ways in
which these relationships might be mediated by the
artifacts of everyday life. The content of the study
was developed in three stages. In each stage the
studied suggested same-sex conversations, observed
respondents that were largely of the same age group
and social class.
Within our data we found that males tended to speak
more neutrally about specific topics, whereas women
were more inclined to refer to subjects in either a
positive or negative manner. In the female group,
members often publicly disagreed with each other,
so both positive and negative comments emerged.
With an open conversational agenda, the males
rarely disagreed: we observed how they seemed
less intimate and less prying, seldom speaking
of their personal experiences and opinions. From
the emerged data was the way in which product,
service and brand information is exchanged by the
two sexes. The results suggested that the amount of
3. Study 1
We recruited two groups, three males and three
f e m a l e s each. Each set meet three t i m e s in
an informal location for an unstructured, unscripted
research ‘episode’. These sessions were of 20
m i n u t e s but extending to 3 0 m i n u t e s . In this
30
information given, and the extent to which it was
sought, differed between male and female groups.
It appeared that passing on information came more
naturally to females and was more regular in allfemale groups than it was in all-male ones. Indeed
there appeared to be no instances in which a male
explicitly imparted product information to the other
members in his group. After thorough a n a l y s e s
and interpreting our data, we made the following
observations.
• The verbal content and meanings embedded in
the dialogues (in common with most marketing
studies looking at word-of-mouth, it has to be
noted). But we really needed to understand the
whole nature of the communicative in the verbal
transcripts.
• The respondents engaged i n natural, spontaneous
discourse i n the way any young people would
communicate a m o n g themselves. Our datagathering method was not ideal for picking up
these verbal interactions, and completely missed
the physical interactions of contact and b o d y
l a n g u a g e t h a t characterize interpersonal
communication.
At this stage we chose to undertake some preliminary
interrogation of the data by reference to the literature
– in particular, aspects of social psychology and
sociolinguistics.
Female respondents in this stage had insisted on
being given a short topic guide. In practice they
addressed only three explicit themes in the 90
minutes allowed to them: shopping, hairdressers
and clothes. It was apparent that, a s time passed,
the respondents were increasingly less aware of
deviating from the subject.
The respondents in
this phase, like the younger females in stage
one, found it perfectly natural to talk about any
aspect of almost any consumption decision: data
were both expected and given – products, prices,
brands, locations. Invariably, however, the older
group preferred to talk of these things as they
affected others in their lives, particularly their
children, but occasionally their partners. The older
men, by contrast, were as limited in their topics of
conversation as their younger counterparts. Mostly
t h e i r t a l k c e n t e r e d o n work. One of the most
striking elements to emerge from this stage, from
visual medium was the importance of bodily position
and eye contact. Although t h e women’s chairs were
positioned at right angles to each other, eye contact
was obligatory and almost constant. With the men,
two people positioned themselves at right angles,
while the third sat face-to-face.
We found that, regardless of age, the same sort
of rules applied to same- sex dialogues. Women
would commence a narrative, pausing regularly for
encouragement, clarification and points of detail. Each
narrative would be backed up with a regular chorus
of agreement, plus occasional interruptions to clarify
points of information or to add emphasis. We also
noticed how frequently o n e speaker w o u l d p a u s e ,
uncertain, mid-sentence a n d allow her friends
to complete the narrative or to find the words that
were eluding her. Listeners would also encourage
the speaker to carry on when a narrative was
apparently over: ‘So what happened?’ With the
men, however, it appeared that there were clearly
defined conversational rules, based around whose
turn it was to speak: only when the speaker had
signaled the end of his piece would the second man
respond.
We found older women to be just as active
as
their
younger contemporaries in providing
and seeking out knowledge, using the sharing of
4. Study 2
We therefore chose to extend the work in two
important areas: first we decided to study middleaged consumers, and second we felt it important
to supplement the verbal content of the discussions
with visual elements. When it came to addressing
the female half of the research agenda, it was
comparatively straightforward to replicate the first
stage, merely by adding a digital camcorder to the
voice recorder u s e d previously. Three friends male
and female separately were recruited, each aged in the
region of 45 to 50, all of whose children attended the
different schools. As with the previous stage of the
research, the respondents were made comfortable
at the home of one of the group, the recording
devices were switched on and then the researcher
left the room for 90 minutes.
31
information as collaborative and friendship building.
This appeared to be done very much on an equal
footing and women tended to avoid taking a didactic
stance, even where they clearly had specialist
knowledge or experience to share. The women pooled
their knowledge – where to shop for bargains, what
teenagers could be persuaded to eat, when
supermarkets reduced t h e i r prices on fresh produce.
The men, however, used knowledge to establish
or reinforce hierarchies in their relationships in
much the same way we observed with the
younger group It is important to note that this sort
of jockeying for position was done without apparent
malice or aggression. But while a female would
appeal to her listeners for help or corroboration, the
male equivalent was independent and emphatic in
his declarations. Another f e a t u r e noticed earlier,
how men tended to talk in generalities, was evident
here too.
in public transport venues such as bus and train
stations.
The attraction o f this approach was that it
potentially involved hundreds of people; in practice,
however, it was possible only to monitor a few
e x c h a n g e s on each journey, and at times
even those were fragmentary. Our methods could
be described as pure ethnography in the sense that
there was no direction, and the process of data
gathering involved no more than natural interaction
with one’s subjects. In keeping with this, we took
minimal notes on the journeys, but compiled
this post-hoc from memory. We focused on
dialogues involving single-sex participants in order
to maintain the overall theme of the research.
Most of the young travelers were of school or
college age; with the males in this group, their
natural topics of conversation were about friends
and mutual associates, particularly anyone who
was spotted during the journey. Indeed, there
was comparatively little spontaneous conversation,
and an almost total absence of product or brand
d i a l o g u e s . The triggers for these were invariably
visual and immediate: the carrier-bag one was
holding, the mobile phone another was showing off.
These young males used conversation for socializing
and forming; this was noticeable in their use of
slang and profanities. On the whole, however, their
conversations were intermittent and infrequent. Young
females, by contrast, appeared to be far more vocal
together; their conversational strategies seemed to
mirror those already observed among middle-class
women in terms of ‘rules of engagement’. Once
again, however, products, brands and services rarely
featured in mostly of the conversations.
5. Re-evaluation of study 2
We found that the decision to include both audio
and visual elements to the data gathering was
vindicated in terms of the additional richness it
brought. Body language, facial expressions and other
non-verbal cues were as much a part of the answer
as the words used in the exchange. However,
we recognized that although many of the themes
identified in the young respondents were apparently
shared by middle-aged respondents, we were still
looking at only a partially p a i n t e d c a n v a s .
6. Study 3
We attempted to address these limitations in the
third study. Noting how promising observation had
appeared to be, we decided to expand the use of this
technique but to restrict the data gathering as much
as possible to working-class subjects. We found that,
by careful choice of location, w e were able to start
to build a picture of attitudes to products, services
and brands among a wider section of the population,
including the elderly. Our observation work was
carried out on public transport in a working-class
area of M u m b a i . Over a period of a fortnight
we took over a dozen bus journeys, supplemented
by an occasional train trip and some ad- hoc work
The most vocal groups appeared to be the elderly.
Once again, however, products, services and brands
rarely featured in their extensive narratives. The
main topics for female conversation were the
weather, one’s health and relationships, holidays,
bereavements, grandchildren. This again corresponds
issues (Albrechtsen 2007). Brain scans of females
and males when subject to emotional stimuli show
32
that much more activity takes place in female brains
than in male brains in response to such stimuli.
communication was employed. However, stage three
produced results that were by no means so clear-cut.
What we seemed to have found was a p a t t e r n of
b e h a v i o r among middle-class people, between the
ages of about 25 and 55s. When we came to look at
the under- 25s and over 60s, these patterns did not
seem to hold. Perhaps it was that stage three drew
predominantly on working-class subjects. Or maybe
the differences in data-gathering methods (contentrich, overt data gathering vs. a more superficial,
covert study) were responsible for the dichotomy.
In the earlier part of the study we saw males using
interpersonal discourse to create, negotiate, m a n a g e
and strengthen social ties within the group. While
there was little overt aggression, the key source of
power was knowledge, and respondents appeared
to be using it to make power statements and to
position themselves vis-à-vis other group members.
Many of the male interventions seemed designed
to show the speaker in a new light – intelligent,
articulate, well informed, widely travelled, well
read, and so on.
Elderly m e n t e n d e d to t a l k a b o u t sports and
hobbies.
There w e r e additional triggers for
conversation too, s u c h as posters, b u i l d i n g s
a n d other visual elements either inside or outside the
vehicle. Sometimes a passenger, usually a woman,
would start to show off the proceeds of her shopping
trip to a fellow traveler, sharing information on
place, price and related elements in the way
we observed with middle-class women. Counterintuitively, we noticed that few elderly people dwelt
on the past (apart from the recent past), being
very much tied up with describing the present and
planning for the future. It was particularly noticeable
that where a mixed-gender couple were travelling,
they would invariably choose a member of their
own sex with whom to engage in dialogue. In
this process the partner appeared to be almost
completely ignored as the male–male or female–
female dialogue developed. It was also very striking
that, f o r the elderly females at least, eye contact
was essential in any dialogue. This factor regularly
determined seating position, and we noticed that
the start of a conversation would often have to be
deferred until both participants had rearranged
themselves in such as way as to be able to see eye
to eye.
Table 1 summaries the gendered differences we found
in conversational styles, ignoring the effects of social
class. In course of observed middle-class females,
both the younger and middleaged, engaged in
more debate, covered a wider range of topics and
were apparently more open to socialization than
male counterparts. This seemed to be true also for
working-class women. In the later stages of the
research we add the supporting evidence of non-verbal
communication, and to suggest that interpersonal
discourse used as social glue in a way that was
not evident with middle-class men. It is important
to remember, while trying to be non-judgmental, that
both groups were using discourse for socialization.
7. Analysis
The first two stages of research seemed to indicate
clear patterns of behavior, qualitative differences in
the ways in which women and men engage in
conversation, the reasons they did so, and the topics
they talked about. We noticed these differences in the
words they used and in the ways in which non-verbal
Table 1 Gendered differences in conversational styles – not class specific
33
But w h i l e the women’s approach seemed t o b e c o m m u n i t a r i a n , the underlying theme in the middleclass men’s groups may have been authoritarian. See Table 2 for a summary.
We felt that the interpersonal communication in the women’s group moved through three key phases in
discussion, and a fourth element outside the group. However, this was not a linear process as there could be
any number of strands to the discussion, each involving a different consumption experience. We saw the key
rules of debate being interrogation, evaluation and negotiation; validation took place later when members of
the group may themselves have assessed the group knowledge by using the product that had been discussed.
The interrogation phase was very evident in our data. Debate was encouraged and accepted. Interrogation was
not an undermining process, but we saw
Table 2 Gendered differences in conversational styles: middle-class respondents
women using it to provide more information w i t h o u t f o r m i n g a judgment. Indeed, in this stage
what often appeared to be statements by one respondent or another were actually questions or hypotheses
to be debated by this micro community. From this process came the evaluation phase where the respondents,
having ascertained the facts, debated t h e salient aspects and started to form views. In the negotiation phase a
group consensus was arrived at, an implicit agreement negotiated through each member having been entitled
and encouraged to have her say. In our data, what might have appeared to be argument, taking on board the
non-verbal cues, could be reinterpreted as sharing knowledge, but in a dialectic learning process where
discussion and debate helped the respondents to develop knowledge (see Figure 1).
Personal narratives
Common Knowledge
Conversation
(Integration, Evaluation,
Negotiation)
Validation
(Experimental)
Figure 1 How female respondents used conversations to develop knowledge. When at the start of this paper we
implied there was little guidance in the literature we could have been accused of selectivity, ingenuousness,
or both. While it is true that the marketing literature on word of mouth is dominated by unhelpful studies of
Word-of-Mouth effectiveness and Word-of-Mouth practices, our search failed to unearth any reliable research
in gender-related differences in communication strategies.
It has to be remembered that market researchers are interested in the views, motivations and opinions of
consumers, and the ways in which these are formed. In this area there have been some useful contributions
to knowledge in terms of understanding the reasons why people engage in product- or service-based
interpersonal communication. But arguably some of the most valuable (and overlooked) insights are also
the most dated. ( Dichter (1966)), for example, suggested that although talking about products may simply
be a means of social interaction, motivations for engaging in this sort of discussion are actually much
34
more complex. Indeed, Whyte (1954) had already
been arguing that conversations about products are
entered into in order to advance the interests of
the self. Dichter’s interpretation was that people are
unlikely to pass on their views unless they gain
something from it, and that this could be in terms
of reduced perceived risk. All of this is consistent
with our findings in relation to the women’s group
in our study, although it fails to take account of
our interpretation of male patterns of interpersonal
discourse.
And further tentative confirmation of some aspects
of our analysis comes again from Dichter (1966): he
demonstrated that individuals often engage in product
discussion because of the personal satisfaction that
can be gained from influencing the people.
8. The Implications for market research
Ethnographic methods seemed to generate some
promising consumer insights, precisely because of
the non-directive nature of the research instruments.
Yet our most interesting data seemed to come from
groups where there was some direction. Left t o their
own devices, h o w e v e r , our respondents seemed
to be able to provide only snippets of information
that might be of interest to a brand owner, a service
provider or a policy maker.
From a marketer’s point of view, our study suggests
that a consumer will engage in a d i a l o g u e (as
p e r f o r m e r or audience) where there is a
compelling narrative, regardless of gender. Research
suggests that when we merely take crude measures
of satisfaction and dissatisfaction, without allowing
for the gender of the respondent and the context
in which the opinion is given, the measures may be
open to serious misinterpretation.
Other studies, by Coleman et al. (1966), Roselius
(1971) and Buttle (1998), reinforce the claim that
discussing products and services is a risk reduction
strategy that can eliminate the uncomfortable
feeling of exposure or doubt. Moreover, according
to cognitive dissonance theory, speaking to
friends and relatives about the positive qualities
of a recently purchased product or service relieves
tension created by the experience and confirms the
consumer’s original judgment (Bansal & Voyer
2000). This seems to mirror the dialectic process
we identified in our female subjects. None o f these
studies, however, e x p l i c i t l y identified or explored
g e n d e r differences.
9. Conclusions and further research
This study has shown some of the potentials and
frustrations of ethnographic research. We believe
that market researchers can usefully introduce
potentially biasing thematic direction to what
otherwise would be an ethnographic study; indeed
one of the most productive episodes in our study
involved allowing respondents to choose from a
menu of topics. While recognizing that our results
a r e based on small samples and ad hoc methods
lack some generalisability, we believe we can find
some support in other areas of study. Our c o u n t e rintuitive findings, therefore, deserve some further
detailed investigation. It may be that what we had
been picking up was actually age r e l a t e d , with
under-20s and over-60s showing different patterns
of behavior.
There are important lessons again for market
researchers in Dichter’s (1966) seminal research,
where he argued that consumers make productrelated comments, disclose their opinions and make
recommendations in order to affirm their sense of
self. As we suggested in interpreting male use of
interpersonal discourse, so Dichter claimed that
discussing products and services serves as a tactic
to gain attention, feel loved, demonstrate insider
information, denote status, show connoisseurship,
connote pioneering spirit, spread the gospel and
assert superiority. More tellingly in relation to our
interpretation of male didacticism in interpersonal
communication is the fact that social exchange
theory predicts that this type of intervention is
motivated by status and power needs (Gatignon
& Robertson 1987). Consumers also share product,
service or company experiences with loved ones as
a way of expressing care, love or friendship for them.
It is worth remembering that while Tannin (1990)
and Gray (1993) were able to give sociolinguistic
35
6. Chrzanowska, J. (2001)
studies a mass-market appeal, their focus was primarily
on relationships and barely touched the commercial.
Tannen and others have successfully taken the
subject into the workplace and commented on gender
and language in the context of people management
(see, for example, Tannen’s 1994 bestselling book
Talking from 9 to 5).
Men are focus
groups, women are group discussions. AQR
Discussion Paper, online at http://www.aqr.org.
uk/inbrief (accessed 26 September 2007).
7. Coleman, J.S., Katz, E. & Menzel, H. (1966)
Medical
Innovation: A
Diffusion Study.
Indianapolis: Bobbs-Merrill. Croft, R. (2006)
We suggest, on the basis of this exploratory
study at least, that the consumers of products,
services and brands do indeed say what they mean
when they are interacting with other consumers.
The difficulty for a market researcher is that the
words they choose may mean any number of things,
depending on the gender, age and social class of the
speakers and their audience. The problem is neatly
summed up in Through the Looking Glass, when
Alice suggests that ‘ T h e question i s whether y o u
can make words mean so many different things.’
Folklore,
families and fear: understanding
consumption
decisions
through
the
oral
tradition. Journal of Marketing Management,
22, 9/10, pp. 1053–1076.
8. Croft, R. & Pentucci, C. (2006) Dangling
conversation: exploring
the word-ofmouth
behaviours of men and women. Proceedings
of the Academy of Marketing Conference,
Middlesex University.
9. Dichter,
10. References
E. (1966)
How
word-of-mouth
marketing works. Harvard Business Review,
44, 6, pp. 147–165.
1.Albrechtsen, J. (2007) Feminism begs to differ,
but unisex brain is a fantasy. The Australian,
27 September, p. 14.
10.Gardner, M. (1960)
The Annotated Alice.
New York: Clarkson Potter. Gatignon, H. &
2.Bansal, H.S. & Voyer, P.A. (2000) Word-ofmouth processes within a services purchase
decision context. Journal of Service Research,
3, 2, pp. 166–177.
Robertson, T.S. (1987) An exchange theory
3.Boddy, C.R. (2005a) Projective techniques
in market research: valueless subjectivity
or insightful reality? A look at the evidence
for the usefulness, reliability and validity of
projective techniques in market research.
International Journal of Market Research, 47,
3, pp. 239–254.
11. Gray, J. (1993) Men are From Mars, Women are
model
of
interpersonal
communication.
Advances in Consumer Research, 13, 1, pp.
534–538.
From Venus. New York: HarperCollins. Hussey,
J. & Hussey, R. (1997) Business Research:
a Practical Guide
for Undergraduate and
Postgraduate Students. Basingstoke: Palgrave
Macmillan. Roselius, T. (1971)
Consumer
rankings of risk reduction methods. Journal of
4. Boddy, C. R. (2005b) Groups in focus: the
distinctive difference between focus group
discussions and focus group interviews.
Australasian Journal of Market and Social
Research, 13, 2, pp. 29–38.
Marketing, 35, 1, pp. 56–61.
12.Sarantakos, S. (1997) Social Research, 2nd
edn. Basingstoke: Palgrave. Stewart,
J. &
Logan, C. (1998) Together: Communicating
Interpersonally, 5th edn. New York: McGraw-
5. Buttle, F. (1998) Word of mouth: understanding
and managing referral marketing. Journal of
Strategic Marketing, 6, 3, pp. 241–254.
Hill.
36
Applicability of SERVEQUAL Scale in Indian Retailing
N. Udaya Bhaskar
Assistant Professor, School of Management Studies, Adikavi NannayaUniversity, Rajahmundry, Andhra Pradesh
Dr. B.Raja Shekhar
Reader,School of Management Studies, University of Hyderabad, Hyderabad, Andhra Pradesh
1. Introduction
terms of Definition, Measurement, reliability and
validity of service quality.
In the present day of retailing, service quality has
become the basic tool for retailers to create competitive
advantage and to enhance shopping experience.
The quality of services significantly effect customer
satisfaction, company revenues, cross selling and
also repeat purchase behavior (Berry, 1986; Hummel
and Savit, 1988; Reichheld and Sasser, 1990). Indian
retailing is one of the fastest growing sector and ranked
tenth among the largest retail markets in the world. The
sector is growing at a rate of 25-30 percent per annum;
revenues from this sector are expected to reach US$ 24
billion by the end of 2010. The fast pace of the Indian
retail industry presents many companies with a host of
daily challenges. In today’s competitive environment
and with the growing importance of services, delivering
high quality services has become the basic retailing
strategy. With the rise in competition, change in
environmental factors, shift in consumer attitudes, the
concern for service quality is growing. As service quality
has become the key marketing strategy, it is necessary
on the part of marketer to measure the service quality
effectively. The most popular tool to measure service
quality is SERVEQUAL, an instrument developed by
Parasuran et.al (1985; 1988). The scale has 22 items
for measuring service quality in five dimensions and
was initially tested in five service settings like Retail
banking, Credit card services, Repair and maintenance of
electrical appliances, long distance telephone services,
and Title brokerage. Later on the scale has been used
to measure service quality in different service settings
(Ladhari, 2008), but the scale has not been tested and
proved to be applicable to the emerging service settings
like Apparel retailing, Furniture retailing, Jewelry
retailing etc… The present paper aims to study the
applicability of SERVEQUAL scale in Indian Retailing
and will also reviews the SERVEQUAL research in
2. Service Quality
The concept of quality has different meanings to
different people; the product based approach sees
quality as a precise and measurable variable, the
manufacturing based approach focuses on conformance
to internally developed specifications, the value based
approach measures quality in terms of benefits against
costs, the user based definitions of quality feels that,
quality lies in the eyes of beholders and equates with
maximum satisfaction, another transcendent approach
views quality as a mark of uncompromising standards
and high achievement. Parasuraman, Zeithaml and
Berry, defined Service Quality as “A global judgment
or attitude, relating to the overall superiority of the
service”. The characteristics of services like intangibility,
perishiability, inseparability and heterogeneity make
measuring service quality indefinable and abstract.
Due to this ambiguity measuring the service quality has
become the biggest challenge for the service marketers.
With this background Gronroos (1984) defined
perceived service quality as:
The outcome of an evaluation process,
[whereby] the consumer compares his
expectations with the service he perceives he
has received, i.e. he puts the perceived service
against the expected service. The result of this
process will be the perceived quality of service.
By the above definition, service quality is the ‘Gap’
between customer expectations and perceptions.
Customer expectations are standards/reference points
that they bring into service experience, whereas
customer perceptions are subjective assessment of
37
actual service experiences. The customer gap is the
servequal scale was reliable and values ranges from
resultant of other four provider gaps.
0.74 to 0.94 proving the high reliability of the servequal
Gap1: Not knowing what customer expect
scale. There are basically three types of Validity:
Gap2: Not selecting the right service designs and
Convergent, Discriminant and Predictive validity.
standards
Convergent validity is the degree to which items on a
Gap3: Not delivering to service designs and standards
scale which relate to the same construct and correlates
Gap4: Not matching performance to promises
strongly with one another, Discriminant validity is the
degree to which those items on the scale which relate to
Customer Gap = Gap1+Gap2+Gap3+Gap4.
As stated by Parasuraman et al. (1985), consumers
different constructs are uncorrelated with one another.
evaluate service quality based on their perceived
Predictive validity is the degree to which an individual‘s
experiences against their expectations about the service.
score on a scale is predictive of his/her performance on
In order to close the customer gap it is required to close
some criterion measure. The validity of an instrument
the other four gaps and measuring the customer gap
refers to whether it accurately measures the attribute of
is the resultant of all other gaps. In order to measure
interest whereas reliability of an instrument concerns
various aspects of service quality they developed a
whether the instrument identically produces results
survey research instrument called SERVEQUAL,
in repeated applications. In the studies conducted by
which can be applied to a broad spectrum of service
Landrum et.al (2007) and Carrillat et.al (2007) the
industries. The scale consists of 22 perception items and
validity of the servequal scale was examined and found
a series of expectation items, reflecting five dimensions
high predictive validity, thus the scale is fairly reliable
of service quality which were extracted from ten
and valid.
dimensions in their earlier research. The five critical
dimensions of service quality are Tangibles, Reliability,
4. Applicability of SERVEQUAL scale in
Responsiveness, Assurance, and Empathy. Several
Indian Retailing
research studies taken place in different countries like
It is evident from the literature that majority of the
USA, China, Australia, Cyprus, Hong Kong, Korea and
SERVEQUAL scale applications happened outside
South Africa during the period from 1995 to 2007. The
India and little research is taking place on service
scale is widely used in different service industries like
quality measurement in India. The question arises here
Health care (Carman 1990), Banking (Mels et al, 1997),
is the generic scale which was developed by Parasuran
Tele communications (Van der Wal et al. 2002), Retail
et.al (1985; 1988) is applicable in all service settings
Chains (Parasuraman et al., 1994), Information systems
with in India and all the 22 items were appropriate to
and also in Library services. It is evident from the earlier
measure service quality. Sureshchander et.al (2001)
studies that little research was done in India related to
conducted a study to identify weather Servequal and
measuring service quality and more specific to Indian
Servepref addresses the critical aspects of customer
retail sector which indicates the need for research in this
perceived service quality in India. To measure service
area.
quality in retail banking Aldlaigan and Buttle (2002)
developed a scale called ‘SYSTRA-SQ’ containing 21
3. Reliability and Validity of Servequal
items comprising of four dimensions like system quality,
Reliability can simply be defined as the degree of
behavior quality, machine quality, service transactional
consistency with which a scale measures a specific
accuracy. As stated by Gefen (2002) service quality
attribute. The value of Cronbach’s Alpha coefficient is
dimensions comprised into three (tangibles, empathy
considered to test the reliability. The test value ranges
and a combined dimension of ‘responsiveness, reliability
from -1 to 1 and a higher positive Cronbach’s Alpha
and assurance) when applied to online services.
indicates higher reliability. Ridah Ladhari (2009) stated
Later Parasuran et.al (2005) developed ‘E-S-QUAL’
38
having 22 items with four dimensions like ‘efficiency,
system availability, fulfillment, and privacy’ for online
customers. In the year 2007 Cristobal et.al developed a
scale consisting 17 items with four dimensions. From
the above they concluded that measuring service quality
in online service requires special dimensions as it differs
from manufacturing service quality.
to extend the study to other cities with large sample
having varied demographics to explore new dimensions
of retail service quality scale. So it is evident from the
earlier studies that there was no generic scale to measure
service quality in Indian Retailing.
5. Conclusion
Servequal scale is one of the popular tools and still is
The SERVEQUAL scale was tested in different
countries having different cultural contexts. Researchers
like Chi Cui et.al (2003) applied servequal to Korean
banking customers and observed that instead of five
dimensions three dimensions (empathy, tangibles, and
reliability/responsiveness) have fit good for their data.
useful to measure service quality though it has some
empirical shortcomings. When applying the scale
to different industries, in different countries having
different cultural contexts, the generic items of the scale
has to modify, test, and then apply to fit according to the
research need. When the scale was modified as Retail
Later the three dimension structure was tested again by
Arasli et.al (2005) at Greek banking sector; they found
that dimensionality of the scale will vary according to
different cultural contexts. It was also observed that
selection of the construct, items and method will play a
very important role in order to reduce the bias.
Service Quality Scale (RSQS) and applied to the Indian
retailing sector found that the scale is valid and reliable
but not clearly explaining all the sub dimensions of the
scale unless otherwise the retailers can not take strategic
decision to improve their service levels. The scale
requires modification and examination of the factor
structure so as to fit to the Indian retailing. The future
As stated by Gagliano and Hathcote (1994) measuring
service quality in retailing differs from other service or
product environments, with this a scale was developed
to measure retail service quality by Dabholakar, Thrope
and Rentz (1996) and coined the name ‘Retail Service
Quality Scale- RSQS’ which has a five dimensional
structure (Physical aspects, Reliability, Personal
interaction, Problem solving and Policy) they have
also identified in their extended study that all these five
dimensions were valid in the USA. Later The RSQS was
tested by Mehta, Lalwani and Han (2000) for measuring
the service quality perceptions of supermarket
consumers in Singapore and found appropriate. Kim
and Jin (2001) tested the RSQS across two cultural
contexts of USA and South Korea and identified rather
than five dimensions four dimensional structure was
suitable to measure service quality. Subhashini Kaul,
(2005) applied the RSQS in the Indian Retail setting
with a sample of 119 apparel retail customers selected
in one of India’s fastest growing cities i.e. Bangalore.
She observed that rather than five dimensions of
Service Quality Four dimensions were appropriate to
measure Apparel Retail Service Quality. There is a need
research may be carried out on applicability of the scale
in different retailing sectors like Furniture, Jewelry,
Foot ware etc. and test it in different geographical
places with in India with an appropriate sample size.
This enables to develop and standardized new scale to
measure service quality in Indian retailing.
6. References
1.
Aldlaigan,
A.H.
and
Buttle,
F.A.
(2002),”SYSTRA-SQ: a new measure of bank
service quality”, International Journal of Service
Industry Management, Vol. 13 No.4, pp 362-81
2.Gefen, D. (2002), “Customer loyalty in
e-commerce”, Journal of the Association for
Information Systems, Vol. 3, pp.27-51.
3. Arasli, M.G., Nataraajan, R. and Jaheera, J.S.
(1999), “Service quality in the banking industy:
an assessment in a developing economy”,
Managing Service Quality, Vol.15. No.1, pp.4156
4. Berry, L.L (1986) “Retail businesses are Service
39
usiness” Journal of Retailing, Vol.62, spring, pp.
3-6.
5.
Carman, James M. (1990), “Consumer
Perceptions of Service Quality: An Assessment
of the SERVQUAL Dimensions,” Journal of
Retailing, 66 (Spring), 33-55.
13.
Kim, Soyoung and Byoungho Jin
(2002). “Validating the retail service quality
scale for US and Korean customers of discount
stores: an exploratory study,” Journal of Services
Marketing, 7 (2), 223-237
14.Landrum, H., Prybutok, V.R. and Zhang, X.
(2007), “A comparison of Magal’s service quality
instrument with SERVPERF”, Information &
Management, Vol. 44 Bo.1,pp. 104-13.
15.Mehta, Subhash C., Ashok Lalwani and Soon Li
Han (2000). “Service quality in retailing: relative
efficiency of alternative measurement scales
for different product-service environments,”
International Journal of Retail & Distribution
Management, 28 (2), 62-72
16.Parasuraman, A., Valarie Zeithaml and Leonard
Berry (1988). “SERVQUAL: A Multiple-Item
Scale for Measuring Consumer Perceptions
of Service Quality,” Journal of Retailing, 64
(Spring), 12-40.
17.Parasuraman, A., Zeithaml, V.A. & Berry, L.L.
(1985) A conceptual model of service quality
and its implications for future research, Journal
of Marketing, 49, pp. 41- 50.
18.Parasuraman, A., Berry, L.L. & Zeithaml, V.A.
(1991) Refinement and reassessment of the
SERVQUAL scale, Journal of Retailing, 67, pp.
420- 450.
6. Chi Cui, C., Lewis, B.R. and Park, W. (2003),
“Service Quality Measurement in the banking
sector in South Korea”, International Journal of
Bank Marketing, Vol. 21 Nos 4/5, pp.191-201.
7. Cattillat, F.A., Jaramillo, F. and Mulki, J.P. (2007),
“The validity of the SERVEQUAL dimensions”,
Journal of Retailing, Vol.14, pp.60-72.
8.Cristobal, E., Flavian, C. and Fuinaliu, M.
(2007), “Percieved e-service quality (PeSQ):
measurement validation and effects on consumer
satisfaction and web site loyalty”, Managing
Service Quality, Vol. 17 No.3, pp 317-40.
9. Dabholkar, Pratibha, Dayle Thorpe and Joseph
Rentz (1996). “A Measure of Service Quality
for Retail Stores: Scale Development and
Validation,” Journal of the Academy of Marketing
Science, 24 (Winter), 3-16.
10.
Gagliano K.B. and Jan Hathcote (1994).
“Customer Expectations and Perceptions of
Service Quality in Retail Apparel Specialty
Stores,” Journal of Services Marketing, 8 (1),
60-69.
11.Gronroos.C (1984), “ A Service Quality model
and its Marketing Implication” , European
Journal of Marketing, Vol. 18 No.4, pp. 36-44.
12.
Hummel, J.W. and Savitt, R. (1988),
“
Integrated
Customer
Service
and
Retail
Strategy”,
International
Journal
of Retailing, vol.3 No.2, pp. 5-21.
Mels, G., Boshoff, C. and Nel, D. (1997).“The
dimensions of Service Quality: the original
European perspective revisited”, Service
Industries Journal, Vol.17 No.1, pp 173-89.
19.Parasuraman, A., Berry, L.L. & Zeithaml, V.A.
(1993) More on improving service quality
measurement, Journal of Retailing, 69, pp. 140147.
20.Reichheld, F.F. and Sasser, W.E.Jr (1990), “Zero
defections: Quality comes to services”, Harvard
Business Review, Vol.68 No.5, pp. 105-11
21.Riadh Ladhari (2008) “ A Review of twenty years
of SERVEQUAL” research” , International
Journal of Quality and Service Sciences, Vol.1
No.2, pp.172-198.
40
22.
Subhashini kaul (2005), “Measuring Retail
Service Quality: Examining Applicability of
International Research Perspectives in India”,
Indian Institute of Management, Ahmedabad,
Working Paper No. 2005-10-2, pp 1-19.
23 Sureshchander, G.S., C. Rajendran and T.J.
Kamalanaban (2001). “Customer perceptions
of Service Quality – A Critique,” Total Quality
Management, 12(1), 111-124
24.Van der Wal, R.W.E, Pampallis, A. and Bond,
C. (2002), “Service quality in a cellular
telecommunications company: a South African
experience”, Managing Service Quality, Vol.12
No.5, pp.323-35.
41
Consumers’ perception on Matching Quality of Celebrity
and Brand Features in Advertisement
Raja
Sr. Lecturer, Dept. of Management Science, Velammal Engg. College, Chennai
Dr. N. Magesh
Sigma MU-Research Consultancy Sciences, Chennai
1. Introduction
media exposure. Information from an attractive source
is accepted because of the consumer’s desire to identify
with that source (Erdogan, 1999). In the product
match-up model, effective advertisement results
when the messages conveyed by celebrity image are
compatible with product image (Pornpitakpan, 2003).
With this background, the present study was attempted
to study the matching qualities of the celebrity with
advertisement, brand image and consumers’ perception
and relationship between matching qualities of celebrity
and advertisement in Madurai city of Tamil Nadu.
Advertisements of all varieties pop up everywhere
on streets, in stores and restaurants, and on public
transportation. Each of these advertisements attempts
to steal at least a fraction of an unsuspecting person’s
time to inform him or her of the amazing and different
attributes of the product at hand. Because of the constant
media saturation that most people experience daily,
they eventually become numb to standard advertising.
The challenge of the advertiser is to find a hook that
will hold the subject’s attention and keep them from
changing the channel or turning the page.
2. Methodology
The Madurai city is purposively selected for the
present study since it is the predominating trade center
for South Tamil Nadu. About 120 respondents were
selected by adopting simple random techniques and
were interviewed. Information/data was collected by
interviewing the respondents by using a pre-tested,
well-structured interview schedule. The data and
information collected pertains to the year 2009-10.
The descriptive statistics, frequency analysis and mean
score and ranking were carried out to draw meaningful
interpretations.
One
well-used
approach
at
differentiating
advertisements is the use of celebrity endorsements.
Using celebrity fame, bought or contrived, has certain
advantages and risks. A celebrity-product association
can capture a viewer’s attention, increase the public’s
awareness of the product, and cause consumers to
purchase the product endorsed. In contrast, celebrityproducts associations can be very costly and risky based
on the potentially volatile image, nature, and credibility
of the personalities used.
Celebrities ‘cut through’ advertising clutter, hold viewer
attention, contribute to brand name recognition and
transfer positive qualities such as physical attractiveness
and likeability to the brand (Dyson and Turco, 1998;
Charbonneau and Garland, 2005). The source credibility
model suggests message effectiveness depends on the
endorser’s perceived credibility. Celebrity combines
both expertise and trustworthiness. Through the
process of internalization, credible sources influence
consumer beliefs, attitudes and or behaviour (Kamins,
1990; Ohanian, 1991). The source of attractiveness
model proposes that message effectiveness depends
on the similarity between source and receiver, source
likeability and source familiarity through repeated
3. Spearman’s Rank Order Correlation
In order to identify the relationship between matching
qualities of celebrities and advertisement in celebrity
endorsement, the Spearman’s rank order correlation
was worked out and the formula is;
r=1-
6 ∑d2 ( n-(n -1) )
2
Where,
d = Difference in Ranks
n = Number of Pairs.
42
4. Chi-Square Test
In order to study the differences between brand features
and perception of the consumers, the Chi-Square Test
has been employed and the formula is:
5. Results and discussion
The general and socio-economic characteristics of
consumers were analyzed and the results are presented
in Table-1. The results indicated that the majority of
the consumers (64.16 per cent) were the age group of
21-30 years followed by less than 20 years and 31-40
Years. About 45.80 per cent of were married while
79 per cent were males. The majority of consumers
(49.17 per cent) were postgraduates and about 30 per
cent of consumers were under-graduates. The monthly
income of consumers were ranging from Rs. 0-5000(85
per cent) followed by Rs.5000- 10000(8.34 per cent).
About 70.83 per cent of the consumers have a family
size of 4-6 members followed by less than 3 members
(25.00 per cent).
χ2 =
Where
O = Observed Frequency in each category
E = Expected Frequency in the corresponding
category
d.f = Degree of Freedom” (n-1)
χ2 = Chi Square
Table-1: Socio-Economic Demographic Characteristics of Consumers
Respondents(N=120)
Respondents(N=120)
Variables with Category
Variables with Category
Number
Per Cent
Age
Number
Per Cent
Monthly Income(Rs)
< 20 Years
16
13.33
0-5000
102
85.00
21-30 Years
77
64.16
5001-10000
10
8.34
31-40 Years
14
11.67
10001-15000
4
3.33
41-50 Years
8
6.67
> 15000
4
3.33
> 51 Years
5
4.17
Gender
Marital Status
Male
79
65.80
Married
55
45.80
Female
41
34.20
Unmarried
65
54.20
Educational Qualifications
Family Size
Secondary
8
6.66
<3
30
25.00
Higher Secondary
12
10.00
4-6
85
70.83
UG
36
30.00
>6
5
4.17
PG
59
49.17
Others
5
4.17
43
The matching qualities of the celebrity with
advertisement were analyzed and the perceptions of
the consumers are presented in Table-2. The confident
of the celebrity in the advertisement, easy identity of
celebrity, worthiness and similarity were the main
qualitative attributes that match the celebrity with
advertisement. Besides, advertisement, product-match,
positive image and celebrities’ behaviour were also the
important factors that influence the matching qualities
of the celebrity with advertisement.
Table-2 Matching Qualities of the Celebrity with Advertisement
Attributes
Mean Ranking
0.93
1.21
1.34
1.09
0.98
0.90
0.87
0.86
0.84
0.82
Similarity
Identity
Confident
Worthy
Brand
Scandal
Positive Image
Attractiveness
Product match
Advertising
The relationship between matching qualities of celebrity
Order of Importance
5
2
1
3
4
6
7
8
9
10
The attribute of identity was positively correlated
with confident while it was negatively associated with
favourite, scandal and positive image at one per cent
level of significance and it was negatively correlated
with attractiveness at five per cent level of significance.
The confidence was positively correlated with brand,
favourite and scandal while it was negatively associated
with attractiveness, perfect match and celebrity value at
one per cent level of significance.
and advertisement, the Spearman rank order correlation
was computed and the results are presented in Table-3
The results showed that similarity was positively
correlated with identity and confident at one per cent
level of significance while similarity was negatively
associated with positive image and attractiveness at one
per cent level of significance.
Table -3 Relationship between matching qualities of Celebrity and Advertisement- Spearman
Rank Order Correlation
Similarity
Similarity
Identity
Confident
Brand
Favourite
Identity
Confi
dent
Brand
Fav
ourite
1.00
0.14**
(0.00)
0.35**
(0.00)
-0.06
(0.20)
-0.02
(0.65)
1.00
0.29**
(0.00)
0.03
(0.50)
-0.13**
(0.00)
1.00
0.14**
(0.00)
0.11**
(0.01)
1.00
0.09**
(0.04)
1.00
44
Scan
dal
Positive
Image
Attrac
tiveness
Perfect
Match
Celebrity
Value
Scandal
Positive
Image
Attrac
tiveness
Perfect
Match
Celebrity
Value
0.08
(0.08)
-0.13**
(0.03)
-0.14**
(0.00)
-0.16**
(0.00)
-0.00
(0.95)
-0.01
(0.88)
-0.11*
(0.02)
0.00
(0.99)
0.07
(0.14)
-0.13**
0.13**
(0.00)
0.03
(0.52)
-0.27**
(0.00)
-0.10**
(0.03)
-0.17**
(0.00)
0.17**
(0.00)
-0.03
(0.57)
0.02
(0.65)
-0.06
(0.15)
-0.20**
(0.00)
0.14**
(0.00)
0.06
(0.18)
-0.08
(0.07)
-0.13**
(0.00)
-0.17**
(0.00)
1.00
-.01
(0.75)
-0.09*
(0.03)
-0.03
(0.52)
-0.15**
(0.00)
1.00
0.06
(0.17)
0.10*
(0.02)
0.01
(0.83)
1.00
0.19**
(0.00)
0.36**
(0.00)
1.00
0.32**
(0.00)
1.00
Note: ** indicates significance at one per cent level.
*indicates significance at five per cent level
per cent level of significance while perfect match and
celebrity value were positively associated at one per
cent level of significance.
The brand was positively associated with favorite
and scandal while it was negatively correlated with
celebrity value at one per cent significance level and
the favorite was positively correlated with scandal and
it was negatively associated with perfect match and
celebrity value at one per cent level of significance. The
scandal was negatively correlated with attractiveness
at five per cent level of significance and it was also
negatively associated with celebrity value at one per
cent level of significance. The positive image was
positively correlated with perfect match at five per cent
level of significance. The attractiveness was positively
correlated with perfect match and celebrity value at one
The relationship between brand features and consumers’
perception was analyzed by computing Chi-Square test
and the results are presented in Table-4 The results
showed that the Pearson Chi-Square value was 0.0196
and the likelihood ratio was 193.365 indicating that
the test statistic was significant at five per cent level
of significance thus, there was a significant differences
among the consumers’ perception of the consumers
about brand features as noticed by them.
Table -4 Brand Features and Consumers’ Perception -Chi Square Test
Pearson Chi-Square
Likelihood Ratio
N
Value
df
0.0196
193.365
2500
20
20
6. Conclusion
Asymp.
Sig. (2-sided)
.000
.000
similarity was negatively associated with positive image
and attractiveness at one per cent level of significance.
The attribute of identity was positively correlated
with confident while it was negatively associated with
favourite, scandal and positive image at one per cent
level of significance and it was negatively correlated
with attractiveness at five per cent level of significance.
The confidence was positively correlated with brand,
favourite and scandal while it was negatively associated
with attractiveness, perfect match and celebrity value at
one per cent level of significance.
The forgoing analysis indicated that the majority of the
consumers (64.16 per cent) were the age group of 2130 years. About 45.80 per cent of the consumers were
married while 79 per cent were males. The majority of
consumers were postgraduates and about 30 per cent of
consumers were under-graduates. The monthly income
of consumers were ranging from Rs. 0-5000(85 per
cent) followed by Rs.5000- 10000(8.34 per cent). The
results indicated that about 35.84 per cent of consumers
occasionally visited the market followed by fortnightly
(30 per cent) and about 28.33 per cent of the consumers
visited the market at least monthly once. The similarity
of celebrity was positively correlated with identity and
confident at one per cent level of significance while
In overall, the brand features of celebrities help me to
remember the brand, creditability of the brand, quality
of the brand, advertisement of the brand and price of
45
8. Erdogan (1999), “Celebrity Endorsement: A
Literature Review”, Journal of Marketing
Research, 15: pp. 291-314.
its products were noticed by the consumers and there
was a significant differences among the consumers’
perception of the consumers about brand features as
noticed by them. The consumer looks for a variety of
aspects from the endorsement like the credibility and
likeability of the endorser. When one endorser endorses
many brands, then the recall of the endorsement
depends entirely on the power of the brand. There are
definitely some brands that go unnoticed and the recall
for those stands is at a bare minimum. The company
can heighten the advertising content because that grabs
a special place in the mind space of the consumer. Since
celebrities have the impetus to market the product
quickly, they have the advertisers running behind them
for various benefits including brand credibility, creating
interest; thereby, creating a win-win situation.
9. Jagdish, A. and Wagner, K.A. (1995), “The
Economic Worth of Celebrity Endorsers: An
Event Study Analysis”, Journal of Marketing,
56(3):pp. 56-62.
10.Kamins, Michael A.(1990), “An Investigation
into the ‘Match Up’ Hypothesis in Celebrity
Advertising: When Beauty May be Only Skin
Deep”, Journal of Advertising 19(1) : p. 413.
11.Louie, T.A., Obermiller, C. (2002). “Consumer
Response to a Firm’s Endorser (Dis) Association
Decisions”, Journal of Advertising, 31( 4): pp.
41-52.
12.Ohanian, R.(1991), “The Impact of Celebrity
Spokespersons. Perceived Image on Consumers
Intention to Purchase”, Journal of Advertising
Research, 31(1): pp. 46-54.
6. References
1. Agrawal,J and Kamakura.W(1995), “ The
Economic Worth of Celebrity Endorsers: An
Event Study Analysis”, Journal of Marketing,
59: pp. 56 – 62.
13.Pornpitakpan, Chanthika (2003), “Validation
of the Celebrity Endorsers” Credibility Scale
Evidence from Asians”, Journal of Marketing
Management, 19 (1/2): pp.179 - 195.
2. Basil, Michael(1996), “Identification as a
Mediator of Celebrity Effects”, Journal of
Broadcasting and Electronic Media, pp. 478495.
14.Saleem, Farida(2007), “Effect 0f Single and
Multiple Celebrity Endorsement on Low
Involvement and High Involvement Product
Advertisement”, European journal of social
sciences, 5(3): pp.125-132.
3. Buhr, T A, Simpson, T L and Pryor, B (1987),
“Celebrity Endorsers” Expertise and Perceptions
of Attractiveness, Likability, and Familiarity “,
Psychological Reports, 60:pp. 1307 - 1309.
15.Sternthal, Brian, Ruby Roy Dholakia, and Clark
Leavitt(1978), “The Persuasive Effect of Source
Credibility: Tests of Cognitive Response”,
Journal of Consumer Research, 4: pp.252-260.
4. Caballero, M.J., Lumpkin, J.R., and Madden,
C.S. (1989),”Using Physical attractiveness
as an Advertising Tool: An Empirical Test
of the Attraction Phenomenon”, Journal of
Advertising Research, 29 (4):pp. 16-22.
16.Tripp, C., Jensen, T.D., Carlson, L(1994). “The
Effects of Multiple Product Endorsements
by Celebrities on Consumers’ Attitudes
and Intentions”. Journal of Consumer
Research,20:pp.535-547.
5. Charbonneau, J. and Garland, R. (2005), “Talent,
Looks or Brains? New Zealand Advertising
Practitioners’ views on Celebrity and Athlete
Endorsers”, Marketing Bulletin, 16: pp. 1- 10.
6. Dawra, Jogrook and Katyal, Kanupriya (2006),
“Brand – Celebrity Conformance”, The ICFAI
Journal of Brand Management, 3(2): p. 6.
17.Walker, M.; Langmeyer, L., Langmeyer,
D. (1991), Celebrity Endorser: Do You Get
What You Pay For?. The Journal of Services
Marketing, 6: pp.35-42.
7. Dyson, A. and Turco, D (1998), “The State of
Celebrity Endorsement in Sport”, The Cyber
Journal of Sport Marketing, 1 (2): pp. 34 - 35.
18.Zafer Erdogan (2001), Selecting Celebrity
Endorsers: The Practitioner’s Perspective,
Journal of Advertising Research, 41 (3): p 39.
46
Customer Loyalty on Telecom Mobile
P.S. Rajeswari, Assistant Professor
Dr. P. Ravilochanan, Professor
School of Management, Srm University Kattankulathur
that influence customer churn. It enables the Telco to
understand which customer is likely to leave and why,
which in turn can help the company take the necessary
measures to counter it.
1. Introduction
The Indian telecommunications Industry is one of the
fastest proliferating sector in the World and India is
projected to bench the second largest telecom market
globally by 2011.Indicators are clearly representing the
increased competition and that induced the customers
to hop for low cost options . This in turn entangled
with disloyalty and as the industry saturates, it become
imperative for the mobile operators to shift their focus
from rapid acquisition strategies to strategies which
helps to maintain and enhance margins from existing
customer base.
Subject Area:
Customer loyalty can be determined through the
customer profile, level of satisfaction, and their
buying behavior with regard to Indian mobile telecom
providers.
Research Methodology
4. Research problem
Indian mobile telecommunication is facing very
high churn and disloyalty in the market inspite of its
tremendous growth. It is highly critical to analyze the
factors influencing customer loyalty and their level of
satisfaction on the cellular providers.
2. Impact of the problem
Though many service industries are affected by the
churn phenomenon the problem is extremely acute
in the telecom industry, with customers joining and
quitting in short periods. According to research firm
Gartner, India’s churn rate is anywhere between 3.5
percent to 6 percent per month, one of the highest in
the Asia-Pacific region. Considering that the cost of
acquiring a new customer is as high as Rs 3,000, the
losses are immense.
5. Research purpose
The purpose of this research is to determine customer
loyalty by identifying the operational factors
that are influencing customer buying behavior,
level of satisfaction with regard to Indian Mobile
telecommunications.
3. Customer loyalty and its significance
Research is all about Customer loyalty on Indian cellular
market, is a process by which data from customer
behavior is aggregated and analysed to gather the
purpose and factors influencing them to be loyal in their
purchasing pattern. Recent statistics depicts very high
churn in this Industry, is mainly rooted by the Youth
segment Hence this study of customer loyalty is mainly
focusing on Youth segment to lead not only to better and
more productive customer relations in terms of sales
and service but also to improvement in supply chain
management (lower inventory and speedier delivery)
and thus lower costs and more competitive pricing. It
facilitates to assess the Customer profitability index
and Customer lifecycle, Customer loyalty enables an
operator to gain a better understanding of the variables
6. Research Objective
Recent trend line shows the growth and prospects
of youth marketing and especially in the field of
Telecommunications, they are marking tremendous
development. At the same time indicators are
highlighting very high churn rate in this segment. Hence
this Research focuses on Youth segment and Research
objectives are listed below.
1. To identify the factors influencing the
customer loyalty with respect to Indian mobile
telecommunications.
2. To determine the level of customer satisfaction
with regard to their perceived product quality,
services and values.
47
7. Research Design
Excel were used for statistical analysis to find out the
Research design adopted for this study is “Exploratory”
type of research.
relationship between the customer loyalty and our data.
List of Variables taken for the Data Analysis:
Totally 10 Dependent variables and 13 Independent
8. Data collection
variables are taken for the analysis and they are
The research work is in need of first hand information
and also secondary information so as to assess the
15. Dependent variables
changes happening in customer satisfaction.. So Primary
1. Mobile operators
and Secondary data are collected for this survey.
2. Service quality-quality of phone calls
3. Service quality-quality of coverage
9. Primary Data
4. Service quality-quality of SMS
Survey method was adopted for collecting the primary
5. Service quality-quality of network
data. As mentioned above in the research objective,
6. Service quality-quality of convenience & reliability
youth segment falling under the age group of 18 to
7. Service quality-quality of service center and hotline
8. Service quality-rate of pricing for given quality
34 are selected as the respondents for the research.
9. Service quality-score accumulation plan, bonus
Questionnaire was designed in the structured objective
10. Service quality-Advertisement
pattern focusing on the Research objectives.
16. Independent Variables
10. Secondary Data
The secondary data had been collected from the previous
Research findings, scholarly reports, telecommunication
1.
Satisfactory level over performance-in general
2.
Satisfactory level over performance-customer
services
reports, respective marketing departments and through
3.
the different sources of literature such as journals,
Satisfactory level over performance-billing
system /RCV
articles etc.
11. Sampling plan
4.
Satisfactory level over performance-tariff rates
5.
Satisfactory
level
over
performance-call
connectivity
Simple Random sampling has been adopted by the
6.
Satisfactory level over performance-network
coverage
researcher.
7.
Satisfactory
level
over
performance-
subscription easiness
12. Sample size
8.
For academic and effective result, the targeted customer
Satisfactory level over performance-SMS,
MMS, VAS
base of 200, falling under the age group of 18 to 34 is
9.
selected for sampling.
Satisfactory level over performance-offers,
discounts10. Satisfactory level over
13. Pilot study
The questionnaires were distributed randomly to 30 of
10.
Performance-internet services
11.
Satisfactory level over performance-ringtones,
caller tones
the samples.
12.
Satisfactory level over performance-social
responsibility
14. Process of data analysis
13.
In order to analyze all the data collected, SPSS 18.0 and
Satisfactory level over performance-ad and
other promotional activities
48
Table 1
Multiple Regression Analysis
Dependent
variables
Independent Variables
F value
Beta coefficients
t value
1.Mobile operators
Satisfactory level over
offers ,Discounts
4.538*
.150
2.130*
2. Service quality
of Network
coverage
Satisfactory Level
Over PerformanceNetwork Coverage
8.321**
.469
5.934**
3. Service QualityQuality Of SMS
Satisfactory Level
Over PerformanceSMS,MMS
3.635**
.249
3.339**
4. Service QualityQuality Of Network
5. Service QualityQuality Of
convenience &
Reliability
a)Satisfactory Level
Over PerformanceTariff Rates
b) Satisfactory Level
Over PerformanceInternet Services
.218
7.913**
.403
a)Satisfactory Level
b)Satisfactory Level
Over PerformanceBilling System /Rcv
2.806*
5.652**
.170
2.313*
.278
3.685**
5.991**
6. Service QualityQuality Of Service
Center And Hotline
Satisfactory Level
Over PerformanceCustomer Services
4.249**
.260
3.166**
7. Service QualityRate Of Pricing For
Given Quality
Satisfactory Level
3.491**
.162
2.092*
8. Service
Quality-Score
Accumulation Plan,
Bonus
Satisfactory Level
Over PerformanceRingtones,Callertones
3.958**
.208
2.674*
9. Service QualityAd
Satisfactory Level
Over PerformanceAd And Other
Promotional Activities
3.098*
.166
2.238*
*at 0.05significance level
** at 0.01 significance level
49
Step 1:-Performed correlation, by taking each one
of the dependent variables with all the Independent
variables and list of Independent variables extracted
from the correlation matrix whose value fell below
0.5 with statistical significance. This is mainly due to
avoid multicollinearity among the predictor variables,
as these extracted Independent variables are subjected
to Multiple Regression analysis.
Step 2:-By performing Multiple Regression for each
Dependent variable, the list of Independent variables
are selected as per the significance.
change in billing service will pose the impact
of 0.27 unit change in the Service quality of
convenience .Hence for post-paid segment
marketers should facilitate billing system for
customer accessibility and precision.
6. For every unit change in the satisfactory
level on Customer services and Ringtones
influencing 0.2 unit change in their service
quality .This indicates that customer services
and product utilities should get strengthened
for attaining customer loyalty
17. Interpretation
7. Each unit of satisfactory level on advertisements
influences 0.16 unit of change on service
quality implies Teleco should concentrate on
Advertisements to create high loyalty.
1. For every unit of change in discounts and offers
or promotions, affects 0 .15 unit of change in
the mobile operators .Hence Mobile operators
can increase their customer loyalty rate and
implement Retention strategy based on Offers,
Discounts and with other promotional tools.
18. Recommendations
Based on the above analysis, Telecom marketers
should prioritize and concentrate on Quality of network
coverage and internet services. Web oriented loyalty
programs and promotional schemes to be introduced
to increase customer loyalty. Marketers should give
importance to enrich Customer services, value added
services and adding promotional offers for SMS,
MMS etc. The fact that youth, especially teens, are the
biggest users of SMS and MMS services in markets is
drawing increasing attention from marketers. Mobile
marketing campaigns for youth audiences are to be
devised for everything ranging from new product
launches and mobile coupons to wireless community
and mobile auctions Joint promotional campaigns can
be engaged to ascertain customer loyalty. Successful
marketing to youth should entertain and empower, be
very responsive to their queries and needs, give them
free reign in designing Web content, and engage them in
quick-win SMS-based competitions. Marketers can add
benefits with RCVs and in Advertisements to capture
and sustain customer loyalty.
2. Satisfactory level on Quality of Network
coverage influences for its every one unit with
0.469 units of change in the service quality
of Network. Therefore Operators should take
necessary steps to focus mainly on quality of
the network to increase customer loyalty,
3. Every single unit change of Satisfactory level
over the performance of value added services
influences 0.249 unit change in the service
quality of VAS .Since the market taken for the
Research is youth, Telecom companies should
concentrate on Value added services by giving
offers and promotional Recharge coupons with
good quality.
4. Service quality of Network is highly influenced
by satisfactory level on Internet services and
with their tariff rates. Since for every unit of
change in the satisfactory level of internet
services and with their tariff rates, inducing
0.4 unit and 0.2 unit of change in the service
quality of network respectively, marketers have
to equip themselves to bridge up the customer
mind gap.
19. Conclusion
The mobile industry of India is undergoing a vibrant
change and the mobile number portability is paving
the pathway for the subjective Research. This study is
one such attempt to enhance the exposure on customer
loyalty and it is also expected to facilitate the marketers
5. From the table it is clear that for every unit
50
American customer satisfaction index: Nature,
purpose, and findings, Journal of Marketing, 60. 7-19
Ahn, J. H., Han, S. P., Lee Y. S., 2006. Customer
churn analysis: Churn determinants and mediation
effects of partial defection in the Korean
mobile telecommunications service industry,
Telecommunications Policy, 30, 552-569.
to design the essential operational parameters for
designing the retention strategies and to enhance
Customer Experience management.
20 References
ACSI: Fornell, C. Johnson, M. D., 1996. The
51
Customer Shopping Experience in Malls
With Entertainment Centres in Chennai
D. Anuradha
Asst. Professor, MBA Dept, Vel Tech High Tech
Dr.Rangarajan
Dr.Sakunthala Engineering College, Chennai & Research Scholar, Anna University
According to the report by Northbridge Capita, Indian
1. Introduction
retail industry is expected to grow up to US $833 billion
Today the word ‘Mall’ has become a part of people living
by the year 2013 and reach US $1.3 trillion by the year
in Metro and big cities. Mall culture is mushrooming
2019 at a CAGR 10%. In India the consumer spending
across the country’s landscape at a faster pace. Few
pattern has enormously increased and in the last few
years before people felt that Malls are for upper middle
years, the consumer spending in India has raised up
class people but now Mall mania is common among all
to 75%. As a result of increase in disposable income,
people .Also that earlier people had to make a choice
Indian retail industry is expected to grow.
among shopping stores or movies but today all that is
In fact, malls play a major role in consumers’ lifestyle
available under one stop shop with a good shopping
(Terblanche, 1999). They have become not only a centre
experience. Today people believe that the malls are the
for shopping but also a community centre for social and
best place to shop or hang out.
Name
Spencer Plaza
Abirami Mega Mall
Alsa Mall
Chennai Citi Centre
Prashanth Real Gold Tower
Ampa Mall
Express Avenue
The Laurel Mall
Mayajaal
Isphaani Centre
Coromandel Mall
Marg Junction
Phoenix Market City Velachery
Gold Souk Grande Vandalur
Grand Velachery Mall
Riverside
Chandra Metro Mall
Prestige Forum Vadapalani
Matrix Mall Saligramam
Prestige Forum Teynampet
Ramee Mall
Ten Square Mall
Ozone Mall
Challa Mall
Indi Mall
Brook Field Plaza
recreational activities (Ng, 2003). Stores, food courts,
Year
1863
2003
1998
2006
2008
2009
2010*
2010*
2003
2005
2011
2012
2011
2012
2011
2011
2010
2010
2011
2012
2010
2011
2011
1996
2009
restaurants, cinemas, children’s play areas, interactive
entertainment, social use areas, relaxation spaces and
promotional areas are now major components of any
mall (Terblanche, 1999).
It has a multiple role in modern culture, with a constant
change in its appearance. The concept of globalization
has made the customers expose to different types of
brands. Also that Indians travel abroad for work and
business has made them experience different lifestyle,
products and services available there. This has led the
retailers in India to develop quality of life in India with
a provision of modern retailing. And so, there are many
malls upcoming in Chennai trying to match international
outlook (The list of malls in Chennai is provided) The
Mall growth shows the economic prosperity of the
country.
The growth in retailing has led to the competition
between the malls and the decision of which mall to
choose since all the malls have apparent similarity in
terms of stores. With the growing number of malls,
shoppers tend to be more selective. They are more likely
to patronize malls that are more attractive and have a
52
wide variety of stores and merchandise that match their
Clulow (2004), “Retail concentration: a comparison of
preferences (Mohammed Ismail El-Adly) . Therefore,
spatial convenience in shopping strips and shopping
it is essential for mall managers to know the extent to
centres”, the findings yielded three important insights
which their malls are attractive to their shoppers (Wong
(1) The shopping centre was found to offer consumers’
et al., 2001). However, mall attributes that are attractive
greater spatial convenience (2) the findings add support
for some shoppers are not necessarily attractive for
to the notion that the demise of the shopping strip
others. Therefore, the purpose of this paper is to provide
could be linked to its inability to satisfy the needs of
an insight of the role of external and internal variables in
a convenience-oriented society. (3) While the shopping
influencing the choice of Mall and shopping behavior.
strip may be at a competitive disadvantage in terms of
spatial convenience, market mechanisms.
Intensive efforts have been made to find the relevant
Michon Richard and Jean Charles Chebat (2004),
studies in customer shopping experience in shopping
“Cross-cultural mall shopping values and habitats - A
malls with entertainment centres. Only a limited study
comparison between English- and French-speaking
is available in this field especially in India. A summary
Canadians”, the findings indicate that French are less
of literature reviewed is reported here.
likely than English shoppers to use the mall for other
Machleit A. Karen, Sevgin A.Eroglu (2000), “the
activities than buying goods and services. Haytko
findings indicate that the broad range of emotions
L. Diana and Julie Baker (2004), “It’s all at the mall:
felt in the shopping context vary considerably across
exploring adolescent girls’ experiences”, this study
different retail environments. They also show that the
provides insight into young girls’ patronage behaviors
Izard (Izard, C. E.: Human Emotions, Plenum, New
and motivations, the results indicate five characteristics
York. 1977) and Plutchik (Plutchik, R.: Emotion: A
of the mall environment influenced the girls’ perceptions
Psycho evolutionary Synthesis. The findings indicate
of their experiences: comfort, safety, retail mix,
that in the specific context of the shopping experience,
accessibility and atmosphere.
across the retail environments. The Izard measure
contains many negative emotion types and may be more
Michon Richard, Jean-Charles Chebat and L.W. Turley
appropriate for studies that look at the unpleasant, rather
(2005), “Mall atmospherics: the interaction effects of
than the pleasant, aspects of shopping. The Plutchik
the mall environment on shopping behavior”, the final
emotion types of expectancy and acceptance also
results are that Ambient odors positively influence
may be particularly relevant in studies of salesperson
shoppers’ perceptions only under the medium retail
interactions with shopper.
density condition. Also that mood has little direct effect
on the perception of product quality. Wesley Scarlett,
Taylor Lee Susan and Robert M.Cosenza (2002),
Melody LeHew, Arch G. Woodside (2006), “Consumer
“Profiling later aged female teens : Mall shopping
decision-making styles and mall shopping behavior:
behaviour and clothing choice “,the study was conducted
Building theory using exploratory data analysis and
to examine shopping choice behaviour of an important
the comparative method “. The result is that gender
and viable segment of teen market called, “ Later aged
is prime antecedents associating with CDM styles i.e.
female teen”. The results revealed that typical later aged
Demographics moderate the influence of consumer
female teen made right choice especially for clothing
decision-making styles on planned expenditures.
products. Finally the group’s desire to stay and shop
Preez Du R., E.M. Visser and L. Zietsman (2007),
at the local mall seemed to be a function of the mall
“Profiling male apparel consumers : Lifestyle, shopping
composition and excitement. Reimers Vaughan and Val
orientation, patronage behaviour and shopping mall
53
behaviour “.The results of the study are Male apparel
4. Objectives of the Study
consumers differ in terms of price ,quality, selection
The study has the following objectives:
of shopping mall, they were also media-oriented. Ofir
Chezy and Itamar Simonson (2007), “The Effect of
Stating Expectations on Customer Satisfaction and
•
To study the profile of the shoppers
•
To determine the relative importance
of criteria which influence the overall
Shopping Experience”. The findings of the research
attractiveness of mall.
suggest that stated expectations tend not to be met, and
•
explicitly stating expectations influences the likelihood
that post experience evaluations would be lower than
To assess the reasons for visiting the mall and
their expenditure pattern
they would have been had the participants not articulated
•
their expectations.
To propose a model depicting Shopping Mall
attractiveness
Michon Richard, Hong Yu and Donna Smith (2008),
5. Methodology
“The influence of mall environment on female fashion
Most of the previous research on malls with
shoppers’ value and behaviour”, the results indicate
entertainment centers, focused only on one mall, this
that mall atmospherics has no or little effect on the
study has attempted to conduct research across 2
utilitarian value of low- or high-fashion oriented
different malls in Chennai. The malls include Express
shoppers. Rajagopal (2008) has focused on the impact
Avenue and Citi Centre in Chennai. Both the malls fit
of growing congestion of shopping mall in urban areas
commonly in terms of varieties of entertainment offered
on shopping conveniences and shopping behavior. The
such as theatres, rides for children and shopping outlets.
findings reveal that the perspectives of shopping mall
ambience and shopping satisfaction effectively become
The survey instrument used is structured personal
a measure of retailing performance, customer attraction
interview questionnaire. Interviews was conducted
and propensity to shop for urban shoppers.
from a random sample of mall shoppers from each of
these malls. The questions focus on the following areas
The above review gives an understanding that only
– Distance traveled to reach the mall, reasons for visit,
limited systematic attempt has been made across
whether the respondent had visited the mall earlier,
the world on the select dimensions of the shopping
amount of time spent/ would like to spend in the mall,
behavior of customers in shopping centres. This is so in
opinion about the food court/ theatre/stores, Opinion
India, where no study that focused directly on the issue,
shopping experience in malls.
about the mall atmospherics, etc.
3. Research Problem Identified
The questionnaire was distributed among 115 shoppers
The purpose of this paper is to assess customer shopping
who visited the mall; out of this 93 completed
experience in malls with entertainment centres in
questionnaires have been received. As such, the total
Chennai. This research aims to explore the shopping
sample size is 93. The collected data has been processed
experience of customers at malls with entertainment
using percentage, cluster and factor analysis. Likert’s
centres visit them due to the availability of large scale
scaling technique was used wherever necessary
entertainment centres. The purpose of this paper is to
provide an insight of the role of external and internal
6. Result and Analysis
variables in influencing the choice of Mall and shopping
a) Profile of the Shoppers: - The profile of the sample
behavior.
respondents is summarized in the following Table no.1
54
Table No.1
Demographic
Number
%
06
41
31
8
5
2
6%
44%
34%
9%
5%
2%
41
52
44%
56%
62
31
71%
29%
24
21
27
19
2
26%
23%
29%
20%
2%
09
39
32
12
1
9%
43%
34%
13%
1%
9
84
9%
91%
21
42
18
10
2
23%
45%
19%
11%
2%
51
35
6
1
Nil
55%
38%
6%
1%
-
Age
> 18 yrs
19-30 yrs
31-40 yrs
41-50 yrs
51-60 yrs
61 & older
Gender
Male
Female
Marital Status
Single
Married
Purpose of Mall Visit
Shopping
Get-Together with Friends/Relatives
Entertainment
To spend time
Business
Travel to the Mall
Bus
Bike
Car
Auto / Cal Taxi
Others
Shopping Companion
Alone
Companion
Shopping Frequency (per month)
1-1 time
2-3 times
4-5 times
6-7 times
More than 8 times
Expenditure Pattern at Malls
Less
than
10,001 –30,000
30,000 –60,000
60,000-1,00,000
1,00,000 & above
b) Attractiveness & Reasons for visit to Mall – The
results reveal the attractiveness of the Shopping mall
with entertainment centres. To understand the customer
shopping experience at shopping malls, the shoppers in
both the malls (Citi Centre and Express Avenue) were
asked to mark the reasons why they prefer a shopping
10,000
mall for shopping instead of independent outlet. The
reasons identified were (in the order of preference):
Shopping ambience, Availability of different types of
shops, Entertainment offered at Malls, Parking facility,
Ease of shopping, Good product quality, Pride and
Prestige attached shopping.
55
The different types of stores visited by shoppers in the
Mall apart from the entertainment centres like multiplex
theatre, snow bowling, video games are: Apparel store
followed by food Services, leather stores, fashion stores,
consumer service, professional services, electronic
stores, departmental stores, home ware and so on.
Address and Location, Parking availability, Traffic and
Congestion, Height, Size and colour of building
External Variables affecting shopping experience at
shopping malls – The External Variables influencing
shopping experience include: Flooring/ Carpeting /
Painting, Lighting /Music / Scent, Merchandise,
Temperature, Cleanliness, Restroom and waiting area.
Internal Variables affecting shopping experience at
shopping malls – The Internal Variables influencing
shopping experience include : Entrance, Exterior
Display, Architectural style, Surrounding stores,
Factors influencing opinion on shopping experience at
malls with entertainment centres
Table No.2
Factors and Items
Loadings
Factor 1 : Shopping Ambience
1. Pleasant Atmosphere Of This Mall
2. Parking Facility
3. Cleanliness, Lighting and Temperature
4. Address and Location of the Mall
5. Restroom and Waiting area
6. Lift and other Facilities
0.78
0.84
0.61
0.91
0.80
0.61
Factor 2 : Layout of Store
1. Ease Of Locating The Mall
2. Overall Convenience Of The Mall
3. Ease of locating the stores
4. Easy access to restrooms
5. Easy access to food court
6. Easy to get around and shop
0.65
0.75
0.84
0.68
0.61
0.71
Factor 3 : Variety of Shops
1. Number Of Stores In This Mall
2. Quality of stores
3. Price offered by retailers in the store
4. Fashionability of merchandise
0.81
0.84
0.62
0.60
Factor 4 : Service offered at Mall
1. ATM , Banking And Other FOREX Facilities
2. Quality of Multiplex Theatre
3. Children’s Play area
0.92
0.90
0.61
Factor 5 : Design
1. Architecture is attractive
2. Attractively decorated
0.60
0.62
0.86
0.81
Factor 6 : Desire to Stay in Mall
1. Enjoy spending time in this mall
2. Felt a sense of adventure
56
purpose, and they spend additional time at food court,
stores in the mall (Salil, 1997). The findings are in
supportive of the similar studies across the world.
The marketing strategists has to concentrate on the
five factors identified in this study such as : Shopping
ambience, Layout of the store, Variety of shops, Service
offered at Mall, Design, Desire to stay in Mall.
The dimensions according to which the consumers
evaluate the shopping experience at shopping malls
with entertainment centres are: Shopping Ambience,
Layout of Store, Variety of shops, Service offered
at Mall, Design, Desire to stay in Mall, if any. These
dimensions describe the factors to which the shoppers
evaluate their shopping experience at large shopping
malls such as Citi Centre Mall and Express Avenue
Mall with entertainment centres in Chennai.
The study has the following limitations in terms of one
location considered for the study that too with a limited
sample size. Therefore generalization of the findings
requires enough caution. The researcher recommends
that the study may be extended in the following lines:
by including large number of samples; covering all the
major cities in India; The comparative number of malls
may be increased.
7. Conclusion, limitations and directions for
future study
The study enables to conclude that the shoppers visit
shopping malls with entertainment centres for making
use of all facilities under one roof. This indicates that
shoppers visit the malls for social and entertainment
Shopping Model
57
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58
Drivers of New Product Success
Prof. K. Vijayan
Valliammai College of Arts & Science
Dr. Jayshree Suresh
Dean, School of Management, SRM University, Kattankulathur
1.Introduction
Objective
Repackaged, price change and new brand. (C. Merle
Crawford, 1987)
The following are the objectives of the study.
1. To identify factors that are antecedents and
predictors of new product success.
2. To determine the impact of factors identified on
the success of selected new products.
3. To examine the success of products with reference
to FMCG and is consumer durable company.
B) New Product by product characteristics
1. Performing an entirely new function.
2. Offers improved performance of an existing
function
3. A new application of an existing one
4. Offers additional functions
5. An existing product offered to a new market
6. A product which reaches more buyers through
Null Hypothesis : There is no difference in the means
of each of the drivers of new product success between
company A and B.
lower cost
7. An existing product integrated into another
existing product
8. Marketing components/sub assemblies of a
2. What is a New Product?
product offered separately
A new product has a new FORM attained through
TECHNOLOGY which is the power to do work, that
delivers BENEFITS that the customer has a need or
desire for. Further a new product essentially is of the
right quality at the right time at the right cost. (C. Merle
Crawford, 1987).
9. A restyled product. (Adapted from Philip
Marvin, Product Planning Simplified, 1972)
4. Success / Failure Rate of New Products
Different studies have indicated a success rate between
60-70% and a failure rate of 30-40% which involves
3. What is a product?
hundreds and thousands of crores of loss and trauma
By product we mean anything offered for sale.
to the executives and firms that launched the products
(that failed).
The newness of the product can be in terms of :
1. Newness to the Firm :
a. Improved versions
b. Line extensions or companion products
c. Brand extensions
d. Diversification
2. Newness of the product to the Marketed place :
a. Similar to the products in the market
b. An improvement
c. New to the market/new to the world
3. Newness of product as perceived by buyers / users :
The new product success rate is 69% according to Larry
and Dwyer (1993), 65-70% according to Crawford
(1987) and 80% according to Hopkins and Baily
(1971) The variation in new product success failure
rates depend on several factors such as the product
characteristics, degree of product innovation and on how
well the product met its goals (Crawford 1991). Further,
the perception of success or failure depends on the
performance criterion employed and the time horizon
for judging performance (Urban and Hauser 1980). The
59
8. Firm Strategy Characteristics
new product success, can be explained by the success
6) Marketing synergy is the match between
the existing marketing skills of the firm
and the marketing skills needed to make
and market a new product successfully.
or performance measures used by Cooper (1985) Larry,
Dwyer and Robert Mellor (1993). According to them
the following seven measures are used to measure the
success or performance of new Products :
7) Technological synergy or the match
between the existing technological skills
of the firm and the technological skills
needed to execute a new product initiative
successfully.
5. The Measures of Success of New Products
1.
2.
3.
4.
5.
6.
7.
Percentage of firms’ sales made up
by new products introduced over
the past five years.
Percentage of new products
that succeeded, failed or were
terminated prior to market launch.
The extent to which the new
product program met its financial
performance objectives over the
past five years.
The importance of the program in
generating sales and profits for the
firm.
The extent to which the profits
from the new products exceeded
the program costs.
The successfulness of the program
relative to the competitors
An overall success rating.
8) Order of entry which is the timing of
marketplace entry of a product.
9) Dedicated human resources in terms
of focussed commitment of personnel
resources to the new product project.
10) Dedicated R & D resources.
9. Firm Process Characteristics
11) Structured approach in terms of
employment of formalized product
development procedures.
12) Predevelopment task proficiency with
which a firm executes the pre-launch
activities of idea generation screening,
market research and financial analysis.
6. Drivers of new product success
13) Marketing task proficiency
Out of the various possible predictors of new
product success studied in over 60 studies, the following
24 factors classified into different categories are found
to be predictors more often than others. Therefore they
have been selected as the predictors whose effect on
product success has been examined in this study.
14) Technological proficiency
15) Launch proficiency
16) Reduced cycle time or reduction in
concept-to-introduction time (time to
market)
7. Product Characteristics
17) Market orientation or the degree of firm’s
orientation to its internal, competitor, and
customer environments.
1) Product advantage, superiority or
differentiation over competitor’s offerings.
2) The extent to which product is perceived
to satisfy desires/needs of the customer
18) Customer input : Incorporation of
customer specifications into the new
product initiative.
3) Perceived price – performance congruency
or value
19) Cross functional integration or the degree
of interdepartmental participation in the
new product effort.
4) Perceived technological sophistication of
the product
20) Cross functional communication : Level
of communication among department in a
new product effort.
5) Product innovativeness is perceived
newness/originality/uniqueness of the
product
60
21) Senior Management support to the new
product initiative.
as David Henard and David Szymanski (2001) due to
reasons including excessive heterogeneity in the values
of the individual correlations.
10. Market Characteristics
13. Dominant drivers of new product success
22) Likelihood and degree of competitive
response to a new product introduction.
In the research mentioned above it was found that 10
factors are dominant drivers of new product success
(mean r>40), The dominant factors that emerged are;
market potential (r = 0.54), dedicated human resources
(r=0.52), marketing task proficiency (r=0.50), product
meeting customer needs (r=0.50), product advantage
(r=0.48), predevelopment task proficiency (r=0.46),
dedicated research and development resources (r=0.45),
technological proficiency (r=0.43), order of entry
(r=0.41) and the technological sophistication of the
product (r=0.41).
23) Degree, intensity or level of competitive
response to a new product introduction.
24) Market potential : Anticipated growth in
customers/customer demand in the market
place.
In the past studies on new product success exceeding
sixty in numbers the following factors are found to be
the dominant predictors of new product success.
11. Major factors that influence new product
success
The new product success phenomenon is complex yet
more and more clear in terms of the causal factors.
New product introduction is acknowledged as a major
factor in the sustainable success of a business. The
predictors or drivers of new product success mainly
investigated by various researchers, i.e., 1. Product
advantage 2. Market Potential 3. Meeting Customer
Needs 4. Predevelopment task proficiencies and 5.
Dedicated resources have a causal impact on product
performance.
The intricate and multifaceted nature of the new product
performance phenomenon is seen from the fact that three
predictors that are of product characteristics which are
: products meeting customer needs, product advantage
and product technological sophistication; two of strategy
characteristics, (R & D and human resources); four of
process characteristics, (marketing, predevelopment,
technological and launch proficiencies) and one market
place characteristics; (market potential). The above
study aims to assess in the Indian context, as well as to
evaluate the most frequently modelled predictors; (n>40
modeled effects), marketing synergy (n=61), market
orientation (n=60), cross functional communication
(n=58), structured approach (n=53), product advantage
(n=44), and marketing task proficiency (n=40).
Note : r = corrected mean correlations
n = number of times a predictor has been
modeled.
12 Measurement
Empirical studies on causes of New Product
Performance
In the 60 empirical studies that document the statistical
relationship between new product performance and
the causal factors identified by David.H.Henard
and David.M.Szymanski, correlation was the main
metric. These researchers emphasized models – level
correlations (an averaging of reported correlations
across all models and all studies to arrive at an estimate
of the central tendency of the predictor – criterion
relationship) rather than the study – level correlations
(an initial averaging of the correlations reported within
the study followed by a further averaging of the mean
correlations across studies). A model-level analysis has
been followed and advocated by Glass, McGraw and
Smith (1989) as well as meta – analyses by Assmus,
Farley and Lehman (1984) Churchill et al (1985),
Sultan, Farley and Lehman (1990), Tellis (1988) as well
14. Implementation for the success of the New
Product
Key Result Areas (KRA’s) need to be emphasized :
1. Ideation-to-launch stage gate system and
its effectiveness
2. Cost-Volume-Profit Analysis
61
3. Effectiveness of proposed advertising
three products of each of the two companies were
4. The number of households buying the
selected using the seven measures of new product
success mentioned earlier and with the type of product
product and repeating purchase
in mind.
5. New actions such as new packaging that
have to be executed.
A census survey of all managers in company A, an
6. Adequate trial purchase during early
FMCG company and B, a consumer durable products
launch.
company was made. In the consumers’ survey 124
7. Responsiveness of trial purchase to
effective respondent consumers of company A, and 33
advertising and sales promotions.
effective respondents consumers of company B were
Competitive Response to the New Product identifying
covered. Both internal data from managers and external
where volume gains have been made is necessary to
data from consumers of both companies were collected.
ensure that the overall strategy for the new product is on
Structured, tested questionnaires were employed in
track. At this point the following need to be considered.
both the manager’s and consumers’ surveys.
1) The market share
2) Did the new product attract new category
17. Data Analysis
buyers?
3) How much has the market grown on a
The data collected was codified, tabulated and
result of this new product.
analysed. The T-Test on Managers’ survey data with
Long term forecast for the new product. Assessment,
the Independent Samples Test was carried out. The
long term forecast of the new product future are
high and low classification of differences in the means
essential to determine the long term viability of the
of company A and B are presented in table No.1. The
product as well as to allocate capital needed. The issues
analysis of T-Test of consumer survey data is presented
to be considered are :
in Table No.2.
1.What should be the revenue, market share,
Return on Capital employed and capital
18. Findings
required for factory and equipment.
T-Test was performed on each of the predictor variables,
2 What form/flavour extensions can be
to test the difference in the means of company A and
considered?
Company B
15. The Current Study
19. Managers Survey Data – T-Test
An effort to find any differences in the predictors of
Ho.: There is no difference between the means of an
new product success between the product categories
item (k) with respect to company A and B.
Level of significance is 5%
of Fasting Moving Consumer Goods (FMCG) and
consumer durables significant differences were found
In the independent sample test using Levene’s Test for
between company A and B through the T – Test
equality of variances there is difference in the means of
described below and after tests as well.
21 drivers relating to company A and B.
In the case of the following categories, there is no
significant difference in the means between Company
16. Data Collection
A and B:
In FMCG category Company A was selected as it is a
company with successful new products; and company
Technological Sophistication
B was selected for examination as it was a consumer
Separate Team working
durables company with successful new products. The
Cross functional Integration
62
20. Consumers
On the basis of analysis, the null hypothesis is accepted
for 3 drivers mentioned and rejected for the other 21
drivers.
The significance of difference of means of
each item with respect to Company A and Company B
is given below:
Company A is a Fast Moving Consumer Goods (FMCG)
company and company B is a consumer durable product
company.
Ho : There is no difference between the means
of an Item (k) with respect to Company A and B.
1) In the analysis of T-Test on Manager’s
survey data (Table-1) low differences
including very low is found between the
means of the following 7 factors (25%)
relating to company A and B .
Technological Sophistication
Level of significance is 5%
It is found the there is no significant difference
between the means of A and B with respect to the
following items:
(Product) More Advantageous
(Product) Meets Needs
Cross Functional Integration
Cross functional communication
Senior Management Support
Market Potential
It is found that there is high difference (including very
high) between the means of the following factors :
Marketing Synergy
Suitable price
Product Innovativeness
Time of Introduction
Separate Team working
Market Proficiency
Launch Proficiency
Customer Oriented Product
Development
Structured Approach
Marketing synergy
Technological Synergy
Dedicated R&D
Success of precious products
Technological proficiency
Market/Consumer Orientation
Reduced Cycle time
Likelihood of competitive response
Competitive response intensity
Thus it is found that in the case of the above
18 variables (72%) their influence on product success is
different in the company A’s products and B’s products.
Suitable Price
Technological Sophistication
Separate Team Working
Dedicated R & D
Success of Previous Products
Market Potential
Product Success
The consumers of items of both the companies are
considered.
Total number of consumers = 157.
The null hypothesis is accepted for the above 7 drivers
(24%) and rejected for the other 10 drivers (76%).
It is found that in the case of 9 variables the difference
in the means between Company A and Company B are
low, while in the case of 9 other variables the difference
in the means between the two companies is high, as in
Table-2.
21. Conclusion
In Technological Sophistication and Separate Team
working belonging to firm strategy characteristics,
no significant difference is found in the Manager’s
responses as well as the Consumer’s responses. In
the consumer’s responses, Suitable Price A Product
characteristic and Separate Team Working, dedicated R
63
& D and Success of Previous Products (Firm Strategy
Characteristics) are identified as factors where there
is no significant difference between the means of
companies A and B.
All other factors can be classified as follows :
Product Characteristics : Product Innovativeness,
Development, Structured Approach, Technological
Proficiency, Reduced Cycle Time
Market Characteristics : Competitive Response
Intensity, Likelyhood of Competitive Response.
They exhibit high difference between the means of
company A and B.
This could be attributed in some measure to the type
of products (FMCG and Consumer Goods) and in
some measure due to factors such as, differences in the
products and markets.
Firm Strategy Characteristics : Marketing Strategy,
Technological Synergy, Time of Introduction.
Firm Process characteristics : Market Proficiency,
Launch Proficiency, Customer oriented Product
Table – 1
Analysis of Means
T-Test Managers’ Survey Data. Difference in the means of company A and B.
Very
Low
Item
1. More Advantageous
2. Meet Needs
3. Suitable Price
4. Technological Sophistication
5. Product Innovativeness
6. Marketing Synergy
7. Technological Synergy
8. Time of Introduction
9. Separate Team Working
10. Dedicated R & D
11. Success of Previous Products
12. Market Proficiency Product
13. Technological Proficiency
14. Launch Proficiancy
15. Market/Custmer Orientation
16. Customer Oriented Product RDevelopment
17. Reduced Cycle Time
18. Structured Approach
19. Cross Functional Integration
Low
High
Very High
0.1755
----------------
0.5634
0.4308
----------------0.4767
0.9269
-0.7641
--0.8733
0.6335
--0.7953
-0.6335
-0.8460
-0.7953
--
---1.0858
1.3664
--1.2368
1.5117
-1.4464
-1.0331
-1.778
---
20. Cross Functional Communication
--
0.5653
--
--
21. Senior Management Support
--
0.4064
--
--
22. Likelihood of Competitive Response
--
--
--
1.2125
23. Competitive Response Intensity
--
--
--
1.4542
24. Market Potential
--
0.4737
--
--
25. Product Success
--
--
0.7589
--
64
Table – 2
Analysis of Means
T-Test Consumer’s Survey Data. Difference in the means of company A and B.
Very
Low
Item
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
More Advantageous
Meet Needs
Suitable Price
Technological Sophistication
Product Innovativeness
Marketing Synergy
Technological Synergy
Time of Introduction
Separate Team Working
Dedicated R & D
Success of Previous Products
Market Proficiency Product
Technological Proficiency
Launch Proficiancy
Market/Custmer Orientation
Customer Oriented Product RDevelopment
Market Potential
Product Success
---0.3323
----0.0791
0.3345
0.3941
-----0.1052
0.0288
Low
--0.5269
--------0.5237
--0.6394
----
High
------------0.7319
0.9765
-0.9527
---
Very High
1.0327
1.3265
--1.7697
1.3710
1.1429
1.9429
-----------
22. References
1. Assmus Gert, John U, Farley and Donald R
Lehman, “How Advertising Affects Sales ;
Meta Analysis of Economic Results, Journal of
Marketing Research, 1984.
and Project outcomes Journal of Product
Innovation Management 1993.
7. Philip Marin, Product Planning Simplified,
Amercian Management Association, New
York, 1972.
2. Booz-Allen and Hamilton (1982) New Product
Management for the 1980s New York; BoozAllen and Hamilton.
8. Fareena, John U Farley and Donald R Lehman,
A Meta Analysis of applications of Diffusion
Models, Journal of Marketing Research, 1990.
3. Churchill, Gilbert A., Jr, A Paradigm for
Developing Bette, Measures of Marketing
constructs, Journal of 1985 Marketing
Research.
9. Tellis Gerard J, The Price Elasticity of selective
Demand; A meta Analysis of Econometric
Models of Sales, Journal of Marketing
Research., …1988
4. Cooper Robert G, The dimensions of Industrial
New Product success and Failure, Journal of
Marketing, 1979.
10. James M., Lattin, J.Douglas Carroll and
Paul E.Green; Analyzing Multivariate Data;
Thomson Brooks / Cale. 2007.
5. Glass Gene V., Barry Mcgraw and Mary Lee
Smith, Meta Analysis in Social Research,
Beverly Hills, CA, Sage Publication 1989.
11. Kothari C.R.Research Methodology. Methods
and Techniques; New Age International
Publishers 2004.
6. Larry dwyer and Robert Mellor, Organisational
environment, New Product Process Activities
65
E-Marketing in Pharmaceutical Business
Sheeja.V.S
Lecturer,(Research Scholar) SRM College Of Pharmacy, SRM University
Indumathi
Lecturer,SRM College of Pharmacy, SRM University
Dr. R. Krishnaraj
HOD,General Management, SRM School of Management,SRM University
1. Introduction
•
The pharmaceutical marketing strategies (as well as
advertising strategies) are different from other businesses
because pharmaceuticals or drugs can negatively affect
both- the end consumers or the patients and the health
care profession. Also, the advertising strategies included
in the marketing plan of any pharmaceutical company
are not ‘direct to consumer’. Any pharmaceutical
marketing strategy targets the health care professionals
or the Doctors who in turn prescribe the drugs to the
patients (end consumers) liable to pay for the products.
Pharmaceutical representatives, also popularly known
as medical representatives, are the major players for
marketing drugs directly to the physicians. Typically,
the expense of this sales force of any pharmaceutical
company comprises anything ranging from 15-20% of
annual product revenues. However, with changing times
and new developments, the pharmaceutical industry
faces some serious strategic issues.
3. Need for New Pharmaceutical Marketing
Strategies
The internet and related technologies have
revolutionized many aspects of society. For the
pharmaceutical industry, as for other sectors, this has
brought new marketing opportunities. The internet
can greatly expand a company’s reach. For example,
a popular video on YouTube may potentially be seen
by thousands of people. Perhaps more importantly,
internet-based technologies are enabling new styles of
communication between the industry and its targets,
including more interactive and customer-responsive
campaigns. Consultancies have been established and
books written for the pharmaceutical industry to help in
developing internet-based marketing.(1)
While most of the pharmaceutical companies
successfully employ a host of marketing strategies to
target various types of customers, the current business
and customer trends are continuously creating new
challenges as well as opportunities for increasing
profitability. If the pharmaceutical companies want to
improve their Return-On-Investment (ROI), they have
to adopt new communication technologies (digital
media) along with their conventional sales force of
medical representatives. They really need to adopt this
multi channel marketing strategies for the following
reasons.
2. Traditional Pharmaceutical Marketing
Strategies
•
The pharmaceutical companies traditionally adopt four
major marketing strategies for promoting their products•
Giving drugs as free samples to doctors;
•
Providing details of their products through
journal articles or opinion leaders;
•
Gifts that hold the company logo or details of
one or multiple drugs and
Sponsoring continuing medical education.
66
The concept of blockbuster drugs is dying out
for big pharmaceutical companies where 2-3
drugs were good enough to pay back the whole
investment for a larger number of manufactured
drugs. Now the limited prospective for
blockbuster drugs (thanks to low investment
on R&D and patent expiry) makes it essential
to focus on more specialized drugs sold in
lower volumes. And when there is low volume
products, sales driven marketing strategy (with
high cost of sales force) is not feasible
•
•
As far as small pharma companies are
concerned, they already have small sales force.
However, with the use of digital media, having
a lower investment cost (both for the company
and its targeted customer) they can easily get
return on investment.
the doctors participated in a clinical trial of a SanofiAventis drug and entered anonymous patient data into
the device.
The company aimed to build relationships with the
doctors, to use the device as an advertising medium,
and to gather feedback. The company also reported
that these doctors then prescribed more of its diabetes
products.(3)
Customer behavior (doctors’ behavior) is
rapidly changing. Doctors, who are getting
more and more patients, can be hardly seen
by the medical representatives. They are more
inclined towards Internet for obtaining relevant
information. It is the time for pharmaceutical
companies to build their marketing strategies
around this digital media. Website marketing,
online marketing, blogs, social media, forums,
chat rooms and any other such media is an
influential means to present the company’s
products and offers through opinion leaders.
An important aspect of e-detailing is that it enables
‘predictive marketing’. This means that companies can
be more effective and timely in eliciting feedback from
prescribers in order to tailor marketing strategies to
their individual preferences and needs.(4)
5. Promotion by Corporate blogs and websites
The global reach of the internet means that Australians
now have easy access to overseas blogs and websites
promoting prescription medicines and other products,
and even selling them. Safety concerns have been raised
about the purchase of prescription, non-prescription and
complementary medicines over the internet.(5), (6)
4. Electronic detailing
In the context of drug promotion, detailing has
traditionally involved face-to-face contact between a
visiting sales representative and a health professional.
However, drug companies, especially in North America
and Europe, are increasingly adopting electronic
detailing as the process to market their products.
E-detailing includes diverse strategies, such as
videoconferencing, the provision of electronic education
modules, and the use of email and related technologies
as prompts and to promote two-way communications. It
has been used for disease-awareness campaigns, and for
‘customer relationship management’.
Companies are also using blogs and websites to develop
customer relationships. As GlaxoSmithKline says on its
corporate blog in the USA for a weight loss product
(http://alliconnect.com), ‘it is a place for you to have
a conversation with us about weight loss issues’.
Such ‘conversations’ may enable companies to gather
patient stories and feedback for use in positioning
their products. The discussions are not only mined
for information (http://pharmamkting.blogspot.com),
but also ensure the repetition of marketing messages.
Sometimes companies use multiple websites to promote
their products and issues to different market segments.
For example, GlaxoSmithKline also promotes weight
loss issues at www.questioneverything.com
Presentations to a pharmaceutical marketing conference
in Europe suggest that e-detailing is not popular with all
doctors.(2) However, it is cheaper than traditional sales
representatives and can result in a significant return on
investment through increased sales. Top companies are
providing financial incentives for doctors to participate in
e-detailing, such as honoraria, product samples, practice
tools, and patient education resources.(3) In Poland,
for example, Sanofi-Aventis lent physicians internetconnected hand-held devices which were loaded with
clinical support information, drug indexes, abstracts of
clinical studies, information from key opinion leaders,
and advertising and educational materials. In exchange,
Websites are also used for patient support programs
and education, although it is not always clear from the
website name that who is behind it. In the USA, Pfizer
runs such a program (www.get-quit.com) for varenicline
users, providing regular emails and other prompts such
as a personalized web page to support their product use.
In Australia, the company’s advertising and marketing
67
campaign is backed by a consumer website (www.
outsmartcigarettes.com.au) that includes prompts for
questions to ask doctors. Meanwhile, a Wyeth Consumer
Health Care website (www.caltrate.com.au) sounds the
alarm on osteoporosis and encourages people to see a
doctor if they answer yes to any questions on a ‘one
minute risk test’, including the question ‘have either of
your parents broken a hip after a minor bump or fall?’.
viewers describing their experiences with varenicline.
It was unclear whether any of these videos were
commercially generated. However, the first one
identified by the search (http://au.youtube.com/
watch?v=Vx7baviT1DQ) linked to a website whose
name suggests it is an individual’s personal site (http://
www.kims-website.info), although it appears in fact to
be a commercial site. On the other hand, such networks
are also being used for public health purposes, including
promoting messages about the quality use of medicines.
YouTube also includes, for example, a US Food and
Drug Administration (FDA) video discussing potential
adverse effects of varenicline.(7)
Company websites can link to other sites that may not meet
regulatory requirements. GlaxoSmithKline’s Australian
website raising consumer awareness of genital herpes
and treatment issues (www.thefacts.com.au) links to
the Australian Herpes Management Forum but advises
that external links such as this ‘may not comply with
the Australian regulatory environment’. The Forum,
whose board comprises prominent physicians, aims ‘to
improve the awareness, understanding, management
and control of herpes virus infections in Australia’,
and is sponsored primarily by pharmaceutical and
diagnostic companies. Pharmaceutical companies are
not alone in using the internet to market products and
to conduct awareness-raising campaigns that may affect
patients’ interactions with doctors. The complementary
medicines company Black mores, for example, has a
sophisticated website (www.blackmores.com.au), while
Nescafe has launched a website (www.nescafe.com.au/
hcp password: Coffee) supported by advertising in the
medical press which promotes coffee as an agent that
may help lower the risk of developing type 2 diabetes.
Even when listings are clearly commercials, as with a
bizarre video on YouTube promoting a new medicine
for insomnia, ramelteon, it is not necessarily clear who
is responsible for posting them. The video features an
insomniac chatting with Abraham Lincoln and a talking
beaver over a chess board. These characters also appear
in a direct-to-consumer television advertising campaign
in the USA. The video was submitted to YouTube in
2006 by ‘lewisusauk’, who said: ‘New Rozerem Ad
Campaign. Possibly the best prescription drug ad
since the FDA relaxed the rules on drug advertising’.
According to a pharmaceutical marketing blog by John
Mack (http://pharmamkting.blogspot.com), lewisusauk
is a ‘sock puppet … a false identity through which
a member of an internet community speaks while
pretending not to, like a puppeteer manipulating a hand
puppet’. Apart from disseminating company-generated
content, social networking sites also offer opportunities
for companies to insert themselves anonymously into
conversations between site users through postings
and comments on blogs. John Mack says some of
the postings about the ramelteon video on YouTube
smack of this practice, and ‘are attempting to hijack the
conversation by submitting commercial messages (that
is advertisements) disguised as genuine comments from
ordinary citizens’.
6. Viral marketing and social networking sites
Social networking sites such as YouTube and Face book
have been successfully exploited by many consumer
product companies for viral marketing campaigns.
These campaigns are so named because the transmission
of a marketing message through the networks is seen
as analogous to the spread of a viral infection in a
population.
Meanwhile, in the Netherlands, an industry-driven
campaign conducted via Hyves (a Dutch equivalent
of Face book) gathered more than 80,000 signatures
in only three weeks for a petition aimed at influencing
decisions about funding for human papillomavirus
vaccines. According to Dr Ruud Coolen van Brakel,
It can be extremely difficult to identify who is
responsible for content spread through such networks,
and it is not clear how widely the pharmaceutical
industry is using them. A recent search for ‘Champix’
on YouTube (accessed 12 November 2008) identified
46 videos, many of which appeared to be of ordinary
68
Natural Search or Organic Search. The other being Paid
Search related.
Director of the Dutch Institute for the Proper Use of
Medicine, it was ‘a very effective way to create public
awareness and commitment to a commercial cause
disguised as a public health issue’.
According to researcher, there are approximately eight
hundred million people who access the internet. Out
of them, approximately 86% people search for their
information via internet search engines. The same
researches say that the majority of those seeking search
engine help for getting information will only look at the
first two or three pages listed by the search engine. So,
you want your website as high as possible. The best way
that you can achieve a high ranking is by an insistent
search engine marketing campaign. This is the better
way to find a piece of that eight hundred million people
Pharmaceutical companies are also seeking to
capitalize on medical social networking sites. Pfizer,
for example, is reportedly collaborating with Sermo
Inc, a web venture based in Cambridge USA, where
tens of thousands of doctors discuss diagnostic
and treatment issues in anonymous postings. The
collaboration allows Pfizer’s doctors to ask questions
and respond to posts. Members can also rank postings,
which will give insights likely to help the company’s
development of marketing messages. Sermo is said to
be in talks with other companies as well. The site earns
money by letting clients such as hedge funds monitor
doctors’ anonymous conversations and thus gain insight
into, say, the popularity of certain treatments. Sermo
rewards physicians whose input is highly ranked by
other members and plans to offer to pay doctors for
participating in its clients’ surveys.(8),(9)
On the Internet, whenever somebody wants to find
something, they use Search Engines. Search Engine
Marketing is quick becoming the strategic choice for
companies who want to reach a global audience 24
hours a day, 7 days a week, either for free or for as little
as USD $0.05 per visitor. As the Internet becomes more
and more a part of our everyday life, the greater their
role becomes in helping businesses connect with their
customers at that crucial point in their buying decision
process.
7. Search Engine Marketing
Search Engine Marketing referred to as Search
Marketing or SEM, is fast up-and-coming as a great
online client achievement feed. A lot of companies are
now attracting Search Engine Marketing very acutely
because, it has a unbelievable return on investment(ROI)
and has incredible potential for
•
Lead generation
•
Increased sales revenue.
•
Greater brand attentiveness and
•
Better corporate visibility
Right now, there are almost certainly people needs
potential customers who are looking for whatever
products or services you are offering on any or all of
the major Search Engines. When potential customers
type in the keywords that they are searching for and
press that “Search” button, do they find you or your
competitors instead?
8. Regulation
The Medicines Australia Code of Conduct attempts to
regulate the promotion of prescription medicines on the
internet. However, it is difficult to police the anonymous
marketing of drugs on blogs and forums, or to regulate
consumers’ access to information from countries where
pharmaceutical marketing may be less regulated than in
Australia.
Search Engine Marketing is about making sure that
your web site appears on the top 20 of search results
every time potential customers search for whatever
products and/or services that you offer on any of the
major Search Engines including Google, Yahoo and
MSN which collectively accounts for over 90% of all
Search Engine originating traffic.
9. Conclusion
The ongoing development of internet-related
technologies is likely to provide pharmaceutical
SEM is actually a merger of two core techniques. One
is Search Engine Optimization, also known as SEO or
69
manufacturers with further opportunities to influence
consumer expectations of health care and prescribing
practices. It is also providing new opportunities for
those concerned with the quality use of medicines and
evidence-based education.(10) Much can be gained
from constructive engagement with the world wide
web, and 21st century doctors also need to understand
its use as a marketing tool.
LN, Hiller JE. Surfing, self-medicating
and safety: buying non-prescription and
complementary medicines via the internet.
Qual Saf Health Care 2003;12:88-92.
6. Armstrong K, Schwartz JS, Asch DA. Direct
sale of sildenafil (Viagra) to consumers over
the Internet. N Engl J Med 1999;341:1389-92.
7. Food and Drug Administration. Patient
safety news: New safety warnings about
Chantix
[video].
www.youtube.com/
watch?v=ep3U0SVfpW4 [cited 2008 Nov 18]
10. References
1. Dogramatzis D. Pharmaceutical marketing: a
practical guide. Englewood (CO): Interpharm
Press; 2002.
8. Pfizer becomes latest to partner with fastgrowing online doctors’ forum Sermo.
The Age (Melbourne). 2007 Oct 15. http://
healthyskepticism.org/library/2007.php Go to
HSL12469 [cited 2008 Nov 18]
2. Heutschi R, Legner C, Schiesser A, Barak V,
Österle H. Potential benefits and challenges
of e-detailing in Europe. J Med Market
2003;3:263-73.
9. Johnson A. Pfizer-doctors web pact may get
looks. The Wall Street Journal. 2007 Oct 15.
http://healthyskepticism.org/library/2007.php
Go to HSL12470 [cited 2008 Nov 18]
3. Bates AK. Conference Insights: Online
marketing and eDetailing: in-depth report
from an eyeforpharma conference. J Med
Market 2006;6:298-300. [More detailed
version available at www.keywordpharma.
com]
10. Boulos MN, Maramba I, Wheeler S. Wikis,
blogs and podcasts: a new generation of Webbased tools for virtual collaborative clinical
practice and education. BMC Med Educ
2006;6:41. www.biomedcentral.com/14726920/6/41 [cited 2008 Nov 18]
4. Lerer L. E-business in the pharmaceutical
industry. J Med Market 2002;3:69-73.
5. Bessell TL, Anderson JN, Silagy CA, Sansom
70
“Emerging trends in the life style of
apparel consumers in India”
A . Ram Mohan
Senior faculty, Department of Management Studies, K S Rangasamy College of Arts and science, Tiruchengode
Dr. R. Krishnaraj, MBA, PGDMM, Ph.D.
Asst. Professor & Head – General Management, SRM School of Management, Kattankulathur
1. Introduction
2. The increasing buying power of Indian
consumers
In the Global business environment, India is considered
By the end of this decade, India’s income demographics
are going to be unrecognizable. These could translate
into an enormous buying power for luxury consumption.
We are able to feel the emergence of new market. We are
able to see that growing number of Indians are enjoying
unprecedented levels of affluence. The proportion of
disposable income for spending is also found to be
increasing significantly.
as a fast growing economy. This paper analyses the
changing life style of apparel consumers in India. This
paper also deals with the increasing buying power,
spending behavior, dominance of fashion, influence
of celebrity and media, impulsive buying and online
buying.
Table 1 : Mapping India’s Income classes
The Classes
1994-95
1999-2000
2005-06
Rich (Rs.215,000 +) Benefit Maximizers Own Cars, PCs
1
3
6
Consuming (Rs. 45,000-215,000)
29
55
75
Climbers (Rs. 22,000-45,000) Cash Constrained Benefit Seekers
48
66
78
Aspirants (Rs. 16,000-22,000) New Entrants
Destitutes (Less than Rs. 16,000)
48
35
32
24
33
17
Source: NCAER’s MISH Report, as reported in 2003-04 BW Marketing White book
Table 2: Distrbution of Income Classes among Urban Households (%)
Income
Low
Middle
High
1989-90
37.1
59.1
3.8
1992-93
38.4
56.7
4.9
1994-95
33.6
60.4
6.0
1999-2000
15.9
69.1
15.0
Table 3: Urban India’s Income Classes by Size ( All figures in million)
Income Classes
The very rich
The consuming class
The climbers
The aspirants
The destitute
1995-1996
0.8
16.6
16.8
7.1
5.3
2001-2002
1.9
26.5
17.4
9.9
2.7
71
2006-2007
4.0
40.8
13.7
0.7
0.9
Table 4: Urban Classification Based on Income Class and number of Families
Consumer
Classification
Income Class
(in Rs. ‘000’)
Strivers
500-1,000
Near rich
1,000-2,000
Clear rich
2,000-5,000
Sheer rich
5,000-10,000
Super rich
10,000 +
Note: Income figures per annum at 2001-2002 prices.
Source: National council for Applied Economic research, India
Number of
Families (in ‘000’)
Growth Rate
(in %)
3212
1122
454
103
53
17.50
19.40
21.30
23.40
25.90
as the key link between buyer and seller. Studying the
demographic shift by 2010 as projected by the Merrill
Lynch, there is considerable increase in population in the
age group of 20-34 years, which constitutes the major
segment of population. Also analyzing the spending
behavior in the personal grooming products across
different age groups, the age group above 35 years are
the major contributors to the apparel segment. We also
see from the report that the consumers spending have
increased from 6.6% in 2002 to 7% in 2003. Thus we
can conclude that there is a huge potential in the future
for apparel retailing.
Economists have explained this phenomenon as; the
decisions on how much to save and spend depend
on expectation of life time income and not on annual
income. This is here wealth influences. Consumers who
have substantial wealth like financial assets, real estate,
etc. are spending despite temporary variations in their
annual income.
In the future it is expected that the income of the
household will increase and thus will have a positive
effect on the industry as a whole. Especially, the
rich category, which is expected to reach 6 million
households in 2007 from 1 million in 1995, will help
the niche industry to grow. Also the lower income group
will decrease to 17 million households by 2007 from
35 million in 1995. It is also expected that the total
households will increase by around 81 million in high
income groups during the same period. The households
in the low income groups are found to be reducing
significantly. This will increase the market potential for
the organized retailing in the apparel sector across all
income segments.
4. Demand for ready-made garments in India:
Past & Future
Year
Rs. Billion
2007-08
1162
2008-09
1313
2009-10
1490
2010-11
1676
2011-12
1860
2012-13
2055
2013-14
2270
2014-15
2509
2019-20
4133
(Source: 2004, Cygnus Business Consulting &
Research)
The demand for ready-made garments is expected to
increase nearly 4 times between 2007 and 2020.
3. The changing spending behavior of
consumers
India’s population is around 1170 millions, as on July,
2009. Considering the change of consumer preferences
over time, India appears to be a promising market for
apparels, with vast potential. Consumer markets are
witnessing change at a rapid pace not seen before.
Apparel markets also offer new opportunities and
challenges. This can be attributed to dramatic shifts in
the buying behavior, growing urbanization, emergence
of the service sector, changing trends or lifestyle, and
most prominently, the increasing power of retailers
5. Ready-made garments: Market growth
rates in India
Period
Per cent
2001-02 to 2006-07
11.6
2006-07 to 2011-12
12.5
2011-12 to 2019-20
10.5
Research)
72
The market growth rate is predicted to be steady.
Ready-made garments: Market structure in India
Segment
Share (%)
Organised (Branded)
25
Informal
75
Research)
Branded ready-made garments contribute to 25% of the
total market.
when she starts selecting her office wear at the retail
outlet. Comfort comes second, followed by exclusivity,
feminine touch and glamorous looks in the order. So,
the garment purchase pattern among Indian women
is very much in a stage of transformation. Price as an
overriding factor is diminishing. In the garment they
look for fit, style and fabric. They want the garment
to provide them elegance, comfort and exclusivity
(2004, Cygnus Business Consulting & Research).
4. Factors influencing choices of men apparels
6. Increase in fashion consciousness
Fabrics and textures are found to be the most important
factors driving sales of men’s shirts; overall looks of the
shirt mattered next, followed by pricing and fits in the
order (2004, Cygnus Business Consulting & Research).
Undergraduate students are very significant in India in
terms of both magnitude and spending capacity. The
20-25 million Indian teen to early 20s middle class
has extensive spending power and is an important
market segment (Bansal, 2004). The most important
items purchased by young people are clothes. Clothing
purchases are the biggest expenditure in a young
person’s budget (Sarikisian, Miller, 2003) and more than
85 percent of teenagers have a say in buying decisions
of clothes (Tootelian and Windeshausen, 1976). It is
important to study clothing purchase behavior of
teenagers and youth not only because clothes are the
frequently purchased item by them but also because
they become trend setters and opinion leaders for
dress and living styles (Axford, 1970). Hence over 90
percent of clothing manufacturers target the youth
group of 15 to 24 years (Seo and Hathcote, 2001).
The youth market is significant to Indian marketers
not only because of the size and spending potential but
also because they are the trendsetters for the rest of the
population. According to Pareto’s rule, 80 percent of the
purchase or usage of a product can be attributed to 20
percent of the population.
5. Factors influencing choices of women
apparels
Maximum Indian working women across all age groups
prefer to wear Ethnic Salwar-Kameez (34.3 per cent) at
the work place, that too tailor-stitched. But the branded
offerings are not far behind. Amongst the youngest
group of working women, aged 21-25 years formal shirt
with trousers emerges as the most widely used dress.
The age factor clearly appears to have a positive impact
on fashion lifestyles of working women. Formal shirt
with trousers is the most widely used office wear among
women in the 36-40 age group as well. Format shirts
with trousers (28 per cent) are the second most widely
used work wear across all age groups except for the
age group of above 40years where the women prefer
mostly saris. Then comes Indo-Western Kurta (10 per
cent) followed by formal shirt with jeans (6.9 per cent),
T-shirt with jeans (6.2 per cent) and finally sari (5 per
cent). About 72 per cent of the working women had
more than 5 sets of salwar-kameez (which includes
chridars) in their wardrobe; T-shirts and formal shirts
were also plentiful with 66.7 per cent and 91.6 per cent
of working women having five or more pieces of these
respectively. Saris, trousers and jeans were the other
well-stocked items.
There is a need to understand their psychographics so
that it becomes easy for the marketer to reach out to them
or to target and position themselves more appropriately
for them. Product designs and communication
strategies are considered as vital in fashion business.
In he light of the recent view that homogeneity of
global youth consumption practices is misconstrued
and “glocal” structural commonalities are manifested
in diverse youth culture across nations (Kjeldgaard and
Askegaard, 2006) – which implies that what is true of
youth of USA might not be true for youth of India or
Now when it comes to liking, women go for the
apparel that gives them flattered figure whereas, men
go for comfort. Dignified looks emerges as the top
consideration on the back of the Indian woman’s mind
73
fulfillment, belonging and accomplishment are
Brazil. Traditional demographic variables like income,
education or gender can not identify the complete
characteristics of different markets; (Solomon, 2002)
because consumers in the same demographic group
have very different psychographic make-ups (lifestyles).
described as outer-directed values.
7. Dominance of fashion in apparel business
To the producer, the primary function of fashion is the
creation of product obsolescence, i.e. Obsolescence of
desirability. Fashion is used as a competitive device by
Generally it has been felt that psychographic or
life-style traits should be more directly related to
acquisition, use and disposition of goods and services
than standard personality traits (Jacoby, 1976). Values
affect attitude, which in turn affect behavior (Henry,
1976). Psychological variables, like innovativeness are
much more strongly associated with frequent clothing
purchase than demographic variables. Frequent clothing
buyers are also more exposed to fashion-oriented media
and innovative towards new fashion. It would be wise
for a clothing company to identify a fashion conscious
segment. Youth in general place more emphasis on
their appearance than older people and thus clothing
occupies a more vital position in their life-style. These
young consumers are more likely to wear casual wears.
The most frequent buyers of casual wear are found to be
fashion conscious.
the manufacturer. It serves to differentiate the product
of a particular firm and results in non-price rather
than price competition. Fashion is used for successful
creation of demand for the fashion products. Apparel
industry is characterized by perfect competition,
where the number of sellers is so large that the actions
of one seller have little impact on his competitors.
Brand names, which have been used by firms in other
industries to maintain their market share, have been less
successful in the apparel industry.
As a result of the dominance of fashion in apparel, we
have a competitive, uncertain, and easy to enter industry
in which technological advances have been relatively
slow. Thus fashion inflates the price; the consumer pays
for the fashion. Finally the dominance of fashion may
lead to negligence of performance characteristics by
In conclusion it is clear that•
both producers and consumers. Such characteristics,
Fashion-consciousness and
however, determine to a considerable extent consumer
• Innovativeness
are the relevant psychographic traits that predict
clothing purchase behavior (Goldsmith. 2002).
satisfaction with the garment during its wear-life.
Failures related to durability, appearance retention and
ease of care have been cited by consumers often as
major sources of dissatisfaction. One recognized benefit
Innovativeness could be explained as the consumers
like to try new and different things. They like trying
new things. Their life is determined by their own
actions. They enjoy making their own decisions. They
like the challenge of doing something they have never
done before.
is the role of fashion in satisfying the consumers’ desire
for change. In apparel business consumer tastes and
preferences are changing continuously. The apparels are
of semi-durable nature. Fashion garments are relatively
inexpensive. But the cost of product differentiation
is usually high (Rachel Dardis). In the market place,
the consumers have shown willingness to pay for such
Fashion-consciousness could be explained as the
consumers want to be considered fashionable. They
dress more fashionably than most people. They follow
the latest trends and fashions. They like to dress in the
latest fashions (Sudas Roy & P. Goswami, 2007).
product differentiation.
We can not over look the limitations like, many low
income consumers would find it difficult to participate
in the fashion cycle. Another question that arises in our
mind is whether fashion is a class phenomenon or a
Excitement, respect, warmth, and fun are considered
as inner-directed values. Self-respect, security,
mass phenomenon.
74
8. Leading fashion brands marketed in India
Arrow
Allen Solley
Van Heusen
Louis Phillipe
Park Avenue
Zodiac
Lee
Excalibur
Flying Machine
Ruf ‘n Tuf
Newport
Peter England
Levis Straus
Stencil
Rod Lever
Raymonds
Vimal
John Miller
Playboy
Charagdin
Double Bull
Weekender
VIP Lacoste
Benetton
Tussady
Scottish Weave
Scabal
Old Trafford
San Frisco
Byford
Tamarind
Rivolta
Killer
Lee Cooper
Jordachee
Shotgun
Hoffman
Dare
Teseas
Best Waist
Oxemberg
Kilroy
Sunnex
Tommy Hifigur
Evisu
Diesel
Gucci
Christion-Dior
Source: Textile Fibres and Products, TX0501, Garments
9. “Fast fashion”
of new trends and are sources of inspiration for
other consumers when adopting and buying latest
styles. Amongst adolescents aged 12-17, there are more
females in the innovators and early adopters categories
and more males in the late majority and laggards
categories.
According to Mintel (2007) the exceptional growth
of fast-fashion retailers can be attributed to high
impulse buying, an increase in sourcing from lowcost countries and a change in consumer attitude. The
appeal of newness remains very alluring to teens and
Gen-Y consumers, looking for something different to
wear while socializing. Such projection suggest that
fast fashion will remain buoyant for the foreseeable
future, thanks to its attraction to the young and fashionhungry, as well as its practical appeal to the lower socioeconomic groups. In order to satisfy the consumers’
apparel marketers are successfully combining “Justin-time” practice and “Quick-response” strategy along
with “Fast-fashion”.
Fashion innovators are well aware of their appearance.
They were found to have a unique self-image. They
are passionate about “dressing style” and “physical
appearance”. They tend to shop at the reputed
retail stores. They love socializing activities. They
have colorful entertaining activities. They take certain
amount of risk also.
11. Influence of celebrity and media
10. Buying behavior of Fashion Innovators
Recent research by Birtwistle and Moore (2006)
indicates that fashion innovators and early adopters,
compared with followers are heavily influenced by
fashion media. They are also influenced by in their
purchase habits by celebrities.
Research by Rogers (1983) indicates 2.5% are
innovators, 13.5% are early adopters, 34% are early
majority, 34% are late majority and 16% are laggards.
The marketing and apparel literatures are unanimous
in reporting that fashion leaders tend in general to
be young consumers. When compared with other
consumer groups, fashion leaders, or innovators,
deem fashion to be of importance to their lifestyles.
They have strong opinions about taste, are advocates
12. “Impulsive buying”
When the buyer is influenced by emotional attraction
(irrational) rather than rational judgments (such as price)
it is called as impulsive buying. According to Rook and
75
Fisher (1995), impulsiveness is a consumer’s tendency
to buy spontaneously, unreflectively, immediately
and kinetically. In impulsive purchases social roles
and interactions dominate over the buyer’s financial
capabilities. Fashion oriented impulsive buying occurs
as a customer sees the product in an innovative style
and decides to buy immediately. Fashion innovators
especially male college students are found to be
impulsive.
are realigning their activities towards meeting specific
customer needs, radically changing business models
and exploring new ways of collaboration between
buyers and sellers.
15. References
1. Bijapurkar,R (2003), “The New Improved
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2. Goswami.P,(2006), “Media usage behavior
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3. Lall.R.R, (2006), “Young India among
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5. Sheth Jagdish.N, Bruce I Newman and Babara
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13. “Online buying”
Consumers who already buy from catalogues would
respond positively to online purchases. 46% of online
buyers are willing to pay more; 57% stated that Internet
shopping saves time (Nua, 2000). Online buyers of
clothing regard self esteem and personal style as more
important factors than price. One limitation of online
fashion retailing would be the “touch and feel’ factor
(Enhmann, 2000).
14. Conclusion
Frequent cloth shoppers would place more emphasis on
outer-directed values than inner directed values. Outerdirected values significantly influence psychographic
traits like fashion-consciousness and innovativeness,
which in turn positively influence purchase frequency
behavior. The marketer should formulate his product
and communication strategies in such a way that
it appeals to the fashion-conscious and innovative
consumers. For segmenting, targeting and positioning
this identification effort would be useful. In the context
of marketing communication with frequent clothes
purchasers, the marketer should also emphasize outerdirected values rather than inner-directed values (Sudas
Roy & P.Goswami, 2007).
Clothes purchased for socializing are only worn a few
times; meanwhile, work garments are expected to be
kept for longer. Fashion followers are more concerned
with whether clothing is practical and could be worn
again the following season.
Intense competition, shifting customer loyalties,
aggressive marketing and the presence of global players
are some of the salient features that have resulted in
the change of industry outlook recently. Companies
76
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77
Factors Influencing Retail Investors Attitude Towards
Investing in Equity Stocks: A Factor Analysis
E. Bennet, Ph.D
Research Scholar, Department of Commerce and Financial Studies , Bharathidasan University, Tiruchirappalli
Dr. M. Selvam
Associate Professor and Head , Department of Commerce and Financial Studies, Bharathidasan University,
Tiruchirappalli
1.Introduction
In this paper a comprehensive literature review about
behavioural finance has been carried out. Peter Roger
Eiving (1970) carried out a study to identify those
factors which motivate (or) Guide the investment
decisions of the common stock investors. The study
identified the factors (i) Income from dividends (ii) rapid
growth (iii) purposeful investment as a protective outlet
of savings (iv) Professional investment management.
Shanmugam (1990) studied a group of 90 investors to
examine the factors affecting investment decision. The
study focused its analysis on the investment objective
and the extent of awareness on factors affecting
investment decision. The study found that the investors
are high risk takers. Investors possessed adequate
knowledge of government regulations, monetary and
fiscal policy. Warren, et. al., (1996) attempted to
develop lifestyle and demographic profiles of investors
based on the value and types of investment holding.
Krishnan and Booker (2002) analyzed the factors
influencing the decisions of investor who basically
used analysts’ recommendations to arrive at a shortterm decision to hold or to sell a stock. Merikas et. al.,
(2003) analyzed the factors influencing Greek investor
behaviour on the Athens Stock Exchange. The results
indicated that individuals base their stock purchase
decision on economic criteria combined with diverse
other variables. Hussein A Hassan (2006) identified
the factors influencing the UAE investor behaviour. Six
factors were found the most influencing factors on the
UAE investor behaviour. The most influencing factors
were expected corporate earnings, get rich quick, past
performance of the firms stock. On the other hand few
factors were found to be least influencing like expected
losses in international financial markets, family member
opinion, gut feeling on the economy. Kannadhasan.
M (2006) examined the factors that influence the retail
investors decision in investing. The decision of the
Research in behavioural finance is comparatively less in
India, when compared to other foreign countries. Within
behavioural finance it is assumed that information
structure and the characteristics of market participants
systematically influence individuals’ investment
decisions as well as market outcomes. The behavioral
finance mainly focuses on how investors interpret and
act on micro and macro information to make investment
decisions. Behavioural finance is defined by Shleifer,
A (1999), “a rapidly growing area that deals with the
influence of Psychology on the behavior of financial
practitioners”. The globalization of financial markets
has been increasing the retail investors’ community
over the past two decades by providing a wide variety
of market and investment options. However, it makes
much more complex in their investment decisions
process.
The retail investors consider their investment needs,
goals, objectives and constraints in making investment
decisions, but it is not possible to make a successful
investment decision at all times. Their attitude is
influenced by various factors such as dividend, get rich
quickly strategy, stories of successful investors, online
trading, investor awareness programme, experience of
other successful investors etc. A better understanding
of behavioral processes and outcomes is important for
financial planners because an understanding of how
investors generally respond to market movements
should help investment advisors in devising appropriate
asset allocation strategies for clients. Hussein et al
(2006). The various studies have been conducted
in other countries but to the best of the researcher’s
knowledge, the researcher could not find any similar
study in Tamil Nadu. Hence this study attempts to find
out the factors influencing investors attitude towards
investing in equity stocks.
78
retail investors are based on their various dependent
variables viz., Gender, age, marital status, educational
level, income level, awareness, preference and risk
bearing capacity. Glaser, et. al., (2009) tested whether
individual investor sentiment was related to daily stock
returns by using vector auto regressive models and
Granger causality tests. They found out that there exists
a mutual influence between sentiment and stock market
returns, but only in the very short-run (one and two
trading days). The returns have a negative influence on
sentiment, while the influence of sentiment on returns is
positive for the next trading day. The influence of stock
market returns on sentiment is stronger than vice versa.
for the study. Totally ten important places in Tamil
Nadu were identified (Chennai, Coimbatore, Trichy,
Madurai, Karaikudi, Kumbakonam, Hosur, Tirunelveli,
Erode and Tiruppur). From each identified places two
approved stock brokers were chosen and four investors
were contacted with the help of brokers. However, on a
detailed scrutiny of the filled in questionnaires, it was
found that 3 of them had given incomplete information
and hence the responses could not be used for further
analysis. Thus, this study is based on 157 selected
respondents from the retail investors.
4. Variables
Participants were asked to evaluate the importance of
26 variables, identified from the literature and personal
interviews as potentially influencing the value of equity
shares, by making seven choices for every one of the
26 variables: “strongly agree” for the variables which
had a strong influence on the factors considered to be
influencing equity shares and “strongly disagree” for
the variables that does not have much influence on the
factors considered to be influencing equity shares.
From the above review, it is clear that there are some
differences among the retail investors on the factors that
influence investor’s attitude towards investing in equity
stocks.
3. Methodology
3.1 Objective of the Study
To identify the various factors that influences the retail
investors’ attitude towards investing in equity stock
markets.
5. Statistical Tools: The data collected have been
analyzed though Descriptive Statistics and Factor
analysis.
3.2 Sources of Data: The research design for the study is
descriptive in nature. The researcher depended heavily
on primary data. The required data were collected from
the Retail Investors living in Tamil Nadu. The study
was conducted during the period between May and July
2010 through a structured questionnaire.
6. Results And Discussions
Factor Analysis: Kaiser-Meyer-Olkin Measure of
Sampling Adequacy is employed to examine the
appropriateness of the data for factor analysis. High
values (between 0.5 and 1) indicate that the factor
analysis is appropriate. Further, Bartlett’s Test of
Sphericity is a test statistics used to examine the
hypothesis that the variables are uncorrelated in the
population. From table 1 it is clear that the data used for
the study is conducive for performance factor analysis.
It is also evident from Table 1 that the variables are
significantly related to the population.
3.3 Sampling Size and Procedure: The sample size
covered 160 retail investors who were spread through
ten different places in Tamil Nadu. The important places
where large investors are available are identified for
this study using purposive sampling method. In order to
collect information from the retail investors, the sampling
design has been carefully decided and properly chosen
Table 1: KMO and Bartlett’s Test
Variable
Factors
influencing
investors attitude
Kaiser-Meyer-Olkin Measure
of Sampling Adequacy
Bartlett’s Test of Sphericity
Approx. Chi-Square
df
Sig.
0.725
2.159
325
0.000
79
Result
Significant
Table 2 presents the results of factor analysis of the
sample data as well as the suggested label for each
factor. Factor loading for each item exceeded the
minimum threshold level of 0.40 (Kim and Mueller,
1978; Noursis 1985).
The average value of the five top highly influential
factors according to the sample retail investors’ were
Investors tolerance for risk with a mean value of 5.53
(SD 1.201), Strength of the Indian economy with a
mean value of 5.49 (SD 1.217), Media focus on the
stock market with a mean value of 5.46 (SD 1.443),
political stability with the same mean value of 5.46 (SD
1.313) and finally Government policy towards business
with a mean level at fifth position of 5.43 (SD 1.167).
Table 3 shows the mean value and the standard deviation
of each statement that could possibly influence the
attitude of the retail investors investing in equity stocks.
Table 2: Results of Factor analysis for profitability indicators
Factor 1:
Item
Loading
Cost cutting by companies
Technological advancements at company level
Investors’ tolerance for risk
Mergers and acquisitions in the corporate sector
Performance of Internet stocks
0.782
0.738
0.814
0.689
0.520
Variance explained (%)
Eigen Value
Cronbach’s Alpha
11.838
7.587
0.824
Factor 2:
Total variance of factors influencing
retail investors towards investing in
equity market explained by two factors
= 70.743
Item
Loading
Satisfactions with the investments in equity stocks
Availability of corporate research
Government policies towards business
Rate of Inflation
0.655
0.589
.596
Eigen Value
Cronbach’s Alpha
10.824
2.384
0.733
Factor 3:
Item
Performance of the Indian Stock Market
Confidence level of institutional investors
Greed among investors
Strength of the financial sector
Media focus on the stock market
0.562
0.775
0.656
0.607
0.586
Eigen Value
Cronbach’s Alpha
9.793
2.017
0.814
80
Factor 4:
Item
Strength of Indian economy vs other countries
0.537
Access to information
0.776
Access to tools and technology
0.675
Low cost of executing trade
0.599
Eigen Value
Cronbach’s Alpha
9.598
1.685
0.780
Factor 5:
Item
Total variance of factors influencing
retail investors towards investing
in equity market explained by two
factors = 70.743
Stories of successful investor
‘Get rich quickly’ philosophy
Price to earning ratio
0.806
0.806
0.620
Eigen Value
Cronbach’s Alpha
8.941
1.400
0.759
Factor 6:
Item
Online trading
Political Stability
0.740
0.714
Eigen Value
Cronbach’s Alpha
8.368
1.185
0.560
Factor 7:
Item
Information available on the internet
Perception of easy money among investors
0.679
0.729
Eigen Value
Cronbach’s Alpha
6.462
1.112
0.759
81
Table : 3 Descriptive Statistics
Mean
Std. Deviation
My satisfaction with the Investments
5.33
1.303
Dividend
5.27
1.509
Availability of corporate research
5.19
1.321
Government policy towards business
5.43
1.167
Rate of Inflation
5.38
1.168
Stories of successful investors
4.85
1.610
Get rich quick philosophy
4.94
1.731
Price to earnings ratio
5.31
1.320
Information available on the internet
4.95
1.353
Perception of easy money among investors
5.15
1.424
Strength of the Indian economy
5.49
1.217
Access to information
5.38
1.258
Access to tools and technology
5.42
1.331
Low cost of executing a trade
5.25
1.399
Performance of the Indian Stock Market
5.36
1.167
Confidence level of institution investors
5.38
1.393
Greed among investors
5.23
1.572
Strength of the financial sector
5.41
1.524
Media focus on the stock market
5.46
1.443
online trading
5.29
1.241
cost cutting by companies
4.99
1.403
Technological advancements at company level
5.29
1.237
Investors tolerance for risk
5.53
1.201
Mergers and acquisitions in the corporate sector
5.29
1.520
Performance of Internet stocks
5.39
1.435
Political stability
5.46
1.313
The Sample retail investors’ also felt that the following
the four with a average mean value of 4.85 (SD 1.610),
four factors were given lowest priority or which had low
Get rich quick philosophy with a mean value of 4.94 (SD
influence on the attitude of the retail investors investing
1.731), Information available on internet had a mean
in equity stocks. Stories of successful investors was
value of 4.94 (SD 1.353), cost cutting by companies had
considered to be the lowest influencing factors among
a mean value of 4.99 (SD 1.403).
82
7. Conclusion
An empirical study of the UAE Financial
Markets”, The Business Review, Cambridge;
Summer 2006; 5,2 PP 225-232.
It was found out that certain factors were influencing
the retail investor’s attitude towards investing in
Equity Stocks. The average value of the five top
highly influential factors according to the sample retail
investors’ were Investors tolerance for risk, Strength of
the Indian economy, Media focus on the stock market,
political stability and finally Government policy
towards business. Four factors were given lowest
priority or which had low influence on the attitude of
the retail investors investing in equity stocks. Stories
of successful investors was considered to be the lowest
influencing factors among the four, Get rich quick
philosophy, Information available on internet, cost
cutting by companies.
4. Kannadhasan. M (2006), “ Risk Appetite and
Attitudes of Retail Investors with Special
Reference to Capital Market”, The Management
Accountant, June 2006, pp 448 453
5. Krishnan, R and Booker, D.M. (2002).
Investors’ Use of Analysts’ Recommendations,
Behaviour Research in Accounting, 14, 129 –
158.
6. Nagy, R.A and Obenberger, r.w (1994). Factors
influencing Investor Behaviour, Financial
Analysts Journal, 50, 40, 63-68.
7. Petter Roger Ewing., ( 1970): “Motivating
Factors Guiding the Common Stock Investor”;
Dissertation Abstracts International Vol
31, No.5 1970 P-1975A
8. References
1. Anna A. Merikas, Greece Andreas G. Merikas,
Greece George S. Vozikis, Dev Prasad,
(2000),” Economic Factors And Individual
Investor Behavior: The Case Of The Greek
Stock Exchange”, Journal of Applied Business
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83
Impact of Social Media on Global Business
Dr. Sankaran M.Com, M.Phil, PhD,
Associate Professor & Head, Dept. of Commerce, D.B. Jain College, Chennai
T. Ravikumar M.Com,MBA,MHRM,
Research Scholar, School of Commerce & Management, Dravidian University, Kuppam
1. Introduction
2. Accessibility - the means of production for
industrial media are typically owned privately
or by government; social media tools are
generally available to anyone at little or no
cost.
Social media is a channel for social interaction, using
highly accessible and scalable techniques. Social media
uses web-based technologies to turn communication
into interactive dialogues. Andreas Kaplan and Michael
Haenlein define social media as “a group of Internetbased applications that build on the ideological and
technological foundations of Web 2.0, and that allow
the creation and exchange of user-generated content.”
3. Usability - industrial media production
typically requires specialized skills and
training. Most social media does not, or in some
cases reinvent skills, so anyone can operate the
means of production.
Businesses also refer to social media as consumergenerated media (CGM). Social media utilization is
believed to be a driving force in defining the current
time period as the Attention Age. A common thread
running through all definitions of social media is a
blending of technology and social interaction for the
co-creation of value.
4. Regency - the time lag between communications
produced by industrial media can be long
(days, weeks, or even months) compared to
social media (which can be capable of virtually
instantaneous responses; only the participants
determine any delay in response). As industrial
media are currently adopting social media
tools, this feature may well not be distinctive
anymore in some time.
2. Distinction From Industrial Media
People gain information, education, news, etc., by
electronic media and print media. Social media are
distinct from industrial or traditional media, such as
newspapers, television, and film. They are relatively
inexpensive and accessible to enable anyone (even
private individuals) to publish or access information,
compared to industrial media, which generally require
significant resources to publish information.
5. Permanence - industrial media, once created,
cannot be altered (once a magazine article is
printed and distributed changes cannot be made
to that same article) whereas social media can
be altered almost instantaneously by comments
or editing.
One characteristic shared by both social media and
industrial media is the capability to reach small or large
audiences; for example, either a blog post or a television
show may reach zero people or millions of people. The
properties that help describe the differences between
social media and industrial media depend on the study.
Some of these properties are:
Community media constitute an interesting hybrid of
industrial and social media. Though community-owned,
some community radios, TV and newspapers are run
by professionals and some by amateurs. They use both
social and industrial media frameworks.
In his 2006 book, The Wealth of Networks: How Social
Production Transforms Markets and Freedom, Yochai
Benkler analyzed many of these distinctions and their
implications in terms of both economics and political
liberty. However, Benkler, like many academics, uses the
1. Reach - both industrial and social media
technologies provide scale and enable anyone
to reach a global audience.
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neologism network economy or “network information
economy” to describe the underlying economic, social,
and technological characteristics of what has come to
be known as “social media”.
•
in the U.S. used mobile devices in December
2009.
•
Andrew Keen criticizes social media in his book The
Cult of the Amateur, writing, “Out of this anarchy, it
suddenly became clear that what was governing the
infinite monkeys now inputting away on the Internet was
the law of digital Darwinism, the survival of the loudest
and most opinionated. Under these rules, the only way
to intellectually prevail is by infinite filibustering.”
Twitter processed more than one billion tweets
in December 2009 and averages almost 40
million tweets per day.
•
Over 25% of U.S. internet page views occurred
at one of the top social networking sites in
December 2009, up from 13.8% a year before.
•
There are various statistics that account for social media
usage and effectiveness for individuals worldwide.
Some of the most recent statistics are as follows:
•
A total of 234 million people age 13 and older
Australia has some of the highest social
media usage statistics in the world. In terms
of Facebook use Australia ranks highest with
almost 9 hours per month from over 9 million
users.
Social networking now accounts for 11% of all
time spent online in the US.
3. Some of The Big Social Media Network
85
3. Social Media and its Marketing Strategy
4. Social Impacts
Web based social network services make it possible to
connect people who share interests and activities across
political, economic, and geographic borders. Through
e-mail and instant messaging, online communities are
created where a gift economy and reciprocal altruism
are encouraged through cooperation. Information is
particularly suited to gift economy, as information is
a non rival good and can be gifted at practically no
cost. Facebook and other social networking tools are
increasingly the object of scholarly research. Scholars
in many fields have begun to investigate the impact of
social networking sites, investigating how such sites
may play into issues of identity, privacy, social capital,
youth culture, and education.
1) Listen to conversation - Tap into the online
conversations to find out who is talking about
you, what they are interested in and where they
are saying it.
2) Establish share of voice - There are millions of
conversations online every day. When you tap
in to the once about your industry what share of
voice do you have.
3) Set goal/Benchmark - Use the information and
insight you got to set the goals you should pursue
in social media.
Several websites are beginning to tap into the power
of the social networking model for philanthropy. Such
models provide a means for connecting otherwise
fragmented industries and small organizations
without the resources to reach a broader audience
with interested users. Social networks are providing a
different way for individuals to communicate digitally.
These communities of hypertexts allow for the sharing
of information and ideas, an old concept placed in a
digital environment.
4) Find Bloggers and communities - You have to
know where the conversations and discussions are
taking place so you can allocate your resource for
best ROI.
5) Identify Influences - What or who influences
people has changed dramatically in the last few
years that do your customers trust?
6) Develop a content strategy - Success in social
5. Four Ways To Measure Social Media
media depends on the quality of your quantity it’s
1: Measuring Social Media Exposure:
How many people could you have reached with your
message?
In social media, this measurement is about as reliable
as a print magazine’s circulation, but knowing your
potential audience does have value because it represents
your potential sales lead pool.
about engaging people.
7) Pick tools - Should you have a facebook page?
Should you be on Twitter?
8) Create and Deliver the content - Once you have
content strategy bright ideas will naturally flow
about what to create, how to deliver this content.
Unfortunately, as of the writing of this post, some of
these metrics have to be accounted for manually, so
you’ll have to balance the level of effort to track the
metrics versus the value you’ll receive from them to
determine their importance to your overall strategy.
A good example of where there can be unreliability in
social measurement is when isolating unique users for
each of your metrics. You want to avoid counting the
same person twice in the list below, but realistically it’s
difficult to do.
9) Engage and Facilitate conversation - Social
media is about a two way flow of conversation.
People are no longer willing to be passive. They
went to part of the conversation.
10)Measure Results - Having Mountains of data is
all very well but “what does this mean” is a crucial
question? Social Media can be measured.
86
listed above are positive, neutral or negative in
sentiment. In other words, did your campaign influence
positive vibes toward the brand or did it create bad
moot?
Exposure is the top of the brand awareness funnel and
represents your potential sales lead pool.
#2: Measuring Engagement:
How many people actually did something with your
message?
You can also use automated tools like Twitalyzer, Social
Mention, Radian 6 or Scout Labs to make it a little easier,
but ALWAYS do a manual check to validate any
sentiment results. Influence is generally displayed as a
percentage of positive, neutral and negative sentiment,
which is then applied in relation to the engagement
metrics and to the metrics for reach where applicable.
This is one of the most important measurements because
it shows how many people actually cared enough about
what you had to say to result in some kind of action.
Fortunately engagement is fairly easy to measure with
simple tools such as Radian 6, Biz360 and Tweet Effect.
These metrics highlight who you want to target to retain
on social media channels.
#4: The Lead Generation Funnel
After you’ve measured through the influence portion of
the funnel, you’re now creeping into where too many
companies are starting their measurement efforts:
the lead generation funnel. This is where the brand
awareness portion of the funnel ends and the traditional
ROI-driven action begins.
#3: Measuring Influence
This category gets into a bit of a soft space for
measurement. Influence is a subjective metric that relies
on your company’s perspective for definition. Basically,
you want to look at whether the engagement metrics
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Exposure, influence and engagement represent brand
awareness in the measurement funnel.
are good to implement in business because they are low
in cost as compared to Television and print media.
Understanding your reach, engagement and influence
through these primary social channels will allow you
to define your presence and impact, which can then be
applied as a model to other social networks.
Social media marketing is not difficult at all. It is
something everyone can do with some effort and
knowledge. It isn’t some secret art form that only
experts can master. Unlike other skills, social media has
a remarkably low barrier of entry. Everyone is invited to
the party. No one is excluded.
Now that you’ve tracked all of this information, how
do you make it meaningful? Excel is a great tool to
help organize your data. Build yourself a standard
dashboard in Excel that highlights the key metrics
that matter to the organization. Create a tab for a
high-level overview of multiple campaigns, and a tab
for each campaign for the time period you’re reporting
on. Ultimately, you should put the information into the
same format that you’ve used to report on traditional
brand awareness campaigns, with social media as just
another vehicle in the overall marketing mix.
References
1. Socialnomics: How Social media transforms
the way we live and do business, Erik Qualman,
Anz Publication, New York, 2009.
2. The Whuffie Factor: Using Power of Social
networks to build your Business, Tara Hunt,
Mc Milan Publication, 2008.
3. Crowdsourcing: Why the power of crowd is
driving the future of the business? : Jeff Howe,
2009.
4. Viral Loop: From facebook to twitter, how
today’s smart businesses grow themselves? :
Adam L. Penenberg, 2009.
Conclusion
In conclusion, social media has proved to be effective
channel in global marketing. Social media campaigns
88
Influence of Children Advertisements on Consumer
Decision Making
J. N. V. Raghuram, Assistant Professor (Senior)
VIT Business School, VIT University, Vellore
Prof. P. Ravilochanan
School of Management, SRM University, Kattankulathur ,Tamil Nadu, INDIA,
1. Introduction
attractive advertisement when directed at adults, in
Today the world has become so competitive that
in every field, products do require some sought of
promotion to make a stand in the market. Days were
there when we used to emphasis on the importance of
marketing mix, where evaluation on Product feature,
price, place and then promotion used to be done. But
today marketers are more concentrated on the term
promotion. Customers are in a state of confusion in
choosing a product, because almost all the companies
are coming with more or less the same product features,
price and just next to the customers place.
promoting an adult product, tends to aim at building
brand loyalty, focusing on product characteristics
that are perceived to be of long-term value. But when
creating an advertisement for child product the ad has to
be updated frequently which enhance on the theme and
the characters that garb the attention of a child. Creative
advertisement concept is developing on a rapid scale
which tells about how a customer looks at an ad and
what different tools advertisers should use to attract
the consumers. (Mario Pricken, 2008). For business to
move in positive direction, both negative and positive
methods of advertising are necessary to attract business
Promotion, is a concept where the product is positioned
in the minds of customers and done with the help of Ads,
hoardings, direct mailing, telephonic, event sponsoring,
etc, which are all the various tools used to promote the
product depending on the reach to the customers. In fact
along with the reach, marketers used to take care of the
appeal which really touches the minds of the customers.
New types of communication have evolved in the field
of marketing for promoting, but none except the TV
ads have high impact on the consumer in context to the
consumer durables and FMCG products.
Advertisements a tool used more to create an impact
on the consumers because it really makes a consumer
visualize the product and as well makes the consumer to
become a character in the ad and be involved. Creating
advertisement is now days a very difficult issue as the
field of advertisement is involved with increasing talent
heads on creativity. Advertising agencies are working
hard to create an ad which really positions perfectly
in the minds of the consumers. An advertisement
is supposed to be in a very short period build one’s
respect for a company, it’s supposed to create a feeling
of liking for the product and the manufacturer. An
and to save a business.
What type of ad do the customers remember the most
and why they do so?
And the answers will most
likely be “the funny ones” or “the stupid ones” even a
commercial one complains about still stays in his/her
mind! But that is what the ad writers are trying to do, get
people to remember their advertisement, with reference
to the bottom line is that the person remembers the ad
and when making a decision to buy something, that
brand name comes to mind first. But this again is good;
the entire survival of a company depends on the simple
act of buying their product.
Advertising may influence consumers in many
different ways, but the primary goal of advertising is to
increase the probability that consumers exposed to an
advertisement will behave or believe as the advertiser
wishes. Thus, the ultimate objective of advertising is to
sell things persuasively and creatively. The forms that
advertising takes and the media in which advertisements
appear are as varied as the advertisers themselves and
the messages that they wish to deliver.
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2. Uses of Advertisements
to apply the theories and methods of psychology to
its study. Individuals such as Harlow Gale began to
conduct experiments designed to determine the power
of individual advertisements to attract attention and
persuade consumers to buy. First hurdle for an advertiser
is to obtain the attention of the consumer. This involves
two important actions. First, it is important for the
advertiser to know where a communication should be
place to increase the odds of reaching a particular type
of consumer; this is the media decision. The attention of
a consumer who is, in fact, exposed to an advertisement
is a significant challenge for advertisers, but at the time
advertisers should also take care of the concept like
“Wear out”(Philip Kotler).
The primary function of an advertisement is to first
identify a product and that has to be positioned in the
minds of the customer. In the process of position the
product has to be differentiated from the other products
and make its uniqueness, so that the customer buys that
product or remembers that product when the product
is displayed in the shop. Apart from differentiation the
advertisement should also communicate the attributes
and also persuade. Advertisers should struggle hard to
find out the best ways of coming out with creativity and
make the best ad. A classic example how a mistake done
on the production floor can be used for advertisement
purpose is, a soap maker at Procter and Gamble left his
machine running during his lunch period and returned to
find a whipped soap that, when made into bars, floated.
The company decided to capitalize on this mistake by
advertising Ivory Soap with the phrase “It Floats.” This
characteristic of Ivory Soap served to uniquely identify
it and differentiate it from other bars of soap. This how
ads took a vital role from promotion and the best tool for
promotion. But then of course it’s just not the concept
of what to communicate as in the olden days, but than
today, it is all about whom to communicate and who
will communicate is more important in advertisement.
With these concepts becoming stronger in the ad making
process, lot many appeals started coming in the field of
Advertisement.
5. Information processing by the consumer
Advertisements that are interesting, entertaining,
and even irritating can attract attention; however,
such advertisements may not result in the consumer
attending to or understanding the intended message
of the advertiser. It is important when creating the
advertisement to understand how consumers think
about products and product benefits and to use language
that the consumer will understand. Apart from the
product, product message should also be the focal
point in creating an advertisement. That’s the reason
when creating an ad; advertisers should consider the
characters and the background very cautiously. The
time duration of the ad also will have an impact on the
minds of the customers.
3. Role of Advertisements
Advertising became especially important in the second
half of the nineteenth century as retailers began to
advertise products and prices that would bring customers
to their stores. Advertising for patent medicines
also played a prominent role in the development of
advertising, and by the end of the nineteenth century,
the firms that would become advertising agencies had
already begun to form.
6. Attitudes formation
Attitudes are predispositions/tendencies to make a
consumer behave or respond in a consistent way over
time. There is an affect, feeling or dimension associated
with attitudes. The goal of advertising is to create a
positive impact on attitudes; these attitudes, in turn,
influence future behavior. In other words when the
consumer next goes to the stores to buy a particular type
of product, these attitudes influence the choice of the
product.
4. Marketing and Psychology
Marketing means an in depth study of the consumer’s
Attitude, Perceptions, Beliefs, Values, personality
and many more components of Consumer Behavior.
Psychologists began to recognize that advertising
was an important form of communication and began
7. Attractive media for Promotion
Today probably more attractive ways of promoting a
product is through an Electronic media. In this E-media,
90
Televisions play a vital role, which have the highest
number of spectators and almost all types of consumers
or customers. This media can create the advertisement
of a product with very attractive figures, background
and excellent closures.
bombarded with 1000 of ads every day and at the same
time every child is also getting exposed to all these
ads from morning to evening till they sleep. In fact
children are more susceptible and get easily influenced
by advertisements.
8. Child in an Advertisement
Kids represent an important demographic to marketers
because they have their own purchasing power, they
influence their parents’ buying decisions and they’re the
adult consumers of the future. The power of the children
on the decision making of the parents is very high. Every
parent now a days are more depended on the Child’s
attractiveness towards the product promotion. Even
child is very much sharp to grasp any type of appeal of
an advertisement. That is what the power of children to
drag their parents towards the products. This power is
known as the delighting power or in other words Pester
Power. It is well known that every parent only looks
at the delightment of his or her child and obliviously
buy the product which makes their child delighted. In
fact some products are not at all concerned with the
child but then still the ads are depicted by the children.
Companies are able to craft sophisticated marketing
strategies to reach young people by analyzing children’s
behavior, their fantasy lives, art work and even their
dreams. This is how the advertisers are positioning
themselves in the minds of the children.
The advertisements now days are more concentrated
towards the children rather than the adults. The
advertisers are using an appeal which touches the
customer’s minds and makes the sale for the product.
An appeal is a tool which creates the attention and then
the tension in the minds of the customers and makes him
motivates towards the product. Thus lot of changes and
various trends are evolving in making an advertisement
position perfectly in the minds of a consumer.
Ads were earlier or even now sometimes use big
celebrities in promoting a product, but of course as the
word celebrity it self speaks about huge investments
on the advertisement. Celebrity endorsements are as a
part of marketing communication strategy, has become
common among organizations around the globe.
Depending on the status of the Celebrity, endorsements
could run into millions of rupees. In fact in one of
the research work it was found that the celebrity
advertisements made the sales increase for the product
and non celebrity ads could get that much of success.
But now days many of the marketers shifted from using
the celebrities to small kids. What is the reason and how
this is effecting the promotion of a product?
Prahlad Kakkar shared with the audience about old
Pepsi commercial showcasing street kids with a mask,
which he directed as since street kids do not have the
affordability to buy a Pepsi, he was under pressure to
use professional child artists or rich kids. But Prahlad
insisted that the insight is not to promote Pepsi, but
promote the aspirations (Yeh Dil Mange More!)
Whilst this child-targeted marketing used to concentrate
on sweets and toys, it now includes clothes, shoes, a
range of fast foods, sports equipment, computer
products and toiletries as well as adult products such as
cars and credit cards.
In using a child in an advertisement the marketer is
reducing lot of investment as compared to celebrities’
ads, which are very much costlier. Apart from cost
reduction another interesting issue over here is the target
segment. Now targeted segment means who? Is it the
consumer or the child?. Over here the child is only a tool
in creating an interest to the target segment. Products
like Biscuits, Milk, Boost, Bournvita, Johnson’s baby
products, Chocolates etc can be positioned in the
minds of the customers by using children. But today
the interesting issue is creating an advertisement for
products like washing machine, Paints, Luxury Car by
using a 10 year old kid is definitely a new trend in
the creation of an advertisement. Every customer is
10. Child becoming a customer
Young children are increasingly the target of advertising
and marketing because of the amount of money they
spend themselves, the influence they have on their
91
parents spending (the nag factor) and because of the
money they will spend when they grow up. Advertising
to children has long been a very successful way to build
a solid consumer base. Today advertisement towards
children has increased globally and the European Union
estimates to generate $620 to $930 million a year in
revenue from marketing products to children. However
these ads not only bring funds but brings out an effect
called as NAG Factor (Chetan Choudhari & Milind
Marathe). The “Nag Factor” is when a child sees an
ad for a product then cries and complains to a parent
until the parent purchases the item. Over the last five
years, there’s been a substantial increase in the amount
of influence kids have on durable goods—cars, boats,
big-ticket items. The power in the household is being
ceded to the children.
process may be indirect, television commercials that are
targeted at children are highly effective at accomplishing
their intended goal of promoting product sales. Parents
today are willing to buy more for their kids because
trends such as smaller family size, dual incomes and
postponing children until later in life mean that families
have more disposable income .The marketers are using
various tools or strategies to attract the consumers
or position rightly at right time in the minds of the
customers. A huge market with huge investments, but
the impact of these Advertisements on the sales of a
product may be a debatable. 11. Conclusion
Children are a vulnerable audience, with limited
information-processing capabilities that constrain
their early understanding of the nature and purpose of
television advertising. Because of these limitations,
young children are more easily persuadable than are
older children or adults. They are more trusting of
advertising claims and appeals, and they are more
susceptible to commercial persuasion.
Kids these days are much more computer literate than
their parents. According to McDonald and Lavelle,
“In today’s families, many kids also serve as chief
technology officers. When it comes to computers and
other electronic purchases, even 7-year-olds may boast
more expertise than Mom or Pop. A 1999 survey by
Yankelovich found that 60 percent of parents don’t shop
for technology without consulting their kids.” That’s
just another reminder of the tremendous positive effects
of advertising to children.
12. References
1.
2.
With children either spending or influencing 500 billion
dollars worth of purchases, marketing techniques have
been turned upside down. In the past the most effective
way to sell children’s products was through mom and
dad. Now the opposite is true, children are the focal point
for intense advertising pressure seeking to influence
billions of rupees of family spending. Advertisers are
aware that children influence the purchase of not just
kid’s products anymore, but everything in the household
from cars to toothpaste. Thus these “adult” products are
being paired with kid- oriented logos and images.
3.
4.
5.
Research also makes clear that children’s purchaseinfluence attempts have a relatively high degree of
success. Frequent parental yielding to children’s
purchase requests has been reported in studies that rely
on parent self-reports as well as unobtrusive observation
of behavior in the supermarket. In sum, although the
6.
7. 92
Mario Pricken, Creative Advertising: Ideas
and Techniques from the World’s Best
Campaigns, Thames & Hudson, (2004).
Chetan Chaudhari and Milind Marathe,
Marketing To Children: Issues and Remedies,
Proceedings on International Marketing
Conference on Marketing & Society, IIMK
(2007) p.167-168.
Prahlad Kakkar, Talk on Advertising, at
Manipal
Institute of Communication’s
annual communication Festival, in 2009
James U. McNeal, The Kids Market: Myths
and Realities, Paramount Market Publishing,
1999
Strasburger, Victor .C, Call it kid-fluence.
U.S. News & World Report, July 30, (2001)
p.32.
McDonald, Marci and Lavelle, Marianne.
“Call it Kid-fluence.” U.S. News & World
Report 131. 4 (2001) p. 32
Philip Kotler, Principles of Marketing,
Pearson.
Customers’ Attitude, Satisfaction and Potentiality of
Online Shopping in Chennai
Dr. N. Mahesh
Sigma-Mu Research Consultancy Services, Chennai
Sadasivan
Assistant Professor, School of Management, SRM University, Kattankulathur
The proliferation of online shopping has stimulated
widespread research aimed at attracting and retaining
consumers from either a consumer or a technologyoriented view. The two views do not contradict but
rather reinforce each other. Because the success of
an electronic market largely depends on consumers’
willingness to accept it. The consumer-oriented view
focuses on consumers’ attitude about online shopping.
The potential benefits of online shopping for consumers
include convenience, various selection, low price,
original services, personal attention and easy access to
information, among others (Vijayasarathy, 2002).
New information and communication technologies are
constantly emerging, altering business methods, and
particularly, the relationship an organisation establishes
with its customers. Technological innovations ensure
that, as soon as consumer behaviour in any field is on
the verge of stability and explainability, new products
and services are introduced to destabilise the consumer
behaviour model so as to create competitive openings
for challengers, niche players, and other contenders
(Firat et al., 1995).
The popularity of interactive media such as the World
Wide Web (WWW) has been growing at a very rapid
pace. From a marketing perspective, this has manifested
itself primarily in two ways: (1) a drastic increase in
the number of companies that seek to use the WWW
to communicate with (potential) customers, and (2)
the rapid adoption of the WWW by broad consumer
segments for a variety of purposes, including pre
purchase information search and online shopping
(Alba et al., 1997). The combination of these two
developments provides a basis for substantial growth
in the commercial use of interactive media. Today
Internet is not only a networking media, but also as a
means of transaction for consumers at global market.
Internet usage has grown rapidly over the past years
and it has become common means for delivering and
trading information, services and goods.(Alan and
William, 2003). Considering that Internet shopping, is
still at the early stage of development, little is known
about consumers’ attitudes towards adopting this new
shopping channel and factors that influence their attitude
toward(Eun and Youn, 2004). The consumers’ attitude
towards online shopping is known as the main factor
that affects e-shopping potential (Michieal, 1998).
That means that, through motivation and perception,
attitudes are formed and consumers make decisions.
Thus, attitudes directly influence decision making.
A unique characteristic of online shopping environments
is that they allow for the implementation of very
high degrees of interactivity. It is a multidimensional
construct, the key facets of which include reciprocity in
the exchange of information, availability of information
on demand, response contingency, customization
of content, and real-time feedback(Michael and
Erik,2001;Rowley, 2000). In the context of computermediated communication, a distinction has been made
between person interactivity and machine interactivity
(Venkatesh, 1998; Venkatesh et.al., 2003). While the
former describes the ability to communicate with other
individuals, the latter refers to the ability to interactively
access information in an online database (Hoffman and
Novak 1996).
Indeed, the Internet has not only provides new ways
for consumers to learn about and acquire products and
services online but has also reshape consumer buying
patterns. With this background, the general objective
of the research paper is to explore factors that affect
potential of online sales of a specific product and to
investigate the consumer online behaviour, potential
of online sales to identify those factors that influence
online potential sales of a specific product.
93
1. Methodology
Hypotheses
H1: The consumer attitude towards online shopping
is not statistically significantly different based on
consumer demographic characteristics.
H2: The consumer attitude towards online shopping
is not statistically significantly different based on
e-shopping environment.
H3: There is no significant difference between
influences of human senses in online shopping.
H4: There is no significant relationship between
shopping experience and familiarity and confidence in
online shopping.
satisfaction and familiarity and confidence in online
shopping.
customers’ attitude towards online shopping and
potential of online sales.
product type and potential of online sales.
familiarity and confidence and potential of online sales.
Conceptual Foundation and Framework
The present research study concentrates on
conceptual framework of consumer online behavior
and e-shopping. This framework emphasizes the
decision variables, which affect potentiality of online
sales to specific product. The research framework and
conceptualization of the relationship between potential
of online sales and affective factors are constructed
in the Figure- 1. This particular framework shows
that potential of online sales is influenced by three
factors including consumer attitudes, product type and
familiarity of consumer to the product. In addition,
demographic characteristics and environmental
characteristics influence consumer attitude towards
online shopping and entered into the model as
controlling factors. Product type is affected by human
sensory attributes. Moreover, familiarity and confidence
to the product is influenced by brand name, shopping
experience and satisfaction.
The hypotheses of the research study are
constructed in order to establish the relationships
between factors.
94
2. Data Collection
5. Logistic Model
A structure questionnaire was used to collect the
necessary data which served as primary data to answer
the research questions and objective regarding identified
potentiality online shopping in Chennai. The data and
information were collected from 200 questionnaires
during the year 2009-2010.
In order to investigate relationships in potential of
online sales, a Logistic model was developed. As the
potential of online sales it is probability in nature and
changing between zero and one, so it appropriately
treated as a binary or two choices variable the following
Logistic equation was estimated.
3. Statistical Techniques
Lij = βij + βij 2 .PCij + βij3 .CAij + βij4 .FCij
The descriptive statistics, Analysis of Variance
(ANOVA), Friedman Test, Chi-Square test and
correlation measures were the statistical techniques
which were used to analyze the data and information.
Where, PC refers to product type, CA refers to
consumer overall attitude towards online shopping and
FC refers to familiarity and confidence.
6. Results And Discussion
For hypothesis testing, overall consumer attitude
towards online was measured by Fishbeins’ behavioural
model.
The age distribution of respondents showed that mean
age was 32 years old while minimum age was 17 and
maximum age was 45. The gender distribution of the
respondents was 75 per cent males and 25 per cent
females. Also nearly 55 per cent of respondents were
married and the rest of 45 per cent were unmarried.
Regarding to the respondents’ job, the largest group
belong to businessmen in IT fields (32.50 per cent),
followed by private sector professionals (26.40 per
cent), businessmen in non IT fields (20.70 per cent),
government servant (9.80 per cent)and others (10.60
per cent). In the term of the family income, families
with Rs. 15000 to Rs. 20000 per month were the
largest group among the respondents (34 per cent) then
families with more than Rs 20000 (18.50 per cent). Also
7.5 per cent of respondents reported that they earn less
than Rs. 10000 per month. Furthermore, 93 per cent of
respondents had access to the Internet, 76 per cent were
aware of e-shopping but 68 per cent have not had any
experience in e-shopping. Along with this, 35 per cent
said they will purchase online in next six months.
4. Fishbein’s Behavioral Model
Measuring attitude in survey studies are widely used
in different researches today. Fishbein’s behavioural
model is one of the most influential and widely
researched models about attitude (Shwu-Ing Wu,
2003). According to the Fishbein’s model, attitudes of
people are formed toward a specific object based on
their beliefs (perceptions and knowledge) about these
objects. Fishbein’s model was constructed to measure
person’s overall attitude toward some object and could
be derived from his beliefs and feelings about various
attitudes about the object. This model can thus be used
as a multi attribute attitude measurement model.
In this study five attributes namely, convenience,
information, speed, enjoyment, and customer service
were chosen to measure consumer overall attitude
towards online shopping. Fishbein’s attitude model can
be expressed in equation form as:
n
Ao = Σ bi ei
i=1
7. Demographic Characteristics
The relationships between overall consumer attitudes
towards online shopping and consumer demographic
characteristics were analyzed by using ANOVA and the
results are presented in Table-1. The results indicated
that two factors of gender and family income have
significant relationship with overall attitude towards
online shopping at 95 per cent of confidence level (P
≤ 0.05).
Where: Ao = the person’s overall attitude toward object
o. bi = the strength of his belief that the object is related
to attribute i. ei = evaluation or intensity of feelings
toward attribute i. n = the number of relevant beliefs for
that person.
95
Table-1. Analysis of Variance for Customer Demographics
Demographic Features
F
Age
3.245
Gender
9.002**
Education
0.765
Marital Status
0.000
Job
0.260
Family Income
3.462**
Sig
0.096
0.012
0.746
1.102
0.986
0.026
Note: ** indicates significant at 5 per cent level.
8. E- shopping Environment
The relationships between overall attitudes towards online shopping and experiences were analyzed and the results
are presented in Table-2. The results showed that three factors viz., internet use, e-shopping experience and willing to
e-shopping in future have significant relationship with overall consumer attitude towards online shopping (P≤ 0.05).
Table-2. Analysis of Variance for Environmental Characteristics
Demographic Features
F
Internet Access
0.068
Internet Use
4.385**
E-shopping Awareness
0.026
E-shopping Experience
3.472**
Future Purchase
6.024**
Sig
0.764
0.003
0.899
0.002
0.003
9. Product Type
The significant difference between the applicability of human senses and online shopping was analyzed and the
result is presented in Table-3. The human senses were categorized then based on the virtual online space. The
Friedman Test was used to test significantly differences of ranking human senses. The results showed with 95 per cent
confidence, there is significant difference in human senses in online shopping.
Table-3.Friedman Test of Ranking Human Senses in Online Shopping
Statistic
Value
Sample Size
200
Chi-Square
467.802
Asymp.Sig
0.000
Table-4 shows ranking result of effectiveness of human senses. From the table, products which need sense of sight
to be chosen online are more likely to be sold online followed by sense of sound, sense of smell, sense of taste and
sense of touch.
Table-4. Online Shopping Virtual Ranking of Human Senses
Human Sense
Mean Rank
Sense of Sight
1.54
Sense of Sound
2.32
Sense of Smell
3.16
Sense of Taste
3.98
Sense of Touch
4.35
96
10. Familiarity and Confidence
Where consumers already know the product brand name and have purchased it before and been satisfied with their
experiences, familiarity and confidence for e-shopping is higher. The respondents were asked to report their familiarity
with Indian Railways and their previous shopping and satisfaction. Chi-Square test and Spearman correlation were
used to investigation significantly of relationships between these variables and the results are presented in Table- 5
and Table- 6.
Table-5. Correlation among Familiarity, Confidence and Satisfactory
Test
Chi-Square
Spearman Rank Correlation
Statistics
Sig
102.458
0.000
0.286
0.019
The results proved that where consumer purchased a product and especially if he/she satisfied of previous purchase,
familiarity and confidence of consumers to purchase the product online is increased.
Table-6. Correlation among Familiarity, Confidence and Experience
Test
Chi-Square
Spearman Rank Correlation
Statistics
Sig
115.290
0.000
-0.469
0.000
11. Potential of Online Sales
In order to identify factors affecting potential of online sales of a specific product, the logistic model was developed
and the results are presented in Table-7. The dependent variable was the potential of online sales that takes 1 when
product has bought online and 0 when product has bought offline. According to the results with 95 per cent confidence,
all coefficients were significant. It is mean that potential of online sales has significant relationship with the variables.
The constant coefficient of the equation also was significant in same confidence level. The negative value of the
variable PC (Products type) indicates that when the dependency of choosing a product to human senses increases,
potential of online is decreased.
Using analysis of variance and overall attitude mean with 95 per cent confidence and result showed that only two
factors, gender and family income had significant relationship with overall attitude towards online shopping (P≤ .05).
It reveals that overall attitudes of families with higher income are higher than others. In addition, men have stronger
attitudes to online shopping compared with women.
Variables
Constant
CA
FC
PC
Table-7. Estimation of Coefficient of Logistic Regression
B
Wald
df
**
-3.964
5.102
1
**
5.987
1
0.086
**
6.846
1
0.925
7.142
1
-1.432**
97
Sig
0.035
0.010
0.034
0.026
The estimation of logistic model shows with 95 per cent
confidence all coefficients were significant. It means
that potential of online sales has significant relationship
with overall attitude towards online shopping, product
type and familiarity and confidence. The negative value
of the variable PC (Products type) indicated that in
online shopping when consumer has to apply physical
human senses such as touch and taste, potential of
online sales will be reduced.
confuse potential buyers; they should ensure that they
provide an efficient delivery service to their customers.
The leading telecommunication and internet service
providers in Chennai need to provide cheaper internet
access in order to encourage more consumers to become
internet users.
Introduce more affordable high-speed internet access
to cater online customers who require high bandwidth
in the delivery of digitized products such as computer
software, music, videos and games through the internet,
which are presently popular and frequently purchased
by users of internet shopping. In fact, the potential of
e-shopping will get significant privilege when customers
will show less traditional culture and shopping behavior
attitude. ‘
12. Conclusion And Implications
The forgoing analysis indicated that gender and family
income had significant relationship with overall attitude
towards online shopping and environment characteristics
and there is no any significant relationship between
internet access and overall attitudes towards online
shopping, but weekly internet use having in e-shopping
and willingness to more shopping online have significant
relationship with overall attitudes online shopping. It
means internet access rate is high among people but few
percentages have intention for e-shopping. In addition,
results of this study investigated significant differences
between human senses in e-purchasing process. The
result also proves that there is a significant difference
between human senses in online decision making
process.
13. References
1.
2.
Moreover, results concluded from Logistic model and
showed strong relationship among the three independent
variables with dependent variable which belong to brand
familiarity, product types and consumer attitudes for
online shopping. These results are significantly different
from the electronic shopping test in which attitudes
towards online shopping have the strongest influence on
e-shopping possibility. Also depart from estimation of
the Logistic model and verified that companies present
physical product online but need to gain the advantages
of famous brand name and sales experience are likely
to be successful than those companies offer virtual
products without familiar brand name and are new in
the market.
4.
5.
6. For online retailers need to ensure that online shopping
process through their website is designed and made
as easy, simple, and convenient as possible. The
web site should also be designed in such way not to
98
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Rural Producer and Urban buyer
Mr. D.Subramaniam, B.Sc, MBA, M.Phil, (Ph.D),
Asst.Professor, Xavier Institute of Management and Entrepreneurship (XIME), & Research Scholar.
Sri Chandrasekharendra, Saraswathi Vishwa Mahavidyalaya University, Kanchipuram,
1. Introduction
So, one has to have a proper understanding of the rural
buyer’s need before trying to market the product in that
sector in order to succeed.
Many of the marketing text books have described
the various strategies that can be adopted to market a
product keeping the profile of people in general. Of late
advances have been made and books have been written
based on the profiles of the consumer behaviours of the
urban and rural population. Marketers have found the
necessity to understand the varying needs of the urban
and rural buyer in order to succeed in their endeavor.
Very recently it has been established that the urban
market is reaching a saturation level and the producers
have felt the necessity to penetrate the rural population.
Especially in India with over 70% of the population
living in the rural side, they see a huge potential for
their future markets in rural India.
Similarly the rural producers when they try to enter the
urban market also need to have a proper understanding
of the needs of buyers who are in urban sector before
entering into urban segment. The kind of rural producers
exist are as evidenced by their pattern of occupation as
given below;
3. Occupation Pattern
Occupation
Cultivators
2.All India Population distribution
Distribution
Total
Rural
Urban
Population
Population %
102,7015,247
741,660,293
285,354,954
100
72.22
27.78
Source: National Council for Applied Economic
Research –NCAER – 2002
their literacy level
•
awareness level
•
income level
•
social environment and culture
Agriculture labourers
27
Trading & craftsmanship
10
Non-agriculture labourers
(kivestock,forestry,fishing,
hunting,plantations etc)
10
Salary earners
3
Total
100
Source: Chart used in the book, rural marketing in India
(2004) by KS Habeeb ur rahman, Pg 22)
It is also established that marketing strategies that has
clinched success for them in urban India is not yielding
the same success in rural India. They encounter severe
challenges in this regard. A common sense approach
will reveal that this difficulty is faced mainly because
the profile of the rural buyer differs from the profile of
the urban buyer in terms of
•
Proportion of
rural population
%
50
But there are many an item produced in the rural sector
and doest not have much of market in the rural side but
has huge potential in the urban sector. This is interesting
an aspect which calls for the understanding of the urban
mind set for these products and accordingly devises
the marketing strategies. For example a handicraft is
mainly produced only in rural side, doest not have much
potential in the rural sector as such. However it has a
better market potential in the urban side as urbanites
can afford and also have a taste for these kinds of items.
100
6. Bridging the Gap
Many of the agriculture products are similarly making
their way to urban side for better profit realization.
Some of the commonly used items both in rural as
well a in urban – but produced mainly in rural side also
have succeeded commercially well when branded. For
example the “butter” commonly used product has made
a huge headway in the form of “AMUL” from the rural
side to many of the urban centers all over the country.
Similarly “Aavin” has succeeded as a milk sachet at the
regional level in Tamil nadu though it now has many
competitors.
If this mismatch in skill is identified and facilitated for
their removal the rural products can easily reach the
urban sector. This will also enable rural producers to
understand the urban buyer’s expectation and attain the
ability to reach them. The so called Gap between the
rural producers and urban buyers can thus be bridged.
This will transform the rural economy in specific and
the whole economy in general.
The above responsibility of bridging the skill can
best be handled by Government and sometimes the
Government can also take the help of NGOs as it calls
for massive involvement, plan and resources. Also it
requires different approaches at different places with
the ultimate goal remaining the same.
4. Urban Vs Rural divide in business
approaches
It has been found that many firms have tasted success
in rural areas when they found urban market getting
saturated for their products. It has been comparatively
easier for these firms as they were able to understand
the needs of the customer and accordingly devised their
marketing strategies.
One important task is to identify the linkages of various
variables that have an impact on factors leading to the
removal of the negatives as listed above or strengthen
the positives of the rural businessmen.
This is not happening when a rural business tries to
enter an urban sector as the rural producers lack such
an expertise. This is precisely because they only have
a skill to produce but not the skill to market. This
necessitates the role of a middleman to fill this gap. If
only the rural producer is equipped to acquire the skill
to market and to manage the business they will be able
to succeed easily. It is more easily said than done.
For example rural literacy is a function of rural income
& urban expenditure is a function of rural income. This
phenomenon requires a sort of long term focus to work
on these interdependent variables to create a climate
conducive for the growth especially of rural side. The
nature of variables are such that they can be nurtured
only by the Governments in power on a long term
basis and private players can be drafted in as additional
players to make the development process speedily.
5. Skill Gap
The negatives of rural businessmen are
•
Generally they are illiterates
•
They lack business acumen
•
They lack money for investment
•
They lack infrastructure
Similarly the role of technology in information sharing
and its potential to create a powerful impact on rural
development is another area which can be handled
both by private as well as Government sources. The
successes that have been witnessed on account of the
scheme e-choupal conceived and developed by ITC in
Indian rural side is worth emulating. The user friendly
environment that has been enabled was the key factor to
the success of this scheme involving technology. Here
opportunities exist for both Government and private
sector to invest in ITES sector in the rural side. Many
firms have tasted success by establishing e-kiosks in
the rural side. The ITC a big corporate of India was
able to taste success by going in for large scale IT
• They lack access to information
The positives of rural businessmen are
•
They have the creative skill to produce.
•
Generally they are low cost and qualitative
•
They have enough time at their disposal
•
Cheap labour
101
investment (e-choupal scheme ) in the rural side and
by providing the required training to the rural youth
they were able to taste success in their business. The
technology helped in better sourcing of agricultural
products, monitoring of agricultural production,
monitoring of their price patterns and planning of
logistics etc. Also recently C I I (Confederation Indian
Industry) has signed a memorandum of undertaking
with Khadi and Village Industries Commission (KVIC)
& Ministry of Panchayathi raj to promote a new concept
of “Rural Business Hubs (RBH). These RBH enable
direct business linkage between industry and rural
business community. It helps farmers, Artisans, and
rural business enterprises to establish market linkages
enabling knowledge transfer, enabling reduction in
logistics costs etc. The buyer also benefits by way of
reduction in procurement cost and standardized sources
of supply.
results. For example spending on rural education is an
important action that can benefit the rural economy in
the long run. But one has to wait for it to bring success
in the long run. The elimination of ignorance and
enriching the rural folk with knowledge will lead to
bridging the skill gap that is currently depriving him
of success. This will eliminate the dependence on the
middlemen and enable him or her to be independent.
Thirdly the power of information has to be understood
in the proper context for achieving success in any
business. To-day many company’s are spending a lot
on information management as they help in qualitative
decision making and thereby get a competitive edge in
the market. The ERP (Enterprise Resource Planning)
is one such investment which will enable capturing
information at the source and provide consistent
information at all levels of the management hierarchy
for decision making. Also the role of technology has
to utilize fully to exploit information power. While the
type of technology to be used may vary, an appropriate
use of technology is inevitable. For example the use of
ERP may be appropriate for an established business
in the urban area: it may be too much for the asking
for a small or medium business of the rural side. But
still the business in the rural side also has to use an
appropriate IT tool to succeed in their venture. For
example the power of “internet” is exceptional for any
upcoming business. This enables a rural educated youth
to exploit the opportunities in the market. of course the
ERP manufactures have now realized this and hence
have brought about new concepts such SaaS (ERP on
demand) /Cloud Computing etc to make this technology
affordable.
There are certain globally proven methods to accelerate
the economic growth in the economy such as increased
spend on Infrastructure and thereby bringing about
growth and development especially in the rural side
which again is the domain of the Government.
In today’s economic scenario where” recession” is
setting in “in global economy” many countries are
resorting to massive investments in infrastructure.
For example, Chinese Government has announced a
package of $ 586 billion investment in infrastructure
and public welfare spending to boost economy and
revive employment opportunities. The multiplier effect
is supposed to set in and bring growth to the economy.
This is one possible action the government can take.
This will not only improve the infrastructure but also
improve the income in general and rural income in
specific. This action addresses some of the concerns
listed under the negatives as above.
The initiatives as discussed above have the potential to
bridge the skill gap and make the rural entrepreneur to
be independent.
Further one has to understand that mere increased
spending in infrastructure alone can not bring in
results as such spending has to take place in projects
that can help stimulate growth. Hence spending has to
take place with increased focus .Also it has to strike a
balance between projects that yield quicker results and
the projects that are likely to take longer time to yield
Fourthly, the importance of training can never be over
emphasized. Here again the initiatives can come from
both Government and private sectors. NGOs can also
actively contribute. There have been many instances of
rural arts disappearing over a period of time due to lack
of support for those arts and the younger generation has
not been able to inherit the art from their fore fathers. For
102
example Crafts Council of India has initiated a venture
to help rural handicraft artisans in acquiring skills. The
government of India Ministry of textiles in their annual
report 2000-01 has also listed many initiatives taken for
revival of languishing arts like “Bamboo Etching” in
megalaya.”Scroll Painting” of Manipur etc.
growth was as low as 1% during
2000 and 2005 whereas the non farm
jobs have grown by 20% for the said
period.
The other factor that can bring about success for a rural
product is that if the rural location is visited by outsiders
such as urban buyers, tourists, floating population etc.
This is possible if the rural location happens to be
a tourist destination. This will enable direct contact
between the buyer and the rural seller. For example,
many miniature
-versions of “TAJMAHAL” are made using marble
stones which are available locally in AGRA. Since the
place is visited by many tourists the rural manufacturer
of the above product are able to sell it directly to buyers
visiting as tourists.
All the above linkages clearly establish the various
levels of impact on the rural economy and help in
reducing the skill – Gaps as listed above.
Schemes as above can again bridge the skill gaps listed
above.
Also, there is a linkage between the income levels of
urban to the increased manufacturing activity at the
rural side especially if the rural product depends upon
urban market for its survival.
The rural product in such a situation has to depend upon
the urban market to have higher income levels more
specifically higher personal disposable income for its
success.
It has been established in several studies carried out that
the rural economy is growing faster than urban economy
due to higher income level among the urbanites. A study
carried out by Roopa Purushothaman, a U S trained
economist in their research paper “Is urban growth good
for rural India” has listed the following revelations.
-
10 % increase in urban expenditure
has lead to 4.8 % increase in rural nonfarm employment.
-
Rs 100 increase in urban spending
resulted in increase of Rs 39 in rural
income.
-
The rural economy has grown @ 7.3%
average when compared to just 5.4 %
in the urban economy.
-
The study also reveals quoting central
statistical figures indicating the
contribution of rural economy as 49
% of GDP in 2000 indicating a high
increase in contribution compared to
46%.of period 1993-94.
-
-
6. Conclusion
The product produced in rural side has to reach the urban
hands as necessitated by the market forces. In order for
the above transaction to take place certain skill gaps have
to be bridged which act as a bottle neck. Government
has a very vital role to play in removing such an obstacle
and so also others like private players, NGOs etc. The
schemes like investment in infrastructure improvement,
cresting a conducive environment for rural investment,
rural education, and information accessibility and
training opportunities are aimed at addressing these
obstacles so that rural economy flourishes.
7. References
1. Azhar Kazmi, 2nd edition, Business Policy and
strategic management, Tata McGraw-Hill
2.
There is a declining trend in the
process of urbanization as a result of
economic growth.
3.
The rural agricultural employment
103
Dell I Hawkins-Roger J Best – Kennet A Coney
– Amit Mookerjee – ninth edition – Consumer
Behaviour – Building marketing strategy – The
McGraw-Hill Companies.
Dr.N.Rajan Nair & Sanjith R.Nair – seventh edition,1993, Marketing – Sultan Chand & Sons
4.
6.
S.A.Sherlekar,thirteen revised edition, Marketing management –Himalaya Publishing House.
Rural business hub, www.rbh.in
7.http://apparel.indiamart.com/annualhandicrafts.html
5. K.S.Habeeb ur rehman – Rural marketing in
India-2004 –ICFAI
report/
8.http://knowledge.wharton.upenn.edu/india/
article.cfm
104
Service Quality Gap In Healthcare Services in India
- A Birdseye View Analysis
Dr. Y. Lokeswara Choudary
Asst.Professor& Research Supervisor
SRM B-School, SRM University, Vadapalani, Chennai
Dinesh Doha,
Research Scholar, SRM B-School, SRM University, Chennai
“The fruit of SILENCE is Prayer- The fruit of
PRAYER is Faith
The fruit of FAITH is Love- The fruit of LOVE is
Service
The fruit of SERVICE is Peace.”
2.47 million people in India are estimated to be HIV
positive. India is one of the four countries worldwide
where polio has not as yet been successfully eradicated
and one third of the world’s tuberculosis cases are in India
.According to the World Health Organization 900,000
Indians die each year from drinking contaminated water
and breathing in polluted air . As India grapples with
these basic issues, new challenges are emerging for
example there is a rise in chronic adult diseases such as
cardiovascular illnesses and diabetes as a consequence
of changing lifestyles .There are vast disparities in
people’s health even among the different states across
the country largely attributed to the resource allocation
by the state governments where some states have been
more successful than others. Better efforts are needed
by the local governments to ensure that the health
services provided are actually reaching the poor in
worst-affected areas. In the era of globalization all the
services are delegated to the private organisations. Like
many other basic service Health care facilities are also
taken up by both private as well as public sector. Health
care facilities provided by private sector vary.
1. Introduction
Health Care in India has can be traced back nearly
3500 years. From the early days of Indian history the
Ayurvedic tradition of medicine has been practiced.
During the rule of Emperor Ashoka Maurya (third
century B.C.E.), schools of learning in the healing
arts were created. Many valuable herbs and medicinal
combinations were created. Even today many of these
continue to be used. During his reign there is speculation
that it was attempted for the state to provide health care
to all of its citizens.
Healthcare in India is the responsibility of constituent
states and territories of India. The Constitution charges
every state with “raising of the level of nutrition and the
standard of living of its people and the improvement
of public health as among its primary duties”. The
National Health Policy was endorsed by the Parliament
of India in 1983 and updated in 2002 .Although India
has eradicated mass famines, half of children in India
are underweight, one of the highest rates in the world
and nearly double the rate of Sub-Saharan Africa. Water
supply and sanitation in India continue to be abysmal;
only one of three Indians has access to improved
sanitation facilities such as toilet. India’s HIV/AIDS
epidemic is a growing threat. Cholera epidemics are not
unknown. The maternal mortality in India is the second
highest in the world.
2. Salient features of healthcare in India
Providing healthcare and disease prevention to India’s
growing population of more than a billion people
becomes challenging in the face of depleting resources.
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•
Changes in demographic with nuclear families
spring up in ever large numbers leading to
more awareness in health related problems.
•
There has been increase in various disease
owning to the life style of the people.
•
Increase in population from 1 billion to 1.2
billion will lead to increase in number of
treatment from 1.6 bn to 1.9 bn.
•
There has been increase spending power and
higher disposable income in personal health by
the people.
•
The no of beds is dismally low in India,
multi-specialty private hospitals, characterized by
professional management, state-of-the art equipment
and world class specialists.
currently at 1.5 beds per ‘000 population as
against the world average of 3.3. There are
currently 105 million beds in the country, and
there will be a need for additional 75 million
in 10 years. This will be driven by the need
to expand the number of tertiary beds by over
50% to 150 million beds.
•
India’s healthcare industry is currently growing
at 17% annually. The growth is being propelled
by an increasingly middle-income group of
100 million who are seeking and willing to pay
for a higher standard of healthcare.
•
The entry of private insurance companies
into India market is expected to transform the
healthcare landscape in India increasing the
customer base by including people of middle
and rural population. At present only 0.25%
of the Indian population is covered by medical
insurance in any form. It is stated to grow 5
times in the next 6 years.
•
There has been increase in health awareness
due to easy access to information through
varied media.
Equipment: Foreign manufacturers with extensive
service networks (GE, Phillips, Hitachi, Siemens)
dominate the high end of the equipment market. Indian
manufacturers are producing higher quality medium
tech equipment, though local products maintain the
stigma of unreliability. The price of imported equipment
is bloated by the combination of steep duty tariffs
(between from 40-50%) and the weak rupee.
Education and Training: In 1998 – 99 there were
162 Medical Colleges in India. With over 498,689
doctors and 565,696 nurses there is a tremendous stock
of intellectual capital in Indian healthcare (source:
OPPI, 1998-99 estimates) but there is a pressing
need for qualified, specialist nurses. Several private
hospitals have invested in nurse education, but are
concerned about loyalty: trained nurses often leave
India, attracted by the higher wages offered in the Gulf
countries. Specialist nurse training will become vital as
the number of specialty and multi-specialty hospitals
increases. Doctors in India are inclined towards UK
medical processes and accreditation bodies such as the
Royal Colleges. While private hospitals are attracting
the most qualified individuals, entrepreneurial doctors
have set up their own private clinics or nursing homes
in addition to their hospital work.
3. Features of the Indian Health Care Market
Size of the Market: Government-run hospitals and
those operated by charitable organizations were the
main providers of subsidized healthcare until the
early 1980s. However, the last decade has seen the
mushrooming of corporate and privately run hospitals
both small hospitals (popularly called nursing homes,
which typically have 4 – 50 beds) and large. Most large
trust and corporate hospitals have invested in modern
equipment and focus on super-specialties.
Management Information: Indian healthcare is
plagued by a lack of standardization and accreditation,
highlighting the need for information management
expertise. This nebulous aspect of the market covers
a variety of sectors including public health, insurance,
hospital management, clinical research and clinical
trials. Information Technology, a core competence of the
western and southern regions, facilitates management
of information.
4. Key Market Characteristics
Hospitals: These doctors have lacked the funding
and management skills necessary to establish large,
private multi and super-specialty hospitals. Interest
rates on such projects have been prohibitively high and
exchange rate exposure has limited foreign investment
in hospital construction. Recently, the Apollo Group
has succeeded in developing a chain of high quality,
Healthcare services: Two services that are desperately
needed in India are emergency medical services (EMS)
and clinical waste management. In both cases there is
willingness for the private and public sectors to work
together to implement effective systems.
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Insurance: Insurance will drive quality consciousness
and increase demand for better standards, accreditation
and patient/management information systems.
Corporations will be the first to subscribe to private
insurance schemes, developing the market for third
party administration of insurance packages. The
major international players will establish networks of
affiliated hospitals and may seek direct involvement
in the development of new facilities, especially costeffective diagnostic centres.
was necessary to incorporate marketing as an integral
function in the hospital operations. But the major
argument at that time lay in understanding whether
this professional orientation was really required for its
viability, profitability and sustainability. This argument
however became favorable in the late nineties as
corporate companies like Wockhard and Max India
started venturing into the hospital industry, apart from
the ongoing mergers and acquisitions that were already
taking place at that time.
Pharmaceuticals: India became a member of the WTO
in January 1995 when it agreed to amend its patent laws
to grant product patents. However a 10-year concession
has been granted, which means that process patents will
continue to be recognized until 2005.
7. Categorisation of the Health Care Industry
The Health Care industry is mainly classified into two
main heads.
•
Social
•
Commercial
5. Different types of health care services
available in India
•
•
•
•
•
•
•
•
•
•
•
•
Social marketing: This relates to areas of family
planning, child immunization and health and family
welfare, AIDS etc., mostly carried out by the
Government and some NGOs. Mass communication
media like TV, print media, cinema, transit advertising,
direct mail scheme etc. and personal communication
are used in promoting these services.
Hospitals
Pathology Clinics
Blood Banks
Meditation Centres
Emergency services like Ambulances, etc.
Online Medical Services
Telemedicine
Naturopathy
Yoga Centres
Fitness Centres
Laughter Clubs
Health Spas
Commercial marketing: According to the law,
hospitals cannot advertise their services but can do
advertisement with some social message. Competition
has forced the private hospitals to take up advertising
in print media, encouraging people to take preventive
healthcare by having regular check-ups, etc.
In the Constitution of India, health is a state subject.
Central govt’s intervention to assist the state govt is
needed in the areas of control and eradication of major
communicable and non-communicable diseases, policy
formulation, international health, medical & paramedical education along with regulatory measures, drug
control and prevention of food adulteration, besides
activities concerning the containment of population
growth including safe motherhood, child survival and
immunization programme.
Several schemes such as medical insurance policies by
the GIC, Oriental Insurance, LIC etc. have also been
promoted during the last decade.
8. Marketing Mix Variables for Hospitals
Quality Level: When we talk about marketing
hospitals, it is very natural that we are very particular
to manage our services in the right fashion. Supportive
services play an important role in improving the quality
of Medicare. These services, which include laboratory,
blood-banks, catering, radiology and laundry, in a true
sense determine the quality of services made available
by medical and para-medical personnel.
6. Marketing in Hospitals
‘Marketing in unethical’ was the frequent refrain in
the eighties, when very few hospitals realized that it
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Accessories: This is a very good way of segmenting
customers. Many hospitals provide additional services
such as catering, laundry, yoga sessions, cafeterias etc.
for customers (patients) who are willing to pay extra.
Hospitals have different wards – General and Special.
Packaging : This is the bundling of many services into
the core service E.g. Apollo hospital offers a full health
check-up to patients. Similarly other hospitals also offer
package deals for health check-ups.
•
Product line : Hospitals offer patients services catering
to a wide range of customer needs.
Brand name: The hospitals use a brand name to
differentiate themselves and their services from others.
The intangibility factor of the service makes it all the
more important for them to do so.
•
9. Medical Insurance
Opening of the Insurance Sector: Consultants,
Financiers and Insurance Agencies stand to benefit
from this boom. The insurers will use PPOs, which
will grow into HMOs, to assume insurance risks on the
clients’ behalf. Medical equipment, medical software
and hospitals will see the biggest boom. Apart from
starting insurance by corporate hospitals, for example
government of Tamil Nadu signed up private Health
Insurance company to provide quality health care to the
people below poverty.
•
Medical Equipment: All the surgical equipment
required in this field also contributes a lot to the
healthcare industry. Although it forms an inseparable
part of this industry, it is not a service but a product.
These products sometimes are so expensive to install
or maintain that it gives rise to other services in the
healthcare industry. This kind of service includes
pathological laboratories, blood banks, organ banks
etc. Since all the hospitals or small clinics and nursing
homes cannot afford to purchase such expansive
equipment, they outsource these services.
10. Suggestions for improving health care in
India
•
Setting New Hospital: Going through the
huge variation in demand & supply of hospital
108
and growing trend in the industry, there is
need of setting of new hospitals, particularly
in B class cities. According to a World Health
Organization report, India needs to add 80,000
hospital beds each year for the next five years
to meet the demands of its population.
Tapping the middle income group : The
current growth in the healthcare segment is on
account of increasing number of middle class
population of 100 million who are seeking
and willing to pay for a higher standard of
healthcare. Thus alliance with private national
insurance company can serve a tap the middleincome group.
Tie-ups: Alliance with small nursing homes
can be undertaken, where in the technology
and expertise of the tertiary hospital will be
shared with small nursing homes. Tie-ups
with existing nursing homes are a less capitalintensive strategy for tertiary hospital as well it
benefits small nursing homes.
Customer Awareness: Since the service
product is intangible more stress must be made
to make customer aware of the service product
in order to change the perception of the public
with regard to the services that are available to
them.
a. This includes a customer
education about the various
diseases treatment available,
treatment cost, profile of doctors
and other related information
should be made. Well-informed
patients will work as watchdog,
leading Hospital to improve upon
its services.
b. Organizing programmes and
awareness campaigns in the
community as well as updating
the general practitioners about
contemporary developments and
advancements in the different
aspect of healthcare, who can
really bridge the gap between
the patients treatment needs and
providers available service range.
Setting Clinics: Setting a number of satellite centres
connected to a common hub (tertiary care hospital)
called Hub and spoke model can be preferred as a
solution to make healthcare easy and accessible to the
vast and diverse Indian population. The hub and spoke
model offers great opportunity for vastly improving
quality care.
situation. International organizations like world health
organization and World Bank emphasis government to
consolidate the program with a tighter geographic focus
on the poorer states.The Bank’s work also emphasizes
the strengthening of governance in health systems,
and the monitoring and evaluations of outcomes. They
currently collaborate with the government to improve
governance and capacity in the Ministry of Health
and Family Welfare’s focal unit for health sector
procurement. There are different types of health care
facilities are provided by the private sector. Private
sector’s effective marketing strategies attracting
customers to utilize the services. Unlike other sectors
Health services have to go long way to provide effective
service delivery.
11. Conclusion
Even though Health sector is emerging in India, still
quality health care for all is distant dream. India is a
place where frequent outbreak of epidemic disease
is common. During that time, government is not in a
position tackle the situation. When situation arises,
private sectors are also not in a position to tackle the
109
The Impact of FDI in Retail, More Advantageous
Rabi Jayakumar
Retail Consultant
1. Introduction
According to the latest data released by Department
of Policy and Promotion (DIPP) the India achieved a
substantial 85% increase in FDI flows in calendar year
2008—the highest increase across all countries—even
as global flows declined by 14.5 per cent.
Amidst today’s time of fierce competition and a quest
to achieve and enhance a substantial level of economic
and social development; each and every nation is trying
to liberalize its economic policies in order to attract
investments from domestic & International players
across the globe. Consequently, people with generous
reserves of funds, all around the globe, are expanding
their wings and seeking opportunities of investing in
different spheres of this lucrative market. The advent
of FDI in India was witnessed during the end of 1990’s
when the Indian national government announced a
number of reforms which aimed at helping in the
process of liberalization and deregulation of the Indian
economy.
Needless to say, but FDI inflows has evidently proved to
be very advantageous for the overall development of the
Indian economy and inter alia has resulted in increased
capital flow, improved technology, notable management
expertise and favorable access to international markets.
Now coming to the captioned topic of FDI in the
Indian retail sector, it is submitted that the scenario of
the same is kind of depressing and unappealing, since
despite the ongoing wave of incessant liberalization
and globalization, the Indian retail sector is still aloof
from progressive and ostentatious development. This
dismal situation of the retail sector undoubtedly stems
from the absence of an FDI encouraging policy in
the Indian retail sector. However, it needs to be noted
here that unfortunately this dismal situation is there to
exist, especially in the light of the recent developments
– in terms of the abrupt change in the ideology of the
political parties.
Since its inception there has been a remarkable surge in
the FDI inflows in the country. The total amount of FDI
in India came to around US$ 42.3 billion in 2001, in
2002 this figure stood at US$ 54.1 billion, in 2003 this
figure came to US$ 75.4 billion, and in 2004 this figure
increased to US$ 113 billion. This shows that the flow
of foreign direct investment in India has grown at a very
rapid pace over the last few years.
2. Salient Features of Indian Market
Key Developments
Yesterday
Today
Largest democracy, Stable Govt
Protected market
Resilient Economy even during
global crisis
Dominant Private sector
Small consumer markets
Opening up sectors for investment
Robust banking sector; Capital
markets
Underdeveloped infrastructure
Promising consumer markets, with
8-9 % GDP
World class IT & telecom
infrastructure
One of the fastest growing
economies
Investment in infrastructure
development
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The key Growth primarily driven by the strong domestic
market with domestic savings rate at more than 35%,
India projected to be the 5th largest consumer market
by 2025, worth over USD 1,500 Bn – CAGR of 7.3%
(Source: McKinsey Institute)
resources of banks. Inflation has been under strict
control and is currently hovering around 5 per cent.
Import duties are being increasingly brought down.
Currently, these are around 15 per cent, down from a
high of over 130 per cent only a decade earlier.
3. Reforms and consumerism
India is being sought after as a major destination by
international retailers. Even China which until recently
was greatly favored, is now occupying a back seat
compared to India. Availability of resources, adequate
skilled labor at competitive cost, increased purchasing
power, the bulging of the middle income group
with disposable incomes, reduced transaction costs,
improving rural economy helping to create a surge in
demand for all goods and certainly demanding FDI,
Indian Consumers remain most upbeat in the world
despite food price concern at home and improving
outlook elsewhere, India registered 129 points in the
latest Nielson Global consumer confidence survey
Economic reforms have increased the spending power
of the middle-income group which is growing bigger
day by day. Consequently, purchasing power is on a
high with malls, department stores, discount stores, all
springing up in various parts of the country.
The consumer today demands value for money. Quality
is of prime importance and the consumer is prepared to
pay a price for it. Privatization has become a bye-word
today in the economy of the country. Cheap loans are
being made available to meet the basic needs of shelter.
The demand for these loans has outstripped available
Consumer Confidence Index - 2010
Country
Points
India
129
Indonesia
119
Vietnam
119
Philippines
113
China
103
Brazil
108
Russia
88
US
87
UK
78
Egypt
78
Spain
69
Japan
55
Lithunia
52
World Average
93
69% of Indian Consumers think that India has
not gone under a recession
92% of Indians are optimistic about their job
prospects in next 12 months
85% of Indians consider their state of finance in
coming year is good or excellent
59% of Indian consumers think that this is the
right time to buy.
63% of Indian put their spare cash in savings
48% love to invest in Stocks and MF
36% spend on technology products
34% love to spend on new clothes
29% spend on home improvements
30% will pay of debts.
The number of shopping malls cropping up across India
has made you wonder where they will find shoppers
and tenants. The fact is mall culture is still in nascent
stages in the country when compared to developed and
other developing countries. According to a study done
by Asiapac, a Bangalore based real estate development
consultancy, only the country’s largest 12 malls qualify
as regional malls (5 – 11.2 Lakh Sq.Ft) while Australia
has 75 regional malls besides 15 super malls. Clearly
there is room for hundreds of more mega malls as
country continues its drive to become a super power
economy with a huge middle class market.
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4. Modus operandi on Foreign Direct
Investment In Retail
Retail trade reforms still continue to be in a limbo,
nearly seven years after the first report, commissioned
by the Department of Consumer Welfare, recommended
that permitting entry of foreign direct investment in
the sector would result in a win-win outcome for all
stakeholders. The conclusion was reinforced by another
study by ICRIER, done for the Department of Industrial
Policy and Promotion (DIPP). These findings, based on
a scientific and unbiased primary enquiry, should have
been enough to convince even the biggest skeptics of the
need for retail reforms. Yet, the government is unable to
muster the political will to liberalize FDI in multi-brand
retail, even as it assures all our foreign partners that the
reform is just round the corner.
Importantly, there is a complete ban on foreign
investment in multi-brand, front-end retail. This has
resulted in keeping all the giant corporate – backed
retailers of the world like Wal-Mart (USA), Carrefour
(France), Tesco (UK), and Metro (Germany), who
are very keen to foray into India’s retail sector, away
from entering into the country. All of these retailers,
therefore, to make their presence felt in the country,
have either tied-up or trying to tie-up with local
corporate, to offer their services for back-end operations
like sourcing, logistics, inventory management, among
others, for front-end, multi-brand retail operations of
such corporate. The retail industry in India is of late
often being hailed as one of the sunrise sectors in the
economy. AT Kearney, the well-known international
management consultancy, recently identified India as
the ‘second most attractive retail destination’ globally
from among thirty emergent markets. It has made India
the cause of a good deal of excitement and the cynosure
of many foreign investors’ eyes. With a contribution
of an overwhelming 14% to the national GDP and
employing 7% of the total workforce (only agriculture
employs more) in the country, the retail industry is
definitely one of the pillars of the Indian economy.
5. Opposing Will Never Work
Those who oppose the reform must understand that they
are standing in the way of India’s progress. The country
cannot achieve its desired rate of growth while being
shackled by a backward trading sector characterized
by low productivity, obsolete processes, technological
stagnation, unacceptable employment conditions and
multiple layers of intermediation that lack transparency
in price formation.
By contributing to the relatively high prices of wage
goods like food grains, vegetables and daily necessities
of life, a backward retail trade sector prevents India
from achieving higher rates of economic growth while
maintaining price stability, an outcome that China has
managed by rapidly modernizing its trading practices.
The emotive argument made in favour of retaining the
status quo is that the small trader, the owners of kirana
stores and street vendors and hawkers would fade out
shortly, which is nothing but a myth stopping India’s
aggressive growth.
According to the Investment Commission of India, the
retail sector is expected to grow almost three times its
current levels to $660 billion by 2015. It is expected
that India will be among the top 5 retail markets then.
The organized sector is expected to grow to $100 bn
and account for 12-15% of retail sales by 2015.
There is certainly a lucrative opportunity for foreign
players to enter the Indian terrain. Growth rates of
the industry both in the past and those expected for
the next decade coupled with the changing consumer
trends such as increased use of credit cards, brand
consciousness, and the growth of population under the
age of 35 are factors that encourage a foreign player to
establish outlets in India. However, it is not out of place
to mention here that the government policies towards
FDI are the only hindering factors that do not make way
for foreign players.
6. Big, Small Can Co-Exist
With economic growth of 9% per annum, the size of
the retail sector would be more than double every eight
years. This will surely leave more than enough space for
the growth for the modern and self-organized retailers.
In fact, it should be clear that mom and pop stores will
not be able to meet the needs of a rapidly growing
economy and this will result in a severe bottleneck, as
urbanization gathers pace and the burgeoning middle
112
class demands greater convenience and minimal time
and effort to meet its basic consumption needs. The
present estimates are that the market share of modern
retail will increase from a merely 4% now to 16% in
20 years later, the remaining 84% share that will still
remain with the kirana stores will amount to a business
output of no less than $800 billion.
down to them. On a survey conducted across 8 Cities
in India among traditional retailers, we have found that
they have several start up barriers which is confining
them to realign to fierce competition which is round the
corner.
Start up barriers for Unorganized Retailers
Base Respondent
1001
Lack of funds
14%
Despite the fact 100% FDI is allowed or not MNC would
exist in Indian market probably with different business
arrangements with local partners. Such as Walmart with
Bharati and Carrefour with Future Group
Not Sure, if the idea will
click in saturated Mkt
14%
Involves far too much risk
10%
Happy continuing the same
job
Having no interest in
turning big
Without the colored glasses of ideology and of shortterm vested interests, it is clear that both the modern
and self-organized sectors can happily co-exist and
generate synergies that would enhance both producer
and consumer welfare. The consumers, unanimously,
want both formats to develop to take advantage of
the distinct advantages that the two formats such as
Organized and Unorganized can offer.
The smaller producers of non-branded manufactured
goods will gain because large retailers contract them to
improve their bargaining position vis-à-vis established
brands and improve their margins. Empirical studies
reveal that farmers get up to 25% higher for their output
when supplying directly to retail chains.
10%
8%
Gestation time - Time
taken for execution
8%
Time taken for Break-even
8%
Lack of experience
7%
Not viable in shaky
economic environment
7%
Sole earning business / No
back up
7%
No Mentor
Total
7%
100%
8. Benefit to Producers
7. Should small stores fade out?
Moreover, large retailers critically dependent on
assured and timely supplies of fresh farm products that
meet minimum standards will introduce new seeds and
processes to the farmers and attract investments in postharvest logistics and supply chains. Thus, modernizing
the retail trade will directly result in modernization of
the agriculture sector and give our poor farmers the
opportunity to improve yields and incomes.
This is the million dollar question to which everyone
almost always thinks the answer is a straight yes. I
think there is scope for a counter argument to this. The
answer is also likely to vary by category – while luxury
categories (which most kirana stores do not operate in)
may expand the market, specific categories may see
consolidation such as electronics Retailing and Grocery
Retailing.
Today at least $25 billion worth of agriculture
produce is wasted because of poor handling and lack
of post-harvest processing. Even if half of this is saved it
would represent major value addition and employment
generation.
While organized retail will likely bring differentiation
with their marketing investment, they will still likely
have to provide competitive service and prices that
appeal to the same segment of the population that will
shop at the traditional retailers as well. Who may gain
are the farmers and end consumers, who are likely to
see some of the benefit of the disintermediation trickle
We can ensure that local farmers and producers do not
suffer by making it incumbent on retailers to procure
113
a given share of their supplies from local farmers
and producers. And farmers could be encouraged
to get into cooperative organizations for achieving
better bargaining outcomes when negotiating with the
retailers.
before it starts harming them unless Traditional retailers
revamp themselves. Our society will develop in existing
localities and in new suburbs. In the existing localities,
the infrastructure that small retailers enjoy cannot
be duplicated by the modern retailers and therefore
new retailers will have to develop cooperation and
collaboration with the existing kirana’s.
9. Modernizing retail in India cannot be
interrupted
With rising aspiration of the youth, new mindset and
attitude, our entrepreneurial drive has already unleashed
the beginning of a new consumption drive. This drive
demands new products, new services, alternate uses
and myriad of desires. The assortment required to fulfill
these desires cannot be fitted into a small 500-800 sq ft
store. Somebody within the supply chain has to meet
these demands now and in the future. The process
of modernizing retail cannot be interrupted in India
anymore. The question to ask is how we modernize,
who will bring in the capital to modernize and how will
the small shops in the current eco system participate in
the consumption drive of modern Indians. Sustained
capital infusion, expertise in managing modern retail,
building the business from scratch and nurturing it to
grow to a scale over a 15-25 years period are essential
to build and grow modern retail in India. India can
achieve high growth only if modern retail is 30-40% of
the retail sector and becomes a primary driver of growth
and consumption. Even with such high penetration,
large modern retail companies may not get into cities
and towns of less than half a million population. The
size and scale of consumers required for modern retail
to survive does not exist in the smaller towns. Therefore
the question is not whether we need to allow modern
retail to grow, or the current retailers to modernize, but
how to allow flow of capital to help modernize retail.
We need to create a level playing field for every new
business, small or big to enter the retail industry. This
will take away the need to distinguish between Indian
and foreign or big and small. The impact of small and
big, Indian or foreigner on the small shops will be the
same. Allowing foreign investors will not only help
investment in the front end but also all through the
supply chain. We should open up the industry at the
earliest so that modern retail can support development
of the total retail eco system. Modern retail will help
and support the small stores in the next 15-20 years
By delaying modernizing of retail and not allowing FDI
to flow in, we are actually hurting the small retailers. We
require many more players and large capital infusion to
meet the growing needs of modern Indian Retail. 10. Will Retail FDI harm the Regional Players
Certainly no, take a look at the sheer size and volume
of the sector. Total retail business is near Rs 12,00,000
crore, 40 million of our workforce is engaged in Retail
sector, It is estimated there are 15 million retail outlets
in this country accounting for the highest retail outlet
density in the world. Only 4% of our retail outlets have
larger than 500 sq feet area. Food constitutes 70% of
retail sector, eventually three out every 10 men in the
city work in retail sector, these 40 Million labors has
mediocre education with no big pay packets hence they
deserve a fair deal which would be provided by large
retailers who could offer better jobs with lower prices
and inflation.
11. Uniqueness of Indian Retail
As India enters its second phase of organized retailing,
it is interesting to take stock of first phase learning’s.
Organized retailing in India took off with great gusto in
the early 2000. Capital markets and large business houses
saw immense potential in retail as less than 4% of the
trade was organized. Capital markets gave astronomical
valuations to retail businesses, developers started
creating malls everywhere, the best in the industry was
lured away offering double of what they were earning
earlier, and those who had international exposure of
developed retail markets could demand any price. So what has changed in The Second Phase? Why have
malls started struggling? According to estimates only
about half the retailers in merely 10 of the 200-odd malls
make money. Why did India’s first mall in South Mumbai
shut down? Why are some key retailers deserting
malls? Why are the valuations not robust anymore? 114
The answer lies in one simple word, ‘execution’ The
2006, suggested that 49% FDI be allowed in the Indian
retailer-developer-capital markets combine, decided to
retail sector without any restrictions on the number of
use fixed benchmarks — those of the developed western
outlets or location of stores.
markets. So the retailers copied the strategies and operating
procedures of successful international retailers, the
The Indian retail boom and the Investment Commission’s
developers planned their pricing based on international
suggestions renewed the debate on the issue of allowing
sales and the analysts merely took international growth
FDI in the retail sector. The Commission opined that
stories and valued Indian brands accordingly. While
that foreign investment would help in improving the
doing all this, industry ignored one basic element of
retail and Supply chain infrastructure. Ultimately, the
the chain — the consumer, his usage and attitudes, his
consumers would benefit due to the availability of more
affordability and most importantly his living conditions. product offerings, lower prices, and efficient service.
Likewise, there is much hype about tier- 2 and 3 towns.
Foreign retailers have to spend sizeable time in the
Smaller towns in the US fuel retail growth and so it was
domestic market to capture their market share, before
believed that the same would apply for India. There was
that if Regional and Unorganized players should equip
utter disregard to the consumption patterns, propensity
themselves for the competition there is no question of
to spend, income levels, and socio-economic indicators
death or fading out from business; there will only co-
for the city/area. We now have the experience to script
existence for sure.
a truly successful story for the Indian retail industry.
Clearly, the rules need to be different now. We must
13. Employment generation through FDI
understand the hugely heterogeneous Indian customers
The FDI will help to overcome both – the lack of
completely — their tastes, preferences, mindsets,
experience in organized retailing as well as lack of
regional sensitivities, weather conditions, propensity
trained manpower. FDI in retail would reduce cost of
to spend, their socio-economic outlook etc. The Indian
intermediation and entail setting up of integrated supply
market is very unique, especially so during this phase
chains that would minimize wastage, give producers a
of rapid economic growth. To be successful here,
better price and benefit both producers and consumers.
primary understanding on consumer behavior plays a
From the stand point of consumers, organized retailing
major role which would take lot of time for MNC to
would help reduce the problem of adulteration, short
adapt and execute, within this time frame the regional
weighing and substandard goods.
and traditional players have to ensure they adapt to the
Moreover, it is submitted that in the fierce battle between
momentum
the advocators and antagonist of unrestrained FDI flows
in the Indian retail sector, the interests of the consumers
12. Retail Makeover
have been blatantly and utterly disregarded. From this
It is to be noted that lately there has been an remarkable
point of view, it can inter alia be concluded that the
surge in the demand for the liberalization of the Indian
interest of the consumers should take precedence over
retail sector both in domestic and as well as at the
the interest of the retailer and consequently healthy flow
international front and it seems that the government
of FDI in retail should be permitted. is giving the matter a very pensive and careful
Further, it would be worthwhile to list down certain
consideration. Some of the factors that have contributed
advantages from the point of view of consumers
to this trend are the evident profits in the ever growing
which will inevitably flow from the establishment and
but conserved Indian retails sector, reduction in tariff,
development of larger stores and supermarkets:
cheaper real time communications, and cheaper
transport. In wake of relentless protests for the opening
14. FDI in Retailing – Isn’t a need of the hour
up of the Indian retail market for the reception of
India is targeting for its GDP to growth of 8% to 10%
unrestrained FDI, the Investment Commission in July,
per year. This requires raising the rate of investment as
115
15. The sources and advantages in allowing
FDI in retail:
well as generating demand for locally produced goods.
1. To reduce gap between farm prices and final
retail prices through structural change in
distribution - Inflation control mechanism.
2. To acquire market-savvy, market-intelligent
and best management practices Provide an aid
to Indian agriculture to become lowest cost
source of farm produce.
3. India should focus on foreign investment
because strong trade base can prosper the
economy of India, to increase liquidity by the
way of foreign exchange reserves
FDI will not just provide access to larger financial
resources for investment in the retail sector but
simultaneously will rationally allow larger supermarkets,
which tend to become regional and national chains
– (i) to negotiate prices more aggressively with
manufacturers of consumer goods and thus pass on the
benefit to consumers; and (ii) to lay down better and
tighter quality standards and ensure that manufacturers
adhere to them. Apart from this, by allowing FDI in
retail trade, India will significantly flourish in terms of
quality standards and consumer expectations, since the
inflow of FDI in retail sector is bound to pull up the
quality standards and cost-competitiveness of Indian
producers in all the segments. It is therefore obvious
that we should not only permit but encourage FDI in
retail trade.
1. Only a few global firms possess proprietary
expertise in retail trade. They would not transfer
their expertise to local firms unless they were
allowed to operate in the domestic market.
2. The government needs FDI to meet its foreign
exchange requirements.
3. Only global retailers can satisfy the rising and
varied demands of Indian consumers.
Trade liberalization and improvement in communication
systems have increased opportunities for retailers to
buy their products from producers worldwide. Some
of the factors that have contributed to this trend are
the reduction in price, incentives provided to foreign
investment, cheaper real time communications, and
cheaper transport.
16. Legal Implication on FDI in retail
1. Post-investment protection to Retail
companies.
2. Protection of all material and intellectual
property of the company
3. Independent and binding disputes settlement
mechanisms
4. The right of the company to determine its own
ownership structure and provisions on legal,
regulatory and administrative transparency
17. Beneficial or Detrimental
Reiterating the Indian Council of Research in
International Economic Relations (ICRIER), projections
that worth of Indian retail sector to reach $496 billion
by 2011-12 and ICRIER has also come to conclusion
that investment of ‘big’ money (large corporates and
FDI) in the retail sector would in the long run not
harm interests of small or traditional retailers, hence it
can be safely concluded that allowing healthy FDI in the
retail sector would not only lead to a substantial surge in
the country’s GDP and overall economic development,
but would inter alia also help in integrating the Indian
retail market with that of the global retail market in
addition to providing not just employment but a better
paying employment, which the unorganized sector
(kirana and other small time retailing shops) have
undoubtedly failed to provide to the masses employed
in them.
Last decade has indeed witnessed tremendous growth
in Indian retail industry and has integrated our
Indian economy with the world. Retailing in India is
progressively inching its way toward becoming the
next boom industry. It has emerged as one of the most
dynamic and fast paced industries accounting for over
10% country’s GDP. This growth has become major
attraction for foreigners to enter in India.
The challenge to the retail on the other hand is the
requirement of heavy initial investments which leads to
difficulty in achieving break even and this is the reason
that many of these players have not tasted success so
far. However, the growing trend of the market, changes
in the lifestyle of consumer segment, increasing per
capita income and emerging technologies in operations
still promises success in the long run with achievement
116
of economies of scale. India is the fourth largest
economy as far as purchasing power is concerned just
behind, USA, Japan and China. Even though 25% of the
population lives below poverty line, India has a large
and growing middle-income group of over 300 million,
making it a strong emerging market.
elsewhere. Hence, both the consumers and the suppliers
would lose, while the profit margins of such retail
chains would go up. Our burecrats have to become
possibilitarian. No matter how dark things seem to be
or actually are, raise your sights and see possibilities always see them, for they’re always there.
18. Threats on Retail FDI
However, it can be said that the advantages of allowing
unrestrained FDI in the retail sector evidently outweigh
the disadvantages attached to it and the same can be
deduced from the examples of successful experiments in
countries like Thailand and China; where too the issue
of allowing FDI in the retail sector was first met with
incessant protests, but later turned out to be one of the
most promising political and economical decisions of
their governments and led not only to the commendable
rise in the level of employment but also led to the
enormous development of their country’s GDP. As the
Indian Retail Industry has come to a saturation point
to evolve consumer experiences hence it is the right
time for trying to do something beyond what we have
already mastered, otherwise failure is imminent. During
a recent study by American Express it is found that 8
out of 10 Indian consumers are willing to pay upto
11% more for products and services if the company
provided quality customer service, this shows the
sheer attitudinal change of Indian consumers in recent
past which open the window of possibility for Retail
FDI who are urging to show a difference in consumer
service & quality levels to domestic consumers. It is to
be noted that FDI in retail would undoubtedly enable
Indian Inc to integrate its economy with that of the
global economy. Achievement seems to be connected
with action. Successful economies keep moving. They
make mistakes, but they don’t quit.
1. Threat on unorganized retail players – It
remains as a threat definitely regional players
would coexist; they would die only when they
don’t adapt to the competition which may also
lead to Marginalizing.
2. Huge spread of retail chain stores – The
financial strength would equip the MNC to
negotiate best retail properties which may
shoot up the real estate prices
3. Monopoly among suppliers - The suppliers
may become monopolist in supplying their
brands / goods to respective retailers because
they provide huge margin to suppliers to enjoy
monopoly displacing domestic players
19. Conclusion
It is submitted that the antagonists of FDI in retail sector
oppose the same on various grounds, like, that the entry
of large global retailers such as Wal-Mart etc would kill
local shops and millions of jobs, since the unorganized
retail sector employs an enormous percentage of
Indian population after the agriculture sector; secondly
that the global retailers would conspire and exercise
monopolistic power to raise prices and monopolistic
(big buying) power to reduce the prices received by
the suppliers; thirdly, it would lead to asymmetrical
growth in cities, causing discontent and social tension
117
A Study of Paradigm Shift in Management of Capital in Flows
in Indian Financial System In The Post Liberalization Era
Anli Suresh,
Asst. Professor, Madras Christian College – India
1. Introduction
as it allowed assessing whether the increase in capital
inflows influences new challenges, which in turn affect
monetary and exchange rate management.
In most of the period since the mid-1990s, external sector
developments in India have been marked by strong
capital inflows. Capital inflows, which were earlier
mainly confined to small scale official confessional
finance, gained momentum from the 1990s after the
initiation of economic reforms. As well as increasing
in size, capital inflows have undergone a compositional
shift from predominantly official and private debt
flows to non-debt-creating flows in the post-reform
period. Though capital inflows are generally seen to
be beneficial to an economy, a large surge over a short
span of time in excess of domestic absorptive capacity
can be a source of stress, leading to upward pressure
on the exchange rate, overheating of the economy and
possible asset price bubbles. This paper elaborates on
various aspects of capital inflows to India.
1.4 Hypothesis
The increase in capital inflows influences new
challenges, which in turn affect monetary and exchange
rate management.
2. Literature Review
1. The Indian economy is now a relatively open
economy, despite the capital account not being fully
open. The current account, as measured by the sum
of current receipts and current payments, amounted to
about 53 per cent of GDP in 2007-08, up from about
19 per cent of GDP in 1991. Similarly, on the capital
account, the sum of gross capital inflows and outflows
increased from 12 per cent of GDP in 1990-91 to around
64 per cent in 2007-08.i With this degree of openness,
developments in international markets are bound to
affect the Indian economy and policy makers have to
be vigilant in order to minimize the impact of adverse
international developments on the domestic economy.
1.1Statement of the problem
In India, capital inflows in the post liberalization period
increased sharply and have been well above the current
account deficit, which has largely remained modest. This
has posed new challenges for monetary and exchange
rate management. So the problem of this study is to
have an insight into the management of capital inflows
in India in the post liberalization era.
2. Whereas the Indian current account has been
opened fully, though gradually, over the 1990s, a more
calibrated approach has been followed to the opening
of the capital account and to opening up of the financial
sector. The evidence suggests that the greatest gains are
obtained from the opening to foreign direct investment,
followed by portfolio equity investment. The benefits
emanating from external debt flows have been found
to be more questionable until greater domestic financial
market development has taken place (Henry, 2007;
Prasad, Rajan and Subramanian, 2007) ii.
1.2 Objective of the study
•
To Study the composition of capital inflows in
India in the post liberalization era.
•
To study the capital inflows and exchange rate
management in the post liberalization era.
•
To study the capital inflows and monetary
management in the post liberalization era.
1.3 Methodology
3. The rate of increase in foreign exchange market
turnover in India between April 2004 and April 2007
was the highest amongst the 54 countries covered in
the latest Triennial Central Bank Survey of Foreign
The preliminary findings of this research, comprising
of a literature review, roundtable discussions and focus
groups. The analysis improved upon previous work
118
Exchange and Derivatives Market Activity conducted
by the Bank for International Settlements (BIS).
According to the survey, daily average turnover in India
jumped almost 5-fold from US $ 7 billion in April 2004
to US $ 34 billion in April 2007; the share of India in
global foreign exchange market turnover trebled from
0.3 per cent in April 2004 to 0.9 percent in April 2007 iii.
i
BIS Review 122/2008 Page No.1. ii Henry, Peter
Blair (2007), “Capital Account Liberalization: Theory,
Evidence, and Speculation”, Journal of Economic
Literature, Vol. XLV, December. - Prasad, Eswar S.,
Raghuram G. Rajan and Arvind Subramanian (2007),
“Foreign Capital and Economic Growth”, Brookings
Papers on Economic Activity, 1. iii Mohan (2007b),
“India’s Financial Sector Reforms: Fostering Growth
While Containing Risk”, Reserve Bank of India
Bulletin, December.
including short-term borrowings and deposits from
non-resident Indians (NRIs). As a result, the proportion
of short-term debt in India’s total external debt had
increased significantly by the late 1980s.
The third phase was marked by the balance of payments
crisis of 1991 and the initiation of the reform process.
The broad approach to reform in the external sector was
based on the recommendations made in the Report of
the High Level Committee on Balance of Payments
1991. The objectives of reform in the external sector
were conditioned by the need to correct the deficiencies
that had led to payment imbalances in 1991. Among
the components, since the 1990s, the broad approach
towards permitting foreign direct investment has been
through a dual route, i.e. automatic and discretionary,
with the ambit of the automatic route being progressively
enlarged to almost all the sectors, coupled with higher
sectored caps stipulated for such investments.
3.1. Historical backdrop
For the first four decades after independence in 1947,
the economic policies of the Indian government were
characterized by planning, control and regulation. Until
the 1980s, India’s development strategy was focused
on self-reliance and import substitution. There were
periodic attempts at market-oriented reform, usually
following balance of payments pressures, which
induced policy responses that combined exchange
rate depreciation and an easing of restrictions on
foreign capital inflows. However, these controls were
relatively an arrow in scope and had little impact on
actual inflows, which remained small. The situation
changed dramatically with the onset of reform programs
introduced in the early 1990s in the aftermath of the
balance of payments crisis of 1991. Broadly speaking,
India’s approach towards external capital flows can be
divided into three main phases.
Portfolio investments are restricted to institutional
investors. The approach to external commercial
borrowings has been one of prudence, with selfimposed ceilings on approvals and a careful monitoring
of the cost of raising funds as well as their end use. In
respect of NRI deposits, some modulation of inflows is
exercised through specification of interest rate ceilings
and maturity requirements. In respect of capital outflows,
the approach has been to facilitate direct overseas
investment through joint ventures and wholly owned
subsidiaries, and through the provision of financial
support to exports, especially project exports from
India. Ceilings on such outflows have been substantially
liberalized over time. The limits on remittances by
domestic individuals have also been eased. With the
progressive opening-up since the early 1990s, the
capital account in India today can be considered as
the most liberalized it has ever been since the late
1950s.The process of capital account liberalisation is
managed by keeping in view the elasticity of supply
and other responses in the economy, and vulnerabilities
or potential shocks. The issue is handled with extreme
caution given the potential for sudden capital reversals.
3.2 Composition of Capital inflows in India: Net
capital inflows, which increased from 2.2% of GDP
in 1990/91 to around 9% in 2007/08, do not, however,
In the first phase, starting at the time of independence
and spanning up to the early 1980s, India’s reliance on
external flows was mainly restricted to multilateral and
bilateral concessional finance.
In the second phase however, in the context of a
widening current account deficit during the 1980s,
India supplemented this traditional external source of
financing with recourse to external commercial loans,
119
reflect the true magnitude of capital inflows to India.
Gross capital inflows, as a percentage of GDP, have
undergone a more than fivefold increase from 7.2% in
1990/91 to 36.6% in 2007/08. Much of this increase has
been offset by corresponding capital outflows, largely
on account of foreign institutional investors’ (FIIs)
portfolio investment transactions, Indian investment
abroad and repayment of external borrowings. Capital
outflows increased from 5.0% of GDP in 1990/91
to 27.4% of GDP in 2007/08. The gross volume of
capital inflows amounted to $428.7 billion in 2007/08
as against an outflow of $320.7 billion. Strong capital
inflows to India in the recent period reflect the sustained
momentum in domestic economic activity, better
corporate performance, and the positive investment
climate, the long term view of India as an investment
destination, and favorable liquidity conditions and
interest rates in the global market. Apart from this, the
prevailing higher domestic interest rate along with a
higher and stable growth rate have created a lower risk
perception, which has attracted higher capital inflows.
The large excess of capital inflows over and above those
required to finance the current account deficit (which
is currently around 1.5% of GDP) resulted in reserve
accretion of $110.5 billion during 2007/08. India’s total
foreign exchange reserves were $308.4 billion as of
July 2008.
Figure3.1.Foreign Investment Inflows In The Indian Capital Market
in
FOREIGN INVESTMENT INFLOWS IN THE INDIAN CAPITAL MARKET (in US $ billion)
of $ US billions
900
800
700
600
500
400
Series1
300
200
100
0
SERIES 1
103
133
559
415
513
489
613
538
240
518
678
815
601
156
153
214
298
616
213
Source: Reserve Bank of India Economic Survey 2009-10.
3.3 Capital inflows and exchange rate
management
The importance of capital inflows in determining
exchange rate movements has increased considerably,
rendering some of the earlier guideposts of monetary
policy formulation. Capital inflows have been observed
to cause overshooting of exchange rates as market
participants act in concert while pricing information. In
the Indian case, notwithstanding the persistence of a large
trade deficit, capital inflows have led to appreciation of
the exchange rate, indicating the dominance of capital
inflows in determining exchange rate movements.
In India, with the gradual removal of restrictions on
international capital inflows and greater integration of
domestic with global financial markets, understanding
the precise nature of the causal relationship among
capital inflows, the exchange rate, interest rates and
reactions of monetary policy has certainly become
more complex. The response lag of the exchange rate
and domestic liquidity to monetary policy actions in
the form of direct intervention in the exchange market
as well as changes in the short-term policy rates has
important implications for the stability of foreign
exchange markets and external price competitiveness.
In India, since a market-determined exchange rate
system was set in place in March 1993, the exchange
rate has been largely determined by demand and supply
120
conditions in the market. Over the years, transactions in
the Indian foreign exchange market have experienced
tremendous growth. The increase in foreign exchange
market turnover in India between April 2004 and April
2007 was the highest amongst the 54 countries covered
in the Triennial Central Bank Survey of Foreign
Exchange and Derivatives Market Activity conducted
by the BIS in 2007. According to the survey, the daily
average turnover in India jumped almost fivefold from
$7 billion in April 2004 to $34 billion in April 2007,
whereas global turnover over the same period increased
by only 69%, from $1.9 trillion to $3.2 trillion.
Reflecting these trends, the share of India in global
foreign exchange market turnover trebled from 0.3% in
April 2004 to 0.9% in April 2007. The average daily
turnover in Indian foreign exchange market almost
doubled from $25.8 billion in 2006/07 to $48.0 billion
in 2007/08. Despite interventions by the Reserve Bank
in the face of large capital inflows, the exchange rate
in the recent period has been marked by significant
bidirectional movement, implying greater flexibility.
Figure3.2 Average Daily Volume Of Transactions In The Indian Forex Market
in of $ US billions
Source: Reserve Bank of India Economic Survey 2009-10.
3.3 Capital inflows and monetary management
which leads to withdrawal or injection of liquidity, as
the case may be. It aimed at neutralizing part or whole
of the monetary impact of foreign inflows is termed
sterilization. The non-market-based approach involves
the use of quantitative barriers, rules or restrictions on
market activity, which attempt to keep the potential
injection of liquidity outside the domestic financial
system. In the face of large capital inflows coupled with
a declining stock of government securities, the Reserve
Bank introduced a new instrument of sterilization, the
Market Stabilization Scheme (MSS) to sustain market
operations. Since its introduction in April 2004, the MSS
has served as a very useful instrument for medium-term
monetary and liquidity management. In recognition of
the cumulative and lagged effects of monetary policy,
pre-emptive monetary tightening measures have also
been put in effect since September 2004 and continued
during 2006/07, 2007/08 and 2008/09, in part to manage
monetary effects of excess capital inflows.
In the recent period, in India, one of the most serious
challenges to the conduct of monetary policy emerges
from capital inflows in view of their significantly higher
volatility as well as the fact that capital inflows in gross
terms are much higher than those in net terms. Swings in
capital inflows can have a significant impact on exchange
rates, domestic monetary and liquidity conditions and
overall macroeconomic and financial stability. In fact,
the Indian experience illustrates the tight link between
external sector management and domestic monetary
management. With a view to neutralizing the impact
of excess forex flows on account of a large capital
account surplus, the Reserve Bank has intervened
in the foreign exchange market at regular intervals.
Most techniques to offset the impact of forex inflows
can be classified as either market-based or non-market
based. The market-based approach involves financial
transactions between the central bank and the market,
121
Figure 3.3 Mss Operations (In billions of rupees)
MSS OPERATIONS (In billions of Rs)
MSS OPERATIONS (In billions of Rs)
Interest payments
Outstanding amount
1683.9
642.1
629.7
290.6
20.6
2004‐05
34.2
26.1
2005‐06
2006‐07
83.5
2007‐08
Source: Union Finance Accounts and budget documents 2009.
4. Conclusion
Foreign Exchange Risk. Kluwer Academic Press,
Norwell, MA.
Recent global developments have considerably
heightened the uncertainty surrounding the outlook for
capital inflows to India, complicating the conduct of
monetary policy and liquidity management. In view of
the strong fundamentals of the economy and massive
injections of liquidity by central banks in advanced
economies, there could be sustained inflows, as in the
recent past. Hence the study based on the hypothesis
that the increase in capital flows influences new
challenges, which in turn affect monetary and exchange
rate management is proved. The policy makers should
focus on this aspect in order to have sustainable financial
system in India.
Periodical Articles
3. Datar, M. K. and Basu, P. K. (2004), financial sector
Reforms in India: Some Institutional Imbalances,
Conference volume, AWBMMDC, Australia, and July.
4. Nagraj, R. (1996): “India’s Capital Market Growth,
Trends, Explanations and Evidence”, Economic and
Political Weekly, Spl. Number, September, pp. 2553-61.
Books
1. Ajit Singh (1998): “Liberalization, the stock market
and the market for corporate control: A bridge too far for
the Indian Economy”. In I.J.Ahluwalia and I.M.D Little
(Eds), India’s Economic Reforms and Development,
Oxford University Press, pp.169-191.
Reports
5. International Monetary Fund (2008a), “Global
Financial Stability Report”, October --- (2008b), “World
Economic Outlook”, October. (Mohan, 2007b)Mohan,
Rakesh (2006), “Coping With Liquidity Management
in India: A Practitioner’s View”, Reserve Bank of India
Bulletin, April. ---- (2007a), “Development of Financial
Markets in India”, Reserve Bank of India Bulletin,
June. ---- (2007b), “India’s Financial Sector Reforms:
Fostering Growth While Containing Risk”, Reserve
Bank of India Bulletin, December.
2. Jacque, L.L. (1996). Management and Control of
6. Reserve Bank of India Economic Survey 2009-10.
5. Bibliography
122
An Empirical Study-Consumers’ Prefernce Towards Unit
Linked Investment Plan (ULIP)
S. Arun Kumar, Assistant Professor,
R.Murali , II MBA, & S.Bharath, II MBA
Saranathan College of engineering, Trichy, Tamilnadu , India.
1. Introduction
in a family, the need and scope for life Insurance
operation has increased tremendously. Life Insurance
are not only best suited for the purpose of insuring the
life but also are capable of meeting future financial
challenges effectively. Hence, this study explores about
the customers’ perception and awareness level of Unit
Linked Insurance Policy (ULIP).
Insurance may be described as a social device to
reduce or eliminate risk of life and property. Under the
plan of insurance, a large number of people associate
themselves by sharing risk, attached to individual.
Unit Linked Insurance Plan (ULIP) provides for life
insurance where the policy value at any time varies
according to the value of the underlying assets at the
time. ULIP is life insurance solution that provides for
the benefits of protection and flexibility in investment.
The investment is denoted as units and is represented
by the value that it has attained called as Net Asset
Value (NAV).ULIP came into play in the 1960s and is
popular in many countries in the world. The reason that
is attributed to the wide spread popularity of ULIP is
because of the transparency and the flexibility which
it offers. As times progressed the plans were also
successfully mapped along with life insurance need to
retirement planning. In today’s times, ULIP provides
solutions for insurance planning, financial needs,
financial planning for children’s marriage planning etc.,
Unit Linked Insurance Plan - is a financial product that
offers you life insurance as well as an investment like a
mutual fund. Part of the premium you pay goes towards
the sum assured (amount you get in a life insurance
policy) and the balance will be invested in whichever
investments you desire - equity, fixed-return or a mixture
of both. In India Insurance Regulatory Development
Authority(IRDA) on the recent regulations 1st
September 2010 states that the following changes such
as Increasing cap on various charges, change in the lock
in period from 3 to 5 years and the assured return has
been stated as 4.5%.Hence there is a need to understand
the consumer perception.
3. Objectives of the Research
To study the demographic and rational profile of
customers of ULIP
To study the Customers’ Perception towards ULIP
To identify those factors which develops a favorable
opinion among consumers towards ULIP.
Conceptual Review
Unit Linked Insurance Policies [ULIP] was first offered
in the United States in 1976, [after being developed
and sold successfully in The Netherlands, England,
and Canada] in the name of Variable Life Insurance.
Basically it was a type of whole life insurance whose
values may vary directly with the performance of a set
of earmarked investments. A plan which gives complete
clarity about the various charges deducted and why it’s
being deducted and so how your fund will grow over
time. Unit Linked Insurance Policies (ULIPs) as an
investment avenue are closest to mutual funds in terms
of their structure and functioning. As is the case with
mutual funds, investors in ULIPs is allotted units by
the insurance company and a net asset value (NAV) is
declared for the same on a daily basis. Similarly ULIP
investors have the option of investing across various
schemes similar to the ones found in the mutual funds
domain, i.e. diversified equity funds, balanced funds
and debt funds to name a few. Generally speaking,
ULIPs can be termed as mutual fund schemes with
an insurance component. However it should not be
2. Problem Statement
With the increase in domestic savings and improvement
in awareness of value of life of the earning person
123
construed that barring the insurance element there is
nothing differentiating mutual funds from ULIPs.
half yearly or yearly. Out of the premium amounts,
deductions will be made towards Initial administrative
charges like, Investment management charges [there
will be an extra charge if the policyholder utilizes the
switch over (from equity to debt or debt to balance)
option], Annual administration charges, Risk cover and
the balance will be invested in a selected fund [debt or
equity or balance].
ULIPs are a category of goal-based financial solutions
that combine the safety of insurance protection with
wealth creation opportunities. In ULIPs, a part of the
investment goes towards providing you life cover.
The residual portion of the ULIP is invested in a fund
which in turn invests in stocks or bonds; the value
of investments alters with the performance of the
underlying fund opted by you. Simply to put in nutshell,
ULIPs are structured in such a way that the protection
element and the savings element are distinguishable,
and hence managed according to your specific needs. In
this way, the ULIP plan offers unprecedented flexibility
and transparency.
In case of death during the premium paying term or
the term of the policy, the sum assured [Rs.1 Lakh in
example] or value of policy fund, whichever is higher,
is paid to the beneficiaries. In case of survival up to
maturity, the value of the fund is paid out. The returns
on that day [maturity or death] on the plan depend
upon the performance of the market, be it equity or
debt. So if the fund value falls below amount invested on
that day, the policyholder will receive a lesser amount.
Hence one can see that the risk here is transferred to
the policyholder as nothing is guaranteed. The Net
Asset Value [NAV] will reflect the underlying value of
assets, which in turn is dependent on the movement of
the Sensex.
5. Working of ULIPs
It is critical that you understand how your money gets
invested once you purchase a ULIP: When you decide
the amount of premium to be paid and the amount of
life cover you want from the ULIP, the insurer deducts
some portion of the ULIP premium upfront. This portion
is known as the Premium Allocation charge, and varies
from product to product. The rest of the premium is
invested in the fund or mixture of funds chosen by you.
Mortality charges and ULIP administration charges
are thereafter deducted on a periodic (mostly monthly)
basis by cancellation of units, whereas the ULIP fund
management charges are adjusted from NAV on a daily
basis. Since the fund of your choice has an underlying
investment – either in equity or debt or a combination of
the two – your fund value will reflect the performance
of the underlying asset classes. At the time of maturity
of your plan, you are entitled to receive the fund value
as at the time of maturity. Unit linked plans provide
an opportunity for the discerning investor to benefit
from the return available in their capital market without
going for direct investments in capital market.
1.
Research Review:
2.
According to Agarwal(2010), ULIP helps to
manage the risk return profile. With the double advantage
of security and investment, ULIPs have become the
most popular insurance product from the available
range of life insurance policies. With a higher rate of
return, ULIPs gives tough competition to traditional
insurance products like endowment plans and money
back plans.The basic reason for opting for policies other
than the term insurance is ensuring highest maturity
value for invested sum besides mortality benefits. In
maturity value the important factors to be considered
is the internal rate of return (IRR) on investment. IRDA
has fixed 6% and 10% as the assumed rate of return
for projecting future benefits.The general rule for DebtEquity portfolio management in ULIPs is that you
should go conservative by increasing your investment
in debt when the markets are at their highest, very
unstable and likely to start falling any time. Vice versa
when the markets are very low and depressed. [1]
3.
Dipak Mondal (2010) The minimum sum
assured (life cover) in Ulips is five times and most
1.
Now many markets are offering these ULIPs
in children plans [ICICI Smart Kid policy] endowment
and retirement plans [LIC’S Forty Plus policy] also.
These plans give an option to the investor to choose
between three fund options – debt, equity, and balanced.
In these products, premiums can be paid quarterly,
124
policies offer cover between 5-10 times the annual
premium which has been the signaling factor for the
investors[2]
4.
Amar
ranu(2010),
leading
financial
conglomerate says that other market related products
lags behind ULIPs return by a larger margin in the long
term which confirms that investment in ULIPs are ideal
investment vehicle for wealth creation in long run.
ULIP score over other products in terms of returns and
additional benefits such as insurance cover. However it
scores below PPF as investment in ULIPs involves high
risks. [3]
5.
ULIPs are covered under sec 80(C), 10 10(D)
of IT Act, hence tax benefits up to a maximum of Rs.1,
00,000 investment can claimed in these plans.( Sanjay
Mathew,2010) [4]
6.
As per the news published on business line
on Monday, December 13, 2010 the changes made by
IRDA on ULIP includes the top-up premium. IRDA said
adding all limited premium ULIPs, other than single
premium products, shall have premium paying term of
at least five years. The premium has also gone up to
10 times of the year premium compared to existing 5
times. All ULIP pension or annuity products will offer
a minimum guaranteed return of 4.5% per annum or as
specified by the IRDA from time to time. [5]
7.
According to Suddhadeb Chakraborti(2010),
financial consultant and author discuss about the latest
amendments that it provides mortality health cover in
which it has been made mandatory to have Mortality
Health Cover for all ULIPS apart from Pension and
Annuity schemes. No partial withdrawal is available
under new ULIPS. This enables a person to stay invested
and hence protect his corpus. A guaranteed return of
4.5% has been announced to keep investors happy. [6]
125
Descriptive research is used. The sampling method is non probability purposive sampling. In that, the
sample is chosen so that a particular research purpose is served and is adequate for it. The sample is typical. The
sample size is 105 respondents. Content Validity which refers to the extent to which a measurement reflects the
specific intended domain of content. Reliability which refers to the confidence we can place on the measuring
instrument to give us the numeric value. If the same set of objects are measured again and again with the same or
comparable measuring instrument and the results obtained are the same or similar, then the measuring instrument is
said to be reliable. Pilot study was carried out were the draft questionnaire was eventually subjected to pilot testing
with a total of 30 consumers, and they were asked to comment on any perceived ambiguities, omissions or errors
concerning the draft questionnaire. The feedback received was rather ambiguous thus only minor changes were
made. For instance, technical jargon was rephrased to ensure clarity and simplicity. Data were collected by means
of a structured questionnaire, all the items were presented as statements on the questionnaire, with the same rating
scale used throughout, and measured on a five point Likert-type scale that varied from 1 = strongly disagree to 5 =
strongly agree. In the subsequent full-scale survey, data were collected from the insurance consumers who have ULIP
Transactions. The data collected will be analyzed and interpreted using statistical package for social sciences (SPSS).
Statistical tools used namely, Simple percentage analysis, Chi-square test and Factor analysis.
Results and Discussions:
Table: 1
Demographic Variables
Gender
Age
Qualification
Occupation
Income
Savings
Categories
Number of Respondents
Male
Female
18-25
71
34
14
26-35
46
36-55
Above56
33
12
12th
6
Graduate
Post Graduate
53
46
Government Service
Businessman
Private Company
Self Employed
Retired Person
Any other
Below 150000
150001-250000
250001-350000
20
11
62
2
9
1
29
36
20
350001-450000
More than 450000
Below 10000
10001-25000
25001-50000
50001-100000
More than 100000
13
7
37
32
16
15
5
126
Investment decision
Opinion about investment
How many times do you invest
in a year
Tax Saving
Good Returns
19
40
Better Future after Retirement
25
Wealth Creation
19
Any Other
2
Mutual Funds
28
Stocks and Shares
21
Insurance Schemes
41
Govt. Bonds and Securities
3
Post Office Schemes
Investment in Gold and Silver
Bank Deposits
1-2 times
3-5 times
5-10 times
2
3
7
57
37
11
7. KMO and Bartlett’s Test:
Bartlett’s test of sphericity indicates that whether the correlation matrix is an identity matrix which would indicate
that the variables are unrelated.
Table: 2
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Bartlett’s Test of
Sphericity
Approx. Chi-Square
.803
957.632
Df
300
Sig.
.000
The significance level (.000) gives the result of the test. Very small values (less than .05) indicate that there are
probably significant relationships among the variables. A value higher than about .10 or so may indicate that the data
are not suitable for factor analysis.
Table: 3
Communalities
Initial
Extraction
Investment Decision
1.000
.825
Opinion About Investment
1.000
.701
Preferably you would like to Invest in
1.000
.571
How many times do you invest in a year
1.000
.772
Insurance Products are susceptible to very low Risk
1.000
.748
Name the Insurance Company that come to your mind instantly
1.000
.695
Do you own an insurance policy with regard to ULIP
1.000
.761
Amount of risk involved in ULIP.
1.000
.784
Rate of Return is High?
1.000
.690
Extra Returns for Same Investment
1.000
.711
127
Tax Benefits are high
1.000
.671
Compulsory Investment
1.000
.506
Transmission
1.000
.637
Gaining and enriching Investment Knowledge
1.000
.676
Wealth Creation and Accumulation
1.000
.652
High Maturity Benefits
1.000
.589
Switching of Options within the fund
1.000
.764
Risk Coverage
1.000
.685
Benefits payable after death
1.000
.800
Partial Withdrawals
1.000
.780
Minimum Premium
1.000
.662
Surrender Options
1.000
.802
Recommendations from friends and relatives
1.000
.669
Life Coverage
Overall I will prefer to have ULIP for my investment, since I am overall satisfied
with it
1.000
.668
1.000
.733
8. Initial Communalities
Initial communalities are estimate of the variance in each variable accounted for by all component or factor. For
principal component analysis this is always equal to 1.0(for correlation analysis).
9. Extraction Communalities
Extraction communalities are estimate of the variance in each variables accounted for by the factors.
Small values (0.564, 0.495, 0.497, 0.561, 0.575, and 0.558) indicate variables that do not fit well with the factor
solution and should possibly dropped from the analysis.
Table 4.1:Total Variance Explained
Component
Initial Eigen values
Total
Extraction Sums of Squared Loadings
% of Variance
Cumulative %
Total
% of Variance
Cumulative %
1
6.944
27.777
27.777
6.944
27.777
27.777
2
3
4
5
6
7
8
9
10
11
12
13
1.696
1.573
1.520
1.354
1.247
1.136
1.066
1.016
.896
.773
.757
.658
6.784
6.291
6.080
5.416
4.990
4.544
4.265
4.063
3.585
3.093
3.027
2.631
34.561
40.853
46.932
52.349
57.339
61.883
66.148
70.211
73.796
76.889
79.916
82.546
1.696
1.573
1.520
1.354
1.247
1.136
1.066
1.016
6.784
6.291
6.080
5.416
4.990
4.544
4.265
4.063
34.561
40.853
46.932
52.349
57.339
61.883
66.148
70.211
128
14
15
16
17
18
19
20
21
22
23
24
25
.599
.552
.491
.457
.429
.414
.328
.260
.239
.219
.212
.164
2.397
2.210
1.965
1.827
1.715
1.654
1.311
1.040
.957
.874
.849
.655
84.943
87.153
89.118
90.944
92.659
94.313
95.625
96.665
97.622
98.496
99.345
100.000
In the above table principal component analysis is used for the purpose of extracting the data. This table gives
Eigen values, variance explained and cumulative variance explained for the factor solution. There are 9 factors or
components extracted using rotated Component Matrix.
Table 4.2- Rotated Component Matrix (a)
Variables
1
2
3
4
5
6
Investment Decision
7
8
9
.892
Opinion About Investment
Preferably you would like to Invest in
.691
How many times do you invest in a
year
Insurance Products are susceptible to
very low Risk
Name the Insurance Company that
come to your mind instantly
Do you own an insurance policy with
regard to ULIP
What is the amount of risk involved in
ULIP?
.805
.850
.800
.654
.811
Rate of Return is High?
.781
Extra Returns for Same Investment
.792
Tax Benefits are high
.804
Compulsory Investment
Transmission
.702
Gaining and enriching Investment
Knowledge
.585
.548
Wealth Creation and Accumulation
.519
High Maturity Benefits
.624
Switching of Options within the fund
.822
Risk Coverage
.714
129
Benefits payable after death
Partial Withdrawals
.830
.644
Minimum Premium
Surrender Options
-.548
Recommendations from friends and
relatives
.573
Life Coverage
.786
Overall I will prefer to have ULIP
for my investment,since I am overall
satisfied with it
.608
Chi-square Test:
Table: 5.1 Age Group (in years) * Rate of Return is High.
Hypotheses: The age group of the respondent and the rate of return is high
H0: There is no significant relationship between age group and the rate of return.
H1: There is significant relationship between age group and the rate of return.
Value
df
Asymp. Sig. (2-sided)
23.174(a)
12
.026
23.900
12
.021
Linear-by-Linear Association
.098
1
.754
N of Valid Cases
105
Pearson Chi-Square
Likelihood Ratio
Inference
From the above table it is inferred that the calculated P value (0.026) which is less than (0.05), hence null hypothesis
(H0) is rejected and the alternative hypothesis (H1) is accepted. Hence the age group has the significant association
with the Rate of return.
Table: 5.2 Age Group (in years) * Tax Benefits are high
Hypotheses: The age group of the respondent and the tax benefits are high
H0: There is no significant relationship between age group and the tax benefits.
H1: There is significant relationship between age group and the tax benefits.
Value
Df
23.646(a)
12
.023
Likelihood Ratio
23.652
12
.023
5.390
1
.020
Pearson Chi-Square
N of Valid Cases
105
130
Inference
From the above table it is inferred that the calculated P value (0.023) which is less than (0.05), hence null
hypothesis (H0) is rejected and the alternative hypothesis (H1) is accepted. Hence the age group has the significant
association with Tax benefits.
Table: 5.3- Qualification * Compulsory Investment
Hypotheses: To test the relationship between the Qualification and Compulsory Investment
H0: There is no significant relationship between Qualification and Compulsory Investment
H1: There is significant relationship between Qualification and Compulsory Investment
Value
Df
17.598(a)
8
.024
Likelihood Ratio
15.288
8
.054
1.445
1
.229
Pearson Chi-Square
N of Valid Cases
105
Inference
(H0) is rejected and the alternative hypothesis (H1) is accepted. Hence, the Qualification has the significant association
with Compulsory Investment.
Table: 5.4- Qualification * Gaining and enriching Investment Knowledge
Hypotheses: To test the relationship between the Qualification and Gaining and Enriching Investment Knowledge.
H0: There is no significant relationship between Qualification and Gaining and Enriching Investment Knowledge.
H1: There is significant relationship between Qualification and Gaining and Enriching Investment Knowledge.
Value
Df
18.958(a)
8
.015
23.639
8
.003
.090
1
.765
N of Valid Cases
105
Pearson Chi-Square
Likelihood Ratio
Inference
(H0) is rejected and the alternative hypothesis (H1) is accepted. Hence the Qualification has the significant association
with Gaining and Enriching Investment Knowledge.
131
Table: 5.5- Occupation * Tax Benefits are high
Hypotheses: To test the relationship between the Occupation and Tax Benefits are high.
H0: There is no significant relationship between Occupation and Tax Benefits are high.
H1: There is significant relationship between Occupation and Tax Benefits are high.
Value
Df
40.346(a)
20
.005
33.425
20
.030
.749
1
.387
N of Valid Cases
105
Pearson Chi-Square
Likelihood Ratio
Inference
From the above table it is inferred that the calculated
P value (0.005) which is less than (0.05), hence
null hypothesis (H0) is rejected and the alternative
hypothesis (H1) is accepted. Hence the Occupation
has the significant association with Tax Benefits are
high.
variables loaded in factor analysis also
determine their preference.
•
10. Conclusions
•
The age groups having significant association
with tax benefits availed using ULIP and rate
of return and same variables also got loaded
in factor analysis, if we analyze the frequency
analysis most of them are youth, so their
preference is quiet clear on their requirements
on tax benefits and good rate of return
.Good rate of return denotes the clear youth
expectation on ULIP.
•
If you look at the qualification which has
significant association with compulsory
investments
and
gaining
investment
knowledge, as the respondents mostly belong
to graduates segment these people expect
these variables as a mandatory requirement for
making ULIP choice and the same variables
got prominence through factor loading.
•
Most of the respondents belong to private
company occupations and hence the variable
tax benefits really influence the customer in
preferring ULIP and also the rate of return
I f you look at the factor analysis ,39% of
variance is explained in factor one ,hence
those factors like Tax benefits are high,
Transmission, Switching of Options within the
fund, Risk coverage, Life Coverage plays a
prominent role in bringing customer preference
towards ULIP.
11. Recommendations
For the above stated conclusions the marketers need to
focus attention on creating confidence among customers
about good rate of return and tax benefits by educating
them through elucidating the rate of return with clear
transparent references and testimonials will help them
to attract more customers.
Marketers need to educate and bring awareness among
customers about the need for compulsory investments
and mostly respondents are from private companies
they should run promotional programs to them to attract
more number of customers, education about the need
for insurance policy should be educated to them through
various strategies like in house company campaigning
programs and focused advertisements strategy reaching
those focused graduate segment belong to private
companies. Marketers need to bring awareness and
build confidence among consumers about the benefits
availed on risk coverage and life coverage with focused
niche advertisement strategies.
132
12. Bibliography
1.
2.
in/bw/2010_06_28_IRDA_Issues_Ulip_
Guidelines.html.
Agarwal, (n.d.). Long Term Ulip Management.
Retrieved December 13, 2010, from http://
www.articlesnatch.com/Article/Long-TermUlip-Management/1411742.
6. Suddhadeb Chakraborti (22 nova 2010) New
ULIP Guidelines: Benefits and Impact Retrieved
December 13, 2010 from http://ezinearticles.
com/?New-ULIP-Guidelines:-Benefits-andImpact&id=5398783.
7. Appa Rao. Machiraju “Risk Management and
Family Economics “Yogakshema, April, 1998.
8. Bernstein, Peter L., (1998): “Against the Gods”,
John Wiley and sons, New York.
9. Black, Jr. Kenneth and Harold Skipper Jr. (2000)
th
edition),
“Life and Health Insurance”, (13
Prentice - Hall, Inc., Englewood cliffs, N.J.
10.Joseph M. Belth “Life Insurance – a
Consumer’s Handbook” Indiana University
Press, Bloomington, London.
11. Huebner.S.S. (1927) “The Economics of Life
Insurance” (3rs Edition), Appleton century Crofts, Inc., New York
12. Rejda, George. E (2001), Principles of Risk
th
management and Insurance”, (7 edition),
Addison Wesley Longman, Inc., Boston, MS.
Dipak Mondal (Apr 15 2010), The Businessline,
, New Delhi., Many Ulips offer life cover of
50 times yearly premium Retrieved December
13, 2010 from http://www.mydigitalfc.com/
insurance/many-ulips-offer-life-cover-50times-yearly-premium-965
3. Amar Ranu, (16 Mar 2010). Invest in ULIPs
- A Good Wealth Creator Tool in Long
Term Retrieved December 13, 2010 from
http://ezinearticles.com/?Invest-in-ULIPs--A-Good-Wealth-Creator-Tool-in-LongTerm&id=3939540.
4.
Sanjay Mathew, (n.d). ULIP-Merits and Demerits
Retrieved December 13, 2010 from http://
www.articleslash.net/Insurance/571692__
ULIP-Merits-and-Demerits.html
5.
The Business Line (13, 2010, December) IRDA
Issues ULIP guidelines Retrieved December
13,2010 from http://www.businessworld.
133
A Comparative Study Between Ann,Arima And Hybrid of Ann
and Arima for Predicting The Gold Rates
E.Priyadarshini
Research Scholar, Sathyabama University, Chennai
Dr. A. Chandra Babu
Dept of Mathematics, MNM Jain Engineering College, Chennai
1. Introduction
able to explain this residual variance and produce more
reliable predictions of the stock price movements.A
hybrid ARIMA–ANN model for time series prediction
synergically combines the advantages of the easy-touse and relatively easy-to-tune ARIMA models and the
computational power of ANN.
Recent studies have established that non-linearity exists
in financial data and artificial neural networks can be
successfully used to model the relationship among
this data.Since Neural Network can extract valuable
information from a mass of historical information and
can be efficiently used in financial areas, the applications
of neural networks to financial forecasting have become
very popular over the last few years[Zhang, et al, 2004,
Refenes, 1995; Kate, et. al, 2000, Abu- Mostafa, at el,
2001]
2. Neural Network Forecasting Model
The Artificial Neural Networks, the well-known function
approximators in prediction and system modelling, has
recently shown its great applicability in time-series
analysis and forecasting . ANN is more effective in
describing the dynamics of non-stationary time series
due to its unique non-parametric, non-assumable,
noise-tolerant and adaptive propertiesRecently neural
networks have been used for modeling nonlinear
economic relationship because of its ability to extract
complex nonlinear and interactive effects. Neural
networks are a class of nonlinear model that can
approximate any nonlinear function to an arbitrary
degree of accuracy and have the potential to be used
as forecasting tools in many different areas. There are
many different neural net learning algorithms found in
the literature. No study has been reported to analytically
determine the generalization performance of each
algorithm.
Artificial neural networks have a natural way of solving
problems that involve learning and pattern recognition.
It can detect patterns in data through learning and are
much easier to program .New researches suggest that
seeing the nature of gold rates, combining two or more
computational models synergistically is better approach
for prediction problem. The basic idea behind this
is that each models’ unique capability can be used to
model different patterns of data.
1.1 Literature Survey
Contemporary studies show that the techniques of
ANN and ARIMA when combined, offer a competitive
edge over each of the individual model. The benefits
of such methods appear to be substantial especially
when dealing with non-stationary series .Results from
study (Sallehudin, et al.,2008) show that GRANN_
ARIMA(Grey Relational Artificial Neural Network_
Auto Regressive Integrated Moving Averages) is better
than the individual model and conventional hybrid
model in terms of accuracy and robustness since it
produces small forecasting errors and can work well
in both small and large scale data. Technical analysis,
(Murphy, 1999) refers to the various methods that aim
to predict future price movements using past stock
prices and volume information. It is (Mills, 1990;
Priestley, 1988) possible that non-linear models are
2.1Neural Network Architecture and Design
An Artificial Neural Network (ANN) is an information
processing system whose performance characterizes
biological neural networks. ANNs are mathematical
models of neural biology based upon the assumption
that:
1. Information processing occurs at many simple
elements called neurons.
2. Signals are passed between neurons over connection
links.
3. Each connection link has an associated weight, which
multiplies the signal transmitted.
134
(say 0.000001), then stop. Otherwise, reset E=0, and
repeat from Step 1 for another iteration.
4. Each neuron applies an activation function (usually
non linear) to its net input (sum of weighted input signals)
to determine its output signal. ANN is characterized by
(1)a pattern of connections between the neurons called
its architecture (2) Method of determining the weights
on the connections called training algorithm and (3)
activation or transferring function from one neuron to
another neuron. Neurons in ANN are organized in single
or multi layers. The current work without emphasizing
on these strategies assumes learning rate, momentum,
epochs, error tolerance and target randomly. Back
Propagation Algorithm is the most commonly used
algorithm for developing ANN models for financial
data.
3.Arima Methodology
The art of ARIMA modeling involves the following st
eps:
3.1. Model Identification
The foremost step in ARIMA modeling is to check for
stationarity of the series. A cursory look at the graph of
the data and the structure of autocorrelation and partial
autocorrelation may provide clues for the presence of
stationarity. If the model is found to be non-stationary,
stationarity can be achieved mostly by differencing the
series.
2.2 Back Propagation Algorithm (BPA)
Back propagation Algorithm assumes that there is
supervision of training of network. The method of
adjusting weights is designed to minimize the sum of
the squared errors for a given training data set. ANNs
are developed by BPA in following steps.
Step 1: Select an input and output variables and decide
the architecture of ANN for modeling the variables.x
presents the input , y hidden and z output layer.
Step 2: calculate the net inputs and outputs of the hidden
layer neurons
Netjh =
N +1
∑
i =1
The next step in the identification process is to find
the initial values for the orders of parameters p, q.
They could be obtained by looking for significant
autocorrelations and partial autocorrelation coefficients.
The autocorrelation function (ACF) and partial ACF
(PACF) are very important for the definition of the
internal structure of the analyzed series. Theoretically,
both an AR (p) process and an MA (q) process should
be associated with well-defined patterns of ACF and
PACF.
3.2. Estimation
wji x i ,yj =f(Net j h )
At the identification stage, one or more models are
tentatively chosen that seem to provide statistically
adequate representation of the available data. Then we
attempt to obtain precise estimates of the model by least
squares as advocated by Box &Jenkins.
Step 3: calculate the net inputs and outputs of the output
layer neurons
Netk0
=
J +1
∑
j =1
v kj yj
,zk =f(Netk0 )
3.3.Diagnostics
Step 4: update the weights in the output layer (for all k,
j pairs)
v kj vkj +c λ (d k - z k )z k (1- z k)yj
Step 5: update the weights in the hidden layer
(for all i, j pairs)
k
(dk -zk )zk
wji ← wji + c λ2 yj( 1 – yj )xi {
k
=
1
( 1 –z k ) v kj }
Step 6: update the error term
∑
E ←
E
+
k
∑
k =1
(dk - zk )2
and, repeat from Step 1 until all input patterns have
been presented (one iteration.)
Step 7: If E is below some predefined tolerance level
135
Different models can be obtained for various
combinations of AR and MA individually and
collectively. For the models obtained, perform
diagnostic tests using
(1) Residual ACF (2) Box pierce Chi-square
tests
(d)Forecasting: Arima models are developed basically
to forecast the corresponding variable. There are two
kinds of forecasts-sample forecasts and post sample
forecasts. The former are used to develop confidence in
the model and the latter to generate genuine forecasts
for future planning. Arima model can be used to yield
both these kinds of forecasts.
4.Hybrid Model of Ann and Arima (Ann_arima)
In the proposed model there are mainly two stages. In the first stage ANN is used to predict the gold rates using four
predictors,namely two yearly moving average,one yearly moving average,six monthly moving average,three monthly
moving average.Then the residual generated is provided to the ARIMA which will forecast the error forecast. In the
second stage , the predicted price by ANN is summed with the error forecast generated by ARIMA which produces
the final forecasted value.
Fig 1.Flow Chart of the Proposed Hybrid Approach (ANN and ARIMA)
5. Data Analysis
The data for analysis is taken from the average monthly gold rates from the June 1999 to April 2010 obtained from
World Gold Council. In this study, we used time delay moving average as technical data. The advantage of moving
average is its tendency to smooth out some of the irregularity that exits between market days. The predictor that
are chosen are two yearly moving average,one yearly moving average,six monthly moving average,three monthly
moving average.
Fig 2:Sequence Chart of Gold Rates
136
5.1Modeling using ANN:The neural network model has 4 inputs for 4 predictors,two hidden layer and one output
unit to predict gold rate. Historical data are used to train the model. Once trained the model is used for.forecasting
.
Fig 3:Network Diagram of ANN
Hidden layer activation function: Hyperbolic tangent
Output layer activation function: identity
Table 1:Network Details for Multilayer Perceptron model of ANN
Network Information
Input
Covariates
Layer
1
2
3
4
Number of Unitsa
Rescaling Method for
Covariates
Number of Hidden
Hidden
Layer(s)
Dependent
Output
Layer
Variables
Number of Units
oneyrMA
sixmnthMA
ThreemnthMA
twoyrMA
4
Standardized
1
Layers
Number of Units in
1
Hidden Layer 1a
Activation Function
Hyperbolic tangent
1
goldrate
1
Rescaling Method for Scale Dependents
Standardized
Activation Function
Identity
Error Function
Sum of Squares
137
Table 2:Estimated values of the parameters
Parameter Estimates
Predicted
Hidden Layer
Predictor
Input
Layer
1
H(1:1)
.179
.185
.087
-.612
(Bias)
oneyrMA
sixmnthMA
ThreemnthMA
twoyrMA
Output Layer
goldrate
-.197
Hidden
(Bias)
.348
Layer 1
H(1:1)
-2.135
5.2.Model Identification, Estimation and Diagnosis in the merged ARIMA
The input series is the residual or error generated from the difference of actual and predicted gold price of the indices
from ANN model during the same time period.
First stage is to verify that whether the series is stationary or not with the help of sequence graphs. It can be seen from
the Figure that series is not stationary and requires to be differenced once. ACF and PACF on the input series will
help to find out the tentative values of three parameters p, d and q of ARIMA (p, d, q).After analyzing ACF, PACF
and performing various iterations by taking different p and q parameter values with d as 1 and best fit was found
having minimum Bayesian Information Criteria (BIC) value(Table 3). The best fit was selected after applying various
p and q values the model. To check the adequateness of the model the ACF and PACF plots of the error between the
input series and its fit were generated. In the process of diagnosis,to determine whether the time series is white noise
or not, the Box-Ljung Q statistic is compared with the chi-square distribution with (h-m) degrees of freedom. Here h
is the number of lags and m is the number of parameters. Table 3 clearly demonstrates that the Q* statistic has same
distribution as chi-square with (h-m) degrees of freedom. The plots and the Autocorrelation generated indicate that
the model fits well(fig4).It was found that ARIMA(0,1,0) is the model that fits the residuals generated by the ANN.
Table 3:Model Parameters of ARIMA(0,1,0) model
Model
(0,1,0)
RMSE
MAPE
MaxAPE
Gold
Rate
28.397
3.196
14.895
MAE
19.356
MaxAE Q*Statistics
114.758 6.739
138
DF
Sig
18.652 18
BIC
0.414
Fig 4:Residuals of the ACF and PACF of the fitted ARIMA model
The fit of the input (residual of ANN) series generated by the ARIMA models is summed with the predicted close value
generated by ANN. This results in the final predicted value.
139
Fig 5:Chart of actual versus predicted values.
Fig 6:Chart of predicted versus residuals.
6.Conclusion
In the current research attempted to study whether a hybrid model achieves better results than an individual
model .Hybrid model was developed using techniques of ANN and ARIMA and comparison is also made between
the conventional hybrid approach using ARIMA, ANN and proposed hybrid approach using ANN, ARIMA based on
the error measures Mean Absolute Error(MAE),Mean Absolute Percentage Error(MAPE),Mean Square Error(MSE)
Root Mean Square Error(RMSE) and Percentage Mean Absolute Deviation(PMAD)(Table 4).
Time Series Plot of gold rate, predANN, PredARIMA, finalhyb
Variable
gold rate
predA NN
PredA RIMA
finalhy b
Average Monthly gold rates
1000
900
800
700
600
500
400
300
200
Month
Jun
Year 2001
Jun
2002
Jun
2003
Jun
2004
Jun
2005
Jun
2006
Jun
2007
Jun
2008
Jun
2009
Fig 7:Comparative Graph showing the plot of actual rates,predicted ANN rates ,predicted
ARIMA rates and hybrid ANN_ARIMA rates.
Table 4: Error Measures for ANN,ARIMA,Hybrid ANN_ARIMA
Error
ANN
ARIMA
Measures
MAE
16.82615
19.355
HYBRID
ANN_ARIMA
6.59235
MAPE
0.03036
0.03195
0.01159
MSE
496.8101
798.2354
86.6236
RMSE
22.28923
28.25306
9.30718
PMAD
0.030755
0.035025
0.01205
Results show that prediction of hybrid ANN_ARIMA model for the average monthly gold outperformed the
traditional ARIMA Model and the contemporary ANN Model in all the error measures.Hence it can be successfully
used for forecasting than the ANN and ARIMA models.
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141
“Mutual Funds – Motivating Factors Behind Investment”.
R.A.Rabika Begum, Research Scholar, (Ph.D In Commerce)
Mother Teresa Women’s University, Kodaikanal
Dr. P. S. Valarmathy
Head, Department of Management Studies, Vel Tech Institute
“To grow is to develop and to develop is to achieve
a designed target”.
actual practice. These ‘expectations’ of the investors are
influenced by their “perception” and humans generally
relate perception to action. Formulation of schemes and
marketing of the mutual fund products requires an indepth study of the financial behaviour of the investors.
In this paper an attempt is made to identify the major
factors that Influence the investors in their selection of
the fund/scheme.
Creation of wealth is the primary objective of investors.
There are a number of investment opportunities all
around the investor to achieve his objectives. There are
bank deposits, company deposits, equities, bonds, life
insurance policies, small savings scheme, and mutual
fund products etc. which create wealth and which in a
way compete among themselves for the choice of the
investor. A mutual fund is the ideal investment vehicle
for today’s complex and modern financial scenario.
4. Need for the Study
Mutual fund is a growing industry and considered as
the major mobilizes of financial resources for the stock
market and the economy in general. . The rapid growth of
the mutual fund industry in India has attracted a number
of private players into the market. The various mutual
funds’ companies have been successfully operating
in the industry by providing a wide range of products
to suit a variety of investors’ needs. Formulation of
alternative schemes by various mutual fund companies
has become important to fight the battle and to secure a
sound position in the industry.
2. Scheme of the Paper
 Background Information
 Need For The Study
 Objectives Of The Study
 Limitations Of The Study
 Review Of Literature
 Analysis And Findings
 Future Prospectus
3. Background Information
Mutual Fund as an investment Vehicle is capturing
the attention of various segments of the society, like
Academicians, industrialists, financial intermediaries,
investors and regulators for varied reasons and deserves
an in-depth study.
“Put not your trust in money put your
money in trust”is the perfect way by which the concept of mutual
funds can be understand. Mutual funds are dynamic
financial intermediaries, which pool the savings of
numerous individuals and invest the money thus raised
in a diversified portfolio of securities. A Mutual Fund
is the most suitable investment for the common man
as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a
relatively low cost.
4. Objective of the Study
 To identify the major factors that influence the
investors fund/scheme selection
5. Methodology
The required data was collected by means of a structured
questionnaire distributed among 60 investors spread
over the city of Chennai but only 52 questionnaires
which was complete in all aspects used for the study .
In financial markets, “expectations” of the investors play
a vital role. They influence the price of the securities;
the volume traded and determines quite a lot of things in
142
6. Limitations of the Study
know about MFs/Schemes and investor service is a
major differentiating factor in the selection of Mutual
Fund Schemes.
Sujit Sikidar and Amrit Pal Singh (1996) carried out a
survey with an objective to understand the behavioural
aspects of the investors of the North Eastern region
towards equity and mutual funds investment portfolio.
The survey revealed that the salaried and self employed
formed the major investors in mutual fund primarily
due to tax concessions. UTI and SBI schemes were
popular in that part of the country then and other funds
had not proved to be a big hit during the time when
survey was done.
Syama Sunder (1998) conducted a survey to get an
insight into the mutual fund operations of private
institutions with special reference to Kothari Pioneer.
The survey revealed that awareness about Mutual Fund
concept was poor during that time in small cities like
Visakapatnam. Agents play a vital role in spreading the
Mutual Fund culture; open-end schemes were much
preferred then; age and income are the two important
determinants in the selection of the fund/scheme; brand
image and return are the prime considerations while
investing in any Mutual Fund.
Anjan Chakarabarti and Harsh Rungta (2000)
stressed the importance of brand effect in determining
the competitive position of the AMCs. Their study
reveals that brand image factor, though cannot be
easily captured by computable performance measures,
influences the investor’s perception and hence his fund/
scheme selection.
Since 1986, a number of articles and brief essays
have been published in financial dailies, periodicals,
professional, research journals, explaining the basic
concept of Mutual Funds, and highlight their importance
in the Indian capital market environment. They touch
upon varied aspects like Regulation of Mutual Funds,
Investor expectations, Investor protection, Trend in
growth of Mutual Funds and some are critical views
on the performance and functioning of Mutual Funds.
From the above review it can be inferred that Mutual
Fund as an investment vehicle is capturing the attention
of various segments of the society, like academicians,
industrialists, financial intermediaries, investors and
regulators for varied reasons and deserves an in depth
study.
The data collection procedure was taken up
from mutual fund investors of
Chennai City only.
Personal bias and prejudice of the respondents
could have affected the results of the study.
The existing “Behavioural Finance” studies are very
few and very little information is available about
investor perceptions, attitudes and behaviour.
Ippolito (1992) says that fund/scheme selection by
investors is based on past performance of the funds and
money flows into winning funds more rapidly than they
flow out of losing funds.
Goetzman (1997) states that there is evidence that
investor psychology affects fund/scheme selection and
switching.
De Bondt and Thaler (1985) while investigating the
possible psychological basis for investor behaviour,
argue that mean reversion in stock prices is an evidence
of investor over reaction where investors over emphasize
recent firm performance in forming future expectations.
Kulshreshta (1994) offers certain guidelines to the
investors in selecting the mutual fund schemes.
Shanmugham (2000) conducted a survey of 201
individual investors to study the information sourcing
by investors, their perceptions of various investment
strategy dimensions and the factors motivating share
investment decisions, and reports that among the
various factors, psychological and sociological factors
dominated the economic factors in share investment
decisions.
Madhusudhan V Jambodekar (1996) conducted a
study to assess the awareness of MFs among investors,
to identify the information sources influencing the
buying decision and the factors influencing the choice
of a particular fund. The study reveals among other
things that Income Schemes and Open Ended Schemes
are more preferred than Growth Schemes and Close
Ended Schemes during the then prevalent market
conditions. Investors look for safety of Principal,
Liquidity and Capital appreciation in the order of
importance; Newspapers and Magazines are the first
source of information through which investors get to
143
8. Need for the Present Study
Even though studies were already made in this subject, the investor’s behaviour tend to change over a period of time
and it also differs among the investors , in this article an attempt is made to study the major factors, which influence
the investors in their selection of the fund/scheme.
Predominant Factors influencing the investors fund/scheme selection:
Factor analysis is applied to identify the factors that influence the investors fund/scheme selection, 19 variables were
identified based on theory and past research.
The Investors were asked in the questionnaire to express their agreement & disagreement with the motivational
factors attributing to investment in Mutual funds from their personal experience.
Factor analysis is applied on the 19 variables influencing the investors. This analysis is multivariate tool generally
used to condense the greatest number of variables in to least number of factors. The results of factor analysis are
presented as follows.
FACTOR ANALYSIS
The identified variables were classified under the appropriate group. 19 variables have emerged into 5 major factors
I
Financial Factor/Economic Factor
II
Brand Image
III Quality Factor
IV Macro Factors
V
Investor Services
Table 1.1
Factor
Loading
I Financial Factors/Economic Factors
A1
Mutual Fund products maximizes return
.77098
A2
Products with tax benefits is an important criterion in choosing
Mutual Fund units
.67706
A3
Management fees payable is very low/Cost of record keeping is
low / in mutual fund investment
.55128
A4
Fund’s/Scheme’s past performance/track
importance while investing
.54044
record
is
given
The above table explains the variable loadings of each factor. The above table denotes that factor 1 has 4 variables
which can be uttered as Financial Factor/Economic Factors.
I
FINANCIAL FACTOR/ECONOMIC FACTOR
 Lower cost of Investment
 Tax Benefits
 High Return
 Past performance
144
Table 1.2
II Brand Image
Factor Loading
B1
Favorable rating by a rating agency influences
the investors of mutual fund
.82341
B2
I make investment in mutual funds based on the
reputation of the scheme
.73988
B3
Investors are mostly influenced by the reputation
of the asset management company
.72236
B4
I am always impressed upon on the expertise of
the fund managers in managing money
.56650
From the above table it is observed that Factor 2 has 4 variables under it
 Reputation of the Asset Management Company
 Reputation of the Scheme
 Fund Managers expertise
 Favorable Rating by a rating agency
The factor can be named as BRAND IMAGE.
Table 1.3
III Quality Factors
Factor Loading
C1
Innovative features of Mutual Funds attracts
customers towards mutual funds
.91859
C2
Easy entry and exit to and from Mutual
Funds
.87809
C3
Mutual Funds provides good infra structure
facilities
.66562
C4
Investors in Mutual Funds can liquidate
their investments at any time
.59579
C5
The extent of diversification of risk in MF is
commendable
.52782
It is ascertained from the above table that Factor 3 has the following variables
Quality Factor
 Flexibility
 Liquidity
 Innovative features
 Diversification of Risk
 Infra structure facilities
These Variables can be suitably named as QUALITY FACTOR
145
Table 1.4
IV Macro Factors
Factor Loading
D1
Declining interest rates on government
backed securities shifts small savings to
Mutual Funds
.85677
D2
Uncertain and unattractive bank deposit
interest rates makes Mutual Fund investment
attractive
.62316
D3
Mutual funds are well – regulated as it is
continuously monitored by SEBI
.44298
It is prominent from the listed table that Factor 4 contains the following 3 variables
IV
MACRO FACTORS
 Lower return on Government Securities
 Unattractive Interest on Bank Deposits
 Effective Monitoring by SEBI
These variables together can be named as MACRO FACTORS
Table 1.5
V Investor Services
Factor Loading
E1
Individual has no time & energy to monitor
his portfolio
.80358
E2
MF operation is very transparent
.76446
E3
Fringe benefit like free insurance, free
credit card, loans on collateral influences
investment in Mutual Funds
.68193
It is eminent from the above table that Factor 5 has 3 variables under it
V INVESTOR SERVICES
 Convenient Administration
 Transparency
 Fringe benefits
This factor can be correctly termed as INVESTOR SERVICES
The data for each of the 5 sub-groups were factor analysed using Principal Component Analysis, with the objective
of identifying the factor in the sub-group which turns out to be significant in the fund/scheme selection.
146
FACTOR ANALYSIS
PRINCIPAL COMPONENTS ANALYSIS
1
FINANCE FACTOR
4.8925
PercentageOf
Variance
25.8
2
BRAND IMAGE
3.54509
18.6
44.4
3
QUALITY
2.03949
10.7
55.1
4
MACRO FACTORS
1.69851
8.9
64
5
INVESTOR SERVICES
1.49970
7.9
71.9
S.No
Factors
Eigen Value
Cumulative
Percntage
25.8
10. Future Prospectus
Findings of the study:
The 19 fund related variables were analyzed for their
importance. The analysis reveals that the investor
considers finance factor as the first influencing factor
followed by the other factors .Still all the 19 variables
are important in the selection of the fund/scheme.
Running a successful Mutual fund requires complete
understanding of the peculiarities of the Indian Stock
Market and also the psyche of the small investor. This
study has made an attempt to understand the financial
behaviour of Mutual Fund investors. The post survey
developments are likely to have an influence on the
findings. Behavioral trends usually take time to stabilize
and they get disturbed even by a slight change in any of
the influencing variables.
In the future, Mutual Fund industry has to face
competition not only from within the industry but also
from other financial products that may provide many of
the same economic functions as mutual funds but are
not strictly Mutual Funds. Hence, surveys similar to the
present one need to be conducted at intervals to develop
useful models. Unless the Mutual Fund schemes
are tailored to the changing needs of the investors,
and unless the AMCs understand the fund selection/
switching behaviour of the investors, survival of funds
will be difficult in future. Nevertheless, it is hoped that
the survey findings will have some useful managerial
implication for the AMCs in their product designing
and marketing.
147
Impact of Financial Crisison Indian Economy
– A Strategic Route Map to Future
Dr. Y. Lokeswara Choudary
Asst.Professor & Research Supervisor, SRM B-School, SRM University, Chennai
Mr. Yaseen Masvood
Asst.Professor& Research Scholar, School of Management, SRM University, Kattankulathur, Chennai
1. Introduction
A national and global regulatory architecture needs to
be built so that financial markets return to their primary
function: to ensure stable and cost-effective financing of
productive investment in the real economy. Moreover,
governments must acknowledge the urgent need to begin
work on a more inclusive, just and democratic system
for the governance of global markets. To stabilize the
present crisis the global economy and governments
need to contemplate on the areas which can pave way to
fill the gap of present crisis and future economy.
The OECD and IMF forecasts for 2009 suggest that
for the first time since the 1930s GDP will fall in the
industrialized economies that make up the OECD. Yet
even these forecasts are based on relatively optimistic
assumptions that the financial markets begin to stabilize
in the months ahead and that there are not other major
“shoes to drop” in terms of negative financial shocks.
History has shown that crises on this scale lead to social
and political instability with unpredictable and often
tragic results.
3. Impact on It And Ites
2. Impact on Employment and Social Life
The current crisis parallels the 2001-2002 bust especially
for India’s IT (export) sector. Approximately 61% of the
Indian IT sector’s revenues are from US clients. If you
just take the top five India players who account for 46%
of the IT industry’s revenues, the revenue contribution
from US clients is approximately 58%. About 30% of
the industry revenues are estimated to be from financial
services. In addition, from a qualitative standpoint,
the tentacles of the financial sector business are quite
well-entrenched and have significant structural impact
as well. The size and maturity of the IT industry today
are far ahead of the 2001 days, and the current model
has signs of “irreversibility” and long-term competitive
advantage. While GE invented the industry along with
India’s biggest IT outsourcing firms, the US financial
services and insurance sector (BFSI) was one of the
earliest adopters of the outsourcing trend in a big way.
Working families have an enormous stake in the response
of governments and the international institutions to this
crisis. How protracted and deep the global recession
proves to be depends on how timely and well-focused
government action is. However, for more than two
decades social cohesion has been under stress as a result
of growing inequality in most countries. Today, those
who are losing homes, jobs and pensions as a result of
the financial crisis for which they bear no responsibility,
are being called on–as taxpayers–to bail-out those who
are responsible. This produces a strong political cocktail
that governments would do well to heed. While shortterm action to save the banking system, stop major
companies going under and stimulate demand to help
the recovery of the real economy are all necessary, there
can be no return to “business as usual” once the recovery
is underway. This is a point OECD appears to accept in
principle, but what about in practice, in the analysis and
advice they give to their member governments.
4. Impact of Exchange Rate Risk
The Rupee-Dollar exchange rate benefit for a company
that would have done zero-hedging is in the range of
10-12%. However, if we analyze the top few firms, the
median seems to be around an offset benefit of around
2-3% on the bottom-line, assuming some hedging. The
Rupee has depreciated since the last quarter by more
than 10% which has had a positive effect on both top line
This most serious economic crisis since the Great
Depression must mark an end to an ideology of
unfettered financial markets, where self-regulation
has been exposed as a fraud and greed has overridden
rational judgment to the detriment of the real economy.
148
and the bottom-line in Rupee terms. This is to an extent
6. Real Estate Market
countered by the significant hedging done by the IT
The big risk is a possible repeat of what happened
in 1996. Projects that are halfway to completion, or
companies that are stuck with cash flow issues on
businesses that are yet to reach break even, will run
out of cash. The big sector that potentially could be hit
would be real estate, where building projects are halfdone all over the country and some developers who
touted their ‘land banks’ find now that these may not be
bankable. The only way out of the mess is for builders
to drop prices, which had reached unrealistic levels and
assumed the characteristics of a property bubble, so as
to bring buyers back into the market, but there is not
enough evidence of that happening.
biggies, the ramifications of which translated into forex
losses for them in the June quarter. This may bite them
again this quarter. For example, TCS has hedged about
US$ 2.2 billion for the year at Rs.45/US$. According
to the June quarter results transcript, at Rs.45/US$, the
mark-to-market loss on this would be about US$100
million. And, considering the Rupee has moved beyond
Rs.47/US$ into the first week of October, this can be
far worse.
5. Credit Markets
Inter bank lending has been slow globally. This means
that banks are lending to each other at high rates which
7. Stock Market
further implies more expensive credit .In short, capital
Any uncertainty in global markets always proves to be a
poison pill for the stock markets. The drop in real estate
and stock prices robs a much larger body of consumers
of the wealth effect, which could affect spending on a
broader front. The stock market values can fall further
if the foreign institutional investors start pulling out
money in large numbers over a short period of time.
has suddenly become more expensive than a few months
ago and, in many cases, it may not be available at all.
Many consumers today in India are quite leveraged.
More expensive money means that floating rate loans
begin to get more and more expensive.
8. Low Risk And High Potential Economic Indicators of India
Table: Relative Weight of EME in Capital Markets (billions of $)
GDP
Stock
Markets
Debt
Securities
Bank
Assets
Capital
Markets
World
54545,1
65105,6
79821,9
84784,5
229712
Euro Area
12202,0
610040,1
23023,8
30137,1
63461,4
United States
13807,6
19922,3
29879,3
11194,1
60995,7
Japan
4381,6
4663,8
9217,5
7839,4
21720,6
Emerging Markets
17281,7
20950,2
7820,1
15003,8
43774,1
Relative Weight of EME Capital Markets as % of world
Euro Area
22,4%
15,4%
28,8%
35,5%
United States
25,3%
30,6%
37,4%
13,2%
Japan
8,0%
7,2%
11,5%
9,2%
Emerging Markets
31,7%
32,2%
9,8%
17,7%
149
27,6%
26,6%
9,5%
19,1%
The above table clearly indicates the strength of the emerging markets in terms of GDP, Assets holding in stock
markets, debt securities, bank assets, and capital markets. Emerging markets play a keen role during crisis when
compared to developed economies due to market rational behaviour and conservative approach of investments. This
can be a better solution to crisis.
Table 2: Showing Inflation trends for food products in India during global financial crisis
Deflationary phase:
Data released by the Finance Ministry on the
contribution of broad commodity groups to the yearon-year inflation during the latest week show that
primary articles contributed 227 per cent to inflation, a
quadrupling of its share from 56 per cent in the previous
week. In manufactured products, the contribution to
inflation was 166 per cent in the week under reference,
from 90 per cent in the previous week. The fuels group,
on the other hand, showed a negative contribution at
(-) 289 per cent against (-) 46 per cent the previous
week, registering a six-fold drop. Even as analysts
predict that inflation is likely to turn negative starting
April and could remain so until the end of 2009, the
Government, on its part, allayed fears that the economy
could be entering a deflationary phase. The International
Monetary Fund, earlier this week, said that India should
rely more on monetary policy to support the economy
as high public debt makes fiscal efforts difficult. The
RBI had, on March 4, cut its key repo rate to an all-time
low of 5 per cent, having pruned it by 400 basis points
since October.
The annual Wholesale Price Index-based inflation
inched closer to zero in the first week of March, setting
the stage for the Reserve Bank of India to cut interest
rates further to prop up growth. Despite the decline in
the headline inflation estimate to a three-decade low
of 0.44 per cent, food products inflation continues to
rule high and hurt at the consumer-level. The latest
Consumer Price Index for Industrial Workers, to be
released on Friday, is expected to be around 10.4 per
cent.
According to data released by the Ministry of Commerce
and Industry here on Thursday, the annual WPI inflation
rose 0.44 per cent for the week ended March 7, sharply
lower than the previous week’s annual rise of 2.43 per
cent. Inflation was recorded at 7.78 per cent a year ago
and the sharp dip in the latest reported week has been
partially attributed to the base effect coming into play.
The drop of 199 basis points in the latest WPI inflation
estimate is the steepest since the week ended November
1, 2008. There is no record of inflation dipping this low
since 1977-78, according to Government estimates.
150
Industrial output as measured by the index of
industrial production for January was weighted down
by poor output from intermediate goods such as auto
ancillaries and chemicals and basic goods, which fell
9.2% and 1% respectively. However, consumer durables
output grew 2.5% moving into positive territory after
three months of decline, on the back of high growth in
automobile sales. But capital goods sector saw strong
growth, with output rising 15.4%, led by an impressive
expansion in production of machinery and equipment.
“ The improvement in production of consumer goods
hints at a demand pick up and improvements in credit
availability. The worst quarter is behind as, and on
revisions.
relatively year-on-year inflation rates. In the fuel and
power group, inflation dipped further to clock minus 6
per cent versus minus 5.1 per cent in the earlier week. In
manufactured products, inflation rate decreased to 1.3
per cent in the current week, from 4 per cent last week.
Inflation in most sub-groups declined or remained
steady relative to rates recorded in the previous week.
10. Strategies to Overcome Crisis
Initiate a major recovery plan to stabilize global capital
markets, move economies rapidly out of recession, stave
off the risks of a global depression and get back on the
track of creating decent work. There should be further
coordinated interest rate cuts as necessary. Governments
should bring forward infrastructure investment
programmes that can stimulate demand growth in the
short term and raise productivity growth in the medium
term. Now is the time to move forward with a “Green
New Deal” to create jobs through alternative energy
development and energy saving and conservation. Tax
and expenditure measures should be introduced to
support the purchasing power of middle and low income
earners. Development assistance budgets need to be
maintained to the Least Developed Countries (LDCs)
9. Inflation and Price Index
The sharp fall in headline inflation during the latest
reported week was on account of an across-the-board
dip in inflation levels. In primary articles, the yearon-year inflation dipped to 4.4 per cent for the latest
reported week, against 5.8 per cent the previous week.
In food articles, inflation fell to 7.4 per cent after being
stable at 8.3 per cent in the previous two weeks. Cereals,
pulses, salt, milk and sugar, however, clocked high
151
economy. It must ensure more balanced growth in the
global economy between regions, as well as within
countries, between capital and Labour, between high
and low income earners, between rich and poor and
between men and women. Fiscal deficits are being cited
as constraints, yet there is no choice: governments must
step in as investors of last resort as the private sector
has seized up. Better to incur deficits to support the
recovery of the real economy than to face a collapse of
public finances, not to mention investor and consumer
confidence, due to the accelerating contraction of the
real economy. In the short term, governments have
little choice but to continue their efforts to stimulate
economic activity. 2009 will be tough. Unemployment
is rising, consumers are hesitant and investors are
standing on the sidelines. The first and most urgent task
for policy makers is to stabilize financial systems while
persevering with tax cuts and infrastructure spending to
bolster economies by encouraging demand and creating
jobs. Working people need action. They require a seat
at the table in these meetings and institutions. They
have understandably little confidence that bankers and
governments meeting behind closed doors will get
it right this time. In fact, many business people and
governments share this distrust. There must be full
transparency, disclosure and consultation. The global
union organizations are ready to play their role in this
process.
to help meet the Millennium Development Goals
(MDGs) with the adoption of binding commitments and
a timetable to meet the UN target of 0.7 % of GDP.
Ensure that a financial crisis on such a scale never
happens again. For two decades most governments,
together with the International Financial Institutions
(IFIs) have promoted the lightly regulated ‘new financial
architecture’ that has characterized the global financial
markets responsible for this crisis. Governments have
now been forced to intervene to save the banking
system; the quid pro quo must be properly regulated
financial institutions. The agenda must cover: the
public accountability of central banks; countercyclical
asset requirements and public supervision for banks;
the regulation of hedge funds and private equity; the
reform and control of executive compensation and
corporate profit distributions; the reform of the credit
rating industry; the ending of offshore tax havens; the
taxation of international financial transactions; proper
consumer protection against predatory lending and
aggressive banking sales policy; and active housing
and community-based financial service public policies.
The new system needs to reflect the requirements of
all regulators; bank regulators, tax and competition
authorities, and governance and consumer bodies
in each country. There must be no more piecemeal
approaches to reform.
Establish a new structure of economic governance
for the global economy. This must go beyond
financial markets or currency systems to tackle all
the imbalances of growth and capital flows that
contributed to the crisis. Just as the post-World War II
economic settlements included the strengthening of the
International Labour Organization (ILO), in parallel
with the creation of the United Nations, the new postcrisis settlement must address international economic
governance. Governments must start work on the
necessary structures. But this debate should not be held
between bankers and finance ministry officials behind
closed doors. Trade unions must have a seat at the table.
11. Conclusion
The conclusions can be more detailed on the areas
where financial market supervision and regulation must
be reformed–counter-cyclical capital requirements
for banks, reformed executive pay, supervision of
credit rating agencies, codes for hedge funds and
private equity, reformed accounting standards, tighter
regulation and transparency of offshore financial
centers. We also need new thinking in other areas,
from competition, investment and pensions policies to
tackling climate change, social exclusion and poverty.
We need to raise productivity while keeping trade and
investment frontiers open. We must find ways to spread
opportunity and the fruits of future growth more evenly
and encourage the low-carbon innovation needed for a
“green” recovery.
Combat the explosion of inequality in income
distribution that lies behind this crisis. The new
system of economic governance must tackle the crisis
of distributive justice that has blighted the global
152
Promoting economic co-operation is core to the OECD’s
mission. For nearly half a century, OECD had worked
with governments and with business, labour and civil
society to help markets grow, societies advance and
countries emerge from poverty. By involving such
key world players as Brazil, China, India, Indonesia,
Russia and South Africa in this work, together, they
are pursuing a collective long-term goal to build a
stronger, cleaner and fairer global economy, free of the
corruption, tax evasion, fraud, greedy exploitation and
resource destruction that have discredited globalization
and obstructed the benefits it can bring. Such initiatives
will help to build our economy tomorrow. The financial
crisis has knocked both us and others off balance. But it
has not knocked us off course. There is no time to lose
in responding, and we count on business leaders to help
us in our efforts. We can take steps together towards
such a better future, 2009 could brighten up after all.
2009 marks the Chinese Year of the Ox, a symbol of
patience and hard work, and inspiring confidence in
others. The crisis has knocked governments off balance,
but like the ox, we must not be knocked off course. The
long-term job of building a better tomorrow starts now.
4. TED spread Bloomberg.com “Investment
Tools” Confer Thomas Philippon: “The future
of the financial industry”, Finance Department
of the New York University Stern School of
Business at New York University, link to blog
[1]
5. For this term see: Arrighi, G., & Silver, B. J.
(1999). Chaos and governance in the modern
world system Minneapolis: University of
Minnesota Press. And: [2] John Bellamy
Foster: Monopoly finance capital and the crisis.
Interview with John Bellamy Foster for the
Norwegian daily “Klassekampen”, conducted
on October 15, 2008.
6. Whitney, Meredith (2009-03-10). “Credit
Cards Are the Next Credit Crunch:
Washington shouldn’t exacerbate the looming
problem in consumer credit lines”. Wall
Street
Journal.http://online.wsj.com/article/
SB123664459331878113.html.
7. The Run-Up in Home Prices: Is It Real or Is It
Another Bubble?, Dean Baker, CEPR, August
2002
12. References
8. Shiller, Robert J. (November 2, 2008),
Challenging the Crowd in Whispers, Not
Shouts, pp. BU5, http://www.nytimes.
com/2008/11/02/business/02view.html,
retrieved on 2009-03-08
1. Wall Street Journal. “TED Spread spikes in
July 2007”. Wall Street Journal. http://www.
princeton.edu/~pkrugman/ted-spread-wsj.gif.
2. Norris, Floyd (August 10, 2007), “A New
Kind of Bank Run Tests Old Safeguards”,
The New York Times, http://www.nytimes.
com/2007/08/10/business/10liquidity.html,
9. Lohr, Steve (November 5, 2008), “In Modeling
Risk, the Human Factor Was Left Out”, The
New York Times: B1, http://www.nytimes.
com/2008/11/05/business/05risk.html,
3. Elliott, Larry (August 5, 2008), “Credit crisis
- how it all began”, The Guardian, http://
www.guardian.co.uk/business/2008/aug/05/
northernrock.banking, retrieved on 2009-03-08
10. Shiller, R. 2006. Irrational Exhuberance
Princeton, NJ: Princeton University Press.
153
Estimation of Appropriate Lambda Value for Indian
Markets (Money, Sovereign Debt, Forex and Interest Rate
Swap Market)
R. Natarajan
AVP (Derivatives), The Clearing Corporation of India Limited, 5th Floor, C-Wing, Trade World, Mumbai
Dr. V. Balasubramanian, Professor, School of Management, SRM University
1. Introduction
as Historical Simulation and Monte-Carlo Simulation.
In Simulation Method, various scenarios are created
to generate the entire distribution of future portfolio
returns. Variance-covariance method is the simplest
way of calculating VaR. This method is a parametric
method and assumes that the returns are normally
distributed. The most important variable in Variancecovariance method is volatility. Variance estimation
can be bifurcated into historical and implied (implicit)
approach. Historical approach takes into consideration
the past history of the asset returns while estimating
volatility. On the contrary, implied approach ignores
history, i.e. it estimates volatility by current market
prices.
Volatility, a variation in asset returns, has become a
major concern in the financial arena. Volatility, which
once was due to domestic events, now has gone global
due to integration of global markets. Volatility, which
differs for each asset class, is measured by the variability
in the price over time measured as the variance or the
standard deviation of the returns on the asset. Variance
and standard deviation are statistical measures of the
dispersion of returns around the expected (actual)
returns. Volatility is also a measure of riskiness of an
asset (more the variability, more the unpredictability
associated with the returns of an asset).
2. Value at Risk (VaR)
Monitoring market risk is a major concern for financial
institutions and banks as the value of their vast portfolio,
comprising of various financial products, changes
as and when market conditions change. The need
for quantifying the financial market risk, which has
resulted in many financial disasters in past, has led to a
development of Value at Risk (VaR). VaR is a standard
method of assessing market risk. It measures the worst
expected loss over a given horizon under normal market
conditions at a given confidence interval. Value-at-Risk
(VaR) has emerged as a widely used tool of financial
institutions for measuring and managing volatility.
Due to its simplicity, VaR is widely used by corporate
treasurers, fund managers and financial institutions.
Even regulators use VaR to determine the capital that a
bank should keep to reflect the market risk it is bearing.
The successful implementation of VaR depends heavily
on the accurate estimation of the conditional distribution
of portfolio returns.
Historical approach can be further classified as Simple
variance, EWMA variance and GARCH variance.
The assumption underlying EWMA and GARCH is
that volatilities and correlations are not constant over
the period. Sometimes they are relatively low and
sometimes they are relatively high. These two models
measure the variations in the volatility or correlation
through time.
3. EWMA Variance
In EWMA method, greater weight is assigned to most
recent returns and the weight goes on decreasing to
prior returns. EWMA uses lambda (λ) as a smoothing
factor. The value of lambda should always be less than
1. Under this method, the variance forecast is computed
using the recursive formula:
σ 2 n = λ σ 2 n - 1 + (1 – λ) U2n-1
Whereas σ 2 is Lagged variance, U2 is lagged return
and λ is lambda, weight assigned to lagged variance.
The limitations associated with Variance-covariance
methods are the assumptions considered while
Among various methodologies used to calculate VaR,
Simulation method and Variance-covariance method
are quite popular. Simulation method can be classified
154
evaluating VaR. This method assumes that the returns
are normally distributed but in practice, financial asset
returns are not normally distributed. Also, this method is
applicable for linear portfolios and hence it has limited
usage area.
markets in India. Accordingly, we have considered
seven various active benchmark asset classes viz.
MIBOR Overnight, MIBOR 12 Months Swap Rate,
MIBOR 3 Year Swap Rate, MIBOR 5 Year Swap Rate,
INR/USD Exchange Rate, CBLO O/N Rate and G-sec
10-year yield. A look-back period of data for the 500
days was considered for the analysis. While the traded
rates were included in respect of CBLO and G-Sec 10
year time series, the rates published by RBI for INR/
USD reference rate was considered for the exchange
rate. Similarly, rates published in Reuters for MIBOR
12 Months Swap Rate, MIBOR 3 Year Swap Rate and
MIBOR 5 Year Swap Rate and MIBOR overnight rate
published by NSE were considered in the time series.
4. Lambda – A time decay factor
RiskMetrics refers Lambda as a decay factor which
determines the relative weights that are applied to the
observations (returns) and the effective amount of data
used in estimating volatility. High value of lambda
(nearer to one) indicates slower decay in the series,
i.e. shocks are less quickly absorbed due to a smoother
series and more historical data is included. Low value
of lambda indicates faster decay, i.e. the weights fall off
more quickly and fewer data points are used.
6. Methodology
The lambda value for each of the above time series was
calculated by employing Root Mean Squared Error
(RMSE) criterion and Normal Likelihood (LKHD)
criterion as under:
J.P. Morgan conducted an extensive research to measure
the market risks in portfolios of fixed income instruments,
equities, forex, commodities and derivatives markets.
It launched its study through RiskMetrics Technical
document in October 1994. RiskMetrics, in its technical
document, has mentioned the methodology to determine
an optimum decay factor which would be suitable for
any market worldwide. RiskMetrics considered 480
time series across various countries to estimate volatility
and correlation. RiskMetrics has adopted Root Mean
Squared Error (RMSE) to arrive at optimal decay factor
considering all time series.
7. Normal Likelihood (LKHD) criterion
Normal LKHD criterion assumes that returns are
conditionally normal, which specifies the joint
probability density of returns given a value of the decay
factor.
The density function for the return on day “t” is given
by:
The value for density function is calculated for all 500
days. The conditional distributions for all days are
combined to arrive at the following equation.
RiskMetrics has chosen optimal decay factor as 0.94
for daily returns and 0.97 for monthly estimates which
are globally widely used for estimating volatilities and
correlation forecasts. Exchanges and clearing houses in
India too are using the lambda value of 0.94 in their
EWMA method for computing volatility. It has ignited
the curiosity to see as to whether any other lambda value
could be more justifiable and which could be arrived at
based on the movement of market variables in Indian
money market, sovereign debt market, forex market and
interest rate swap market.
The above equation is known as the normal likelihood
function. The maximum likelihood (ML) principle
stipulates that the optimal value of the decay factor
lambda is one which maximizes the above likelihood
function. This equation can also be written as following:
5. Data
To begin the analysis, it was decided to undertake
the study the suitable lambda value, proposed to be
computed by different methodologies, for the above
The lambda can also be calculated by minimizing the
above equation.
155
8. Root Mean Squared Error (RMSE)
criterion
The above equation is a function of lambda. The
optimal decay factor is calculated by minimizing the
above equation. The optimal decay factor applied by
RiskMetrics is a weighted average of individual optimal
factors where the weights are a measure of individual
forecast accuracy.
According to RMSE criterion, squared variance error
is calculated for all 500 days. By combining all the
errors, root mean squared prediction is arrived at which
is given by:
Results
Using the above two methods, the lambda value for
different asset classes and the results are as under:
Table-1: Benchmark-wise lambda values based on RMSE criterion and Normal Likelihood criterion
Normal Likelihood
Benchmark
RMSE criterion
criterion
MIBOR Overnight
0.3497
0.9351
MIBOR 12 months Swap
0.9390
0.9179
Rate
MIBOR 3 year Swap Rate
0.9503
0.8767
0.9511
0.8958
CBLO O/N Rate
0.9601
0.9244
G-sec 10-year
0.9584
0.8670
INR/USD Xrate
0.9336
0.8234
The optimal decay factor is arrived at by taking weighted average of individual optimal decay factors.
Accordingly, the lambda value arrived at based on these two methods is given below:
Table-2: Lambda Value
Normal LKHD
Lambda (λ)
0.8885
RMSE
0.9497
variance, the lambda values so arrived were subjected
to exception analysis i.e. how many days that the actual
variance exceeds the forecast variance. The actual
variance was compared with forecasted variance using
such lambda values and an attempt was made to capture
the failure rate by counting the number of times that
the volatilities fall beyond the limits at 99% Confidence
Interval (CI) on distribution. EWMA variances were
calculated for all the seven time series followed by the
standard deviation. Further, standard deviation was
multiplied with z-score at 99% CI to set the limits on
distribution. Subsequently, the returns were compared
to check as to whether the actual values were within
the EWMA values or not and this process was repeated
for all 500 data points for all series. The results are
tabulated below for comparison.
It is interesting to observe from Table-1 that the lambda
value calculated by RMSE method is greater than 0.93
for all assert classes except MIBOR Overnight for
which the lambda value is found to be a clear outlier,
i.e. 0.3497. However, the lambda value computed
as using Normal Likelihood Function, as per Table-1
above, is fluctuating between 0.82 and 0.94. But, the
weighted average lambda value has been found to be
0.9497 i.e. 0.95 under RMSE and 0.8885 i.e. 0.89 under
Normal LKHD. The lambda value of 0.95 computed
using RMSE method is almost closer to the value
recommended by RiskMetrics.
In order to test the significance of the lambda value
computed as per the above methods in forecasting
156
Table-1: Benchmark-wise lambda values based on RMSE criterion and Normal Likelihood criterion
Normal Likelihood
Benchmark
RMSE criterion
criterion
MIBOR Overnight
0.3497
0.9351
MIBOR 12 months Swap
0.9390
0.9179
Rate
0.9503
0.8767
0.9511
0.8958
CBLO O/N Rate
0.9601
0.9244
G-sec 10-year
0.9584
0.8670
INR/USD Xrate
0.9336
0.8234
From the Table-3 above, it can be seen that the failure rate for lambda at 0.9497 computed as per RMSE method
was found to be lower as compared to the failure rate for lambda at 0.94 and 0.8885. The volatility forecast using
the lambda value of 0.9497 has thrown 3.57% failure as against 3.74% and 4.51% failure in the case of volatility
forecast with lambda value of 0.94 and 0.8885 respectively. The Technical Document of RiskMetrics talks about the
number of historical observations required by the EWMA Model for a specific decay factor at specific tolerance level.
Following table shows the relationship between the tolerance level, the decay factor, and the effective amount of data
required by EWMA:
Decay Factor
0.85
0.86
0.87
0.88
0.89
0.90
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
Table-4: Effective Amount of Data Required
Days of historical data at tolerance level
0.001%
0.01%
0.1%
71
57
43
76
61
46
83
66
50
90
72
54
99
79
59
109
87
66
122
98
73
138
110
83
159
127
95
186
149
112
224
180
135
282
226
169
378
302
227
570
456
342
1146
916
687
The above table reveals that while the lambda at 0.89
requires only 40 days at 99% CI, the lambda at 0.94
requires 74 days at same CI. Thus the lambda value of
0.89 gives more weight to the volatility of recent days
as compared to lambda value computed by RMSE.
Professor Jayanth R. Varma from IIM-A, in his research
paper “Risk Management Lessons from the Global
Financial Crisis for Derivative Exchanges”, has talked
about the relevance of choosing lambda value as 0.94
over 0.995. He stated that when lambda is 0.94, the most
1%
28
31
33
36
40
44
49
55
63
74
90
113
151
228
458
recent 11 days account for half the weights and the most
recent 37 days account for 90% of the weights. However,
when lambda is raised to 0.995, the corresponding
numbers are 138 days and 459 days. Therefore the effect
of a wrong initial volatility estimate lasts for about 1-2
years when lambda at 0.995. On the other hand, with
lambda at 0.94, the initial value affects the estimates
only for the first month or so. It is proposed that when
lambda at 0.995 is used, the volatility estimates should
be initialized on a date at least 3 years in the past so that
157
the initial value has a negligible impact on the current
volatility estimate. When lambda of 0.89 (generated
by LKHD method) is used, it is observed that the most
recent 6 days account for half the weights and the most
recent 20 days account for 90% of the weights whereas
the lambda of 0.95 (generated by RMSE method) is
used, it is observed that the most recent 14 days account
for half the weights and the most recent 45 days account
for 90% of the weights.
RiskMetrics Group found that the variance forecast at
lambda equal to 0.94 is more close to realized variance
rate than any other lambda value. Our study has found
that the lambda value of 0.95 has performed better
than 0.94 and 0.89 in the exceptional analysis. Since,
the number of research studies on lambda value is very
limited, it, at this juncture, appears that the lambda
value of 0.94 as advocated by RiskMetrics Group for
forecasting of variance is appropriate. Moreover, it also
needs to be studied as to whether it would be beneficial
to compute the lambda value for each asset class at
periodic intervals and also across asset classes by taking
into account the correlation factors and use such values
for forecasting variance rather than adhering to a single
value at all times.
Conclusion
The selection of lambda value primarily depends on
the consideration of volatility for the number of days
in past. If the market is volatile for longer time in past,
then higher lambda value can be selected. With high
lambda value, the weight decays at a slower rate and
more number of days can be taken into consideration.
On the contrary, if volatilities across few days are to
be considered then lower value lambda can be chosen.
Lower value will cause the weight to decay at higher
rate and less number of days can be considered.
References:
1. RiskMetrics – Technical Document, 1996
2. Varma J R (2009) – “Risk Management
Lessons from the Global Financial Crisis for
Derivative Exchange”, February 2009
158
A study on Cultural intelligence in
Cross-Cultural Leaders
KALAI LAKSHMI, Senior Lecturer, Dept. of Management Studies, Sathyabama University,
Chennai
Dr. S. S. Rau, Registrar, Sathyabama University, Chennai.
Leaders in global Environment
Introduction
Culture is developed, transformed and transmitted
through the conscious and unconscious activities of
every member in the organization. It is however, the
leader’s driving force and ability to facilitate preferred
mind-sets as well as preserve, create, and transmit the
essence of existing culture as he leads his subordinates
to new challenges. Culture and leadership augment each
other in bringing excellence to the enterprise. (Schein,
1997).Cultural intelligence is defined as the ability to
interact with others from diverse cultural backgrounds,
being aware of our cultural values that drive our attitudes,
behaviors, and beliefs. In certain cultures, trust is built
quickly and is based on competence, proactive sharing
of information, and integrity. In some other cultures,
the preference is for deep trust that develops over time,
and that is based on compatibility, benevolence, and
security. In these cultures, relationships, reputation, and
influence are the building blocks for trust. We live and
work in a world that is an integrated entity, increasingly
influenced by external cultural factors. For those in
leadership positions it is not only necessary to have a
high IQ and EQ (emotional intelligence), but strong
Cultural Intelligence (CQ) is also increasingly regarded
as a necessary skill to succeed in today’s global business
community.
Adapting
Culturally intelligent leaders are comfortable in adapting
their behavior to suit different circumstances without
changing their inherent leadership style. With stronger
awareness they can determine whether, for example,
their followers are from an individualistic versus a
collectivist culture, whether they work better in an
autocratic versus a bureaucratic environment, whether
they are motivated by incentives versus punishment,
whether they respond to an informal versus formal
approach, etc. Successful global leaders spend time
with their followers to understand their comfort level
and listen to what is said and not said.
Communicating
Culturally intelligent leaders understand that the way
they communicate is critical to their success. Once they
are aware of the cultural attributes of their followers
and have adapted to their environment, it will be easier
to tweak their communication style accordingly. Apart
from the obvious need to use clear language, this may
also mean determining how much information needs
to be imparted in order to achieve the required goal
and what the consequences and/or rewards are for the
followers. It also means adjusting communication styles
to take into account whether the follower’s culture is
one that exhibits an implicit rather than explicit manner,
as well as non-verbal communication traits.
Effective global leaders are a vital asset for
organizations today (Van Dyne & Ang, 2006). In
this global environment, leaders who are capable of
understanding, functioning and managing are valuable,
rare, and inimitable resource that can offer firms a
competitive advantage (Ang & Inkpen, 2008; Barney,
1992). Training and development of global leader
competencies is one of the top five organizational
practices that significantly influences effectiveness of
multinational companies (Stroh & Caligiuri, 1998).
Fig 1: Leaders in global environment
The Cultural Intelligence (CQ) Model
Most of us know that IQ or intelligence quotient is
a measurement of one’s intellectual capabilities. In
recent years, we’ve also seen the significance of EQ
or emotional intelligence one’s ability to lead and
interact with effective emotional sensibilities. Cultural
intelligence builds upon some of these same ideas
159
but instead focuses specifically on one’s capability to
effectively understand and adapt to a myriad of cultural
contexts as an additional and essential skill set needed
by contemporary leaders (Ng, Van Dyne, & Ang,
2009). Thus, cultural intelligence provides a researchbased model for becoming a more effective leader in
culturally diverse settings and across cultural settings.
so we can plan and interpret what’s going on in
diverse contexts. It’s the ability to think about our own
thought processes and draw on our cultural knowledge
to understand a different cultural context and solve
problems in that situation.
When meetings involve individuals from different
cultural contexts all the rules change that’s were
metacognitive comes in. Metacognitive includes
Cultural intelligence
Motivational
Fig2: Factors
intelligence
Cognitive
Metacognitive
Enhancing
Overall
•
Awareness
o
Being in tune with what’s going on in one’s self
and others
•
Planning
o
Taking the time to prepare for a cross-cultural encounter, anticipating how to approach the people, topic, and situation.
•
Checking
o
It is the monitoring we do as we engage in
interactions to see whether the plans and expectations
we had are appropriate
Behavioral
Cultural
The factors that are helpful for enhancing overall
cultural intelligence.
Motivational CQ (Drive)
The motivational factor of CQ refers to the leader’s level
of interest, drive and energy to adapt cross-culturally;
it gives the energy and self-confidence, to pursue the
needed cultural understanding and planning.
Behavioral CQ (Action)
It provides us with the ability to engage in effective
flexible leadership across cultures. It influences whether
we can accomplish our performance goals effectively in
light of different norms across cultural situations. one of
the important aspects of behavioral is knowing when to
adapt to another culture and when not to do so.
Motivational cultural intelligence includes
Intrinsic motivation
The degree to which you derive enjoyment from
culturally diverse situations
The behavioral factor includes the capability to be
flexible in verbal and non-verbal actions
Verbal
Tone - Loud vs. soft
In which words are spoken can convey different
meaning across cultures
Extrinsic motivation
The more tangible benefits you gain from culturally
diverse experiences and self efficacy-your confidence
that you will be effective in a cross-cultural encounter.
Cognitive CQ (Knowledge)
Non-verbal
It provides us with an understanding of basic cultural
cues. It also includes the overall understanding of the
ways that cultures vary from one context to the next. It
refers to the leader’s level of understanding about culture
and culture’s role in shaping the way to do business and
interact with others across cultural contexts.
The exact words and phrases we use when we
communicate specific type of messages.
Feedback loop
Others respond to our behavior; this influences our
Motivational CQ; and the cycle starts over — leading
to further enhancement of overall cultural intelligence.
Metacognitive CQ (Strategy)
It allows us to draw upon our cultural understanding,
160
Hofstede’s dimension
spite of the leader but rather he or she succeeds with the
leader. Success requires cooperation between leaders
and followers, and it requires cooperation among the
leaders themselves .More constructive feedback will be
provided when the employee recognizes the importance
of each individual’s contribution to the success of the
team. Organizations are increasingly applying the team
concept in the design of work. Leaders today must be
effective at managing and leading not just individuals
but teams as well. A servant-leader is an excellent fit with
the self-managing teams employed in many of today’s
organizations. These teams are empowered to manage
themselves and the leader’s role is to assist the team by
removing any roadblocks that interfere with its path to
success. In other words, the leader is there to develop
the employees into leaders and employee development
is a key characteristic of the servant-leader. A low to
moderately individualistic culture appears to be the best
fit for the leader.
Hofstede (1993) identified five cultural dimensions that
provide a framework for identifying similarities and
differences across cultures. Each of these characteristics
will be applied to determine the best cultural fit with
leadership theory.
Power Distance
The degree of inequality among people which the
population of a country considers as normal: from
relatively equal (that is, small power distance) to
extremely unequal (large power distance)” (Hofstede,
1993, p. 89). In order to be effective, the leader requires
significant participation and interaction with employees.
Employees must feel free to contribute their thoughts,
opinions and recommendations, while leaders must
respect these contributions and utilize them as a basis
for building a more effective workplace. In a society
where each member is viewed as having an important
role regardless of his or her social or economic position,
or his or her position in the societal or organizational
hierarchy, it is expected that there will be a free flow of
ideas and discussion, thereby empowering employees to
take some control and responsibility in the workplace.
Masculinity
The tough values like assertiveness, performance,
success and competition with the male role, while
he identifies more tender values like quality of life,
maintaining warm personal relationships, service,
care for the weak, and solidarity with the female role
(Hofstede, 1993, p. 90). The effectiveness of the leader
depends on his or her ability to develop a personal
connection with the employees. It requires that leaders
understand the needs and desires of their employees
so that they can individualize their jobs, rewards, and
training to fit the needs, experiences and desires of
those employees. It requires building trust and loyalty
so that the leader can empower those employees to take
the lead in the workplace.
Low power distance
Leaders from low power distance countries are much
more likely to acknowledge the capabilities of their
employees to assume these tasks and complete them
successfully.
High power distance
It is unlikely that employees would provide accurate
feedback to their managers and it is similarly unlikely
that managers would consider it a meaningful and useful
source of data for performance improvement.
The application of feminine qualities is a way to secure
the valued masculine outcomes. The culture rating low
to moderate on the masculinity characteristic would
provide an environment most conducive to the success
of the leader.
Individualism
The degree to which people in a country prefers to act
as individuals rather than as members of groups.
The leader and the employees work together much more
closely as a team. Employees and leaders jointly address
issues in the workplace and collectively determine an
outcome that is in the best interest of the employees
and the organization. The employee does not succeed in
Uncertainly Avoidance
The degree to which people in a country prefer structured
over unstructured situations” (Hofstede, 1993, p. 90).
Rather than a traditional workplace where the leader
161
sets the rules, the quotas, assigns the work and evaluates
the performance of the employee, a workplace guided
by a leader will push these responsibilities down to the
employees themselves. The employees must be prepared
to stand up and accept these new responsibilities. For
many this will be new territory and there will likely
be some reluctance as they are uncertain about how
to perform these new roles. But as employees gain
experience and confidence, the leader fulfils his or her
goal to develop new leaders for the organization. The
leader will provide training and guidance to employees
as they take on these new responsibilities, and ultimately
the employees will experience personal and professional
growth and success. A society that shuns new
experiences, that resists change and new organizational
structures will fail to embrace these new opportunities.
Employees who do not develop leadership skills will
therefore be trapped in their current roles with no hope
of self actualization. Leaders and employees who have a
higher tolerance for uncertainty will be more effective.
Long-term versus Short-term Orientation
On the long-term side one finds values oriented towards
the future, like thrift (saving) and persistence. On the
short-term side one finds values rather oriented towards
the past and present, like respect for tradition and
fulfilling social obligations” (1993, p. 90).
effectiveness, strategic planning, decision-making,
negotiation, conflict resolution, team building and
information sharing, while working with diverse cultural
groups and in new global settings. To be a competitive
player in the global scene, incorporating IQ, EQ and
CQ competencies is a necessity.
Due to the impact of progressed globalization on firms
and the factor that lead to effective global leadership,
businesses need to embrace cultural and emotional
intelligence as portion of their global leadership
program. Any cross-cultural leader is not born as a
leader and is able to improve the leadership capabilities
by training
Reference
1. Chen Oi Chin, Ph.D U.S.A. Global Leadership
Competence: A Cultural Intelligence Perspective
2. Nerella Campigotto. Cultural Intelligence: The
Key to Global Leadership
3. Linn Van Dyne, Soon Ang Nanyang, David
Livermore Cultural Intelligence: A Pathway for
Leading in a Rapidly Globalizing World Michigan
State University, Technological University,
Cultural Intelligence Center East Lansing,
Michigan
4. Livermore, D. (2009) Leading with cultural
intelligence: The new secret to success. New York:
5. Business Horizons (2005), 48 pp501-512 “Global
leadership success through Emotional and cultural
intelligences”
6. Maureen Hannay, Troy University, Journal of
International Business and Cultural Studies
7. The Cross-cultural leader: The Application of
servant leadership theory in the international
context.
The leader work is to develop the employee in such a
way as to maximize his or her long-term potential. The
leader seeks to develop each employee by meeting his
or her needs in both the short-term and the long-term.
This means the leader utilizes immediate rewards (like
cash compensation) but also takes a longer-term view
of building a more committed and engaged employee
and ultimately an organizational leader. The leader will
utilize training, career development, challenging job
assignments, and educational opportunities to build
skills that the employee will need in the long term.
Acquiring more skills and higher level competencies
that will prepare the employee for future opportunities.
Conclusion
In order to interact effectively with diverse followers in
given situations, effective global leaders require IQ, EQ
and CQ competencies. Cultural Intelligence, while not
new, is newly recognized. There is much more research
required on how it affects leaders’ communication
162
The Impact of IT Governance Practices & Human Resources
on Business- IT Alignment
-
Dr. Mu.Subrahmanian, Professor, Dept. of Management Sciences, Velammal Engineering College, Chennai,
Lakshmi Vishnu Murthy Tunuguntla, Research Scholar, School of Management, SRM University Chennai,
1.Introduction
Information technology (IT) alignment with business has been a significant management concern over the last two
decades (Luftman, Kempaiah and Nash 2006). Information systems (IS) strategic alignment is a nebulous concept that
has engendered much debate and many definitions (Chan, Huff, Barclay and Copeland 1997). In fact IT Governance
is thought out in different organizations and High Level IT-Governance models were created. However developing
the High Level IT Governance model to improve Business-IT alignment is only a first step. Much depends on the
implementation of this model at the organization level. This paper is focusing on both the parts.
IT governance is the organizational capacity exercised by the board, executive management and IT management to
control the formulation and implementation of IT strategy and in this way ensure the fusion of business and IT (Van
Grem- bergen, 2000). The three layers of IT Governance responsibility is described as shown below.
The Business- IT alignment is described as shown in the below diagram
163
2.
Literature Survey and Critical Governance
Practice Identification
The IT governance literature has been surveyed and
the following IT governance Practices are found to be
influencing the Business – IT Alignment. The critical
ones that have the maximum information were included
in the references.
1.
Vision for IT department/understanding the Vision for IT
2.
Build Enabling Mechanisms
3.
Business Value Planning
4.
Build and Implement Communication Strategy
1.
•
•
•
•
Hypothesis Formulation
Hypothesis – 1 (H1) - Articulating and
communicating the vision for IT would
positively influence the IT-Business alignment.
Hypothesis – 2(H2) - Building enabling
mechanisms would positively influence the ITBusiness value alignment
Hypothesis – 3 (H3) - Performing Business
value Planning would positively influence the
IT-Business alignment
Hypothesis – 4 (H4) - Development
Enabling Technology
6.
Build Partnership
7.
Develop Scope and Implement architecture
8.
Develop & Implement Portfolio Management Practices
9.
Develop and Implement IT (Project) Investment management
10. Human resource skills
All these IT Governance Practices are organized in to
an integrated Frame work as described below.
Objective of the Study
Understand and Analyze the relationship
between the Business/IT alignment and various
factors influencing the Business/IT alignment
as listed in the Research model in the Indian
context in the entities that are captive IT
organizations, system integration and Product
development service providers
2.
5.
•
•
•
•
•
communication strategy would positively
influence the IT-Business alignment
Hypothesis – 5 (H5) - Building relational
mechanisms would positively influence the ITBusiness alignment
Hypothesis – 6 (H6) - Develop Scope and
implement appropriate IT architecture would
positively influence the IT-Business alignment
Hypothesis – 7 (H7) - Develop and Implement
IT (Project) investment practices would
Hypothesis – 8 (H8) - Develop and Implement
IT Portfolio Management practices would
Hypothesis – 9 (H9) - Build Human resource
skills would positively influence the ITBusiness alignment
3.
Research
Model
Independent Variables)
164
(Dependent
and
165
7.
Research & Sample Design
to Business-IT alignment .
Research Design
 Sampling Frame or Source List –
Descriptive research has been planned
The source list will be consisting of
for this study. The study is a fact finding
the Program Managers, Directors/
investigation aimed at presenting the current
Vice Presidents and top management
state against the Independent variables
of the organizations that are sampled
identified from the Literature. Based on the
understanding of the current state of the
 Size of Sample – 40 organizations
independent parameters, identify a set of
which
IT governance factors that have correlation
development/Product
with Business- IT alignment in the Indian
or Captive units would be chosen .
context.
A total population of 300 people are
are
in
to
Application
development
envisaged from the above categories.
Sample Design
 Type of Population – finite universe:
 Sampling Plan - -
Probabilistic,
In this study, it is planned to cover IT
purposive / judgmental sampling plan
Industry (Captive IT Organizations,
selected in such a way that only the
Application
product
important item representing the true
Development organizations) in India
characteristics of the population are
(Bangalore,
included in the sample
development,
Hyderabad,
Chennai,
Mumbai and Pune)
 Desired Outcome
 Sampling
Unit
Organization
Application
–
that
social
is
unit:
•
involved
development,
Provides the correlation between
the listed IT governance factors and
product
Business –IT alignment
development or Captive IT units in
•
India
Provides the list of Governance
Practices that are effective that could
be used by the Industry to improve
 Population
The
Parameters
Designation,
Role
of
–
Business – IT alignment in the Indian
the
context.
Person/ Experience Level in IT/
Business Program Managers, Vice
Presidents and top management of
the organization in India handling
Program
Management,
Product
development and responsible for the
value add to the customer contributing
166
Technologies, University of Bridgeport
9.References
1.
Pete
Waterhouse,
Director,
Product
A Study of the Causal Relationship
Marketing, Business Service Optimization,
between IT Governance Inhibitors and Its
CA
Success in Korea Enterprises
6.
Chi-Hoon Lee, Jung-Hoon Lee, Jong-
for
Technology
Mooney, John, University of California,
jhoonlee@
Irvine, Gurbaxani, Viijay, University of
[email protected],
California, Irvine Kraemer, Kenneth L.,
University of California, Irvine
[email protected]
7.
Practices in IT Governance and Business/
A Causal Model Of Strategic
IT Alignment, By Steven De Haes, Ph.D.,
Alignment
and Wim Van Grembergen, Ph.D.
Performance
Structures,
processes
and
Van
Grembergen,
Firm
Masa’deh, Ra’ed, Nottingham University
Road, Nottingham, UK, raedmasadeh2003@
yahoo.co.uk
Governance: Theories and practices
Wim
And
Business School, Jubilee Campus, Wollaton
relational
mechanisms for Information Technology
University
Kuk,
George,
Nottingham
University
Business School, Jubilee Campus, Wollaton
of Antwerp & University of Antwep
Management School
Framework
School of Information, Yonsei University,
yonsei.ac.kr,
Oriented
Assessing the Business Value of Information
[email protected],
3.
Process
Sung Park, Kap-Young Jeong Graduate
Seoul, Korea
2.
A
Road,
Nottingham,
UK,
g.kuk@
nottingham.ac.uk
Steven De Haes, University of Antwerp
Management School Erik Guldentops, IT
8.
Governance Institute
GETTING VALUE FROM IT BEGINS
WITH AGILE, RESULTS-ORIENTED IT
4.
GOVERNANCE
Achieving andSustaining Business- IT
Eric Bartholet, Mark Budd and Fran Turisco
9.
Aligning IT to Corporate Objectives:
alignment
5.
Jerry Luftman, Tom Brier
Organisational Factors in Use
Framework and Roadmap: How to Plan,
Deploy and Sustain for Competitive
Ivor Jonathan Farrell Dip.Tech.,
10.
ASSESSING STRATEGIC ALIGNMENT
Advantage
Dr. Gad J. Selig, PMP, Managing Partner,
IN REAL-TIME
GPS Group, Inc & Associate Professor,
Management
and
Technology
and
Director, Center for Business Information
167
Raymond Papp, University of Tampa
11.
IT Governance on one Page, MIT Sloan,
Peter Weill, Jeanne W.Ross
13.
Ideal patterns of strategic alignment and
business performance: Francois Bergeon,
Louis Raymond , Suzanne Rivard
12. Why business needs should shape IT
architecture – Mekinsey on Business
TEchnolgy Nov 2010
168
Monthly Effects in Indian Stock Market
P. Nageswari, Ph.D Research Scholar
Dept. of Commerce and Financial Studies, Bharathidasan University, Trichy
Dr. M.Selvam
Associate Professor and Head, Dept. of Commerce and Financial Studies, Bharathidasan University, Trichy
Kiran Jindal (2006) investigated one of anomalies by
1. Introduction
segmenting pre and post rolling settlement. The result
Efficient Market Hypothesis (EMH) is one of the
of this study found that the returns of the month effect
grossly researched areas of financial economics. One
and semi monthly effect were prevalent in the Indian
of the significant anomalies of EMH is seasonal effect.
stock market. Guneratne B Wickremasinghe (2007)
It is important that testing for a seasonal effect in
using the sample of 75 companies from Colombo Stock
monthly returns has been given considerable attention
Exchange (CSE) found that there are no statistically
in the financial literature. The existence of the seasonal
significant differences among the returns for different
effect negates the week form of the EMH and it implies
days of the week. The analysis of this study indicates
market inefficiency of the markup. Several studies and
that the returns for the month of January are not different
tests investigated the seasonal behavior of monthly
from those that of the other months of the year. The study
stock market returns on all forms of EMH. Some cross
found that daily and monthly patterns of returns cannot
sectional differences among stock returns were found
be used to devise any method to profit from trading in
to occur with regularity. These regularities in the stock
shares in the Colombo Stock Exchange (CSE). Hareesh
returns have been termed as anomalies. An investigation
Kumar.V and Malabika Deo(2007) analyzed the
to these anomalies can be used to frame investment
efficiency of Indian Stock Market by using S&P CNX
strategy to outperform a naïve buy and hold strategy.
The different patterns identified in stock returns include
500 Index. They found out the presence of Day of the
the January effect, day of the week effect, different
Week Effect in the Indian Stock Market, which affected
monthly effect like Turn of the month effect, semi
both the stock returns and volatility, thereby proving
month effect, the end of the month effect, etc.
the Indian Stock Market to be inefficient. Ushad
Subadar Agathee (2008) found that the average returns
of Stock Exchange of Mauritius (SEM) lowest in the
2. Review of literature
month of March and Highest in the month of June.
A brief review of select studies has been presented here
The equality means-return tests show that returns are
to understand research gap and methodologies employed
statistically the same across all months. The regression
in the research area of calendar Anomalies. Harvinder
analysis reveals that returns are not independent on
Kaur (2004) analyzed the nature and characteristics of
the months of the year, except for January. Khokan
stock market volatility in India and the US. The study
found that the response to news arrival is asymmetrical,
Bepari and Abu Taher Mollik (2009) investigated
meaning that the impact of good and bad news is not the
the existence of seasonality in return series of DSE
same. The volatility forecast models are used for Sensex
of Bangladesh. The study confirmed the existence of
and Nifty returns to show that the day of the week
seasonality in stock returns in DSE but didn’t support
effect and the January effect are not present. The return
the tax loss selling hypothesis. The study found that
and volatility on various weekdays have somewhat
there was an April effect in DSE and invalidated the
changed after the introduction rolling settlement. There
paradigm of the efficient market hypothesis in DSE.
was mixed evidence of return and volatility spillover
Anoki Parikh (2009) examined monthly returns
between the US and Indian markets. B. S Badla &
of the Nifty index for the period 1999-2008. This
169
study used the GARCH (Generalized Autoregressive
Conditional Hetroskedasticity) model & Exponential
The present study intends to accomplish the following
GARCH model to capture the non normality of the
objectives
•To identify the monthly effect exist in the Indian
return series such as skewness clustering. Nageswari.P
Stock Market,
and Selvam.M (2010) examined the Day-of-the Week
•To summarize the findings of the study.
Effect on the Indian Stock Market after the introduction
of the Compulsory Rolling Settlement. It was found
that the Mean Returns were positive for all days of the
5. Hypothesis of the Study
week, highest being on Friday for selected indices and
The present study tested the following null hypotheses
NH1: There are no significant differences between the
the day of the week pattern did not appear to exist in the
Indian Stock Market.
monthly returns.
The above literature provides an overview of valuation
6. Methodology of the Study
a) Sample Selection
of Monthly Effects in various Stock Markets. An attempt
For the purpose of this study, S&P CNX 500 Index is
is made in this study to analyze the “Monthly Effects
in Indian Stock Market” taking model of above study.
considered as sample Index. Besides, this is the best
3. Statement of the Problem
S&P CNX 500 is India’s first broad based benchmark of
indicator of the performance of the whole economy. The
the Indian capital market
The firms and Governments generally release good
news between Monday and Friday and bad news on
b) Sources of Data
the week-ends. As a result, the bad news is reflected in
The required information of the present study were
lower stock prices on the next trading day (Mondays)
collected from the www.nseindia.com and prowess,
and good news is reflected in higher stock prices on
which is corporate database maintained by CMIE.
Friday. The investors, who wish to reduce their tax
liability, may sell the loss making shares before filing
c) Period of the Study
their tax returns in order to set off capital losses against
The present study covers a period of five-years from 1st
capital gains. This would reduce the share price further.
April 2005 to 31st March 2010.
Similarly, in the Month of January, firms release new
information pertaining to the previous accounting year.
7. Monthly Effect
When new positive information reaches the market,
When the returns in some months are higher than that
the prices become bullish due to buying pressure.
of other months, this anomaly is called as ‘monthly
The active trading strategies, based on the knowledge
effect’. January effect is the most studied pattern of
of market anomalies, would provide benefits to the
month of the year effect. It is defined that the January
investors; but the countervailing arbitrage will also
stock return is higher than the other months of the year,
exploit the excess return over time. In the process,
and it is caused normally by a significant low return in
observed anomalies will eventually disappear and
December.
pave the way to make the market more efficient. In this
environment, it is necessary to periodically find out
8. Tools Used for Analysis
whether these types of Anomalies exist in the Stock
In this study, independence of return series was
Market. Against this background, the present study “An
investigated for Nifty and Sensex index. The following
Empirical Analysis of Monthly Effects in Indian Stock
were calculated,
Market” is significant.
170
i) Returns:
the monthly patterns we construct almost an identical
Rt = In ( Pt Pt − 1) * 100
model.
This model has been used e.g. by Mehdian and Perry
Where,
(2001). Therefore, we employ the following regression:
Rt
Return at the time t.
Pt The closing price of the day.
Pt − 1 The closing price of the day t-1.
Rit = α1i D1 + α2iD2 + α3i D3 +,…, α10i D10 + α11i D11 + α12i
D12 + Vit
where Rit is the monthly return of the index i as defined
earlier in equation 1, D1 through D12 are dummy variables
ii) Descriptive Statistics
for each month of the year such that D1 takes a value of
In this part, Statistics of the daily return, Standard
1 for all January observations and zero otherwise and
deviation, Skewness, kurtosis and jerque-bera tests
so on. The coefficients from α1 through α12 are estimates
were analyzed.
of the return for each month from January through
December. Vit is the disturbance term. Again we can
iii) Kruskall-Wallis Test
consider our null hypothesis as follows:
H = α1 =α2 = α3 …, = α10 =α11 =α12= (0)
The Kruskall-Wallis Test is an appropriate one
for testing the data typified of non-normality,
Again, we want to test if stock returns in e.g. January
heteroskedastic variance like security returns (Jason,
differ from the returns in other months. We reject
1996). The Kruskall-Wallis Test employed for testing
the null hypothesis if we find some form of monthly
the equality of mean returns for different days of the
seasonality that is statistically significant.
week. The Kruskall-Wallis Test ranks the entire set of
observations— higher the value, higher the rank and
9. Results and Analysis of the Study
vice-versa – and then arranges them into nj x 5 matrix
For the purpose of this study, the following analysis is
where nj represent the rank of the return and columns
made as given below,
represent the day-of-the-week — Monday through
Analysis of Descriptive Statistics
Friday. The formula for calculating the Test Statistic
Results of Kruskall-Wallis Test
‘H’ is as under:
Results of Regression Test
1. Analysis of Descriptive Statistics for S& P CNX
5
12
R2 j
X∑
− 3( n + 1)
N ( N + 1) J =1 n
j
500 Based Monthly Returns
Table 1 presents the Descriptive statistics for S&P
CNX 500 Index monthly returns on the sample period
H =
Where: Rj = Sum of the Ranks in the jth Column
nj = Number of Cases in the jth Column
N= Sum of Observations in all the Columns.
from 1st April 2005-31st March 2010. In the Table are
iv) Linear Regression Model
are negative mean returns for the months of January,
According to the Monthly effect there appear some
February, June and October. And positive mean returns
systemic patterns in the stock returns depending on
for the remaining months. Highest mean return for the
the Month. Therefore we test if the monthly returns
month of April (.0032) most negative mean returns
are statistically different from each other. Basically
for the month of October. This implies that, for the
we do this by using Eviews program and the linear
month of March and investors towards the end of the
regression model and the ordinary least squares-method
year tend to sell the loss making shares so as to reduce
(OLS). Brooks (2002) suggests several assumptions
their tax burden putting the downward pressure on the
for the classical linear regression model. For testing
stock prices. In April they again start buying the shares.
shown number of observations (N), mean, standard
deviation, skewness and kurtosis. Series normality is
tested by Jarque- Bera test. The Table shows that there
171
This April puts the upward pressure on stock prices
and it results in higher return in the month. Standard
Deviation ranges from 1.4% to 2.5%. The highest
(0.0254) Standard Deviation earned for the month of
October with negative mean return and lowest (0.0144)
Standard Deviation earned for the month of September.
It found that the market was more volatile for the month
of October and least volatile for the month of September.
It also found that there is inverse relationship between
return and risk (negative mean return with high Standard
deviation).
3. Regression Analysis for S& P CNX 500 Based
Monthly Returns
Results of the regression analysis for S&P CNX 500
Index based monthly Returns during the sample period
2005-2010 are shows in Table 2. The above Table
showed the estimated coefficients for each month,
t-value and p-value. The F-value measures the equality
of coefficients. The coefficients in August seem to be
statistically significant at 1% risk level. Other months
does not seem to have any statistically significant
coefficients. However, based on the F-value we cannot
reject our null hypothesis and therefore we are not able
to confirm August anomalies in S&P CNX 500 Index
during the sample period
The monthly return distribution was positively skewed
for the month of May and negatively skewed for all other
months. The Peak of the Monthly Return distribution
was leptokurtic for all months and highest (21.32)
on for the month of May. Jarque- Bera test which is
commonly used method in normality testing. The test
shows that the null hypothesis, which suggests that
the series are normally distributed, is rejected at 0.01
significance level for each index for all time periods. It
shows that either the monthly returns are not so normally
distributed. Only the returns for June and April seem to
be normally distributed at 1% level. Again, one reason
for non-normality could be the kurtosis.
10. Summary of Findings and Suggestions of
the Study
The following are important findings and suggestions
of the study,
•
Figure 1 clearly indicates that the daily mean returns
for the month April is higher than other months of
the year. And also clear that there was negative mean
returns earned for the month of January, February, June
and October.
•
•
2. Results of Kruskall-Wallis Test for S&P CNX 500
Index
The analysis of Kruskall-Wallis test for S& P CNX 500
Index is also given in Table-1. The Kruskall-Wallis
test Statistic of 16.649 was lower than the Table Value
of 19.7 at 5% level of significance for 11 degrees of
freedom. Thus, there is no evidence to reject the null
hypo thesis that there is no difference in the mean
returns among the months. In other words, monthly
effect did not exist for S&P CNX 500 Index during the
study Period.
•
•
172
The study found that the highest mean return
was earned for the month of April and most
negative mean returns for the month of
October during the study period. Therefore,
it is suggested that the investors would yield
good returns for the month of April.
So, it is suggested that April is the best month
to invest in the market.
The study also found that highest (0.0254)
Standard Deviation earned for the month of
October with negative mean return and lowest
(0.0144) Standard Deviation earned for the
month of September. It found that the market
was more volatile for the month of October and
least volatile for the month of September
During the study period, the kurtosis measure
of return distribution was leptokurtic for all the
months of the year, but the highest (21.3263)
being on May.
It is to be noted that the return distribution is
positively skewed for the month of May and
negatively skewed for remaining months.
•
•
•
There is significant negative correlation
between the returns of Tuesday-Friday, for
S&P CNX 500 Index during the study period.
The regression analysis reveals that the
coefficients in August seem to be statistically
significant at 1% risk level. Other months does
not seem to have any statistically significant
coefficients for S&P CNX 500 Index during
the study period.
It found out based on the F-value we cannot
reject our null hypothesis and therefore we are
not able to confirm August anomalies in S&P
CNX 500 Index during the sample period
Seasonality: A study of the Indian Stock
market’, Electronic copy available at: http://
ssrn.com/abstract
4. Bodla.BS and Kiran jindal (2006) ‘Monthly
Effects in Stock Returns: New Evidence from
the Indian Stock Market’ The ICFAI Journal of
Applied Finance, Vol. 12, No.7, pp.5-13.
5. Goloka C Nath and Manoj Dalvi (2005) ‘Day
of the Week Effect and Market Efficiency
Evidence from Indian Equity Market using
High Frequency Data of NSE’ The ICFAI
Journal of Applied Finance, Vol. 11, No.2,
pp.5-25.
11. Conclusion
6. Guneratne B Wickremasinghe (2007)
‘Seasonality of Emerging Stock Markets:
Evidence from the Colombo Stock Exchange
‘The ICFAI Journal of Applied Finance, Vol.
13, No.6, pp.43-65.
The present study investigates Monthly effect
on stock returns for S&P CNX 500 index of NSE.
The study found that there is a maximum return for
the month of April. The analysis of non-parametric
Kruskall-Wallis test found that, there is no evidence to
reject the null hypothesis that there is no difference in
the mean returns among the months. In other words,
monthly effect did not exist for S&P CNX 500 Index
during the Study Period. The returns in the stock market
are not independent across different months of the year.
Thus the investors should be cautious enough to exploit
the benefit that they may earn from the strategy i.e., to
buy the securities on the Month with the lowest monthly
mean returns and sell these with the highest Monthly
mean returns. The findings of this study would possibly
help in understanding and explaining such seasonality
for the Indian stock markets.
7. Hareesh kumar V. and Malabica Deo (2007)
‘Efficiency of Indian Stock Market- A case of
Day of the Week Effect’ SMART Journal of
Business Management Studies, Vol.3, No.2,
July – December2007, pp.28-35.
8. Harvinder kaur (2004) ‘Time Varying Volatility
in the Indian Stock Market’ Vikalpa, Vol.29,
No.4, October - December
9. Nageswari.P and Selvam.M (2010),”Day-ofthe-Week Effect on the Indian Stock Market
: An Empirical Analysis(Ed.)2010”, Ed. By
Sundarapandiyan.P ‘Research Methods in
Social Sciences’ VHNSN College, pp.99-103.
12. References
1. Anokhi Parikh, (2009) ‘The December
Phenomenon: Month of the year effect in the
Indian Stock Market’,http://www.nseindia.
com
10. Ravi Anshuman.V and Ranadev Goswami,
(2000) ‘Day of the Week Effects on the
Bombay Stock Exchange’, The ICFAI Journal
of Applied Finance, Vol. 6, No. 4, pp. 31-46.
2. Ariel, R.A., (1987) ’A Monthly Effect in Stock
Returns, ‘Journal of Financial Economic’, Vol.
18, pp. 161-74.
11. Selvarani.M and Leena Jenefa (2009) ‘Calendar
Anomalies in the National Stock Exchange
(NSE) indices’, The ICFAI Journal of Applied
Finance, Vol. 15, No.1, pp. 56-67.
3. Ash Narayan Sah (2009) ‘Stock Market
173
Table - 1
Descriptive Statistics for S&P CNX 500 Index for the period of 2005- 2010
Std.
JarqueMONTH
Observations Mean
Skewness
Dev.
Kurtosis Bera
Probability
JANUARY
102
-0.0020
0.0222
-1.0277
9.0207
172.014*
0.0000
FEBRUARY
98
-0.0011
0.0157
-0.2679
5.0107
17.681*
0.0001
MARCH
102
0.0010
0.0189
-0.7283
5.1868
29.340*
0.0000
APRIL
94
0.0032
0.0153
-0.4250
3.7256
4.892
0.0866
MAY
105
0.0021
0.0223
2.2696
21.3263
1559.500*
0.0000
JUNE
110
-0.0020
0.0202
-0.0805
3.8466
3.404
0.1823
JULY
108
0.0024
0.0191
-0.2887
3.9042
5.179*
0.0751
AUGUEST
107
0.0014
0.0144
-0.7514
4.0283
14.783*
0.0006
SEPTEMBER
103
0.0018
0.0140
-0.5180
5.1965
25.311*
0.0000
OCTOBER
102
-0.0029
0.0254
-0.7869
6.7399
69.971*
0.0000
NOVEMBER
102
0.0018
0.0182
-0.2591
4.4213
9.727*
0.0077
DECEMBER
103
0.0029
0.0152
-0.3568
4.3285
9.760*
0.0076
Asymp. Sig. - 0.1186895
K.W Statistics
-
16.649
Df -
11
Source: Computed from PROWESS
*Significant at 1% level.
Table - 2
Results of the regression analysis for S&P CNX 500 Index for the period of 2005 - 10
Variable
Coefficient
Std. Error
t-Statistic
Prob.
JANUARY
-0.00187
0.00249
-0.7521
0.4541
FEBRUARY
-0.11554
0.150899
-0.76564
0.4461
MARCH
0.04205
0.121203
0.34694
0.7295
APRIL
-0.06277
0.160895
-0.39012
0.6975
MAY
-0.01353
0.139393
-0.09709
0.9229
JUNE
0.072616
0.115907
0.6265
0.5327
JULY
-0.03426
0.122956
-0.27866
0.7812
AUGUEST
0.508502
0.170165
2.9883
0.0037*
SEPTEMBER
-0.20921
0.172973
-1.20947
0.23
OCTOBER
0.120714
0.087888
1.3735
0.1733
NOVEMBER
0.085861
0.128626
0.66753
0.5063
DECEMBER
0.171086
0.155563
1.09978
P-VALUE
F-VALUE
1.476
Source: Computed from PROWESS
*Significant at 1% level.
174
0.2746
0.156
Figure-1
Monthly Mean returns for S&P CNX 500 Index for the period of 2005 - 2010
0.0040
0.0030
0.0020
0.0010
Mean
-0.0020
-0.0030
-0.0040
Source: Computed from Table - 1
175
De
c
No
v
t
Oc
p
Se
g
Au
ly
Ju
ne
Ju
Ma
y
ril
Ap
Ma
rch
b
Fe
Ja
-0.0010
n
0.0000
Mutual Fund Investor Education Program – A study on
the Awareness, Response and Impact among Individual
Investors
Anila Mathews
Asst. Professor, Anna Adharsh College for Women, Chennai
Dr. P. Ravilochanan, Professor, School of Management, SRM University
made to:
1. Examine the awareness and response of investors to
the investor education efforts taken by Securities and
Exchange Board of India.(SEBI) and Association of
Mutual Funds (AMFI)
2. Analyse the relationship between attending investor
education program and the future intention to invest in
equity mutual funds
3. Impact of investor education on pre and post
investment behavior of mutual fund investors.
Research Methodology. The research is based on a
survey of randomly selected 606 mutual fund investors
of Chennai. The survey instrument was a well structured
questionnaire. K-means clustering method was used
to classify investors into different segments based on
their pre investment and post investment behavior. Non
parametric Chi square using the application of cross tabs
was used to study the impact of investor education on
both enhancing responsible behavior and on the future
intention to invest in equity mutual funds. Percentage
analysis was done to examine the responses to investor
education programs.
The mutual fund industry in India is unusual because
of the dominance of institutional investors. Retail
investors account for only 37 percent of the Industry
Assets under Management. By comparison, retail
contribution to fund assets in markets such as China is
70 percent and US is 86 percent. Focus on institutional
investors has led to poor retail penetration particularly
in smaller cities and rural India. The question is can
the Asset Management Companies (AMCs) operating
in India sustain long being heavily dependent on
the institutional investors only. It is for a fact that
institutional AUM is highly vulnerable. They may all
of a sudden find themselves reeling under the pressure
of big size redemptions as was seen when the markets
crashed following the Global Meltdown. The industry
needs to shift focus to retail investors. Mutual fund
penetration in India is at present very low. In a country
of over 1.1 billion, there are just 4.8 crore mutual fund
portfolios. It is forecasted that the retail segment will
grow at a compounded annual growth rate (CAGR) of
35 percent to 42 percent in the next 5 years. During this
period the mutual fund industry could see an addition
of nearly 9 million first time retail customers. Only
about 7 per cent of Indian households invest in mutual
funds, while in the US 50 per cent of households invest
in mutual funds. A January 2010 study of the Indian
mutual fund industry by research outfit, Evalueserve,
points out that the assets under management (AUM)
of the mutual fund industry as a percentage of gross
domestic product (GDP) as on December 2008 stood at
8 per cent, while it was 66.5 per cent and 55.5 per cent
in developed countries such as the United States and
France. Industry officials underscore the importance
of awareness among investors as the first step towards
the growth of the industry. Investor education also
enhances investor responsibility. In this context mutual
fund Investor Education and Awareness Programs plays
a vital role. Against this background an attempt is
Analysis and Interpretation of Data
Investor education and awareness programs
Investor education programs are conducted regularly
by SEBI in association with registered investor
associations. (e.g., Tamil Nadu Investors Association).
Association of Mutual Funds in India (AMFI) has set up
an investor awareness committee. Investor education
materials are also posted on the websites of AMFI,
SEBI and the respective mutual funds. Every Fund
house carries out education campaign through investor
meets, seminars etc,..The main aim of these materials
and programs is to educate the investors with regard to
mutual fund investments
Evaluating the response of investors to the investor
education efforts taken by Securities and Exchange
176
Board of India.(SEBI) and Association of Mutual Funds (AMFI)
The respondents were asked to respond to 4 dichotomous questions to study the response towards investor education
efforts taken by SEBI and AMFI. Table 1 shows the response.
Table 1
Responses to Investor Education Programs
Response
Investor Education Variables
Yes
No
Total
Are you aware of investor education programs sponsored by Sebi
296
(48)
310
(52)
606
(100)
Have you read the investor education material posted by Sebi/Amfi/
respective mutual funds.
208
(34)
398
(66)
606
(100)
Have you attended investor awareness programs sponsored by Sebi
97
(16)
509
(84)
606
(100)
If ,Yes was it useful in enhancing investment knowledge and decision making
76
(78)
21
(22)
97
(100)
Note: Figures in parenthesis shows the percentage values.
Analysis of the table reveals that only 48 % of the respondents are aware of investor education programs, while only
34 % and 16 % have read the investor education materials posted in the web sites and attended the investor awareness
programs respectively. Of the 97 (16%) respondents who have attended the investor awareness programs more than
three fourths of the respondents have found that the program has had a positive impact in enhancing their investment
knowledge. It can be inferred that both awareness as well as the response to investor education is poor among the
respondent mutual fund investors. But a good majority (78 %) who have attended the investor awareness programs
have benefited from it.
Relationship between attending investor education program and the future intention to invest in equity mutual funds
It is generally believed that the vast untapped mutual fund market can be penetrated through investor education. A
Non parametric Chi square test was performed on the summarized cross tabulation to determine if a relationship exists
between attending investor education programs and the intention to invest in equity mutual funds. Table 2 reveals the
impact of attending investor education program on future intention to invest in Equity mutual fund scheme.
Table 2
Impact of investor education program on intention to invest in Equity mutual fund
Intention
Program
Will invest
Will not invest
Total
Attended
72
(74.2%)
25
(25.8%)
97
(100%)
Did not attend
299
(58.7%)
210
(41.3%)
509
(100%)
Total
371
(100%)
235
(100%)
606
177
Chi Square
Significance
8.228
0.004
Cross tabulation of attending/not attending investor
education program and future intention to invest /not to
invest in equity mutual funds reveal that 74.24% of the
respondents who attended investor education programs
express their intentions to invest in equity mutual funds
in the next one year against 58.7% of them who did not
attend the program. 41.3% of the respondents who did
not attend the program said they would not invest in
equity mutual funds in the next one year against 25.8%
who attended the program. A non parametric chi-square
test performed for the summarized cross tabulation
reveals that attending investor education program and
intention to invest in equity mutual funds are well
associated at 5% level of significance (chi-square
value = 8.288 p = 0.004). Hence it can be concluded
that investor education programs conducted under
the umbrella of SEBI will have a positive impact on
retail penetration. Grouping Investors on the basis of
responsibility levels
The individual investor, be it the one who takes the
direct channel or the one who works with a financial
advisor, there is an increased likelihood that better
investment decisions will be made and long term
investing success achieved if the investor acts in a
responsible manner. The respondents were asked to
respond to nine statements which best described their
behavior prior to and post their investment in mutual
fund to assess how responsible they were in their
investment behavior. K-means Clustering method
was used where the 606 investors were classified into
different segments based on their pre-investment and
post-investment behavior. On the basis of cluster
analysis two segments of investors were formed for
each of the classification (pre-investment behavior and
post-investment behavior). Each group had clear and
differentiated behavioral strengths and weakness. The
results of the cluster analysis by clustering variables are
presented in Tables 3 and 4
Table 4
Post investment Behavior Final Cluster Centers
Statements
Clusters
1
2
I keep track of the NAVs of schemes I have invested in on a regular basis.
2.62
1.84
I ensure that I revive an account statement for the money that I have invested
2.86
2.09
I update myself on the performance of the scheme (e.g. Return, expense, change in fund
managers etc) on a regular basis
2.43
1.68
I will not hesitate to approach the investment relation officer of the concerned fund and
then the appropriate authorities when I face a problem
2.60
2.33
Number of investors
430
176
Percentage of the total
71
29
Intensity of responsible behavior
High
Low
Number of investors in each cluster
Like with the pre investment behavior it is observed
that investors show clear and differentiated behavioral
strengths and weakness in their post investment
behavior also. Again we have 2 segments of investors.
Cluster 1: High intensity post investment responsible
behavior (71%) These investors show a clear and
differentiated behavior from the investors in the second
cluster. They are very strong on most statements.
178
Hence they can be classified as investors who exhibit
highly responsible post-investment behavior.
Cluster2: Low intensity post investment responsible
behavior (29%) Relative to the cluster1 this group
exhibits weaker post investment behavior on most
aspects. Hence they have been categorized as investors
exhibiting low intensity post-investment responsible
behavior.
Cluster analysis reveals that 64.5 percent and 71 percent
of the respondent mutual fund investors exhibit high pre
investment and post investment responsible behavior
respectively. It can be concluded that a good majority
of the respondents act in a responsible manner
Impact of Investor education programs on investor
responsibility
Cluster analysis brought out two segments of investors
for each of the classification (pre investment behavior
and post investment behavior) having clear and
differentiated behavioral strengths and weaknesses.
•
•
•
•
Investors exhibiting moderate pre investment responsible behavior
Investors exhibiting high pre investment responsible behavior
Investors exhibiting low post investment responsible behavior
Investors exhibiting high post investment responsible behavior
To study the impact of investor education program two
variables related to this namely, reading of investor
education materials posted in the websites of SEBI/
AMFI/respective mutual funds and attending investor
awareness programs organized by SEBI were used. The
impact of each of these investor education variables
on the different segments of investors brought out by
the cluster analysis was studied with the help of non
parametric Chi-square using the application of cross
tabulation. Table 5 show the results of the analysis
Table 5
Impact of Investor education programs on investor responsibility
Investor Education
Behavior
P
r
e
i n v e s t m e n t Clusters
Behavior
Moderate Responsibility
Reading investor
Education material
Attending investor
Education programs
Yes
No
Tot
%of
yes
Yes
No
Tot
% of
yes
65
150
215
30
25
190
215
12
High Responsibility
143
248
391
37
72
319
391
18
Total
208
398
606
97
509
606
Chi-square value
P o s t
investment
Behavior
Low Responsibility
2.474 (p=0.116)
4.752 (p=0.029)
Yes
No
Tot
%of
yes
Yes
No
Tot
% of
yes
50
126
176
28
23
153
176
13
High Responsibility
158
272
430
37
74
356
430
17
Total
208
398
606
97
509
606
Chi-square value
3.849 (p=0.05)
An analysis of the above table reveals that
179
1.593 (p=0.207)
•
•
Conclusion
It can be concluded from the above study that both
awareness as well as the response to investor education
is poor among the respondent mutual fund investors.
But a good majority who have attended the investor
awareness programs have benefited from it. The study
also reveals that attending investor education program
and intention to invest in equity mutual funds are well
associated. More over the study reveals that investor
education enhances responsible investment behavior.
Hence it can be concluded that investor education
programs will have a positive impact on retail investor
penetration. A well informed and knowledgeable
investor is a boon to the industry. These investors pass
on the benefits of their knowledge and experience to
peers which could in turn result in an overall expansion
of the Industry.
Only 208 (34 percent) of the respondents
have read the investor education materials,
while 398 (66 percent) have not read any
investor education material.
A dismally low 97 respondents (16 percent)
have attended the investor awareness and
education programs conducted by Sebi,
while 509 respondents (84 percent) have
not attended the programs.
To test whether investor education has contributed
towards the enhancement of investor responsibility
among the 208 and 97 respondents who have read the
investor education material and attended the investor
education program respectively, a non parametric chi
–square is performed using the application of cross tabs.
An analysis of the above table reveals that
•
•
•
•
Reference
Books:
Nalini Prava Tripathy, Mutual Funds in India, Emerging
Issues, First Edition, Excel Books, New Delhi ,2007.
Sadhak H, Mutual Funds in India, Marketing Strategies
and Investment Practices, Second Edition, Response
Books, A division of Sage Publications India Pvt. Ltd
, 2003.
Sundar Sankaran, Indian Mutual Funds Hand Book,
Vision Books , 2008.
30 percent of the respondents who read the
investor education material fall in the category
of investors exhibiting moderate responsible
behavior while a higher 37 percent of them fall
in the category exhibiting high pre investment
responsible behavior.
Similarly, with respect to each of the pre
investment and post investment behavior
against the two variables relating to investor
education namely, reading the investor
education material and attending the investor
awareness programs it was found that investors
who have responded positively to these exhibit
higher responsible behavior. (37% against30%,
37% against 28%, 18% against 12% and 17%
against 13%).
The non parametric chi-square values 4.752
for the association between attending investor
education program and pre investment
responsible behavior is statistically significant
at 5 % level.
Similarly chi-square values 3.849 for the
association between reading investor education
material and post investment responsible
behavior is statistically significant at 5 %level.
It can be inferred from the above analysis
that investor education enhances responsible
investment behavior.
Reports
Confederation of Indian Industry and KPMG Report,
Indian Mutual Fund Industry – The Future in a Dynamic
Environment Outlook 2015, June 2009.
Confederation
of
Indian
Industry
and
Pricewaterhousecoopers Report, Indian Mutual Fund
Industry-Towards 2015 Sustaining Inclusive Growth
–Evolving Business Models, CII 6th Mutual Fund
Summit, 2010.
Internet:
http://ww w.amfiindia.com
http://ww w.rbi.org
http://www.sebi.gov.in
180
Qualitative Research in Vamana Industries Limited
Mr. N. Divakaran
Vice President
Jamuna Auto Industries,Chennai, India
Profile of the company
Improvised steel grades developed combined with
stringent heat treatment results in higher fatigue life of
the product. This warrants a high degree of repeatability
and Strong existence of Systems in place, which are
proven and acceptable as a process with good sustenance
for practice in the manufacturing areas.
Vamana has dedicated and highly trained Research
and Development team which has won appreciation
from CV manufacturers for aiding them in design
modification and value engineering, which enhance the
vehicles’ load bearing capacity and overall efficiency.
This way concurrent development is ensured which is
the need of the modern day Technology and the original
equipment manufacturer.
Vamana Industries Limited is a single largest
manufacturer of under Chassis component as an
Automobile Ancillary Tier1 supplier for Commercial
Vehicles (CVs) in India. It is a trusted and preferred
supplier to all the major CV manufacturers for over
40/50 years .The turnover has been in constant raise by
25/ 30% year after year and now touching 100 crores/
month since last 2 years.
Vamana had some kind of technical arrangement with
some Asian manufacturer who is pioneers in their Field
of Technology, quality and quantity in the World during
90’s and even now has some minor holdings by the
Asian partner. To bring world class ride comfort for
buses, Vamana is tying up some more understanding
with, World reputed companies across the Globe for
Suspension as well, in the coming future.
Need For the Research study
The Management has appointed an Expert
Mr.Subramaniyan, who has spent more than 2 decades
in Auto Industry as its Director-operation, giving
responsibility to Study, and implemented plants to a
World Class Level, acceptable to the century demands,
on the following, Mr.Subramaniyan has worked in
various capacity in Tier1 and Auto OEM and has a good
exposure on Process and also has successful experience
as a full time consultancy for similar capacity earlier.
Some key areas of focus are,
Vamana has spread its wings across India with multi
location customer based operations, The OE supply to
After Market supply ratio is 10:1 significantly show
the market to be tapped in the market for growth,
profitability and expansion. The current SOB of OE
Business is over 60% of the market requirements. To
take up this expansion in the aftermarket, Vamana
has set up a good net work as its subsidy with strong
presence of dealers and distributor net work across the
Country. With strong OE presence Vamana product
command a premium in the aftermarket.
1) Standardisation
As it always happens, it is no different in Vamana
industries where in different Plant and locations has
their unique Style of operation, standard. And methods
though they make the same product. Standardisation is
missing to the extent that different Plants have different
ISO certification with different manuals/standards,
though the certifying Body is the same. These have
caught the management to think in establishing a single
Product Criticality and growing demands:Suspension system is a highly critical component in
commercial vehicles. It is because of this reason that
Vamana places high reliance on constant technological
innovation and adoption of the best practices in world
class manufacturing in all its Plants.
181
standard. With Worlds best Practices in Place to Give
Customer confidence on the Capability/ ability of
Vamana plants across.
2) Customer growing demands
function and utility.
• Management strengths
• Strength of Systems, bottleneck & Loop holes
prevailing.
Training and HR activities, to suit regional culture.
With the view to Equip for the growing Customer
demands of More Multinational Players coming in to
action, need for quick response quality control tools
practice with daily routine management and visual
controls are increasing.
2) The second approach was to also have a team to
study physically on the shop floor using various quality
tools like Value Stream Mapping to identify the gaps
in various processes existing in the company/ plants.
Towards this a team was...
3) Consolidation and up gradation
•
the manufacturing / operation areas with the
Upgrade the factories which are developed over a period
of time to meet the growing customer demands in terms
of Concurrent Engineering, adaptation of best practices
like process approach, First in First out etc.
4) Operational efficiency Improvement.
Ensure all wastes are eliminated and stream line
operations and improve the plants efficiency in terms of
quality, cost and delivery to customers.
application of the following tools
•
Value Stream mapping
•
Root cause analysis with 5W+!H ( why why &
How)
The Expert has taken the following qualitative research
approach.
•
Identifying the need/ scope of Visual management
•
Policy deployment in respective areas
•
Possibility of standardisation across the plants
Practice 5’S’ and kaizens for elimination of
The expert derived two fold approaches of a theory and
practical approach was constituted as below.
wastes
1)
1) In order to derive a reliable data and bring out the
ideas from inside, a questionnaire was framed. The
questionnaire contained questions on the concerns,
ideas of improvement and why the individual choose to
work with Vamana industries. This was tested with over
20 persons from each plant thus ensuring more than 120
persons in the group, covering various levels in each
plant and the focus was on to.
•
•
•
•
Formed to identify areas of improvement in
Observations and results of the qualitative
research were:-
2)
Systems are violated.
3)
Factory work 7 days a week and scattered
weekly holidays.
4)
Dependency on untrained labour is in the
increase with a view to keep cost low.
Conduct an interview with many/ HOD people
in each Plant to Bring out the” VOICE” of each
plant, with a prescribed Questionnaire with a
view to Find out
Ground reality
Concerns of Individuals. With respect to.
welfare, facility, retention wish list etc
Internal Suggestions for improvement for plant
5)
Need a good working atmosphere with Good
Light, Air Circulation and other infrastructure,
like Road, Automation etc in the Plant.
6)
Currently factory is working at 60% original
equipment Efficiency (OEE) and with 65%
182
Straight pass.
7)
group. Approximately saved about 35% on the input
costs, quality and less inventory carrying cost.
4) Identified internal Resources for Training and
established various training models across the various
plants. Sustenance of the plants is ensured with trained
man power availability within.
Conclusion:
Best practices like Daily Routine management at the
shop floor to cascade the Objectives of the management,
Adapting First in first out practices to ensure traceability
of the product, eliminating all the waste by doing the
value stream mapping were implemented at Vamana
Industries limited. These activities have improved the
quality, cost and delivery which has added value for the
customers and there by Gained Customer Confidence.
Break Down and machine conditions are to be
improved.
8)
High level of inventory and First in First Out (
FIFO), traceability of product are missing
9)
Need a retirement policy and medical policy,
10) Role and responsibility clarity to improve
11) To avoid Duplication of responsibility
Management is Good and easily accessible
Actions initiated by the Management:Mr. Subramaniyan, made a SWOT analysis based
on the study and. various action points were derived
ensuring Key Important concerns/ improvement areas
are addressed out as VOICE of the plants, All the
deviations, improvement areas emerged out of the Value
stream mapping and other quality tools are in corporate
as action points .
1) The management took the following initiatives
based on the report and asked the expert to
continue implementation of the following
2) Conduct mapping of the Process to eliminate
waste across in depth.
3) Train and develop Teams in all the plants as a
Cross functional team (CFT) to accomplish the
above Task.
4) Took the Change movement as a KRA of the
management.
Focussed review & steps to Ensure Sustenance
were in Place.
References:
1.
Voice of the customer - Wikipedia, the free
encyclopaedia
2.
The Voice of the Customer - How to get Answers
from Your Market
3.
Voice of the customer definition
4.
Voice of the Customer - Enterprise Feedback
Management - Market Research Software
5.
Voice of Customer Analysis
6.
Voice of Customer - Online Surveys - Enterprise
Research Platform - Enterprise Feedback
Management - Market Research Software
7.
Survey
Software,
Enterprise
Feedback
Management, Voice of the Customer
Results and Benefits Derived
Build
Online Surveys with Qualtrics Survey Software
1) Eliminated waste approx 20% and thereby made the
Operations more efficient. /effective with incorporation
of best Practices.
2) Process across the various Plants are unified,
duplication avoided by sharing of solutions across the
group.
3) Standardisation of the systems and Knowledge
Sharing Across the plants. Vendor’s selection and
cost lowered by consolidating requirements across the
8.
Survey Analtycals.com
9.
Skills Inventory Database - Online Surveys
- Enterprise Research Platform - Enterprise
Feedback Management - Market Research
Software
10. Market Research Survey Software for Real
183
Time Customer Feedback
13. Employee Satisfaction Surveys Page 1 “Survey
11. Employee Satisfaction Survey - Employee
Research & Enterprise Feedback Management
Feedback Survey - Employee Engagement
Voice of Vovici Blog”.
Survey.
14. Survey Research & Enterprise Feedback
12. Survey Research & Enterprise Feedback
Management Voice of Vovici Blog
Management Voice of Vovici Blog
184
An Impact of Knowledge Management in IT Industry
R. Shanmugam, MBA., M.Phil
Research Scholar, School of Management Studies, SRM university,Kattankulathur
Dr. K. Kalpana
Asst.Professor (S.G), School of Public Health,
SRM University, kattankulathur
1. Introduction
2. History
Knowledge Management penlights a range of
practices used in an organization to identify creates,
represent, distribute and enable adoption of insights
and experiences. Such insights and experiences
comprise knowledge, either embodied in individuals
or embedded in organizational processes or practice.
An established discipline since 1991 KM includes
courses taught in the fields of business administration,
information systems, management, and library and
information sciences. More recently, other fields,
to include those focused on information and media,
computer science, public health, and public policy, also
have started contributing to KM research. Many large
companies and non-profit organizations have resources
dedicated to internal KM efforts, often as a part of
their ‘Business Strategy’, ‘Information Technology’, or
‘Human Resource Management’ departments. Several
consulting companies also exist that provide strategy
and advice regarding KM to these organizations.
KM efforts have a long history, to include on-the-job
discussions, formal apprenticeship, discussion forums,
corporate libraries, professional training and mentoring
programs. More recently, with increased use of
computers in the second half of the 20th century, specific
adaptations of technologies such as knowledge bases,
expert systems, knowledge repositories, group decision
support systems, and computer supported cooperative
work have been introduced to further enhance the such
efforts .
KM efforts typically focus on organizational objectives
such as improved performance, competitive advantage,
innovation, the sharing of lessons learned, and
continuous improvement of the organization. KM
efforts overlap with Organizational Learning, and
may be distinguished from by a greater focus on the
management of knowledge as a strategic asset and a
focus on encouraging the exchange of knowledge. KM
efforts can help individuals and groups to share valuable
organizational insights, to reduce redundant work, to
avoid reinventing the wheel per se, to reduce training
time for new employees, to retain intellectual capital as
employees turnover in an organization, and to adapt to
changing environments and markets.
3. Research
In 1999, the term personal knowledge management
was introduced which refers to the management of
knowledge at the individual level .
More recently with the advent of the Web 2.0, the
concept of knowledge management has evolved
towards a vision more based on people participation and
emergence. This line of evolution is termed Enterprise
2.0.
A broad range of thoughts on the KM discipline exists
with no unanimous agreement; approaches vary by
author and school. As the discipline matures, academic
debates have increased regarding both the theory and
practice of KM, to include the following perspectives:
Techno-centric with a focus on technology, ideally
those that enhance knowledge sharing and creation
Organizational with a focus on how an organization can
be designed to facilitate knowledge processes best
Ecological with a focus on the interaction of people,
identity, knowledge, and environmental factors as a
complex adaptive system akin to a natural ecosystem
Regardless of the school of thought, core components
185
of KM include People, Processes, Technology (or)
Culture, Structure, Technology, depending on the
specific perspective (Spender & Scherer 2007).
Different KM schools of thought include various lenses
through which KM can be viewed and explained, to
include:
• Community of practice
• Social network analysis
• Intellectual capital
• Information theory
• Complexity science
• Constructivism
• Dimension
Different frameworks for distinguishing between
knowledge exist. One proposed framework for
categorizing the dimensions of knowledge distinguishes
between tacit knowledge and explicit knowledge. Tacit
knowledge represents internalized knowledge that an
individual may not be consciously aware of how he or
she accomplishes particular tasks. At the opposite end of
the spectrum, explicit knowledge represents knowledge
that the individual holds consciously in mental focus, in
a form that can easily be communicated to others.
Early research suggested that a successful KM effort
needs to convert internalized tacit knowledge into
explicit knowledge in order to share it, but the same
effort must also permit individuals to internalize and
make personally meaningful any codified knowledge
retrieved from the KM effort. Subsequent research
into KM suggested that a distinction between tacit
knowledge and explicit knowledge represented an
oversimplification and that the notion of explicit
knowledge is self-contradictory. Specifically, for
knowledge to be made explicit, it must be translated
into information.
A third proposed framework for categorizing the
dimensions of knowledge distinguishes between
the exploratory creation of “new knowledge”
(i.e., innovation) vs. the transfer or exploitation of
“established knowledge” within a group, organization,
or community. Collaborative environments such as
communities of practice or the use of social computing
tools can be used for both knowledge creation and
transfer.
•
STRATEGIES
Knowledge may be accessed at three stages: before,
during, or after KM-related activities. Different
organizations have tried various knowledge capture
incentives, including making content submission
mandatory and incorporating rewards into performance
measurement plans. Considerable controversy exists
over whether incentives work or not in this field and no
consensus has emerged.
One strategy to KM involves actively managing
knowledge. In such an instance, individuals strive
to explicitly encode their knowledge into a shared
knowledge repository, such as a database, as well as
retrieving knowledge they need that other individuals
have provided to the repository.
Another strategy to KM involves individuals making
knowledge requests of experts associated with a
particular subject on an ad hoc basis. In such an
instance, expert individual(s) can provide their insights
to the particular person or people needing this.
4. Role of HR In Institutionalizing Knowledge
Management in an Organization
Impact of HR Processes and Practices in the
Knowledge Sharing in a Firm
At the stage of induction of new executives into the
organization, coaching and mentoring systems are
meant to transfer knowledge; exposure during training
to variety of functions, units and geographical locations
helps knowledge awareness / transfer. Employees will
benefit from” Mentorship,” not only during the initial
months but also for a long time after that. The role
A second proposed framework for categorizing the
dimensions of knowledge distinguishes between
embedded knowledge of a system outside of a human
individual (e.g., an information system may have
knowledge embedded into its design) and embodied
knowledge representing a learned capability of a human
body’s nervous and endocrine systems.
186
choice. Corporate online universities, exclusive learning
space to induct managers or develop future leaders, on
going programs for sales personnel and induction into
new products and services are some of the e-learning
offerings, some of the companies are making available
to their employees to develop themselves. E-Learning
provides the benefit of convenience—allows the learner
to do the learning at his other pace, flexibility—Learner
does not have to sacrifice a training program because
of its clash with customer or personal visit, and ease of
learning..
Of the mentor in the later period would be to challenge
the executive to look beyond the obvious, look for
past learning and base decisions on a more informed
platform.
A. Job rotations
Well-planned job (role) rotations across geographic
allocations and businesses in a firm help not only people
development, but also provide an important vehicle for
transfer of knowledge and best practices, even though
an organization cannot obviously depend on this as the
main source of knowledge transfer.
D. Culture Change
Leveraging collective knowledge is possible only when
people value building on each other’s ideas and sharing
their insights. Much of this shaped by the culture of
the organization. In some cultures, where knowledge
is seen as power, knowledge sharing may be seen to
be in conflict with the individual’s personal interests
(individual excellence /competitive advantage).
Therefore,
institutionalization
of
Knowledge
Management requires HR to focus on managing
The culture change mindset of the people to strengthen
collaborative team working and knowledge sharing.
Other knowledge management strategies for companies
include:
• Rewards (as a means of motivating for
knowledge sharing)
• Storytelling (as a means of transferring tacit
knowledge)
• Cross-project learning
• After action reviews
• Knowledge mapping (a map of knowledge
repositories within a company accessible by
all)
• Communities of practice
• Best practice transfer
• Competence
management
(systematic
evaluation and planning of competences of
individual organization members)
• Proximity & architecture (the physical
situation of employees can be either conducive
or obstructive to knowledge sharing)
B. Networked organizational networked organization
with people playing multiple roles, being part of
multiple teams—a vertical team (Business /category) as
well a horizontal team (function /knowledge domain),
is the way forward to effectively “leverage collective
knowledge” of an enterprise. HR should play a key role
in developing such a networked organization, through
Sponsorship and or facilitation of knowledge
communities(teams),
cutting
across
formal
organizational silos.
C. Training
Learning and knowledge are inter-linked. Knowledge
strategies should encompass learning initiatives and
knowledge initiatives need to converge with training
initiatives. A Company’s training program needs
to focus nonfunctional and business specific skill
development programs.
As well as competency development focused programs.
Knowledge communities (Teams), as the owners and
users of the knowledge, should play an active role in
developing suitable course material for the functional
and business specific courses. Knowledge management
cannot be practiced without a clear focus on “learning”
within the organization. E Learning is online learning. It
is made available through company websites (Intranets),
and even through CD-ROMs. It allows the learner to
enroll into courses or programs of their choice and
acquire knowledge at their own pace at the place of their
187
•
•
•
•
•
•
Master-apprentice relationship
Collaborative technologies (groupware, etc)
Knowledge repositories (databases, etc)
Measuring and reporting intellectual capital
(a way of making explicit knowledge for
companies)
knowledge brokers (some organizational
members take on responsibility for a specific
“field” and act as first reference on whom to
talk about a specific subject)
Social software (wikis, social bookmarking,
blogs, etc)
•
•
Target setting is the driver for improvement.
Without target setting, teams will do what
they have always done and so will always “get
what they have always got”. Targets need to
be achievable, but should be set beyond the
knowledge of the team. If a team sets a goal
which it knows how to meet, it will use only its
own knowledge. If a team sets a goal which they
know (through benchmarking) is achievable,
but is outside their own performance, then they
will seek the knowledge to deliver the goal. The
targets can be driven by benchmarks - “Poland
uses 20% less energy than you - I want you
To close the gap halfway by year end”. “Slough
uses 80% of the packaging
that you do - learn from them, and close the
gap halfway by year end”.
•
KM is the enabler. Target setting creates the
focus of knowledge sharing, while measurement
and benchmarking define where that knowledge
should come from. KM closes the gap, enabling
the production units to learn from Slovenia,
from Slough, from Syracuse. The mechanism of
learning may be by site learning visits, by Peer
Assist, by creating Learning Assets or training
courses, or through the operation of Learning
Communities.
Performance management in operations
Performance measurement and benchmarking,
target setting and knowledge management can
be closely linked in an operation, production
or manufacturing environment, as part of a
performance management system.
Performance measurement allows an operation
5. Motivations
A number of claims exist as to the motivations
leading organizations to undertake KM effort Typical
considerations driving a KM effort include:
• Making available increased knowledge content
in the development and provision of products and
services
• Achieving shorter new product development
cycles
• Facilitating and managing innovation and
organizational learning
• Leveraging the expertise of people across the
organization
• Increasing network connectivity between
internal and external individuals
• Managing business environments and allowing
employees to obtain relevant insights and ideas
appropriate to their work
• Solving intractable or wicked problems
• Managing intellectual capital and intellectual
assets in the workforce
• Debate exists whether KM is more than a passing
fad, though increasing amount of research in
this field may hopefully help to answer this
question, as well as create consensus on what
elements of KM help determine the success or
failure of such efforts.
• Performance management
Performance management consists of three
elements, measurement (and benchmarking),
•
188
target setting, and KM .
Measurement and benchmarking show where
performance or a team or unit is weak or strong,
and shows which other teams or units are stronger
performers, and can be sources of knowledge, or
weaker performers and therefore potential users
of knowledge. The strong performers can help
the weaker performers.
engage can emerge and be made visible through the
development of interesting activities and tools involving
innovative computer network technologies. We also
assume that meaningful activities will arise out of our
commitment to engage in participatory design.
or production unit to track its performance
levels on key metrics (energy use per unit, water
use per unit, packaging use, throughput, cost
per unit, inventory, uptime, etc). Benchmarking
those metrics allows it to compare those levels
with other units, Identify the areas where it
needs to improve, or areas where it can Help
others improve
Processes with teachers. We further assume that the
tools will assist teachers in the preparation of their
work, which involves tacit, informal, and unwritten or
unarticulated rules, knowledge, and practical methods
and techniques. Thus, we assume that collaboration with,
or sharing of, resources can be helped by facilitating
sharing and communication in communities governed
by common work and purposes .Teacher Bridge is not
just a pile of static Web pages. On the contrary, it is
designed to support various teacher activities:
Fieldwork: Several classes could take part in monitoring
local wildlife and water quality. Data can be collectively
updated in Teacher Bridge’s charts and tables.
Identify the business units from which it can learn, and those which it
Can help
Target setting allows it to focus on areas
for improvement, and
motivate the
teams to learn
Knowledge management allows it to acquire
or develop the knowledge it needs in order
to meet its targets.
6. Technologies
Early KM technologies included online corporate yellow
pages as expertise locators and document management
systems. Combined with the early development of
collaborative technologies, KM technologies expanded
in the mid-1990s. Subsequent KM efforts leveraged
semantic technologies for search and retrieval and
the development of e-learning tools for communities
of practice. More recently, development of social
computing tools (such as blogs and wikis) have allowed
more unstructured, self-governing or ecosystem
approaches to the transfer, capture and creation of
knowledge, including the development of new forms
of communities, networks, or matrixed organizations.
However such tools for the most part are still based on
text and code, and thus represent explicit knowledge
transfer. These tools face challenges in distilling
meaningful re-usable knowledge and ensuring that their
content is transmissible through diverse channels.
Online Discussion: Chat workgroups could be set up for
students to discuss any number of topics. The chat
Window can be integrated with a text or problem to be
discussed. These chat sessions can be secured and
Monitored by teachers.
7. Knowledge Management
Communities of Educators
Online Portfolios: Class projects, as well as group or
individual portfolios, can be created and edited within
TeacherBridge.
in
Class management: The system enables teachers to
easily publish assignments, activity guides, due dates,
and the like.
Curriculum: Teachers can share lesson plan ideas and
collaborate on what works/what doesn’t within various
Contexts.
Go Virtual: Additional learning strategies, such as
science fairs, gardens, journals, field trips, and
Quizzes/tests, can be posted with TeacherBridge’s
Maptool.
Online
We are proceeding with the assumption that the formal
and tacit technical resources, and the innovative and
successful methods and practices in which teachers
Contests: Teachers can post students’ progress on
189
oneTeacherBridge site where all students/classes can
see
participation in knowledge sharing activities and (2) to
support teachers in the finding, retrieving, and reusing
of materials and activities created by colleagues. As a
step in this direction,TeacherBridge makes it extremely
easy for teachers to author online a significant portion
of materials: it offers an innovative way of direct editing
and page creation through (what you do is what you get).
Teachers can use either a Web Editor or a Full Editor
to edit materials in TeacherBridge. With Web Editor,
teachers merely type the text that they wish to add
with the assistance of simplified shorthand—without
having to learn HTML—and then just click the Save
button. With Full Editor, teachers can interactively edit
not only text, but also various non text domain specific
objects. In order to use the Full Editor, teachers might
want to install an application helper, called Java Web
Start , which is a free Java download.
Where they stand.
WebQuests: Classes/students can organize Internet
research with comments within TeacherBridge.
In order to make collaborations like the above mentioned
achievable through the Web, we must break down the
stereotyped conception that the Internet is best suited
to passive, uni-directional, read-only media. We need
to turn the Web not only into a place to interact but also
into a writable medium. Currently, however, publishing
Web pages can be problematic: the page must first
be downloaded, then modified off-line using special
HTML editor tools, and finally reposted onto the server.
This annoying download-update upload
Cycle makes it difficult for teachers to prepare materials
and conduct activities online. Therefore, it is
Necessary to eliminate the notion of publishing to the
Web as a separate process.
8. Conclusion
It is highly imperative to implement the right
techniques of Knowledge management in the
organization to enrich their HR practices to
obtain the synergy.
The fundamental goals of TeacherBridge are (1)
to provide environments that facilitate teacher
190
Challenges and Learning in Human Resource Management
- A Study on Customer Service and Employee Engagement in
the Indian Healthcare Industry
Dr. B.Shivraj
Professor, Bahadur Institute of Management Sciences, University of Mysore
Manasa Gangothari,Mysore.
Mr.Bharath C (Ph.D), Manager – Human Resource, Aricent Technologies (Holdings) Ltd, Bangalore
Dr. B. Rose Kavitha, Professor – HR & OB, CMR Institute of Technology, ACES Layout, Bangalore
1. Introduction
or services .Customers usually call a business when
they need a solution to a problem and secondly when
they want to feel special in some way. Several important
factors that make a customer feel special are discussed
in the following. One of the most important aspects
of customer service is speed of delivery. Fast service
adds value, and speedy follow-up shows empathy. Also,
speed often costs nothing but has to be designed into the
processes. Fast service is a distinct source of competitive
advantage, especially when some customers are
prepared to pay a premium price for quality products to
be delivered at exceptionally quick time.
HRM has evolved from a number of different schools of
thought and is best described as a loose philosophy of
people management rather than a focused methodology.
The value of this research is in its ability to recognise
the organisational policies and practices that are the
most important drivers of customer satisfaction in a
specific organisation. Human Resources Management
(HRM) plays a central role in the exchange relationships
between the organisation’s management and its
employees. Work has been organized for a very long
time and many issues we find today have been addressed
in the past. But each generation finds solutions that fit
the culture and beliefs of the time. Ultimately, it is an
organization’s empowered people who can help an
organization achieve its goal.
Personal interaction with a customer is another
important aspect of customer service. It is important
to get to know all customers, and to give them full
attention. Even the minor things regarding a customer
such as likes and dislikes, hobbies and interests do
make a difference since this adds new dimensions
and richness to the relationship. The risk of defection
is considerably reduced when a customer is made to
feel special due to the truly personalized service. Here,
positive, transparent communication plays a vital role.
In particular, courtesy, politeness and manners are keys
to building trust, respect and loyalty.
2. HRM and Customer service
Quality is often established in real-time encounters
between employees and customers in services,
therefore quality is a function of HRM that has placed
the right type of people in customer services positions.
The service practices apparently associated with this
correlation are described, concentrating on HRM’s role
in creating satisfied employees who are motivated and
able service providers Bowen and Schneider (1988).
Information and keeping the customer informed is
another dimension of customer service. One of the
most important ways of making a customer feel special
is to keep them informed of all changes taking place.
For example, the customer should be kept informed of
the delivery of a product and the status of a product if it
is being manufactured. Also if the customer is awaiting
The importance of customizing HRM practices to fit a
specific market segment is highlighted in this research.
Lalonde and Zinszer (1976), defined customer service
as those activities that occur at the interface between
the customer and the corporation which enhance or
facilitate the sale and use of the corporation’s products
191
some information or change, they should be always kept
up-to-date on the status of their request. On the other
hand, follow-up efforts should also be made regularly,
to elicit customer feedback. Ensuring effective two-way
communication with the customer ensures more sales
and greater customer satisfaction.
businesses typically lose 10%-50% of their customers,
and the business does not know who they are.
Employees have a direct bearing on customer service.
Providing superior quality service to customers
cannot be achieved through employee satisfaction
alone; it requires employee engagement. The level
of commitment and involvement an employee has
towards his/her organization and its values is termed as
employee engagement. The key factors in engagement
are alignment of employees toward strategy, enabling
employees to have the capability to engage themselves,
and creating the sense of engagement, i.e. creating the
sense that individuals are a part of a greater entity. Better
leadership and motivational practices would strengthen
employee engagement in work, in turn improving
customer service.
Another important aspect of customer service is
customer expectations. Customer expectations differ
from customer to customer, so that it is important to
discover what the customer’s expectations really are.
In this context, it is very important to make promises
only when one is sure that they can be delivered, and
to deliver with high quality. This establishes clear
expectations, and the goal should be to exceed them.
In particular, quality should be the number one priority,
and should be an organization-wide responsibility.
This underlines the importance of a good quality
management system in delivering customer service,
involving establishing customer-focused standards
of performance, simplifying of procedures to reduce
errors, standardizing systems to ensure consistency, and
understanding the processes to pre-empt all problems.
CEO Hal Rosenbluth of Rosenbluth International, a
corporate travel agency wrote an excellent book about
their company’s approach called Put The Customer
Second - Put your people first and watch’em kick butt.
Rosenbluth argues that when you put the employees
first, they put the customers first. Put employees first
and they will be happy at work. Employees who are
happy at work give better customer service because:
•
They care more about other people, including customers
•
They have more energy
•
They are happy, meaning they are more fun to talk to and interact with
•
They are more motivated
The present study is an exploratory study examining
customer service as a Human Resource function in
the healthcare services, and the impact of employee
engagement on customer service.
Complaint handling is another important area of customer
service is. In fact, complaints are opportunities to
improve service, involving creativity and commitment.
The people who complain are the people who want to
stay customers and are looking for reasons to do so. It
is important for businesses to be proactive on customer
service issues, not reactive. This enables businesses to
turn complaints into opportunities.
The development of long-term relationships is
identified as a part of customer service. A customer
will feel special if he/she is rewarded for maintaining
a long-term relationship with a company. Studies have
shown that many people who have got used to a certain
way of being served by a company will not defect to a
competitor since the human mind looks to maintaining
the same patterns over longer period of time. This
explains why some very poor companies continue
in business even with very poor service levels. But a
business cannot afford to be complacent. Statistics show
that 68% of customers switch away if those serving
them are indifferent to their needs. In fact, every year
3. Data and Methodology
The data for the present study was collected from a
sample of thirty managers/ administrators of different
healthcare organizations, and thirty customers of
the same healthcare organizations, and from thirty
employees of the healthcare organizations. The managers and customers were asked about their
perceptions of importance of customer service, and
about the different parameters used by them to evaluate
quality of customer service.
192
The employees were asked about the level of employee
engagement and its impact on quality of service. The
scale used for data collection from employees was a
standardized scale for employee engagement, including
the following items:
1.
I have the materials and equipment I need to do
my job efficiently.
2.
I receive the information and communication I
need to do my job.
3.
I regularly receive recognition/praise for doing
good work.
4.
The benefits offered here are fair and
reasonable.
5.
The people here are pleasant and co-operative
to work with.
6.
There is someone at work who encourages my
development.
7.
My opinions and ideas seem to matter.
8.
My supervisor provides me with feedback and
guidance.
9.
My supervisor helps me know what is expected
of me.
10. My supervisor cares about me as a person.
11.
Even if I had the opportunity to get a similar
job with another organization, I would stay
with my present company.
12. In the last year, I have had opportunities to
learn and grow.
13. I would recommend the organization as a good
the core product/service, but also included customer
service elements such as providing nursing/care,
psychological support, privacy, and ensuring equity (for
all patients), balanced with personalized care.
Customer satisfaction and feedback (33%) was another
important parameter, particularly because of its linkage
with word-of-mouth recommendations/referrals. Two
important processes directly impacting these were
information communication and query handling.
Appointments management, particularly relating to
promptness of treatment and availability of doctors
(especially visiting doctors), and grievance handling
were also crucial processes in this context. On the other
hand, networking/ancillary services, such as referrals
to specialists, complemented the customer relationship
processes.
Another very important parameter was found to be
infrastructural and technological dimension (25%),
which included such elements as having state-of-the-art
facilities and equipment, ambience, accessibility, and
providing pharmaceutical and diagnostic services.
Finally, employees and employee satisfaction (10%)
were also a factor impacting the effectiveness of
customer service. In particular, training was an
important parameter in this respect, especially in terms
of skills related to handling patients, and in applying
“emotional intelligence.” Attrition was also a source of
concern in this context.
place to work.
4. Limitations of the Study
The study has several limitations. The sample size
considered for the study was very low (thirty of each
group), so that the results of the study may not be
representative. Also, the data collection instrument was
not lucid. In particular, there may have been confusion
between the concepts of employee commitment,
dedication, satisfaction, relationship, involvement, and
engagement.
From the point of view of patients, a similar pattern
emerged, but with quite different emphasis. The most
important factor influencing customer satisfaction
with customer service was found to be interaction/
involvement/hospitality of employees (60%). In
particular, this underlined the importance of friendly,
cooperative employees in healthcare service delivery,
providing personalized care to individual patients. On
the other hand, lack of employee commitment and
dedication could be easily sensed by patients, for example
if employees were rude or did not promptly respond to
queries; these contributed to customer dissatisfaction. A
related factor was that of administration of the hospital
(40%). For example, the role of reception staff in the
communication of information to patients was a crucial
4. Analysis and Inference
There were several criteria/factors used by healthcare
managers to evaluate the effectiveness of their customer
service, and most managers were found to use multiple
factors. The most important parameter was found to be
the treatment/consultation (40%), which is essentially
193
factor. In particular, this was found to affect posttreatment services.
of the hospital.
There were also some ancillary services which were
found to impact patients’ perception of healthcare
services; for example, critical/emergency services.
In terms of the perception of customer service as a
supplement to the core product/service, offered free of
charge, it was found that 90% of healthcare managers
and 96% of patients agreed to this view. Further, in
terms of the importance of customer service, 86.5%
of healthcare managers rated customer service as very
important or extremely important, while 93.5% of
patients rated customer service as very important or
extremely important. Paired-samples t-test indicated that
there was no significant difference of the importance of
customer service to healthcare managers and to patients
(Table 1). Further, comparing these with the importance
of customer service to employees shows that there is
no significant difference in the importance of customer
service between all three players.
Another important factor influencing customer
satisfaction was the treatment by the doctor (45%)
and expertise/professionalism of the doctor (40%). In
particular, timely treatment/waiting time/availability
of doctors were all of general concern for the patients.
Also, the success rate of operations was a cause for
concern in this context.
The infrastructure, facilities, and technology (45%)
were important factors from the patients’ point of view.
This included a wide variety of elements such as food/
canteen facilities, drinking water, diagnostic equipment/
services,
pharmacy/availability
of
medicines,
accessibility, lounge/waiting area, rush/crowdedness,
and so on. Ambience (10%) and hygiene (15%) were
also factors affecting patients’ perception of healthcare
services. These functioned to convey the sophistication
Table 1: The importance of Customer Service to Healthcare Managers and to Patients
Mean
Std. Deviation
Correlation
Sig.
t
Sig.
(2-tailed)
Importance of customer service
4.7600
0.5110
0.0680
0.7240
1.6530
to the managers
Importance of customer service
4.5200
0.6340
0.0670
0.7320
1.4320
to the patients
in comparison:
Importance of customer
4.6400
0.8420
0.0680
0.6230
1.5320
service to the employees
Although there was no significant difference about the importance of customer service between
0.1090
0.1020
0.1040
healthcare
organizations’ managers/administrators and patients, the rating of importance of customer service of patients (93.5%)
were relatively higher than that of managers (86.5%).
The importance of employee engagement from the manager’s point of view is shown in Table 2.
Table 2: Importance of Employee Engagement (manager point of view)
Mean
High quality of service is possible form a healthcare organization when
4.76
employee commitment/dedication is high
Std. Deviation
0.511
employee satisfaction/relationship is high
4.59
0.501
employee engagement/involvement is high
4.41
0.568
Superior customer service helps to build effective and efficient healthcare
organization
4.69
0.541
194
All aspects of employee involvement were found to have an enabling influence on quality of customer service from
the manager’s point of view. Employee commitment/dedication was given the highest emphasis, as observed earlier.
Healthcare organizations’ managers/administrators were found to strongly agree with the statement “superior customer
service helps to build effective and efficient healthcare organizations.” However, the same level of agreement with
the statement was not found from the employees of healthcare organizations (as shown in Table 4).
From the employees’ point of view, the degree of engagement was found to be quite high. Table 3 shows the levels
of the employee engagement variables (from the employee’s point of view).
Table 3: Employee Engagement (employee point of view)
Mean
Std. Deviation
Even if I had an opportunity to get a similar job in a different company, I would
stay with my present company
People are pleasant and cooperative to work with
4.50
.650
4.43
.646
I receive the information and communication I need to do my job
4.36
.497
Recommend my organization as a good place to work
4.36
.745
My supervisor helps me know what is expected of me
4.29
.611
Someone at work encourages my development
4.14
1.167
My supervisor provides me with feedback and guidance
4.07
1.072
I have the materials and equipment needed to do my job efficiently
3.93
.997
I regularly receive recognition/praise for doing good work
3.93
.917
My supervisor cares about me as a person
3.86
1.167
My opinions and ideas seem to matter
3.79
.893
Benefits offered are fair and reasonable
3.79
.802
I have had opportunities over the last year to learn and grow
3.71
1.326
All the variables were found to have relatively high average levels. However, the last variable, relating to having
opportunities over the last year to learn and grow, was found to have a relatively lower average level, with high
variability, indicating a divergence of responses. Table 4 shows the importance of employee engagement from the
employee point of view.
Table 4: Importance of Employee Engagement (employee point of view)
High quality of service is possible form a healthcare
organization when employee satisfaction/relationship is high
organization when employee commitment/dedication is high
Superior customer service helps to build effective and efficient
healthcare organization
organization when employee engagement/involvement is high
Mean
Std. Deviation
4.29
1.139
4.14
1.167
4.07
1.207
4.07
1.385
The importance of employee engagement to employees showed similar levels as those of the importance of employee
engagement to managers, with higher variability.
195
Implications and Discussion:
The results of the study show that employee engagement
is an important parameter for quality of healthcare
services. Though healthcare managers had a low
priority for employee involvement and engagement,
these were particularly important from the customer
point of view. Further, the results show that there is no
significant difference in the importance of customer
service between all three players. However, there were
differences in the perception of managers, employees,
and customers towards the impact of employee
engagement on quality of service. Healthcare managers/
administrators were found to give more importance to
customer satisfaction and feedback (33%) as compared
with the importance given to employees and employee
satisfaction (10%). This difference may lead to patients’
dissatisfaction, because dissatisfied employees often
give inferior customer service.
service quality and employee satisfaction in the
marketplace service quality beings with employees.
Every employee who works for a service organization
must understand the values, beliefs and overriding
objectives of the organization. In this way every
employee is working from the same set of beliefs. Overall
this is done by creating vision/mission statements or
guiding philosophies and then disseminating these to
all concerned so that every individual understands what
is expected of them as an employee. So one needs to
create a right philosophy in the minds of both customers
and employees.
References
• Aravinth, S. and Niranjanaa Devi, K., “Contemporary
Strategies in Customer Satisfaction”.
• Borrill, C. West, M.A., Shapiro, D. and Rees, A.
(2000). Team working and effectiveness in health
care. British Journal of Health Care, 6(8), 364-371.
• Carter, A.J. & West, M.A. (1999), “Sharing the
burden - teamwork in health care settings,” in J.
Firth-Cozens & R. Payne (Eds). Stress in Health
Professionals,. Chichester: Wiley.
• Kharb, M. (2008) , “Creating the Right Service
Philosophy”.
• Wall, T.D., Bolden, R.I., Borrill, C.S., Carter
A.J., Golya, D.A., Hardy, G.E., Haynes, C.E.,
Rick, J.E., Shapiro, D.A., and West, M.A. (1997).
Minor psychiatric disorder in NHS Trust staff:
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Carter, M., Anelay, S., Patterson, M., Waring,
J. (2002). The link between the management of
employees and patient mortality in acute hospitals.
The International Journal of Human Resource
Management, 13, 8.
• Borrill, C., West, M., Carter, M., and Dawson, J.,
“The Relationship between Staff Satisfaction and
Patient Satisfaction: Results from Wolverhampton
Hospitals NHS Trust.”
• De Villiers MR, Couper ID, Hugo J, Conradie H,
Shaw V. (2005), Tools for busy hospital managers:
A guidebook for the district hospital management
team, Health Systems Trust. Lalonde and Zinszer,
(1976), “Customer Service as an element of the
Marketing Mix –The evaluation of a Descriptive
Model of sustomer Service”, Ohio State University.
Infrastructural facilities and technology was given
more importance by patients (45%), compared to
that of healthcare managers/administrators (25%), as
these included such elements as food/canteen facilities,
drinking water, state-of-the-art equipment/services,
ambience, and hygiene, which affect the patients directly
more than administrators. Interestingly, the importance
of timely treatment/consultation/expertise of doctors
was perceived same by both managers/administrators
(40%) and the patients (40-45%).
This paper contains ideas that have many different
roots that do fit comfortably within one coherent and
self-consistent body of knowledge. One major point of
debate has been the difference - if any - between HRM
and ‘traditional’ personnel management and service
quality. The evolution of HRM continues today as new
management theories, fashions and fads are developed.
There is a vast scope for further research in testing
for the impact of employee engagement on service
quality. Also, the underlying dimensionality of the
quality of customer service may be further analyzed.
There is also further scope of research on understanding
the characteristics/qualities of healthcare organizations
which may provide superior customer service. Some
implications for HRM of these choices are outlined in
this paper with research implications.
Conclusion
Finally, it is argued that customer-focused management
in general might enhance competitiveness and better
196
Emotional Recognition Readiness and Leadership
Kavitha Sethuraman
Incharge compensation & CSR, FLSMIDTH Pvt., Ltd., Chennai & Research Scholar
SRM University
1. Introduction
2. Emotions and Leadership:
Emotions are a physical sensation that obliges one to
act. This word is derived from a latin verb ‘emovare’
meaning to move. These emotions act as the basis for
body and mind to communicate.
The literature briefly described above is representative
of a much wider body of knowledge which suggests
that feelings serve multiple purposes in human affairs.
As will be demonstrated below, it is likely that feelings
play an important role in leadership. While George and
Bettenhausen (1990) and George (1995) investigated
some of the potential beneficial consequences of leader
positive mood, it is likely that a diversity of feelings
(both emotions and moods) influences leadership
effectiveness. Negative moods, for example, foster
systematic and careful information processing (Sinclair,
1988; Sinclair & Mark, 1992) and may be advantageous
when leaders are dealing with complex problems in which
errors carry high risk. As another example, relatively
intense negative emotions may appropriately redirect
a leader’s attention to an issue in need of immediate
attention (Frigda, 1988). Leaders who experience anger
frequently may have a difficult time building good
relationships with followers and engendering their
trust (Jones & George, 1998). Similarly, a leader who
frequently experiences positive moods on the job may
fail to notice and attend to performance.
We typically view emotions as primitive and instinctive
responses that are not associated with complex
intellectual or cognitive functions. Certainly, key
stimulus elements in the environment can trigger
instinctive emotional responses (imagine confronting
a large, threatening animal). However, cognitiveemotional interactions are extremely important in
the elicitation of everyday emotions. In primates and
humans, the brain has a striking capacity to learn and
remember the emotional significance of diverse stimuli
and events. Furthermore, our cognitive capacity allows
us to assign emotional valence to stimuli, and to change
the value that was previously assigned to a stimulus. For
example, a child may be initially fearful of dogs, but
through positive experiences the child may eventually
enjoy and approach them. As another example, imagine
the emotions associated with a new relationship.
Initially, seeing the person may evoke positive emotions
of desire and happiness. However, after a nasty breakup,
the same person could easily elicit emotions of anxiety,
tension, and anger. This second example illustrates
two important points. First, the sensory or perceptual
analysis of the person is the same. The physical
expression of emotion may also be the same (i.e., racing
heart, flushed sensations , increased breathing rate).
Second, the emotional reaction to the stimuli depends
on cognitive processing. In other words, the evaluation
of the stimulus (the person) in conjunction with past
experiences determines the feelings or the conscious
experience of joy or anger. Studies of brain functions
reveal that neural pathways exist for these important
cognitive-emotional interactions.
Shorfalls that is less than apparent. Hence, this
inquiry into the role of feelings in leadership is not
bent on determining the ‘right’ or ‘effective’ moods
and emotions that facilitate leadership effectiveness.
Leaders are obviously human beings with the full
range of moods and emotions potentially available to
them. Both positive and negative moods and emotions
serve numerous functions in people’s lives. Likewise,
both positive and negative moods and emotions can
sometimes be the cause of human dysfunctions (George,
2000).
These emotions in a person will affect his leadership
skills, knowing the emotional preparedness (EP1 being
197
low and EP4 being very high) of the subordinates would
contribute to a large extent for effective leadership.
For example, if a person has experienced too much of
sorrow in his past, his sorrow will be at EP4 compared
to that of happiness; if that person interacts with a
leader who is always very happy and excited and tries
to communicate to this person with the same excitement
then this person might be annoyed.
3. Overview of the Brain and the Location of Emotions:
Source: http://www.colorado.edu/intphys/Class/IPHY3430-200/image/limbic.jpg
The limbic system plays a major role in our experience
and expressions. This part of brain initially evolved
for feeding, mating and defence of territory. This is
still the part of the brain we use for evaluating what
is happening and generating appropriate physiological
reactions in the body.
and compares the threat with past events; it has a role in
storing emotional memories. If there is a positive match
with earlier memories, it is the memory bank which gets
involved to initiate a fight or flight response.
The limbic system consists of five parts namely scanner
or Thalamus, evaluator or hippocampus, memory bank
or Amygdala, Sensory or information and cortex or
thinking cap. Although there are various areas in limbic
system the most important areas of the brain involved in
emotions are the memory bank and evaluator.
Hence the limbic system in the brain plays a major role
in controlling emotions of a person.The brain produces
natural chemical messengers - called neurotransmitters
- that send messages from one nerve cell to another.
Serotonin is known as the “feel good” neurotransmitter
because it plays an important role in the regulation of
mood. Low levels of serotonin can cause excessive
feelings of sadness and anxiety.
The evaluator has an evaluative function to assess
context, comparing current information with what has
been seen before. We can trigger strong emotions from
a relatively minor event. On the other hand Memory
Bank determines the emotional significance of events
Two other important neurotransmitters - dopamine
and norepinephrine - also affect mood. When the brain
doesn’t produce enough dopamine or norepinephrine,
you can feel tired, unmotivated and foggy-headed.
There should be a balance of all the three.
198
4. Art and Science of Leadership:
Volumes of research, opinions and books have been
written on scientific leadership methods and practices.
Leadership is both an art and a science, effective
leadership requires that we embrace both dimensions.
The art is about developing practical experience in the
application of the leadership practices and methods
resulting from the “science of leadership”. To me, the
art of leadership is about practice! It’s about practicing
the leadership science until you develop intuition.
The science of leadership concerns the observation,
study and classification of leadership practices, resulting
in a reliable explanation of what makes leaders effective.
5. Linking Emotional preparedness to leadership:
The above frame work can be explained with the
following example. If a subordinate with the emotional
preparedness 4(EP4) in sadness, it will be from his
past experiences stored in the memory bank. These
experiences could be a top down processing or bottom
up processing in the brain, meaning that the top down
processing is the past experiences and memories stored,
on the other hand the bottom up processing is the
experiences from the external stimuli. The former would
be stronger than the latter as it has been experienced in
the past and stored in brain. This means that the brain
produces excess of Serotonin. As a next step, we form
perceptions and thereby respond through actions.
experiences. This model can be empirically tested.
6. Reference:
•
•
•
As we know Leadership is an attempt to influence
people, if leaders are able to understand the emotional
balance of their team members they will be in a better
position to support and motivate them. An attempt
has been made to develop the model objective. It was
developed on the basis of literature review and practical
•
199
Papez, J.W. (1937). ‘The Neurology
of Emotion’. Available
< http://www.
n e u r o a n a t o m y. w i s c . e d u / c o u r s e b o o k /
neuro5(2).pdf >. [Accessed 25th November
2010].
George. M. Jennifer. (2000). ‘Emotions
and Leadership: The role of emotional
intelligence’. SAGE Publications, Volume
53(8): 1027–1055: 013316.
Frigda, N.H (1988). The laws of emotion.
American Psychologist, Vol 43 PP. 349–58.
Sinclair, R.C. Mood (1988).’Categorization
breadth, and performance appraisal: The
effects of order of information acquisition and
affective state on halo, accuracy, information
•
retrieval, and evaluations’. Organizational
Behavior and Human Decision Processes.Vol
42.PP. 22–46.
•
Sinclair, R.C. & Mark, M.M (1992).’ The
influence of mood state on judgement and
Action: Effects on persuasion, categorization,
social justice, person perception, and
judgmental accuracy’. In L.L. Martin and
A. Tesser (Eds), The construction of social
judgments. Hillsdale, NJ: Erlbaum, pp. 165–
93.
•
•
200
Jones, G.R. & George, J.M (1998).’ The
experience and evolution of trust: Implications
for cooperation and teamwork’. Academy of
Management Review, Vol 23.PP. 531–46.
George, J.M (1995).’ Leader positive mood
and group performance: The case of customer
Service’. Journal of Applied Social Psychology,
Vol. 25. PP. 778–94.
George, J.M. & Bettenhausen, K (1990).
‘Understanding prosocial behavior, sales
performance, and turnover: A group level
analysis in a service context’. Journal of
Applied Psychology. Vol 75.PP. 698–709.
Human Resource Management Socio-Economic Factors
Influencing the Success of Women Entrepreneurs in
Network Marketing Industry
(With Reference to Amway)
Manjula Pattnaik, Research Scholar, University of Madras
Balachandra Pattanaik, Asst. Professor, Kalsar college of Engineering, Chennai
1. Introduction
The entrepreneurial spirit has been described
as the most significant development in recent economic
history. Entrepreneurship is the process of creating or
seizing an opportunity and pursuing it regardless of the
resources currently controlled (Timmons 1994). . A
good entrepreneur is one who is capable of inspiring
confidence in people, and has the ability to motivate
them to work with him in fulfilling the economic goals
set by her.
women alliance (DSWA) says that there are about 14
million people in direct selling in united states. There
are over 55 million worldwide, doing an estimated
97 billion dollars in sales value. Statistics tell us that
women constitute 73% of the total direct sellers in the
world. According to the IDSA (Indian Direct Selling
Association) report, women constitute 60% of the total
direct sellers in India.
1.3 Objective of the study:
1. to study the social as well as economic profile of
women entrepreneurs in network Marketing Industry.
2. To analyse microscopically the indispensable HRM
competencies of women entrepreneurs of Network
Marketing Industry namely achievement motivation,
teamwork, customer orientation, organizational
commitment and empowerment.
1.1
Concept of Women Entrepreneurs: Earlier
research tended to focus on those issues that have
created barriers to female entrepreneurship and
support mechanisms that have attempted to alleviate
such problems for the putative female entrepreneur.
Though women constitute almost half of the world’s
population their representation in gainful employment
is comparatively low. global entrepreneurship Monitor
(GEM) report (2007) on women entrepreneurship
says that women are creating and running business
around the world, contributing to the economies that
represent more than 70% of the world’s population
and 93% of Global GDP. Women entrepreneurship is a
key contributor to economic growth in low and middle
income countries like India.
1.4 Hypothesis:
The following research hypothesis are formulated
and structured for the study :
•
•
1.2 Women Entrepreneurs in Network Marketing:
Network Marketing is a subset of direct selling and
is also known as “multilevel marketing”, “structure
marketing” or “Multilevel direct selling” (WFDSA
2000). Business organizations have long relied on direct
marketing to target customers without spending a lot of
money on retail distribution. However, the Network
(Multilevel) Marketers have taken the direct model
one step further i.e. not only they do the sales, but
recruit and train new distributors i.e., independent sales
persons who are members in the network marketing
company. This ‘ingenious’ method was first popularized
by Amway in 1950’s. Women are caretakers and are
well suited to network marketing. The Direct selling
There is no significant difference among
factors of HRM competencies.
Women entrepreneurs in network
marketing industry do not differ in their
perceptions.
1.5 Scope of the Study:
The study area is restricted to Chennai city as most
of the network marketing companies are having their
operations in Chennai. The study covers the major
HRM competencies of women entrepreneurs in this
business, the determinants of entrepreneurship.
1.6 Limitations of the Study: The study focuses on the
perceptions of women entrepreneurs about their HRM
competencies in select network marketing companies
functioning in Chennai city and these perceptions are
subject to Change in the days to come. A questionnaire
survey is conducted among the women entrepreneurs
201
number of women entrepreneurs attending the meetings
of Amway. A total of 100 questionnaires were circulated
to the women entrepreneurs.
of network marketing companies. As it is a perception
study, the results cannot be generalize.
1.7 Research Methodology:
The Research Methodology of this study based on
both analytical and descriptive type of methodology.
The study is conducted in two stages format, with
a preliminary pilot study followed by the main
study. Chennai hosts a number of network marketing
companies like amway, Oriflamme, Modicare,
Tupperware, Avon and Conybio and many others who
have regional offices in Chennai.
Data Analysis:
All data analysis was conducted using SPSS V-15.
Sample means, standard deviation and N are presented
in the analysis chapter for all the variables of the study.
The data were screened in order to obtain the variance
between various HRM competencies. Factor analysis,
cluster analysis, one way analysis of variance, karl
Pearson’s co-efficient of correlation, t-test, ranking
analysis are discussed here.
1.8 Questionnaire Design:
The questionnaire was based on the initial research
model and propositions. Primary data were collected
through questionnaire survey. The respondents were
asked to give their opinion relating to the five major
HRM competencies. The first part of the questionnaire
comprises demographic factors with optional questions.
The second part contains statements about the profile
of the business. Some optional questions are included
along with the rating questions and also yes / no
questions. The third part consists of statements relating
to the HRM competencies with Likert’s 5 point scale.
The fourth part of the questionnaire relates to the
profile of entrepreneurship. All relevant statements are
included to derive responses. The fifth part comprises
statements pertaining to the constraints faced by the
respondents and the reasons for the high attrition rate.
Data Collection:
The sample size was determined by considering the
1.9Analysis and Interpretation:
This Tree analysis creates a flow chart (Trees) based
on the classification model. It classifies the cases into
groups or predicts values of a dependant target variable
based on the values of independent predictor variables.
It also provides tools for exploratory and confirmatory
classifications.
1. Inability to withstand negative effects:
The women entrepreneurs in network marketing industry
specified the “inability to withstand negative effects” as
the primary reason for their attrition. But the research
needs to ascertain how far the five HRM competencies
achievement motivation, team work, organizational
commitment, customer orientation and empowerment
are attributed to curtail the above mentioned reason for
attrition.
Sample Reverse Auction Process
ATR 1
Node 0
Mean
Std. Dev.
n
%
Predicted
4.087
1.012
412
100.0
4.087
Commitment
Adj. P. Value=0.000. F=108.695.
Df1=2. Df2=409
(3.30.3.90)
<=3.30
Node 1
Mean
Std. Dev.
n
%
Predicted
3.493
1.073
203
49.3
3.493
Node 0
Mean
Std. Dev.
n
%
Predicted
Achievement
Adj. P. Value=0.000. F=25.017.
Df1=1. df2=201
Node 0
Mean
Std. Dev.
n
%
Predicted
4.087
1.012
412
100.0
4.087
Node 0
Mean
Std. Dev.
n
%
Predicted
4.087
1.012
412
100.0
4.087
202
>3.90
4.556
0.499
132
100.0
4.087
Node 0
Mean
Std. Dev.
n
%
Predicted
4.087
1.012
412
100.0
4.087
From the above diagram, it is found that the attrition
reason “ inability to withstand negative effects”
diminishes from the mean value 4.087 at Node 0 to 2.985
at Node 4. But it trespasses the two radical branches over
the independent variables organizational commitment
(F = 108.695) and achievement motivation (F = 25.017).
This forces one to conclude that when there is attrition
of women entrepreneurs due to the reason of negative
effects in their business venture, it is safeguarded by the
two HRM competencies, organizational commitment
and achievement motivation in the sequential order.
2. Poor planning / Self confidence:
The second reason quoted by women entrepreneurs in
network marketing for attrition is “Poor planning / Self
confidence. The research tries to ascertain how far the
five HRM competencies are able to control attrition in
the business.
ATR 2
Node 0
Mean
Std. Dev.
n
%
Predicted
3.800
0.000
412
100.0
3.800
Commitment
Adj. P. Value=0.000. F=130.405.
Df1=3. Df2=408
(3.00.3.30)
<=3.00
Node 1
Mean
Std. Dev.
n
%
Predicted
3.493
1.073
203
49.3
3.493
Node 0
Mean
Std. Dev.
n
%
Predicted
>3.90
4.556
0.499
132
100.0
4.087
Node 0
Mean
Std. Dev.
n
%
Predicted
4.087
1.012
412
100.0
4.087
Achievement
Adj. P. Value=0.000. F=25.017.
Df1=1. df2=201
Node 0
Mean
Std. Dev.
n
%
Predicted
4.087
1.012
412
100.0
4.087
Node 0
Mean
Std. Dev.
n
%
Predicted
The diagram makes it clear that the attrition reason
“poor planning / self confidence diminishes from the
mean value 3.850 at Node 0 to 2.421 at Node 5. But it
trespasses the two radical branches over the independent
variables organizational commitment (F – 13.405) and
empowerment (F = 22.074). So it can be concluded
that when there is attrition of women entrepreneurs
due to the reason of poor planning / self confidence
in their business venture, it is minimized by the two
HRM competencies, organizational commitment and
empowerment in the sequential order. This makes it clear
that if the women entrepreneurs are highly committed
to their business and also highly empowered (capability
4.087
1.012
412
100.0
4.087
to make right decisions), they are able to tide over their
attrition reason “poor planning / self confidence, and
become more confident to plan for their future business.
3. Poor performance at the execution level:
The third reason given by the women entrepreneurs
in network marketing industry for attrition is “Poor
performance at the execution level”. The research tries
to ascertain how far the five HRM competencies are
able to control attrition in their business. The above
mentioned reason for attrition is taken as a dependant
variable and the execution of the probabilistic tree
model brought out the following results.
203
ATR3
Node 0
Mean
Std. Dev.
n
%
Predicted
3.767
0.917
412
100.0
3.767
Commitment
Adj. P. Value=0.000. F=90.326.
Df1=4. Df2=407
<=3.00
Node 1
Mean
Std. Dev.
n
%
Predicted
2.948
0.000
115
27.0
2.948
(3.00.3.30)
Node 2
Mean
Std. Dev.
n
%
Predicted
3557
0.544
88
21.4
3.557
The above diagram makes it clear that the reason for
attrition “poor performance at the execution level”
diminishes from the mean value 3.767 at Node O to 2.948
at Node 1. But it trespasses a radical branch of unique
independent variable, organizational commitment (F =
90.326). This forces one to conclude that when there is
attrition of women entrepreneurs due to their inability
to perform effectively, it is minimized by the HRM
competency, organizational commitment. This makes it
clear that when women entrepreneurs possess very high
degree of commitment towards their organization, they
are able to break the constraints of poor performance,
and try for better performances at the execution level.
1.10 Findings:
• Strong achievement motivation is a powerful tool
to extract significant team work from the women
entrepreneurs.
• A torrent of motivation helps the women
entrepreneurs to achieve a value congruency with
network marketing industry.
• Achievement motivation has led to customer
activation in order to help the women entrepreneurs
to enhance their service quality. It has helped the
women entrepreneurs to deliver the product on time
as their main focus is on customer satisfaction.
• The achievement motivation of women
entrepreneurs has improved their self-confidence
which in turn has led to betterment of their status both
socially and economically. The motivated women
in network marketing industry feel empowered
because of their economic independence.
>3.90
>3.90
>3.90
Node 3
Mean
Std. Dev.
n
%
Predicted
3.948
0.440
74
18.0
4.176
Node 3
Mean
Std. Dev.
n
%
Predicted
3.948
0.440
74
18.0
4.176
Node 4
Mean
Std. Dev.
n
%
Predicted
4701
0.488
77
18.7
4.701
The optimistic co-ordination in team work has
made the women entrepreneurs emotionally
attached towards the organization. The team work
factor “synergy” has led the women entrepreneurs
to have value congruency with the organization.
1.11 Conclusion:
Today, there is a greater awakening among
women. Given an opportunity, they will deliver the
results. In education, they have not only excelled but
also become top rankers. Educating women is absolutely
essential in strengthening their personality. therefore,
encouragements of the growing intensity of motivation
amongst educated young women for coming into the
entrepreneurial stream and extended support with
scientifically designed package of the technical and
financial assistance are needed. The non-governmental
organizations have a bigger role in stimulating and
nurturing the spirit of entrepreneurship amongst women.
There are indications, however, that women-owned
businesses are only beginning to become involved
international trade and other forms of globalization
which may be a factor preventing them from reaching
their full potential in the networking market. Towards
this end, an integrated approach is necessary for making
the movement of women entrepreneurship a success.
The role and attitude of women entrepreneurs are critical
to the success of network marketing industry. A long
standing, successful relationship with the entrepreneurs
allows the network marketing companies to introduce
new and improved advanced products relatively easy
to market, using an experienced team which knows the
local market very well.
•
204
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edu Nunnallly J.C and Bernstein I.H(1994).
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Impact of Strategic HRM Implementation on Firm
Performance: An Empirical Study on the Indian IT Sector
Prof. A. Shameem
Prof & Head
Department of Management Studies, Avadi - IAF
Aallim Muhammed Salegh College of Engineering, Chennai
1. Introduction
3. Importance and Justifications of the Study
Strategic Human Resource Management (SHRM) is
the planned pattern of human resource deployment and
activities intended to enable the organisation to meet
organisational goals and objectives (Noe et al. 2007).
In other words, the definition of SHRM is represented
by the degree of participation in core decision-making
and partnership undertaken by human resource (HR)
department and the specificity and formality that HR
departments require in planning and implementing, all
of that, to ensure that a firm’s human capital contributes
to achieving firm business goals.
The importance and justification for conducting this
study by the researcher is on account of two reasons.
Firstly, as the literature shows, such a study has not
previously been conducted in India, especially what is
related to SHRM implementation in the IT sector. The
research objective is to explore the impact of SHRM
implementation on organisational performance of the IT
sector in India, which is considered as one of the leading
growth sectors of the Indian economy. Secondly, the
positive results of foreign studies on SHRM and the
interest of renowned thinkers and researchers in this
field have prompted this study.
Nowadays, it is a common belief in the business world
that HR of an organisation can be a source of competitive
advantage, provided that the policies and practices
for managing people are integrated with the overall
strategic goals and objectives. SHRM emphasises the
importance of establishing congruence between HR
policies and organisational strategic goals.
The objectives of this study are to gain a deeper
understanding of the relationship between SHRM
implementation and the organisational performance
and to know if the relationship between SHRM
implementation and organisational performance is
affected by firms’ size and age.
2. Problem Statement
5. Literature Review
HRM has been developed into SHRM by researchers
seeking to emphasise the importance of the concept
to the effective functioning of organisations. To this
end, many authors have maintained that SHRM is
straightforwardly linked to organisational performance
and that high-performing work organisations pay
special attention to adopting particular HRM policies
and linking these to the strategies of their organisations.
However, regardless of the rising popularity of SHRM,
there have been very few systematic evaluations of the
claims that it is linked to performance and doubts remain
as to its theoretical foundations (Harris & Ogbonna
2001). This problem can be particularly examined
through answering the research main question ‘How
does SHRM implementation affect the Indian IT sector
firms’ performance’?
Within the last two decades, there has been a number
of important contributions in the literature dealing
with issues pertaining to the management of people.
Significant attention has been directed towards
HRM, which many have seen as representing a
distinct approach to managing people (Guest, 1997).
Interestingly, although researchers have highlighted the
holistic nature of HRM, much of the initial research into
the concept focused on a limited range of issues and
has been criticised as `micro analytic’ (Delery and Doty,
1996). However, in the last decade, researchers have
sought to show the importance of HRM in influencing
organisational performance and it is from this premise
that the current interest in SHRM has developed
(Cappelli and Crocker-Hefter, 1996).
206
Rapid environmental change, globalisation, innovations
to provide competitive products and services, changing
customer and investor demands have become the
standard backdrop for organisations. To compete
effectively, firms must constantly improve their
performance by reducing costs, enhancing quality, and
differentiating their products and services. To improve
firm performance and create firm competitive advantage,
HR must focus on a new set of priorities. These new
priorities are more business and strategic oriented and
less oriented towards traditional HR functions such as
staffing, training, appraisal and compensation. Strategic
priorities include team-based job designs, flexible
workforces, quality improvement practices, employee
empowerment and incentive compensation (Jing and
Huang 2005). SHRM was designed to diagnose firm
strategic needs and planned talent development which
is required to implement a competitive strategy and
achieve operational goals (Huselid et al., 1997).
practice’ SHRM policies. Delery & Doty (1996) note
that ``these researchers . . . posit that some human
resource practices are always better than others and that
all organisations should adopt these best practices.’’ It
is within this perspective of theorising in SHRM that
the present interest in developing `high performance
work practices’ is located (Osterman, 1994). Thus,
the assumption is that the adoption of certain SHRM
policies is likely to result in increased organisational
performance (Kochan & Dyer, 1993).
The second strand of theorising identified by Delery
& Doty (1996) comprises those researchers adopting
a contingency approach. In keeping with the early
foundation of the contingency perspective within
organisational theory, these researchers argue that
the success of HRM policies is contingent upon the
achievement of a match between HR policies and other
aspects of the organisation. For example, researchers
adopting this perspective have demonstrated that
different HR policies may be required at different stages
in an organisation’s life cycle (Bird & Beecher, 1995).
Delery & Doty (1996) identified a third group of SHRM
theorists as adopting a `configurational’ approach.
Delery & Doty (1996) noted that this approach is more
complex and consists of researchers who seek to `` .
identify configurations or unique patterns of factors,
that are posited to be maximally effective.’’ This
category of researchers are also said to approach their
subject from a more theoretical perspective and many
of the phenomena they identify may not necessarily be
empirically observable (Doty & Glick, 1994).
Interestingly, the burgeoning interest in SHRM has
not been matched by the development of appropriate
theoretical constructs for the concept (Guest, 1997).
Indeed, researchers have criticised the underpinning
theoretical foundations of SHRM and many have called
for the formulation of a theory of SHRM (Dyer, 1985).
Two major reasons account for this criticism.
The first is that the concept of HRM, from which
SHRM originated, has itself been subjected to extensive
criticisms for its poor theoretical framework (Legge,
1994). The second, and perhaps more important
reason, is that researchers have approached the field
of SHRM from a variety of perspectives with little
acknowledgement of the differences within them and
no attempt has been made to identify the common
threads in the perspectives (Delery & Doty, 1996). Such
an understanding is important to enable an assessment
of the viability and adoption of the concept. A brief
discussion is offered in what follows.
A consistent theme in all three theoretical perspectives
of SHRM is the assumption that SHRM is linked
to organisational performance. However, while the
literature is rich with claims that both HRM and SHRM
are linked to performance, there is little empirical
evaluation of this and the theoretical foundations
upon which these links are based have been described
as inadequate (Guest, 1997). Accordingly, a better
understanding of the role of the implementation of
SHRM in creating and sustaining organisational
performance and competitive advantage should be
achieved through further theoretical development and
empirical evidence (Jing & Huang 2005).
In an extensive review of the literature, Delery & Doty
(1996) identify three categories of researchers and the
perspectives that they have adopted in theorising SHRM.
They tag the first group of researchers `universalists’
largely because of their interest in identifying `best
207
Recent years have been characterised by an increased
interest in examining the added value of HR to a
firm’s success. The literature suggests that HRM
can be a source of sustained competitive advantage
(Pfeffer 1994; Wright et al. 1994). Huselid (1995), for
example, suggested that a proper configuration of HR
practices may not only help an organisation sustain
its competitive advantage, but may also contribute
significantly to a firm’s performance. The challenge
that HRM has to face relates to the outcomes. What is
important, says Ulrich (1998), is not so much what HR
does, but its “deliverables”, or its contribution to the
overall organisational outcomes.
in which HRM system is constructed may be critical
to a firm’s success and the role of HR processes in this
construction is often overlooked (Purcell 1999; Monks
& Schuster 2001). To make things worse, there is no
consensus on what the term “performance” actually
means. While some researchers (e.g. Huselid 1995)
concentrate on financial performance, others (e.g.
Arthur 1994; MacDuffie 1995), measure productivity
and quality. The absence of a widely accepted measure
of firm performance construct (in addition to a HRM
practices construct) makes it difficult to compare
findings across studies (Rogers & Wright 1998). Most
of the previous studies focus on one or two of them;
subsequently, they do not adopt a more integrated view.
It is thus essential to identify profiles or configurations
of the essential HR policies and practices that are tied
to organisational success measured in terms of financial
and performance objective yardsticks.
Certain research work has traditionally focused on the
impact of HR practices on individuals or, alternatively,
on examining that impact using the organisation as the
level of analysis. Another possible distinction (Wrigh
& Boswell 2002) lies in the number of practices
analysed. Many scholars have focused on one or more
HRM practices and examined their effect on various
performance measures (e.g. Banker et al. 1996; Delaney
& Huselid 1996, Delery & Doty 1996; Harel & Tzafrir
1999; Khatri 2000, among others).
6. Research Hypotheses
The research hypotheses framed for this study include
two main directional hypotheses; and two subhypotheses generated from the first main hypothesis.
They are as follows:
H1 – There is a significant impact of SHRM
implementation on organisational performance.
H1/1 - There is a significant impact of HR devolvement
on organisational performance.
H1/2 - There is a significant impact of HR strategic
involvement on organisational performance.
H2 - There is a significant variation in the impact of
SHRM on organisational performance in terms of firm
size and firm age.
Studies in the late 1990’s have examined the effect
of sets of HR practices on performance (Arthur
1994; Becker et al. 1997) and the characteristics
and orientation of the HRM function and the link to
performance (Huselid et al. 1997; SnellYoundt 1995).
The common denominator for these studies lies with
the concept of multiple HR practices as a system,
borrowing from the paradigms of systems approach.
Thus, in the HRM system perspective, the implicit
assumption is that a single or isolated HRM practice
may have only limited competitive effects on overall
performance. In fact, despite voluminous theoretical
and empirical literature, no consensus exists among HR
scholars regarding the ways in which HRM might have
an impact on the firm’s outcomes (Becker & Gerhart
1996). Moreover, no consensus exists with regard to the
right set of contingencies that explain the relationship
between HRM practices and performance (Ferris et al.
1998), nor is there general agreement as to the precise
policies and practices that comprise any HRM system
(Beckert & Gerhart 1996). More importantly, the ways
7. Methodology
A survey method was carried out using a standardised
measuring instrument. To differentiate the SHRM
implementation level in the targeted firms, a
questionnaire was designed based on the definition of
SHRM. Additionally, objective and subjective variables
were used to measure the organisational performance.
The study population was IT firms operating in Chennai
city and included 75 HR managers with more than 15
years of experience in the HR field. The researcher has
used appropriate data analysis tools.
208
8. Findings of the Study
effectively, then HR will make a substantial impact
on firm performance. A greater use of HR practices is
associated with higher levels of employee commitment
and contribution and is in turn linked to higher levels of
productivity and quality of services.
The study has shown that there is a significant
impact of SHRM implementation on organisational
performance. SHRM places new demand on the HR
function, but brings about proper alignment of HR
goals with organisational goals, improves interpersonal
relations among HR and line managers and reduces
turnover. HR managers of large-sized firms strongly
agree and HR mangers of medium-sized firms agree
that implementation of SHRM improves team-based
job designs, makes available flexible workforces,
improves quality practices, enhances employee
empowerment and incentive compensation and helps
plan talent development which is required to implement
the chosen competitive strategy and achieve operational
goals. Thus the study has also shown that there is a
significant impact of HR devolvement on organisational
performance and that there is a significant impact of HR
strategic involvement on organisational performance.
References
•
•
•
On the question of whether there is a significant
variation in the impact of SHRM on organisational
performance in terms of firm size and firm age it is seen
that age and size of firm influence not only what HR
does, but its “deliverables”, or its contribution to the
overall organisational outcomes.
•
9. Suggestions
•
Based on the study conducted, the researcher would
like to put forth the following suggestion in order to
increase the effectiveness of HR functioning. The
HR Department has to play the following strategic
roles - Business Partner – working alongside business
colleagues to align HR and business strategy and
manage human resources strategically; Innovator –
developing integrated HR strategies; Change Agent
– the management of transformation and change;
Implementer – getting strategies into action.
•
•
10. Conclusion
The assumption underpinning the practice of HRM
is that people are the organisation’s key resources
and organisational performance largely depends
on them. If, therefore, an appropriate range of HR
policies and processes is developed and implemented
•
•
209
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Business Strategy and Human Resource
Management Strategy in US-based Japanese
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of Theorising in Strategic Human Resource
Management: Tests
of
Universalistic,
Contingency, and Configurational Performance
predictions’. Academy of Management Journal.
39(4): 802-35.
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as unique form of theory building: toward
improved understanding and modeling.
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Distinctive Human Resource are Firms Core
Competencies. Organisational Dynamic.
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Management and Performance: A Review and
Research Agenda, International Journal of
Human Resource Management, Vol. 8, no. 3,
pp. 263-276.
Harris, L. Ogbonna, E. (2001) Strategic Human
Resource Management, Market orientation,
and Organisational Performance. Journal of
business research,51, pp. 157-166.
Huselid, M.A. Jackson, S.E. and Schuler,
R.S. (1997), “Technical and Strategic Human
Resource
Management Effectiveness as Determinants of
Firm Performance”, Academy of Management
•
•
•
•
Journal, Vol. 40, pp. 171-88.
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Strategic Human Resources Management and
Firm Performance, International Journal of
Manpower, pp. 434-449.
Kamoche, K. (1994) A Critique and a Proposed
Reformulation of SHRM. Human Resource
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•
•
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or Fiction: Sisson, K, editor. Personnel
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A Comprehensive Guide
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Wright (2007) Human Resources Management:
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Analysis And Awareness of IPR in IndiaA Study Among the Graduates in Chennai City
Y.Alfred Benjamin, Research Scholar
Dr. Y.Lokeswara Choudary, Research Supervisor
SRM B-School,SRM University, Chennai.
1. Introduction
3. IPR – Outlook in India
Intellectual property (IP)is an abstract property
which is legally entitled like any other property that
refers to creations of mind such as musical literacy ,
artistic work , inventions, symbols, names ,images , and
designs used in commerce , including copyright , trade
marks , patents & related rights, industrial designs;
geographical indications, layout designs of Integrated
Circuits, and protection of Undisclosed Information.
Intellectual property surrounds us in nearly everything
we do. At home, at school, at rest, at play no matter
what we do the fruit of human creativity and invention
surrounds us. The law governing the rights for owning
this Intellectual Property has taken it vital position in
the recent years across the globe. This right empowers
the IP owner to have certain exclusive rights in the form
of “limited monopolistic rights” for his/her labor and
efforts to these creative works which is covered by it.
Though the existence of IPRs is very old it gives the
social recognition to its holder with further addition of
economic benefits to its holders.
The developed countries have any how embraced
the IPR strategy long before and have made their systems
align to this but the developing and the underdeveloped
countries sees this as a mammoth task and unnecessary.
All the developing countries except few always have
a dilemma in their outlook when it comes to IPR. Due
to their own state policies, lack of knowledge, lack
of systems and procedures, unwillingness for change
are some of the obstacles stand in the way of the IPR
acceptance and implementation.
According to The Economic Times Reports
Manufacturing cos lead in filing patents. However
Among the top 100 tech companies in India, almost 89
have not filed any patent applications as yet. During
FY07 and FY08, India’s top two exporters of software
services TSC and Infosys Technologies filed 14 and
22 patents, respectively. Though the stats has a raising
curve yet when we compare in the global scenario it
shows that India’s IPR regime had to go a long way
which is not easy.
2. IPR – Symbol of Pride
IPR has taken a status symbol of a county at this
globalization phase as it becomes a strategic response
for the globalization and liberalization of the economy
growth of a country. It also signifies the scientific,
technical and industrial development of a nation.
IPR drives the industrial change and attracts foreign
investment in a nation.
4. IPR awareness study: Methodology
This study aims to test the knowledge on IPR, its
importance and the willingness to adhere and accept
IPR among the college students. 7 notable colleges in
the Chennai city were picked to answer a questionnaire
which was prepared as a study tool for this study. The
following briefings show the response to each question
in the questionnaire.
Corporate takes IPR as the power that keeps the
business moving forward. IPR as tool to maintain their
competitive advantage; for significant collaborations;
to streamline processes; drive new revenue streams;
maximize their profitable investment, reduce risk; drive
innovation effectively and efficiently…etc
Q1: When did you come across the term Patent?
Since most of the college students participated in the
survey are from science background I had a curiosity
to know when they came across the term patent in their
life. The responses were little bit disappointing. 11.1%
211
of the students have not come across the term patent so far; 11.1% in the post graduation only; 37.04% in under
graduation and 40.74% in their school level itself. As most of the students are in their PG studies this answer is little
unexpected as they are the future of a country.
Q2: Correct identification of definition of Patent:
Definition for patent was given in this question and students were asked to identify this against patent, copyright,
license and Trademark. 81.48% correctly marked it as patent; 7.41% marked it as copyright; 7.41% marked it as
Trademark and 3.7% ticked it as License.
Q3: IPR is abbreviated as Intellectual Property Rights?
To test the knowledge on IPR we first started with the abbreviation related question. Unfortunately many of them i.e
55.56% answered wrongly and only 44% answered correctly. It is a pathetic state as the students participated were
mostly in their final year.
212
Q4: Your knowledge on IPR
This question was framed to know the knowledge on IPR among each individual. As the IPR takes a centre stage
in this global world it is good to see our future generation equipped with all its knowledge. There this response
shows the work that India has to concentrate on its grass root level if it has to sustain in the future innovative market.
Of course nobody can claim that they 100% knowledge in IPR and this survey is not different to that; only 7.41%
indicated their knowledge on IPR is 75 to 80%; 29.63% of students responded that their knowledge is between 50
to 60%; 37.04% showed that they had 20 to 40% of knowledge in IPR and 25.93% of students reveal that they don’t
have any knowledge on IPR.
This answer clearly shows that it is high time to act upon our IPR strategy for a better future. Whatever we can do
to improve this knowledge to our future base we need to do it immediately. This is a big “WAKE UP” call for India.
Q5: Suggestions for improving IPR awareness:
We put a question to ask students to suggest on this graving problem of lack of awareness on IPR. The students
responded brilliantly like 29.63% felt that this could be suggested as an optional subject in college; 62.96% responded
that frequent seminars from corporate like Thomson Reuters and other could be great and 7.41% said other if any.
Yes, this is brilliant.
213
Q6: IPR awareness is important in India:
Finally we tossed the question to read the neediness of the students. 96.3% of students positively revealed
that IPR awareness is important in India and 3.70% couldn’t answer this but none said that this not important in India.
Little encouraging factor right!!!
5. Conclusion
The future growth of the nations is certainly going to be based on innovation and creativity. As this becomes the base
of the competition the countries which have adapted, designed, embraced and implemented will certainly have an edge
over other countries. India has a long way to go but this not too late. We need to rise up to the occasion and act in unison
to make ourselves competent in the global market.
One of the most important and basic thing required is the preparation of our future generation. This study reveals rather
some of the shocking things for which we need to take immediate action. This is an wake up call for India to gear his
future with all that thing required. In this action all the educational institutions, universities, colleges, schools and it is
should come forward to take this IPR awareness to the students as they are the future of the nation. Let us make India
proud and make her name glorious by joining hands for this cause.
214
Will Transactional Form of Interdependence Improve
Group Effectiveness?
Dr. V. L. Narasimham
Assistant Professor (Selection Grade), University of Petroleum & Energy Studies
P.O. Bidholi, via Prem Nagar, Dehradun, Uttarakhand State
1. Introduction
particular organizational level than on to a series of
organizations over a greater geographical space.
Group categories are not very new in the business and
organizational management point of view, research
literature has identified self-directed groups, parallel
learning groups, cross-functional groups, executive
groups, and group-based organizations while mapping
respective effectiveness (Cohen, 1997 and literature
review there in). As Cohen admits in his research,
the terms, group and team may also be understood
interchangeably in the following article. Synchronizing
diversified personal efforts of the group members,
aligning individual’s roles to the group objectives,
and routine conformity of all natural members to
the group decision are some of the determinants that
govern the group effectiveness within a given business
environment. For example, groups that recommend
improvements with the existing system necessarily
adapt to a cautious approach among the group members,
and in many circumstances, group effectiveness will be
politically truthful than absolutely productive. Further,
decisions on suggestive improvements will be either
delayed or become obsolete over a period of time. On
the other hand, built-in independency will demonstrate
how conceptual group effectiveness is revealed by a
group of members. Incidents such as group rewarding
will not always be an irrefutable experience unless
qualified competent groups demonstrate and fare poorer
in relative circumstances. Different theorists (adapted
from Jex, 2002, including McGrath, 1964, Gladstein
1994, Hackman 1987, Campion et al., 1993 and others,)
have promulgated group effectiveness with the support
of flow-chart models, but for the lack of rational
determinants, group effectiveness has not empirically
and competitively mapped in different management
situations thoroughly. It is also equally important to
note that at most of the times, mapping of selected
determinants need not necessarily be extended on to a
different organization or business situation on the same
lines. Hence, conceptual models will largely satisfy at
Group effectiveness at educational institutes can be
at project level (research projects in the disciplines of
genetics, biotechnology, material sciences or polymers)
where the group productivity can be empirically
demonstrated through quantifiable patents, research
publications, new arrival or renewal of research
projects. Parallel groups in academic institutes are
possible between industry and management education
through consultancy and industrial engineering &
management development programs.
Educational
work groups are generally formed through delegation in
order to evaluate cumulative outcome than in exclusive
terms of productivity and efficiency. Intellectual
efficacy is quite uncertain with academic work groups
for the reasons include, limited returns in terms of
monetary gains to the work groups, relatively under
paid emoluments, low social recognition for intellectual
professions at selective places, constraints in renewing
same work groups. Secondly, the work group efficacy
varies with respect to a particular discipline and on how
efficiently the results are derived through a particular
work group. On other side of academic institutes,
management student work teams do form based on
convenience than on the conviction, strengths, planning
or to resolve a business challenge (eg., competing a
business plans, games, or case study deliberations). The
returns for such successful outcomes include, one-time
monetary awards, and in selected cases, possibility for
getting engaged with the sponsor agents over summer
internships and employment. In the recent times,
management education periodically reviewed and
assessed to the modern demands with the help selected
management groups or faculty core teams to strengthen
course plans, evaluation processes, on the conduction
of faculty and management development programs,
industry interactions or in initiating international
215
conferences. These groups can be efficient and
functional when group members are aware and appear
sound with the intricacies of the management education.
However may be the intellectual vacuity, or in contrast,
intellectual cartelization, passive endorsement to the
mediocre improvements, weak appraisals, personally
influenced evaluation schema, and other forms of
irrational inputs will result in superficial and politically
truthful group effectiveness.
other awareness rising programs may sometimes will
be wrongly attributed to the government nodal agencies
(unit administrations but rarely in groups) than to the
participants involved. In the similar lines, propagating
for incredible India campaign has been effective
among the overseas tourists where the group that is
behind it is hardly noticed. Project groups’ efficiency
may be mapped through the particular activity related
stories of 108 emergency teams, sanitary teams of a
different municipalities, recue & safety teams, courier/
postal services, logistics supporting teams at ports,
inland container depots, railway, road and other mode
of transportations, hotel, banking and miscellaneous
financial institutions, however, the effectiveness is
largely confined to a smaller team, a gang, or a group. At
the same time, successful outcomes are shared between
groups and its chef, or a manager of an organization.
Hence, outcomes are short living, rather mild, and go
unnoticed except for using a theoretical term, effective.
When effectiveness is compared at project group level
of IT industries, the empirical research highlights
annual turnovers, and thereby satisfies the effectiveness
and productivity in terms of profits, earned. At
manufacturing enterprises level, the productivity
may be understood with the help of orders executed
against orders received with limited rejections by the
parallel groups (raw material procurement, segregating,
preparing, assembling, finishing, polishing or
packing for exports) responsible for part of the whole
organization activity. Management group effectiveness
at any industry level is governed through the brand value
created by that group through organic and/ or inorganic
growth, including, acquisitions or mergers, and joint
ventures developed as well as attracted at specific
domain level. In spite of relevant success through
group networks and from team building exercises (refer
to literature survey of Cohen, 1997, and Pescosolido,
2003), the competency of a group under consideration
can be clearer when the effectiveness is determined
using quantifiable metrics like, productivity, yield, or
perceptible output than with how a meticulous planning
was done to derive effectiveness (eg., failures of Fortis
group acquisition of Singaporean chain of hospitals,
RIL’s bid for North American petrochemical industries
or Bharti group’s business ventures with MTN, Africa).
2. Group effectiveness on quality outcomes
Group thinking theory has received mixed response
(see Turner et al., 1992 and references there in) for
the outcomes in terms of creativity, quality, feasibility,
significance and competence solutions for the reasons
like, i) a group cannot be in a position and initiate
cohesively on a creative and quality product unless there
has been a primer, manual, guidelines or directional
supremacy of an individual who might head such
group, ii) possible disruption in group cohesion either
by deletion or addition of a member, and henceforth,
creativity and quality cannot be directly attributed to the
available group at the time of success/ failure evaluation,
iii) any form informal communication among the
groups cannot be transferred into a measurable
outcome of group performance/effectiveness and iv)
lack of understanding on seasonal changes, personal
ambitions, attitudinal cycles, domestic issues and other
unique qualities of individuals in a group that fail to
demonstrate group cohesion.
When agriculture, poultry, tourism or service industries
are considered, group efficiency is clear as well as obscure
depending upon geographies and groups’ rationale. For
example, the outcomes of protectionist groups against
introduction of Bt-brinjal, influencing the government
to a minimum supporting price for cotton, sugarcane or
wheat, voluntary participation in culling against viral
spread through poultry and animals, and effectiveness
of parallel groups while campaigning against H1N1/
swine–flu, polio eradication, tuberculosis, AIDS or
When successful group cohesion at academic institutes
is revealed through patents, research projects, or research
publications, it is imperative to believe that group
heads, senior academicians, principal investigators, or
research directors are pivotal in bringing in cohesion,
managing a particular research group, training the
216
individuals, assigning research responsibilities, and
effective monitoring member’s performance. Research
progress based on Gantt Charts, accommodating interdisciplinary partnerships, attending to project short
comings, and other miscellaneous research management
issues will also be the part of group effectiveness.
Successful executing of research project is largely the
onus of the group head than group members with the
help of low-profile young group members. However
may be the diversification at the individual efficiency/
experience and contribution to a research project, the
success (read as patent, research article, or discoveries)
of a group and its effectiveness (read as credit) will
usually be distributed among the members that remain
at the time of final outcome (read as authorship/ patent
holders). In such circumstances, group effectiveness
cannot always be truthful to the group cohesion that
is exhibited through research articles. But many
successful outcomes of such research projects will
usually be shared among the group members than
negative outcomes (media reports on Chandrayan I,
PSLV launches, commissioning of power plants, or
democratic elections).
Group effectiveness at service industry depends upon
time based task execution where, the efficiency of
the groups/teams will determine whole efficiency of
a particular service industry (courier, postal, health,
environmental mitigation due to coastal oil slick,
detective and investigative agencies, customs clearance,
and other related industries). Since the nature of the tasks
do vary at a particular interval of time, the efficiency
will directly depend upon the complexity of the task in
review. Though many industries have rationalized the
complexity, there are certain bench marks with respect
to time taking into consideration a general perceivable
efficiency of the individuals associated with such tasks.
As more and more automation is introduced into service
industries, group efficiency can be better understood
through the perceivable customer satisfaction levels
over a period of time. At places, the group efficiency
is either positively or negatively attached to a particular
brand (Saravana Bhavan, DHL/GATI Couriers,
Subhiksha and others). But customer satisfaction can
be a valid metric to evaluate group efficiency when
there are more than one service industry is available,
when the same customer has experience with both/ or
group of the industries, and when customer’s opinion is
equally rational.
Similarly, the quality of manufactured products will
depend upon existing standards, their interpretation,
tolerance set by the management, training extended to
the employees (management point of view), automation,
consistency of the machinery, their maintenance
(manufacturing related), nurtured skills, attrition rate,
compensation and other secondary benefits (employee
focused) govern group performance efficiency at
any particular interval of the manufacturing process.
Hence, group efficiency can be a dynamic situation
where, product quality is largely based on compliance to
the rule book of manufacturing than cumulating effect
of individual’s efficiency, alone. However, when each
level of manufacturing process effectively managed by
a group, when operational process does not demand
personal concerns and emotion based alterations, long
periods of observations on a particular group may yield
outcomes as poor, satisfactory or highly satisfactory.
Hence, the group effectiveness can be determined with
respect to the pre programmed bench marks for a given
situation, geographical spaces, product variations, and
objectivity of such efficiency determination.
3. Directives based Interdependence
Campion’s synthesis model of Group effectiveness
(adapted from Jex, 2002) identifies certain themes like
job design, interdependence, composition, context, and
process and presumed to be considered as effectiveness
criteria while performing productivity judgment.
Though there are different models (McGrath, 1964,
Gladstein 1994, Hackman 1987, and others) who
have given similar such themes for assessing group
effectiveness, interdependence is found to be well
connected to human nature and to the task complexity.
Individual’s proactive nature, how extent a member
is motivated to the demands of task, personal culture/
belief/ norms/ traditions, trust, and self-esteem will
certainly elevate individual’s initiative to perform in
interdependence work environment. Though returns
in terms of monetary gains motivates in the initial
stages of a particular interdependency task, a point may
disembark where, members will seek respect, honour,
be expecting credit sharing, will turn to opportunistic,
campaign for impartiality and other such actions that
217
may alter expected outcomes in terms of effectiveness.
Interdependence will also have a bearing with the
attitude of individuals towards observational or social
learning (Miller and Dollard 1941, Bandura 1969,
1971, 1977, all references adapted from Petri, 1979).
Social learning emphasizes vicarious, symbolic and
self-regulatory process, and social learning process
channelizes individual’s ability in multiples and allows
an individual to build patterns of behavior without
having to resort to trial and error. This quality sometimes
nullifies shortcomings through directives based learning
and subsequent instructions based interdependence.
Directives based learning compartmentalizes the
abilities mechanically, and effectiveness of a group
will become largely rudimentary. Longer periods of
instructional based learning will result into learned
helplessness as it was observed in mariners who
happen to stay on sea for good length of time, and in
those who have not explored opportunities to excel in
creative ways of learning. Greater the opportunity for
creativeness, the group effectiveness will fall short of
productivity and expected outcomes.
observations, and nurture rational thinking, there can
be adverse effect for the directive-based learning and
with the anticipated effectiveness. At times, it may
totally disintegrate and results in as failed cohesion.
In place of such transactional interdependence,
introduction of more complexities into the challenges
may be thought out. Tasks improvisation, rise in the
existing/ anticipated outcomes, heightened expectations
and mounting satisfactory levels, sophistication with
ease, and multi dimensional applications with sensible
utility are some of the recent challenges in which
directional interdependence will be of some help while
differentiating superior challenges from a routine task.
4. Conclusions
Group effectiveness will be more apparent in certain
situations where as, the same will be difficult to measure
except through qualitative terms. (eg., satisfactory).
Quality outcome may be the term that may be perceived
as utility period versus the value in particular context, but
group effectiveness is the consistent but distinguishable
nature for the group that abides to the task completion
or till the outcome achieved through an activity over
a period time. Transactional and directive based
interdependence will lead to management cartelization
of an activity leading to learned helplessness unless
tasks’ improvisations happen from time to time.
When instructional or directives based learning is applied
in academic environments, group effectiveness, will
result certain kinds of outcome, that are both effective
and not so effective in fixed length of time (eg., academic
calendar that highlights admission to convocation). On
the other hand, non-directive based interdependence
will result improved self-regulatory conditions for
the group (eg., successful product appeals done by
advertising agencies, engineering design/architectural
professionals, journalistic abilities, cinematography
and others). Similarly, in the manufacturing industry,
product development, innovation, or introducing
multi-purpose tools will take different periods of time
depending upon involvement of the individuals in
the group. However, when an appreciable outcome/
product/ tool or solutions is/are resulted, the brand
will be recognized and recalled first, than the group
and its effectiveness in the minds of the customer.
Direction based interdependence will be helpful in
those environments where, compulsions on the group
members in the form of leaned helpless is prevailing.
As and when group members initiate learning through
5. References
1. Cohen, S. G. (1993) What makes teams work?
Group effectiveness research from the shop floor to
the executive suit. Journal of Management, v. 23,
No. 3, pp. 239-290
2. Jex, S. M. (2002) Organisational Psychology A
Scientist-Practitioner Approach pp. 321-551 John
Wiley & Sons, Inc ISBN 9812-53-230-7
3. Pescosolido, A. T. (2003) Group efficacy and group
effectiveness: The effects of group efficacy over time
on group performance and development. Journal of
Small Groups Research v. 34, No.1, pp. 20-42.
4. Petri, H. L. (1979) Motivation: Theory and research
pp. 200-202, ISBN No. 0-534-00936-0
5. Turner et al., (1992) Threat, Cohesion, and Group
Effectiveness: Testing a Social Identity Maintenance
Perspective on Groupthink. Journal of Personality
and Social Psychology, v. 63, No. 5 pp. 781-796.
218
An Overview of Support Services to Women Entrepreneurs
K.Sindhu
Lecturer, Department of Corporate Secretaryship
M.O.P. Vaishnav college for women
1. Introduction
professional and managerial skills and experience they
needed as entrepreneurs. In addition, many women felt
they were discriminated against in large companies,
which provided them with an incentive to be their own
bosses. Some women also have found entrepreneurship
to be an ideal way to juggle the competing demands of
career and family, and some single mothers have started
businesses as a way out of poverty.
It has been well renowned all over the world that
women’s empowerment is an excellent strategy for their
overall economic and social development. The GEM
2000 report showed that among the major industralised
G-7 countries, there was a very strong relationship
between the level of entrepreneurial activity and annual
economic growth.1 There is a positive linkage between
entrepreneurship and economic prosperity. The field of
self-employment and entrepreneurship has become a
viable career option in the recent times. Endowed with
the famous female intuition that helps women to make
the right choices even in situations where experience and
logic fail, women have innate flair for entrepreneurship.
The greatest deterrent to women entrepreneurs is that
they are women. Male chauvinism still exists in oriental
countries including India. Women are away from
high-flying economic activities, which are supposedly
regarded as the preserve of men. Even the financial
institutions are skeptical of the entrepreneurial abilities
of women to provide funds. The social setting is still
not conducive as the men folk are less understanding
and less co-operative to women entrepreneurs. Women
in non-urban areas have to suffer still further. They have
to face not only resistance from men but also of elderly
women who are ingrained with this attitude of inequality.
Although men and women may be motivated by different
goals and expectations women entrepreneurs are just as
competent as and better than their male counterparts.
Women are more likely than men to admit when they
do not know something and ask for help. Women are
natural net workers and relationship builders, forging
powerful bonds and nurturing relationships with clients
and employees alike. They are also more inclined to seek
out mentors and develop supportive teams. In business
this translates into establishing rapport with clients and
providing great customer service. This is the reason
why many women tend to launch businesses that are
client based or service-oriented. Women typically tend
to give away too much and charge too little. Sometimes,
however, a lack of training and prior experience can
render women entrepreneurs susceptible to a number of
pitfalls.
Cultivating the skill for entrepreneurship is an area,
which promises encouraging results in this connection.
By motivating, training and assisting women towards
forming and running independent business ventures,
it is possible to tackle many of the gender issues.
Entrepreneurship is the organisation of an economic
activity, with the goal of reaping the benefits and profits
that accrue from it assuming all the risk that arise there
from. According to Evans “ Entrepreneurs are person
who initiate, organize, manage and control the affairs of
a business unit that combines the factors of production
to supply goods and services whether the business
pertains to agriculture, industry, trade or profession.”2
Women have owned and operated businesses for decades,
but they were rarely recognized or given credit for their
efforts. Often women entrepreneurs were “invisible”
as they worked side by side with their husbands, and
many only stepped into leadership positions when
their husbands died. But a variety of factors have
combined in recent years to contribute to the visibility
and numbers of women who start their own businesses.
As more women joined the work force, they gained the
219
entrepreneurial careers in plastics, electronics and leather
related industries. A majority of women entrepreneurs
in India are concentrated in the light manufacturing
sector (leather, garments, engineering goods, beauty
products). The second most common category is
that of services (interior designing, management
and placement, consultancy, nursery school). This is
followed by the retail trade sector including boutiques,
home furnishing, automobile dealing, etc. However,
overall women entrepreneurs settle towards ventures
with low investment and lesser technological barriers.
Women business owners still face greater difficulties
in gaining access to commercial credit and bidding on
government contracts than do their male colleagues, and
pockets of resistance to women entrepreneurs remain
strong in some industries and geographic regions.4
More women are getting enrolled in the Universities
and technical institutions and their number is growing.
There is evidence of a direct relationship between the
growth of women’s education and their numbers in the
non-agricultural professions. The citadels of academic
excellence are no longer the prerogatives of men, in fact
women are gradually willing to accept challenges and
assume responsibilities in various fields – economic,
social and political.
Recent studies have revealed that several women
are willing to become entrepreneurs due to various
reasons. These reasons can be broadly classified into
two: “Pull factors” and “Push factors”. Pull factors
imply the factors, which encourage women to have an
independent occupation. Under the influence of these
factors the women entrepreneurs choose a profession
as a challenge and as an adventure with an urge to do
something new. Push factors are those which compel
women to take up business enterprises to get over
financial difficulties and responsibility are thrust on
them due to unfortunate family circumstances .3 The
latter category forms only a negligible percentage of the
total women entrepreneurs in this country. Women start
businesses for essentially diverse reasons than their
male counterparts. Men start businesses mainly for
development opportunities and profit potential, women
most often found businesses in order to meet personal
goals, such as gaining feelings of achievement and
success. In many instances, women consider financial
success as an external confirmation of their ability
rather than as a primary goal or motivation to start a
business, although millions of women entrepreneurs
will grant that financial profitability is important in its
own right. Their task has been full of challenges and
yet they have steered clear of prejudice, oppositions
and constraints and have established themselves as
successful entrepreneurs.
It is estimated that women entrepreneurs presently
comprise about 10% of the total number of entrepreneurs
in India, with the percentage growing every year. If the
prevailing trends continue, it is likely that in another five
years, women will comprise 20% of the entrepreneurial
force.5 With corporate eager to associate and work with
women-owned businesses, and a host of banks and
non-governmental organizations keen to help them get
going, there has rarely been a better time for women
with zeal and creativity to start their own business. The
government and private organizations have entered the
scene on a large scale to encourage women to be selfemployed and succeed by offering training programmes,
consultancy services and guidance. . In order to harness
their potential and for their continued growth and
development, it is necessary to formulate appropriate
strategies for stimulating, supporting and sustaining
their efforts in this direction. Such a strategy needs to be
in congruence with field realities, and should especially
take cognizance of the problems women entrepreneurs
face within the current system. An entrepreneur stands
at the centre of economic activity and whose role
as the organizer of human and material resources is
most important and pivotal in ensuring the progress of
economic development. The government of India has
recognized the role of entrepreneurship in solving the
problems of urban poverty and unemployment and has
formulated a number of employment programmes. Any
Women or group of women which innovates, imitates
In the 1970s and 1980s women entrepreneurs were
confined to “kitchen-enterprises” – the three Ps: pickle,
powder (spices) and papad or “soft” traditionally
feminine enterprises, such as garments, beauty care, etc.
However, from the 1990s and onwards, with increased
levels of education, more women have opted for
220
or adapts an economic activity may be called woman
entrepreneur.
(IDBI)
 Industrial Finance Corporation of
India (IFCI)
 Small Industries Development Bank
of India (SIDBI)
 National Small Industries Corporation
(NSIC)
 State Small Industries Corporation
(SSIC)
 Commercial Banks
 Co operative Banks
 Regional Rural Banks (RRB)
 Gramin Banks
 State Financial Corporation (SFC)
 State
Industrial
Development
Corporation (SIDC)
3. In India a large number of training and promotional
activities are being organized to develop
entrepreneurial skills among women. Some of
the programmes are exclusively for the women
and the others take women along with their
male participants. As self-employment breed
entrepreneurship, more and more self employment
programmes are undertaken and proper training are
carried to bathe rural and urban youths including
women.
Specialized institutions, which are responsible for
training and entrepreneurship development- mainly
among small and medium enterprises (SMEs) 7, are
Several measures are taken by Institutions, Agencies
and Governments to encourage and facilitate greater
involvement of women at all levels in entrepreneurship.
Some of the measures undertaken are listed below.
1. Banks and financial institutions are lending more
freely to women entrepreneurs today. In public
financial institutions and banks, special cells are
opened for providing easy finance to women
entrepreneurs. The nationalized banks and state
financial corporations advance loans to women
entrepreneurs on preferential basis. State Industrial
development Corporations and District Industries
Centers provide loans, subsidies and grants to small
scale and women entrepreneurs. State level agencies
assist women entrepreneurs in preparing project
reports, buying machinery and building, training
and hiring staff. NABARD has been supporting in
setting up of Women Development Cells (WDCs)
in Regional Rural Banks and Cooperative Banks.
NABARD also conducts a number of training
courses for women entrepreneurs. The various
financial institutions providing finance for women
entrepreneurs 6 are
2.
 Industrial Development Bank of India
Name of Institute
Place
National Institute of Small Industry Extension
and Training (NISIET)
Hyderabad
Training, research and consultancy services
Indian Institute of Entrepreneurship
Guwahati
Training, research and consultancy services
National Institute of Entrepreneurship and Small
Business Development (NIESBUD)
New Delhi
Coordinating and overseeing activities of various
institutes /agencies engaged in entrepreneurship
development
Integrated Training Centre (Industries)
Nilokheri
Conducts EDP course
Institute for Design of Electrical Measuring
Instruments (IDEMI)
Mumbai
Render services to the instrumentation industry
Central Institute of Hand Tools
Jalandhar
Aims at rapid growth of the hand tool sector
221
Activities
Hand Tool Design Development and Training
Centre
Central Tool Room
Nagaur
Ludhiana
Central Tool Room and Training Centre
Kolkata
Central Institute of Tool Design (CITD)
Hyderabad
Product-cum-Process Development Centre for
Sports Goods
Meerut
Product-cum-Process Development Centre for
Essential Oils
Kannauj
Product-cum-Process Development Centre
Agra
Assistance for improvement in productivity,
betterment in quality, high value addition
Provides services in the area of consultancy, tool
design and manufacture and technical training
Training, design and manufacture of complicated
precision tools for the telecom industry and
other common facility services
Training, CAD/CAM centre to train postgraduate trainees, automatic process control
unit, and so on
Training, process and product development of
sports goods, R & D
Modernise and upgrade technology status for
the essential oils and perfumery industry
Provide better technology to small-scale
foundry and forging units, process and product
development, and provision of design for
melting equipment, testing facilities
Electronic Service and Training Centre
Ramnagar
Training, technical and consultancy services
Centre for the improvement of Glass industry
Firozabad
Development and adoption of new technologies
and products
National Small Industries Corporation
New Delhi
Supply of machinery, marketing assistance,
training
1. Both the Central Government and various State
Governments are taking increased interest in
promoting the growth of entrepreneurship. Projects
such as Rashtriya Mahila Kosh (March 1993) and
Indira Mahila Yojana (August 1995) are specially
designed for empowerment of the economically
backward women through micro-credit in order
to promote self-employment.
Trade Related
Entrepreneurship Assistance and Development of
Women (TREAD) scheme was launched in 1998.
The scheme envisages development of micro/tiny
women enterprises in the country both in the urban
and rural areas. The main objective of the scheme is
to empower women through development of their
entrepreneurial skills by eliminating constraints
faced by them in their sphere of trade. A revised
scheme of TREAD was launched in May, 2004.
The Government of India is implementing various
programmes for promotion of entrepreneurship in
general and particularly among women.
Some other organizations engaged in training and
Development of SME Entrepreneurs are:
•
Indo-German Tool Room at Ahmedabad,
Aurangabad and Indore
•
Indo-Danish Tool Room at Jamshedpur
•
Hand Tool Design , Development and Training
Centre, Nagore, Rajasthan
•
Central Machine Tool Institute at Bangalore
•
Central Institute of Plastic s Engineering and
Tools at Chennai & Ahmedabad
•
National Institute of Foundry and Forge
Technology at Ranchi
•
DICs at District level Small Industries
Development Corporations set up by various
State Governments.
222
Scheme
Details of the Scheme
Self Employment Scheme for the Registered
Unemployed
Provides subsidy to a ceiling of 25% of the loan sanctioned by
banks. This scheme is in operation in West Bengal.
Self Employment Scheme
Provides assistance towards margin money for seeking loans
from banks and is being operated in Madhya Pradesh.
Sanjay Gandhi Swavalamba Yojana
Provides assistance for promoting small self employment ventures
& operated in Maharashtra.
Societies for Training and Employment
Promotions (STEP)
Society for Training
Promotion and Training
and
Employment
These schemes are operated in AP & other States.
Development of Women & Children in Rural
areas
Rural Landless Employment
Programme (RLEGP)
Graduate
National Rural Employment Programme
(NREP)
Integrated Rural Development Programme
(IRDP)
These Schemes are operated by different departments &
ministries of Government of India in all the states. The thrust
of all these programmes is mainly in
1.Employment and
Income Generation Services 2.Education and Training Services
3.Support Services
4.General
Awareness Services
5.Legal Support
Services.
Training of Rural Youth in Self Employment
(TRYSEM)
Prime Minister’s Rojgar Yojaja (PMRY)
Loans upto Rs. One Lakh is provided without any security. 10%
would be women
Women Development Corporation Scheme
(WDCS)
WDCS identify women entrepreneurs, prepareviable projects,
facilitate the availability of credit through banks.
Working Women’s Forum
Access to credit without collateral and helping women in local
sales (Tamil Nadu).
Indira Mahila Yojana
Helps in setting up of groups in villages and urban slums operating
in 200 blocks in the country.
223
Indira Mahila Kendra at Anganwadi level
Economic Empowerment by ensuring direct access mobilisation
& their actual participation in the development process.
Rashtriya Mahila Kosh (National Credit
Fund)
Extends credit to poor women (informal credit delivery)
Mahila Samithi Yojana
Informal Banking
Khadi & Village Industries Commission
(KVIC)
Provides training for women & markets products in handloom
and weaving, handicrafts, products of wool, marbles, Stone, Semi
Precious stones and Metal.
Indira Priyadarshini Yojana
Provide Rs. 2 lakhs as term loans & upto Rs. 1 lakh as working
capital.
IDBI’s Mahila Udyam Nidhi
Mahila Vikas Nidhi
Provides seed capital assistance for Voluntary Organisation
working for the upliftment of the status of women.
SBI’s Street Shakti Scheme
Loans upto Rs. 25, 000. No guarantee nor margin money
State Financial
Entrepreneurs
Scheme
for
Women
Loans provided for acquiring fixed assets such as loans, building,
plant & machinery.
1. Government has stressed on women education and
special programmes have been introduced. Skill
development is being done in women’s polytechnics
and industrial training institutes. Under various
schemes like the World Bank sponsored programme
to upgrade polytechnics, separate institutes have
been set up for women. At present, emphasis in
women polytechnics is laid on traditional skills like
embroidery, interior decoration, tailoring, knitting,
etc.
2. To organize women in to self Help Groups and equip
them with services of awareness generation and
income generation through training, employment,
credit and marketing linkages to small entrepreneurs
etc., programmes like Indira Mahila Yojana (IMY)
now recast as Integrated Womens Empowerment
Projects (IWEP) and Rural Womens Empowerment
and Development (RWDEP) have been launched.
Of the total Ninth Plan target of 50000 more than
37000 groups were set up benefiting about 8 lakh
women.
3. Women entrepreneurs have to face severe marketing
problems. Women’s development corporations
are holding frequent exhibitions and setting up
marketing outlets to provide space for the display
of products made by women. Some NGOs have
marketing vans to make it even easier.
4. The development of transport and communication
throughout the country have helped women
entrepreneurs to market their products easily.
Infrastructure to set up industries is provided in
the form of industrial plots and sheds by state run
agencies. Apart from allotting units to women
entrepreneurs on priority basis, it is desirable to
provide amenities particularly required by them in
industrial areas.
5. Individuals are being encouraged to form new
businesses and are being provided various subsidies
like technical subsidy, know-how subsidy, power
subsidy, generator subsidy and concessions like
Relief, sales tax exemption, Octroi duty exemption,
Electricity duty exemption, stamp duty exemption.
224
6. Many information bureaus have started to help
women entrepreneurs in getting the required
information.
7. More research programmes are conducted in recent
days to analyze and solve the problems of women
entrepreneurs.
professions like trade, industry and engineering. Women
today are more willing to take up activities that were once
considered the preserve of men, and have proved that
they are second to no one with respect to contribution
to the growth of the economy. Women entrepreneurship
must be molded properly with entrepreneurial traits and
skills to meet the changes in trends, challenges global
markets and also be competent enough to sustain and
strive for excellence in the entrepreneurial arena. Their
role is also being recognized and steps are being taken
to promote women entrepreneurship.
2. Institutions Providing Assistance to Small /
Tiny Entrepreneurs in Tamil Nadu
The following institutions have been
established by the Government of Tamil Nadu to extend
the assistance to the small /tiny entrepreneurs.
•
Tamil Nadu Small Industries Corporation
Ltd. (TANSI)
•
Tamil Nadu Small Industries Development
Corporation Ltd. (TANSIDCO)
•
State Industries Promotion Corporation of
Tamil Nadu (sidcot)
•
Tamil Nadu Industrial
Corporation Ltd. (tiic)
•
Tamil Nadu Industrial Development
Corporation Ltd. (tidco)
•
3. References
1. (GEM) 2005 Report
Entrepreneurship.
on
Women
and
2. Evans G.H. “The Entrepreneurs and Economic
Theory”-American Economic Review.
3. Dr. Mohiueddin Asghaine “Entrepreneurship
among women Retrospect’s and Prospects”,
SEDME, Hyderabad, March 1983, p.1.
Investment
4. Sumangala Naik, “The need for developing
Women Entrepreneurs”, Yojana, July 2003,
Pp.36-39.
5. Bindu Shridhar, “Women as entrepreneurs”,
The Hindu, Metro Plus, December 14,
2005.
Tamil Nadu Technology Mission and
tamil nadu corporation of Development
of women ltd. Is exclusively established
for implementing the schemes of the
government relating to promotion of
women entrepreneurs.
The role of Women entrepreneur in economic
development is inevitable. Women are also willing to
take up business and contribute to the Nation’s growth.
Women enter not only in selected professions but also in
•
6. Dr. R. Chinnadurai,“Women Entrepreneurship
and service sector”, Kurukshetra, November
2005, Pp.19-24.
7. K. Kamalakannan, “The role of Financial
Institutions in Development of Women
Entrepreneurs”, Kurukshetra, April 2005,
Pp.10-14.
225
Competencies Required by Entrepreneurs in Emerging
Economies: Some Research Propositions
Manisha Karia
AIS St Helens, P.O.Box. 2995, Auckland, New Zealand
1. Introduction
Therefore, Bruton et al. (2008) highlight the importance
of understanding entrepreneurship in these economies.
There is an urgent need to examining the competencies
of entrepreneurs operating in emerging markets as the
emerging economies have different environment and
challenges compared to those in developed countries,
and also the emerging markets themselves have diverse
sub-groups. Zahra (2007) also recommends adaptation
of entrepreneurship theories developed in developed
countries to emerging economies. For these reasons,
we believe our study in examining the competencies of
entrepreneurs in emerging economy fills an important
gap.
Entrepreneurs play a critical role and are considered the
prime determinant for business survival and success is
the entrepreneur himself/herself (van Praag, 2005). To
play this role effectively, entrepreneurs require skills
and abilities to not only create new ventures but also for
further growth. Man, Lau and Chan (2002) refer to these
competencies as the ‘total ability of the entrepreneur to
perform this role successfully’. According to these
authors, entrepreneurial competence encompass the
ability to recognise opportunities, developing products
and /or services to meet the needs discovered, assuming
risk in order to fulfil the identified goals, and employing
strategic management skills.
The main purpose of the study is to investigate
entrepreneurial competencies necessary in emerging
economies. The paper is structured as follows. First,
the term competencies is examined in the context of
entrepreneurs. Second, a conceptual model is proposed
based on review of extent literature. Third, a set of
propositions on the entrepreneurial competencies and a
conceptual model are presented. Finally the implications
of this research are mentioned and concluded.
Several studies have examined the entrepreneurial
competencies (for example, Baum, 1994; Bird, 1995;
Baron & Markman, 2003; Chandler & Jansen, 1992;
Herron and Robinson, 1993; Man et al. 2002). These
studies have found positive relationship between existence
of competencies and venture performance. However, it
is found that most of the literature on entrepreneurial
competencies, and other entrepreneurship areas, are
focused on developed countries (Bruton, Ahlstrom
& Obloj, 2008). Recognising the importance of the
entrepreneurship role in emerging economies, some
researchers have shown interest in the recent past (e.g.,
Ahmad, Ramayah, Wilson, Kummerow, 2010).
2. Definitional Issues of Competencies
A review of literature shows that competency has been
defined from different perspectives for the purpose of
serving the researchers own agendas (Burgoyne, 1993;
Strebler, Robinson, & Heron, 1997; Hoffmann, 1999).
In the context of entrepreneurship, Bird (1995, p.51)
defines entrepreneurial competencies as “underlying
characteristics such as generic specific knowledge,
motives, traits, self-images, social roles, and skills
which result in venture birth, survival, and/or growth”.
According to Strebler et al. (1997) the definition of
competencies has two aspects: demonstrable behaviour
for effective performance in a job and minimum
standard of competent performance. Hoffmann (1999)
The economic landscape of emerging economies is
different from developed countries. Emerging economies
are the low income countries that are experiencing rapid
growth and industrialization. (Hoskisson, Eden, Lau,
& Wright, 2000). Significant changes in political and
market reforms encouraging liberalization, stabilization,
and the encouragement of private enterprise have
strengthened the market mechanism in these countries
putting them on a path of rapid growth and development.
226
venture performance
economies.
suggests that entrepreneurial competencies can be
examined from three approaches: inputs, behaviouraloutputs, and standard-outputs. This study considers the
‘behavioural’ concept of competency which is closely
linked to entrepreneurial performance (Herron &
Robinson, 1993; Man Lau & Snape, 2008) .
in
emerging
Organising competencies: For establishing and
managing a business successfully, Hebert and Link
(1989) state that an entrepreneur should be “specialized
in taking responsibility for and making judgemental
decisions that affect the location, form, and the use of
goods, resources, or institutions” (p.47). Entrepreneurs
to have the ability to lead, coordinate, control, monitor,
and organise internal and external resources such as
finance and human resources (Chandler & Hanks, 1994;
Snell & Lau, 1994; Man et al., 2002). Park and Bae
(2004) also underscores the entrepreneur’s capabilities
in organising internal and external resources for
organisational performance. In the Indian context,
Panda (2002) observe that high achieving entrepreneurs
have the capability to organise a large proportion of the
fixed capital (over 40 per cent) and arrange for more
than 90 per cent of their working capital requirement.
This suggests:
P2. A higher level of entrepreneurs’ ability
to arrange and organise resources will
positively influence venture performance
in emerging economies.
As mentioned earlier, Fastré & Van Gils (2007)
highlighted the important role of an entrepreneur in
venture performance. However, this role is multi-fold
such as: being a manager (to efficiently plan and organise
resources), a leader (to motivate staff and have a vision
for the firm), etc. However, the tasks and roles undertaken
by entrepreneurs will indicate the type of competencies
required. Further, entrepreneurial researchers (Lerner
& Almor 2002; Sadler-Smith, Hampson, Chaston, &
Badger, 2003; Man et al., 2002; Harris & Gibson, 2006)
believe that the performance of the firm will be higher
when the business owner has requisite entrepreneurial
and managerial competencies. According to Chandler
and Jansen (1992) entrepreneurial performance depends
on human/conceptual competence; ability to recognize
opportunity; motivation or a drive to pursue the
venture; technical/functional competence and political
competence or nous.
Strategic Competencies: Much literature in the area
of entrepreneurial competency relates to entrepreneurs’
ability to have a vision in mind for their business
(Mitton, 1989; Snell & Lau, 1994; Thompson, Stuart
& Lindsay, 1996), to have clear goals, and to formulate
and implement strategies to achieve the vision and
goals (Man et al., 2002). Bracker and Pearson (1986)
found that the performance of the firm was better when
entrepreneurs undertook structured strategic planning
rather than other types of planning. Stressing the
importance of the entrepreneurs’ ability to be responsive
to changing market conditions and customers, Mullins
(1996) attested that competency facilitates responsive
behaviour thereby enhancing the firm’s survival rate
and increasing its growth potential. Not surprisingly,
it was found that low levels of strategic orientation are
associated with high failure rates in businesses (Sexton
& Van Auken, 1985). This leads to:
P3. A higher level of strategic competencies will
3. Propositions on Competencies Required by
Entrepreneurs
In this section, we examine relevant literature on
entrepreneurial competencies and presents propositions
that are relevant to emerging economies and a conceptual
model that could be used for empirical testing.
Opportunity competencies: Timmons, Muzyka,
Stevenson and Bygrave (1987) refer to the ability
to recognise an opportunity as the ‘core’ of
entrepreneurship. Business founders undertaking the
classic entrepreneurial role scan their environments,
identify opportunities, and take advantage of these
opportunities (Chandler & Jansen, 1992). McClelland
(1987) also found in his study of 24 entrepreneurs, from
developing countries, that successful entrepreneurs
where able to ‘see and act on opportunities’. This leads
to:
P1. A higher level of opportunity
competencies will positively influence
227
Learning Competencies: Man et al. (2008) identified
learning competencies as providing supporting role to
the six competencies identified by them. Learning
competencies include the entrepreneur’s ability to
learn from a variety of sources and apply the learned
skills and knowledge to actual practices (Ahmad, et
al., 2010). The ability to learn and apply from past
experience is important to entrepreneurs (Bird, 2002,
Snell & Lau, 1994). Entrepreneurs should be able to
learn from their environment, their own mistakes and
from other people (Cope and Watts, 2000; Harrison &
Leitch, 2005).
If potential entrepreneurs developed
the ability of directing and utilising their learning they
would be more successful in recognising and adapting
to the changing roles of entrepreneurs required for
enterprise growth (Bird, 2002). We posit:
P4. A higher level of learning competencies will
construed to possess commitment competency (Man &
Lau, 2000). Other characteristics are taking initiatives
(McClelland, 1987) and possessing entrepreneurial
drive (Eyre & Smallman, 1998). Neace (1999) found
that entrepreneurs who never give up reveal their inner
quality of ambition and determination and that this is
perhaps the most important controllable behavioural
trait necessary to succeed. Entrepreneurs possessing
this competency will refuse to let the venture fail
and will be determined to make the venture work,
while making large personal sacrifices if they have to
(Chandler & Jansen, 1992). This suggests:
P6. A higher level of commitment competencies
will
positively
influence
venture
performance in emerging economies.
Conceptual Competencies: The entrepreneur requires
analytical competency when faced with addressing
complex situations (Eyre & Smallman, 1998, Man &
Lau, 2000). Based on the tenets of cognitive theory,
Palich and Bagby (1995) believe that entrepreneurs
view risks positively and interpret them as opportunities
while others do not see such potential. These abilities
help in cognitive and analytical thinking, decision
making, innovating, coping with uncertainty and risk
are classified as conceptual competencies (Man & Lau,
2000). Thus, we propose:
P7. A higher level of conceptual competencies
will
positively
influence
venture
performance in emerging economies.
Networking/Relationship Competencies: A key
success factor for an entrepreneur has been found to
be his or her capabilities to work with others such as
employees, business partners, family, friends, customers
and so forth. Falter (2007) suggests that entrepreneurs
can gain access to business contacts through family
members. Further to using familial relationships,
entrepreneurs draw upon non-kin networks such as
relationships with organizations, professional networks,
friends and colleagues (Greve & Salaff, 2003; Hansen,
1995). There is evidence that network density and the
proportion of strong ties in the entrepreneur’s personal
network are linked positively to success in launching a
new venture (Davidsson & Honig, 2003) and venture
performance (Vissa & Chacar, 2005). To successfully
use these contacts, entrepreneurs need to possess
relationship competencies such as relationship building,
interpersonal abilities, and effective communication
skills (McClelland, 1987).
P5. A higher level of networking and
relationship competencies will positively
influence venture performance in
emerging economies.
Managerial/Functional Competencies: Starting
a business venture is the first challenge that the
entrepreneur encounters. Entrepreneurs then face new
challenges as the new venture moves from one stage of
development to another, requiring a different set of skills
(Churchill & Lewis, 1983). Therefore, entrepreneurs
require competencies that both entrepreneurial and
managerial-administrative (Capaldo, Iandoli &
Ponsiglione, 2004). Several studies have focused on
managerial/functional competencies that business
owners require for succeeding (Ibrahim & Soufani,
2002; Huck and McEwen, 1991; Prahalad & Hamel,
1990; Swiercz & Spencer, 1992). Research shows that
majority of business failures can be attributed to the lack
of management skills/competencies (for example, see
Commitment Competencies: Entrepreneurs who strive
to achieve long-term goals with strong devotion can be
228
Bruno, Leidecker, & Harder, 1987; Terpstra & Olson,
1993). This leads us to believe that:
P8. A higher level of managerial/functional
venture performance in emerging
economies.
institutional and cultural forces (Bruton et al. 2008).
They face challenges in the areas of labour, capital,
infrastructure, property rights, bribery and corruption
etc. While some institutional factors are favourable,
others are not (Bruton & Ahlstorm, 2003; Peng &
Heath, 1996). Further it is important to understand the
values and beliefs of the various cultures and how these
P9. A higher level of managerial competency
combined
with
entrepreneurial
venture performance in emerging
economies.
factors will moderate the influence of the entrepreneur
in starting and growing the business venture.
We
propose:
10.
The business environment significantly
moderates the relationship between
Business Environment: Entrepreneurs working in an
emerging economy face different challenges due to the
competencies and venture performance
in the emerging economies.
Figure 1: Relationship between competencies and venture performance
4. Conceptual Framework
are more relevant to the context of emerging economy
Based on the review of extant literature, a model
such as India. The role of environmental and other
is proposed for further empirical investigation (see
contextual factors could also be examined. Results
Figure 1). The model and propositions presented in
of such a study will have implications for educational
this paper suggest that venture performance is linked
institutions, professional bodies, governmental agencies
to the competencies of the entrepreneur, moderated by
in designing entrepreneurial education and specific
environment and culture.
training programmes to improve the competencies of
potential entrepreneurs.
5. Implications and Conclusion
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232
Determinants of Income Generation of Women
Entrepreneurs Through SHGs
Ms.RevathiPandian and D.Karthick
Assistant Professor
Velammal Engineering College, Department of Management Sciences, Chennai-600 066.
1. Introduction
level of production. Third, the rapid expansion and
specialization of the service sector have provided
women with new opportunities to pursue their own
business careers.
In almost all the societies, women have less power than
men, have less control over resources and receive lesser
wages for their work. It is unfortunate that because
of centuries of inertia, ignorance and conservatism,
the actual and potential role of women in the society
has been ignored, preventing them from making their
rightful contribution to social progress. Women must be
empowered by enhancing their awareness, knowledge;
skills and technology use efficiency, thereby, facilitating
overall development of the society. In various national
policies and developmental programmes, emphasis has
been given on organizing women in Self Help Groups
and thus, marks the beginning of a major process of
empowering women (Ashford, 1995).
Although women are taking on important positions
in the business sector, they continue to face barriers
to their entrepreneurial activities, compared to their
male counterparts. Women still have to struggle
with their traditional role in order to balance career
and household responsibilities. They have to endure
negative social value and cultural bias that lead to unfair
perceptions about their ability to operate a business
and legal constraints also limit the pursuit of economic
independence by women. With this background, the
present study was attempted to study the determinants
of income generation of women entrepreneurs through
SHGs in Tiruvallur district of Tamil Nadu.
Entrepreneurship development and income generating
activities are a feasible solution for empowering
women. It generates income and also provides flexible
working hours according to the needs of home makers.
Economic independence is the need of the hour.
Participation in income generating activities helps in the
overall empowerment of women. Empowering women
through education, ideas, consciousness, mobilization
and participatory approach can enable them to take
their own decisions, make them self-reliant and selfconfident.
2. Methodology
Among the different districts in Tamil Nadu, the
Tiruvallur district has been purposively selected for the
present study. Among different geographical locations
in the district, Madavaram, Manali, Redhills and
Tiruvallur have been again purposively selected based
on the concentration of number of Self Help Groups
(SHGs) and members. The data and information have
been collected from the respondents by adopting random
sampling technique. The district has been selected
purposively followed by geographical location and
the sample respondents have been selected randomly
thus, multi-stage random sampling technique has been
adopted for data collection. The data and information
have been collected from the sample size of 500 through
pre-tested, structured interview schedule through direct
interview method. The primary data collected from
respondents pertains to the year 2008-2009.
The emergence of women entrepreneurship in the
past two decades and especially in the second half of
the 1990’s is not a coincidence. First of all, the entire
business environment has changed. Women are being
encouraged to participate in various business activities
– a process that was unimaginable decades ago. Next,
the rapid development of computers and information
technology makes starting and operating a business
easier, with less capital and a lower minimum efficient
233
3. Statistical Techniques
Descriptive Statistics and Chi-Square Test
α = Intercept
βi = Partial Regression Coefficients
In order to analyze the socio-demographic
features, the descriptive statistics has been carried out.
Besides, in order to analyze the differences among
the socio-economic features, the Chi-Square test is
employed and the formula is:
ei = Random Error or Stochastic Disturbance
Term
The α and βi are the coefficients which
are to be calculated through Ordinary Least
Square (OLS) estimation.
5. Results and Discussion
Socio-Demographics
The socio-demographic features of
women entrepreneurs were analyzed and
the results are hereunder discussed. The age
distributions of women entrepreneurs were
analyzed and the results are presented in Table
1. From the table, the majority of women
entrepreneurs (52.80 per cent) belonged to
the age group of 30-45 years followed by less
than 30 years (41.80 per cent). Only 5.40 per
cent of women were in the age group of 45 and
above 45 years. The chi square value was 0.01
and it was statically significant at five per cent
level of significance indicating that there was a
significant difference between age of the women
entrepreneurs.
Where
O = Observed Frequency in each category
E = Expected Frequency in the corresponding
category
4. Determinants of Income Generation
In order to assess the determinants on
income generation of women entrepreneurs, the
multiple linear regression analysis by Ordinary
Least Square (OLS) estimation has been applied
for identified variables. The functional form of
multiple liner regression model are given below:
Y = α + βi Xi + ei
Where
Y = Dependent Variable (Business Income)
Xi = Independent Variable(Growth Determinants)
i = 1 to 15
Table-1. Frequency Distribution of Age of Women Entrepreneurs
Age
Frequency
Per cent
< 30 Years
209
41.80
30-45 Years
264
52.80
45 and Above
27
5.40
Total
500
100.00
Source: Primary & Computed Data
234
Chi Square
Value
Sig
0.010
0.00
The educational qualifications of the women entrepreneurs are presented in Table 2. The results indicated that about
half of the entrepreneurs (50.40 per cent) have school education followed by under graduation (42.80 per cent). The
post graduation and professionals accounted about only 2.60 per cent while illiterates were only 4.20 per cent. The
chi square value was 0.05 and it was statically significant at five per cent level of significance indicating that there
was a significant difference between educational qualifications of the women entrepreneurs.
Table-2. Frequency Distribution of Qualification
Educational
Qualification
School Education
Under Graduation
Frequency
Per cent
252
214
50.40
42.80
13
2.60
21
4.20
500
100.00
Post Graduation and
Professionals
Illiterates
Total
Chi Square
Value
Sig
0.050
0.00
The source of income from business for women entrepreneurs are presented in Table 3. The results showed that about
48 per cent of women entrepreneurs earned income in the range of Rs. 50000-1 lakh from their business followed
by less than Rs. 50000(33.00 per cent). About 18 per cent of entrepreneurs earned the income in the range of Rs.1
lakh-150000 and only 0.4 per cent earned their income in the range of above 2.5 lakh. The chi square value was 0.02
and it was statically significant at five per cent level of significance indicating that there was a significant difference
between business income for the women entrepreneurs.
Table-3. Frequency Distribution of Business Income
Business Income(Rs)
Frequency
Per cent
< 50000
165
33.00
50000-1 Lakh
240
48.00
1Lakh- 150000
90
18.00
150000-2.5 Lakh
3
0.60
> 2.5 Lakh
2
0.40
Total
500
Chi Square
Value
Sig
0.02
0.01
100.00
The distribution of sector wise business activity is presented in Table 4. It is clear that about 48 per cent of women
entrepreneurs were involving in marketing followed by supplier (23.40 per cent). About 16.60 per cent of the women
carried manufacturing activities while, only 12.00 per cent was involving in service sector activities. The chi square
value was 0.01 and it was statically significant at five per cent level of significance indicating that there was a
significant difference between sector of business activity of the women entrepreneurs.
235
Table-4. Frequency Distribution of Sector of Business Activity
Sector
Frequency
Per cent
Manufacturing
83
16.60
Marketing
240
48.00
Supplier
Service
Total
117
60
500
23.40
12.00
100.00
Chi
Square
Value
Sig
0.01
0.00
The enterprise base of the women entrepreneurs is presented in Table 5. From the table, it is apparent that the
enterprise base for majority of the entrepreneurs (60.40 per cent) was semi-urban followed by urban (37.60 per cent).
Only two per cent of them, used metropolitan area as their enterprise base. The chi square value was 0.02 and it was
statically significant at five per cent level of significance indicating that there was a significant difference between
enterprise base of the women entrepreneurs.
Table-5. Frequency Distribution of Enterprise Base
Sector
Semi Urban
Urban
Metropolitan
Total
Frequency
Per cent
302
188
10
500
60.40
37.60
2.00
100.00
Chi
Square
Value
Sig
0.02
0.01
6. Determinates of Income Generation
mistakes (X9 ) and Orientation and training assisted me
In order to assess the determinants on income generation
of women entrepreneurs, the multiple linear regression
analysis by Ordinary Least Square (OLS) estimation
has been applied and the results are presented in
Table-6. The results of multiple linear regression
analysis through OLS estimation is presented in Table
4.8. The results show that the coefficient of multiple
determination (R2 ) is 0.46 indicating the regression
model is moderately fit. The independent variables of My
past experience strengthens and develops network(X4),
Correct business location contributed to my success
(X6), I take measures to protect the environment as I
grow (X8 ), As I gain more experience I commit less
to run my business (X12 ) are statistically significant at
one per cent level of significance and these variables
are positively influencing the business income of the
The factors Capital planning at each stage helped me
to develop ( X5 ) and Infrastructure facilities provided
by the Government has led to development of the
business (X13 ) are also statistically significant at one
per cent of level of significance but, these factors are
negatively influencing the business income of women
entrepreneurs through self-help groups.
236
Table-6. Regression Estimates of the Variable Determining the
Income Generation of Women Entrepreneurs
Regression
Coefficients
t-value
Significance
2.030**
11.468
.000
My status improved when I achieved better results
-.008
-.247
.805
My advisers help me in smooth conduct of business
-.008
-.251
.802
My past experience strengthens and develops
network
-.021
-.720
.472
Capital planning at each stage helped me to develop
.041**
2.224
.021
Correct business location contributed to my success
-.075**
-2.508
.012
.072**
2.376
.018
-.035
-1.038
.300
As I gain more experience I commit less mistakes
.037**
2.145
.023
Legal status of the organization led to my growth
.038**
2.227
.020
Proper pricing strategy enhanced my growth
-.014
-1.058
.291
Orientation and training assisted me to run my
business
-.045
-1.417
.157
Infrastructure facilities provided by the Government
has led to development of the business
.029**
2.842
.010
Liberalization, Privatization and Globalization
policy of the Government led to my present growth
-.095**
-2.623
.009
Quick and prompt decision marking helped me to
grow
My friendly attitude towards labour led me to my
success
R2
Adjusted R2
F
N
.038
1.105
.270
-.017
-.572
.568
Growth Determinants
Intercept
Incentives, subsidies and concessions provided by
Central/State Government are great assistance to
me
I take measures to protect the environment as I
grow
Note: ** Significance at one per cent level
Source: Computed Data
237
0.46
0.28
2.304
500
0.004
7 Conclusion
8. References
1. Agrawal, S., “Technology Model for Women’s
Empowerment”, Kurukshetra, (2003): May,
pp. 18-28.
The forgoing analysis indicted that the sociodemographic features of the women entrepreneurs are
significantly different in various aspects. About 52.80
per cent of women entrepreneurs belong to the age
group of 30-45 years followed by less than 30 years. It
was evident that about 62.42 per cent of women in the
business income group of Rs. less than 50000, 55.42
per cent in the income group of Rs.50000-1 lakh and
73.00 per cent in the income group of Rs. 1 lakh-15000
have invested less than Rs.25 lakhs. About 48 per cent
of women entrepreneurs were involving in marketing
followed by supplier (23.40 per cent). About 16.60 per
cent of the women carried manufacturing activities
while, only 12.00 per cent was involving in service
sector activities
2. Ahmad, M.A., “Women Empowerment: Self
Help Groups”, Kurukshetra,(1999): April, pp.
13-15.
3. Ashford, L., ‘Gender Equality and the
Empowerment of Women’. Population
Bulletin, 50 (1), (1995): pp. 17 – 22.
4. Batliwala, S., ‘The Meaning of Women’s
Empowerment: New Concepts from Action’.
In Sen, G., Germain, A., and Chen, L., (Eds).
Population Policies Reconsidered: health,
empowerment and rights, Boston, Harvard
University Press, (1994).
My past experience strengthens and develops network,
Correct business location contributed to my success,
I take measures to protect the environment as I grow,
As I gain more experience I commit less mistakes and
Orientation and training assisted me to run my business
are positively influencing the business income of the
5. Bharat Dogra,”Women Self-Help Groups
Kindling Spirit of Entrepreneurship”,
Kurukshetra, 50(5),(2002): pp. 40-42.
7. Deepti Agarwal, “Empowerment of Rural
Woman in India”, Social Welfare, 48(4),(2001):
pp. 3-4.
Entrepreneurial development should not be left to
chance, as is the practice now. The training programmes
should include identification and selection of potential
entrepreneurs, and their motivation into entrepreneurial
career through provision training and other inputs
necessary to set up entrepreneurial units.
8.
The growth of women entrepreneurs should be
encouraged by providing special incentives, tax
concessions, reduced rat of interest, transport and
fuel subsidies. For creating a healthy entrepreneurial
environment, they should also be given orientation
about the various tools and techniques of accounting
and finance.
Gain, Raji T.S. and P. Satish,, “A Micro Study
on Group Dynamics and Group Functioning”,
Working Paper No. 6, Banker’s Institute of
Rural Development, (1995).
9. Huq, A. and Richardson, P., “Business
Ownership as an Economic Option for
Middle-Income Educated Urban Women in
Bangladesh”, Frontiers of Entrepreneurship
Research, (1997): pp. 240-241.
Lack of coordination among the institutions in
providing power, water, communication and finance
seriously hinder the growth of women entrepreneurship.
To improve this situation, the proper coordination
mechanism and monitoring system should be formulated
and implemented.
10.
Kabeer,
Naila.,
“Resources,
Agency,
Achievements: Reflections on the Measurement
of Women’s Empowerment”, Development
and Change, 30,(1999): pp. 435-464.
238
11.Leelamma Devasia, V., V., Devasia,
Empowering Women Folk Sustainable
Development, Ashish Publishing House, New
Delhi, (1994).
Group to Examine Issues Relating to Rural
Credit and Microfinance, (2005).
17. Senthil Vadivoo, K. and V.Sekar, “Self Help
Groups a Movement for Women Services: How
the Poor in India Could be Better Served?”,
Kissan World, 31(7): (2004). Pp. 13-14.
12. Manimekalai, M. and Rajeshwari, G., “Nature
And Performance Of Informal Self Help
Groups – A Case From Tamil Nadu”, Indian
Journal Of Agricultural Economics, 56 (3),(
2001):pp.34-46.
18. Sharma, K.C., “Micro Financing Through
SHG’s”, Indian Journal Of Agricultural
Economic, 56 (3), (2001):. pp. 76-86.
13. Morrison, A., Breen, J. and Ali, S., “Small
Business Growth: Intention, Ability and
Opportunity”, Journal of Small Business
Management, 41(4), (2003): pp. 417-425.
19. Srinivasan, R. and Sriram, M. S., ”Round
Table Microfinance in India: Discussion”,
Management Review, 15(2), (2003): pp. 5286.
14.Naggayya, D., “Micro-Finance For Self
Help Groups”, Kurukshetra,42(2), August,
(2000):pp.15-26.
20. Tripathy K.K,”Self-Help Groups-A Catalyst
of Rural Development”, Kurukshetra, 52(8)
(2004): pp. 40-43.
15.Purithavarthy Pandian, S., R., Eswaran,
“Empowerment of Women through MicroCredit”, Yojana, November, (2002): pp 124132.
21. Vijayanthi, “Women’s Empowerment through
Self-Help Group: A Participatory Approach”,
Indian Journal of Gender Studies, (2002):pp.
263-273.
16. Reserve Bank of India, Report of the Internal
239
Forecasting of Land Price at Madhavaram
in Chennai Metropolitan Area
Sampathkumar.V
Research Scholar, Sathyabama University
Helen Santhi. M
Principal, Indira Gandhi college of Engg &Tech for Women, Chengalpet
1. Introduction
monthly data on economic factors are drawn from
National statistics published by Reserve Bank of India
(RBI) and from the dailies. The monthly average value
of the selected factors such as National Gross Domestic
Product, cost of crude oil, dollar equivalence to Indian
currency, rate of inflation, gold and silver price per
gram, Mumbai and National share index, population in
the study area, interest rate on home loan, unit cost of
construction, guideline value and time factor from the
year 1997 to 2008 are collected and used for developing
the models. Statistical model and training the factors
in NN are made to forecast the unit price of land for
the period between 2011 and 2015 with assumption on
the future economic conditions. The factors are ranked
based on the magnitude of influence it has on the land
price.
Economic base of Chennai city has shifted from trade
and commerce to administration and services. Buoyant
Economy, increased employment rate, high disposable
income, cosmopolitan atmosphere and improved life
style are instrumental in driving the demand for highrise apartments. The hike in the input cost, demand on
developed plots and shrunk in supply leads to hike in
land price. Invest on land for a secure future becomes
a reality. Investment made on land yields better returns
than on apartments and traditional investment options in
the past few years, in all part of Chennai. The land price
depends on economical, social and physical features
and gets stabilized now. The market will see a positive
momentum with job security which increases number
of end users. Most housing finance companies have
kept their home loan rates stable also helps to stabilize
the market. Nominal interest rate, increased affordable
price supply is reason to predict the market will
continue to rise. The revival of Information Technology
(IT) sector and increased liquidity is expected to give
a positive momentum to land and housing market in
Chennai. The study on land price trend is felt important
to support the decisions in urban planning issues.
2. About Chennai Metropolitan Area (Cma)
And Study Area
Chennai city and CMA have 55 and 70 lakhs of
population respectively in 2009. The contribution of
CMA to state GDP is 40 %. Chennai accounts for 30
% of national auto industry, 15 % of software exports
and 50 % of leather exports. Land price scouring in city
area and the development along IT corridor in South
and electronic hardware corridor on West has given a
virtual boost to land owners to increase the price. Tidel
park, existing industrial estates in Guindy and Ambattur,
upcoming Sipcots on the fringes and IT units in West
and Southern regions, proposed international airport,
rapid transport and metro trains, over bridges, elevated
and circular ring roads are the additional power of
Chennai realty sector and the land price rise.
The present study focused on assessing the trend of unit
land price in the study location by estimating the annual
rise or fall of it, to find the interaction effect of land
price on selected factors by performing correlation and
regression analysis, and forecast the price of land for
the forthcoming years by plugging the predicted values
of factors in the developed models. The comprehensive
review of literature about the factors influencing the
land price and the models of land price narrowed down
this study to focus on the quantifiable, fundamental
economic and social factors as ingredients. After a
comprehensive literature review factors are identified
and used in the prediction of unit land price. Past
Madhavaram is selected as the study area, which is a
Special Grade Municipality located in the Northern
premises of Chennai City about 10 kms away from
the Central railway station and George Town. It is
240
NN is a computing technique from the artificial method.
In the development of feasible NN analysis all 13 factors
are used to ascertain the effect and to predict the trend
of land price. All the input values are normalized using
the MinMax Table. The principle behind is:
located on the bank of National Highway No.5 and it
is the gateway of Chennai from North. It has an area
extent of 17.4 Sq.km and upgraded as Special Grade
Municipality in 2008. It comes under Chengalpat
region and it has around 127 Kilometer length of road.
The total population in the study area is 76793 as per
2001 Census. It has large scale diary form, number of
apartments, schools, local markets and hospitals. It can
be easily accessed from the major locations in the City
and its location in Chennai is shown in Figure 1.
Normalized value, N= [Original value - Minimum
value] / [Maximum value - Minimum value], Where,
0 ≤ N ≤ 1.
Back-propagation (BP) NN in MATLAB software is
used in the study. A gradient descent rule is adopted
in the programme of training set. NN is set to 10000
iterations, learning rate of 0.6, increase in learning rate
of 0.9 with 3 hidden layers of 20, 13 and13 neurons
and one linear output. Training stops when convergence
obtains at the required root-mean-square-error below
0.0001 percent. It takes 54 Epochs to reach the desired
target. Forecasts are being made over a period between
2011 and 2015, and the Run dialog box helps to establish
the actual output. The share of influence of selected
indicators is established using Garson’s method. For
this, the neural programme has the NN tool box that
shows the change in output by weightages. This helps
to know which of the factors has the most effect on the
output.
Fig.1.Location of Madhavaram
3. Multiple Regression And Neural Network
Modeling
Multiple regression allows more of the available
information to estimate the dependent variable. More
independent variables are added in the model will
increases the closeness to real trend. Multiple regression
looks at each individual independent variable and
test whether it contributes significantly to the way the
regression describes the data. Step-wise regression is
the most frequently used regression method.
Share of Influence Input Node, Ii, asserts on the subject
Output Node = S i %
Σnjj=1 (|wij||oj|) / (Σni i=1|wij|)
S i = __________________________X 10
(2)
ni
nj
ni
Σ i=1 Σ j=1(|wij||oj|) / (Σ i=1|wij|)
Where
ni = number of input nodes
n
number of hidden nodes
j =
wij = connection – weight from input
node Ii to hidden–node Hj
oj = connection – weight from hidden
node Hj to subject output node Si
The general multiple regression equation is
(1)
Y = a + b1 x1 +b2 x2 + ….. bn xn
Where, Y = Estimated value corresponding to the
dependent variable
a
= y intercept
x1, x2…xn = values of n independent variable
b1, b2…bn = slopes associated with x1,x2…xn respectively.
4. Analysis And Results
To measure the magnitude of linear relationship of land
price (Y) on individual factor (X), correlation analysis
is performed. Correlation analysis is a statistical tool,
241
which is used to determine the degree of which one variable is linearly related to another. The general form of
correlation is given by
∑(x - x’) (y – y’)
Correl (X,Y) = _____________________
( ∑(x - x’)2 ∑ (y – y’)2 )1/
(3)
The interaction of selected factors on Madhavaram land price per 5.5 cents (2400 Sq.ft.) is studied and the outcome
is given in Table 1. Other than Dollar, Inflation and home loan interest all factors show good closeness. Forward
regression analysis is performed using Statistical Package on social Science (SPSS) software, with 95 % confidence
level and 5 % error significance and the analysis explains the trend very closely with a R2 of 0.9966. The analysis
neglects 2 factors such as Mumbai sensex and Crude oil price which has comparatively lesser response with land
price. The significant error of factors on the model at which the alternate hypothesis is to be selected is also depicted.
Table 1 Interaction Effect of Factors on Sowcarpet Land Price
Factors
Correlation coefficient
Error significance
Time
Gold price
Construction cost
0.956477
0.952565
0.969179
0.000
0.006
0.000
Guideline value
0.893302
0.000
-0.0644
0.000
Dollar equivalence
0.123959
0.000
Silver price
0.956484
0.005
Home loan interest
-0.45344
0.000
National sensex
0.932255
0.018
Population
0.97544
0.000
GDP
0.546645
0.002
Mumbai sensex
0.904283
0.054
Crude oil price
0.859138
0.070
Inflation
The model outcome of the forward regression on land price in rupees of Madhavaram is given in equation 4 and
Table 2 shows the response of model with the real trend of land price by performing analysis of variance (ANOVA).
Land price per 5.5 cents (Madhavaram)
=1.653E9 - 838036.045 X1 - 550.613 X2 + 1888.852 X3 - 0.274 X4 + 18886.295 X5 - 23913.094 X6 +
12519.754 X7 - 63865.298 X8 + 69.09 X9 + 327.205 X10 + 17442.337 X11
Where
X1 = Time factor (Year and Month)
X2 = Gold price per gram (Rs
X3 = Cost of construction per Square foot
X4 = Guideline value per ground (Rs)
X5 = Inflation (%)
X6 = Dollar equivalence (Rs)
X7 = Silver price per gram (Rs)
X8 = Home loan interest (%)
X9 = National sensex Index
X10 = Population (No.)
X11 = GDP (%)
242
(4)
Table 2 Model Summery b and ANOVA b
Description
Forward Regression
0.998a
0.997
R
R2
Adjusted R2
0.996
Standard error
77519.910
Sum of square
2.244E14
Degree of freedom
12
Mean square
1.846E13
F
3.057E3
Sig.
0.000a
a. Predictors: (Constant), Home Loan Int (%), Inflation (%), Doll Equ (Rs),
Guideline Price (Rs), GDP (%), Silver Price/gm (Rs), Crude oil ($),
Construction Cost/sft (Rs), BSE Index, Population (No), Gold Price/gm (Rs),
NSE Index, Time & Month
b. Dependent Variable: Market Price of Madhavaram (Rs)
5. Model Performance
The predictive ability of the forward regression and NN solution is compared. The market values and the predicted
values using models are shown in Table 3. The model fit with market price is shown in Figure 2 with a close R2 value.
The predictions show lesser difference between the model and market prices NN approach
Table 3 Prediction ability of Statistic and Neural model
Year
Actual Market
Price (L)
Forward Regression
BP Neural Network
Model Price
(L)
STDEV
Model Price
(L)
STDEV
1997
2.50
1.64
0.6086
2.50
0.0000
1998
3.00
3.42
0.2988
3.01
0.0041
1999
3.00
3.18
0.1249
3.03
0.0214
2000
4.00
4.02
0.0111
4.01
0.0065
2001
5.00
4.88
0.0822
4.99
0.0084
2002
6.00
7.10
0.7789
6.00
0.0002
2003
10.00
11.05
0.7447
10.00
0.0021
2004
15.00
15.52
0.3718
15.01
0.0042
2005
20.00
20.41
0.2955
20.00
0.0011
2006
25.00
23.68
0.9357
25.00
0.0006
2007
30.00
30.36
0.2588
30.00
0.0001
2008
36.67
36.63
0.0259
36.93
0.1891
2009
43.33
41.71
1.1447
44.24
0.6378
2010
50.00
47.36
1.8642
52.40
1.6979
243
Fig. 2. Model Fit with Market Price
The STDEV column indicates Standard Deviation (SD)
from the actual (Market) value which is calculated
using the formula
(5)
SD = [(Σx2 /n) – (Σx /n) 2] ½
The results of SD are very less (0.54 and
0.184 average respectively) and it confirms that the
solutions are acceptable. Another parameter used in this
comparative study is the Mean Absolute Percentage
Error (MAPE):
MAPE = Σi |(xi –Fi) /xi |
* 100
(6)
___________
n
Where, Xi = historical (Market) price
Fi = predicted price
n = number of iterations used in the calculation
The MAPE values of the statistical and NN
solution are just 7.6 % and 0.66 % respectively, which
implies that the selected indicators may be used as
reliable inputs for modeling of land price and this finding
provides further justification that a close relationship
exists between land price and the selected factors.
Ranking the Influence of Factors
Σ j=1 [(|wij||oj|) / (Σ i=1|wij|)] is the sum of signal transfers
from input to output, shown in column 2 of Tables 4.
Table 4 Explanatory strength of indicators in BP Neural model
Indicators
Silver price
Time
Population
National sensex
Mumbai sensex
Construction cost
Inflation
Guideline value
Home loan interest
Gold price
GDP
Dollar equivalence
Crude oil price
Sum of signal
transfer
Σ j=1 [(|wij||oj|) /
(Σ i=1|wij|)]
Share of Influence
Classification by
ranking the strength
of Factors
0.614497749
0.60184447
0.540848382
0.518860622
0.501559525
0.499650511
0.478302467
0.478221196
0.468749084
0.436143129
0.411415804
0.397615324
0.332395335
9.784834588
9.583352577
8.612093313
8.261975522
7.986484891
7.95608708
7.616155682
7.614861579
7.464034258
6.944839718
6.551099
6.331349759
5.292832034
1
2
3
4
5
6
7
8
9
10
11
12
13
6.280103598
100
-
244
NN solution has ranked GDP, Population and Gold price
as major influencing factors towards Land price. The
influence share of factor ranges form 5.2 % to 10.6 %
which show the uniformity in contribution. NN solution
emphasizes these 3 indicators because they account for
a large change in the land price.
and the inflation rise will remain at 3.5 % which peaked
upto 10 % in the first half of 2010. A marginal annual
rise of just 0.6 % on Dollar equivalence and 7 % on
crude oil price is expected. Based on the past trends,
the Consumption of precious metals, gold and silver
show a remarkable increase in price of more than 20 %.
As far as increase in stock is concerned, the projected
increase is 6.6 % and 7 % on BSE and NSE respectively
to reflect a progressively healthy economy. An increase
in guide line value is justifiable by the strong demand
on land and rise in population in the study area and it is
expected as 1.21 % annual rise in population projected
in CMDA draft. These above assumption on the factors
are plugged in the Reg. model and trained in the NN.
The result yields the future price of unit land and shown
6. Forecast of Land Price
To forecast the future price of land certain assumptions
are made on all the factors. The factors such as
Gold, Silver and Home loan interest are predicted by
polynomial method and the rest of the factors by least
square method from 2011 to 2015. The interest on home
loan is expected to climb by 2015 and its growth is
projected as 9 % annual. Construction cost is believed
to rise by 6 %. The GDP is expected to increase by 3.2 %
in and Figure 3.
Fig. 3. Forecast of Land Price (L) form 2011 to 2015
The outcome of the statistical and NN models are
validated with the market price in 2009 and 2010
and it shows an average error of – 4.5 % and 3.44 %
respectively. From the results, the predictions offered
an average STDEV of 0.54 and 0.18 which is very
marginal between 1997 and 2010. Both the models
show a dip in land price in the year 2011 and thereafter
there is a annul rise of 8 and 5 %, respectively upto
2015.
forward regression) and NN methods are employed to
7. Conclusion
than statistical (regression) model in all aspects and the
The unit price of land in Madhavaram, Chennai is
forecasted between 2011 and 2015. Statistical (Stepwise
the forth coming years till 2015.
develop models to forecast the land price. The stepwise
forward regression model accepts 11 factors and rejects
2 factors, namely BSE and crude oil price. The NN trains
the factors towards land price in 54 cycles and identifies
silver price, time and population as top 3 contributing
factors. The regression and NN models fit with the real
market price closely upto the R2 value of 0.9966 and
0.9999, respectively. The NN model performs better
annual land price rise in Madhavaram would be 5 % in
245
8. References
1. Greg’s Musings, “Factors contributing to an
appreciating value of land”,
http://www.
factorscontributing.com, 2000
Multiple Regression Analysis for Real Estate
Valuation”, Journal of Real Estate Practice and
Education, 2004,Vol 7, No 1,
5. Newell Graeme And John Macfarlane, “The
2. Wilson. I.D, S. D. Paris, J. A. Ware and D. H.
Jenkins, “Residential property price time series
forecasting with neural networks”, Journal of
Knowledge-Based Systems, 2002, Volume 15,
Issues 5-6, pp 335-341.
Accuracy of Property Forecasting in Australia”,
Pacific Rim Real Estate Society Conference,
2006,Auckland.
6. Hannonen, “Predicting urban land prices: a
comparison of four approaches”, International
3. Asabere Paul K and Barrie Harvey, “Factors
Influencing the Value of Urban Land: Evidence
from Halifax-Dartmouth, Canada”, Journal of
Real Estate Economics,2003, Volume 13, Issue
4, pp 361 377.
Journal of
Strategic Property Management,
2008,Vol.2, pp 20-25.
7. Vandna Singh and Komal (2009), “Prospects &
Problems of Real Estate in India”, International
Research Journal of Finance and Economics,
4. Benjamin D. John , Randall S. Guttery and C. F.
Sirmans, “Mass Appraisal: An Introduction to
2009,No.24.
246
Predictive model for success of ERP implementations
Dr. Santhosh Kumar
Asst.Professor( SG) & Professor in charge of Research in School of Management Studies,
SRM University & R.Dhinakaran Samuel, Research scholar in School of Management Studies,
SRM University & HOD of Management Studies, Loyola institute of technology, Chennai
1. Introduction
be successful. Twelve CSFs are commonly identified
by [1] several researchers which are pertinent for the
success of ERP implementation project . These are
Project management ( PM) (Coordinating, Scheduling
& monitoring of defined activities to ensure the stated
objectives of the implementations), Business process
re-engineering ( BPR)(Fundamental rethinking &
radical redesign of business processes to redesign of
business processes to achieve dramatic improvement),
User training & education ( UTE)( To make the user
comfortable with the system & increase the expertise
& knowledge level of the people.) Technology
Infrastructure ( TI)( Adequate I.T infrastructure
in terms of hardware & connectivity), Change
management ( CM) (The way organization do
business will change & the ways people do their jobs
will change as well), Management of Risk ( MoR)
(To minimize the impact of unplanned incident in the
project by identifying & addressing potential risk before
significant consequence occur.), Top management
support (TMS) (Providing leadership & necessary
resource), Effective communications (EC) (Sharing
information between project team, communicating the
whole organization about the goals & progress of the
project.), Team work & composition ( TC) (Comprise
competent internal & external members on all functional
areas.), User involvement (UI) (User participation in
the project , at the time of requirement finalization &
testing ), Use of Consultant ( UC) (Use of experts who
are knowledgeable about the installation & software),
Goals & Objectives ( GO) (Clear goals & objectives in
terms of scope, time & cost).
Enterprise resource planning (ERP) packages exploded
into the market during 1990s as a popular way by which
companies attempted to integrate their financial, human
resource, operation, and customer information. Now
after a decade of experimentation, the key business
driver for this implementation in most of the companies
is ‘increasing the bottom line ‘. They expect to achieve
any one of the following business benefits.
• Provide efficiency gains that reduce overhead
or allow the company to do more without
adding resources,
• Put the organization in compliance with legal
or contractual requirements, decreases security
risk or to reach technology compatible with
that of the customers
• Supports a new strategic initiative
Although ERP systems are capable of providing
significant returns on investment, they can also cause
havoc in an organization if not managed correctly.
Unfortunately, the success rate of ERP implementations
is only around 50% and approximately 90% of ERP
implementations are late or over budget [ one example
described in 11 ). Implementing these projects place
tremendous demands on organization’s time &
resources. There are risks associated with this type of
investments. It is important for the investor to understand
the non-technical complexities before embarking on
a new ERP project. This study examines what factors
affecting success of ERP implementation projects. It
uses case study methodology to compare successful
ERP implementation with unsuccessful implementation
of a same Project manager.
3. Conceptual Framework:
All ERP implementations go through three phases.
Success or failure depends on the activities carried out
each of the phases.
2. Theoretical background:
Critical success factors ( CSF) are the few key areas
where things must go right for the implementation to
247
Phase
People involved
Activities
Selection
Top management & Vendor
Requirement finalization,ERP selection
&Vendor selection
Implementation
Top management, vendor, Positional
power users, Knowledge power
users, Transaction users, Project
team & Consultants
Business Analysis, Set up / Configuration,
Conference room pilot. Customization,
Production set up, Data migration, Security
profile, Readiness assessment, Go live
Post implementation
Project team & Transaction users
Report generations, Monthly / Yearly closing,
Refinement
There are number of barriers that can slow down
the progress of this change process or even stop it
altogether. One of the barriers that it is most difficult to
overcome centers on the attitude and behavoiur of the
people who are affected by the change, either directly
or indirectly. The key players associated with ERP
implementation & stake holder analysis is described in
[2][10].The attitude and behavior of people are likely to
depend on the power they have and their perceptions of
the effect of the change. Power is the ability to control
all types of resources, such as information, people,
Sl.no
People
involved
Behavior
expertise, transport & so on . Power does not rest with
position, so much as in relation to the change. When
faced with change people ask themselves what it will
mean for them. In the case study referred there are
seven type of people involved in the project , Vendor,
Top management, Positional-power users , Knowledgepower users, Project team members, Transaction users,
Consultants.
Expected behavior from the above for the success of the
project are given below:
Explanation
Actual status
Transparency
Vendor should be transparent
on the product capability,
their consultants capability,
resource requirements &
project mile stones.
But in reality, the vendor sales man
promises moon from the software
& increase the expectation of the
management & later it affects the
scope of the project. It increase
customization resulting costly
implementation {12]. Most of the
time due to competition the vendor
capability is magnified by the sales
man & some important information
on the implementation is silenced.
But in reality , in some cases given
least priority & in many places
medium priority without affecting
production or sales,.
1
Vendor
2
Top
management
Priority
Top management should show
highest priority to the project
3
Positional
power users
involvement
Managers to involve in the
project during design
&
testing stage.
But in reality, it is delegated to down
the level
Knowledge
sharing
Sharing of knowledge by these
users is very vital otherwise
it is identified during testing
phase in trial & error basis
which increases the project
time line.
But in reality, in many organisation
there is no Knowledge management
systems & we need to relay on
individuals
4
Knowledge
power users
248
dedication
Project team dedication to the
project compensate gaps of
internal readiness & reduce
project overheads
But in reality, the team requires
motivation
But in reality, they have to work in
both old & new systems, Resulting
resistance to change, it requires
some motivation.
But in reality, they manage with what
they know & set their mind only on
project mile stone completion.
5
Project team
6
Transaction
users
Change
Attitude to change is absolutely
required . They should learn &
adopt to new way of working
7
Consultants
Customer
focus
Consultants to put extra effort
to see what is best for the user
& configure, test & train
1. Research method :
It uses case study methodology to compare four
successful ERP implementations with four unsuccessful
implementations of a same Project manager ( the
second author of this article). The Project manager has
implemented ERP systems like SAP, Oracle E-business
suite, JDEdwards Enterprise one etc., for more than
15 companies in India & abroad . Many projects were
successful and some were failure. Details of the chosen
eight companies are enclosed in Annexure-A. Data
collected by conducting interviews at various levels
of the subject organizations as wells recorded facts
from archival. Weighted average scores are taken when
multiple people responded to the same analysis.
When applying the behavior model on the above 8
cases, the behavior model proved to be more effective
in identifying the successful project. (Refer Annexure C) It
is inferred that all the successful projects scored more
than 7 average points and all the failure projects scored
less than 5 average points. Hence we could mark clear
demarcation between successful & failure projects
through this behavior model.
3. Conclusion
It is evident from the above analysis the commonly
indentified CSFs do not pinpoint the real causes of the
failure. The behavior model play the most important
role. This model can be applied in advance to predict
the success of the implementation. All the parameters
controlling this behavior models
like
Vendor
transparency, top management priority, Positional
power user involvement, Knowledge power user
sharing, Project team dedication and Consultants’
customer focus are predictable factors which can be
identified before start of the project.
2. Analysis :
Critical success factor analysis were carried out for all
this 8 implementations for both successful & failure
projects, the analysis shows almost equal score. (refer
Annexure B) From that score we will not be in a
position to identify the failure projects. Following are
the reasons for failure in the eight cases considered for
study which explicitly relate to the behavioral model of
people involved in the project:
1. Expectation mis-match on scope & capability of
the software created by Vendor
2. Lack of support from Knowledge-power users in
the organisation
3. Lack of involvement of the users / no dedicated
team
4. Lack of customer focus from consultants side.
5. Lack of priority to the project by top management
6. Resistance to change
4. References
1. T.R.Bhatt “ Critical success factors for the
implementation of ERP”, Proceedings of the
2nd International conference on Innovation &
information technology, IIT 2005
2.
Toni M.Somers, Klara G.Nelson, “ A taxonomy
of players and activities across the ERP project
life cycle’ , Information & Management 41 (
2004), 257-278
3. Esteves, J. and Pastor, J., “Analysis of
249
critical success factors relevance along SAP
implementation phases”. Proceedings of the
7th Americas Conference on Information
Systems (AMCIS), Boston, Massachusetts,
USA, 2001.
4.
5.
6.
7.
8.
9.
April 2009
12. Marc N. Haines, “Understanding Enterprise
System Customization: An Exploration of
Implementation Realities and the Key Influence
Factors”, Information Systems Management,
26: 182–198, ( 2008)
Rao S., “Enterprise resource planning:
Business needs and technologies”, Industrial
Management & Data Systems, Vol 100, Issue
2, pp 81–88, 2000.
13. Mojca Indihar Štemberger, Vesna Bosilj Vukšić,
Andrej Kovačič , “Business process modeling
as a critical success factor in implementing a
ERP system”, SEE journal, Nov 2009.
Gupta (2000), “Enterprise resource planning
to emerging organizational value systems”,
Industrial Management & Data System (100),
pp.114 -118, 2000.
14. D. L. OLSON* and F. ZHAO, “CIOs’
perspectives of critical success factors in ERP
upgrade projects”, Enterprise Information
Systems, Vol. 1, No. 1, Feb. 2007, 129–138
Davenport, “Putting the enterprise into the
enterprise system”, Harvard Business Review,
Vol 76, Issue 4, pp. 121 – 131, 1998.
15.
ALAN
R.
PESLAK,
GIRISH
H.
SUBRAMANIAN, GEORGE E. CLAYTON
“The Phases of ERP Software Implementation
and Maintenance: A Model for Predicting
Preferred ERP Use”, Journal of Computer
information systems, Winter 2007-2008.
Subramanian Muthu, Larry Whitman, and
S. Hossein Cherag , “Business Process
Reengineering : A consolidated methodology”
, Proceedings of The 4th Annual International
Conference on Industrial Engineering Theory,
Applications and Practice November 17-20,
1999, San Antonio, Texas, USA.
16. BooYoung Chung; Mirosław J. Skibniewski;
and Young Hoon Kwak, “Developing ERP
Systems Success Model for the Construction
Industry “,JOURNAL OF CONSTRUCTION
ENGINEERING AND MANAGEMENT ©
ASCE / MARCH 2009 / 207.
Christopher P. Holland & Ben Light, “A
critical success factors model for ERP
implementation”, IEEE software, May/June
1999.
17. Shih-Wen Chien , Shu-Ming Tsaur,”
Investigating the success of ERP systems:
Case studies in three Taiwanese high-tech
industries”, Computers in Industry 58 (2007)
783–793.
Robert plant & Leslie will cocks , “ Critical
success factors in International ERP
implementations : A case research approach”,
Journal computer Information systems, Spring
2007..
18. Meg Fryling,” The dynamics of ERP success”,(
Un Published ), Information Science and
Policy , University at Albany ,State University
of New York.
10. Hein Ray Chetcuti , “ERP Implementation: A
multi-stakeholder analysis of critical success
factors”, WICT proceedings, December 2008.
11. Saad Ghaleb Yaseen, “Critical Factors
Affecting Enterprise Resource Planning
Implementation: An Explanatory Case Study”,
IJCSNS International Journal of Computer
Science and Network Security, VOL.9 No.4,
19. Jiang Yingjie, “ Critical success factors in ERP
implementation in Finland”, ( Published ), The
Swedish School of Economics and Business
Administration, 2005.
250
Annexure –A
Sl.no
Company
Status
1
( A Glass manufacturing company) SAP implementation in six month period
Successful
2
( A construction group with 9 different company). JDEdwards Enterprise one
implementation for one company in six months)
Successful
3
( A medical equipment sales & service organization), JDEdwards Enterprise one
implementation in six months)
Successful
4
( A construction company ), JDEdwards Enterprise one implementation in six months )
Successful
5
( Group with more than 50 Higher sec.schools), Custom developed ERP’ ‘Prodigy’
implementation , More than 15 months implementation, project stopped
Failure
6
( An IT services organization), Tried JDEdwards implementation for 4 years failed, then
started Oracle E-business suite implementation for one year
Failure
7
( A polymer products manufacturing company ), JDEdwards Enterprise one
implementation. Went live in 12 months, implementation team left immediately,
Localization module not stabilized, went for re-implementation after six months.
Failure
8
( A needle manufacturing company), JDEdwards Enterprise one implementation , Gone
live in 15 months, system crashed, re-implementation started after six months)
Failure
Annexure – B
company
1
2
3
4
5
6
7
8
1
PM
8
8
8
8
8
8
8
8
2
BPR
-
-
-
-
-
-
-
-
3
UTE
8
8
8
8
8
8
8
8
4
TI
8
8
8
8
8
8
8
6
5
CM
8
8
8
8
8
5
5
8
6
MoR
8
8
8
8
8
8
8
8
7
TMS
8
8
8
8
8
5
8
8
8
EC
8
8
8
8
8
8
8
8
9
TWC
8
8
8
8
8
4
8
5
10
UI
8
8
8
8
8
8
8
8
11
UC
8
8
8
8
8
8
5
7
12
GO
8
8
8
8
4
4
7
4
88
88
88
88
84
75
81
80
251
Annexure – C
sl.no
People
involved
behaviour
1
2
3
4
5
6
7
8
1
Vendor
Transparency
8
8
8
8
4.2
5.8
5.4
3.6
Software
capability
8
7
7
7
3
5
5
3
Resource
requirement
8
8
8
8
6
6
7
4
Consultant
availability/
capability
8
8
8
8
4
4
4
5
Project scope
8
9
8
8
3
6
5
3
Project mile
stone
8
8
8
8
5
8
6
3
Priority
8
9
8
8
4
2
6
6
Attend review
8
10
8
8
4
2
8
8
First priority
even to loss of
business
8
8
8
8
4
2
4
4
involvement
7
8
8
8
6
2
5
4
Attend all
meetings
6
8
8
8
8
2
6
4
Involve in
design
8
8
8
8
4
2
4
4
Sharing
8
8
8
8
4
1.33
4.67
3.7
Assigned key
role to play
8
8
8
8
4
0
4
3
Involved in
design stage
8
8
8
8
4
0
6
5
Involved in the
testing stage
8
8
8
8
4
4
4
3
dedication
8
8
8
8
6
2
5.5
2
Full time
involved
8
8
8
8
8
2
8
2
2
3
4
5
Top mgmt
Pos.power
Know.power
Proj.team
252
6
7
Trans.users
Consultant
Final
Work
extra time
voluntarily
8
8
8
8
4
2
3
2
Change
7
8
6.33
7
4
3.66
3.66
4.3
Learn with
extra effort
8
8
8
7
4
3
4
3
Work extra
hours to
complete the
load
8
8
6
7
4
3
3
5
Appreciate
benefits in the
new system
5
7
5
7
4
5
4
5
Customer
focus
8
8
8
8
5
5
4.5
6.5
Intention
to satisfy
customer need
8
8
8
8
5
6
5
7
Exploit
knowledge
pool to derive
best for the
org,
8
8
8
8
5
4
4
6
Total
54
57
54.3
55
33.2
21.8
34.7
30
.1
Average
7.7
8.1
7.7
7.8
4.7
3.1
4.9
4.3
253
A Study On Stress And Anxiety Among The
Two Wheeler Riders In Chennai City
Dr.G.Rajesh Kumar
Assistant Professor (Sr.G), School of Management, SRM University
Rajan Daniel, Assistant Professor (O.G), School of Management, SRM University
“A driving behaviors is aggressive if it is deliberate,
likely to increase the risk of collision and is
motivated by impatience, annoyance, hostility and/
or an attempt to save time”.
susceptibility to stress. This method was employed
because it enabled the survey to be conducted relatively
easily over a broad area with respondents from all
age groups and also because it was a well-established
method generally used to research market trends by
quickly obtaining many responses. This survey method
was matched to this study, which required sufficiently
numerous answer samples to analyze the complex and
diverse characteristics of drivers’ susceptibility to stress.
INTRODUCTION
People are subject to stress caused by different
environmental factors in their daily lives. Stress
induces mental and physical burdens, distortion and
pressure. Under a situation involving continued tension,
stress animates the sympathetic nerves. This upsets
the balance between the sympathetic nerves and the
parasympathetic nerves, the latter of which work to keep
the bodily functions stable. It is widely known that this
is a factor that causes various physiological disorders,
such as psychosomatic and psychoneurotic disorders.
To extract answers that reflect the candid psychology of
drivers, the questions used in the survey were designed
in a free-answer format as shown below. Through this
process, the stress elements could be classified into the
following four categories:
1 Trouble (failure, something wrong, bad condition)
2 Performance (acceleration, fuel efficiency,
driving stability, braking, traction)
3 Usage (operation, function, storage ability,
loading capacity, livability, easy access, easy
drive)
4 Sense (somatic sensation, visual sensation,
auditory sensation, olfactory sensation, cognitive
judgment)
Driver stress is caused by various factors that can be
broadly classified into two categories: short-term factors
and long-term factors. One example of short-term stress
is sudden emotional one that may be reflected in the
driver’s driving behavior. Such type of stress typically
appears as anger and irritation. Also one example of
long-term stress is one that accumulates over time,
the typical of which is the stress induced by long-term
inconvenience with car use. This type of factors may
influence a customer’s decision when purchasing next
vehicle.
The “sense” as defined in this study, however, includes
an addition of “cognitive judgment” for understanding
and judging the information obtained through the
senses. Cognitive judgment is, for example, familiarity
with driving or perceptions of the distance between
vehicles.
It is important for automakers to gain an understanding
of this driver stress and improve the brand strength of
the car by eliminating these factors. In this study, a
free-answer questionnaire was distributed on the Web
to extract stress factors. The purpose was to identify
the relation in characteristics between the driver’s
Efforts to identify predictors of driving anger and
aggression have examined both situational and
personality explanations but have typically been
254
theoretically lean. The majority of research examining
situations has explored the impact of traffic congestion
or travel impedance, which is conceptually similar. More
recent theoretical accounts of frustration-aggression
suggest that the causal link between congestion and
aggression is likely due to the activation of negative
affect and anger trait differences in driving stress
have been positively associated with state stress while
driving. Trait aggression and stress have been positively
associated with number of traffic accidents.
There is a need to describe some of these behaviors
and the circumstances under which they would occur in
greater detail. For example, while tailgating is always
included on lists of aggressive driving behaviors, we
are never offered a more detailed description of what
constitutes an unacceptable gap length between two
vehicles. These descriptions can best be obtained
through observational studies.
The small amount of survey research on
aggressive driving indicates that most drivers admit
to these behaviors, at least on occasion. However, it
appears that survey respondents tend to provide socially
desirable responses. It is unclear if the lower incidence
The specific behaviors which constitute aggressive
driving would include:
• Tailgating
•
•
•
•
•
•
•
•
•
•
Weaving in and out of traffic
Improper passing (eg.cutting in too close in
front of vehicle being overtaken)
Passing on the road shoulder
Improper lane changes (failure to signal)
Failure to yield the right of way to other road
users
Preventing other drivers from passing
Unwillingness to extend cooperation to
motorists unable to merge or change lanes due
to traffic conditions
Driving at speeds far in excess of the norm
which results in frequent tailgating, frequent
and abrupt lane changes
Running stop signs
Running red lights
of certain behaviors associated with higher collision
risks such as running stop signs is due to this tendency
rather than to an actual low incidence of such behavior.
The driving behavior generally has one or more of the
following characteristics:
• Likely motivated by impatience, annoyance
or anger with another road user(s) or with a
prevailing traffic condition
• Calculated to save time at the expense of other
road users
• Shows obvious disregard for other road users • Intimidate or be perceived as dangerous by
other road users
• Irritate or anger other road users
• Force other road users to take evasive action
• Driven through yellow lights that are turning
red
• Driven 20 kms per hour or more over the speed
limit
• Changed lanes without signaling
• Tailgated or driven too closely behind another
car
• Flashed high beams at car in front of you
• Made rude gestures
• Waited until last second to merge with traffic
on highway
• Pulled into parking space someone else is
waiting for
• Passed on the shoulder of the road
• Another driver had cut very closely in front me
Displays of annoyance or hostility which are not
intended to physically harm other road users but likely
to intimidate, irritate, anger or provoke them may
accompany these behaviors and serve as indicators of
the underlying motivation.
These behaviors would include:
• flashing headlights
• sustained horn-honking
• glaring at another driver to show disapproval
• yelling
• gesturing
This list of specific behaviors is preliminary.
255
•
•
•
•
•
Another driver drove very closely behind me
Another driver passed me in a dangerous
manner
Another driver cut me off at an intersection or
exit
Another driver made an obscene or threatening
gesture
Another driver wove in and out of traffic
not the only traits that may predispose an individual to
engage in aggressive driving behavior. There are other
personality traits that may also result in aggressive
behavior.
Shinar (1998) suggests that drivers possessing traits
associated with extroverted or Type a personalities may
be more likely to drive aggressively. While Shinar’s
suggestion is certainly plausible, there does not appear
to be any published research which reports a significant
relationship between these two personality traits and
aggressive driving behavior. Much of the road safety
research on personality has focused on crash risk, not
driving behavior.
REVIEW OF LITERATURE
Individuals have traits which dispose them to behave
regularly and persistently in a variety of situations.
These traits are said to constitute their personality.
Efforts have been made to explain social behavior with
personality test results. Personality, however, has been
found to be a poor predictor of social behavior.
Greyetal (1989) report that personal factors which have
been identified as associated with motor vehicle crashes
include generally high levels of aggression and hostility,
competitiveness, less concern for others, poor driving
attitudes, driving for emotional release, impulsiveness
and risk taking.
Sensation seeking may be defined as the “need for
varied, novel and complex sensations and experiences
and the willingness to take physical and social risks for
the sake of such experiences”. A report says that only
four of the thirty-eight studies did not find a positive
relationship between sensation seeking and risky
driving. Much of the research has focused on drinking
and driving, but thirteen of the studies reviewed also
assessed the effects of sensation seeking on other risky
driving behaviors.
Norrisetal (2000) conducted a prospective study of
500 drivers aged 19-88 and found that the combination
of high trait hostility and low self-esteem resulted
in significantly higher crash risk. Personality traits
certainly appear to have some predictive value.
Hennessy and Wiesenthal (1997) interviewed a
small sample of 40 drivers who experienced rush hour
congestion on a major divided highway in the Greater
Toronto Area. They measured each driver’s trait stress
(i.e. the driver’s predisposition to stress) and state stress
(driver’s exposure to traffic congestion) and interviewed
the drivers to determine how these variables affected a
driver’s behaviour. Observed stress levels were highest
in drivers with high trait stress who also experienced
higher levels of roadway congestion.
The concept of lifestyle refers to clusters of behaviors
typically displayed by individuals with certain
personalities. Beirness (1996) reviewed the fairly
substantial research on the relationship between lifestyle,
driving performance and collision risk. These studies,
The Aggressiveness to measure, respectively, sensationseeking and aggressiveness in a sample of 139 young
drivers aged 17-18 and 38 adults aged 41-59. They
found both personality traits were significantly related
to reckless driving behaviors such as driving 20 mph
or more over the speed limit, racing and passing in a
no passing zone. Sensation-seeking and aggressiveness
were significantly correlated, with adolescents scoring
higher than adults and male adolescents scoring higher
than female adolescents. This study found not only a
relationship between trait aggressiveness (a general
tendency to be aggressive) and reckless driving, but also
found that state aggressiveness (i.e. being in an angry
mood at a particular time) is related to episodes of highspeed driving. Sensation seeking and aggressiveness are
256
which focused primarily on young drivers, found a
higher incidence of risky driving behavior and collision
involvement in individuals with lifestyles characterized
by a favorable disposition towards taking chances,
impulsiveness and displaying aggression. These young
drivers were more likely to display other delinquent
and health-compromising behaviors i.e. drinking, drug
use, smoking, fatigue due to late night socializing, poor
academic performance and encounters with the police.
Forty per cent of the sample was classified as “Thrill
Seekers.” They were tolerant of deviant behavior and
were more likely to be influenced by peers. Thirtynine per cent of participants was “Conventional” and
displayed a strong attachment to traditional values, high
Hennessy and Wiesenthal (1997) found that
the most commonly reported behaviours on a divided
highway in high congestion conditions were direct
coping behaviours (eg. seeking pre-planned routes
and listening to radio traffic reports), time facilitation
behaviours (eg. listening to music or the radio) and
aggressive behaviours (eg. tailgating, swearing and
yelling at other drivers and horn honking). While the
incidence of aggressive behaviours increased during
congestion, these behaviours still ranked third behind
both direct coping behaviours and time facilitation
behaviours.
levels of self-confidence and less responsiveness to peer
influence. The remaining was classified as “Inadequate”
and displayed low levels of self-confidence, difficulty
controlling anger and frustration, low attachment to
traditional values and poor academic performance. By
the second year of the study, the Thrill Seeking group
scored significantly higher on a risky driving index than
either the Inadequate or Conventional groups. By the
third year of the study, 27 per cent of Thrill Seeking
group, 14 per cent of the inadequate group and 9 per
cent of the Conventional were involved in motor vehicle
collisions. Research on lifestyle factors has not been
applied specifically to aggressive driving behavior. The
combined focus on both personality and social factors
typical of lifestyle research may improve our ability to
understand the motivation of an individual who often
displays aggressive driving behavior (i.e. an aggressive
driver).
Formal interest in aggressive driving behavior
as a research topic can be traced back to a short
monograph by Meyer Parry entitled Aggression on
the Road. Parry’s work pre-dated that of Leeming by
one year. Also writing in England, he suggested that
“the increasing stress involved in motoring nowadays
makes the psychological efficiency of the driver a more
important factor than the mechanical efficiency of the
vehicle he drives” (Parry, 1968). He found that drivers
with high scores on tests for anxiety and aggression had
a higher crash risk.
Parry’s work makes it clear that aggressive driving is
not a new phenomenon.
In a study of aggressive driving, Hauber
(1980) defined aggression on the road as actual or
intended behavior which the offender supposes will do
physical or psychological harm to the victim and which
the victim experiences as such. This definition states
that the aggressors must have the expectation that their
behavior will cause victims to experience physical or
psychological harm. Hauber, however, does not provide
a list of driving behaviors he would include or exclude
from this definition.
Shinar(1999) reports a strong association
between environmental conditions and manifest driver
aggression. He has reported a fairly strong relationship
between the length of the red phase and length of the
green phase at an intersection, on the one hand, and
the tendency for drivers either run a red light or honk
their horns when they are delayed by a vehicle that fails
to proceed when the light turns green. Drivers were
more likely to run red lights at intersections with long
red phases and more likely to be impatient and honk at
intersections with shorter green phases.
257
Mizell (1997) for the purposes of his study,
aggressive driving is defined as an incident in which an
angry or impatient motorist or passenger intentionally
injures or kills another motorist, passenger or attempts
to injure or kill another motorist, passenger , in response
to a traffic dispute, altercation or grievance. This
definition focuses exclusively on behavior intended to
physically harm, or indeed, fatally injure another road
user. The Mizell definition is extremely narrow and
differs substantially from that offered by the National
Highway and Traffic Safety Administration (NHTSA).
In testimony before a Congressional subcommittee,
then NHTSA administrator Ricardo Martinez defined
aggressive driving as the operation of a motor vehicle
in a manner which endangers or is likely to endanger
people or property. For NHTSA, aggressive drivers are
more likely to: speed, tailgate, fail to yield, weave in
and out of traffic, pass on the right, make improper and
unsafe lane changes, run stop signs and red lights, make
hand and facial gestures, scream, honk and flash their
lights. NHTSA is currently preparing a more thorough
description of the specific driving behaviors that
constitute aggressive driving. It has also undertaken
research to develop the observational methods necessary
to measure the incidence of aggressive driving. From
NHTSA’s standpoint, Mizell has provided a definition
of “road rage” - an extreme form of aggressive driving
behavior. For NHTSA, the behaviors associated with
road rage are criminal offences while the unsafe driving
practices associated with aggressive driving consist of
traffic offences. Using Mizell’s own statistics, it is clear
that road rage is a relatively rare phenomenon on U.S.
roads. He reports that violent traffic disputes resulting
in homicide and assault are increasing at the rate of 7
per cent per year. Mizell’s study is based on 10,037
media and police reports of violent traffic disputes
over a six year period. These incidents resulted in 218
deaths. Bearing these methodological limitations in
mind, it should nevertheless be noted that the incidence
of this extreme roadway violence appears to be quite
low relative the number of fatalities and injuries
resulting from motor vehicle collisions. During the
same six year period covered in Mizell’s study, there
were 22,761,000 motor vehicle collision injuries and
290,105 motor vehicle collision fatalities recorded in
the U.S. (NHTSA, 1999).
According to the frustration-aggression model (the
dominant theory of aggression in psychology),
aggression is behavior directed at a person with the
intention of inflicting psychological or physical harm
to that person. All aggressive behaviors are triggered
by frustrating behaviors, situations or events. The level
of aggression will vary depending upon three important
factors.
1) The level of frustration experienced by the driver.
Drivers have differing thresholds for how much
frustration they will tolerate in a particular situation.
Drivers who have extroverted, Type A personalities may
have a low threshold and be more inclined to respond
with an aggressive driving maneuver.
2) Factor affecting whether aggressive behavior will
be displayed is the negative consequences for the
aggression. Consequences can be broadly defined to
include personal consequences, social consequences or
legal consequences. As we shall see, one environmental
condition which seems to increase the perception that
negative consequences are unlikely is the extent to
which drivers feel anonymous (eg. because they are
driving at night or on a freeway).
3) Factor is the extent to which the frustration is seen
as unfair or inappropriate. Surveys indicate that drivers
are particularly annoyed by slow moving vehicles in the
left lane of divided highways. Driving slowly in the
left lane contravenes accepted driving practice which
stipulates that slow moving traffic should keep to the
right. Conversely, a slow moving vehicle in the right
lane is less likely to irritate other motorists.
Shinar identifies two broad categories of aggressive
behavior:
1) Hostile: Hostile aggression is characterized by
strong emotion and involves behavior intended to make
the aggressor feel good. An individual engaging in
hostile aggression is venting anger at someone without
giving much thought to the possible consequences. An
example of hostile aggression might be a driver who
258
decides to follow a vehicle that cut him off abruptly
on the highway. The pursuing driver would be highly
emotional and preoccupied with “getting even.” It is
unlikely that a pursuing driver has given much thought
to how the chase will affect arrival time at his/her
original destination, what would happen if the other
driver uses a cell phone to contact the police or how
involvement in a fight with another motorist would
affect one’s personal life or livelihood.
driving population who display aggressive driving
behaviors most of the time. Aggressive driving refers
to the behaviors themselves which tend to be displayed
by most drivers less frequently.
Factors which seem to increase the likelihood of
aggressive driving behavior are: • Being relatively young
• Being male
• Being in a traffic situation which confers anonymity
and/or where escape is
high likely.
• Being generally disposed to sensation-seeking or
aggressiveness in other social
situations.
2) Instrumental: Instrumental aggression
refers to aggressive behavior which is used as a means
to an end rather than an end in itself. This latter form
of aggression seeks solely to overcome the frustrating
situation or event. The aggressive behavior stops as
soon as the source of frustration has been removed. An
example of instrumental aggression might be a driver
who decides to weave in and out of traffic because s/he
is late for a meeting. Other drivers are simply obstacles
and the aggression is not characterized by anger directed
at a particular individual. The driver has presumably
behaved in this way only because s/he is late.
Most aggressive driving behaviors are unlikely
to be exclusively hostile or exclusively instrumental. We
would expect them to have elements of both hostility
and instrumentality.
Nevertheless the distinction
is helpful to researchers because there are clearly
aggressive driving behaviors that are more hostile than
instrumental and vice versa.
Using these concepts, Shinar defines aggressive driving
as instrumental behaviors which are manifested in
either 1) inconsiderateness towards or annoyance with
other drivers (or)
2) deliberate dangerous driving to save time at the
expense of other road users. These behaviors would
include tailgating, disobeying traffic controls, weaving
in and out of traffic, preventing a vehicle from passing,
flashing headlights and horn-honking.
Shinar also makes an important distinction
between aggressive drivers and aggressive driving.
Aggressive drivers constitute a small sub-set of the
•
Being in an angry mood (likely due to events
unrelated to traffic situation)
• Belief that one possesses superior driving skills
• Traffic congestion, but only if drivers do not expect
it
METHODOLOGY USED FOR THIS STUDIES
The objective of this research studies are
 To study the stress among the two wheeler
riders during driving in CHENNAI city.
 To study the behavioral pattern of driving
among bikers.
 To come out of with remedial measures for
curbing the stress among bikers.
 To study the responses of bikers with anxiety .
The radom sample method used in this study.
The sample collected from 110 respondents at various
places of Chennai city through structured questionnaire.
Following statistical tools were used in the study for
analysis of data.
 Percentage Analysis
 Chi-square Method.
 ANOVA Test
 Weighted average method
ANALYSIS OF STRESS AND ANXIETY
Table 1. Gender & Marital status
259
From the below table it is inferred that, out of the surveyed population, 75 were males (68%) and 35 were
females (32%). 86 were unmarried (78%) and 24 were married (22%). It shows that most of the respondents are male
and married.
MARITAL
STATUS
UNMARRIED
MARRIED
TOTAL
%
MALE
61
15
75
68.2
FEMALE
25
9
35
31.8
TOTAL
86
24
110
100
%
78.2
21.8
100
GENDER
Comparative analysis between gender with marital status by using chi- square
Ho- There is no significant difference between GENDER & MARITAL STATUS OF RIDERS.
H1- There is significant difference between GENDER & MARITAL STATUS OF RIDERS.
Observed
Value (O)
FORMULA to calculate
Experimental Value
Experimental value (E)
(O-E)2 /
61
(86*75) / 110
58.6
0.098
15
(24*75) / 110
16.4
0.12
25
(86*35) / 110
27.4
0.21
9
(24*35) / 110
7.6
0.26
TOTAL
0.69
Calculated value
0.69
Level of significant
5%
Degree of freedom
(m-1)(n-1)= (2-1)(2-1)= 1
Tabulated value
3.84
CV< TV, Accept Ho. So there is no significant difference between marital status & gender.
Table 2. The daily average duration & travel of two wheelers usage
From the above table it is inferred that 24 rides(21.8%) less than 5km on an average, 28 rides(25.4%)
5-10km on an average, 20 rides(18.3%) 10-15km on an average, 38 rides(34.5%) more than 20km on an average.
Also it is inferred that 72 rides(65.4%) less than 2hrs, 17 rides(15.4%) for 2-3hrs, 14 rides(12.7%) for 3-4 hrs, and 7
rides(6.5%) for more than 4hrs.
260
PARTICULARS
RESPONSE
%
PARTICULARS
RESPONSE
%
Less than 5 km
24
21.8
Less than 2 hrs
72
65.4
5-10 km
28
25.4
2-3 hrs
17
15.4
10-15 km
20
18.3
3-4 hrs
14
12.7
More than 20 km
38
34.5
more than 4 hrs
7
6.5
Total
110
100
Total
110
100
Table 3. Statement which best suits your response while driving
It is inferred from below table that, 42 of the two wheeler riders strongly disagree that they have night mares,
49 of the rider strongly disagree that they get cold & 55 strongly disagree that their sleep is fitful and disturbed while
riding the two wheelers. Also 44.4% riders strongly disagree the symptoms while driving.
1-Strongly Disagree
2-Disagree
3-Neutral
4-Agree
5-Strongly Agree
Statement
Nightmare
Handshake
Sleep fitful
1
42
49
55
2
25
19
25
3
18
19
11
4
15
12
14
5
10
11
5
Total
110
110
110
Total
146
69
48
41
26
330
%
44.4
20.9
14.5
12.4
7.8
100
Table 4. What extent you perceive the action that caused you to become stress, how stress you become & for
how long?
It is noted that two wheeler riders perceive the action only sometimes that cause them stressed (43 riders),
drivers gets stressed sometimes (55 riders) & even they get stressed they lack only for less than 2 minutes (46 riders).
Particulars
Response
Particulars
Response
Not at all
23
Not at all
16
How long they
Response
get stressed
>2 minutes
46
Sometimes
43
Sometimes
55
2-5 minutes
16
Occasionally
22
Occasionally
19
5-10 minutes
15
10-15 minutes
19
15-30 minutes
4
Frequently
10
Extremely very
12
much
Frequently
14
Extremely
6
very much
261
Table 5. Status which you belong to while driving
It is observed that only sometimes (43 riders) drivers feel danger of being late while driving, they are not
at all taking care of their driving (49 riders) i.e. stress affect their driving & 46 riders of drivers are sometimes
aggressive in their driving
Danger of
being late
Not at all
Response
More careful
Response
More aggressive
Response
9
Not at all
49
Not at all
12
Sometimes
43
Sometimes
20
Sometimes
46
Occasionally
33
Occasionally
15
Occasionally
22
Frequently
Extremely very
much
16
Frequently
Extremely
very much
12
Frequently
Extremely very
much
17
9
14
13
Table 6. Response towards a stressful situation
From the below table we infer the first response towards the stressed situation was SLOWED DOWN (60
responses), second response was FLASHED LIGHTS (48 responses), third response was TAPPED OR HIT BRAKES
(42 responses).
PARTICULARS
Made gesture(s)
Yelling
Honking
Name calling
Muttered comments
Tailgated
Sped up
Slowed down
Flashed lights
Refused lane access to other driver
Tapped or Hit brakes
No action at all
RESPONSE
5
31
28
15
36
25
17
60
48
23
42
0
Table 7. Comparative analysis between gender with distance travelled by riders by using chi-square test
Ho- There is no significant difference between GENDER & DISTANCE TRAVELLED BY RIDERS.
H1- There is significant difference between GENDER & DISTANCE TRAVELLED BY RIDERS.
262
Daily travel
in kms
Gender
Male
Female
Total
Less
5kms
18
6
24
than 5-10kms
11
17
28
10-15kms
More than TOTAL
20kms
13
7
20
33
5
38
75
35
110
Observed
Value (O)
Experimental Value
Experimental value (E)
(O-E)2 / E
18
11
13
33
6
17
7
5
TOTAL
24*75/110
28*75/110
20*75/110
38*75/110
24*35/110
28*35/110
20*35/110
38*35/110
16.4
19.1
13.6
25.9
7.6
8.9
6.4
12.1
.16
3.4
.03
1.95
.34
7.4
.06
4.2
18.08
CALCULATED VALUE
18.08
LEVEL OF SIGNIFICANT
5%
DEGREE OF FREEDOM
(m-1)(n-1)= (4-1)(2-1)= 3
TABULATED VALUE
7.49
CV> TV, reject Ho.
There is no significance difference b/n gender & distance traveled daily.
Table 8. Comparative analysis between marital status with distance travelled by using chi-square
Ho- There is no significant difference between marital status and daily distance traveled by riders
H1- There is significant difference between marital status and daily distance traveled by riders
Daily travel
in Km
Marital
status
Married
Unmarried
Total
Observed
Value (O)
Less
5kms
11
13
24
than 5-10kms
4
24
28
Experimental Value
263
10-15kms
More than TOTAL
20kms
3
17
20
5
33
38
Experimental
(E)
23
87
110
value (O-E)2 / E
11
4
3
5
13
24
17
33
Total
24*23/110
28*23/110
20*23/110
38*23/110
24*87/110
28*87/110
20*87/110
38*87/110
5.02
5.9
4.2
7.9
19.0
22.1
16.0
30.0
7.12
0.61
0.34
1.06
1.9
0.16
0.06
0.3
13.45
CALCULATED VALUE
13.45
LEVEL OF SIGNIFICANT
5%
DEGREE OF FREEDOM
(m-1)(n-1)= (4-1)(2-1)= 3
TABULATED VALUE
7.82
CV > TV, hence reject Ho. There is significance between marital status and daily distance traveled by the riders
Table 9. Comparative analysis between responses with riders, symptoms with riders by using anova test.
ROW: H0 = There is no significant difference between the response and riders.
H1 = There is a significant difference between the response and riders.
COLUMN:
Nightmare
Handshake
Sleep fit
Total
Nightmare
Handshake
Sleep fit
Total
H0 = There is no significant difference between symptoms and riders.
H1 = There is a significant difference between symptoms and riders.
Strongly
Disagree
Disagree
Neutral
Agree
Strongly
Agree
42
49
55
146
25
19
25
69
18
19
11
48
15
12
14
41
10
11
5
26
Strongly
Disagree
Disagree
Neutral
Agree
Strongly
Agree
TOTAL
17
24
30
71
0
-6
0
-6
-7
-6
-14
-27
-10
-13
-11
-34
-15
-14
-20
-49
-15
-15
-15
-45
264
TOTAL
110
110
110
330
GRAND TOTAL (GT) = -45
1) CF=GT2/Total no. of observation = (-45)2/15 = 135
2) Sum of Square between Column (SSC)
SSC= {[(ΣC1)2/observation under c1] + [(Σc2)2/observation under c2] +
[(Σc3)2/observation under c3] + [(Σc4)2/observation under c4] +
[(Σc5)2/observation under c5] - CF
= {[(71*71)/3] + [(-6*-6)/3] + [(-27*-27)/3] + [(-34*-34)/3] + [(-49*-49)/3]}- 135
= 1680.33 + 12 + 243 + 385.33 + 800.33 - 135
= 3121 – 135 = 2986
Degree of freedom = (c-1)
= (5-1) = 4
SSC = {[(-15*-15)/5] + [(-15*-15)/5] + [(-15*-15)/5]}-135
= 135 – 135
= 0
Degree of freedom = (r-1) = (3-1) = 2
4) Total sum of squares = (sum of square of all the terms in the table) - CF
= [(17)2 + (24)2 + (30)2 + (0)2 + (-6)2 + (0)2 + (-7)2 + (-6)2 +
(-14)2 + (-10)2 + (-13)2 + (-11)2 + (-15)2 + (-14)2 + (-20)2] - 135
= 3293-135
= 3158.
5) Residual Sum of Square = 3158-2986-0
= 172
Degree of Freedom = (c-1) (r-1)
= (5-1) (3-1)
= 4*2 = 8
6)
Source
Between
column
Between
Row
residual
7) CV of F?
DF
2986
4
0
2
0
172
8
21.5
Let us keep residual value as fixed and compare with column and row.
COLUMN:
TV =?
Sum of square
F= 746.5/21.5
= 34.72 => CV
DF = (4, 8) at 5%
TV => 3.83
265
Variance
746.5
So CV>TV, Reject H0, There is a significant difference between symptoms and riders.
ROW
F = 0/21.5 = 0
TV =?
DF = (2, 8) at 5%
TV = 4.45
So TV > CV, Accept H0 , There is no significant difference between the response and riders.
Table 10. Comparative analsis between driving behaviour with riders, response with riders by using anova
test
ROW: H0 = There is no significant difference between the driving behaviors and riders.
H1 = There is significant difference between the driving behaviors and riders.
COLUMN: H0 = There is no significant difference between the response and riders.
H1 = There is significant difference between the response and riders.
Extremely
Not at all Sometimes Occasionally Frequently
very much
(1)
(2)
(3)
(4)
(5)
Danger of
being late
9
43
34
16
8
110
Carefully
50
17
15
14
14
110
aggressively
13
45
22
17
12
110
72
106
71
47
34
330
Not at all
(1)
Extremely
Sometimes Occasionally Frequently
very much
(2)
(3)
(4)
(5)
Danger of
being late
-25
9
0
-18
-26
-60
Carefully
16
-17
-19
-20
-20
-60
aggressively
-21
12
-12
-17
-22
-60
-30
4
-31
-55
-68
-180
GRAND TOTAL (GT) = -180
1) CF=GT2/Total no. of observation = (-180)2/15 = 2160
TOTAL
SSC= {[(ΣC1)2/observation under c1] + [(Σc2)2/observation under c2] +
[(Σc3)2/observation under c3] + [(Σc4)2/observation under c4] +
[(Σc5)2/observation under c5] - CF
= {[(-30*-30)/3] + [(4*4)/3] + [(-31*-31)/3] + [(-55*-55)/3] + [(-68*-68)/3]}- 2160
= 300 + 5.33 + 320.33 + 1008.33 + 1541.33 - 2160
= 1015.33
266
Degree of freedom = (c-1)= (5-1) = 4
SSC = {[(-60*-60)/5] + [(-60*-60)/5] + [(-60*-60)/5]}-2160
= 2160 - 2160
= 0
Degree of freedom = (r-1) = (3-1) = 2
4) Total sum of squares = [(-25)2 + (9)2 + (0)2 + (-18)2 + (-26)2 + (16)2 + (-17)2 + (-19)2
+ (-20)2 + (-20)2 + (-21)2 + (12)2 + (-12)2 + (-17)2 + (-22)2] - 2160
= 4914 - 2160
= 2754
5) Residual Sum of Square = 2754-1015.33-0
= 1738.67
Degree of Freedom = (c-1) (r-1)
= (5-1) (3-1)
= 4*2 = 8
6)
Source
Sum of square
DF
Variance
Between
column
1015.33
4
507.665
Between Row
0
2
0
residual
1738.67
8
213.33
7) CV of F?
Let us keep residual value as fixed and compare with column and row.
COLUMN
TV =?
F= 507.665/213.33
= 2.379 = CV
DF = (4, 8) at 5%
TV = 3.83
TV>CV, Accept H0, There is no significant difference between the response and riders.
ROW
TV =?
F = 0/213.33 = 0
DF = (2, 8) at 5%
TV = 4.45
TV > CV, Accept H0, There is significant difference between the driving behaviors and riders
267
Table 11. Analyysis of response of bikers due to stress by using weighted average method
Nightmare
Handshake
Sleep fit
1
2
3
4
5
TOTAL
42
49
55
25
19
25
18
19
11
15
12
14
10
11
5
110
110
110
146
69
48
41
26
330
Category of item
Calculation
Value
Rank
Nightmare
(1*42+2*25+3*18+4*15+5*10)
0.775
I
Handshake
(1*49+2*19+3*19+4*12+5*11)
0748
II
Sleep fit
(1*55+2*25+3*11+4*14+5*5)
0.663
III
INFERENCE:
From the above table it is inferred the nightmare is first symptoms given by the drivers while driving.
MAJOR FINDINGS OF THE STUDY
•
•
•
•
•
•
It is observed from table 1 that, out of the surveyed population, 75 were males (68%) and 35 were females
(32%) riders. 86 were unmarried (78%) and 24 were married (22%) riders.
It is noted from table 2 that 24 respondants rides(21.8%) less than 5km on an average, 28 respondants
rides(25.4%) 5-10km on an average, 20respondants rides(18.3%) 10-15km on an average, 38 respondants
rides(34.5%) more than 20km on an average. Also it is inferred that 72 respondants rides(65.4%)
less than 2hrs, 17 respondants rides(15.4%) for 2-3hrs, 14 respondants rides(12.7%) for 3-4 hrs, and 7
respondantsrides(6.5%) for more than 4hrs.
It is inferred from table 3 that, 42 riders of the two wheeler riders strongly disagree that they have night
mares, 49 riders of the rider strongly disagree that they get cold & 55 riders strongly disagree that their sleep
is fitful and disturbed while riding the two wheelers. Also 44.4% riders strongly disagree the symptom while
driving.
It is cited from table 4 that drivers perceive the action only sometimes that cause them stressed (43riders),
drivers gets stressed sometimes (55riders) & even they get stressed they lack only for less than 2 minutes
(46riders).
Table 5 shows that only sometimes (43riders) feel danger of being late while driving, they are not at all
taking care of their driving (49 riders) i.e. stress affect their driving & 46 riders are sometimes aggressive in
their driving.
It is oberved from table 6 that the first response towards the stressed situation was SLOWED DOWN (60
responses), second response was FLASHED LIGHTS (48 responses), third response was TAPPED OR HIT
268
•
•
•
faster, but could prevent you from arriving at
all;
BRAKES (42 responses).
It is noted from table 7 that there is significance
between marital status and daily distance
traveled by the riders
Table 8 cited that there is significance between
marital status and daily distance traveled by the
riders
It is inferred the table 11 that nightmare is first
response given by the drivers while driving.
Try to clear your mind of personal or work
problems before driving;
•
Focus on the drive ahead and its hazards – be
aware that an unexpected hazard could crop up
at any moment and if you are not concentrating
it could be fatal;
•
Remember that you have a responsibility as
a driver to look out for vulnerable road users
(pedestrians, cyclists, motorcyclists and horseriders), which requires your full attention;
•
Predict and accept things that bother you on the
road and make a decision not to let them wind
you up;
•
Calm, controlled breathing helps to release
muscular tension and relieve stress;
•
don’t drive if you’re tired and take regular
breaks during long journeys to refocus your
concentration (the Government advises breaks
at least every two hours for fifteen minutes);
•
Plan your route carefully and allow plenty
of time for your journey - rushing will only
increase anxiety;
•
Ensure the driver’s seat and handle column are
correctly adjusted for you;
•
Drive at an appropriate speed within the speed
limit – driving aggressively, speeding and
overtaking are unlikely to get you there much
Don’t go hungry - hunger can affect your
concentration but don’t eat at the wheel;
•
Tell your employer if you think you may be
suffering from stress due to your job-its their
duty to resolve the problem
CONCLUSION
RECOMMENDATIONS
•
•
Driving Psychology is now in the beginning
stages and is still evolving in content and method,
in response to the new need for managing driving
behavior in an industrialized society. The goal of
driving psychology is to reverse the natural trend of
escalating accidents that occur with a sharp increase in
the number of drivers and miles driven. The escalation
of accidents, injuries, and their financial cost is a
preventable phenomenon, but it requires socio-cultural
interventions by government, social agencies, and
citizen organizations. It is not preventable or containable
by law enforcement methods alone because these are
external coercion mechanisms that have only a limited
effect. Drivers will revert to aggressive driving styles
when detection by police can be avoided. Compliance
is dependent on surveillance.
Therefore, internal influence is possible only
through the voluntary cooperation of each individual.
This voluntary cooperation can be engineered by means
of the social influencing process that naturally occurs in
small groups like the Quality Driving Circles (QDCs).
In addition, the new driving norms that these sociocultural methods create in each community, are then
spontaneously adopted from their parents by the current
generation of children who will form the next wave of
drivers in the region.. Thus, driving psychology is also
a health-enhancing practice. Driving psychology can
draw on the methodology used in allied fields such as
behavior management techniques for self-modification.
This feature can be used in self-assessment as well as in
setting standards for testing, licensing, and rewarding or
269
punishing (socially, economically, and legally).
6. Meichenbaum, D. and Goodman, S. (1979)
Clinical use of private speech and critical
questions about its study in natural settings.
In G. Zivin (Ed.), The Development of SelfRegulation Through Private Speech. New
York: Wiley.
7. Michon, J.A. (1985) A critical view of driver
behavior models: What do we know, what
should we do? In L. Evans and R.C. Schwing
(Eds.). Human Behavior and Traffic Safety.
New York: Plenum Press. pp. 485-520.
8. Mischel, W. (1991) Personality dispositions
revised and revised: A view after three decades.
L. A. Pervin (Ed.) Handbook of Personality
Theory and Research (pp. 111-134) New York:
Guilford Press.
9. Nahl,. Diane (1999) What is Driving
Informatics. On the Web at http://DrDriving.
org/informatics.html
10. Nahl, Diane. (1998) Novices’ First Use of
Web Search Engines: Affective Control in
Cognitive Processing. Internet Reference
Services Quarterly 3(2): pp. 51-72.
11. Nahl, Diane. (1997). Information Counseling
Inventory of Affective and Cognitive
Reactions while Learning the Internet.
Internet Reference Services Quarterly 2(2/3):
pp. 11-33.
“HASTE MAKES WASTE”
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(1987) Learning the library: Taxonomy of skills
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(3), pp. 203-214.
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moralization. In T. Lickona (Ed.), Moral
Development and Behavior. New York: Holt,
Rinehart & Winston.
3. Krathwohl, D.R., Bloom, B.S., and Masia, B.B.
(1964) Taxonomy of Educational Objectives:
The Classification of Educational Goals.
Handbook II: Affective Domain. New York:
David McKay.
4. Luria, A. (1961) The Role of Speech in the
Regulation of Normal and Abnormal Behavior.
New York: Liveright.
5. McKnight, A.J. and Adams, B.B. Driver
education task analysis. Alexandria, VA:
Human Resources Research Organization,
1970-1 (Volumes I, II, III) (Cited in Michon,
1985)
270
Vertical Integration - Emerging trends and Challenges
Madhavi Latha Kanniganti
Research Scholar, School of Management, SRM University, Kattankulathur
Dr. Ravilochanan, P
Professor, School of Management, SRM University, Kattankulathur
1. Introduction
2. In house Vs Outsource:
Vertical integration is the degree to which a firm owns its
upstream suppliers and its downstream buyers. Contrary
to horizontal integration, which is a consolidation of
many firms that handle the same part of the production
process, vertical integration is typified by one firm
engaged in different parts of production (e.g. growing
raw materials, manufacturing, transporting, marketing,
and/or retailing).
Major considerations for the expansion though Vertical
Integration would be the In house versus Outsource
analysis -to assess what part of supply chain a firm
should gain control and make it an in-house versus
contract out to a third party or outsource .
3. Drivers for the decision
There are 5 primary assessments which need to be
conducted across the supply chain- the key drivers for
In house Vs outsource decision
There are three varieties: backward (upstream) vertical
integration, forward (downstream) vertical integration,
and balanced (both upstream and downstream) vertical
integration.
• Strategic Importance:
The product/service or a business process contributing
towards uniqueness or intellectual property and gaining
competitive advantage due to differentiation cannot be
outsourced. Factors impacting short and/ or medium
term cost advantage may or may not hold true in longer
term. Such assessment is required while evaluating the
options.
A company exhibits backward vertical integration when
it controls subsidiaries that produce some of the inputs
used in the production of its products. For example,
an automobile company may own a tire company, a
glass company, and a metal company. Control of these
three subsidiaries is intended to create a stable supply
of inputs and ensure a consistent quality in their final
product.
• Operational Competence:
If the product category / manufacturing technology
under assessment is medium to highly sensitive towards
quality requirements and requires medium to high
technical / resource support the firm may chose to make
it an In-house development or control.
A company tends toward forward vertical integration
when it controls distribution centres and retailers where
its products are sold. Balanced vertical integration
means a firm controls all of these components, from raw
materials to final delivery.
• Supply Depth and Competitiveness:
Availability of contract manufacturing options
and intensity of industry competition is a relevant
factor. Level of product / manufacturing technology
differentiation and Level of cost competitiveness
relative to firm also may impact the In-house or
outsource decision.
The three varieties noted are only abstractions; actual
firms employ a wide variety of subtle variations.
Suppliers are often contractors, not legally owned
subsidiaries. Still, a client may effectively control a
supplier if their contract solely assures the supplier’s
profitability. This paper discusses about emerging
trends in vertical integration in post recession era and
probable challenges there upon.
• Potential Bargaining Leverage:
Bargaining power of suppliers and / or distributors
271
total available market. Inbound and outbound logistics-
may impact the firm’s decision regarding the vertical
integration. Bargaining leverage the firm enjoys in its
supply chain is a key assessment driver for make or to
buy decision.
M & A may not be a better choice always. Owning a
logistics division for a seasonal and limited Usage may
not be an intelligent option rather than outsourcing it.
A logistics firm handling operations for various firms
• Scale benefit from specialization:
Low costs of production (cost per unit or the average
cost) can only be achieved if a firm is producing an
output level that constitutes a substantial portion of the
may attain cost benefits due to economies of scale and
specialization and may pass on that profitability to the
outsourcing firms.
In-house Vs Outsource Analysis Drivers
1
Strategic
Improtance
Is product and / or technology is of strategic importance to the firm?
2
Operational
Competence
Does the firm have superior operational capability?
3
4
Supply Depth and
Competitivences
Are the upstream and / or downstream options limited?
Potential
Bargaining
Leverage
Does a potential for bargaining exits?
Scale benefit from
Specializtion
Does the firm gain scale benefits from specialization?
5
1. Pre Recession era
Vertical integration is a century old strategy pioneered
during the industrial revolution. The old style vertical
integration usually crossed multiple industries. With
vertical integration, an organization controls the supply
of raw materials and the delivery of its products. In
other words, it has ‘complete control’ over its supply
chain. More inclined towards In-house development.
Later the trend moved towards outsourcing, core
competencies and gaining cost reduction due to
specialization. Outsourcing has been prospering since
the 90s for various reasons such as cost reduction, focus
on core competencies, Risk mitigation and a long list
of others.
hard to overlook the shift to ‘vertical integration’ by a
number of leading companies such as Oracle, Apple,
Arcelor Mittal, GM, Boeing, Pepsi, Tata to name a few.
Oracle has been on a spending spree over the last few
years by acquiring just about any maker of software,
computers, and computer components. The intent is
to sell ‘complete systems’ made of chips, computers,
storage devices and software from Oracle.
Apple which exited the semiconductor business
recently shifted its strategy by silently grabbing small
semiconductors suppliers so it can develop its own
chips to meet its popular new devices.
General Motors, despite its struggle, is also moving
towards a lean vertical integration model by grabbing
a number of struggling suppliers (e.g. Delphi) and
2. Post Recession era
But if we have been following the news lately, it is
272
purchasing factories. The trend towards vertical
integration is driven by many reasons such as more
control over raw materials (e.g. Arcelor), more
control over parts supply (GM, Boeing), more control
over beverage distribution (Pepsi), and strategic
differentiation (Oracle, apple).
blunders have been made by firms that broadened their
scope to achieve benefits that did not exist. If the barriers
of exit are significant; a firm may be forced to continue
to hold the acquisitions of the vertical integration, as
the costs of leaving may be higher than those incurred
if they continue with the holdings which may not be a
desirable outcome.
Major contribution to this phenomenal shift is sick units
being available at through away prices and evolution of
few sustained market leaders in post recession era.
4. Conclusion
Changing dynamics of economic health Vis- a -Vis
evolving requirements of business post recession
have fuelled significant changes in trends of vertical
integration. While vertical integration is core to business
models servicing growth especially in economies such
as India. This paper made an attempt at highlighting key
drivers which are critical for defining the future trend
of vertical integration. Both strategic and operational
challenges as highlighted in the paper are likely to
influence the emerging trends for such integration.
It is hence pertinent that business houses are cognizant
of these drivers and suitable risk mitigation steps need
to be put in place in order to design a sustainable vertical
integration model in line with their growth business
needs and addressing risks arising in short to medium
term.
5. References:
• Mansfield, Edwin. Essential Microeconomics:
Principles, Cases, Problems.
• Johnson G, Scholes K and Whittington R, (2006),
“Exploring Corporate Strategy”, Prentice Hall
International
• Bain, Joe S. Barriers to New Competition: Their
Character and Consequences in Manufacturing
Industries
• Martin K. Perry. “Vertical Integration: Determinants
and Effects”. Chapter 4 in: Handbook of Industrial
Organization. North Holland, 1988.
• Joseph R. Conlin. “The American Past: A Survey
of American History”. Chapter 27 page 457
under “VERTICAL INTEGRATION”. Thompson
Wadsworth. Belmont, CA, 2007.
• The Re-rise of Vertical Integration: Mega or
Dead Supply Chains? By Farid Harche - Senior
consultant Wipro BAS
Appendix 1: Acquisition of Shantha Biotechnics by
Sanofi Pasteur
3. Emerging challenges
Post M&A Integration issues:
This new style vertical integration (M & A) will make
supply chain much more complex to manage and
control. Bureaucratic, cultural and organizational issues
have long plagued their supply chains which are often
masked by the magnitude of the profits in this industry.
Regardless of the degree of vertical integration, supply
chains are unlikely to disappear or become easier
to manage or control. With multiple acquisitions,
organizations end up having multiple supply chains
each as complex as the other. The resulting supply
chain is slow and bogged by process inefficiencies and
limited internal collaboration.
Conflicts of Interests:
Organizations comprising of multiple business units
adopting Vertical integration within one or more of
their business units could face challenges in addressing
conflicts of interest arising due to multi point competition
in related and / or unrelated industries.
Challenges due to Dynamic economies:
Further, countries such as India and China present
unique challenges in that their fast growing economies
fuel significant changes over short to medium term.
This requires dynamic and agile supply chain systems
which pose significant challenges to such a vertical
integration.
Exit barriers:
Another concern is whether the anticipated economic
gains will materialize. Before expanding the scope
of the firm through vertical integration, management
should be sure that the imagined benefits are real. Many
273
Paris, France – July 27, 2009 - Sanofi-aventis
(EURONEXT: SAN and NYSE: SNY) and Mérieux
Alliance announced the signature of a strategic
agreement for the acquisition by Sanofi Pasteur of
Mérieux Alliance’s French subsidiary ShanH, which
owns a majority stake in vaccine company Shantha
Biotechnics based in Hyderabad, India. A new joint
committee will be chaired by Alain Mérieux on vaccine
strategy for the Emerging Markets.
For Shantha: This evolution was rolled out
respecting Shantha’s philosophy to provide
developing countries with international quality
level products at an accessible price. Shantha’s
future development necessitates of bringing a
state-of-the-art vaccine manufacturing facility
gets a support from a major international vaccine
company
Alain Mérieux to chair a new Vaccine Strategic
Committee of Sanofi Pasteur for Emerging Markets
Under the terms of the agreement, Sanofi Pasteur, the
vaccines division of the Sanofi-aventis Group, will
support Shantha’s ongoing development as a platform to
address the need for high quality affordable vaccination
in international markets. Dr Varaprasad Reddy, the
founder of Shantha Biotechnics, will continue to lead
the company as Managing Director.
Context of Acquisition
Mérieux Alliance acquired the majority
shareholding in the Shantha Biotechnics Limited
in November, 2006. ( Mérieux Alliance acquired
80% of the stake)
Death of Alliance CEO’s son who was supposed
to take over the charge of Shantha meant the firm
lacked managerial guidance and effort for nearly 3
years
In 2009, Sanofi-aventis and Mérieux Alliance
signed a strategic agreement for the acquisition by
Sanofi Pasteur of Shantha Biotechnics.
Acquisition particularly focused on successful
launch of a pentavalent pediatric vaccine as well
as a Cholera vaccine. Its main activity being
strengthening a portfolio of new products which
are in development: Rotavirus vaccine, Conjugated
Typhoid vaccine, and HPV vaccine
Shantha Biotechnics was created in 1993 by Dr.
Varaprasad Reddy and is based in Hyderabad, India.
Shantha develops, manufactures and markets several
important vaccines. Shantha works with supranational
organizations like UNICEF and PAHO to supply major
international markets including Asia-Pacific, Africa and
Latin America.
Sanofi-aventis, a leading global pharmaceutical
company, offers the broadest range of vaccines
protecting against 20 infectious diseases. Every day, the
company invests more than EUR 1 million in R & D.
Sanofi-aventis has a workforce of 105,000 employees
in 110 countries and its net sales were of €29.3 billion
in 2009. Sanofi-aventis is listed in Paris (EURONEXT:
SAN) and in New York (NYSE: SNY).
Present situation
Employees have identified more with Mr.
Varaprasad than the firm Shantha. Lack of ‘sense
of connect’ with the firm and the acquired brand
contributed to many employees leaving the firmAttrition rate rose from 23 % to 73%
Within a year of acquisition Sanofi Aventis-owned
Shantha Biotech is recalling several lots of its 24
million five-in-one vaccines globally after WHO
found it unsuitable for use and raised concerns over
its safety. This is estimated to be causing a loss of
around $72 million
WHO and UNICEF have asked Hyderabad-based
Shantha Biotech to determine the root cause of the
problem and prepare a corrective action plan within
two months, failing which the company’s vaccines
Mérieux Alliance, the family holding company of Alain
Mérieux comprises five companies dedicated to public
health that span the full range of healthcare: prevention,
diagnosis, prognosis, treatment and clinical follow-up.
Strategy of Acquisition
For Sanofi Pasteur: Sanofi Pasteur strengthens
vaccines position in India through the control of
Shantha Biotechnics via Mérieux Alliance. Shantha
shall operate as an R & D wing extension and new
distribution channel for Sanofi in emerging markets
274
will be disqualified from supply to the agency
Besides losses from the recall, if WHO disqualifies
Shan5, the Indian company could lose a
$340-million UNICEF contract to supply Shan5
for 2010-12
This is a setback to Sanofi Aventis, which bought
80% in Shantha in July 2009, valuing the company
at € 550 million. From past 3 to 4 years Shantha
Biotechnics is not in a position to launch a single
vaccination
 Lot of money is being pumped into Shantha by
sanofi to get the situation up and running and
correcting the organizational disparities both in
culture and technology
(UTI - I), Life Insurance Corporation of India (LIC) and
General Insurance Corporation of India (GIC) and other
four PSU insurance companies, i.e. National Insurance
Company Ltd., The New India Assurance Company
Ltd., The Oriental Insurance Company Ltd. and United
India Insurance Company Ltd.
The Bank today is capitalized to the extent of Rs. 408.84
crores with the public holding (other than promoters and
GDRs) at 53.81%. The Bank has a very wide network
of more than 1095 branches and has one of the largest
ATM networks in the country.
ENAM was founded in 1984 to provide knowledgedriven financial services at a time when the Indian
economy was being redefined by market-oriented
reforms. The founders - Manek Bhanshali, Nemish
Shah, Vallabh Bhanshali and Jagdish Master - were
referred to as the Formidable Four of Dalal Street.
Epilogue
In lieu of above discussion it may be concluded that all
M& A need not head towards a desired result.
Bureaucratic, cultural and organizational issues arising
from the M & A have to be taken care of.
Management should be sure that the imagined benefits
are real by performing an extensive due diligence.
Appendix 2: Merger of Axis bank and Enam i-banking
arm
Being privately owned by professionals contributes
to an exceptionally high level of commitment to
excellence in client service. Almost all the key decision
makers who have joined Enam over the last 20 years
are still with it. Enam’s partnership approach is unique
in the Indian context.
Axis Bank on Nov 17, 2010 announced acquisition
of investment banking and other businesses of Enam
Securities for Rs 2,067 crore, a move that will allow the
private sector lender expand its footprint in i-banking
and retail broking space similar to its rivals HDFC and
ICICI banks.
Strategy of the Axis Bank
Axis Bank will use the ‘Enam brand ‘ , one of the
strongest among the pure-play domestic financial
majors, for two years and there will be a non- compete
agreement on the merged business for the next five
years.
Under the deal, Axis Bank’s first inorganic growth
foray, Enam’s shareholders -- Vallabh Bhansali, Manish
Chokhani, Jagdish Master and Nimesh Shah -- will get
5.7 shares of Axis Bank for every one share held which
will constitute about 3.3 per cent of the lender’s equity
base on enlarged capital. Bhansali will also be inducted
on to the Board of Axis Bank as an independent Director
while Chokhani will be the Managing Director and
CEO of the newly formed entity created by the merger.
Axis Bank was the first of the new private banks to
have begun operations in 1994, after the Government
of India allowed new private banks to be established.
The Bank was promoted jointly by the Administrator
of the specified undertaking of the Unit Trust of India
The transaction has the potential to create a financial
services powerhouse in the country and it combines
the investment banking and equities strength of Enam
securities and the dominant debt market and commercial
banking operations of Axis Bank.
Perspective of Enam
India is going to see so much capital investments that
the landscape is going to change dramatically.
There would have been several handicaps for Enam to
grow individually since as business grows there would
275
have been a need for significantly large sums of capital.
Enam saw this opportunity to move to the next level.
Market situation
The M & A deals in India bring in the fees in the
range of 1% to 4% of the value of the deal and the
market is worth about $800 million (About Rs 3500
crores) in terms of fees, annually
On the other hand, Issuance of shares through IPOs,
FPO and QIP- bring in fees in the range of 0.5% to
4% of the deal value
Axis bank has been growing at about 20-30%
annually without strong investment banking wing.
Now with strong M& A advisory team and equity
issuance issue team under its command and a strong
balance sheet to back the deal -will probably make
Axis Bank grow at a much faster pace
It is clear attempt by Shikha Sharma( Axis bank MD
& CEO) to create and integrated financial services
firm that will bring banking and investment
banking under one roof
The deal comes at a time when the government is
planning to sell equity in about 60 state run firms.
Although Government deals do not bring in much
money, but that takes the merchant banker higher
up the M & A league table
It is well known fact that being in the top deck in
the league table brings in the clients from private
sector that pay for the service.
Epilogue
The combination of capability & capacity of Axis with
the talent & experience of Enam in the equities market
makes it a strong merger. Through such acquisitions,
Axis Bank targets to become a one-stop financial service
provider,” said Gaurang Shah, assistant vice-president
of Geojit BNP Paribas Financial Services.
Enam, which is credited for pioneering equity research
in the country, enjoys much of its strong reputation for its
corporate business. The guarantee that the considerable
goodwill enjoyed by Enam would get transferred to
Axis Bank is still a question of debate and to be proven
by time.
276
A Study on Sources of Fruit Wastages in Cold Storage and
Fruit Processing Industries in Tamilnadu
R. Arivazhagan
Asst. Professor, School of Management, SRM University, Kattankulathur
Dr. Ravilochanan
Professor, School of Management, SRM University, Kattankulathur
1. Introduction
making agriculture more profitable, through efficient
land use, optimum utilization of natural resources and
creating skilled employment for rural masses especially
womenfolk. Recent efforts have been rewarding
in terms of increased production and productivity
and availability of much larger volumes of fruit and
vegetable crops. As a result India has emerged as the
second largest producer of fruits and vegetables in the
world. A large variety of fruits are grown in India. India
produces over 46 million tonnes of fruits accounting
for around 10% of the world’s production. The country
ranks first in mango, sapota and acid lime, and in recent
years recorded the highest productivity in grape. Some
important fruits of India can be seen in the table below:
The contribution of agriculture to India’s GDP at the
time of Independence was 70% and it accounted for
85% of total employment. The share of agriculture in
the country’s GDP has been gradually declining since
then. At present, the contribution of agriculture to
GDP is about 25%, but it still engages about 70% of
the population. The annual average rate of growth of
agricultural GDP has also declined from around 3.5%
during mid eighties to mere 1.5 % during 2006-07. It
is estimated that if the country has to maintain a GDP
growth rate of over 8%, the agricultural sector has
to grow at the rate of at least 4%. The country has a
huge potential for growth in agriculture with about 160
million hectares of arable land and diverse agro climatic
conditions, suitable for cultivation of a wide variety of
crops.
Tropical and subtropical: Mango,
banana, citrus, pineapple, papaya,
guava, sapota, jackfruit, litchi and
grapes
Temperate: Apple, pear, peach, plum, almond and walnut
Arid Zone: Anola, ber, annona, fig, phalsa
India is the second largest producer of overall fruits. A
fresh estimate from the ministry of food processing says
a whopping Rs 58,000 crore (Rs 580 billion) worth of
agriculture food items get wasted in the country every
year. Officials said only 7% of food in India is processed.
Out of that the fruits and vegetable processing level
in India is estimated to be around 2% as compared to
about 80% in Malaysia, 30% in Thailand, and 60-70%
in the UK and USA. In spite of being a major producer
of fruits, a large quantity is wasted in the absence of
storage, logistics and processing support. This study
has been conducted in Tamilnadu to find out different
sources of fruit wastages in cold storage and fruit
processing industries.
Mango is the most important fruit covering 39 percent
of the area accounting for almost 23 percent of total
fruit production in the country. India’s share in the
world production of mango is about 54 percent. Banana
ranks second in area covering about 13 percent of total
area. Banana contributes nearly one-third of the total
fruit production. Citrus ranks third in area and accounts
for about 10 percent of the country’s fruit production.
Apple is another major fruit in the country with
production of about 1.42 million tonnes. There has been
steady increase in the area, and production of arid zone
fruits particularly aonla, ber and pomegranate as a result
of identification and development of suitable varieties
and production technologies. The area and production
of major fruit crops can be seen in the table below.
2. Overview of the Fruits in India
India with its wide variability of climate and soil
produces a wide range of horticultural crops including
fruits and vegetables. Fruit and vegetable crops
have been identified as a means of diversification for
277
Table – 1: Fruit Production in India
Area
Production
Banana
(In
Million
Ha.)
0.62
Mango
1.56
10.64
22.8
Citrus
0.56
4.58
9.8
Papaya
0.07
1.82
3.9
Guava
0.19
1.68
3.6
Apple
0.25
1.42
3.0
Pineapple
0.08
1.26
2.7
Grapes
0.06
1.10
2.4
Litchi
0.05
0.42
0.9
Crop
(In Million
Tonnes)
Percentage in Total Production
16.45
35.3
Source: Ministry of Agriculture, Government of India
the production. More than 72 percent of the vegetable
and fruits are wasted in the absence of proper retailing.
(Source: CII Fruit and Vegetable Summit - 2008)
Major issues that exist in the supply chain of fruits
and vegetables include the losses during post harvest
handling, processing, packaging and transportation. The
loss of fruits and vegetables during transportation is said
to be in the range of 20 - 30% in countries like China
and India. In many countries including China and India
- two largest producers of fresh fruits and vegetables
in the world - the existing cold storage facilities, reefer
vehicles, product traceability solutions and other
infrastructural facilities are insufficient to counter the
problem of high supply chain losses. (Source: Articles
Base SC #2720238)
Agriculture Minister Sharad Pawar also said there
were quite a few constraints in the sector. The sector
is constrained by widespread fragmentation in the
supply chain, low productivity levels, and huge post
harvest losses arising out of inadequate storage, cold
chain and transport infrastructure, logistics and supply
chain management. Only organised and traditional
retailing will ultimately drive the growth of the fruits
and vegetable sector in the country. Pawar also called
for an appropriate policy support for the growth of retail
chains for fruits and vegetables in the country. (Source:
CII Fruit and Vegetable Summit - 2008)
P.K. Mishra, secretary in the ministry’s department
of agriculture and co-operation, said at a Fruit and
Vegetable Summit organised by Confederation of
Indian Industry (CII) in 2008, that the production of
vegetables in India is next only to China. The vegetable
and fruit production contributes more than 30 percent of
the agriculture GDP. The crop diversification has led to
rise in horticulture production, which has reached 185.2
billion tonnes last year. But the real challenge starts after
Inadequate infrastructure has been identified as a major
constraint in the growth of fruit and vegetable processing
industries. Without a strong and dependable cold chain,
a vital sector like F&V processing industry, which is
based mostly on perishable products, cannot survive
and grow. Even at currents level of production, wastage
278
in F&V is estimated at 35%, major reasons being
inadequate storage, transportation, cold chain facilities
and other infrastructure support facilities. Government
of India has been implementing several schemes for
facilitating creation of infrastructure for food processing
including the following components relevant for F&V
processing sector: Food Parks, Packaging Centers,
Integrated Cold Chain Facility, Value Added Centers
and Irradiation Facilities. (Source: Ministry of Food
Processing Industry (MFPI), Government of India)
•
Another important reason why large-scale
investments have not taken place in India’s
cold chain infrastructure is that to be viable,
investments in cold chain are expected to
require not less than 100 days in a year whereas
the typical inflow for raw material from
agriculture is within the range of 30-40 days
for each product.
•
The failure to build supply chain from the farm
to the consumer has prevented any incentive
The Tenth Plan schemes for Packaging Centre,
Integrated Cold Chain Facilities, Value Added Centre
and Irradiation Facilities have had a low response.
Only 12 cold storage/ chains, 3 Value Added Centers, 1
Packaging Centre and 4 Irradiation Facilities have been
supported under the four components during the Tenth
Plan so far. The weaknesses identified in these schemes
are as follows:
to invest in cold chain. Fruits and vegetables
Keeping in view the National Horticulture
Around 5 to 10 per cent of vegetables and fruits that
arrive at the Koyambedu wholesale market in the
city are wasted daily for want of proper temperaturecontrolled storage facilities, according to the traders.
The market receives around 3,000 tonnes of vegetables
every day. The arrival at the fruits market is anywhere
between 1,500 and 2,000 tonnes daily. A governmentrun cold storage facility is available near the market.
But its patronage is low as traders say that maintenance
of the facility is inadequate. Wholesale trader K. Ponraj
said if maintained properly the facility would help in
storing at least some amount of the excess produce
that arrives in the market. Such storage would also
help facilitate price stabilization. Vegetables such as
cauliflower, potato and green peas could be stored for
about a week. V. R. Soundararajan, one of the members
of the Koyambedu Market Management Committee,
said different vegetables and fruits have to be stored
at different temperatures. But, it is not being followed
properly at the cold storage facility. Traders also found
the timing of the facility inconvenient. While the bulk
of the business in the market takes place between 2 a.m.
and 5 a.m., the facility is open only after 7 a.m. As the
traders require the stocks from the cold storage before
2 a.m., not many patronize the facility, he said. The
cold storage, belonging to the Tamil Nadu Co-operative
Marketing Federation Ltd (TANFED), has a capacity to
•
are largely distributed and consumed in the
immediate vicinity of production centers,
requiring little cooling. It is only when
production is surplus to requirements that
processing is resorted to. (Source: 11th five year
plan report, Government of India)
Board’s Capital Subsidy Scheme for cold
storages, the MFPI’s assistance is limited to:
•
Cold storages for non-horticulture produce
•
Where the cold storage is an integral part of the
processing unit or of the common facilities in
the food park
•
Special type of cold storages with Controlled
Atmosphere/ Modified Atmosphere facility
•
Integrated solution for cold chain facility from
farm gate till consumer is missing. Since precooling units, mobile refrigerated transport
including reefer vans etc. have been excluded
from the scheme, complete cold chain facilities
without any break cannot be supported under
the scheme.
•
Exclusion
of
horticulture
produce
for
assistance under the scheme has created a gap.
Since 1999-2000, NHB along with NABARD,
NCDC and NAFED have been able to provide
assistance for cold chain facilities to the tune
of Rs. 273 Crores only, while the total need
for investments for cold chain facilities for
horticulture produce is envisaged at Rs. 2245
Crores during the Tenth Plan.
279
store 2,500 tonnes. Officials of the Federation said only
60 per cent of the facility is being used and about 300
customers patronize it. The produce is stored between
two degree Celsius and four degree Celsius according
to the requirements of the customers. The officials
complained that private cold storage plants are operated
by some of the traders in the market, resulting in low
patronage for the government-run facility. Traders said
that two or three such private facilities were available
to store mushrooms. (Source: The Hindu - Friday, Jun
25, 2010)
Most of the imported fruits have been received through
ship logistics. It takes normally one month of lead time.
This leads to reduction of shelf life and spoilage of
fruits. Spoilage due to this particular reason could not
able to determine, because cold storage people dispatch
all the imported fruits before their spoilage.
Most of the private cold storage people are doing job
work for the fruit suppliers and agencies. Hence demand
and supply for the private cold storage is more or less
equal. So wastage during storage due to lack of demand
is 0%. Some of the government based cold storage also
doing job work for the suppliers, agencies, whole sellers
and retailers on contract basis. Though it is job work,
wastage during storage in government cold storage is
around 5 to 10% per day due to poor maintenance.
4. Methodology
Researcher has collected list of 17 different fruit
processing industries and 23 cold storages in Tamilnadu.
Out of above sampling frame with 40 numbers,
researcher has collected data from 25 different people
of sample which includes 10 fruit processing industry
and 15 cold storages. Data have been collected through
telephonic interviews. Questions were asked based on
fruit wastages. Researcher has identified some sources
of wastages and the same were confirmed with empirical
data of the respondents. Respondents themselves also
have given some of the resources of fruit wastages.
After collecting the data, they were tabulated and
analyzed based on simple tool called average method.
Beaten spots in fruits could not able to identify in
raw stage. It is due to poor method of harvesting,
poor handling, careless transportation etc. During the
ripening process it will get directly decay without going
for ripening stage. This kind of wastage happening in
fruit processing industry is about 2 - 3%.
Shelf life of fruits in fruit processing industry’s cold
storage is very high. For example, one of the mango
processing industry is stored their raw materials (Mango
fruits) more than 18 months under -16°C temperature.
5. Findings
Wastage of fruits in cold storage and fruit processing
industry is 10 to 15% due to receiving of fruits with
poor quality of packages, beaten spots during harvesting
and post harvest handling and transportation of fruits,
careless handling during processing, manual processing,
peeling, seed removal etc.
Since most of the fruit processing industries are micro,
small and medium enterprises, they are doing most of
the process by manually. During manual peeling, some
quantity of pulp and flesh will stick with outer cover
layer of the fruits. Similarly, some quantity of wastage
is occurring during seed and some fiber removal stage.
Wastage due to manual process is coming around 5-6%.
Cold storages are receiving fruits from different parts
of India and they are importing some of the fruits
from different countries which are less available in our
country like apple, orange, grapes, strawberry etc. All
the cold storages are felt that domestic packages are
poor than the international packages. Spoilage of fruits
in international packages is just 1 to 2% whereas in
domestic package it is coming around 4 to 7%. Most of
the suppliers are not following the terms and conditions
of packaging methods and materials which used for
packing.
6. Discussions and Conclusion
As per our review of literature more than 72% of fruits
are getting waste in total production in India. Based on
our study, 10 to 15% of fruits are getting waste through
fruit processing industry and cold storage facilities. It is
very less with compared to total wastage. Major wastage
is occurring excluding these two areas. Researcher
is now suspecting that major wastage is occurring
before reaching in to the cold storage or lack of cold
storage facilities. Cold storages are dispatching their
280
7. References
1. The IUP Journal of 92 Supply Chain
Management, Vol. VII, Nos. 1 & 2, 2010
2. Articles Base SC #2720238, www.articlesbase.
com
3. Ministry of Agriculture report, Government of
India
4. Confederation of Indian Industry Fruit and
Vegetable Summit - 2008
5. A report on Indian Food Processing Industry,
Corporate Catalyst India
6. Eleventh five year plan, Report of the working
group on food processing sector, Ministry of
food processing industries, Government of
India, November 2006
7. The Hindu - Friday, Jun 25, 2010
8. Food Industry India - Online news magazine
9. Thaindian News – Online news portal
10. www.mofpi.nic.in
11. www.ibef.org
12. www.apeda.com
13. www.fao.org
commodities in two different ways. First one is that to
fruit processing industry. Second one is that, to market
for direct selling and consumption. This study clearly
states that, wastages in fruit processing industry are
very less. Hence there may be chances of wastages in
direct market. So finally researcher has concluded that
wastage of fruits might be happen in two different areas.
They are, before coming in to the cold storage (Poor
harvesting methods and equipments, Poor post harvest
handling, logistics and supply chain management and
lack of cold storage) and markets (suppliers, agencies,
whole sellers and retailers). Moreover it is confirmed
that, wastage in cold storage facilities and fruit
processing industry is very less. In contrast, they are
good resources for reduction of wastages through proper
storage and effective utilization of fruits. Though they
are good resources for reduction of wastages, they are
facing other problems like lack of technology and R&D
facilities. If these problems could be reduced, wastage
of fruits will become very meager in fruit processing
industry and cold storage.
281
An instrument for the measurement of Vendor
perceptions of software quality in Off shoring
K. Sankaran and G. Kannabiran
Department of Management Studies, National Institute of Technology,Tiruchirappalli
1. Introduction
software development, through a survey of leading IT
Services Company in India. The paper is organized as
follows. The review of previous research is presented
followed by research objectives and methodology, data
analysis and interpretation, followed by the discussion
on the relative importance of the determinants. The
paper is concluded with implications for practice and
directions for future research.
Many Indian software companies have become an
acclaimed “vendor” for offshore software development
projects due to their delivery capabilities, characterized
by quality and cost-effective software to the customers
across the globe. Predominantly driven by cost
considerations, increasing number of software projects
have been outsourced by organizations in the US and
Europe to firms in developing countries such as India
and China. In recent times, management teams of both
outsourcing and vendor firms have realized that cost
considerations, generally assumed to be the primary
reason for offshore outsourcing, need to be balanced
with the focus on high quality. In the past few years,
the Indian software industry has pursued the goal of
acquiring the highest standards of quality and has
thus created a strong value proposition in the software
and services arena. India has the largest number of
companies in the world that are certified for quality
standards According to NASSCOM (2006), over 440
Indian companies had acquired quality certifications
with 90 companies certified at SEI CMM Level
5 – higher than any other country in the world. This
demonstrates the maturity levels achieved in quality by
the Indian software industry.
2. Previous Research
The importance of software quality has been stressed
by researchers who observed that Software quality can
determine the success or failure of a software product
in today’s competitive market (Tian, 2004; Luftman &
Kempaiah, 2008). The need for quality management
in software projects becomes highly relevant in this
context and quality of software is receiving a great deal
of attention. Quality management is one of the methods
for reducing the cost of production, by eliminating
inefficiencies in the development processes. In an effort
to keep costs within budget and simultaneously to meet
the scheduled time of delivery, IT firms are adopting
various quality management practices (Harter et al.,
2000; Wali et al., 2000). The relevant previous research
relating to software quality and its determinants are
reviewed and presented in the following sections.
Researchers have reported that in view of the decreasing
cost advantages, Indian offshore vendors need to change
focus from ‘cost’ to the “quality” related measures of the
software services provided (Carmel & Agarwal, 2002;
Davis et al, 2006). Therefore, managing software quality
is very important in evolving strategy for both offshore
vendors and customers. It is observed that there have
been only few comprehensive studies on factors that
impact software quality; but quantitative survey-based
research is lacking on the subject (Verner & Evanco,
2005). Therefore, this paper empirically evaluates
the key factors that determine the quality in offshore
2.1 Software Quality [SQ]
Many definitions of software quality [SQ] are in
use, which in general agree on what quality means
and it can be enshrined by the phrase ‘satisfaction of
customer requirements’ (Xenos & Christodoulakis,
1997). SQ is a multidimensional measure, it is essential
to determine what aspects of quality are important to
organizations. There are essentially two approaches that
can be followed to ensure software product quality, one
being assurance of the process by which the product
is developed, and the other being the evaluation of the
282
quality of the end product. The state of the art in software
technology does not yet present a well established and
widely accepted description scheme for assessing the
quality of software products. Much work has been done
by a number of individuals to define a SQ model which
acts as a framework for the evaluation of attributes of
SQ (Behkamal et al., 2009).
the ability of a system to provide the required services
and functions, when used under specified conditions,
while reliability is an indication of the confidence
that the software will live up to the expectations.
Usability indicates the understandability of software
as well as the easiness to learn and operate it (Selfah
et al., 2006). Efficiency is related to the performance
of software and maintainability to the means provided
by the software to be upgraded and customized. In this
context, software process improvement (SPI) helps
to enhance maintainability of the software (Chen &
Huang, 2009). Finally, portability indicates the level
of adaptability/installability of a software product to
different environments, as well as its conformance to
related standards. In our research, since the attribute
portability is considered applicable only in software
products that need to be implemented on multiple
platforms (Glass, 1998), it was not included. Similarly,
efficiency attribute is viewed as an internal quality
attribute as it deals with time behavior and computing
resources consumed (Gorla & Lin 2010); thus, it was
substituted by ‘performance’ of the software in our
chosen list of software quality attributes. However,
these factors of ISO 9126 model are customized. For
example, desirable SQ attributes for web applications
are reliability, usability, security, availability, scalability,
maintainability, and time to market (Behkamal et al.,
2009).
Traditionally, SQ has been defined to be composed of
correctness, reliability, usability, and maintainability
(Dromey, 1995). Quality models have been developed
in the past, the most widely known of which being
McCall’s and Boehm’s, and more recently the ISO9126.
In 1991, International Organization for Standardization
introduced a standard named ISO/IEC 9126 software
product evaluation-Quality characteristics and
guidelines for use (Jovanovic & Shoemaker, 1997).
Finally, the ISO 9126 model follows the same approach
as the other two aforementioned models, with the
main difference being that the level of complexity is
lower here as the hierarchy is stricter that each quality
characteristic is related only to exactly one attribute,
with no common attributes between characteristics.
As per ISO 9126 standard, quality is defined as ‘‘the
totality of features and characteristics of a product
or service that bears on its ability to satisfy given
needs” (Agarwal & Chari, 2007). SQ has also been
defined (Boegh, 2008) in terms of two types of product
characteristics: (i) external quality (how the product
works in its environment), like usability and reliability,
and (ii) internal quality (how the product was developed),
such as, software structure and complexity (Gorla &
Ramakrishnan, 1997). External SQ attributes is being
emphasized as they have been already validated through
a study carried out in the recent past (Jung, 2007). A
recent study by Gorla and Lin, (2010) on determinants
of SQ through a survey of Information system project
managers has found that organizational factors are more
important than technical factors in impacting SQ.
3. Determinants of Software Quality: Vendor’s
Perspective
Based on a detailed review of relevant literature and
discussions with the project managers, it is found that
the software quality can be measured with the help of
six determinants: requirements uncertainty, technical
infrastructure, knowledge transfer and integration,
process maturity, trained personnel and communication
& control. Each of these determinants is examined in
the following section.
3.1 Requirements Uncertainty [RU]
Requirements uncertainty [RU] emerges from inability
to apply a standardized process to convert requirements
into functional specifications (Pressman 2005). Previous
studies (Nidumolu, 1995; Harter et al. 2000; Han and
Huang 2007) posit RU to be an important source of
According to ISO 9126 model, there are six major
characteristics, namely functionality, reliability,
usability, efficiency, maintainability and portability,
along with their associated sub-characteristics
(Andreou & Tziakouris, 2007). Functionality expresses
283
poor quality in software development. The effects of
RU are magnified in the offshore domain due to barriers
of geographical and organizational boundaries between
the client and vendor (Gopal & Koka, 2008). Therefore,
it may be considered that RU will affect the quality of
software in projects.
rework in software development (Harter et al. (2000).
Many researchers have endorsed the view that process
improvements are vital for improving software quality
(Bunse et al., 1998; Li et al., 2000). Higher level of
process maturity, invariably, results in the enhancement
of SQ (Subramanian et al., 2007).
3.2 Technical Infrastructure [TI]
3.5 Trained personnel [TP]
Technical Infrastructure [TI] is vital in the case
of software industries, where the technological
advancement is experienced at a very rapid pace and
its adaptation is mandatory for the very survival of
software organizations. Many researchers have found
obsolescence of technologies as the major risk faced by
software companies (Barki et al., 1993; Ravichandran
& Shareef, 2001). Exposure to latest technology and
availability of facilities, including latest hardware and
software infrastructure, play a crucial role with respect
to SQ.
Prior research has highlighted the importance of
personnel competence in developing high-quality
software. This effect should be particularly true in the
offshore development since there is always a supplydemand mismatch with respect to trained professionals
(Shah, 2004). Pressman (2005) observed that trained
programmers use better design techniques, are more
aware of the link between requirements and systems
parameters and are able to write better code. Experienced
personnel are also more capable in testing and defect
prevention activities, thereby resulting in better quality
and more productive use of resources (Krishnan et
al., 2000).In offshoring projects, the availability /nonavailability of trained personnel is further affected by
the continuity in the staffing of projects (Gopal and
Koka, 2008).
3.3 Knowledge Transfer and Integration
[KTI]
Knowledge Integration is defined as the process of
absorbing knowledge from external sources and
blending it with the technical and business skills, knowhow, and expertise that reside in the business and IS
units of a firm ( Okhuysen and Eisenhardt 2002; Tiwana
& Sambamurthy, 2003). Internal knowledge Integration
refers to the extent to which the development team
builds on the knowledge of the stakeholders during
the development process. External integration refers
to the knowledge relating to market needs, regulatory
constraints, external environment and business and
technical developments that may affect development
project (Prahalad & Krishnan 2002). Adopting the
development project as the focal point, both external
and internal integration are considered to be important
in achieving quality (Lyytinen et al.1998).
3.6 Communication and Control [CC]
Communication helps to provide better control of
processes, which in turn helps to improve quality (Bunse
et al., 1998). A control mode is a formal arrangement
practiced by both vendors and customers in software
projects facilitating the interaction among the teams.
According to (Gopal et al., 2002), communication and
control mechanisms in offshore development reduce
project uncertainty and thereby improve quality.
Communication helps to provide better control of
processes, which in turn helps to improve quality
(Bunse et al., 1998).
3.4 Process maturity [PM]
4. Empirical Validation of Software Quality
Management Constructs
Process maturity [PM] is defined as the indication of
how close a developing process is to being complete,
and capable of continuous improvement through
quantitative measure and feedback. It is observed that
quality improvement, cycle time and effort reduction
can be simultaneously achieved by fewer defects and
Measurement of the perceptions of the project managers
of vendors, followed by an empirical analysis of data
(by using reliable and valid instruments) is necessary
to identify the key determinants of software quality
management in offshore development projects, as
4.1 Methodology
284
perceived by vendors. A questionnaire survey is widely
acknowledged as an efficient tool for assessing the
perceptions of individuals on a particular subject. A
measurement model is specified for each construct,
and by using the data collected from respondents of the
questionnaire survey, a Confirmatory Factor Analysis
(CFA) is run for all constructs for checking convergent
validity, unidimensionality, and reliability of the
constructs.
prior work. The scale development has been based on
an exhaustive survey of literature, and a pilot study in
India (involving senior executives and project managers
in software companies, and academics working in the
area of quality management and software engineering),
so that the theoretical and conceptual relevance of the
constructs could be properly explained and critical
dimensions of the constructs could be identified. Thus,
the content validity, and face validity of the instrument
have been assured in the initial stages of questionnaire
development.
4.2 Development of Survey Instrument
For development of the survey instrument for the
research, we had interacted with the senior project
managers of various software companies to verify
the applicability of the various constructs used in our
study. First, a review was performed on questionnaires
published in the area of software quality management
that measured variables similar to those represented
in the hypotheses. Few questionnaires were identified
(Ravichandran and Rai, 2000; Rajendran et al.,
2006; Gopal and Koka, 2008) from which reliable and
valid questions were drawn and included as a part of the
proposed instrument. This benchmarking process was
aimed to reduce the risks of survey failure (i.e., to collect
data that may not consistently measure the variables). A
comprehensive research questionnaire was constructed
to measure the constructs in the proposed research model.
Items related to measure software quality attributes viz.,
Functionality, Reliability, Maintainability, Usability
and Performance were measured using a 5-point Likert
Scale (Strongly Disagree ,Disagree, Neutral, Agree and
Strongly Agree).
(2) Prior to a pilot test, the scales were pre tested by two
executives, selected from five different reputed software
firms, comprising of at least one project manager.
(3) A pilot study was conducted involving Senior
Managers, Project Managers and/or Leads from a
midsize software firm to further refine the scales and
develop a survey instrument. Based on inputs from
the respondents of the Pilot Study, the modified final
research questionnaire was designed.
The final research questionnaire was divided into three
sections.
Section A à related to general details regarding the
nature of software project like industry vertical,
duration, project team size (number of people deployed),
technology platform, country of the client and process
maturity level of the vendor.
Section Bà covered the software quality which
was further subdivided into 5 sub sections namely,
functionality, reliability, maintainability, usability
and performance , each carrying questions anywhere
between 4 –6.
Similarly, items related to measure the determinants,viz.
Requirements Uncertainty, Technical Infrastructure,
Knowledge transfer and integration, Process Maturity,
Trained personnel and communication & Control were
measured using a 5-point Likert Scale. To ensure the
correct comprehension of the terminology used and also
to level the participants’ understanding of the concepts,
a brief explanation of the research objectives was
provided at the beginning of the survey instrument.
Thus, basically, the scales of the constructs were
developed in following three stages:
Section Cà was pertaining to the independent
variables namely, requirements uncertainty, Technical
Infrastructure, knowledge transfer and integration,
process maturity, trained personnel and communication
& control; also, cost and time factors were included.
Each variable contained questions in the range
between4-9.
Personal details relating to the age, nature of job
assignment, experience and type of organization were
(1) The scales were based on those used and reported in
285
reliability of a measuring instrument. Of all the methods,
the internal consistency method is considered as the
most effective, especially in field studies. The internal
consistency is estimated using a reliability coefficient
called Cronbach’s alpha (α) (Cronbach, 1951). An
alpha (α) value of 0.70 or above is considered to be the
criterion for demonstrating strong internal consistency
of established scales (Nunnally, 1978). In the case
of exploratory research, alpha value of 0.60 or above
is also considered as significant (Hair et al., 1998).
Using the data collected from the respondents to the
survey, reliability of the constructs has been checked
by computing Cronbach’s alpha (α) value for all the
factors. The results are presented in Table 1. It can be
seen from the table that all the factors have Cronbach’s
alpha value above 0.70, which testifies the reliability of
the instrument.
also collected. The complete instrument consists of 64
items.
4.3 Validity of the Survey Instrument
First, a reliability analysis of the measure of each
variable was performed using Cronbach’s alpha.
Reliability of an instrument is defined as the extent to
which any measuring instrument yields the same results
on repeated trials (Carmines and Zeller, 1990). It refers
to the extent to which a variable or set of variables is
consistent in what it is intended to measure. If multiple
measurements are taken, the reliable measures will all be
very consistent in their values. Reliability differs from
validity in that the latter is concerned with how well the
concept is defined by the measure(s), whereas reliability
relates to the consistency of the measures (Hair et
al., 1998).There are several methods to establish the
Factor/Construct
No of
Items
Functionality
4
Reliability
4
Maintainability
6
Usability
4
Performance
5
Requirements UnCertainty
9
Technical Infrastructure
4
Knowledge Transfer and Integration
8
Process Maturity
6
Trained Personnel
4
Communication And Control
6
Cronbagh Alpha Value > 0.7 confirms reliability
* CFI=Comparative Fit Index >0.90 indicates
Unidimensionality
Cronbach
Alpha
CFI*
NFI**
0.75
0.79
0.85
0.81
0.80
0.71
0.79
0.81
0.88
0.70
0.82
1.00
0.98
0.98
0.78
1.00
0.99
0.99
0.99
0.99
0.95
0.99
0.99
0.98
0.98
0.78
1,00
0.99
0.99
1.00
0.99
0.94
0.99
** NFI=Normed Fit Index(Bentler-Bonnet Index) >0.90 indicates Convergent
Validity
4.4 Unidimensionality analysis
extent they share a common nucleus–the characteristics
to be measured (Nunnally, 1978). The concept of
‘unidimensionality’ enables to represent the value of
a scale by a solitary number. For unidimensionality
verification, a measurement model is specified for each
construct and Confirmatory Factor Analysis (CFA) is
run for all constructs. Individual items in the model
are investigated to see how closely they represent
the same construct. Computing the Comparative
Second, a confirmatory factor analysis (CFA)
was performed for each construct using principal
components. Unidimensionality refers to the existence
of a single construct/trait underlying a set of measures
(Hair et al., 1998). The most important and basic
assumption in measurement theory is that a set of
items forming an instrument measures just one thing in
common. Items within a measure are useful only to the
286
Fit Index (CFI) value for all the factors tests the
unidimensionality of the scale developed in the current
study. CFI value of 0.90 or above implies that there is
strong evidence of unidimensionality (Byrne, 1994).
Using the data collected from the respondents to the
survey, a Confirmatory Factor Analysis has been run
for all constructs for checking unidimensionality of the
constructs. The results are shown in Table 1. The results
indicate that all the factors have CFI value above 0.90,
which testifies the unidimensionality of the instrument.
offshore vendor. Considering the fact that there are only
very few empirical research initiatives in the past on
SQ linking the offshore development from vendor’s
perspective, our research has explored and identified
the key determinants which need to be addressed for
ensuring high quality software. Nevertheless, further
quantitative research may be undertaken to validate the
variables based on survey of more organizations from
IT Industry. Further, it may be interesting to extend and
carry out future studies from different stakeholders’
perspective, especially the quality personnel in the
vendor organizations.
4.5 Convergent validity
The evidence for ‘convergent validity’ is obtained when
a measure correlates well with other measures that are
believed to measure the same construct (Kaplan and
Scauzzo, 1993). Each item in a scale is treated as different
approach to measure the construct (Ahire et al., 1996).
In other words, convergent validity is the degree to
which various approaches to construct measurement are
similar (converge). Using confirmatory-factor-analysis
technique, the convergent validity can be checked by
computing a coefficient called Bentler-Bonett Fit Index
(BFI) which is also termed as Normed Fit Index (NFI).
A scale with BFI values of 0.90 or above is an indication
of strong convergent validity (Bentler and Bonett,
1980).Using the data collected from the respondents to
the survey, a Confirmatory Factor Analysis (CFA) has
been run for all constructs for checking their convergent
validity. The results of CFA are presented in Table 1.
It can be seen that all the measures have a BFI value
of more than 0.90, thereby demonstrating strong
convergent validity for each construct.
6. References
Due to space constraints, the details of references are not
included; however, interested persons may correspond
with [email protected]
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289
Factors Contributing to Perishability Iin Traditional
Fresh Produce Distribution System – A Study on Tomato and
Banana Chains in Andhra Pradesh
Dr.G.V.R.K. Acharyulu.,M.Tech.,MBA,PhD,
Reader, School of Management Studies, University of Hyderabad, Central University
Hyderabad AP, Inida
1. Introduction
processes to continue. As soon as produce is harvested
the processes leading to breakdown begin, and cannot
then be stopped. The rate at which breakdown occurs
can, however, be slowed up and losses minimized by
employing the correct handling methods after harvest.
Most fresh produce is highly perishable and if it is to
reach the consumer in the right condition it must be
marketed properly bearing in mind the most suitable
temperature and humidity for each commodity as
well as appropriate packaging and handling methods.
Failure to address these issues leads to stress to the
produce rapidly followed by spoilage and losses. The
enormous losses of fruits and vegetables produced in
the country are mainly because of the lack of proper
infrastructure for storage and transportation under
controlled conditions.
India is continued to be the world’s second largest
producer of fresh produce in last five year. It produced
68.4 million tonnes of fruits and 129 million tonnes
of vegetables in the year 2008-09 (IHD, 2009).
National horticulture mission statistics forecasts annual
production growth is at 8.8 percent for fruits and 10.9
percent for vegetables by 2015. A total consumption of
90 million tonnes of fresh produce is supplied through
7300 wholesale assembly markets and 27294 rural
weekly markets (Acharya, 2005). The consumption of
fresh produce is expected to reach 140 million tonnes
by 2015 (Kumar and Kumar, 2003). The research
revealed that the fresh produce accounts for 50 per
cent of the food and grocery bill (Kumar et.al, 2001).
It indicates there is an enormous growth opportunity in
fresh produce sector. India can become market leader
in world horticultural produce through the vertical and
horizontal integration of different components of the
supply chain.
Effect of Injuries: Injuries take many forms, including
cuts, punctures, scraping of outer surfaces, internal
and surface bruising, sunburn, heat damage and cold
damage. Their effect on harvested produce is to speed
up the rate at which water is lost by as much as five
times, to provide sites for attack by decay agents such
as moulds and bacteria, to increase the rate of heat
production at injury sites, to cause dis-colouration due
to internal damage and to cause off-flavours to develop.
The major issue in the supply chain is the inefficient
post-harvest management. Cultivable waste of about 24
to 40 per cent is reported due to the inefficiency and
the extent of losses of fruits and vegetables in India
is estimated at about Rs. 10,000 crore to 12,000 crore
per annum(Surabhi,2007). Approximately 20 per cent
of India’s fruit and vegetable produce goes waste on
account of the lack of cold chains. India has around
1,300 cold storage facilities, of which 50 per cent are
being used for potatoes and the rest remain underutilized
(CII, 2007).
Effect of Pests and Disease: Increase in post-harvest
decay occurs where produce is washed before packing.
Most moulds and bacteria causing decay require free
water to establish infection, particularly where injuries,
even though small, are present on washed produce and
the washing water is stagnant or recycled. It may also
be a problem where condensation occurs on the surface
of produce when it is moved from cold stores to high
ambient temperatures, or when produce is exposed to
rain after harvest. Produce saturated with water, from
rain or other causes may become ‘soft’ and more easily
2. Spoilage of Fresh Produce
The fruits, vegetables and root crops are still alive
after the harvesting process. They contain 65 to 95
percent water, depending on the type of produce.
They also contain food materials which enable living
290
damaged than when dry. This damage not only provides
opportunity for infection by decay agents but may in
itself leave unsightly surface damage, leading to downgrading and lower prices. This is often seen in citrus
fruits, where fruit harvested when wet develop the skin
blemish. It may not always be possible to keep produce
dry but field-men should avoid harvesting freshly wet
produce.
The data is collected from the AMCs that are located in
the selected districts where the respondents participate
in the fresh produce distribution activity.
5. Description of Variables
Perishability (y): Perishable products are those that
worsen in quality over time, and become lesser in value.
Perish able goods decay rapidly, if preservation and
pre-cautionary technique is not employed. Common
perishable goods include foods, plants and agricultural
products. Fruits and vegetables are examples of time
and temperature-sensitive perishable products that can
rot or spoil easily. Perishable products must be handled
and transported by highly efficient distribution channels
that can retain the integrity of the produce.
3. Rationale of the Study
The present study is aimed to identify the various
factors that contribute to the perishability of fresh
produce which are caused during logistic operations in
fresh produce distribution. These activities are mostly
human and material oriented and gives a scope for
damage to fresh produce. However many other factors
contributes to the perishability of fresh produce, the
existing activities taken for the study are purely concern
with the logistic and supply chain related. The study
reveals most contributing factors to perishability using
regression model so that the spoilage of fresh produce
can be minimized using appropriate mechanism and
hence the overall supply chain is strengthened.
Perishability (Y) =
Independent variables (x1 to x9): Perishability of the
fresh produce will influence with the operational
variables such as care during transportation, use of
plastic crates, removal of foreign bodies, condition
of road, safety packaging, cleaning and washing, and
foreign bodies.
4. Methodology
This study is causal in nature and relies on survey
method. Andhra Pradesh is chosen for this purpose based
on the contribution its share in terms of production and
growing area to the national agriculture sector in last
ten years and it is also one among the top five produces
of banana and tomato states in the country. The study
examined the banana and tomato chains which are more
susceptible to the spoilage in distribution operations.
The study is conducted in three districts for each produce
namely, Krishna, Chittoor and Ranga Reddy for tomato
and East Godavari, West Godavari and Chittoor for
banana. These districts are selected on the basis of Area
and production of tomato and banana during 19992009. A total sample size of 305 farmers, 62 traders
and 120 retailers are drawn from the population.
•
Different questionnaires are designed for data collection
from the target respondents such as farmers, traders and
retailers to obtain views and level of agreement on the
factors pertaining to fresh produce spoilage during the
supply chain operations on Likert’s five-point scale.
•
X1- Damaged during the harvest by the farm
men (PR_farm_men).
•
X2- Road conditions causes the physical
damage to the fresh produce
(PR_physical_damage),
•
X3- Lack of effective packaging (PR_lack_
packaging),
•
X4- Non saperation of living organism like
Bacteria, Fungus, insects etc.
(PR_living_organism),
•
X5- Non-removal of foreign bodies causes
perishability (PR_foreign_bodies),
X6- Lack of plastic crates during the
transportation (PR_plastic_crates),
•
X7
- Lack of cleaning and Washing (PR_
washing),
291
•
•
X8- Lack of enough care while the loading
exists positively with the coefficient value ranging from
and loading (PR_care_load_unload),
0.6 to 1.0 among independent variables. It indicates
that there is no multi-collinearity among the variables.
X9- Lack of effective care during road
Consequently, a multivariate statistical technique,
transport (PR_packing_perishability),
multiple regression method is applied to analyze the
data. The enter method is adopted for the running of
Prior to the carrying out of regression model, the
Regression model. From multiple regression analysis it
Pearson’s correlation statistic has been run to determine
is observed that Eigen values in the multi-colinearity
the variability among the independent variables.
The following correlation matrix table (Table 1) has
diagnostic matrix found to be more than 1.0 for all the
been generated. The Pearson correlation co-efficient
variables hence no independent variable is dropped
indicates that there is no incidence of strong correlation
from the multiple regression model.
Table 1: Correlation
Perishability
Farm_
men
Physical_
damage
Lack_
packaging
Living_
organism
Foreign_
bodies
Plastic_
crates
Washing
Care_
load_
unload
Packing_
perishability
Perishability
1
Farm_men
.623*
1
Physical_
damage
.732*
.346**
1
Lack_
packaging
.639*
.299**
.124*
1
Living_
organism
.783*
.118*
-0.08
0.04
1
Foreign_
bodies
.682*
.145*
0.098
0.013
.168**
1
Plastic_crates
.823*
.328**
0.086
.167**
.234**
0.04
1
Washing
.648*
0.091
0.09
0.03
.181**
.247**
0.007
1
Care_load_
unload
.776*
0.035
0.075
0.063
0.02
-0.025
0.059
-0.103
1
Packing_
perishability
.603*
0.056
-0.015
0.004
.120*
0.042
0.003
0.085
-.212**
1
The model summary table indicates what predictors
are relevant for the R and R2. The word “constant” in
parentheses refers to the intercept. The coefficient of
multiple determinations is 0.883; therefore, about 78
percent of the variation in the perishability is explained
by its quadratic relationship with the predictors which
cause perishability. The regression equation appears to
be very useful for making predictions since the value of
R2 is close to 1. From the table 2, Durbin–Watson value
of 1.841 indicates there is no autocorrelation among the
independent variables.
292
Table 2: Model Summeryb
Model
R
R Square
1
.773a
.659
Adjusted
R Square
.635
Std. Error of the
Estimate
.286
Durbin-Watson
2.058
a. Predictors: (Constant), PR_packing_perishability, PR_lack_packaging, PR_farm_men, PR_plastic_crates, PR_
care_load_unload, PR_physical_damage, PR_living_organism, PR_foreign_bodies, PR_washing
b. Dependent Variable: Perishability
The table 3 below shows the “ANOVA table” for the
degrees of freedom. These are called the numerator and
regression. ANOVA stands for Analysis Of Variance
denominator degrees of freedom of df1 and df2. Here
specifically the analysis of variation in the Y scores. At
the numerator df (df1) tells us how many predictors we
this point we observe the two sums of squares introduced
have (it is 9) and the denominator degrees of freedom
in class the regression and residual (or error) sums of
are n - 1- df1 or n-2 for bivariate regression. The table
squares. The variance of the residuals (or errors) is the
provides us with the data that need to compute R2. If we
value of the mean square error —here it is .085. Also
compute SS-regression divided by SS-Total, we should
in this table we find the F test. This tests the hypothesis
get R2.
that the predictor (here our only predictor) shows no
SS (Sum of the squares)-regression / SS (Sum of the
relationship to Y. The F test has two numbers for its
squares)-Total = 88.745/ 113.751 = .780
Table 3: ANOVAb
Model
1
Sum of Squares
df
Mean Square
Regression
6.337
9
.704
Residual
4.260
52
.082
10.597
61
Total
F
Sig.
8.595
.000a
a. Predictors: (Constant), PR_packing_perishability, PR_lack_packaging, PR_farm_men, PR_plastic_
crates, PR_care_load_unload, PR_physical_damage, PR_living_organism, PR_foreign_bodies, PR_
washing
b. Dependent Variable: Perishability
The table 4 provide a full of information about the
model. In which we find the slope (or slopes, in multiple
regressions). The values of Constant and Predictors are
listed as ‘unstandardized’ values, and their standard
errors (Std. Error) and SE (Beta) are in the second
column. The standardized coefficient for the predictor
in a multiple regression is simple the correlation. Since
neither of the predictor variables has a variance inflation
factor (VIF) greater than 10 (All VIFs are less than 2),
there are no apparent multi-collinearity problems; in
other words, there is no variable in the model that is
measuring the same relationship/quantity as is measured
by another variable or group of variables. From the table
4, the multiple-regression model is depicted as:
y = .473 + 0.136 x1 + 0.054 x2 + 0.100 x3 + 0.122
x4 + 0.055 x5 + 0.141 x6 + 0.118 x7 + 0.046 x8+
0.073 x9
293
Table 4: Coefficients
Model
(Constant)
PR_farm_men
PR_physical_damage
PR_lack_packaging
PR_living_organism
1
PR_foreign_bodies
PR_plastic_crates
PR_washing
PR_care_load_unload
PR_packing_perishability
a. Dependent Variable: Perishability
Unstandardized
Coefficients
B
.473
.136
.054
.100
.122
.055
.141
.118
.046
.073
Standardized
Coefficients
Std. Error
.306
.037
.037
.037
.036
.045
.033
.044
.042
.042
t
Sig.
Beta
.336
.136
.271
.318
.129
.414
.285
.103
.174
1.547
3.688
1.451
2.742
3.381
1.212
4.290
2.679
1.095
1.715
.128
.001
.153
.008
.001
.231
.000
.010
.278
.092
Collinearity
Statistics
Tolerance
VIF
.932
.884
.793
.873
.687
.830
.685
.873
.752
1.073
1.131
1.261
1.146
1.455
1.205
1.460
1.146
1.330
It is clear that Road conditions causes the physical
damage to the fresh produce (PR_physical_damage),
Non-removal of foreign bodies causes perishability
(PR_foreign_bodies), Lack of enough care is not taken
while the loading and loading (PR_care_load_unload)
and Lack of effective care during road transport
(PR_packing_perishability) are showing insignificant
effect on the perishability of the fresh produce as their
probability value are higher than the acceptable limit
of 0.05.
of these issues by optimizing quality, safety and by
reducing waste. Effective post-harvest management
requires adequate and appropriate cooling and packing
facilities, hygienic and speedy transportation, careful
handling and adequate environment control. This
includes aspects such as appropriate temperature,
relative humidity, ventilation and sanitation. Difference
in prices between the farmer and the retailer is highest
in India when compared with other countries.
It is concluded that from the table 4, which indicates the
significant values of predictors that affect the dependent
variable. It is found that Damaged during the harvest
by the farm men (PR_farm_men), Lack of effective
packaging (PR_lack_packaging), Non saperation of
living organism like Bacteria, Fungus, insects etc.
(PR_living_organism), Lack of plastic crates during
the transportation (PR_plastic_crates), and Lack of
cleaning and Washing (PR_washing) variables falls
under the impacting as their probability values .001,
.008, .001, .000 and .010 respectively
1. Acharya S.S (2005), Agriculture marketing and
rural credit: Status, Issues and reform agenda,
‘Area, Production and Yield of Principal
Crops in India’, Directorate of Economics and
Statistics, Ministry of Agriculture
7. References
2. “CII- Cold Chain Summit 2007”, organized
jointly by Ministries of Agriculture and Food
Processing Industries and the CII, March 2021, 2007, CII, New Delhi
3. Indian Horticulture Database (2009). National
Horticultural Board. Ministry of Agriculture,
Government of India.
6.Conclusion
The proper integration of post-harvest technology
into marketing supply-chain is critical. Post-harvest
management not only means reducing waste but also
maintaining the quality but also aim to address some
4. Kumar, Praduman and Promod Kumar (2003),
Demand, Supply and Trade Perspective of
Vegetables and Fruits in India,” Indian Journal
of Agricultural Marketing, Vol 17(3): 121-130.
294
5. Kumar, P. and Donato B. Antiporta. (2001).
Expenditure and price elasticities of food and
non-food consumption by income groups:
region-wise analysis of India. Working Paper.
FAO/RAPP. Bangkok.
6. Surabhi Mittal (2007). “Can horticulture be a
success story for India?” Indian Council for
Research on International Economic Relations
295
Panorama of a Strategic Alliance on Arbitrator Logistics A Peep Into The Chennai Porttrust
Mr.R. Venkatajalapathy, MBA, (Ph.D)
Lecturer, Hallmark Business School, Tiruchirapalli
&
Dr. B. Balamurugan
Director, Hallmark Business School, Tiruchirapalli
I. Introduction
based 3PL provider does not own such assets, and
usually relies on sub-contractors’ assets. Examples of
non-asset 3PL providers include forwarders, brokers,
marketing companies, and information system
management companies.
Second, the service of 3PL is contract-based. Recently,
a contract was written about the way to share
responsibilities assuming various situations in detail.
Such strict contract would make reliable relationship
between the parties, and strengthen the alliance.
Third, offering consulting-serv ices to the firms is an
important feature of the 3PL. The 3PL provider can
make various advises to answer customers’ requirements
concerned with marketing strategy, information system
configuration, cooperative transportation, etc.
There are several instances where the logistics system
has become the cause of bottlenecks in the firm’s
overall management. The potential for reducing total
cost and for improving the quality of services provided
to customers can be increased through the elimination
of these bottlenecks. Also, from the social standpoint,
an efficient logistics system could offer possibilities to
reduce road congestion and environmental pollution,
which could result in increased macroscopic economic
productivity.
2. 3PL and its functions
Originally, 3PL means outsourcing logistics activities
including transportation and warehousing to outside
firms, which are not a consignor or a consignee.
However, it is not common 3PL practice to outsource
a single activity of logistics independently, but to
outsource multiple activities from the firm’s strategic
point of view.
3PL (or 3PL provider) has the following features at
present:
1. Integrated (or multi-modal) logistics service provider
2. Contract-based service provider
3. Consulting service provider
First, a 3PL provider is regarded as an integrated
logistics service provider. IT-related activities for
controlling goods flow such as order processing, and
inventory management, among others are also included
in the function of the 3PL provider. However, the 3PL
provider need not provide all the services solely. The
3PL provider can outsource some activities to subcontractors.
3. Theoretical Framework
Earlier literatures based on third part party logistics,
consider IT as a key factor in the selection of a logistics
provider, as it enables coordination across organizational
boundaries, integrate suppliers and customers existing
to achieve newer levels of effectiveness, efficiency and
productivity. (Aghazadeh, 2003; Colson & Dorgio,
2004; Moberg & Speh, 2004; Anderson & Norman,
2002, Lynch, 2000; Langley et al., 2002; Babban &
Prasad, 1998).
On Time Delivery is another key aspect a prospective
logistics user needs to analyse before making the
selection. (Mc Ginnis., et al.,1995 & Menon et al.,
1998; Effendgil et al., 2008; International Warehouse
Logistics Association survey, 2003; Stock et al.,1998;
Galtorma & Walters, 1996). Reliability of the firm on
the basis of its duration in the logistics business is past
performance are key indicators in its selection. (Murphy
& Daley, 1997; Effendgil et al., 2008; International
Warehouse Logistics Association survey, 2003; Simchi
& Levi et al., 2000)
A 3PL provider can be classified into the asset-based
and the non-asset-based. The asset-based 3PL provider
owns some assets, particularly transport-related assets
such as trucks, warehouses, etc., while the non-asset296
Performance standards and the quality level of service
that helps in achieving competitive edge in the market.
provided by the 3PL provider are key elements that are
(Effendgil et al., International Warehouse Logistics
taken into key consideration(Mc Ginnis., et al.,1995
Association survey, 2003; Stock et al.,1998; Tam &
& Menon et al., 1998; Meade & Sarkis (2002);
Tummala (2001). Financial Stability of the 3PL is a key
International Warehouse Logistics Association survey,
factor that goes in its favour; if the firm is financially
2003; Razzaque & Sheng (1999), Thompson(1996),
strong it can weather the hard economic downturns
Langley et al., (2002). Geographical Reach of the
with ease. (Mc Ginnis., et al., 1995, Burt et al., (2004),
logistics provider helps in providing to services to
Anderson & Norman (2002) Boyson et al., (1999).
various parts of the world in the most effective way.
Finally the level of customer satisfaction provided by
(Colson & Dorgio, 2004; Lieb & Maltz, 1999; Boyson
the 3PL provider in the past is another key factor thats
et al., 1999.Also the 3PL’s ability to provide assistance
considered before making the final selection of the 3PL
with the customs helps 3PL’s clients in easy shipment
provider. (Effendgil et al., Murphy & Daley, 1997;
of goods. (Simichi Levi et al., 2000) Unit Operation
Leahy et al., (1995).
Cost is another key factor in the selection of 3PL as
Table 1: Reliability Coefficients for the constructs (α value)
Sr.no
Dimensions Reliability
Coefficients
1
Strategic Partnership
0.841
2
Reliability
0.874
3
Performance Standards
0.835
Sr.no
Dimensions Reliability
Coefficients
5
Inventory
0.843
6
IT
0.765
7
Customer Satisfaction
0.884
297
4. Methodology
5. Analysis and Discussion
For the purpose of studying the objectives and to test the
hypothesis, a questionnaire was used as an instrument
to collect the data. The questionnaire had two parts: the
first part to measure the profile of the company, second
part to measure the constructs designed. The constructs
in the second part captured the factors that part a key
role in the selection of a third part logistic provider.
Strategic Alliance/Partnership is the key objective of
the project, they are analysed against the independent
factors.
The data collected from the respondents was tabulated
and analysed using appropriate statistical techniques in
the research methodology.
The summary statistics such as average score and
standard deviation are performed for the relevant
variables to find the level of opinion/ agreement of the
respondents on various issues related to the study. The
opinion was put under the five points scaling similar
to Likert scaling. The results are represented in the
following tables with suitable interpretation.
The population for the study was taken from the state of
Tamil Nadu. The sample was selected using systematic
sampling technique. The total number of respondents
to the questionnaire distributed to the various logistics
service providers was seventy five. The reason for
selecting the state Tamil Nadu for the purpose of
research were, (1) it had large number of logistics
companies with high expertise in the field, (2) Since the
investigator is in Tamil Nadu it is convenient to collect
the data in these regions, (3) More significantly the
cities in Tamil Nadu have a distinction of being Alpha.
Traditionally, the Cronbach α coefficient (Cronbach,
1951) has been used to evaluate reliability. The alpha
values for the various dimensions are shown in the
Table 1. So the items constituting each variable under
the study have reasonable internal consistency.
The table 2 describes the level of agreeability of the
respondents on the various factors that play a key role
in setting up a strategic partnership between a firms
looking for a 3PL service provider for the purpose of
gaining a key competitive edge.
It is found that the 3PL providers lay high importance on
providing service of the highest quality to their clients
(4.27), also they do give due importance in passing on
information about the whereabouts any irregularities
at the earliest t their clients (4.08), also most of the
3PL’s strive for a long term relationship with their
clients(4.00). The other important results from the
research are that most believe in value based business
transactions with their partners (3.99).
Table 2: Summary Statistics- Key for Strategic Partnership
S.no
Average Standard
Score
Deviation
Factors Considered
Strategic Alliance
1
You strive for a long term relationship with your customers
2
You believe in value based business transactions with your
3.99
partners
0.923
3
You believe in providing service to your partners of highest
4.27
levels
0.92
4
You lay high importance for your client’s growth
1.115
298
4
3.8
0.637
5
You play an active role in planning and goal setting of your
2.71
partners
0.653
6
You are willing to share the risk associated with the
3
transportation of our goods
0.637
7
In case of any irregularities in delivery of goods, in situations
like this information would be passed on to your clients on 4.08
high priority basis
0.712
8
Valuable inputs would be constantly given by you to improve
3.39
your clients business
0.914
9
You help client to increase, “just in time capabilities”
0.807
3.41
They do lay high importance on clients growth (3.8) and they have started incorporating practices such as just in time
capabilities (3.41) thus providing their clients strategic edge. The least role the 3PL’s play are in the planning and goal
setting of their clients ( 2.71). Thus we conclude that the basis for a strategic partnership is providing service of the
highest quality level to their client’s
The table 3 shows the agreeability of the respondents on the various factors that influence strategic partnership
between the firms and 3PL service provider.
Table no.3: Summary Statistics- Factors affecting strategic partnership
S.no
Av e r a g e S t a n d a r d
Score
Deviation
Factors Considered
On Time Delivery
10
11
12
13
You deliver goods as per the set time limit
The top management of your firm place high importance on delivering the
goods on time
You have adequate measures to come up with alternatives to meet our business
requirements in case of any accidents
In the past one year how many times have you missed in meeting the delivery
target?
4.07
0.844
3.99
1.02
3.77
0.764
3.17
1.083
3.57
1.232
3.77
1.088
Reliability
14
15
You make constant technological changes to provide the competitive edge
through your clients
You have constantly provided services of the highest level to your clients in
adverse condition
299
Performance Standards
16
TQM is in practise in your organization, for focusing on meeting all your
client’s meets
3.29
0.653
17
Your firm is ISO Certified
3.4
0.944
18
You have the capacity to provide services to a stateless enterprise
2.99
1.3
Geographical Reach
20
You have a global presence in all parts of the world
3.79
0.89
21
You have local offices in international countries
3.89
1.047
22
You have facilities for allowing cross docking
3.91
0.947
Inventory
26
You are ready to provide insurance cover for the goods that you transport
3.88
0.716
27
You have perpetual review of the inventory present in the warehouse
3.51
0.828
28
You provide quick response to replenish inventory
3.69
1.139
Information Technology Systems
29
You have advanced planning and scheduling (APS) systems for logistics
application
3.77
0.894
30
You use electronic product code (EPC) for product identification
3.89
0.847
31
You use EDI Transaction sets for the purpose of communication
3.68
0.918
32
You have a well developed ERP system in place in your firm
3.99
1.133
Customer Satisfaction
38
You have a proper system of handling customer complaints
3.92
0.693
39
Your firm gives high preference in resolving customer grievances
4.23
0.606
40
You bring in necessary changes based on the suggestion given by
4.11
the customer
0.815
300
On Time Delivery is one of the key factors that goes in
the selection of a 3PL, the respondents agree majorly
to this (4.07). Also the Services in adverse condition
to clients acts an important factor in the selection of
3PL, the respondents agree majorly to this (3.77),
ISO certification plays a key factor in determining
the standards. The respondents agree majorly to this
(3.4), Facilities for cross docking is a key factor in the
selection of a 3PL. The respondents majorly agree to
this (3.91), Insurance cover for the goods is a key factor
in the selection of a 3PL. The respondents agree to this
(3.88), ERP system in IT is a key factor in the selection
of a 3PL. The respondents agree to this (3.99) AND
Resolving customer grievances is a key factor in the
selection of a 3PL. The respondents majorly agree to
this (4.23)
The Table 4 below shows the factors influencing
strategic partnership significantly that need to be
considered before selecting the 3PL. The R- square
value is .996 and the adjusted R- square value is .995
with the standard error estimate at .03767.
Table 4: Summary Statistics- Influence of Factors on Strategic Partnership
Sr.no Factor
Standardized
t-value
Coefficients
P-value
P-value
Significant/Not
Significant
1
On Time delivery
0.661
44.323
2.26 E-51
0.001
S
2
Reliability
-4.89
-19.229
5.60 E-29
0.002
S
3
Performance
Standards
0.444
27.778
1.73 E-38
0.000
S
4
Geographical Reach -5.24
-31.367
8.95 E-42
0.000
S
5
Inventory
0.012
0.395
0.6939
0.694
NS
6
ITs
0.771
17.924
2.91 E-27
0.001
S
7
Customer
Satisfaction
0.535
52.313
4.65 E-56
0.000
S
S- Significant (p-value ≤ 0.05; NS- Not Significant (pvalue >0.05)
It is found from the table 4 that it is significant in six
factors and in case of inventory it is significant. It is
concluded that strategic partnership is greatly influenced
by on time delivery (.001), reliability of the 3PL firm
(.002), performance standards (.000), geographical
reach of the 3PL (.000), IT’s (.001) and customer
satisfaction of the 3PL service (.000). The F- value of
the regression test is 2238.878, and the significance
value i.e. p- value 8.24e-077.
Thus we conclude that the six factors: On time
delivery, reliability of the 3PL, performance standards,
geographical reach, IT’s and customer satisfaction
affects the strategic partnership between the 3PL
provider and its client.
6. Major Findings
The findings of the research bring to light the key
factors that play a key base in the selection criteria of
the 3PL. The main reason a firm opts for a 3PL is set up
a partnership, a partnership that will provide it with a
real competitive edge over its competitors. The research
301
References:
(1) Aghazadeh S.M. (2003), How to choose
an effective third party logistics provider?,
Management Research News, Vol. 26, No. 7,
pp. 50-58.
tested several factors before concluding on major six
factors that are important in the selection of a third party
logistics provider.
The data collected through the questionnaire was tested
using regression analysis that showed the significant
amount of influence that the six factors have on
strategic partnership between two parties. If a firm
wants to achieve its organisational goals that aim at
high profits year after year they need to start by having
a proper system in place and select the best logistics
service provider for their needs, this research has laid
down the key to their selection and they include: on
time delivery, reliability of the 3PL firm, performance
standards, geographical reach of the 3PL, IT’s and
customer satisfaction of the 3PL service.
(2) Aissaoui N., Haouari M., Hassini E. (2007),
Supplier selection and order lot sizing
modelling: a review, Computers & Operations
Research, Vol. 34, No. 12, pp. 3516-3540.
(3) Colson G., Dorigo F. (2004), A public
warehouse selection support system, European
Journal of Operational Research, Vol. 153, No.
2, pp. 332-349.
(4) Efendigil T., Önüt S., Kongar E. (2008), A
holistic approach for selecting a third-party
reverse logistics provider in the presence
of vagueness, Computers & Industrial
Engineering, Vol. 54, No. 2, pp. 269-287.
7. Conclusion:
The issues that challenge businesses today are Rapidly
rising fuel costs, the globalization of the supply chain,
new security threats, and pressure to be both dynamic
and environmentally and socially responsible are forcing
companies to be innovative and strategic in their supply
chain design and execution. Outsourcing of logistics
can be considered as a great option. It has become clear
that the combination of a willing company and a capable
3PL can result in outcomes far beyond what are initially
perceived as the benefits of outsourcing. A well-run 3PL
brings a multi-company, cross-industry perspective and
array of skill sets and systems to the table, which can
be leveraged by customers with a collaborative mindset
and an understanding of how to best complement their
own capabilities with those of a 3PL.
(5) Hertz S., Alfredsson M. (2003), Strategic
development of third party logistics providers,
Industrial Marketing Management, Vol. 32,
No. 2, pp. 139-149.
(6) Leahy S., Murphy P., Poist R. (1995),
Determinants
of
successful
logistical
relationships:
a
third-party
provider
perspective, Transportation Journal, Vol. 35,
No. 2, pp. 5-13.
(7) Weber C., Current J., Benton W. (1991), Vendor
selection criteria and methods, European
Journal of Operational Research, Vol. 50, No.
1, pp. 2-18
302
Analysis of Quality of Work Life (QWL) and perceived
public image among the Teachers of Dindigul, Tamil Nadu
A.Sabarirajan, N.Geethanjali, D.Lavanya
1. Introduction
promote and instigate easy communication amongst
their students, promoting good class rapport. Effective
teachers make purpose and content explicit, plan
carefully, use systematic assessment and feedback,
make connections, encourage students to think about
thinking and model what they want the students to do,
in addition to giving clear instructions. A teacher also
should look outside the box in an effort to teach her
students. She should look for unconventional ways to
reach a student who for some reason is not learning the
conventional way.
The value of knowledge is different in every culture
but good basic education is important in every culture.
The role of teachers in the student’s life is very crucial
as they lay the foundation for developing their nature
and personality. Today in the fast moving world more
and more children are living in the household where
both the parents are working, these children rely on
their teachers for help, advice and guidance therefore a
visionary teacher can play a prominent role in making
the future of their students. Teachers are one of the main
pillars of a sound and progressive society (Campion
College, 2009).A teacher transcends the act of merely
passing knowledge and disciplining the student. A
proactive teacher can direct a student to lead a fulfilling
life beyond the successful career.
Due to these high expectations teachers are subject to
high stress level which has been supported by various
studies. “In a survey assessing the stress levels of various
jobs by the Health and Safety Executive, teaching came
out top”. “The report, The Scale of Occupational Stress:
further analysis of the impact of demographic factors
and type of job, published in 2000, found that 41.5%
of teachers reported themselves ‘highly stressed’,
while 58.5% came into a ‘low stress’ category, while
36% of teachers felt the effects of stress all or most of
the time.” This is indeed an alarming state and visibly
also the biggest reason for school teachers quitting at
a very high percentage or seeking professional help
to fight back stress. Quality of work life (QWL), and
employee job satisfaction, are increasingly being
identified as progressive indicators related to the
function and sustainability of business organizations.
The rising complexity of the competitive business
world and the cumbersome process of implementing
effective social laws make ethics a suggested strategic
factor in protecting companies from unwanted disasters
(Beauchamp & Bowie, 2004; Carroll & Buchholtz,
2006; Ferrell, Fraedrich, & Ferrell, 2008). In parallel
to the importance of ethics; QWL and job-related
outcomes such as job satisfaction or organizational
commitment have been issues associated with human
The teachers must provide a wonderful learning
environment for the children, teach them how to interact
with others and help them with their daily needs. A
teacher will instruct them in basic educational programs,
teach them to be creative and provide them with a safe
and caring environment to learn and grow. A teacher
must also prepare creative activities for the children to
complete each day. It is important that creativity is a
big part of the school experience and the teachers will
prepare various activities for the children to engage in.
A teacher must also monitor their development. It is
important to know which children are doing fine and
which ones may need a little extra help. This will be
done by monitoring progress and making notes of the
progress of each child.
A teacher must be professional yet sympathetic to
the student needs. He\ She should Posses an in-depth
knowledge on the subject. A good teacher transmits
their passion for the subject onto their students in an
interesting, clear and concise manner. They must
303
resource (HR) and organizational development (OD)
since the beginning of 1960s (Cummings & Worley,
2005; Leopold, 2005). Writings and research works
in management, HR, and OD often link QWL and
job-related outcomes to ethics, productivity, corporate
social responsibility, or organizational performance
(Cascio, 1998; Cummings & Worley, 2005; Dess,
Lumpkin, & Eisner, 2007; Lau & May, 1998; Leopold,
2005; Walker, 1992; Wheelan & Hunger, 2006; Yorks,
2005). Brenner (1992) suggested the explicit parts to
be a code of ethics, policy manuals, employee training
programs/materials, ethics seminars, management
speeches, internal control systems, and ethics staff.
H2: There is a significant difference between the
expectations and QWL attributes in work environment
for both male and female teachers
H3: there is a significant difference between
the perceptions of male and female teachers about QWL
The samples consisted of 100 teachers from various
schools located in Dindigul city comprising of 75 male
and 25 female teachers. All of them were graduates. A
structured questionnaire was prepared and it consists of
attributes checklist to measure their perceptions about
public image, a scale measuring their quality of work
life. The detailed description of the study is given below.
The respondents were presented with 12 attributes
having equal number of positive and negative
components. The positive attributes were responsible,
intelligent, helpful, honest, trustworthy, and dedicative.
The negative attributes were selfish, lazy, money
minded, inefficient, corrupt, and argumentative. The
respondents were asked to describe their public image
through a five point Lickert scale. Score 1 given for the
opinion never perceived. Score 5 given for the opinion
always perceived.
Regarding quality of work life of teaching profession,
it is difficult to best conceptualize the QWL elements
(Seashore, S.E., 1975.). (Walton, R.E.,1975.) proposed
eight major conceptual categories relating to QWL as
(1) adequate and fair compensation, (2) safe and healthy
working conditions, (3) immediate opportunity to use
and develop human capacities, (4) opportunity for
continued growth and security, (5) social integration
in the work organization, (6) constitutionalism in the
work organization, (7) work and total life space and (8)
social relevance of work life. Several published works
have addressed the constructs that make up the QWL
domain and key elements of QWL programs, Others
such as (Pelsma et al.) and (Hart, P.M., 1994.) found
that psychological distress and morale contributed
equally to teachers’ QWL. They determined that in the
work climate of an occupation, QWL can be assessed
by combining the amount and the degree of stress and
the degree of satisfaction experienced by the individual
within his/her occupational role. (Winter, R., 2000.)
Viewed QWL for academicians as an attitudinal
response to the prevailing work environment and posited
five work environment domains that include role stress,
job characteristics, and supervisory, structural and
sectoral characteristics to directly and indirectly shape
academicians’ experiences, attitudes and behavior.
Based on our review of literature, the following
hypothesis was formulated.
3. Measurement of quality of work life
To measure the quality of work life QWL survey
questionnaire of Dhaval and Uyas (1997) which
consists of 21 dimensions, was used. The respondents
were asked to respond for all the dimensions regarding
its importance and its availability in their work life by
using licker 5 point scale.
A brief descriptive about the 21 dimensions are given
below.
1) Acknowledgment:
Recognition
for
the
performance.
2) Challenge: An opportunity to achieve more
and more in work environment.
3) Dialogue: Transparency in discussion about
work related problems.
4) Direction: Awareness
of
relationship
of
activities with the organizational vision.
H1; there is a significant difference in the
perception of male and female teachers in their self
image in the society
5) Equality: Equal opportunity to everyone in
work environment.
304
6) Fit: The alignment between expectation and its
15) Relevance: the relevance of the work compared
fulfillment at work place.
with the personal goals of the employees.
7) Flexibility: No fixed rules, different approaches
16) Respect:
can be introduced.
A
perceived
image
regarding
the respect received from superiors and
8) Informality: Less emphasis on prescribed form,
subordinates.
structure, relationship or established outcome.
17) Self identity: Awareness and identification with
9) Invention: An opportunity to do something
oneself.
creatively.
18) Service: The perception of the employees
10) Oneness: collaboration and cooperation among
regarding the services provided.
the employees of the organization.
19) Support: The assistance provided by the
11) Ownership: employees can shape their work
organization for the employees.
place as they want. This will maximize the
20) Validation: Opportunities to see the results of
involvement of the employees.
one’s work.
12) Personal development: An opportunity for the
21) Worth: Perception of being valued by the
workers to develop themselves. It may be a
organization.
The respondents were contacted through their respective
principals and the opinions were collected from them.
Each of them filled up the questions separately.
knowledge development or promotions.
13) Purpose: The object toward which one strives
or for which something exists; an aim or a goal
of an employee.
4. Results and Discussions
14) Relationship building: An opportunity for the
The mean score of male and female teachers regarding
their opinion on public image measured through
attributes checklists are presented below
employee to develop better relationship with
superiors and subordinates.
Table-I
Mean and standard deviation values of perceived public image across male and female teachers in positive
attributes
Male
Positive attributes
Mean
Female
Standard
deviation
Mean
Standard
deviation
Responsibility
3.68
1.35
3.88
1.39
Intelligent
3.11
1.52
3.34
1.33
Helpful
3.01
1.57
3.23
1.37
Honest
3.42
1.34
3.43
1.34
Trust worthy
309
1.54
3.41
1.35
Dedicative
3.65
1.37
3.84
1.36
Male = 3.326
Average mean value of positive attributes
Female = 3.521
305
Table-II
Mean and standard deviation values of perceived public image across male and female teachers in negative attributes
Male
Negative attributes
Selfish
Lazy
Money minded
Inefficient
Corrupt
Argumentative
Female
Standard
Mean
deviation
2.13
2.05
1.05
1.02
1.11
1.15
Standard
Mean
1.33
1.35
1.3
1.4
1.35
1.4
deviation
2.06
2.01
1.02
1.01
1.03
1.06
1.4
1.33
1.35
1.33
1.32
1.35
Male =1.418
Average mean value of positive attributes
Female =1.365
We compared the mean scores of male and female
teachers on all the attributes related to perceived public
image. The mean score on positive attributes of both
male and female teachers were significantly higher
than the negative attributes. The average mean values
of positive attributes of male and female teachers are
3.326 and 3.521 respectively. Similarly the average
mean score of negative attributes of male and female
teachers are 1.418 and 1.365 respectively. There was no
significant difference between the perceived opinions
of male and female teachers regarding their positive
attributes like responsible, intelligence, honest, and
dedication. Regarding trustworthy and helpfulness,
teachers. There was no significant difference between
the perceived opinion of male and female teachers
regarding their negative attributes. The findings suggest
that the teachers of Dindigul area have an accurate
perception about their public image on the whole.
Female teachers have more belief in their helpfulness
and trustworthy than the male teachers.
In the same way the opinions collected from male
and female teachers regarding their expectations in
quality of work life components and availability of
those components in their work atmosphere shows the
following results.
female teacher’s mean value is more than the male
Table III
Mean values of male and female teachers regarding their expectations in QWL components and availability of the
components
Male
Components
Acknowledgment
Challenge
Dialogue
Direction
Expectations
4.04
3.6
3.51
3.6
Female
Availability
4.03
3.51
3.49
3.48
306
Expectations
3.62
3.52
3.48
3.51
Availability
3.71
3.61
3.51
3.49
Equality
Fit
Flexibility
Informality
Invention
Oneness
Ownership
Personal
development
Purpose
Relationship
building
Relevance
Respect
Self identity
Service
Support
Validation
Worth
3.7
3.39
3.35
3.48
3.40
3.65
3.01
3.67
3.4
3.29
3.41
3.38
3.49
3.05
3.6
3.35
3.42
3.33
3.90
3.48
3.11
3.58
3.61
3.38
3.31
3.71
3.39
3.02
3.8
3.31
3.6
3.42
3.61
3.58
3.48
3.43
3.65
3.59
3.33
3.41
3.41
3.52
3.6
3.48
3.61
3.58
3.34
3.38
3.48
3.49
3.39
3.48
3.50
3.39
3.38
3.58
3.49
3.33
3.41
3.31
3.68
3.35
3.60
3.20
3.1
3.38
3.03
3.38
In most of the dimensions the expectation of both
male and female teachers is significantly more than the
availability of the concerned dimensions in their work
place. In some dimensions the availability is more than
the expectations. There is no significant difference
among the opinions of male and female teachers in
many of the components. There is significant different
in the opinion between male and female teachers in
few components like acknowledgement, flexibility,
invention, oneness, relationship building. The average
mean value of the expectation of male teachers is 3.539
and this is greater than the average mean value of the
expectation of male teachers 3.472.
quality of work life of the teachers should be considered
as primary factor in schools since they are producing
the future generation of India.
6. References
1) Dhaval R & Vyas R “Quality of worklife
questionare.” Tata institue of social sciences.
(1997).
2) Urmi Nanda Biswas, “Perceived quality of life
and public image among police personal:A
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3) Beauchamp, T. L., & Bowie, N. E. (2004).
Ethical theory and business. Upper Saddle
River, NJ: Pearson Prentice Hall.
5. Conclusion
The management of various schools and institutions
should understand the expectations of male and female
teachers. Since in most of the dimensions their opinion
regarding their expectation and their perception about
public image are similar, they don’t need separate
regulations on gender basis. Common set of rules are
enough for administration. Concentration should be
given for the areas where male and female teachers
have difference of opinion regarding their expectations.
The senior officials should interact with the teachers
frequently to understand their expectation precisely so
that they can provide a better quality environment. The
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15) Kalayanee Koonmee, Busaya Virakul3, 2007,
December, Ethics, Quality of Work life, and
Employee job-related outcomes: A survey of
HR and Marketing managers in Thai business,
308
Creating Ecological Value: An Evolutionary Approach
From Business to Business
Dr. G. Vijaya Kumar, M.Com. M.B.A., M.Phil., Ph.D
Assistant Professor, Department of Commerce, Sir Theagaraya College, Chennai
S.G. Balaji, M.B.A., PGDIB. M.Phil. (Ph.D), Assistant Professor, Department of Management Studies
Aalim Muhammed Salegh College of Engineering, Muthapudupet, Avadi – IAF, Chennai
the form of either forward integration or backward
integration or both in order to make sure market share is
well protected. The Bata India limited makes foot ware
and it has a total of five manufacturing facilities across
the country and sell the wares through 1250 company
owned outlets all over India. Bata’s stated value as
far as customers are concerned is “Superior customer
service” and own retail out let solely to care customers
in today’s world of virtual business model. 1` The
public sector organization Neyveli Lignite Corporation
does the opposite of what Bata does. It mines the lignite
and uses it for thermal power generation and connects
it to main grid and the same in turn is used by state
electricity boards that in turn supply to households and
the phenomenon is known as backward integration.
The vision of the firm is as follows “To emerge as a
leading Mining and Power Company, continue to be a
socially responsible company and strive for operational
excellence in Mining and Exploration”. 2 Dhirubhai
Ambani promoted Reliance Industry progressed by
systematic backward and forward integration and
became the largest home grown company in a span of
25 years. Vertical integration has been the cornerstone
of the evolution and growth of Reliance.
1. Introduction
The ecological impact of industrial activities already
was much debated and acted upon topic in the second
half of the 19th century. During this period commonly
known as the second industrial revolution monumental
changes took place. Innovations such as electricity and
the first chemical products reshaped society. Scientific
knowledge most notably chemical engineering, was
more systematically applied to industrial production,
railroads were build that effectively enlarged the
markets that a firm could serve. Perhaps most important
from an eco-logical perspective this period marked a
shift towards a carbon-based economy, as coal and later
oil became major inputs as energy sources as well as
raw materials for newly developed products.
Another major innovation was not technical
but organizational. Before 1850 production was
predominantly organized in craft shops where craftsmen
produced complete products single handedly, or
through the putting out system in which home workers
would produce products with raw materials provided
by merchants who also sold the finished products.
In the later part of the 19th century businessmen
increasingly brought workers together in factories in
order to make use of larger technical equipment. This
required the management of a concentrated workforce
and as a result new organizational structures emerged
which eventually resulted in the shape of the modern
firm. This development is of considerable importance
as the firm constituted an institutional form in which
organizational and technological change interacted to
produce new products and more efficient methods of
production.
Starting with textiles in the late seventies, Reliance
pursued a strategy of vertical integration - in polyester,
fiber intermediates, plastics, petrochemicals, petroleum
refining and oil and gas exploration and production - to
be fully integrated along the materials and energy value
chain. 3 The motive behind this form of business model
might be due to easy capital mobilization, not wanting
to risk business for supply of Original Equipments
(OE), for fear of suppliers getting into main stream
activity in due course and reduction in profit margin.
The old firms focus was one of smooth production
since demand existed for most of the goods and cost
assumed less significance. For fear of capital flight and
2. Business in the Past
Business in the yesteryears was self reliant and inward
looking. Growth manifestation for firms often in
309
home grown firm’s protection, market remained well
protected through licensing and other trade barriers.
In the absence of globalization, market size remained
small and few players run the industry with
cartelization albeit to a very low degree, innovation was
seen as luxury and process patent for nation like India
stood in the way all the time for new research. Now
the product patent is in place for India, firms invest in
research and development (R&D). Customers’ side too
was not empowered as it is today due to low literacy
and no worthwhile legislation to protect consumer
interest. Investor’s activism was also not significant as
the culture of investment in the share trade was with
few affluent people in the system. The culmination of
it, shaped most firms as an island of operation and no
network worth mentioning.
best use of technical competence globally. (Karlsson,
2009)123TCOUnp035aIrtiJ.05iyee1egB078rlg0lion0Sen8r1a0uApa 0t5aNl@i/
The benefit of core competency idea is another reason,
firms create a network of suppliers and assemble
components and sell in the market. To be more
competitive, they need to operate more in an outward/
strategy driven way and develop a strategic architecture
to enable their organization to develop the necessary
core competencies. It is not easy. It takes a long time
and many resources to build exchange relationships that
last in our integrated markets. Many resources and skills
will be needed to handle relationships, once established.
The auto majors in US now confine their operation to
assembly, styling and design and both GM and Toyota
have a supply chain of components exclusively and
now the competition is Toyota supply chain and GM
supply chain instead of competition between Toyota
and General Motors. The idea of Just-in-time (JIT)
is of Japan origin, the inventor Toyota came up with
it to reduce work in progress (WIP) and it called
for suppliers plant located around the Toyota plant
to supply components on a daily basis. JIT is a very
effective manufacturing philosophy which is universal
in nature encompassing all aspects of manufacturing.
(A.Z.Keller, 1993) The result is formation of business
ecosystem for Toyota with large supplier network.
3. Business Today
Marketing model has evolved from “more for more”
in uni-polar world to “more for same” in the bi- polar
world and now in “more for less” in tri- polar world.
Now US is one single market, European union is
another market and it is kept in equilibrium by Asia
dominated by India and China and in this borderless
world. Empowered customers want more features for
less sum and there is no reversal of the “sellers market”
that world saw just before World War I and II. In the
current “buyers market”, product differentiation has
reached a point of no return and still to stay viable,
companies expand the scope of service and forced to
have a network of service providers. The expanding
nature of service around the product is one reason for
the concept of network set to grow. The market now
can be called ‘superpoly’. Superpoly is a development
of the concept of monopoly to accommodate market
structures in networked and knowledge-intensive
economies characterized by a high underlying level of
consumer choice. (Rowley, 2009) There the economy
benefits the customers. The network industry under
unregulated monopoly would yield more social welfare
than in the case of several producers in the industry, and
would therefore be socially preferred. (Spiegel, 2008)
Net works is developed as a major operating unit and
are taking over as the managed unit from the firms
themselves. The firms and the networks which they are
operating in are building hierarchies of technology for
What
came along globalization desire is cashing
on the scale advantage and inevitably the size of the
denominator rise resulting in cost advantage. Economies
of Scale (EOS) remain an essential determinant for
cost-efficient production, and that without sufficient
EOS; high levels of flexibility cannot alone translate
into world competitive production. (Husan,1997). Cost
concern, a phenomenon world witnessing from late
80s onwards due to crumbling of tariff and non- trade
barriers. It can become a critical factor if they create
prohibitive costs or difficulties. (Allan Zimmerman ,
1999)
4. The Underpinnings of Business Ecosystem
The understanding of existence of business ecosystem
came in the year 1993 by James F. Moore by his
award winning article in Harvard Business review
310
(HBR). It is a system with group of organizations
crossing many industries working cooperatively and
competitively in production, customer service and
innovation. Academically, the study of economic
ecosystem has traditionally been the province of
economic geographers – themselves a complementary
combination of economist, urban and regional planners
and development experts, and geographers. Now it
is in the domain of management due to the growing
status of business ecosystems.
Organizations like
in biological ecosystem “are characterized by a large
number of loosely interconnected participants who
depend on each other for their mutual effectiveness and
survival”. (Iansiti, 2004) The need for cooperation
arises because OE supply for example to do well, both
the buyer and the seller have to dovetail perfectly; else
the outcome suffers. Components design is sent from
the buyer and the capital goods are made by the seller
accordingly and as firms do not rely on one single
source and thus multiple players supply the same parts
at a competitive price to match the others. As all end
products keep adding feature after feature to induce
consumer to buy, it calls for innovation both at the back
end and front end. The rise of personal computer is a
revealing example of ecological business development.
In the 70s , a new technology –the microprocessor –
emerged with a potential to spawn vast new applications
and dramatically reduce the cost of computing. Yet this
innovation sat dormant for several years. But Apple
and Tandy Corporation used the microprocessor which
changed the fate of microprocessor and co- evolved
better and better. Similarly a tire company may switch
over to steel redial as innovation and the OE supplier
steel is forced to innovate rust free steel for more tire
durability. Each industry to safe guard its interest , has
its own trade association and bound by its rule and yet
co-operate as a buyer or supplier and this independence
is what keep them as ‘loosely interconnected’. It may
sound ironical due to being interconnected and yet not
tightly. Firms in the system strive for competitiveness
and thus seek innovation constantly resulting in co
–evolving over a period of time.
(Moore, 1993).
Technology convergent products to seek a business eco
system and work for creation of it. Today’s computers
hold calculators, typewriters, e mails, printers and all
technology into one product. This calls for industry
collaboration. Mobile phones to hold camera, FM radio
and camera and they also have their own network for
customer services. Technology has become a synthetic
term for a number of techno-socioeconomic forces at
play in our material world (John Thackray, 1983).
This appears to be the trend in the future as products
on their own have reached optimal differentiation and
for customer appeal, technology convergence is the
only option. Generally the business eco systems are
the result of cost containment, technology sharing, and
globalization of brand. Given the growing increase in
size, power and dominance of the MNCs, the locus of
sovereignty is currently being questioned. (Richard L.
Brinkman, 2002)
5. The Metaphor of Biological Ecosystem
The nature as in business, have many species live cooperatively and competitively in production. The players
have a ‘shared fate’ meaning one player’s prosperity is
contingent upon the prosperity of the biological eco
system. For example some lichens are cyanolichens and
they contain N-fix ing cyanobacteria (blue algae). The
cyanobacteria releases 50-90% of the nitrogen fixed, as
ammonia, to the fungus; it also releases glucose. It in
turn receives shelter, water and nutrients. The process
is mutual and co-evolving. Similarly a large number of
animals depend on the Prairie dogs for food and shelter.
Their burrowing activity churns up the soil to enhance
nutrient cycling and reptiles, mammals and even birds
use their as home. The biological ecosystem is a self
regulated one and is done through resource-sharing,
co-evolution and optimization as happening in business
eco system. In the case of former, it happens where
spittle bugs in tropical rain forest suck water containing
nitrogen and sugars and spit out the excess water with
sugars, thereby keep the dry litter at the base moist
and sugar rich that in turn enhance decomposition and
nutrient cycling.
Business ecosystem is also regulated, co- evolve and
seek optimization of shared resources. The health of the
ecosystem is sustained by the presence of the crucial hub
that assumes the key stone function of maintaining the
ecosystem health. For example sea otter by consuming
large numbers of sea urchins, left unchecked, sea
urchins overgraze a variety of invertebrates and plants,
311
including kelp, which in turn support a food web that
is the engine for near-shore productivity. Microsoft
market capitalization range between 20 to 40 percent
of the combined market capitalization of soft providers
yet it is singly responsible for the value creation for
its ecosystem by playing the role of keystone as it
happen in biological ecosystems.(Marco Lansiti and
Roy Levien,2004) The established ecological system
is a self-contained system, stable, active within itself,
moderate diversity, well defined boundaries ,low
exchange of species and change is driven within and
the standard business has similar attributes as found in
the established ecosystems.
other species that originally populated the habitat. The
key stone actions are
•
i.e. the protection of niche players
•
Dominator species
•
Keystone species
mutualism i.e. the direct support of niche
players
•
System enabling i.e. enabling energy
flows or the exchange between community
members.
The stability of the eco system hinges on resistance and
resilience. The first concept refers to the system ability
to fend of external disturbances and invasions into the
system. The second concept refers to the degree to which
an ecosystem will return to its original position after an
exogenous shock occurs and the speed of adaptation.
Indian Railways that began in the year 1832 now has
63,028 route kilometers, transporting just under five
billion passengers and moves 650 million tons of freight
annually. It has employee strength of 1.6 million. The
Rail road business is state owned and nation economy
heavily depends on it. No external disturbance what
so ever can alter its monopoly today and to have one
similarly by a rival, the cost is prohibitively expensive.
A person in 1990 when wants to buy a Ford car, would
typically read a magazine or journal about the type of
vehicle desired, visit a number of dealerships to look
at various models; visit one dealer to test drive the
car; discuss; purchase options such as price, color and
financing with the dealer; review consumer reports on
the car; visit banks to establish a line of credit; and
make a purchase. The same person would approach the
purchase of a car differently now. This time he goes on
line to research the car and investigate the dealer invoice
price and manufacturer’s suggested retail price (MSRP)
for the base car and options. After selecting his options
and determining the price he is willing to pay, he would
go back on line to advertise the required loan and gets
bids. Then he would go to a dealership to inspect the
engine and test drive the car. Online again, he would
advertise details about his chosen car and how much
he would pay, asking dealers to bid for business. Based
on the responses, he would make his final decision on
the vehicle, dealership and the loan source. This is the
resilience of the auto business in the net worked world.
( Sanjiv Gossain, 1998)
E- Commerce and new natural ecosystem both have
imperceptible boundaries, in a state of flux, highly
diverse and interactive. They are open to outside
influence and system interaction drive change. There
are three characteristic types of species behavior and
roles in eco systems depending on (a) on the relative
size or abundance of the species in the whole system
and (b) on the particular strength of interaction of the
species has on productivity , diversity and sustainability
of the entire system. They distinguish
•
defeating of dominants and competitors
• Niche species
Dominators strive to disperse over major parts of the
eco system and occupy maximum nodes in the system’s
network and in doing so reducing species diversity.
Key stone in architecture parlance in the top stone
on the arch and its removal let instant collapse of the
structure as the consolidation is held at the helm. While
in biological systems keystone let enough space for
other species to grow and proliferate, the control is
held by the key stone species; in the end it reduces
the competitive stress on the niche species. Due to this
a higher diversity is ensured. Niche players are small
and impact the eco system minimal. The keystone
concept is introduced by Paine, a biologist who carried
out studies in aquatic ecosystems. In the study by him,
he artificially removed starfishes that preyed on mussels
from a marine community. As a result the mussels
proliferated heavily and aggressively covered the
available living space there by simultaneously repelling
312
6. Business Ecosystem
in fierce competition with in it, which obliges the firms
to elevate their standards of performance. Aggressive
rivalry is induced by the bargaining power of customers
who may be in contact with several firms within the
cluster. These connections also encourage the flow of
information and diffusion of innovation.
In a business eco system, company’s co evolves
capabilities around a new innovation: they work cooperatively and competitively to support new products,
satisfy customer needs, and eventually incorporate the
next around of innovation. For instance, Apple computer
is the leader of an ecosystem that crosses at least
four major industries: Personal computers, consumer
electronics, information and communications. The
Apple ecosystem encompasses an extended web of
suppliers that includes Motorola and Sony and a large
number of customers in various market segments. A
business ecosystem’s scope is the set of positive sum
relationships (symbiosis) between actors who work
together around a core technology platform. Irrespective
of an organization’s individual strength, all actors in a
business ecosystem are connected and share the success
or failure of the network as a whole. Take the case
of reverse osmosis whose water treatment technology
has an eco system of companies involved membranes,
pumps, filters, piping and services after the sale. The
business is collective task and growth or decline affects
all the players.
8. Marketing and Business Ecosystem
Ravi S. Arhrol and Philip Kotler’s “Marketing in the
network economy” Written in the year 1999 in Journal
of Marketing special issue is important in the business
circle as the shift is paradigm in nature. According
to them, marketing half a century represented the
manufacturer but now they represent the customer
instead. The hierarchal organizations are disaggregating
into a variety of network forms. The twenty- first
century is shaping up to be a knowledge –driven society
in which the basic economic resources is not materials,
labor, or capital but knowledge. . Firms in the past built
a strong center of control, unity of purpose and many
layers of management. AT&T in the past had 16 layers
to have a good control of the activity and Ford once had
a sheep farm for its car seat fur requirement. For fear of
profit erosion and technology secrecy, all the activities
were carried out by the brand owners. Now with the
focus of core competency let a creation of network
around them for supplies. Without a strong network, it
is not possible to practice Just-in-time by the inventory
conscious firms at all. Now the competition in the auto
industry is not between the leader Toyota and General
Motors but between supply chain networks of these two
firms. Nike or Galoob Toys are gone one step further and
they do no manufacturing and concentrate marketing
alone. The information highway since make paperless
transaction possible and the optical fiber enabling data
transfer speed faster than sound, response time of
business too have gone many fold.
7. The Concept of Value Network
According to Mariotti (2002) a value network is “an
interactive combination of information machines and
people”. It is a co-operative structure and member’s
tasks are strictly defined and generally not expected
to compete with other members. The whole idea of
value network arises from a notion that a single firm
cannot produce the whole product by itself and needs
other firms with different capabilities to complement
the product. Here shared knowledge is central to
relationship. The value chain refers to sequential flow
while network implies multidimensional connectedness.
(Turati and Ruta, 2002). This connectedness help
in transferring order quantities, economical figures,
design specifications, supply time line and quality
measurements. It is operational information and all
members get the information. However there should
not be any confusion with similar firms in a particular
location. Bangalore in India is having an Information
Technology Enabled Services (ITES) cluster, Silicon
Valley in U.S has a cluster of e commerce firms, Detroit
has an auto components concentration and its power lies
The network phenomenon is in four ways as internal,
vertical, inter market and opportunity network. In a
knowledge society with dynamic industries, the task
is to create organizations that are maximally open to
the environment and can seek a state of more or less
continuous adaptation to the non-static environment.
These knowledge firms have weak hierarchies, dense
lateral connections, low departmental walls and
313
development through it’s network of exchange
Relationships. Journal of Business and
Industrial Marketing , 16 (7), 574-599.
openness to environment. In the case of vertical network
model, the focal organization does the ‘integrator’ role
and manufactures only few components. Nike and
Cisco follow this model and energy is rather diverted
to co ordination and customer relationship. The third
one inter market synergy aims to have business that
can help each other and benefit. In India ITC a sole
cigarette seller three decades back, now sells biscuits
taking advantage of the selling network created over
years. The hair care division sells Vival shampoo again
thro’ the same retail network. It sells classmate brand
note books again through the same sales network. The
internet revolution has changed the way we do business.
It is paperless, networked, collaborative and operational
oriented.
3. Husan, R. (1997). The continuing importance
of economies of scale in automotive industry.
European Business Review , 9(1), 38-42.
4. Iansiti, M. .. (2004). The keystone advantage.
Massachuates : Harvard Business School Press.
5. Karlsson, C. (2009). International journal of
operations and production management , 2(7).
6. Mariotti, J. (2002). The value network .
Executive Excellence , 19.
7. Moore, J. F. (1993). Predators and Prey: A new
ecology of competition . Harvard Business
Review , 77.
9. Conclusion
Nature seems to be a good teacher even today and the
biological eco system that work for stability all the
time, has a valuable tact for business too. As progress is
attractive to all, the value of trust and collaboration. The
transformations that are taken place in business leads
to the ultimate benefit for the business, customers and
other stakeholders. This situation helps to grow business
and service industries and leading to grow your GDP.
8. Richard L. Brinkman, J. E. (2002). Corporate
power and the globalization process. Corporate
power and the globalization process ,
International journal of Social Economics , 29(
9), 30-752.
10. References
10. Sanjiv Gossain, G. K. (1998). Reinventing the
value: The new business eco system. Strategy
and leadership , 26 (5), 28.
9. Rowley, J. (2009). Superpoly: monopoly in the
twenty-first century. Management Research
News , 32(8),751-761.
1. A.Z.Keller.,
A.
(1993).
Just-in-time
manufacturing system: A literature review.
Journal of Industrial Management and Data
system , 93 (7), 22-32.
http://www.bata.in,
http://www.nlcindia.co.in ,
2. Awuah, G. B. (2001). A firm’s competence
http://www.ril.com,
314
Exit Interviews & Their Empanelment:
The Current Scenario
Dr. M. Sureesh Baabu
Professor, Department of Management Studies, Sri Venkateswara University, Tirupati (Ap)
Radha Mohan Chebolu
Senior Faculty Member, Icfai Business School (Ibs), Mumbai-4000 76 (India)
S.G.Balaji
Assistant Professor, Department of Management Studies, Aalim Muthmmed Salegh College of
Engineering, Avadi – Iaf, Chennai
1. Introduction
so if the organization finds it difficult to begin the
Exit interviews are interviews conducted with departing
employees, just before they leave. From the employer’s
perspective, the primary aim of the exit interview is to
learn reasons for the person’s departure, on the basis
that criticism is a helpful driver for organizational
improvement. Exit interviews (and prior) are also an
opportunity for the organization to enable transfer of
knowledge and experience from the departing employee
to a successor or replacement, or even to brief a team
on current projects, issues and contacts. Good exit
interviews should also yield useful information about
the employer organization, to assess and improve all
aspects of the working environment, culture, processes
and systems, management and development, etc.;
in fact anything that determines the quality of the
organization, both in terms of its relationship with its
staff, customers, suppliers, third-parties and the general
public. Many employers ignore the opportunity that exit
interviews offer, chiefly because exit interviews have
not been practiced in the past, and starting them is a
difficult initiative to undertake, given the potentially
subjective and ‘fuzzy’ nature of the results; the time
involved; and the unspoken corporate urge to avoid
exposure to criticism. Exit interviews are nevertheless
a unique chance to survey and analyze the opinions
of departing employees, who generally are more
forthcoming, constructive and objective than staff still
in their jobs. In leaving an organization, departing
employees are liberated, and as such provide a richer
source of objective feedback than employed staff do
when responding to normal staff attitude surveys.
practice as a matter of general policy, managers can still
undertake their own exit interviews locally with their
own staff as and when they leave.
From the departing employee interviewee perspective,
an exit interview is a chance to give some constructive
feedback, and to leave on a positive note, with
good relations and mutual respect. Recrimination,
blame, revenge and spite are destructive feelings and
behaviors, so any temptation they might have to go
out all guns blazing. Departing employees should be
calm, fair, objective and as helpful as possible. In the
future departing employees may wish to return to the
organization (situations and people change..) and may
cross the paths of your ex-colleagues, managers in the
future. The adage about treating people well on their
way up because they might meet them on the way down
applies just as well on their way out. The exit interview
is an opportunity to shake hands and leave friends, not
enemies.
2. Exit Interviews: Aims and Outcomes
•
They provide an opportunity to ‘make peace’
with disgruntled employees, who might
otherwise leave with vengeful intentions.
•
Exit interviews are seen by existing employees
as a sign of positive culture. They are regarded
as caring and compassionate - a sign that the
organization is big enough to expose itself to
criticism.
•
Exit
interviews
accelerate
managers’ understanding
of
As ever, corporate insecurity and defensiveness can be
an obstacle to implementing exit interview processes,
managing
people
participating
and
and
experience
organizations.
Hearing and handling feedback is a powerful
315
•
•
•
•
•
•
•
development process.
Exit interviews help to support an organization’s
proper HR practices. They are seen as positive
and necessary for quality and effective peoplemanagement by most professional institutes
and accrediting bodies concerned with quality
management of people, organizations and
service.
The results and analysis of exit interviews
provide relevant and useful data directly into
training needs analysis and training planning
processes.
Exit interviews provide valuable information
as to how to improve recruitment and induction
of new employees.
Exit interviews provide direct indications as to
how to improve staff retention.
Sometimes an exit interview provides the
chance to retain a valuable employee who
would otherwise have left (organizations often
accept resignations far too readily without
discussion or testing the firmness of feeling the exit interview provides a final safety net).
A significant proportion of employee leavers
will be people that the organization is
actually very sorry to leave (despite the postrationalization and sour grapes reactions of
many senior executives to the departure of
their best people). The exit interview therefore
provides an excellent source of comment and
opportunity relating to management succession
planning. Good people leave often because they
are denied opportunity to grow and advance.
Wherever this is happening organizations need
to know about it and respond accordingly.
Every organization has at any point in time
several good people on the verge of leaving
because they are not given the opportunity to
grow and develop, at the same time, ironically,
that most of the management and executives
are overworked and stretched, some to the
point of leaving too. Doesn’t it therefore
make good sense to raise the importance
of marrying these two situations to provide
•
•
advantage both ways - ie, facilitate greater
delegation of responsibility to those who want
it? Exit interviews are an excellent catalyst for
identifying specific mistakes and improvement
opportunities in this vital area of management
development and succession.
Exit interviews, and a properly organized,
positive exit process also greatly improve
the chances of successfully obtaining and
transferring useful knowledge, contacts,
insights, tips and experience, from the departing
employee to all those needing to know it,
especially successors and replacements.
Most leavers are happy to help if you have
the courage and decency to ask and provide
a suitable method for the knowledge transfer,
be it a briefing meeting, a one-to-one meeting
between the replacement and the leaver, or
during the exit interview itself.
Actions resulting from exit interview feedback
analysis fall into two categories:
1. Remedial and preventative (improving
health and safety issues, stress, harassment,
discrimination etc.
2. Strategic improvement opportunities,
(improved induction, management or
supervisory training, empowerment or team
building initiatives, process improvement,
wastage and efficiencies improvements,
customer service initiatives etc)
3. How Exit Interviews Should Be Conducted?
Exit interviews should, where possible, be conducted
face-to-face, in private and by Line Managers, who have
attended the University’s Recruitment and Selection
Training Course in order that they understand good
practice regarding interview techniques. Face-to-face
interviews enable better communication, understanding
and interpretation and provides a better opportunity to
probe and get to the root of any sensitive matters. The
style of exit interview is different for someone who is
being asked to leave, retiring, being made redundant,
dismissed etc, compared to an employee leaving to
316
3. Interpret, reflect and understand
(interviewers can understand someone
without necessarily agreeing)
4. Keep calm, resist the urge to defend
or argue - their aim is to elicit views,
feedback and answers
5. Ask open questions, unless they
require specific confirmation about a
point
move on to another employer. However everyone
who leaves should be given the opportunity of an exit
interview, as the University can learn something from
every situation. In terms of managing the interview
the following tips may assist to get the most from the
interview.
Participation in exit interviews by the employee
leaving is voluntary. They can’t be compelled to
attend exit interviews. Offering a questionnaire form
can be an alternative, which again must be voluntary.
Organization cannot compel a departing employee
to give knowledge that is in their head, although the
return of files, paperwork and material is normally
something that an employer rightfully can insist
happens. In any event, a positive constructive, grownup approach is the best assurance of a happy outcome
and an optimal transfer of knowledge and contact
names, etc., should this be helpful, which often it will
be. Ideally the organization should have a documented
policy stating how exit interviews happen, when, and by
whom. Some organizations hand the responsibility to a
skilled interviewer in the HR or Personnel department.
Alternatively line-managers or even supervisors can
conduct the interviews. Interviewers need to be trained
to interview, just as for normal job interviews. All
types of interviews are sensitive emotional situations
which require ability and maturity to manage properly,
especially if interviewees are anxious or volatile.
In large organizations HR or Personnel department
should be responsible for designing the process, issuing
guidelines and documentation, collecting results data,
analyzing and reporting findings, trends, opportunities
and recommendations, especially including anything
relating to health and safety, or employment law and
liability. If a questionnaire is designed or either exit
interview form which will be used as an input document
towards central analysis it is a good idea to convert
questions wherever practicable into a ‘score able’ and/
or multiple-choice format, which makes analysis far
easier than lots of written opinions.
5. Important tips for Interviewee
When employee decides to leave their current employer
they may also have to face such an interview. So here
are some tips that should help employees in handle their
exit interview.
1. Prepare before appearing: Employees should
prepare yourself for an exit interview like you
would for a recruitment interview. They should
take small notes about the things they would like
to say, issues they would like to raise.
2. Avoid derogatory remarks: They should avoid
making derogatory remarks about their boss and
colleagues. If they think providing feedback
about certain things is important, focus on the
situation, what they expected, what actually
happened and how it could have been made
better. Employees should not go on a rant.
3. Knowledge transfer: One of the basic purposes
of the exit interview is to make knowledge
transfer easier. This becomes more important
if a long-time employee decides to leave the
company. So, they should help their employer
by transferring whatever knowledge they have
gained during their employment with them
and information that could be critical for them.
This makes it easy for their replacement to take
over their responsibilities and will leave their
employer appreciative of your effort.
4. Provide feedback only if it will be used: Many
of departing employees might harbor a lot of
ill feeling towards their employer but if they
think that your feedback is not going to change
anything, they should rather avoid it. They will
have to judge the situation and talk accordingly.
4. Important tips for Interviewers
1. Listen rather than talk
2. Give the interviewee time and space
to answer
317
3. NET APP -Their exit interviews are
outsourced to a Canadian firm Exit Check.
A couple of years back, the firm realized that
most exit interviews stated the need for internal
role changes which may lead to better career
growth for an individual. It decided to sensitize
the managers and ensured that no matter how
good an employee was in a current role, he
needed to be rotated. Now, out of the overall
recruitments, around 25% are done internally
vis-a-vis the earlier 18%,.
4. Exit interviews helped IT solutions company
MindTree realise two years back that many
women quit their job after the birth of the
second child. MindTree decided to make its
policy more flexible. Head of people function
at MindTree, Babuji Abraham , says, “We
decided to come up with a policy where women
employees can take a year off. And now, we
are extending the same to men too. There are
cases where employees have to go and look
after their ailing parents and this allows them
to do so.”
5. Sameer Karayi, a consultant with Stanton
Chase International, worked with MphasiS
as a team manager till 2002. During his exit
interview, he told his reporting head that the
lackadaisical approach of employees resulted
in an unprofessional work atmosphere.
5. Legal cases: If employees decide to leave their
employer for a legal reason such as harassment
or discrimination, they should talk to their lawyer
and ask them how to handle the interview.
6. Exit Interviews – an Eye Opener for
Organizations
Exit interviews are not merely a formality but can be
proved as an eye opener for organizations. There are
many examples to justify this fact which are as below.
1. In 2007, an Indian automotive firm had
recruited a US-based expat as their R&D
head. However , he soon found out that he
was expected to work on their idea of rolling
out a hybrid car and not on the overall R&D
platform. He tried to convince them that
India was not ready for such a car but to no
avail. He left within a few months but made it
clear in his exit interview that the company’s
plans for a hybrid car would go kaput.
The auto major soon conducted a survey ,
which according to an industry expert, was
triggered by the exit interview and found out
that the hybrid car would indeed be ahead of
its times. The plan for the car was postponed
by three years.
Although exit interviews figure in almost
every firm’s list of protocols, they have always
been regarded as an outlet to release pent-up
feelings towards the company. Most think these
grievances would join a pile of closed files.
2.
MphasiS managed to retain him for six months
during which he was pleasantly surprised to
see that some of his pointers got implemented.
For Karayi, these efforts spoke a lot about the
firm and his exit interview.
Retail giant Titan- Its chief human resource
officer (CHRO) S Ramadoss says, “Some of
the exit interviews in our retail sector have
shown that working women find it difficult
to stay back after 7 pm, so we will make
our timings more flexible from next year.”
7. Exit Interviews & Knowledge Transfer
The period between the decision of the employee to
leave, and the actual departure date offers a crucial
opportunity for the University to gather important
information and knowledge from the employee. This
is especially relevant in roles where the employee has
accumulated a significant amount of knowledge and
personal connections. The knowledge of the departing
This is not the first time that Titan has made
policy changes triggered off by exit interviews.
Last year, they introduced an education policy
under which employees could pursue an MS/
MBA degree with BITS-Pillani.
318
employee attitudes and behavior, has the potential to
become a valuable tool to help reduce turnover and
increase employee satisfaction and commitment. In turn,
an effective reduction in turnover has clear economic
and organizational benefits that can more than pay back
the investment made in an exit survey system.
employee has immense value, and the recovery of it
is often overlooked altogether until the employee has
departed although much depends on the atmosphere
surrounding the departure.
When any employee resigns, or a decision is made for
a person to leave for any reason, always ask: Should
we spend some time thinking about how to enable
knowledge transfer? The leaver could be encouraged
and enabled to hold a briefing meeting, which all
interested parties, including the person’s replacement if
possible, can attend and learn what they need to know.
10. References
Exit Interviews: Revealing Stories of Why People Are
Leaving Church, William D. Hendricks
1. How Effective Executives Interview by Walter
Robert Mahler (Paperback - Jan 1976)
8. Knowledge Transfer Questions
•
•
•
•
•
2. When it’s time to say goodbye: how to conduct
effective exit interviews.: An article from:
Hardware Retailing by Claire Sykes (Digital
- Oct 31, 2007) - HTML
In advance of the exit interview, start thinking
about asking these questions.
How might we benefit from your knowledge,
experience, introductions to your contacts, etc.,
prior to your departure?
Would you be happy to take part in a briefing
meeting with managers/replacements/successor/
colleagues so that we can benefit from your
knowledge and experience, prior to you leaving?
What can we do to assist you to pass on as much of
your knowledge and experience as possible to your
colleagues prior to your departure?
How and when would you prefer to pass on your
knowledge?
3. Exit interviews as a tool for examining
turnover. (Managing): An article from: Security
Management by Lin Grensing-Pophal (Digital
- Jul 28, 2005) – HTML
4. Baker, B. Alan Moore’s Exit Interview.
5. exit interview. (n.d.). Retrieved august 2010,
from www.jobsearchtech.about.com: http://
jobsearchtech.about.com/cs/interviewtips/a/exit_
interview.htm
6. exit interview. (n.d.). Retrieved august 2010, from
www.en.wikipedia.org: http://en.wikipedia.org/
wiki/Exit_interview
9. Conclusion
Exit is just as important as the procedures one uses
while hiring. Handled in a professional way, exit
practices can be constructive, useful and improve your
work environment and above all add to retention.
7. Exit Interview Policy . (n.d.). Retrieved august
2010, from www.oaktraining.com: http://www.
oaktraining.com/Policies/Exit-Interview.html
8. Exit Interview Policy and guidance notes for
managers. (n.d.). Retrieved august 2010, from
www.sheffield.nhs.uk: http://www.sheffield.nhs.
uk/policies/resources/exitinterview.pdf
Exit Interviews have not been practiced in past. It is
a difficult initiative to undertake as corporate are still
resistant towards exposure to criticism. Corporate
insecurity and defensiveness acts as an obstacle.
According to a survey only 4% of Organizations
are following a structured pattern of conducting exit
interviews.
9. exit interviews and knowledge transfer - tips
for employees and employers, sample questions
and answers. (n.d.). Retrieved august 2010,
from
www.businessballs.com:
http://www.
businessballs.com/exitinterviews.htm
A well-structured plan of exit interviews, in combination
with other HR initiatives related to maximizing
319
Mental health among private and public sector employees
– A comparative study
R. Narayanan
Assistant Professor of Business Administration, Management Wing, Directorate of Distance Education,
Annamalai University, Annamalainagar – 608 002, Tamil Nadu, INDIA.
Dr. M. Syed Zafar
Professor and Head, Management Wing, Directorate of Distance Education, Annamalai University,
Annamalainagar – 608 002. Tamil Nadu, INDIA.
1. Introduction
4. Characteristics of a mentally healthy person
A mentally healthy person must know well about his
motives, desires, strong points and weakness. He must
be capable of accepting his shortcomings.
Mental health refers to adjustment of one individual to
oneself with a view of attaining maximum effectiveness,
satisfaction and cheerfulness. Also this term refers
to the ability to face and accept the relatives of one’s
life. This will prove the study is needed in the present
context. In short, mental health refers to a positive state
and it is related to quality state and it is related to quality
of life. According to psychologists, mental health refers
to capacity of an individual to what extent one can make
personal and social adjustments. The mental health is
related to both social life and personal life. In Sutherland
et al. (1953) reported that the joint goal of all types of
education is mental health. It aims at developing the
growth of both intellectual and emotional potentialities
of an individual in an intricate and complex culture.
According to Stevenson et al., (1999) the ability of a
mentally healthy person is to use his or her talents to
satisfy his or her fruitful and purposeful objectives is
termed as personal goal.
He must have self-respect. He must also feel secure in a
group and have cent percent self-confidence.
He must have sense of personal security. He must
realize and understand people’s motives, objectives and
problems.
He must be capable of facing relations rationally and
effectively. He must show emotional maturity.
He must have rational attitude towards his health
problems. He must be capable of thinking clearly and
constructively in solving his problems.
5. Dimensions of Mental Health
Marie Jahada (1958) has described the various
dimensions of mental health while discussing the
importance of positive mental health. He has suggested
the following categories with a view to understand the
nature of mental health.
Principles of mental health are discussed below:-
•
2. Maintenance of sound physical health
It is well known that strong mind provides a sound
body. This can be achieved by adopting several aspects,
including suitable diet, enough rest, good recreation and
proper exercise.
•
•
An attitude towards one’s self in which
introspection leads to acceptance of weaknesses
and egoism.
One must be motivated towards his or her inner
ability.
One must develop growth in self-realization.
6. Conceptual frame work
Dutt (1966) studied the psychological and educational
implications on mental health. Studies were made to
relate self surrender mechanism with mental health and
strength.
Replacement of worries by plans :-Worry plays a vital
role in a mentally poor health person. It can be removed
by replacing it with a workable successful plan.
3. Self-acceptance
One must realize the importance of self-acceptance. He
must also realize his own and others limitations.
Mathew (1975) did research in order to find out the
320
relation between the factors such as anxiety and the
multiple roles of the working women. These working
women were found to possess anxiety depression mania
and inferiority complex and they were also found to be
more anxious and more depressed than non-working
women. These working women experience less
inferiority complex than those who have single and dual
roles. Hence, it is inferred that the working women’s
performance had some definite impact on their mental
health.
comprised of mostly men with varying level of years of
experience in the same organization in both private and
public. Some were married and some were yet to enter
the bond.
10. Tool used for the study :Trier Personality Inventory (TPI) for mental health.
Peter Backer (1989) discovered this method
“Trier Personality Inventory” was used with a view
to assess mental health of different types of people.
This instrument contains 120 statements. These 120
The influence of various factors, including interest,
mental health and attitudinal variables on the three
levels of academic achievement was examined and
statements are grouped into nine sub-statements.
Among these nine sub-statements, one is mental health.
In this instrument, 20 statements are provided in order
analyzed by Barreti Fuches and Meadow (1976). They
selected 239 university students for their investigation
and found that the two factors, viz., interest and mental
health could be related successfully and positively to
their academic achievements.
to assess mental health. These 20 statements are given
in jumbled order. Some of these are positive and some
are negative.
Procedure followed to score the response :The mental health tool contains twenty items. For each
Bhan (1983), contrarily did research on a group
consisting of 293 male engineering and 254 male nonengineering students and compared their mental health
characteristics. The results reveal that the engineering
students were found to possess superior mental health
than the non-engineering students.
item, four ratings are given as :-
Sinha and Bhan (1983) carried out a research study
of mental health with a view of assessing their mental
health and to determine the characteristics of psychosocial dynamics.
“Always” got four marks, “Often” got three marks,
7. Objective
marks.
i)
Always
ii)
Often
iii)
Sometimes and
iv)
Never
For a positive statement, the respondent who answered
“Sometimes” got two marks and “Never” got one mark.
However, for a negative statement the respondent who
answered “always” got one mark, “often” got two
marks, “sometimes” got three marks “never” got four
This study aims to find out the mental health among
private and public sector employees
The questionnaires were given to individual employees
who come under the sample and oral instruction was
8. Hypothesis
Private and public sector employees do not differ
significantly in their mental health.
given clearly. The respondents took few days to answer
the questionnaire. The filled in questionnaire were
collected back from their work spot and processed
9. Methodology
further. (Questionnaire administered is given in the
Sample :This is an empirical study and primary data were
collected from a sample of 100 employees (50 from
private and 50 from public sector employees). Stratified
random sampling method was used. The sample
Appendix)
11. Statistics used
t-test was used to interpret the obtained data.
321
13. Result and Discussion
Table - I
t-test for mental health between private and public sector employees
Group
N
Mean
SD
t-value
LS
Private
50
15.41
3.17
2.17
0.05
Public
50
11.37
1.98
Hypothesis : Private and Public Sector employees do not differ in their mental health
From the obtained result it is noted that private
•
sector employees scored higher mean values (15.41)
try to focus on their accomplishment rather
than public sector employees (11.37). This mean
than on your short-comings. By discarding
difference is statistically proved by the obtained t-test
the negative beliefs and should have positive
(2.17) which is significant at 0.05 level. Hence the null
thinking.
hypothesis is rejected. In fine the analysis leads to the
•
conclusion that private sector employees have better
organized both at work and family. They
shall adopt methods for keeping track of
14. Reasons
commitments due dates and events.
In private sector, the employees are getting better
•
Recognization, Respect and Reward (ie 3R) for
management. They may allot some specific
time to their family members and household
performance. Once they get recognization for their
commitments.
work, they are satisfied they have better mental health.
•
But in public sectors the employees are more secured in
Both private and public sector employees can
manage their stress well by adopting interaction
their job and they are promoted on the basis of tenure.
and interpersonal communication.
These are the reasons which the researcher has observed
•
from the study.
have involvement and enjoyment in their work.
Sense of humour and mental equanimity them
15 Suggestions
ahead in their personal relationship.
•
manage their stress well by adopting regular
develop problem solving skills and explore a
practice of spiritual methods such as yoga and
variety of alternatives.
meditation etc.
•
Both private and public sector employees
shall have proper planning and effective time
those organizations
the employees are promoted on the basis of their
•
can reduce their tension by becoming more
mental health than public sector employees.
their excellency. Because in
Both private and public sector employees must
•
The best way for both private and public sector
employees to reduce their stress is learn to
must invest in their health. Good nutritional
accept disappointments.
habits such as balanced diet and checking of
•
overweight will certainly yield a stress-free
Both private and public sector employees are
needed to be more flexible so that they can
life.
reduce employees tension to a greater extent.
322
a view of assessing their mental health”.
Experiments in Education, vol.XXIII No.5
(83-87).
By keeping these employees can maintain
better mental health and they perform well in
their job.
8. Sutherland et al., (1953) “Survey of mental
health of foreign students”. Scandinavian
Journal of Psychology, 32, I 22-30
16. Conclusion
The present study attempted to compare of mental
health among private and public sector employees.
Total estimated sample size is 100 (private sector –
50 and public sector – 50). Questionnaire method
of survey was used to collect the sample. Stratified
random sampling technique was used to collect the
data. After collecting the data, they were coded. To test
the hypothesis, statistical tool t-test analysis was used.
The result revealed that private sector employees have
better mental health than public sector. Mental health is
very important for employees to perform well in their
job. So, organization should do something towards in
this aspect. It is also imperative that proper balancing of
work-family relationship is essential.
Example
Always
Appendix
Questionnaire
Often
Sometimes
Never
X
I ................... have an inferiority complex.
(If your answer is Never)
(TPIMH)
1. I………feel that I am well matched for life and
its difficulties.
2. When something important has to be decided, I
………… know exactly what I want.
3. I ……….feel interior to other people.
4. I am ……….well able to represent my own
interest.
5. I …….allow myself to be easily influenced by
others.
6. I …….have a feeling of passivity and inner
emptiness.
7. I …….view the future with complete confidence.
8. When I encounter a difficult situation I………
trust my ability to master it.
9. I ……..feel full of energy and enterprise.
10. My mood is ………..good.
11. I ……….have an inferiority complex.
12. I ………feel some what awkward among others.
13. I am………..in good physical and mental
condition.
14. It is ………….true that I can’t stand myself.
15. I………have the feeling that things are too much
for me.
16. I am …………successful in satisfying my needs.
17. I ………act by motto that I am responsible for
my own happiness.
18. It is ……….hard for me to keep my mind on a
task or a job.
19. I……….let myself be easily intimated by others.
20. I am………very worried.
17. References
1. Barreti Fuches and Meadow (1976) “Survey
of mental health of students”. Scandinavian
Journal of Psychology, 32, I 22-30.
2. Bhan (1983) “Engineering and nonengineering students and compared their
mental health characteristics”. Dissertation
obstruct international – A 56/10. P.41-49.
3. Dutt (1966) “Mental Health in University
Students” Third survey of Research in
Education, New Delhi: NCERT – 424-425
4. Marie Jahada (1958) “Various dimensions of
mental health while discussing the importance
of positive mental health”. Fourth Survey of
Research in Education.
5. Mathew (1975) “ A study on relation between
the factors such as anxiety and the multiplied
roles of the working women”. Fourth survey of
research education.
6. Peter Backer (1989), Trier Personality
Inventory (TPI) standardized scale, to assessing
mental health of different types of people.
7. Sinha and Bhan (1983). “Mental health with
323
An empirical study on impact of demographics on buying
behavior of food and grocery consumers in Punjab
Anupama Prashar
1. Introduction
is now witnessing a remarkable change in consumption
patterns, especially in case of food. Food retailing
is undergoing a transformation from selling of food
items in grocery shops & mandis, haats and bazzars to
selling of processed food and grocery in supermarkets
where consumers inspect and select the products in a
comfortable ambience and still pay a fair price for the
product and the merchandise. Sometimes it happens
that one pays less than the price one would pay at the
nearest food store. Shopping for groceries is no longer
a strenuous and uncomfortable affair. Instead, it has
become a pleasant experience. Figure 1 shows the
formats for food retailing in India.
Food retailing is now an industry in itself. According
of Shopping Centers (ICSC). Currently, the food retail
to one of the recent reports on Food Retailing Scenario
sector is valued at US $70 billion and the valuation is
in India by Technopak, food & beverages is the major
expected to rise to US $150 billion by 2025.
‘Food and grocery’ is the second-largest segment of the
retail industry and is the least organized. According to
a recent report by Ernst & Young, ‘food and grocery’
accounts for almost 54% (USD 152 billion) of the total
Indian annual retail business . However, food retail
continues to be dominated by small local stores in the
unorganized sector.
Fuelled by the large disposable incomes, the food sector
segment, worth Rs 8,97,000 crore. This is contrary to the
belief that fashion is the largest segment of organized
2. Food and Grocery (F&G) Retail in India
retail in India. India’s food retail industry has been the
Unlike in the past, the debate today is no longer whether
main focus of MNCs looking to grow with the economy.
food and grocery retail in India would grow but rather
The industry has been rated as the fifth most attractive
how fast can it grow and what challenges need to be
emerging market for retail by the International Council
overcome. The Indian consumers do visit about eight
324
to ten outlets to purchase various food products,
which make up the daily consumption basket. These
outlets include neighborhood kirana stores, bakeries,
fruit and vegetable outlets, dairy booths and chakkies
(small flour mills), which offer very time-consuming
and unproductive way of shopping for food. With
changing lifestyle there is growing scarcity of time,
and convenience in food shopping is emerging as
an important driver for the growth of one-stop retail
formats that can offer consumer ‘value for time’ in
addition to ‘value for money’.
in Food retailing is supermarkets. This format caters
to the consumers’ need for choice and variety. These
needs translate into ‘more width’ and ‘more depth’ in
each category. These stores cater to the consumers in a
catchment area with a radius of 3 to 4 km and therefore
need to be destination stores. A supermarket can cater to
the consumers’ weekly, monthly and occasional needs.
Examples of supermarkets already in India are Reliance
fresh, Food World, Trinetra and Nilgiri’s .Hypermarket
is another popular format. Hypermarkets are essentially
destination stores catering to the consumers’ bulk
shopping needs in both food and non-food categories.
The key added values for the customer are ‘choice’
and ‘value for money’ because products are sold at a
discounted price. The hypermarkets model of food
retailing is new to India. Spencers (RPG), Big Bazaar
(Pantaloons), Star India Bazaar are some examples.
Cash & Carry (C & C) Stores sell their products to
their members only. The typical area of a C & C store
is 70,000 to 100,000 sq. ft. and both food and nonfood products are stocked. The members are typically
retailers and institutions. The key added value is a
wide range of products under one roof, available at
wholesale prices. So far, only four (three foreign and
one domestic) companies operate in this space: Metro
(German), Shoprite (South African), and SPAR (Dutch)
are the foreign players while Wal-Mart has recently set
up a joint venture with Bharti retail with the first cash
and carry store in Amritsar under the brand name of
“Best Price” .Table 1 summarizes the various companies
operating in different retail formats.
Modern state of the food retailing is not a demand led
but the supply led one. Major spending on food and
increasing out of home food consumption represent
a significant opportunity for food retailers and food
service companies. The organised food retailers deploy a
number of formats ranging from gigantic hypermarkets
at one end of the spectrum to the no-frills discount
stores at the other end. They are distinguished by size,
number of items carried, strategic pricing and customer
segments targeted among others. In India about 90%
of food purchases are made within a distance of 1.5
km from the customer’s home. This means that an
organised retailer would need to have a ‘neighbourhood
store’ close to customers in order to capture the share
of wallet that is spent on food. These stores would cater
to the consumer’s daily and weekly needs. The outlets
closest to a neighbourhood store in India are ‘Safal’
outlets operated by Mother Dairy in Delhi, Margin
Free in Kerala and Subhiksha. Another popular format
FORMAT
Hypermarket
KEY
COMPANIES
SIZE
TARGET
POPULATION
PRICING
ITEMS
CARRIED
RPG’s Giant,
Pantaloons,
Big bazaar,
Vishal,Amartex
25,00050,000
sq ft
Middle income
group
Lower than
MRP
Most
categories
325
Supermarkets
Discount stores
Convenience
stores
Reliance fresh,
More stores, Easy
day, Food world,
Food bazaar
30005000 ft
Subhiksha,
Margin free,Apna
Bazaar
Varies
but less
than
3,000
sq ft
6-Ten, Spencers
Everyone
Middle income
group
Everyone
Varies
MRP
Processed
foods and
groceries
Everyday
lowest
price
Processed
foods and
groceries
MRP
Varies – but
specialized
in each store
Table1: Organised Retail formats in food segment
3. Key Challenges in Food Retailing
Supply Side
Demand Side
•
•
Penchant for fresh/home-made and value
Sourcing base and efficiency
The fragmented agri supply base coupled with an
consciousness
The Indian consumer, unlike his western counterpart,
inadequate legal framework make it difficult for
has a penchant for freshly cooked food over packaged
retailers and food processors to procure quality produce
food. This is a result of dietary patterns, poor electricity
at competitive costs directly from farmers. The small
supply, low penetration of refrigerators and a family
size of the food processing industry further limits the
structure where one of the primary roles of the
supply options.
•
housewife is feeding the family. The Indian consumer
is extremely value conscious. A TSMG study indicates
Rentals account for 7-7.5% of the total costs for
that packaged food players need to drive down prices
organized retail in India against global benchmarks
by almost 35-40% to be comparable on cost with home
of less than 3%. Real estate availability and costs will
made food.
•
continue to remain achallenge in the retail industry with
Diversity of tastes and preferences
factors like adequate parking, ambience and proximity
Multiple cultures, languages and religions have a huge
being the key drivers of footfalls.
bearing on the tastes and preferences of the Indian
•
consumer. This will pose a challenge for players
aspiring to develop a pan Indian presence.
•
Real estate availability and cost
Manpower availability
As organized retail expands, there is expected to be a
Willingness to travel
dearth of skilled manpower. The lack of institutions
Given the current density of retail outlets in India,
and courses for different aspects of retail management
retailers will have to motivate the consumer to trade
will have an impact on the overall supply of quality
convenience with price, range and ambience.
manpower.
326
4. Review of literature
economic shoppers, convenient shoppers and elegant
Ali, Kapoor,and Moorthy(2009),conduced a study to to
shoppers were identified. Main conclusions and its
develop a marketing strategy for a modern food/grocery
implications for retailing management were pointed
market based on consumer preferences and behaviour.
out.
A total of 101 households having sufficient purchasing
power were personally surveyed with a structured
Erdem, Oumlil, Tuncalp, (1999) proposed that
questionnaire. These households are spread across the
retailing business is greatly affected by the patronage
well-developed Gomtinagar area of Lucknow city.
behavioral orientations of shoppers. Understanding
Simple statistical analysis such as descriptive statistical
these orientations can assist retailers in developing
analysis, frequency distribution, cross tabulation,
appropriate marketing strategies toward meeting the
analysis of variance, and factor analysis to assess the
needs and wants of consumers. One important factor
consumers’ preferences for food and grocery products
explaining consumer behavioral orientations is their
and market attributes were carried out. The results
values. Another important factor affecting consumer
shows that the preferences of the consumers clearly
behavioral orientations is the store image, an image
indicate their priority for cleanliness/freshness of food
shaped by store attributes. They examined the linkage
products followed by price, quality, variety, packaging,
between consumer values and the importance of some
and
salient store attributes.
non-seasonal
availability.
The
consumers’
preference of marketplace largely depends on the
convenience in purchasing at the marketplace along
Omar and Abisoye (2008) examined the role price as
with the availability of additional services, attraction
a determining factor in consumer patronage of grocery
for children, basic amenities and affordability. Results
retail stores in the United Kingdom. A cross-section of
suggest that most of the food and grocery items are
grocery consumers (n = 250) constituted the sample
purchased in loose form from the nearby outlets. Fruits
for the study. Grocery stores were grouped and stores
and vegetables are mostly purchased daily or twice a
were selected for the study on the basis of the variety of
week due to their perishable nature, whereas grocery
grocery stores offers the consumers. A mail survey was
items are less frequently purchased.
used to investigate price perceptions and store choice
across three different retail formats. Respondents
Hemalatha, Sivakumar, Jayakumar, (2009) suggested
were grouped into high and low groups for each of
that different groups of consumers believe that different
the price cue factors. The groups were compared
store attributes are important. Therefore, store attributes
using analysis of variance (ANOVA) for each price
appears to be a promising market segmentation criterion.
construct at each level of the dependent variable for
In this sense, their work focused on store attributes as a
store choice. Findings suggested that price cues affect
possible criterion to segment the shoppers. They started
consumer store choice. Price awareness positively
by analysing the importance of consumer segmentation
impact patronage of retail stores that implement low
to the retailers. After reviewing the literature of market
cost strategies, while status sensitivity and price/quality
segmentation, a segmentation analysis of clothing
plan tend to positively impact patronage of retail stores
and apparel shoppers in India was performed. First, a
that implement higher price strategies. As the UK
hierarchical cluster analysis was carried out, and then
grocery market becomes saturated consumers tend to
k-means cluster analysis identified three meaningfully
take advantage of price competition. This is particularly
differentiated customer groups. Further, a classification
important when communicating store pricing policy
tree analysis was performed to identify the store
to the target consumers. Mittal (2009) compared the
attributes that differentiated the clustered groups.
consumer evaluation of store attributes for grocery
Finally, three clusters of Indian shoppers, namely,
and apparel retail segment.. The retail format- which
327
represents the right mix of various store dimensions-
across four Indian cities- two major and two smaller
will eventually depend upon the interplay between
cities with around 100 respondents from each city.
various store attributes. This study used a research
Stratified systematic sampling design with a sample size
instrument developed by the author in an earlier
of 409 was used for the study. Multivariate statistical
study for the comparative analysis. A very significant
techniques were used to analyze the data collected with
pointer from this research is that while there is some
the help of a structured questionnaire. it was found that
commonality of attributes between retail sectors, the
Customer patronage to grocery stores positively related
precise importance and mix was, arguably, determined
to location, helpful, trustworthy salespeople, home
more by the motivation of the customer behind each
shopping, cleanliness, offers, quality and negatively
specific shopping excursion. The grocery and apparel
related to travel convenience. Kiranas do well on
store attributes dimensions that have emerged from this
location but poorly on cleanliness, offers, quality, and
study prove that the factors are different in terms of
helpful trustworthy salespeople. The converse is true
their composition and importance.
for organized retailers.
Carpenter and Moore, (2006) provided a general
Alhemoud, (,(2008), studied the product selection
understanding of grocery consumers’ retail format
processes from Kuwaiti nationals based on their
choice in the US marketplace. A random sample of US
shopping habits in the Co-Operative Supermarkets (A
grocery consumers (N=454) was surveyed using a self-
government owned grocery stores. The literature on
administered questionnaire. Descriptive and inferential
consumer behavior and store choice presented in the study
statistical techniques (regression, ANOVA) were used
suggests that consumers make decisions to patronize a
to evaluate the data. Identifies demographic groups who
particular store on the basis of a set of attributes that
frequent specific formats (specialty grocers, traditional
they view as important. This study attempts to explore
supermarkets, supercenters, warehouse clubs, internet
the determinant attributes that influence the patronage
grocers) and examines store attributes (e.g. price
decisions of supermarket consumers in Kuwait. Based
competitiveness, product selection, and atmosphere) as
on a descriptive analysis of data collected via an
drivers of format choice.
accidental sampling procedure, fourteen store attributes
were identified. These attributes were factor analyzed,
4. Objective of study
generating four image dimensions intuitively labeled
(a) To analyze the buying behavior of consumers with
merchandise, personnel, accessibility and promotion.
respect to food and grocery products.
A stepwise regression showed that merchandise image
was the most salient in determining the frequency of
(b) To explore how respondents actually differ in
supermarket shopping. None of the demographic
terms of their demographic characteristics across
characteristics of consumers did seem to have an impact
on the perceived importance of the promotion image.
the preference of shopping food and grocery.
Most of the differences among the categories of the
(c) To find out the shopping patterns and spread of the consumers’ demographic characteristics were found in
monthly basket across different formats.
the accessibility image, providing possible explanation
for why the rank of the importance of accessibility
5. Research methodology
elements varies considerably from one study to another.
The methodology adopted for the study is as follows:
Goswami & Mishra (2009) studied Indian consumers
Research Design
move from kirana stores to organized retailers when
The research design chosen for conducting the study
shopping for groceries. The study was carried out
was Descriptive Cross Sectional. A cross-sectional
328
study is the simplest variety of descriptive study that can
travelled to purchase the items and packaged versus
be conducted on representative samples of a population.
loose purchasing.
6. Source of data
The second part of the questionnaire included socio-
Primary data was collected using questionnaire method
demographic information of the respondents such as
of data collection.
age, gender, family size, education level and household
income.
10. Data analysis
7. Sample selection
The target population of the study included customers
The collected data were digitized in an SPSS spreadsheet
who prefer to shop at organised retail stores in Punjab.
and a simple statistical analysis to assess the buying
behaviour
A sampling frame from which a random sample could
which
included
descriptive
statistical
analysis, cross-tabulation and frequency distribution
be drawn was unavailable. However, an accidental
was carried out. Analysis of variance (ANOVA) was
sampling method was chosen to serve the purpose of
used to assess whether socio-demographic factors play
data collection. This method seemed acceptable and
a significant role in food purchase decisions. To assess
appropriate taken into account the exploratory nature of
the mean rank difference and the importance of product
the study and the lack of a sampling frame. 50 organized
and market attributes, the Friedman test was conducted.
retail stores were selected in five selected cities for data
Factor analysis was conducted to identify the underlying
collection. A total of 101 consumers were interviewed
dimensions among a set of food product and market
personally to know their buying patterns for food and
attributes. The Principal Component Analysis was done
grocery items. The product categories under the study
using Varimax rotation criterion. The Kaiser criterion
included fruits, vegetables and grocery products such
was used to retain factors with eigen values only greater
as processed and unprocessed rice, wheat flour, pulses,
than one.
edible oil and spices. These cities were selected since
the respondents in this locality are considered to be
11. Results and Discussion
Demographic profile of respondents
progressive; health, hygiene and quality conscious and
have sufficient purchasing power to go for organized
Out of the 101 respondents surveyed, 70 per cent were
retail shopping.
male. Age composition of the sampled respondents
indicate that the surveyed group is matured enough to
8. Data Collection Technique
respond on various food consumption issues. Out of
Data was collected by doing survey at 50 retail stores
the total surveyed consumers, more than 65 per cent of
in five selected cities viz. Ludhiana, Patiala, Amritsar,
the respondents were between 20 to 40 years of age.
Jalandhar, and Mohali.
Educational profile of the respondents shows that most of
them have graduate level or higher qualifications. Only
9. Data Collection Tool
10 per cent of the respondents are from the intermediate
The survey questionnaire was structured with two parts.
(higher secondary) level and below. Sample households
The first part included questions related to consumers’
falling between the monthly income group of Rs 10,000-
purchase behaviour in terms of frequency of purchase,
15,000 dominated, with a 40.6 per cent share. Table 1
monthly expenditure, place of purchase, distance
lists the demographic profile of respondents.
329
Demographics
Response(%)
Gender
Male
70.3
Female
29.7
Family size
<=2 adults
45.6
3 adults
28.7
>3 adults 25.8
25.8
<= 2 children
73.3
3 children
21.8
>3 children
5.0
Age of respondent
<=20 years
3.0
21-30 years
21.8
31-40 years
44.6
41-60 years
26.8
Educational background
Intermediate and below 9.9
9.9
Graduate
37.6
Post graduate
38.6
Doctoral and professional
3.9
Monthly income (%)
<Rs 10,000
34.6
Rs 10,000-Rs 15,000
40.6
>Rs 15,000
24.8
Impact of demographics on buying behavior
The survey results show that vegetables are the most
frequently purchased products with a mean value of
1.59 and a mode value of 1 which indicates that most
of the consumers shop for vegetables on a daily basis.
Similarly, fruits are generally purchased twice a week
with a mean value of 2.29 and a mode value of 2. On the
other hand, grocery products, which are less perishable,
are less frequently purchased. The analysis reveals that
most of the respondents buy grocery products on a
monthly or fortnightly basis. Table 2 details the buying
behavior of respondents.
330
Table 2: Buying behavior of respondents
Buying
decision
Products
Grocery
Frequency
of purchase
Monthly
expenditure
Mode
Standard
deviation
Friedman test
Chisquare=114:78
4.02
5
1.31
Fruits
98
2.29
2
1.04
Significance=
0.000
Vegetables
100
1.59
1
0.84
Degree of
freedom=2
Grocery
91
3.18
3
1.07
Chisquare=76:74
2.18
2
0.79
Significance=
0.000
2.08
2
0.71
Degree of
freedom=2
2.35
2
0.97
Chisquare=36:53
1.79
1
1.07
Significance=
0.000
96
2.07
1
1.28
Degree of
freedom=2
92
1.52
1
0.72
Chisquare=36:53
Fruits
96
1.28
1
0.54
Significance=
0.000
Vegetables
97
1.24
1
0.45
Degree of
freedom=2
Fruits
Grocery
Fruits
Vegetables
Grocery
Preference
on food
packaging
Mean
94
Vegetables
Preferred
market
distance
n
94
96
93
95
Note: Frequency of purchase: Daily – 1, twice a week – 2, Weekly – 3, Twice a month – 4, Monthly – 5
Monthly expenditure: Rs 100 – 1, Rs 100-500 – 2, Rs 500-1000 – 3, Rs 1000-2000 – 4, . Rs 2000 – 5
Preferred marketplace: Roadside shops – 1, nearby vendor/shop – 2, Supermarket – 3, Wholesale market – 4
Preferred market distance: , 1 km – 1, One to 3 km – 2, 3 to 5 km –3, 5-10 km – 4, . 10 km – 5;
Preference on food packaging: In loose form – 1, Vendor packaged – 2, Branded (packaged) – 3
331
demographic profile of the respondents was done by
analyzing the variance (ANOVA) to assess if there are
any significant differences in the individual responses
for grocery, fruits and vegetables (Results indicate
that out of the five aspects, the responses of males and
females differ significantly on the frequency of purchase
and preferred market distance for grocery items and
monthly expenditure and preference on packaging for
vegetables. Males generally prefer to purchase grocery
once a month; while some of the female respondents
prefer a weekly purchase.On the other hand, male
respondents may travel more distance for purchasing
grocery while females prefer a neighbourhood
marketplace. Table 3 gives the details of analysis of
variance between buying behavior and demographic
characteristics.
Table 2 indicates that most of the consumers prefer
nearby marketplaces to meet their food consumption
requirements. Grocery food items are generally
purchased from nearby grocery shops situated in the
residential localities, whereas fruits and vegetables are
purchased from roadside shops. With rapid changes in
the preferences of the consumer towards convenient
purchasing, the supermarket culture is coming up very
fast. These supermarkets offer conveniently packaged
food items with choose and pick facilities. About
10 per cent of the respondents prefer supermarkets
for grocery food purchasing. Food purchasing is
distance sensitive and most of the respondents desire
for availability of food products within one kilometre
radius. A comparative study of consumer responses on
the five aspects of food purchase behaviour with the
Table 3: AVONA between buying behavior and demographic characteristics
Buying
behavior
Products
Gender
Age
Education
Income
6.742
0.692
1.13
0.318
Fruits
0.11
1.897
0.506
3.824
Vegetables
0.67
2.598
0.961
5.731
Grocery
0.561
1.043
0.453
1.153
Fruits
0.247
0.625
0.7
3.003
Vegetables
4.161
0.613
2.872
4.283
1.492
0.849
0.732
0.39
Fruits
0.717
1.096
1.445
1.335
Vegetables
1.25
0.941
1.28
0.781
Grocery
7.909
0.214
2.057
2.869
1.085
3.655
1.253
1.412
Vegetables
1.063
0.981
0.968
1.358
Grocery
0.2
0.752
0.625
1.634
Fruits
0.479
0.608
0.747
3.882
Vegetables
5.591
0.875
1.103
1.938
Grocery
Frequency of
purchase
Monthly
expenditure
Grocery
Preferred
market distance
Preference on
food packaging
Frequency of
purchase
Fruits
332
In case of monthly expenditure, males spend more on
vegetables as compared to female respondents; while in
case of packaging, females are more inclined towards
purchasing vendor packaged vegetables. Consumers
belonging to the young and middle age groups of less
than 40 years prefer frequent purchase of vegetables
as compared to consumers belonging to the older age
groups. Likewise, consumers of the young and middle
age groups may travel more to purchase grocery and
fruits as compared to those belonging to the older
age groups. Consumers of the higher income groups
purchase fruits and vegetables frequently and also spend
more on these items. These findings clearly indicate
that H2 is only partially true and the income level of a
•
•
•
consumer is an important factor which affects most of
the food purchase decisions.
Conclusion
Food consumption patterns in India are rapidly changing
from cereal-based food products to high-value food
products and slowly from fresh, unprocessed, unbranded
food products to processed, packaged and branded
products. A strong economic growth has brought with it a
new set of consumers with sufficient disposable income,
who are more conscious of the latest trends in health and
hygiene, particularly in the fast growing cities. To reap
the benefits of the changing buying behaviour of the
consumers and their capability for buying quality food
and grocery items, modern organized retail formats are
growing at a phenomenal pace throughout the country.
This has induced big national and multi-national
corporations to invest into organized retailing. In the
emerging Indian retail environment, this study provides
insights on consumers’ preferences of food and grocery
products in terms of product and market characteristics
with the help of primary survey data. Findings of the
study clearly indicate that vegetables and fruits are most
frequently purchased from nearby markets as compared
to grocery products.
•
•
•
•
•
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•
•
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Food Retailing in India(2009)-Technopak
adviser
McKinsey & Co in Food Forum 2009
The Great Indian Retail Story- Ernst &
Young(2009)
Brand Valuation: An Empirical Study With Special
Reference to Indian Car Industry
Dr. P. Natarajan
Professor of Commerce, School of Management, Pondicherry University
U. Thiripurasundari
Doctoral Scholar of Commerce, School of Management, Pondicherry University
1. Introduction
In the dynamic scenario of competitive market and
with the increasing concern for quality, brand and
brand management have become a core element of
the corporate policy. “Brand, which is a distinguishing
name and a symbol, logo, trademark, package, and
design intended to identify the goods or services of
either one seller or a group of sellers and to differentiate
these goods and services from those of competitors and
brand loyalty psychic allegiance to the combination of
attribute of a branded product focusing on the valuation
of brand”1. Brand evaluation has become an important
measure of valuing a product in the current business
environment. A brand is an index of how strong
and successful a firm is. There are various methods
developed for valuing brand equity. They are cost based
approaches, market based approaches, royalty method,
discounted cash flow method and Interbrand method.
Interbrand has been adjudged as widely used method
to ascertain brand strength and to arrive at brand value.
A build presentation about valuing brand equity of
selected car brands is given in this paper.
Maruti Suzuki India Limited is the premier car company
2. Major Car Manufacturers in India
Tata Motors Limited is India’s largest automobile
in India. Maruti Udyog Limited (MUL) was established
in Feb 1981. The company entered into collaboration
with Suzuki Motor Corporation of Japan to manufacture
cars. Maruti is the highest volume car manufacturer in
Asia, outside Japan and Korea. Despite there being 19
companies now in the passenger car market in India,
Maruti holds about 50% of the total market share. Maruti
Udyog Limited has many unique service advantages for
the customers. On 17th September 2007, Maruti Udyog
was renamed as Suzuki India Limited. Both in terms
of volume of vehicles sold and revenue earned, the
company is India’s leading automobile manufacturer
and the market leader in the car segment. It has bagged
the First Position in JD Power Customer Satisfaction
Index for the last consecutive ten years. The company
has also ranked highest in the India Sales Satisfaction
Study. The models of Maruti Udyog Limited cars
are Maruti 800, Maruti Alto, Maruti Zen, Maruti Zen
Classic, Maruti Esteem, Maruti Gypsy, Omni, Wagon
R, Versa, Baleno, Swift and Grand Vitara.
company with large revenues. It ranks first in the
There are many companies producing cars such
as Maruti, Tata, Hyundai, Ford, Honda, Toyota,
Chevrolet etc. in the Indian Market. The top leaders
in this domain are Maruti, Tata and Hyundai as these
companies have high market share of 75 percent and
provide acknowledgement confidence, tangible values
and status of the society to the customers and to the
value, utility, life, pride which proceeds towards giving
a brand name to its product. This study focuses only
three companies such as Maruti Suzuki Indian Limited,
Tata Motors India Limited and Hyundai Motors India
Limited. A brief description about the selected car
manufacturers are given below:
category of commercial vehicles and the second largest
in the passenger vehicles, mid size car and utility vehicle
segments. The company is the world’s fifth largest
medium and heavy commercial vehicle manufacturer.
Over 3.5 million Tata vehicles are moving on Indian
roads, since 1954. The models of the company are Tata
Indigo, Tata Indica, Tata Sumo, Tata Safari and Tata
Indigo Marina.
Hyundai Motor India Limited (HMIL) was established
in 1996 and is a wholly owned subsidiary of South
Korean multi national, Hyundai Motor Company.
334
not forward looking. Rather, they look backwards into
history. The cost-based method is conceptually the least
defensible. It is perhaps the weakest. In order to arrive at
the value of all costs including advertising, promotions,
research and development, that have gone into brand
creation are added and converted into current prices.
For instance, for an imaginary brand like ‘Rootsa’ Rs.50
Crores was spent in brand building. According to cost
based method, the brand’s value would be Rs.50 Crores.
HMIL is the fastest growing and the second largest car
manufacturer in India and presently selling 30 variants
of passenger cars in six segments. The Company has
set up more than 70 dealer workshops that are equipped
with the latest technology, machinery and international
quality press, body and paint shops, across the country,
thereby providing a one-stop shop for a Hyundai
customer. Hyundai also has a fleet of 78 emergency
road service cars that can provide emergency service
to all its customers anytime, anywhere. The models
of Hyundai are Santro, Getz, Accent, Elantra, Sonata,
Tucson and Terracan. The new models of Hyundai
Motors are Verna, Getz next generation and Santa Fe.
3.2. Market Based Method
Consider how various things are traded on the basis
of market price. For instance, if a Maruti 800 car is
available for sale, how does one calculate its price? The
immediate point of reference that is taken for arriving
at its value is the year of its purchase and the price
at which other cars are sold or bought with the same
characteristics. The price which is generally quoted is
above, equal to or less than the average price of similar
goods or articles. Here, the value is determined by
making a reference to the market price of comparable
brands in recent transactions.
3. Brand Valuation
In today’s business arena, brand valuation plays a key
role. The intellectual properties of the business like
patents, copyrights, design, trademarks are getting
greater importance. The valuation of such intangible
assets processes towards the brand valuation. It is most
frequently used in some sort of transaction including
balance sheet. “Brand valuation is the process of
assigning financial value of brand. As the brand
value is the net present value (NPV) of the forecast
brand earnings, discounted by the brand discount rate
(Interbrand). The value of the brand depends both on a
good and a strong financial performance and the result
of owing powerful brand is the increased shareholders
value”2. The brand value does not depend only on
the consumer’s behaviour, therefore, it is crucial to
conceptualize brand value creation process and develop
adequate quantitative methods of measuring brand
value. A brand is an index of how strong a firm is.
There are various methods which have been proposed
for valuating a brand. These include cost based method,
market-based method, royalty method, discounted cash
flow method and interbrand method. Interbrand has also
proposed a procedure. It has based brand strength to
arrive at brand valuation.
3.3. Royalty Method
“In this method, the brand value is estimated by the
royalty income that a brand would generate if it is
licensed out to another party” 5. For instance, what
would be the brand value of Nescafe brand for Nestle?
Or in other words, how much royalty would Nestle have
to pay to a third party if it did not have its own coffee
brand and desired to use Nescafe? The royalties in this
method are added for a specific period in future and
then added and discounted to arrive at the net present
value. This method of brand valuation is quite popular
among accounting firms. There are two important
dimensions of these methods: the expected future sales
or forecast sale and the royalty rate. Both these numbers
need extreme caution in its calculation. A wrong sales
projection or incorrect royalty rate that is applied to the
sales may through the whole brand valuation exercise
out of gear. Therefore, while calculating the royalty rate
applicable to brand sales, a reference has to be made
with reference to the industry scenario, characteristics of
comparative licensing arrangement, nature of business,
3.1. Cost Based Method
Typically, cost-based brand valuation methods take
into consideration the costs that have been incurred by
the company to create the brand. These methods are
speculative or established, etc.,
335
3.4. Discounted Cash Flow Method
cost synergies, second demand generation and third
This method takes the brand as an asset. “An asset is
secure future demand (thereby reduce operative and
something which is useful to the business because of
financial risk). The brand evaluation process consists of
its unique capability to generate revenues or profits
the following five steps:
in future. The economic value of an asset to a great
extent depends on the revenue or profit stream which
Segmentation: Markets are generally made up of
is associated with it. Greater the more will be its
different segments. Consumer behaviour and attitudes
valuation, and vice versa. The discounted cash flow
vary towards brand. This calls for separate assessments
method of brand valuation takes the brand as an asset”
for individual segments for arriving at correct valuation
. It is to be observed that the brand ownership brings
of the brand.
6
cash flows or returns. The estimation of the returns from
brand ownership is what is aimed at in this technique of
Financial Analysis:
brand valuation.
starts with assessment of company value and then
The brand valuation process
the contribution made by the brand is determined.
3.5. Inter Brand Method
This requires isolation of brands’ contribution from
“This method of valuation is a kind of discounted cash
total income. Accordingly, economic value added is
flow method. Historical earnings are not sufficient
calculated. This facilitates to find out whether the firm
for valuing the brand, because past earnings may not
is able to generate returns that exceed cost of capital.
provide authentic and reliable indication of a brand’s
future performance. Therefore, this method relies on
Demand Analysis: A brand’s value is influenced by how
future cash flows which could be associated with the
it is positioned in the minds of customers. Interbrand
brand” .
valuation takes into account the factors that influence
8
consumer demand and motivate purchase. The factors
The Interbrand procedure includes the following steps:
so identified are weighed in terms of their influence
Firstly, the percentage of revenues which could be
on demand. The contribution of brand’s association is
accounted for by the brand from the total earnings of
statistically calculated and expressed as Role of Brand
the business is figured out. Secondly, with the help of
Index (ROBI)
experts, projections are made about the net earnings of
that business. Thirdly, earning due to intangible factors
Brand Strength Analysis: Brand strength is inversely
is found out. This is done by deducting a charge for
related with risk. Low risk implies greater certainty of
the ownership of tangible assets. Their contribution
future earnings. The brand’s strength is analyzed in
to the earnings is deducted. The residual is earnings
comparison with its competitors on the basis of seven
generated by intangible assets like patents brand, etc.,
facts. These include market, stability, brand leadership,
The fourth step is to identify the earnings of intangible
support, trend, internationality and protection. This
assets. The issue is something like this: when we buy
measure diagnoses the brand’s competitive position.
groceries from a store, is the earning to the store due
to brand name or its physical location which provides
Net Present Value: The economic value of future
convenience to customers?
earnings of a brand is inversely correlated with
estimated risk (and risk has direct relation with brand
3.6. Brand Equity Evaluation
strength). The brand’s strength is transformed into
Brand value is the net present value of future earnings
brand risk through S-curve. Depending upon the brand
generated by the brand alone. The Interbrand method is
strength, the discount rate is applied (risk free rate fro
based on three economic functions of the brand: first,
strongest brands).
336
Some brands are strong and some brands are weak.
several models of competing Brand Equity, Interbrand
method is widely adopted. Hence, the researchers also
have used the Interbrand method for computing Brand
Equity of the selected car manufacturing units. It is
based up on the application of brand strength assessment
because they require a complete and comprehensive
brand analysis and then to balance that valuation against
the other less comprehensive methods to set final brand
value. The study period was considered from 2006
-2010. The researcher has modified this method on the
following line.
Strong brands signify strength and certainty in future
earnings. In weak brands, future earnings tend to
be shrouded with uncertainties. The final step in the
Interbrand valuation method is to calculate the brand
strength. These brand strength factors are:
1. Market Characteristics: Brands in growing
markets are better and stronger than declining
or trend based markets.
2. Stability: Established and familiar brands tend
to be stronger and enjoy customer loyalty.
Financial performance measures an organization’s raw
financial return to the investors. But for brand equity
valuation the researchers have used the concept of
economic profit which is a concept akin to EVA.
3. Leadership: Leading brands in the product
category are stronger. They are better positioned
to influence the market they operate in.
4. Internationality: This signifies a brand’s
acceptance in other markets. Widely accepted
brands can always offset misfortune in one
market with gains in the other markets.
To determine economic profit, taxes from net operating
profit to get to net operating profit after tax (NOPAT) is
removed. From NOPAT, a capital charge is subtracted
to account for the capital used to generate the brand’s
revenues; this provides the economic profit for each
analyzed year.
5. Trend: What is brand’s performance over
time? Consistent brands exhibit their relevance
to customers.
For the purpose of rankings, the capital charge rate is
set by the industry weighted average cost of capital
(WACC). The financial performance is analyzed for a
five-year forecast and for a terminal value.
6. Support: How consistently has the brand been
supported by the company? It is not a matter of
one time investment in the brand, rather quality
and consistency of investments made in the
brand matter?
The terminal value represents the brand’s expected
performance beyond the forecast period. The economic
profit that is calculated is then multiplied against the
role of brand to determine the branded earnings that
contribute to the valuation total as noted earlier.
7. Protection: Protected brands are stronger.
Brand protection is brand strength. These
seven dimensions of brand strength criteria are
not equally weighted. Rather, a total score is
divided amongst these dimensions on the basis
of their importance.
6. Analysis & Discussion
Brand Equity has been valued by adding Discount
Brand earning and Terminal Brand Value. The basic
assumptions laid down for adopting this model are:
The main objective of the study is to evaluate brand
equity of selected car manufacturer in India.
1. The average annual growth rate of the car
industry 2.5%
2. The Weighted average cost of capital 15%
5. Methodology of the Study
It is an analytical study based on secondary information
given by the selected car manufacturing units. Among the
337
EXHIBIT 1 MARUTI SUZUKI BRAND VALUE
Rs.Crore
PARTICULARS
2006
2007
2008
2009
2010
NOPAT
1189.1
1561.6
1730.8
1218.7
2497.6
CAPITAL EMPLOYED
5524.3
7484.7
9315.6
10043.8
12656.5
CAPITAL CHARGED @ 8%
441.944
598.776
745.248
803.504
1012.52
INTANGIBLE EARNINGS
747.156
962.824
985.552
415.196
1485.08
BRAND EARNING
590.2532
760.631
778.5861
328.0048
1173.213
BRAND DISCOUNT RATE @ 15%
88.53799
114.0946
116.7879
49.20073
175.982
DISCOUNTED BRAND EARNINGS
501.7153
646.5363
661.7982
278.8041
997.2312
ROLE OF BRANDING INDEX @79%
NPV OF DISCOUNTED BRAND
EARNINGS
3086.085
NPV OF TERMINAL BRAND VALUE
10971.46
BRAND VALUE
14057.54
Source: www.marutisuzuki.com
EXHIBIT 2 HYUNDAI MOTORS BRAND VALUE
Rs.Crore
Particulars
2006
2007
2008
2009
2010
406.92
525.1
466.75
514.12
195.64
1948.01
2576.97
4411.43
6137.11
7274.59
155.8408
206.1576
352.9144
490.9688
581.9672
INTANGIBLE EARNINGS
251.0792
318.9424
113.8356
23.1512
-386.327
198.73
251.96
89.93
18.29
-305.2
29.8095
37.794
13.4895
2.7435
-45.78
168.9205
214.166
76.4405
15.5465
-259.42
NOPAT
CAPITAL EMPLOYED
BRAND EARNING
EARNINGS
215.6535
2019.12
BRAND VALUE
2234.774
Source: www.hyundaimotors.com
338
EXHIBIT 3 TATA MOTORS BRAND VALUE
Rs.Crore
Particulars
2006
2007
2008
2009
2010
NOPAT
1528.88
1913.39
2028.92
1016.55
2240.08
CAPITAL EMPLOYED
8447.52
10852.94
14094.51
25534.76
31591.38
675.8016
868.2352
1127.561
2042.781
2527.31
INTANGIBLE EARNINGS
853.0784
1045.155
901.3592
-1026.23
-287.23
673.93
825.67
712.08
-810.72
-226.9
101.0895
123.8505
106.812
-121.608
-34.035
572.8405
701.8195
605.268
-689.112
-192.865
BRAND EARNING
EARNINGS
997.951
956.95
BRAND VALUE
1954.901
Source: www.tatamotors.com
Further, this model helps the management to review the
brand decisions on a return-on-assets basis which tries
to link investment made on a brand to the increments
8. References
1. A. Aakar, Managing Brand Equity, New
York: Free Press,1991
2. Bir Kin, Michael, “Brand Valuation” in Don
Cowley, Understanding brands, NY, Kogan
Page 1996, p185
3. Business week, the 100 Top Brands,
Interbrand citigroup, August 6, 2005, p 52.
4. Doyle, Peter Value Based Marketing NY,
Wiley 2000.
5. Harsh & Verma, “Brand management” Excel
Books Publication ,
New Delhi, 2008.
6. Kevin Lane Keller, “Strategic Brand
Management NJ, Prentice – Hall, 2005
7. Murphy, John M, “Brand Strategy Camb”,
England, Director Books, 1990
8. Interbrand, brand valuation, April 2004, p.8.
9. Woodward Caroline, “Intangible assets,
Brand
Valuation”,
Headlines
Price
Waterhouse Coopers, October 2004.
10. www.interbrand.com
11. www.marutisuzuki.com
12. www.hyundaimotors.com
in brand value over a reasonable period of time. Brand
Equity valuation using the Interbrand model, reveals
the management the disparities between its assumptions
and the market realities pertaining to the brand, and also
brings the management closer to its consumers and helps
them more responsive to market needs. The cumulative
effect of brand value over the period of last five years
has been computed and shows as brand equity of the
car unit. When comparing the results of Brand Equity
value of three car units, Maruti has got the highest value
followed by Hyundai and Tata Motors.
7. Conclusion
In a nutshell, this article highlights the emerging need
for gaining brand equity is the sinquonun for all types
of industries to thrive in the competitive environment.
Car Industry is not an exception to this competitive
strategy. The continuous promotion of brand value will
for formulate the unit to capitalize its brand and gain
Brand Equity. The result of this paper clearly shows that
MUL is able to maintain Brand Equity consistently.
13. www.tatamotors.com
339
Online Perfpormance Appraisal System: An
Emprical Study at Bhel Piping Centre, Chennai
Prof. V.M. Ponniah, School of Management, SRM University, Chennai
Ms Bala.R & Ms Jonisha S. Jones, MBA Final Year students
School Of Management, SRM University, Chennai
Human Resource management is one of the most
important functional areas of any organization. And
one of the major components of Human Resource
Management is Performance Appraisal. Performance
Appraisal helps us to identify the ability of each
salary increases. With the introduction of Information
Technology, Performance Appraisal has gone to the
next level. Online Performance Appraisal is the latest
trend in Performance Appraisal process.
individual and relatively merit them in the organization.
In general there are many types and methods involved
in evaluating an employee using performance appraisal.
The contents of the paper include:
This research has focused on the Online Performance
Appraisal system in existence at Bharat Heavy
Electricals Ltd (BHEL), a company which is one
among the Navaratnas of India. BHEL is one of the
Largest Engineering and Manufacturing Enterprise in
India in the energy related infrastructure sector today.
The research aims to find out the effectiveness of the
Online Appraisal which was introduced for appraising
the performance of the Executive level employees of
BHEL.
1.
2.
3.
4.
5.
6.
7.
Introduction
Company Profile-BHEL
On Line Performance Appraisal
Research Methodology
Data Analysis and Interpretation
Findings
Conclusion
2. Company Profile - Bhel
Bharat Heavy Electricals Limited (BHEL) is one of
the largest engineering and manufacturing enterprise in
India in the energy-related/infrastructure sector. BHEL
is one of the nine large Public Sector Undertakings
known as Navratnas or nine jewels. BHEL was
founded in 1950s. Its operations are organized around
three business sectors: Power, Industry - including
Transmission, Transportation, and Telecommunication
& Renewable Energy - and Overseas Business. Today,
BHEL has a wide-spread network comprising 14
manufacturing divisions, 8 service centers, 4 power
sector regional centers, 18 regional offices, and a large
number of project sites spread all over India and abroad.
BHEL is one of the largest exporters of engineering
products & services from India. BHEL has established
its references in around 60 countries of the world,
ranging from the United States in the West to New
Zealand in the Far East. BHEL’s vision is to become
a world-class engineering enterprise, committed
1. Introduction
People differ in their abilities and their aptitudes. There
is always some difference between the quality and
quantity of the same work on the same job being done
by two different people. Performance appraisals of
Employees are necessary to understand each employee’s
abilities, competencies and relative merit and worth
for the organization. Performance appraisal rates the
employees in terms of their performance. Performance appraisals are widely used in the society.
Performance Appraisal is one of the most important
functions of the Human Resources Department. The
formal performance appraisal has been called a tool of
management, a control process, an activity and a critical
element in human resources allocation. Applications
of performance appraisal include equal employment
opportunity considerations, promotions, transfer and
340
to enhancing stakeholder value. The company is
striving to give shape to its aspirations and fulfill the
expectations of the country to become a global player.
industrial customers all over the country. Export orders
have also been executed successfully.
Table 2 - Key Customers
Segment
The greatest strength of BHEL is its highly skilled and
committed 42,600 employees. Every employee is given
an equal opportunity to develop himself and grow in
his career. Continuous training and retraining, career
planning, positive work culture and participative style
of management all these have engendered development
of a committed and motivated workforce setting new
benchmarks in terms of productivity, quality and
responsiveness.
2.2 Profile of The Unit Chosen For Research:
Piping Center
Piping center was set up at Chennai in June 1979 to
develop “Piping business” for the utilities and process
sectors like the refineries, petrochemicals etc. The
location advantage in Chennai is attributed to better coordination and interaction with customers, consultants,
regulatory authorities and the institutions like IIT etc.
From a turnover of Rs.90 crores in 1993-94 the unit has
posted a turnover of Rs.730 crores in 2008-09, crossing
the Rs.3 crore turnover/employee and achieving Rs.1.6
crores value-added per employee milestone.
A General Manager reporting to the Executive Director
at Trichy heads Piping Center. The organizational
structure is as follows:
Table 1 - Functions
GM/PC
DGM/Finance
DGM/vigilance
Vigilance
GM/Operations
AGM/C&CS
•
Utilities
SEB’s/NTPC/DVC/NLC
•
Private Utilities
TEC/BSES/Jindal/
TISCO
•
Nuclear
NPCIL,Bhavini
•
Industries
TISCO/NALCO/
HZL/IOCL/VSTP
•
Export of
piping/Hangers
Koniambo,Syria,Kosti
Sudan,Senegal
•
Piping/Hangers
Sister units
2.3 Human Resources Department At Bhel
The core strength of piping center also includes Human
resources who are a committed, devoted and dedicated
force of employees. They believe that their contribution
in all spheres would enable the company to scale up
to further heights. This is reflected by way of healthy
trends in terms of growth.
Table 3 - Respondents
Head of product/unit
Engineering,
Quality,
Management services
Purchase, Matl. Planning
Stores Ancillary Development
OP&CE, BP co-ordination,
PC cell, Personnel, training
and development
Contracts,marketing,
computer services
Finance & accounts
GM/E&Q
Key customers
Executives ( E1- E 9)
122
Supervisors
46
Others
68
Total
236
3. Online Performance Appraisal System
The online performance appraisal system has been
introduced at the executive level in BHEL from the year
2002.
Online Performance Appraisal captures many inputs
which help to identify the ability of each individual
and to assign responsibilities to executives based
on individual’s potentiality. While assigning job
responsibilities, Key Result Areas (KRA) are identified
by the top management in discussion with subordinate
The customer profile encompasses SEB’s, NTPC,
Government utilities, private utilities and other
341
in a sample. It is a definite plan for obtaining a sample
from a given population. The sampling technique used
was the convenience sampling. The executive level
employees were filtered through a computer-generated
report .This method ensured that only those employees
of BHEL to whom the Online Performance Appraisal
system is applicable were selected for the research
survey. Sample size was taken to be 120 respondents,
who were selected based on their designation of being
Executives under various categories ( E1 – E9)
executives considering the potentially and requirement
of the company in various functional domains. After the
discussions, targets are planned. KRAs are also known
as key work outputs (KWOs).It also enables them to
set goals and to prioritize them. This leads to better
communication of their role’s purpose.
After the review period, individual executive‘s actual
performance is evaluated based on the key result areas
/ targets already planned and agreed by both. In view
of this, there is likelihood of improved performance
by every individual executives thereby resulting in
company’s overall performance.
5. Data Analysis And Interpretation
Data analysis consist of descriptive analysis and
inferential analysis.
The type of research design used in this project was
the descriptive research. The opinion of the employees
was to be ascertained to find out the effectiveness of
Online Performance Appraisal system. The opinion of
the executives may differ in many ways in different
companies. The opinion varies from one executive
to another in the company. The descriptive study was
carried out to seek the opinion of the employees on the
various parameters of Online Performance Appraisal
system. Careful design of descriptive studies was
necessary to ensure the complete interpretation of the
situation and to ensure minimum bias in the collection
of data.
5.1. Descriptive Analysis
The respondents’ profile in terms of age-wise break
up, gender-wise breakup, marital status, designation is
tabulated below:
Table 4-Age-wise classification of the respondents
It is necessary for every research to have
both primary data and secondary data, without which
the research would be inefficient. A pilot study was
conducted with an initial questionnaire which was
later modified according to the suggestions of the
Executives. In this research the primary data was
collected by means of a structured questionnaire. The
questionnaire consisted of thirty-six questions inquiring
into the process of Online Performance Appraisal
system at BHEL. The secondary data was collected
through company profile, journals, websites and other
databases of the company. All these data were helpful
in carrying out the analysis.

Primary data collection.

Secondary data collection.
Sample design lays down all the details to be included
Age
No. of
respondents
Percentage
Below 30 years
16
13.3%
31-40 years
8
6.67%
41-50 years
30
25%
51-60 years
66
55%
Total
120
100%
Source- primary data
55% the respondents are in the age group of 51-60 years
and 25 % are between 41-50years.
Table 5 - Gender of the respondents
Gender
No. of respondents
Percentage
Male
102
85%
Female
18
15%
Total
120
100%
Source- Primary Data
342
85% of the respondents are male and 15% of them are
female.
Table 6 - Marital status
Status
No. of respondents
Percentage
Married
106
88.3%
Unmarried
14
16.67%
Total
120
100%
system.
88.3% of the respondents are married and only 16.67%
are unmarried.
50
41.67%
E6A-E7
20
16.67%
E8-E9
0
Total
120
Respondents
Percentage
Highly influential
10
8.33%
Influential to an extent
72
60%
Not changed
26
21.67%
Not Influential
8
6.67%
Can’t say
4
3.33%
Total
120
100%
The statistical tool used in the analysis is one sample
kolmogorov smirnov test and the results are given as
below:
Table 7 – Designation of the respondents
No. of
Designation
Percentage
respondents
E1-E3
50
41.67%
E4-E6
Options
Sample
size
Mean
Std.
Deviation
120
2.37
.859
Kolmo
grovSmirnovZ
3.818
Asymp.
Sig
(2-Tailed)
.000
Since the value is 0.000, the null hypothesis is rejected.
Hence it is concluded that there is a relationship between
individual performances because of online performance
appraisal.
5.2.2 Objective 2
To determine the relationship between the
Key Result Area pertaining to executives at the time of
finalization during scheduling process and executives’
ability to achieve within the deadline
Null hypothesis (Ho): There is no relationship between
KRA scheduling and meeting of the deadlines.
The following table shows the number of KRA usually
set:
100%
Out of the 120 respondents 41.67% belong to the
category E1-E3 and another 41.67% to E4- E6 and the
remaining 16.67% belongs to E6A – E7.
5.2. Inferential Analyses
In this section following two objectives are examined,
hypotheses are framed, tested and conclusions are
obtained:
• To determine whether Online Performance
appraisal system influences the individual
performance of Executives in BHEL-Piping
Center
• To determine the relationship between the
Key Result Area pertaining to executives at the
time of finalization during scheduling process
and executives’ ability to achieve within the
deadline
5.2.1. Objective 1
To determine whether Online Performance appraisal
system influences the individual performance of
Executives in BHEL-Piping Center
Null hypothesis Ho: There is no influence in individual
Number
No. of respondents
Percentage
Less than 5
14
11.67%
5-7
60
50%
7-9
18
15%
More than 9
28
23.33%
Total
120
100%
The details regarding the Achievement of KRAs within
deadlines are as shown below
No. of
Options
Percentage
respondents
Always
42
35%
Mostly
performance because of online performance appraisal
343
78
65%
Sometimes
0
0%
Rarely
0
0%
Never
0
0%
Total
120
100%
•
•
•
Chi square test is done in order to determine the number
of KRAs set usually compared with meeting of KRAs
within deadlines and the values are shown below
Asymp.
Sig.
(2-sided)
Value
df
54.359(a)
3
.000
Linear-by-Linear
Association
72.476
3
.000
46.840
1
.000
N of Valid Cases
120
Pearson Chi-Square
Likelihood Ratio
•
•
fall in the category of 41-50 years.
Out of 120 employees 85% are male.
Out of the total respondents, 88% of the
employees are married.
Maximum percentage, being 42% is observed
to be executives with designation E1-E3. Also
designation and another 42% belong to the E4E6 designation.
There is a relationship between the Key
Result Area pertaining to executives at the
time of finalization during scheduling process
and executives’ ability to achieve within the
deadline.
There is a relationship between individual performances because of online performance appraisal.
7. Conclusion
The study examines the Online Performance appraisal
system being followed in BHEL, Pipeline system,
Chennai. It is found that Online Performance appraisal
system influence the employees performance. This is
a win win situation because it has merits over other
appraisal systems viz employer (top management)
can plan key result areas in tune with requirement and
executives’ performance is improving, which acts as a
motivating factor. Further being an Online Appraisal
system, it has inherent advantages like transparency,
accuracy, quickness. . It is likely that Online Performance
appraisal system will be in the agenda of corporate in a
big way in the immediate future.
Since the value is 0.000, null hypothesis is rejected.
Hence it is concluded that there is a relationship
between the Key Result Area pertaining to executives
at the time of finalization during scheduling process and
executives’ ability to achieve within the deadline.
6. FINDINGS
Major findings are listed below:
• 55% of the employees fall in the category of
below 51-60 years and 25% of the employees
344
Knowledge Management in ICICI Bank and Bank of Baroda
Dr. Pulidindi Venugopal  Professor, VIT Business School, VIT University, Vellore.
Dr. P. Vijayakumar
Professor, Dean and Director, School of Management Studies, JNT University, Kakinada
R. Gangadhar, Research Scholar, JNT University, Kakinada
2. Knowledge Management Process
1. Introduction
‘‘A little knowledge that acts is worth more than much
knowledge that is idle.’’
- Kahlil Gibran, The Prophet
Knowledge management is difficult in practice unless
there is strategic leadership. Without the system of belief
on knowledge management it is not successful in any
organization, often it is not just a strategy to implement.
The requirements of knowledge management are
culture of collective work, sharing and thinking and
so on. Besides organizational culture innovation,
responsiveness and collective wisdom will be vital in
the success of knowledge management. One renowned
Management Guru revealed that it as an application
with manifold experiences. It always moulds itself
basing on the contingencies and conditions.
3. Need of the Study
“Knowledge Management is the set of processes that
seeks to change the organization’s present pattern
of knowledge processing to enhance both it and its
outcomes.”
A study like this is needed to be informed by the need
and benefits of Knowledge Management in today’s
organizations. What role does it plays in organizations
such as banks in an Indian perspective. This will give
us an opportunity to be educated about current trend
of applying Knowledge Management for the growth
of organization. It always existed but now when it is
being concentrated upon as separate field many newer
scenarios have come into picture. And new ways to
manage knowledge effectively came into light. Thus
to be enlightened we should explore the world of
Knowledge Management and its applications.
It always used to contribute some processes by showing
its force on various aspects of equipped processes.
But it is not directly relevant to manage, integrate or
create outcomes but only impacts. The changing rules
and regulations by knowledge manager will affect the
production quality. With the intervention of knowledge
management there are more chances of bringing new
technology with more analysis.
4. Scope of the study
The mode shows how KM is managed in an organization
and more importantly how it does helps business
processes. This framework self explains the process of
knowledge being carried forward to the next level for
business decision making.
This study concentrates on how the Knowledge
Management is used in an organization for its growth
and development. Banking organizations could be
benefited to replicate this study and evolve their own
Knowledge Management approach. This study echoes
345
Products and services:
There is will be so many problems to the customers
regarding their products and services but the banks didn’t
have updated information regarding. This is a threat for
the development of bank by offering mismatch products
and services to the customers. Knowledge management
helps the organization to offer the products and services
as per the requirements of the customers.
to influence as far as corporate culture goes and as close
as development of organization by existing information
is considered.
5. Methodology Used
This study is basically done on secondary data analysis
on data provided in magazines, newspapers, published
papers, projects, websites and forums. A comprehensive
conclusion of these data is presented in this paper.
6. Banking
Application
–
Knowledge
Process knowledge:
There should be competency in the processes. If the
employees don’t have the full knowledge about the
processes and procedures it causes threat to customer
services. It is the duty of employees to respond
adequately and quickly to the customers. Knowledge
management gives lively ground for getting required
information. It supports continuous up gradation of
various issues to offer better services to the consumers.
It helps in reducing cost by removing unwanted
processes.
Management
In the present scale of financial services banking is also
a part. By virtue of its process it is just involved with
routine and unthinking reduced the innovative thinking
of the employees. But it is true that unless and until
one possess unique selling proportion it is difficult to
succeed in the present global immense competition.
Every bank has to change itself internal and externally
to make them fit to the current perceptions of the
customers. Almost all the banks are trying to offer
new set of services to the end users. Even the public
banks are trying their level best in all aspects. But every
bank has to satisfy the financial needs of customers by
understanding the lifetime needs of the customers by
using all means of marketing activities. In its unstable
environment banks are trying to provide better services
by using knowledge management by understanding
customer fully, by bringing awareness about their
products and services, by increasing the knowledge
processes, by improving the skill set of employees,
by having the market intelligence and by customer
relationship management.
Imparting required skills:
The introduction of new technology has given rise in the
banking sector with enormous growth in all its services.
It initiated the skill set development in its employees.
Almost all the organizations are giving importance
and spending high amounts in gaining superiority in
the knowledge. So many incentives are introduced to
stimulate the employees in sharing their experiences
and knowledge.
Knowledge of people:
There will be implicit knowledge in so many persons
which is acquired because of experience is having great
significance. But there is no proper way to maintain
record of such people but it is will be there personally.
Even so many organizations don’t know about their
knowledge people. It is always true that experience
and expertise within the employees is always an added
advantage to every organization. The experiences shared
by the seniors in handling the difficult situations will be
shared knowledge to the present and future generations.
Knowledge management provides opportunity to have
information of the people they have with their field of
experience and expertise.
Understanding the customer:
Every business is successful if they are customer
centric. If an organization has the full knowledge about
their customer it automatically makes the firm to be a
leader in all aspects. In this immense competition it is
the duty of every firm to identify the needs and wants of
the customers and to formulate marketing strategies as
per the change in the trends. Knowledge management
provides scope to tune the services as per customers and
helps in getting the customers, retaining the customers,
increasing the sales and revenues and so on.
346
Market Aptitude:
The external environment of the business is always
uncontrollable. In other words it is not static and it is
dynamic in its nature. It is the duty of every organization
to have current information of all its influencing factors.
In this present global scenario every one is competing
to get the customer by delivering value hence, it is
essential to have complete business aptitude.
services. The data base should be available when ever
there is need. The technology using in the banks should
be friendly to both the customers and employees.
7. KM AT ICICI BANK
Whatever may be the business, it should change itself
as per the current trends of the market if not its survival
becomes question. Hence every organization changes
its activities by acquiring knowledge. It thinks that it
is quite difficult to meet the consumer’s expectations in
this competitive world. In order to inculcate knowledge
sharing it started a portal with the name “Wise Guy”.
It found that when employees go away from the
organization he will not give the information about the
potential customers but it will be difficult to the new
comer to know about his job and to get started. Hence it
felt the need for introducing the concept of knowledge
management. All over the country it has branches where
employees used to through emails without seeing. They
used to work as a community by using web services.
Sharing of best practices and Customer service:
When we look at the trend projection and extrapolation
method of demand forecasting it is clearly known that
we can estimate future basing on the past history or
trends. Even though past is uncertain we use to take
as an example to solve our present problems and also
to estimate the future. If we are given with effective
knowledge about failure and success reasons of the
past there is possibility of taking right decisions in the
present. Knowledge management is one of the sources
where we will get an arena to contribute our views, ideas
and innovations to reduce the cost, repeated mistakes
and increases customer service.
8. INITIATING KM AT ICICI
ICICI influenced by the knowledge management and
it want to implement. As it has strong harmonization
team the idea being sold to the entire workforce. In
the Intranet ‘Wise Guy’ was also included. Once the
features are known by the workforce, interested staff
got their login password from the system administrator.
With the efforts of its software engineers the first
version started on 15th June, 2000. We know that every
once intellectual quotient retains in brain like that it
also started keeping all database of field experiences,
expertise, skills etc, in its system. The knowledge
management provides an opportunity to utilize the
implicit intellectuals of one employee to be accessed by
other employees. In the knowledge management there
are two problems one is with the owner and the other is
with the recipient. Some times owner is not willing to
share and in some cases recipient is not willing to take up.
The portal at ICICI consists of lectures, presentations,
authors’ contributions, reports, deliberations and so on.
in this portal all the experts contributions are praised
and offered with cash prizes and their photos are placed
in the portal. There will be few confidential and secret
intellectuals of the employees such things by will be
kept in the control of administrator. Industry analysis
Avoidance of knowledge walkouts:
Banks used to recruit intellectuals but the banking system
failed in using them because of the routine activities.
Today even the banks became learners’ organizations.
But so many surveys revealed that their strength is their
people. Knowledge is that which we can not get simply
on one day and it is a continuous process linked with
learning through so many sources. Even VRS caused
scarcity of essential knowledge hence it is denoted as
high lose to the organizations. Till the implementation
of VRS banks fail to recognize the importance of
knowledge. They came to realize that the downsizing
has given chance to knowledge walkout. All the service
organizations depend on patrons and workforce. All
the organizers are trying to get the customer loyalty
in the same way banks too, for which they initiated
knowledge management in gaining customer loyalty.
It is the way to understand the customer needs, wants,
etc. to satisfy and treating all the customers as more
valuable no matter how small the transaction is. Banks
started using the concepts of data base and data mining
in its process. Implementing the technology in banks
enabled reducing cost and improving the quality of
347
11. Suggestions
•
Every growing organization should implement KM to avail its benefits.
•
People should be trained to disseminate information for better KM.
•
KM should be understood and focused for strategic decision making.
•
Technology should focus to develop KM
•
Direct and fresh data should be stored with priority
•
KM should be done at all levels of hierarchy
and company research are provided by the corporate
information bank. It also maintains alliance in sharing
knowledge with knowledge data base, Banking rules,
ICRA data base etc. Knowledge management is no
where submissive to IT. Knowledge management
arranges events by which it facilitates to interact with
superiors and experts in the meetings.
9. KM IN BANK OF BARODA
It had massive renovation agenda to construct itself
as a best bank by initiating knowledge management.
It forced its manpower in bringing their skills and
experiences of their fields to make other to do in a better
way.
Knowledge management headed for smooth
progress of the operations by sharing views with higher
authorities. It is using knowledge management in
designing new products and services. In order to face
the contemporary competition it is taking feedback
from the customers and it is considering all the ideas,
views and suggestions of customers. It also introduced
intranet to make the job easy. It believes in sharing and
using of knowledge by revealing that having system will
not differ the organization but proper implementation
makes the difference and it is implementing in the
proper way.
12. References
Goswami Chandana, (2004), “Managing the Technical,
Professional Workforce: Can Knowledge Management
be the answer?”; In: Managing Trade, Technology and
Environment (M. Mallikarjun and Pawan K. Chugan
Ed.) , pp 362-372, Excel Books, India
Prahlad C.K. and Gary Hamel, (1990), “The core
competence of the Corporation”; Harvard Business
Review, May-June, pp79-91
Firestone Joseph M. & McElroy Mark W., 2005, “Doing
Knowledge Management”, Emerald Group Publishing,
Ltd., pp 2-3
Grant Robert M., (1996), “Prospering in DynamicallyCompetitive Environments: Organizational Capability
as Knowledge Integration”; Organization Science,
Vol.7, No.4, pp375-387
Grant Robert M., (1991), “The Resource-Based Theory
of Competitive Advantage: Implications for Strategy
Formulation” ; California Management Review, Vol.33,
Spring , pp114-135
Quinn James Brian, Philip Anderson, and Sydney
Finklestein, (1996), “Leveraging Intellect”; Academy
of Management Executive, Vol.10, No.3, pp7–27
Firestone, J. M. (2000) “Knowledge Management:
A Framework for Analysis and Measurement,”
White Paper No. 17, Executive Information Systems,
Inc.,Wilmington, DE, October 1, 2000.
Sangameshwaran
Prasad,(2003),“Knowledge
Management”; Indian Management, May, pp31-35
Goswami,
Dr.
Chandana,(2005)
“Knowledge
Management In India : A Case Study Of An Indian
Bank”
10. Findings
Implementation of Knowledge Management is critical
to have:
•
Better customer knowledge
•
Better knowledge of products and services
•
Better knowledge of processes
•
Skill development
•
Better knowledge of people
•
Better Market Intelligence
•
Sharing of best practices
•
Better customer service
•
Prevention of knowledge walkouts
•
Overall growth
•
Creation of data warehouse and knowledge base for strategic decision making
•
Proper implementation is a challenge
•
Better forecasting
348
An empirical Analysis on e-Procurement for Construction
Projects using e-RAs
T.Baladhandayutham
Dr. Shanthi Venkatesh
PhD Research Scholar, School of Management Studies, SRM University, India
Asst.Professor, School of Management Studies, SRM University, India
1. Introduction
tracking inventory, managing production and handling
logistics, customer support services, supply chain
management and collaborative engineering. Electronic
Commerce, or e-commerce, is buying and selling
on-line. It is part of the broader term e-business and
involves transactions. In simple words B2B commerce
can be defined as “doing business electronically” or
business that is conducted over the Internet.
Faced with a challenging economy and a fiercely
competitive market environment, corporations around the
globe are hard pressed to explore newer and sustainable
approaches of attaining Competitive advantage. The
global economy has changed dramatically from an
industrial society to an information society. Business
has turned into e-business. The new world of business
with business pressures and increasing business needs
forms the driving force for the organizations to take
competitive advantage using E-commerce.
1.2. E-Marketplace
In economics, a market is defined as a virtual
meeting-place of supply and demand. E-marketplaces
fulfil the same purpose. E-marketplaces are a Business
to Business relationship model (B2B) in which multiple
organizations, both sellers and buyers, can communicate,
collaborate, and perform commercial transactions by
means of a Web platform which is common to all those
participating in the market. The main advantage of the
e-marketplace compared with other B2B models is
that it allows a purchasing company access to multiple
selling companies and to selling companies access to
multiple purchasing companies.
The organizations respond to these business pressures
to fulfil their business needs by Adopting strategic
systems, Continuous improvement efforts, Business
process reengineering (BPR), Business Alliances,
and Electronic commerce. E-Commerce is a fairly
new concept that has recently taken off. Electronic
commerce is driving fundamental changes in the way
in which organizations buy and sell. Traditionally, high
operation and transaction costs and limited information
flows forced most enterprises to adopt one of two
procurement operating models: centralized command
and control or highly decentralized operations. Each
of these organizational models offered benefits and
challenges. However, transforming procurement into
a centre for value creation will require companies to
overhaul both how they organize the procurement
function and how they align supply management
operations with overall business activities and goals.
Many procurement organizations continue to transform
their procurement organizations to maximize their scale
and drive spend control.
1.3. Procurement in Construction Project
The construction industry is faced with the ongoing
challenge to enhance current work practices and
become more client-oriented. This trend is influenced
by a number of factors, including greater performance
expectations by clients, globalization of the economy,
increased competitions between contractors, continued
restructuring of work practices, industrial relations,
and industry’s need to implement information and
communication technologies. Despite the unique and
individual nature of any construction project, it requires
involvement by many participants, such as clients,
designers, consultants, contractors, subcontractors,
and suppliers, as an entity to perform various roles
and responsibilities. Sharing up-to-date information
1.1. E-Commerce and E-Business
In general, e-business is used in the broadest sense.
It includes buying and selling on-line, but also other
aspects of on-line business activity, such as purchasing,
349
between participants leads to reduction of errors and
time delays and consequently facilitates more effective
and efficient productivity and ultimately improves
collaboration and teamwork.
the fact that a great amount of demand uncertainty exists
between the supply houses and contractors. Supply
houses are challenged to base production and materials
management decision-making on orders received
from a large number of disparate contractors from
diverse trades. The aforementioned demand distortion
and uncertainty causes construction supply chain
distribution channels to be crowded with unnecessary
inventory.
However, current construction industry is facing
costly progress delays due to inaccurate and untimely
communications amongst project team members. Often
vital information is ‘lost’ to the degree that information
needs to be re-entered, or hardcopy manuals and
drawing documents need be re-produced to have rapid
access to the required information to perform some of
their tasks.
According to the existing literature, e-Procurement
is likely to increase firm’s competitiveness through
cost reduction and increased efficiency on the inbound
logistics. However, even though some construction
companies are adopting and using such systems, other
firms are not intending to do so. In such circumstances,
we intend to understand what makes a difference on
what regards to e-Procurement adoption, which leads
us to the following research questions:
In this era of escalated demand for growth, the
construction industry across the globe faces issues of
constant material price fluctuation and shortage of skilled
resources. Today, enterprises are increasingly in need of
sustainable, faster and safer methods of construction,
innovative project delivery modes and procurement
practices, as well as interoperable standards within the
construction industry, which is really a big challenge
to their existing supply chain to improve the efficiency
and effectiveness. The aim of supply is to deliver the
correct quantity of a quality product, at the correct time,
in the correct place, and at the best price. Purchasing
is seen as a great opportunity for savings since it takes
quite a large part in the turnover.
(i) What are the factors that foster the intention of
Construction companies to adopt e-Procurement? What
is their relative relevance?
(ii) What are the barriers in construction project for
the adoption of e-Procurement using B2B e-markets?
(iii) How likely is a specific Construction Project to
adopt e-RAs?
(iv) What is the degree of readiness of construction
project supply chain partners for participating in the
e-RA?
(v) How to adopt suppliers for construction supply
chain e-partnerships?
(vi) What should be the right mix of strategies
for the different types of commodities purchased by
construction companies?
At all junctions of construction project there has been
continuous encouragement to consolidate, innovate,
improve quality, improve safety, make partnerships,
reduce wastages, deliver on time, meet / save the budget.
Service, cost and time are the measures of Procurement
excellence in any construction project and the amount
saved on cost of the materials directly adds up to the
profit of the project.
In order to ascertain the answers for the questions
above, a detailed literature review was conducted to
develop a research model containing a set of factors
for explaining the construction companies’ likelihood
to adopt e-Procurement using e-RAs on a B2B
e-Marketplace.
2. The Problem and research questions
Construction material supply chains have evolved over
time to base production and materials management
decision-making on demand information from the
immediate downstream node in the supply chain. This
myopic view leads to demand signal amplification as
individual upstream nodes attempt to forecast and fulfill
orders. Further compounding this demand distortion is
3. literature review
A detailed literature survey was conducted on
the Procurement process for construction projects,
350
various e-Business models, e-business applications in
construction industry. The sources of literature review
includes books, management journals, survey reports,
research reports and contemporary articles on the
e-business applications in supply chain management.
Summary of observations made out of the detailed
literature survey is given below:
shareholders. The development of e-business is upon
us, now affecting the short and medium term but it is
also the way business will develop over the long term.
(Chimay J. Anumba and Kirti Ruikar, 2008).
A construction project is a complex activity involving
several participants; for example, the client, architect,
structural engineer, fabricator and the contractor. It is
team efforts, involving several, inter organizational
activities and dialogue. Traditional communication and
document exchange models were often manual and
hence slow. The traditional means of communication
involves producing numerous paper copies of documents
and drawings. Management of these loose documents
is often very time-consuming and tedious. Libraries of
documents need to be maintained to effectively access
data as and when required by the user. ‘A lack of a clear
audit trail causes delays in communicating with other
members of the team’ (Needleman, 2000).
1.1E-Commerce in Relation to Construction
E-commerce can be defined as the conducting of buying
and selling of goods and services as well as business
communication and transactions over computer
networks and through individual computers linked to
the World Wide Web (Key IT Solutions, 2005). The
potentials of e-commerce technologies applications
in the construction industry include: E-marketing;
E-selling/e-procurement of goods and services;
E-collaboration; E-finance; and E-customer services
and relations (Veeramani et al., 2002).
The necessary technological solutions for e-supply chain
systems are readily available in the current market. Some
of the fundamental issues for successful ecommerce in
construction, such as signature exchange (Pederson,
1999; Asokan et al., 2000), secure payment (Shamir
et al, 1998; Bellare et al., 2000), and fair contracting
models (Coscia et al., 2000; Rohm & Pernul 2000; Liu
et al., 2001) have already been addressed in broader
business-to-business (B2B) projects. E-commerce
applications have enhanced the development process
operations of a project, and promoted integration and
operation through the shared information network
system to diverse participants in the construction supply
chain (Jones & Saad 2003).
E-business provides mechanisms for cross-enterprise
coordination in name of construction supply chain
integration. In order to optimize the entire supply
chain system cross-enterprise coordination and special
business relationship must be established among the
organizations along the supply chain (Francisco Loforte
Ribeiro and Jorge Lopes, 2001).
1.2E-Procurement Process
E-Procurement can be defined as the “electronic
integration and management of all procurement
activities including purchase request, authorization,
ordering, delivery and payment between a purchaser
and a supplier” (Chaffey, 2002). The more general
classifications of the procurement process have been
created by authors such as Kalakota and Robinson
(2000), Lysons (1996), Fogarty et al (1991), and
Whitely (2000). These classifications contain three
to four stages of procurement and put the “order” or
“sale” as the central phase of the process. In a more
recent classification, Archer and Yuan (2000) detail a
seven-phase procurement process. The phases include
(1) information gathering,(2) supplier contact, (3)
background review, (4) negotiation (5) fulfilment,
(6) consumption, maintenance and disposal, and (7)
renewal.
e-Business has much to offer the construction sector,
as it directly addresses the issues that a disseminated
industry has to deal with – distributed collaboration,
electronic sourcing and purchasing of products
and services that meet well-defined requirements,
globalization, need for improved efficiency and timely
delivery. It is widely accepted that e-business is the way
to conduct construction business in the 21st century. It
is the means available to companies to continuously
improve efficiency and effectiveness in serving
their clients’ needs and in delivering a return to their
351
Six forms of e-Procurement are described by de
Boer et al.(2002); (i) electronic-Maintenance Repair
and Operations (e-MRO), (ii) web-based Enterprise
Resource Planning (ERP), (iii) electronic-sourcing
(e-sourcing), (iv) electronic-tendering (e-tendering) (v)
electronic-reverse auctioning (e-reverse auctioning)
and (vi) electronic-informing (e-informing). Both
e-MRO and web-based ERP are built on a webintegrated enterprise resource planning system. The
difference between the two is that e-MRO focuses on
the procurement of MRO items whereas web-based
ERP focuses on direct materials (de Boer et al, 2002).
B2B relationships have most effect on the sourcing,
fulfilment, and consumption phases of the procurement
cycle (Nagle T, Finnegan P, Hayes J, 2006).
Dimitri P. Bertsekas, David A. Castanon, and
Haralampos Tsaknakis (1993) have conducted detailed
research and developed reverse auction algorithms
for Symmetric Assignment Problems. Auction-based
mechanisms are extremely relevant in modern day
electronic procurement systems since they enable
a promising way of automating negotiations with
suppliers and achieve the ideal goals of procurement
efficiency and cost minimization (T. S. Chandrashekar,
Y. Narahari, Charles H. Rosa, Devadatta M. Kulkarni,
Jeffrey D. Tew, and Pankaj Dayama, 2007).
Despite the benefits of e-commerce technologies to
the construction industry, there are many challenges
in its applications. In many instances, the potential of
e-commerce technologies has yet been fully and properly
utilized, as many companies are simply utilizing various
technologies to automate existing processes without
analyzing the company’s objectives and realistic needs.
In addition, significant people and culture issues need
to be addressed to overcome resistance to change and
achieve radical revision (Elliman & Orange 2003).
Research of enterprises’ experiences with Internetbased
procurement
automation
technologies
indicates that companies have been able to achieve
significant cost and process benefits by automating
key procurement activities (Aberdeen, 2001). As a
result of their e-procurement initiative, enterprises, on
average, displayed a 35% improvement in spend under
management, with a 41% reduction in maverick spend.
Additionally, enterprises reduced their requisitionto-order cost by approximately 100%, and more than
halved their transaction cycle time. In addition to
improvement in various performance areas, enterprises
reported negotiating, on average, a 4.75% incremental
discount with suppliers after implementing their
e-procurement solution (Aberdeen, 2007).
4. research gaps identified
It has been noted from the above detailed literature
survey that, until now, not much evident research has
been conducted to pursue successful applications of
ecommerce technologies to the construction supply
chain. Furthermore, there is very little empirical
research available that investigates the implementation
of e-Procurement initiative for construction project
procurement. Also it has been noted that the available
exploratory research does not provide detailed analysis
on the various procurement organizational structures
(i.e. De-centralized Vs Centralized Vs Center-led)
and does not proposes a hybrid form of procurement
organization coupled with e-Procurement application.
1.3e-Reverse Auctions
In the mid-1990s, a new electronic sourcing tool
emerged that has had, and is continuing to have, a
profound impact on the way in which firms source
goods and services from current and potential external
suppliers. This tool, while known by other names
(e.g., “online negotiation”) is the electronic reverse
auction (e-RA). For a growing number of buying
firms, e-RAs have found an appropriate niche in their
strategic sourcing toolkit, allowing them to efficiently
source goods and services that are highly standardized,
have sufficient spend volume, can be replicated by a
reasonable number of qualified competitors, and have
insignificant switching costs (CAPS Research, 2002).
For this reason, this research will focus on developing
a methodology for implementation of e-Procurement
using e-RA on a B2B e-market platform in construction
supply chain. The specific issues which will be
investigated include the objectives, reasons/benefits,
barriers of using e-commerce technologies. This
research will also investigate the encouraging factors and
352
the need for learning, training, and knowledge sharing
for better applications of e-commerce technologies
and provide suggestions for better utilization of such
modern communication and management tools.
Scope this research is limited to the development of
a e-Procurement model for Procurement processes of
construction projects related to the Commercial and
Industrial buildings considering the high complexity
/ value of materials being procured. The following
aspects have been covered in the scope of study:
(i) Procurement Process Analysis
(ii) Commodity spend analysis
(iii)Supplier Spend Analysis
(iv)Analysis on e-Procurement models
(v) Online negotiations
(vi)Auctions
(vii) e-Procurement Integration
5. Objectives of Research
The objective of this research is to conduct a detailed
study on the procurement process of a construction
project, d

srm management digest - 2011

Transcription

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