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ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 12, December 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/

ZENITH INTERNATIONAL JOURNAL OF BUSINESS ECONOMICS & MANAGEMENT RESEARCH Vol.2 Issue 12, December 2012, ISSN 2249 8826

SR. NO.

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CONTENTS EVALUATION OF THE PRODUCTIVITY AND PROFITABILITY OF PUBLIC AND PRIVATE BANKS IN ETHIOPIA – COMPARATIVE STUDY DR. GARADCHEW WORKU THE USE OF FINANCIAL INFORMATION IN STOCK EXCHANGE DECISION MAKING IN MTWARA TANZANIA DR. A.S.K NORMAN BANCASSURANCE – A NEW CHANNEL FOR EMERGING GROWTH OF INDIAN INSURANCE INDUSTRY DR.GIRISH.K.NAIR, DR.R.RAJKUMAR, S.VINOTH MBA WORK DIVERSITY MANAGEMENT AND PERCEIVED OUTCOME: A STUDY OF WORKER AWARENESS AND SENSITIVITY IN SELECT INDUSTRIES OF UTTARAKHAND

PAGE NO.

1-11

12-23

24-33

34-53

DR D.S.CHAUBEY, MR. SIDHESWAR PATRA, MR. DEEPAK GUPTA A STUDY OF WORKER'S PARTICIPATION IN MANAGEMENT 5.

54-62

6.

A STUDY ON CONSUMER ATTITUDE TOWARDS STORE BRANDS WITH SPECIAL REFERENCE TO RELIANCE RETAIL OUTLET IN MADURAI CITY

63-84

7.

C.R.MATHURAVALLI, DR.S.SAKTHIVEL RANI SERICULTURE INDUSTRY – AN EFFECTIVE TOOL FOR DEVELOPMENT OF DROUGHT-PRONE AREAS TECHNOLOGY INDUSTRY)

85-97

MR. N.V.RATHNAM, P.V.NARASAIAH

www.zenithresearch.org.in

DR.D.T.CHAVARE


8.

INCORPORATION OF FUN AND ENJOYMENT IN WORK: BUILDS THE WAY FOR SUCCESS AND GENERATION OF LONG TERM BENEFITS

98-113

9.

DR. MANI KANSAL, MS. PUJA, MS. GUNJAN MAHESHWARI AN ANALYSIS OF THE NEWSPAPER PUBLISHING INDUSTRY –CAN IT SURVIVE THE ONSLAUGHT OF THE DIGITAL MEDIA

114-130

10.

MOU MUKHERJEE-DAS, DR PARTHO P. SENGUPTA A STUDY ON INFLUENCE OF UTILITARIAN AND HEDONIC SHOPPING VALUES ON PERCEIVED BENEFITS AND RISKS IN ONLINE SHOPPING

131-141

11.

PATEL VIPULKUMAR BALDEVBHAI, PRAJAPATI MAULIK CHANDRAKANT, PATEL KUNDAN MAHENDRABHAI CUSTOMER SATISFACTION OF SAVINGS BANK ACCOUNTHOLDER OF STATE BANK OF INDIA -- A STUDY IN SILCHAR TOWN OF ASSAM

142-161

12.

PARAG SHIL, SIKHA DEB A STUDY ON LEVEL OF CUSTOMER’S AWARENESS IN VALUE ADDED SERVICES ON MOBILE PHONE SUBSCRIBERS - WITH SPECIAL REFERENCE TO TIRUPPUR DISTRICT, TAMIL NADU

162-175

DR. P.RENGARAJAN, T.KAVIPRIYA A STUDY OF ADVANCED FINANCIAL LITERACY AMONG THE WORKING WOMEN IN PUNJAB 13.

176-190

14.

FDI IN RETAILING

191-198

DR N.P.HARIHARAN, G. RAJA RAJESWARI

15.

16.

A STUDY ON EMERGED & EMERGING RETAIL FORMATS IN INDIA MR. M. RUPESH KUMAR JAIN, DR. A.G.V. NARAYANAN A STUDY ON EFFECTIVENESS OF TECHNIQUES OF MANAGING EMPLOYEES AMONG VARIOUS INDUSTRIES WITH SPECIAL REFERENCE TO ERODE DISTRICT

199-208

209-226


DR. SARITA BAHL


DR.V.KAVITHA, Ms.P.KAVITHA

17.

ART ADHERENCE- A SIGNIFICANT DETERMINANT OF SURVIVAL FOR PEOPLE LIVING WITH HIV/AIDS

227-242

PRADIP KUMAR DAS EMPLOYABILITY OF THE STUDENTS – A FACULTY ROLE 18.

243-248 SRINIVAS RRS,

19.

20.

21.

22.

STUDY ON PRINCIPLES FOR IMPLEMENTING CRM STRATEGIES FOR ORGANIZED RETAIL IN INDIA MRS. T.GIRIJA A STUDY ON MOTIVATION AND JOBSATISFACTION OF HIGHER SECONDORY SCHOOL TEACHERS NEVILLE C PRADEEP HUMAN RESOURCE ACCOUNTING PRACTICES IN INDIAN CORPORATE ENTITIES: A STUDY ON INFOSYS DEVARAJAPPA S PRICING STRATEGY: LIC VS INDIAN PRIVATE LIFE INSURERS

249-254

255-262

263-270

271-277

DR.RENU AGGARWAL BACK SLIDE OF BUSINESS-RECESSION 23.

“RECESSION IS COMMON MAN’S UNCOMMON REACTION”

278-282

SHILPA B.S, SHILPA L.R, NITU GHOSH SELF HELP GROUPS IN SOCIAL TRANSFORMATION 24.

283-287 HR ISSUES AND INTERVENTION MODEL FOR FAMILY BUSINESS

25.

288-297 DR. EKTA SHARMA

26.

IMPACT OF NANOTECHNOLOGY IN AUTOMOBILE INDUSTRY MS.A.JOSEPHINE STELLA, DR.K.RAJESWARI

298-302


DR.S.BOSE


CREDIT RISK OF AGRICULTURAL BORROWERS 27.

303-313


DR.G.LALITHAKUMARI, CB SOWPARNIKA


EVALUATION OF THE PRODUCTIVITY AND PROFITABILITY OF PUBLIC AND PRIVATE BANKS IN ETHIOPIA – COMPARATIVE STUDY DR. GARADCHEW WORKU Asst.Professor of Accounting and Finance Department of Accounting and Finance Dean, College of Business sand Economics University of Gondar, Ethiopia P.O.Box-196

ABSTRACT This paper is an effort to comparatively analyze the profitability and productivity of public banks against private banks in Ethiopia. The study is based on secondary data collected from the annual reports of the respective banks and National Bank of Ethiopia and the period of study cover twelve years from 1996/7 to 2007/8. The study found that mean difference between the profitability of public and private was statistically insignificant. However, the productivity of public banks was statistically found significant than private banks and indicates that the branches and employees of public banks are more efficient than the branches and employees of private banks KEYWORDS: Productivity of Banks, Profitability Banks, Banking in Ethiopia, Public and Private Banks in Ethiopia

1-INTRODUCTION The post 1991 government change in Ethiopia has led a transition to a more market based system and a series of financial sector liberalization measures have been introduced since 1992. The Ethiopian government has recognized the banking sector as the important source of finance for most businesses and introduced a number of reform m measures since 1992. Following the demise of the socialist regime in 1991, the country has been turned to a wave of financial sector reforms as one of the important economic reform policy under the Structural Adjustment Program (SAP) with the objective to deregulate the financial activities with a view to improve mobilization of domestic resources for investment and to improve the efficiency of financial intermediation. The existing financial institutions have been reorganized so as to operate based on market-oriented policy frame work and in 1994 domestic private owned financial institutions are allowed to participate in the country’s financial sector. The proclamation No. 84/1994 laid down the legal foundations for the participation of the private sector in banking business which had been completely prohibited by the socialist regime. Accordingly the number of private commercial banks has reached to 10 at the end of 2007/8. 1


How ever the very limitation of this proclamation is that it does not allow foreign banks entry and participation. Undeniably a relatively free entry of domestic private banks makes the banking market of Ethiopia competitive, and the three public banks are facing some degree of competition from domestic private commercial banks. This paper focuses on the evaluation of the performance of Public Sector Banks vis-à-vis Private Sector Banks. The indicators selected for evaluation of performance of both groups of banks are profitability and productivity parameters. The time period for the performance analysis has been chosen from 1996/7 to 2007/8. The year 1996/7 was selected as a starting point for the reasons that the private commercial banks have started their operation commercially from the year 1996/7 onwards, following the liberalization of the entry of private domestic banks. The paper is scheduled into five sections: the first section is devoted to the introduction. The next section of literature review focuses on the related work done in the same areas of banking. The third section explains the methodology adopted in conducting the study, the sources of data and data analysis tools and techniques. The fourth section reports the analysis results and findings of the study. The last section has the conclusions.

2-Literature Review: Performance is defined as a means of evaluating how effectively and efficiently organizations use resources to achieve their objectives (Robert N. Lusser, 1996). The banking sector is considered as the important source of finance for most businesses and is the back bone of the economy. The performance of the macro economy of any country depends on the prudent and sound performance of the banking sector. Greuning and Bratanovic (2000) supported this concept and argued that unstable macroeconomic environment is principally caused by the instability in the financial system. There are different arguments concerning how to evaluate the performance of financial institution in general and commercial banks in particular. Generally the financial performance of banks and financial institutions has been measured using a combination of techniques. The empirical review of the literature shows that financial ratios have been widely used as a means for appraising bank’s performance and are still good indicators for evaluating the relative performance of banks, though alternative techniques like CAMEL, Stochastic Frontier Approach, Thick Frontier Approach, Multi discriminant Analysis, and Data Envelopment Analysis are often used for the measurement of the performance of banks. Such variations in indicators used to assess the performance of commercial banks give rise to different conclusions. Beaver (1966) was the first person to use financial ratios for predicting bankruptcy and thereafter financial ratios have been used to measure the overall financial soundness of a bank and the quality of its management. Malami M. (2004) identified eight financial ratios that could serve financial analysts in evaluating financial state of commercial banks. Some researchers have tried to compare the performance of commercial banks in terms of profitability and productivity ratios. Using regression simple analysis, Saovanee (2003) has used profitability ratios such as ROA, ROE, Net interest margin to total assets, and loan loss provisions to total assets, to compare the performance of domestic and foreign banks in Thailand. His study has indicated that foreign banks profitability is higher than the average profitability of domestic banks, though, the

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gap between foreign and domestic banks’ profitability is getting closer and attributed this as the positive results of financial restructuring programs. By using productivity, profitability and financial management indicators, Sarkar et al (1998) have studied and compared the performance of public sector banks, private sector banks and foreign banks in India for the year 1994/5. The commonly applied productivity ratios by these researchers are deposit per branch, deposit per employee, Advances per branch, advances per employee, business per branch and business per employee, profit per branch and profit per employee. In their study they found that foreign banks were more profitable and efficient than Indian banks and amongst the Indian banks private banks were superior to the public sector banks. Ram Mohan (2002) has studied the profitability of public, private and foreign banks in India covering the period from 1996/7 to 1999/2000 and that over these years the profitability of the public sector banks have been improved in comparison to private and foreign banks, but they have lagged behind in their ability to attract deposits at favorable interest rates and have been slow in technology up gradation and improving staffing and employment practices. Ram Mohan (2002) has studied the profitability of public, private and foreign banks in India covering the period from 1996/7 to 1999/2000 and that over these years the profitability of the public sector banks have been improved in comparison to private and foreign banks, but they have lagged behind in their ability to attract deposits at favorable interest rates and have been slow in technology up gradation and improving staffing and employment practices. Timothy and Scott, M. (2003) argued return on equity (ROE) and return on assets (ROA) as best tools to measure the aggregate bank profitability.

3-Research Design Study Sample: The study includes three public banks and six private banks operating in Ethiopia during the period 1996/7 to 2007/8 and equivalent to the study of the performance of the banking industry in Ethiopia as all banks operating in Ethiopia during the specified period have been included. The Three public banks are Commercial Bank of Ethiopia (CBE), Construction and Business Bank (CBB) and Development Bank of Ethiopia (DBE). The Six Private Banks in their order of establishment and market entry are Awash International bank (AIB), Dashen Bank (DB), Wegagen Bank (WB), Bank of Abyssinia (BOA), United Bank (UB) and NIB International Bank (NIB). In Ethiopia foreign banks are not allowed to operate in Ethiopia and the Banking sector in Ethiopia includes only these public and private banks.

Data Source The study is based on secondary data collected from the annual reports of sample banks and Annual reports of the National Bank of Ethiopia (NBE). The figures in the annual reports of the banks are presented in Ethiopian currency called Birr and have been converted in to US Dollar based on the prevailing exchange rates at the end of each fiscal year.

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Data Analysis techniques In order to analyze and compare the performance of public banks against private banks descriptive statistical tools and techniques like statistical tables, percentages, averages, compound growth rates, ratios and coefficient of variations are applied. Moreover, independent t-tests are employed to test the significance of the difference between the mean performances of the selected parameters. Research soft ware, Statistical package for social sciences-version-15 (SPSS-15), and Microsoft office Excel-2003 have been used for the analysis of the data. Before deciding on the methods of analysis, relevant literatures on the research methodology and research studies were reviewed. Return on asset (ROA), Return on equity (ROE), Ratio of interest income to total income and net interest margin (spread ratio) are selected parameters used for evaluating the profitability. Deposit per employee and per branch, Advances per employee, and per branch and Business per employee and per branch are the parameters used to measure the productivity of banks in this study. Performance of Public banks is compared with that of private banks in each area of the above profitability and productivity indicators and comparisons are made on the basis of mean values. The profitability and productivity of both banks has been presented and analyzed in subsequent sections. Research hypothesis: This paper is aimed to test the following two assumptions 1. Private banks are more profitable than public banks 2. Employees and branches of private banks are more productive than the employees and branch of the public banks

4-Analysis and Findings

4.1: Profitability of Public vs private banks Financial liberalization has arguably increased the profitability of banking industry which is best measured by return on assets (ROA) and return on equity (ROE). More over, to evaluate the diversification and sources of income, the percentage of interest income to total income and net interest margin (spread ratio) have been employed as tools of measuring profitability.

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4.1.1: Return on assets (ROA) and Return on Equity (ROE) The ROA and ROE of both groups of banks have been presented in Table-1. Table-1: ROA and ROE of public and private banks (percentages) ROA ROE Year/banks Public Private Industry Public Private banks Banks Average banks banks 1996/7 0.5 1.4 1.0 6.9 21.6 1997/8 1.6 0.5 1.1 22.7 6.1 1998/9 0.4 1.6 1.0 6.1 17.2 1999/0 1.9 1.2 1.6 25.1 9.3 2000/1 0.2 1.8 1.0 2.8 14.7 2000/2 -1.7 1.2 -0.3 -33.5 9.8 2000/3 2.0 1.0 1.5 29.8 9.8 2003/4 1.3 2.0 1.7 19.6 20.2 2004/5 1.5 2.3 1.9 28.5 23.9 2005/6 2.1 2.7 2.4 25.3 24.9 2006/7 1.8 2.8 2.3 14.5 24.2 2007/8 2.5 2.6 2.6 21.1 22.0 Average 1.2 1.8 1.5 14.1 17.0 CV 98.3 42.0 53.9 124.1 39.9 GR 14.4 5.3 8.3 9.8 0.15 Source: Compiled from annual reports of public and private banks

Industry Average 14.3 14.4 11.7 17.2 8.8 -11.9 19.8 19.9 26.2 25.1 19.4 21.6

15.5 64.7 3.5

The Ethiopian banking sector’s overall profitability as measured by the return on assets (ROA) has improved to 2.6 per cent in 2007/8 from 1.0 per cent in 1996/7 with annual growth rate of 8.3 percent. The overall banking sector’s average ROA is 1.5 percent. The average profitability of public banks as measured by ROA is 1.2 percent and is less than the average profitability of banking sector. However, the average profitability of private banks is 1.8 percent, exceeding by 0.3 percent the average profitability of banking sector in Ethiopia. The CV of 98.3 percent for public banks shows the great variability of profitability compared to 42 percent for private banks and 53.9 percent for banking industry. In terms of average ROA, private banks are more profitable compared to public banks. The Ethiopian banking sector’s overall profitability as measured by the return on equity (ROE) has improved from 14.3 percent in 1996/7 to 21.6 percent in 2007/8 with annual growth rate of 3.5 percent. The overall banking sector’s average ROE is 15.5 percent. The profitability of public banks has grown from 6.9 percent in 1996/7 to 21.1 percent in 2007/8 with annual growth rate of 9.8 percent. The growth rate of profitability in terms of ROE of private banks was only 0.15 percent, insignificant growth compared to public banks. The average profitability of public banks as measured by ROE is 14.1 percent and is slightly less than the average profitability of banking sector. However, the average profitability of private banks is 17.0 percent and shows that private banks are more profitable compared to public banks, 5


though the rate of growth was too slower compared to public banks. The study found that in terms of both ROA and ROE, private banks are relatively more profitable than public banks 4.1.2: Percentage of interest income to Total income and spread ratio: Interest on loans and advances is an important source of profit for banks and interest income has remained as one of the main source of profit for commercial banks. As revealed in the Table-2, on the average 65.5 percent of total income during the years of study for the Ethiopian banking sector has come from interest income, while the rest 34.5 percent of income is generated from fee based services like commission, foreign exchange etc. The average share of interest income has declined from 72.8 percent in 1996/7 to 59.2 percent in 2007/8. Similarly a declining trend has been observed for both public and private banks during the years under review. Table-2 Percentage of interest income to Total income and Net interest margin Interest income to Total income (%) Net Interest Margin (%) Year/banks Public Private Industry Public Private Industry banks Banks Average banks Banks Average 1996/7 78.3 67.2 72.8 2.92 3.34 3.13 1997/8 83.7 73.8 78.8 2.52 2.45 2.49 1998/9 74.0 54.6 64.3 2.76 2.31 2.54 1999/0 78.4 68.4 73.4 3.20 2.82 3.01 2000/1 76.9 69.0 73.0 2.75 3.56 3.16 2000/2 66.5 70.2 68.4 1.38 2.83 2.11 2000/3 58.6 64.8 61.7 2.01 2.24 2.13 2003/4 53.9 63.4 58.7 1.76 3.07 2.42 2004/5 56.6 61.5 59.1 1.24 2.98 2.12 2005/6 51.1 64.3 57.7 1.69 3.48 2.59 2006/7 52.3 65.8 59.1 1.98 3.75 2.87 2007/8 55.6 62.8 59.2 2.17 3.43 2.80 Average 65.5 65.5 65.5 2.19 3.02 2.61 CV 18.5 7.5 11.3 28.70 16.77 14.69 GR -2.8 -0.6 -1.7 -2.4 0.22 -0.92 Source: Compiled from annual reports of public and private banks The average percentage share of interest income to total income for both public and private banks was 65.5 percent, indicating that both groups of banks offer similar services to their customers and the service of private banks can not be differentiated from that of public banks.. Table-2 also depicts the net interest margin of public and private banks in Ethiopia. The overall average percentage of net interest margin during the years under consideration for the Ethiopian banking sector was 2.61 percent with a declining rate of 0.92 percent per annum. A separate analysis of the public and private banks indicated that the average interest margin was 2.19 percent for public banks while it was 3.02 percent for private banks. Thus it can be inferred that private banks were more effective in managing their assets and liabilities compared to the public banks.

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4.2 Productivity of Public vs private banks 4.2.1: Deposit per branch and per employee: The productivity of banking branches and employees can be measured in terms of their deposit mobilization. Hence employees are most valuable assets; their performance should be measured to find out their productivity. The deposit mobilized per branch and per employee of both public and private banks has been depicted in Table-3. Table-3: Deposit per branch and per employee of public and Private Banks (in millions of US$) Industry Industry Year/banks Public banks Private Banks average average per Deposits Per Deposits Per Per employee Per branch employee branch Employee per branch 1996/7 9.338 0.337 3.48 0.14 6.409 0.238 1997/8 9.454 0.323 3.24 0.13 6.347 0.226 1998/9 8.109 0.227 3.30 0.13 5.705 0.178 1999/0 10.069 0.264 3.36 0.12 6.715 0.192 2000/1 10.805 0.272 3.96 0.14 7.382 0.206 2000/2 10.987 0.272 4.55 0.15 7.768 0.211 2000/3 10.881 0.269 5.44 0.17 8.160 0.220 2003/4 12.260 0.30 6.33 0.20 9.295 0.25 2004/5 13.640 0.36 7.44 0.22 10.54 0.29 2005/6 14.550 0.38 8.50 0.24 11.525 0.31 2006/7 15.120 0.41 9.06 0.25 12.09 0.33 2007/8 15.440 0.42 11.02 0.31 13.23 0.365 Average 11.720 0.319 5.807 0.183 8.764 0.252 CV 19.7 58.4 45.7 32.8 23.5 38.8 GR 7.8 5.1 13.6 10.4 9.7 7.0 Source: Compiled from annual reports of public and private banks

As revealed in Table-3, deposits per branch of both public and private banks have shown a dramatic improvement. The average deposit per branch for public banks was US$ 11.720 million while it was US$ 5.807 million for private banks. The overall average deposit per branch of the whole banking industry was US$ 8.764 million. A comparison of deposit per branch shows that public banks are more productive compared to private banks. The same table also shows the deposit per employee of public and private banks. The over all average deposit per employee of the Ethiopian banking sector during the period of study was US$ 0.252 million while it was US$ 0.319 million and US$ 0.183 million for public and private banks, respectively and it can be easily inferred that public banks are more ahead of private banks in terms of deposit per employee and deposit per branch. 4.2.2: Advance per branch and per employee Just like deposits, the productivity of banking branches and employees can be measured in terms of their credit disbursement. Deposits mobilized by banking branches and employees should be effectively disbursed hence credits are the important sources of income for banks. The credit disbursement at branch and employee level has been presented in Table-4. 7


Table-4: Advance per branch and per employee by public and Private Banks (in millions of US$) Industry Industry Year/banks Public banks Private Banks average per average per Advance per Advance per Advance Advance branch employee branch employee per per branch employee 1996/7 2.510 0.091 $1.79 $0.07 2.150 0.080 1997/8 2.520 0.086 $2.64 $0.11 2.580 0.098 1998/9 1.872 0.052 $2.36 $0.09 2.116 0.071 1999/0 1.615 0.042 $1.88 $0.07 1.747 0.056 2000/1 1.373 0.035 $2.01 $0.07 1.692 0.052 2000/2 0.929 0.023 $1.71 $0.06 1.319 0.041 2000/3 0.921 0.023 $2.39 $0.08 1.655 0.051 2003/4 $1.37 $0.03 $3.18 $0.10 2.275 0.065 2004/5 $2.40 $0.06 $3.61 $0.11 3.005 0.085 2005/6 $2.50 $0.07 $4.76 $0.14 3.63 0.105 2006/7 $2.74 $0.07 $4.81 $0.13 3.775 0.1 2007/8 $5.75 $0.16 $3.17 $0.09 4.46 0.125 Average 2.21 0.06 2.86 0.093 2.53 0.078 CV 62.4 23.9 37.8 26.9 33.3 30.1 GR 10.6 7.9 8.3 5.2 9.7 6.8 Source: Compiled from annual reports of public and private banks

As it is seen in Table-4, The average credit disbursed per branch for public banks was US$ 2.21 million while it was US$ 2.86 million for private banks. The over all average deposit per branch of the whole banking industry was US$ 2.53 million. A comparison of deposit per branch shows that private banks are relatively more productive compared to public banks. The same table also shows the credit disbursed per employee of public and private banks. The over all average credit disbursement per employee of the Ethiopian banking sector during the period of study was US$ 0.078 million while it was US$ 0.06 million and US$ 0.093 million for public and private banks, respectively. It can be concluded that private banks are more productive compared to public banks in terms of credit disbursement per employee and per branch. In spite of their late entry in to the banking sector, the private banks have made outstanding achievement in mobilizing deposits and disbursing loans both at branch and employee level. 4.2.3: Business per branch and per employee Business per branch and per employee is derived from deposits and advances per branch and per employee and is taken in to consideration for the purpose of evaluation and comparison of the productivity of each bank at branch and employee level. The business per branch and per employee of public and private banks has been shown in Table-5. The average business per branch for public banks was US$ 13.93 million while it was US$ 8.67 million for private banks. The over all average business per branch of the whole banking industry was US$ 9.549 million. A comparison of business per branch shows that public banks are more productive compared to private banks. 8


Table-5: Business per branch and per employee of public and private banks (in millions of US$) Industry Industry Public banks Private Banks Year/banks Business

Business per average

average per

Business per

Business per

Per branch

employee

branch

employee

1996/7

11.848

0.427

$5.27

$0.21

8.559

0.319

1997/8

11.974

0.409

$5.88

$0.24

8.927

0.324

1998/9

9.981

0.279

$5.67

$0.22

7.825

0.249

1999/0

11.684

0.306

$5.24

$0.19

8.462

0.248

2000/1

12.178

0.306

$5.97

$0.21

9.074

0.258

2000/2

11.915

0.295

$6.26

$0.20

9.088

0.247

2000/3

11.802

0.292

$7.83

$0.25

9.816

0.271

2003/4

$13.63

$0.33

$9.51

$0.30

11.57

0.315

2004/5

$16.04

$0.42

$11.05

$0.33

13.545

0.375

2005/6

$17.05

$0.45

$13.26

$0.38

15.155

0.415

2006/7

$17.86

$0.48

$13.87

$0.38

15.865

0.43

2007/8

$21.19

$0.58

$14.19

$0.40

17.69

0.49

Average

13.93

0.38

8.67

0.276

95.49

0.33

CV

23.9

29.8

40.9

28.4

30.1

25.1

GR

8.4

5.8

12.1

8.9

9.7

6.9

Per branch employee

The above table also shows the business per employee of public and private banks. The overall average business per employee of the Ethiopian banking industry during the period of study was US$ 0.33 million while it was US$ 0.38 million and US$ 0.276 million for public and private banks, respectively. Just like for business per branch, it can be concluded that the employees of public banks are relatively more productive compared to private banks in terms of business per employee. Test of the hypothesis for profitability and productivity: The first hypothesis which was at the outset stated as private banks are more profitable compared to public banks is tested in Table6. This hypothesis is tested using ROA, ROE, ratio of interest income to total income and Net interest margin ratio.

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Table-6: Comparative mean scores of productivity between public and private banks productivity Variables

Public banks

(millions birr Mean ROA ROE Interest /total income Net interest margin

SD

1.18 1.16 14.07 17.5 65.5 12.1 2.19 0.63 Deposit per branch 11.720 2.45 Deposit per employee 0.319 0.063 Disbursement/ branch 2.21 1.289 Disbursement/employee 0.06 0.039 Business per branch 13.93 3.342 Business per employee 0.38 0.095 *Significant level 0.05 Source: Compiled by the author

Private banks mean SD 1.76 16.98 65.4 3.02 5.807 0.183 2.86 0.093 8.67 0.276

0.74 6.78 4.89 0.51 2.65 0.06 1.08 0.025 3.55 0.078

Mean difference

“t”

“p” value

Remark

0.155 0.598 0.998 0.002 0.000 0.000 0.194 0.029 0.001 0.007

Insignificant Insignificant Insignificant Significant Significant Significant Insignificant significant Significant Significant

Value 0.58 2.91 0.02 0.83 5.91

0.136 0.651 0.032 5.26 0.105

1.47 0.54 0.002 3.53* 5.68* 5.43* 1.34 2.36* 3.73* 2.97*

As depicted in table-6, the difference between profitability of public and private banks as measured by ROA and EOE was found statistically insignificant as proved by t-values of 0.155 and 0.598, respectively. By these best and commonly used indicators of profitability, the hypothesis which was stated as private banks are more profitable compared to public banks is rejected. Moreover, t-test was conducted to verify the relative dependence of both groups of banks on interest income to generate profit. The result was found that both groups of banks were almost equally dependent on interest income and therefore the mean difference was insignificant with t-values of 0.002 at 0.05 levels. The percentage of net interest income to total assets usually reflects the banks’ ability to manage its assets and liabilities and is also a good indicator of the profitability of banks. The average net interest margin of private banks (3.01) was significantly higher than the average net interest margin of public banks (2.19) as proved by t-values of 3.53 at 0.05 levels and only with this single profitability indicator, private banks profitability was statistically significant than public banks. The second hypothesis which stated as the employees and branches of private banks are more productive than the employees and branch of the public banks was formulated for testing. The comparative means scores, mean differences and t-values for productivity indicators are presented in Table-6 for hypothesis testing. Except advance per branch the mean difference between the productivity indicators of public and private banks was statistically found to be significant. The average deposit per branch and per employee of public banks (US$ 11.72 million and US$ 0.319 million, respectively) were significantly higher than the average deposit per branch and per employee of private banks (US$ 5.807 million and US$ 0.183 million, respectively) as evidenced by statistically significant tvalues of 5.68 and 5.43 respectively, indicating that the branches and employees of public banks were more productive than private banks. Like for deposits, the average business per branch and per employee of public banks are significantly higher than the average business per branch and per employee of private banks as proved by statistically significant t- values of 3.73 and 2.97, respectively. The mean difference 10


for the advance per branch was statistically found to be insignificant while it was significant for advance per employee. Therefore the hypothesis that was stated as the employees and branches of private banks are more productive than the employees and branches of public banks are rejected and the alternative hypothesis is accepted.

References: Greuning, H. and Bratanovic, S. (2000) “Banking crisis analysis”, World Bank, 2000, p.19. Malami M. Maishanu (2004) “A univariate Approach to predicting failure in the Commercial banking sub-sector” in Nigerian Journal of Accounting research Vol.1, No 1, PP 76, Ahmadu Bello University, Zaria Ram Mohan (2002) “Deregulation and performance and public sector banks”, Economic and political weekly, Issue on banking, money and finance. Robert N. Lussier (1996) “Management concepts, applications, and skill development”, (Ed), International Thomson publishers, 1996 P. 91 Saovanee Chantapong (2003) “Comparative study of domestic and foreign banks Performance in Thailand: the Regression Analysis, Bank of Thailand, Bangkok, Sarkar J. Sakar S. and Bhuamik Das (1998) “ Does ownership always matter? Evidence From the Indian Banking Industry” Journal of Economics, 1998, 262-282 Timothy, W. and Scott, M. (2003) “Bank management,” 5th Ed, Thomson Asia pacific Ltd. Singapore, 2003, P 140

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11


THE USE OF FINANCIAL INFORMATION IN STOCK EXCHANGE DECISION MAKING IN MTWARA TANZANIA DR. A.S.K NORMAN Tumaini University and Kampala International University in Tanzania,

ABSTRACT The use of financial information in deciding to invest wisely is crucial in all undertakings of investment ventures. This article presents the research findings on the use of financial information in Tanzania a case of Iringa region. The study was conducted to find out whether investors of stock exchange do consider financial information when deciding to invest. Mixed methodology of data collections strategies was used in the study. However, questionnaire was the prominent collection strategy. Correlation and descriptive methods were used in the analysis of the data. The study applied purposive sampling methodology and was stratified into three categories: Small Investors (SI), Medium Investors (MI), and Large Investors (LI). The findings revealed three propositions. 1) That the use of financial information assimilated a direct relationship with the level of investment. 2) That small investors realized poor use of financial information compared to other groups of investors. 3) That large investors indicated that they were more sensitive to the use financial information when deciding to invest than other groups of investors. Generally it was found that only 13.63 percent of all investors use/consider financial information when deciding to invest. KEYWORDS: Stock exchange, investors, financial information ______________________________________________________________________________ 1.0 INTRODUCTION TO MTWARA REGION This paper presents the extent of the use of financial information by people investing in stock exchange in Mtwara region in Tanzania. And it is divided into four parts. 1) the introduction which covers the background of Mtwara region, historical background of stock exchange in Tanzania and the institutions in the stock exchange sector. 2) the Literature review. 3) is the methodology of the study, and 4) is the Conclusion, recommendations and policy cum research implications. Mtwara region occupies 16,720 sq. kms or 1.9% of Tanzania Mainland land area of 885,987 sq. kms. It is the second smallest region after Kilimanjaro. Mtwara region is administratively subdivided into 5 districts, 21 divisions, 98 wards and 554 villages. as The mandate to demarcate regions and districts are vested to the President of the United Republic of Tanzania, hence regional profile can change any time, particularly during and or close to elections. Hence the data that are provided are as on 27th November, 2010.

12


Economically Mtwara region depends solely on Cashew nuts as an official economic crop, while Cassava saves as the key food crop. There are also a number of people who depend on fishery particularly using Indian Ocean. 1.2 HISTORICAL BACKGROUND OF STOCK EXCHANGE IN TANZANIA The Capital Markets and Securities Authority (CMSA) is a Government Agency established to promote and regulate securities business in Tanzania. It was established under Capital Markets and Securities Act, 1994. The legal framework for the regulation of the securities industry is the Capital Markets and Securities Act, 1994 [Act No. 5 of 1994 as amended by Act No. 4 of 1997]. In order to facilitate the securities (shares and bonds) investment, the Dar es Salaam Stock Exchange (DSE) was established by the Capital Markets and Security Authority under the Capital Markets and Securities (CMS) Act of 1994. The DSE was incorporated in September, 1996 as a company limited by guarantee without a share capital under the Companies Ordinance (Cap. 212) (DSE, 2008). The enactment of DSE came as a result of government’s policy of transforming its economy from public government dominated economy to private sector driven economy. The Act is supplemented by various regulations that are promulgated by the Minister responsible for Finance. The DSE is a non-profit making organization created to facilitate the government implementations of the economic reforms in particular on enabling the private sector raise capital through the purchase of shares made by individuals and firms. The exchange became operational in April 1998 with TOL Gas Limited listing as the first company followed by the Tanzania Breweries Limited (TBL) during the same year. The delay was due to the necessary background operational preparations that were inevitable such as training of brokers and formulation of issuance and trading rules (CMSA, 2007). Hence, a stock exchange is a secondary capital market where large and small investors can buy and sell securities (shares, bonds etc.). It is an organized market where buyers and sellers of securities meet as they are represented by dealers/brokers and acquire or dispose securities (DSE, 2007; Norman, 2006). It is a market which securities are traded by members of the exchange who may act as both agents (brokers) and as principal (dealers) (Benning, 2007). The establishment of the DSE marked the beginning of the people in Tanzania indulging in purchase of shares as a strategy for investing consequently a need for proper decision-making on where to invest and why. It can be added that the establishment of the Capital Markets followed suit of many other changes which gave a signal for the need to transform the economy from government driven to private driven economy. For example the Tanzania ruling party Chama cha Mapinduzi devolved the popularly known Arusha Declaration at the expense of adopting a Zanzibar Revolution. The former had stipulated the need for leaders not to participate in businesses or investment from what was perceived as avoidance of conflict of interest. The Arusha Declaration set it clear that one should choose to be a leader or to become a businessperson. It further made it clear that a leader should not be subjected into two pay jobs. 13


The essence was to protect conflicting interest that may arise from different dealings of business ventures. For example, it is hard for a business man who is also the minister for trade and industry or finance to fairly play the role of paying taxes and or being royal to other government procedures that will be required on importing, exporting and in general transactions. It was felt so with reference to Africa, and specifically Tanzania. Since the creation of the Zanzibar Resolution, leaders have been massively participating in business including investing in capital markets. Therefore, investing needs a keen responsibility of why, where and when to invest, and at what amount. The where and why questions are vital, in particular, when observing the performance of the companies that were the first to list shares with the DSE market and reasons backed people to invest in such companies. The first company to list its shares with the DSE was the Tanzania Oxygen Company Gas Limited (TOL). The observation, however, reveal that those who purchased shares encountered what could be termed as loss, since the TOL Gas Limited share value dropped from TZS 500 in 1998 to TZS 290 in 2009. On the other hand there are companies that have flourished. Such companies include the Tanzania Tea Packers Limited (TATEPA), which experienced the rise of share value from TZS 330 as an Initial Price Offer in the year 2000 to TZS 510 in 2009. Further, Breweries Tanzania Limited has her shares increased value from IPO of TZS 550 in 1998 to TZS 1850 in 2009 (DSE, 2009). Other firms such as NICO have IPO of TZS 300 in 2005 as on 4 March 2009 the price has decreased to TZS 285. The research problem attracted the researcher in several ways; including the new-fangled venture of investment, which has attracted many Tanzanians. Secondly is the potentials vested in the entire shares business, which seem to supersede the banking interest rate by far. For example, while those invested in the Tanzania Cigarette Company (TCC) have enjoyed the share value increase of about 400% from TZS 410 in 2000 as Initial Price Offer (IPO) to TZS 1740 as Closing Price Offer (CPO) in 2009 (DSE, 2009; DSE, 2005). Such money increase, if were deposited at Commercial Banks would not reach an interest of 5%. The normal rate of most banks in Tanzania for saving accounts is between 2% to 4%. Those who invested in the Tanzania Breweries Company Limited earned about 254% in the period of about five years. Therefore, the main purpose is to set out paradox of whether those investing in shares do consider financial analysis/information when investing. 1.3 INSTITUTIONS IN THE SECTOR The capital markets and security business commonly known as stock exchange can be said is manned by five key players namely the Capital Markets and Security Authorities (CMSA), the Dar es salaam Stock Exchange (DSE), the registered stock brokers, the firms that have listed shares/stocks, and the customers/investors (sellers and buyers). The Capital Markets and Securities Authority (CMSA) is a Government Agency established to promote and regulate securities business in Tanzania.

14


The DSE prime function is to facilitate the conduct of the stock exchange on day to day basis. It is the organization that enables the conduct of the business. The law has given mandate to the DSE to register brokers whose prime function is to firstly, provide room for trading of stocks on behalf of the client and the DSE. Secondly, provide advice to customers regarding the trading. Thirdly, link the customers with the DSE and other financial institutions such as banks on the payments and various transactions regarding stocks, among others. The listed firms are just like farmers who present their products to the official markets. They present the products (shares and bonds) through rules established by the DSE and regulated by the CMSA. The final players in the stock business are the customers, which comprise of people and firms willing to purchase and or sell shares and bonds. They play an integral part of the stock exchange business since without buyers and sellers; the essence of the markets is depleted. 1.4 BACKGROUND TO THE PROBLEM Informed investment is important for the purpose of minimizing the risks associated with loosing value for the money invested. It is the spirit of the government and thus the policy to ensure that people participate in programs that reduce poverty. The essence of capital markets is imperative in the efforts of the government to improve the economy and reduce poverty. Capital markets enables individuals to own firms and multiply their incomes through investment that is managed by other people but with profits shared with many individuals – the poor and the rich. Capital markets are basically divided into two categories namely bonds and shares both are generically known as securities. Most people with normal economic status have been able to boost their economic strength and improve livelihood through purchase of shares. For example about 153,630 people participated in purchasing shares at Initial Price Offer (IPO) in Tanzania in 14 listed companies (DSE, 2009). The descriptions of the firms and the number of people subscribed are TOL 10,500; TBL 23,000; TATEPA 2,000; TCC 7,508 Tanga Cement 14,228; DAHACO 41,025; Twiga Cement 18,300; NICO 2986; TCB 5,447; and NMB 28,636. The number of subscribed in shares suggest that the multiplier effects is huge. Since stocks are purchased at lower price and sold at higher price. Hence the total number benefiting from the entire exercise of purchasing and selling of shares is bigger than 153,630. It is estimated that a third of those purchase shares at IPO do sell during first appearance at secondary market. The tendencies, however, vary pending other factors. The drivers of purchasing shares promulgate such factors. There are number of factors that enable people purchase shares of the listed firms. The factors include the perceived management – to what extent the management of the firm suggests future prospects. Another factor considered are owners of the firms listing shares – who own the firms listing shares. For example firms that solely belong to the government seem to automate reliability of the people to purchase shares. The figures of people subscribed shares in Tanzania supports the argument. The first five firms with big numbers of investors are those owned by the government. The logic behind this is the risk associated with any business. Buyers would confide the government than individuals (Norman, 2005).

15


Further, another factor considered pertinent is the performance of the firm realized through financial information regarding profits, dividends, ratios regarding assets versus liabilities, acidic ratios and so forth. Normally, people are not much concerned with trends of the business and other technical financial interpretation. Most individuals rank the firms by mere understanding the profits and hence dividends anticipated, which suggest the need for acquisition of financial information. Financial information is important to the management of firms in Tanzania. It is from financial information the management can decide to list shares. The financial information tells managers on what measures should be taken for the survival of the firms. It is financial information that gives among other information whether the firms can pay dividends, cover debts, purchase new machines, establish branches, go abroad, and increase capital, among others. The studies on the performance of the organizations in Tanzania and the world over reveal that most firms face two huge problems: working capital and competent personnel (Mautz, 1968; Norman, 1996; 2005). Hence capital markets are the key to raising financial capital of the firms as opposed to loans from financial institutions such as banks (DSE, 2008; 2007). The importance of capital markets particularly on raising firms’ capital is on the base that no interest is charged on the capital acquired. Most first firms listed shares in Tanzania have encountered more money raised compared to what was needed. Therefore it can generally be argued that capital markets translate the policies of Tanzania government of alleviating poverty and finally improving the people’s livelihood. It is the capital market, which adds values on number of employments which results from rejuvenation that emanate from increased working capital of the firms. The firms listed with the DSE pay taxes to the government hence improving the accumulated fund, which ultimately are allocated to roads improvements, health services, schools and so forth. 2. LITERATURE REVIEW Most studies indicate the general importance of financial information/financial statements analysis as opposed to the use of the same in capital markets and in particular stock exchange. To bridge the gape, this study has found out the use of financial information by investors of stock exchange. The study has also covered the evolution and the development of capital markets in Tanzania and has set the comparative analysis of the capital markets in East Africa. Hence while many studies have revealed the role played by the understanding of financial information/financial analysis the link has been on indicating the general use in investment and in decisions of various portfolios but not specifically on whether people investing in stock exchange consider the financial information when investing or purchasing shares. Financial statements analyses emphasize on developing financial information within the context of formal decisions models. For instance the study of Nasser and Nuseibeh (2003) on the usefulness of annual reports reveal that the user groups surveyed in the study rely mainly on information made directly available by the company and do not consult intermediary sources of corporate information in order to make informed decisions. This may suggest that there could be same correlations if same study was to be carried in Tanzania, since, just like Saudi Arabia, Tanzania is perceived to have a limited number of listed

16


companies and businesses and financial communities have many social and business links, resulting in relatively easy interaction between the user groups and related companies. The expediency of information released by companies should be in a simple form and expressive language to be consumed by any client. In this dimension, Norman (2006) suggests that to make annual reports adequate and readable, the information contained in these annual reports should be presented in an understandable manner and grouped and organized appropriately. Moreover, Epstein and Pava (1994) asserted that the language style might have a material effect on the readership, and influence the understandability of information that appears in annual reports. Wolk et al. (1992 in Nasser et al., 2003), however, suggested that even if users of annual reports are assumed to be knowledgeable, the information itself could have different degrees of comprehensibility. In all sense the importance of Financial Statements Analysis which is literary known as financial information is inevitable to investors and most findings have indicated the imperativeness of these reports. Nasser and Nuseibeh (2003) provide a number of studies, which have investigated the usefulness of corporate information to the users and found the annual report to be important and primary source of information. These include, (Mautz, 1968; Briggs, 1975; Lee and Tweedie, 1975a,b, 1976, 1981; Epstein, 1975; Chang and Most, 1977; Anderson, 1981; Arnold and Moizer, 1984; Moizer and Arnold, 1984; Chang and Most, 1985; Epstein and Pava, 1993; Bence et al., 1995; Anderson and Epstein, 1995; Abu-Nassar and Rutherford, 1996; Bartlett and Chandler, 1997). 3. MATERIALS AND METHODS This study used combined/mixed strategy. This included case study strategy. However, mini survey analysis was employed to capture responses that would allow generalization, hence a combined research strategy. According to Robson (1993), there are three traditional research strategies for real world research; experiment, survey and case studies. However, Yin (1994), points out that research is made up of five primary strategies. These are experiments, surveys, archival analysis, histories and case studies. Additional strategies imposed by Yin suggest that knowledge is not static, it is dynamic and grows. Barnes (2001) argues that it seems unlikely that experiments are appropriate for investigating such a complex and multi-faceted phenomenon as the operation of a strategic process. Even if it were possible to manipulate variable to observe their impact on one another, it would prove impossible to control for all other possible variables. Although the use of mini survey may suggest quantitative approach yet the combined research strategy allows both non-researchers to capture information presented and also enables the academicians to interpret through the use of figures and other cognitive values that will be depicted. Mini survey calls for the use of a consistent and logical approach towards what is being investigated and uses statistical inferences and mathematical techniques for processing the data with emphasis on the measurements and analysis of causal relationships between variables (Thurston, 1956; Kothari, 2004). The sample for the study was 50 investors drawn from the population of about 246 being total number of stock investors in Mtwara region. The sample was thus 20.3% of the entire 17


population. Population was drawn using purposive sampling method, which focused on investors that would represent the three strata that were identified. Hence small investors were represented by 40 investors; medium investors were represented by 8 and the big investors were represented by 2 investors (table 1). 4. RESULTS AND DISCUSSION As narrated above responses were categorized as small investors, which include all investors who invested any amount below 10 million. The second category was investors who did so between 10 million but below 50 million. The third category involved investors who invested from 50 million and above. The reason for categorization was to ensure that all categories of investors were represented. The theory of Capital Assets Price Model asserts that risk is determined according to the amount of money invested. Hence different capital invested may lead to different responses in terms of sensitivity to risk. The concern is that the more the risk felt by an investor, the more the sensitivity to Information Asymmetry- that is an art of realizing that investors differ in knowledge accrued on investment. The theory of information asymmetry emphasizes the fact that investors knowledge differ. Some know more than others. Responding to risk may not be in conformity to CAPM rather can be pushed by other factors such as information asymmetry. Expectation theory asserts the fact that interest is what pushes the investors to invest more. The expectation theory emphasize that, interest rates can be used as a barometer for future interest rates. Investors expecting higher short term interest rates are more likely to buy bonds maturing in the short term. Fifty investors were involved in the study. Table 4 reveals the responses and the number of investors that participated in the study. Table 1: The profile on consideration of financial information when investing S/NO Type of investor Respondents Yes No Percentage for yes Small investors

40

2

38

5.00

Medium

8

4

4

50.00

Large Investors

2

2

0

100.00

Total

50

Source: Findings on the field 2009/2010 in Mtwara

4.1 THE USE OF FINANCIAL INFORMATION IN MTWARA

In Mtwara total of 50 investors were subjected into the study. Questionnaires and in-depth interview were conducted. The table bellow summarizes the findings on the use of financial information for decision making investment.

18


It was evident that small investors did not consider financial information when investing. Unlike in Iringa where no single investors under the category of small investors considered the use of financial information, in Mtwara two (2) out of 40 investors indicated considering financial information when investing. Financial information was considered by two investors with capital bellow 10 million shillings. The analysis indicated that 5% of small investors considered financial information in deciding to invest. Further, the findings in Mtwara revealed that only 25% of medium investors- those who invest between 10 million Tanzania shillings but bellow 50 million shillings considered financial information when investing. Further more, it was revealed also that 100% of large investors considered financial information when investing in securities. The trend suggests that risk averse (sensitivity to risk) is proportional to the amount of money invested. The more the money invested the more the sensitivity to risk, hence need to ensure investment is well taken. The study in Mtwara was very similar with that of Iringa except in medium and small investors. One large investor had this to say in Mtwara: My firm purchase shares. Before we purchase we seat on the board meeting, decide on the potentials vested to such firms, and buy the respective shares. Shares is a business of prospective and thus can be analyzed and predict the trend basing on financial information, hence implications (Response of Nyaluke, an investor in Mtwara). It was further observed that the category/strata that used financial information were the large investors. In this regard about 100 % large investors interviewed used financial information when deciding to invest. The second group was the medium investors which attained a score of 25% of those investigated under that stratum. The last group was the small investors which attains 5% percentage. On aggregate in Mtwara it was noted that only 13.63% of all investors under the study did consider financial information when investing. The percentage reflects the total of 6 respondents being in favor of using financial information out 50. The observation revealed also that 86.37% did not consider financial information when deciding to invest in securities. It can be concluded that in Mtwara financial information is not considered when deciding to invest in securities. Table 2, summarizes the analysis for Mtwara. Table 2: The use of financial information in Mtwara

Frequency Percent Valid Yes

Valid

Cumulative

Percent

Percent

6

13.63

13.63

12.0

No

44

86.37

86.37

100.0

Total

50

100.0

100.0

Source: Analysis of field data 2009/2010 19


Figure 1: The use of financial information in Mtwara 120

Percentage

100 80

The use of financial information in Mtwara

60 40 20 0 Small investors

Medium investors

Large Investors

Type of Investor

Source: Analysis of field data 2009/2010 As described above, in Mtwara the total percentage of those who use financial information when investing is 13.63%. The total percentage of those who do not use financial information when investing is 86.37%. It can be concluded that the consideration for financial information by stock investors is negligible. 5. CONCLUSION AND RECOMENDATIONS Financial information is imperative in decision-making. This part has provided conclusions on the specific tendencies that were observed on whether investors in securities do consider financial information when deciding to invest. From the findings, the following facts were revealed: That the total use of financial information in Mtwara for all investors stands at 13.37%. However, the use of financial information by strata of Small Investors (SI), Medium Investors (MI), and Large Investors (LI) stands at 5%, 50% and 100% respectively. The value of financial information remains to be crucial, since it gives the investors to understand the anticipated profits and gains of the firms. Financial information provides also an understanding on the prospective growth of the firm, hence investors of stocks could predict future investments plan for those who need growth of the value of shares at market. Financial information gives information regarding the ability of the firm to cover its liabilities, and thus enables investors to realize the true trend of the firms. Financial information further provides information on earning per share, hence enabling investors to understand the amount of growth their shares are likely to earn. Hence financial information is critical to any investor.

20


5.1 Recommendations The study involved two key components which are stock exchange investment, and secondly the consideration of financial information. Hence the recommendations are divided into two those related to the use of financial information and those related to the need for investing in stocks/securities. Therefore the following is recommended: Realizing the fact that the stock exchange business is benefiting many people, therefore Governments and all concerned stakeholders such as the DSE, CMSA and brokers should promote more firms to list shares with the DSE to enable more people enjoy the benefits for investing in stocks at the same time providing unbiased, fair and coordinated financial information education in the area of stock exchange. Recognizing that financial information education is needed in every dot of life, and to all people, therefore financial information education should start at primary school, since it is the fact that if people cannot be financial information literate, the impact will affect the government and other institutions. And such provision of financial information education can be attained through specific Web sites, free information services and newspaper, brochures, and Television for the purpose of enabling the majority people get advantage of investing in the Stock Exchange. 5.2 Policy Research Implications (i) The findings of this study have demonstrated that only 13.67% of the stock investors do use financial information. The policy implication on this situation calls for the ministry of education in Tanzania to ensure that financial education is taught at elementary stage of primary and secondary school, since financial education is imperative in all endeavors of finance. (ii) The findings of this study have revealed that barriers towards the use of financial information are lack of brokers in places other than Dar es Salaam. The policy implication in this situation is for the Capital Markets and Securities Authority (CMSA) and the Dar es Salaam Stock Exchange (DSE) to create rules and regulations that makes it mandatory for registered brokers to have branches in areas other than Dar es Salaam. Or the CMSA and /or DSE should create a structure in six zones of Tanzania for educating and providing advisory role on securities investment. REFERENCES Act No. 5 of 1994 as amended by Act No. 4 of 1997]. Abu-nassar, M., Rutherford, B.A., 1996. External users of financial reports in less developed countries: the case of Jordan. British Accounting Review 28, 73–87. Anderson, R., 1981. The usefulness of accounting and other information corporate annual reports to institutional investors in Australia. Business Research Autumn, 259–265.

disclosed Accounting

in and

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Anderson, R., Epstein, M., 1995. The usefulness of annual reports. Australian April, 25–28.

Accountant

Arnold, J., Moizer, P., 1984. A survey of the methods used by UK investment analysts to appraise investment inordinary shares. Accounting and Business Research Summer, 195– 207. Bartlett, S.A., Chandler, R.A., 1997. The corporate report and the private shareholder: Lee and Tweedie twenty years on. British Accounting Review 29, 245–261. Bence, D., Hapeshi, K., Hussey, R., 1995. Examining investment information sources sophisticated investors using cluster analysis. Accounting and Business Research 26 (1), 19–26.

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Benning, F.J.(2007). Trading Strategies for Capital Markets. MacGraw-hill, Newyork. The Capital Markets and Securities Act, 1994, (Cap.79) (as amended) The Companies Act, 2002 (Cap.212) Chang, L.S., Most, K.S., 1977. Investors uses of financial statements: an empirical Singapore Accountant 12.

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CMSA, 2008. Frequently Asked Questions. Capital Market and Security Authority, CMSA, Dar es Salaam Day, J.F.S., 1986. The use of annual reports by UK investment analysts. Business Research Autumn, 295–307.

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and

DSE, 2008a. DSE Journal 10TH Anniversary. DSE, Dar es Salaam DSE, 2008b. DSE Annual Report. Dar es Salaam Stock Exchange, Dar es Salaam DSE, 2007. DSE Annual Report. Dar es Salaam Stock Exchange, Dar es Salaam DSE, 2008c. DSE Handbook. Dar es Salaam Stock Exchange, Dar es Salaam DSE, 2003. Blue Print. Dar es Salaam Stock Exchange, Dar es Salaam Epstein, M.J., 1975. The Usefulness of Annual Reports to Corporate Shareholders, Bureau of Business and Economic Research, California State University, Los Angeles. Epstein, M.J., Pava, M.L., 1993. The Shareholder’s Use of Annual corporate Press Inc, London.

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Epstein, M.J., Pava, M.L., 1994. Profile of an annual report. Financial Executive Jan/Feb, 41–43. Kothari, C. R., 2004. Research methodology: Methods and techniques. Delhi, New age international publishers. Lee, T.A., Tweedie, D.P., 1975a. Accounting investigation of private shareholder usage. Accounting and Business Research Autumn, 280–291. Lee, T.A., Tweedie, D.P., 1975b. Accounting investigation of private shareholder understanding. Accounting and Business Research Winter, 3–17. Lee, T.A., Tweedie, D.P., 1981. The Institutional Investors and Financial Information. The Institute of chartered Accountants in England and Wales. Lee, T.A., Tweedie, D.P., 1976. The private shareholder: his sources of financial information and his understanding of reporting practices. Accounting Business Research Autumn, 304–314. Mautz, R.K., 1968. Financial Reporting by Diversified Companies, Financial Research Foundations, New York.

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Moizer, P., Arnold, J., 1984. Shares appraisal by investment analystsportfolio vs. portfolio managers. Accounting and Business Research Autumn, 341–348. Naser, K., Nuseibeh, R., 2003. Quality of financial reporting: evidence from Saudi non-financial companies. International Journal of Accounting, Naser, K., Nuseibe, R., 2003. The British Accounting Review 35, 129– 153

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Norman, A.S., 2006. Financial Analysis as a Consideration for Stock Exchange Investment Decision in Tanzania, Mzumbe University Norman, A.S. 2005. Development is a war what do we do? TREECARE, Dar es salaam Thurstone, L.L. 1959. The measurement of values, Chicago, University of Chicago Press. URT. 1997. Mtwara Regional Profile. Regional Commissioners’ Office, Mtwara Wallace, R.S.O., 1988. International and international consensus on the importance of disclosure items in financial reports: a Nigerian case study. British Accounting Review 20, 223–265.

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BANCASSURANCE – A NEW CHANNEL FOR EMERGING GROWTH OF INDIAN INSURANCE INDUSTRY DR.GIRISH.K.NAIR*; DR.R.RAJKUMAR**; S.VINOTH MBA*** *Team Leader, International Hospitality Management, Stenden University, Qatar ** Director, RVS Institute of Management Studies and Research, Coimbatore – 641 402, Tamilnadu, India *** Assistant Professor, RVS Institute of Management Studies and Research Coimbatore – 641 402, Tamilnadu, India

ABSTRACT Bancassurance simply means selling of insurance products by banks. In this arrangement, insurance companies and banks undergo a tie-up, thereby allowing banks to sell the insurance products to its customers. In India, the insurance companies opened up to Bancassurance in 2002. This study makes an attempt with the objectives to examine the recent trends in Bancassurance business in India and to analyze the growth in bank tie-ups with insurance companies in India. At present 91 banks have tie up with insurance companies. The new IRDA guidelines for Bancassurance have increased the disclosure norms for the banks and insurance companies and restricting the number of tie-ups. While comparing various insurance products in the Bancassurance, the survey reveals that the motor insurance is the top selling product for general insurers through the bank and non-banking financial companies channel followed by Personal Accident insurance, Housing insurance and Property insurance. The future of the Bancassurance depends on how well the banks and insurance companies are able to overcome the operational challenges that are being constantly thrown at them. KEYWORDS: Bancassurance, Growth, Corporate agents- Bank tie ups, BancassuranceProducts

INTRODUCTION The banking and insurance industry have changed rapidly in the changing and challenging economic environment throughout the world. In the competitive and liberalized environment everyone is trying to do better than others and consequently survival of the fittest has come into effect. Insurance companies are also to be competitive by cutting cost and serving the customers in a better way. Now the time has come to choose and adopt appropriate distribution channel 24


through which the insurance companies can get the maximum benefit and serve customers in manifold ways. The intermediaries in the insurance business and the distribution channels used by carriers will perhaps be the strongest drivers of growth in this sector. Multi channel distribution and marketing of insurance products will be the smart strategy to continue playing an important role in distribution, alternative channels like corporate agents brokers and Bancassurance will play a greater role in distribution. The time has come for the industry to gradually move from traditional individual agents towards new distribution channels with a paradigm shift in creating awareness and not just selling products. The game is old but the rules are new and still developing. Ensconced in a monopoly run from the nationalized days beginning in 1956, the insurance industry has indeed awakened to a deregulated environment in which several private players have partnered with multinational insurance giants. However despite its teaming one billion populations, India still has a low insurance penetration of 1.95 percent, 51st in the world. Despite the fact that India boosts a saving rate around 25 percent, less than 5% is spent on insurance. To streamline the saving into insurance, Bancassurance is the best channel to tackle Insurance industry. BANCASSURANCE Bancassurance simply means selling of insurance products by banks. In this arrangement, insurance companies and banks undergo a tie-up, thereby allowing banks to sell the insurance products to its customers. This is a system in which a bank has a corporate agency with one insurance company to sell its products. By selling insurance policies bank earns a revenue stream apart from interest. It is called as fee-based income. This income is purely risk free for the bank since the bank simply plays the role of an intermediary for sourcing business to the insurance company. “Bancassurance” - a term coined by combining the two words bank and insurance (in French) – connotes distribution of insurance products through banking channels. Bancassurance encompasses terms such as Àllfinanz’ (in German), Ìntegrated Financial Services’ and Àssure banking’. Banks, with their geographical spread and penetration in terms of customer reach of all segments, have emerged as viable sources for the distribution of insurance products. The ubiquitous agent is no more the only distribution channel today for insurance products.

ORIGIN AND GLOBAL SCENARIO Bancassurance has grown at different places and taken shapes and forms in different countries depending upon demographic, economic and legislative prescriptions in that country. It is most successful in Europe, especially in France, from where it started, Italy, Belgium and Luxembourg. The concept of Bancassurance is relatively new in the USA. As mentioned above Bancassurance growth differs due to various reasons in different countries. The Glass-Steagall Act of 1933 prevented the banks of the USA from entering into alliance with different financial services providers, thereby putting a barrier on Bancassurance. As a result of this life insurance was primarily sold through individual agents, who focused on wealthier individuals, leading to a majority of the American middle class households being under-insured. With the US 25


Government repealing the Act in 1999, the concept of Bancassurance started gaining grounds in the USA also. Coming to Asia, it has been estimated that Bancassurance would contribute almost 16% of the life premium in the Asian markets in the year 2006 primarily due to the growth expected in India and China. BANCASSURANCE IN INDIAN SCENARIO In India, the insurance companies opened up to Bancassurance in 2002, when AVIVA Life Insurance, came up as a forerunner in the field. Over the years, many others have followed the league and have been joining hands with various public and private sector banks, cooperative societies and regional rural banks etc in different nature of tie-ups to have growing insurance business and policy coverage as well as to compete with their counterparts. Bancassurance as a business generating channel has been increasingly becoming important for the insurance companies, especially for the new private players which started functioning after the reforms in the industry. The early Bancassurance distribution arrangements in India took off under two categories: (a) distribution alliances by way of referral arrangements and corporate agency relationships, and (b) joint venture agreements. Pure distribution arrangements provide both banks and insurance companies with additional sales potential with minimum of investment. The referral form of distribution is a loose agreement, an opportunistic approach, whereby the bank effectively controlling access to the client base passes on business leads to career agents of the insurance company with which it has tie up. The insurance company assigns career agents to sit in the premises of specific bank branches, and for every lead passed on, the bank gets a referral fee commission (with some banks also permitting the staff to receive incentives from the insurer concerned). The other form of Bancassurance distribution through the joint venture platform is currently practiced by a few banks, with State Bank of India leading the pack as the promoter of SBI Life Insurance Co. Ltd. A joint venture structure offers more synergy potential than pure distribution agreement. The main advantage is the scope for significant know-how transfer to take place between the parties. International evidence suggests that fully integrated Bancassurance partnerships demonstrate superior performance, as the insurance company orients itself towards the bank, and the bank plays a crucial role in managing the interface with customers. Banking is fully governed by RBI &Insurance sector is by IRDA and bank assurance being the combination of two sectors comes under the purview of both the regulators. Each of the regulators has given out detailed guidelines for banks getting into insurance sector. Coming to India, Bancassurance is a new buzzword in India. It originated in India in the year 2000 when the Government issued notification under Banking Regulation Act, which allowed Indian Banks to do insurance distribution. It started picking up after Insurance Regulatory and Development Authority (IRDA) passed a notification in October 2002 on 'Corporate Agency' regulations. As per the concept of Corporate Agency, banks can act as an agent of one life and one non-life insurer. Currently Bancassurance accounts for a share of almost 25-30% of the premium income amongst the private players in India. 26


OBJECTIVES OF THE STUDY This study makes an attempt in this direction with the following objectives. 1. To examine the recent trends of Bancassurance business in India. 2. To analyze the growth in bank tie-ups with insurance companies 3. To find about the various products in Bancassurance. 4. To analyze the Individual and Group wise business growth through Bancassurance.

RESEARCH METHODOLOGY This study uses secondary data which were collected from Journals, Magazines, Websites, IRDA Annual Reports, RBI Reports, etc. The data collected were analyzed by preparing suitable tables. The study period covers from 2005-06 to 2010-11 i.e., 5 years. The information collected with the help of IRDA website are compiled and tabulated for analysis. For the analysis of data, statistical tools like percentages, ratios, and growth rates are used. ANALYSIS AND DISCUSSION 1. Growth in the number of insurance players As a global sweet spot, India attracts the attention of every major insurer. The country started in 20th place in the global insurance league table when the market opened to private players in 2000, and it moved up to 11th place in 2010. The opening up of the insurance sector for private participation/global players during the 1990s has resulted in stiff competition among the players, with each offering better quality products. The number of players increased from four and eight in life insurance and non-life insurance, at end-September 2011, there are forty-nine insurance companies operating in India; of which 24 are in the life insurance business and another 24 are in general insurance business. In addition, GIC is the sole national re-insurer. Recently Four Insurance companies named Star Health & Allied Insurance, Apollo Munich Health Insurance, Max Bupa Health Insurance and L&T General Insurance Company Ltd., joined in to the Indian Insurance Industry.

Table-1: Growth in the Number of Insurance Players 2006-2007 2007-2008 2008-2009 2009-2010

Type of business Life Insurance Public Sector – LIC Private Sector Non- Life Insurance Public Sector Private Sector Reinsurer

2010-2011

1 15

1 15

1 21

1 21

1 23

6 9 1

6 10 1

6 15 1

6 15 1

6 18 1 27


Source: Compiled from IRDA Annual Reports

2. Growth in bank tie-ups with insurance companies Insurance Regulatory and Development Authority (IRDA) is mulling options to allow banks to tie up with two to three insurance companies to sell the insurance products. In India, the concept of Bancassurance appears to be growing more rapidly both through commission based agents and Joint Ventures between banks and insurance companies. The tie-ups between the insurance companies and banks are doing reasonably well in India, through different types of Bancassurance models. The picture gives the number of banks tied-up with Insurance Companies:

S. No 1 2 3 4 5 6 7 8 9 10

Table-2: Growth in Bank tie-ups with Insurance Companies Insurance Companies 2007-08 2008-09 2009-10 LIC 8 8 12 HDFC Standard 7 9 3 SBI Life 8 7 ICICI Prudential 3 3 1 Birla Sun-life 6 5 Tata AIG 5 5 4 Bajaj Allianz 4 4 2 Aviva Life 4 8 Met Life 3 3 3 Others (Canara HSBC, Kotak Life, Star Union, ING Vysya)

Total Growth Source: Compiled from IRDA Annual Reports

2010-11 26 3 7 13 5 4 16 3

-

11

12

14

30 -

61 103.33

57 90.00

91 203.33

The above table shows the details in connection to growth in the banks tie-ups with Insurance Companies. In 2007-08, only 30 banks tied with Insurance companies, it was increased to 91 in 2010-11.Out of 13 Life insurance companies, the public sector corporation i.e., LIC was top runner in this race, tie-up with 26 Banks, followed by Aviva Life Insurance Company and ICICI prudential Life Insurance Company. As per an IRDA study, 7,000 bank branches, out of 80,000 tie-ups with insurance companies sell any kind of insurance product. Recently IRDA 1 has proposed a limit on insurers to tie up with any Bancassurance agent not with more than one life, one non-life and one standalone health insurance companies in any of the states, in addition to one each specialized insurance company. This arrangement will rightly direct and give a chance 1

http://articles.economictimes.indiatimes.com/2011-11-24/news/30437564_1_insurance-regulator-irdabancassurance

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to the banks to monitor insurance company service levels and ensure that its customers get the best in class general insurance products and services.

3. Number of life insurance agents The Insurance Corporation reaches out to people through main traditional route of the agency model for the selling of numerous complex need-based products. Most people have their first contact with an insurance company through an insurance sales agent. These workers help individuals, families, and businesses select insurance policies that provide the best protection for their lives, health, and property. The agents help in marketing its policies by spreading the message of life insurance among the masses2. The progressive growth in number of life insurance agents for the past 5 years is projected below:

Year 2006-2007

Table-3: Number of Life Insurance Agents Private LIC Total 890,152

1,326,748 (49.05) 1,592,579 2008-2009 (78.91) 1,575,476 2009-2010 (76.99) 1,302,328 2010-2011 (46.30) Source: Compiled from IRDA Annual Reports 2007-2008

1,103,047 1,193,744 (8.22) 1,344,856 (21.92) 1,402,807 (27.18) 1,337,064 (21.22)

Growth

1,993,199

-

252,0492

26.45%

293,7435

47.37%

2,978,283

49.42%

2,639,392

32.42%

The above table clearly shows the details on No. of life insurance agents in the last 5 years. The number of life insurance agents in the industry has grown from 19,93, 199 in 2006-2007 to a total of 26,39, 392 in 2010-2011 i.e. an increase of 32.42 % in the term of 5 years. However, in the year 2010-2011 the sudden decline in the number of agents for both LIC and Private companies has been attributed to large number of terminations of bad performing agents made by the companies. For LIC, which is the oldest life insurance provider in India and has been solely working through agents since inception, there has been approximately 21.2 % increase in the number of insurance agents from 2006-07 to 2010-2011. In case of private insurance companies, the number of insurance agents has grown by 49 % from 2006-07 to 2007-08; the growth has come down to 46.3 % in 2010-11. A primary reason for this declining growth in the number of agents has been the strict regulations of IRDA regarding educational qualifications of agents, mandatory training hours and certification and authority to work for only one insurance company.

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4. Number of corporate agents – bank tie ups

Year 2006-2007

Table-4: Number of Corporate Agents – Bank Tie Ups Private LIC Total 1906

409

2070 345 (8.60) (-15.65) 2091 415 2008-2009 (9.71) (1.47) 2420 510 2009-2010 (26.97) (24.69) 1870 295 2010-2011 (-1.89) (-27.87) Source: Compiled from IRDA Annual Reports 2007-2008

Growth

2315

-

2415

4.32%

2506

8.25%

2930

26.57%

2165

-6.48%

There will be a total increase of 26.57% in the number of bank intermediaries from 2006-07 to 2009-2010 i.e., from 2315 in 2006-07 to 2930 in 2009-2010. But the growth rate had fall down to -6.48% in 2010-11. In overall private insurance companies and LIC, as many of them get a major chunk of their business from Bancassurance alone, the growth has been considerable. The numbers have grown from 2315 in 2006-07 to 2165 in 2010-2011. However, the year 2010-2011 saw a negative growth primarily because of the new IRDA guidelines for Bancassurance which has increased the disclosure norms for the banks and insurance companies”, besides restricting the number of tie-ups. 5. Individual and group new business through Bancassurance Table-5: Individual and Group New Business through Bancassurance (% of Total Business) INDIVIDUAL NEW BUSINESS GROUP NEW BUSINESS GENERATED THROUGH GENERATED THROUGH BANCASSURANCE BANCASSURANCE Year Private LIC Industry Private LIC Industry Total Total 2005-06 16.87 1.25 6.38 12.22 0.02 2006-07 16.58 1.24 5.46 13.36 0.04 2007-08 18.89 1.3 7.97 12.36 0.44 3.46 2008-09 20.78 1.7 9.69 9.19 1.13 3.28 2009-10 24.88 1.64 10.6 8.67 0.06 2.15 2010-11 33.21 1.81 13.3 11.51 0.88 3.08 Source: Data Compiled from IRDA Annual Reports

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It is clear that the share of business conceded by the individual agents has been picked up by the corporate agents especially banks. The bank’s share grew from 6.38 % in 2005-2006 to 13.30% in 2010-2011. For both LIC and Private new business increased from 2005-6 to 2010-11. The LIC at 1.25 % in 2005-06 and went up to 1.81 % in 2010-11, mean time the Private players growth was more than this i.e., 16.87 in 2005-06 and increased to 33.21 % in 2010-11. For the group life insurance schemes, the industry figures are a mixed basket over the years as for both LIC and private insurance companies; these policies are sold through direct contracts between the insurance company and the applicant company. Hence, a very low volume of the total proportion of business comes from other distribution channels. LIC also witnessed a growth of 1.13% in 2008-09 but its share has also reduced to 0.88 % in the year 2010-2011. In the case of bank intermediaries also, the private players which gained 12.22 % of the group business, came down to 11.51% by the year 2010-2011, although the industry proportion has increased from 0.02% in 2005-06 to 3.08% in 2010-2011. A major reason that can be cited for this lackluster growth in the group insurance segment is the negotiation and service factor that exists between the insurer and the insured. This shift in the insurance distribution channels and the resultant increased business that we see, owes its success to the innovative products that have been brought in to meet the multifarious needs of the consumers. This paradigm shift from traditional term plans and endowment funds to ULIP‟s, SIP‟s and other market linked schemes which promise higher returns along with insuring the life of the insured has lured the customer towards insurance and hence insurance is being considered as an investment option and not only as a tax saving product. 6. Insurance Products in Bancassurance Comparing with the various insurance products in the Bancassurance, the survey reveals that the motor insurance is the top selling product for general insurers through the bank and non-banking financial companies channel followed by Personal Accident insurance, Housing insurance and Property insurance. The key factor inhibiting an even higher rate of growth of general insurance sales through the Bancassurance channel is the lack of hard targets or KPIs for general insurance products and the resultant low priority accorded amongst the range of products that branch managers are now expected to sell. Table-6: Insurance Products in Bancassurance S. No Insurance Products Sales (%) 1 Motor Insurance 100 2 Personal Accident Insurance 86 3 Home Contents 86 4 Property 71 5 Health Insurance 71 6 Travel 67 7 Disability 33 8 Cancer (Specific) 33 Source: http://www.towerswatson.com/indiabancassurance bench marking survey-2009-10. 31


CONCLUSION Bancassurance as a distribution channel facilitates insurance companies in developing networks and customer database faster than any other channel. Insurers can find Bancassurance as a profitable venture due to lower customer acquisition cost, quicker reach to untapped market, introduction of new hybrid products, and economies of scale in administrative cost. The Bancassurance channel has already contributed around 20 to 25 percent of the new business amongst the private sector life insurance companies and it is expected to increase further. Bancassurance has the potential to be an effective distribution channel in India due to its extensive network of 80,369 bank branches comprising 31,796 rural branches, 19,119 semiurban branches and 15,612 urban and 13,842 metropolitan branches3 which offers the bank a huge opportunity to sell insurance products. Bancassurance, as an alternate distribution channel, has contributed to the growth of insurance business by leveraging the benefits to customers, bankers and insurance. But the future depends on how well the banks and insurance companies are able to overcome the operational challenges that are being constantly thrown at them. In order to get the full benefit of it the following steps should be taken: (i) Service delivery mechanism should be strengthened, (ii) Knowledge of target customer needs should be developed, (iii) Extensive and high quality training should be ensured, (iv) Strategies consistent with the banks vision should be developed and (v) Bank's data base system should be made flexible to cope with the change. There needs to be a clear cut identification of activities between banking and insurance at the institution’s level as also at the level of regulators. Finally, the combination of bank and insurance will result in win-win-win situation for its stake holder’s viz., banks, insurers and customers, the ultimate winner. REFERENCES 1. Aggarwal, Vineet.(2004). Bancassurance: Concepts, Framework and Implementations. The Journal of Insurance Institute of India, July- Dec 2004,. 34 – 51 2. Anuja Banerjee. “Bancassurance: Chronicle, Apr. 2009, pp. 35-38.

A

Major

Para -banking

Activity”.

Insurance

3. Asis Bandyopadhyay. “Bancassurace: Trends and Issues”, India Insurance Report Series-I. Ed. Dharmendra Kumar and Rahul Sin gh. New Delhi: Allied Publishers, 2005, p. 415. 4. Barathi, C. and Balaji,C.D.(2011). Innovative strategies to catalyze growth of Indian Life insurance sector – an analytical review. Indian Journal of Commerce and Management studies, Vol –II, 136-145. 5. Barua, Abheek.(2004). Bancassurance – New Concept catching up fast in India. The Chartered Accountant, June 2004, 1348 – 1351. 6. Bhat., Ramesh., and Dixit. M.R. 2005. “Bancassurance: Exploiting an Opportunity with Partnerships”. Vikalpa. Vol.30, July-Sept, pp. 111-115.

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Report on Trend and Progress of Banking in India 2008-09. New Delhi: Reserve Bank of India. Oct. 22, 2009, p.141, 358

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7. Brahmam, R., Lokanandha Reddy Irala., Aparna Pulugundla . “Bancassurance in IndiaIssues and Challenges”. Pratibimba. Vol.4, No.1, Jan. 2004. 8. Chaudhary, Amitesh. (2004). Bancassurance – The Most Challenging Insurance Distribution Channel with special reference to SBI. Management Accountant, April 2004 9. Gupta,Mukul.(2006). Bancassurance : Taking the Lead- online edition of Hindu Business Line, Jan 1 10. IRDA Annual Reports 2005 – 2010 11. IRDA Report on Insurance Distribution Channels 12. Jutur and Sharath. “Bancassurance: Indian Scenario”. Chartered Financial Analyst . Aug. 2004, pp. 41-43. 13. Krishnamurthy, R. Bancassurance in India. Paper presented at the CEO summit of Swiss Reinsurance company 14. Krishnamurthy, R.(2003). Bringing Bancassurance to India – Blue prints for Success. IRDA Journal, Aug, 20 -23 15. Malpani, Sudarshan. (2003). Many roads to Bancassurance. IRDA Journal, Aug , 24 -25 16. Morris Graham, “Bancassurance in India – the seeds are sown‟ – www. WATSONWYATT.com 17. Nalini Prava Tripathy. “Bancassurance in India-Tasks Ahead”. Journal of Insurance and Risk Management. Vol.V, Issue 10, June 2007, pp. 51 -60. 18. Neelamegam, R. and Veni, K. Pushpa. (2009) .Bancassurance - An Emerging Trend in Indian service Sector. Indian Journal of Marketing , October, 50-54 19. Parakala, V.S. Naga Raja Rao. (2004). Alternative channels of Insurance Distribution in India.Paper presented at 6th Global Conference of Actuaries. 20. Parihar, Rachna. (2003). Bancassurance: Challenges and Opportunities in INDIA.Bancassurance: Trends and Opportunities; ICFAI Press. 21. S Sarvanakumar, U.Punitha, S. Gunasekaran, S Sankar, Flourishing Bancassurance Business: An Indian Perspective, Zenith International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780, pp269 – 280. 22. Shivani Gupta, Dr. Ajay Jain, Anubha, Bancassurance –A New Feasible Strategy in Banking & Insurance Sector Moving Fast in India, International Journal of Research in IT & Management (IJRIM) Volume 2, Issue 2 (February, 2012) (ISSN 2231 -4334), pp. 771-781 23. Singhvi, Neha and Bhatt, Prachi , “Distribution Channels in Life Insurance”; Bimaquest, Vol III, issue I , Jan 2008 24. Sumathi Kumaraswamy, Bancassurance: Tapping of Insurance into Banking Pursuit, International Journal of Scientific and Research Publications, Vo lume 2, Issue 7, July 2012, ISSN 2250-3153 25. The WATSON WYATT Bancassurance benchmarking study – India 2006. A comparative study of Bancassurance performance practices in India. 26. Viswanadham, Dr. P. “Bancassurance in India: An Alternative Channel o f Insurance Distribution”. Indian Journal of Marketing . Nov. 2005, pp. 15-19, 29.

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WORK DIVERSITY MANAGEMENT AND PERCEIVED OUTCOME: A STUDY OF WORKER AWARENESS AND SENSITIVITY IN SELECT INDUSTRIES OF UTTARAKHAND DR D.S.CHAUBEY*; MR. SIDHESWAR PATRA**; MR. DEEPAK GUPTA*** * Directror, Uttranchal Institute of Business Studies Dehradun ** Asst. Professor, Trinity College of Education, Dehradun *** Research Scholar ______________________________________________________________________________ ABSTRACT Management of workforce diversity to increase organizational effectiveness has become essential in the current fast changing business environment across the globe. Globalization has boosted the worker mobilisation at national and international levels. The meaningful diversity process management becomes the need due to one or other benefits in the highly rich intellectual awareness and understanding of recent and emerging themes. In a short survey of 141 employees working in different industries located in Uttarakhand, it was found that discrimination exists in outcomes of workforce diversity with respect to satisfaction, expectation and performance of the employees. The absence of benchmarking the processes and activities for any business is evident in this study. The study also reveals the absence of organizational strategy towards the enhancement of the diversity competency to a great extent. Some of the organizational outcomes of workforce diversity as perceived by the employees of different cadres are also discussed in this paper. KEYWORDS: Workforce Diversity, cultural diversity, benchmarking, workforce mobilisation. ______________________________________________________________________________ INTRODUCTION Workforce diversity is a complex phenomenon to manage in an organization. The management of workforce diversity as a tool to increase organizational effectiveness cannot be underscored, especially with current changes sweeping the globe. It is argued that organizations that value diversity will definitely cultivate success and have a future in this dynamic global labour market. Workforce diversity management has become an important issue for both government and private organizations. Its importance has mainly been brought about by the free movement of labour due to globalization and the fight for human rights by certain minority groups who feel excluded from the employment sector.

34


The workforce diversity emerged mainly to further the availability of equal opportunities in the workplace. This equal opportunity philosophy is aimed at ensuring that organizations make the most out of the differences in a diverse workforce rather than losing talent which might assist the organization to be more efficient and effective. The increased mobility and interaction of people from diverse backgrounds as a result of improved economic and political systems and the recognition of human rights by all nations has put most organizations under pressure to embrace diversity at the work place. Diversity brings with it the heterogeneity that needs to be nurtured, cultivated and appreciated as means of increasing organizational effectiveness in this competitive world. Rational Behind the Study Workplace diversity is a people issue, focused on the differences and similarities that people bring to an organization. It is usually defined broadly to include dimensions beyond those specified legally in equal opportunity and affirmative action non-discriminatory statutes. Diversity is often interpreted to include dimensions which influence the identities and perspectives that people bring, such as profession, education, parental status and geographic location. After the formation of the state, government of Uttarakhand with the help of central government, has brought many reforms and given a lot number of industrial assistance for fast development of the state. State has got high literacy rate, potential for hydropower generation, potential for adventure sports, rural and religious tourism, rich cultural heritage, rich source of biodiversity, Presence of centers of excellence like IIT-Roorkee, GBPUAT, FRI etc. and, excellent network of schools in Dehradun and Nainital; all these help in enabling policies for industrial development and attracting investment, and harmonious and peaceful social and industrial environment. This government policy on industrialization has attracted large amount of investment in the state. This further has boosted the worker mobilisation at national and international level. In spite of rich intellectual awareness and understanding of recent and emerging themes, organizational response – the “enactment” of a meaningful diversity process – has been limited and fragmented. The present study is an attempt to highlight the work diversity management practices and its perceived outcome with the specific reference to worker’s awareness, their sensitivity and managerial implication in select industries of Uttarakhand. Review of literature The subject of workforce diversity has never been a major problem in India as much as it is today. The concept of diversity management gained attention with globalisation and the need for more organisations to spread globally to reach customers across the world. There is an increasing need to understand more about workforce diversity, which is deeper than what we see at the surface level. The 1990s saw the development of a new trend in the form of workforce diversity mainly because of the liberalization and globalisation of markets (Jain and Verma, 1996). At the same time , the liberalization of economies and structural adjustment policies brought about by the government opened the doors to free market economies in India. These free market economies brought in the free movement of labour as a commodity which has resulted in the diverse workforce across the continent. The privatisation of most of the state-owned enterprises in India also created an open door for migration of labour from all over the world. The concept of diversity encompasses acceptance and respect. It means understanding that each individual is unique and recognizing the differences. These can be along the dimensions of race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious 35


beliefs, political beliefs or other ideologies. It is the exploration of these differences in a safe, positive, and nurturing environment. It is about understanding each other and moving beyond simple tolerance by embracing and celebrating the rich dimensions of diversity contained within each individual. Broadly defined, diversity management as the systematic and planned commitment by the organizations to recruit, retain, reward and promote a heterogeneous mix of employees. Theories and techniques of diversity management have been developed and enthusiastically supported by a growing number of chief executives, training specialists, diversity consultants and academics (Saji, 2004). Diversity can improve organisational effectiveness. Organisations that develop experience in and reputations for managing diversity will likely attract the best personnel (Carrel et al., 2000). Diversity refers to the co-existence of employees from various socio-cultural backgrounds within the company. Diversity includes cultural factors such as race, gender, age, colour, physical ability, ethnicity, etc. The broader definition of diversity may include age, national origin, religion, disability, sexual orientation, values, ethnic culture, education, language, lifestyle, beliefs, physical appearance and economic status (Wentling and Palma- Rivas, 2000). Diversity requires a type of organizational culture in which each employee can pursue his or her career aspirations without being inhibited by gender, race, nationality, religion or other factors that are irrelevant to performance (Bryan, 1999). Managing diversity means enabling the diverse workforce to perform its full potential in an equitable work environment where no one group has an advantage or disadvantage (Torres and Bruxelles, 1992). Diversity has increasingly become a "hot-button" issue in corporate, political, and legal circles. For example, managing workforce diversity is one of the most difficult and pressing challenges of modern organisations. The demographic differences like sex, age, and were conventionally related to team level outcomes (Williams and O’Reilly, 1998). Managers in public and private organisations will have to understand, predict and manage this intriguing nature of the diverse workforce. Diversity in the workforce can be a competitive advantage because different viewpoints can facilitate unique and creative approaches to problem-solving, thereby increasing creativity and innovation, which in turn leads to better organizational performance (Allen et al., 2004). For organizations, this means that their market share, efficiency, human capital, international competitiveness, and level of innovation will dependant in part upon their ability to effectively manage a diverse workforce both within and across organizational boundaries (Barker and Hartel, 2004; Dass and Parker, 1996; Kandola et al., 1995, Strauss and Mang, 1999). There are numerous ways in defining diversity. Diversity includes all the ways in which people differ, and it encompasses all the different characteristics that make one individual or group different from another. It is all inclusive and recognizes everyone and every group as part of the diversity that should be valued (Wentling, 1997). A broad definition includes not only race, gender, ethnicity, age, national origin, religion and disability, but may include sexual orientation, values, personality, education, language, physical appearance, marital status, lifestyle, beliefs and background characteristics such as geographic origin, tenure with the organization and economic status. Corporations around the globe largely subscribe to, and endorse, the effort to create a diverse and multicultural work force, and to end discrimination in hiring and promotion. However, the fact is that many corporations have failed to take the necessary steps to implement this laudable goal. 36


As a result, the loose hiring and promotion policies and unacceptable work-place practices that were frequently tolerated in the past are still in place today (Dilenschneider, 1997, p.1). Managing Diversity Wentling & Palma-Rivas (1998) surveyed 12 diversity experts on their perception of best strategies for managing diversity. The four strategies most frequently mentioned were training and education programs, with ten of the experts citing (83 percent); organizational policies that mandate fairness and equity for all employees, with eight citing (67 percent); mentoring programs, with seven citing (58 percent); and career development programs, with six citing (50 percent). Providing training and education programs was the most frequently mentioned strategy for managing diversity training. Education was considered important for such areas as building awareness, building skills, helping employees understand the need for and meaning of managing and valuing diversity, educating employees on specific cultural differences, and how to respond to such differences in the workplace. Education was also considered important for providing the skills necessary for working in diverse work teams, improving employee understanding of the cultural mix within the organization, assisting employees in learning about the culture and community the organization is serving, and providing skills and development activities necessary for diverse groups to be able to integrate within the organization, do their jobs effectively, and have opportunity for advancement (Wentling & Palma-Rivas, 1998, p. 4). Organizations need to provide employees with the most important skills for operating in a multicultural environment so that they understand their own as well as others’ cultures, values, beliefs, attitudes, behaviors and strengths and weaknesses. Employers must invest constantly in all employees by providing training and improving competencies if they are to work most effectively in a diverse advancement (Wentling & Palma-Rivas, 1998, p. 5). Diversity Training Programs Arguing conclusively about the value of any training program is always tough because training evaluation is so rarely done beyond the anecdotal or reaction level. Not having controlled studies to report, the authors cite Equal Employment Opportunity Commission (EEOC) statistics. Between 1990 and 1995, EEOC sexual harassment cases increased 150% (from 6,126 to 15,549). Age discrimination cases went from 9,500 in 1981 to 17,009 in 1994. Race discrimination increased from 29,159 cases in 1990 to 31, 656 in 1994. Sex discrimination complaints rose from 31,695 in 1993 to over 40,000 in 1994. Overall, from 1990 to 1994, the authors report a 34% increase in claims and a 38% increase in dollar awards through EEOC claims. Counter-argument is that without diversity training the increases could be even larger. Yet another explanation might be that the increases could be attributable to those organizations not conducting diversity training (Tallarigo, 1998, p.1). Evaluating diversity programs and the factors that cause them to succeed or fail is important for several reasons. One is cost. The average diversity expert costs $2,000 per day, with the most sought after consultants earning four to five times that amount, according to H. MacDonald writing in the July 1993 New Republic. Cultural audits, which most experts recommend as precursors to training, can cost as much as $100,000. A second reason is the possibility of not just neutral, but of negative outcomes from diversity training. These include the possibility of post-training participant discomfort, reinforcement of group stereotypes perceived, disenfranchisement of backlash by white males, and even lawsuits based on managers’ exposure of stereotypical beliefs exposed during “awareness-raising” sessions. Although we know such 37


outcomes do at times occur, it is really anyone’s guess as to just how often (Rynes & Rosen, 1994, p.2). In a research project, using a sample from members of Society for Human Resource Management, investigating success of diversity training programs 785 members responded to a survey. Thirty-two percent of responding firms provided some sort of diversity training. However, most diversity training programs last only a day or less. Additionally, the proportion of the training budget earmarked for diversity is typically small (Rynes et al., 1994, p.1). However, times have changed. The number of training experts specializing in diversity has increased. Workforce 2000 Today, a Towers-Perrin survey published in 1992 reported that three-quarters of companies either have or plan to begin training programs to deal with diversity issues (Rynes et al., 1994, p.2). The mechanisms that generate these patterns can be understood by analyzing organizations’ policy and practice for hiring, job assignment, training, pay, and promotion (Bielby, 2000, p. 4). Today, 74 percent of all Fortune 500 companies have managing cultural diversity (MCD) programs, according to a 1996 survey by A.T. Kearney Executive Search in Chicago. The aim of these programs is to help employee’s value differences and make sure that those differences become a net benefit to the bottom-line (p. 1).Valuing differences is also seen as a way to increase productivity and profitability in this day of globalization and segmented marketing. These programs also include in Equal Employment Opportunity (EEO) hiring goals for women and minorities, along with many other initiatives (Klimley, 1997, p.2). Why should companies concern themselves with diversity? Until recently, many managers answered this question with the assertion that discrimination is wrong, both legally and morally. Another crucial argument for diversity programs was that demographic changes were altering labor markets and consumer markets. Demographic predictions provided “a sense of crisis, urgency, and purpose” for diversity programs (Dobbin, 1998, p. 9). Soon, mainstream business organizations accepted diversity management as a legitimate subfield of human resources management. In the Spring of 2000 Palma-Rivas reported on the results of a study of eight multinational organization’s diversity initiatives. All of the study participants indicated that their corporations had initiatives to recruit and promote women and minorities. The majority (88 percent) of the corporations also had in place initiatives that aimed to retain women and minorities. There is a growing and continuous interest in workplace diversity within management and organization studies. This interest can be traced back to Johnston and Packard s (1987) influential report, Workforce 2000, which alerted organizations to the dramatic demographic changes that were in the process of transforming the North American workforce (Prasad, 1997). Managing diversity at the workplace presents many dilemmas. Confronted with constant change, management, business educators, and organizational consultants continue to meet the challenges of a new and diverse workforce in a number of ways. All of the study participants indicated that their corporations were focusing on increasing the representation of women and minorities at the managerial level. The study participants indicated that the best and brightest candidates were increasingly made up of people who were diverse. Therefore it is imperative, according to the study participants, for companies to recruit, hire, develop, and promote from the diverse talent pool in order to be productive and remain competitive (Wentling & Palma-Rivas, 2000, p. 6). The movement of managing diversity in the workplace is at a critical stage. Given the realities of the changing workforce and workplace, diversity issues will not go away; organizations of the future will need to develop systematic efforts for managing diversity they will need to connect 38


their diversity efforts to organizational needs and business objectives through needs assessments and measures for feedback and evaluation of their efforts. A long-term perspective and integration with other organizational change efforts will be needed in order to ensure that diversity becomes an effective corporate strategy (Wentling & Palma-Rivas, 1998, p. 8). The Role of HR in Diversity Management An essential role for HR in a culture change effort is assisting organizational leaders to realize that people are their most important resource. To create a sustainable, high performing work culture, the people of the organization must be treated as valuable resources that are essential for the continuing success of the organization. Barriers to their full involvement and contribution must be identified, removed and replaced with inclusive norms and values that allow all people to do their best work. HR professionals’ tools for helping to bring about this culture change include training, coaching, mentoring, modeling, monitoring and measuring (Miller, 1998, p.8). Pollar (1998), explains the role of the human resource department as “…the catalyst that finds and develops opportunities and resources that support the company’s diversity program”. Human resources are the researcher that gathers the comprehensive information that organizations will need to develop an effective initiative. Benefits of Managing Workforce Diversity Managing diversity can create a competitive advantage. Potential benefits of this diversity include better decision making, higher creativity and innovation, greater success in marketing to foreign and domestic ethnic minority communities, and a better distribution of economic opportunity (Cox, 1991; Cox and Blake, 1991). According to one study (Watson et al., 1993), culturally diverse groups relative to homogeneous groups are more effective both in the interaction process and job performance; these benefits occur after a diverse group has been together for a period of time. Research indicates that greater diversity can create higher levels of dissatisfaction and turnover (Miliken and Martins, 1996). Maintaining diversity in organitions may be important, however, for createvity, and for improveing representation and access to power in view of the demographic changes in the workforce and equal opportunity, employment equity/affirmative action, and human rights legislation. Organizations with a diverse workforce can provide superior services because they can better understand customers’ needs (Wentling and Palma-Rivas, 2000). As the economies are shifting from manufacturing to service economies, diversity issues will gain importance because in a service economy effective interactions and communications between people are essential to business success (Wentling and Palma-Rivas, 2000). As globalization is increasing, diversity will help organizations to enter the international arena (Cascio, 1998). Diversity enhances creativity and innovation (Adler, 1997; Jackson et al., 1992), and produces competitive advantages (Coleman, 2002; Jackson et al., 1992). Diverse teams make it possible to enhance flexibility (Fleury, 1999) and rapid response and adaptation to change (Adler, 1997; Jackson et al., 1992). Managing Diverse Workforce in Organisation Companies can succeed at diversity if the initiative to create, manage and value the diverse workforce has the full support of the top management (Hayes, 1999; Jackson et al., 1992). The following are the conditions which would make workforce diversity a success in any organisation: The organization should assign this work to a senior manager (Jackson et al., 1992). The organization should link concerns for diversity to human resource management decisions around recruitment, selection, placement, succession planning, performance management, and rewards (Cascio, 1998). The organization should create such a working environment as will increase the motivation, satisfaction, and commitment of diverse people. 39


Performance standards must be clearly and objectively established, effectively communicated, and used on objective criteria without any bias. Identify desirable and undesirable behaviors that must be based upon performance feedback discussions involving a diverse workforce. The strategy (diversity or otherwise) must be based on the will of the human resources, strength, and culture of the organization (Hayes, 1999). Managers must understand their firm’s culture first and then implement diversity strategies according to that culture (Hayes, 1999). Training and development programs will improve the skills in dealing with the day to day diversity dilemmas. This will help managers to be aware on how power relations impact on stereotypes of groups and on perceptions of individuals and the expectations. Communicating intercultural’ it will aid in managing a diverse workforce. An individual will be able to understand how cultural and ethnic differences shape the conflict process and coming up with conflict resolution strategies. There will be able to negotiate outcomes with cultural differences in mind. Mentoring programs, involvement of experienced advisors and helps others for a period of years. This mentor should be able to advise employees on the whole concept of workforce diversity and the reasons why diversity should be managed in the workplace. Assessment of one’s beliefs about work values, being able to identify work values of others from different cultural backgrounds and examination of the leadership assumptions from a multicultural perspective and creation of the support system to reduce isolation and discrimination. This can be done through the encouragement of a formal system and informal networks. Language competence, lack of language skills in multicultural environments is a significant barrier to building a multicultural organization. The rationale for diversity training programmes is often misunderstood at all levels. So it is important to first communicate what diversity is and what the organisation hopes to achieve by managing it more effectively (Bagshaw, 2004) and this gives diversity a context that enhances understanding. Workplace diversity is a people issue, focused on the differences and similarities that people bring to an organization. It is usually defined broadly to include dimensions beyond those specified legally in equal opportunity and affirmative action non-discrimination statutes. Diversity is often interpreted to include dimensions which influence the identities and perspectives that people bring, such as profession, education, parental status and geographic location. Moreover, history has shown that the failure of organizations to manage diversity in this respect can lead to costly lawsuits. To mention just a few examples, in 1991 a jury awarded $20.3 million to a single person in a sex discrimination suit involving denial of promotion (“jury awarded,” 1991); in 1998, Honda Motor Company made a $6 million settlement of a suit involving charges of discrimination by blacks and women in its U.S. operations Cole & Deskins’ study (as cited in Cox, 1994, p. 13). In 1992, Shoney’s agreed to set aside $105 million to compensate victims of racial discrimination after a lawsuit was filed against the company Pulley’s study (as cited in Cox, 1994, p. 13). Thus, it is clear that there are economics as well as good citizenship implications of the legal obligations in this area of management (Cox. 1994, p. 13). Statement of the Problem In this very 21st century, workforce diversity has become an essential business concern. It’s a fact that the greatest asset of any organization is its composition of work force. No organization can afford the loss of restricting its ability to attract and retain the best employees available and the companies that diversify their workforces will have a distinct competitive advantage over those that don’t. Further, the greatest benefits of workforce diversity is experienced, not by the companies that have learned to employ people in spite of their differences, but by the companies 40


that have learned to employ people because of them. In this context it has become essential to investigate worker awareness, sensitivity and managerial implication of workforce diversity. This paper also tries to establish relationship of diverse workforce with the performance of the organization and investigates various aspects of diversity that exist in selected industries of Uttarakhand. Objectives and Methodology Although there is wide research regarding employee diversity, mainly its relationship with the predictors of employee unrest, there is little research focused on work place diversity and its linkage with organizational performance. The main objective of this empirical study, therefore, is to address this research gap by identifying and prioritizing the most important predictors of work place diversity. To study the psychology of how employees feel, reason, and select between different alternative organisations having diverse composition and study various upcoming challenges of work place diversity. Another objective is to analyze the management practices for managing workforce diversity and its linkage with employee productivity. In the present study the population consisted of employees of management as well as support staff working in different manufacturing cluster located at SIDCUL Dehradun and Haridwar. Because the nature of work of the employees, it makes it difficult to conduct face to face interviews and thus a questionnaire is found ideal as the respondents as per their convenience with regard to time and place to complete the questionnaires. Judgment sampling is used considering research convenience and financial constraints for the selection of the employees. Two Hundred (200) questionnaires were distributed to the respondents and one hundred and forty one (141) questionnaires (70.5%) (duly completed) were received back. After collection of data these have been systematically arranged, tabulated and Univariate and bivariate data analysis techniques like Percentage analysis, Rating / Ranking analysis, Chi-square test, Factor analysis and ANOVA are used to analyze the data. It was hypothesized that, “Employees sensitivity toward workforce diversity does not differ significantly” and “there is no relationship between workforce diversity and employees’ performance”.

41


Table 1: Demographic Profile of the Respondents Characteristics

No of Respondents %

Total Number of Respondents 141

Age

Upto 25 Years 26-35 Year 36-45 Years 46-55 Years

100

4 110 6 21

2.8 78.0 4.3 14.9

Gender

Male Female

98 43

69.5 30.5

Marital Status

Married Unmarried

96 45

68.1 31.9

Hindu Muslim Jain Graduate and Below Sikh Post Graduate Professional Qualification

120 8 7 6 15 44 82

85.1 5.7 5.0 4.3 10.6 31.2 58.2

11 78 34 13 16 5 28 2 26 67 2 61 70 10

7.8 55.3 24.1 9.2 11.3 3.5 19.9 1.4 18.4 47.5 1.4 43.3 49.6 7.1

Religion

Education Qualification

Matric and below Graduate and Below Fathers Qualification Post Graduate Professional Qualification Farmer Othres Engineer Manager Father Profession Teacher Others Defence 2 Language Number of Languages known 3 Language Four Language

42


The present study covers a wide range of people having different family back grounds, age groups, religion and education. The data show that almost 70% of our respondents are males and the majority of the respondents are in the age group of 26-35 years (78%). Since most (more than one third) of our respondents are married, having different attitude towards their profession can be distinguished in relation to that of the unmarried ones. The religious family backgrounds of the employees can also affect the organization’s working and here we have most respondents (85.1%) from Hindu family background due to obvious reasons. And the survey has also covered the minority community to an approximate coverage of 15% which includes Muslims (5.7%), Jains (5%) and Sikhs (4.3%). In order to study the effect of father’s education level in employees’ working this data has covered wide range in this regard. Here we have data covered 55.3% respondents’ fathers who are educated up to graduation level. The surveyed data also shows that 100% of the respondents are multilingual and out of them there are 10 respondents (7.1%) having language skills in 4 different languages. Thus the study enables to understand the lingual aspects of the workforce in a diverse environment. As the child’s bringing up subject to be affected by the parents’ education as well as their profession; the father’s profession for our respondents has also been considered. Table 2: Period of Association Sl. No. Years

No. of respondents

Percentage

a

0-03 Years

64

45.4

b

4-5 Years

53

37.6

c

6-10 Years

3

2.1

d

More than 10 Years

21

14.9

Total

141

100.0

Most of the respondents in the study are found to be new at their present employment, as their association with the organization for up to 3 years has a proportion of 45.4%. The respondents of the survey for an association with their respective employers for more than 10 years covers about 15% of the total data so collected. Nevertheless, only 2.1% of the data here covers the employees working with their current employer for a period of 6 to 10 years. Table 3: Main Reasons of Joining Present Organization Sl. No. Main Reasons No. of respondents Better Prospects 92

Percentage

b

Global Presence and Global recognition

7

5.0

c

Good Package

2

1.4

d

Diverse in Nature

6

4.3

Local Residence

23

16.3

Secure environment and exposure of big 11 town Total 141

65.2

7.8 100.0

43


Although Personal and family matters are seen as one of the major factors deciding a work place; in this era of going global for the organizations and the global mobility of the resources due to globalization has been changing the deciding factors and the reasons of joining any workplace for employment. Better future prospects, opportunity to visit a foreign country, a diverse environment to learn various cultures, languages and expressing oneself with ethnicity along with a good package are also considered important. Human nature to stand recognized and to satisfy the need of self actualization brings the importance of diverse culture at the work place. Here our survey data depict that almost two-third of our respondents have expressed (65.2%) their preference to be the better prospects as to decide the present organization. It’s worthwhile noting that a substantial number of respondents have shown their attachment to the home town in the surveyed area. 16.3% of the total respondents still seem to be encouraged to find employment close to their home. From the above table, we may arrive at that good package (monetary and non monetary compensation) offered by the employer is not the effective means of attracting prospective employees as only 1.4% of our respondents has shown their interest in good package of the employer in selecting the current employer. Table 4: Imbalances Frequencies Sl. No. Main Reasons A B C D E F G H I

Recruitment and selection Promotion and movement Training Performance evaluation Disciplinary action and termination Salary and benefits Accommodation Condition of work Others Total

No. of respondents

Percentage

68 95 39 99 40 70 22 32 10 475

14.3% 20.0% 8.2% 20.8% 8.4% 14.7% 4.6% 6.7% 2.1% 100.0%

Implementation of relevant and adequate measures for the betterment of the human resource and providing them with the right environment is certainly required as an integral part of any business unit and especially in the organizations where the diversity extensively prevails and brings a lot of challenges to keep the work force motivated and contributing all the time. Even though this is felt by the management time and again the imbalances still exist and there are problems with respect to satisfaction, expectation and performance of the employees. The respondents were asked to express their organization’s imbalances and it is worthwhile to note that the most identified imbalance is the performance evaluation system. There is also a clear dissatisfaction with the promotion and movement, which is certainly a derivative of the improper performance evaluation. And combined together we see that 40.8% of our respondents indicate the imbalances in these areas. There is also discrimination expressed by 14.7% of the respondents in salary and benefits. Similarly the recruitment and selection seems to be having imbalances as 14.3% respondents have so indicated. These really are serious issues that should be tackled judiciously in order to derive the benefits of workforce diversity. 44


Table 5: Organization Benchmark to evaluate progress Sl. No. Description No. of respondents

Percentage

a

Yes

26

18.4

b

No

46

32.6

c

Do Not Know

69

48.9

Total

141

100.0

In order to have an uniform and performance basis compensation system in place and in order to keep the employees motivated a performance evaluation and appraisal system is an essential aspect of a successful business. Especially where there is a lot of pressure building up with new challenges emerging with the changing global scenario, benchmarking the processes and activities for any business is expected to stay competitive and establish as a global player. But, the present data so obtained for this research unfolds a bitter fact regarding evaluation through proper benchmarks. Only 18.4% of our respondents are sure about the presence of such evaluation benchmarks where as 32.6% have expressed that their organizations do not have any such parameter in place. It is evident that there is a lack of proper knowledge about the necessity of benchmarking and most of them (48.9%) are seem to be unaware of such a system.

Sl. No.

Table 6: Organizational Strategy for enhancing Level of Diversity competency Description No. of respondents Percentage

a

Yes

21

14.9

b

No

57

40.4

c

Do Not Know

63

44.7

Total

21

14.9

Various researches have indicated that well managed diversity and even having diverse work force leads to competency and multidimensional improvement in work culture and employees’ personality development. Yet from our surveyed data we can see that in this sphere of research 40.4% of our respondents have denied the presence of any strategy in their respective organizations towards the enhancement of the diversity competency. It is also to be noted that 44.7% of the total respondents are unaware of such a strategy existing at their respective organizations.

45


Table 7: Development opportunity Sl. No. Description

No. of respondents

Percentage

a

Yes

37

26.2

b

No

74

52.5

c

Do Not Know

30

21.3

Total

141

100.0

The respondents comprises of more than 50% of the data clearly indicate that there is absence of a system to create ample opportunity in favour of the employees for their development using the diversity as the medium. Only a small portion (26.2%) of the total respondents agrees that their organizations provide the right environment for their development and apart from this about 21% of the respondents don’t clarity their environmental scenario in this regard. Descriptive Statistics In order to outline the contributions and the benefits derived from the diverse nature of the employees at workplace various outcome parameters of work diversity are developed on the basis of past studies. Employees are asked to rate the various outcomes of work diversity on a scale of 1 to 5. The descriptive statistics for all the variables under investigation are calculated with the help of SPSS software. From the mean, it can be concluded that the outcome variable “Diverse language and cultural skills” is the most important outcome of work force diversity. It has scored the highest mean of 3.4752. However, the higher standard deviation (1.44707) of the variable “Higher attraction and retention rates” Indicates that respondents’ view on this area is heterogeneous.

46


Table8: Descriptive Statistics N Lateral thinking and flexibility; 141 Improved customer service; 141 Increased creativity and innovation; 141 Improved recruitment outcomes; 141 Greater skills base; 141 More flexible and motivated workforce; 141 Higher attraction and retention rates; 141 Increased return on training investment; 141 Improved workplace relations and morale; 141 Improved attendance; 141 Increased productivity; 141 Better relationships with customers and stakeholders; 140 Greater sense of unity; 141 Safe and healthy work environment; 141 Diverse language and cultural skills; 141 Interpersonal and management skills; 141 Enhancing Team work 141 Conflict resolution 141 Flexibility in working patterns and arrangements. 141 workplace diversity has helped in Tribunal benefits 141 Has helped work force to adjust to globalization of business 141 Diversities has promoted better team spirit among 141 employees Valid N (listwise) 140

Mean 2.8582 3.6383 3.2340 2.8511 3.0851 3.1560 2.5248 2.7943 2.8794 3.0142 2.9504 3.0429 2.9574 2.9078 3.4752 3.0284 3.0071 3.0638 2.9433 2.5957 2.5248 2.4894

Std. Deviation 1.05276 1.01613 1.13161 1.08849 .91409 1.33782 1.44707 1.48092 1.27881 1.28166 1.29464 1.25733 1.20637 1.22999 1.07956 1.12722 .91415 .97257 1.17579 1.04866 .95305 1.11878

The various outcomes are grouped into five areas and are classified as, “Improvement in the organizational contribution”, “Better work environment and work culture”, “Personality enhancement”, “Improved Productivity” and “Satisfaction of customers and other stake holders”. The composite mean of various outcomes are calculated with the help of SPSS-15 software and is presented in the table below. Mean score of individual out come variable were taken and is presented in the table below.

47


Table 9: Different Organizational outcome of Work Force Diversity and its related Mean Factor Name of Statement Dimension Improved recruitment outcomes Improvement in Greater skills base More flexible and motivated workforce the F1 organizational Higher attraction and retention rates contribution Improved attendance Conflict resolution Improved workplace relations and morale Better work Safe and healthy work environment environment Team work F2 and work Flexibility in working patterns and arrangements culture Understanding cultural diversities has promoted better team spirit among employees Lateral thinking and flexibility Increased creativity and innovation Greater sense of unity Personality F3 Diverse language and cultural skills enhancement Interpersonal and management skills By valuing and embracing workplace diversity the Tribunal benefits from Has helped work force to adjust to globalization of business Increased return on training investment Improved F4 Productivity Increased productivity F5

Satisfaction of Improved customer service customers and other stake Better relationships with customers and stakeholders holders

Mean Score 2.8511 3.0851 3.1560 2.5248 3.0142 3.0638 2.8794 2.9078 3.4752 3.0284 3.0071 2.8582 3.6383 3.2340 2.8511 3.0851 3.1560 2.5248 2.7943 2.8794 3.6383 3.0429

Table 10: Mean of perceived diversity outcomes across the age category of respondents Age Improvement Better work Personality Improved Satisfaction of in the environment enhancement Productivity customers and organizational and work other stake contribution culture holders

Upto 25 Years

3.7857

3.9583

4.6250

4.1500

4.6250

26-35 Year 36-45 Years 46-55 Years Total

2.9208 3.2143 2.8912 2.9534

2.8515 2.8611 3.2937 2.9492

2.8591 2.6667 2.6667 2.8723

2.8836 3.0000 2.3524 2.8454

3.3091 3.5833 3.2143 3.3440

48


It is seen from the above table that mean rating of perceived diversity outcome like personality enhancement and satisfaction of customers and other stake holders has scored highest mean of 4.6250 among the age categories ranging upto 25 years. This indicates that diversity in the workplace is more helpful in the personality development and understanding customers and other stakeholder among the younger lot. Table 11: One way ANOVA for outcomes of Diversity across the Age category of Respondents Sum of df Mean Square F Sig. Squares 3 1.126 1.666 .177 Improvement in theBetween Groups 3.378 organizational Within Groups 92.561 137 .676 contribution Total 95.939 140 Better workBetween Groups 7.661 3 2.554 3.072 .030 environment andWithin Groups 113.891 137 .831 work culture Total 121.552 140 Between Groups 13.449 3 4.483 2.720 .047 Personality Within Groups 225.753 137 1.648 enhancement Total 239.202 140 Improved Between Groups 12.217 3 4.072 4.635 .004 Productivity Within Groups 120.373 137 .879 Total 132.590 140 3 2.465 2.480 .064 Satisfaction ofBetween Groups 7.395 customers and otherWithin Groups 136.172 137 .994 stake holders Total 143.567 140

One way ANOVA to test the hypothesis that, the mean of perceived outcome of diversity does not differ significantly across the different age categories respondents; the table showing calculated value of F is lesser than the tabulated value of F (3.12) at (p< 0.05) level of significance in the case of all the factors under consideration except in the case of improved productivity, thus null hypothesis is accepted indicating that there is no significant difference in the mean of different outcome across the age categories of the respondent except in the case of improved productivity where the null hypothesis is rejected. Table 12: Mean of perceived diversity outcomes across the Level of Education of respondents Education Improvement Better work Personality Improved Satisfaction of Qualification in the environment enhancement Productivity customers and organizational and work other stake contribution culture holders Graduate and Below

3.0190

2.7111

2.8333

2.9067

3.4000

Post Graduate

2.8571

2.9735

2.9205

2.7273

2.8409

Professional Qualification

2.9930

2.9797

2.8537

2.8976

3.0864

Total

2.9534

2.9492

2.8723

2.8454

3.0429

49


The mean scores presented in the above table indicate that perceived diversity outcome “satisfaction of customer and other stake holders” has scored highest mean of 3.400 among the employees educated up to graduation. This indicates that diversity in the workplace is more helpful in the understanding customers and other stakeholder among the educated lot of all categories.

Table 13: One way ANOVA for outcomes of Diversity across the level of Education of Respondents Sum of df Mean F Sig. Squares Square Improvement in theBetween Groups Within Groups organizational contribution Total

.601

2

.301

95.338

138

.691

95.939

140

workBetween Groups andWithin Groups

.952

2

.476

120.600

138

.874

Total

121.552

140

Between Groups

.153

2

.077

Within Groups

239.049

138

1.732

Total

239.202

140

Between Groups

.893

2

.447

Within Groups

131.696

138

.954

Total

132.590

140

3.861

2

1.931

215.881

137

1.576

219.743

139

Better environment work culture Personality enhancement Improved Productivity

Satisfaction ofBetween Groups customers and otherWithin Groups stake holders Total

.435

.648

.545

.581

.044

.957

.468

.627

1.225

.297

The above one way ANOVA tests the hypothesis - “mean of perceived outcome of diversity does not differ significantly across the different education level of respondents”. From the table it is clear that calculated value of F is lesser than the tabulated value of F (3.12) at (p< 0.05) level of significance in the case of all the factors under consideration. Hence null hypothesis is accepted indicating that there is no significant difference in the mean of different outcomes across the respondents of different educational category.

50


Table 14: Mean of perceived diversity outcomes across the Level of education of Father of the respondents Fathers Qualification

Improvement Better work Personality Improved in the environment enhancement Productivity organizational and work contribution culture

Satisfaction of customers and other stake holders

Matric and below Graduate and Below Post Graduate Professional Qualification Othres Total

3.6753 2.7784 3.1471

4.0303 2.6389 3.1225

4.4091 2.3654 3.0441

3.4364 2.6154 2.8529

3.1818 2.9221 2.7647

2.9560

3.2179

3.8077

3.4308

4.0769

2.7714 2.9534

3.5333 2.9492

3.8000 2.8723

3.5600 2.8454

3.8000 3.0429

The mean score presented in the above table indicates that perceived diversity outcome “personality enhancement” has scored highest mean of 4.4091among the customers whose parents are less educated. This indicates that diversity in the workplace is more helpful in improving personality of respondent even if parental education is less.

51


Table 15: One way ANOVA across outcome of Diversity across the education level of Father Respondents Sum of df Mean Square F Sig. Squares Between Groups 9.563 Improvement in the organizational Within Groups 86.376 contribution Total 95.939

4

2.391

136

.635

Between Groups 24.034 Better work environment andWithin Groups 97.518 work culture Total 121.552

4

6.009

136

.717

Personality enhancement

Improved Productivity

.006

8.380

.000

12.079

.000

4.330

.003

3.516

.009

140

140

Between Groups 62.703

4

15.676

Within Groups

176.499

136

1.298

Total

239.202

140

Between Groups 14.978

4

3.745

Within Groups

117.611

136

.865

Total

132.590

140

Between Groups 20.733 Satisfaction of customers and other stakeWithin Groups 199.010 holders Total 219.743

3.764

4

5.183

135

1.474

139

Further the one way ANOVA tests the hypothesis that the mean of perceived outcomes of diversity do not differ significantly across the educational level of parents. From the table it is clear that calculated value of F is greater than the tabulated value of F (3.12) at (p< 0.05) level of significance in the case of all the factors under consideration Hence null hypothesis is rejected indicating that there is significant difference in the mean of different outcomes across the respondents of different parental educational categories. Conclusion:

52

of


To conclude, management of workforce diversity as a tool to increase organizational effectiveness cannot be underscored, especially with current changes across the globe. Globalization has boosted the worker mobilisation at national and international level. the meaningful diversity process management becomes the need due to one or other benefits in the highly rich intellectual awareness and understanding of recent and emerging themes. The study reveals that discrimination exists in the outcomes of workforce diversity with respect to satisfaction, expectation and performance of the employees. Although the benchmarking of the processes and activities for any business is essential to stay competitive and establish as a global player, the present data so obtained for this research unfolds a bitter fact regarding evaluation through proper benchmarks in the organizations. Only 18.4% of our respondents were sure about the presence of such an evaluation benchmarks where as 32.6% have expressed that their organizations do not have any such parameter in place. It is evident that there is a lack of proper knowledge about the necessity of benchmarking and most of them (48.9%) are seem to be unaware of such a system. Various researches have indicated that well managed diversity and even having diverse work force leads to competency and multidimensional improvement in work culture and employees’ personality development. Yet from our surveyed data it is evident that in this sphere of research, 40.4% of our respondents have denied the presence of any strategy in their respective organizations towards the enhancement of the diversity competency. It is also to be noted that 44.7% of the total respondents are unaware of such a strategy existing at their respective organizations. Also we may conclude that the outcome variable “Diverse language and cultural skills” is the most important outcome of work force diversity as it has scored the highest mean of 3.4752. However the higher standard deviation (1.44707) of the variable “Higher attraction and retention rates” indicates that respondents’ view on this area is heterogeneous. Study reveals that there is no significant difference in the mean of different outcome across the age categories respondent. It was observed that there is no significant difference in the mean of different outcomes across the respondents of different educational category nonetheless there is significant difference in the mean of different outcomes across the respondents of different parental educational categories. REFERENCE:        

Brown, E., (1998), BankAmerica: An Open Dialogue, Fortune Magazine; (8/3/98). Forst, J., Lehman, W., (1997). Ethnic Differences in the Workplace Environment by Employees in Two Municipal Workforces. Hispanic Journal of Behavioral Sciences, 19(1) 84-96. Labich, K. (1996). Making Diversity Pay, Fortune Magazine, (9/9/96). Mor Barak, M., Cherin, D., Berkman, S., (1998). Organizational and Personal Dimension in Diversity Climate, Ethnic and Gender Differences in Employee Perceptions. Journal of Applied Behavioral Science, 34(1) 82-104. Prasad, P., Mills, A., Elmes, M. & Prasad, A., (1997). Managing the Organizational Melting Pot: Dilemmas of Workplace Diversity; Sage Publications. Vinzant, C., (1998). Liz Clairborne: A Casual Success, Fortune Magazine (8/3/98). Wentling, R., Palma-Rivas, N. (1997). Diversity in the Workplace: A Literature Review, Executive Summary, grant supported by the National Center for Research in Vocational Education, the Office of Vocational Adult Education and the U.S. Department of Education.

53


A STUDY OF WORKER'S PARTICIPATION IN MANAGEMENT DR.D.T.CHAVARE C.D.Jain College of Commerce, Shrirampur.

ABSTRACT Worker's Participation in Management (WPM) is so broad that it has acquired different meaning for different people. It is one of the most widely and a forcefully debated issue of industrial relation it has been defined clearly because it has come to be associated with varying practices in different countries. Management expert’s executives look upon it as a tool for improving the overall performance of an enterprise. It means that workers are given an opportunity to take part in those decisions. Which affects their wage and their working conditions and this participation paves way to harmonious industrial relations in an atmosphere, which is conductive to increased productivity and efficiency. Participation in management would fulfill workers urge for self expressions, which would also compensate for any feeling of loss in material benefit. Workers participation in management generates feelings among workers and thus it helps in motivating. It acts also as a mean of improving industrial relations and increase efficiency of workers. This paper highlights different aspects of WPM in of Chetan Industries Pvt. Ltd. Solapur. KEYWORDS: Worker's Participation in Management, Quality of Workforce, Motives of Worker's Participation, Managerial Decisions. ______________________________________________________________________________ 1. INTRODUCTION Chetan Industries Pvt. Ltd. started back in 1984 at Solapur in Maharashtra. It is one of the reputed industry in the corporate world. The company has created a unique place for itself in industry. It has established supremacy in manufacturing various types of quality packing material for all type of dairy products like as Shrikhand, Amrakhand, Curd, Buttermilk, Cheese, Butter etc. The need for the packing material for the dairy product was well anticipated by the management of the company. Apart from the food processing industry, co-operative and private dairies have been growing by leaps and bounds in over India. The concept of WPM is a broad and complex one. It is depending on the socio-political environment and cultural conditions. Participation refers to involvement of individuals or group of individual for common purpose. It will be effective only if there is interaction among individuals or groups.WPM refers to the emotional and mental involvement of an employee to contribute for the goals and share responsibilities of an organization. Following three groups of managerial decisions affect the workers of any industrial establishment. Economic decisions – methods of manufacturing, automation, shutdown, lay-offs, mergers. Personnel decisions -recruitment and selection, promotions, demotions, transfers, grievance settlement, work distribution. Social decisions – hours of work, welfare measures, questions affecting work rules and conduct of individual 54


worker’s safety, health, sanitation and noise control. Participation basically means sharing the decision-making power with the lower ranks of the organization in an appropriate manner. 1.1 Management Problem People involvement in the management is nil and management want to improve their involvement. 1.2 Statement of research problem Management would like to know probable problems of management facing in WPM. Hence the title of study is “A Study of Workers Participation in Management” with special reference to Chetan Industries Pvt. Ltd Solapur. 1.3 Objectives of Study 1. To study the concept of workers participation in management. 2. To know the extent to which workers participate in management of firm. 3. To investigate problems of workers participation in management. 4. To identify benefits of workers participation in management to an organization and employees. 1.4 Scope of Study The scope of the study is as follows. Geographical scope – The study is confined to Chetan Industries Pvt. Ltd. Solapur, Maharashtra. Conceptual scope – The present study encompasses the introduction, function, concept of workers participation in management and benefits of workers participation in management to an organization and employees. Analytical scope – The collected data analyzed by using some analytical tools such as graphs, pie chart and percentage. 1.5 Importance of Study This study will helpful for improvement in management of organization. Also it will helpful for development and improvement in co-ordination between organization and workers. It will reduce the labour turnover and also reduce overall burden of management. 1.6 Research Methodology 1.6.1 Research method:- The target population of this study includes employees of Chetan Industries Pvt. Ltd. Solapur. For getting information a structured schedule was developed. 1.6.2 Data Required:- Data required regarding to the various aspects such as conceptual framework, company profile, information about workers participation in management relating to organization and workers etc. 1.6.3 Data Sources:- Required data is collected through various sources: A) Primary Data Source- The researcher collected data from observation, schedules and interviews of workers. B) Secondary Data Source- This study is mainly based on company profile, information collected from books and websites. 1.6.4 Instruments:- For the collection of primary data, structured schedule was prepared to know about workers participation in management. 1.6.5 Sampling: - The researcher has selected 116 samples (50%) out of 232 for the study. Disproportion stratified convenient sampling method is used. 1.6.6 Type of research: - The research is descriptive inferential type research. 55


1.6.7 Data Analysis: - The Primary and Secondary Data is analyzed by using pie chart and percentage method. The present research study is about workers participation in management in Chetan Industries Pvt. Ltd. Solapur. Analysis is done so as to draw the conclusion about workers participation in management and to know it's loop holes. 2. Manpower Scenario of the Company Chetan Industry is a good human resource management organization. The human capital has been key of the organization. Manpower is very important tool of the human resource management because it is beneficial in various ways. Manpower planning basically aims at maintaining and improving the organization ability to achieve its goals by developing and utilizing human resources most effectively. Human Resource Planning is considered as a strategy acquisition, utilization, improvement of enterprises and human resources. Effective process of manpower planning demanding and assuring an adequate number of qualified persons, available at the proper time for performing jobs which meets the needs of enterprises and provides satisfaction of the individuals involved. Forecasting of long range manpower requirements are helpful in compensation of cost which involved anticipation of future manpower needs provides an opportunity for training and development of existing personnel. Table No.1 Manpower Scenario of the company Sr.No 1 2 3 4 5 6 7 8 9 10 11 *

Designation Accountant Computer Operator Agent Incharge --Machine Department Clerk Workers /Operator Helper Security HR Manager Financial Manager Production Manager Total

Number of Employee 2 4 2 4 2 120 80 12 2 2 2 232

(Source: Primary Data.)

Table No.1 indicates the total manpower engaged in the company. There are total 232 employees. Quality of Workforce of the Company Quality is the almost canon at Chetan Industries. Every stages of the production is consistently backed with systematic control and inspection. Company is known for it's performance. Main thirst area is quality which is well maintained and promoted by highly qualified and dedicated work force. Company constantly upgrades the product as per the technological changes and requirement in the fact flourishing industry.

56


Qualifications of Employees

SSC HSC Graduate Post Graduate

Graph No. 1

The above graph shows Educational Qualifications of employees. It indicates that 31.03% (36) respondents are passed S.S.C., 29.37% (34) respondents are passed H.S.C, 22.41 % (26) respondents are Graduate, 17.25% (20) respondents are Post Graduate. Therefore, it can be concluded that employees are well-educated. Table No. 2 Awareness about Workers Participation in Management Sr. Particular Respondent Percentage No. Yes 74 63.79% 1. No 42 36.21% 2. * Total 116 100% (Source: Primary Data)

Table No. 2 indicates that 63.79% (74) employees are aware about WPM & 36.21% (42) employees are not aware about WPM. Therefore, from the above interpretation it has been concluded that, majority of employees are aware about workers WPM. Table No.3 Workers Participation in Management Sr. No. 1. 2. *

Particular Yes No Total

Respondent

Percentage

54 62 116

46.55% 53.45% 100%

(Source: Primary Data)

It has been interpret that 46.55% (54) workers are participated in management and 53.45 % (62) workers are not participated in management. Therefore it can be concluded that a few workers are participated in management. Table No. 4 Extend of Workers Participation in Management Sr. Particular Respondent Percentage No. Fully 14 25.94% 1. Partially 16 29.62% 2. Temporary 24 44.44% 3. * Total 54 100% (Source: Primary Data)

57


The above table shows that 25.94% (14) workers are fully participated in management, 29.62 % (16) workers are partially and 44.44% (24) workers are Temporary participated in management. Table No. 5 Types of Participation of Workers in Management Sr. No. 1. 2. *

Particular Active participation Mere sharing information Total

Respondent

Percentage

32 22 54

59.25% 40.75% 100%


The above table shows that 59.25% (32) workers take active participation in management and 40.75% (22) workers are mere sharing information in management. Therefore it can be concluded that more workers have actively participated in management. Table No. 6 Superior allow to take part in management Sr. No. 1. 2. *

Particular

Respondent

Percentage

Yes No Total

46 70 116

39.66% 60.34% 100%


Table No.6 interprets that 39.66% (46) workers said that superior management are allowed to take part in management but 60.34% (70) workers said that they are not allowed to take part in management. Therefore it can be concluded that few workers are allowed for participation in management. Table No. 7 The ways of workers contributing in decision making Sr. No. 1. 2. 3. 4. 5.

Particular Giving ideas for improving productivity and quality. Simplifying work Try to reduce cost of production Identification of suppliers Work administration Total

Respondents Percentage 14 8 10 8 6 46

30.43% 17.39% 21.73% 17.39% 13.06% 100%


Above table shows that 30.43% workers are giving ideas for improving productivity and quality, 17.39% workers use to give ideas about simplifying work, 21.73% workers are trying to reduce cost of production, 17.39% workers help to management in identification of suppliers and 13.06% workers use to take part in work administration. 58


Table No. 8 Benefits Received by Employee after Participation in Management (Out of 54 workers participants)

Sr. No. 1. 2. 3. 4.

Particular

Respondent

Allowances Motivation to work Additional Knowledge Enrich moral

34 38 42 30

Percentage 63% 70% 78% 56%


Above table show that 34 workers have received allowances after participation in management, 38 workers received inspiration to work sincerely and 42 workers got additional knowledge where as remaining 30 workers moral is uplifted. Table No. 9 Problems in Worker's Participation in Management (Out of 116 Workers)

Sr. No. 1. 2. 3.

Particular Management gives less value of employee Neglect workers opinion Worker neglect routine work

Respondents Percentage 68 54 82

59% 47% 71%


This table shows the problems in worker's participation in management. 68 respondents are facing problem that management gives less value to employee's opinion, 54 respondents opinion that, management always use to neglect workers opinion and 82 respondents opinioned that workers are neglecting their routine work. Table No. 10 Table shows Benefits of Workers Participation in Management (Out of 116 Employees)

Sr. No. 1. 2. 3. 4.

Particular Getting new ideas Maintenance of Healthy Relation Receiving idea for development Increase in Coordination

Respondents 58 84 62 86

Percentage 50% 72% 53% 74%


Table No. 10 indicates that, according to the opinion of 86 respondents, WPM is beneficial to increase in co-ordination among various departments and it's human resources, 84 respondents opined that WPM is useful in maintenance of healthy relations, 62 respondents are agreed in receiving ideas for organizational development and, as per opinion of 58 respondents, they are getting new ideas after their participation in management.

59


Table No. 11 Table shows Motives of Workers Participation in Management (Out of 116 Employees)

Sr. No. 1. 2. 3. 4.

Particular

Respondents

For employee's welfare For getting incentives To reduce conflicts To increase healthy relations

Percentage

62 84 80 70

53% 72% 69% 60%


Table No.11 indicates that, according to the opinion about motives of WPM, 62 workers participated in management for employee's welfare, 84 workers for getting incentives, 80 workers participated in management to reduce conflict between organization and employees and 70 employees participated for increasing healthy relations between management and workers. Table No. 12 Manner in Which Participation Helps to Achieve Peace and Efficiency (Out of 116 Employees)

Sr. No. 1. 2.

Particular

Respondents

Achieving Mutual coordination Increasing efficiency and productivity

Percentage

90 62

78% 53%


It has been interpreted that the manner in which workers participation helps to achieve peace and efficiency. 90 respondent's opinion is that it helps in achieving mutual cooperate in the organization, 62 respondent's opinion is that WPM helps to increase efficiency and productivity. Table No. 13 Effects of Workers Participation on Workers Efficiency (Out of 116Employees)

Sr. No. 1. 2. 3. 4.

Particular Makes them more responsible Willing to take initiative Contribute to cost saving suggestions Feeling of being treated equally

Respondents

Percentage

62 84 58 86

53% 72% 50% 74%


Table No.13 shows that 62 employee's opinion is that employee participation makes them more responsible. 84 Employees are willing to take initiative.58 Employees are participating in management to contribute the cost saving suggestions.86 Employees are participating due to feeling of being treated equally.

60


Table No. 14 Incentives received by workers (Out of 54 Workers)

Sr. Particular No. 1. Monetary 2. Non- Monetary A. Promotion B. Extra leave

Respondents 38

Percentage 70% 74%

16 24


This table shows that 38 workers have got monetary incentives and 40 employees have got non- monetary incentives, among these 16 workers are promoted and 24 workers have got extra leaves. 3. Suggestions Researcher has studied the concept of WPM has derived findings, also he located some loopholes. Proposed suggestions will be useful to bridge the gap between workers and management. Following are the suggestions for effectiveness of the Workers Participation in Management. 3.1 General Suggestion Management should motivate the workers to take a part in the management as they are real fighter on the field and can contribute for the development of work process which will be economical. 3.2 Specific Suggestions 1. Company should take the special camp for the workers who are not aware about workers participation in management. 2. Company should get participated remaining workers which may helpful to increase productivity of company. 3. Company should give permission to workers for participation in management. 4. Company should implement the relevant ideas which are suggested by workers. 5. Company should arrange the annual ceremony in which they have to give prizes to employees who are participated in management fully and give fruitful ideas to management which get succeed. 4. Conclusion Chetan Industries Pvt. Ltd., Solapur is a company which produces Industries tins, tiffin’s etc. In such company there are 232 workers are working permanently. Such workers are fully literate some are passed S.S.C., some are passed H.S.C. and some are graduate and post - graduate, so they are aware about workers participation in management. So company should have to try to motivate workers for participation in management and also aware about their actual problems faced during the work. So management has to accept ideas or suggestions which are given by workers. Company has to keep a suggestion box in the working area and they have to open in ones in a work. Company can increase their production as well as productivity and also reduce the cost of production.

61


References:

1) K. Ashwathappa Human Resource Management and Personnel Management 2) R.S. Davar, Human Resource Development, Himalaya Publication, 2006 3) V. S. P. Rao. Human Resource Management (2nd Edition 2005) 4) www.hrguide.com. 5) www.citehr.com. 6) www.hrmwpm.com.

*****

62


A STUDY ON CONSUMER ATTITUDE TOWARDS STORE BRANDS WITH SPECIAL REFERENCE TO RELIANCE RETAIL OUTLET IN MADURAI CITY C.R.MATHURAVALLI*; DR.S.SAKTHIVEL RANI** *Research Scholar ** Associate Professor, Department of Management Studies, Kalasalingam University, Anand Nagar, Krishnan Koil – 626 126, Tamil Nadu, India.

ABSTRACT Organized retail is on the threshold of a boom in India. The battle is likely to change the face of the industry between the manufacturer brands and the retail chains‟ private label brands. Worldwide experience shows that as retailers become more powerful, they have increasingly focused on their own brands at the expense of manufacturer brands. Due to the rapid growth of private-label market share, researchers have looked into different influential factors in attempting to find out the reasons behind the success of these store products. As consumers reflect the demand side of fast-moving goods, their perceptions critically affect decisions on brand selection, and therefore the performance of the brands. This paper focuses on, determining customers‟ attitude towards PLs with respect to different attributes. In addition, this study also investigates the impact of demographics on the purchase of private labels. Further it also discusses the effect on preference pattern with respect to demographic profile of respondents for private label brands .The results indicate that perceived risk and attitude determinants such as quality variability, price consciousness, price-quality association and brand loyalty influence significantly on consumers‟ propensities to buy private labels. KEYWORDS: Attributes, demographic characteristics, store brands, and perception. ______________________________________________________________________________ INTRODUCTION Retail, one of India‟s upcoming industries, has presently emerged as the most dynamic and fast paced industries of recent times with several players entering the market. One of the way to succeed in retail business is to focus on own brands / store brands / private label brands. Historically, private labels were seen as low-priced, low-quality products. However in recent years, companies have started using private labels to market higher quality items, and many believe high-quality private labels will increase their presence. There has been a significant increase in private label brands in the recent years worldwide. In Europe, private label goods now account for about 45% of products sold in supermarkets, compared to 25% in the USA. Wal-Mart, for instance, has a 40% private label representation in their stores. Survey shows that 50 per cent of Indian retail will be occupied by private labels within the next 10 or 15 years. 63


Today, as markets become more aggressive and competitive, many organizations realize the significance of retaining existing customers and some of them have framed strategies to build a long term relationship and to create brand loyal customers. At present, most of retailers are likely to develop store brand as it has high potential in obtaining loyal customers. Besides, brand is one of many factors that may influence customer‟s purchasing behavior because of the uniqueness and specialty of the product. Store brand can be determined as private label, own label or retails brand as noted by Huang and Huddleston (2009). A good brand name or symbol should be able to deliver product image to its customers and has value added in it. As stated by Palumbo and Herbing (2000), an excellent store brand should be identifiable and recognizable by customers, which highlight important characteristics such as quality and value of the product. Furthermore, there are plenty of store brands in the market today that serve customers a variety of choices. So, retailers should be more creative and innovative in developing store brand in order to attract customers and differentiate their product with competitors. PRIVATE LABELS CONCEPT Private Labels Brands (PLB), also called store brands, are made by the retailer or a third-party supplier to the retailer's specifications. Private label products have become a global phenomenon and are of increasing interest to practitioners and academics alike. Private labels have gained a sizeable share of global grocery sales and further growth is predicted for the future (Ailawadi et al. 2008). These brands, owned and controlled by retailers, have become a significant threat to national brand manufacturers as the quality gap between the two closes (Herstein and Gamliel 2004). From the retailer„s perspective, private labels are seen as a strategy to improve profitability and store image (Quelch and Harding 1996). The image of a store in turn is regarded as critical to retail success given the impact it is considered to have on store patronage, loyalty and profitability (Hansen and Solgaard 2004). According to the ownership, two types of brands are distinguished. Manufacturer brand (also producer brand, national brand), which is owned and coordinated by a producer and sold through, a specific chain of stores and private label (also retailer‟s brand, own label) being owned, coordinated and sold exclusively by a retailer (Baltas 1997) as well as produced by a contracted manufacturer under license (Berthon et al. 1999). Kumar and Steenkamp (2007) have defined store brands to be any brand that is owned by the retailer or distributor and is sold only in its own outlets. Kumar and Steenkamp ‟s (2007), definition of private label wherein they have defined a private label to be any brand that is owned by the retailer or the distributor and is sold only in its own outlets. Mills (1995) poses the question "Why do Retailers Sell Private Labels?" and finds that private labels increase the channel's overall profits, while the incentive to introduce private labels is a direct consequence of the retailers' increase in their share of total channel profits. REVIEW OF LITERATURE In the 1980s, another research stream emerged in the literature, which focused on the comparison of consumer perceptions among PLBs, generics and national brands. Findings from these studies indicate that consumers perceive PLB products as the middle alternative between national brands and generics in terms of a variety of product attributes. By challenging the findings of earlier studies in the 60s and the 70s, these 80s‟ studies have revealed that differences among PLB, generic and national-brand buyers can be seen in their demographic profile as well as perceptions 64


of price, quality and risk. Batra and Sinha (2000) suggest that the search versus experience nature of the product attributes should be involved as one of the determinants of store brand attitude Search-type attributes refer to the tangible features that can be verified before buying the product, through direct inspection or sources which are readily accessible to the purchasers, for example, color, quality standards, or other written description on product packaging. Studies of PLBs have often used “price consciousness” as one of the attitudinal characteristics describing PLB buyers. Batra and Sinha (2000) found that price consciousness is the strongest of all variables studied which significantly affect consumer propensity to buy PLBs. Consumer perceptions of price are central to influencing their purchase behavior (Miranda and Joshi, 2003). PLB purchasers have apparently more price consciousness than national brand users (Erdem et al., 2004). Hoch and Lodish (1998) reported that as the price gap between private labels and national brands increases, consumers perceived value for money (quality in relation to price) increases although the degree of value diminishes as the price gap gets larger. While some studies indicate that consumers who associate quality with price have less favorable attitudes to private labels (Garretson et al. 2002). A number of studies have shown that attitudes to private labels are positively affected by price consciousness (Anselmsson and Johansson 2007, Sinha and Batra 1999). Sinha and Batra (1999) also found that perceived category risk reduces price consciousness and hence reduces private label purchase in the category. Studies confirmed that private label prone consumers are price conscious (Baltas and Argouslidis 2007). Some studies have found that private label prone consumers are price conscious but not quality conscious (Ailawadi et al. 2001, Martinez and Montaner 2008),although this finding is apparently contradicted by studies that found perceived quality is an important factor in private label preference (Baltas and Argouslidis 2007, Veloutsou et al. 2004). As a result consumers are more willing to try a new private label when there is a small or a large price differential between the private label and the national brand, but least willing when there is only a medium differential (Zielke and Duberstein 2007). From a producer‟s perspective, product quality can be defined on the basis of eight dimensions: performance, feature, reliability, conformance, durability, serviceability, aesthetics, and perceived quality (Garvin, 1987). From a consumer‟s perspective, product quality refers to the extent to which a product meets or exceeds the consumer‟s expectations (Garvin, 1987; Sebastianelli and Tamimi, 2002). Rosen (1984) examined three quality perceptions of grocery products, including overall quality, quality consistency over repeat purchases, and quality similarity across stores. The results show that PLBs are perceived as better than generics but as poorer than national brands in all three quality areas. Price and perceived quality are considered to be related with each other as stated by Elliot (1996). Consumers also consider price discrepancies as quality indication. In addition, Azzato (2009) stated that lower-income and middle-income households prefer to buy store brand due to its lower price. When a purchased brand fails to meet the consumer‟s expectation, the consumer may suffer from some type of loss such as time loss, hazard loss and ego loss (Roselius, 1971). In addition, other losses include performance loss, financial loss and social loss (Dunn et al., 1986). The degree of inconvenience brought about by these losses may vary across different situations and product categories. Since perceived risk is described as the expected penalty associated with a purchase (Narasimhan and Wilcox, 1998), it is important to investigate how important the perceived 65


outcomes of an expected penalty might be on consumers when they consider buying a PLB product. In addition, the perception of purchase-mistake consequence is influenced by the degree of involvement the consumers have with the products. Some researchers have shown that the lower the involvement associated with the purchase, the lower the degree of inconvenience perceived in making a wrong purchase (Laurent and Kapferer, 1985). The association of price and quality has been widely studied in the literature in analyzing consumers‟ purchase decisions. In other words, high prices are positively related to high quality perceptions (Wheatley, Chiu, and Allen, 1982), whereas low prices are positively associated with low quality perceptions. Based on this definition, a lower priced product in a category may be viewed less favorably. This is because consumers may apply the low price to some problematic attributes of the product, and then perceive the product as inferior in overall quality (Burton et al., 1998; Garretson et al., 2002). Following this perspective, consumers may associate the low price of PLB products with low quality. Some researchers argue that consumer attitudes towards PLB proneness are directly affected by the extent to which consumers draw assumptions from price and brand names when assessing the quality level of the products (Wolinsky, 1987). Consumers who are afraid of purchasing low-quality products may choose high-price brands to reduce purchase risk (Burton et al., 1998). In addition, Richardson in his previous research asserts that a successful private label depends on the way how retailers deliver product quality rather than low price to its consumers (Richardson et al., 1994). Nevertheless, today‟s researchers claim that gap in price is no longer an issue in determining the success of store brand in the market (Hoch, 1996). Consumer perceptions of private labels have changed as retailers have repositioned them over time. The reduction in the gap between own labels and national brands in terms of price and quality, together with the increasing promotion of retailer names and their own brands, has changed consumer perceptions of own labels and reduced perceived risk associated with their purchase (McGoldrick 1984). Hence the study is made to identify the key constructs like search experience, price consciousness, quality variable, consequences of purchase mistake, convenience, and price & quality association. PURPOSE OF THE STUDY National and private label products have been in competition for decades. But the battle for market share has intensified in recent years due to a variety of reasons including changes in the marketplace, evolution in the channel of distribution and the proactive strategic options taken by national and manufacturers as well as private label retailers. Both the manufacturers‟ brands and private label brands are fighting to attract the consumers on these factors. In the past, lower priced private label brands were equated with lower quality products during the time of initial introduction (Steiner 2004). However, in recent times, major retailers have increased the quality level of the private label brands to near or, in some cases, even better than that of the national brand leaders (Quelch and Harding 1996). There are evidences that quality private label brands can help differentiate a retail store and create store loyalty (Corstjens and Lal 2000, Sudhir and Talukdar 2004). Sudhir and Talukdar (2004) also find that a retailer‟s profit can go up when the sale of private label brands increases. Major retailers see consumers as the main driving force for the continued existence and future development of private label brands (Chronsell and Naucler 66


2006). Given this context, it is important to understand consumer‟s predisposition towards private label brands and the antecedent perceptions towards private labels in grocery retail stores. Therefore the purpose of the study is to study the perception and attitude of consumer towards private label brands and in addition, do consumers' profiles influence their attitudes towards private label products. Research Objective The research objective of this study includes studying and identifying the factors on which consumers evaluate store brand. The second objective is to know the over all consumers attitude towards store brands and finally to study the effect on consumer attitude towards store brands with respect to different demographic variables. Research Methodology Demographic factors were identified from various past studies in the similar areas: Richardson, Jain, and Dick (1996). While different attributes like Image (Brand Image / Stores‟ Image), Quality, Price, Risk, and Packaging have been identified to assess the consumer evaluations of PLBs were identified from the past studies. Dolekoglu et al. (2008) stated factors viz. quality, price, trust, availability of alternatives, attractive packaging, frequent advertising, sales promotions, imitations, well-known, healthy, availability, brand image, prestige, freshness and habits. Batra & Sinha (2000); Bettman, 1973; Dunn et al., (1986); Richardson, Jain, & Dick(1996) stated Perceived Risk as factor. Batra and Sinha 2000 stated Price Consciousness, Price-Quality association as factors influencing customers‟ attitude. Batra and Sinha 2000 stated Price Consciousness, Price-Quality association Search Experience and Consequence of Purchase Mistake are the factors influencing customers‟ attitude. Ashokkumar and Gopal (2009) studied Price, Quality, and Risk perception as factors affecting consumers‟ attitude; while relationship between Price and Quality was studied by Ailawadi, Pauwels and Steenkamp (2008). Tool employed for generating responses was structured questionnaire, consisting of 35 Questions out of which 5 Questions were framed together demographic as well as personal profile of respondent, while 30 Question was framed to rate store brand perception on a five - point Likert Scale, ranging from Strongly Disagree (1) to Strongly Agree (5) was related to each of the statement for the respondents to rate. SPSS 17 was used for data analysis. Research was conducted in Madurai and the total numbers of 180 respondents were studied. Stratified random sampling method (disproportionate method) was used to collect primary data. Information was collected from respondents outside the retail outlets in different parts of Madurai city. List of Abbreviations used in analysis table are given below: SE - Search Experience, PC - Price Consciousness, QV - Quality Variable, CPM - Consequences of Purchase Mistake, CON – Convenience and PQA - Price & Quality Association.

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ANALYSIS & INTRPRETATION: Composition of the sample The sample is deemed to be the card holders (representative) of the retail outlet shopping population in Madurai. In terms of gender, slightly more females (70%) completed the questionnaire than males (30%). The majority of the sample falls into the 30- 39 years middle age category, reflecting 43% of respondents. The 40 to 49, 20 to 29,50 to 59 and above 60 years old age categories represent similar numbers of respondents with approximately 26 %, 15%, 12% and 5% respectively. However, representation is skewed towards the younger segments. The proportions of employment represented in the sample are 27% are employed or working with about a 13% doing business and 54% as home makers and only 6% are professional of the total sample. However, it is acknowledged, that the sample is slightly biased towards home makers, as they fall in to the urban category. The data pertaining to the amount spent for grocery purchase of respondent presented in the above table that the sample includes 48%, 28 %, 9 %, 8 %, 5 %and 2 %respondents respectively representing the group of respondents with the amount spent on monthly grocery purchase Rs. 1001-2000, 2001-3000, below 1000, 3001-4000, 40015000 and above 5000. This signifies that the sample is dominated by those respondents whose monthly expense for grocery purchase between Rs 1001 to 2000. Analysis clearly signifies that the sample is dominated by the respondents who are purchasing store brand more than 2-3 years and 1-2 years, since it is 36 % and 34% respectively of the total sample. A. Demographic Profile of the Respondents DEMOGRAPHIC PROFILE OF THE RESPONDENTS N=180 Gender Male 54 Female 126 Age 20 – 29 years 27 30 – 39 years 77 40 – 49 years 47 50 – 59 years 21 60 & above 8 Occupation Salaried 48 Business 23 Professional 13 Homemaker 96 Grocery Amount Spent per Less than 1000 17 month 1001 to 2000 87 2001 to 3000 50 3001 to 4000 15 4001 to 5000 9 Above 5000 2 Duration of store brand Last 6 Months 7 purchase Last 1 Year 34 1-2 Years 62 2-3 Years 64 > 3 Years 13

30 70 15 43 26 12 5 27 13 7 53 9 48 28 8 5 2 4 19 34 36 7 68


B. DEMOGRAPHIC EFFECT ON CONSUMERS ATTITUDE TOWARDS STORE BRAND One way ANOVA was administered to find the significance; demographic parameters were taken as factors / independent variable while corresponding response with respect to attributes and product category was taken as dependent variable. Only significant results (significance at 5%) across different demographic parameters, attributes are tabulated and discussed in table 1B.

TABLE 1 A Effect of Gender on Perception towards Store Brands (Descriptive)

FACTORS SE

PC

QV

CPM

CON

PQA

GENDER Male Female Total Male Female Total Male Female Total Male Female Total Male Female Total Male Female Total

N 54 126 180 54 126 180 54 126 180 54 126 180 54 126 180 54 126 180

Mean 1.7259 1.8127 1.7867 4.3981 4.2222 4.2750 4.2593 4.2884 4.2796 4.1358 4.1270 4.1296 4.2963 4.2937 4.2944 4.2037 4.0185 4.0741

Std. Deviation .53876 .51396 .52154 .39009 .60434 .55375 .63992 .43889 .50591 .69896 .35492 .48232 .43758 .54586 .51456 .62919 .71219 .69185

Std. Error .07332 .04579 .03887 .05308 .05384 .04127 .08708 .03910 .03771 .09512 .03162 .03595 .05955 .04863 .03835 .08562 .06345 .05157

Minimum 1.00 1.00 1.00 4.00 1.75 1.75 1.00 4.00 1.00 1.00 3.00 1.00 4.00 1.00 1.00 3.00 2.00 2.00

Maximum 4.00 4.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00

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Table 1 B Effect of Gender on Perception towards Store Brands (ANOVA)

SE

Between Groups Within Groups Total PC Between Groups Within Groups Total QV Between Groups Within Groups Total CPM Between Groups Within Groups Total CON Between Groups Within Groups Total PQA Between Groups Within Groups Total * Significant at 5% Level

Sum of Squares .285 48.403 48.688 1.170 53.718 54.888 .032 45.782 45.814 .003 41.639 41.642 .000 47.394 47.394 1.296 84.383 85.679

df 1 178 179 1 178 179 1 178 179 1 178 179 1 178 179 1 178 179

Mean Square .285 .272

F 1.047

Sig. .308

1.170 .302

3.877

.05*

.032 .257

.124

.725

.003 .234

.013

.911

.000 .266

.001

.975

1.296 .474

2.734

.100

As per the table 1 a that the male have positive attitude towards price consciousness, convenience, price –quality association, consequences of purchase mistake, and since their mean values are 4.39, 4.29, 4.20, 4.13 respectively. Female shoppers have positive attitudes in factors like quality variable and search experience, since their mean values are 4.28 and 1.81 respectively. From the above table 1 b it is noted that gender has significant effect on perception towards store brands only for price consciousness.

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Table 2 A Effect of Age Group on Perception towards Store Brands (Descriptive) FACTORS SE

PC

QV

CPM

CON

PQA

AGE GROUP 20-29 Years 30-39 Years 40-49 Years 50-59 Above 60 Total 20-29 Years 30-39 Years 40-49 Years 50-59 Above 60 Total 20-29 Years 30-39 Years 40-49 Years 50-59 Above 60 Total 20-29 Years 30-39 Years 40-49 Years 50-59 Above 60 Total 20-29 Years 30-39 Years 40-49 Years 50-59 Above 60 Total 20-29 Years 30-39 Years 40-49 Years 50-59 Above 60 Total

N 27 77 47 21 8 180 27 77 47 21 8 180 27 77 47 21 8 180 27 77 47 21 8 180 27 77 47 21 8 180 27 77 47 21 8

Mean 1.7852 1.7766 1.7702 1.8381 1.8500 1.7867 4.2778 4.2760 4.2340 4.2976 4.4375 4.2750 4.0988 4.3593 4.3191 4.1905 4.1250 4.2796 4.2469 4.0476 4.0851 4.3016 4.3333 4.1296 4.1852 4.3030 4.3759 4.3333 4.0000 4.2944 3.7037 4.1775 4.1206 4.0794 4.0417

Std. Deviation .38800 .57854 .54848 .47590 .35051 .52154 .66265 .56717 .39838 .69650 .49552 .55375 .73272 .46443 .45555 .40237 .35355 .50591 .49435 .56897 .26437 .45832 .43644 .48232 .37363 .58784 .45374 .57735 .00000 .51456 .96225 .69160 .54029 .53650 .45207

Std. Error .07467 .06593 .08000 .10385 .12392 .03887 .12753 .06464 .05811 .15199 .17519 .04127 .14101 .05293 .06645 .08781 .12500 .03771 .09514 .06484 .03856 .10001 .15430 .03595 .07191 .06699 .06618 .12599 .00000 .03835 .18519 .07882 .07881 .11707 .15983

Minimum 1.00 1.00 1.00 1.00 1.00 1.00 1.75 1.75 2.75 1.75 4.00 1.75 1.00 4.00 4.00 4.00 4.00 1.00 3.00 1.00 4.00 4.00 4.00 1.00 4.00 1.00 4.00 3.00 4.00 1.00 2.00 2.00 3.00 3.33 3.33

Maximum 2.00 4.00 4.00 3.00 2.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00

180

4.0741

.69185

.05157

2.00

5.00

71


Table 2 B Effect of Age Group on Perception towards Store Brands ANOVA (A) Sum of Mean

SE

PC

QV

CPM

CON

PQA

Squares

df

Square

F

Sig.

Between Groups

.108

4

.027

.097

.983

Within Groups

48.580

175

.278

Total

48.688

179

Between Groups

.301

4

.075

.241

.915

Within Groups

54.586

175

.312

Total

54.888

179

Between Groups

1.804

4

.451

1.793

.132

Within Groups

44.011

175

.251

Total

45.814

179

Between Groups

1.935

4

.484

2.132

.079

Within Groups

39.707

175

.227

Total

41.642

179

Between Groups

1.365

4

.341

1.297

.273

Within Groups

46.029

175

.263

Total

47.394

179

Between Groups

4.638

4

1.159

2.504

.044*

Within Groups

81.041

175

.463

Total

85.679

179

* Significant at 5% Level From the above table 2 a we infer that respondents belong to age group above 60 years have positive attitude with respect to price consciousness, consequences of purchase mistake, search experience, and since their mean values are 4.43, 4.33 and 1.85 respectively, while other respondents who belongs to age group 30- 39 years and 40-49 years have positive attitudes in factors like quality variable, price –quality association, and convenience 4.35, 4.17 and mean score is 4.37 respectively. As per table 2 b we find that age group category have significant effect on perception towards store brands for price –quality association.

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Table 3 A Effect of Occupational Level on Perception towards Store Brands (Descriptive)

FACTORS SE

PC

QV

CPM

CON

PQA

OCCUPATIONAL Std. Std. LEVEL N Mean Deviation Error Minimum Maximum Salaried 48 1.6833 .45163 .06519 1.00 2.00 Business 23 1.9826 .60577 .12631 1.00 4.00 Professional 13 1.7077 .37072 .10282 1.00 2.00 Home Maker 96 1.8021 .54173 .05529 1.00 4.00 Total 180 1.7867 .52154 .03887 1.00 4.00 Salaried 48 4.3750 .39947 .05766 4.00 5.00 Business 23 4.2935 .34255 .07143 4.00 5.00 Professional 13 4.2885 .85297 .23657 1.75 5.00 Home Maker 96 4.2188 .60941 .06220 1.75 5.00 Total 180 4.2750 .55375 .04127 1.75 5.00 Salaried 48 4.3264 .67893 .09799 1.00 5.00 Business 23 4.2029 .39872 .08314 4.00 5.00 Professional 13 4.2051 .39764 .11029 4.00 5.00 Home Maker 96 4.2847 .44057 .04497 4.00 5.00 Total 180 4.2796 .50591 .03771 1.00 5.00 Salaried 48 4.0556 .68186 .09842 1.00 5.00 Business 23 4.1884 .38699 .08069 4.00 5.00 Professional 13 4.3077 .44015 .12208 4.00 5.00 Home Maker 96 4.1285 .37579 .03835 3.00 5.00 Total 180 4.1296 .48232 .03595 1.00 5.00 Salaried 48 4.1597 .62262 .08987 1.00 5.00 Business 23 4.4058 .49192 .10257 4.00 5.00 Professional 13 4.0769 .14618 .04054 4.00 4.33 Home Maker 96 4.3646 .47407 .04838 3.00 5.00 Total 180 4.2944 .51456 .03835 1.00 5.00 Salaried 48 4.3611 .59483 .08586 3.33 5.00 Business 23 3.9420 .46766 .09751 3.00 5.00 Professional 13 4.0000 .50918 .14122 3.33 5.00 Home Maker 96 3.9722 .76574 .07815 2.00 5.00 Total 180 4.0741 .69185 .05157 2.00 5.00

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Table 3 B

Effect of Occupational Level on Perception towards Store Brands Sum of

SE

PC

QV

CPM

CON

PQA

(ANOVA)

Mean

Squares

df

Square

F

Sig.

Between Groups

1.499

3

.500

1.864

.137

Within Groups

47.189

176

.268

Total

48.688

179

Between Groups

.794

3

.265

.861

.462

Within Groups

54.094

176

.307

Total

54.887

179

Between Groups

.315

3

.105

.406

.749

Within Groups

45.499

176

.259

Total

45.814

179

Between Groups

.755

3

.252

1.084

.358

Within Groups

40.887

176

.232

Total

41.642

179

Between Groups

2.244

3

.748

2.915

.036*

Within Groups

45.151

176

.257

Total

47.394

179

Between Groups

5.423

3

1.808

3.964

.009*

Within Groups

80.256

176

.456

Total

85.679

179

* Significant at 5% Level From the above table 3 a we infer that respondents who belong to Business people have positive attitude towards store brand with respect to convenience, price consciousness and search experience, since their means are 4.40,4.29 and1.98 respectively. Professionals have positive attitude in factors like consequences of purchase mistake, price –quality association with their mean scores are 4.30 and 4.00 and salaried people have positive attitude in quality variable towards store brands and it‟s mean score is 4.32. As per above table 3 b the occupational level has significant effect towards store brand for convenience and price –quality association.

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4 A EFFECT OF AMOUNT SPENT ON GROCERY PURCHASE ON PERCEPTION TOWARDS STORE BRANDS (DESCRIPTIVE)

Factors SE

PC

QV

CPM

CON

PQA

Grocery purchase amount per month Below 1000 1001-2000 2001-3000 3001-4000 4001-5000 Above 5000 Total Below 1000 1001-2000 2001-3000 3001-4000 4001-5000 Above 5000 Total Below 1000 1001-2000 2001-3000 3001-4000 4001-5000 Above 5000 Total Below 1000 1001-2000 2001-3000 3001-4000 4001-5000 Above 5000 Total Below 1000 1001-2000 2001-3000 3001-4000 4001-5000 Above 5000 Total Below 1000 1001-2000 2001-3000 3001-4000 4001-5000 Above 5000 Total

N 17 87 50 15 9 2 180 17 87 50 15 9 2 180 17 87 50 15 9 2 180 17 87 50 15 9 2 180 17 87 50 15 9 2 180 17 87 50 15 9 2 180

Mean 1.8353 1.7747 1.7840 1.6400 2.0222 2.0000 1.7867 4.2353 4.3190 4.3300 4.0500 4.2222 3.2500 4.2750 4.1765 4.2912 4.2533 4.3778 4.2222 4.8333 4.2796 4.2745 4.0996 4.0933 4.2889 4.1111 4.0000 4.1296 4.0000 4.3525 4.3200 4.2667 4.2593 4.0000 4.2944 3.6471 4.0307 4.1533 4.3556 4.3704 4.1667 4.0741

Std. Deviation .49616 .42460 .63096 .47329 .83931 .00000 .52154 .29936 .49517 .59213 .68920 .31732 2.12132 .55375 .35586 .45125 .64439 .48578 .44096 .23570 .50591 .44465 .55479 .38709 .45192 .33333 .00000 .48232 .89753 .44709 .47121 .45774 .43390 .00000 .51456 .78591 .61554 .76550 .51125 .69611 1.17851 .69185

Std. Error .12034 .04552 .08923 .12220 .27977 .00000 .03887 .07260 .05309 .08374 .17795 .10577 1.50000 .04127 .08631 .04838 .09113 .12543 .14699 .16667 .03771 .10784 .05948 .05474 .11669 .11111 .00000 .03595 .21768 .04793 .06664 .11819 .14463 .00000 .03835 .19061 .06599 .10826 .13200 .23204 .83333 .05157

Minimum 1.00 1.00 1.00 1.00 1.00 2.00 1.00 4.00 2.00 1.75 1.75 4.00 1.75 1.75 4.00 4.00 1.00 4.00 4.00 4.67 1.00 4.00 1.00 3.00 4.00 4.00 4.00 1.00 1.00 4.00 4.00 4.00 4.00 4.00 1.00 2.00 2.00 2.00 3.67 3.00 3.33 2.00

Maximum 3.00 3.00 4.00 2.00 4.00 2.00 4.00 5.00 5.00 5.00 5.00 5.00 4.75 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00

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Table 4 B Effect of amount spent on Grocery purchase on Perception towards Store Brands (ANOVA)

SE

Between Groups Within Groups Total PC Between Groups Within Groups Total QV Between Groups Within Groups Total CPM Between Groups Within Groups Total CON Between Groups Within Groups Total PQA Between Groups Within Groups Total * Significant at 5% Level

Sum of Squares .966 47.722 48.688 3.232 51.656 54.888 1.014 44.800 45.814 .918 40.724 41.642 1.996 45.399 47.394 5.574 80.105 85.679

df 5 174 179 5 174 179 5 174 179 5 174 179 5 174 179 5 174 179

Mean Square .193 .274

F .704

Sig. .621

.646 .297

2.177

.059

.203 .257

.788

.560

.184 .234

.785

.562

.399 .261

1.530

.183

1.115 .460

2.421

.038*

From the above table 5 a shows that whose monthly amount on grocery purchase between 40015000 have positive attitude with respect to price –quality association consequence of purchase mistake and search experience ,since the mean values are 4.37,4.11,& 2.02 respectively .And the consumer who are spending amount on monthly grocery purchase between Rs.1001-2000 and 2001-3000 have positive attitude in factors like convenience and price consciousness, since their mean values are 4.35,4.33 respectively. From the table 5 b the amount spent on grocery purchase has significant effect on perception towards store brand for and price –quality association.

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Table 5 A Effect of duration of Store Brand Purchase on Perception towards Store Brands (Descriptive) Factors SE

PC

QV

CPM

CON

PQA

Duration of Store Brand Purchase Last 6 Months Last 1year 1-2 Years 2-3 Years More than 3 Years Total Last 6 Months Last 1year 1-2 Years 2-3 Years More than 3 Years Total Last 6 Months Last 1year 1-2 Years 2-3 Years More than 3 Years Total Last 6 Months Last 1year 1-2 Years 2-3 Years More than 3 Years Total Last 6 Months Last 1year 1-2 Years 2-3 Years More than 3 Years Total Last 6 Months Last 1year 1-2 Years 2-3 Years More than 3 Years Total

N 7 34 62 64 13 180 7 34 62 64 13 180 7 34 62 64 13 180 7 34 62 64 13 180 7 34 62 64 13 180 7 34 62 64 13 180

Mean 1.7143 1.7000 1.7548 1.8750 1.7692 1.7867 4.6429 4.2426 4.2944 4.2500 4.1923 4.2750 4.2857 4.2941 4.2043 4.3385 4.3077 4.2796 4.0952 4.0980 4.2097 4.1146 3.9231 4.1296 4.1429 4.2549 4.3978 4.2135 4.3846 4.2944 3.8571 3.9412 4.1129 4.1562 3.9487 4.0741

Std. Deviation .42984 .45991 .49578 .56960 .59914 .52154 .47559 .57894 .41371 .69579 .18125 .55375 .48795 .46250 .58939 .45033 .48038 .50591 .25198 .38076 .41918 .46847 .95407 .48232 .37796 .43468 .45102 .58303 .65044 .51456 1.06904 .84674 .60037 .70265 .18490 .69185

Std. Error .16246 .07887 .06296 .07120 .16617 .03887 .17976 .09929 .05254 .08697 .05027 .04127 .18443 .07932 .07485 .05629 .13323 .03771 .09524 .06530 .05324 .05856 .26461 .03595 .14286 .07455 .05728 .07288 .18040 .03835 .40406 .14522 .07625 .08783 .05128 .05157

Minimum 1.00 1.00 1.00 1.00 1.00 1.00 4.00 1.75 2.75 1.75 4.00 1.75 4.00 4.00 1.00 4.00 4.00 1.00 4.00 3.00 3.00 2.00 1.00 1.00 4.00 4.00 4.00 1.00 3.00 1.00 2.00 2.00 2.00 2.00 3.33 2.00

Maximum 2.00 2.00 4.00 4.00 3.00 4.00 5.00 5.00 5.00 5.00 4.50 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.67 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00 5.00

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Table 5 B Effect of duration of Store Brand Purchase on Perception towards Store Brands ANOVA (A) Sum of Mean Squares df Square F Sig. SE Between Groups .858 4 .215 .785 .536 Within Groups 47.830 175 .273 Total 48.688 179 PC Between Groups 1.135 4 .284 .924 .451 Within Groups 53.753 175 .307 Total 54.888 179 QV Between Groups .592 4 .148 .572 .683 Within Groups 45.223 175 .258 Total 45.814 179 CPM Between Groups 1.009 4 .252 1.086 .365 Within Groups 40.633 175 .232 Total 41.642 179 CON Between Groups 1.402 4 .350 1.333 .259 Within Groups 45.993 175 .263 Total 47.394 179 PQA Between Groups 1.660 4 .415 .864 .487 Within Groups 84.019 175 .480 Total 85.679 179 * Significant at 5% Level As per table 5 a it is inferred that the respondents who are purchasing store brand between 2-3 years have positive attitude with respect to quality variable, price –quality association and search experience, since their mean values are 4.33,4.15 and 1.87 respectively. Consumers purchasing store brand for the last 1-2 years has positive attitude with respect to convenience and consequence of purchase mistake, since their mean is 4.39 and 4.20 respectively. And the consumers who are more price consciousness, since only for the last six months they have purchased store brand .The consumers who are purchasing store brand for the last six months have positive attitude in price consciousness ,it‟s mean score is 4.64 Findings In attempt to explain variations in customer attitude towards private label brands, the effect of gender, age group, and occupation, monthly household grocery expenses, has been taken into consideration. In this study, we examined how customers‟ in Madurai perceive private label brands with respect to six attributes. Most the demographic characteristics age, gender, occupation, amount spent for grocery purchase of the respondents have significant effect on price and quality association, price consciousness, convenience which results positive attitude towards store brands. The male respondents have positive attitude towards price consciousness, convenience, price –quality association, consequences of purchase mistake. The respondents who belong to age group above 60 years have positive attitude with respect to price consciousness, consequences of purchase mistake, search experience, and also other age group category have positive attitudes in factors like quality variable, price –quality association, and 78


convenience. Business people have positive attitude towards store brand with respect to convenience, price consciousness and search experience, since their means are 4.40, 4.29 and1.98 respectively. Professionals have positive attitude in factors like consequences of purchase mistake, price –quality association with their mean scores are 4.30 and 4.00 and salaried people have positive attitude in quality variable towards store brands and it‟s mean score is 4.32. The consumer who are spending the amount on monthly grocery purchase between Rs.1001-2000 and 2001-3000 have positive attitude in factors like convenience and price consciousness. The respondents who are purchasing store brand between 2-3 years have positive attitude with respect to quality variable, price –quality association and search experience, since their mean values are 4.33, 4.15 and 1.87 respectively. Consumers purchasing store brand for the last 1-2 years has positive attitude with respect to convenience and consequence of purchase mistake, since their mean is 4.39 and 4.20 respectively. And the consumers who are more price consciousness, since only for the last six months they have purchased store brand. The findings of the study clearly bring forth the importance of pricing as an attribute in influencing customers‟ acceptance of private label brands. This is so because today‟s customers are smart enough to understand that since they are not buying branded products so they need not pay premium. Support for this belief was challenged, however, by Ailawadi et al (2001). Burton et al (1998) pointed out that the danger for a retailer using low prices alone with which to compete is that some consumers may use price as a proxy for quality. Richardson et al (1994) found that private label brands were considered by shoppers to be inferior in quality terms to national brands. Perception of quality is an important element relating to private-label brand use; if all brands in a category are seen as sharing a similar quality, then private-label brand use is often observed to increase (Richardson et al 1994). But as proven in this study and other global studies, one constant finding of private-label research had been that quality is more important than price to shoppers (Hoch and Banerji 1993; Sethuraman1992). Retailers should promote PLs by which it decreases the level of perceived risk while increase level perceived image of PL / store / retail outlet. Supporting the above findings, Batra and Sinha (2000) provided evidence showing a negative relationship between the degree of consequence of a purchase mistake and PLB purchase. Their findings suggest that PLB buying increases in product categories where consumers‟ perception of consequence of making a purchase mistake decreases. As across all categories, attitude towards perceived risk as well as image was found to me unfavorable. Narasimhan and Wilcox (1998) argue that consumers will be less motivated to purchase privatelabel groceries if the level of perceived risk in that category is high. The findings of the study can be useful to retailers in formulating strategies to make products other than the national branded ones acceptable in the market, which will help retailers in developing stronger store/private label brands and in increasing their presence and acceptance among the customer. CONCLUSION & IMPLICATION The objective of the study was to determine the effect of consumer perception dimensions and demographics on attitude toward private label brands among grocery consumers. The result of the ANOVA test shows that perception of private label brand has the major influence on attitude towards private label brands. Most the demographic characteristics age, gender, occupation, amount spent for grocery purchase of the respondents have significant effect on price and quality association, price, convenience which results positive attitude towards store brands. There are several implications for the retailers who are willing to target consumers with through private 79


labels. First, the study finds that perception is an important instrument in developing attitude toward private label brands among consumers. This implies that retailers should engage in generating positive reviews about their private label brands and at the same time counter any negative perception of their private label brands. The retailers could accomplish this through instore promotions, store image building and advertising. Other factors that were found to be important are consumers‟ education level, earning members in the family and marital status. Retailers should, therefore, focus on targeting these segments. The results showed that occupation, monthly grocery purchase and of the respondents had an indirect effect on attitude toward private label brands. This seems to stem from the fact that better occupational level and higher income level of the consumers result in them not considering private label brands as providing value for money and symbol of status. Thus, the retailers should engage in promotional activities to promote their private label brands as providing value for money. SUGGESTIONS FOR FUTURE RESEARCH The current study focuses on the grocery consumers. As the current study does not consider the effect of product categories on attitude toward private label brands the results cannot be generalized to other consumer. Differences in product categories have been found to affect the purchase behavior of private label brands (Batra and Sinha 2000, Chen, 2005, Sinha and Batra 1999). Future research could expand the current research across product categories to investigate whether consumer perception influence on attitude toward private label brands as found in the current study. Another area that has not been investigated is the influence of antecedents of perception of private labels REFERENCES Ailawadi, K.L., Pauwels, K., and Steenkamp, J.E.M., 2008, “Private label use and store loyalty,” Journal of Marketing, Vol. 72 (6), pp. 19-30. Ashley, S. R. (1998). How to effectively compete against private-label brands. Journal of Advertising Research, 38(1), 75-82. Ashokkumar, S. and Gopal, S. (2009), “Diffusion of Innovation in Private Labels in Food Products,” The ICFAI University Journal of Brand Management, 6(1), pp 35-56 Anselmsson, J., and Johansson, U. 2007, “Are the retailer motives of private label brands fulfilled? Creation of brand value, brand loyalty and the effect on store image and store loyalty,” Working Paper Series, Lund Institute of Economic Research, Lund University Batra, R., Sinha, I. (2000), “Consumer-level factors moderating the success of private label brands”. Journal of Retailing 76 (2), pp175-191 Baltas, G., 1997, “Determinants of store brand choice: A behavioural analysis,” Journal of Product and Brand Management, Vol. 6, pp. 315-324. Burger, P. C., and Schott, B. (1972). Can private brand buyers be identified? JMR, 80


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Hansen, T., and Solgaard, H.S., 2004. New perspectives on retailing and store patronage behaviour: A study of the interface between retailers and consumers. Dordrecht, The Netherlands: Kluwer Academic Publishers Herstein, R., and Gamliel, E., 2004, “An investigation of private branding as a global phenomenon,” Journal of Euro Marketing, Vol.13, No. 4, pp. 59-77. Hoch, S. J., and Lodish, L.M., 1998, “Store brands and category management,” Unpublished working paper. University of Pennsylvania Hoch, S. J. (1996). How should national brands think about private labels? Sloan Management Review, 37(2), 89-102. Huang, Y. & Huddleston, P. (2009). Retailer premium own-brands: creating customer loyalty through own-brand products advantage,.International Journal of Retail & Distribution Management, 37(11), pp. 975-992. Juhl, H.J., et al., 2006, „The fight between store brands and national brands - What's the score?” Journal of Retailing and Consumer Services, Vol.13, No. 5, pp. 331-338. Kumar, N. and Steenkamp, Jan-Benedict E.M. (2007). Private Label Strategy, Boston, Massachusetts: Harvard Business School Press. Kumar, N., and Steenkamp, J.E.M., 2007, “Brand versus brand,” International Commerce Review, Vol.7, No.1, pp. 46-53. Lichtenstein, D. R., Bloch, P. H., and Black, W. C. (1988). Correlates of Price Acceptability. Journal of Consumer Research, 15(2), 243-252. Lichtenstein, D. R., Ridgway, N. M., and Netemeyer, R. G. (1993). Price perceptions and consumer shopping behavior: A field study. JMR, Journal of Marketing Research, 30(2), 234-245. Lambert, D. R. (1981). Price as a Quality Cue in Industrial Buying. Academy of Marketing Science. Journal, 9(3), 227-238. McGoldrick, P. J. (1984). Grocery Generics - An Extension of the Private Label concept. European Journal of Marketing, 18(1), 5-24. Mendez, C., 1997, “Hacia la Diferenciacion Y Rentabilidad De La Cadena A Traves De La Marca Privada,” ARAL 1330, pp. 90–95 Mills, D.E., 1995, “Why retailers sell private labels,” Journal of Economics and Management Strategy, Vol. 4, No. 3, pp. 509-28. 82


Miranda, M. J., and Joshi, M. (2003). Australian Retailers Need to Engage with Private Labels to Achieve Competitive Difference. Asia Pacific Journal of Marketing and Logistics, 15(3), 34-47. Martinez, E., and Montaner, T., 2008, “Characterization of Spanish store brand consumers,” International Journal of Retail and Distribution Management, Vol. 36, No. 6, pp. 477-493 Quelch, J.A., and Harding, D., 1996, “Brands versus private labels: fighting to win,” Harvard Business Review, Vol. 74, No. 1, pp. 99–109 Palumbo, F., & Herbig, P. (2000). The multicultural context of brand loyalty. European Journal of Innovation Management, 3(3), pp. 116-124. Richardson, Paul S., Arun K. Jain, and Alan Dick (1996). "Household Store Brand Proneness: AFramework," Journal of Retailing, 72 (2), pp. 159-185. Rosen, D. L. (1984). Consumer Perceptions of Quality for Generic Grocery Products: A Comparison Across Product Categories. Journal of Retailing, 60(4), 64-79. Roselius, T. (1971). Consumer Rankings of Risk Reduction Methods. Journal of Marketing, 35(1), 56-61. Rothe, J. T., and Lamont, L. M. (1973). Purchase Behavior and Brand Choice Determinants for National and Private Brand Major Allicances. Journal of Retailing, 49(3), 19-33 Rao, A. R., and Monroe, K. B. (1988). The Moderating Effect of Prior Knowledge on Cue Utilization. Journal of Consumer Research, 15(2), 253-264. Richardson, P. S., Dick, A. S., and Jain, A. K. (1994) . Extrinsic and intrinsic cue effects on perceptions of store brand quality. Journal of Marketing, 58(4), 28-36. Sebastianelli, R., and Tamimi, N. (2002). How product quality dimensions relate to defining quality. The International Journal of Quality & Reliability Management, 19(4), 442-453. Steiner, R.L., 2004, “The nature and benefits of national brand/private label competition,” Review of Industrial Organization, Vol. 24, No. 2, pp. 105-127. Sudhir, K., and Talukdar, D., 2004, “Does store brand patronage improve store patronage?“ Review of Industrial Organization, Vol. 24, No.2, pp. 143-160.

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SERICULTURE INDUSTRY – AN EFFECTIVE TOOL FOR DEVELOPMENT OF DROUGHT-PRONE AREAS MR. N.V.RATHNAM*; P.V.NARASAIAH** *Ph.D. Research Scholar Department of Commerce Sri Venkateswara University Tirupati – 517 502 Andhra Pradesh

** Department of Commerce Sri Venkateswara University Tirupati – 517 502 Andhra Pradesh

ABSTRACT Sericulture provides an excellent nexus in promoting integrated development of agriculture and industry and also in transforming a stagnant rural economy into a dynamic and buoyant industrial economy. The role of sericulture in the rural economy can be judged on the following grounds. The data / information in this regard were collected from the authentic records of Joint Director of Sericulture, Chittoor district in the State of Andhra Pradesh. Chittoor has been recognized as a drought-prone district in the Rayalaseema region of the State. More than 70 per cent of the area under mulberry cultivation in the State is found in Rayalaseema, while the rest is almost evenly scattered in the remaining districts of the State. Sericulture is considered as a boon to many marginal and small farmers in the drought-prone areas like Chittoor district. When compared with the food and other commercial crops, one can aptly emphasise that mulberry cultivation and silkworm rearing are more lucrative to the farmers in the district. Chittoor district occupies the second place in the State of Andhra Pradesh in respect of sericulture industry. The geographic, climatic conditions and soils are conducive for sericulture development in the district. Against this backdrop, a conceivable attempt is made to analytically review the growth and development of sericulture industry in Chittoor district so as to arrive at meaningful inferences A modest attempt is made in the paper to review analytically the growth and development, problems, challenges of sericulture industry in the Chittoor district. In the light of the conclusions drawn from the study, a few relevant suggestions are offered for placing sericulture industry in the district in right perspective. KEYWORDS: Sericulture Industry, Mulberry Cultivation, Cocoons, Problems and Prospects of Sericulture Industry. ______________________________________________________________________________ 85


INTRODUCTION In developing countries like India, agriculture and agro-based industries play a stupendous role in the upliftment of rural economy. The limited availability of land, the limited cash returns and agriculture being confined to one or two seasons in the year, have made villages to look for supporting rural industries such as sericulture. Agriculture and sericulture are adopted simultaneously by the farmers where the ecological conditions are favourable. In India over six million people are employed in various fields of sericulture. A very significant characteristic of this industry is its ability to provide gainful occupation for a sizeable section of rural mass without dislodging them from their homesteads. SERICULTURE INDUSTRY – HISTORICAL BACKDROP Sericulture has been developed in India as an agro-based cottage industry with considerable employment potential. China is the origin of silk and it is called as the land of ‘serica’ in the past. Sericulture is an ancient industry in India dating back atleast to the second century BC in its long history. Indian sericulture witnessed periods of both boom and recessions. The industry sustained well after independence with the setting up of Central Silk Board (CSB) in the year 1948. India in the recent past has emerged as the second largest silk producing country in the world next to China. The demand for silk is also increasing all over the world and it is only China and India which have to meet the growing demand of silk in the world. India is the second largest producer of silk, contributing more than 28 per cent of the world production. The state of Karnataka occupies the first place in respect of sericulture in India followed by Andhra Pradesh. In Andhra Pradesh, varieties of silkworm cocoons viz., mulberry, tassar, eri and muga are grown. The State has got very strong and tradition weaving base with more than three lakh numbers of handlooms mostly concentrated in weaving pockets like Dharmavaram, Pochampally, Gadval, Patur, Peddapuram, Narayanpet etc. Sericulture in the State is richly concentrated in the backward and drought-prone Rayalaseema region which comprises four districts viz., Anantapur, Chittoor, Kadapa and Kurnool districts. More than 70 per cent of the area under mulberry cultivation in the State is found in Rayalaseema, while the rest is almost evenly scattered in the remaining districts of the State. WHAT IS SERICULTURE INDUSTRY? Sericulture, the technique of silk production is an agro-industry. Silk fibre is a protein produced from the silk-glands of silkworms. Sericulture involves four important operations – mulberry cultivation; silk-worm egg (layings) production; silkworm rearing, production and disposal (marketing) of cocoons. Cocoons supply the raw material out of which silk thread is obtained by reeling. Sericulture and reeling together constitute raw silk industry, while raw silk industry with weaving and knitting activities represent silk industry. Cultivation of mulberry and rearing of silkworms for production and marketing of cocoons are considered as agricultural activities, while reeling twisting, printing and dyeing are industrial operations. Sericulture 86


industry therefore was recotgnised as agro-based cottage industry. Utilization of by-products, silk waste and pupae constitute an ancillary industrial activity of the industry. Fig. – 1 depicts the process of sericulture. Process of Sericulture Nursery:

Nursery:

Mulberry cutting

Mulberry leaves Chawkie rearing centres Early age worms

Grainages

Cottage/rearing House

Silkworm seed

Cocoons

Regulated markets Sale of cocoons

SALIENT FEATURES OF SERICULTURE The sericulture industry is an excellent avenue for providing employment and improving the socio-economic conditions of the rural poor. It can be successfully practiced as a rural industry because of its multiple advantages. The salient features of sericulture industry are: Sericulture is a labour-intensive rural industry, creating employment to 14 persons per hectare of mulberry. 3 to 5 crops can be harvested in a year without interfering with other agricultural crops. Mulberry plants can be grown on any type of soil. Sericulture can be practiced by growing silkworm food plants on waste / fallow lands, forest areas, canals / tank bunds. Mulberry withstands severe drought condition and yields atleast some income for sustenance while other agricultural crops wither. Sericulture ideally suits small and marginal farmers owning half acre to one acre of mulberry plantation. It involves simple technology and requires low investment. Most of the sericultural activities are village based. Hence, migration of people from rural to urban areas in search of jobs can be minimized. Sericulture provides self-employment opportunities to the educated unemployed youth in its varied sectors. Silk being an expensive commodity, used mostly by the affluent society, transfer of money from the rich to the poor is ensured.

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Silk has high export possibility creating trade surplus. Sericulture is a good source for earning foreign exchange. At present India is earning about Rs.2,500 crores from the export of silk fabrics and garments. Sericulture could be a more advantageous industry for improving the economy of retarded sections of the society like SCs and STs. It provides employment at home for the entire family by way of reeling and hand spinning of the cocoons along with silkworm rearing. Sericulture is a more definite and certain source of income to the villages than that of other food and commercial crops. SERICULTURE - A BOON FOR RURAL POOR IN DROUGHT-PRONE REGIONS Sericulture provides an excellent nexus in promoting integrated development of agriculture and industry and also in transforming a stagnant rural economy into a dynamic and buoyant industrial economy. The role of sericulture in the rural economy can be judged on the following grounds. The data / information in this regard were collected from the authentic records of Joint Director of Sericulture, Chittoor district in the State of Andhra Pradesh. Chittoor has been recognized as a drought-prone district in the Rayalaseema region of the State. Employment generation The sericulture industry, being highly labour intensive, could be used as an effective tool for generating gainful employment for a large number of people in the rural areas. The employment avenues in sericulture may broadly be divided into two types.  Direct employment by way of mulberry cultivation, silkworm rearing; and cocoon production; and  Indirect employment which involve reeling of cocoons, twisting, warping, dyeing and weaving. The former activities are rural in nature and the later are semi-urban and urban. Sericulture is at present providing gainful employment to more than 50 lakh people in both the main industry and its ancillary activities in the country. In drought-prone and backward regions, more than 60 per cent of the total extent of land under mulberry cultivation belongs to the marginal and small farmers. The landless poor, the agricultural labour, the marginal and small farmers are employed in a big way in sericulture and its allied activates. Labour is required in silk cocoon production, and for different operations such as cultivation of mulberry plants, harvesting the mulberry leaves, transporting the leaves from garden to rearing house, feeding the silkworms, cleaning the beds, placing the ripe silk worms on mountages and, finally collecting the cocoons from mountages. Table-1 elucidates the human labour requirements for cultivating an acre of mulberry, and the associated rearing operations.

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Table – 1 : Human Labour Requirements per acre of Mulberry Cultivation (Mandays/acre) Sl. Family Hired Total Type of operation No. labour Labour Labour 1. Mulberry cultivation: 210 92 302 Preparing the soil, ploughing, planting, application of farm yard manure fertilizers weeding, irrigation etc. 2 124 68 192 Rearing operations: Feeding silk worms, maintenance or rearing equipment, disinfection and harvesting of cocoons 334 160 494 TOTAL Source: Compiled from the records of Joint Director of Sericulture, Chittoor, A.P.

The above table is a positive proof that mulberry cultivation is regarded as an area with greater potential to absorb a large number of family members and hired labour than silk worm rearing. Lucrative income Sericulture assures of employment opportunities throughout the year with lucrative income to the rural folk, especially in the drought prone areas. In addition, it plays a vital role in controlling the seasonal unemployment. Sericulture, apart from being an engine for employment generation, is also a perennial source of income to the silkworm rearers. Sericulture is the only cash crop that yields a sizeable margin over other food and nonfood crops. It is a perpetual source of income to the farmers. Table -2 depicts the comparison of cost and net return of sericulture with other crops. Table – 2 : Comparison of Cost and Return of Sericulture with other Crops per Hectare per Annum (in Rupees) No. of Sl. Name of the crops in Annual income Expenditure Net return No. crop one year 1. Paddy 2 188750 100750 88000 2. Groundnut 2 302500 167000 135500 3. Sugarcane 2 400000 221250 178750 4. Mango 2 250000 113750 136250 5 Sericulture 3 552854 250894 301960 Source : Figures compiled from the records of the Assistant Director of Sericulture Chittoor and field survey.

As seen from the table, one hectare of land per annum under paddy yields a gross income of Rs.188750 and a net return of Rs.88,000. The return in case of sugarcane is Rs.178750; Mango Rs.136250; Groundnut Rs.135500 and sericulture Rs.301960. When compared to other food and commercial crops, sericulture appears to be more lucrative to the farmer. Next to 89


sericulture, sugarcane and mango crops are beneficial to the farmers. It is thus evident that sericulture is a money spinner to the farmer. Income leveling Sericulture is an income leveling industry. It plays a unique role in transferring wealth from the richer to the poorer. Silk is a luxurious item, a sign of prestige, mostly used by the affluent. The money spent by the affluent on purchase of silk is distributed among the sericulturists, reelers, twisters, weavers and traders. The details of distribution of income from the sale of soft silk fabrics among different sections of the society are furnished in Table – 3 (Fig.2). Table – 3 : Distribution of Income from Sale of Soft Silk Fabrics Sl. No. Category of person % Share 1. Cocoon Producer 56.8 2. Reeler 6.8 3. Twister 9.1 4. Weaver 10.7 5. Trader 16.6 TOTAL 100.0 Source: Central Silk Board, Bangalore.

Fig.2 - Distribution of Income from Sale of Soft Silk Fabrics Trader, 16.6

Weaver, 10.7 Cocoon Producer, 56.8

Twister, 9.1 Reeler, 6.8 Cocoon Producer

Reeler

Twister

Weaver

Trader

It is obvious from the table that the cocoon producer receives around 57 per cent share in the money from the sale of silk fabrics, whereas the reeler receives around 7 per cent. The twister along with the weaver receives more than 19 per cent. The trader is benefited by a margin of over 17 per cent. Generally the cocoon producer, the reeler, the twister and the weaver belong to poorer and retarded sections of the society. Thus, sericulture plays a crucial role in eradicating disparities in income distribution by transferring wealth from the rich to the poor.

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SERICULTURE INDUSTRY IN CHITTOOR DISTRICT – AN ANALYTICAL REVIEW Sericulture is considered as a boon to many marginal and small farmers in the droughtprone areas like Chittoor district. When compared with the food and other commercial crops, one can aptly emphasise that mulberry cultivation and silkworm rearing are more lucrative to the farmers in the district. Chittoor district occupies the second place in the State of Andhra Pradesh in respect of sericulture industry. The geographic, climatic conditions and soils are conducive for sericulture development in the district. Against this backdrop, a conceivable attempt is made to analytically review the growth and development of sericulture industry in Chittoor district so as to arrive at meaningful inferences. Are under Mulberry Cultivation It is observed that the area under mulberry cultivation in the district during the period from 2005-06 to 2011-12 recorded a fluctuating trend. In most of the times, downward trends have been registered in the area under mulberry cultivation, as is evident from Table-4 (Fig.3). The acreage which was 2027 acres in 2005-06 increased to 2807 in 2006-07, afterwards, reduced to 2671 acres in 2007-08 and 1588 acres in 2008-09. During the year 2009-10 the acreage was 2513 which ultimately rose to 3676 acres in 2010-11 and declined to 2837 acres by the end of 2011-12. Consequent upon the wide fluctuations in the area of mulberry cultivation, the growth rates fluctuated widely. The calculated mean is 2588.429, C.V. 25.53357 per cent and compound growth rate stood at 5.454312. Table – 4 : Area under Mulberry (In Acres) Sl. No.

Year

1. 2. 3. 4. 5. 6. 7.

2005-06 2006-07 2007-08 2008-09 2009-10 2010-2011 2011-12 Mean CV (%) CGR (%)

Area under Mulberry 2027 2807 2671 1588 2513 3676 2837 2588.429 25.53387 5.454312

% in crease (+) / decrease (-) 38.48 -4.84 -40.54 58.24 46.27 -22.82

Source: Joint Director of Sericulture Chittoor.

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Acres

Fig.3 - Area under Mulberry 4000 3500 3000 2500 2000 1500 1000 500 0

3676 2807

2671

2837

2513

2027 1588

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Years Area under Mulberry

Brushing of CBDFLs The details with regard to brushing of CBDFLs in lakh nos. are furnished in Table-5 (Fig.4). It is to note from the table that growth rates in the brushing of CBDFLs fluctuated from the lowest of 9.78 per cent in 2008-09 to the highest of 46.54 per cent in 2007-08. The calculated mean is 118.2557 CV is 38.5473 per cent and component growth rate recorded at 21.03643 per cent. Table – 5 : Brushing of CBDFLs in Government Grainages (In lakh Nos.) Sl. No.

Year

1. 2. 3. 4. 5. 6. 7.

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Mean CV (%) CGR (%)

Quantity of CBDFLs 58.68 70.60 103.46 113.58 135.72 164.66 181.09 118.2557 38.5473 21.03643

% increase (+) / decrease (-) 20.31 46.54 9.78 19.49 21.32 9.97

Source: Joint Director of Sericulture, Chittoor.

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Fig.4 – Brushing of CBDFLs in Government Grainages 200

181.09

Quantity of CBDLFs (In lakh Nos.)

180

164.66

160

135.72

140 120

113.58

103.46

100 80

58.68

70.6

60 40 20 0 2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Years

Brushing of CBDFLs in Govt. Grainages

Production of Reeling Cocoons The particulars regarding production of reeling cocoons in Chittoor district during the period from 2005-06 to 2011-12 are clearly shown in the Table-6 (Fig.5). The fluctuations in the production of reeling cocoons are somewhat less compared to mulberry cultivation in the district. Upto 2010-11, the growth rate was impressive except the year 2008-09. The production which was 3858 MTs increased to 109747 MTs by the end of the year 2011-12. Here the calculated mean is 7056.857, CV 38.57023 per cent and CGR recorded at 19.67753 per cent as against 5.454312 per cent in case of mulberry cultivation. Table – 6 : Production of Reeling Cocoons (In MTs) Sl. No. 1. 2. 3. 4. 5. 6. 7.

Year

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Mean CV (%) CGR (%) Source: Joint Director of Sericulture, Chittoor.

Production 3858 4631 5714 6174 7859 10215 10947 7056.857 38.57023 19.67753

% increase (+) / decrease (-) 20.03 23.38 8.05 27.29 29.97 7.16

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Fig.5 - Production of Reeling Cocoons 12000 10215

10947

Production (In MTs)

10000 7859 8000 5714

6000

6174

4631 3858

4000 2000 0 2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Years Production of Reeling Cocoons

Marketing of Cocoons in Government Markets The quantity of reeling cocoons marketed through regulated cocoon market in the district, their value and market fee collected are indicated in Table-7 (Fig.6). Though the quantity of reeling cocoons produced in the district is more, the quantity marketed through government regulated cocoon markets is less. It is evident from the table that during the year 2005-06 a total quantity of 3858 MTs, produced in the district, but only 1216 MTs were marketed through regulated markets. It is observed that only 31.52 per cent of total quantity of reeling quantity produced in the district was marketed through regulated markets. The same trend could be observed in the rest of study period. The CGR recorded at 9.620375 per cent as against 19.67753 per cent in case of production of reeling cocoons. Table-8 : Marketing of Cocoons (Rs. In lakhs) Quantity Sl. No. Year Value Market Fee (MTs) 1. 2005-06 1216 1553 31.11 2. 2006-07 1754 2130 42.53 3. 2007-08 1605 1770 35.44 4. 2008-09 1389 1904 37.78 5. 2009-10 1429 2397 47.96 6. 2010-11 1389 3153 63.07 7. 2011-12 1417 2547 50.95 Mean 2207.714 CV (%) 24.55342 CGR (%) 9.620375 Source: Joint Director of Sericulture, Chittoor.

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Fig.6 – Marketing of Cocoons 3500 3153

Quantity / Value

3000

2130 1754

2000 1500

2547

2397

2500

1553 1216

1770 1605

1904 1389

1429

1389

1417

1000 500 0 2005-06

2006-07

2007-08

2008-09 Years

Quantity of Cocoons (In MT s)

2009-10

2010-11

2011-12

Value (Rs. In lakhs))

The decline in the area under mulberry cultivation in the district is mainly due to failure of monsoons, prevalence of drought conditions throughout the year and conversion of land into house sites. Failure of cocoon crops, adverse climatic conditions, lack of technical knowledge on the part of the farmers may be said to be the main reasons for decline in the production of reeling cocoons. The farmers in the district are habituated to sell out their cocoons in the nearby Karnataka markets for getting higher price for their produce. This result into diversion of income to the neighbouring Karnataka State. PROBLEMS AND PROSPECTS OF SERICULTURE INDUSTRY IN CHITTOOR DISTRICT In view of the high employment potential and remunerative income generation, sericulture has come to be regarded as one of the means of alleviating rural poverty and ushering in rural prosperity in the district. However, the present scenario of sericulture in the State in general and Chittoor District in particular reflects certain problems and drawbacks. The growth rate in the area under mulberry cultivation is depleting sharply from year to year due to lack of rainfall during monsoon season and consequent drought conditions; consequently the production of cocoons is by and large sagging. The industry at present has been confronting with a plethora problems in the areas like production, finance and marketing. Problems associated with Mulberry Cultivation, Silkworm Rearing and Cocoon Marketing The foremost problems faced by the sericulturists in mulberry cultivation in the area under study were incidence of pest and diseases. The other problems are scarcity of irrigation water during summer, lack of demonstration farms for imparting practical knowledge in plantation and maintenance of mulberry gardens. It is necessary to regulate water supply carefully when the leaves are harvested during silkworm rearing. The decline in the growth of leaves affect the profitability of cocoon production. In addition, attack of uzifly, muscardin, grassary and flachery during silkworm rearing, lack of disinfection vans, non-availabilty of qualitative CBDFLs, shortage of rearing equipment, lack of separate rearing sheds according to the specifications of sericulture department, lack of transport, 95


and storage facilities, absence of adequate number of regulated markets, lack of remunerative price for cocoons too, much dependence on Karnataka market, domination of reelers in the area of marketing, lack of timely bank finance, dependence on unscrupulous village money lenders in the area of finance have been reported as the most pressing problems adversely affecting the sericulture industry in Chittoor district. PROSPECTS FOR SERICULTURE INDUSTRY IN CHITTOOR DISTRICT In recent times, sericulture has undergone a sea change, has started weaving a new look. Till the beginning of the decade seventies, it is used to be regarded as a subsidiary or minor crop, providing supplemental income to the primary earnings from agriculture and also providing parttime work to idle labour in the rural areas. Since 1971-72, with the ushering in of a new era of improved production technology resulting from outstanding break through achieved in sericulture research, the industry has undergone radical changes. It is no longer regarded as a subsidiary or minor crop. It has attained a status of an important cash crop along with other commercial crops. It appears to be a boon to marginal and small farmers, especially in the drought prone areas like Chittoor district. It is beyond doubt that there are bright prospects for sericulture in Chittoor district, provided the latest technology is utilized. The geographic and climatic conditions are quite compatible for cultivation of mulberry and rearing of silkworms. It is only because of lack of adequate infrastructure, and timely help and guidance from the side of government machinery, sericulture development in the district has been bleak. There is sufficient area available in the district for extending sericultural operations. Even if the arable land is reserved for food and other crops, mulberry can be raised on all types of soil by using government waste lands, forest fringes, fallow lands, panchayat lands, canal bunds etc.Sericulture can also be taken up as one of the aforestation programme of social forestry. The farmers must be given financial and technical support for undertaking sericulture on modern lines. SUMMING UP To sum up, constructive strategy need to be formulated to give a multipronged attack on the problems of sericulture industry in the area of production, finance and marketing. The most important thing is that the farmers should be provided with technical, financial and extension support for undertaking sericultural operations on scientific lines. There is an urgent need to allocate adequate funds and implement the developmental schemes and programmes more effectively to enliven the sericulture industry in the district. Further, the strategy for future development should concentrate on improving quality and productivity besides increasing production on a massive scale to make the prospects for sericulture in the district brighter. It is strongly believed that proper implementation of these suggestions would take the sericulture industry to glorious heights, not only in the state and nation in general but also the Chittoor district in particular.

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REFERENCES 

Abdul Aziz and Hanumappa, H.G, Silk Industry in India: Problems and Prospects, Ashish Publishing House, New Delhi, 2001.



Ganga, G., Sulochana Chetty, J. An Introduction to Sericulture, Oxford and IBH Publishing Co., Mumbai, 2005.



Ramana, D.V., Economics of Sericulture and Silk Industry in India, Deep and Deep Publications, New Delhi, 1987.



Annual Reports of Joint Director of Sericulture, Chittoor.

Websites 

www.seri.ap.gov.in



www.csb.gov.in/



www.google.com

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INCORPORATION OF FUN AND ENJOYMENT IN WORK: BUILDS THE WAY FOR SUCCESS AND GENERATION OF LONG TERM BENEFITS DR. MANI KANSAL*; MS. PUJA**; MS. GUNJAN MAHESHWARI*** *(HOD-MBA) Venkateshwara Institute of Technology, Meerut **(Assistant Professor) Venkateshwara Institute of Technology, Meerut ***(Assistant Professor) Venkateshwara Institute of Technology, Meerut

ABSTRACT Everyone wishes their jobs to be something they enjoy and fun adds an element that creates that feeling of enjoyment. If the workplace is fun, the person will ultimately like his work more and put more effort into it and be happier with the job. A good job helps make a person happy and can add a lot of fulfillment and personal enjoyment to a person‘s life i.e. both to the personal and professional life. The aim of this paper has been to show that the people working in an environment which is full of fun and frolic are key to business success and that‘s because such environment improves productivity and reduces employers‘ costs that ultimately leads to long term benefits. This paper has explained that the most important aspect of understanding workplace fun and the work that it does, and does not do, offers opportunities to improve relationships between employees and between employees and the organization and this helps in generating high performance and therefore this is the reason why organization must attempt to engage employees through fun activities that oversimplifies the human dynamism involved in the employment relationship. This paper has also explained in brief that the a sound organization knows what makes each person tick and helps employees create situations where they can contribute their best work and get what they need and want from the experience and to create such situations enjoying the work is crucial and it is also crucial for sustainability and success of the organization and to get long term benefits. KEYWORDS: Enjoyment and Fun at Work, Long term benefits, Sustainability and Success ____________________________________________________________________________

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INTRODUCTION:

Worker Characteristics: 1. Age, Job Level 2. Gender 3. Education 4. Department

Physical work Setting: 1. Function 2. Design 3. Social Climate

Fun In The Workplace

Creativity: 1. Expertise 2. Creative thinking skills 3. Intrinsic Motivation

Outcomes: 1. Job Satisfaction 2. Creative Product 3. Productivity

Management Style Figure 1. Model for fun in the workplace, adapted from Gifford (2002) and Amabile (1997) Gifford‘s framework was then adapted to serve as a model for this study of workplace fun (Figure 1). In this model, individual worker characteristics, physical work setting, and management style all affect worker-environment interaction. However, in this model, workerenvironment interaction is specifically defined as fun in the workplace. This fun then influences creativity, based on Amabile‘s 1997 Componential Theory of Creativity, which combines expertise, creative thinking skills, and intrinsic motivation. The final outcomes are creative products, job satisfaction, and productivity. DEFINITIONS: 1) Fun 

‗Enjoyment from an activity that is not important‘



‗A source of enjoyment, amusement or pleasure‘

2) Enjoyment      

 

The act or condition of receiving pleasure from something The use or possession of something that is satisfying or beneficial Something that provides joy or satisfaction. ―Enjoyment‖ is characterized by forward movement by a sense of novelty, of accomplishment. When expectations are met, and then exceeded which stretches the consciousness of what is thought of as attainable. Mihaly Csikszentmihalyi (Pioneer of positive psychology) ―Without enjoyment life can be endured, and it can even be pleasant. But it can be so only precariously, depending on luck and the cooperation of the external environment. To gain personal control over the quality of experience, however, one needs to learn how to build enjoyment into what happens day in, day out.‖ Mihaly Csikszentmihalyi (Pioneer of positive psychology)

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3) Work: 

‗To spend time achieving something, especially when it involves a lot of effort‘



‗To have a job, usually one you are paid to do‘

4) Enjoyment at Work/ Flexible Workplace At work one can create his own best balance between his work and life by making sure that he not only achieve, but also reflect the joy of the job, and the joy of life, every day. A flexible workplace supports employees to balance work and life commitments. It‘s an environment in which the workplace culture views this balance as positive and encourages employees to take advantage of options such as:  Flexibility – allowing employees to have some capacity to adapt their workday to respond to their personal issues.  A place where supportive supervisors/managers whose management style values staff and is characterized by a desire to help employees achieve better balance between work and the rest of their lives.  A culture that is family friendly - overall attitudes, beliefs, values and taken-for-granted ways of doing things that support work-family issues as legitimate workplace concerns, and as an opportunity to develop ‗new ways of working‘. Options include maternity, paternity, family and personal leave provisions.  Alternative work arrangements – options are available to employees including daily or scheduled flex time arrangements, job-sharing, reduced hours, compressed work week, family leave options, part-time work, gradual retirement, telecommuting, other leaves and sabbatical options. PURPOSE OF THE STUDY: This research aims to examine the relationship between workplace fun and employees‘ job satisfaction, and the moderating role of attitudes toward fun on this relationship. In this study, we reviewed past literatures about the three variables: Workplace fun, Attitudes toward Fun and Job Satisfaction & Higher Productivity. Then, we developed two testable hypotheses and discussed what our control variables, samples and methodology were. Finally, we presented the statistical results after our analysis, stated the limitations on our study and made suggestions on future research. FUN ENABLERS AND CHARACTERISTICS OF IDEAL WORKPLACE THAT DRIVE JOB PERFORMANCE:

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1) Fun Enablers: For management these fun enablers are crucial in order to achieve success and to motivate their employees to give their best: Enablers of Fun that Driver Job performance Tasks Environment Relationships Job responsibilities Physical space Friends Strengths & weaknesses Industry Colleagues Interests Compensation Professional network Competitive level(easy/tough) Company mission Team philosophy Volume (too little/too much) products & services Trusting & professional Resources needed Company reputation Boss/ supervisor Latitude Supervisory control Leadership Control over schedule Corporate culture Celebration, jokes, laughs & recognition Do I like What I'm doing? Do I Like being here? Do I Like the people? To manage fun in work (both individual and team work), three critical areas are needed to be considered: Tasks, Environment, and Relationships.  A good management will over time, get to know the preferences of each of the individual, team and team members in these areas. How well they help their employees would have a positive impact over employees and they would be more productive, effective and efficient.  Building a work environment based on collaboration, agreed upon strategies, cohesiveness, sound communication, business knowledge, consensus and education , celebration, proper control with some liberty etc results not only in a high performing, highly motivated business, but also evolves into highly motivated and competent teams of individuals that will lead their organizations positively.  The work place should breed productivity, efficiency, collaboration, profit, environment, task to be allocated and other positive company goals. Employees and management must work as a unit. Keeping an open mind for the changes that occur with time will allow companies to turn themselves around into highly performing functional entities admired for their ability to fix their issues once and for all.  Management‘s these efforts would give their workforce the confidence and incentive to solve the problems around them and to enjoy their work. 2) Characteristics of Ideal Workplace: The diagram can be used to describe the ideal place to generate higher productivity, higher morale, long term benefits and healthy environment. 

Business – Secure job, livable wage, health benefits, business transparency 101




Technical – Smart people, right tools/languages for the job, courage to change with the industry, learning organization



Human – Energetic office space, ability to make a difference, autonomy, organizational alignment, shared values, fun, enjoyment harmonious relations between the members etc.

The intersection of business, technical and human is the spot for an ideal job workplace.

Hypothesis 1: Workplace fun is positively associated with job satisfaction. Hypothesis 2: The positive effect of workplace fun on job satisfaction will be stronger for employees who have more positive attitudes toward fun. METHODOLOGY Data was collected using a questionnaire containing measures of workplace fun, attitudes toward fun and job satisfaction. It also covered the demographic characteristics of respondents. The target participants are the full-time employees in different organizations. Questionnaire packages were distributed to the voluntary employees individually which they completed inside the organization. Table 2 shows the demographics data of the respondents from the observed samples. The final sample included 73 males (71.6%) and 29 females (28.4%). For age composition, 5 employees were between 50 to 59 years old. More then one half of the respondents were between 20 to 29 years old (55.9%). The remaining percentage of respondents were distributed in the age range of 30 to 39 (25.5%) and 40 to 49 (12.7%). Majority of the respondents are single (65.7%) while 31.4% are married. In terms of education level, approximately half of the sample held bachelor degree (45.1%) and 8.8% even obtained master degree or above qualification. The remaining 19.6% studied up to secondary level or below and 26.5% were diploma or associate degree holders. In respect of job tenure, most of the respondents worked for 1 to 5 years (30.4%), while others worked for 1 year or below (26.5%), 5 to 10 years (20.6%) and 10 years or above (22.5%).

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Table 2: The Demographic Characteristics of the Sample (N=102) Variable Gender

Age

Marital Status

Educational Level

Job Tenure

Category

Frequency %age

Male

73

71.6

Female

29

28.4

20-29

57

55.9

30-39

26

25.5

40-49

13

12.7

50-59

6

6.9

Single

67

65.7

Married

32

31.4

Other

3

2.9

Secondary or below

20

19.6

Diploma / Associate Degree

27

26.5

Bachelor Degree

46

45.1

Master Degree or above

9

8.8

below 1 year

27

26.5

1 to 5 years

31

30.4

5 to 10 years

21

20.6

10 years or above

23

22.5

To test the main effect and see if attitudes toward fun moderate the relationship between workplace fun and job satisfaction, we conducted a hierarchical moderated regression analysis and the results were displaced in Table 3. Before running these analyses, the independent variables (workplace fun) and moderator (respondents‘ attitudes toward fun) were standardized, and then were entered in to a three-step regression equation. As indicated in the Model 2 column in Table 3, workplace fun was found to have significant positive relationship with job satisfaction (β = .561, p < .001). Thus, Hypothesis 1 was supported. In other words, the provision of workplace fun leads to higher job satisfaction. The interactive effect of attitudes toward fun with workplace fun on predicting job satisfaction was also examined in the last step of the hierarchical regression. A significant positive relationship was found in Model 3 in Table 3 (β = .020, p < .05). This provided support to Hypothesis 2.

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Table 3: Hierarchical Regression Analyses of the Interaction between Workplace Fun and Attitudes toward Fun on Job Satisfaction (N=102) Dependant Variable: Job Satisfaction Particulars

Model 1

Model 2

Model 3

Gender

-.233*

-.206**

-.174**

Age

0.146

0.144

.176*

Marital Status

-0.034

0.019

0.016

Educational Level

-0.049

0.038

0.027

Job Tenure

0.229

0.143

0.092

Workplace Fun

.561***

.478***

Attitudes toward Fun

275***

.275***

Step 1

Step 2

Step 3 Workplace Fun x Attitudes toward Fun

.020*

F Value

4.306

25.155

23.775

R

0.183

0.652

0.672

Adjusted R

0.141

0.626

0.643

Sum of R

0.183

0.058

0.02

Standardized betas are reported here Note:

* p < .05 (2-tailed). ** p < .01 (2-tailed).

*** p < .001 (2-tailed). STEPS FOR THE EMPLOYEES TO ENJOY THEIR JOB AT THE FULLEST One must not wait for fun to come to him. Consciously choosing the attitude and behavior to embrace enthusiasm, joy, and fun generates positive energy around him and directly affects the mood and productivity of the workplace but sometimes people do not prefer to enjoy at workplace, here some reasons why they don‘t enjoy and the ways to come out of them are discussed in brief. 1) Problems why employees do not enjoy at work

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The concept of having fun at work is opposed to taking everything very seriously is a relatively new one in today‘s world. Fun at work brings freshness and helps in gaining good concentration over the goal as it refreshes the mind and generates the interest in the task assigned but sometimes people are afraid of having fun at work, this is because of many reasons from the side of management and employees both and the reasons are listed below:  The employees think that management won‘t allow them to have fun.  Employees think they have too much work to do; there is no time for fun.  Management is afraid of customers i.e. they are afraid that the public or customers would think that they are not doing their jobs properly.  Employees assume that if they will adopt a playful attitude or a bit of fun come up on the job, they can‘t be working. They consider that work and play are incompatible with each other.  Both management and employees assume that work is serious; there is no space of enjoyment.  They think that Clients would not take them seriously.  Employers and employees both fear that people will feel they‘re being unprofessional, and that they‘re incompetent, not taking their job seriously,  They assume it as total wastage of time. 2) Steps for the employees to move out of the above reasons: Employees can enjoy their work and can get rid of above mentioned reasons for not enjoying their work by adopting following steps properly: Phase 1: By Examining Themselves  Understand what makes him happy/unhappy: One needs to take some time out to make a list of the things that bring a smile to his face and on the other side the things which makes him unhappy.  Ask "Why?" for each item: Then he needs to figure out why those things make him happy/unhappy.  Understand what motivates him: People like doing the things that motivate them so one needs to make a list of the things that makes him feel motivated. Phase 2: By Examining the Job  Identify Positive and Negative Aspects: List the things one actually likes and dislikes about the job about his job.  Ask Why: Then he should identify why he likes and dislikes these things. Phase 3: By Putting them Together  Match Positive/Negative Influences: one need to look closely at the list of things that makes him happy/unhappy and the list of things one likes and dislikes about his job. With the help of this one might find that some things he listed in the plus side for his job actually match his unhappy list.  Look for Contradictions: Next step after matching is the step for contradiction. This would help in bringing the actual fact out.  Look for Confirmations: Just like the previous step, one will have things that match the way he thought they would. Some of the "bad" things about his job are in his unhappy list and vice versa. One needs to make a confirmation list that contains all those.  Check the work done: To be on the safe side, this is a very, very important tool. 105




Take a Pause: Now one need to give him some time to let these things sink in. Brain needs a bit of time to process the information one has just developed. If one has done the steps properly, he will have some new and potentially surprising information. Phase 4: By Taking Action  Make the Commitment: The goal one has set is to enjoy his job. To do that, he has to be determined that he is going to make a positive psychological change. This will require a constant examination of part of his attitudes and behaviors.  Focus on the Positive Matches: The objective now is to focus on the things about the personal life and job that match the things one listed as making him happy and he likes.  Look for Job-Related Motivation: There must be something about the job that matches the motivation list. One must work to find those things.  Eliminate "Bad” Thoughts: One sometimes find himself thinking how he don't like his job - or he don't like parts of it and his mind will feed on that and it grows until it engulfs him. These Bad thoughts increases stress, can lead to depression and definitely reduces performance which will lead to poor performance.  Use Your Breaks Wisely: Whenever one is having a 15-minute break or a 30-minute lunch, he must use that time to do things that he enjoys doing. Here the objective is to increase the positive and decrease the negative.  Use Affirmation: Positive thoughts are habit forming so one should start his day with positive thoughts.  Look for Results: If all the steps have been done properly, one would surely get the results. He must not dwell on the negatives and focus on the positives. REASONS WHY COMPANIES SHOULD THINK ABOUT ENJOYMENT AT WORK AND WHAT THEY NEED TO DO FOR IT Every single person must contribute in making his work more fun and enjoyable. It makes no difference whatsoever what his position in the company. Everyone can have an impact on his working environment and make it more fun for him selves and for everyone around him. It can be beneficial in several ways:  It enhances communication and builds social bonds that encourage people to help each other.  It makes people want to perform well at work and be a contributing member of their team.  It energizes people so they are healthier and have more energy.  It stimulates creative thinking which helps people be more resourceful with challenges.  It encourages staff build rapport amongst themselves and with customers and clients  Fun breaks up boredom and fatigue  Fun fulfills human social needs  Fun increases creativity and willingness to help  Fun fulfills the need for mastery and control  Fun improves communication  Fun breaks up conflict and tension

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1) The ways for the companies to insert fun at work: To encourage employees to enjoy their work the company should adopt these steps:  They should give their employees some liberty i.e. they should let their employees decorate their space as if it’s a Personality Explosion: One‘s space at work should be all about what he is. One should be given proper freedom to decorate his space as per his choice and taste because this would make it easier for the people to form a bond with him.  They should allow Freedom for Employees, as Long as the Work Gets Done: No clocking in, minimal meetings, no ―hovering‖ as long as a good job has been performed by the employees. This would motivate them to work better.  Throw Small Parties: Companies must cover the importance of having friends at work and because it improves productivity and employee retention. What is the better way to encourage friendships than a company that allows for small and big parties power of parties because it helps the employees their in forming the bond.  Company should promote the environment of giving Gratitude: This should be taught to the employees that one must not lose sight of little things, like patting each other on the back, it would be really good if one walks up to his colleague and give him an honest compliment . Gratitude improves one‘s happiness and those around him.  Encourage Personal Development at Work: Companies should ask their employees to develop themselves at work, it would help them in coming out as a stronger/happier and better performer.  They should encourage the employee to do what is best for them, and most likely the practice will benefit from this decision as well.  They should spend money on the work environment-it is a wise investment. Little things can go along way in improving the work environment. Easy listening music playing softly; providing uniforms for all employees-not just clinical staff; allowing office staff to choose their desk chair (within set parameters are all relatively inexpensive ways to assist in the creation of a positive and professional work environment. These suggestions may not be feasible for everyone, but even little things go a long way in creating a work environment that will benefit your staff, which will then ultimately benefit your patients. 2) Benefits of inserting fun at work:  Having fun at work builds friendships. Every company should encourage their employees to become friends because that means their people will be more loyal and have someone to let off steam with.  There is a need to build a culture that accepts mistakes especially if an employee put their neck on the line. When people are encouraged to take risks, they will be more likely to accomplish projects that will succeed big.  If employees' moods are up, they will more likely do what it takes to please customers, thereby increasing sales.  It's commonly known that when one feels good, he becomes more energized and work better, and hence more creative and productive. Mental efficiency increases, memory becomes more acute, understanding increases, and one makes better decisions.

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IDEAS FOR FUN AT WORKPLACE 1) Ideas for company: A company have to understand that making fun at work makes work more enjoyable while, it is essential for boosting their employee‘s ability to perform at peak levels and provide quality service under increasingly demanding work conditions and once company gets convinced it can implement some ideas in generating fun at work. It would have a long term effect over the performance of employees and the list of ideas are:  By creating a playground in the office: By providing a common area where everyone can go to ―play‖.  By stocking the area: i.e. by stocking the area with puzzles, craft projects, toys such as Lego‘s, jacks, playing cards, etc.  Crafty Contributions: By involving the artistic aspects of employees that might not otherwise get tapped during the normal workday. Employees from various departments could be asked to use their crafty imaginations in creative contests such as:  A snack sculpture contest – build the tallest tower using chips and cream cheese dip.  A logo, slogan, mascot, or jingle contest to develop a new image for a project or product.  A painting or collage to represent the department and its people to hang in their area.  By Establishing a Fun Committee: Establishing a fun committee not only helps assure that fun activities and events will actually be created; it assures that they will be appropriate for the company. This committee should rotate to keep ideas fresh and sustain ongoing commitment to fun on the job.  By Provide challenging work: having challenging work is an important source of fun for many employees. While people often feel too overwhelmed by their workload to experience this form of fun.  Company can introduce “Lunch time, Fun time” once a month : Company can do it by :  Showing a comedy movie,  Encouraging employees to develop a skit in which they poke fun at themselves and their work.  Decorate the Board Room and other bulletin boards by putting up photos of the management team when they were children and with funny posters at lunch time  Add pertinent cartoons or funny quotes to memos and meeting agendas.  Allowing employees to perform a comedic act,  Putting departments on a skit.  “Theme Days”: In this the company needs to pick a day/week/month and have everyone participate in a theme. It can be as simple as ―Shorts Day‖  The Name Game: It helps in building morale and team spirit by making a game of naming the teams, departments, products, or meeting spaces.  By having cartoon caption contests: This can be done using the bulletin board approach. Everyone who wants to do so submits a caption in advance. At the meeting, people vote on the funniest caption. Winner gets a fun prize. For Ex: The photos of employees can be taken in unusual physical positions while interacting with each other and by putting them on a bulletin board certain funny captions could be invited below the photo. And then the prize could be given to the caption judged funniest. 2) Ideas for employees

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An employee don‘t need to rely on the company to enjoy work, he can put his own touch into it. He needs to consider ways at which he will be able to come up with his own version fun at work. Some of the ways would be:  By Lightening up: One must not take things too seriously at job, and should enjoy working with colleagues, one can share a nice joke, some entertaining news, with his colleagues and enjoy the fun spirit. Having fun with others will promote happiness at work. One must try to throw a joke every once in a while and give a funny comment (about some accident or instance that happened with him or others)  By Taking short breaks: Short breaks do improve productivity, and helps in getting out of stress.  Encourage spontaneity on the job: Spontaneity is central to play and fun. If one wants to improve his sense of humor, and get humor working for him on the job, he need to be open to the spontaneity of the moment  By Listening music: Music can freshen up the mood, and give a boost to better perform work while being happy. So one can pick out a list of his favorite songs or music and play them during his work and change this playlist every now and then so that he doesn‘t get bored.  By Planning social activities with colleagues: Planning during a weekday to have fun with colleagues, practicing some group hobby will lighten up the day.  By putting fun gadgets on the desk: These gadgets will entertain a person and his visitors, whether it‘s a funny toy, a funny picture, or weird gadget, or even a small aquarium, these things will certainly freshen a person and his colleagues up.  By surrounding Oneself with things that bring him Joy: By decorating the workspace with things that have meaning in one‘s life, such as:  Family or pet photos in unique frames  Plants or fresh flowers to cleanse the air  Bright colors that make him feel good HOW THE FUN FACTOR AT WORKPLACE BOOST BUSINESS AND LEADS TO STRESS MANAGEMENT The most striking feature of most corporations today is change. The pace of change is continues to increase. Companies recognize that if they want to survive—even thrive—in the global market place, they have to adapt quickly. “A company that has fun, where employees . . . put cartoons on the wall and celebrate, is spirited, creative, and usually profitable.” (David Baum) There are constant pressures to do things faster, to assimilate more information, and to learn new skills and adopt new responsibilities. All of these changes have triggered more job stress than ever before. Companies want stress management techniques which help their employees deal with job stress and which make work more enjoyable and boost productivity at the same time and leads to long term benefits. Fun at work enables to sustain a frame of mind conducive to dealing more effectively with the problem of the moment and reduced job stress, greater enjoyment of work, and sustaining a frame of mind conducive to effective working all make a significant contribution to the goal of increased productivity and quality service. Here are some benefits

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It increases productivity: Every business has a culture and by deliberately creating a culture that cultivates fun and creativity, will generate better business results. People would start liking their work more and will find their job more rewarding.  It stimulates creativity: The fact is, the right brain works best when freed up, especially during times of play. By allowing the staff to have some down time would help them in turning out to be more creative.  It boosts morale: It boosts morale and makes employees happier.  Happier customers because Customers like enthusiasm: Customers love enthusiasm and happy, fulfilled, and engaged employees treat customers better, which in turn impacts the bottom line.  It is a stress reliever: Having a place where it is possible to goof off a bit and have a good time can prevent stress to a large extent.  It increases employee retention: People who have fun at work and enjoy their job stick around and at a time when money is tight and offering financial incentives is difficult, creating a happier workplace is an easy, affordable way to reward and retain staff.  Hormones: Fun reduces the level of stress hormones and increases the level of healthenhancing hormones; this means a stronger immune system, as well as fewer physical effects of stress.  Physical Release: Fun provides a physical and emotional release.  Distraction: Fun and enjoyment brings the focus away from anger, guilt, stress and negative emotions in a more beneficial way.  Perspective: Fun and enjoyment can give a more lighthearted perspective and help in viewing events as 'challenges', thereby making them less threatening and more positive.  Social Benefits: Fun and enjoyment connects the people with others by elevating their moods up and reducing their stress. HOW WOULD A HEALTHY WORK ENVIRONMENT BENEFIT THE COMPANIES? Research shows that fun filled people working in a healthy and good environment are keys to business success. That‘s because a healthy workplace improves productivity and reduces employers‘ costs. As businesses progress along the path toward being a healthy business they will see increased benefits for both employees and performance. Normally these questions come before implementing the ways to insert fun is:  Why the companies do needs to generate healthy and fun filled working environment?  Is it necessary to have such environment?  Would they really work? To get the answers of such questions, the companies should ask themselves these questions  Where is their business in the current time?  Where do they want to be in 5 years?  What actions will get them there? The answer would be they want to achieve new peak in the upcoming years and wants to capture the market. Enhance their performance, wants to gain the trust of the employees etc and these all can be generated if the performance of the employees is up to the mark and to get that performance they needs healthy and stress free environment because a healthy workplace will:  Improve employee health outcomes  Make it easier to attract and retain qualified employees 110


      

Be having lower absenteeism Reduce health benefit costs Enhance morale Reduce risk of injury Improve job performance Improves overall productivity of the company Healthy work environment not only benefits employees but also benefits customers, shareholders and communities  Encourage workers to take responsibility for their own performance and stress management but also of the others working around them and this ultimately contributes to create a fun filled working environment  Provide information and resources to the companies to assist their workers to make stress free lifestyle choices and to achieve and maintain good performance  Promote work-life balance and make work a healthy life experience  Create a glowing physical, social and psychological work environment as a core business goal.  Improve the performance of the workers: Providing a healthy working environment is not only beneficial for the workers, but increases the efficiency and productivity of the company as a whole. By optimizing the sound environment for communication and concentration in office premises one is also optimizing the company's profitability and improving the company's popularity as a workplace, which in turn can help in attracting highly qualified employees. LONG TERM BENEFITS OF HAVING FUN AT WORK Fun brings creativity, innovation, play, experimentation, progress, in seeing real things that come in a person‘s life both personal and professional. There are certain ways to activate the creativity through fun and enjoyment, the ways are:  One way to activate the creativity of employees is to develop an environment where problem-solving is encouraged.  Promoting opportunities for employees to try new and fun things in the workplace—as well as offering rewards for innovative activities outside the workplace—teaches that experimentation, creativity and exploration are worthwhile pursuits.  By taking breaks from the problem-solving process because it is needed sometimes to give brain a break, getting some fresh air or letting the thoughts and ideas simmer overnight can lead to better creativity and a more productive meeting.  Finding creative ways to solve problems can give you fresh perspective to the business, helps in thinking beyond the dimensions, helps the brain in thinking in a different way and brings team members closer.  By creating an action plan in the form of a flow chart or a timeline that one can post on the office wall for everyone to see. Assigning of responsibilities to each individual in the meeting, and set expectations so everyone has ownership and responsibility over carrying out the solution they just worked together to create.  The most fun loving people becomes innovative people and they don‘t see any dichotomy between work and fun and the long term benefits of this type of working are:  Escape the inhibitions. Fun and enjoyment tends to remove inhibitions which makes a person to think outside the box and encourage everyone to be open to new ideas and 111


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solutions without setting limiting beliefs. Under the spell of inhibition, people feel limited and stuck Willing to make mistakes. People who take themselves too seriously are afraid to be seen failing. Failure while having fun is not usually seen as life-threatening. Enjoying the work helps in developing a thinking that some ideas will fail in the process of learning. Rather than treating the mistakes as failures, it helps in thinking of them as fun experiments. Reset to a positive attitude. Under the pressure of a difficult problem, nothing innovative is likely to emerge and therefore something fun is required to shift the thoughts back to the positive. It helps in coming back to the work problem with a fresh and more creative mind. Productive group activity. In teams, people feed off each other. A ―downer‖ in a group takes the whole group down, whereas a fun person can bring the whole group to a more productive and innovative plane. This allows the group to ―suspend disbelief‖ and really brainstorm new alternatives. Likely to be seen. Successful people surround themselves with people they enjoy and respect. If one is unhappy, or takes himself too seriously, he is less likely to get the attention and trust of people who can make a difference, or even recognize his innovative ideas. Likely to be heard. Communication effectiveness is the final hurdle for any kind of progress through creativity and innovation. No matter how great one‘s idea is, it won‘t happen if it is not heard. People like to listen to fun people, and they close their mind to all the rest. If one wants to be heard, he would have to deliver it in a positive one.

CONCLUSION Fun in the workplace comes in many flavors, most elements of fun in the workplace require some imagination and fortunately, imagination and fun both lead to more innovation and ideas sharing among workers. This is one of the many great impacts fun has on an organization as well, especially in one where design, innovation and new ideas are an important part of the company‘s success. This aim of this paper has been to show that one strategy for organizations to gain success and long term benefits is to replace job security with interesting, important work. Organizational survival under this requires harnessing the employee's desire for meaning and purpose by producing healthy environment where high performers can create and make contributions. The result is that the worker population stabilizes for a time, helping organization in maintaining equilibrium and gaining success. This paper has thrown light over the points which have explained that to truly enjoy daily work activities, there are of course some risks attached with fun in the workplace but they can easily be mitigated and controlled and they helps in maintaining proper work life balance and would help the persons in living tress free life. The material and arguments presented in this paper indicate the need for a focus on a positive aspect of the need of joy and enjoyment at the workplace in organizations. This paper has explained why fun and enjoyment has become the vital part in today‘s scenario.

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AN ANALYSIS OF THE NEWSPAPER PUBLISHING INDUSTRY –CAN IT SURVIVE THE ONSLAUGHT OF THE DIGITAL MEDIA MOU MUKHERJEE-DAS*; DR PARTHO P. SENGUPTA** *Assistant Professor –Media Science. Durgapur Society of Management Science. Durgapur-713212. West Bengal India ** Professor & Ex H.O.D ; MBA.. National Institute of Technology. Durgapur- 713209. West Bengal.India.

ABSTRACT Newspapers were once the lifeline of the nation and was hailed as the fourth estate for its sheer power in forming public opinion and creating revolution on many issues .But as time had passed with the advent of digital technology, questions are ripe that whether print media can survive this onslaught. The researcher aims to find out through the case of Times of India, by application of diffusion of innovation theory and disruptive technology theory – regarding the nature of hurdles they face and the nature of survival strategies they are taking for survival. The researcher has found that to survive in the market the newspapers had already come up with newer technologies that have helped them to connect with their audience in a more fast manner and also innovative content and promotional strategies help in combating the digital media. In this regard the researcher strives to highlight the achievement and success story of the Times of India. KEYWORDS: Diffusion of Innovation, Disruptive Innovation theory, Innovative Survival Strategies of newspapers, Newspapers vs. Digital technology, Newspapers as the lifeline of the nation, Print Media, Survival strategies of Times Of India, Times of India.

INTRODUCTION “Print is still king: Only 3 percent of newspaper reading happens online” Nieman Journalism Lab (A Nirman foundation at Harvard University). As platforms on which to consume news expand and proliferate, newspapers continue to delight, enthrall, inform and enlighten billions of people around the world every day. Newspapers possess unique characteristics that are desirable for the ages: they are tactile, portable and packed with information to enhance the reader's quality of life. Newspapers also continue to function as vigilant watchdogs over government, serving as beacons for democracy around the world. The newspaper itself also has esoteric qualities that, while not measurable, are certainly tangible. ―Paper‘s great strength is that it allows the mind to settle down into that peaceful deep dive state in which we do our best thinking. This state is much harder to achieve when we‘re reading in the digital medium, where there is endless information, and so many possible tasks to undertake at any moment. On the Internet, there is no beginning and no end,‖ William Powers writes in Chapter 1, from his book titled 114


―Hamlet‘s Blackberry.‖ Newspaper industry in India has witnessed various trends over the years. It has become capital intensive requiring crores of rupees of investment on materials and machines. The advertisement revenue has increased to more than 60% of the total revenue. Feature articles, fortnightly features, continuation stories, columns, interesting short tales have become a common feature. Layout and designing is playing a very important role in appearance and presentation. Modular layout is now being adopted which is based on building block concept. Technological up gradation has become the order of the day. Satellite transmission via VSAT is used for sending texts and photographs. Satellite editions are becoming popular. The industry is becoming more and more reader‘s oriented which is in tune with the modern marketing concept. These trends have brought about paradigm shift in the philosophy and practice of the contemporary newspaper industry in India. The macro and micro environment of the newspaper industry has undergone sea change in the last decade. the tectonic shift towards the online as also electronic media has made print media more vulnerable and susceptible .Competition from within the industry in terms of huge volume of different newspapers both vernacular as also national , and competition from the digital media has raised a potential question of the very survival of the print media. LITERATURE REVIEWThe traditional publishing landscape has changed decidedly during the past decade. Technological and demographic developments, deregulation and the convergence of different information and communications markets have left an important mark on the configuration of the traditional publishing industry (Wirtz, 2001; Picard, 2003). The performance and survival opportunities of newspaper publishing companies, have been poor over the last decade. Even if traditional newspaper publishing companies – on average- have been profitable in the last decades, their real competitive strength has been questioned. Although It is possible that this trend of publishing companies is a sign of above-average performance but to do so without having a sustainable competitive advantage , is very likely that they have adopted the harvesting strategy. Some studies have pointed at the spiral of decline in the newspaper publishing industry, due to destabilizing force of such factors as new entrants from outside the industry, innovations from existing information and communications companies and changes in customer behavior. Declining profits because of increased competition and environment uncertainty have led to doubts about the newspaper publishing companies strategies‘ viability. Not only management, but also empirical evidence has failed to find conclusive answers on matters like scale and scope economies, alliances and consolidation benefits. Newspaper publishing companies is finding their way in the information and communications landscape. In order to survive and prosper in the today‘s changing industry structure and competitive situation, newspapers publishing companies clearly require a viable competitive strategy. They have to make adequate adaptations to these dynamic changes and respond quickly to create or to sustain their competitive advantage (Picard, 2003). Around the world, change has become the de rigueur strategy for every newspaper company. From content creation, to distribution, to new business models and beyond, the newspaper industry is in the midst of the most profound change in its history. Newspapers are learning how to adapt to and grow in this new ecosystem, where outside forces, such as technological advances, the economic climate and reader consumption habits dictate the new building blocks that will enable media houses to survive and flourish. These crashing waves of change have left in their wake both devastation and a mindset of renewal for many of the world‘s publishers. In some parts of the world, the economic downturn, coupled with debt challenges and advertising revenue 115


shortfalls, have left many newspaper companies shifting gears into new, high potential revenue strategies. Emerging communication technologies have disrupted the established media economic models of information production and distribution in significant ways (Dahlgren, 1996; Bratich, 2004; Shirky, 2008). The new communication technologies present both opportunities and challenges. News organizations are experimenting with ways to exploit the new technologies to reinvigorate journalism and address contemporary needs (Zamith, 2008). Some scholars have discussed the potential of using new media technologies to promote civic engagement (Schultz, 1999; Rosenberry, 2005; Nip, 2006). Scholars have identified three dimensions of civic engagement that such interactive features must provide namely, connecting to the community; engaging individuals as citizens; and helping public deliberation in search of solutions (Nip, 2006). Research on media and innovation paints the picture of an industry that has not always embraced innovation as a critical part of its mission and was content with the age-old model of relying on advertising and subscription to finance its business. The disruption of that model means the media industry is not just looking for a new model, but they suddenly have to understand the concept of innovation itself. They are also under pressure to respond to the increasing sophistication of audiences who now expect to participate in the process of content creation and dissemination. Many marketing studies on diffusion of innovation have focussed on how new technology is perceived by consumers, which is usually tested by their behaviours and reactions to technological innovation (Moore and Benbasat, 1991) and how these may change with time and experience (Kim, 2009). A common interest here is the analysis of user demographics (e.g. Laukkanen et al., 2007; Lee et al., 2005) such as age, gender, education and so on, to predict technology adoption (e.g. Morris and Venkatesh, 2000) On the other hand, most sociological studies on this subject analyze how technology adoption is affected by the characteristics of society in which potential users are embedded (e.g. Selwyn, 2003; Slowlkowski and Jarratt, 2007). How can newspaper publishers successfully address these challenges? Therefore my research focuses on two key issues: the innovative strategies used by the newspapers for their survival and how diffusion of innovation model and disruptive innovation theory can help the newspapers ? There is also an effort to understand how the leading newspapers like Times of India have become market leaders by creating embracing these new technologies. RESEARCH QUESTIONRQ1- How the newspaper industry through diffusion of innovation and disruptive technology theory is creating a survival strategy for themselves.? RQ2- Whether this strategy is successful in generating revenue for the publishing industry? METHODOLOGYThe researcher through the secondary literature collected from various reports have attempted to do an exploratory and descriptive study on the innovations of the newspaper publishing industry in order to survive in the onslaught of the digital media.

OPERATIONAL DEFINITIONS OF CATEGORIES AND TERMS OF DISCOURSE 

DISRUPTIVE INNOVATION THEORY- Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service 116


takes root initially in simple applications at the bottom of a market and then relentlessly moves ‗up market‘, eventually displacing established competitors. A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. 

DIFFUSION OF INNOVATION- Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system. Diffusion is a special type of communication concerned with the spread of messages that are perceived as new ideas.

INNOVATION IN NEWSPAPER PUBLISHING INDUSTRY AS ENVISIONED BY CRITICSThere has been a frenzy of activities in the Indian newspaper industry - some eye it with pleasure, some with anxiety, but this spur of fresh developments is quite encouraging for the industry. More slimmer look, New editions, new titles, all-color pages, acquisitions and mergers, internal co-operation these are just a few of the happenings that have transformed the entire scenario. Undoubtedly, the newspaper industry is in its full bloom, posing a winwin situation for everyone; newspaper publishers, readers, advertisers, web offset manufacturers, consumable suppliers, etc. Such is the potential of the Indian newspaper industry. What makes some newspaper publishing companies consistently more profitable than others within the same industry? Strategy issues for the newspaper publishing companies, which are closely related to the question, are why newspapers publishing companies differ, how they behave, how they choose their strategies and how they are managed. However, a firm can only posse two basic types of competitive advantage: cost leadership or differentiation (Porter, 1985). Newspaper publishing companies pursuing a cost leadership strategy aim to become the low cost producer of information and communications products in the industry. These firms usually have a broad scope and serve many market segments. They may even operate in related industries, such as broadcast market (Ferguson, 1983) because this breadth of operations is often crucial in achieving cost-advantages. Ownership of two or more newspapers or ownership of broadcast stations and newspapers provides publishing companies opportunities for economies of size in news gathering, in securing advertising, in financing, and in management by lowering average and marginal costs. The costs advantages are greater for chain ownership, for high aggregate circulation, and for homogeneous products (Rosse, 1967; Norton and Norton, 1986). Innovation in the publishing industry is an important source of scale and scope economies. Schumpeter (1934, 1942) argued that innovations give companies temporally monopolies because they have no competitors on the same playing field until a company duplicates or betters the innovations or products. These temporally innovations are essential for the publishing companies because they can protect or increase the market share. Or even better they generate funds to strength their competitive position. For instance, the appearance of free newspapers has had a significant impact on the traditional newspaper market (Picard, 2001). The concept of free newspapers is based on only advertising income and free distribution in and around metropolitan public transportation systems. According to Rosabeth Moss Kanter, the Ernest L. Arbuckle Professor of Business Administration at the Harvard Business School who studies innovations and leadership for 117


change in organizations, one of the greatest irony of the technological changes now disrupting media industries is that the media are often the first to report about new technologies (as news stories) but they never seem to ask how the technology might actually affect or improve the news business (Niemann Reports, 2002). As a result, the media have tended to be slow in developing appropriate and strategic responses. Part of the reason is that journalism and innovation are often treated as two separate enterprises even though one has the potential to add value to the other. She suggests that it is important to foster a culture of organizational curiosity that brings employees together to look at technologies of the future and find ways to integrate them in the news business. She offers several critical lessons on ways the print media industry could become innovative: 1. There is need for the media to internalize a culture of change and innovation including hiring leaders who embrace and encourage innovation. She cites the example of Reuters, the financial news company, as an organization that was most threatened by the internet because, if people could find the information online freely, Reuters business model was doomed. But through a leadership that embraced change, Reuters was able to team up with Yahoo!, in the latter‗s formative days, in a strategic alliance that made both companies big brand names in the USA in a way they hadn‗t been. The lesson then for media companies is: ―Figure out what could hurt you and then figure out how to bring that inside, (Niemann Reports, 2002, pg. 30). 2. Media companies must understand that innovation involves a lot of unscripted experiments without a clear understanding of what the end product or process might look like. Companies that are successful at innovating, simply start moving, often working with multiple partners on multiple projects, but paying attention to customer feedback and improving until they find out what works. 3. Companies that are innovative tend to be structurally flexible and are less territorial because they have created a culture of shared values across all areas. Change becomes organic and the organization simply changes without announcing they are changing. 4. While innovation has centered on technology, there is need to pay attention to the economic angle as well. She advises against straying from a company‗s core business areas especially in response to market whims. The best innovation strategy is one that uses technology to evolve the core business, which is a more secure bet. 5. Innovation and experimentation must not always be measured in terms of financial returns. Experiments offer important learning lessons and ―learning should be a valued output. Other scholars posit that information gathering and trend watching are important skills in responding to transformative change. Media publishers and journalists should therefore learn to think like innovators by developing a knack for trend watching, spotting opportunities and capitalizing on them. They suggest that those in media interested in innovation should develop a habit of looking at trends, searching for solutions to negative trends, coming up with ideas that run against current trends, and watching the competition and doing what they do better (Waitley and Tucker, 1987). Boczkowski offers a user-centered approach to understanding innovation and argues that online journalism has created certain user expectations that innovative print media organizations must strive to address. Using what he calls ―distributed construction, which refers to the process of enabling users to participate in content creation and distribution, he says user participation creates a multiplicity of information flows as well as multiple rationalities. He suggests that a good way for innovative media to enable user participation is by capitalizing on the strengths of online journalism such as its immediacy, multiple representations, multimedia options, flexible delivery platforms, archival access, and 118


nonlinear narratives. He further argues that the internet has created the closest approximation to Habermas idea of the public sphere in which citizens express opinion on public matters. Tremayne et al (2007) argue that the technological changes have produced what they call ―a dynamic journalism content which changes hour-by-hour on newspaper Web sites. These changes include the addition or subtraction of stories, altering headlines, changing or adding photos, and other multimedia elements. According to him, this has consequences for journalists at least in three areas. 1. The age old practice of publishing once a day or weekly has been replaced by a new model that requires publishing on a continuous basis and newsrooms have to find a way to address that. 2. Journalists are expected to exploit the advantages of the new medium through the use of video, audio and animated graphics. 3. The new medium affords users the opportunity for greater activity and involvement and the corresponding ability of newspapers to monitor that activity, harness it, and respond to it. The authors make the interesting observation that innovations in journalism appear to be driven by consumers and not necessarily the media organizations themselves. Other scholars have suggested that media innovation must pay close attention to mobile phones as the likely future of media. The convergence of mobile phones and multimedia now enables information processing through audio, video, text, graphics and animation. As a multimedia tool, the mobile phone is portable, constantly connected, and personal, which has also led to a more individualized news consumption pattern (Westlund, 2008). Some scholars have addressed innovation by looking at the promising capabilities of computational journalism that would equip journalists with better reporting tools. A report from the Center for Media and Democracy at Duke University identifies four target areas for helpful innovation: 1. More efficient data-analysis tools to help reporters discover patterns; 2. Open source software reporting tools to spot anomalies in information; 3. A watchdog role for readers; and 4. More collaborative research with professionals such as social scientists and medical personnel, among others (USA Today, 2009). A new and comprehensive report released by the International News Marketing Association surveyed news media organizations, especially in Europe, Asia and the USA, to find out how they were repositioning themselves in response to what it called ―the technology-driven seismic shift, (Wilkinson, 2010). The report yields several useful and surprising insights on innovation trends as well as challenges in newsrooms around the world: While most of the literature on media and innovation focuses on the urgency of serving audience needs on continually evolving platforms, the connection between innovation and business is not always made. Some newspapers that draw most of their revenue from print advertising have decided to be deliberately slow in embracing online innovations so as not to close the window on newspapers at a time when revenue from online platforms is not enough to sustain their operations. The report also documents instances where innovative thinking has resulted in new and unconventional value propositions. For example, while current trends emphasize the value of the digital content, Minnesota‗s Star Tribune has instead decided that the real value of its products is in its print content. Therefore it will reserve its best journalism of deeply reported stories, beautiful narratives and investigative projects for the print edition where it gets its most advertising value, while reserving its online platform for breaking news and less weighty stories. Newsweek has followed a similar trend by reserving original, provocative, and unique reporting for its print edition. The decisions in both cases were driven largely by 119


the need to find an acceptable model that would address the financial needs of the media outlets and reward their valued audience with quality journalism, even while maintaining some form of web presence. Other news organizations have encountered a problem online . it becomes hard to sell such an amorphous audience to advertisers thus resulting in a loss of revenue. It also dilutes the brand names of such news organizations. Furthermore, while most media organizations that have a website have seen an increase in audience size, some of that audience is brought in by search engines and leaves after a few minutes, again making it hard to target advertising. Norway offers a lesson of innovative thinking through the popular classifieds portal, Finn, built around a model of burrowing into ever deeper but exhaustive advertising sub-categories that give it a presence in every conceivable niche market. The portal is a joint project of several Norwegian media companies who were looking for a reliable way to finance their separate news business. And while such an experiment might appear to undermine the newspapers own individual classifieds businesses, it is a successful experiment that leverages the power of several brand names into one platform to generate over $100 million in revenue and close to a 40% profit margin. It also proves that new media technologies can be a boon to news media through deployment of new and highly focused metrics. The report notes that innovation goes beyond adopting the latest technologies and there is a need to continue searching for sustainable economic models. The innovative differentiating characteristics/attributes of publishing products can be divided into tangible and intangible features. The tangible features are observable differences that make the products or services better, cheaper or faster. For the newspaper publishing company this may include size, design features, material used, new technology that the product can now made of, consistency, speed of delivery, and accessories. The other group of features say something about the customer. The created ―aura‖ of the product is important. The intangible aura of publishing products is one of image, lifestyle, quality and political, occupational, geographical or ethnical orientation. As media organizations strive to respond to today‗s changes, it is important to anticipate and plan for the technological changes of tomorrow which may include more data-driven rather than narrative-based products, non-proprietary products, smaller and smarter gadgets such as mobile phones and e-readers, as well as smart informatics for navigation, search, archiving, targeting, and predictive accuracy. Each of these innovations will have an impact on journalism as a profession and its products and will require an appropriate response from news organizations. Therefore news organizations have no choice but to embrace a culture of innovation for their very own survival and to thrive in the constantly changing information environment. For instance, it is difficult for many newspaper publishers around the world to imitate the image and reputation of specialized newspapers like the Financial Times and Wall Street Journal. These newspapers are highly specialized in economic and financial information. Newspaper publishing companies can achieve differentiation through cost advantage as also innovative strategies. INNOVATION IN INFORMATION TECHNOLOGY: This source may have great potential for publishing companies to achieve economies of scale and scope. The recent information technology developments facilitate an increase in efficient and effective utilization of information over ranges of products, services and customers. Information may allow for scope economies and facilitate competitive advantage to publishing companies that can offer a range of products and services to their customers. The possibility for reusability of 120


information across customers has increased. Furthermore, the information technology developments may help facilitate differentiation of products and services (Chyi and Sylvie, 1998). New technologies such as the internet and online subscription services make it possible to combine old and new media into one product with an additional element that was missing in the earlier markets: interactivity. The integration of activities allows a greater personalization of relationships and interactivity between customers and publisher. The company can offer bundle of services and products into a complete service package for the customer (Wirtz, 2001). Newspaper publishers could offer services such as interactive forum, searchable news archives, online transactions, up-to-the minute information, and audio/video presentations. It is in the increased integration of activities and new technologies that lay the potential competitive advantage of publishing companies. Therefore, publishing interacts with many different fields within the information and communications industries and technologies. Because of this diversification publishing companies may have to redefine their ‗core business‘. INNOVATION IN PRODUCTION: The production process of publishing products often involves high fixed costs. The web offset printing process has enabled newspapers, since the mid-80s, to move from departmentalized, foundry-type operations into integrated, computerized businesses, using printing plates produced by direct exposure from a film negative, offering far better quality and a more compatible photographic-style of printing plate production than was previously achievable. This process has been simplified still further over the past decade, with direct imaging of the printing plate itself, cutting out the film stage. Presses produce newspapers at ever-increasing speeds (86,000 copies per hour for the largest machines). The introduction of new technology into the production process streamlined and speeded the operation and opened doors to a vast increase in added value marketing and publishing activity through numerous editions, special targeted supplements and new titles. INNOVATION IN MARKETING: The next source of potential scale and scope economies is linked to marketing and reputation. It is generally understood that marketing may enlarge the readership of a newspaper .Because marketing expenses involve substantial fixed costs, this implies the existence of economies of scale. Another purpose of marketing is to create a brand image and loyalty of customers. Image and loyalty are related to the notion of ‗reputation‘. A company can build up a reputation with a consistent policy, marketing and highly qualified products and services. Newspaper publishing companies offer products that crucially depend on their reputation and reliability. Furthermore, the companies operate in industries that are characterized by the existence of a demand interdependence process. Newspapers depends on two markets: the reader market and the advertising market. With the intensification of competition within and outside the industry, the newspapers have started designing and implementing various marketing strategies with regard to product, price, distribution, segments and positioning. As marketing itself was of recent origin with newspaper industry in India, most of the marketing strategies were either pioneers or innovations. ‗Rajastan Patrika‘ had a virtual monopoly in Rajasthan which was broken by Madhya Pradesh based ‗Dainik Bhaskar‘ with the help of innovative marketing strategies. innovative direct mailers, introduction of colour pages, advertisements on Zee TV and sponsorship of awards and programmes helped ‗Dainik Bhaskar‘ in this regard. ‘Dainik Bhaskar‘ also overtook ‗Nayi Duniya‘ by starting more editions, colour printing on glazed paper, prominent advertising in the main line english dailies and magazines. In Madhya Pradesh, it adopted the strategy of selling the state first and then selling the newspaper. Even during the days of tension and curfew a team of boys cycled down to remote areas and 121


dropped ‗Dainik Bhaskar‘. Suppliments like Madhurima, Navrang, Rasrang and Swad were published for readers of different age groups. ‗Navabharath‘ started its edition in Navimumbai rather than in Mumbai with the objective of providing a complete newspaper, which was not available in that part. In its business section, a particular focus was given to commodity prices since some of the main commodity markets were in that region. Keeping in mind the Mumbaits passion for doing crosswords, it introduced three crosswords on sports and films. The emergence of Vijaya Karnataka as No. 1 Kannada daily is a case study for aggressive marketing of a newspaper with extensive distribution network and appropriate pricing strategy. In a matter of two years, this newspaper overtook Prajavani which was an established leader. publishing companies need to begin to transform themselves into sustainable companies which rationalize current operations and adapt to changing technologies, markets, methods and competitive strategies (Picard, 2003). The absorption of at least part of the environment by means of mergers and acquisitions is one of the alternatives that publishing companies have if they attempt to reduce uncertainty, increase control over environmental changes, catch-up with new technological developments and trends or reduce their dependency on an existing environment (Hitt, Ireland and Hoskisson, 2002). INNOVATION IN CONTENT AND LAYOUT AND DESIGNING-There is a historical tradition in newspapers that they understand what readers want intuitively, or, they simply don‘t care about what readers want. The change has come and it is driven by customer satisfaction and the publishers are formulating plans to use this new-found audience knowledge to develop editorial products that suits both the consumers (readers) and clients (advertisers). As competition has increased and since it‘s a question of survival most of the Newspaper companies are trying to innovate, by studying their audience members‘ media consumption patterns and crafting editorial strategies to better reach the news and information to consumers. The publishers and editorial team is very much involved to know the consumer‘s preferences for certain types of content and buying habits, special news articles, how to cater the corporate class etc to frame out the strategies. This resulted in making a huge impact on future editorial product development at many media companies. As a part of the strategy invariably includes expanding the media channels from just print to video, audio, Web and mobile – and leaving the door open for any other channels that come along. This includes getting into broadcast medium, Mobile etc. At present the choice is with the consumers and not with publishers in getting the news and information and which media to look for breaking news and latest information‘s. With the advancement of web as a platform for news delivery, breaking news has taken centre stage, since the new channels have a powerful ability to deliver news as it every second. The consumer is responding enthusiastically getting into websites, registering for breaking news alerts sent to their mobiles, and listening and watching breaking news broadcasts. It is quite interesting to note that the consumers with high income group are very much willing to pay for these services. Perhaps the hottest and most debated area of innovation is the area of citizen- contributed journalism and the publishers are very much depending on this stream for new generation and very much promoting them. Some of the most popular areas of citizen journalism are blogs, breaking news contributions, and photographs. The new change is very much helping them the publishers to exploit these changes in media interaction, to build loyalty, interest and service delivery.

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THEORITICAL FRAMEWORK UNDERLYING THE SUCCESS OF THE NEWSPAPER INDUSTRY Two theoretical models provide the foundation for understanding the attitudes and responses of media workers and media organizations to the technological innovations currently impacting the news business. These theories are the diffusion of innovations theory and the disruptive technology theory. In his seminal book, Diffusion of Innovations (1964), Everett Rogers defined ―diffusion of innovation‖ as "the process by which an innovation is communicated through certain channels over time among the members of a social system. Rogers synthesized 508 diffusion studies and developed a theory for the adoption of innovations among individuals and organizations. He identified five stages in the innovation process that organizations undergo: agenda-setting, matching, redefining/restructuring, clarifying and routinizing. (Lawson-Borders, in a subsequent study, developed a rubric for the media industry‗s adoption of new media technologies based on Rogers five stages: the first stage—agenda setting—was when media companies recognized the implications of the internet and the growth of personal computers; the second stage—matching—was the resultant creation of online divisions to exploit the potential of the internet; the third stage— redefining/restructuring—was the dot.com bust when media organizations retrenched and reduced online resources; and the fourth stage—clarifying—was the increasing focus on convergence. Routinizing refers to the mainstreaming of the innovation when it becomes a part of the organization‗s structure (Lawson-Borders, 2003). Closely related to this theoretical sketch is Clayton Christensen‗s Disruptive Innovation theory that seeks to explain organization‗s responses to technology. In his 1995 article, Disruptive Technologies: Catching the Wave, which he co-wrote with Joseph Bower, he argued that a disruptive technology can come to dominate a market by filling a role that the old technology wasn‗t filling or through performance improvements until eventually replacing old market incumbents. In subsequent writings, Christensen replaced the term ―disruptive technology‖ with ―disruptive innovation arguing that few technologies are intrinsically disruptive and that it is the business model that the technology enables that eventually creates a disruptive effect .For example, early desktop publishing systems could not match the performance and capabilities of high end computing systems but nevertheless catered to the specific needs of low-end consumers and eventually changed the entry cost to the publishing world and disrupted the markets for established players that were slow to respond to the emerging technology. Understanding the gradual diffusion of innovations and a historical perspective on disruptive technologies can help media organizations develop a well-grounded view that can guide them in developing workable models and templates for adopting innovations.

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Model 1. Source- Clayton Christensen The newspaper industry is going through a "disruptive" change. In the media industry, blogs, Google, eBay, Monster.com, and freely distributed commuter papers each fit the pattern of disruptive innovation. Each emerging competitor lacks something that is core to most newspaper companies' value proposition Some can't match a newspaper's broad distribution network. Others can't compete with the newspaper's detailed reporting capability or local reach. All, however, compete along dimensions of performance that are different than the traditional metrics emphasized in the print newspaper business. Three barriers typically make it difficult for marketing incumbents to get disruption right: 1.Fail to spot the disruptive change early enough: Disruptive change tends to start innocently at a market's fringes. Market leaders tend to dismiss early disruptive developments because they just don't affect their core business. 2.Fail to allocate sufficient resources towards disruptive offerings: Disruptive innovations often have lower performance and lower prices than established offerings. Companies find it hard to prioritize spending time and money on disruption when they have seemingly attractive opportunities in their core business. 3.Force the disruptive initiative into the existing business model and product concept. Fortunately the Indian newspapers were fast enough to realize the urgency of the situation and adopt the various innovative steps required for the rejuvenation of the newspaper industry.

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THE TIMES OF INDIA CASE STUDY The times of India case study discusses the print media can embrace innovation by innovative marketing strategies and developing digital tools that are both engaging and valuable to their audiences and re-orient themselves to take advantage of the seismic shifts in the information world. The Times of India came into being on November 3, 1838 and was known as "The Bombay Times and Journal of Commerce". Initially the paper served only the British residents western India. Published twice a week on every Saturday and Wednesday, The Bombay Times and Journal of Commerce contained news from Europe, America and and was circulated between India and Europe via regular steamships. From the year 1850 the daily editions of the paper were started and the newspaper got name in 1861. In the 19th century, the company employed over 800 people and had a good circulation in India and Europe. The Times of India was originally British-owned and controlled. Jehu was its last British editor, who left the editorship in 1950. After India's Independence in 1947, the ownership of the paper was passed on to the industrial family of and later it was over by Sahu Shanti Prasad Jain of the Sahu Jain group from Bijnore of Uttar Pradesh. TOI Circulation The newspaper has the widest circulation among all English-language broadsheets with about 2.6 million daily paid copies. In the year 2005, the newspaper reported that daily circulation of more than 2.4 million) it was certified by the Audit Bureau of Circulations as the world's largest selling English broadsheet newspaper. INNOVATION IN MARKETING STRATEGIESpan India presence of the brand through its various sister publications and supplements targeting various age groups TOI Sister Publications Economic Times - A Financial daily Navhbharat Times - Hindi Daily Newspaper Maharashtra Times - Marathi Daily Newspaper Mumbai Mirror - Morning newspaper from Mumbai Femina - Women's magazine published in association with BBC Filmfare - English Film Magazine published in association with BBC TOI Supplements The Times of India comes with several city-specific supplements, such as Delhi Times, Bombay Times, Lucknow Times, Bangalore Times etc. These city edition consists of entertainment news, gossips, page3 party news, photographs and other lifestyle related happenings in metros and big cities. Other major supplements of TOI include: Times Wellness : Carries health related news and also provides solution of your grievances by experts. Education Times : Education Times is weekly supplement focussed towards students and acts as a counselor and advisor for student community. Times Ascent : A weekly supplement Times Ascent seeks to introduce more understanding of Human Resources and corporate life related stories. Also advertisements of various kinds of jobs in India and abroad. Times Drive : Times drive is a supplement related to auto-mobiles and latest development in the industry. 125


Times Property : The weekly supplement has real estate and property news. Times Life : Times life comes once in a week carrying news about life of personalities and famous people. Times Classifieds : Carries advertisements regarding jobs, buy and sell of items etc. Times Matrimonial : Feature marriage advertisement of boys and girls looking for match. Rouge : A weekly supplement Times en Vogue : A weekly supplement TOI has its presence in Electronic Media which helps it further to extend its presence and associate it with its mother brandA 24 hour English news channel, TIMES NOW has been started couple of years back by a joint venture between Reuters and the Times Group. The company also owns TV channel Zoom and a radio channel - Radio Mirchi. One of India's leading radio channel - Radio Mirchi is available in Delhi, Mumbai and other important cities of India. Times Group in Merchandise Planet M: Times Retail with Planet M outlets offer merchandise from music to designer watches, books and cafes. Times Group Events The Times group organizes a number of fairs and exhibitions time-to-time all over the country. Times Utsav Consumer fairs, Times Ascent Job Fairs and Education Events fair and exhibitions organized by the Times group. The Times Group sponsors Miss World and Miss Universe events and played host to a galaxy of stars at the Filmfare The group also organizes The Economic Times Awards for Corporate Excellence or the Brand Equity Quiz. Times Group in Social Services The philanthropic arm of the Times group, the Times Foundation, offers Non Government Organizations , institutions & others organizations all over India, a good platform converge and address the country's developmental needs. Renowned People Associated with TOI whose columns add an aura of seriousness to the content. Sahu Shanti Prasad Jain Indu Jain, chairperson Jug Suraiya (Associate editor, Columnist, Jugular Vein, cartoonist, Dubyaman II) Shashi Tharoor - Edit page Swaminathan Aiyar (Columnist and "Swaminomics") R. K. Laxman ("You Said It" editorial cartoon, featuring the famous Common Man) Popular Columnist have always been associated with TOI, so as to give it credibility. Jug Suraiya Swaminathan Aiyar Rashmee Roshan Lal Bachi Karkaria Shashi Tharoor Shobha De Tarun Vijaya Gurcharan Das Chidanand Rajghatta The group even has important tie ups with international newspapers. On January 22nd 2004, toi entered Dow Jones & Co. to publish the Wall Street Journal for India. The Journal 126


would be published 5 days a week, with Dow Jones owning 26% – the maximum allowed by foreign ownership laws – and the Times of India, owning 74% of the new venture. The content would focus on Indian readers and tap into the global resources of the Wall Street Journal. Additionally, the editor named was Suman Dubey, a nationally recognized Indian journalist.This marked a major accomplishment for the both the Times of India and the country as a whole. The presence of a customized Wall Street Journal for India validated its growth and economic importance worldwide. INNOVATION IN INFORMATION TECHNOLOGYTOI has its presence also in Internet Times Group offers Internet services worldwide that covers everything from art to airlines, knowledge events to telecom and integrated marketing,. The site is visited by users from India and other countries of the world. Websites of Times group are : http://www.timesofindia.com (The Times of India) http://www.economictimes.com (Economic Times) http://www.indiatimes.com (Indiatimes) http://www.epaper.timesofindia.com (TOI e Paper) http://www.syndication.indiatimes.com (Times Syndication Service) http://www.educationtimes.com (Education Times – A comprehensive education portal) http://www.timesascent.in (Times Ascent – A HR community portal) http://www.timesjobs.com (Times Jobs.com – A job portal) http://www.simplymarry.com (Simply Marry.com – A matrimonial portal) http://www.magicbricks.com (Margi Bricks – A real estate portal) http://www.radiomirchi.com Not only this it is very much active in social networking sites asking for opinion and activating citizen journalism. INNOVATION IN CONTENT, AND PAGE DESIGNINGThe group introduced and successfully implemented various layout and designing strategies with regard to the contents, layout and packaging of the newspaper. Recruitment advertisements in colour, tender advertisements under different segments like catering, power, stationery, etc. times classifieds dot com in 23 categories, introduction of color printing in the Bangalore edition are some of these strategies. In addition, innovative supplements is also another attraction. Total of eleven supplements are brought out per week in case of Bangalore edition. They include Bangalore Times, . Classifieds, Men and Women, Education Times, Ascent and Financial Times. It brought out a special supplement called IT Ascent in order to cope up with the IT boom. Many booklet presentations were brought out from time to time keeping pace with certain events and developments. Giving importance to local news and events is another strategy followed by this group. Happenings in the respective cities, weather conditions, entertainment, grievances, sports and other events are covered prominently. A supplement exclusively catering to local happenings is also brought out. For example Bangalore Times is brought on six days of the week and this supplement caters only to happenings in Bangalore. Even the language has been kept at the basic level , avoiding any flowery decorations or even jargons difficult to decipher for common people. The English it writes is desi Indian English making it more comfortable even for the novices. INNOVATION IN PRICINGIn the price front also price paid by the readers of newspaper was considered insignificant in Indian conditions until Times of India group brought down the prices. This opened a new era in the marketing strategies of newspapers in India. Times of India resorted to an invitation 127


price of Rs 1.50 and Rs 1 in important locations of India like New Delhi and Bangalore. This strategy took the rivals by surprise and compelled them to follow the suit. The circulation of Times of India not only increased but also surpassed that of the main rivals like Hindustan Times in New Delhi and Deccan Herald in Bangalore.

INNOVATION IN PROMOTIONThe group resorted to various promotion strategies, which are innovative in nature. In fact, these strategies were eye openers to many as people thought that newspapers are to promote others products but not their own. Times of India group distributed free samples in select areas, offered special discounts for the tickets of select programmes, organized various contests and events like public speaking etc.,and started ‗Newspaper in Education‘ programme in various schools. Regular advertisements are given on hoardings. It launched a massive campaign called LEAD INDIA to build its brand image which they want to be synonymous with the term ‗India‘. Times of India Group introduced a slimmer but not lighter, livelier but not frivolous newspaper in the recent months. This slimmer, easy to handle, sleeker and contemporary newspaper started a new trend in newspaper industry of India. Jain and his team have made the Times a destination, the must-read paper to begin the morning, not only for the current national, world, and business events, but also for the society gossip. And that combination sells papers. Jain noted: Today's readers don't just expect news about politics or society or business issues anymore. They also expect an editorial line on contemporary issues like fashion, entertainment, and lifestyle. So instead of sticking to the traditional age-old methods of reporting on these categories, why not get the advertiser to give the news to you and pay for it as well! It's a win-win – the reader benefits and so does the advertiser. SUMMARYThe Pew Research Centres latest ―The State of the News Media (2011)‖ report says extremedependence on advertisements made American newspapers an easy target for the internet.Readership, circulation and revenues have gone into free fall in the US market as readers shift to the internet. While this is true for large parts of Western Europe too, the rate of revenue fall in the US is sharper than in Europe. This is because of various factors, says the report. The biggest is the disaggregation of news by the internet. Since people go to specialised websites for news on, say, cars or technology, that advertising no longer comes to newspapers, which earlier used it to cross-subsidize plain news. The report also states that globally newspapers earn 57 per cent of their revenues from advertising and 43 per cent from other sources such as subscription, syndication and so on. In the US, the proportion is 73:27 in favor of advertising. In India, it is 80:20. Theoretically, therefore, the Indian market is as susceptible as the US market. Nevertheless there is still a silver lining for the print industry in India . India, like other developing markets, is on a growth trajectory. As the economy, literacy and population grow, the circulation and readership of newspapers are growing. At more than 156 million copies sold every day (against 46 million in the US), India is one of the largest and fastest-growing newspaper markets in the world by volume. There are 330 million newspaper readers in India. Thus India, Egypt and Lebanon were the only three countries that saw a rise in newspaper advertising revenues from 2008 to 2009, says the World Press Trends Report for 2010. 128


Newspapers in India have phenomenal aspirational value, especially in small towns and non metros, from where the maximum growth in newspaper readership and circulation is coming. The biggest difference between India and the US is net penetration — at 83 million surfers, we are way behind the 239 million American figure. Then there are the infrastructure constraints — electricity, lack of language content and poor PC penetration. But the advantages outnumber the disadvantages when it comes to innovation. 1. Indian newspaper groups are leaner and more productive. Their fixed costs (of content and people) are spread over a larger number of copies sold. 2. It is the sheer energy of Indian newspaper groups, There are reader workshops, house-to-house-surveys of readers, special campaigns on local issues and so on. 3. On the advertising side, workshops are organized for local advertisers, dealers and others to educate them on the benefits of advertising. In fact, most newspaper groups actually do the creative bit for small, local advertisers. In most international conferences, Indian newspaper groups inevitably win awards for innovation. Thus aptly said by―Innovation believes in the future of newspapers, but the newspapers of the future will be very different, better and more profitable than ever if they embrace change and innovation without losing the core and soul of our business: journalism.‖ Juan Antonio Gine REFERENCESAlbarran, A. (1996). Media Economics: Understanding Markets, Industries and Concepts. Ames: Besanko, D., D. Dranove, and M. Shankley. (1996). Economics of Strategy. New York: John Wiley.Iowa State University Press. Boczkowski, P. (2004) Digitizing the News: Innovation in Online Newspapers. Cambridge, Mass.: MIT Press Bratich, J. (2004) Trust no one [On the Internet], Television and New Media, Vol. 5 No. Campaign (2010) ―How technology can herald a new lease of life for print Campaign March 5, 2010: p.14. London: Haymarket Business Publications Carroll, G.R. (1995). ‗Newspaper Publishers,‘ in Carroll G.R. and M.T. Hannan (ed.). Organizations in Industry: Strategy, Structure and Selection.. New York: Oxford University Press. Chyi, H.I. and G. Sylvie. (2000). ‗Online Newspapers in the US – Perceptions of Markets, Products, Revenue and Competition,‘ International Journal of Media Management, 2 (2), pp. 6977. Dahlgren, P (1996) ―Media Logic in Cyberspace: Repositioning Journalism and its Publics, Javnots/The Public 3:(3): 59-77 Ferguson, J.M. (1983). ‗Daily Newspaper Advertising Rates, Local Media Cross-Ownership. FICCI-PWC Media report 2010 Hafstrand, H. (2002). ‗Competitive Advantage in the Magazine Publishing Business: a Resourcebased Perspective Hitt, M.A., R.D. Ireland and R.E. Hoskisson. (2002). Strategic Management: Competitiveness and Globalization. Cincinnatti, Ohio: South-Western College Publishing. Innovations in Marketing Strategies of News Paper Industry in India- A Case Study of Times of India Group. M. K. Sridhar and A. R. Sainath, Management and Labour Studies, 2003 28: 241. Pg 243-244. Kranenburg, H.L. van, F.C. Palm and G.A. Pfann. (2002), ‗Exit and Survival in a Concentrating Industry: the Case of Daily Newspapers in the Netherlands,‘ Review of Industrial Organization, 21, pp. 283-303

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Lintas Media Guide 2008 Model 1.http://www.claytonchristensen.com/disruptive_innovation.html Newspaper Chains, and Media Competition,‘ Journal of Law and Economics, 26, pp. 625-654. Nip, Joyce (2006) ‗Exploring the Second Phase of Public Journalism, Journalism Studies,212236 Norton S.W. and W. Norton Jr. (1986). ‗Economies of Scale and the New Technology of Daily Newspapers: a Survivor Analysis,‘ Quarterly Review of Economics and Business, 26, pp. 66-83 Picard, R.G. (2003). ‗Cash Cows or Entrecôte: Publishing Companies and Disruptive Technologies,‘ Trends in Communication 11(2), pp. 127-136. Porter, M.E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. Picard, R.G. (2001), ‗Strategic Responses to Free Distribution Daily Newspapers,‘ International Journal of Media Management, 2(3), pp.167-172. Pew Project for Excellence in Journalism (2010) ―The State of the News Media, URL (consulted Oct. 2010 Rosse, J.N. (1967). ‗Daily Newspapers, Monopolistic Competition, and Economies of Scale,‘ American Economic Review, 57, pp. 555-577 Rosenberry, J. (2005). ―Few Papers Use Online Techniques to Improve Public Communication, Newspaper Research Journal, 26 (4): 61-73. Rogers, E.M (1964) Diffusion of Technologies. NY: The Free Press. Schultz, T. (1999) ―Interactive Options in online journalism: A content analysis of 100 US newspapers, Journal of Computer Mediated Communication. 5(1) URL (consulted Oct. 2010): http://jcmc.indiana.edu/vol5/issue1/schultz.html Shirky, C. (2008). Here comes everybody: The power of organizing without organizations. New York: Penguin Press Schumpeter, J.A. (1942). Capitalism, Socialism and Democracy. New York, N.Y. : Harper and Row. Schumpeter, J.A. (1934). The Theory of Economic Development. Cambridge Mass: Harvard University Press. Tremayne, Mark., Amy Schmitz Weiss, and Rosental Calmon Alves (2007). ―From Product to Service: The Diffusion of Dynamic Content in Online Newspapers, Journalism & Mass Communication Quarterly 84 (4): 825-839. USA Today (2009). ―Ways to Rescue ―Watchdog Media, Farmingdale 138, (2775) p 12-14. Westlund, O., (2008). ―From Mobile Phone to Mobile Device: News Consumption on the Go, Canadian Journal of Communication. Toronto: 2008, 33, (3): 443-463 Wilkinson, E.J. (2010) News media Outlook 2010: Last Minutes of Danger, Last Minutes of Opportunity. Dallas: INMA Wirtz, B.W. (2001). ‘Reconfiguration of Value Chains in Converging Media and Communications Markets,‘ Long Range Planning, 34, pp. 489-506 Waitley, D., and Tucker, R.(1987) "How to Think Like an Innovator," Futurist 21, no. 2: 9-15: WAN Report: World Press Trends 2008 Wirtz, B.W. (2001). ‘Reconfiguration of Value Chains in Converging Media and Communications Markets,‘ Long Range Planning, 34, pp. 489-506. Zamith, F. (2009). A methodological proposal to analyze the news websites use of the potentialities of the Internet. Paper presented at the 9th International Symposium on Online Journalism, Austin, TX. April, 5, 2009.

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A STUDY ON INFLUENCE OF UTILITARIAN AND HEDONIC SHOPPING VALUES ON PERCEIVED BENEFITS AND RISKS IN ONLINE SHOPPING PATEL VIPULKUMAR BALDEVBHAI*; PRAJAPATI MAULIK CHANDRAKANT**; PATEL KUNDAN MAHENDRABHAI***

* Assistant Professor V.M. Patel College of Management Studies Ganpat University Kherva Gujarat India *** Assistant Professor V.M. Patel College of Management Studies Ganpat University Kherva Gujarat India *** Assistant Professor V.M. Patel College of Management Studies Ganpat University Kherva Gujarat India ______________________________________________________________________________ ABSTRACT Online business success depends upon attraction of wider group of customers including students. In order to attract them, it is decisive to stuff how online shopping orientation influence online shoppers perceived benefit and risk. An individual’s overall perceived shopping value has two dimensions – utilitarian and hedonic. Utilitarian shopping value relates to the functional aspects of the shopping context. Hedonic shopping value is derived from the perceived fun or playfulness of the shopping. An individual also assumes some benefits and risks in any shopping context. The online shopping tendency is increasing rapidly among buyers across the world, which is the focus of this study. In this study, 173 samples had been drawn randomly. Collected data was analyzed with Regression Analysis. This study investigates how the individual buyer’s perceived benefits and risks in online shopping are influenced by his or her perceived utilitarian or hedonic shopping values. KEYWORDS: hedonic shopping value, perceived benefits in online shopping, perceived risks in online shopping, online shopping, utilitarian shopping value. ______________________________________________________________________________ INTRODUCTION Traditional research in the field of consumer behavior have been started by drawing concepts from the field of cognitive psychology and the concepts of utilitarian shopping value, which came from the research conducted mainly in the field of micro-economics and classical decision theory (Holbrook and Hirschman, 1982). The utilitarian perspective assumes the buyer as a logical problem solver. However, group of researchers have analyzed shopping from a different 131


perspective. They focused on the emotional and irrational aspects of individual buying behavior. Ernest Dichter (1947) pioneered this research tradition, which is known as motivation research (Sheth, 1988; pp.109-126). The basic assumption underlying this research tradition is that consumers made product or brand choices for emotional reasons deeply rooted in their psychology. This motivation research stream heavily relied on "Freudian psychology" (Sigmund, 1953). This stream of research was strongly criticized by the scholars who advocated rational buying behavior models. During the decades of 60s and 70s, research in emotional and irrational buying was ignored to a certain extent (Sheth , 1988; pp.109-126). Again, this research tradition emerged in the decade of 80s, as Zuckerman invented the scale to measure individual sensation seeking in 1979. An individual’s overall attitude towards any brand has distinct hedonic and utilitarian dimensions (Batra & Ahtola, 1990). However, they have stated that the relative dominance of either of the dimensions varies across brands. Today, one can find two basic formats of shopping: store format and non-store format. Nowadays, more and more shoppers are purchasing online in order to save time and maximize their convenience instead of physically visiting a store (Dholakia , 2002). The internet has become a significant means for carrying out commercial transactions. The online retail market in India may grow to 70 billion rupees ($1.7 billion) by 2015 from 20 billion rupees in 2011 as internet access improves by the Associated Chambers of Commerce and Industry of India. The size of e-commerce market in India is worth around Rs 9,500 crore, out of which the pure play online shopping market is worth Rs 1,300 crore. While online shopping globally is growing at around 8-10 percent, in India the growth rate is upwards of 30 percent. (Economic Times, (India), Dec 18, 2009). According to a forecast by Forrester Currently, total online population in India ranges anywhere between 50 million to 80 million users. The objective of the present study is to investigate the impact of these individual shopping values on an individual’s perceived benefits and risks in the online shopping context. LITERATURE REVIEW UTILITARIAN AND HEDONIC SHOPPING VALUES Utilitarian buying motives include convenience-seeking, variety seeking, searching for quality of merchandise, and reasonable price rate, etc. On the other hand, hedonic buying motives are related to emotional needs of individuals for enjoyable and interesting shopping experiences (Bhatnagar & Ghosh, 2004). Holbrook & Hirschman (1982a) have stated that in traditional information processing buying model the buyer is a rational decision maker wanting to maximize utility by focusing on tangible benefits of the product. According to this model, purchasing has been viewed as a problem solving activity in which consumer moves through a series of logical steps. Hedonic consumption involves emotional arousal taking place while purchasing or consuming (Holbrook & Hirschman, 1982 b). In hedonic consumption, different types of emotional feelings, which are both physiological and psychological, play major roles. Hopkinson & Pujari (1999) have explained how hedonic consumption takes place in a high-involvement situation, where an individual is deeply involved in experiencing a consumption event. This research points out that the level of hedonism varies across products or brands depends on the changing levels of involvement. In high- involvement consumption situations, the level of hedonism is expected to be higher. A little research has been conducted to explore this aspect of 132


consumption. The traditional buying decision model utilitarian) and modern experiential model (hedonic) differs in four substantive areas: “mental constructs, product classes, product usage and individual differences” (Holbrook and Hirschman, 1982a). In several buying instances, emotional desires dominate the utilitarian motives. The intensity of emotive arousal largely depends on the capacity and desire for spending emotional resources on the part of the buyer, and this capacity and desire vary within one consumer over time. Batra and Ahtola (1990) have examined the composition of the overall consumer attitude towards four different brands: Pepsi, Listerine, Comet Cleanser and Cadillac. In all the cases, a two-factor structure emerged: utilitarian and hedonic. This finding reinforces the fact that any brand has both utilitarian and hedonic attributes, and their relative proportions vary across brands. Holbrook and Hirschman (1982 a) have stated that any product, however mundane it might be, carries some symbolic meanings. The above findings suggest that in the cases of most of the products or brands, the total consumer attitude is composed of at least two dimensions, utilitarian and hedonic. Online shopping is a mode of shopping where both utilitarianism and hedonism are likely to persist. PERCEIVED BENEFITS IN ONLINE SHOPPING Consumers make online purchases for both convenience and enjoyment (Childers, 2001, pp. 421-422). Forsythe (2006) developed a scale to measure perceived benefits and risks in online shopping. Their study shows that convenience, ease of shopping, and product selection (which are utilitarian benefits) account for larger variance explained in total perceived benefits in online shopping, compared to the perceived hedonic benefit while shopping online. Hence, it can be inferred that an individual with higher utilitarian shopping motive is likely to perceive greater benefits in online shopping compared to another individual having lower utilitarian shopping motives. The hedonic perspective includes emotive arousals accompanying a consumption act (Holbrook & Hirschman, 1982b). The authors have stated that hedonic arousal mainly takes place when the consumer is using the product. "Dynamic interaction between product and consumer" (Holbrook & Hirschman, 1982b, p 97) is an especially important requisite for hedonic arousal to take place. Apart from a few exceptional cases, like, online movie watching, game playing, hearing songs, etc., an individual is unable to interact directly with a product online. While choosing any brand online for purchasing, the individual can see only those attributes of a brand which can be expressed through the picture on the screen. The consumer cannot touch, smell, or taste a product online (Childers, 2001, pp. 421-422). Consumers place an order online, but actual usage of the product takes place after it is delivered. Looking from this point of view, the scope of hedonic arousal is limited in case of online shopping, and the individual with high hedonic shopping value is expected to perceive a lesser benefit in online shopping. A few researchers have also stated that hedonic motives play positive roles in shaping the attitude towards online shopping. For example, Childers, (2001) have concluded that both functional and hedonic motives are important predictors of online shopping attitude. Parsons (2002) found that some social motives are applicable for online shopping, but these types of conclusion are relatively few in number. The majority of researcher’s state that a buyer’s utilitarian motives dominate non-store shopping as it provides convenience by the way of saving time and effort (Forsythe, 2006). The hedonic shopping motive is dominant in the case of store-shopping where buyers can directly interact with the sales person or can feel the products on the spot. 133


PERCEIVED RISKS IN ONLINE SHOPPING There are broadly three types of perceived risks in online shopping: financial risk, product risk and convenience risk (Forsythe, 2006). Financial risk is the perceived net loss of money and consumers’ perceived insecurity (like, the feeling of insecurity regarding online credit card usage). Product risk is associated with the expected future non- performance of the product (as in case of online buying, the consumers are unable to directly examine the product while making choices) or perceived delay in actual delivery. Convenience risk includes buyers’ perceived inconvenience while placing order online, like, technological complications faced. Bhatnagar and Ghosh (2004) have stated that the product performance risks and financial risks are very much associated with any online shopping. A potential financial risk associated with online buying is the consumer’s sense of insecurity regarding online credit card usage, which has been found to be a potential obstacle to online shopping (Maignan & Lukas, 1997). Therefore, the prior literature shows that all these major types of perceived risks in online shopping (financial risk, product risk, convenience risk) are primarily utilitarian in nature or related to time and cost. So, it is likely that an individual with higher utilitarian shopping motive is likely to perceive greater risk in online shopping compared to another individual with lower utilitarian shopping motive. According to Holbrook and Hirschman (1982b), in order for the hedonic arousal to be present in any shopping context, dynamic interaction between the buyer and the product should be present. According to Alba et al. (1997), the departmental and specialty stores give the buyers the opportunity to touch and feel the merchandise and to obtain information directly from sales persons. On the other hand, the online shopping environment doesn’t offer the buyer the opportunity to touch, feel, or smell the product while buying (Childers, 2001). Hence, it is likely that an individual having a high hedonic shopping motive will tend to prefer more direct interaction and go for store shopping. By directly interacting with the merchandise, he/she will be able to reduce his/her perceived risks in shopping. Therefore, in the online shopping context, the individual’s perceived risk is likely to be high if his/her hedonic shopping motive is high. NEED OF THE STUDY Limited research has been conducted investigating the impact of an individual’s perceived shopping values on his/her perceived benefits and risks in online shopping. Prior literature postulates that in any shopping context, both hedonic and utilitarian shopping values coexist (Batra & Ahtola, 1991; Babin, 1994). Therefore, it is of prime importance to investigate how the perceived shopping values influence the perceived benefits and risks in online shopping. OBJECTIVES OF THE STUDY To study the influence of perceived benefit on utilitarian value in online shopping To study the influence of perceived benefit on hedonic value in online shopping To study the influence of perceived risk on utilitarian value in online shopping To study the influence of perceived risk on hedonic value in online shopping To study the demographic characteristics of online shoppers in the study 134


RESEARCH METHODOLOGY The present study collected relevant primary data with the help of structured questionnaire. The instrument was divided into two main sections, first was related demographic information of the respondents and second is related to factors indicating value of online shopping. Statements in the second section represented each groups of items measuring a particular dimension. Since university students have been found to be frequent users of technology and likely to buy products online and actively participate in online purchasing, as a result, students were chosen as the target sample. In addition, today’s university students represent a significant part of the online buying consumers and a long-term potential market (Bruin and Lawrence, 2000). A quantitative study, involving the administration of a survey was conducted in order to empirically validate the influence of utilitarian and hedonic value on perceived benefit and risk in online shopping. Likert five point scales ranging from “strongly disagree” to “strongly agree” were used as a basis of questions. Respondents were asked to give their perception of the factors on a 5–point Likert scale (1= Strongly Disagree, 2=disagree, 3=Neutral, 4=Agree and 5= Strongly Agree) and a total of 173 useable surveys were collected. The data were analyzed by using SPSS 16.0 software. As per the requirements of the study reliability test conducted and only those dimensions has been used for further analysis which having Cronbach’s alpha above 0.600. The appropriate sample size for this study is related to the statistical tool being utilized for data analysis. A self administered questionnaire was distributed to 200 students randomly in the selected faculties and institutes of Gujarat State. Nature of such activities is not likely to vary across different buyers. All the selected respondents were enrolled in their respective faculties or institutes doing broad range of courses. Among 200 questionnaires that were distributed, approximately 186 were returned and only 173 fully answered questionnaires from the respondents were utilized. STATISTICAL TOOLS EMPLOYED The collected data was processed and analyzed in accordance with the objectives and requirement of the study. Principal component factor analysis with varimax rotation has been done to test the discriminate validity of the four constructs. In order to test the above hypothesized relationships, the multiple regression technique has been used. The coefficient alpha values have been computed for examining the reliability of the constructs in Indian context. Multiple regression analysis has been done to investigate the linear relationships hypothesized between the constructs. MEASUREMENT ITEMS Perceived benefits in online shopping have been measured using 12 items taken from the scale developed by Forsythe et al. (2006). Perceived risks in online shopping have been measured using 5 items taken from the scale developed by Forsythe et al. (2006). Eight items to measure 135


hedonic and four items to measure utilitarian shopping values have been adopted from the scale developed by Babin et al. (1994).

HYPOTHESES FORMULATION Based on the above literature review, the following hypotheses were formulated: H1: Consumers’ perceived utilitarian shopping value has significant positive impact perceived benefits in online shopping. H2: Consumers’ perceived hedonic shopping value has significant negative impact perceived benefits in online shopping. H3: Consumers’ perceived utilitarian shopping value has significant positive impact perceived risks in online shopping. H4: Consumers’ perceived hedonic shopping value has significant positive impact perceived risks in online shopping.

on their on their on their on their

The following theoretical framework is developed based on the above hypotheses. In the framework, arrow flows from predictor construct to dependent construct. Positive and negative signs denote positive and negative relationship respectively. A survey has been conducted to test the framework empirically. Hedonic Shopping Value

-

Perceived Benefit

+ + Utilitaria n Shopping Value

Perceived Risk

+

DEMOGRAPHIC PROFILE OF RESPONDENTS The respondents’ profile was categorized into groups namely; gender, age and education level. Table 1 illustrates this pattern. Frequency distribution profile of respondents showed that 51.4% of the respondents were male while 48.6% of the remaining respondents were female. The majority of the respondents (57.8%) fall in the age range between 21 to 25 years of age and approximately 2.3% were above 25 years old. Population studied comprised Graduate and Post Graduate students with frequency distributions of 83.2% and 15% respectively.

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Table 1 Demographic Profile of Students Demographic Variable Frequency Gender Male 89 Female 84 Age 18-20 69 21-25 100 More than 25 4 Education Graduate 144 Post Graduate 26 Other 3 Internet use Yes 171 No 2 Place of internet use No Purchase 2 Home 145 Office 14 Cafe 3 Others 9

Percentage 51.4 48.6 39.9 57.8 2.3 83.2 15.0 1.7 98.8 1.2 1.2 83.8 8.1 1.7 5.2

(Source: Primary survey) RESULTS & DISCUSSION In order to prove the internal reliability of the model used, the author has performed Cronbach’s Alpha Test of Reliability. Applying this test specified whether the items pertaining to each dimension are internally consistent and whether they can be used to measure the same construct or dimension of study of influence. Study consider 0.600 acceptable (Garson, 2002; Kenova and Jonasson 2006). As shown in Table 2, here those dimensions are considered which have Cronbach’s Alpha 0.600 or above. Construct BENEFIT RISK UTILITARIAN HEDONIC

Table 2 Composite Reliability Composite Reliability (Cronbach’s Alpha) 0.667 0.735 0.695 0.696

No. of Items 12 5 4 8 (Source: Primary survey)

The Kaiser-Meyer-Olkin measure of sampling adequacy tests whether the partial correlations among variables are small. High values (close to 1.0) generally indicate that a factor analyses 137


may be useful with the data. If the value is less than 0.50, the results of the factor analysis probably won’t be very useful. Bartlett’s test of sphericity tests the hypothesis that correlation matrix is an identity matrix, which would indicate that variables are unrelated and therefore unsuitable for structure detection. Small values (less than 0.05) of the significance level indicate that a factor analysis may be useful with data. Table 3 indicates that in the present test the Kaiser-Meyer-Olkin (KMO) measure was 0.751. Bartlett’s sphericity test indicating Chi-Square = 1141.787, df 276 with a significance of 0.000. Table 3 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig.

0.751 1141.787 276 0.000

(Source: Primary survey) KMO Measure of Sampling Adequacy test is significant and Bartlett’s Test of Sphericity also found significant (approx. Chi-square = 1141.787, df = 276, Significance = 0.000). Table 3 indicates that the data set was fit to perform further study.

Table 4 Data on loading Construct RISK HEDONIC UTILITARIAN BENEFIT Indicator Loading Indicator Loading Indicator Loading Indicator Loading BE1 0.848 RK1 0.792 HE1 0.733 UT1 0.787 RK2 BE2 0.844 0.694 HE2 0.676 UT2 0.646 RK3 BE3 0.820 0.680 HE3 0.668 UT3 0.620 BE4 0.802 RK4 0.667 HE4 0.636 UT4 0.581 RK5 BE5 0.799 0.520 HE5 0.597 BE6 0.695 HE6 0.589 BE7 0.676 HE7 0.564 BE8 0.662 HE8 0.534 BE9 0.651 BE10 0.588 BE11 0.549 BE12 0.532 (Source: Primary survey)

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RESULT A total of 32 items were in the questionnaire. Principal component factor analysis with varimax rotation has been done to examine the discriminate validity of the constructs. Only factors with an eigen value 1 or greater than that were retained for rotation. The set criteria were to retain the items with loading greater than or equal to 0.5. The rotated component matrix revealed four factors with eigen values greater than 1. All the items loaded highly (> 0.5) on their respective latent constructs on which they were supposed to load. The four factors were clearly interpretable as perceived risks in online shopping, perceived benefits in online shopping, utilitarian, and hedonic shopping values. Therefore, discriminant validity was established. Regression analysis has been done, taking the mean score of each construct for each respondent. For each respondent, the summated score of all items representing a construct has been divided by the number of items. A mean score has been taken, as all the constructs achieved good reliability. Cronbach’s Alpha values were all greater than 0.6. Two regression models have been estimated. In the first regression model, perceived benefit was regressed on utilitarian and hedonic factors. In the second regression model, perceived risk was regressed on utilitarian and hedonic factors. Both the regression models achieved statistical significance. The F-value of the first regression model was 25.872 and 21.237 for the second. Both were significant. The adjusted R2 values were 0.224 and 0.217 for the first and second regression models, respectively. In the first regression model, the coefficients of both utilitarian factor (coefficient= 0.175, p-value= 0.015) and hedonic factor (coefficient= - 0.168, p-value= 0.00) emerged as significant. The impact of hedonic factor on the perceived benefit was negative and the impact of utilitarian factor on perceived benefit was positive, as expected. In the second regression model, the coefficient of the hedonic factor (coefficient = 0.165, p value = 0.00) was statistically significant and positive, as expected. In the second model, the coefficient of utilitarian factor (coefficient = 0.184, p-value = 0.00) was also significant and positive. Therefore, H1, H2, H3, and H4 were empirically supported. FINDING The findings of the above study show that students with high hedonic shopping values tend to avoid online shopping. They perceive more risks and lesser benefits in online shopping. They are likely to avoid online shopping, as they cannot touch the product or interact with the salespeople directly while shopping online. A student with high hedonic shopping values tends to prefer direct interaction with the product or salespeople, which become stimuli in creating the hedonic arousal. A hedonic student, therefore, is likely to make most of the purchases by visiting brick, rather than click stores. This finding has a very important implication in the context of online marketing management. In order to be successful, an online marketer must try to increase the hedonic or entertainment value of its website. The website design should be such that it provides fun to the customers. This fun element is necessary to attract and retain online customers. The results of this study also reinforce the fact that the students with high utilitarian shopping values perceive greater benefits in online shopping. Most of the online stores provide the utilitarian benefits to their customers by saving their time and costs. Students primarily make online purchase in order to get greater convenience. Another provocative finding of this study is that a customer with high utilitarian shopping value is also likely to perceive greater risks in online shopping. This finding has strong implication for the online marketers. Online marketers must provide the assurance to their target customers that the risks inherent in any online shopping in 139


terms of credit card fraud, leakage of personal and confidential information, delay in delivery or delivering defective items, etc., are minimized. This perceived security is very important to attract and retain the online customers. CONCLUSION Today, many students across the globe are shopping online. The competition is increasing rapidly in this sector. In order to be successful in online marketing, the marketers must do two things: increase the hedonic or entertainment value of the sites and increase the level of perceived security in online shopping. Online marketers should make web store very attractive and fun provider. By increasing the hedonic value, the marketers will be able to attract those students whose hedonic shopping value is high and who normally purchase from brick stores. By improving the security provisions, the e-marketers will be able to mitigate the risks perceived by the students in online shopping. Security provision must be stricter when an individual is paying using credit or debit card online. With this study, it is conclude that online marketers should offer benefits like product information, product comparison, availability of mass products with varieties, quick and free home delivery and discount. As a whole, fun, and security are two key benefits that are desired by online students. As nature of such activities is not likely to vary across different group of buyers, same may be applicable to wider group of consumers shopping online. REFERENCES Alba, J., Lynch, J., Weitz, B., Janiszewski, C., Lutz, R., Sawyer, A., & Wood, S. (1997). Interactive home shopping: Consumer, retailer and manufacturer incentives to participate in electronic marketplaces. Journal of Marketing, 61(July), 38-53. Babin, B. J., Darden, W. R., & Griffin, M. (1994). Work and/or fun: Measuring hedonic and utilitarian shopping value. Journal of Consumer Research, 20(4), 644-656. Batra, R., & Ahtola, O. (1990). Measuring the Hedonic and Utilitarian sources of consumer attitude. Marketing Letters, 2(2), 159-170. Bhatnagar, A., & Ghosh, S. (2004). A latent class segmentation analysis of E-Shoppers. Journal of Business Research, 57(7), 758-767. Childers, T. L., Carr, C. L., Peck, J., & Carson, S. (2001). Hedonic and Utilitarian motivations for online retail shopping behavior. Journal of Retailing, 77, 417-424. Dholakia, R. R., & Uusitalo, O. (2002). Switching to electronic stores: Consumer characteristics and the perception of shopping benefits. International Journal of Retail & Distribution Management. 30(10), 459-470. Dichter, E. (1947). Psychology in market research. Harvard Business Review, 25(summer), 432443.

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Forsythe, S., Liu, C. L., Shannon, D., & Gardner, L. C. (2006). Development of a scale to measure the perceived benefits and risks of online shopping. Journal of Interactive Marketing, 20(2), 55-75. Freud, S. (1953). The standard edition of the complete psychological works of Sigmund Freud. J. Strachey, ed. (24 volumes), London: Hogarth Press. Holbrook, M. B., & Hirschman, E. C. (1982a). The experiential aspects of consumption: Consumer fantasies, feelings, and fun. Journal of Marketing, 9(2), 132-140. Holbrook, M. B., & Hirschman, E. C. (1982 b). Hedonic consumption: Emerging concepts, methods and propositions. Journal of Marketing, 46(summer), 92-101. Hopkinson, C. G., & Davashish, P. (1999). A factor analytic study of the sources of meaning of Hedonic consumption. European Journal of Marketing, 33(3/4), 273-290. Holbrook, M. B., & Hirschman, E. C. (1982a). Experiential aspects of consumption: Consumer fantasies, feelings and fun. Journal of Consumer Research, 9, 132-140. Holbrook, M. B., & Hirschman, E. C. (1982b). Hedonic consumptions: Emerging concepts, methods & propositions. Journal of Marketing, pp 92-101. Maignan, I., Lukas, B. A. (1997). The nature and social uses of the Internet: A qualitative investigation. Journal of Consumer Affairs, 31(2), 346-371. Parsons, A.G. (2002). Non-functional motives for online shoppers: Why we click. Journal of Consumer Marketing, 19(5), 380-392. Sheth, J. N., Gardner, D. M., & Garrett, D. E. (1988). Marketing theory: Evolution and evaluation. USA: John Wiley & Sons, Inc.

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CUSTOMER SATISFACTION OF SAVINGS BANK ACCOUNT-HOLDER OF STATE BANK OF INDIA -- A STUDY IN SILCHAR TOWN OF ASSAM PARAG SHIL*; SIKHA DEB** * Assistant Professor, Department of Commerce, Assam University, Silchar-788011, India. ** P. G. student, Department of Commerce, Assam University Silchar-788011, India.

ABSTRACT Satisfaction with a banking service is an up-and-coming area. In the present cutthroat environment, banks have to recognize the changing needs of the customers, their aspirations and expectations to create value. In this study we have measured the satisfaction level of customers of State Bank of India. The study aimed at to measure the level of satisfaction of saving-bank account holders of SBI in Silchar town. This study focuses on the various parameters of level of satisfaction of SBI customers in Silchar town. This study is based both primary and secondary data. Convenient sampling technique is used to select the samples. KEYWORDS: Customer, satisfaction, satisfaction-level, savings-bank, facilities. ______________________________________________________________________________ INTRODUCTION A business can be successful only if the customers are satisfied. Satisfaction with a banking service is an emerging area. The commercial banking industry like many other financial industries is facing a rapidly changing market, new and modern technologies economic, uncertainties, and changing and more demanding customer service, fierce competition has presented an unpredictable set of challenges. Banking industry is a customer oriented service industry, therefore the customers are the focus and customer service are the differentiating factor (www.en.wickipedia.org/wiki customer _ satisfaction). Customer satisfaction, a term frequently used in marketing is a measure of how products and services supplied by a company meet or surpass customer expectation. It is essential for businesses to effectively manage customer satisfaction. To be able do this, firms need reliable and representative measures of satisfaction. (Ibid). A business ideally is continually seeking feedback to improve customer satisfaction. Customer satisfaction is measured at the individual level, but it is almost always reported at an aggregate level. It can be, and often is, measured along various dimensions (Kothari, 2009). Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction 142


can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products (Ibid). In the present competitive environment, banks have to understand the changing needs of the customers, their aspirations and expectations to create value. Also, banks should have a strong customer relationship management system that would indicate the worth of the customer and be able to understand his needs, so as to cross sell their products (Anath, Ramesh and Prabhakaran, 2011). In this study we have considered the satisfaction level of customers of State Bank of India (SBI), the leading commercial bank of India. This study focuses on the various parameters of level of satisfaction of SBI customers (saving account holders) in Silchar town. REVIEW OF LITERATURE

Agathee (2010) assessed customer’s general expectation are perception towards the current performance of bankers in terms of their services offered. The results showed a huge gap for reliability and responsiveness, implying that the customers are not satisfied with the willingness or readiness of employees to provide services as well as with bank’s ability to perform the promised service in a timely manner and with accuracy. However, high scores and lowest gaps were noted for tangibles, indicating that customers are generally satisfied with the bank’s physical facilities, equipments and appearance of personnel. Thus, the results of the study underscore the need for bankers to great customer service and quality improvement efforts towards components of reliability and responsiveness. Nittala and Kameswari (2011) studied the perception of customers of SBI regarding the various services provided to them by the bank, in Visakhapattanam city with the main objective to identify and discriminate the satisfied customers from the unsatisfied customers. It concluded that the response given to variable customer enquiries, patience of employees, parking facilities, relevance of information being provided and performance of banking services appear to be important constructs in the satisfaction extent. Sankar (2010) found out the reasons for customers satisfaction or dissatisfaction at business are compared with public sector banks all the private banks have excellent locations from business point of view compared to public banks. Agarwal (1999) has studied the extent to which facilities provided by the private sector banks have resulted in as increase customer satisfaction level. The study has also suggested some improvements in both the existing or new facilities which will increase the level of customer satisfaction. Joshi (2000) observed that the privileged status which public sector banks enjoyed for more than last three decades has already been changed with the entry of private and foreign banks. Under these circumstances the banks will have to face two pronged challenges to retain the existing customers and to create new customers. However, success rate depends on the innovative 143


strategies adopted by the banks including better customer services and adequate fulfilment of customer’s expectation. Khatri and Ahuja (2010) observed that the success mantra for every organization could be customer centric orientation, where the organizations build long term strategic relationship with its customer. Private sectors banks have been successful in achieving such relationship with its customers however public sector banks have to improve in this area. Private Banks need to concentrate more on their credit facilities and its insurance service since customers do not have a very good opinion about these. Javed (2005) has measured the customer satisfaction level at a large public sector banks in Pakistan. The study also effect of various factors at the bank like employees, services, process, environment and location on customer satisfaction level. Cohen (2006) has given suggestions for bank managers to improve their customer retention in today’s competitive banking environment. The study has also shown that the age of the customers increase, so too does the propensity to stay with their current banks. In addition, respondents with higher education are most likely to switch banks perhaps because highly educated consumers tend to have greater expectations of services. Narayana and Brahmanandam (1989) studied customer services in commercial banks by analyzing account operations, draft operations, cheque operations, money transfer, and perception on staff behaviour, complaints and suggestions, bank image. Jain (1993) discussed the various areas of bank marketing & suggested that the weaker and underdeveloped section needed support. The study highlighted the specific expectations of various types of banking customers and focused on the banker-customer relationship. Anath, Ramesh and Prabhakaran (2011) indicated that banks have to understand the changing needs of the customers, their aspirations and expectations to create value. Also, banks should have a strong customer relationship management system that would indicate the worth of the customer and be able to understand his needs, so as to cross sell their products. The study suggested that banks may follow a feedback system to know the customer expectations for improving the level of customer satisfaction to maximum level and remarks on service reliability should be continuously obtained from customers which will enhance their service quality to a large extent. Johnston (1995) examined the link between services and overall satisfaction and has found that the cause of dissatisfaction and satisfaction are not necessarily the same. Some service quality attributes may not be critical for customer satisfaction but can significantly lead to dissatisfaction when they performed poorly. Bhattacharjee (1990) examined whether customer service in the banking industry was really deteriorating. He examined the issue using data from two field surveys, conducted by the National Institute of Bank Management in 1974 & 1984. Based on the study he concluded that an unqualified assertion that customer services have determined in the post nationalization places was empirically untouchable. 144


Swaroop (2004) emphasized that the customer orientation builds long term relationship resulting in customer satisfaction and cash flows to the bank. Ahmed (2008) discussed the various factors affecting customer’s satisfaction level in the district. The author insists that public sector banks in the districts need to adopt certain specific marketing strategies in order to survive in the present globalization environment and in the world of competition. Paul and Barman (2010) observed that unless the commercial banks are able to satisfy their existing customer fully they cannot expect to retain its customer and that would discourage the fresher to open a bank account. This would adversely affect the banking business and profitability of the bank. Thus in the age of competition, the banks have to concentrate on the customers satisfaction level through the existing customers and at the same time have to improve the quality of services day by day to attract new customers. From the review of the existing literatures, it is understood that there are numerous factors which increase or decrease the level of satisfaction of bank customers. The various studies analyzed customers’ satisfaction in different ways taking various parameters. However, all the studies pointed out that analysis of customer satisfaction is extremely important in view of the fiercely competitive market and in order to survive and grow; commercial banks should strive to improve the quality of service. OBJECTIVES OF THE STUDY

  

To understand the level of satisfaction of saving-bank account holders of SBI in Silchar town. To identify the major problems faced by the customer of SBI in Silchar town. To provide possible solutions for improving the level of customer satisfaction.

LIMITATIONS OF THE STUDY

 Non-personal/ artificial personal of savings bank account were not be taken into consideration of the study.  The study was applicable to SBI only ignoring all other banks.  The study was conducted on the basis of savings-bank accountholders of the bank and measured their satisfaction.

SIGNIFICANCE OF THE STUDY

o The study has provided pertinent information which may be considered by the management of SBI in order to increase the market share in Silchar town.

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o It has been proved from various researches and practical experiences that there is increase in customer dissatisfaction with an increase in the number of products and services offered by a company. o This study has tried to find out what type of problems faced by customer of SBI. METHODOLOGY AND DATA

The study is exploratory in nature with survey method being used to complete the study. Population includes only savings account holders of State Bank of India in Silchar town (jurisdiction of Silchar Municipality Board) of Assam. Since the data was collected through personal contacts, the sample frames were the individuals who have accounts in SBI more than one year. Individual respondents were the sampling elements. Convenient sampling technique was used to select the samples. The usual measures of customer satisfaction involve with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement and in term of their perception and expectation of performance of the organization being measured. Their satisfaction is generally measured on a five-point scale.

In customer satisfaction three general components can be identified: (1) Customer satisfaction is a response (emotion or cognitive). (2)The response pertains to a particular focus (expectation, product, consumption experience etc) (3)The response occurs at a particular time (alter consumption, alter choice based on accumulated experience etc) The concept of customer’s satisfaction is explained by many authors as the consumer’s fulfilment response. Oliver [1980] defined customer satisfaction as the feeling or attitude of a customer toward a product or service after it has been used and is generally described as the feel meeting of or is expectations. Cot leer [2000] described satisfaction as the feeling resultant from the comparison between the performance or the result from an offer and what was expected. Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a products perceived performance in relation to his or her expectations, i.e., if the performance falls short of expectations, the customer is dissatisfied, if performance matches expectations, the cost standard if it exceeds expectations, the customers is highly satisfied or delighted. In the present study, customer perception about SBI has been studied in Silchar town, Assam. It is not possible to study the perception of all the saving-bank accountholders of Silchar town. So 146


initially sample size of 100 was selected for the study as per convenient sampling. The data collected with the help of semi-structured questionnaire from 100 respondents were not accepted because it contained unnecessary information and under-emphasized facts. Therefore, respondents from 75 saving-bank accountholders were considered for the purpose of analysis. Thus, the effective samples size for the study was 75. RESULT AND DISCUSSION EVOLUATION OF SBI The State Bank of India (SBI) was established on 1 July 1955. Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank of India to make the eight former state associates banks as it subsidiaries. The State Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. The bank served the heterogeneous financial needs of the planned economic development. State Bank of India is the largest stateowned banking and financial services company in India. The Bank provides banking services to the customer. In addition to the banking services, the Bank through their subsidiaries, provides a range of financial services, which include life insurance, merchant banking, mutual funds, credit card, factoring, security trading, pension fund management and primary dealership in the money market (www.sbi.co.in). The corporate centre of SBI is located in Mumbai. In order to different functions, there are several other establishments in and outside Mumbai, apart from the corporate centre. The bank boasts of having as many as 14 local head offices and 57 zonal offices, located at major cities throughout India. It is recorded that SBI has about 10000 branch well networked to cater to its customer throughout the India (Ibid). State Bank of India Savings Bank (SB) account This is first step to garaging additional cash in the safe custody of the bank. There is a consistent accessibility to the cash that allows the customer to use the same and withdraw at any given time of need. Additionally there is a standard interest rate of 4% that is paid annually against your savings account. The customer will have the convenience of the cheque book and an ATM card cum debit card also. Various kinds of proof are to be submitted along with the filled in the form. One need to submit proof of address, a proof of identity, a proof of date of birth, a copy of ration card and a copy of pan card. A minimum balance of Rs1000 is required to maintain for savings bank account and these days most of the banks giving a welcome kit of a cheque book, a pass book and an ATM debit card. Savings bank accounts get interest credited (Ibid).

Brief profile of the study area

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Silchar is the headquarters of Cachar district in state of Assam in India. It is the economic gateway to the state of Mizoram and Manipur. The town of Silchar has tremendous commercial importance is the second largest in the state of Assam. Banks operating in Silchar 1. SBI (State Bank Of India) 2. UBI (United Bank Of India) 3. UCO Banks 4. Punjab National Bank 5. Canara Bank 6. Central Bank Of India 7. Allahabad Bank 8. Indian Overseas Bank 9. IDBI Bank 10. HDFC Bank 11. Assam Gramin Vikash Bank (RRB) 12. ICICI Bank 13. AXIS Bank 14. Vijaya Bank 15. Federal Bank 16. Bank Of Baroda 17. Indian Bank 18. Union Bank 19. Indusind Bank 20. Assam Co-Operative Bank 21. Yes Bank 22. Dena Bank 23. Syndicate Bank 24. Corporation Bank 25. Punjab & Sind Bank Profile of Respondents The present study is based on primary data. In order to obtain primary data, field survey conducted with the help of a questionnaire and responses of seventy five (75) accountholders of savings bank account of SBI were taken. Following is a summary of the accountholders considered for the present study.

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Table1: Classification of respondents according to their age Age

No. of Respondents

Percentage of Respondents

Less than 20

10

13

20-35

30

40

35-50

13

17

50-65

17

23

65 & above

5

7

Total

75

100

Source: Field Survey

On the question of gender, out of 75 respondents 46 (61%) are male and rest 29 (39%) are female; and as per occupation, out of Seventy five (75) respondents 21% are business person, 32% are service-holders, 8% belongs to profession, 27% are students, 12% belongs to any other group. As per qualification, out of Seventy five (75) respondents 13% are HSLC pass, 29% are HSSLC pass, 43% are Graduate, 15% are belongs to Post graduate. DATA ANALYSIS An attempt is has been to assess the perception of the Savings-bank accountholder of SBI. Information regarding various aspects have been procured from the accountholders during field survey. Such information were analyzed and tabulated and also diagrammatically presented to arrive at the findings of the study. Table 2: Time Taken to Deposit Cash at the Counter Level of Satisfaction Highly Satisfied Satisfied Average Dissatisfied

Highly Dissatisfied Total

No. of Respondents


3

4

23

31

34

45

11

15

4

5

75

100


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Table 2 shows that 4% of the respondents are highly satisfied, 31% were satisfied, 15% were dissatisfied, 5% were highly dissatisfied. The satisfaction level of another 45% is average. The table reveals that the satisfaction level of the majority of the respondents regarding time taken to deposit cash at the counter at average level. Table 3: Time Taken To Withdrawn Cash at the Counter Level of Satisfaction

No. of Respondents


Highly Satisfied

5

7

Satisfied

22

29

Average

34

45

Dissatisfied

11

15

3

4

75

100



Table 3 shows that out of Seventy five (75) respondents 7% of the respondents are highly satisfied, 29% were satisfied, 25% were dissatisfied, 4% were highly dissatisfied. The degree of satisfaction of another 45% is at average level. The table reveals that the satisfaction level of majority of respondents regarding time taken to withdrawn cash at the counter is at average level. Table 4: Computerized Operation of the Bank Level of Satisfaction

No. of Respondents


Highly Satisfied

7

9

Satisfied

46

61

Average

15

20

Dissatisfied

5

7

2

3

75

100



Table 4 shows that the out of Seventy five (75) respondents, 9% of the respondents are highly satisfied, 61% were satisfied, 7% were dissatisfied, and 3% were highly dissatisfied. The degree of satisfaction of another 20% is at average level. The table reveals that the satisfaction level of the majority of the respondents regarding computerized operation of the bank is satisfied.

150


Table 5: Formalities for Opening Savings A/c Level of Satisfaction

No of Respondents


Highly Satisfied

3

4

Satisfied

24

32

Average

39

52

Dissatisfied

8

11

1

1

75

100


Source: Field survey

Table 5 shows that the out of Seventy five respondents (75) 4% of the respondents are highly satisfied, 32% were satisfied, 11% were dissatisfied, 1% were highly dissatisfied. The degree of satisfaction of another 52% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding formalities for opening savings A/C is at average level. Table 6: Co-operation of Staff at the time of Opening new Savings A/c Level of Satisfaction

No. of Respondents


Highly Satisfied

6

8

Satisfied

7

9

Average

42

56

Dissatisfied

18

24

2

3

75

100



Table 6 shows that out of Seventy five (75) respondents, 8% of the respondents are highly satisfied, 9% were satisfied, 24% were dissatisfied, 3% were highly dissatisfied. The degree of satisfaction of another 56% is at average level. The table reveals that the satisfaction level of the majority of the respondents regarding co-operation pf staff at the time of opening savings A/C is at average level.

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Table 7: Time Taken To Prepare Demand Draft Level of Satisfaction

No. of Respondents


Highly Satisfied

1

1

Satisfied

8

11

Average

17

23

Dissatisfied

34

45

15

20

75

100



Table 7 shows that the out of Seventy five (75) respondents, 1% of the respondents are highly satisfied, 11% were satisfied, 45% were dissatisfied, 20% were highly dissatisfied. The degree of satisfaction of another 23% is at average level. The table reveals that the satisfaction level of majority of respondents regarding time taken to prepare demand draft is dissatisfied. Table 8: Time taken to Update Pass Book Level of Satisfaction

No. of Respondents


Highly Satisfied

2

3

Satisfied

10

13

Average

15

20

Dissatisfied

37

49

11

15

75

100


Source: Field Survey Table 8 shows that out of Seventy five (75) respondents, 3% of the respondents are highly satisfied, 13% were satisfied, 49% were dissatisfied, 15% were highly dissatisfied. The degree of satisfaction of another 20% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding time taken to update pass book is dissatisfied.

152


Table 9: Availability of Staff at the Counter Level of Satisfaction

No. of Respondents


Highly Satisfied

2

3

Satisfied

17

23

Average

42

56

Dissatisfied

10

13

4

5

75

100



Table 9 shows that out of Seventy five (75) respondents, 3% of the respondents are highly satisfied, 23% were satisfied, 13% were dissatisfied, 5% were highly dissatisfied. The degree of satisfaction of another 56% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding availability of staff at the counter is at average level. Table 10: Competency & Efficiency of Employees Level of Satisfaction

No. of Respondents


Highly Satisfied

2

3

Satisfied

12

16

Average

49

65

Dissatisfied

10

13

2

3

75

100



Table 10 shows that out of Seventy five (75) respondents, 3% of the respondents are highly satisfied, 16% were satisfied, 13% were dissatisfied, 3% were highly dissatisfied. The degree of satisfaction of another 65% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding competency & efficiency of employees is average.

153


Table 11: Handling of Customer Grievances Level of Satisfaction

No. of Respondents


Highly Satisfied

1

1

Satisfied

11

15

Average

26

35

Dissatisfied

30

40

7

9

75

100



Table11 shows that out of Seventy five (75) respondents, 1% of the respondents are highly satisfied, 15% were satisfied, 40% were dissatisfied, 9% were highly dissatisfied. The degree of satisfaction of another 35% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding handling of customer grievances is dissatisfied Table 12: Charges for Various Services Level of Satisfaction

No. of Respondents


Highly Satisfied

3

4

Satisfied

19

25

Average

32

43

Dissatisfied

18

24

3

4

75

100



Table 12 shows that out of Seventy five (75) respondents, 4% of the respondents are highly satisfied, 25% were satisfied, 24% were dissatisfied, 4% were highly dissatisfied. The degree of satisfaction of another 43% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding charges for various services is at average level.

154


Table 13: ATM Services Level of Satisfaction

No. of Respondents


Highly Satisfied

5

7

Satisfied

12

16

Average

43

57

Dissatisfied

9

12

6

8

75

100



Table 13 shows that out of Seventy five (75) respondents, 7% of the respondents are highly satisfied, 16% were satisfied, 12% were dissatisfied, 8% were highly dissatisfied. The degree of satisfaction of another 57% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding ATM services is at average level. Table 14: Cleanliness of the Bank Level of Satisfaction

No. of Respondents


Highly Satisfied

3

4

Satisfied

7

9

Average

27

36

Dissatisfied

32

43

6

8

75

100



Table 14 shows that out of Seventy five (75) respondents, 4% of the respondents are highly satisfied, 9% were satisfied, 43% were dissatisfied, 8% were highly dissatisfied. The degree of satisfaction of another 36% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding cleanliness of the bank is dissatisfied.

155


Table 15: Innovativeness of Bank in Introducing New Services Level of Satisfaction

No. of Respondents


Highly Satisfied

3

4

Satisfied

12

16

Average

30

40

Dissatisfied

22

29

8

11

75

100



Table 15 shows that out of Seventy five (75) respondents, 4% of the respondents are highly satisfied, 16% were satisfied, 29% were dissatisfied, 11% were highly dissatisfied. The degree of satisfaction of another 40% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding innovativeness of bank in introducing new services is at average level. Table 16: Duration of Banking Hours Level of Satisfaction

No. of Respondents


Highly Satisfied

10

13

Satisfied

48

64

Average

11

15

Dissatisfied

4

5

2

3

75

100



Table 16 shows that out of Seventy five (75) respondents, 13% of the respondents are highly satisfied, 64% were satisfied, 5% were dissatisfied, 3% were highly dissatisfied. The degree of satisfaction of another 15% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding duration of banking hours is satisfied.

156


Table 17: Atmosphere in the Bank Level of Satisfaction

No. of Respondents


Highly Satisfied

4

5

Satisfied

14

19

Average

26

35

Dissatisfied

25

33

6

8

75

100



Table 17 shows that out of Seventy five (75) respondents, 5% of the respondents are highly satisfied, 19% were satisfied, 33% were dissatisfied, 8% were highly dissatisfied. The degree of satisfaction of another 35% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding atmosphere in the bank is at average level. Table 18: Behavior of Staff towards Customer Level of Satisfaction

No. of Respondents


Highly Satisfied

3

4

Satisfied

8

11

Average

25

33

Dissatisfied

35

47

4

5

75

100


Source: Field Survey Table18 shows that out of Seventy five (75) respondents, 4% of the respondents are highly satisfied, 11% were satisfied, 47% were dissatisfied, 5% were highly dissatisfied. The degree of satisfaction of another 33% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding behavior of staff towards customer is dissatisfied.

157


Table 19: Internet Banking Services Level of Satisfaction

No. of Respondents


Highly Satisfied

7

9

Satisfied

36

48

Average

16

21

Dissatisfied

11

15

5

7

75

100



Table 19 shows that out of Seventy five (75) respondents, 9% of the respondents are highly satisfied, 48% were satisfied, 15% were dissatisfied, 7% were highly dissatisfied. The degree of satisfaction of another 21% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding internet banking services is satisfied. Table 20: Willingness of Staff to meet Customer Queries Level of Satisfaction

No. of Respondents


Highly Satisfied

3

4

Satisfied

6

8

Average

36

48

Dissatisfied

25

33

5

7

75

100



Table 20 shows that out of Seventy five (75) respondents, 4% of the respondents are highly satisfied, 8% were satisfied, 33% were dissatisfied, 7% were highly dissatisfied. The degree of satisfaction of another 48% is at average level. The table reveals that the satisfaction level of majority of the respondents regarding willingness of staff to meet customer queries is at average level.

158


SUMMARY AND CONCLUSION From the study, it is clear that customer experience experienced adverse response from the bank in the areas like time taken to prepare demand draft, time taken to update pass book, behaviour of staff toward customers, handling of customer grievances, and cleanliness of bank premises of the bank. Therefore the SBI management needs to give immediate attention on these aspects. It is clear that the customer experienced positive response from the bank in the areas like computerized operation of the bank, duration of banking hours, internet banking services, etc. It is seen that the customer experiences in the areas like time taken to deposit cash at the counter, time taken to withdrawn cash at the counter, co-operation of staff at the time of opening new savings account, competency and efficiency of employees, willingness of staff to meet customer queries, charges for various services, ATM services, innovativeness of bank in introducing new services and atmosphere in the bank are by large moderate. Therefore in this area the SBI management has a scope to improve the services so that overall satisfaction of customer goes up. On the basis of the personal observations and suggestions given by the respondents following suggestions need to be implemented to improve the satisfaction level of the customers of the State Bank of India. 

For quick withdrawal of money there is a need to provide better and an error free ATM services. The SBI should take necessary steps so that customer of SBI can make more than 5 withdrawals per month from ATM counters of other banks without any charges.



Considering the necessity of different groups of customers’ bank management may open a Sunday branch in the town (which is popularly termed as 7-days week) by declaring holiday for its employees for any other day in a weak or providing rest-day to the employees in a rotation basis. The bank may also think about the concept of evening banking.



To pay attention towards the new account opener i.e. new customers.



The bank management needs to give attention on the drinking water facilities of the bank.



The bank management needs to improve their parking facilities.



The employee of the bank must behave properly or pay attention towards the customers queries, the bank should make the employees realize that it’s not about getting a secure job, it’s about professionalism-serving the customers.



The management of SBI needs to give attention on the cleanliness of the bank premises.



The amount charges by the bank for providing various services need to be competitive for better customer satisfaction.



The atmosphere inside the bank needs to be improved.

159


Customer Satisfaction can be defined as an overall customer provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfilment of some need goal or desire. Satisfaction represents a variable key of modelling the acquisition behaviour of customer, being supported by three groups of variable: a) Cognitive variables, based on the qualitative superiority of the products given by the performance.

b) Affective variables, based on the emotions produced to the customers.

c) Co-native variables, based on the interaction between the provider and the customer in the buying act. Customer Satisfaction does have a positive effect on an organization’s profitability. Satisfied Customers from the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty and positive word of mouth. It is important to realize that many customers will not complain. Measuring customer satisfaction must be a continuously, consistent, time, accurate and reliable process.

Reference:  Ahmed, J. U. (2008): Public Sector Banks in the Barak Valley: A Study on Customer Satisfaction, The NEHU Journal, Vol. VI Nos. 1&2.  Agarwal, P. (1999): Customer Satisfaction Level in Private Sectors Bank in Chandigharh, The Indian Journal of Commerce, Vol.52 No.1, pp.37-32.  Bhattarcharjee, B. N. (1990): Is Customer Service Deteriratory in The Indian Banking Industry, Vikalpa, Vol,15.  Cohen, E. L. (2006): Customer Satisfaction: A Study of Bank Customer Retention in New Zealand.  Dabhalkar P. A. (1995): A Contingency framework for predicting Causality between Customer Satisfaction and Service Quality, Advance Customer Research, Vol 22. pp.101-108.  Jham V. and Khan M. K. (2008): Customer Satisfaction in the Indian Banking Sector: A Study, IIBM Management Review, pp.84-93.  Jain, A. K. (1993): Marketing Challenges for Commercial Banks of India - A Managerial Approach, unpublished PhD Thesis, University of Rajasthan, Jaipur.  Johnston, R. (1995): The Determinants of Service Quality: Satisfier and Dissatisfiers, International- Journal of Service Industry Management, Vol 6(5), pp.53-71.

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 Joshi, J. K. (2000) : Customer Expectations and Level of Satisfaction from the Banking services: An Empirical Investigation, Report of UGC sponsored on Liberalization and Role of National Banks, 6-7 January 2000, Kumar University, Nainital. U.P.  Kothari, C. R. (2009) : Research Methodology Methods & Techniques, New Age International (P) Ltd, publishes .  Kotler, P. (2000): Cliffs, NJ.

Marketing Management International Edition, Prentice Hall, Eaglewood

 Khatri, P. and Ahuja, Y. (2004): Comparative Study of Customer Satisfaction in Indian Public Sector and Private Sector Banks, International Journal of Engineering and Management Sciences. Vol 1 (1), pp.42-52.  Oliver, R.B (1980) : A Cognative Model of the Antecedents & Consequences of Satisfaction Decisions, Journal of Marketing Research, Vol 17, pp.460-469.  Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988): SERVQVAL a Multiple Item Scale for measuring Customer Perception of service. Journal of Retailing, Vol 64 (1), pp.12-40.  Paul, M. K. and Barman, A. (2010): Customer Satisfaction- the Ignored Phenomenon: A case study in Rural Banking, Indian Journal of Commerce, Vol-63, No-1, Jan- March, pp.21-35.  Swarup, K.S. (2004): Customer Orientation in Bank for Building long term Relationship, IBA Bulletin, VOL. XXVI, NO. 8 (August), PP.17-20.  Singh, S. (2004): An Appraisal of customer Service of Public Sector Banks, IBA Bulletin, Vol. XXVI, No.8 (August), pp.17-20.  Thomas, O. J. and Sasser, W. E. Jr. (1995): Why Satisfied Customers Defects, Harvard Business Review, pp.88-89.  Uppal, R. K. (2009): Customer Service in Indian Commercial Banks - An Empirical Study, Asian- Pacific Journal of Social Sciences, Vol. 1(I), pp.127-141.  www.wickipedia.org  www.sbi.co.in

***

161


A STUDY ON LEVEL OF CUSTOMER’S AWARENESS IN VALUE ADDED SERVICES ON MOBILE PHONE SUBSCRIBERS - WITH SPECIAL REFERENCE TO TIRUPPUR DISTRICT, TAMIL NADU DR. P.RENGARAJAN*; T.KAVIPRIYA** * Head & Associate Prof of Commerce, Vidyasagar College of Arts & Science Udumalpet, Tamil Nadu. ** Ph.D Commerce (FT) - Research Scholar Vidyasagar College of Arts & Science Udumalpet, Tamil Nadu.

ABSTRACT

Mobile Value Added Services are those services that are not part of the basic voice offer and are availed separately by the end user. They are used as a tool for differentiation and allow mobile operators to develop other stream of revenue. Mobile VAS include non-voice advanced messaging services such as SMS, MMS and wireless data services based on wireless data bearer technologies such as WLAN, GPRS, WAP with VAS applications including mobile gaming. Mobile VAS also includes voice-based services such as PTT, IVR and WDA. According to a study conducted by IAMAI and IMRB, the Indian Mobile VAS market is expected to reach Rs. 26,000 crore by the end of 2012 and Rs 33,280 crore by 2013, growing at 28 percent. In the last three years, the average MVAS spent per month has risen by Rs 9 to stand at Rs.24 per month in 2012. KEYWORDS: Average Revenue Per User (ARPU), Growth Drivers, Value Added Services and Mobile Value Added Services. ______________________________________________________________________________

INTRODUCTION: A value-added service (VAS) is popular as a telecommunications industry term for noncore services, or in short, all services beyond standard voice calls and fax transmissions. It can be used in any service industry, for services available at little or no cost, to promote their primary business. In the telecommunication industry, on a conceptual level, value-added services add value to the standard, spurring the subscriber to use their phone more and allowing the operator to drive up their ARPU. For mobile phones, while technologies like SMS, MMS and GPRS are usually considered value-added services, a distinction may also be made between standard (peerto-peer) content and premium-charged content. These are called mobile value-added services 162


(MVAS) which are often simply referred as VAS. Value-added services are supplied either inhouse by the mobile network operator themselves or by a third-party Value Added Service Provider (VASP), also known as a Content Provider (CP). VASPs typically connect to the operator using protocols like Short Message Peer-to-Peer Protocol (SMPP), connecting either directly to the Short Message Service Centre (SMSC) or, increasingly, to a messaging gateway that allows the operator to control and charge of the content better. There are many national and international investors are ready to invest in this segment of telecom market. A list of some Value Added Services provided by the telecom operators to the end users.                

News - e.g. Business, sports, politics etc. Finance - e.g. Share market, foreign exchange etc. Entertainment - e.g. Games, jokes, films etc. Travel - e.g. Railway, airlines etc. Download - e.g. Caller tunes, wallpapers etc. Astrology - e.g. Horoscope Contest - e.g. Reality shows MMS - e.g. Picture messages, video clips etc. E-mail - e.g. SMS, E-mail etc. Music - e.g. Ring tones Cricket - e.g. Score, video clips etc. GPRS - e.g. Internet, chat etc. Call Alert - e.g. Missed call alerts when mobile is switched off or busy Health - e.g. Health tips, beauty tips etc. M-Commerce - e.g. mobile transactions like mobile banking Others - e.g. movies, music etc.

Growth drivers of Value Added Services:      

India is one of the fastest growing telecom markets globally; VAS potential as an ARPU enabler; Increased availability of affordable multifunction handsets with enhanced capabilities; A need for telecom service providers to differentiate themselves based on key VAS offerings; High speed networks like 3G and WIMAX likely to drive adoption of VAS The telecom market still has significant potential for growth, especially among rural population.

Objectives of the Study: The study has been undertaken with the following objectives: 1. To analyse the level of customers awareness in Value Added Services on mobile phone subscribers. 2. To find the customer level of satisfaction of Value Added Services on mobile phone subscribers.

REVIEW OF LITERATURE: 163


Harvinder Singh (2005) in his study, “Mobile Telephony Need to Knock Multiple Doors” concluded that, Mobile telephony in India has been tremendous growth in terms of subscriber base, tele-density, and usage, in the past six years, but it has not translated into a high Average Revenue per User (ARPU). A gradual but steady shift of mobile service providers towards value added services will help in achieving a higher level of differentiation among service providers. It will also generate an alternative stream of revenue and dependence on voice-call revenue will come down. Smruti Bulsari (2006) in his study “National Telecom Policy (NTP) 1994 and Structural Change in Telecommunication sector of Gujarat” concluded that, There has been a significant development in the telecommunication sector in the past decade. The reforms in the telecommunications sector its beginning with the liberalization policy in general and the NTP 1994. This policy was revised after having identified the lacunae and it is being revised continuously in tune with the changes in technology and value added services with basic telephony. Since the introduction of the NTP 1994, a significant growth in the telecommunications sector of Gujarat and the growth rate is estimated to be 9.6%. Jessy John (2011) in his study “An analysis on the customer loyalty in telecom sector: Special reference to Bharath Sanchar Nigam limited, India” concluded that, The purpose of this paper was to investigate the factors that influence customer loyalty of BSNL customers. Trustworthiness, relationship, image, value added services and inconvenience in switching phone no. were found to the key factors that influenced the loyalty of the BSNL customers. Even though the service provided by BSNL is very cost effective it is still loosing its customer base. BSNL must look away from the issue of cost and must try to improve the network quality and the quality of customer services as per the expectations of the customers. New technologies and features are being introduced in mobile services like PDA, MP4, high mega pixel digital camera and others. BSNL need to update itself with respect to these technologies at the same time take the initiative to market itself as youth friendly as youth are the target universe of any mobile provider. At the same time initiatives should be taken to improve the functional service quality were attention should be given to improve reliability, assurance, empathy and overall satisfaction of the customers. The existing customers should be actually made to feel that the „BSNL is best hai mere a lie‟ which means BSNL is the best one. Sivarthina Mohan. R and Aranganathan, P (2011) in their study “Conceptual framework of Mobile Marketing : Spamming the consumer around the world” found that, Mobile phones can also be an extremely cost effective communication channel as well as an efficient way of delivering a marketing message. Promotion through mobiles has emerged as an integral part of any brand‟s marketing campaign today. It has become an important engagement tool for brands and aims to fulfill the gap that traditional media has been unable to bridge. With the increasing popularity of the Mobile Internet, this form of marketing is soon on the edge to achieve a significant reach. It is also widely believed that the success of mobile advertising will directly depend upon the penetration and the success of Mobile Internet. There are plentiful opportunities for content and service providers to generate mobile value added services (mVAS) revenues from this nascent market. Mallikarjuna .V, Krishna Mohan .G and Pradeep Kumar .D (2011) in their study “Customer switching in mobile industry - an analysis of pre-paid mobile customers in AP circle of India” found that, Switching is quite high in the pre-paid customer segment due to low switching costs and competitive tariff plans. With entry barriers easing and mobile number 164


portability around the corner, there is a high probability for switching especially in the pre-paid segment. As network coverage, tariff plans, service play a vital role in retaining customers; the mobile operators should employ a number of strategies to manage the challenges. New levels of customer interaction at various stages are necessary to ensure customer intimacy and loyalty. Providing information on different plans, value added services, provision and activation of additional services, and customer friendly environment at all points of interaction are necessary to ensure customer delight. Network coverage and access are the key factors that influence the customer retention. Hence, investment in network and technology should go on to improve the geographic coverage, seamless connectivity and speed. Improvement in the quality of basic service – the voice call s will prove to be an excellent strategy for enhancing customer loyalty.

METHODOLOGY: The purpose of the present study was to study the awareness level of Value Added Services in the telecom sector. Mobile phone subscribers taken for the study were BSNL, Airtel, Reliance, Aircel and Vodafone. 

 



Selection of the population: For the purpose of this present study Tiruppur District is chosen. It is a convenient place to collect the sample to the researcher and sample design is determined before data are collected. Selection of Sample Size: A sample of 300 respondents was taken based on randomly. These respondents were interviewed and data were collected from Tiruppur District. Selection of the Sample: Selection of the sample unit was selected under the “Random sampling”. Random sampling is a sample selected from a population in such a way that the every member of the population has to get an equal chance of being selected. The choice of sample items depends on chance. Methods of Data Collection: Both primary and secondary sources of data were used. The primary data required for the study were collected through questionnaire. Primary data has been collected from different mobile phone service provider users in Tiruppur District. The main Mobile Phone Service providers are BSNL, Airtel, Reliance, Aircel and Vodafone. Secondary data was collected from the Annual reports of the companies, Magazines, Journals and Websites of various National and International Institutions.

 Analysis of Data: To arrive at certain conclusions regarding the hypothesis advanced in the present investigation, the following statistical tools for analysis of data were employed to consolidate, classify and analyse the data with reference to the selected objectives of the study. i.e., Simple Percentage Analysis, Weighted Average Analysis, Factor Analysis, Chi-Square Test and ANOVA. Statistical calculations have been made making extensive use of Microsoft Excel and SPSS Software Packages on the computer.

165


ANALYSIS AND INTERPRETATION: Table – 1 Usage of Value Added Services No. of Mobile Phone Subscribers 222 78 300

Usage Yes No Total

Percentage (%) 74 26 100

Source: Primary data

The above table reveals that usage of value added services. Out of 300 mobile phone service provider users, 74 percent of the mobile phone subscribers are using value added services and remaining 26 percent of the mobile phone subscribers are not using value added services. It is cleared that maximum numbers of mobile phone mobile phone subscribers are using Value Added Services.

Table – 2 Customer Awareness Level of Value Added Services Services SMS - X1 Ring tones &Pictures download - X2 MMS - X3 Internet/GPRS - X4 Chatting - X5 Video clips – X6 Contest in TV through SMS - X7 Voice based SMS - X8 Third party conference X9 Tele-Horoscope / TeleAstrology - X10 Opinion polls - X11 Quiz/Contest - X12 City info line - X13 Cricket and games - X14 Information service - X15

Aware

Utilized

Unaware

282

18

0

Weighted Average Score 1.06

285

15

0

1.05

II

129 282 210 264

69 12 42 24

102 8 48 12

0.89 1.02 0.98 1.04

XI V VIII III

246

18

36

0.94

X

108

57

135

0.74

XIV

279

12

9

1.01

VI

75

60

165

0.65

XV

231 207 129 297 255

12 30 69 3 27

57 63 102 0 18

0.85 0.89 0.89 1.01 1.03

XIII XII XI VII IV

Rank I


The above table shows that awareness of value added services. The weighted average score is ranged from 0.65 to 1.06. It has been observed through survey that SMS, Ring tones & 166


Pictures download, video clips, information services, Internet/GPRS, third party conference, and chatting are the most frequently used value added services. Very few people rarely used services are city info line, contest in TV through SMS, MMS, and Quiz/Contest, opinion polls, voice based SMS and Tele-Horoscope/Tele-Astrology services. These are various valued added services offered by service provider. Maximum number of users is familiar with prepaid & postpaid services, which are offered to them by their respective service provider. SMS, Ring tones & Pictures download, video clips, information services, Internet/GPRS, third party conference are commonly known services to most of the mobile phone subscribers frequently used for value added services.

Factor Analysis Factor analysis is a multivariate statistical technique used to condense and simplify the set of large number of variables to smaller number of variables called factors. This technique is helpful to identify the underlying factors that determine the relationship between the observed variables and provides an empirical classification scheme of clustering of statements into groups called factors. Using all the 15 awareness on value added services namely X1, X2,…….and X15 factor analysis is performed in order to group these variables on priority basis based on the strength of inter-correlation between them called „Factors‟ and cluster theses variables in to the factors extracted and the results are presented in the following tables.

Table - 3 Factor Analysis on Valued Added Services Awareness Of Value Added Services SMS-X1 Ring tones & Pictures download-X2 MMS-X3 Internet/GPRS-X4 Chatting-X5 Video clips-X6 Contest in TV through SMS-X7 Voice based SMS-X8 Third party conference-X9 Tele-Horoscope/Tele-Astrology-X10 Opinion polls-X11 Quiz/Contest-X12 City info line-X13 Cricket and games-X14 Information service-X15 Eigen value % of vari expl Cum % of vari exp

I 0.046 0.111 0.861 0.132 0.536 0.275 0.172 0.794 0.239 0.775 0.513 0.723 0.785 0.064 0.317 3.96 26.41 26.41

FACTORS II III 0.770 -0.062 0.833 0.008 0.085 0.253 -0.093 0.832 0.463 0.429 0.785 -0.135 0.555 0.450 0.086 0.225 0.524 0.237 0.208 0.202 0.546 0.262 0.361 -0.127 0.193 -0.200 -0.049 0.045 0.583 -0.041 3.57 1.44 23.83 9.61 50.24 59.85

IV 0.045 0.001 0.034 0.035 -0.213 0.044 0.345 0.035 -0.140 -0.029 -0.194 0.200 0.217 0.914 0.478 1.38 9.20 69.05

Communality 0.601 0.707 0.814 0.719 0.731 0.712 0.659 0.690 0.407 0.686 0.668 0.709 0.741 0.844 0.670 10.358 69. 05 167



The above table gives the rotated factor loadings, communalities, eigen values and the percentage of variance explained by the factors. Out of the 15 awareness on value added services, 4 factors have been extracted and these four factors put together explain the total variance of these problems to the extent of 69.05 %. In order to reduce the number of factors and enhance the interpretability, the factors are rotated. The rotation increases the quality of interpretation of the factors. There are several methods of the initial factor matrix to attain simple structure of the data. The varimax rotation is one such method to obtain better result for interpretation is employed and the results are given below:

Table - 4 Clustering Of Value Added Services into Factors Factor I (26.41 %)

II (22.83 %)

III (9.61%) IV (9.20%)

Awareness on value added services MMS - X3 Chatting - X5 Voice based SMS - X8 Tele-Horoscope/Tele-Astrology - X10 Quiz/Contest - X12 City info line-X13 SMS - X1 Ring tones & Pictures download - X2 Video clips - X6 Contest in TV through SMS - X7 Third party conference - X9 Opinion polls - X11 Information service - X15 Internet/GPRS - X4 Cricket and games - X14

Rotated factor loadings 0.861 0.536 0.794 0.775 0.723 0.785 0.770 0.833 0.785 0.555 0.524 0.546 0.583 0.832 0.914


Four factors were identified as being maximum percentage variance accounted. The 6 awareness on value added services X3, X5, X8, X10, X12 and X13 were grouped together as factor I and accounts 26.41 percent of the total variance. The 7 awareness on value added services X1, X2, X6, X7, X9, X11 and X15constituted the factor II and accounts 23.83 percent of the total variance. The one awareness on value added service X4 constituted the factor III and accounts 9.61 percent of the total variance. The one value added service X14 constituted the factor IV and accounts 9.20 percent of the total variance. Thus the factor analysis condensed and simplified the 15 value added services and grouped into 4 factors explaining 69.05 percent of the variability of all the 15 value added services.

Hypothesis Testing: Ho : There is no significant difference in the mean of awareness scores on the value added services among the mobile phone subscribers.

168


ANOVA Table – 5 Awareness of Value Added Services Source SS DF MS F Between groups 1186.932 14 84.781 167.615** Within groups 2268.54 4485 0.506 Total 3455.472 4499 **- Significant at 5 % level It is observed from the above table that the calculated value of F 167.615 is greater than the table value 1.69 (167.615>1.69). The null hypothesis is rejected. It is concluded that there is significant relationship in the mean of awareness scores on the value added services among the mobile phone subscribers.

HYPOTHESIS TESTING - CHI-SQUARE TEST Personal Variables and Awareness level on Value Added Services H0 : There is no significant association between age and awareness on value added services.

Table – 6 Age and Level of Awareness Age Below 25 Years 25 – 35 Years Above 35 years Total

Level of awareness Low Medium 33 42 39 27 36 21 108 90

High 18 45 39 102

Total 93 111 96 300

Chi – Square Test Factors Age & Level of Awareness

Degrees of Freedom

Level of Significance

Table Value

Calculated Value

4

0.05

9.49

19.023

It is observed from the above table that the calculated value 19.023 is of χ2 is more than the table value 9.49 (19.023>9.49). Hence the null hypothesis is rejected. It is concluded that there is significant relationship between age and level of awareness of value added services.

H0 : There is no significant association between sex and awareness on value added services.

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Table - 7 Sex and Level of Awareness Level of awareness

Sex

Total

Low

Medium

High

Male

56

47

50

153

Female

52

43

52

147

108

90

102

300

Total

Chi – Square Test Factors

Degrees of Freedom

Level of Significance

Sex & Level of Awareness

2

0.05

Table Value

Calculated Value

5.99

0.245

It is observed from the above table that the calculated value is 0.245 of χ2 is less than the table value 5.99 (0.245 < 5.99). Hence the null hypothesis is accepted. It is concluded that there is no significant relationship between sex and level of awareness of value added services.

H0 : There is no significant association between educational qualification and awareness on value added services.

Table - 8 Educational Qualification and Level of Awareness Educational Qualification Upto 12th UG & PG degree Diploma holders Total

Level of awareness Low Medium High 32 31 36 72 57 63 4 2 3 108 90 102

Total 99 192 9 300

170


Chi – Square Test Degrees of Level of Table Calculated Freedom Significance Value Value

Factors Educational Qualification & Level of Awareness

4

0.05

9.49

1.16

It is observed from the above table that the calculated value is 1.16 of χ2 is less than the table value 9.49 (1.16 < 9.49). Hence the null hypothesis is accepted. It is concluded that there is no significant relationship between educational qualification and level of awareness of value added services.

H0 : There is no significant association between occupation and awareness on value added services.

Table - 9 Occupation and Level of Awareness Level of awareness Low Medium High 35 20 41 10 6 11 34 25 13 17 24 28 12 15 9 108 90 102

Occupation Employee Professional Student Businessmen Home maker Total

Factors Occupation & Level of Awareness

Chi – Square Test Degrees of Level of Freedom Significance 8

0.05

Total 96 27 72 69 36 300

Table Value

Calculated Value

15.51

20.6

It is observed from the above table that the calculated value is 20.6of χ2 is more than the table value 15.51 (20.6>15.51). Hence the null hypothesis is rejected. It is concluded that there is significant relationship between occupation and level of awareness of value added services. H0 : There is no significant association between family income and awareness on value added services.

171


Table - 10 Family Income and Level of Awareness Level of awareness Low Medium High 3 3 6 57 42 48 33 33 33 15 12 15 108 90 102

Family income Below Rs.10000 Rs.10001- Rs..20000 Rs.20001- Rs.30000 Above Rs. 30000 Total

Chi – Square Test Degrees of Level of Freedom Significance

Factors

Table Value

Total 12 147 99 42 300

Calculated Value

Family Income & 6 0.05 12.3 2.541 Level of Awareness It is observed from the above table that the calculated value is 2.541of χ2 is less than the table value 12.3 (2.541 2.378). The null hypothesis is rejected. It is concluded that there is significant relationship in the satisfaction scores on the value added services among the mobile phone subscribers.

FINDINGS OF THE STUDY:  

 

Maximum numbers of mobile phone subscribers are using Value Added Services. Maximum number of mobile phone subscribers is familiar with prepaid & postpaid services, which are offered to them by their respective service provider. SMS, Ring tones & Pictures download, video clips, information services, Internet/GPRS, third party conference are commonly known services to most of the mobile phone service provider users frequently used for value added services. The factor analysis condensed and simplified the 15 value added services and grouped into 4 factors explaining 69.05 percent of the variability of all the 15 value added services. Maximum number of mobile phone subscribers are availing the valued added services. But now everyone frequently uses some Value Added services like SMS, ring-tone downloading, internet connection and gaming, etc. Majority of mobile phone subscribers are satisfied with charges for value added services and very few of mobile phone subscribers are neutral, dissatisfied and highly dissatisfied with internet connection, activation time for value added services, free sms and guaranteed delivery of notification.

173


RESULTS OF HYPOTHESIS TESTING:       

There is significant relationship in the mean of awareness scores on the value added services among the mobile phone subscribers. There is significant relationship between age and level of awareness of value added services. There is no significant relationship between sex and level of awareness of value added services. There is no significant relationship between educational qualification and level of awareness of value added services. There is significant relationship between occupation and level of awareness of value added services. There is no significant relationship between family income and level of awareness of value added services. There is significant relationship in the satisfaction scores on the value added services mobile phone subscribers.

CONCLUSION: The Value Added Services industry in India is at nascent stage. At present, the telecommunications industry was revolutionized by the rapid penetration of 'Mobile', and the next level of growth-cum-revolution is undoubtedly marked by the value-added services (VAS) market. Mobile VAS has gained significance as it has been emerging as a potential alternative revenue stream. VAS enables the subscriber to use the mobile phone for a host of purposes such as for sending short messages, pictures, to surf the Internet, for mobile banking including mobile payments, to read news headlines, astrology, to listen to music, to play games and to seek various other types of information. The current Indian MVAS market can be gauged into two categories that are Current MVAS and Emerging MVAS. The current MVAS category covers 63 percent of the total industry, whereas emerging MVAS covers the remaining share of 37 percent. The current MVAS consists of CRBT (27 percent) and SMS Based application (17 percent). On the other hand, the emerging MVAS consist mostly of Mobile Apps (10 percent) and Games (8 percent). MVAS growth further, affordable mobile devices and cheaper data subscription rates will play a crucial role in the market.

REFERENCES: 1. en.wikipedia.org/wiki/Value-added_service 2. Harvinder Singh ,“Mobile Telephony Need to Knock Multiple Doors”, Marketing Mastermind, December, 2005, Pg. 49 3. Smruti Bulsari, “ National Teleocm Policy (NTP) 1994 and Structural Change in Telecommunication sector of Gujarat”, The Icfai Journal of Infrastructure, Vol. V, No.3, September 2007, Pg. 35 174


4. Jessy John (2011) in his study “An analysis on the customer loyalty in telecom sector: Special reference to Bharath Sanchar Nigam limited, India”, African Journal of Marketing Management, January 2011, Vol. 3(1) pp. 1-5. 5. Sivarthina Mohan. R and Aranganathan. P ,“Conceptual framework of Mobile Marketing : Spamming the consumer around the world”, Indian Journal of Marketing, Feb 2011, Vol.41, No. 4, Pg. 39-45 6. Mallikarjuna .V, Krishna Mohan .G and Pradeep Kumar .D, “Customer switching in mobile industry - an analysis of pre-paid mobile customers in AP circle of India”, International Journal of Research in Computer Application & Management, May 2011, Vol.1, No. 3, Pg. 63 7. http://www.maxis.com.my/personal/mobile/vas/index.asp 8. http://web.it.kth.se/~maguire/DEGREE-PROJECT-REPORTS/110708Narayanan_Anandpadmanabhan-with-cover.pdf 9. http://www.tmobilecellphones.biz/mobile-service-providers/index.htm 10. http://india.mapsofindia.com/transportation/telecom-backbone-of-india.html 11. www.trai.gov.in 12. www.coai.in 13. http://thinkingaloud.in/ArticleComments.aspx?ArtId=921 14.http://www.cci.in/pdf/surveys_reports/indias_telecom_sector.pdf 15. http://www.trai.gov.in/WriteReadData/trai/upload/ConsultationPapers/256/MVAS_C_Pa per_v2.pdf 16.http://www.lemontreeconsulting.com/pdf/mobile.pdf

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A STUDY OF ADVANCED FINANCIAL LITERACY AMONG THE WORKING WOMEN IN PUNJAB DR. SARITA BAHL Associate Professor P.G.Department of commerce & Management, Arya College, LUDHIANA

ABSTRACT Financial literacy has assumed greater significance in the recent years, as financial markets have become increasingly complex and there is also an information asymmetry among market participants leading to making informed choices more and more difficult for the common person. The most common definition of financial literacy is the ability to make appropriate decisions in managing their personal finances India is among the world‘s most efficient financial markets in terms of technology, regulation and systems. It also has one of the highest savings rate in the world - our gross household savings rate, which averaged 19% of gross domestic product (GDP) between 1996-97 and 1999-2000, increased to about 23% in 2003-04 and has been growing ever since Advanced financial literacy covers the ability to understand the financial concepts like asset allocation, diversification, investment planning etc. Knowledge of such advanced financial literacy concepts will definitely add value in investment behaviour of the investors. The present paper aims to study the advanced financial literacy among the working women of Punjab. Efforts have been made to know the association between age and advanced financial literacy among the working women in Punjab. Further, an attempt has been made to highlight the Self assessed Advanced Financial Literacy of working women of Punjab. KEYWORDS: Advanced Financial Literacy, Asset allocation Financial Markets, Financial Instruments, Financial Institutions. ____________________________________________________________________________ INTRODUCTION Financial literacy is the process by which investors improve their understanding of financial markets, products, concepts and risks. Through information and objective advice, they develop the skills and confidence to become more aware of financial risks and opportunities and make informed choices to improve their financial position. Financial education primarily relates to personal finance, which enables individuals to take effective action to improve overall wellbeing and avoid distress in financial matters. Financial literacy goes beyond the provision of financial information and advice. It is the ability to know, monitor, and effectively use financial resources to enhance the well-being and economic security of oneself, one‘s family, and one‘s business. Financial literacy is to identify key personal finance topics and behaviours that support financial success. Without this knowledge, a person is unlikely to pass any test of financial competency. Financial literacy refers to the knowledge about financial concepts, financial 176


instruments, financial institutions & services. It deals with how people use their finance to get more and more returns amidst their risk preferences. It has become an integral part of today's education system, because it is necessary for earning good returns as well as for economic development. Financial Literacy is the ability and knows how to grow, monitor, and effectively use financial resources to enhance the financial well-being and economic security of oneself, one's family, and one's business. Advanced Financial Literacy covers the ability to understand the financial concepts like asset allocation, diversification, investment planning etc. Knowledge of such advanced financial literacy concepts will definitely add value in investment behaviour of the investors. Asset allocation points to division of financial resources to different assets and sub assets and further passive management of their allocated ratios. Such a strategy is highly useful in achieving prudent financial goals. Further investors should not place all their investible money into one or two assets. They should diversify. Research has shown that alternate diversification protects the return and reduces the risk. Know-how of such advanced financial concepts will lead to optimal investment behaviour depicted by investors. COMPONENTS OF FINANCIAL LITERACY Understand the key financial products you may need throughout your life – including bank accounts, mortgages, retirement savings plans and basic investments like stocks, bonds and mutual funds Understand basic financial concepts like compound interest, investment return, risk, diversification and so on Discuss money and financial issues – even if you don‘t really like to talk about them Make good financial choices about saving, spending and managing debt throughout your life: for example, when getting an education, starting a job, buying a house, starting a family, getting ready to retire and living out your senior years Respond competently to changes that affect your everyday financial well-being – including events in the general economy like the recent collapse of financial markets, rising unemployment and the threat rapid inflation. Financial literacy is providing the familiarity with and understanding of financial market products, especially in context of their rewards and risks, in order to make informed choices. Viewed from this standpoint, financial education primarily relates to personal financial education to enable individuals to take effective decisions to improve overall financial wellbeing and avoid distress in matters that are financial. Financial literacy refers to the knowledge about financial concepts, financial instruments, financial institutions & services. It deals with how people use their finance to get more and more returns amidst their risk preferences. It has become an integral part of today's education system, because it is necessary for earning good returns as well as for economic development. Thus, Financial Literacy is the ability and knows how to grow, monitor, and effectively use financial resources to enhance the financial well-being and economic security of oneself, one's family, and one's business

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FINANCIAL LITERACY AMONG WOMEN In the Indian context how many of us remember when our ladies at home took any decisions regarding banking, Insurance or Investments? Their role has been always limited to household work and as caretakers of our homes & hearths, for decades and centuries now. Even in today‘s world, when women are at par or even above par with men in all areas, they fall behind in this one. Decisions (as far as finances go) are primarily made by men, & not women in general. In this article, we‘ll see why it‘s important for women, to know about Personal finance .One of the big problems, with women, is that they do not treat Personal Finance as something that‘s important for them. For ages, they have not participated in Personal finance, regarding it as the man‘s domain, just as they felt cooking was theirs. Obviously, this isn‘t true now, in this day & age. Cooking is as much a guy‘s activity as Personal Finance ought to be a woman‘s. Women, in general, don‘t show real eagerness for these activities, for some reasons like women treating their earning as time pass activity: The biggest reason for this is that, since the dawn of time, Man has been the main provider and the primary bread-winner of the Family. Many women in spite of being qualified enough, and having skills to earn money, view their earning as secondary compared to men. They ―feel‖ that they are not at the same level, even though it‘s not true; most of this is psychological. Women require financial literacy to ensure their own and often their families‘ economic security. Falling marriage rates, rising divorce rates, and the requirement of higher income, women are more likely to have to rely on their own financial literacy skills for managing their money. This research project will provide new understanding on the information access barriers and how they may be overcome to assist working women to become more financially literate. Despite gloomy statistics about financial literacy among women, the evidence about how women fare in financial decision making is far from unfavourable. Research shows that women who hold stocks trade them less frequently than men, thereby paying fewer fees and transaction costs and ending up with more wealth. Women tend to hold more conservative portfolios, and in the current environment this has worked out well. Women are also less likely to be victims of scams that seem to be disproportionately perpetrated against white men. One reason that women might be better financial decision makers, despite displaying, in general, lower literacy than men, is that women know what they do not know. In studies of financial literacy in which participants were asked to rank their level of financial knowledge prior to being given a set of problems to measure their actual level of financial literacy, women‘s low self-evaluations were fairly consistently correlated with fair to poor performance on the literacy problems. This demonstrated lack of overconfidence may prove helpful in financial decision making and in avoiding financial mistakes and this awareness may help women to take action. As several studies about financial education show, seminars and education programs are disproportionately attended by female participants. Moreover, it is primarily women who report being affected by those programs. The fact that women make decisions with the well being of others in mind, that they steer clear of excessive risk, and that they do not consider themselves ―financial geniuses‖ and ―financial wizards‖ are characteristics that have not been fully exploited. Interestingly, women are often brought in when there is a financial crisis and confidence needs to be restored. For example, after a less than spotless record, the Securities and Exchange Commission is now headed by a woman, and it‘s Office of Investor Education and Advocacy is also headed by a woman. Perhaps one of the ways to ensure the smooth functioning of financial institutions and contracts is to have more women in charge. 178


OBJECTIVES OF THE STUDY To study the advanced financial literacy among the working women in Punjab. To know the association between age and advanced financial literacy among the working women in Punjab. To highlight the Self assessed Advanced Financial Literacy of working women of Punjab. RESEARCH METHODOLOGY For completion of objectives under study, primary data was collected from the working women from private and public sector through structured questions after PILOT study. The study was limited to Punjab state only. For the purpose of this study, the working women is operationally defined as "The female who is working in any kind of private sector or public sector job at any level, whose gross salary is more than 15000/- p.m. and falls in the age bracket of 25-55 years." The selected sample of working women was assessed for their financial literacy. The responses of the sample were collected using well designed structured and non disguised questions which were personally administered to the respondent under study Moreover; intensive desk research was done to achieve the objectives. For each of the aspect under study three to four questions will be asked which generally will be of multiple choice types. The respondent will be scored on the basis of their responses to these questions and further will be classified as financially literates and otherwise depending upon the preset limits of the scores. Since it was impossible to prepare a sampling frame of all the working women, the sampling of 100 working women was collected to achieve the objectives of the study. For collection of secondary data, books, journals and articles related to this subject were considered. Financial Literacy of working women is analyzed age wise. The women whose age is less than average age of all the working women (36 years) are considered in younger group and whose age is more than average age (36 years) is considered in older group. To analyze data, women are divided into three categories named women

having sound knowledge, fair knowledge and poor knowledge. The categorization is done as shown as below………..

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TABLE-1 Literacy Level

FINANCIAL LITERACY -OPERATIONAL FRAMEWORK Concepts

No. of questions asked

No. of questions Correct Sound Fair Poor Knowledge Knowledge Knowledge

Advanced

Financial Markets

3

3

2-1

0

Financial Instruments

2

2

1

0

Asset allocation

1

1

1

0

Diversification

1

1

1

0

As per Table.1, the responses taken on five point scale is categorized into three categories namely sound, fair and poor. The women who have marked four to five on five point scale are in sound knowledge category, who have marked three are in fair knowledge category and who have marked one or two are in poor knowledge category. Weighted mean score is calculated by assigning weights three, two and one to the three knowledge categories named sound, fair and poor respectively. Weighted mean score is also calculated to know self assessed financial literacy. Respondents were asked to assess their literacy level on five point Likert scale. Recorded frequencies were converted into sound, fair and poor categories. Weights are given to the frequencies from 1 to 5. 1 point given to very low knowledge and 2 to low knowledge and so on.... Then weighted mean is calculated from the data.

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REVIEW OF LITERATURE Erling Steigum, Jr.(1983) analyzes the optimal capital policy of an entrepreneurial firm whose cost of borrowing depends on its debt-equity ratio. The firm chooses the investment plan that maximizes the entrepreneur's intertemporal utility, given static expectations. It is shown that the rate of investment is closely related to the rate of profit retention. It is also demonstrated that the optimal plan can be approximated by a flexible accelerator model of investment. If expectations prove wrong, the investment behaviour of the firm could involve instantaneous debt and capital stock adjustment prior to the operation of the flexible accelerator. Cliff A. Robb highlights some of the general difficulties inherent in studying the area of financial literacy and education, noting the variety of definitions and measures that have been used in previous studies of the topic. Without a universally recognized measure of knowledge or literacy, it is difficult to develop relevant initiatives, assess current education policy, and advance the knowledge base of the field in regards to financial literacy and its significance.. Behrooz Sedaie (1998) empirically studies the effect of economic literacy at the high school level on students ‗intention to attend college. Using a multinomial model and the data from the National Assessment of Economic Education survey, He finds that a student‘s perception of the helpfulness of economics in thinking about getting more education positively affects the intention to attend college. Other factors found to be influential include ethnic background, academic ability, performance in high school, parents' education, per capita personal income in a student's county of residence, and tuition of vocational/two-year colleges in the student's home state. J.America (2009) The psychological variables, examined played a larger role within IRA accounts than within 401(k) accounts. This finding makes sense because the decision to place money into an IRA account is an individual one whereas the placement of assets in 401(k) accounts depends on the sponsor‘s offerings. In particular, the choice may depend on the default option. As a result of mental accounting or similar phenomena, investors may view assets within the two types of account very differently, and our results may reflect those differences.Twk Yuen (2009) The risk of adjustment occurrence increases with increasing asset prices. Once the risk comes larger than that investors could bear, investors would definitely adjust accordingly their investment portfolio for risk reduction reason. And the entire investment market would therefore adjust. Therefore, people's investment risk tolerance could lead to great impact to the entire investment market and they are interrelated. Extensively literature and studies have identified many demographic factors and sociological factors and psychological factors to be the determinants of risk tolerance. A prospect theory indicated that the individual investment decisions are affected by past experience and thought thus, the determinants of risk tolerance is very important related to the behavioural finance arena. Barry N. Rosen , Dennis M. Sandler , David Shani An important dimension of the ongoing demand for greater corporate social responsibility is the emergence of the socially responsible investor (SRI). The SRI invests in companies whose actions support social objectives deemed desirable by the investor, e.g., reducing environmental pollution. There are two broad groups of SRIs: individuals and institutions such as public and private pension funds, trusts, and endowed institutions (e.g., universities or religious orders). While a couple of studies have examined the socially responsible investment criteria used by institutions such as pension funds (Gasper and Schweig 1985) and religious groups (Wokutch 1984), no studies have measured the identity, objectives, expectations, and social screens used by individuals in their investment decisions. As a result, the SRI is unknown except through anecdotal evidence (Schonbak 1984). J.Grable(2009) attempted to determine how accurately individuals judge their own level of 181


financial risk-tolerance and whether self-assessed financial risk-tolerance is associated with investment risk-taking behaviours. Using a sample of internet risk-assessment survey respondents (n = 1,740), it was concluded that individuals do a fair job of assessing their own level of financial risk-tolerance using self-classifications into one of four levels of risk-tolerance (r = 0.50 with risk-tolerance test score). Moreover, this self-classification was associated with actual risk-taking investing behaviours. Individuals who assume themselves as real risk avoiders or cautious when making investments tend to hold more cash than riskier assets like equities. Conversely, individuals who viewed themselves as gamblers or being willing to take risks after completing adequate research had larger holdings in equities. Robert ferber (1965) This volume contains the papers presented at a conference sponsored by the Universities-National Bureau Committee for Economic Research on June 10—12, 1965, at the University of Wisconsin, together with much of the discussion of these papers. The purpose of this conference was to bring together the work of people studying the investment decisions of different economic units and to compare the methods employed and the nature of the results obtained. Jean Crockett and Irwin Friend take an empirical approach to the analysis of consumer investment behaviour. After providing a concise review of the current literature on consumer saving and investment, they proceed to formulate a theory of the determinants of consumer holdings of different tangible as well as financial assets wherein the desired stock of assets depends primarily on the normal or permanent income of the household. Increments to this stock then depend on the difference between the desired stock and the actual stock, with normal income serving as a proxy for desired stock in the empirical tests. Two sets of cross-section data are used for the empirical tests, carried out by a series of multiple regressions. The tests were designed partly to experiment with ways of separating normal from transitory income effects 4 introduction and partly to obtain improved estimates of the effect of initial asset holdings on consumer saving and investment by holding tastes constant in various ways. The most noteworthy feature of the results, the author‘s state, is the tendency for the longrun normal income elasticity of saving or of assets to exceed unity by substantial margins. The results also suggest that initial assets are necessary in explaining saving behaviour, as is implied by a lagged adjustment model, though in a number of the regressions the assets effect is very weak. Vasant P. Gandhi (1990) The empirical results show that with appropriate modifications, the theory of investment behaviour provides a useful framework for explaining private investment behaviour in developing country agriculture. The modifications are important because. for instance, the theory excludes the influence of government investment on private investment. It also grossly underplays the critical role of credit, particularly institutional credit, in developing countries. With these modifications it becomes apparent that many government policies can have an important influence on private investment in developing countries. The dominance of the nonlinear model over the linear in the non tested specifications test is inflictive of the usefulness of tile theoretical basis and derivation. The substantial differences in their results show that liberalised functions of determinants, such as used in Tun Wai and Wong (1982). Blejer anid Khan (1984). and Stindarajan and Thakur (1980), might be inappropriate and might give misleading results. Further more. Linear models seem to have unrealistic production function assumptions. Alex Wang Americans‘ attitudes and behaviours toward wealth management have clearly tracked the economy the last couple of years (Helman et al. [2009]). In January 2010, the Employee Benefit Research Institute (EBRI) surveyed 1,153 people, age 25 and older, about their attitudes and behaviours toward investing and saving for retirement (Helman et al. [2010]). In terms of attitude, just 24% of the respondents were very confident in 182


investing their retirement savings (down from 45% in 1998). Another 54% of the respondents were somewhat confident that their savings were wisely invested. In terms of behaviours, the percentage of the respondents who had virtually no money in investments and savings increased over the past year. While 54% of the respondents reported that the total value of their household‘s savings and investments, excluding the value of their primary home and any defined benefit plans, was less than $25,000, 27% of them reported they had less than $1,000 in investments and savings (up from 20% in 2009). Other respondents reported totals of $25,000– $49,999 (12%), $50,000–$99,999 (11%), $100,000–$249,999 (11%), and $250,000 or more (11 %). More surprisingly, the percentage of the respondents who had invested and saved for retirement fell to 69%, from 75% in 2009, suggesting that the percentage of Americans with virtually no investments and savings for retirement grew for the third straight year (Sutton [2010]). John B.Guerard (1987) The hypothesis that firms simultaneously determine their research and development, investment, dividend and effective-debt policies generally is substantiated in the financial literature. The determinants of research and development, dividend, investment and financing decisions of 303 firms are estimated econometrically during the 1976-1982 period. Moreover, an optimization model is estimated for a firm that seeks to minimize underachievement of desired investments, dividend and R&D and minimize the underachievement of desired effective debt. Management gains additional insights to increase the achievement of maximizing research and development expenditures at the expense of paying dividends and undertaking investments. Joo and Bagwell (2003) introduced the meaning and components of personal financial wellness and discussed how financial professionals can use financial wellness as a tool. A series of survey results with financial professionals on the concept and components of personal financial wellness are reported. Objective, subjective, behavioural, and attitudinal components of personal financial wellness are presented in this paper, as are implications for using these components in practice with clients. Guiso and Jappelli (2005) explored the determinants of awareness and found that the probability that survey respondents are aware of atocks, mutual funds and investment accounts is positively correlated with education, household resources, long term bank relations and proxies for social interaction. Lack of financial awareness has important implications for understanding the stockholding puzzle and for estimating stock market participation costs. According to Campbell (2006) household finance is challenging because household behaviour is difficult to measure and households face constraints not captured by textbook models. Evidences on participation, diversification and mortgage refinancing suggest that many households invest effectively, but minority make significant mistakes. This minority appears to be poorer less educated and unaware than the majority of more successful investors. There is some evidence that households understands their own limitations and avoid financial strategies for which they feel unqualified DEMOGRAPHIC PROFILE OF THE WORKING WOMEN This section contains information about working women with respect to the demographic features like age, department, designation, monthly income, family details and learning of financial or economic subjects. All the attributes are displayed in following tables:

183


Table2 explains the demographic profile of working women. Frequency of various demographic features like age group, gender, designation and monthly income are as shown as follows. TABLE 2. PUNJAB

DEMOGRAPHIC

Age Group Frequency (In Years)

PROFILE

OF

WORKING

WOMEN

%age

Cumulative %age

57

57

57

30-35

21

21

78

35-40

9

9

87

40-45

3

3

90

45-50

6

6

96

50-55

3

3

99

55 and above

1

1

100

Total

100

Qualification Frequency

%age

Cumulative %age

Graduate

40

40

40

Post graduate

58

58

98

Ph.D.

2

2

100

Total

100

OF

25-30

Average age is 32 years

184


Organisation

Frequency

%age

Cumulative %age

Private

66

66

66

Public

34

34

100

Total

100

Designation

Frequency

%age

Cumulative %age

Executive

71

71

71

Manager

29

29

100

Total

100

Monthly Income

Frequency

%age

Cumulative %age

0-25000

70

70

70

25001-35000

20

20

90

35001-45000

7

7

97

45001-55000

2

2

99

55001 above

1

1

100

Total

and 100

Table 2 shows that there are 100 respondents. They are divided into age range i.e. 25-3 0, 30-35, 35-40,40-45,45-50,50-55 and 55 above. Frequencies of this category are 57, 21, 9, 3, 6, 3, and 1 respectively. The average age is 36 years. Out of 100 women, 40 are graduates, 58 are post 185


graduates and 2 are doctorate. 66 women working in private sector and 34 are working in public sector. They are divided into monthly income categories i.e. 0-25000, 25000-35000, 3500045000, 45000-55000, 55000 and above and frequencies are 70, 20, 7, 2, and 1 respectively. RESULTS AND DISCUSSION ADVANCED FINANCIAL LITERACY In this section advanced financial literacy of working women of Punjab is analyzed. Four parameters are used to check the advanced financial literacy i.e. financial markets, financial instruments, asset allocation, and diversification. Three questions of financial markets, two of financial instruments, one of asset allocation and one question of diversification were asked from working women of Punjab. Each parameter is divided into three level of knowledge i.e. sound, fair and poor according to the correct number of questions marked by the respondents. Mean scores and frequencies related to knowledge about various advanced financial literacy concepts of working women are shown below in table: TABLE 3. ADVANCED FINANCIAL LITERACY OF WORKING WOMEN OF LUDHIANA CITY (N=100) Financial Aspects

No. of Questions Level of knowledge asked Sound

Fai r

Poo r

Mean Score

Financial Markets

3

14

45

41

1.73


2

19

48

32

1.87

Asset allocation

1

55

37

8

2.47

Diversification

1

57

25

18

2.39

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In Table 3, we can see that 14% women are having sound knowledge about financial markets, 19% women are having sound knowledge about financial markets, 55% women are having sound knowledge about assets allocation, and 57% women are having sound knowledge about diversification. Respondents have got a mean score of 1.73 in financial markets, 1.87 in financial instruments, 2.47 in asset allocation and 2.39 in diversification FREQUENCIES AND MEAN SCORE VALUES RELATED TO AGE WISE ASSESSMENT OF ADVANCED FINANCIAL LITERACY PARAMETERS of working women of Punjab are shown below: TABLE 4. AGE WISE ASSESSMENT OF ADVANCED LITERACY OF WORKING WOMEN OF PUNJAB (N=100)

Financial Aspects

Financial Markets


Asset allocation

Diversification

No. of Question Age s asked

3

2

1

1

Level knowledge

of

FIN ANCIAL

Mean Score

Soun d

Fai r

Poo r

Younge r

7

22

25

1.67

Older

7

23

16

1.8

Younge r

10

26

18

1.85

Older

9

23

14

1.89

Younge r

29

22

3

2.48

Older

26

15

5

2.46

Younge r

32

11

11

2.39

Older

25

14

7

2.39

Table 4 depicts the age wise assessment of advanced financial literacy. Each parameter is divided into two parts i.e. younger and older. Mean score values have been calculated to check the significance of knowledge of younger and older working women. No significant difference has been found in age and knowledge of advanced financial literacy among working women Punjab. 187


SELF ASSESSED FINANCIAL LITERACY OF WORKING WOMEN OF PUNJAB Self assessment of advanced financial literacy of working women of Punjab was analyzed by Likert scale. Respondents were asked to assess their literacy level on five point scale. Recorded frequencies were converted into sound, fair and poor categories. Frequencies and weighted mean values are related to self assessment of advanced financial literacy is shown below with table:-TABLE 5. SELF ASSESSED ADVANCED FI NANCIAL LITERACY OF WORKING WOMEN OF PUNJAB (N=100)

Low

Neither Low High nor High

Very High

Weighted Mean score

0

8

17

61

14

3.81

Financial In struments

9

43

17

18

13

2.83

Financial Institutions

27

19

30

20

4

2.55

Asset allocation

15

30

23

21

11

2.83

Diversification

1

19

41

35

4

3.22

Very Low

Financial Markets

Financial aspects

Advanced literacy

financial

Table 5 depicts that Self assessed Advanced Financial Literacy of Working Women of Punjab is maximum i.e. 2.83 as for as Asset allocation and Financial Instruments aspects are concerned. Asset allocation points to division of financial resources to different assets and sub assets and further passive management of their allocated ratios. Such a strategy is highly useful in achieving prudent financial goals. Further investors should not place all their investible money into one or two assets. They should diversify. Research has shown that alternate diversification protects the return and reduces the risk. . It is minimum regarding knowledge of Financial Institutions i.e.2.55. Know-how of such advanced financial concepts will lead to optimal investment behaviour depicted by investors.

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CONCLUSION Financial literacy is the process by which investors improve their understanding of financial markets, products, concepts and risks. Through information and objective advice, they develop the skills and confidence to become more aware of financial risks and opportunities and make informed choices to improve their financial position. Financial education primarily relates to personal finance, which enables individuals to take effective action to improve overall wellbeing and avoid distress in financial matters. A majority of our households do not use modern financial markets. Unless the common person becomes a wiser investor and is protected from wrong doings, wealth creation for the investor and the economy will remain a distant dream Working women have sound knowledge with respect to basic financial literacy in case of compound interest especially. Women have wrongly assessed themselves in case of knowledge of financial concepts. They are having poor knowledge about advanced financial concepts like asset allocation and diversification. Financial literacy goes beyond the provision of financial information and advice. It is the ability to know, monitor, and effectively use financial resources to enhance the well-being and economic security of oneself, one‘s family, and one‘s business SCOPE FOR FURTHER STUDY The study was conducted in Punjab only. The future studies can be conducted at National level to check the working women‘s financial literacy For this study 100 working women were selected from the total population. In future research more number of working women can be selected to attain more accurate results A total of 4 parameters were used to check advanced financial literacy of working women, in future research, more parameters can be used to check the financial literacy level. REFERENCES Agnew J R and Szykman L R (2005) Asset Allocation and information overload: the influence of information display, asset choice and investor experience. J. Behavioural Fin 6: 57-70. Agarwal S. Amromin G, David I, Chomsisengphet S and Evanoff d (2010) Financial Counseling, Financial literacy, and household decision making. http://ssrn.com/abstract=1628975 Alexander G, Jones J and Nigro P (1998) Mutual Fund Shareholders: characteristics, investor knowledge, and sources of information Bernheim B D, Garrett D M and Maki D M (2001) Education and saving: the long term effects of high school financial curriculum mandates Braunstein S and Welch C (2002) Financial Literacy : an overview of practice, research and policy. Federal reseve bulletin Hilgert M A, Hogarth J M and Beverly S G (2003) Household financial management: the connection between knowledge and behaviour Hung A A, Parker A M and Yoong J (2009) Defining and measuring Financial Literacy, RAND working Papers 189


Hilgert M A, Hogarth J M (2002) Financial knowledge, experience and learning preferences: preliminary results from a survey on financial literacy. Mason C L J and Wilson R M S (2000) Conceptualising financial literacy, occasional paper, & Loughborough: Business school, Loughborough University Mcdanial L, Martin R D and Maines L A (2002) Evaluating financial reporting quality: The effects of financial expertise vs. Financial Literacy Rajamohan R (2006) An empirical study on the impact of financial knowledge on household portfolio. Indian institute of capital markets 9th capital markets conference paper Sultana S T (2010) An empirical study of Indian Individual Investors‘ behaviour. Global Journal of Finance and Management. Vanderhei J L an Olsen K (2000) Social security investment accounts: lessons from participantsdirected 401(k) data WEBLIOGRAPHY www.jstor.org www.springerlink.com inderscience.metapress.com www.nber.org pdf.usaid.gov www.sp.uconn.edu

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FDI IN RETAILING DR N.P.HARIHARAN*; G. RAJA RAJESWARI** * Professor & Division Leader in Economics ** Asst Professor in Economics VIT University, Vellore

INTRODUCTION: FDI has been widely seen as one of the most positive forces in the recent economic globalization, with the supposed potential to transform productive structure in developing countries and bring about economic convergence across the different regions of the world. It has been one of the great belief that foreign investment and FDI in particular could and would transform the world by brining more capital-scarce economies and causing great change in the productive structure of the developing economies. As a developing country, FDI continuous to play an important role. It is an opportunity to make India a manufacturing hub for textile, automobiles, steel, metals and petroleum products, etc for the world market. Foreign financial analysts have concluded that India provides maximum return on investments, more than even China. Thus FDI is superior to other forms of foreign capital like portfolio investment, loans and commercial borrowings.

Definition: Foreign direct investment, in its classic definition, is defined as a company from one country making a physical investment into building a factory in another country. The direct investment in buildings, machinery and equipment is in contrast with making a portfolio investment, which is considered an indirect investment. In recent years, given rapid growth and change in global investment patterns, the definition has been broadened to include the acquisition of a lasting management interest in a company or enterprise outside the investing firm‟s home country. FDI is defined as the investment by the foreign parties in the form of capital, management, technical expertise, etc. It is the investment by the institutions, entrepreneurs, corporate undertakings, transnational corporations, government, etc in the productive units and in the developmental activities. It is generally guided by the controlling interest and of long term interest. FDI is considered to be the most attractive type of capital flows for emerging economies as it is expected to bring latest technology and enhance production capabilities of the economy. Though there are various types of foreign capital inflows into a country, direct investments are now the principal channel of international private capital inflows especially to a country like India.

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Role of FDI in Developing Economy: Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing.  For a host country or the foreign firm which receives the investment, it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development.  Domestic capital is inadequate for purposes of economic growth and it is necessary to invite foreign capital.  For want of experience, domestic capital and entrepreneurship may not flow into certain lines of production. Foreign capital can show the way for domestic capital.  It may be difficult to mobilize domestic savings for the financing of projects that are badly needed for economic development. In the early stages of development, the capital market is itself underdeveloped. During the period in which the capital market is in the process of development, foreign capital is essential as a temporary measure.  Foreign capital brings with it other scarce productive factors, such as technical knowhow, business experience and knowledge which are equally essential for economic development.

FDI in India: India enjoys a strong position as a global investment hub with the country registering high economic growth figures even during the peak of financial meltdown. As a result, overseas investors rested their confidence in the economy which eventually pushed foreign direct investments (FDI) in India. The fact is further consolidated by the excerpts of a research by Morgan Stanley which anticipates that India could attract FDI worth as much as US$ 80 billion in next 1-2 years. Around US$ 48 billion of FDI has been pumped in the Indian economy in the last two years. Considering the pace of FDI growth in India, KPMG officials believe that FDI in 201112 may cross US$ 35 billion mark.

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Table: 1: FDI Inflows to India Years

Amount of FDI inflows In Crores

US$mn %age growth over

In US $ Million

previous year (in terms of US $)

2000-01

10.733

2,463

2001-02

18,654

4,065

+65

2002-03

12,871

2705

-50

2003-04

10,064

2,188

-19

2004-05

14,653

3,219

+47

2005-06

24,584

5,540

+72

2006-07

56,390

12,492

+125

2007-08

98,642

24,575

+97

2008-09

123,025

27,330

+11

2009-2010

123,120

25,834

-5

2010-2011(upto

73,177

16,039

-

565,913

126,450

-

December 2011) Total

Source: Various UNCTAD Statistics, 2011. Some of the sectors like services (financial and non- financial), telecom, housing and real estate, construction and power attracted maximum FDI while Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE, among others, are the major investors in India.

Divisions of Retail Sector: The retail industry can be divided into,  organized large,  unorganized and  informal sector enterprises. Organized retailers comprise traders who possess legal permissions or licenses to undertake the activity, are registered with sales tax/VAT etc. Such enterprises are super markets, hypermarkets, retail chains, and also the privately-owned large retail businesses. At present, it is gradually gaining in importance, and slowly eating in to the business of second category of retailers.

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The Unorganized retail trade enterprises mean all those local kirana & general shops, family managed registered under the Shops and Establishment Act (s), administered by the local authorities. Their number is very large and this category of enterprises dominate Indian scenario with a whopping 98 per cent estimated share in the total establishments. The third category of retailers includes small shops such as tiny grocery and vegetable shops run from a room of a house, paan/beedi kiosks (often selling a variety of items, like small toothpaste tubes, tooth brushes, soaps, pouches of shampoo, etc), way-side vendors, and hand carts operating without any licenses.

FDI in Retail Trade: The government of India has permitted any foreign multinational through FDI, to invest in India up to 51% in joint venture for the retail of its exclusive/ branded product. This permits investment in retail with respect to branded retail, meaning confined to a single brand. India had 1.2 crore (12 million) kirana shops and by next week, the number had moved up to 40 million kirana stores and by the 3rd of December, it had shot up to 50 million kiranas. Nearly 25.1 million people are employed in the retail trade enterprise sector, 41.8 per cent of total non-agricultural establishments‟ falls under the category of retail trade category.

Foreign Retailers have started operations in India through various routes: (i)

joint ventures where the Indian firm is an export house;

(ii)

Franchising (eg. Kentucky Fried Chicken, Nike);

(iii)

sourcing of supplies from small-scale sector;

(iv)

„cash and carry‟ operations (Giant in Hyderabad, Metro in Bangalore)

(v)

Non-store formats – direct marketing (Amway).

In February 2002, the world‟s largest retailer, Wal-Mart, opened a global sourcing office in Bangalore. In November 2006, it announced its entry under a joint venture with the Indian Corporation Bharti. This is a preliminary step by Wal-Mart pending the removal of all restrictions on FDI in retail trade.

Different Characters of Indian Retail Trade: The Indian trading sector is very different from that of the developed countries. In the developed countries, products and services normally reach consumers from the manufacturer/producers through two different channels: (a) through independent retailers and, (b) directly from the producer In the latter case, the producers establish their own chains of retail outlets, or develop franchises. In India, less than three per cent of the retail transactions are done in the organized sector; and this is projected to increase to 15-20 per cent by 2010.To date, the organized sector is restricted to metropolises. The second mode is found in a few national firms and some subsidiaries of global firms. Indian wholesale trade too is not organized. The few government initiatives (such as the formation of Boards for tea, coffee, and spices, and the State Trading Corporations) have largely become defunct by now, and private initiatives have mostly remained localized. 194


Small and medium enterprises dominate the Indian retail scene. The trading sector is highly fragmented, with a large number of intermediaries. So also, wholesale trade in India is marked by the presence of thousands of small commission agents, stockiest and distributors who operate at a strictly local level. The retail sector acts as an important shock absorber for the present social system. Thus when a factory shuts down rendering workers jobless; or peasants find themselves idle during part of the year or get evicted from their land; or the stagnant manufacturing sector fails to absorb the fresh entrants into the job market, the retail sector absorbs them all. A skilled labourer turns into a street hawker, a farmer turns to delivering milk packets door to door, an educated unemployed youth hawks newspapers and a better off unemployed person starts a telephone booth and retails telecom cards as an „add on‟ service. When (in exceptional cases) the factory reopens, or harvesting time arrives, some of these new entrants leave the retail trade and return to their respective employments. Thus, after agriculture, the incidence of under-employment is probably highest in the Indian retail sector. There are nearly 12 million retail outlets. Small retailers operating in the unorganized sector dominate the trade.

The Source of the Pressure for Allowing FDI in Retail: (i) “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.” (ii) “The government needs FDI to meet its foreign exchange requirements.” (iii) “Only global retailers can satisfy the rising and varied demands of Indian consumers.” Rather than internal „pull‟, the reason that the Government is interested in pushing FDI in retail trade is external pressure. Foreign firms are interested in the growing Indian market of the better-off; India is an emerging procurement site for global retailers, especially for handicraft products (including textiles) and semi-processed local food items; the profitability of major retail firms in the developed countries is declining, and capital is looking for better pastures; and new rules in international trade encourage movement of FDI across nations to maximize return on investment

Pros and cons of FDI in Retail Trade: Disadvantages:  It will lead to closure of tens of thousands of mom-and-pop shops across the country and endanger livelihood of 40 million people.  It may bring down prices initially, but if multinational companies get a stronghold in the retail market.  Farmers may be given remunerative prices initially, but eventually they will be at the mercy of big retailers.  Small and medium enterprises will become victims of predatory pricing policies of multinational retailers.

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 It will disintegrate established supply chains by encouraging monopolies of global retailers.

Advantages:  It will abolish intermediaries and thereby helping them get more money for their produce.  It will help in bringing down prices at retail level and calm inflation.  Big retail chains will invest in supply chains which will reduce wastage, estimated at 40 percent in the case of fruits and vegetables.  Small and medium enterprises will have a bigger market, along with better technology and branding.  It will bring much-needed foreign investment into the country, along with technology and global best-practices.  It will actually create employment than displace people engaged in small stores.  It will induce better competition in the market, thus benefiting both producers and consumers.

Effect of FDI in Retail Trade: How many kirana shop owners will get out of business if Wal-Mart, Carrefour, Tesco and other foreign retailers are allowed to set up hypermarkets in West Bengal? Since Kolkata is the only city in West Bengal with a population of more than one million, "foreign” hypermarkets can only be set up in Kolkata. By any measure, Greater Kolkata can only have a maximum of 20 more hypermarkets. These 20 hypermarkets cannot displace more than 1400 kirana stores (70 kirana stores per hypermarket). There will be absolutely no change in employment as about 7800 people will get employed by the "foreign” hypermarkets. Certainly, the 1400 kirana shops are not employing more than 7800 people. So, no one will lose jobs, period. On the contrary, the 7800 employees of the "foreign” hypermarkets will have benefits such as PF, ESI and insurance. They will have far better training in personality development and selling skills, thus making them far more marketable. Does the kirana provide them all of this? The 20 "foreign" hypermarkets in Kolkata are expected to do sales of Rs.18.48 billion per year. At an average 11% VAT rate, they will contribute Rs.1.831 billion in VAT. In all probability, zero VAT is being collected from the 1400 kirana shops that they might displace. That's a 2.5% increase in West Bengal's VAT collections.

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Position of Retail Trade in India; 1. Average size of a kirana shop (petty shop/corner shop) is around 500sq.ft. 2. Most of the kirana shops are sole proprietorship shops. 3. Most of them are not registered; they are not governed by shop at or by minimum wages act. 4. They employ labour, who are mostly their own relatives and the kirana shops act as training ground to start new shops by the persons working there. 5. The average monthly turn-over of a kirana shop is Rs.3 lakhs, i.e., a average sale of Rs.10, 000 per day. 6. Leaving a side a handful of consumers, most of the customers buy provisions, oils, and vegetables in very small quantities. 7. These kirana shops do not pay taxes, they are operated on OPM (other peoples money) i.e., manufacturers supply these kirana shop on weekly/monthly credit. 8. Indirect employment of the kirana shops are in the form of delivery boys, supply of materials by the wholesalers/ producers and uneducated unskilled, errand boys.

If FDI is permitted in Retail? 1. Average size of hiper market is 75,000sq.ft to 150,000sq.ft (taking into account the size of wall mart. 2. The FDI retail shops will be joint-ventures or fully-owned and financed by foreign capitals. 3. FDI retail shops will be registered firms, paying minimum wages to labour (as per industries act) shall provided PF, medical insurance, stipulated working hours, etc. 4. FDI retail will be employing educated labour for their sales counters and uneducated labours for all other related works. There will be both direct and indirect employment of FDI retail. 5. The average FDI retail shop will be in Crores which is liable for income tax, sales tax, vat, customs duty, etc 6. FDI retail shops can not sell very small quantity of any commodity; their sale will be targeted towards the rich and the creamy layer.

Will FDI Retail Effect Kirana Shops? Considering the nature of customers for kirana shops, there can not be any drop in their turn-over. The people belonging to less- effluent section of the community will continue to get their goods only from the kirana shops. So, the impact of FDI in retail is 197


not likely to affect the volume of the sales of the kirana shops. However there are departmental store and super market which now cater to the requirements of middle income and the creamy layer like the reliance stores. FDI retail will result in the creation of hyper markets, which may attract a large percentage of customers from the super markets and the departmental stores. One should remember that these departmental stores are subsidiaries of bigger corporations and given the competitiveness, they may also expand their business because in a competition the fittest only can survive. The socialistic argument that FDI in retail is likely to kill the small traders is not very acceptable in live of the low level of income, purchase of essentials on daily basis and the use of indigenous credit instruments for the purchases. These can not be substituted by any international agency, leave along FDI in retailing. The arguments against retail by FDI are not well-founded.

Conclusion: A consumer is sovereign and he should be given goods and services according to his choice and at the lowest price. The FDI in retail and creation of hyper markets are likely to result in availability of more standardized and branded products at a lower cost. India has become a global economy after 1991 and in a market economy, competition prevails and efficiently succeeds and hence entry of FDI in retail is likely to provide both. By comparison, FDI in telecom, power, computer software, finance have not affected the common man. On the other hand, they have helped even a man on the street. We find most of the Indians having mobile phone, growing computer literacy increase in automobile ownership and improvement in the knowledge economy. When FDI in other sectors have not harmed the common man, it is not likely to harm if permitted in retail also. REFERENCES: Chelapathy Rao D.S. et. Al, “FDI in the Post Liberalization Period”, Journal of Indian Political Economy, Vol.ii, No.4, July-Sep. 1999, P.429. RBI (2006) Foreign Direct Investment Policy, Department of Industrial Policy, Ministry of Commerce & Industry, Govt. of India, April, 26, pp.1701-12. Balasubramaniam V.M., David Sapsford (2007), “Does India Need a lot more of FDI?”, Economic & Political Weekly, April, 28. Prasad, V. N. (2009, July). Indian MSEs: Trading and other Enterprises Need a Common Policy Treatment. Retrieved July 17, 2010, from GSME News: The Economic Times. (2010, July 8). BJP opposes FDI in multi-brand retail. Retrieved July 13, 2010, from http://economictimes.com: http://economictimes.indiatimes.com/news/politics/nation/BJP-opposes-FDI-inmultibrandretail/articleshow/6140941.cms DIPP. (2010). DISCUSSION PAPER ON FOREIGN DIRECT INVESTMENT (FDI) IN MULTI-BRAND RETAL TRADING. New Delhi: Department of Industrial Policy and Investment Promotion. UNCTAD Statistics.

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A STUDY ON EMERGED & EMERGING RETAIL FORMATS IN INDIA MR. M. RUPESH KUMAR JAIN*; DR. A.G.V. NARAYANAN** * Assistant Professor K.S.R School Of Management, K.S.R College Of Technology, (Affiliated To Anna University - Coimbatore) Tiruchengode Namakkal (Dist) Tamilnadu, India. ** Dean Faculty Of Management Ebet Group Of Institutions, (Affiliated To Anna University - Coimbatore) Kangayam Tirupur-638108 (Dist) Tamilnadu, India.

ABSTRACT The Indian retail sector is going through a transformation and this emerging market is witnessing a significant change in its growth and investment pattern. Both existing and new players are experimenting with new retail formats. Currently fresh popular formats like, Exclusive Brand Outlets, Hypermarkets, Discount stores, Wholesale Clubs, Single price Stores, Hobby shops, Antique stores, e-tailing, etc. are growing very hasty. The retailing has developed its pace towards modern methods in electronic way such as e-tailing, Kiosks, etc. The conversion has taken place from ancient period to modern age. The revolution has taken place in India through these modern retailing formats adopted from the developed countries. The revolt has taken place in terms of changing habits, spending of disposable income, change in fashion, rise in the standard of living, exposures to modern methods, etc. KEYWORDS: Exclusive Brand Outlets (EBOs), Hobby Shops, Hypermarkets, Single Price Stores (SPS), Wholesale Clubs. ______________________________________________________________________________ INTRODUCTION The Indian retail market is categorized into organized and unorganized forms of retailing. The unorganized sector shares majority of the market share when compared to organized sector. But now, the retailing scenario in India is changing from unorganized to organized due to the introduction of many newer formats in India by the foreign players. The Indian retail scenario has many formats such as traditional, emerged and emerging retail formats. The Indian retail

199


market is the fifth-largest retail destination globally. It has grown from US$ 330 billion in 2007 to US$ 427 billion in 2010 and expected to grow by US$ 637 billion by 2015 by At Kearney.

1.1 Ancient Retailing The premature Retailing in India was being carried out through weekly Haats or Gatherings at the market, Melas, Mandis, etc, wherein local products from nearby villages are accumulated for the sale at the market place. Apart from weekly markets, village fairs usually were in bigger in size with a variety of goods sold like, food, clothing, handmade goods, cosmetics, small consumer goods, etc. Then, the kirana stores came into existence cater to the needs of the local people. Hence, early Indian Retail set-up was primarily focused on local products and by local merchandisers. The various other forms of ancient retailing are, Hawkers, Peddlers and Petty shops.

1.2 Modern Retailing At the beginning of the 21st century, Indian retailing underwent drastic changes like, opening up of Supermarkets, Department stores, Chain stores, Discount stores, Speciality stores, Variety stores, Malls, etc. Today, Indian retailing Industry is being embraced by lot of forces like, excess competition within and across the formats, the expansion of online retailing known as e-tailing, admission of MNC players like, Wal-Mart, Metro, Tesco, Carrefour, etc. Global Brands like, Swarovski, Lacoste, Domino‟s, Benetton, Sub-Way etc. also have shown great interest in Indian Retailing industry. The National players like, Tata, Reliance, ITC, Godrej, RPG, Birla, Future Group, etc. have also taken part in the booming sector.

2. Emerged Retail Formats in India 2.1 Kirana Stores It is an unorganized format which covers major portion of retailing business. The kirana stores are also called as, “Provision Stores, Grocery Stores & General stores”. The kirana is a colloquial term which is used for „Ration‟. The person who is involved in this business is termed as Kiranawala, who is engaged in selling all kinds of grocery or merchandise items. It is an independent store normally run by the family members for generation together. Kirana store is mostly engaged in providing the credit facility to the regular customers and door delivery system. He maintains a small tiny notebook wherein, he posts all the credit transactions. 2.2 Supermarkets A supermarket is a large self service retail store to minimize the operational cost. It carries a wide range of consumer products under one roof. It comprises line of food products, laundry requirements and household maintenance items. It provides products at reasonable prices and at high quality. A supermarket could be classified into, a. Mini supermarkets which ranges from 1,000 to 2,000 Sq.ft. b. Maxi Supermarket ranging from 5,000 to 10,000 Sq.ft. Example: More, Cinthamani, Spencer‟s Daily, Spar etc. 200


2.3 Department Stores A Departmental store is a large store organized into several departments, offering a broad array and depth of product lines. The store ranges from 20,000 to 50,000 Sq. ft. These stores are general merchandisers. The product mix includes food products, clothing, apparels, appliances, furnishing, utensils, cosmetics, stationeries, gifts, foot wears, toys, accessories, household goods, etc. It offers a substantial customer service. Example: Vishal Mega Mart, Pantaloons, Lifestyle, Reliance Retail, etc. 2.4 Speciality Stores The Speciality stores are also called as Exclusive Brand Outlet or Mono-Brand Outlet or Single Brand Outlet which offers specialized type of items. It carries a narrow product mix with depth of assortment within the line. A Speciality Store deal with specific categories and provide a deep assortment. The Speciality Stores stock only a single brand. It can either be a Company Owned outlet or a Franchised Outlet. It is specialized in selling variety of goods or products, of a particular Brand alone. It has good ambience and fully air-conditioned shop with all range and vivid varieties available in that particular brand. In exclusive stores, if a manufacturer suffers a fall in market share or suffers losses, the store-keeper is unable to reduce his own losses and so he suffers along with the producer. The main aim of this store is that it targets on a limited number of gracious products with intense level of customer service. However, all the branded stores come under this format. The speciality stores are in many distinct retailing fields, like, a. Gold Retail: Tanishq, Gold Plus, Kalyan, Khazana, Kirtilal & Kalidas etc. b. Mobile Retail: Nokia Priority Dealer, Samsung, Sony Ericsson, Motorola, LG, etc. c. Toys Retail: Funskool, Leo, Toys R Us, etc. d. Pen Retail: Reynolds, Editions, Parker, etc. e. Electronics Retail: LG, Samsung, Sony, Godrej, Kelvinator, Philips, Onida, etc. g. Watches Retail: Titan, Timex, Rado, Quartz, etc. h. Beauty Care Retail: Himalaya, Revlon, Lakme, Health Glow, CavinKare‟s, etc. i. Automobile Retail: Hero, Honda, Suzuki, Mahindra, Opel, Fiat, Tata, TVS, Hyundai, Toyota, Mercedes, Chevrolet, Nissan, Skoda, etc. k. Apparel Retail: Raymond‟s, Peter England, Derby, Trigger, Arrow, Allen Solly, Koutons, etc. l. Footwear Retail: Action, Reebok, Nike, Adidas, Liberty, Bata, Khadims, etc. m. Food Retail: Pizza Hut, Dominos Pizza, Subway, Suvidha, Haldiram‟s, etc. n. Cafeteria Retail: Barista, Café Coffee Day, etc. o. Home Décor Retail: Gautier, Durian, Nilkamal‟s @ home, Godrej, etc. p. Mattress Retail: Kurl-on, Duro-flex, etc. q. Ice-Cream Parlours Retailing: Baskin Robbins, Arun, Amul, Kwality, Dairy Day, etc r. Computers Retailing: HP, HCL, Dell, Lenovo, Acer, etc. s. Tyres Retail: MRF, Apollo, CEAT, Dunlop, TVS, etc t. Books Retail: Crosswords, Fountainhead, etc. 2.5 Discount Stores The Discount Stores tend to offer a wide selection of products & services, but they compete mainly on price offers, extensive variety of merchandise at affordable and cut-rate prices. It offers discount on the MRP to promote more selling and to reach high turnover. All 201


kinds of products are available from perishable to non-perishable goods. Normally, the retailers sell less fashionable goods. Example: Subhiksha, Tru-Mart, Margin Free, Apna Bazaar, etc. 2.6 Convenience Stores It is normally located at residential areas. These stores range from 3,000 to 5,000 Sq.ft. This store is very much perfect for making immediate and emergency purchases. These stores provide limited amount of merchandise at average prices with fast check out time. These stores run up to extended hours and also work round the clock but with a limited variety of goods for the customers. It has a good accessibility. Example: Nilgiris in South, 24/7 in Delhi, etc. 2.7 Retail Chains A retail Chain operates a multiple brand outlet or an Exclusive retail outlet either under a common ownership or through a franchisee in different towns and cities. To an extent the purchases and the decisions made would be centralized. The Chain stores should have a strong networking system which ties a knot with all the outlets coming under the stream. 2.7.1 Exclusive Retail Chains i. Fast Food Chains: Comesum, Adyar Anand Bhavan, McDonalds, Haldiram‟s, etc. ii. Petroleum Retail Outlets: BP, HP, Indian Oil, Essar Oil, Reliance Petrol, etc. iii. Hotel Chains: Taj, Oberoi, Suvae, Saravana Bhavan, Annapoorna, etc. iv. Cards Retail Chain: Archies, Expressions, etc. 2.7.2 Multiple Retail Chains i. Mobile Chains: Mobile Store, Univercell, Poorvika, Mobile Hash, etc. ii. Electronics Chains: Next, Viveks, Girias, etc. 2.8. Variety Stores The Variety Stores are also termed as Category Killers or Category Specialists or Multi-Brand Outlets. It supplies wide assortment in single category for low prices. The retailers “kill” that category for their customers by giving a complete range in single item. Multi-brand Outlet welcomes more footfalls because the public gets a wider choice. When a customer visits a multi-brand store it satisfies his hunger for choice on both the time and space parameters. The customer chooses from a host of brands and products in a single visit from a single outlet, thus allowing him to make a real-time product comparison, save on time, and the cost of purchase. In the case of multi-brand stores, retailers can easily lower their losses because they can distribute their costs among multiple brands. The variety stores are of many distinct segments like, 2.8.1 Mobile Retail: Univercell, Poorvika, Mobile Express, Mobile Store, Mobile Hash, etc 2.8.2 Toys Retail: Toys R Us, Kids Kemp, etc. 2.8.3 Electronics Retail: Viveks, Next, Girias, Croma, Best Buy, etc. 2.8.4 Apparel Retail: Cock tail, Planet Fashion, Beyond, Gamma, Top Brass, etc. 2.8.5 Footwear Retail: Style walk, Loft, etc. 2.8.6 Food Retail: Food World, Food Court, etc. 2.8.7 Home Décor Retail: Furn. Planet, Relax Furniture, etc. 2.8.8 Sports Retail: Sportxs, Sports Authority, etc 2.8.9 Textile Retail: Nallis, Chandana Bros, Chabara 555 etc. 2.8.10 Book Retail: Odyssey, Crossword, Landmark, etc. 2.8.11 Music Retail: Planet M, Music World, Music Gallery etc. 202


2.9 Factory Outlets This is an outlet which sells mostly season end items, excess stocked products, defected goods, irregular sizes, non-movable items, cancelled order, out of fashion, close outs, etc. This store can either be a company owned outlet or a franchised outlet. These stores are generally found at outskirts of the city to reduce the operational, storing and distribution expenses. Some of the factory outlets are with permanent covered sheds and fixed locations which offer parking facility. The main advantage of this store is it offers heavy discounts and creates a threat to existing retailers. Example: Van Huesan, Louis Phillip, Allen Solly, Arrow, Peter England, etc. 2.10 Family Shops A family shop is very distinct format which satisfies all the age groups with clothing requirements. The name itself depicts that it satisfies all the members in the family. It fulfills the needs of children, teenagers, women, aged men and women, all under one crown. These types of stores aim at providing complete shopping with a collective decision-making of all the members in the family within a limited time frame. They can enjoy and rejoice shopping together with their inmates. Example: SKC, Chennai Silks, Pothys, Ganapathy Silks, Saradhas, etc. 2.11 Shopping Malls A Shopping Mall is also known as a Shopping Centre or a Shopping Precinct. It ranges between 50, 000 and 1, 00, 000 Sq.ft. It holds a range of retail shops under one Single Giant Outlet. It operates with various brands without any boundaries between them and providing flawless services to their shoppers. It deals with several products categories and it provides a large variety of merchandise too. A shopping mall is well equipped with interiors, entertainment, leisure facilities, food, etc. with a mixture of shopping outlets inside a mall. Example: Garuda Mall (Bengaluru), Spencer Plaza and Express Avenue in Chennai, Empress Mall and Eternity Mall in Nagpur, TDI Mall and Ansal Plaza in Delhi, Sahara Plaza (Gurgaon), etc. 2.12 Hypermarkets The Hypermarkets are also called as Giant stores or a Super store which is a combination of both supermarket and departmental store. A hypermarket normally ranges from 1, 00, 000 to 3, 00, 000 Sq.ft. It displays numerous range of product all under one roof. It is generally a very large self serviced format in retailing. The main endeavor of a hypermarket is to provide the customers with weekly or monthly shopping needs or wants at a single stroke or at one visit. In India first hypermarket was opened by Pantaloon Retail India Ltd. which operates Big-Bazaar in India. Bharti - Wal-Mart, Shoppers Stop, Timberland, Star Trent, etc. all followed the stride in India. 2.13 Parasite Stores A parasite store is a small store or outlet, which has neither its own floor area nor its own customer traffic. The Parasite is a name given to this store because its identity exists with its host. Parasite store depends on existing traffic flow of a shopping centre or retail business area. The customers visit these stores not because of its customer service or store image but they enter into to refresh or relax after a weary shopping or exhausted meeting or conference. Example: i. A Coffee Parlour in a shopping centre ii. A Magazine and Newspaper stall in a Hotel Lobby 203


iii. A Canteen or a Beauty Parlour at PVR Cinemas iv. An Ice-Cream Parlour or a Restaurant at a Multiplex v. A Restaurant or a Fast Food at an Institution or at Government offices 2.14 Shop-in-Shops (SIS) The shop inside a shop could also be called as Leased Departmental Stores. It means a portion of a store is left on lease to an outside person. He has to pay either a lease amount or rent to the store owner. The parties involved would be a Lessor and Lessee. He would be held responsible for all the interiors designs into his allocated area. The main benefit of these kinds of stores is, they reduce their risk by dividing the space among various other outside players. The benefit for the inner players is, they use the Store identity and the Brand name but care should be taken by the Outside Players, that it should not dissolve the Store‟s identity. Example: Archies, Hall Mark, etc. 2.15 Confectionery Stores A confectionery store could be a sweet shop, a candy store, a pastry shop, a cake shop, a lolly shop etc. These stores sell variety of sweets, namkins, candies, cakes, pastries, etc. targeting the children. It accumulates heavy assortment of sweets which is far larger than a grocer or a convenience store keeper. They often sell traditional treats and sweets from different countries. Their lay-out is designed in such way that it attracts the children and pleasant fragrance attracts the people of all ages. Example: Nala Bakery (Coimbatore), Chaudhry Mistan Bhandar, Darks, Bakers Station and Cake Palace in Delhi, Krishna Sweets and Adyar Anand Bhavan in Chennai, etc. 2.16 Multiplexes The multiplexes are those retail destinations which is associated with providing exclusive services and enjoyment to the viewers in the pasture of entertainment. The big screen cinema attracts the viewers even if the cost per ticket is heavy than the other local cinema halls. The viewers pay for ambience, interiors, good spacious seating arrangements, excellent audio output, exclusive service, good parking facility, cleanliness, etc. The price of a ticket ranges from Rs. 150 to Rs. 500. They can have their own convenient timings with freedom of number of shows to be run per day. The viewer plays the role of a consumer too by adhering on to the services of a fast-food or a restaurant or a canteen. Apart from this it also has various shops to provide a convenience of shopping during the leisure hours. Example: INOX Leisure Ltd, PVR Ltd, M2K Cinema, Waves Cinemas, Cinemax, Ad labs Cinemas, DT Cinema, etc. 2.17 Vending Machines Vending machines are automatic machines that serve the purpose of selling general merchandise like soft drinks, tea, coffee, newspapers, eatables, etc, to the customers in the absence of the retailer. These machines are often located at railway stations, bus terminals or at busy centres. These machines work either on the basis of inserting metal coins or card swipes. These machines are hasselfree but need regular maintenance and service to keep machine working. Example: Espresso, hot noodles, magazines, newspapers, novels, comic books, weight measure, pens, beverages, milk, snacks, etc. 2.18 Single Price Store (SPS) A Single Price Store is also called as Unique Price Store or Solo Price Store or Mono Price store wherein the products are dispersed over to the racks for the ease of the customers for 204


fast and easy selection. These stores‟ speciality is that the customers need not disturb the store keeper every time asking about the price of the product, because of its unique pricing policy. In this format all the store keepers price their products at odd pricing such as, Rs.99, Rs.149, Rs.199, etc. Example: Store 99, One Dollar Store, etc. [

3. Emerging Retail Formats In India 3.1 Revival of Mom and Pop Stores The Neighbourhood or Mom and Pop Stores are again coming into existence owing to the short term needs and immediate purchasing requirements of the customers. The revitalization of these stores could be seen in future because now-a-days, people are more time starved. They do not have time to spare for 2-4 hrs for complete shopping for a whole week or a month. So, they purchase it on a daily basis at the convenient time. 3.2 Extension of Service Galleries The Service Galleries are of modern expectations by the customers. The fresh trend is any product bought by a customer they anticipate Service Gallery to be located in their city. It was felt by the companies that to satisfy and to retain a customer with a particular brand, the key power to be given to the services. So, this is the way the Service Galleries came into existence. The key duty of these galleries is to provide the customers with flawless service. Free services during the warranty and guarantee periods and once the promise period lapses, going on with paid services until the product is disposed off. Example: Nokia Care Point, Samsung Customer Care Gallery, Sony, Motorola, LG, HP, Dell, HCL and Apple Service Centers, etc. 3.3 Emergence of Hobby Shops A Hobby store is involved in selling of recreational modeling, craft supplies, model airplanes both military craft and airliners, house and building models, train models and ship models. Some hobby shop also sell dolls, coins and stamps. Other hobby stores sell remote control cars, boats, remote control planes, etc. People who enter into the store cannot leave the store without buying something as the products are well displayed with attractive prices. These stores also have videos running throughout the time which teaches the people how to make the models. Example: JRR Hobby Shop [online store], Rotor Sport & Hobby Pvt. Ltd, Hobby Ideas (Craft & Hobby Chain Store), Itsy Bitsy, etc. 3.4 Growth of Antique Stores An antique shop is a retail store specialized in selling of antiques. These shops are located normally at busy places may be near a museum, traditional temple or some other tourist place where flow of population is high. The typical products which are sold in this shop are paintings, wood engravings, crystal glass, cutlery, wall plates, ancient clocks, olden pearls & stones, etc. Example: Noahs Ark & Mughal Art Corner (Mumbai), Art O Gems, Hatke Gifts (Chennai), Rare Antiques, Shobana Arts, Tejo (Bangalore) 3.5 Expansion of Wholesale Clubs 205


The Wholesale Clubs are also termed as Membership Clubs or Warehouse Clubs. These stores provide the goods in bulk or fixed quantities but at low prices. The Speciality of this store is that, only those who become the member of this store by getting a membership card can avail the services. These stores are more suitable for the local retailers and wholesalers who can buy in bulk for further selling at their shops. The members also avail good discount for their purchases with nominal customer service due to low pricing policy. These kinds of stores are more suitable for B 2 B format. Example: Metro, Big Bazaar Club, Sam‟s Club, Max, etc. 3.6 Entry of Duty-Free Shops The Duty-Free Shops are the retail outlets which are exempted from certain local duties and national taxes. Mostly these shops are located in the International zone of International airports and seaports, wherein the travelers buy the products and take away out of the Country. The products could be sold duty-free with some restrictions. Example: Delhi Duty Free Services, Alpha Future, Planet Y, Custom Shop, Flamingo Duty Free Shop, etc. 3.7 Fresh Live Booths 3.7.1 Live Chakki – These retail stores are opened for the customers for grinding wheat, rice, barley, maize etc. immediately at the store and get a fresh delivery. 3.7.2 Live fresh juice Booths – These fresh juice bars are increasingly gaining importance because the people are now nature friendly and seeking for everything fresh because of health consciousness. 3.7.3 Live Kitchen – Its best utility is the customers have the freedom to choose the vegetables hand it over to the shop-keeper who will either cook wholly or partly or chop it according to the requirements of the customers. At these stores the salads, soups, sandwiches, paav bhaji, cutlets, etc. are also sold to fulfill the needs of the customers. 3.7.4 Live Dairy – It is a booth where in fresh milk, kova, butter milk, curd, cheese, butter, cream, pure ghee, etc. would be sold at nominal prices less than the prices available at the market. 3.7.5 Live Dosa Corner – This is a place where in the numerous varieties of Dosas are prepared and served at the appeal of the customers. This is also called as Dosa Mela wherein more than 50 varieties of dosas are sold. 3.8 Rural Retailing The rural retailing is focusing on the explorations by both the entrepreneurs and the corporate houses. It is carried on by various business houses such as, DSCL Haryali kisan Bazaar, ITC‟s - Choupal Sagar, HUL‟s - Project Shakthi and Mahamaza, the Godrej Agrovet ltd, Future Group-Aadhaar, M & M Shubh Labh stores, Escorts Rural Stores, Tata Kisan Sansar, Warna Bazaar, etc. The rural initiatives are taken by the various giants for providing multitude services to the farmers and their families. Example: ITC, HUL, Godrej, Future Group, Tata, etc. 3.9 Unconventional Forms of Retailing 206


3.9.1 Kiosks – The video kiosks are interactive, supportive electronic computer terminal which displays goods and services at a video screen and allows the viewers to make their own selection and decisions. It has touch screen terminals for the use of their consumers. This is very famous at places where the retailer cannot afford to book the store space for displaying variety of products. Kiosks are used either for customer service or taking orders. Kiosks could be attached with the retailers‟ computer network or to the websites. Example: Wal-Mart, Future Shop, The Home Depot, etc. 3.9.2 E-tailing – It is also called as cyber retailing, internet retailing, virtual retailing or eretailing for the selling of goods or services through electronic media. But now-adays due to the revolution in electronic communications many other devices like web-enabled mobile telephones, tele-conferencing devices, etc have also equipped well in retailing forum. Its main advantage is convenience of access, reliability and lower cost. Example: Amazon, e-bay, shoebazaar, etc. 3.9.3 Airport Retailing - It is one of the promising sectors in the field of retail development. It offers all branded products like, clothes, food, toys, mobiles, electronics, magazines, wrist watches, etc. Example: Tata‟s Croma, Shoppers Stop, Future Group, etc.

4. Conclusion The retailing formats are developing in India at a faster phase. The reasons for the development are fast adoption to fashion and habits of western culture. The people are now focusing on delightfulness rather than satisfaction. This is one such industry which gives more importance to customer services. The fresh formats have not yet tasted the success because of high initial investment for space management and stiff competition with the existing formats. The boom in the real estate industry in India, has indirectly affected the retail industry‟s establishments. In the years to appear, the retailing industry would be the rocking industry which would pitch the entire world.

5. References 1. Dr. Harjit Singh (2009), “Retail Management-Global Perspective Text & Cases”, Sultan Chand & Company Ltd, New Delhi. 2. Dr. Pooja Sharma, “Retail Management”, “Education & Information Network”

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3. Retail Industry in India – The Economist 4. Mr. Vasant Parakhiya, “The Indian Retail sector” 5. www.ibef.org - Eighth Annual Global Retail Development Index (GRDI) of AT Kearney in 2007. 6. www.Slideshare.com – “Retail Sector in India”, “Retail Management” & “The growth of new Retail format” 7. www. Retail india.com 8. www. en.wikipedia.org/wiki/retail/Hobby store/Duty-free shop 9. www.infoFanz.com 10. www.naukrihub.com/india/retail 11. www.retail marketing-rdm/intro.retail.formats 12. www. Indian Journal of Marketing 13. www.business.mapsofIndia.com – “Indian Retail Market” 14. www.zainbooks.com - principles-of-marketing-retailing

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A STUDY ON EFFECTIVENESS OF TECHNIQUES OF MANAGING EMPLOYEES AMONG VARIOUS INDUSTRIES WITH SPECIAL REFERENCE TO ERODE DISTRICT DR.V.KAVITHA*; Ms.P.KAVITHA** * Associate Professor Kalaignar Karunanidhi Institute Of Technology Coimbatore District Tamilnadu India

** Associate Professor Kalaignar Karunanidhi Institute Of Technology Coimbatore District Tamilnadu India ______________________________________________________________________________ ABSTRACT Employee management is the most important job that managers do for the growth of an organization. Managers in the manufacturing sector are faced with increasing challenges. The span of control of these managers continues to grow, while the demand for customer satisfaction is also on the rise. With more employees to manage and greater the demands on performance, the managers can easily feel restricted in their ability to develop relationships with the employees on the dyad-level. An attempt has been made to identify the opinion of the managers on the attributes of managing employees at workplace in various manufacturing industries. For the purpose of this analysis, the chosen variables were classified into two important strata Viz., dependent variable and independent variables. The opinion of the managers on attributes of managing employees was taken as the dependent variable. The independent variables used in the study was nature of organization. Two-way table and chi-square analysis were employed. Eleven main factors were identified and 5 point scaling technique was employed which was grouped under 3 levels. The details of the study are presented in the results and discussions. It is found from the analysis that all the dimensions are influenced in an average level in the industries like paper, textile and other group of industries. These practices can be followed to manage and develop the employees, which in turn will improve the productivity. The various findings of the study help us to conclude that the managers belonging to sugar industries have low commitment towards the growth of the employees and the organization. KEYWORDS: Employee Management, Managers, Manufacturing Industries, Performance, Productivity. ______________________________________________________________________________

209


INTRODUCTION Employee management is a critical factor in the efficiency and competitiveness of both the large and small organizations. But small companies traditionally do not, or cannot, devote sufficient resources to this area of management. Indeed, managing employees in a service sector setting provides unique challenges for the managers, particularly if the manager attempts to develop quality dyadic relationships with the employees. People in an organization have to be cared for and nurtured so as to be able to give out their best to the organization. With all the boundaries remaining only in the mind and seamless knowledge and technology transfers becoming the way the world works, the competencies of people have to be constantly upgraded. Ironically, more often than not, managing innovations in technology comes easier to us, than managing the employee in the organization. Higher the employee in the organization, the greater is the emphasis on interpersonal relations. The management of one’s own emotions and realizing the implications of one’s own behavior on others around has gained critical importance for success. A person can be a successful manager if he makes a serious difference in the work life of the employees and the organization. A successful employee management helps the employee motivation, employee development and the employee retention. STATEMENT OF THE PROBLEM The growth rates for 2009-10 are remarkable in the sharp decline because of the global recession that started in September 2008. The industry has started recovering from May 2009 and it has been a strong V shaped recovery. The growth is not just because of the base effect but the indices have increased as well. The growth rate in IIP (Index Industrial Production) in last six years, it is the second highest growth rate. It is an outstanding recovery and a few could have projected this quick recovery in the beginning of 2009-10. The overall growth of the Industrial Production in the State during 2007-08 (New Base Year: 1999-2000=100) witnessed a slowdown growth of 5 percent compared to the robust growth of 8.1 per cent in 2006-07. This slowdown in the industrial sector was attributed to the sluggish growth, experienced by the manufacturing group which enjoyed the largest weight of 81.14 per cent in the index. Erode district has a place of unique importance with 40.32 percent of population depending on non-agricultural sector. Erode district was not able to attract large scale investment in manufacturing, but few industries were established in the SIPCOT (State Industries Corporation of Tamilnadu). Industrial Growth Centre at Perundurai and in proximity to it. The State Government also, apart from starting the SIPCOT complex, did not make any substantial investment in industries in the district. In the current situation, to develop the manufacturing industries in Erode district organization has to focus on employees. Employees are the most critical assets of a modern organization. This study examines the implications of the concept of managing employees at workplace and the effect of employer-employee relationship in the manufacturing industries. The present study titled “A Study on effectiveness of techniques of managing employees with reference to Erode district” probed the following questions:

210


i.

To what extent the managers are executing various techniques in managing their employees? ii. Are the managers using same tactics in all type of manufacturing industries? OBJECTIVES OF THE STUDY To answer the above research questions, the following objectives are framed. 1. To evaluate the opinions of respondents on attributes of managing employees at workplace. 2. To examine the respondents level of using the constructs in managing employees on various manufacturing industries. 3. To suggest appropriate ways and means for improving the techniques of managing employees at workplace. METHODOLOGY The validity of any research depends on the systematic method of collecting the data, and analyzing the same in appropriate order. In the present study, an extensive use of both primary and secondary data was collected. In this study, descriptive research was used. 1.4.1 SAMPLING DESIGN In Erode district, sixty eight large and medium scale manufacturing industries are registered with DISTRICT INDUSTRIES CENTRE. The respondents were chosen from thirty seven manufacturing industries with a minimum sales turnover of 5 crores per annum and where the number of employees employed is greater than or equal to 200 for the three consecutive years. The researcher approached 300 middle level managers located in these manufacturing industries, for collecting the information. The respondents were chosen by non-probability convenience sampling method. DATA COLLECTION PRIMARY DATA The primary data was collected from the middle level managers in Erode District. The information was gathered through questionnaire method. SECONDARY DATA The primary data was supplemented by a spate of secondary sources of data. The secondary data was gathered from the records of DISTRICT INDUSTRIES CENTER in Erode district. Latest information in the manufacturing sector was gathered from well equipped libraries of Coimbatore and Chennai. TOOLS OF DATA COLLECTION By virtue of mass data obtained from the research survey as well as the data collected from secondary sources, descriptive and analytical research were considered the most appropriate for the study. The research problems and the questionnaire were all framed accordingly. The suggestions offered in the final chapter of the present research report emerged from the inferences drawn from the study of the sample respondents. The researcher used closeended questions in the questionnaire to collect the necessary primary data. The difference in the extent of managing employees among the manufacturing industries is based on their nature of organization, These factors were studied through Percentage analysis, Chi-Square test have been used for this research study. CHI-SQUARE ANALYSIS To find the degree of influence of the independent variable on the level of satisfaction, a chi-square test was used and the formula is given as follows. Chi-square statistics is defined as 211




2

 O 

i

 Ei 

Ei

2

  (2n 1) d . f

O= Observed frequency E= Expected frequency C= Number of Columns R= Number of Rows SCOPE OF THE STUDY The study highlights the factors influencing managing employees at workplace and their impact on productivity with regard to industrial relation. It shows the contribution of managers to develop employees in various manufacturing industries and highlights the scope of managing employees. LIMITATIONS OF THE STUDY The survey was conducted only in Erode district of TamilNadu and the questionnaire was administered to only 300 respondents. Time was the major constraint in collecting data from the respondents. Certain respondents had given information from their memory, as they had no account of them. Hence, the generalization of the findings of the study is subject to these limitations. REVIEW OF LITERATURE: Swapna(2009)83 in her article has highlighted that management means getting things done .The job of a manager in the workplace is to get the things done through the employees. A manager’s most important and most difficult job is to manage the people. A good manager who leads the team must show what he expects from his people through displaying his own values and beliefs by setting high standards. Instead of into giving orders, a smart manager gives instructions Let people know where they stand and what kind of behavior one can expect from them. One should always ready to listen to the opinion and to encourage the staff to contribute to discussions. Ronald(2009)84 in his article reveals the demands facing organizations and their leaders. Human resource management practices, and organizational culture is the only competitive advantage in today's world in both good and bad times. He highlights the benefits of effective human resource management in building the individual and organizational capacity. It is possible to use the ideas, thoughts, and wisdom of the people who do the work everyday to help the organization. It has become more productive and efficient. This requires leaders of the organizations to have the courage to put people first if they are to meet successfully these challenges successfully. They need to remember that at the end of the day their most important resource walks out the door. David, Michael, Eva, Michael(2009)85 in their article explain that the role of the manager in promoting the production is a little-understood phenomenon. In particular, it is difficult to separate the manager’s contributions from the abilities of the workers they supervise. The firms may therefore mistakenly attribute the contributions of the workers to the managers 212


who happen to oversee them. Some highly regarded coaches deserve their accolades, but several coaches owe their success to managing highly-talented teams. Most coaches, however, do not have a statistically significant impact on their employers or on their teams. They are nothing more than the “principal clerks” as Adam Smith called managers over 200 years ago. Every organization today works towards ensuring the value of human capital and, thus adds to its bottom line responsibility. The evaluation of human capital is, in effect, a measurement of an organization’s productivity and effectiveness. The organization wants to measure, track and analyse the human capital to know its contribution towards the organizational growth. Human capital being the key to the success of any organization, it is imperative for the HR professionals and the organizations to have the right tools and measurement metrics in place to evaluate the effectiveness of human capital and its contribution to the productivity. ANALYSIS & INTERPRETATION: Null hypothesis: There is no close relationship between the nature of industries and the constructs of employee management. Alternative hypothesis: There is no close relationship between the nature of industries and the constructs of employee management COMMUNICATION With a view to find the degree of association between the nature of industries and the level of communication, a two-way table was prepared and it is exhibited in table 7.1. TABLE NO 1.1 TWO-WAY TABLE LEVEL OF COMMUNICATION Status Textile Sugar Paper Others Total

Low

Medium

High

5 (5.1%) 14 (22.9%) 10 (14.1%) 3 (4.3%)

87 (87.8%) 35 (57.3%) 51 (71.8%) 65 (94.2)

7 (7.1%) 12 (19.8%) 10 (14.1%) 1 (1.4%)

32

238

30

Total 99 61 71 69 300

In order to find out the relationship between the nature of manufacturing industries and the level of communication perceived on managing employees, a chi-square test was used and the result of the test is shown in table no 7.2.

213


TABLE NO:1.2 NATURE OF INDUSTRIES AND THE LEVEL OF COMMUNICATION Factor

Calculated Value

Table Value

D.F

Remarks

Communication

22.27

9.488

4

Significant at 5%

It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the level of communication”, holds good. From this analysis, it is found out that there is a close relationship between the nature of industries and their level of communication towards managing employees. COACHING/MENTORING With a view to find the degree of association between the nature of industries and the level of coaching/mentoring, a two-way table was prepared and it is exhibited in table 7.3 TABLE NO 1.3 TWO-WAY TABLE LEVEL OF COACHING/ MENTORING Status Textile Sugar Paper Others Total

Low

Medium

High

7 (7%) 21 (34.4%) 11 (15.4%) 7 (10.2%)

84 (85%) 32 (52.4%) 49 (69.2%) 54 (78.2%)

8 (8%) 8 (13.2) 11 (15.4%) 8 (11.8%)

46

219

35

Total 99 61 71 69 300

In order to find out the relationship between the nature of industries and the level of coaching/ mentoring perceived on managing employees, a chi-square test was used and the result of the test is shown in table no 7.4

214


TABLE NO:1.4 NATURE OF INDUSTRIES AND THE LEVEL OF COACHING/ MENTORING Factor

Calculated Value

Table Value

D.F

Coaching/ mentoring

25.11

12.59

6

Remarks Significant at 5% level

It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the level of coaching/ mentoring”, holds good. From this analysis, it is found out that there is a close relationship between the nature of industries and their level of coaching/ mentoring towards managing employees . PROMOTING DISCIPLINE THROUGH LEADERSHIP With a view to find the degree of association between the nature of industries and the level of promoting discipline through leadership, a two-way table was prepared and it is exhibited in table 7.5 TABLE NO 1.5 TWO-WAY TABLE LEVEL OF PROMOTING DISCIPLINE THROUGH LEADERSHIP Status Textile Sugar Paper Others Total

Low

Medium

High

Total

6 (6.1) 15 (24.6%) 9 (12.7%) 3 (4.4%) 33

88 (88.8%) 37 (60.6%) 48 (67.6%) 60 (86.9%) 233

5 (5.1%) 9 (14.8%) 14 (19.7%) 6 (8.7%) 34

99 61 71 69 300

In order to find out the relationship between the nature of industries and the level of promoting discipline through leadership perceived in managing employees, a chi-square test was used and the result of the test is shown in table no 7.6

215


TABLE NO:1.6 NATURE OF INDUSTRIES AND THE LEVEL OF PROMOTING DISCIPLINE THROUGH LEADERSHIP Factor Calculated Value Table Value D.F Remarks Significant Leadership 21.19 9.488 4 at 5% It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the level of promoting discipline through leadership”, holds good. From this analysis, it is found that there is a close relationship between the nature of manufacturing industries and their level of promoting discipline through the leadership towards managing employees. EMPLOYEE ORIENTATION, TRAINING AND DEVELOPMENT With a view to find the degree of association between the nature of industries and the level of orientation, training and development, a two-way table was prepared and it is exhibited in table 7.7 TABLE NO 1.7 TWO-WAY TABLE LEVEL OF ORIENTATION, TRAINING AND DEVELOPMENT Status Textile Sugar Paper Others Total

Low

Medium

High

Total

5 (5.1%) 19 (31.1%) 9 (12.6%) 5 (7.2%) 38

86 (86.8%) 34 (55.7%) 48 (67.6%) 59 (85.6%) 227

8 (8.1%) 8 (13.2%) 14 (19.8%) 5 (7.2%) 35

99 61 71 69 300

In order to find out the relationship between the nature of industries and the level of orientation, training and development perceived in managing employees, a chi-square test was used and the result of the test is shown in table no 7.8. 216


TABLE NO:1.8 NATURE OF INDUSTRIES AND THE LEVEL OF ORIENTATION, TRAINING AND DEVELOPMENT Factor Calculated Value Table Value D.F Remarks Significant Communication 30.50 12.59 6 at 5% It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the level of orientation, training and development”, holds good. From this analysis, it is found that there is a close relationship between the nature of industries and their level of orientation, training and development towards managing employees. MOTIVATION With a view to find the degree of association between the nature of industries and the level of motivation, a two-way table was prepared and it is exhibited in table 7.9 TABLE NO 1.9 TWO-WAY TABLE LEVEL OF MOTIVATION Status Textile Sugar Paper Others Total

Low

Medium

High

5 (5.1%) 18 (29.6%) 10 (14.2%) 2 (2.9%) 35

89 (89.8%) 37 (60.6%) 54 (76%) 60 (86.9%) 240

5 (5.1%) 6 (9.8%) 7 (9.8%) 7 (10.2%) 25

Total 99 61 71 69 300

In order to find out the relationship between the nature of industries and the level of motivation perceived in managing employees, a chi-square test was used and the result of the test is shown in table no 7.10 TABLE NO:1.10 NATURE OF INDUSTRIES AND THE LEVEL OF MOTIVATION Factor Calculated Value Table Value D.F Remarks Significant Motivation 22.58 9.488 4 at 5% It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of 217


industries and the level of motivation”, holds good. From this analysis, it is found out that there is a close relationship between the nature of industries and their level of motivation towards managing employees.

GOAL SETTING With a view to find the degree of association between the nature of the industries and the level of goal setting, a two-way table was prepared and it is exhibited in table 7.11 TABLE NO 1.11 TWO-WAY TABLE LEVEL OF GOAL SETTING Status

Low

Medium

High

Total

Textile

7 (7.1%)

87 (87.7%)

5 (5.2%)

99

Sugar

14 (22.9%)

38 (62.3%)

9 (14.8%)

61

Paper

10 (14.1%)

49 (69%)

12 (16.9%)

71

Others

4 (5.8%)

57 (82.6%)

8 (11.6%)

69

Total

35

231

34

300

In order to find out the relationship between the nature of industries and the level of goal setting perceived in managing employees, a chi-square test was used and the result of the test is shown in table no 7.12. TABLE NO:1.12 NATURE OF INDUSTRIES AND THE GOAL SETTING Factor Calculated Value Table Value D.F Remarks Significant GOAL SETTING 19.44 9.488 4 at 5% It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the Goal Setting”, holds good. From this analysis, it is found that there is a close relationship between the nature of industries and their level of goal setting towards managing employees.

218


CARING AND MAKING WORK FUN With a view to find the degree of association between the nature of industries and the level of caring and making work fun, a two-way table was prepared and it is exhibited in table 7.13

TABLE NO 1.13 TWO-WAY TABLE LEVEL OF CARING & MAKING WORK FUN Status Textile Sugar Paper Others

Low

Medium

High

10 (10.1%) 16 (26.3%) 10 (14.1%) 4 (5.8%(

84 (84.8%) 36 (55.9) 55 (77.4%) 55 (79.6%)

5 (5.1%) 9 (14.8%) 6 (8.5%) 10 (14.6%)

40

230

30

Total

Total 99 61 71 69 300

In order to find out the relationship between the nature of industries and the level of caring and making work fun perceived in managing employees, a chi-square test was used and the result of the test is shown in table no 7.14 TABLE NO:1.14 NATURE OF INDUSTRIES AND LEVEL OF CARING & MAKING WORK FUN Factor Caring & making work fun

Calculated Value

Table Value

D.F

17.58

9.488

4

Remarks Significant at 5%

It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and caring and making work fun”, holds good. From this analysis, it is found out that there is a close relationship between the nature of industries and their level of caring and making work fun towards managing employees.

219


EMPOWERING EMPLOYEES AND TEAM BUILDING With a view to find the degree of association between the nature of manufacturing industries and the level of empowering employees and team building, a two-way table was prepared and it is exhibited in table 7.15

TABLE NO 1.15 TWO-WAY TABLE LEVEL OF EMPOWERING EMPLOYEES AND TEAM BUILDING Status Textile Sugar Paper Others Total

Low

Medium

High

Total

8 (8.1%) 14 (23%) 10 (14.1%) 5 (7.2%) 37

82 (82.8%) 40 (65.6%) 55 (77.5%) 55 (79.7%) 232

9 (9.1%) 7 (11.4%) 6 (8.4%) 9 (13.1%) 31

99 61 71 69 300

In order to find out the relationship between the nature of industries and the level of empowering employees/ team building perceived in managing employees, a chi-square test was used and the result of the test is shown in table no 7.16 TABLE NO:1.16 NATURE OF INDUSTRIES AND THE LEVEL OF EMPOWERING EMPLOYEES/ TEAM BUILDING Factor Empowering employees

Calculated Value

Table Value

D.F

12.71

12.59

6


It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of the industries and the level of empowering employees/ team building”, holds good. From this analysis, it is found out that there is a close relationship between the nature of manufacturing industries and their level of empowering employees/ team building towards managing employees.

220


EMPLOYEE RETENTION/ RECOGNITION With a view to find out the degree of association between the nature of industries and the level of employee retention/ recognition, a two-way table was prepared and it is exhibited in table 7.17

TABLE NO 1.17 TWO-WAY TABLE LEVEL OF EMPLOYEE RETENTION/ RECOGNITION: Status Textile Sugar Paper Others Total

Low

Medium

High

Total

5 (5.1%) 15 (24.6%) 12 (16.9%) 9 (13.0%) 41

88 (88.8%) 34 (55.7%) 51 (71.8%) 52 (75.4%) 225

6 (6.1%) 12 (19.7%) 8 (11.3%) 8 (11.6%) 34

99 61 71 69 300

In order to find out the relationship between the nature of industries and the level of employee retention/ recognition perceived in managing employees, a chi-square test was used and the result of the test is shown in table no 7.18 TABLE NO:1.18 NATURE OF INDUSTRIES AND THE LEVEL OF EMPLOYEE RETENTION/ RECOGNITION Factor

Calculated Value

Table Value

D.F

Remarks

Employee retention

23.17

12.59

6

Significant at 5%

It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the level of employee retention/ recognition”, holds good. From this analysis, it is found out that there is a close relationship between the nature of industries and their level of employee retention/ recognition towards managing employees.

221


PERFORMANCE MANAGEMENT With a view to find the degree of association between the nature of industries and the level of performance management, a two-way table was prepared and it is exhibited in table 7.19

TABLE NO 1.19 TWO-WAY TABLE LEVEL OF PERFORMANCE MANAGEMENT Status Textile Sugar Paper Others Total

Low

Medium

High

Total

5 (5.1%) 16 (26.2%) 11 (15.5%) 8 (11.6%) 40

88 (88.8%) 37 (60.7%) 50 (70.4%) 54 (78.3%) 229

6 (6.1%) 8 (13.1%) 10 (14.1%) 7 (10.1%) 31

99 61 71 69 300

In order to find the relationship between the nature of industries and the level of performance management perceived on managing the employees, a chi-square test was used and the result of the test is shown in table no 7.20 TABLE NO:1.20 NATURE OF INDUSTRIES AND THE LEVEL OF PERFORMANCE MANAGEMENT Factor Performance management

Calculated Value

Table Value

D.F

19.64

12.59

8

Remarks Significant at 5%

It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the level of performance management”, holds good. From this analysis, it is found out that there is a close relationship between the nature of manufacturing industries and their level of communication towards managing employees.

222


WORKING ENVIRONMENT POLICIES, PROCEDURES AND FLEXIBLE WORK ARRANGEMENTS With a view to find out the degree of association between the nature of industries and the level of working environment policies, procedures and flexible work arrangements a two-way table was prepared and it is exhibited in table 7.21

TABLE NO 1.21 TWO-WAY TABLE LEVEL OF WORKING ENVIRONMENT POLICIES, PROCEDURES Status Textile Sugar Paper Others

Low

Medium

High

6 (6.1%) 20 (32.8%) 12 (16.9%) 5 (7.2%)

88 (88.8%) 35 (57.4%) 50 (70.4%) 55 (79.7%)

5 (5.1%) 6 (9.8%) 9 (12.7%) 9 (13.1%)

43

228

29

Total

Total 99 61 71 69 300

In order to find out the relationship between the nature of manufacturing industries and the level of working environment policies, procedures and flexible work arrangements perceived on managing employees, a chi-square test was used and the result of the test is shown in table no 7.22 TABLE NO:1.22 NATURE OF INDUSTRIES AND THE LEVEL OF WORKING ENVIRONMENT POLICIES, PROCEDURES Factor Working Environment policies

Calculated Value

Table Value

D.F

26.1

12.59

6


It could be noted from the above table that the calculated chi-square value is greater than the table value and the result is significant at 5% level. Hence, the hypothesis “Nature of industries and the working environment policies and procedures”, holds good. From this analysis, it is found out that there is a close relationship between the nature of the industries and their level of working environment policies, procedures towards managing employees. 223


FINDINGS: It is found from the two-way table that managers in paper industries performed well and textile, others industries are performing medium and sugar industries are performing low. It is found from the chi-square analysis that there is a close relationship between the nature of industries and different constructs used in the development of employees. SUGGESTIONS Based on the various findings of the study, the researcher offers the following suggestions which may help to increase the capacity of the managers in the manufacturing industries to manage the employees. In Erode District, manufacturing industries need basic research solutions in order to equip the employees, and right type of HR practices to get the job done efficiently and effectively. It is suggested that the management of sugar industries may take appropriate steps in developing the capability of the managers in managing their employees in various aspects. The involvement of its management is vital to the whole process. Steps are to be taken to grant more freedom and autonomy to the managers in developing the skill of an employee and should motivate them whenever they are in need of appreciation. Through this, productivity and involvement of the employees in their work can be improved. At present in the manufacturing industries, the managers can make a sincere smile as a trademark and link work and family life in a fun situation and try to celebrate every positive situation.Hence, it is suggested that the management of people at shop floor is shop function but it is the moral duty of that top management to provide the necessary support to the industrial relation by developing sound HRM and industrial relation policies. A constant review of the industrial relation program is essential to evaluate the existing practice and also to identify the problems of the system. CONCLUSION All the managers are eventually responsible for a group's performance and India is no exception. In order to achieve the goals of a group, the managers have to play three roles that of supervisor, manager and leader. It is of utmost importance for the managers in an organization to create a feeling of attachment and a willingness to follow faithfully the guidelines of the organization among the employees. This is possible when the employees are managed by their managers. Sugar industries must create a culture of continuous engagement built on effective internal communication, intense customer focus, and effective communication of HR policies and practices. The company policies and culture need to be such that it enables the employees to manage a healthy work-life balance. Managers belonging to the small scale industries that have lower number of employees do not have much capacity to manage their employees. HR Practices in all types of manufacturing industries leads to the improvement of productivity. Skills inculcated in the employees by the managers should be developed and Industrial relations has to be improved which in turn will improve the productivity.

224


BIBLIOGRAPHY BOOKS 1. 2.

3.

Armstrong, M., "Human Resource Management: A case of the Emperor's new clothes?",Personnel Management,1987. Aswathappa K., “ Organizational Behaviour – Text, Cases and Games”, 8th revised Edition, Himalaya Publishing House. David J Berri, Michael A Leeds, Eva Marikova Leeds, Michael Mondello,"The Role of Managers in Team Performance”, International Journal of Sport Finance. Morgantown,Vol, 4, lss. 2; pg. 75, 19 pgs, A Division of ICPE West Virginia University ,May 2009.

225


4. 5. 6.

7.

Gary Dessler, “Human Resource Management”, 11 th Edition, PHI Learning, 2009. Gupta.S.P., “Statistical Methods”, 29 th Edition, Sultan Chand and sons, 2000. Ronald J Burke, Professor of Organizational Behavior, Schulich School of Business, York University, Toronto, Canada. The author can be reached at [email protected] “Workplace Issues: The people make the place: In good times and bad", HRM Review, Vol:06, Issue.no:01, April 2009. Swapna Mallick, HR Desk, "Effective Management Of People At Workplace", (5).,A Monthly Journal From Rourkela Institute OF Management Studies,E-Sukaushalam,19 June 2009, www.rimsology.com

RESEARCH ARTICLES AND WORKING PAPER SERIES 8. Alison P Smith. “Nursing Economics”. Pitman:. Vol.24, Iss 1;p.no.45-46 January/February. 2006. 9. Anandan Pillai, “Motivation as Key Retention Strategy in Hospitality Industry”, HRM Review, ,Vol:04, Issue.no:01, March 2008. 10. David clutterbuck and David megginson, “Techniques for coaching and mentoring”, 1st published,p.no:176,2005. 11. Gayathri Reddy.K , “What We Need Today Are Androgynous Managers”, HRM Review,Vol:05, Issue.no:01, Dec 2005, www.iupindia.org 12. Kulik,C.T,Bainbridge,H.T.J, “HR and the line: The Distribution of HR Activities in Australian Organizations”, Asia Pacific Journal Of Human Resources, 44(2),p.no:240256,2006. WEB SITES 13. 14. 15. 16. 17. 18. 19.

www.allbusiness.com www.astd.org www.ee.ed.ac.uk.com. www.emeraldinsight.com/researchchregister www.eurojournals.pdf www.google.com www.humanresource.co

226


ART ADHERENCE- A SIGNIFICANT DETERMINANT OF SURVIVAL FOR PEOPLE LIVING WITH HIV/AIDS PRADIP KUMAR DAS Secretary, Swasthya Bhabna Society, Principal Investigator, Consultant Physician & Dermatologist, Ex External Monitor, Who, Pulse Polio Programme, Master Trainers & Supportive in GFATM-Project -7, Ex SMO, ART Centre, BMC&H, Burdwan. Honorary Secretary, Indian Medical Association, IQAS & Ethical Committee Member, Serampore College & University

ABSTRACT Adherence to ART is the prime factor in making the virological success of initiation of a particular ARV regimen and a significant determinant of survival for PLWHAs. Adherence of more than 95% are essential for optimal viral suppression but in our centre of study the average ART adhesion is near about 94-95%.,so in the patients with non adherence or suboptimal adherence, viral load increases very rapidly and with the increased viral load in the patients of ARVs, more mutations develop creating to resistance of ARVs which are generally less effective causing increased multiplication of viruses and fall in CD4 count in the blood, rapid progression of opportunistic infections and subsequently clinical illness occurs. A Multidisciplinary team headed by Senior Medical Officer, Medical Officer, Staff Nurse, Community Care Organizer, Counselor, Pharmacist, Lab Technician and a Data Manager is formed to evaluate and support patient adherence. Other assessment tools like Patients self reports, pill counts, pharmacy records, prescription refill monitoring are applied for evaluation of drug adherence. For improving the ART adherence, patients are educated to take the drugs exactly as prescribed by Medical Officer and to consume it in right dose on every day. If the patient missed the dose, he is instructed to notify the miss doses in the clinic on every visit. During the consumption of ARV drugs if side effects appear, the patient is instructed to notify it in the clinic and proper treatment processes are applied to reduce these adverse effects and good adherence manner is reinforced so that adherence is improved. KEYWORDS: ART- Anti Retroviral Therapy, ARV- Anti Retroviral drugs, PLWHAs- People Living with HIV/AIDS, CD4-Cluster Designate 4 ______________________________________________________________________________ INTRODUCTION Adherence literally means stick to it. So Adherence to ART means sticking to ARVs drugs regularly by the AIDS affected patients. It is important to remember that as HIV is a chronic manageable disease, it is not as simple as managing other chronic diseases like hypertension or Diabetes malitus. Long-term success can only be achieved with complete virological suppression 227


as in case of HIV/AIDS more than 95% [] adherence is necessary to achieve viral load less than 400 copies /ml, 10% reduction in adherence is associated with doubling of HIV RNA level [] whereas in other chronic disease states like hypertension, 80% adherence [] may be sufficient to achieve therapeutic goals. A small reduction in the regularity of taking medication can have disastrous long-term effect in case of HIV/AIDS. It has been evident that a decrease in medication compliance is associated with marked rising mortality. There are numerous reasons why patients do not take their medications regularly. It is evident from the study reports that due to some reasons patients miss doses and these are due to forgetting, being too busy, being out of place, being asleep, being depressed, and being too ill, having adverse side effect. Race, gender and severity of disease do not affect adherence. Alcohol, drug use and psychological illness have to some extend a negative effect on adherence. The importance of educating the patient relevant to his or her level of understanding is very often overlooked. On the contrary, if the patient believes in the effectiveness of the treatment and if he has adequate friend, family and social support and is remaining a constant monitoring under an experienced doctor, the chance of adherence is remarkably accelerated. It is the key factor in making the virological success of initial starting of a particular ARV regimen and a significant determinant of survival for PLWHAs. As life cycle of HIV is very short (1-2 days), so in the patients with non adherence or suboptimal adherence, viral load is very rapidly increased and with the raised viral load in the patients of ARVs, more chances of mutations develop leading to resistance of ARVs which are less functioning causing more replication of viruses and fall in CD4 count in the blood, rapid progression of opportunistic infections and subsequently clinical illness develops. Objectivesi) Long term viral suppression indicates the effectiveness of ART - an indirect evidence of good adherence. ii) CD4 count maintaining more or less at the normal level iii) Better quality of life for PLWHAs Hypotheses/ Research questions- It was evident from the previous studies that the assessment of the patient's drug adherence to ARVs done by the health care providers were not upto the mark, so a scientific and rational approach in this context is very pertinent to cope with the problem. Regarding the adherence assessment study, it is very important to conduct it in a rational and non-judge mental approach. The health care provider has to learn the barriers faced by the patients and develop a trusting relationship. The common barriers to adherence are communicational difficulties, low literacy level, inadequate knowledge or awareness about HIV disease, experiencing adverse drug effects, forgetting to take the medicines, having difficulty with the dosing schedules, being too busy with other business, missing a dose due to oversleeping, facing embarrassed to take medicines in front of family members and friends, loss of social support and homelessness, addicted to alcohol and other drugs, discomfort with disclosure of HIV status, psychiatric illness, negative or judge mental attitude of health care providers, shortage of drugs, shortage of staff and shut down of health facility. METHODOLOGYi. 2-3 counseling session was done for adequate preparedness for ART initiation ii. Definite Address proof was documented for registration for patients at ART centre

228


iii. In ART study centre a notice board was put up mentioning the contact details of the local Network of positive people. iv. A Multi-disciplinary team headed by Medical Officer, Staff Nurse, Community Care Organizer, Counselor, Pharmacist, Lab Technician and a Data Manager was formed to evaluate and support patient adherence. v. Structured format was prepared and patients were put the questionnaires in a simple, lucid approach and invited right answers about the issues that could affect adherence. vi. Other assessment tools like Patients self reports, pill counts, pharmacy records, prescription refill monitoring were applied for evaluation of drug adherence. RESULTS - It was evident from the study report that socio-demographic variables like sex, literacy level, weather variation, HIV risk factors, long distance from the ART centre generally were not associated with adherence. Moreover history of alcohol and drug abuse was not an usual barrier to adherence. During the consumption of ARV drugs, financial condition, social support system such as support from family members or friends reminded patients to take medicines in proper time and in schedule dose and assisted with management of side effects of the drugs. Suffering from major illness during the ARV drugs consumption was a strong barrier to good adherence. Some strategies for the management of side effects of ARV drugs before starting a regimen were implemented to emphasize that side effects of the drugs and were treated more effectively. It was also revealed from the study that the patient's self report obtained from the counselor's interview, Medical officer's examination, entries in the white card and patient's record (Green book) was convenient, inexpensive and it was the quite effective measure of adherence. Next came the Pill count which was more accurate than self-report. Pharmacy records and prescription refill monitoring were additional tool to improve adherence. Age wise category of PLWHAs 120

100

2 0 11 TABLE-VI AGE WISE CATEGORY OF PLHAs UNDER STUDY ABOVE TABLE-VI AGE WISE CATEGORY OF PLHAs UNDER STUDY 56-65 TABLE-VI AGE WISE CATEGORY OF PLHAs UNDER STUDY 46-55

20 80 Total No. 44

66

TABLE-VI AGE WISE CATEGORY OF PLHAs UNDER STUDY 36-45

60

TABLE-VI AGE WISE CATEGORY OF PLHAs UNDER STUDY 26-35 TABLE-VI AGE WISE CATEGORY OF PLHAs UNDER STUDY 15-25

40

TABLE-VI AGE WISE CATEGORY OF PLHAs UNDER STUDY AGE 23

20

0

0 1

2

3

Different age

Fig.-I It was revealed from the Fig.-I that out of 100 PLHAs under study categorised in the different age groups, 23 belonged to the age group of 15-25 years, 44 in the age group of 26-35

229


years, 20 in the age group of 36-45 years, 11 in the age group of 46-55 years. 2 in the age group of 56-65 years and above the age group of 66 none was found.

Sexwise category of PLWHAs

100

100

90 80 70 60 Total No.

56

50

44 Series1

40

Series2

30

S7

20 10

0

1

2

3

Series5

S3

0

Male

0 4

Series6 Series7

S1

Series8

5

4

5

0

0

100

Series2

0

56

Series3

0

44

0

Series1

2

Series4 Female

0

0

0

1

Series3

S5

3

Series4 Series5 Series6 Series7

Fig.-II It was evident from the Fig.-II under study regarding the sexwise categorisation of PLWHAs that 56 PLWHAs were male category and 44 were famale catogories. Marital Status of PLWHAs 90 85 80 70 No of Plhas 60

Series1 Series2 Series3 Series4 Series5 Series6 Series7 Series8

50 40 30 20 10 0

Series1 Series2 Series3 Series4 Series5

TABLE-VIII MARRITAL STATUS OF PLWHAs UNDER

9 4 2

0 MARITAL STATUS

TOTAL

0 0

85 4

0 0

2 9

100 PLWHAs

Series6 Series7 Series8 Different status

Fig.-III It was found from the Fig.-III regarding the marital status of PLWHAs under study that 85 were married, 4 were single, 2 were divorced and 9 were widows.

230


Literary Status

7

No of PLHAs

6

5 4 4, 0

4, 29 TABLE-IX LITERACY STATUS OF PLHAs UNDER STUDY

02 3 3,3, 2 2, 0

LITERACY STATUS

2, 34

TOTAL 1 1, 0

1, 35 100 PLWHAs

0

5

10

15

20

25

1

2

3

4

TOTAL

35

34

2

29

LITERACY STATUS

0

0

0

0

30 5

35 6

7

100 PLWHAs

TABLE-IX LITERACY STATUS OF PLHAs UNDER STUDY

Fig.-IV Regarding the literacy status of PLWHAs under study it was evident from the Fig.-IV that out of 100, 35 PLHAs had primary level of education, 34 PLWHAs had secondary level of education, 2 were graduate and 29 PLWHAs were illiterate. Monthly Income Status of PLWHAs

24 25 20 17

20 16

9 7

15

TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY MONTHLY INCOME

7

TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Nil

10

TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Below Rs.500/-

TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Rs.1001-2000/-

5 0

0 1

0 2

3


TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Rs.501-1000/No. of PLHAs


Different income Groups



TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Rs.3001-5000/1

2

0

0

TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Nil

16

TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Below Rs.500/-

20

3

TABLE-X MONTHLY INCOME OF PLHAs UNDER STUDY Above Rs.5001/-

Fig.- V The monthly income status of PLWHAs under study as was shown in the Fig.-V revaled that out of 100 PLWHAs, 16 PLWHAs had no income, 20 PLWHAs had income less than Rupees 500 per month, 17 had Rupees 501 to 1000 per month, 24 had monthly income of Rupees in between 1001 to 2000,7 had in between Rupees 2001 to 3000 per month, 9 had monthly income of Rupees in between 3001 to 5000 and only 7 PLWHAs had income per month of rupees above 5000.

231

ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 12, December 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ Addiction status of PLWHAS under study 250 TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY PAST SMOKER 200 No. of PLHAs

1 1 1 1

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY CURENT SMOKER

1

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY SOCIAL ALCOHOLIC

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY PAST ALCOHOLIC

150

100

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY NON SMOKER TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY NON ALCOHOLIC

50 1 0

1 1

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY PAST SMOKER

5

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY CURENT SMOKER

12

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY PAST ALCOHOLIC

7

TABLE- XI ADDICTION STATUS OF PLHAs UNDER STUDY ADDICTION STATUS 2 2

Types of Addiction

Fig.- VI It was reavealed from the Fig.- VI that on observing the addiction status of PLWHAs it was found that out of 100 PLWHAs under study, 77 were non alcoholic and 83 were non smoker. 16 PLWHAs were regular habituated to taking alcohol and 12 were habituated to smoking. & PLWHAs were taking alcohol in the past but not now and 5 PLWHAs were also past smokers but now they gave up smoking. PLWHAs RECEIVING ARV DRUGS

6

5 ARV DRUGS 4

3

100 PLHAs

100 PLHAs ARV DRUGS 2

ARV DRUGS 100 PLHAs

ARV DRUGS 1 0

10

TABLE- XII ARV DRUGS 20

30

40

50

60

70

80

No.OF PLHAs RECEIVING

90

No. of PLHAs 100 PLHAs ARV DRUGS

1

2

89 0

11 0

3

4

5

6

TABLE- XII No.OF PLHAs RECEIVING ARV DRUGS

Fig.-VII It was found from the Fig.- VII that 89 PLHAs receiving 1st line of ARV drugs and 11 PLWHAs were not receiving any ARV medicines

232


COMMON FACTORS FOR NON ADHERENCE

COMMON FACTORS LONG DISTANCE 1, 11%

0, 0%

1, 11%

1, 11%

FINANCE PROBLEM 1, 11% MAJOR ILLNESS SOCIAL PROBLEM MENTAL ILLNESS

1, 11% 2, 23% 1, 11% 1, 11%

ALCOHOL ADDICTION & OTHER DRUG ADDICTION LOW LITERACY ADVERSE DRUG REACTION

Fig.-VIII On observing the common factors causing barrier to non-adherence it was evident from the Fig.-VIII that only sufferings of major illness made a threat to non adherence although it was in very negligible cases (2 out of 100 PLWHAs) other factors like financial problem, social problem, mental illness, addiction to alcohol and other drugs, low literacy, long distance from the centre and even adverse drug reaction could not create a barrier to non adherence in cases of PLWHAs under study. It was evident from the study report that socio-demographic variables like sex, literacy level, weather variation, HIV risk factors, long distance from the ART centre generally were not associated with adherence. Moreover history of alcohol and drug abuse was not an usual barrier to adherence. During the consumption of ARV drugs, financial condition, social support system such as support from family members or friends reminded patients to take medicines in proper time and in schedule dose and assisted with management of side effects of the drugs. Suffering from major illness during the ARV drugs consumption was a barrier to good adherence. Some strategies for the management of side effects of ARV drugs before starting a regimen were implemented to emphasize that side effects of the drugs were treated more effectively. It was also revealed from the study that the patient's self report obtained from the counselor's interview, Medical officer's examination, entries in the white card and patient's record (Green book) was convenient, inexpensive and it was the quite effective measure of adherence. Next came the Pill count which was more accurate than self-report. Pharmacy records and prescription refill monitoring were additional tool to improve adherence.

233


DiscussionBefore starting the ARV regimen, patient's preparedness is very much required as starting it very early can cause poor adherence, failure of the regimen and development of ARV resistance. It is important to consider the socio-economical status of the patient, family and social support with him or her. It is also to be considered the patient's preferences to involve him or her in selecting ARV drugs which can be fit into his or her daily routine. The dosage schedule is preferably once or twice daily dose and pill burden is less, while maintaining efficacy, minimizing side effects, are equally important for getting good adherence for acquiring treatment success. Multidisciplinary team members like Medical Officer, Nurses, Community Care Organizers, Support Groups, Community Based Organizers, Network members focus on adherence at each contact with the patients and share with one another their strategies for improving adherence. Moreover close follow up by telephone, clinic visits or other contact by the peer groups with the patients during the early course of therapy is effective in pointing out the side effects of drugs

Challenging issues :i.Pediatrics- Adeherence in the age group of pediatrics and adolescents is a challenging one because children mostly depend on their parents and caregivers for their medications and adolescents are more likely than younger children are poor adherent. ii. Resource poor settings- Lack of resources like consistent supply of ARV drugs are causing interruption in treatment which is a barrier to adherence in resource poor settings than the resource rich settings. iii. Low Educational level- In low income population, health literacy rate is low and it is an important barrier to good treatment adherence. Medical directions are often ignored by them, so adherence interventions are essential in these groups belonging to low educational level. iv. Mental illness- Patients having mental illness are dealt with poor adherence.So more emphasis is given to improve their adherence. For this purpose, medication cassettes, reminder signs, and calendars are very effective in these group of patients. Conclusion - Good adherence is achieved only when there is a mutual agreement of the treatment plan, when the patient feels himself satisfied that he or she is involved in the decision making process. Simplification of the regimen i.e. with reduced pill burdens is associated with better adherence. For improving the ART adherence, patients must be educated to take the drugs exactly as prescribed by doctor and to take it in scheduled dose on every day. If the patient missed the dose on rare occasion it can be ignored but if it is on a frequent cases, the patient is being informed that the said regimen becomes ineffective and drug resistance can develop. The patient is instructed to notify the miss doses in the clinic on every visit. During the consumption of ARV drugs if side effects appear the patient is instructed to notify it in the clinic and proper treatment ways are applied to reduce these adverse effects and good adherence behaviour is reinforced so that adherence can be improved. Moreover, involvement of family members and friends and other team members like NGOs, CBOs, other organizations related to supporting PLWHAs for periodical reminding the patients for taking medicines is associated with better outcomes.

References i. ii.

Bangsberg DR, Moss AR, Deeks SG, Paradoxes of adherence and drug resistance to HIV antiretroviral therapy, J Antimicro Chemother 2004;53: 696-99 Brummet L, AIDS care: adhering to antiretoviral therapy, Nurs BC,20021 Oct;34(4):24-5 234


iii.

iv. v.

vi.

vii.

viii. ix.

x.

xi. xii.

Deeks, SC, Loftus, R, Beatty, G, et al, Incididence and predictors of virological failure of indinavir or ritonavir in an urban AIDS clinic, [ Abstract], International Conference on Anti-microbial Agents and Chemotherapy, Toronto, October, 1992. Gaithe J Jr. Adherence and potency with antiretroviral therapy; a combination for success, J Acquir Immune Defic Syndr, 2003 Oct 1;34 Suppl 2:S118-22 Golin CE, Smith SR, Reif S, Adherence counseling practices of generalist and specialist physicians caring for people living with HIV/AIDS in North Carolina, J Gen Intern Med, 2004 Jan;19(1):16-27 Lokovios JR, Meisler AW, Adherence in AIDS clinical trans: A framework for clinical research and clinical case, J Clin Epidemiol 1977, 50:4, 385-391 Machtinger EL, Bangsberg DR, Adherence to HIV Antiretroviral Therapy, In; Coffey S, Volberding PA,eds, HIV InSite Knowledge Base [textbook online]; San Francisco; UCSF; Centre for HIV Information; May 2005, Available at hivinsite.ucsf.edu/InSite?page=kb.00&doc=kb-03-02-09, Accessed June 30, 2010 Malcolm SE, Ng JJ, Rosen R K,et al, An examination of HIV/AIDS patients who have excellent adherence to HAART, AIDS Care, 2003 Apr; 15(2): 251-61l Nischal KC, Khopkar U, Saple DG, Improving adherence to Antiretroviral therapy, Indian J Dermatol Venereol Leprol 2005; 71: 316-20 Protopopescu C, Raffi F, Roux P,et al;ANRSCOs APROCO-COPILOTE; Study Group, Factors associated with non-adherence to long-term highly active antiretroviral therapy; a 10 year follow up analysis with correction for the bias induced by missing data, J Antimicrob Chemother,2009 Sep; 64(3):599-606. Stone VE, Smith KY, Improving adherence to HAART; J Natl Med Assoc. 2004 Feb; 96(2 Suppl) : 27S-29S U.S.Department of Health and Human Services, Guidelines for the use of Antiretroviral Agents in HIV-1-Infected Adults and Adolescents, January 10,2011, Available at www.aidsinfo.nih.gov/guidelines/.

235


ANNEXTURES

Structured format Questionnaires regarding consumption i

What is your daily schedule life? How you adjust ARV drugs in your daily schedule? ii What type of ARV drugs you take and what is the dose schedule? When you take it? iii How do you recollect to take your drugs? iv Do you manage your drugs? if not,who help you to manage it? v How many pills of your ARV drugs have you missed in the past 72 hours, past week, past 2 week and past month? vi When are you most likely to miss doses? vii Do you feel any adverse effects from your aRV drugs, if so, what are they? viii Are you comfortable to take drugs in front of your family members or others? ix What is the most difficult task you feel when you take the ARV medication? x How do you feel when come across with the pharmacist or other health care provider?

Questionnaires for initiation of ART i ii iii iv v vi vii viii ix x xi xii

Are you being prepared to take medicines everyday and at the same time? Are you committed to take the ARV drugs regularly for the rest of life? What are your deepest concern about initiation of ART? What is your attitude toward ART? Do you think that ART can be effective in you? What do you expect that these medicines can be good for you? Who knows about your HIV status? What other medicines you are taken over prescription, over the counter? How many feeds do you eat everyday and what are the time interval? What is your daily life schedule from day to night? Have you any addiction like alcohol, marijuana, cocaine or i.v. drugs, if so how much do you use and how long have you used them? What are your ARV regimen schedule and do you feel any side effects of it?

Assessment Tool i ii iii iv

Patient Self Report Pill counts Pharmacy records Prescription refill monitoring 236


Summary Serial No.: Name of HIV care centre: State:

District:

Baseline CD4: Clinical stage at start: Initial Regimen:

Date:

Change Regimen:

Date

ATT Regimen:

Start:

End:

Pregnancy:

Date:

Reason for “stopped” treatment:

Date:

Remarks (if any):

237


Clinical Notes Date of visit: Chief Complaints:

Investigations

Clinical examination:

Treatment

Date of visit: Chief Complaints:

Investigations

Clinical examination:

Treatment

238

ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 12, December 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ 1. Identification Data (Write complete information) Treatment status at registration: On ART

Date of Registration: Name of ART Centre / City:

Not on ART

ART Centre Code

State Name of patient: Age:

Sex:

(date of birth: __ __ / __ __ / __ __ __ __ )

Male

Female

TG/TS*

Patient’s phone number: Address: City/village:

District:

State/province:

Caregiver’s name: Caregiver’s address and phone number:

Date confirmed HIV+ test:

Entry point (services referring the patient for HIV care): 5-Paediatric

6-PPTCT

11-IDU outreach

Place of HIV Test:

__ __ / __ __ / __ __ __ __

7-STI clinic

12- Sex worker outreach

Patient transferred in on ART from:

ARTC

1-VCTC

2-TB/RNTCP

8-Private practitioner

3-Outpatient

9-Other NGO

13-PLHA network

14 MSM

15-other__________________

Private

Name of previous clinic:

Date transferred in :

2. Personal History (tick all applicable) Risk factor for HIV

4-Inpatient

10-Self referred

For IDUs Substitution therapy If yes, type:

Y

3. Family History Marital status: Married Widowed

1 Heterosexual 2 MSM 3 Injecting drug use (IDU) 4 Blood transfusion 5 Mother to child 6 Probable unsafe injection 7 Unknown

Single Divorce/separate Live-in

Family members: partner/children

Age / sex

Estimated monthly household income:

HIV +/-/unknown

ART Y/N

Regist. No if in care

N

Education:

Non-literate Primary school ________________ Secondary school College & above

Employed:

Yes

No Occupation: _________

4. Antiretroviral treatment history Were ARVs received ? Yes No

If yes,

PMTCT PEP

Initial CD4 count No. ______ % _____

Place of ART:

Private

Govt

NGO

Drugs and duration:

ART

239


5. Clinical and Laboratory Investigations (Summary) Date (dd/mm/yy)

WHO clinical stage

Weight (kg)

Height (cm)

CD4 count

Functional Status WAB**

No.

%

At 1st visit in clinic At ART medical eligibility At start of ART At 6 months ART At 12 months ART At 24 months ART At 36 months ART At 48 months ART

6. Antiretroviral Treatment (Summary) st

Treatment Started STV + LMV + NVP

nd

SUBSTITUTION within 1 line, SWITCH to 2 Substitution, switch or stop

Date

STV + LMV + EFV

Reason (code)

line, STOP, RESTART

Date restart

New regimen

ZDV + LMV + NVP ZDV + LMV + EFV Others : _____________ ____________________

Reasons SUBSTITUTE: 1. Toxicity / side effects, 2. Pregnancy, 3. Newly diagnosed TB, 4. New drug available, 5. other reason (specify) ________________________________ Reasons for SWITCH only: 1. Clinical treatment failure, 2. Immunological failure, 3. Virologic failure Reasons STOP: 1. Toxicity / side effects, 2. Pregnancy, 3. Treatment failure, 4. Poor adherence, 5. Illness hospitalisation, 6. Patient lack of finance, 7. Patient decision, 8 others: ______________________

7. Tuberculosis treatment (RNTCP) during HIV care Disease class (tick) Pulmonary TB Smear-positive Smear-negative Extrapulmonary Past history of TB ______________ site: _____________

TB Regimen (tick) Category I Category II Category III (if applicable) Other specify: NonDOTS Rx for MDR Date start TB Rx: ____/____ / _______

TB registration District: TB Unit: Health Centre: TB number: Treatment outcome: Cure Rx completed Rx failure Died Default Transfer out Date: ____/____/_____

8. Reasons for Stopping ART Death

Date of death:

_____/_____/_______

Transferred out

Date last visit:

_____/_____/_______

On medical advice

Date:

_____/_____/_______

Lost to follow-up (>3 months)

Date last visit:

_____/_____/_______

New ART centre name:

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ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 12, December 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ 9. Medical History Habit of Alcohol use: Habitual

Social

Habit of Smoking: Current smoker

Never

Past smoker

Never

HBV carrier

Yes

No

Unknown

HCV carrier:

Yes

No

Unknown

STI

Diabetes

Hypertension

Cardiovascular disease

Coexisting conditions :

Current Medication :

Drug allergy:

Contraception : 1. Condoms

2. Oral contraceptives

3. IUD

4. Tubal ligation

5. Vasectomy

6. None

GYNECOLOGICAL HISTORY G

P

A

Last Menstrual Period : ____ day ____ month ______ year

PAP smear:

Pregnant now:

Yes

No

Gynecological exam:

Refer to PPTCP:

Yes

No

Other Remarks :

10. Linkages to NGOs/Care Institutes Date

Name of Institute / Organization and type*

Purposes **

* 1. NGO; 2. Community Care and Support; 3. PLHA network; 4. Others ** 1. Adherence; 2. Retention; 3. Psychosocial support; 4. Others

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ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 12, December 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ 11. Pediatric Patients (under 15 years of age) Staying with:

Guardian / Caregiver: Sex :

Male

1. Own family

2. In a center but contact with family

3. In a center but no family contact

4. Others _______________________

1. Self

Female

2. Parents

3. Relatives

4. Friends

Age: ________years

5. Others __________

Date of birth:___ day ____month ____ year

Guardian/Caregiver’s highest education: Non-Literate Birth History :

Primary School 1. Normal

Secondary School

2. Caesarean

3. Vacuum

Birth Weight : _____________________________ Infant feeding :

College and above 4. Forceps

Neonatal complications :_______________________

1. Breast (stop_______ months of age)

2. Replacement

st

3. Mixed

nd

DNA PCR results : 1 _______________________________ 2 _______________________________ Others_______________________________________________________________ Neurodevelopment Normal :

Yes

No __________________________________________

Immunization Record Age

Vaccine BCG

Birth

OPV 1

Due on

Given on

Age 15-18 months

HBV 1 DPT 1 6 weeks

Vaccine

Due on

MMR DPT 1 booster OPV 6

5 years

OPV 2

DPT 2 booster OPV 7

HBV 2

10 years

TT 3

DPT 2

15-16 yrs

TT 4

10 weeks OPV 3

Others vaccines

DPT 3 14 weeks OPV 4 6-9 mths.

OPV 5 HBV 3

9 months

Measles & Vit. A

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EMPLOYABILITY OF THE STUDENTS – A FACULTY ROLE SRINIVAS RRS, Associate Professor, Department of Management, Training & Placement Officer Hi-Tech College of Engineering & Technology Himayath Nagar,Gandipet, CB(Post),Hyderabad – 500075 ______________________________________________________________________________ ABSTRACT Employability skills are the non-technical skills and knowledge necessary for securing a job and also effective participation in the workforce, and can include skills such as communication, selfmanagement, problem solving and teamwork and others dealt in this article. They are also sometimes referred to as generic skills, capabilities, enabling skills or key competencies. Students of Management & Engineering may encounter employability skills while facing campus interviews. Necessary skills are discussed in this paper and role of faculty is envisaged . Seminars & training on career education also incorporate development of employability skills. The general capabilities encompass the knowledge, skills, behaviours and dispositions that, together with curriculum content in each learning area and the cross-curriculum priorities, will assist students to live and work successfully in the twenty-first century. Todays faculty plays a crucial role in enhancing students employability. The expected role by faculty is discussed. KEYWORDS: . ______________________________________________________________________________ INTRODUCTION There has been a phenomenal expansion of technical and management education at under graduate level & graduate level throughout the length and breadth of the country. If one tries to find out the number of engineering colleges and the intake capacity at this level at a given point of time, it may be difficult to quantify the information. From the data available online, in the year 2010-11, the number of engineering colleges are 3241 with an intake capacity of 13,24,000 students in the country (www.aicte-india.org). Today the scenario is such that, any student passing out with 50 percent marks at 10+2 level & 50% at graduate level for entrance into MBA is able to secure a seat in an engineering college. Though the admission in the Engineering Colleges has become quite easy but the curriculum of various courses at under graduate level requires considerable amount of ‘cognitive abilities’ for comprehension of concepts, principles and practices at the part of students. A good percentage of students are not able to cope up with their studies, with the result that 35-40 percent of the students are placed in compartments in the very first year.

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It has also been experienced that majority of industrial or field organisations do not consider students to appear for placement interviews who have less than 60-65 percent marks right from 10th to 10+2 and up to graduation without having any compartment (s). There are many students who do not qualify the above stipulation. Further, due to worldwide recession, the employment market is having an adverse affect due to which the wage employment opportunities are shrinking. In the context of above background, some expectations of the corporate world from the engineering students in terms of their employability are given below.

Expectations of Corporate World from Budding Engineers & Managers Engineers & Managers are basically cognitive workers. They plan activities and resources at macro and micro levels such as physical, human and financial for achieving desired results at minimal cost. Interaction with number of corporate executives reveals that industry or corporate world expects engineers to possess the following skills : o Communication skills : which contribute to productive and harmonious relations between employees and customers o Teamwork skills : which contribute to productive working relationships and outcomes o Problem-solving skills : which contribute to productive outcomes o Initiative and enterprise skills : which contribute to innovative outcomes o Planning and organising skills : which contribute to long-term and short-term strategic planning o Self-Management skills : which contribute to employee satisfaction and growth o Learning skills :which contribute to ongoing improvement and expansion in employee and company operations and outcomes o Technology skills :which contribute to effective execution of tasks The Corporate expects the professional like engineers & managers should have following capabilities. o Acquisitive capabilities: the capability to acquire knowledge/technologies for effective functioning in various functional areas. o Adaptive capabilities: the flexibility of adopting new methods and techniques.

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o Operative capabilities: the know-how of production/ fabrication/installation practices, codes and standards, diagnostic and managerial skills. o Innovative capabilities: ability to anticipate future demands and to develop new design, processes, technologies and systems. It can be seen that most of the aspects of learning can be developed by paying greater attention to practical work in laboratories and workshop and even more through industrial training and project work. This matrix is highly relevant for the faculty working in the engineering colleges should who can implement the same in spirit of the benefit for the students and sustenance of the system as a whole. Further, good practical training and providing need based project assignments are also vital to enhance the employability of students as well as promote entrepreneurship. Matrix of Teaching-Learning Process According to Prof.L.N. Mittal, there is a matrix of teaching-learning process, which indicates various aspect of learning viz: cognitive, psychomotor and affective and highlights the type of learning experiences to be given to students for developing what is required from the students in the corporate world

245


Learning Experiences S. No

Aspects of Learning

1.

Knowledge

Lecture Laboratories Industrial Project Tutorial Class Seminars Class Workshops Training Work Ö Ö — — Ö Ö

2.

Comprehension

Partly

Ö

Ö

—

Ö

Ö

3.

Application

Partly

Ö

Ö

—

Ö

Ö

4.

Analysis

Partly

Ö

Ö

—

—

Ö

5.

Synthesis

—

Ö

—

—

—

Ö

6.

Evaluation

—

—

Ö

—

—

Ö

Learning to Learn Report Writing

—

—

—

Ö

Ö

Ö

—

—

—

Ö

Ö

Ö

Ö

Ö

Ö

—

Ö

Ö

—

Ö

Ö

—

Ö

Ö

7. 8.

Communication — — — Skills Interpersonal 10. — — — Skills Psychomotor 11. — — Ö Skills Attitudes & 12. Partly Ö Values Strategies to Enhance Employability of Students: 9.

In enhancing the employability of the Students, Faculty role is very crucial. Following roles & responsibilities are envisaged for better results. Role of Faculty in Student Employability: Faculty association with students of professional courses should be healthy. Faculty is expected to be humble with students and treat and teach them with empathy. Faculty should be willing to help students in learning process and be organized, collegial and be fair in evaluating them. This improves students’ morale and makes them confident in facing real life situations. Following Roles by faculty may improve students employability.  Clearly understand the concepts and principles involved in teaching a subject.  Convert teaching into learning by providing varied learning experiences like: tutorials, laboratory and workshop sessions, seminars etc on a planned basis.  Establish linkages with the world of work for making Teaching-Learning Process involving ‘Concept of Use’ i.e. applied learning. 246


 Provide live project assignments to the students.  Play a role model before the students to inculcate right attitudes and values.  Development of appropriate communication skills also has a high priority in the world of business. Various strategies like organising seminars, paper reading / declamation contests and organising group discussion sessions can help a great deal to develop communication skills Expected Contribution by University & Colleges Practical training of students is an important component of curriculum. This needs proper planning and implementation. This will be helpful to produce good professionals as well as good entrepreneurs. Involvement of teachers is most essential for making practical training more meaningful and effective. Greater emphasis is required to be given to practical work in laboratories and workshops as well as on project work. A good percentage of students should be diverted to undertake such project assignments which help them to start their own enterprises. Development of appropriate communication skills also has a high priority in the world of business. Various strategies like organizing seminars, paper reading / declamation contexts and organising group discussion sessions can help a great deal to develop communication skills. Establishment of language laboratory can also be helpful in this direction. There is need to revise the curricula of different courses to make these more industry oriented and practice based in addition to the JNTU curriculum .Teaching should be converted in to learning and learning should be converted in to innovations and developments which is the essential foundation for wage employment as well as becoming an entrepreneur.

Responsibility of the Students Students should develop seriousness in studies. An student pursuing professional course requires 12-14 hours of study per day, around 7 hours sleep and 4 hours a day for his/her personal self. He/she should also serious about practical work in laboratories and workshops. Develop the habit of reading from books and online Journals. Need to take industrial training seriously by involving themselves in to task oriented or problem-solving oriented workbench involvements. Take as far as possible live project assignments to develop learning-to-learn skills, transfer skills, thinking skills and innovative skills. Be the part in debates and declamation contests for developing confidence in written and verbal communication. Undergoing programmes leading to development of soft skills which will make them better employable.

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CONCLUSION: Good practical training and providing need based project assignments are vital to enhance the employability of students. Institutions are required to plan activities at macro and micro levels. Teachers are the kingpin in planning all the above aspects of instructional processes. Establishing close relationship with the industrial world will go a long way in training, development and placement of students. Faculty has great responsibility in making teaching-learning process more meaningful and contributes to the better employability of the students.

REFERENCES: Prof.L.N. Mittal (2011) Enhancing Employability in Education System Digital Learning-Nov2011-[10-13] Ken Fraser (2008) Employability Skills,. Manager Professional Development, November 2008 Mr.Guru Nandkarni (2012) You can Make Difference Excerpt from talk by on 26.05.2012 at Roots Business School, Hyderabad Cathy Mc.Skimming,John Laird (2007) EMPLOYABILITY- Making it work in Higher National Certificates and Diplomas, Cardonald College, April2007 Aladdin Antiqueno (2006) Teacher-Pupil Relationships in the School www.aicte-ind.org

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STUDY ON PRINCIPLES FOR IMPLEMENTING CRM STRATEGIES FOR ORGANIZED RETAIL IN INDIA MRS. T.GIRIJA Research Scholar, Bharathiar University, Coimbatore- 46,Tamil Nadu, India, _____________________________________________________________________________________

ABSTRACT Retailing is one of the fastest growing fields today in India with its 40% contribution to GDP and 2nd largest employer in India only after agriculture. Out of the total retail market in India, food and grocery retail is by far the largest block. Presently in India major portion of retailing in India is unorganized but, with corporate and foreign players entering retailing it is getting shifted to more organized sector. Retailing had also become more competitive and the business had shifted from short- term transaction based selling to replacement of relationship selling. In this competitive scenario to capture market share it becomes essential for the retailers to maintain a relationship with customers. Thus CRM has come to the front and occupied centre stage as one of the strategic tools for organized retailers to develop way for attracting and motivating potential customers to remain loyal forever. This article examines different CRM practices being followed in retailing and attempts to suggest some principles that need to be followed by organized retailer to implement CRM strategies in India KEYWORDS: Organized retailing, CRM, Principles for implementing CRM. ______________________________________________________________________________ INTRODUCTION Retailing in India The global retail development Index has ranked India as first among the top 30 emerging markets in the world. It is believed that India has the potential to deliver the fastest growth over the next 50 years. Retailing is the second largest sector after Agriculture in India. It contributes about 10 to 11% of the GDP. The estimated size of the organized retail industry in India is Rs 16,000 crores. This is 2% of the total estimated retail trade. Organized Retailing in India According to the Indian Council for Research on International Economic Relations (ICRIER), India is the seventh- largest retail market in the world, and is expected to grow at a CAGR of over 13% till FY121. During the last few years, The Indian retail market has seen considerable growth in the organized segment. Major domestic players like Reliance, Tata, Bharti, Adani enterprise have entered the retail arena and have ambitious plans to expand in the future years across verticals, formats and cities. Beside, a number of transnational corporation have also set up retail chains in collaboration with big Indian companies. India has the highest number of retail outlets in the world at over 13 million retail outlets and the average size of one store is 50-100 249


square feet. It also has the highest number of outlets (11,903) per million inhabitants. Organized retailing has undergone various phases. Four Phases of Organized Retailing: 

In the first phase, new entrants create awareness of modern formats like hypermarket, supermarket, department stores etc and raise consumer expectations



In the second phase, consumer demand more modern formats as the markets develop, thereby leading to a strong growth



In the third phase, the high rate of growth leads to a stage of mature market



In the final phase, the domestic market reaches a saturation point leading to limited growth, so retailers explore and evaluate new markets across the globe.

Factors influencing the growth of organized retail sector 1. Rapid economic growth and urbanization 2. Rising per capita income 3. Younger age group demographics 4. Intensifying demand both in volume as well as variety in urban centers 5. Consumerism on the rise, proliferation of electronic and other means of communication 6. Liberalized trade regimes allowing- free inflow of agro produce amongst other consumer goods, besides easier norms for FDI ingress into domestic markets 7. Long history of exploitative practices on part of intermediaries in the agro food supply chain OBJECTIVES Primary Objective  To study CRM strategies that can be applied by Food and Grocery Organized retailer in India Secondary Objective  To study state of organized retailing in India  To study different practices of CRM in organized retailing abroad.  To suggest principles to frame CRM strategies for Organized Retailers in India

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Statement of problem According to a white paper prepared by CII-Tecnopak, the rural market grew at an impressive 25% in the year 2008 and is expected to have approximately 720-790 million customers with a size of US$425 bn in the year 2010- 11.2 On the other hand the retail Industry in India is growing at a great pace and is expected to go up to US$ 833 billion by year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at CAGR of 10%3. Nowadays big Corporate like Reliance, Pantaloon, Tata, etc., are in this field and this had made organized retailing more competitive to enter and survive. The responsibility of retailers nowadays is not only attracting new customers but also retaining existing customers. To capture further in the market the organized retailers need to understand the psyche of the consumers and then act accordingly for a continuous period to earn their loyalty. This can be well obtained by CRM practices, as it helps organized retailer to understand their customers and retain them by providing them product and services that they expect. Need For the Study In present scenario organized retailing is in growing path. Increasing competition, shrinking margins and high expectation of customers are forcing firms to move from transactional relationship to relational relationship. Relational relationship is best possible by CRM practices. This study is done to analyze various CRM practices followed and suggest some principles that need to be followed to implement CRM strategies by Organized Retailer in India. Review of literature Pradip (2008)4, in his article throws light on the importance of relationship marketing in organized retailing. The article explains strategies for customer Loyalty Enhancement, Customer loyalty programmes in Organized Retail and leverage of customer loyalty in retail. The study conclude that an intelligent packaging of a slew of customer loyalty programs help the retail stores win over a widening segment of loyal customers and thus enhance profitability. The study interprets that a satisfied customer of retail store will influence and rope in his friends, peer group and family members, thus increasing the number of loyal customer. Parvatiya et al., have defined CRM as “a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer”. Esko and Palmer5 in their paper argue that by providing complete solution to their customers need in terms of completeness of offering of products and services and maintain long term close relationship with them; companies can maintain sustainable competitive advantage. Ranjay and James6 in their article speaking about CRM application says that getting closer to customers isn‟t only about building an information technology it is a journey system. It‟s a learning journey- one that unfolds over four stages, each with its own obstacles and each 251


requiring people and units to coordinate in ever more sophisticated ways. Companies that recognize this will invest their customer relationship dollars much more wisely and will see their customer focusing efforts pay off on the bottom line. METHODOLOGY This study involves a descriptive approach. This study describes retailing in India, CRM, and CRM Practices in Grocery market. Based on this CRM strategies are framed for organized retailers to capture the market share. The data used is mainly secondary data from journals websites and published reports. Time constraint is mainly the limitation of this study. ANALYSIS The main problems for organized retailer are to understand the customer in different situation. This requires more analysis of the customer and collecting database about the product that they purchase, the time of their purchase, the mode of payment, the frequency of purchase and so on. These characteristics of the consumers must be studied and the CRM strategies need to be customizing based on their requirement and interests. FINDINGS The study has brought out certain CRM practices in organized retailing abroad. Tesco Tesco is the largest food retailer in the UK. Tesco believes that if their customers like what they offer, they will more often come back and shop with them again and their workforce always try to make the experience of the customer a little bit better. The core purpose of Tesco is to create value for customer to earn their lifetime loyalty. The two important organization value of Tesco are a) No- one tries harder for customers and b) Treat people as we like to be treated. They listen and respond to customers and their changing lifestyle rather than developing products and services that they think customers want. Their strategy is listening to customer and respond. They give 5 promises to customers namely a) Prices are good b) I can get what I want c) The aisles are clear d) I don‟t queue e) The staff are great. They also listen to local communities before building new stores and also listen to the employees and support their needs help them to provide a better service for their customers. Sainsbury It is UK‟s largest standing major food retailing chain, having opened its first store in 1869. The Sainsbury differentiate itself by offering a broad range of great quality product at fair prices with particular emphasis on fresh food, a strong ethical approach to business and continuous leadership and innovation. They have a membership card named as Nectar card in 2003. Nectar is point based reward system that feeds customer demographic and shopping cart data into a corporate wide database built by CRM firm Terada for Sainsbury. It used the database to 252


segment its existing customer and devise offerings and marketing strategies accordingly. This allowed the Sainsbury to shift from a product centric marketing strategy to customer centric strategy. Macy’s Inc. Macy‟s Inc. is one of America‟s premier national retailers, selling a wide range of merchandise, including men‟s women‟s and children‟s apparel and accessories, cosmetics, home furnishing and other consumer goods in 45 states in America. The store continuously makes some events to make the shopping experience fun. In their store they organize fashion events, product demonstrations, personal appearances, sales, cooking events, book signings or samplings. They change the merchandise based on the requirements of their prime customers. The employees are rewarded based on their performance on customer satisfaction measures. The company has used its website as a supplement to the instore shopping experience. All their activities are customer centric. Marks and Spencer (M&S) Marks & Spencer Group Plc is one of the UK‟s largest retailers of women‟s and men‟s wear, lingerie and children‟s wear. The company‟s stores also sell food and home ware provides financial services. Their aim is to continually exceed their customers expectations‟ by ensuring that they meet their needs with appealing superior quality and fashionable product at attractive prices, providing them modern and comfortable environment to shop. Mark and Spencer follow the principle “Listen to your customers and take action”. Because of this principle their store fared good with an average score of 86% satisfaction level.

Suggestions Indian organized retailer should work with following principles while framing CRM strategies       

Make only promises that can be delivered Keep on the time of the promises Communication to the customer should be correct and prompt Plan a complaint handling system and be transparent about the process to customer and give them fixed maximum time that would be taken for solving the complaint and the contact person for complaints. Reward employees based on customer satisfaction. Maintain a database of customer about their likes and dislikes and their attributes of their priority in selecting the product. Collect email ids of customer and send personalized message for the goods they repeatedly purchase.

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Conclusions CRM is like a boom in the hands of organized retailers. The success of organized retailers and growth purely depends on their customers. CRM strategies will help organized retailers to analyze and understand the customer and serve them as they require. This will influence customer to be loyal and this will in process bring growth to the organized retailer. Due to time constraint the strategies followed in abroad was not explained in-depth. So in future the CRM strategies followed in different industries can be analyzed and CRM strategies can be framed for organized retailing in India. References 1. http://www.dnb.co.in/IndianRetail Industry/overview.asp 2. Priyank Azad, 2010, „Go Rural, marketing mantra for the competitive era‟, Mareketing Mastermind, November, pg. 20-23. 3. Article on retail ,http://www.ibef.org/industry/retail.aspx viewed on 16th December 2010 4. Pradip. K. Deb., August 2008. Leveraging Relationship Marketing for Enhancing Customer Loyalty in Organized Retail, Marketing Mastermind, pp. 21- 23 5. Improving firm positioning through enhanced offering and buyer- seller relationships. Esko Pentinen, Jonathan Palmer. 2007, Industrial Marketing Management, Vol.36,pp.552-564 6. The Quest for customer focus. Ranjay Gulati, James B Oldroy., Harvard Business Review, April 2005. Vol 83. 7. Kotler.P and Keller K L (2006) Marketing Management , Chapter 16, p.504 8. Sharma A. (2007) „The Metrics of Relationships: Measuring Satisfaction, Loyalty and Profitability of Relational s‟, Journal of Relationship Marketing Vol.6 (2) p. 33- 50 9. Pahuja Anurag & Verma Rajesh (2008), “Relationship Management Need of the Hour", Marketing Mastermind, January. p.p. 26-29 10. Journal of Interactive marketing, Volume 12, Issue 3, page 32-45, Summer 1998

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A STUDY ON MOTIVATION AND JOBSATISFACTION OF HIGHER SECONDORY SCHOOL TEACHERS NEVILLE C PRADEEP Assistant Professor PSN College of Engineering and Technology, Tirunelveli 3 Packianathan street Opp STC, Perumalpuram,

ABSTRACT Human Resource is one of the most vital assets of any organization. Motivated work force is essential for efficient working of any organization. Education Institutions are not an exception to this. The Teacher is the corner stone of an education institution. The job satisfaction teachers are essential for reaching the goals of the educational institution. The teachers can be motivated either extrinsically or intrinsically. All teachers are not motivated by the same factors. Hence this paper examines the factors motivating school teachers in Kanyakumari District. A sample of 100 teachers from schools in Kanyakumari District was taken for study and it was found education qualification has impact on motivation. Using Garret Ranking Technique motivating factors for school teachers were identified. It revealed recognition is the most important factor and least important factor is working condition Factor Analysis identified recognition as the dominating motivating factor. KEYWORDS: ______________________________________________________________________________ INTRODUCTION Human Resource is one of the most vital assets of an organization. Human resources handle all physical and financial resources in the organization. Employees’ motivation is vital for the success or failure of any organization. Employee motivation is one of the major issues faced by every organization, Educator Organization is not and exception to this. Teachers (employees) play a special role in molding the future generation. This is possible only when teachers are motivated. Only the satisfied teachers help in achieving the goal of the educational institutions. It is the teacher who gives the institution its credibility and determines its character. Job Satisfaction of teachers has been a prime concern of school. Teachers are motivated by extrinsic factors and intrinsic factors. In today’s world, it seems that money has become less of a motivator. The employee’s are not just satisfied with good salary. They now do require some benefit and flexibility to bring their work and personal life together. A good working relationship with colleagues, Recognitions, Status as well as the opportunity for growth is a must. It becomes the educational institutions head’s responsibility to involve teachers (employees) in their job. Hence in this study the researcher was keen to know the factors motivating the School teachers. 255


STATEMENT OF THE PROBLEM Human Resources are the most important and usually the most expensive asset that any organization can possess. In educational institutions it is largely the work of the teacher that determines the degree of success or failure in the institutions’ efforts to achieve its goal. There is an appalling lack of Job Satisfaction among majority of teachers today. A motivated and committed teacher plays an important role in nation building. Motivating Teachers has become the complex task of the heads of educational institutions. All teachers are not motivated by the same factors. Hence it is essential to identify the factors motivating school teachers. OBJECTIVE OF THE STUDY The main objective of the study is to find out the factors motivating the School Teachers in Kanyakumari District. METHODOLOGY The researcher has used Descriptive Research Design for this study. Sampling Design The data and information were collected from the respondents on the basis of convenient sampling. Sample Size The data was collected from a sample of 100 respondents out of the total population in Kanyakumari District. Data Collection The study is based on primary and secondary data. The primary data were collected through well structured Questionnaire. Secondary Data relating to motivation of School teachers were collected from journal, website, and magazines.

Data Analysis The researcher used Percentage Analysis, Chi –square test, Garrett ranking technique and Factor Analysis to analyse the data.

256


RESEARCH FINDINGS Table 1 The demographic and career profile of the respondents Description

F

Percent

20 to 30 years

14

14

30 to 40 years

32

32

40 to 50 years

42

42

Above 50 years

12

12

Male

47

47

Female

53

53

Married

68

68

Single

32

32

Teacher Training

24

24

Graduate

40

40

Post Graduate

24

24

Others

12

12

Below 10000

20

20

10000-12000

22

22

12000-14000

42

42

Above 14000

16

16

Less than 5 years

10

10

5-10 years

22

22

10-15 years

34

34

15-20 years

26

48

Above 20 years

8

8

Primary

30

30

Middle

42

42

High/Hr Secondary

28

28

Respondents Age

Gender

Marital Status

Educational Qualification

Monthly Income (Rs)

Experience

Designation

Source : Primary data 257


The table I shows the demographic and career profile of the respondents. It was inferred that 42% of the respondents belong to the age group of 40-50 years, 47% are male, 68% are married, 40% hold U.G. degree, 42% belong to the income category of 12000-14000, 34% have experience of 10-15 years, and 48% belong to middle school. The researcher attempted to analyse the relationship between personal variables and motivation. The researcher tested the null hypothesis that there is no relationship between personal variables and motivation using Chi – square test. Table 2 Relationship between personal variables and motivation Calculated Value 1.4927

Degrees of Freedom 3

Gender

0.6543

1

3.84

Income

1.5306

3

7.81

Educational Qualification

24.9866

3

7.81

Designation

1.2606

2

5.99

Personal variables Age

Table Value 7.81

Source : Primary data Table 2 revealed there existed relationship between educational qualification and motivation and there is no relationship between age, gender, income and designation and motivation as the calculated value is less than the table value. Garett Ranking The respondents were asked to rank the factors that motivate the School Teachers in Kanyakumari District.

258


Table 3 Factors

Score

Mean score

Garret ranking

Salary

4824

804

IV

Job Security

4836

806

III

Work itself

5622

937

II

Working Conditions

4450

742

VI

Recognition

6140

1023

I

Interpersonal relations

4648

775

V

Table 2 shows the ranking made by the respondents for the factors which Motivate them in the job. Recognition, Work itself, Job Security, Salary, Interpersonal relations and Working conditions I, II, III, IV, V and VI respectively.

Factor Analysis Factor Analysis has been used to determine the motivational factors for School Teachers in Kanayakumari District.

259


Table 4 Factor Analytic Structure S. No. 1.

Factor Recognition

Stmt as per questionnaire 11

Statements My Principal recognizes my

Factor loading 0.818

ccomplishments. 8

It is important to me t have others

0.767

recognize the job I do 2.

Work itself

2

This is a type of job in which I can

0.734

feel a sense of accomplishment.

3.

Interpersonal relations

13

The job is challenging.

0.707

7

My superior is approachable

0.648

5

The management is supportive.

0.607

1

The peer group relationship is

0.571

smooth 4.

Salary

9

My salary is reasonable

0.862

12

The retirement benefits are

0.841

satisfactory. 5.

Job Security

14

I am satisfied with the overall job

0.564

security. 10

Teaching Profession offers secured

0.563

job 6.

Scope for Growth

6

There is possibility of getting

0.800

promotion 3

My works offers me the

0.745

opportunity for growth and development 7.

Working

15

The working condition is good.

0.515

4

The workload is reasonable.

0.624

Condition

260


After grouping the fifteen variables into seven factors, the factors were named. The first factor includes my Principal recognizes my accomplishments and It is important to me to have others recognize the job I do. It is named an "Recognition" The second factor contains This is a type of job in which I can feel a sense of accomplishment and The job is challenging and it is named as "Work itself". The third factor contains My superior is approachable, The management is supportive and The peer group relationship is smooth and is named as "Interpersonal relations" The fourth factor “Salary" includes My Salary is reasonable and The Retirement benefits are satisfactory. The fifth Factor contains I am satisfied with the overall job severity and Teaching Profession offers secured job and it is named as "Job Security". The sixth factor is "Scope for Growth" includes There is possibility of getting promotion and My work offers me the opportunity for growth and development. The seventh factor "Working Condition" includes The working condition is good and The workload is reasonable. Thus "Recognition" is found to be the most dominant among the seven factors. FINDINGS  It was inferred that 42% of the respondents belong to the age group of 40-50 years.  It was found that 47% are male.  From the study it was found that 68% are married.  It was inferred that 40% hold Under Graduate degree.  It was identified that 42% belong to the income category of 12000-14000.  It was found that 34% have experience of 10-15 years.  It was identified that 42% belong to middle school  Using Chi-square test it was identified association existed between educational qualification and motivation.  Using Garrett Ranking it was found that are motivated by Recognition, Work itself, Job Security, Salary. Interpersonal relations and Working conditions.  Using Factor analysis seven motivation factors were identified namely, Recognition, Work itself, Interpersonal relations, Salary, Job Security, Scope for Growth Status and Working Condition. It was identified Recognition iis the dominant factor among seven factors. SUGGESTIONS The quality of the education depends on the motivated teacher. The identified motivational factors both intrinsic and extrinsic should be made available to the teachers as motivated teacher is the strength of the educational institution. The motivated teacher will willingly involve themselves in the job and help the institutions to achieve the goal. CONCLUSION One of the educationists rightly pointed out "If there are at least 10 per cent of job satisfied teachers in the educational institutions, they will be able to carry conviction with 40 to 50 per cent of our teachers". The cent of our teachers". The management can succeed in motivating the teachers by using intrinsic factors supplemented by extrinsic factors as identified by the study. If the teachers are motivated they will work for the upliftment of the students and society at large.

261


REFERENCES 1. Kurien C.T, Motivation of Teachers, Paper presented in the tenth anniversary of AIACHE. 2. Esme Chipo Kadzamira, July 2006, Teacher motivation and incentives in Malawi 3. Jerome John Cammarata, January 1, 1983 "teacher Motivation: A Study to determine the motivating potential of the elementary and secondary teaching job in Chester county (Pennsylvania)". 4. Muhammad Naseer Ud Din, IER, Kohat University, Pakistan. Hafiz Muhammad Inamullah, IER, Kohat University, Pakistan, motivation Techniques Used By Heads Of Higher Educational Institution In Pakistan, Contemporary Issues in Education Research – Second Quarter 2008 Volume 1, Number 2. 5. Khim Ong Kelly, Shi Yun Angela Ang, Wei Ling Chong, Wei, Sheng Hu, 2005. Teacher appraisal and its outcome in Singapore primary school, Journal of Administration, Vol 46, Issuel 1, pp. 39-54. 6. VSO, 2002, What makes teachers tick? 7. www.springerlink.com 8. www.vso.org.uk

262


HUMAN RESOURCE ACCOUNTING PRACTICES IN INDIAN CORPORATE ENTITIES: A STUDY ON INFOSYS DEVARAJAPPA S Asst. Professor in Commerce University College of Arts Tumkur University TUMKUR-572103

ABSTRACT Human Resource Accounting (HRA) means accounting for people as original resources. It is the measurement of cost and value of people for an organization. It is also a way of thinking about the management of people in formal organizations. Knowledge workers are important resources for the typical modern business firms. With the growing complexities of business organizations, the need and importance of competent people is increasing continuously. Yet financial reporting ignores such resources. This paper throws light on the concepts of human resource accounting. It includes an introduction to the concept of human resource accounting, various human resource accounting models, which have been adopted by an Infosys to give information about human resource in their annual Reports.

KEYWORDS: Human Resource Accounting, Infosys, Human Assets, ______________________________________________________________________________

I. INTRODUCTION To ensure growth and development of any organization, the efficiency of people must be augmented in the right perspective. Without human resources, the other resources cannot be operationally effective. The original health of the organization is indicated by the human behavior variables, like group loyalty, skill, motivation and capacity for effective interaction, communication and decision making. Men, materials, machines, money and methods are the resources required for an organisation. These resources are broadly classified into two categories, viz., animate and inanimate (human and physical) resources. Men, otherwise known as the human resources, are considered to be animate resources. Others, namely, materials, machines, money and methods are considered to be inanimate or physical resources. The success or otherwise of an organization depends on how best the scarce physical resources are utilized by the human resource. What is important here is that the physical resources are being activated by the human resources as the physical resources cannot act on their own. Therefore, the efficient and effective utilization of inanimate resources depends largely on the quality, caliber, skills, perception and character of the people, that is, the human resources 263


working in it. The term Human resource at macro level indicates the sum of all the components such as skills, creative abilities, innovative thinking, intuition, imagination, knowledge and experience possessed by all the people. An organization possessed with abundant physical resources may sometimes miserably fail unless it has right people, human resources, to manage its affairs. Thus, the importance of human resources cannot be ignored. Unfortunately, till now generally accepted system of accounting this important asset, viz., the human resources has not been evolved. For a long period, the importance of human resource was not taken care of seriously by the top management of organizations. Therefore, at this juncture, it becomes imperative to pay due attention on the proper development of such an important resource of an organization. Let us now concentrate our discussion on the conceptual framework of the Human Resource Accounting.

II. Meaning and Definition of Human Resource Accounting: The concept of human resource accounting can be better understood if one goes through some of the important definitions given by the competent authors in the accounting field. The American Accounting Society Committee on Human Resource Accounting defines it as follows: “Human Resource Accounting is the process of identifying and measuring data about human resources and communicating this information to interested parties.” In simple terms, it is an extension of the accounting principles of matching costs and revenues and of organizing data to communicate relevant information in financial terms Mr. Woodruff Jr. Vice President of R. G. Batty Corporation defines it as follows: “Human Resource Accounting is an attempt to identify and report investments made in human resources of an organization that are presently not accounted for in conventional accounting practice. Basically it is an information system that tells the management what changes over time are occurring to the human resources of the business.” M.N. Baker defines Human Resource Accounting as follows:” Human resource accounting is the term applied by the accountancy profession to quantify the cost and value of employees to their employing organization"

III. Importance of Human Resource Accounting: Human Resource Accounting provides useful information to the management, financial analysts and employees as stated below:1. Human Resource Accounting helps the management in Employment and utilization of Human Resources. 2. It helps in deciding transfers, promotion, training and retrenchment of human resources 3. It provides a basis for the planning of physical assets vis-à-vis human resources 4. It helps in evaluating the expenditure incurred for imparting further education and training of employees in terms of the benefits derived by the firm. 264


5. It helps to identify the causes of high labour turnover at various levels and taking preventive measures to contain it. 6. It helps in locating the real cause for low return on investment, like improper or underutilization of physical assets or human resources or both 7. It helps in understanding and assessing the inner strength of an organisation and helps the management to steer the company well through the most averse and unfavorable circumstances. 8. It provides valuable information for persons interested in making long term investments in the firm. 9. It helps the employees in improving their performance and bargaining power. It makes each employee understand his contribution towards the betterment of the firm vis-à-vis the expenditure incurred by the firm on him

IV. Objectives of Human Resource Accounting: 1. To furnish cost value information for making proper and effective management decisions about acquiring, allocating developing and maintaining human resources in order to achieve cost effective organizational objectives. 2. To monitor effectively the use of human resources by the management. 3. To have an analysis of the Human Asset, i.e. whether such assets are conserved, depleted or appreciated. 4. To aid in the development of management principles and proper decision making for the future by classifying financial consequences of various practices.

V. HRA Model and Investment Pattern: For valuing human resources, different models have been developed. Some of them are opportunity cost Approach, standard cost approach, current purchasing power Approach, Lev and Schwartz present value of future earnings Model Flam holtz’s stochastic rewards valuation Models etc. Of these, the model suggested by Lev and Schwartz has become popular. Under this method, the future earnings of the human resources of the organization until their retirement is aggregated and discounted at the cost of capital to arrive at the present value. Human resources accounting system consists of two aspects namely: a)

The investment made in human resources

b)

The value human resource

Measurement of the investments in human resources will help to evaluate the charges in human resource investment over a period of time. The information generated by the analysis of investment in human resources has many applications for managerial purposes. The organizational human performance can be evaluated with the help of such an analysis. It also helps in guiding the management to frame policies for human resource management. The present performance result will act as input for future planning and the present planning will 265


have its impact on future result. The same relationship is also applicable to the areas of managerial applications in relation to the human resource planning and control. Investment in human resources can be highlighted under two heads, namely,

Investment pattern: The human resource investment usually consists of the following items:1) Expenditure on advertisement for recruitment 2) Cost of selection 3) Training cost 4) On the job training cost 5) Subsistence allowance 6) Contribution to provident Fund 7) Educational tour expenses 8) Medical expenses 9) Ex-gratia payments 10) Employee’s Welfare Fund All these items influence directly or indirectly the human resources and the productivity of the organization. HRA in India Under the constraints the financial statements are prepared pursuant to the Company Law in India there is no scope for showing any significant information about human resources in financial statements except the remuneration paid to them and the number of employees getting compensation beyond certain amount per annum. But there is nothing to prohibit the companies to attach information about the worth of human resources and the results of their performance during the accounting period in notes or schedules. The following are the general considerations in the working of the HR concept by organizations. 1. Only internal human organization (employees) is considered. External organizations like customers are not considered. 2. All categories of employees are included. The value of employee potential services is considered. 3. HR value is worked out on certain standardized formula developed by experts. 4. A 12% discount rate is adopted. 5. Employees are classified according to age and pay scales under six categories executives, supervisors, supporting technical staff, skilled artisans, unskilled and semi-skilled workers and clerical staff. 266


6. Weighted average is calculated for each group on information of total number of employees at each incremental stage and in each grade. 7. Future number of employees is worked out on the basis of general promotion policy. 8. Employee considerations include direct and indirect benefits. VI. HRA in India Under the constraints the financial statements are prepared pursuant to the Company Law in India there is no scope for showing any significant information about human resources in financial statements except the remuneration paid to them and the number of employees getting compensation beyond certain amount per annum. But there is nothing to prohibit the companies to attach information about the worth of human resources and the results of their performance during the accounting period in notes or schedules. The following are the general considerations in the working of the HR concept by organizations. 1. Only internal human organization (employees) is considered. External organizations like customers are not considered. 2. All categories of employees are included. The value of employee potential services is considered. 3. HR value is worked out on certain standardized formula developed by experts. 4. A 12% discount rate is adopted. 5. Employees are classified according to age and pay scales under six categories executives, supervisors, supporting technical staff, skilled artisans, unskilled and semi-skilled workers and clerical staff. 6. Weighted average is calculated for each group on information of total number of employees at each incremental stage and in each grade. 7. Future number of employees is worked out on the basis of general promotion policy. 8. Employee considerations include direct and indirect benefits.

267


VII. Human Resources Practices in Infosys:  Background Note: In the financial year 1995-96, Infosys Technologies (Infosys) became the first software company to value its human resources in India. The company used the Lev & Schwartz Model (Refer Exhibit I) and valued its human resources assets at Rs 1.86 billion. Infosys had always given utmost importance to the role of employees in contributing to the company's success. Analysts felt that human resources accounting (HRA) was a step further in Infosys' focusing on its employees. Narayana Murthy (Murthy), the then chairman and managing director of Infosys, said: "Comparing this figure over the years will tell us whether the value of our human resources is appreciating or not. For a knowledge intensive company like ours, that is vital information." The concept of HRA was not new in India. HRA was pioneered by public sector companies like Bharat Heavy Electronics Ltd. (BHEL) and Steel Authority of India Ltd. (SAIL) way back in the 1970s. However, the concept did not gain much popularity and acceptance during that time. HR managers were quick to respond on the above developments by stating that more and more organizations had now started to realize the importance of skilled workforce. They felt that to be successful in highly competitive markets, companies require to continuously improve the level of performance of their workforce. HRA enabled companies to understand whether the skill sets of their human capital was appreciating or not. R. Krishnaswamy, an actuarial accountant, said, "The value can be used internally by an organization to make comparisons from unit to unit, from year to year, as well as within its industry."

 Human Resource Valuation in Infosys: A fundamental dichotomy in accounting practices is between human and non-human capital. As a standard practice, non-human capital is considered as assets and reported in the financial statements, whereas human capital is mostly ignored by accountants. The definition of wealth as a source of income inevitably leads to the recognition of human capital as one of the several forms of wealth such as money, securities and physical capital. We have used the Lev & Schwartz model to compute the value of human resources. The evaluation is based on the present value of future earnings of employees and on the following assumptions: (a) Employee compensation includes all direct and indirect benefits earned both in India and overseas (b) The incremental earnings based on group / age have been considered (c) The future earnings have been discounted at the cost of capital of 11.21% (previous year 10.60%). 268


Table-1 Value of Human resource in Infosys In crore, unless stated otherwise 2011 2010 Employees (no.) Software professionals Support Total Value of human resources Software professionals Support Total Total income(1) Total employee cost(1) Value-added Net profit(1) Ratios Value of human resources per employee Total income / human resources value (ratio) Employee cost / human resources value (%) Value-added / human resources value (ratio)

Return on human resources value (%) (1)

1,23,811 7,009 1,30,820

1,06,864 6,932 1,13,796

1,22,539 12,566 1,35,105 27,501 14,856 25,031 6,823

1,06,173 7,114 1,13,287 22,742 12,093 20,935 6,219

1.03 0.20 11.0 0.19

1.00 0.20 10.7 0.18

5.1

5.5

As per IFRS (audited) financial statements.

Source: annual report 2010-11

HRA models in Infosys: Infosys' HRA model was based on the present value of the employees' future earnings with the following assumptions:  An employee's salary package included all benefits, whether direct or otherwise, earned both in India and in a foreign nation.  The additional earnings on the basis of age and group were also taken into account.  To calculate the value of its human assets, all the employees of Infosys were divided into five groups, based on their average age. Each group's average compensation was calculated. Infosys also calculated the compensation of each employee at retirement by using an average rate of increment. 269


VIII. Conclusion: Human resource accounting is of recent origin and is struggling for acceptance. There is no generally accepted concept of Human Resources Accounting of business enterprises. The concept of Human Resource Accounting is in the early stage of development in developing country in India. It has been become a separate section of annual accounts or reports of public or Indian companies for detailed account of their human resources. In the present study, the Infosys technologies Ltd. maintained separate accounts for value of human resources and it is adopted separate HRA model and it is influence other corporate bodies to follow and incorporate such type of accounts and models in their annual report.

Reference: 1. Likert R; Pyle W.C (1971) “Human Resource Accounting, A Human Organizational Measurement Approach” Financial Analysis Journal Jan – Feb, pp 75-84. 2. Singh A. K , Gupta N, 2008 “Measurement of Human Assets: An Empirical Analysis” Indian Journal of accounting vol. xxx VIII (2) pp 13-20. 3. Patra K (2001) “Valuation of Human Resources – Challenges for an Accountant”. The cost Management vol. 1, sep. pp 25-28. 4. Krisnamurthy R 2007, “Human Resource Accounting” the Accounting world, September pp 24-29. 5. www.infosystechnologiesltd.com 6. wikipedia.com

270


HUMAN RESOURCE ACCOUNTING PRACTICES IN INDIAN CORPORATE ENTITIES: A STUDY ON INFOSYS DEVARAJAPPA S Asst. Professor in Commerce University College of Arts Tumkur University TUMKUR-572103

ABSTRACT Human Resource Accounting (HRA) means accounting for people as original resources. It is the measurement of cost and value of people for an organization. It is also a way of thinking about the management of people in formal organizations. Knowledge workers are important resources for the typical modern business firms. With the growing complexities of business organizations, the need and importance of competent people is increasing continuously. Yet financial reporting ignores such resources. This paper throws light on the concepts of human resource accounting. It includes an introduction to the concept of human resource accounting, various human resource accounting models, which have been adopted by an Infosys to give information about human resource in their annual Reports.

KEYWORDS: Human Resource Accounting, Infosys, Human Assets, ______________________________________________________________________________

I. INTRODUCTION To ensure growth and development of any organization, the efficiency of people must be augmented in the right perspective. Without human resources, the other resources cannot be operationally effective. The original health of the organization is indicated by the human behavior variables, like group loyalty, skill, motivation and capacity for effective interaction, communication and decision making. Men, materials, machines, money and methods are the resources required for an organisation. These resources are broadly classified into two categories, viz., animate and inanimate (human and physical) resources. Men, otherwise known as the human resources, are considered to be animate resources. Others, namely, materials, machines, money and methods are considered to be inanimate or physical resources. The success or otherwise of an organization depends on how best the scarce physical resources are utilized by the human resource. What is important here is that the physical resources are being activated by the human resources as the physical resources cannot act on their own. Therefore, the efficient and effective utilization of inanimate resources depends largely on the quality, caliber, skills, perception and character of the people, that is, the human resources 263


working in it. The term Human resource at macro level indicates the sum of all the components such as skills, creative abilities, innovative thinking, intuition, imagination, knowledge and experience possessed by all the people. An organization possessed with abundant physical resources may sometimes miserably fail unless it has right people, human resources, to manage its affairs. Thus, the importance of human resources cannot be ignored. Unfortunately, till now generally accepted system of accounting this important asset, viz., the human resources has not been evolved. For a long period, the importance of human resource was not taken care of seriously by the top management of organizations. Therefore, at this juncture, it becomes imperative to pay due attention on the proper development of such an important resource of an organization. Let us now concentrate our discussion on the conceptual framework of the Human Resource Accounting.

II. Meaning and Definition of Human Resource Accounting: The concept of human resource accounting can be better understood if one goes through some of the important definitions given by the competent authors in the accounting field. The American Accounting Society Committee on Human Resource Accounting defines it as follows: “Human Resource Accounting is the process of identifying and measuring data about human resources and communicating this information to interested parties.” In simple terms, it is an extension of the accounting principles of matching costs and revenues and of organizing data to communicate relevant information in financial terms Mr. Woodruff Jr. Vice President of R. G. Batty Corporation defines it as follows: “Human Resource Accounting is an attempt to identify and report investments made in human resources of an organization that are presently not accounted for in conventional accounting practice. Basically it is an information system that tells the management what changes over time are occurring to the human resources of the business.” M.N. Baker defines Human Resource Accounting as follows:” Human resource accounting is the term applied by the accountancy profession to quantify the cost and value of employees to their employing organization"

III. Importance of Human Resource Accounting: Human Resource Accounting provides useful information to the management, financial analysts and employees as stated below:1. Human Resource Accounting helps the management in Employment and utilization of Human Resources. 2. It helps in deciding transfers, promotion, training and retrenchment of human resources 3. It provides a basis for the planning of physical assets vis-à-vis human resources 4. It helps in evaluating the expenditure incurred for imparting further education and training of employees in terms of the benefits derived by the firm. 264


5. It helps to identify the causes of high labour turnover at various levels and taking preventive measures to contain it. 6. It helps in locating the real cause for low return on investment, like improper or underutilization of physical assets or human resources or both 7. It helps in understanding and assessing the inner strength of an organisation and helps the management to steer the company well through the most averse and unfavorable circumstances. 8. It provides valuable information for persons interested in making long term investments in the firm. 9. It helps the employees in improving their performance and bargaining power. It makes each employee understand his contribution towards the betterment of the firm vis-à-vis the expenditure incurred by the firm on him

IV. Objectives of Human Resource Accounting: 1. To furnish cost value information for making proper and effective management decisions about acquiring, allocating developing and maintaining human resources in order to achieve cost effective organizational objectives. 2. To monitor effectively the use of human resources by the management. 3. To have an analysis of the Human Asset, i.e. whether such assets are conserved, depleted or appreciated. 4. To aid in the development of management principles and proper decision making for the future by classifying financial consequences of various practices.

V. HRA Model and Investment Pattern: For valuing human resources, different models have been developed. Some of them are opportunity cost Approach, standard cost approach, current purchasing power Approach, Lev and Schwartz present value of future earnings Model Flam holtz’s stochastic rewards valuation Models etc. Of these, the model suggested by Lev and Schwartz has become popular. Under this method, the future earnings of the human resources of the organization until their retirement is aggregated and discounted at the cost of capital to arrive at the present value. Human resources accounting system consists of two aspects namely: a)

The investment made in human resources

b)

The value human resource

Measurement of the investments in human resources will help to evaluate the charges in human resource investment over a period of time. The information generated by the analysis of investment in human resources has many applications for managerial purposes. The organizational human performance can be evaluated with the help of such an analysis. It also helps in guiding the management to frame policies for human resource management. The present performance result will act as input for future planning and the present planning will 265


have its impact on future result. The same relationship is also applicable to the areas of managerial applications in relation to the human resource planning and control. Investment in human resources can be highlighted under two heads, namely,

Investment pattern: The human resource investment usually consists of the following items:1) Expenditure on advertisement for recruitment 2) Cost of selection 3) Training cost 4) On the job training cost 5) Subsistence allowance 6) Contribution to provident Fund 7) Educational tour expenses 8) Medical expenses 9) Ex-gratia payments 10) Employee’s Welfare Fund All these items influence directly or indirectly the human resources and the productivity of the organization. HRA in India Under the constraints the financial statements are prepared pursuant to the Company Law in India there is no scope for showing any significant information about human resources in financial statements except the remuneration paid to them and the number of employees getting compensation beyond certain amount per annum. But there is nothing to prohibit the companies to attach information about the worth of human resources and the results of their performance during the accounting period in notes or schedules. The following are the general considerations in the working of the HR concept by organizations. 1. Only internal human organization (employees) is considered. External organizations like customers are not considered. 2. All categories of employees are included. The value of employee potential services is considered. 3. HR value is worked out on certain standardized formula developed by experts. 4. A 12% discount rate is adopted. 5. Employees are classified according to age and pay scales under six categories executives, supervisors, supporting technical staff, skilled artisans, unskilled and semi-skilled workers and clerical staff. 266


6. Weighted average is calculated for each group on information of total number of employees at each incremental stage and in each grade. 7. Future number of employees is worked out on the basis of general promotion policy. 8. Employee considerations include direct and indirect benefits. VI. HRA in India Under the constraints the financial statements are prepared pursuant to the Company Law in India there is no scope for showing any significant information about human resources in financial statements except the remuneration paid to them and the number of employees getting compensation beyond certain amount per annum. But there is nothing to prohibit the companies to attach information about the worth of human resources and the results of their performance during the accounting period in notes or schedules. The following are the general considerations in the working of the HR concept by organizations. 1. Only internal human organization (employees) is considered. External organizations like customers are not considered. 2. All categories of employees are included. The value of employee potential services is considered. 3. HR value is worked out on certain standardized formula developed by experts. 4. A 12% discount rate is adopted. 5. Employees are classified according to age and pay scales under six categories executives, supervisors, supporting technical staff, skilled artisans, unskilled and semi-skilled workers and clerical staff. 6. Weighted average is calculated for each group on information of total number of employees at each incremental stage and in each grade. 7. Future number of employees is worked out on the basis of general promotion policy. 8. Employee considerations include direct and indirect benefits.

267


VII. Human Resources Practices in Infosys:  Background Note: In the financial year 1995-96, Infosys Technologies (Infosys) became the first software company to value its human resources in India. The company used the Lev & Schwartz Model (Refer Exhibit I) and valued its human resources assets at Rs 1.86 billion. Infosys had always given utmost importance to the role of employees in contributing to the company's success. Analysts felt that human resources accounting (HRA) was a step further in Infosys' focusing on its employees. Narayana Murthy (Murthy), the then chairman and managing director of Infosys, said: "Comparing this figure over the years will tell us whether the value of our human resources is appreciating or not. For a knowledge intensive company like ours, that is vital information." The concept of HRA was not new in India. HRA was pioneered by public sector companies like Bharat Heavy Electronics Ltd. (BHEL) and Steel Authority of India Ltd. (SAIL) way back in the 1970s. However, the concept did not gain much popularity and acceptance during that time. HR managers were quick to respond on the above developments by stating that more and more organizations had now started to realize the importance of skilled workforce. They felt that to be successful in highly competitive markets, companies require to continuously improve the level of performance of their workforce. HRA enabled companies to understand whether the skill sets of their human capital was appreciating or not. R. Krishnaswamy, an actuarial accountant, said, "The value can be used internally by an organization to make comparisons from unit to unit, from year to year, as well as within its industry."

 Human Resource Valuation in Infosys: A fundamental dichotomy in accounting practices is between human and non-human capital. As a standard practice, non-human capital is considered as assets and reported in the financial statements, whereas human capital is mostly ignored by accountants. The definition of wealth as a source of income inevitably leads to the recognition of human capital as one of the several forms of wealth such as money, securities and physical capital. We have used the Lev & Schwartz model to compute the value of human resources. The evaluation is based on the present value of future earnings of employees and on the following assumptions: (a) Employee compensation includes all direct and indirect benefits earned both in India and overseas (b) The incremental earnings based on group / age have been considered (c) The future earnings have been discounted at the cost of capital of 11.21% (previous year 10.60%). 268


Table-1 Value of Human resource in Infosys In crore, unless stated otherwise 2011 2010 Employees (no.) Software professionals Support Total Value of human resources Software professionals Support Total Total income(1) Total employee cost(1) Value-added Net profit(1) Ratios Value of human resources per employee Total income / human resources value (ratio) Employee cost / human resources value (%) Value-added / human resources value (ratio)

Return on human resources value (%) (1)

1,23,811 7,009 1,30,820

1,06,864 6,932 1,13,796

1,22,539 12,566 1,35,105 27,501 14,856 25,031 6,823

1,06,173 7,114 1,13,287 22,742 12,093 20,935 6,219

1.03 0.20 11.0 0.19

1.00 0.20 10.7 0.18

5.1

5.5

As per IFRS (audited) financial statements.

Source: annual report 2010-11

HRA models in Infosys: Infosys' HRA model was based on the present value of the employees' future earnings with the following assumptions:  An employee's salary package included all benefits, whether direct or otherwise, earned both in India and in a foreign nation.  The additional earnings on the basis of age and group were also taken into account.  To calculate the value of its human assets, all the employees of Infosys were divided into five groups, based on their average age. Each group's average compensation was calculated. Infosys also calculated the compensation of each employee at retirement by using an average rate of increment. 269


VIII. Conclusion: Human resource accounting is of recent origin and is struggling for acceptance. There is no generally accepted concept of Human Resources Accounting of business enterprises. The concept of Human Resource Accounting is in the early stage of development in developing country in India. It has been become a separate section of annual accounts or reports of public or Indian companies for detailed account of their human resources. In the present study, the Infosys technologies Ltd. maintained separate accounts for value of human resources and it is adopted separate HRA model and it is influence other corporate bodies to follow and incorporate such type of accounts and models in their annual report.

Reference: 1. Likert R; Pyle W.C (1971) “Human Resource Accounting, A Human Organizational Measurement Approach” Financial Analysis Journal Jan – Feb, pp 75-84. 2. Singh A. K , Gupta N, 2008 “Measurement of Human Assets: An Empirical Analysis” Indian Journal of accounting vol. xxx VIII (2) pp 13-20. 3. Patra K (2001) “Valuation of Human Resources – Challenges for an Accountant”. The cost Management vol. 1, sep. pp 25-28. 4. Krisnamurthy R 2007, “Human Resource Accounting” the Accounting world, September pp 24-29. 5. www.infosystechnologiesltd.com 6. wikipedia.com

270


PRICING STRATEGY: LIC VS INDIAN PRIVATE LIFE INSURERS DR.RENU AGGARWAL Assistant Prof. YMCA university Faridabad ______________________________________________________________________________ ABSTRACT INSURERS Indian life insurance industry in post IRDA regime has been changed. Increasing life insurance density and insurance penetration shows the success of Indian life insurance industry. A lot of new life insurers are coming with new strategies and with new offerings. Pricing strategy is also an important component of reaping the large share of the industry. Each segment is trying to attract the prospecting customers of life insurance. The paper focuses that how different life insurers are adopting new pricing strategies. It tells about the different components of the price of life insurers. Paper also emphasize that private players are incurring more and more on business operations and they are paying a lot as insurance commission to their agents. As a result averagely premium paid by the subscribers of theprivate life insurers is quite high than the LIC. Paper also found that life insurers are adopting two typesof pricing strategies, selling of maximum no. of policy strategy and selling of big amount policies. Private insurers’ averagely high premium per policy indicates that they are selling big policies as well as charginghigh operating expenses. LIC per policy average premium is quite low indicates that LIC is selling large no. of policies of small amount. Life insurance is a contract of faith between the insurer and the insured, through which insured transfer his risk of life to the insurer, for this service a consideration is paid to the insurer by the insured which is called insurance premium. Objective of the paper The objective of the paper  To see the pricing strategy of Indian life insurance industry  to make the comparative understanding of the price strategy of Indian life insurers in Post IRDA Tools and techniques  Ratios and % age analysis is used to compare the pricing component of public and Pvt.lifeInsurers. Limitations of the paper  Average premium per policy is computed on average basis total no. of policy sold by the life insurers and total premium collected by them in respective years.

Price Mechanism of Life insurance This Price (premium) is the component of thesethree elements  Mortality charges,  Expanses of life insurers  Investment pool. 271


Mortality charges are almost same of all the insurers, the difference is only for the operating expenses and commission expenses which vary from one insurer to the other. Beyond the premium all the life insurers are using these tactics or facilities under price strategy to attract the customers. 



No. of riders / add on strategy These are extra incentives offered by the life insurers to their customers. Almost all the life insurers are giving these benefits to their customers these are like, accidental death double or triple cover Critical illness benefit, permanent /partly disability and , premium waive off and some others Easy Premium modes as monthly, quarterly, half yearly and yearly

Gold Premium / Mortality Premium Gold premium means pure premium charged against the mortality, which is based upon the statistical tools estimated by the actuaries. Price in insurance is the total premium that includes the expenses of insurers and mortality charges. Mortality charges are almost same for the insurer as private insurers are not having their own database and they are using the database of the LIC. But the other element of the price varies from one insurer to another. In this paper we will analyse the following element of the expenses.

5.4.2 Expenses of life insurers Management expenses Management expenses include  Operating expenses analysis  Commission expenses. Analysis Operating expenses includes office expenses and other operational expenses. Commission expenses are the expense paid to intermediaries to sell the insurance policies. It is the major expense head for the life insurers. Section 40 B of insurance Act, 1938 provides that no insurer shall in respect of life insurance business transacted in India, spend as expenses of management in excess of the prescribed limits. LIC’s Management expenses are continues with in the allowable limits. In 2007-08, 18 private insurers underwrote their business out of which 12 companies compiled with the stipulations on expenses of management. However, Bharti Axa exceeded the prescribed limits. Future Generali, IDBI Fortis expenses are excess was with in the norms for the life insurance industry.  Operating Expenses ratio: Operating expenses includes:  Employee remuneration and welfare expense  Advertisement and publicity expenses  Training expenses It is the ratio of operating expenses and the premium underwritten by the life insurers. Operating expenses ratios are increasing which shows that industry is expanding and companies have sought permission to widen their office network. Private sector operating expenses quotient is very large as compared to LIC it is due to the initial stage 272


burden or well-equipped insurance offices. It can increase the premium of the policy as it is also a component of the premium. Table 1 OPERATING EXPENSES RATIO ( In per cent ) Insurers

2006-07

2007-08

2008-09

Private Sector

23.01

23.34

25.83

LIC

5.54

5.55

5.76

Total industry

8.7

10.1

11.60

Source: IRDA report 2008-09

Analysis of operating expenses Operating expenses of both the sectors are almost constant in 2006-07 and 2007-08. But in 2008-09, these are increased in both the sectors. These expenses are very much large in private sector. These are four times of LIC’s operating expenses. Private industry is expanding more and more on their office operations or it can be said they are providing much good working conditions to their employees. But this is the reason that they are charging high premium.

 Commission Expenses ratio Commission expenses are the expenses paid to the insurance intermediaries’ engaged in selling of life insurance policies Commission expenses ratio is the ratio between commission expenses and the premium underwritten by the insurers Table 2 COMMISSION EXPENSES RATIO ( IN PER CENT ) Insurers

2006-07

2007-08

2008-09

Private Sector

10.92

9.87

8.49

LIC

7.18

6.42

6.39

Total industry

7.85

7.30

7.00

Source: IRDA Report 2008-09

Analysis of operating expenses ratio: Commission expenses ratio of life insurance industry is declining. It may be due to the slowdown. But the commission expenses of both the sectors can be studied individually here. It shows that

273


these expenses are very large in private sector as compared to the public sector. This is the reason that private sector is charging higher per policy premium.

Per Policy Premium Analysis This analysis will serve the purpose of average premium charged by the public and private sector. In this analysis we will check the total new premium collected divided by the total no.of new policy sold. It will give a view for per policy premium charged on an average basis. Table 3 Insurer

Insurer

LIC Total Private Total Industry

2008-09

(Premium in Crores) 2006-07

2007-08

2005-06

New

No. of

New

No. of

New

No. of

New

No. of

Business

Polices

Business

Polices

Business

Polices

Business

Polices

Premium

Issued

Premium

Issued

Premium

Issued

Premium

Issued

53179.08

35912667

59996.57

37612599

56223.56

38229292

28515.87

31590707

33827.15

15010710

33715.95

13261558

19425.65

7922274

10269.67

3871410

87006.23

50923377

93712.52

50874157

75649.21

46151566

38785.54

35462117


Insurer

Insurer


2004-05

2003-04

2002-03

New

No. of

New

No. of

New

No. of

Business

Polices

Business

Polices

Business

Polices

Premium

Issued

Premium

Issued

Premium

Issued

20653.06

23978123

17347.62

26968069

15976.76

24545580

5564.57

2233075

2440.71

1658847

965.69

825094

26217.63

26211198

19788.33

28626916

16942.45

25370674


274


Table 4

(Premium and no. of policy sold in %age) Insurer

2008-09

2007-08

2006-07

2005-06

New No. of New No. of New No. of New No. of Business Polices Business Polices Business Polices Business Polices Insurer Premium Issued Premium Issued Premium Issued Premium Issued 61.12% 70.52% 64.02% 73.93% 74.32% 82.83% 73.52% 89.08% LIC Total Private 38.88% 29.48% Source: IRDA Report 2008-09 Insurer

Insurer LIC

35.98%

2004-05

New Business Premium 78.78%

26.07%

25.68%

17.17%

2003-04

No. of Polices Issued 91.48%

Total 21.22% 8.52% Private Source: IRDA Report 2008-09

26.48%

10.92%

2002-03





12.33%

5.79%

5.70%

3.25%

275


The above table and graph shows that in almost all the years LIC’s no. of policy sole %age is quite larger than the %age of premium collected. Private insurers premium collection % is quite large than the no. of policy sold %age. It indicates that LIC is adopting maximum policy sold strategy while private insurers are adopting the selling of big policy strategy. In Pvt. Sector Average per policy premium is high due to the high management and operating expenses. Table 5

Average Premium Per Policy in New Business ( In Lacs )

INSURER

2008-09

2007-08

2006-07

2005-06

2004-05

2003-04

2002-03

LIC

0.148

0.160

0.147

0.090

0.086

0.064

0.065

Total Private

0.225

0.254

0.245

0.265

0.249

0.147

0.117

Total industry 0.171

0.184

0.164

0.109

0.100

0.069

0.067

Analysis of average premium policy The trend of per policy premium is increasing of the whole industry. It is quite high in private sector as compared to public sector. It shows that private insurers are charging higher per policy premium averagely. Trend shows that premium per policy has become double in last six year. So it should be checked. Pricing strategy of life insurers may differ to 

Maximum no. of policy sold



Maximum premium collection (Big policies)

Life insurers are emphasizing on the above two said objectives. Some of them are focusing on the selling of maximum no. of policy and some of them are emphasising on maximum premium collection. Some life insurers are leading in selling of maximum no, of policy while others are doing well in maximum premium collection. The above table shows that average premium per policy is increasing continuously of the life insurance industry. Both the sectors are on increasing 276


trend in terms of getting per policy premium but private sector per policy is very large as compared to the public sector. It means that private sector is collectingmore premium(per policy) than public sector. it is concluded that LIC is selling small policies and Private insurers all selling big policies REFERENCES Palande R.S., insurance change policies published by allied publishers. ET knowledge series, The economic times insurance 2001-02. Kaushal K Anoop, Mohanty S.K., Insurance law manual, Published by universal law co. Pvt. ltd. Ahuja Rajeev (HT Parekh finance forum), August, 2004 insurance over the transition, Economic and political weekly. Kumar Ranjan, kaushal Vaidya, March 2004 march, Differentiation Strategies of insurance Companies, Insurance Chronicle ICFAI university press. Rama Krishna Rao T.S., May 2006, Bancassurance in India, Icfai University press. Krishnamurthy Naraynan, Enter the super agent in insurance, August 2004Money outlook. Money outlook, August 2004, Market research Report, Indian Insurance industry forecast 200709. Kotler Philips, channel levels, Marketing Management, Prentice hall of India. Shankar Ravi, Services Marketing, Excel Books 2003 FICCI Conference report 2004, on Indian Insurance Industry: New avenues for Growth. IRDA report 2007-08. IRDA report 2008-09 IRDA report 2009-10 IRDA report 2010-11

277


PRICING STRATEGY: LIC VS INDIAN PRIVATE LIFE INSURERS DR.RENU AGGARWAL Assistant Prof. YMCA university Faridabad ______________________________________________________________________________ ABSTRACT Indian life insurance industry in post IRDA regime has been changed. Increasing life insurance density and insurance penetration shows the success of Indian life insurance industry. A lot of new life insurers are coming with new strategies and with new offerings. Pricing strategy is also an important component of reaping the large share of the industry. Each segment is trying to attract the prospecting customers of life insurance. The paper focuses that how different life insurers are adopting new pricing strategies. It tells about the different components of the price of life insurers. Paper also emphasize that private players are incurring more and more on business operations and they are paying a lot as insurance commission to their agents. As a result averagely premium paid by the subscribers of the private life insurers is quite high than the LIC. Paper also found that life insurers are adopting two types of pricing strategies, selling of maximum no. of policy strategy and selling of big amount policies. Private insurers’ averagely high premium per policy indicates that they are selling big policies as well as charging high operating expenses. LIC per policy average premium is quite low indicates that LIC is selling large no. of policies of small amount. ______________________________________________________________________________ Introduction: Life insurance is a contract of faith between the insurer and the insured, through which insured transfer his risk of life to the insurer, for this service a consideration is paid to the insurer by the insured which is called insurance premium. Objective of the paper The objective of the paper  To see the pricing strategy of Indian life insurance industry  to make the comparative understanding of the price strategy of Indian life insurers in Post IRDA Tools and techniques  Ratios and % age analysis is used to compare the pricing component of public and Pvt.lifeInsurers. Limitations of the paper  Average premium per policy is computed on average basis total no. of policy sold by the life insurers and total premium collected by them in respective years.

Price Mechanism of Life insurance This Price (premium) is the component of these three elements  Mortality charges,  Expanses of life insurers  Investment pool. 271


Mortality charges are almost same of all the insurers, the difference is only for the operating expenses and commission expenses which vary from one insurer to the other. Beyond the premium all the life insurers are using these tactics or facilities under price strategy to attract the customers. 



No. of riders / add on strategy These are extra incentives offered by the life insurers to their customers. Almost all the life insurers are giving these benefits to their customers these are like, accidental death double or triple cover Critical illness benefit, permanent /partly disability and , premium waive off and some others Easy Premium modes as monthly, quarterly, half yearly and yearly

Gold Premium / Mortality Premium Gold premium means pure premium charged against the mortality, which is based upon the statistical tools estimated by the actuaries. Price in insurance is the total premium that includes the expenses of insurers and mortality charges. Mortality charges are almost same for the insurer as private insurers are not having their own database and they are using the database of the LIC. But the other element of the price varies from one insurer to another. In this paper we will analyse the following element of the expenses.

5.4.2 Expenses of life insurers Management expenses Management expenses include  Operating expenses analysis  Commission expenses. Analysis Operating expenses includes office expenses and other operational expenses. Commission expenses are the expense paid to intermediaries to sell the insurance policies. It is the major expense head for the life insurers. Section 40 B of insurance Act, 1938 provides that no insurer shall in respect of life insurance business transacted in India, spend as expenses of management in excess of the prescribed limits. LIC’s Management expenses are continues with in the allowable limits. In 2007-08, 18 private insurers underwrote their business out of which 12 companies compiled with the stipulations on expenses of management. However, Bharti Axa exceeded the prescribed limits. Future Generali, IDBI Fortis expenses are excess was with in the norms for the life insurance industry.  Operating Expenses ratio: Operating expenses includes:  Employee remuneration and welfare expense  Advertisement and publicity expenses  Training expenses It is the ratio of operating expenses and the premium underwritten by the life insurers. Operating expenses ratios are increasing which shows that industry is expanding and companies have sought permission to widen their office network. Private sector operating expenses quotient is very large as compared to LIC it is due to the initial stage 272


burden or well-equipped insurance offices. It can increase the premium of the policy as it is also a component of the premium. Table 1 OPERATING EXPENSES RATIO ( In per cent ) Insurers

2006-07

2007-08

2008-09

Private Sector

23.01

23.34

25.83

LIC

5.54

5.55

5.76

Total industry

8.7

10.1

11.60

Source: IRDA report 2008-09

Analysis of operating expenses Operating expenses of both the sectors are almost constant in 2006-07 and 2007-08. But in 2008-09, these are increased in both the sectors. These expenses are very much large in private sector. These are four times of LIC’s operating expenses. Private industry is expanding more and more on their office operations or it can be said they are providing much good working conditions to their employees. But this is the reason that they are charging high premium.

 Commission Expenses ratio Commission expenses are the expenses paid to the insurance intermediaries’ engaged in selling of life insurance policies Commission expenses ratio is the ratio between commission expenses and the premium underwritten by the insurers Table 2 COMMISSION EXPENSES RATIO ( IN PER CENT ) Insurers

2006-07

2007-08

2008-09

Private Sector

10.92

9.87

8.49

LIC

7.18

6.42

6.39

Total industry

7.85

7.30

7.00


Analysis of operating expenses ratio: Commission expenses ratio of life insurance industry is declining. It may be due to the slowdown. But the commission expenses of both the sectors can be studied individually here. It shows that

273


these expenses are very large in private sector as compared to the public sector. This is the reason that private sector is charging higher per policy premium.

Per Policy Premium Analysis This analysis will serve the purpose of average premium charged by the public and private sector. In this analysis we will check the total new premium collected divided by the total no.of new policy sold. It will give a view for per policy premium charged on an average basis. Table 3 Insurer

Insurer


2008-09

(Premium in Crores) 2006-07

2007-08

2005-06

New

No. of

New

No. of

New

No. of

New

No. of

Business

Polices

Business

Polices

Business

Polices

Business

Polices

Premium

Issued

Premium

Issued

Premium

Issued

Premium

Issued

53179.08

35912667

59996.57

37612599

56223.56

38229292

28515.87

31590707

33827.15

15010710

33715.95

13261558

19425.65

7922274

10269.67

3871410

87006.23

50923377

93712.52

50874157

75649.21

46151566

38785.54

35462117


Insurer

Insurer


2004-05

2003-04

2002-03

New

No. of

New

No. of

New

No. of

Business

Polices

Business

Polices

Business

Polices

Premium

Issued

Premium

Issued

Premium

Issued

20653.06

23978123

17347.62

26968069

15976.76

24545580

5564.57

2233075

2440.71

1658847

965.69

825094

26217.63

26211198

19788.33

28626916

16942.45

25370674


274


Table 4

(Premium and no. of policy sold in %age) Insurer

2008-09

2007-08

2006-07

2005-06

New No. of New No. of New No. of New No. of Business Polices Business Polices Business Polices Business Polices Insurer Premium Issued Premium Issued Premium Issued Premium Issued 61.12% 70.52% 64.02% 73.93% 74.32% 82.83% 73.52% 89.08% LIC Total Private 38.88% 29.48% Source: IRDA Report 2008-09 Insurer

Insurer LIC

35.98%

2004-05


26.07%

25.68%

17.17%

2003-04


Total 21.22% 8.52% Private Source: IRDA Report 2008-09

26.48%

10.92%

2002-03





12.33%

5.79%

5.70%

3.25%

275


The above table and graph shows that in almost all the years LIC’s no. of policy sole %age is quite larger than the %age of premium collected. Private insurers premium collection % is quite large than the no. of policy sold %age. It indicates that LIC is adopting maximum policy sold strategy while private insurers are adopting the selling of big policy strategy. In Pvt. Sector Average per policy premium is high due to the high management and operating expenses. Table 5

Average Premium Per Policy in New Business ( In Lacs )

INSURER

2008-09

2007-08

2006-07

2005-06

2004-05

2003-04

2002-03

LIC

0.148

0.160

0.147

0.090

0.086

0.064

0.065

Total Private

0.225

0.254

0.245

0.265

0.249

0.147

0.117

Total industry 0.171

0.184

0.164

0.109

0.100

0.069

0.067

Analysis of average premium policy The trend of per policy premium is increasing of the whole industry. It is quite high in private sector as compared to public sector. It shows that private insurers are charging higher per policy premium averagely. Trend shows that premium per policy has become double in last six year. So it should be checked. Pricing strategy of life insurers may differ to 

Maximum no. of policy sold



Maximum premium collection (Big policies)

Life insurers are emphasizing on the above two said objectives. Some of them are focusing on the selling of maximum no. of policy and some of them are emphasising on maximum premium collection. Some life insurers are leading in selling of maximum no, of policy while others are doing well in maximum premium collection. The above table shows that average premium per policy is increasing continuously of the life insurance industry. Both the sectors are on increasing 276


trend in terms of getting per policy premium but private sector per policy is very large as compared to the public sector. It means that private sector is collectingmore premium(per policy) than public sector. it is concluded that LIC is selling small policies and Private insurers all selling big policies REFERENCES Palande R.S., insurance change policies published by allied publishers. ET knowledge series, The economic times insurance 2001-02. Kaushal K Anoop, Mohanty S.K., Insurance law manual, Published by universal law co. Pvt. ltd. Ahuja Rajeev (HT Parekh finance forum), August, 2004 insurance over the transition, Economic and political weekly. Kumar Ranjan, kaushal Vaidya, March 2004 march, Differentiation Strategies of insurance Companies, Insurance Chronicle ICFAI university press. Rama Krishna Rao T.S., May 2006, Bancassurance in India, Icfai University press. Krishnamurthy Naraynan, Enter the super agent in insurance, August 2004Money outlook. Money outlook, August 2004, Market research Report, Indian Insurance industry forecast 200709. Kotler Philips, channel levels, Marketing Management, Prentice hall of India. Shankar Ravi, Services Marketing, Excel Books 2003 FICCI Conference report 2004, on Indian Insurance Industry: New avenues for Growth. IRDA report 2007-08. IRDA report 2008-09 IRDA report 2009-10 IRDA report 2010-11

277


BACK SLIDE OF BUSINESS-RECESSION “RECESSION IS COMMON MAN’S UNCOMMON REACTION”

SHILPA B.S*; SHILPA L.R**; NITU GHOSH*** * Lecturer, Mba Department Brindavan College, Yellanka, Bangalore ** Lecturer, Mba Department Brindavan College, Yellanka, Bangalore *** Lecturer, Mba Department Brindavan College, Yellanka, Bangalore

ABSTRACT The global financial windstorm which has caused the meltdown the financial system in the US and elsewhere has yet to settle down. Its catastrophic effects have reached out to developing economies in a less intense manner but have increased risks and concern for the future. The recession is mainly due to liquidity crunch and loss in confidence of consumers and investors. Global recession will have serious implications for emerging and developing countries. There are no immediate solutions and short term solutions do not hold much promise. KEYWORDS: Unemployment, Recession, Well-being, lower inflation ______________________________________________________________________________ INTRODUCTION

As India marches to the milestone of the golden jubilee of liberation from colonial rule, it has achieved rapid strides and tremendous exposure in social, economical, information and technological spheres. Today we talk about India as the fastest growing economy in the world and as an independent nation that can make rich contributions. But, are these rapid and rich contributions benefiting people from all strata‟s of India? Or are there still people struggling to get a four square meal and make a living??? India is advancing, we have almost everything, but Progressing at what rate?? Every day the main headline of all newspapers is about our falling share markets, decreasing industrial growth and the overall negative mood of the economy. Almost everybody today seems to be discussing about the US Recessionary trend and its impact on emerging countries, more particularly India Economists, Industrialists and the 278


common man on the streets seem to have been horrified by the very thought of recession in India and that too due to US. Decreasing industrial production, inflation, decreasing job opportunities, cost cutting, reducing purchasing power parity, et al are the aspects discussed among them through every possible mode like articles, talks & walks and places like washrooms, canteens, etc . For many people an economic recession has already arrived whereas for some it is just round the corner. In our opinion the recession has already arrived. But what exactly is recession?? A drastic slowing of the economy. A recession would be indicated by a slowing of a nation‟s production, rising unemployment and falling interest rates, usually following a decline in the demand for money. A popular distinction between recession and depression is:‟ Recession is when your neighbors lose his job; depression is when you lose yours. Recession is a period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters. A recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. A recession is generally considered less severe than a depression, and if a recession continues long enough it is often then classified as a depression. A recession is characterized by? 1) Rising unemployment: (often unemployment is a delayed factor) i.e. it takes time for unemployment to rise, but, even when the economy is recovering, it takes time for unemployment to fall. 2) Rising Government Borrowing: A recession is bad news for the government budget. A recession leads to lower tax revenues (lower income tax and corporation tax revenues) and higher government spending on unemployment benefits. The UK is forecast to borrow £60 billion; a recession could make this borrowing even worse in 2009. This borrowing means higher taxes and higher interest payments in the future. 3) Falling Share Prices: Generally a recession leads to lower profitability and lower dividends. Therefore, shares are less attractive. Note share prices often fall in anticipation of a recession. e.g. the recent falls in share prices are largely because the market expects a recession soon. During the actual recession, share prices often increase in anticipation of the economy recovering. Note also, falling share prices don't always mean a recession, falling share prices can occur for many other reasons. 4) Lower Inflation: Typically a recession reduces demand and wage inflation. This should result in a lower inflation rate. However, this recession is complicated because of rising oil prices. Therefore, the forthcoming recession may actually occur simultaneously with higher inflation - a term known as stagflation. But, a recession will definitely reduce demand pull inflation pressures and encourages price wars on the high street as firms seek to retain consumers.

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5. Falling investment: Investment is much more volatile than economic growth. Even a slowdown in the growth rate (economy expanding at a slower rate) can lead to a significant fall in. Are we facing a recession or not? Yes, for the simple reason that not only our neighbors but our friends are unemployed. There is a saying, „when it‟s tough the tough get going‟. The weaker companies will not survive the brief recession also. Stronger companies will pull through its resources.So when is it time to worry? Many factors contribute to an economy's fall into a recession, but the major cause is inflation. Inflation refers to a general rise in the prices of goods and services over a period of time. The higher the rate of inflation, the smaller the percentage of goods and services that can be purchased with the same amount of money. Inflation can happen for reasons as varied as increased production costs, higher energy costs and national debt. A recession normally takes place when consumers lose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment. Investors spend less as they fear stocks values will fall and thus stock markets fall on negative sentiment In an inflationary environment, people tend to cut out leisure spending, reduce overall spending and begin to save more. But as individuals and businesses curtail expenditures in an effort to trim costs, this causes GDP to decline. Unemployment rates rise because companies lay off workers to cut costs. It is these combined factors that cause the economy to fall into a recession.

IMPACT OF RECESSION Unemployment Unemployment is particularly high during a recession. Many economists working within the neoclassical paradigm argue that there is a natural rate of unemployment which, when subtracted from the actual rate of unemployment, can be used to calculate the negative GDP gap during a recession. In other words, unemployment will never reach 0 percent and thus is not a negative indicator of the health of an economy unless it is above the "natural rate," in which case it corresponds directly to a loss in gross domestic product, or GDP The full impact of a recession on employment may not be felt for several quarters. Research in Britain shows that low-skilled, low-educated workers and the young are most vulnerable to unemployment in a downturn. After recessions in Britain in the 1980s and 1990s, it took five years for unemployment to fall back to its original levels. Many companies often expect employment discrimination claims to rise during a recession Business Productivity tends to fall in the early stages of a recession, then rises again as weaker firms close. The variation in profitability between firms rises sharply. Recessions have also provided opportunities for anti-competitive mergers, with a negative impact on the wider economy: the 280


suspension of competition policy in the United States in the 1930s may have extended the Great Depression. Social effects The living standards of people dependent on wages and salaries are more affected by recessions than those who rely on fixed incomes or welfare benefits. The loss of a job is known to have a negative impact on the stability of families, and individuals' health and well-being. Use cash and borrow less We always debate on the topic whether cash or credit. Borrowing less is always great for us. (Unless you‟re leveraging it for business Investments/etc – that‟s a-ok)

On the Example of education alone, it‟s easy to see how the impact of a recession on a country can be long lasting. Fewer educational opportunities mean less chance of moving into career fields that pay well, which means some people remain in lower below middle class for life. This can then burden the state with higher demand for social services, and thus need to borrow additional funds or make decisions to ignore the needs of a cross-section of society, worsening the problem. Such an example suggests that impact may last far beyond a current recession, and become multi-generational in scope. Conclusion In the short-term, the impact of a recession on a country is typically changes in prices of goods and services, which may rise or fall. Decrease in jobs is another common element. Market stability, companies holding onto money instead of investing it, and most people and industries having less to spend may result. Though these characteristics may improve over time, in the long-term, a country may be scarred by its downfalls, and for some, lives and opportunities change dramatically, or even political and economic emphasis shifts to adjust to new dynamics. Being middle class used to mean having a reliable job with fair pay; access to health care; a safe and stable home; the opportunity to provide a good education for one‟s children, including a college education; time off work for vacations and major life events; and the security of looking forward to a dignified retirement. But today this standard of living is increasingly precarious. The existing middle class is squeezed and many of those striving to attain the middle-class standard find it persistently out of reach. The recession is a Threat to the Economy. When the big business houses and financial institutions and markets are going through doldrums. Proper measures by the industry and the government to encourage entrepreneurship even at the grass-root level and focusing on the growth and internationization of SMEs undoubtedly would lift us from our present status of poor economy, declining GDP,devaluation of the Indian currency and also the „Euro”, increasing inflation, and the never-ending fears of economic recession.

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REFERENCES: 1. N.Sivasankaran&Dr.M.Kannadhasan,Assistant Professors,BIM,Trichy, “Lessons Learnt from the Global Recession in the Indian context ”. 2. sify.com/finance/specials/recession_in_indi 3. www.economyincrisis.org/ 4. www.investopedia.com/articles/.../08/recession-affecting-business.asp 5. www.mumbaispace.com/economics/impact-of-us-recession-in-india 6. www.merinews.com/catFull.jsp?article 7. www.sc 8. ribd.com/doc/7480461/US-Recession-and-Its-Impact-on-India 9. Millward Brown (April 2008) “Marketing During a Recession: To Spend or Not to Spend”. Millward Brown (May 2008) “Recession: Survival Tactics.” 10.Field, Peter. “Marketing in a Downturn: Lessons from the Past,” Market Leader Issue 42, (Autumn 2008): 26-3.

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SELF HELP GROUPS IN SOCIAL TRANSFORMATION DR.S.BOSE District Project Manager, Pudhu Vaazhvu Project, 47, Kohile Hall Street, Melur Road, Sivagangai Dist, Tamilnadu 630561

ABSTRACT Self Help Groups (SHGs) are started by non-profit organizations (NGOs) that generally have broad anti-poverty agenda. SHGs are established as local financial intermediaries with their own internal savings and credit business and access to bank refinancing. Self Help Groups are seen as instruments for a variety of goals including developmental institutional building and social capital formation, empowering men and women through skill training and capacity building, developing leadership abilities among poor people, enhancing individual as well as family income by undertaking market-driven enterprises and giving the power of scale to small producer through SHGs and supporting and increasing incremental income among its members by effectively utilising the natural resources for a sustained income, playing as platform for eliminating unemployment and poverty in rural areas, improve socio-economic position of rural poor by increasing income generation potential with financial support and substituting for money lender menace, school enrolments, and improving nutrition and the use of birth control, enhance the social status of rural poor by raising skills and knowledge and fostering confidence among them to strive for social change.1 KEYWORDS: Customer, satisfaction, satisfaction-level, savings-bank, facilities. ______________________________________________________________________________ INTRODUCTION PRELUDE: SHGs are acting as intellectual force fighting against the evils of this unjust society through their mobilization and social capital building. SHG is a creative force among the rural and marginalized poor through its direct grassroot involvement and thus creating leaders who would become agents of social change. SHG is a protest force, in collaboration with other NGOs, challenging the prevailing values and attitudes of the unjust and exploitative systems, built by means of every endeavor, a fuller expression of justice and love into the structures of human life in common. In addition to the financial analysis of SHGs, the SHG Movement also affects the non-financial areas such as social security and gender dynamics. Indeed, poverty reduction is much less an issue of numbers but rather ideas and concepts. 2

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SHGs and Activism: Political engagement includes active involvement by SHGs in government including local assemblies, Lok Sabha or Panchayati Raj Institutions (PRIs) (APMAS, 2005). One of the key benefits of SHGs is women’s empowerment and this can be seen by the number of women involved in public affairs. establishing mechanism for women's equal participation and equitable representation at all levels of the political process; promoting the fulfillment of women's potentials through education, skills development and employment, giving paramount importance to the elimination of poverty, illiteracy and ill-health among women; eliminating all practices that discriminate amongst women and assisting them to establish and realize their rights; adopting measures to improve women's ability to earn income beyond traditional occupations, achieve economic self-reliance and ensure their equal access to the labour market and social security systems; eliminating violence against women; eliminating discriminatory practices by employers against women; making it possible through laws, regulations and other appropriate measures for women to combine the roles of child-bearing, breast-feeding, and child-rearing with participation in the workforce; Strengthening policies and programmes that improve ensure and broaden the participation of women in all spheres of life as equal partners and improve their access to all resources needed for the full exercise of their fundamental rights. 4 SHGs in Social harmony: Social harmony encompasses equality and integrity of relationships between different social groups. The composition of SHGs is sometimes exclusively one particular social group or a mix. The impact of SHGs on social harmony has also been mixed. It has been observed that groups with mixed membership had group leaders who come from a variety of the social groups. In the vast majority of instances, group leaders were almost exclusively from the dominant social groups’ category. This demonstrates a lack of equality and unity across caste divisions. Given the relatively young history of SHGs, it is to be expected that their impact on bridging centuries old divisions would be slow.4 SHGs in ensuring the social Justice: Social justice is the presence of moral and ethical conduct in areas that are historically typified with backward and abusive customs. There have been several occurrences of SHGs resolving disputes between members and the community at large. These instances include initiating legal action, arbitration, divorce and others. While there have long been dispute resolution mechanisms in villages, in the past it was controlled by men. Now, there are instances of women, SHG members, being involved in resolving disputes. Whether or not the women are working for their own interests or in the case for justice varies, regardless of SHGs’ impact on the political arena is certainly being seen also in social justice, albeit in a slow and evolutionary process.5

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SHGs in addressing the community problems: Being a group-based organization of members of similar caste and geography, the community resources that are shared / affected by the SHG. Recent analysis has shown that the impact that SHGs have on the community at large have been minor. There have been few instances of significant contributions from SHGs to education, family planning, eradication of child labour and hygiene. 6

SHGs in sustainable livelihood security to downtrodden: Rural women play a significant role in the domestic and socio-economic life of the society and therefore, holistic national development is not possible without developing this segment of the society. The perception of a women based organization taking a leading role for the betterment of the greater good has monumental impact on the local community. Gender dynamics begin to balance in instances such as these. Livelihood, meaning a persons’ economic activity, is an area that is vitally important to SHGs. The loans that SHG members receive are intended to improve their livelihood so that they can receive greater and steadier cash flows. In rural areas, livelihood range from agriculture farming, animal husbandry, dairy and various other goods and services activities. Experience has shown that SHGs have had improved livelihood to the extent of providing the leveraging needed to start an enterprise. However, the interventions to introduce new livelihood or refine existing ones that could yield better economic results were done by external agencies. Microfinance to SHGs for promoting enterprises for sustainable livelihood is emerging as a powerful instrument for poverty alleviation in the new economy. In India, Microfinance scene is dominated by Self Help Group (SHGs)-Bank Linkage Programme as a cost effective mechanism for providing financial services to the “Unreached Poor” which has been successful not only in meeting financial needs of the rural poor women but also strengthen collective self help capacities of the poor, leading to their empowerment. Rapid progress in SHG formation has now turned into an empowerment movement among women across the country playing major roles in rural social transformation. Economic empowerment through SHG results in women’s ability to influence or make decision, increased self-confidence, better status and role in household etc. Support to micro finance and enterprises development is necessary to overcome exploitation, create confidence for economic self-reliance among the rural poor, particularly among rural women who are mostly invisible in the social structure.7 SHGs in technology transformation: SHGs have another very important role to play particularly in the transfer of technology to user group population. It has been found by the members of SHGs that they offer them organizational base, large resources, and access to modern technology leading to employment and income generation. Thus, SHG movement among the rural poor in different parts of the country is emerging as a very reliable and efficient mode for technology transfer. However, it is strongly felt that the pace of transfer and popularization of technologies must be accelerated so that even the small farmer can benefit from new technologies.8

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SHGs in Social Transformation: In rural areas the SHGs are playing an active roles and focusing on social mobilization, entrepreneurship promotion among rural women, training and capacity building, involving the government as well as development agencies in SHGs for addressing the problem prone society to problem free society through voluntary action of SHGs at the gross root level and to maintain communal harmony, sustainable livelihood and addressing the socio economic, cultural problem at the rural areas. 9 PROCESS OF TRANSITION Problem prone society In equality In cohesion Exclusion Disintegration Disharmony Ignorance Separation Less Participation Passive members Cultural problem Caste Discrimination Less Empowerment Idle Un Employment In access of resource Lack of Communications Animate agriculture Tradition Micro level approach Un Planned life Lack of confidence Domestic Violence Immobility

Problem free Society Equality Cohesion Inclusion Integration Harmony Knowledge Sharing Complete social integration Active participation / collective Decision making Active members Cultural Change Casteless society and integration Complete Empowerment Belongingness – Feeling of oneness Employment guarantee and Assurance Access of resource Modern and quick information flow In animate and modern agriculture Modern Macro Level approach Planned life Full of self -Confidence Free from domestic violence mobility

Conclusion: SHGs are proving a platform for mobilizing a group of poor men and women who on account of certain similar identity form a common forum irrespective of their caste status for working together, living together, going together and interacting together to undertake enterprises to ensure not only to address the economic issues but also the inherent social issues of inequalities which may be caste ,gender, and religion based and give collective action and voice to erase all disparities and social discrimination and play a vital role in silent social revolution in rural India.

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Refference: 1.Bion, W. Experiences in Groups – Basic Books, New York, 1961. Fisher, Thomas Emerging Lessons and Challenges in beyond Micro credit by (ed) Fisher and Sriram, Vistar Pub. Delhi, 2002. Gupta, R.C. Guidelines for Field Workers On Management Of Self Help Savings And Credit Groups, FES, New Delhi. Harper, M. &. Finnegan, G., Small Enterprise Development -Value for Money?Oxford &. IBH, Delhi, 1998.

Harper, M., Profit for the Poor, Oxford &. IBH, New Delhi/ IT Publications, London,1998.

Hulme, D. & Mosley, Finance against Poverty, Routledge, London, 1996. IFAD, the Role of Rural Credit Projects in Reaching the Poor, Tycoon Publishing, Oxford, England, 1983

Karl, Marilee, 1995, Women as great as empowerment, Ned Books as great as UN Non Governmental Service.

Meier, G. Emerging From Poverty: The Economics That Real Matters, OUP, New York, 1984.

Meenai, Zubair Empowering Rural Women: A Approach to Empowering Women Through Credit Based, Self Help Groups, Aakar Books, Delhi, 2003.

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HR ISSUES AND INTERVENTION MODEL FOR FAMILY BUSINESS DR. EKTA SHARMA Postal address: 13, gopal surya tenement, Nr. Sola railway crossing Sola road Ahmedabad-61 Gujarat India

ABSTRACT The study aims at identifying and analyzing Human Resource management problems in family business and to devise an intervention model for the HR issues. We can date back the origin of family business, to as old as, the human race. The family businesses have ruled the market in every economy. They are the largest wealth-creators too. The article tries to find out- Why is it so that though the family business makes the major chunk of the economy, but they are shortlived? Are there any Human resource management issues involved in this? What can be the HR interventions for this? The findings of study are that, majority of the family owned companies operate like extended family units. All decisions are centralized and taken behind closed doors and lack transparency. There is lack of communication. Challenges faced by family-owned business are different from the challenges faced by non-family business. When close relatives work together, emotions often interfere with business decisions. KEYWORDS: Human resource, succession planning, HR model, Family business, Balancing act, Nepotism, Competency Mapping, Perception, Justice Introduction ______________________________________________________________________________ INTRODUCTION In the lanes of the business, it’s a cliché- "It's nothing personal; it's just business." But food for thought is- Is it apt even for family business? "It's just business" doesn't always sounds true, particularly in family-owned businesses where the personal and the professional are inextricably entwined. The foundation stone which strengthens the family businesses is the proprietors' emphasis on relationships. Despite substantial diversity among family businesses, they often share strengths, such as greater cultural fit, stronger commitment and work ethic, and flexibility in hard times. But Family business provides a unique set of challenges for growth and development as family dynamics inevitably find their way into the corporate culture. Family – owned businesses exist all over the world and some of the world’s oldest firms are family- owned eg. Kongo Gumi of Japan was founded in 578 AD and is currently managed by the 30th generation. Some of the largest wealth creators and businesses are family owned like Wal Mart. (www.familybusinessmagazine.com/oldworld.html) For historical, evolutionary reasons, most countries have family businesses constituting the largest category in terms of ownership; estimates do vary, but is above 75 percent in all cases (Duman 1992, Paisner 1999; Watts and Tucker 2004). About a third of the companies listed in 288


Fortune 500 are family businesses (Lee 2004). Since they normally do not have short term orientation but are interested in growing the family wealth with necessary precautions and have a different set of strategic goals compared to non-family owned private companies (Ward, 1987; Sharma, Chrisman and Chua, 1997), their long term contribution to economy is significant. This is true with the Indian economy too. However, long term sustenance of family business depends on its smooth survival across generations. There are conceptual differences between family and business (Ward 1987, 2004), though opinions on treating them as conflicting systems vary. Family businesses are found to split up like amoeba as they grow, and very few of them survive beyond three generations, supporting the age old saying, “shirt sleeve to shirt sleeve in three generations” (Carlock and Ward 2001, McCulloch 2004). The highest wealth creators are family – owned businesses. The issues faced and the interests involved by family-owned businesses all over the world are more or less the same. The importance of the family in business and the blurredness of the distinction between business and family are predominant issues. The study aims at identifying and analyzing Human Resource management problems in family business and to devise an intervention model for the HR issues. FAMILY ISSUES The challenges faced by family-owned firms vary according to the size of the company and its level of development. There are some large family-owned companies that are on the global map. They have professionalized their management boards, diversified their ownership and, issued shares on the stock market. Majority of the family owned companies operate like extended family units. All decisions are centralized and taken behind closed doors and lack transparency. There is lack of communication. Challenges faced by family-owned business are different from the challenges faced by non-family business. When close relatives work together, emotions often interfere with business decisions. The challenges that the family business confront with, are discussed below. 1. Double Standards Although the companies have formal policies & procedures, but they does not apply to family members. For e.g. the family members and their acquaintances have more shares in benefits & perks and the top managerial positions are generally reserved for the family members. This is evident from the comment of one of the HR managers, who quoted, “You might as well throw salary structure out of the window. There are people in the company whose pay is based on the fact that they knew the owners before, and it has nothing to do with their skills." 2.

Lack Of Professionalism The family business is based on informal premises. Any of the family members can promise the job to any relative or neighbor, irrespective of the qualification and potential. a. Family Lingo In order to give the warmth & to increase the inclusion, the non-family members are given signals that they are considered family and hence assure them of their job security. 289


While well-intended and sincere, these statements may come back to bite the employer. A terminated employee may argue that he or she relied to his or her detriment on these assurances by staying with the company and may bring a claim for promissory estoppels or detrimental reliance. b. Informality There is absence of clear policies and business norms for family members. There is no policy followed for promotion, transfer or compensation of the family members. c. Problems in communication If the members share amicable relations, their communication do not follow any formal communication and the tea-time talks are the mode of communication and if difference in level of seniority and emotions like envy, fear, anger invoke there is zero communication in members. 3.

Religion The religion of the family represents an important cultural aspect of some family businesses and it is obvious too because family members can not leave their faith at home. But the problem arises when they try to run their businesses in accordance with their faith. Those who have a faith-based business need to practice and discuss their faith in ways that do not exclude others. They must acknowledge that others have different faiths but are equally valued remains essential. 4. Dispute Resolution The disputes are common in the family business. The disputes range from succession to difference in vision of the son & father. The history has witnessed many such feuds. Some families could survive the disputes some other had succumbed to them. Addidas & Puma are the example of the survivors of feuds, although it had to bear the brunt of split. 5. Nepotism Hiring unqualified relatives and friends is a classic problem at family-owned businesses. Many a times new positions are created in the organization to accommodate the family members. It has impact on the morale of the other workers and reduces their productivity. This even paves path to the nurturing of sycophancy in the culture. 6.

Emotions Family problems affect the business. Divorce, separations, health or financial problems also create difficult political situations for the family members. It is very difficult to keep the bickering from interfering with work and the company becomes divided into warring camps.

7.

Restricted vision As the family members are reluctant to allow the outsiders to the top managerial positions, there is a lack of outside opinions and diversity on how to operate the business.

8.

Family member compensation Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified. There is an example of a Family- Business, which has all the members of the family as the Director of the organization, whether active in busi ness or not, and are fetching benefits and perks. These people are interested only in dividends and earnings 290


and not in the growth of the business they are unable to comprehend the problems of operating a business. 9.

Confused roles Roles and responsibilities must be clearly defined. But in the family business the role ambiguity & role conflict is common. The roles are not clear. It is very difficult in family businesses to define authority. If a younger member is made CEO he/she may find it very difficult to tell the elder members of the family to change their style of functioning. Many members in the family also tend to overlook decisions taken by younger members even if they are at positions of authority.

10.

Planning for succession Absence of succession planning is the major cause of Great conflicts and division in the business. The Reliance family is the evident example of the same. When the patriarch, Dhirubhai Ambani, died, there was no clear succession planning and it was believed that the younger brother would stay under the wings of the elder brother though the cracks were visible even when Dhirubhai Ambani was alive. The split in the company was not amicable and resulted in a loss to the investor’s wealth and Reliance slipped from its position in the Forbes List.

11.

Perception of non- family member It is a huge challenge in some family-owned companies to retain non family professionals and such companies are plagued with a high turnover. They perceive that the organizational climate lacks transparency & fairness. Many family-owned firms find the morale of non family employees very low because the trust factor in outsiders is very low. Figure 1: HR Model for the family business

FAMILY ISSUES

HR ISSUES

HR INTERVE NTIONS

THE UNIQUE ROLE OF HR IN FAMILY BUSINESSES Beyond the required expertise to deliver the usual HR services – recruiting and staffing, training and development, performance evaluation and promotion policies, compensation and benefits, and employee relations, to name a few – HR management in family-owned businesses have a unique challenges to address. 1. Perception of non- family members Securing the commitment and cooperation of non-family employees is likely to be more difficult if they do not perceive that decision outcomes, decision processes, and decision makers are fair or just. Although all employees in both family and non-family firms may form perceptions about the fairness of the treatment that they experience within their organizations, family involvement and influence in family firms may have unique effects on the fairness of these firms’ human resource (HR) practices as they relate to non-family employees. Further, although family firms’ HR practices affect both family and non-family employees, non-family employees may often 291


face a particularly complex and uncertain situation since they are part of the business but not of the family system (Mitchell, Morse, & Sharma, 2003). This may ultimately affect perceptions of justice (or injustice) among these workers. In particular, family firms’ HR practices related to issues such as staffing, performance appraisal, promotion, compensation, and discipline may vary based on the level of family influence present in family firms. These HR issues can influence the justice perceptions of employees (e.g., Folger & Cropanzano, 1998; Lemons & Jones, 2001). 2. Balancing sound business practices with a history of family politics & dynamics Non-family members brought into the family business, especially at the senior levels, often find themselves in the uncomfortable position of having to balance sound business practices with a history of family politics and dynamics. 3. Training to family & non-family members Non-family members soon after joining the job discovers that family issues outside of the work setting get played out in the business environment. Needs for power, acceptance, direction, control, communication, leadership, and recognition become stumbling blocks for the non-family member. If these issues and needs are not dealt with in an objective and efficient manner, the risk of non-acceptance and alienation will affect the non-member contributions. Therefore it requires a rational method of selecting, training, and integrating both family and non-family members for roles where they can make the most effective contributions to the growth and success of the business. 4.

  

Succession Planning The succession planning is not given due importance in the family business and hence the problem arises when the successor is required. Successful business leaders are those with some combination of proven natural Talent or a demonstrated capacity to learn and use leadership skills. In family-owned businesses, there is a propensity for using criteria other than talent or skill in selecting the company leader. The most common criteria used by family business are traits such as: Gender (sons vs. daughters) Birth Order (oldest rather than youngest) Birth right (family member vs. an outsider) Another common path is to choose the son or daughter with behavior or personality similar to the founder of the company. When these traits are used as the sole criteria, leaders are selected without regard to the set of skills needed at this stage in the corporate development of the family’s company. But there is a major shift that business families are trying to make is to include their daughters as well in the succession and discussion plan. Till now, daughters have been by and large ignored. Including daughters is a welcome change. Kellogg School’s Ward believes that Indian business groups are particularly prone to splitting because they don’t involve daughters in their family business. “A family that only has brothers at the helm is the most unstable form of business enterprise. Brothers often end up with ego issues. If you involve daughters and other members then the bond is stronger,” he says. This stands to reason. It is criminal to not deploy 50 percent of the talent in a business family. The Godrej group is a good example. Adi Godrej’s two daughters, Tanya Dubash and Nisa, are both playing an active role in the group. Ajay Piramal’s daughter Nandini played a very active role in Abbott’s purchase of Piramal’s generics business. She is assisting Ajay Piramal into their 292


foray into realty among other new ventures that they have planned. (http://business.in.com/article/india-rich-list-10/family-businesses-and-splittingheirs/18242/0#ixzz1LM7CKyOV) 5. Hiring- Qualifications for family members One of the biggest challenges that these businesses face is the effective management of nonfamily employees, which has been recognized as keenly important to family firms (Chua, Chrisman, & Sharma, 2003). Although family members often hold key executive positions in family businesses, many family firms employ non-family managers, and most employ a larger number of non-family employees than family members (Deloitte & Touche Study, 1999). Thus, attracting qualified non-family employees and fostering value-creating attitudes and behaviors among these employees can be major factors in the success or failure of family firms (Chrisman, Chua, & Litz, 2003; Chua et al., 2003). 6.

Discipline- Misconduct If a family member engages in misconduct that in the ordinary course would result in termination--for example, theft then if he is not terminated for misconduct, but the adverse action is taken against a non-family member who engages in the same or similar misconduct, then this raises the eyebrows of the employees and even lead to retaliation. In some cases, favoritism is unethical and possibly illegal; in others, it's merely annoying. In one of the firm’s, a family member was accused of sexual harassment. The owners didn't want to fire their relative, but they didn't want a discrimination lawsuit either. In the end, the man got a slap on the wrist, a pay cut and a tarnished reputation. The alleged victim stayed on and was even promoted. One of the employees commented, "If this had been a non-family member, this person would have been terminated.” No lawsuit resulted in this case.

7.

Compensation- benefits to the family members The informality of the family business cascades into benefits administration and it becomes much too easy for any family member to participate in sponsored benefits plans. The HR policies determine eligibility to participate in a benefits plan. Allowing an individual to participate in a plan, even though the individual does not qualify as an eligible employee or as a spouse, dependent or domestic partner of an eligible employee, creates business and legal risks: The insurance company may deny the individual coverage if officials discover that the individual is not an eligible employee. If the insurance carrier makes this discovery after payments have been made, the career may claim fraud and seek repayment and other damages. If an employer wants to include family members who are not employees or otherwise eligible to participate in their group plan, the employer should negotiate with the carrier the right to do so.

8.

Performance Appraisal The family businesses have an unbalanced score card, heavily weighted in favor of subjective, intangible elements, compared with non-family businesses. The performance appraisal is more the function of the proximity with the family owning business rather than the performance.

9.

Organization culture The family businesses have cultures which are often Value driven, stable, and long term in their focus. The transparent organizational climate has to be developed. 293


10.

Dispute resolution The claims by family members against the business have to be guarded. The change in emotional ties might lead to such claims. HR Intervention 1. Competency mapping In dealing with the issues of family business, it is essential to incorporate some means of objective assistance. Competency mapping describes the different aspects of competent behavior in an occupation against competency dimensions such as strategic capability, resource management and quality.This process allows for a systematic observation, collection and analysis of behavior which provides a structured means for making decisions about an individual in relation to the organizational structure. This helps in strengthening employee morale, improving organizational culture, enhancing communication, maximizing fit between individuals and jobs, promoting teamwork, helping employees manage stress, assisting managers in improving their skills, identifying training needs, etc.. In family owned businesses this type of intervention provides the necessary objectivity needed to resolve issues in an unbiased manner. 2. Succession planning: There are many assessment tools available which can show a person’s core traits, which are remarkably stable over time and circumstance. The HR professional should convince the organization to make intelligent use of tests for selection and promotion to achieve better talent management, better assessment of family members wanting to enter the business, and better development planning throughout the organization. The doors should not be closed for the outsiders. 3. Nepotism Nepotism is a big threat to the performance of the family business. So, Leaders in every family business must consider whether employment is a privilege or whether it must be earned. Although the fair & just HR policies recommend hiring of competent workforce but in some cases family members with minimal qualifications may be hired or promoted. Many a times, such employee turns out to be loafers in the organization. The example of the CEO’s son handling a key portfolio but not contributing to the job is a problem employee. To handle such people, complaining is not going to work; the best way is to marginalize them. Besides, that the other problems of Nepotism, like problem of inequity can be solved to some extent, by drafting clear HR policies & practices for the organization which are applicable across the board. ( http://business.in.com/article/india-rich-list-10/family-businesses-and-splittingheirs/18242/0#ixzz1LM88x6gN) GMR uses the results from an “aptitude test” and a host of other criteria like education and inclination to come up with a right place inside the organization for the youngster who wants to join the family business. The Murugappa Group insists on outside work experience. “We try to see that each of them work outside and gain experience for a minimum period of three years,” says A. Vellayan, executive chairman, Murugappa Group. After entering the business, the member works in one area for four-five years and then also works in other businesses by rotation so that he can understand his 294


aptitude and strengths. He has the same kind of objectives and KRAs set out for him as other non-family professionals. His performance is measured in a similar way too. ( http://business.in.com/article/india-rich-list-10/family-businesses-and-splittingheirs/18242/0#ixzz1LM8ShmSf) Forbes India Magazine of 22 October, 2010 4. Dispute resolution: Because claims by family members almost always include personal family issues, keeping these claims as private as possible may be desirable, so consider mandatory alternative dispute resolution. HR professionals may wish to develop guidelines for when family members will be terminated from employment. For example, separation or divorce from a family member may be cause for immediate discharge. Although, it can be uncomfortable to plan for disputes between family members at work, but this is something mandatory in order to avoid the hassles. 5. Change management Family-owned businesses are a little slow when it comes to accepting change. Family-owned business is not used to spending money on R&D and also ploughing back profits into technology development. The family has got used to fat dividends and is not ready to give them up for the purpose of growth of the firm. The HR professionals must understand the importance of change and they must try and convince the top management and non-participative members to facilitate change which would increase the earning capacity after the change. 6. Family emotions Emotions are the important ingredient of any relationship and so the family business have to confront this ingredient but with grace. But these emotions and passion have to be related to business. Family-owned business finds family emotions playing havoc with business. Ego clashes, sibling rivalry, clash of thoughts between generations, dissatisfaction, alienation, etc are some of the problems that are common. The head of the family has a major role to ensure that these emotions stay out of business. So, he must encourage open communication among family members and has a system of mentoring every member who enters the family business. The family-owned business management needs to be very clear about the demarcation between family and business. The HR professionals can help the head of the family in tackling this issue by advising him about the right positions for the new entrants and also about the mentoring of the family members. 7. Human Resource policies & practices In order to compete, family-owned firms need to strictly put in uniform HR policies for nonfamily as well as family members. This will help in curbing Nepotism and hence will help in changing the perception of the non family members about injustice & inequity in organization GMR, the infrastructure heavyweight, has a family constitution that is the “book” to which members must refer for do’s and don’ts. The most interesting aspect of GMR’s approach was actually to get all the family members away on a retreat. The key message sent out at the retreat was that before handling family wealth, each one of them would have to understand relationships within the group. Spouses were taken on board and were explained how their husbands and sons could be picked for a role inside the organization. They were told the logic behind these choices. “Spouses influence the male members’ thinking tremendously,” says Kumar, who worked out their transition plan. All family members were also advised to bring their living standards within a commonly 295


accepted band. “A lot of resentment can be traced back to the fact that one segment in the family may have an extravagant lifestyle while the other may be more down to earth. Family members also decide what sort of schools children will attend,” says Kumar. That might appear intrusive but this sort of thing makes sure that the family members have a similar world view and value systems. ( http://business.in.com/article/india-rich-list-10/family-businesses-and-splittingheirs/18242/0#ixzz1LM8ShmSf) 8. Defining Authority The role & authority of every position in organization should be well defined, so that there is no ambiguity & conflict. The sense of professionalism has to be inculcated in the employees and especially the family members and no statement should be seen in light of personal relations, its only business. Even if a younger member of the family is at a higher position, his authority should not be overlooked by other elders of the family. CONCLUSION For the family factor in family businesses to have positive effects, the dominant coalition in the family firm must effectively manage the involvement and interactions between the family unit and the business. When the family, business, and individual subsystems of family firms do interact in synergistic ways, family influence is more likely to facilitate fair HR practices. Such a facilitating influence, however, needs time to develop since younger family firms are often characterized by less formalized policies, procedures, and rules related to HR practices and processes (Gersick et al., 1997), and formalization is often resisted, and personal preferences dictate decision making. But information and explanations given for decisions and the quality of interpersonal treatment of non-family employees received at the hand of family members are likely to be important to non-family employees. References Carlock, R.S. and Ward, J.L. (2001). Strategic Planning for the Family Business: parallel planning to unify the family and business, New York. Palgrave. Chrisman, J.J., Chua, J.H., & Litz, R. (2003). A unified systems perspective of family firm performance: An extension and integration. Journal of Business Venturing, 18(4), 467–472. Chrisman, J.J., Chua, J.H., & Sharma, P. (2005). Trends and directions in the development of a strategic management theory of the family firm. Entrepreneurship Theory and Practice, 29(5), 555–576. Chua, J.H., Chrisman, J.J., & Sharma, P. (1999). Defining the family business by behavior. Entrepreneurship Theory and Practice, 23(4), 19–39 Chua, J.H., Chrisman, J.J., & Sharma, P. (2003). Succession and nonsuccession concerns of family firms and agency relationship with nonfamily managers. Family Business Review, 16, 89– 107. Deloitte & Touche Study (1999). Are Canadian family businesses an endangered species? The first success readiness survey of Canadian family-owned business. University ofWaterloo, ON: Deloitte & Touche Centre for Tax Education and Research. Duman, R. 1992, “Families are different”, Entrepreneurship theory & practice, vol.17,pp.13-21. Folger, R. & Cropanzano, R. (1998). Organizational justice and human resource management. Thousand Oaks, CA: Sage Publications. Forbes India Magazine of 22 October, 2010

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Gersick, K.E., Davis, J.A., Hampton, M.M., & Lansberg, I. (1997). Generation to generation: Life cycles of the family business. Boston: Harvard Business School Press.Lee, J. (2004) The Effects of Family Ownership and Management on Firm Performance, S.A.M. Advanced Management Journal. 69(4): 46-53. Lemons, M.A. & Jones, C.A. (2001). Procedural justice in promotion decisions: Using perceptions of fairness to build employee commitment. Journal of Managerial Psychology, 16, 268-280. McCulloch, S. (2004). Economic Dominance Through Bloodlines, Families in Business, May-June. No.14: 20-22. Mitchell, R, K, Morse, E, A,, & Sharma, P, 2003, The transacting cognitions of non-family employees in the family business setting. Journal of Business Venturing, 18: 5 3 3- 51. Paisner, M.B. (1999) Sustaining the Family Business – and insider’s guide to managing across generations, New York. Persens Books. Sharma, P. Chrismann, J.J. and Chua, J.H. (1997). Strategic Management of the Family Business: past research and future challenges. Family Business Review.10(1): 1-35. Watts, G. and Tucker, J. (2004). A Systernic View of the Succession Process. Families in Business. May-June. No.14: 16-17. Ward, J.L. 1987. Keeping the family Business Healthy. San Francisco: Jossey-Bass. Ward, J.L. (2004). Is Google a Family Business? Families in Business. May-June. No.14: 83-84. http://business.in.com/article/india-rich-list-10/family-businesses-and-splittingheirs/18242/0#ixzz1LM7CKyOV www.familybusinessmagazine.com/oldworld.html

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IMPACT OF NANOTECHNOLOGY IN AUTOMOBILE INDUSTRY MS.A.JOSEPHINE STELLA*; DR.K.RAJESWARI** *Research Scholar and Assistant Professor in Commerce, SFR College for women, Sivakasi. ** Head and Associate Professor in Commerce, SFR College for women, Sivakasi.

Nano technology is the investigation, application, and production of structures, molecular materials, and systems with a dimension or production tolerance of less than 100 nanometres. Hence this technology is different from older technologies because unusual physical, chemical, and biological properties can emerge in materials at the nanoscale. The automobile industry is also affected by the radical changes that nanotechnology brings to the engineering world. In this paper the nanotechnology’s fields of application in the automobile industry are discussed. “Nanotechnology is the application of nanostructures into useful nanoscale devices./nanoscale, the most fundamental properties of materials and machines depend on their size”.

Importance of Nanotechnology A combination of factors such as the growing demand for cost-effective, high-performance materials and the recent spate of stringent legislations regarding emissions, safety recyclable materials have served to emphasize the significance of nanotechnology in the world automotive market. Automotive manufacturers strive to match the stricter emission norms set by regulatory authorities; they are beginning to consider nanotechnology as a necessity. With their precise structuring and exceptional physical and mechanical properties, nanomaterial-based products have the potential to redefine the energy and material applications. Further their ability to replace expensive platinum in fuel cells that are more environment friendly than regular gasoline cars are expected to act in their favour. Nano has been developed to meet all the safety norms that are applicable for passenger cars in India and will be able to meet upcoming safety norms too. Current norms stipulate that cars sold in India should meet norms set for full frontal crash, head impact on steering system, and seat belt anchorage strength etc. The car has only one rear-view mirror, though. Other car majors are also planning to produce small cars on the nano pattern. Ford is planning to launch a small car in India early 2010 even as its small car.

Technology and Automotive Industries The following technologies are adopted in Automotive Industries 1. Nanocomposites 2. Quantum Dots 3. Nanolithography 1. Nanocomposites: Nanocomposites are materials that are reinforced with nanotechnology- based additives. This helps the material gain exceptional mechanical 298


2.

3.

and / or electrical properties. The base material containing these additives is called nonocomposites. Quantum Dots: Quantum dots are nanocrystals that absorb light and re-emit it at a wavelength different from the incident wavelength. This absorption and re-emission property depends on the size of the quantum dot. Nanolithography: Nanolithography involves the adoption of lithographic techniques to imprint substrates with less than 50 nanometer sized patterns.

4.

Impact of Nanotech in Automobile Industry Nanotechnology is the key for the automobile industry for a sustainable development and growth. The worldwide automobile industries turnover in nanotechnologies is 8.6 billion US $. In 2007 and will be 54.2 billion US $ in 2015 and 137.4 billion US $ in 2020. It is estimated that more than 95 applications from nanotechnology will enter cars in the next 5 years. The worldwide automobile industries turnover in nanotechnologies is 8.6 billion US $ in 2007 and will be 54.2 billion US $ in 2015 and 137.4 billion US $ in 2020. So the Government is taking all initiatives for the application of nanotechnology a “Must “for the automobile industry and converging markets. The current and future prospects of nanotechnology in three main sectors of the automobile market are:  Energy generation and storage  Materials  Electrical and electronics It reviews the potential for new technologies that are likely to enter the market and assesses the competitive profiles of leading participants. Additionally, it also influences the industry thereby enabling companies to formulate their market strategies. It also provides strategic recommendations that are likely to enable participants to overcome the challenges confronting them. With the launch of Nano, the dynamics of IndiaÐ²Ð‚â„¢s auto industry are likely to undergo major changes as wide spectrum of auto manufacturers ranging from two-wheelers to cars will come under intense pressure to minimize prices as much as possible. Success of Nano is expected to make every automobile company change the way it works and looks at the volume market. The creation of an ultra low cost segment has already created a shudder in the automobile industry. Many automobile companies have announced their entry into this segment while that introduction of Nano will lead to a sharp drop in prices of used car and in turn will stretch the budget of a new car buyer looking for exchanging old car. This aspect will affect sales of all small cars like Wagon R, Zen Estillo, Santro, Indica, Hyundai Ð²Ð‚?i10Ð²Ð‚â„¢ and Spark. Others have hinted price cuts to sustain demand.

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Industry experts believe while Maruti is already working on re-pricing its cheapest offering Ð²Ð‚â€œ Maruti Ð²Ð‚â€œ 800 aggressively, Bajaj Auto has firmed up plans to enter into the small car segment, not in the range that Nano would be, but at a price range between the Nano and the Maruti - 800. Global automobile majors such as Toyota, Honda, General Motors, Ford etc. who were already working on their India specific small cars have put their respective small car plans on the fast track. Within a week of the Nano launch, Toyota and Volkswagen have mulled a possible entry into the ultra low cost car segment. Toyota claims that development of the prototype of its small car is on its final stages and will come up by 2009. Volkswagen is also believed to be working on a small car design exclusive of its current line of small cars to be launched in India.

Effect of Tata Nano on Indian Car industry Finally, Tata’s ambitious people’s small car “Nano” is going to launch on 23rd March and there are good chances that this car will definitely change our thinking towards cars. Today, in India car are still believed as an object of luxury and a small portion of our population have access to them. However, this small car from Tata can really change our thinking and perception about ownership of cars. So far, there exist a big price difference between a two wheeler and a car in India. People can easily buy a good two wheeler in India by paying between Rs 25000- 50000 ($ 500- 1000), however, for buying a car they are required to pay at least 2 lakh Rupees ($ 4000). Now, this big price difference can be easily filled by Tata’s small car “Nano” which will cost around Rs 1 Lakh ($2000).Moreover, with the availability of cheap car loans, it will further become easy for people to buy this car. This car can easily provide a good option to large number of lower middle class of India, who is looking for a car. The other major advantage of this car is that it is 8% smaller than so far available small car Maruti 800 and it has 21% more interior space than it. However, there is one problem with this car that there is no back space for Luggage available in it because engine of Nano is in rare, though some space for Luggage is provided in front. Many experts believe that Nano can easily work as catalyst in Indian car market by giving revolutionary push to the Indian car market which is presently struggling. For example, Tata is now marketing their dream one lakh Rupee car.

Features of Tata Nano Car 1) Tata’s Nano will have 2 cylinder 624 cc Multi point fuel injection petrol engine and it will give 33 bhp power (engine is in rare). 2) This car will give fuel average of 20-25 Km/litre. 3) Top speed of Nano will be 72 Km/hour. 4) Petrol tank of this car will have capacity of 30 litres. 5) Nano will be available in three colours red, yellow and silver. 6) Tata Nano will come with Tube less tyres. 7) This car can accommodate 4-5 people. 8) Nano will come with Single windscreen wiper. 9) Price to the distributor of Nano in Delhi will be Rs 1 Lakh and its actual price will be slightly more than 1 lakh for customers. 10) Nano will meet Bharat 3 and Euro 4 emission standards. 11) This car will have 21% more interior space than Maruti 800 and it will be 8% small than 300


Maruti 800. 12) Tata will launch one basic and two deluxe models (with AC) of this car. 13) Team of 500 people have completed this dream of Tata. 14) Length of car is 3.1 meter and its width is 1.5 meter. 15) It will cost Rs 1.35 Lakh after all formalities. 16) Its price in US dollar is around $ 2000. 17) Basic Nano model will not have AC, power steering, anti locks etc

Application of Nanomaterial in Automobile Industry The following are the nanomaterials are applied in the automobile industry. They are as follows,  Frames and body parts  Engines power train  Paints and coatings  Suspension and breaking systems  Lubrication  Tires  Exhaust systems and catalytic converters  Electric and electronic equipment

Opportunities of Nanotechnology in Automobile Industry Nanotechnology is expected to have a pervasive effect on the future of automobile products and manufacturing processes in the automobile industry. Over time, these “new” performance attributes will be greatly enhanced by sustaining improvements in the structural, electrical, thermal, optical, magnetic and catalytic properties of materials, and their biocompatibility. Broad areas within the automobile industry where nanotechnology can be adopted include monitoring and control systems as well as innovative new materials.

Future applications in the Automobile Industry The Nano was the latest addition to the small / cheap car segment. Notably known as the cheapest car in the world, the Nano won hearts all over India. The one lakh car has already started making waves throughout the country and is becoming one popular vehicle throughout the world .Introduction of Nanocar was globally studied from 2006 and its future till 2015. The Future Car is related to cost-effective improvements, based on miniaturization, new lighter and stronger materials, new energy systems, and will be intelligent. Automobile manufacturers are taken to utilize technologies which offer cost-effective improvements in vehicle performance as well as enabling them to meet stricter legislation regarding emissions and safety. There are a number of products and processes enhanced by nanomaterials making an impact in the automobile industry. Through nanotechnology, the automobile industry can get its new growth potential and development momentum. The design and manufacturing of cars, trucks and buses can be affected by nanotechnology and the related technologies up to 60% in last 10 years. The dominating trends of science and technology go to the nanoscale. The automobile industry benefit from this trend by getting e.g. advanced power train, using new energy, reducing car weight, enhancing material functions, increasing comfort degree and flexibility, raising cost 301


efficiency. Almost all the automobile components can be improved by nanotechnology. The nanotechnology provides the automobile industry with huge space for innovations and enormous chance for new markets. The competition will depend on the development and application of nanotechnology for manufacturers at automobiles.

Conclusion In the automobile sector, there is a growing demand for nanoscale technologies because of its high performance and efficiency, and in safety and emissions standards. Nanotechnology provides services in the automobile sector by applications such as fuel cell, sensors, coats and paints. The nanotechnology enabled automobile industry currently has a 15% stake in the market and could reach $ 7 billion with a high growth rate of 84% by 2015. With the introduction of nana car, the used car dealers have slashed prices nearly 30 percent and try to fix prices close to one lakh. India the worlds largest small car producer is going to gain and will compete with Germany, France and South Korea using the nanotechnology in their automobile production. REFERENCE 1. Facts for you Oct2009, Page No. 10 and 11. 2. Http://www.Nano.gov.in/ 3. “Mark Ratner Daniel Ratner”, “Nanotechnology A Gentle Intoduction to Next Bigidea. Low Price Edition.

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CREDIT RISK OF AGRICULTURAL BORROWERS DR.G.LALITHAKUMARI*; CB SOWPARNIKA** * Associate Professor Sri Ramakrishna Engineering College Vattamalaipalyam Coimbatore – 22 Tamilnadu India ** Research Scholar Sri ramakrishna engineering college Coimbatore Tamilnadu India

ABSTRACT Credit risk is the potential that a bank borrower or counterparty will fail to meet its obligation in accordance with agreed term. This paper explores how the impact of borrower characteristics on default probability changes over the life of a loan. It is therefore the objective of the research is to identify the factors which influence the repayment of loans borrowed by the farmers at a cooperative bank. In this study agricultural borrowers’ of a cooperative bank is taken as the samples. Credit risk of the borrowers is highly related to total land owned, cultivated land and the age. This risk is coupled with tenure and the amount availed for the loan. These factors are extremely diverse including income, type of crop, type of loan and security type of the land holding. This study explores the credit risk of the borrowers of the bank and the probability of loan going default and endowers to identify factors contributing to default which limits from payment. The study was carried out by collecting customers’ profile of the bank records. The gathered data was analysed using descriptive and logistic regression analyses which revealed the relationship of demographic factors and the probability of default. KEYWORDS : Agricultural borrowers, Credit, Credit risk, Creditworthiness, Probability of default. INTRODUCTION India has a large and diverse agriculture and is one of the world’s leading producers. It is also a major consumer, with an expanding population to feed. India contributes to 8% of the global agricultural output. It contributes approximately one-fifth of total gross domestic product (GDP). To have a consistent and improved productivity in agriculture, government has taken steps to help the farmers and agriculturists by providing many innovative schemes. One such way is rural credit to farmers at subsidised rates. The inability of the borrower to repay the borrowed fund in accordance with the loan term constitutes a major issue in the bank. This involves non repayment in both principle and interest by famer borrowers. Losses in both principle and interest to banks can result in loan shrinkage liquidation and ineffectiveness. Loan 303


contracts performance determines the profitability and stability of the financial institutions and screening the loan applications is a key process in minimizing credit risk. CONCEPT OF CREDIT AND CREDIT RISK Credit is the transactions involving the transfer of money or other property on promise of repayment, usually at a fixed future date. Credit is an essential marketing tool. It bears a cost, the cost of the lender having to borrow until the customers payment arrives. This credit that is borrowed to the customers bear most significant risk compared with other risk Credit risk is the inability of the borrower to pay his debts in timely manner. To avoid credit risk the loan officer has to analyse the borrowers’ characterises and credit worthiness. The banks providing loan assistance to agricultural sector should have an exclusive credit analysis as the factors are unlike from other sectors. Provision of timely and adequate credit has been one of the major challenges for bank in India in dispensation of agricultural and rural credit to farmers. Farmers and agricultural business are facing increased uncertainties, due to unstable commodity prices. Screening of application is a key process in minimising credit risk. Credit analysis is the primary method in reducing the credit risk on a loan request. This includes determining the financial strength of the borrowers, estimating the profitability of the default and reducing the risk of the non-payment to an acceptable level. The credit analysis can be defined as a process of determining the current creditworthiness of the loan applicant and forecasting the tendencies in its future development. This process is connected with the financial and accounting analysis of the current and future activity and the financial situation of the loan applicant in the specific economic environment. The credit inspector can work out a correct stand during the decision-taking process about the credit applied for on the basis of a comprehensive credit analysis. The information gathered during the credit analysis is of great significance to the accurate structuring of the credit, which would contribute to lowering the credit risk. EVALUATION PROCEDURES In many countries risk management techniques are underdeveloped or insufficient for institution to effectively lend to activities in the agricultural sector. In India agricultural financial institutions, government organisations with the interest in agriculture have to develop low cost ways of reaching and financing the farmers. Private sector bank is taking over and offering credit to farmers than the public sector banks in agricultural sector. The banks providing loan assistance to agricultural sector should have an exclusive credit analysis as the factors are unlike from other sectors. Provision of timely and adequate credit has been one of the major challenges for bank in India in dispensation of agricultural and rural credit to farmers. Farmers and agricultural business are facing increased uncertainties, due to unstable commodity prices. Screening of application is a key process in minimising credit risk. Bank loan officers use information on various borrower characteristics, which are called as the “5 Cs” of credit. They are (1) character of borrower (reputation), (2) capital (leverage), (3) capacity (volatility of earnings), (4) collateral, and (5) condition (macroeconomic cycle) to analyse creditworthiness of the borrower. 304


The major factor in the credit evaluation practices has been the risk assessment of borrowers based on the sophisticated statistical analysis of the borrowers’ financial data and other information related to creditworthiness. The primary statistical tool for making credit lending decision is credit scoring. A credit assessment assist financial institution on loan pricing, determining amount of credit, credit risk management, reduction of default risk and increase in debt repayment. Credit risk measurement tools are commonly referred as credit risk models and it has become a key component in the risk management system of financial institution. The qualitative approaches to credit risk evaluation are modern credit risk model which consist of structure credit risk, reduced form of credit risk, multi factor econometric credit risk and traditional credit risk models consisting expert system ,artificial neural network ,credit scoring and credit rating. The major factor in the credit evaluation practices has been the risk assessment of borrowers based on the sophisticated statistical analysis of the borrowers’ financial data and other information related to creditworthiness. The primary statistical tool for making credit lending decision is credit scoring. A credit assessment assist financial institution on loan pricing, determining amount of credit, credit risk management, reduction of default risk and increase in debt repayment. Credit risk measurement tools are commonly referred as credit risk models and it has become a key component in the risk management system of financial institution. The qualitative approaches to credit risk evaluation are modern credit risk model which consist of structure credit risk, reduced form of credit risk, multi factor econometric credit risk and traditional credit risk models consisting expert system ,artificial neural network ,credit scoring and credit rating. REVIEW OF LITERATURE AmelieJouault and Allen M. Featherstone (2011) has conducted a research on “Determining the Probability of Default of Agricultural Loans in a French Bank”, reveals that, the default characteristics are studied for 756 loans from a French bank: CIC- Banque SNVB. A binomial logit regression is used to estimate several models of the probability of default of agribusiness loans based on information available at loan origination. The results show that leverage, profitability and liquidity at loan origination are statistically significant indicators of the probability of default. As leverage increases, profitability decreases, or liquidity decreases, the probability of default increases. As the length of loan increases, the probability of default also increases. Arindam Bandyopadhyay(2007) has conducted a survey on “Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio” discloses that, a credit scoring model was developed for agricultural loan portfolio of a large Public Sector Bank in India. The logistic model developed in this study reflects major risk characteristics of Indian agricultural sector, loans and borrowers and designed to be consistent with Basel II, including consideration given to forecasting accuracy and model applicability. The author has shown how agricultural exposures are typically managed on a portfolio basis which will not only enable the bank to diversify the risk and optimize the profit in the business, but also will strengthen banker borrower relationship 305


and enables the bank to expand its reach to farmers because of transparency in loan decision making process. The combined effects of financial stress in agriculture, deregulation of interest rates in financial market and improved information systems for lenders have brought significant changes in credit evaluations, risk assessment and pricing policies in agricultural lending. Loan level at the customer level is receiving greater emphasis and loan pricing increasingly is tailored to the risk characteristics of individual farm borrowers ( Barry and calvert 1983). Visit Limsombunchai, Christopher Gan and Minsoo Lee(2005) has conducted a research on “An Analysis of Credit Scoring for Agricultural Loans in Thailand” reveals that, The logistic regression and Artificial Neural Networks (ANN) are used to construct the credit scoring models and to predict the borrower’s creditworthiness and default risk. The results of the logistic regression confirm the importance of total assets value, capital turnover ratio (efficiency) and the duration of bank-borrower relationship as important factors in determining the creditworthiness of the borrowers. The results also show that a higher value of assets implies a higher creditworthiness and a higher probability of a good loan. K. Obrecht(1989) has conducted a survey on “The Role of Credit Evaluations in Agricultural Research” tells that, Credit-scoring models examine the creditworthiness of customers by assigning them to various risk groups. These models provide predictions of default probabilities using statistical classification techniques. The purpose of credit scoring models is to assist the risk evaluation and management process of individual customers and loan portfolios. Creditscoring tools are necessary to assist the loan officer in making loan decisions, controlling and monitoring loan portfolio risk and isolating loans that need additional attention When modelling portfolio credit risk for agricultural loans, one must account for the attributes of the agricultural sector and its borrowers, which is substantially different from the other retail exposures. It experiences chronic cash flow pressures resulting from relatively low but volatile returns to production assets. These characteristics contribute to the aggregate debt-servicing capacity and credit worthiness during downward swings in farm income and reductions in asset value, as happened in 1980’s (Barry et al 2002) Bliss(2002) in his study “Credit Ratings and the BIS Capital Adequacy” reveals that, Credit risk in agricultural loans is closely tied to a farm’s net cash flow just as it is for other retail loan categories. Expected net cash flows are a good leading indicator for the eventual credit worthiness of an agricultural borrower. This is dependent upon cropping pattern, crop yield, balance sheet position of the borrower and local situational factors. Volatile performance of farm businesses stems mainly from fluctuating commodity prices and weather conditions, which are highly correlated, especially for farms with similar typology, commodity, and geographical region. Eze(1993) revealed that age of the farmers , annual farm income, farm size and family size made positive contributes to the total discriminant score. The group cases correctly classified was 56%. He also showed that nearer the homes to credit lending institution greater the probability that the farmers will be classified credit worthy. The variables namely, off farm 306


income, farming experience and family size contributed positively to the credit worthiness of the farmers. On the contrary, farm income, farm income, farm age made negative contribution the classification performance was 70%. Katchova and Barry (2005) in his study “ credit risk models and agriculture lending” developed models for quantifying credit risk in agricultural lending. They calculated probabilities of default, loss given default, portfolio risk, and correlations using data from farm businesses. The authors showed that the calculated expected and unexpected losses under Basel II critically depend on the credit quality of the loan portfolio and the correlations among farm performances. These analyses of portfolio credit risk could be further enhanced if segmented by primary commodity and geographical location. Agricultural lenders could adopt similar models to quantify credit risk, a key component in the calibration of minimum capital requirements.

STATEMENT OF THE PROBLEM Credit risk management in banks had many challenges in early years as the credit decisions of the customers were based on judgment and experience. By the development of technology the bank has made credit process much easier and faster to its customers. The application and use of credit analysis in agriculture is constrained by lack of tools or models that can be used to evaluate the credit risk inherent in such lending transaction, therefore this research seeks to address this challenge by developing a credit risk model that can be used as a tool by banks and lenders, when evaluating credit risk in agriculture. OBJECTIVES OF THE STUDY 1. 2. 3. 4.

To analyse the credit risk of the agricultural borrowers. To study the probability of loan default. To determine the factors contributing to credit risk in agricultural loans. To identify the relationship between the demographic factors and the expected probability of default.

RESEARCH METHODOLOGY Descriptive research design is adopted in this study as the problem is well known and the study focuses on obtain an in depth knowledge. Sampling method used in this study is cluster sampling which belong to non probability sampling method. Samples chosen for the study were the borrowers of kisan credit card. Sample size taken for this 80. Secondary data was collected about the borrowers demographic and loan details through bank records. The data collected. The data collected were tabulated, analysed and formulated using percentage analysis, logistic regression and chi square analysis. RESULTS AND DISCUSSIONS 307


Demographic profile            

Most (44%) of the respondents are in the age group of 26 to 50 years. Majority (82%) of the respondents are Male . Most (35%) of the respondents have 2-3 dependents. Most (37%) of the borrowers have 11 -20 years of relationship with the bank. Most (28%) of the respondents belong to the income group of Rs. 200000 to 500000. Most (36%) of the respondents belong to the group of Rs. 100000 to 200000 of income from other source. Majority (79%) of the respondents have account in other banks . Most (28%) of the respondents have the land 6 -10 acres. Most (34%) of the respondents have the cultivated land of 1- 3 acres. Most (34%) of the respondents availed for loan amount of 100000 to 200000. Most (32%) of the respondents are having the loan tenure of 24 months . Most (34%) of the respondents have a rate of interest of 9 % for their loans.

Credit risk of the borrower Binary logistic regression is used to analyse the credit risk of the borrower, when the dependent is not continuous but instead but has only two possible outcomes 1 or 0. The table below reports the output of 116 borrowers sample data. The dependent variable is a dummy which is coded =1 for defaulted assets and code =0 for standard assets. Table 1: Factors of Binary Logistic Regression Factors

Short names

coefficient

Std.Error

Z value

Age

Age

0.252

0.382

0.6597

Gender

Gender

0.701

0.773

0.9069

Dependents

Dependents

-0.064

0.327

-0.1957

Years of relation with the borrower Income

Yrsrel

-0.485

0.368

-1.3179

Inc

-0.098

0.290

-0.3379

Income from other source

Incothersrc

0.158

0.270

0.5852

Account in Other banks

Otherbank

-0.224

0.746

-0.3003

Total area Landowning of the borrower Cultivated land of the borrower

Landowning

0.307

0.389

0.7892

Cultivated

-0.212

0.403

-0.5261

Loan amount

Loanamt

0.355

0.312

1.1378

Loan Tenure

Tenure

-0.277

0.351

-0.7892 308


Rate of Interest

Int

-0.840

0.982

-0.8554

Cultivated land / total area

Cultildtotld

-0.249

0.314

-0.793

Total liability / total income

Totlibtotinc

0.130

0.288

0.4514

Value of land / total land owned

Valldtotld

-0.168

0.296

-0.5676

Security type

Sectyp

-0.668

0.454

-1.4714

Food crop (D)

Food crp

0.496

0.659

0.7527

Cash crop (D)

Cashcrp

0.271

0.613

0.4421

Horticulture (D)

Horti

0.645

0.669

0.9641

Farm development(D)

Farmdev

-0.339

0.435

-0.7793

Collateral loan (D)

Colloan

0.902

0.335

2.6925

Vehicle loan (D)

Vehloan

-0.319

0.415

-0.7687

Crop loan (D)

Crploan

0.117

0.426

0.2746

Farm house loan (D)

Farmhseloan

0.323

0.350

0.9229

Farm machinery(D)

Frmmac

-0.451

0.388

-1.1624

Mortgage loan(D)

Mortloan

0.001

0.401

0.0025

Constant

Const

0.534

3.061

0.1745

Source: secondary data * D denotes Dummy

The 26 independent variables used in the logistic regression are listed in the first column and their short names are reported in the second column. Coefficients are detailed in the column 3 of the same table with their sign is taken for constructing the model. The standard error of the coefficients and the Z value (ratio of the coefficient divided by standard errors) are reported in column 4 and 5 respectively. Thus the equation can be formed by using the co efficient in the logit Z score equation eq (1) The above equation (1) can be formulated by taking the coefficients resulted from the logistic regression to find the probability of borrowers. Logit Z score equation 0.534+0.252*(Age) +0.701*(gender)-0.064*(Dpndts)-0.485*(yrsrel)-0.098*(inc)+ 0.158*(incothersrc)-0.224*(otherbank) +0.307*(Landowning)-0.212*(cultivated)+

309


0.355*(Loanamt)-0.277*(tenure)-0.840*(Int) 0.168*(valldtotld)-0.668*(Sectype)

-0.249*(cultildtotld)

+0.496*(cashcrop)+

+

0.130*(totlibtotinc)

-

0.271*(foodcrop)+0.645*(horti)-

0.339*(farmdev)+ 0.902*(colletralloan) - 0.319*(vehloan)+0.117*(croploan)+ 0.323*(farmhseloan) - 0.451*(farmmac) +0.001*(mortloan). Using the above Logit Zscore equation , the prediction about the borrower’s health can be formulated. Expected probability of default Expected probability of default is achieved by the values obtained from the logit Z score equation and the borrowers’ probability of default is prepared (2) Where exp ~2.718281828 The expected probability of default is computed with result obtained from the logit Z score equation. The 116 borrowers are classified based on the output of expected probability of default and finally it is rated. The defaulters were distributed into 10 segments ranging from 0% to 100% based on the probability of default and the risk Distribution of respondents on the basis of risk classification Range Rating Number Percentage 0-10% R1 52 44.82 11-20% R2 39 33.62 21-30% R3 11 9.48 31-40% R4 3 2.58 41-50% R5 1 0.86 51-60% R6 5 4.31 61-70% R7(Early warning) 2 1.72 71-80% R8(Risky) 1 0.86 81-90% R9(Very risky) 2 1.72 91-100% R10(Very risky) The above table indicates that most 78% of the respondents are under the 0 to 20% category and they have low risk when compared to the others and so the bank has most of the customers with low risk. Factors contributing to borrowers’ default Factor analysis is used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved, uncorrelated variables called factors. This analysis is to use determine the major factors that contribute to default risk. Kaiser-Meyer-Olkin shows the adequate test value 0.511 to conduct the factor analysis Rotated Component Matrixa 310


Factors Age of the borrower Gender of the Borrower Number of dependents Years of relation with the bank Yearly income Income from other source Area of land holdings Area of land cultivated Loan amount Loan Tenure Interest charged on loan Area cultivated / total land area Total liability/Total income Value of land/total own land Primary security type

1 .034 .024 .023 .036 -.047 .108 .908 .790 .071 .054 .053 .785 -.121 -.049 -.153

2 .796 -.302 .066 .825 -.102 .126 .050 -.042 -.035 .039 .222 .044 -.077 -.040 .376

Component 3 4 5 .036 -.097 -.054 .043 -.172 -.027 .122 .195 .851 -.048 .001 .106 .056 .151 -.121 .233 .217 -.407 .097 .017 .029 .041 -.145 .017 .751 .135 .168 .798 -.140 -.034 -.139 .178 .070 -.005 .103 .020 -.102 .453 -.595 .068 .838 .068 .246 -.419 .142

6 -.041 .662 .011 .083 -.270 .438 .018 -.091 -.095 .064 .538 .211 -.049 .007 -.185

7 .004 .009 .065 -.021 .786 -.191 .029 -.059 -.046 .119 .018 -.015 .135 -.043 .003

The above table is the rotated matrix of the independent variables from these following factors major factors is being extracted. Factor 1: Area occupied  Area of land holding  Area of land cultivated Factor 2: Existence of the borrower 

Years of relation with the bank



Age of the borrower

Factor 3: Credit information 

Loan tenure



Loan amount

Factor 4: Value of the Assets 

Value of land /total land

Factor 5: family Size 

Number of dependents

Factor 6: Gender 

Gender of the respondents 311


Factor 7: Annual Income 

Yearly income

Hypothesis The following hypothesis were determined in this study which is then tested using chi square analysis H0: There is no relationship between demographic factors of the respondents and expected probability of default H1: There is a relationship between demographic factors of the respondents and expected probability of default. Relationship between demographic factors and expected probability of default Demographic factors X2 P value Result Age

140.42

0.020

Reject

Gender

50.07

0.060

Accept

Years of relation with the bank Income

154.05 105.58

0.268 0.548

Accept Accept

Area of land holding

156.20

0.230

Accept

Loan amount

124.33

0.880

Accept

 From the above table the P value is greater than 0.05, the null hypothesis was rejected and alternative hypothesis is accepted. Thus it is concluded that there is a relationship between age of the respondents and expected probability of default.  The hypothesis is accepted and hence it can be inferred that there is no significant relationship between gender of the respondents and expected probability of default.  The hypothesis is accepted and hence it can be inferred that there is no significant relationship between years of relation with the bank of the respondents and expected probability of default.  The hypothesis is accepted and hence it can be inferred that there is no significant relationship between area of land holding of the respondents and expected probability of default.  The hypothesis is accepted and hence it can be inferred that there is no significant relationship between loan amount of the respondents and expected probability of default.  45% of the respondents of 116 borrowers have very minimal default risk and they fall under the category of 0-10%.  The major factors responsible for default of borrowers are Area occupied, Existence 312


of the borrower, Credit information, Value, family Size, Gender, Annual Income.  Age of the borrower is the most influencing factor for the probability of default. CONCLUSION The credit scoring model for agricultural loan has been developed based on the sample data obtained from the bank. credit risk is the largest risk faced by the bank especially in agriculture credit. So the loan officer has to carefully examine the creditworthiness of the customers so that the payments are made at prompt period. The researcher suggests the scoring model as one of the tool to identify the borrowers’ health before the loan is approved. The bankers have to be very cautious with regard to the age of the borrowers while lending the loan since age factor influences the probability of de fault. As the repayment amount options provided by the banks are not appropriate for borrowers and also lead to default of customers. So bank can take concern on the prerequisites of the borrowers for the payment of loan.

REFERENCES 1. AmelieJouault and Allen M. Featherstone ,Determining the Probability of Default of Agricultural Loans in a French Bank, Journal of Applied Finance & Banking, vol.1, no. 1, 2011, 1 -30,ISSN: 1792-6580 (print version), 1792 -6599 (online), International Scientific Press, 2011. 2. ArindamBandyopadhyay(2007), Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio,p.1 -19 3. Barry, P.J. (2001). Modern capital management by financial institutions: Implications for agricultural lenders. Agricultural Finance Review, 61, 103 -122.

4. Visit Limsombunchai, Christopher Gan and Minsoo Lee, An Analysis of Credit Scoring for Agricultural Loans in Thailand, American Journal of Applied Sciences 2 (8): 1198-1205, 2005,ISSN 1546 -9239, 2005 Science Publications 5. K. Obrecht, The Role of Credit Evalu ations in Agricultural Research: Discussion, Amer. Journal of Agricultural Economics , 71, (1989), 1155-56. 6. Bliss, R., (2002). Comments on Credit Ratings and the BIS Capital Adequacy Reform Agenda, Journal of Banking & Finance , Vol. 26, pp. 923-928. 7. Ezeh C.I,2003 creditworthiness and determinants of loan repayment of loan repayment of small holder farmers inabia state naigeria J sustainable trop .Agric. Res.,5 10-13 8. Katchova, A.L., & Barry, P.J. (2005). Credit risk models and agricultural lending.American Journal of Agricultural Economics, Vol. 87, pp. 195-206.

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