You are on page 1of 559


April - 2011 Volume: 9 ISSN 0973-6905

Greetings and wishes from the editorial forum of SRM Management Digest to the readers. I am very happy to inform you that this present issue of the Digest 2011 is a special publication and this comprises the selected research papers of the International Conference on Business Research (ICBR)2011.

Prof. Dr. R. Velu

SRM School of Management SRM University Email: Mobile No: 09884091724

The ICBR was held in our SRM UNIVERSITY at Kattankulathur campus. It was held for two days ( January 20 & 21, 2011). In this conference various international research papers were presented on functional areas of management, viz., finance, marketing, operations, human resource and general management. From these research papers, selected papers are published in this digest 2011. And moreover, The SRM Management Digest, 2011 is available to you online. You can access it through the web site of SRM University. The address of web site is in which when you select school of management you can notice on the right hand side SRM Management Digest issues of three years. You can down load the research papers and be benefitted. Editor

SRM School of Management

Prof. Dr. Oliver Linton

London School of Economics

Associate Editor:

SRM University SRM Nagar, Kattankulathur - 603 203 Kancheepuram District Telephone No:. +91-44-27453901 / 27453903


Volume: 9, April 2011 Annual and Blind Referred Digest of SRM School of Management ISSN 0973-6905


Dr. Velu
2011 by SRM School of Management SRM Nagar, Kattankulathur - 603 203 Kancheepuram District, Tamil Nadu, India

All right reserved

A Note to Readers: The views expressed in articles are the authors and not necessarily those of SRM Management Digest, SRM School of Management or SRM University, Authors may have consulting or other business relationship with the companies discuss. All right reserved. No part of the publication may be reproduced or copies in any form by any means without prior written permission. The articles originally published in other magazines / journals are reprinted with permission.

Published by SRM School of Management SRM University SRM Nagar, Kattankulathur - 603 203 Kancheepuram District, Tamil Nadu, India


Volume: 9 ISSN 0973-6905

April - 2011


Chief Editor
Dr. R. Velu Economics

Associate Editor
Dr. Oliver Linton London School of Economics

Dr. Jayashree Suresh Dean, Strategic Business Management Dr. R. Krishnaraj General Management Dr. T. Ramachandran Financial Management Dr. Ravi Lochanan Operations Management Dr. A. Chandra Mohan Human Resources Management

Dr. V.M. Shenbagaraman Systems Management

Dr. Shanthi Venkatesh Marketing Management


Volume: 9 ISSN 0973-6905

April - 2011

A study on Consumers behaviour on purchase pattern of food products in Salem District of Tamilnadu
Dr. S. Mahalingam & P. Arun


An empirical study : Farmers perception towards contract farming

S. Arunkumar , S. Gugananthan & N. Kaarthik

18 30

An ethnographic approach to understand conversations using exploratory research for better brand communication
Prof. Prasanta Parida

Applicability of SERVEQUAL scale in Indian retailing N. Udaya Bhaskar & Dr. B. Raja Shekhar Consumers perception on Matching quality of celebrity and brand features in advertisement
P. Raja & Dr. N. Mahesh

37 42

Customer loyalty on Telecom mobile

P. S. Rajeswari & Dr. P. Ravilochanan

47 52 59 66 71 78

Customer shopping experience in malls with entertainment centers in Chenni

D. Anuradha & Dr. Rangarajan

Drivers of new product success

Prof. K. Viayan & Dr. Jayshree Suresh

E-marketing in Pharmaceutical business

Ms. Sheeja, V. S., Indumathi & Dr. R. Krishnaraj

Emerging trends in the life style of apparel consumers in India

Ram Mohan, A., & R. R. Krishnaraj

Factors influencing retail investors attitude towards investing in equity stocks : A factor analysis
Bennet, E & Dr. M. Selvam

Impact of social media on Global business

Dr. Sankaran & Ravikumar, T

84 89 93

Influence of children advertisements on Consumer decision making

Raghuram, J.N.V. & Prof. P. Ravilochanan

Customers attitude, satisfaction and potentiality of online shopping in Chennai

Dr. N. Mahesh & K. Sadasivan,

Rural producer and urban buyer

D. Subramaniam

100 105 110 118

Service quality gap in healthcare services in India a birds eye view analysis
Dr, Y. Lokeswara Choudary & Dinesh Doha

The impact of FDI in retail, more advantageous

Rabi Jayakumar

A study of paradigm shift in management of capital in flows in Indian financial system in the post-liberalization era
Anli Suresh

An empirical study Consumers preference towards Unit linked Investment Plan [ULIP]
Arunkumar, S, Murali, R & Bharath, S

123 134

A comparative study between ANN - Arima and Hybrid of ANN and Arima for predicting the Gold rates
Priyadarshini, E & Dr. A. Chandra Babu

Mutual funds motivating factors behind investment

Rabika Begum & Dr. P. S. Valarmathy

142 148 154

Impact of Financial crisis on Indian economy A strategic route map to future

Dr. Y. Lokeswara Choudary & Mr. Yaseen Masvood

Estimation of appropriate Lambda value for Indian markets (money, sovereign debt, forex and interest rate swap market)
Natarajan, R & Dr. V. Balasubramanian

A study on cultural intelligence in Cross-cultural leaders

Kalailakshmi & Dr. S. S. Rau

159 163

The Impact of IT governance practices & human resources on business IT alignment with reference to selected IT industries
Dr. Mu. Subramanian & Lakshmi Vishnu Murthy Tunuguntla

Monthly effects in Indian stock market

Nageswari, P & Dr. M. Selvam

169 176

Mutual fund investor education program a study on the awareness, response and impact among individual investors
Anila Mathews &Dr. P. Ravilochanan

Qualitative research in Vamana industries limited

Divakaran, N

181 185 191

An impact of knowledge management in IT industry

Shanmugam, R & Dr. K. Kalpana

Challenges and learning in human resource Management a study on customer service and employee engagement in the Indian healthcare industry
Dr. B. Shivraj, Bharath, C & Dr. B. Rose Kavitha

Emotional recognition readiness and leadership

Kavitha Sethuraman


Human resource management socio-economic factors influencing the success of women entrepreneurs in network marketing industry
Manjula Pattnaik & Balachandra Pattanaik


Impact of strategic HRM implementation on firm performance : an empirical study on the Indian IT sector
Prof. Shameem, A


Analysis and awareness of IPR in India a study among the graduates in Chennai city
Alfred Benjamin, Y. & Dr. Y. Lokeswara Choudary

211 215 219 226

Will transactional form of interdependence improve group effectiveness?

Dr. V.L. Narasimham

An overview of support services to women entrepreneurs

Sindhu, K.

Competencies required by entrepreneurs in emerging economies : some research propositions

Manisha Karia

Determinants of income generation of women entrepreneurs through SHGs

Ms. Revathi Pandian & Karthick, D

233 240 247 254 271 277

Forecasting of land price at Madhavaram in Chennai metropolitan area

Sampathkumar, V &Helen Santhi, M

Predictive model for success of ERP implementation

Dr. K. Santhosh Kumar & Dhinakaran Samuel, R

A study on stress and anxiety among the two wheeler riders in Chennai city
Dr. G. Rajesh Kumar & Rajan Daniel

Vertical integration emerging trends and challenges

Madhavi Latha Kanniganti & Dr. Ravilochanan, P.

A study on sources of fruit wastages in cold storage and fruit processing industries in Tamilnadu
Arivazhagan, R. & Dr. Ravilochanan, P

An instrument for the measurement of vendor perceptions of software quality in off-shoring

S.Sankaran, K. & Kannabiran, G


Factors contributing to perishability in traditional fresh produce distribution system a study on Tomato and Banna chains in Andhra Pradesh
Dr. G.V.R.K. Acharyulu


Panorama of a strategic alliance on arbitrator logistics a peep into the Chennai Port trust
Venkatachalapathy, R &Dr. B. Balamurugan


Analysis of Quality work life and perceived public image among the Teachers of Dindigul, Tamilnadu
Sabarirajan, A, Geethanjali, N. & Lavanya, D.


Creating ecological value : an evolutionary approach from business to business

Dr. G. Vijaya Kumar & S. G. Balaji

309 315 320 324

Exit interviews & their empanelment : the current scenario

Dr. M. Sureesh Baabu, Radha Mohan Chebolu & Balaji, S. G.

Mental health among private and public sector employees a comparative study
Narayanan, R. & Dr. M. Syed Zafar

An empirical study on impact of demographics on buying behaviour of food and grocery consumers in Punjab
Anupama Prashar

Brand valuation : an empirical study with special reference to Indian car industry
Dr. P. Natarajan & U. Thiripurasundari

334 340 345 349 367 376 385 390 398 402 409 413 419 426

Online performance appraisal system : an empirical study at BHEL piping centre, Chennai
Prof. Ponnaiah, V.M., Ms. Bala, R & Ms. Jonisha S. Jones

Knowledge management in ICICI bank and Bank of Baroda

Dr. Pulidindi Venugopal, Dr. P. Vijayakumar & Gandadhar, R

An empirical analysis on e-procurement for construction projects using e-RAs

Baladhandayutham, T &Dr. Shanthi Venkatesh

Chaotic behaviour of financial time series an empirical assessment

Dr. Ravindran Ramasamy & Mohd. Hanif Mohd. Helmi

Eco system impacting entrepreneurial youth

Ramaraj, R & Raghava Simha, D

Effect of emotional intelligence intervention among software professionals

Nithya sankar & Dr. S. S. Rau

Emerging HR competencies
Dr. Mu. Subramanian & O. Sivaramakrishnan

Impact of activity based learning in Chennai city schools

Nandini Nagarajan & Dr. R. Krishnaraj

KPO as an emerging sector in India Challenges, opportunities and the way out
Satheesh Babu &Dr. Lokeswara Choudary

Cloud computing trend to eco-friendly business

Vijayakumar, S & Saravanakumar, S. G.

Role of E-business in business

Asha Mathew

ERP solutions and hospitality industry

Dr. S. Govindarajan & Sandeep Mohanty

HGRID : An economical model for mass-health care system using latest technology [GRID computing]
Kanchana Devi, S, Dr. S. Govindarajan & Uma Maheswai, K.M.

The influence of factors affecting repeat buying intentions : a study with reference to super market
Joseph Mary Rahila & Ms. Vaishnavi


Emerging trends in IT / ITES markets

Dr. S. Govindarajan &F. Ezhil Mary Arasi

436 442 449 456 463

A study on Work life balance among service sector

Ms D. Maria Angelin Jayanthi & Dr. N. Santhi

Economic analysis of highway projects in India

Siva Kumar, T

The strategic role of corporate boards in organizational decision making

Hanoku Bathula & Sanjaya S. Gaur

NPA Management in public sector banks a Case study with reference to State Bank of Travancore
R. Balaji & Dr. Lokeswara Choudhury

MSMEs in hospitality sector a study on problems and prospects of rural tourism

Dr. Lokeswara Choudhury, Chithra & Malar Vizhi

474 480 487

A study on supply chain operational performance of coconut oil industry.

Jacob Prathapraj and Reeves Wesley, J

Total quality management in single sampling for sequentially inspected manufacturing processes that exhibit Markovian character
Dr. Nagajyothi & Krishnakumar

Impact of emotional intelligence [EI] on individual job performance : am empirical study at selective BPO
Dr. Ramakrishnan


A study on cultural knowledge needed in cross-cultural environment Savitha, L & Dr. Sheela Rani A case study on best practices in management education with reference to Karpagam University, Coimbatore Sudhagar, Dr. Mahesh Narasimhan & Vetrichelvi

500 503

Back to Basics 510 Dr Jeyaraman & Ponnuswamy Optimized multi-criteria decision in Supply chain organizations using AHP model a review Balaji & Dr. Lokeswara Choudhury A Study On Factors Influencing Consumer Behaviour In Retail Industry TR.Kalai Lakshmi & DR S.S.Rau Attritition In Bpo Industry S. Muthumani & M.L. Gnanadasan 515 524 543

Dr. S. Mahalingam Reader, BSMED, Barathiar University, Coimbatore P. Arun Research Scholar, BSMED, Barathiar University, Coimbatore I. Introduction
In the present scenario, purchase behavior of consumers in India is different from one consumer to another consumer due to their change in personal, cultural, social, environmental factors. These factors influence the consumers while purchasing the food products. Due to the influence of technology like print and TV media advertisement, the behavior of consumers in India with respect to purchasing pattern of food products is dramatically changing. Consumers are so concerned on price and then quality while purchasing the food products. According to NSSO (National Sample Survey Organization) in the year 2004-2005 report monthly per capita expenditure on food products for rural consumers goes up to 5.3% where as it is only 39.4% for the urban Indian consumers. So there is a dramatic fluctuation on purchase behavior of consumers in purchasing food products as rural consumer vs. urban consumers because of their cultural and economic changes According to NSSO (National Sample Survey Organization) in the year 2004-2005 report monthly per capita expenditure on food products for urban consumers have fallen down to 42.5% a and it shows a drop of 5% since the year 2000. According to NSSO year 2006-2007 report (63rd round) MPCE (Monthly Per Capita Expenditure) on food products goes up to 52.3%where as in urban area it declines to 39.4% .So there is a large change in consumer expenditure on purchasing behavior of food products in rural vs. urban area. Online purchasing is dramatically increased in the most of the urban areas. Consumers in India especially in urban area people like to purchase some of the food products through online because consumers are feeling that while purchasing food products in online time will be saved. One more important factor that consumer feels is that while on purchasing through online we can buy products in other country that may not be got in India

2. Research Objectives

To study overall profile of the consumers To analyze factors influencing the purchase decision To assess the store selection process of the consumers. To evaluate brand preference, brand loyalty among the consumer To identify the major promotional tools attracting the consumers on purchasing To identify the overall individual attitudes of the consumers towards purchase decision

3. Statistical Tools

Percentage analysis ANOVA-test

Table 1: General profile of the respondence

Gender Male 37 57.8% Female 27 42.2% Total 64 100% Profes sional 34 53.1% Occupation Worker 02 03% Others 28 43.8% 10 Total 64 100% Salem 15 23.4% Omalur 01 1.6% Place Kolathur 19 29.7% Mettur 29 45.3% Total 64 100%

Interpretation of gender: From the data it is revealed that 57.8% of Consumer are male. Remaining 42.2% of respondents are female. It could be concluded that percentage of male respondents is higher than the female respondents. Interpretation of occupation: From the data it is revealed that 53.1% of Consumer is professional. 3.1% of respondents are Workers. Remaining 43.8% of consumers are others. It could be conclude that percentage of professional respondents is higher than the workers and others.

Secondary data were collected from journals, text books and internet. Primary data Primary data were collected from survey in Salem Dt. Sample data of 64 respondence were selected for the survey. Statistical tools applied Chi square and ANOVA test were measured for measured above objectives Table: 1 sample profile of the respondents (N=64)

Interpretation of place: Consumer purchase pattern is different from one consumer to another consumer .From the above table it clearly shows that in total sample of 64 respondents 23.4% of respondents were from Salem area, 1.6.% of respondents were from Omalur, 29.7.% of respondents were from Mettur dam,45.3% of respondents were from Kolathur. Interpretation of marital status: From the data it is revealed that 95.4% of respondents are married. 3% of respondents are un married. Remaining 01.6% of consumers are widow. It could be conclude that percentage of married respondents is higher than the unmarried and widow.

Interpretation of gender: From the data it is revealed that 57.8% of Consumer are male .Remaining 42.2% of respondents are female .It could be conclude that percentage of male respondents is higher than the female respondents Interpretation of place: Consumer purchase pattern is different from one consumer to another consumer .From the above table it clearly shows that in total sample of 64 respondents 23.4% of respondents were from Salem area, 1.6.% of respondents were from Omalur, 29.7.% of respondents were from Mettur dam,45.3% of respondents were from Kolathur

4. Research methodology
Secondary data Secondary data were collected from different sources. Interpretation of occupation: From the data it is revealed that 53.1% of Consumer is professional.

5. Analysis and interpretation

I percentage analysis

Table 2: Purchase pattern of food products

Regu larly Purchasing 18 14 4 11 Occation Nally purcha sing 7 0 0 38

Food Products Jam Sauce Soup Atta

Not purch asing 27 46 56 3

Percen tage 42.2 71.9 87.5 4.7

Percen tage 28.1 21.9 6.3 17.2

Mostly Purc hasing 6 2 2 6 11

Percen tage 9.4 3.1 3.1 9.4

Frequently purch asing 6 2 2 6

Perce ntage 9.4 3.1 3.1 9.4

Percen tage 10.9 0 0 59.4

3.1% of respondents are Workers. Remaining 43.8% of consumers are others. It could be conclude that percentage of professional respondents is higher than the workers and others. Interpretation of jam: From the data it is revealed that 42.2%% of Consumer are not purchasing jam. .28.1% of respondents is regularly purchasing jam. .9.41% of respondents are mostly purchasing jam.9.4% of respondents are frequently purchasing jam, 10.9% of respondents are occasionally purchasing jam in total of 64 respondence. Interpretation of sauce: From the data it is revealed that 71.9% of Consumer is not purchasing sauce. .21.9% of respondents is regularly purchasing sauce.

3.1% of respondents are mostly purchasing sauce.0% of respondents are occasionally purchasing sauce, 3.1 % of respondents are frequently purchasing sauce .in total of 64 respondence. Interpretation of soup: From the data it is revealed that 87.5% of Consumer is not purchasing soup. .6.3% of respondents is regularly purchasing soup. 3.1% of respondents are mostly purchasing soup.3.1% of respondents are occasionally purchasing soup, 0%of respondents are frequently purchasing .in total of 64 respondence. Interpretation of atta: From the data it is revealed that 4.7% of Consumer are not purchasing atta .17.2% of respondents are regularly purchasing atta. .9.4% of respondents are mostly purchasing atta.9.4% of respondents are occasionally purchasing jam, 59.4% of

Table no 3: Ranking of factors that influencing consumer purchase behavior respondents are frequently purchasing jam. In total of 64 respondence Factors Mean
Cultural factors influence on purchase Life partners influence on purchase Childrens influence on purchase Parents influence on purchase Friends influence on purchase Easy product identification in the store influence on purchase Shopping space available inside the store influence on purchase Active checkout counters inside the store influence on purchase Broad casting medias influence on creating awareness Print medias influence on creating awareness 3.52 3.67 2.83 2.09 1.94 3.92 3.36 3.84 3.63 3.00

Rank 5 3 8 9 10 1 6 2 4 7

Gender & influence of various factors on buying behavior Hypothesis 1: Ho: There is no significant difference between gender & influence of various factors on buying behavior H1: There is a significant difference between gender & influence of various factors on buying behavior =0.05%L.O.S

Table No 4: Gender & influence of various factors on buying behavior

Influencing Factors Cultural factors influence on purchase F-ratio 3.404 12 ANOVA table value (Sig. value) .070 Significant/not significant Not significant

Life partners influence on purchase Childrens influence on purchase Parents influence on purchase Friends influence on purchase Easy product identification inside the store influence on purchase Shopping space available inside the store influence on purchase Active checkout counters inside the store influence on purchase Broad casting medias influence on creating awareness Print medias influence on creating awareness

1.533 .355 .792 .073 .035 .057 .296 .001 .042

.220 .553 .377 .788 .853 .812 .589 .979 .838

Not significant Not significant Not significant Not significant Not significant Not significant Not significant Not significant Not significant

Interpretation: gender and all 10 factors i) From the above table, since, F (1, 62) = 3.404, p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between gender and influence of cultural factor on buying behavior. From the above table, since, F (1, 62) = 1.533, p > 0.05, the null hypothesis is failed to be accepted. Hence there is no significant difference between gender and influence of life partner on buying behavior. From the above table, since, F (1, 62) = 0.355 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between gender and influence of children on buying behavior. From the above table, since, F (1, 62) = 0.792 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between gender and influence of parents on buying behavior. From the above table, since, F (1, 62) = 0.073 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between gender and influence of friends on buying behavior. From the above table, since, F (1, 62) = 0.035 p <0.05, the null hypothesis is accepted. Hence there is significant difference between gender and easy product identification on buying behavior. From the above table, since, F (1, 62) = 0.057 p > 0.05, the null hypothesis 13

is accepted. Hence there is no significant difference between gender and shopping space availability on buying behavior. From the above table, since, F (1, 62) = 0.296 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between gender and active checkout counter on buying behavior. From the above table, since, F (1, 62) = 0.001 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between gender and broad casting media on buying behavior. From the above table, since, F (1, 62) = 0.042 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between gender and print media on buying behavior Occupation Hypothesis 2: Ho: There is no significant difference between occupation & influence of various factors on buying behavior H1: There is a significant difference between gender & influence of various factors on buying beaviour =0.05%L.O.S

Table No 5: Occupation & influence of various factors on buying of various factors on buying behavior
Influencing Factors Cultural factors influence on purchase Life partners influence on purchase Childrens influence on purchase Parents influence on purchase Friends influence on purchase Easy product identification inside the store influence on purchase Shopping space available inside the store influence on purchase Active checkout counters inside the store influence on purchase Broad casting medias influence on creating awareness Print medias influence on creating awareness F-Ratio 1.566 .337 .787 .769 .444 .977 3.703 3.683 .955 .213 ANOVA table value Significant/not significant (Sig. .217 .715 .460 .468 .644 .382 .030* .031* .391 .808 Not significant Not significant Not significant Not significant Not significant Not significant significant significant Not significant Not significant

Interpretation: Occupation and all 10 factors From the above table, since, F (2, 61) = 1.566 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and cultural factor on buying behavior. From the above table, since, F (2, 61) = 0.337, p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and life partner on buying behavior. From the above table, since, F (2, 61) = 0.787 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and children on buying behavior. From the above table, since, F (2, 61) = 0.769 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and parents on buying behavior. From the above table, since, F (2, 61) = 0.444 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and friends on buying behavior. From the above table, since, F (2, 61) = 0.977 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and easy product identification on 14

buying behavior. From the above table, since, F (2, 61) = 3.703 p < 0.05, the null hypothesis is accepted Hence there is a significant difference between occupation and shopping space availability on buying behavior. From the above table, since, F (2, 61) = 3.683 p < 0.05, the null hypothesis is accepted. Hence there is a significant difference between occupation and active checkout counter on buying behavior. From the above table, since, F (2, 61) = 0.955 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and broad casting media on buying behavior. From the above table, since, F (2, 61) = 0.231 p > 0.05, the null hypothesis is failed to be rejected. Hence there is no significant difference between occupation and print media on buying behavior Place of residence Hypothesis 3: Ho: There is no significant difference between place of residence & influence of various factors on buying behavior H1: There is a significant difference between place of residence & influence of various factors on buying behavior =0.05%L.O.S

Table No 6: Place of residence & influence of various factors on buying behavior

ANOVA table value (Sig. .948 .378 .950 .056 .003 .042

Influencing Factors Cultural factors influence on purchase Life partners influence on purchase Childrens influence on purchase Parents influence on purchase Friends influence on purchase Easy product identification inside the store influence on purchase Shopping space available inside the store influence on purchase Active checkout counters inside the store influence on purchase Broad casting medias influence on creating awareness Print medias influence on creating awareness

F-Ratio .119 1.048 .117 2.668 5.090 2.898

Significant/not significant Not significant Not significant Not significant Not significant significant significant



Not significant



Not significant

3.021 1.830

.037 .152

significant Not significant

Interpretation: Place and all 10 factors From the above table, since, F (3, 60) = 0.199 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between place and cultural factor on buying behavior. From the above table, since, F (3, 60) = 1.048, p > 0.05, the null hypothesis is accepted. Hence there is no significant above table, since, F (3, 60) = 0.117 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between place and children on buying behavior. From the above table, since, F (3, 60) = 2.668 p < 0.05, the null hypothesis is accepted. Hence there is a significant difference between place and parents on buying behavior. From the above table, since, F (3, 60) = 5.090 p <0.05, the null hypothesis is accepted. Hence there is a significant difference between place and friends on buying behavior. From the above table, since, F (3, 60) = 2.898 15

p <0.05, the null hypothesis is accepted. Hence there is a significant difference between place and easy product identification on buying behavior. From the above table, since, F (3, 60) =1.660 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between occupation and shopping space availability on buying behavior. From the above table, since, F (3, 60) =1.687 p >0.05, the null hypothesis is accepted. Hence there is no significant difference between occupation and active check out counter. From the above table, since, F (3, 60) = 3.021 p<0.05, the null hypothesis is accepted. Hence there is a significant difference between occupation and broad casting media on buying behavior. From the above table, since, F (3, 60) = 1.830 p > 0.05, the null hypothesis is accepted. Hence there is no significant difference between occupation and print media on buying behavior

1. Findings and suggestion Followings are the findings of the study i) With reference to the gender & all influence of 10 factors findings suggest that none of the 10 factors are significantly related ii) With reference to the occupation & all influence of 10 factors findings suggest that shopping space available inside the store with occupation of the consumer is significantly related iii) With reference to the occupation & all influence of 10 factors findings suggest that active check out counter inside the store with occupation of the consumer is significantly related iv) With reference to the occupation & all influence of 10 factors findings suggest that easy product identification inside the store with occupation of the consumer is significantly related v) With reference to the place of residence & all influence of 10 factors findings suggest that place of residence of consumers and influence of friends on purchase on purchasing food products by the consumer is significantly related vi) With reference to the place of residence & all influence of 10 factors findings suggest that place of residence of consumers and influence of broad casting media on purchase of the consumer is significantly related vii) From the data it is revealed that 42.2%% of Consumer are not purchasing jam. 28.1% of respondents is regularly purchasing jam. 9.41% of respondents are mostly purchasing jam.9.4% of respondents are occasionally purchasing jam, 10.1% of respondents are mostly purchasing jam 9.4% of respondents are frequently purchasing jam. In total of 64 respondents viii) From the data it is revealed that 71.9% of Consumer is not purchasing sauce. 21.9% of respondents is regularly purchasing sauce. 3.1% of respondents are mostly purchasing sauce. 3.1 %of respondents are 16



frequently purchasing sauce in total of 64 respondents. From the data it is revealed that 87.5% of Consumer is not purchasing soup. 6.3% of respondents is regularly purchasing soop respondents are mostly purchasing soup 3.1% of respondents are occasionally purchasing soup, From the data it is revealed that 4.7% of Consumer are not purchasing atta 17.2% of respondents are regularly purchasing atta. 9.4% of respondents are mostly purchasing atta 9.4% of respondents are occasionally purchasing atta, 59.4% of respondents are frequently purchasing atta.

7. Suggestion
The research study suggest that by reducing the cost of advertisement & giving to the consumers in affordable price it will be helpful for consumers at the time of purchasing food products. It is also suggest that promotional activities are giving only at season time (deepavali etc).if it giving by the company to maximum times it is also be helpful for the consumers to purchase more food products.

8. Conclusion
In broad conclusion about buying behavior among the consumers indicated that consumers preference plays important role in the final purchase as for as food product is concern. In store purchase behavior of consumers like identification of food products easily while on purchasing food products in shopping malls , active check out counter inside the shopping malls for the consumers to finish the checking and billing perspectives quickly because in the busy world consumers in Tamil nadir especially Salem dt .Next consumers prefer space inside the shopping centers . Most of the Consumers raked active check out counter is very important and it influencing high to select and purchase the particular store. Above study also conclude that easy product identification got highest mean value of 3.92.Least is shopping space available inside the store that got mean value of 3.32. With respect to media creating awareness about the food products on

pre purchasing behavior consumers raked broad casting media as high since it got 3.63 as mean value compare to print media as it got mean value of 3.Domestic factors influencing consumers as for as the above study states that life partner influencing consumer high since it got the mean value of 3.67. As for as food product is concern 42.2% of consumers not purchasing jam of neither HUL nor any other company Jam item which means only 28.1% of consumers are purchasing jam of neither HUL nor any other company jam item as regularly, 9.4% of consumers are purchasing jam of neither HUL nor any other company jam item as occasionally. 10.1% of consumers are purchasing jam of neither HUL nor any other company jam item as frequently. Next sauce 71.9% of consumers not purchasing sauce of neither HUL nor any other company sauce items which means only 21.9% of consumers are purchasing sauce of neither HUL nor any other company sauce items as regulerly.3% of consumers purchasing mostly.14% percentage of consumers occasionally. 3.1 % of consumers purchasing frequently. Next soup neither 87.5% of consumers not purchasing soup of neither HUL nor any other company sauce items means only 6.3% of consumers are purchasing soup of neither HUL nor any other company sauce items as regularly.3.1% of consumers are purchasing soup of neither HUL nor any other company sauce items as mostly. 3.1% of consumers are purchasing soup of neither HUL nor any other company sauce items as occasionally

Believes & purchasing practices of cape town consumers reg: organic produced food Journal of family ecology and consumer science volume 31, 2003 2. (Egay 1989,ott 1990,Huang et al 1990, Huang et al 1993,Misra et al 1991,jolly et al 1989,jolly 1991,Goldman Lewies 2001,the and Clancy et al 1991,Ekeland 1993,Sylvander 2002,wold 1990,Baker and Crosbe 1993,Swanson and 1993,Groff parker 1993,The Parker 1998,Oystein et al 2001,jolly 2001,Demeritt 2002) Organic and Conventional food: A literature review of the economics of consumer perception and preference 3. Aguirre(2001) Organic And Conventional food: A literature Review of the economics of consumer perception and preference Marketing and consumption of organic products in Costa Rica, Working paper no 5, the school for field studies, center for sustainable development-Atenas, Costa Rica 4. Fotopoulos and Kryskallis, 2002; Larue et al., 2004; Wier and Calverley, 2002)Organic food consumer purchase pattern willing to pay premium price Fotopoulos, C., and Krystallis, A. (2002), Purchasing motives and profile of Greek organic consumer: a countrywide survey, British Food Journal, 104 (9), 730-764., Wier, M., and Calverly, C. (2002), Market potential for organic foods in Europe, British Food Journal, 104 (1), 45-62.

9. Reference
1. Lane & Bruhn(1992) ,Believes & purchasing practices of cape town consumers reg: organic produced food Journal of family ecology and consumer science volume 31, 2003 Sunders(1999),Hutcines & Green halgh(1997)



S. Arun Kumar Asst. Professor, Department of Management Studies, Saranathan College of Engineering, Trichy, Tamilnadu, India S. Gugananthan, N.Kaarthik II MBA, Saranathan College of engineering, Trichy, Tamilnadu , India. 1. Introduction
Singh, S., (1998) describe that the entry of large businesses into agribusiness sector has led to a new arrangement in raw material production and procurement in India, known as contract farming. This is happening as good quality, timely and cost effective raw material is a prerequisite for any successful agribusiness firm, whether operating in the domestic or the international market. Given the Land Ceiling Act in India, agribusiness firms cannot own and cultivate land for their raw material requirements. Also, most of the times, it is not a Viable option[22]. Vyas, V. S., (2001) stated that therefore, the only option for them to procure raw materials is to have contractual arrangements with the primary producers which are also suggested as an alternative to corporate farming or liberalisation of land ceiling laws [26]. Key, N. and D. Runsten (1999) prescribed that contract farming refers to the production and supply of agricultural produce under advance contracts, the essence of such contracts being a commitment to provide an agricultural commodity of a type, at a time and a price, and in the quantity required by a known buyer. It basically involves four things - pre-agreed price, quality, quantity or acreage (minimum/maximum) and time. The contracts could be of three types; (i) procurement contracts under which only sale and purchase conditions are specified; (ii) partial contracts wherein only some of the inputs are supplied by the contracting firm and produce is bought at pre-agreed prices; and (iii) total contracts under which the contracting firm supplies and manages all the inputs and the farmer becomes just a supplier of land and labour. The relevance and importance of each type varies across products and over time, and these are not mutually exclusive [15]. As according to Eaton, C. and A. W Shepherd, (2001) a contract reduces price risk for a farmer and can be terminated at reasonably short notice. Also, contractual 18 arrangements are attractive to farmers seeking capital and new technology and other inputs and production services as generally new crops with modern technology or existing crops with new seeds and other inputs are promoted under such arrangements. On the other hand, food processors can minimize their overhead costs per unit of production by operating their plants at or near fully capacity by obtaining assured, stable and quality raw material supplies from farms under contracts. For a processor, contracts are more flexible in the face of market uncertainty, make smaller demands on scarce capital resources and impose less of an additional burden on management. They also overcome land constraint for corporate firms, reduce Production risk, and are politically more acceptable than corporate farming [7]. Baumann, P., (2000) said that contracting can give a positive image to the company as it may be perceived as progressive especially if it works with small farmers, and can help it get access to state or donor funds [1]. Gill, S. S., (2004) & Grosh, B., (1994) stated that at more macro economic level, contracting can help to remove market imperfections in produce, capital, land and labour markets, remove intermediaries and therefore make upstream value chain (agricultural marketing) more efficient, and can help in better co-ordination of local production activities as it often involves initial investment in processing, extension etc. [11&12]. Haque, T. and P. S. Birthal, (1998) provide that from an institutional economics perspective, contract farming could be looked upon as a way of creating positive externalities, created better by private sector instead of the state, which can result in overall rural development. Contracting can lead to more employment opportunities for farm and non-farm labour as generally it deals with labour intensive high value crops requiring labour for harvesting, grading, and packaging at the farm level, and in processing, transportation, packaging and marketing

at the post-farm stage, reducing the seasonality of employment and giving higher wages through Competition in the labour market. There can also be larger developmental effects from the improvement in infrastructure and other amenities due to contracting and general expansion of demand due to higher incomes under contracting [13]. Little, P. D. and M. J. Watts (eds.), (1994) given that the failure of government mechanisms for support to agriculture, there is wide support for contract farming under the Structural Adjustment Programme (SAP) and liberalisation. Given the enthusiastic promotion of this mechanism by the international development agencies like the World Bank, the United States Agency for International Development (USAID), the International Finance Corporation (IFC) and the Commonwealth Development Corporation (CDC) [17], Hayami Y. and A. Damodaran, (2004)reveal that it is inevitable that new forms of contracts will be tried by the agribusiness firms. This is the only way to ensure good quality and timely availability of raw material for processing, especially when, in India, captive farming is not allowed at present under the Land Ceilings Act. Besides, captive farming means putting large resources in raw material production which may not be the best economic option for many agribusiness firms in India, especially small firms, or may not be a viable practice any more in competitive markets like in the case of tea plantations in south India[14].

and Haryana of Cucumber in Andhra Pradesh and cotton in Tamil Nadu found that the net returns from those crops under contract being much higher than those under non contract situations though production cost in tomato was much higher than the contract system.

3. Research Problem
Indian agriculture is expected to take three main challenges in time ahead. First, the area under cultivation is estimated to come down from 170 million hectares to 100 million hectares by 2020. There will be a shortage of irrigation water. The number of people will decline in Agriculture. Hence to overcome these forecasted pitfalls contract farming practices are highly welcome in our Indian agricultural practices.

4. Research Objectives
To understand the farmers perception towards contract farming Practices. To understand the Socio-demographic and Rational profile of farmers with reference to rice bowl of Thanjavur, Tamilnadu , India. To identify the important underlying dimensions of contract farming among farmers. To identify the dominant variables, which is a strong predictor of contract farming among farmers in Thanjavur ,Tamilnadu , India.

2. Contract Farming in India

Contract Farming is fast evolving as a mechanism of alternative marketing in the country. Punjab, Karnataka, Maharashtra, Madhya Pradesh, and Tamil Nadu have been the front runners in this regard. The experience of contract farming in India shows that there is considerable saving in consumption of inputs due to the introduction of improved technology and better extension services. Contract farming has usually allowed the farmers some form of credit to finance use of production inputs. In some cases, viz. Appache Model of contract farming for cotton in Tamil Nadu, there are arrangements for loans from commercial banks. Contract farming has been successful in effecting crop diversification in many states. Studies of Tomato contract production in Punjab 19

5. Scope of the Research

This study is confined to the farmers in Thanjavur. This study creates awareness about contract farming among farmers. This study will help to overcome the future food insecurity problem.

6. Review of Literature
Sunanda S. (2005) has stated that contract farming is a form of vertical integration where the farmer is contractually bound to supply a given quantity and quality of product to a processing or marketing enterprise. The buyer agrees in advance to pay a certain price to the farmer and often provides technical advice and inputs (the cost of the inputs being deducted from the farmers revenue once the product has been sold to the buyer). All inputs were provided on credit through

cooperatives, groups, or middlemen. Contract farming usually involves the following basic elements -preagreed price, quality, quantity or acreage (minimum/ maximum) and time. The key to the success of this venture lies in building up a healthy trust between grower and buyer. The finance extended by the private banks for contract farming are termed as corporate linked agri finance. Neither the corporate nor the farmer is interested in fixing the price upfront. Banks have adopted the market price as the relevant price on the date of the procurement [27]. A look at history displays that the principles of contract farming existed way back to the 19th century when the mechanism was used in the United States for processing crops such as sugar, beets and peaches, and in Taiwan, for sugar production under the Japanese colonial rule [27]. Chen, K., Shepherd, A. and Da Silva, C. (2005) have enumerated that these transformations, and the government responses thereof, are creating challenges and Opportunities for producers, processors, wholesalers, retailers and other supply chain actors. Small farmers in developing countries, in particular, are perceived to be especially vulnerable to changes. Modern organisational arrangements in agro-food systems might promote the emergence of power imbalances and unfavourable terms of trade in the transactions between smaller-scale chain actors and the larger players which typically exercise the leading coordination role in a managed supply chain[2]. Da Silva, C., (2005) argues that not withstanding, contract farming is being promoted by governments and development agencies as a coordination mode that can facilitate the integration of small farmers into supply chains[5]. According to Agricultural produce market committee act (APMC) the basic objective of setting up of network of physical markets has been to ensure reasonable gain to the farmers by creating environment in markets for fair play of supply and demand forces, regulate market practices and attain transparency in transactions. [21] According to Erappa, S., (2006) the main objective is to increase crop production, improve quality farm produce and possibly minimize cultivation cost [9]. 20

7. Advantages of Contract Farming

Erappa, S., (2006) describes that experiences showed that farmers are benefited from technical guidance, supply of quality farm inputs and assured purchasing at remunerative price[9]. Da Silva, C., (2005) It was argued that the private firms, with their profit maximising motive, would invest heavily in the input segment, which coupled with their technical advice during pre- and post-harvest period, would come useful for farmers. Economically it makes more sense for the corporate to go for the large farmers rather than the small and marginal farmers as tenants [5]. Debashis Chakraborty, (2009) reveals that a major precondition for agricultural investment in rural areas is the existence of an adequate communication system that includes roads, transport, telephones and other telecommunication services. Reliable power and water supplies are particularly vital for agro-processing and exporting of fresh produce. The availability of suitable educational and medical services is also important for those who participate in contract farming, whether they be direct employees of the sponsor or the farmers themselves. Sponsors need to be assured that they will be able to organize the supply of all necessary inputs for the farmers and for their own processing needs. All inputs should be identified and ordered well in advance, either from local sources or from overseas. Provision of inputs and production services Many contractual arrangements involve considerable production support in addition to the supply of basic inputs such as seed and fertilizer. Sponsors may also provide land preparation, field cultivation and harvesting as well as free training and extension. This is primarily to ensure that proper crop husbandry practices are followed in order to achieve projected yields and required qualities. Contract farming usually allows farmers access to some form of credit to finance production inputs. In most cases it is the sponsors who advance credit through their managers. However, arrangements can be made with commercial banks or government agencies through crop liens that are guaranteed by the sponsor, i.e. the contract serves as collateral. When substantial investments are required of farmers, such as packing or grading sheds, tobacco barns or heavy machinery, banks will not normally advance credit without guarantees from the sponsor [6].

The major benefits accruing to the farmer are quality inputs, technical guidance, assured market and price. There is an enhanced farm productivity & income [3]. As per Debashis Chakraborty, (2009) Guaranteed and fixed pricing structures sponsors indicate in advance the price(s) to be paid and these are specified in the agreement. On the other hand, some contracts are not based on fixed prices but are related to the market prices at the time of delivery. In these instances, the contracted farmer is clearly dependent on market volatility. If either the sponsors or their contracted farmers fail to achieve consistent and attractive financial benefits a venture will collapse. A further precondition, therefore, is that the sponsor needs to be sure that farmers will obtain higher net incomes from entering into a contract than they could from alternative activities with the same, or less, risk. Sponsors should calculate realistic yields in order to forecast whether production by farmers can be profitable at prices the sponsors are able to pay. These estimates should be based on the experience of farmers

in the chosen area, their historical production data, soil fertility and, sometimes, field trials. Once estimates are compiled and production costs known, the sponsors are in a sounder position to calculate a realistic pricing structure that is mutually profitable. Guaranteed, regular and attractive incomes should encourage farmers to make a long-term commitment both as a facilitator and guarantor in the event of crop failure [6]. Sukhpal Singh ,(2003) has said experiences showed that farmers are benefited from technical guidance, supply of quality farm inputs and assured purchasing at remunerative price[24].In case of any lapses from companies, the government should intervene and come to rescue of farmers. Motivating private insurance companies to participate in the contract farming may be considered to act as a liaison authority [8]. In the words of Singh, S., (2005), technological progress in farming can help the rural poor by raising farm productivity, lowering food prices, increasing employment, and reducing farming risk[23].

Figure 1 : Research Model


8. Research Methodology
Here in this research study descriptive type of research used. Sampling method is Non probability purposive sampling with a sample size of 127 respondents taken for the study. Content validity is tested by showing the variables to farmers ,agricultural scientist & academicians and then subjected to pilot testing with a total of 30 farmers and they were asked to comment on any perceived ambiguities, omissions or errors concerning to the drafted questionnaire. The feedback received was rather ambiguous thus only minor changes were made. For instance, technical jargon was rephrased to ensure clarity and simplicity. Reliability refers to the confidence we can place on the measuring instrument to give us the numeric value. If the same set of objects are measured again and again with the same or comparable measuring instrument and the results obtained are the same or similar, then the measuring instrument is said to be reliable. Here, a Cronbachs Alpha value of .722 has obtained which seems to be having higher reliability coefficient. Data were collected by means of a structured questionnaire comprising three Sections namely A, B and C. Section A , contained thirteen questions pertaining to farmers demographic and rational profile, Section B, on the other hand, is composed of 17 items for contract farming, a scale uniquely developed to embrace different aspects of a contract farming procedure and offering of consumer perceptions and finally Section C, to provide an overall rating of the contract farming. In the subsequent fullscale survey, data were collected from farmers in Thanjavur, the rice bowl of Tamilnadu, for the period of May, 2010 to June, 2010. The data collected will be analysed using Simple percentage analysis, Chi-square test, ANOVA, Factor analysis, multiple regression and interpreted using statistical package for social sciences (SPSS).

Inference A test of reliability is an important test of sound measurement. A reliability test score of 0.6 and above is said to be reliable. Cronbachs alpha reliability test for the study was done and the score was found to be 0.722 which rendered the study reliable. The Financial Analysis reveals that the above table , 118 (93%) of the respondents are male and 9 (7%) of the respondents are female, 71 (56%) of the respondents are in the age group of 21-30, followed by 28 (22%) of the respondents are in the age group of 31-40, and 16 (13%) of the respondents are in the age group of 41-50 and 12(9%) of the respondents are in the age group of more than 50 year , 3 (2%) of the respondents are 2 dependents, 17 (13%) of the respondents are 3 dependents, 28 (22%) of the respondents are 4 dependents, 31 (24%) of the respondents are 5 dependents and 48 (38%) of the respondents are above 5 dependents , 28(22%) of the respondents income is below Rs 25000, 60(47%) of the respondents income is below Rs 25000-50000, 27 (21%) of the respondents income is below Rs 50000-100000 and 12(9%) of the respondents income is above Rs 100000, 17(13%) of the respondents are above 10 acre land holders, 34(27%) of the respondents are 5-10 acre land holders,40(31%) of the respondents are 3-5 acre land holders,33(26%) of the respondents are 2 acre land holders and 3(2%) of the respondents are below 2 acre land holders, 28(22%) of the respondents are primary education, 45(35%) of the respondents are middle class, 30(24%) of the respondents are higher secondary and, 24(19%) of the respondents are college education , 29(23%) of the respondents are below 5 years experience, 20(16%) of the respondents are 5-10 years experience, 27(21%) of the respondents are 10-15 years experience, 17(13%) of the respondents are 1520 years experience and 34(27%) of the respondents are above 25 years experience , 72 (57%) of the respondents are river irrigation system, 23(18%) of the respondents are bore well irrigation system 10 (8%) of the respondents are lake irrigation system and 20 (16%) of the respondents are well irrigation system , 90(71%) of the respondents have own land, 6(5%) of the respondents have contract land and 31(24%) of the respondents have own and contract land , 62(49%) of the respondents have wet land, 30(24%) of the respondents 22

9. Empirical Analysis Interpretation And Findings

Table1: Reliability Statistics
Cronbachs Alpha .722 Source: Primary data N of Items 17

have dry land and 35(28%) of the respondents have wet and dry land , 8(6%) of the respondents produce cash crops, 47(37%) of the respondents produce food crops, 6(5%) of the respondents produce fruits and 66(52%) of the respondents produce cash and food crops , 27(21%) of the respondents getting loan from banks, 52(41%) of the respondents are getting loan from primary agriculture co-operative bank, 35(28%) of the respondents are getting loan from private moneylenders and 13(10%) of the respondents are getting from bank and PACB.26(21%) of the respondents are using chemical fertilizers,11(9%) of the respondents are using

organic fertilizers ,90(71%) of the respondents are using other type of fertilizers.

KMO and Bartletts Test Bartletts test of sphericity indicates whether your Correlation matrix is an identity matrix, which would indicate that your variables are unrelated. The significance level gives the result of the test. Very small values (less than .05) indicate that there are probably significant relationships among your variables. A value higher than about .10 or so may indicate that your data are not suitable for factor analysis. Table 3: KMO and Bartletts Test

10. Factor Analysis

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.


Bartletts Test of Sphericity

Approx. Chi-Square Df Sig.

683.354 136 .000

Source: Primary data Inference The significance .000 is lesser than the assumed value .05. This means that factor analysis is valid. We look at the KMO coefficient which is .506. The value is more than 0.05. So this implies that the factor analysis for data reduction is effective. Communalities indicate the amount of variance in each variable that is accounted for. Initial communalities are estimates of the variance in each variable accounted for by all components or factors. For principal components analysis, this is always equal to 1.0 (for correlation analyses) or the variance of the variable (for covariance analyses. Extraction communalities are estimates of the variance in each variable accounted for by the factors (or components) in the factor solution Small values indicate variables that do not fit well with the factor solution, and should possibly be dropped from the analysis.

11. Rotated Component Matrix (a) Table 5: Component 1 Willingness to give land for contract. Mentally prepared for long term lease. -.085 .129 2 .031 .121 .022 .085 3 .158 -.020 -.263 .275 4 .707 .838 .568 .158 5 .251 6 7 -.188 .181 -.373 -.025

-.077 .117 .225 .272

Abide by the rules and regulation of .466 corporate. Remuneration based on crops yield. .687

-.105 -.134 .169

Fixed lease amount as Remuneration. Freedom to produce any type of crops. Freedom to use all kind of pesticides Preference to grow short term crops Preference to grow long term crops. Use of Contract bonds for availing loans. Advance payment from corporate. Contract farming increases employment opportunities. Mandatory Government intervention Aided with agriculture equipments. Facilitation for crop insurance. Stipulation to protect soil fertility.

.836 .132 .457 .192 .118 .492 .172 .105 .066 .375 -.075 -.013

.055 .038 .029 .034 .047 .118 .635 .067 .727 .625 .841 .090

.019 .814 .377 .190 .140 .190 .004 .763 .060 -.333 .152 .195 .035

-.031 .004 .092 .054 .114 .184

.248 .291 .346

.076 -.076 -.526

-.132 .012 .022 .146 .248 .160 .054 .170 -.070 .116 .211 -.066 .055 -.005 .092 .004 .115 .753 .822

.100 .744 .812 .024 -.445 -.303 .086 .441 -.117 .198 -.290 -.320 .068 .258 .172 .114

-.200 -.006 -.271

Protection of the environment. .017 -.033 Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 9 iterations. This table (called the Pattern Matrix for oblique rotations) reports the factor loadings for each variable on the components or factors after rotation. Each number represents the partial correlation between the item and the rotated factor. These correlations can help you formulate an interpretation of the factors or components. This is done by looking for a common thread among the variables that have large loadings for a particular factor or components Inference Hence from the above table it is inferred that the following factors namely Remuneration based on crop yield and Remuneration based on fixed leased amount for Factor 1 with the factor loading value of

-.074 -.092

0.687 and 0.836. In Factor 2 Advance payment from companies, Government intervention, Aided with agriculture equipments and crop insurance with the factor loading value of 0.635, 0.727, 0.625, and 0.841. In Factor 3 Freedom to produce of crops and Contract farming increasing employability contributes with the factor loading value of 0.814 and 0.763. In Factor 4 Willingness to give land for contract, long term lease and Abide rule and regulation of corporate companies contributes with the factor loading value of 0.707, 0.838 and 0.568. In Factor 5 protected soil fertility and Protected environment contributes with the factor loading value of 0.753 and 0.822. In Factor 6 Favour to grow long term crops contributes with the factor loading value of 0.812. In Factor 7Freedom to use pesticides and Favour to grow short term crops contributes with the factor loading value of -0.526 and 0.744. `

12.Multiple Regression analysis:

Model 1 2 3 4 R .601(a) .660(b) .684(c) .704(d) R Square .361 .436 .468 .495

Table 6:
Adjusted R Square .356 .427 .455 .479 24 Std. Error of the Estimate .81029 .76438 .74523 .72903

a b c d

Predictors: (Constant), Protected environment Predictors: (Constant), Protected environment, Contract bonds availing for loans Predictors: (Constant), Protected environment, Contract bonds availing for loans , Favour to grow long term crops Predictors: (Constant), Protected environment, Contract bonds availing for loans , Favour to grow long term crops, Remunerated based on fixed leased amount. This table displays R, R squared, adjusted R squared, and the standard error. R, the multiple correlations co-efficient, is the correlation between the observed and predicted values of the dependent variable. The values of R for models produced by the regression

procedure range from 0 to 1. Larger values of R indicate stronger relationships. R squared is the proportion of variation in the dependent variable explained by the regression model. The values of R squared range from 0 to 1. Small values indicate that the model does not fit the data well. The sample R squared tends to optimistically estimate how well the models fit the population. Adjusted R squared attempts to correct R squared to more closely reflect the goodness of fit of the model in the population. Here we use R squared to help us to determine which model is best. Here we choose a model with a high value of R squared that does not contain too many variables. Models with too many variables are often over fit and hard to interpret.

13. ANOVA(e)
Model Regression 1 Residual Total Regression Residual Total Regression 3 Residual Total Regression 4 Residual Total 64.841 128.457 68.310 128.457 63.616 82.072 128.457 56.007 72.450 128.457 60.146

Table: 7
Sum of Squares 46.385 1 125 126 2 124 126 3 123 126 4 122 126 25 15.904 .531 29.924 .000(d) 20.049 .555 36.100 .000(c) 28.003 .584 47.928 .000(b) Df Mean Square 46.385 .657 F 70.647 Sig. .000(a)

a Predictors: (Constant), Protected environment b Predictors: (Constant), Protected environment, Contract bonds availing for loans c Predictors: (Constant), Protected environment, Contract bonds availing for loans , Favour to grow long term crops d Predictors: (Constant), Protected environment, Contract bonds availing for loans , Favour to grow long term crops, Remunerated based on fixed leased amount. e Dependent Variable: Overall encouraging contract farming This table summarizes the results of an analysis of variance. The sum of squares, degrees of freedom, and mean square are displayed for two sources of variation, regression and residual. The output for Regression displays information

about the variation accounted for the model. The output for Residual displays information about the variation that is not accounted for by our model. And the output for Total is the sum of the information for Regression and Residual. A model with a large regression sum of squares in comparison to the residual sum of squares indicates that the model accounts for most of variation in the dependent variable. The mean square is the sum of squares divided by the degrees of freedom. The F statistic is the regression mean square divided by the residual mean square. If the significance value of the F statistic is small (smaller than say 0.05) then the independent variables do a good job explaining the variation in the dependent variable.

14. Coefficients(a)

Table : 8
Unstandardized Coefficients Standardized Coefficients t Sig.


B 1 (Constant) Protected environment 2 (Constant) Protected environment Contract bonds availing for crop loans (Constant) Protected environment Contract bonds availing for crop loans Favour to grow long term crops (Constant) Protected environment Contract bonds availing for crop loans Favour to grow long term crops 1.435 .510 .785 .477 .222 1.173 .507 .196 -.141 .738 .519 .159 -.187

S t d . Beta Error .187 .061 .239 .058 .055 .272 .057 .054 .051 .316 .056 .055 .054 .075 .562 .276 .597 .244 -.185 .611 .198 -.246 .178 .601 7.660 8.405 3.292 8.244 4.058 4.304 8.822 3.615 -2.730 2.334 9.194 2.903 -3.492 2.555 .000 .000 .001 .000 .000 .000 .000 .000 .007 .021 .000 .004 .001 .012

Remunerated based on fixed leased .192 amount. 26

a Dependent Variable: Overall encourage and welcome of contract farming Multiple R=0.704, F-Value =29.924, d.f (122,126), p-value <0.01, R Square =0.495 = 0.738+0.519x1+0.159x2-0.187x3 + 0192x4 Where, is the estimated value of Overall contract farming. The above equation shows the impact of the variables of contract farming aspects such as protected environment, fixed yearly contract cost and getting loan through contract bonds. On an average, if the protected environment change by 1 unit, there will be 0.519 units increase in the overall service quality when other variables are kept constant. Moreover the result of the t-test confirms that the calculated partial regression coefficient such as (0.519), (.192) and (.159) are highly significant at 1 percent level and 5 percent level. From the above analysis, it is concluded that the variables of contract farming namely protected environment, Remunerated based on fixed leased amount and Contract bonds availing for crop loans were the dominant variables that predict the overall encourage and welcome of farmers towards contract farming.

govt support, autonomy abiding corporate requirements, concern about environment, long term crops , allowing pesticides usage and short term crops are responsible for affecting the choice of farmers towards contract farming. With the emergence of the free market economy in the wake of liberalisation, globalisation, privatisation, the fast expansion of agri-business and climate changes, small farmers may find it difficult to cope up with the resultant volatility in the economy. Hence, to improve contract farming practices from these research study the necessary recommendations are suggested. Companies should come out with strategies like Educative Advertisement on contract farming, Contract farming Awareness programs focused towards farmers Government and corporate should tie-up in their operational and promotional Activities to achieve credibility among farmers. Companies should create awareness about advance payment policy from companies for agriculture and insist on that to benefit the low income farmers and to encourage initiation from the farmers end towards contract farming.It is inferred from the conclusion that, there seems to be a significant difference observed between Low income farmers with that of government support. Hence, to Nullify those Opinion differences government should come forward and take strong initiative by bringing in stringent policy & measures for small farmers to built trust and credibility among small farmers. Fertilizer subsidies should be extended to farmers through corporate bodies initiatives. From regression analysis, it is observed that the attributes namely to protect the environment and fixed lease amount are the dominant variables which encourage corporate farming among farmers, hence to support these Corporate should provide organic fertilizer to farmers in order for them to protect the environment and fixed lease amount to be given to farmers by through government insurance arrangements even during uncertainty caused due to natural calamities. It is inferred that significance difference observed between education of farmers and crop insurance awareness, hence Companies should educate the benefit of crop insurance to farmers irrespective of their education to manage uncertainty in returns. 27

15. Conclusions
By this study, only 18% of farmers are willingness to give land for contract farming. It is inferred from the study there observed to be significant difference between demographic variables like gender, annual income, area of land, education qualification, and experience with that of willingness to give land for contract, long term lease, and crop insurance and abide company rules and regulation. From the multiple regression analysis protected environment, remuneration based on fixed leased amount and contract bonds availing for crop loans were the dominant variables that predict the overall encouragement and welcoming of contract farming by the farmers. From the factor analysis ,it is concluded that seven factors namely remuneration, corporate and

16. References
1 Baumann, P., (2000) Equity and Efficiency in Contract Farming Schemes: The Experience of Agricultural Tree Crops, ODI Working paper No. 139, ODI, London,October. Chen, K., Shepherd, A. and Da Silva, C. (2005). Changes in Food Retailing in Asia: Implications of Supermarket Procurement Practices for Farmers and Traditional Marketing Systems, FAO AGSF Occasional Paper No. 8.

Contract Farming in India in K T. Chandy and O S Tyagi (eds.),Future of Farming in India: Contract or Co-operative Farming, Indian Social Institute New Delhi 14. Hayami Y. and Damodaran A. , (2004) Towards an Alternative Agrarian Reform TeaPlantations in South India, Economic and Political Weekly, 39 (36), September 4-10, 3992-3997. 15. Key, N. and D. Runsten (1999) Contract Farming, Smallholders, and Rural Development in Latin America: The Organisation of Agro-processing Firms and the Scale of Outgrower Production, World Development, 27 (2), 381-401. 16. Kirsten, J. and Sartorius, K.I. (2002) Linking Agribusiness and Small Farmers in Developing Countries: Is There a New Role for Contract Farming?, Journal of Development Southern Africa 19, (4). 17. Little, P. D. and M. J. Watts (eds.), (1994) Living Under Contract - Contract Farming and Agrarian Transformation in Sub-Saharan Africa, University of Wisconsin Press, Madison. 18. Mac Donald, J., Perry, J., Ahearn, M., Banker, D., Chambers, W., Dimitri, C., Key, Nigel, Nelson, K., and Southard, L. (2004). Contracts, Markets and Prices: Organizing the Production and Use of Agricultural Commodities,Agricultural Economic Report Number 837, USDA, November 2004. 19. Morrison, P.S., Murray, W.E. and Ngidang , D. (2006.) Promoting Indigenous Entrepreneurship through Small-scale Contract Farming: The Poultry Sector in Sarawak, Malaysia, 20. Sarvesh Shah Contract Farming : The new face of traditional farming. Retrieved August 7, 2010 from farming-the-new-face-of-traditional-farming/ 21. Md. Salleh Hassan, Hayrol Azril Mohamed Shaffril, Musa Abu Hassan and Jeffrey Lawrence D Silva Developing Agriculture in Malaysia: Internet Utilization among Malaysian Youth Agro-Businessman . European Journal of Social 28


3 Contract Farming Retrieved July 10 2010, from contract%20farming.pdf 4. Contract Farming Retrieved September 15 2010, from Contract-Farming 5. Da Silva, C., (2005) The Growing Role of Contract Farming in Agrifood Systems Development; Drivers, Theory and Practice, Working Document, Agricultural Management, Marketing and Finance Service 6. Debashis Chakraborty , (2009) contract farming in india:unique solution to multilayer Agricultural problems 1:83 DOI 10.1177/097492920900100105 7. Eaton, C. and A. W Shepherd, (2001)Contract Farming - Partnerships for growth FAO, Rome. 8. Economics, Journal of African Economies, 3(2), October, 231-261. 9. Erappa, S., (2006) contract farming in karanataka : A Boon or bane Agriculture and rural development,1-62. 10. GahukarR.T (2007)contract farming for organic crop production in india 93#12. RetrievedSeptember6,2010from http://www.ias. 11. Gill, S. S., (2004) Small Farmers and Markets (a book review), Economic and Political Weekly, 39(23), June 5, 2356-2358. 12. Grosh, B., (1994) Contract Farming in Africa: an Application of the New Institutional 13. Haque, T. and P. S. Birthal, (1998) Prospects of

Sciences Volume 11, Number 2 (2009). 22. Sharma,D.K.,RetrievedNovember22,2010from 23. Singh, S., (1998) Should Indian Farming Go Corporate?,Business India, Aug.24 24. Singh, S., (2005). Contract Farming for Agricultural Development; Review of Theory and Practice with Special Reference to India, New Delhi, India: New Concept Information Systems Pvt. Ltd. 25. Sukhpal Singh ,(2003). Contract Farming in India Impacts on women and child workers, Gatekeeper 111. Retrieved June 3, 2010 from http://pubs.iied. org/pdfs/9281iied.pdf 26. Sunanda S.(2005),Farm - Firm Linkages Through Contract Farming In India Retrieved

November12,2010from fileadmin/user_upload/contract_farming/ presentations/Contract_farming_in_India_2.pdf. 27. Suraj Kumar Sabat, Kamalika Pal, (2008). Rural Marketing: Term paper Contract Farming. Retrieved July 6 , 2010 from http://www.renege. com/contract%20farming-the-newface-oftraditional-farming/ 28. Vyas, V. S., (2001) Agriculture: Second Round of Economic Reforms, Economic and Political Weekly, 36 (10), March 10, 829-836. 29. Warning , M and Hoo , W. (2000). The Impact of Contract Farming on Income Distribution: Theory and Evidence, Paper prepared for presentation at the Western Economics Association International Annual Meetings, June 2000.


Prof Prasanta Parida Asst. Professor at KiiT school of Rural Management, KiiT University, Bhubaneswar, Ordisha 1. Introduction
What do people mean when they talk about products, services or brands? In Lewis Carrolls Through the Looking Glass, points: When I use a word it means just what I choose it to mean neither more nor less. In 21st century marketing research have often wondered w h e t h e r our respondents mean what they say or even say what they mean. In 1990 bestseller book You Just Dont Understand, by the respected sociolinguist Deborah Tannene argued that the language women use is designed to make connections and to reinforce intimacy but men, by contrast, use words to establish status and to delimit their independence. We wondered, that when a set of words is used to describe a product or service in a particular way, it can mean one thing as spoken by a woman and something totally different coming from a man. first phase the respondents were all relatively young (mostly in their mid-twenties) and had grown up together in a fairly affluent middle-class. The respondents were settled into a comfortable room, provided with ample refreshments and asked merely to get on with it with unknown recording. Analysis of the recordings yielded a preliminary insight into how females and males talk about products, services and brands. Significantly, it appeared to suggest that conversational interaction differs between the sexes. With no guidance from moderator the topics was discussed. Women in this study were much more inclined than men to speak about their personal lives. Males seemed more inclined to focus on what they regarded as deeper issues such as religion or business s t r a t e g y. We found that the depth of information given on specific products or services varied significantly between the sexes. It was expected that the topics were discussed widely. However, the themes covered by males were quite dissimilar to those discussed by females. While males tended to speak about these things in general terms, females were inclined to place great emphasis on specific brand and company names. Within our data we found that males tended to speak more neutrally about specific topics, whereas women were more inclined to refer to subjects in either a positive or negative manner. In the female group, members often publicly disagreed with each other, so both positive and negative comments emerged. With an open conversational agenda, the males rarely disagreed: we observed how they seemed less intimate and less prying, seldom speaking of their personal experiences and opinions. From the emerged data was the way in which product, service and brand information is exchanged by the two sexes. The results suggested that the amount of 30

2. The Research Studies

We needed a set of tools that would enable us to identify the key points of contact between interpersonal communication and goods, services and brands. Our interest was very much in studying the relationship between people, and the ways in which these relationships might be mediated by the artifacts of everyday life. The content of the study was developed in three stages. In each stage the studied suggested same-sex conversations, observed respondents that were largely of the same age group and social class.

3. Study 1
We recruited two groups, three males and three f e m a l e s each. Each set meet three t i m e s in an informal location for an unstructured, unscripted research episode. These sessions were of 20 m i n u t e s but extending to 3 0 m i n u t e s . In this

information given, and the extent to which it was sought, differed between male and female groups. It appeared that passing on information came more naturally to females and was more regular in allfemale groups than it was in all-male ones. Indeed there appeared to be no instances in which a male explicitly imparted product information to the other members in his group. After thorough a n a l y s e s and interpreting our data, we made the following observations. The verbal content and meanings embedded in the dialogues (in common with most marketing studies looking at word-of-mouth, it has to be noted). But we really needed to understand the whole nature of the communicative in the verbal transcripts. The respondents engaged i n natural, spontaneous discourse i n the way any young people would communicate a m o n g themselves. Our datagathering method was not ideal for picking up these verbal interactions, and completely missed the physical interactions of contact and b o d y l a n g u a g e t h a t characterize inter- personal communication. At this stage we chose to undertake some preliminary interrogation of the data by reference to the literature in particular, aspects of social psychology and sociolinguistics.

4. Study 2
We therefore chose to extend the work in two important areas: first we decided to study middleaged consumers, and second we felt it important to supplement the verbal content of the discussions with visual elements. When it came to addressing the female half of the research agenda, it was comparatively straightforward to replicate the first stage, merely by adding a digital camcorder to the voice recorder u s e d previously. Three friends male and female separately were recruited, each aged in the region of 45 to 50, all of whose children attended the different schools. As with the previous stage of the research, the respondents were made comfortable at the home of one of the group, the recording devices were switched on and then the researcher left the room for 90 minutes. 31

Female respondents in this stage had insisted on being given a short topic guide. In practice they addressed only three explicit themes in the 90 minutes allowed to them: shopping, hairdressers and clothes. It was apparent that, a s time passed, the respondents were increasingly less aware of deviating from the subject. The respondents in this phase, like the younger females in stage one, found it perfectly natural to talk about any aspect of almost any consumption decision: data were both expected and given products, prices, brands, locations. Invariably, however, the older group preferred to talk of these things as they affected others in their lives, particularly their children, but occasionally their partners. The older men, by contrast, were as limited in their topics of conversation as their younger counterparts. Mostly t h e i r t a l k c e n t e r e d o n work. One of the most striking elements to emerge from this stage, from visual medium was the importance of bodily position and eye contact. Although t h e womens chairs were positioned at right angles to each other, eye contact was obligatory and almost constant. With the men, two people positioned themselves at right angles, while the third sat face-to-face. We found that, regardless of age, the same sort of rules applied to same- sex dialogues. Women would commence a narrative, pausing regularly for encouragement, clarification and points of detail. Each narrative would be backed up with a regular chorus of agreement, plus occasional interruptions to clarify points of information or to add emphasis. We also noticed how frequently o n e speaker w o u l d p a u s e , uncertain, mid-sentence a n d allow her friends to complete the narrative or to find the words that were eluding her. Listeners would also encourage the speaker to carry on when a narrative was apparently over: So what happened? With the men, however, it appeared that there were clearly defined conversational rules, based around whose turn it was to speak: only when the speaker had signaled the end of his piece would the second man respond. We found older women to be just as active as their younger contemporaries in providing and seeking out knowledge, using the sharing of

information as collaborative and friendship building. This appeared to be done very much on an equal footing and women tended to avoid taking a didactic stance, even where they clearly had specialist knowledge or experience to share. The women pooled their knowledge where to shop for bargains, what teenagers could be persuaded to eat, when supermarkets reduced t h e i r prices on fresh produce. The men, however, used knowledge to establish or reinforce hierarchies in their relationships in much the same way we observed with the younger group It is important to note that this sort of jockeying for position was done without apparent malice or aggression. But while a female would appeal to her listeners for help or corroboration, the male equivalent was independent and emphatic in his declarations. Another f e a t u r e noticed earlier, how men tended to talk in generalities, was evident here too.

in public transport venues such as bus and train stations. The attraction o f this approach was that it potentially involved hundreds of people; in practice, however, it was possible only to monitor a few e x c h a n g e s on each journey, and at times even those were fragmentary. Our methods could be described as pure ethnography in the sense that there was no direction, and the process of data gathering involved no more than natural interaction with ones subjects. In keeping with this, we took minimal notes on the journeys, but compiled this post-hoc from memory. We focused on dialogues involving single-sex participants in order to maintain the overall theme of the research. Most of the young travelers were of school or college age; with the males in this group, their natural topics of conversation were about friends and mutual associates, particularly anyone who was spotted during the journey. Indeed, there was comparatively little spontaneous conversation, and an almost total absence of product or brand d i a l o g u e s . The triggers for these were invariably visual and immediate: the carrier-bag one was holding, the mobile phone another was showing off. These young males used conversation for socializing and forming; this was noticeable in their use of slang and profanities. On the whole, however, their conversations were intermittent and infrequent. Young females, by contrast, appeared to be far more vocal together; their conversational strategies seemed to mirror those already observed among middle-class women in terms of rules of engagement. Once again, however, products, brands and services rarely featured in mostly of the conversations. The most vocal groups appeared to be the elderly. Once again, however, products, services and brands rarely featured in their extensive narratives. The main topics for female conversation were the weather, ones health and relationships, holidays, bereavements, grandchildren. This again corresponds issues (Albrechtsen 2007). Brain scans of females and males when subject to emotional stimuli show 32

5. Re-evaluation of study 2
We found that the decision to include both audio and visual elements to the data gathering was vindicated in terms of the additional richness it brought. Body language, facial expressions and other non-verbal cues were as much a part of the answer as the words used in the exchange. However, we recognized that although many of the themes identified in the young respondents were apparently shared by middle-aged respondents, we were still looking at only a partially p a i n t e d c a n v a s .

6. Study 3
We attempted to address these limitations in the third study. Noting how promising observation had appeared to be, we decided to expand the use of this technique but to restrict the data gathering as much as possible to working-class subjects. We found that, by careful choice of location, w e were able to start to build a picture of attitudes to products, services and brands among a wider section of the population, including the elderly. Our observation work was carried out on public transport in a working-class area of M u m b a i . Over a period of a fortnight we took over a dozen bus journeys, supplemented by an occasional train trip and some ad- hoc work

that much more activity takes place in female brains than in male brains in response to such stimuli. Elderly m e n t e n d e d to t a l k a b o u t sports and hobbies. There w e r e additional triggers for conversation too, s u c h as posters, b u i l d i n g s a n d other visual elements either inside or outside the vehicle. Sometimes a passenger, usually a woman, would start to show off the proceeds of her shopping trip to a fellow traveler, sharing information on place, price and related elements in the way we observed with middle-class women. Counterintuitively, we noticed that few elderly people dwelt on the past (apart from the recent past), being very much tied up with describing the present and planning for the future. It was particularly noticeable that where a mixed-gender couple were travelling, they would invariably choose a member of their own sex with whom to engage in dialogue. In this process the partner appeared to be almost completely ignored as the malemale or female female dialogue developed. It was also very striking that, f o r the elderly females at least, eye contact was essential in any dialogue. This factor regularly determined seating position, and we noticed that the start of a conversation would often have to be deferred until both participants had rearranged themselves in such as way as to be able to see eye to eye.

communication was employed. However, stage three produced results that were by no means so clear-cut. What we seemed to have found was a p a t t e r n of b e h a v i o r among middle-class people, between the ages of about 25 and 55s. When we came to look at the under- 25s and over 60s, these patterns did not seem to hold. Perhaps it was that stage three drew predominantly on working-class subjects. Or maybe the differences in data-gathering methods (contentrich, overt data gathering vs. a more superficial, covert study) were responsible for the dichotomy. In the earlier part of the study we saw males using interpersonal discourse to create, negotiate, m a n a g e and strengthen social ties within the group. While there was little overt aggression, the key source of power was knowledge, and respondents appeared to be using it to make power statements and to position themselves vis--vis other group members. Many of the male interventions seemed designed to show the speaker in a new light intelligent, articulate, well informed, widely travelled, well read, and so on. Table 1 summaries the gendered differences we found in conversational styles, ignoring the effects of social class. In course of observed middle-class females, both the younger and middle- aged, engaged in more debate, covered a wider range of topics and were apparently more open to socialization than male counterparts. This seemed to be true also for working-class women. In the later stages of the research we add the supporting evidence of non-verbal communication, and to suggest that interpersonal discourse used as social glue in a way that was not evident with middle-class men. It is important to remember, while trying to be non-judgmental, that both groups were using discourse for socialization.

7. Analysis
The first two stages of research seemed to indicate clear patterns of behavior, qualitative differences in the ways in which women and men engage in conversation, the reasons they did so, and the topics they talked about. We noticed these differences in the words they used and in the ways in which non-verbal

Table 1 Gendered differences in conversational styles not class specific


But w h i l e the womens approach seemed t o b e c o m m u n i t a r i a n , the underlying theme in the middleclass mens groups may have been authoritarian. See Table 2 for a summary. We felt that the interpersonal communication in the womens group moved through three key phases in discussion, and a fourth element outside the group. However, this was not a linear process as there could be any number of strands to the discussion, each involving a different consumption experience. We saw the key rules of debate being interrogation, evaluation and negotiation; validation took place later when members of the group may themselves have assessed the group knowledge by using the product that had been discussed. The interrogation phase was very evident in our data. Debate was encouraged and accepted. Interrogation was not an undermining process, but we saw Table 2 Gendered differences in conversational styles: middle-class respondents

women using it to provide more information w i t h o u t f o r m i n g a judgment. Indeed, in this stage what often appeared to be statements by one respondent or another were actually questions or hypotheses to be debated by this micro community. From this process came the evaluation phase where the respondents, having ascertained the facts, debated t h e salient aspects and started to form views. In the negotiation phase a group consensus was arrived at, an implicit agreement negotiated through each member having been entitled and encouraged to have her say. In our data, what might have appeared to be argument, taking on board the non-verbal cues, could be reinterpreted as sharing knowledge, but in a dialectic learning process where discussion and debate helped the respondents to develop knowledge (see Figure 1). Personal narratives Conversation (Integration, Evaluation, Negotiation)

Common Knowledge Validation (Experimental)

Figure 1 How female respondents used conversations to develop knowledge. When at the start of this paper we implied there was little guidance in the literature we could have been accused of selectivity, ingenuousness, or both. While it is true that the marketing literature on word of mouth is dominated by unhelpful studies of Word-of-Mouth effectiveness and Word-of-Mouth practices, our search failed to unearth any reliable research in gender-related differences in communication strategies. It has to be remembered that market researchers are interested in the views, motivations and opinions of consumers, and the ways in which these are formed. In this area there have been some useful contributions to knowledge in terms of understanding the reasons why people engage in product- or service-based interpersonal communication. But arguably some of the most valuable (and overlooked) insights are also the most dated. ( Dichter (1966)), for example, suggested that although talking about products may simply be a means of social interaction, motivations for engaging in this sort of discussion are actually much 34

more complex. Indeed, Whyte (1954) had already been arguing that conversations about products are entered into in order to advance the interests of the self. Dichters interpretation was that people are unlikely to pass on their views unless they gain something from it, and that this could be in terms of reduced perceived risk. All of this is consistent with our findings in relation to the womens group in our study, although it fails to take account of our interpretation of male patterns of interpersonal discourse. Other studies, by Coleman et al. (1966), Roselius (1971) and Buttle (1998), reinforce the claim that discussing products and services is a risk reduction strategy that can eliminate the uncomfortable feeling of exposure or doubt. Moreover, according to cognitive dissonance theory, speaking to friends and relatives about the positive qualities of a recently purchased product or service relieves tension created by the experience and confirms the consumers original judgment (Bansal & V oyer 2000). This seems to mirror the dialectic process we identified in our female subjects. None o f these studies, however, e x p l i c i t l y identified or explored g e n d e r differences. There are important lessons again for market researchers in Dichters (1966) seminal research, where he argued that consumers make productrelated comments, disclose their opinions and make recommendations in order to affirm their sense of self. As we suggested in interpreting male use of interpersonal discourse, so Dichter claimed that discussing products and services serves as a tactic to gain attention, feel loved, demonstrate insider information, denote status, show connoisseurship, connote pioneering spirit, spread the gospel and assert superiority. More tellingly in relation to our interpretation of male didacticism in interpersonal communication is the fact that social exchange theory predicts that this type of intervention is motivated by status and power needs (Gatignon & Robertson 1987). Consumers also share product, service or company experiences with loved ones as a way of expressing care, love or friendship for them. 35

And further tentative confirmation of some aspects of our analysis comes again from Dichter (1966): he demonstrated that individuals often engage in product discussion because of the personal satisfaction that can be gained from influencing the people.

8. The Implications for market research

Ethnographic methods seemed to generate some promising consumer insights, precisely because of the non-directive nature of the research instruments. Yet our most interesting data seemed to come from groups where there was some direction. Left t o their own devices, h o w e v e r , our respondents seemed to be able to provide only snippets of information that might be of interest to a brand owner, a service provider or a policy maker. From a marketers point of view, our study suggests that a consumer will engage in a d i a l o g u e (as p e r f o r m e r or audience) where there is a compelling narrative, regardless of gender. Research suggests that when we merely take crude measures of satisfaction and dissatisfaction, without allowing for the gender of the respondent and the context in which the opinion is given, the measures may be open to serious misinterpretation.

9. Conclusions and further research

This study has shown some of the potentials and frustrations of ethno- graphic research. We believe that market researchers can usefully introduce potentially biasing thematic direction to what otherwise would be an ethnographic study; indeed one of the most productive episodes in our study involved allowing respondents to choose from a menu of topics. While recognizing that our results a r e based on small samples and ad hoc methods lack some generalisability, we believe we can find some support in other areas of study. Our c o u n t e rintuitive findings, therefore, deserve some further detailed investigation. It may be that what we had been picking up was actually age r e l a t e d , with under-20s and over-60s showing different patterns of behavior. It is worth remembering that while Tannin (1990) and Gray (1993) were able to give sociolinguistic

studies a mass-market appeal, their focus was primarily on relationships and barely touched the commercial. Tannen and others have successfully taken the subject into the workplace and commented on gender and language in the context of people management (see, for example, Tannens 1994 bestselling book Talking from 9 to 5). We suggest, on the basis of this exploratory study at least, that the consumers of products, services and brands do indeed say what they mean when they are interacting with other consumers. The difficulty for a market researcher is that the words they choose may mean any number of things, depending on the gender, age and social class of the speakers and their audience. The problem is neatly summed up in Through the Looking Glass, when Alice suggests that T h e question i s whether y o u can make words mean so many different things.

6. Chrzanowska, J. (2001)

Men are focus

groups, women are group discussions. AQR Discussion Paper, online at uk/inbrief (accessed 26 September 2007). 7. Coleman, J.S., Katz, E. & Menzel, H. (1966) Medical Folklore, Innovation: A Diffusion Study. Indianapolis: Bobbs-Merrill. Croft, R. (2006) families and fear: understanding decisions through the oral consumption

tradition. Journal of Marketing Management, 22, 9/10, pp. 10531076. 8. Croft, R. & Pentucci, C. (2006) Dangling conversation: exploring the word-of- mouth behaviours of men and women. Proceedings of the Academy of Marketing Conference, Middlesex University. 9. Dichter, E. (1966) How word-of-mouth marketing works. Harvard Business Review, 44, 6, pp. 147165. 10. Gardner, M. (1960) The Annotated Alice. New York: Clarkson Potter. Gatignon, H. & Robertson, T.S. (1987) An exchange theory model 534538. 11. Gray, J. (1993) Men are From Mars, Women are From Venus. New York: HarperCollins. Hussey, J. & Hussey, R. (1997) Business Research: a Practical Guide for Undergraduate and Consumer Postgraduate Students. Basingstoke: Palgrave Macmillan. Roselius, T. (1971) Marketing, 35, 1, pp. 5661. 12. Sarantakos, S. (1997) Social Research, 2nd edn. Basingstoke: Palgrave. Stewart, J. & Logan, C. (1998) Together: Communicating Interpersonally, 5th edn. New York: McGrawHill. rankings of risk reduction methods. Journal of of interpersonal communication. Advances in Consumer Research, 13, 1, pp.

10. References
1. Albrechtsen, J. (2007) Feminism begs to differ, but unisex brain is a fantasy. The Australian, 27 September, p. 14. 2. Bansal, H.S. & Voyer, P .A. (2000) Word-ofmouth processes within a services purchase decision context. Journal of Service Research, 3, 2, pp. 166177. 3. Boddy, C.R. (2005a) Projective techniques in market research: valueless subjectivity or insightful reality? A look at the evidence for the usefulness, reliability and validity of projective techniques in market research. International Journal of Market Research, 47, 3, pp. 239254. 4. Boddy, C. R. (2005b) Groups in focus: the distinctive difference between focus group discussions and focus group interviews. Australasian Journal of Market and Social Research, 13, 2, pp. 2938. 5. Buttle, F. (1998) Word of mouth: understanding and managing referral marketing. Journal of Strategic Marketing, 6, 3, pp. 241254. 36

Applicability of SERVEQUAL Scale in Indian Retailing

N. Udaya Bhaskar
Assistant Professor, School of Management Studies, Adikavi NannayaUniversity, Rajahmundry, Andhra Pradesh

Dr. B.Raja Shekhar

Reader,School of Management Studies, University of Hyderabad, Hyderabad, Andhra Pradesh

1. Introduction
In the present day of retailing, service quality has become the basic tool for retailers to create competitive advantage and to enhance shopping experience. The quality of services significantly effect customer satisfaction, company revenues, cross selling and also repeat purchase behavior (Berry, 1986; Hummel and Savit, 1988; Reichheld and Sasser, 1990). Indian retailing is one of the fastest growing sector and ranked tenth among the largest retail markets in the world. The sector is growing at a rate of 25-30 percent per annum; revenues from this sector are expected to reach US$ 24 billion by the end of 2010. The fast pace of the Indian retail industry presents many companies with a host of daily challenges. In todays competitive environment and with the growing importance of services, delivering high quality services has become the basic retailing strategy. With the rise in competition, change in environmental factors, shift in consumer attitudes, the concern for service quality is growing. As service quality has become the key marketing strategy, it is necessary on the part of marketer to measure the service quality effectively. The most popular tool to measure service quality is SERVEQUAL, an instrument developed by Parasuran (1985; 1988). The scale has 22 items for measuring service quality in five dimensions and was initially tested in five service settings like Retail banking, Credit card services, Repair and maintenance of electrical appliances, long distance telephone services, and Title brokerage. Later on the scale has been used to measure service quality in different service settings (Ladhari, 2008), but the scale has not been tested and proved to be applicable to the emerging service settings like Apparel retailing, Furniture retailing, Jewelry retailing etc The present paper aims to study the applicability of SERVEQUAL scale in Indian Retailing and will also reviews the SERVEQUAL research in 37

terms of Definition, Measurement, reliability and validity of service quality.

2. Service Quality
The concept of quality has different meanings to different people; the product based approach sees quality as a precise and measurable variable, the manufacturing based approach focuses on conformance to internally developed specifications, the value based approach measures quality in terms of benefits against costs, the user based definitions of quality feels that, quality lies in the eyes of beholders and equates with maximum satisfaction, another transcendent approach views quality as a mark of uncompromising standards and high achievement. Parasuraman, Zeithaml and Berry, defined Service Quality as A global judgment or attitude, relating to the overall superiority of the service. The characteristics of services like intangibility, perishiability, inseparability and heterogeneity make measuring service quality indefinable and abstract. Due to this ambiguity measuring the service quality has become the biggest challenge for the service marketers. With this background Gronroos (1984) defined perceived service quality as: The outcome of an evaluation process, [whereby] the consumer compares his expectations with the service he perceives he has received, i.e. he puts the perceived service against the expected service. The result of this process will be the perceived quality of service. By the above definition, service quality is the Gap between customer expectations and perceptions. Customer expectations are standards/reference points that they bring into service experience, whereas customer perceptions are subjective assessment of

actual service experiences. The customer gap is the resultant of other four provider gaps. Gap1: Not knowing what customer expect Gap2: Not selecting the right service designs and standards Gap3: Not delivering to service designs and standards Gap4: Not matching performance to promises Customer Gap = Gap1+Gap2+Gap3+Gap4. As stated by Parasuraman et al. (1985), consumers evaluate service quality based on their perceived experiences against their expectations about the service. In order to close the customer gap it is required to close the other four gaps and measuring the customer gap is the resultant of all other gaps. In order to measure various aspects of service quality they developed a survey research instrument called SERVEQUAL, which can be applied to a broad spectrum of service industries. The scale consists of 22 perception items and a series of expectation items, reflecting five dimensions of service quality which were extracted from ten dimensions in their earlier research. The five critical dimensions of service quality are Tangibles, Reliability, Responsiveness, Assurance, and Empathy. Several research studies taken place in different countries like USA, China, Australia, Cyprus, Hong Kong, Korea and South Africa during the period from 1995 to 2007. The scale is widely used in different service industries like Health care (Carman 1990), Banking (Mels et al, 1997), Tele communications (Van der Wal et al. 2002), Retail Chains (Parasuraman et al., 1994), Information systems and also in Library services. It is evident from the earlier studies that little research was done in India related to measuring service quality and more specific to Indian retail sector which indicates the need for research in this area.

servequal scale was reliable and values ranges from 0.74 to 0.94 proving the high reliability of the servequal scale. There are basically three types of Validity: Convergent, Discriminant and Predictive validity. Convergent validity is the degree to which items on a scale which relate to the same construct and correlates strongly with one another, Discriminant validity is the degree to which those items on the scale which relate to different constructs are uncorrelated with one another. Predictive validity is the degree to which an individuals score on a scale is predictive of his/her performance on some criterion measure. The validity of an instrument refers to whether it accurately measures the attribute of interest whereas reliability of an instrument concerns whether the instrument identically produces results in repeated applications. In the studies conducted by Landrum (2007) and Carrillat (2007) the validity of the servequal scale was examined and found high predictive validity, thus the scale is fairly reliable and valid.

4. Applicability of SERVEQUAL scale in Indian Retailing

It is evident from the literature that majority of the SERVEQUAL scale applications happened outside India and little research is taking place on service quality measurement in India. The question arises here is the generic scale which was developed by Parasuran (1985; 1988) is applicable in all service settings with in India and all the 22 items were appropriate to measure service quality. Sureshchander (2001) conducted a study to identify weather Servequal and Servepref addresses the critical aspects of customer perceived service quality in India. To measure service quality in retail banking Aldlaigan and Buttle (2002) developed a scale called SYSTRA-SQ containing 21 items comprising of four dimensions like system quality, behavior quality, machine quality, service transactional accuracy. As stated by Gefen (2002) service quality dimensions comprised into three (tangibles, empathy and a combined dimension of responsiveness, reliability and assurance) when applied to online services. Later Parasuran (2005) developed E-S-QUAL 38

3. Reliability and Validity of Servequal

Reliability can simply be defined as the degree of consistency with which a scale measures a specific attribute. The value of Cronbachs Alpha coefficient is considered to test the reliability. The test value ranges from -1 to 1 and a higher positive Cronbachs Alpha indicates higher reliability. Ridah Ladhari (2009) stated

having 22 items with four dimensions like efficiency, system availability, fulfillment, and privacy for online customers. In the year 2007 Cristobal developed a scale consisting 17 items with four dimensions. From the above they concluded that measuring service quality in online service requires special dimensions as it differs from manufacturing service quality. The SERVEQUAL scale was tested in different countries having different cultural contexts. Researchers like Chi Cui (2003) applied servequal to Korean banking customers and observed that instead of five dimensions three dimensions (empathy, tangibles, and reliability/responsiveness) have fit good for their data. Later the three dimension structure was tested again by Arasli (2005) at Greek banking sector; they found that dimensionality of the scale will vary according to different cultural contexts. It was also observed that selection of the construct, items and method will play a very important role in order to reduce the bias. As stated by Gagliano and Hathcote (1994) measuring service quality in retailing differs from other service or product environments, with this a scale was developed to measure retail service quality by Dabholakar, Thrope and Rentz (1996) and coined the name Retail Service Quality Scale- RSQS which has a five dimensional structure (Physical aspects, Reliability, Personal interaction, Problem solving and Policy) they have also identified in their extended study that all these five dimensions were valid in the USA. Later The RSQS was tested by Mehta, Lalwani and Han (2000) for measuring the service quality perceptions of supermarket consumers in Singapore and found appropriate. Kim and Jin (2001) tested the RSQS across two cultural contexts of USA and South Korea and identified rather than five dimensions four dimensional structure was suitable to measure service quality. Subhashini Kaul, (2005) applied the RSQS in the Indian Retail setting with a sample of 119 apparel retail customers selected in one of Indias fastest growing cities i.e. Bangalore. She observed that rather than five dimensions of Service Quality Four dimensions were appropriate to measure Apparel Retail Service Quality. There is a need 39

to extend the study to other cities with large sample having varied demographics to explore new dimensions of retail service quality scale. So it is evident from the earlier studies that there was no generic scale to measure service quality in Indian Retailing.

5. Conclusion
Servequal scale is one of the popular tools and still is useful to measure service quality though it has some empirical shortcomings. When applying the scale to different industries, in different countries having different cultural contexts, the generic items of the scale has to modify, test, and then apply to fit according to the research need. When the scale was modified as Retail Service Quality Scale (RSQS) and applied to the Indian retailing sector found that the scale is valid and reliable but not clearly explaining all the sub dimensions of the scale unless otherwise the retailers can not take strategic decision to improve their service levels. The scale requires modification and examination of the factor structure so as to fit to the Indian retailing. The future research may be carried out on applicability of the scale in different retailing sectors like Furniture, Jewelry, Foot ware etc. and test it in different geographical places with in India with an appropriate sample size. This enables to develop and standardized new scale to measure service quality in Indian retailing.

6. References
1. Aldlaigan, A.H. and Buttle, F.A. (2002),SYSTRA-SQ: a new measure of bank service quality, International Journal of Service Industry Management, Vol. 13 No.4, pp 362-81 2. Gefen, D. (2002), Customer loyalty in e-commerce, Journal of the Association for Information Systems, Vol. 3, pp.27-51. 3. Arasli, M.G., Nataraajan, R. and Jaheera, J.S. (1999), Service quality in the banking industy: an assessment in a developing economy, Managing Service Quality, Vol.15. No.1, pp.4156 4. Berry, L.L (1986) Retail businesses are Service

usiness Journal of Retailing, Vol.62, spring, pp. 3-6. 5. Carman, James M. (1990), Consumer Perceptions of Service Quality: An Assessment of the SERVQUAL Dimensions, Journal of Retailing, 66 (Spring), 33-55. 6. Chi Cui, C., Lewis, B.R. and Park, W. (2003), Service Quality Measurement in the banking sector in South Korea, International Journal of Bank Marketing, Vol. 21 Nos 4/5, pp.191-201. 7. Cattillat, F.A., Jaramillo, F. and Mulki, J.P. (2007), The validity of the SERVEQUAL dimensions, Journal of Retailing, Vol.14, pp.60-72. 8. Cristobal, E., Flavian, C. and Fuinaliu, M. (2007), Percieved e-service quality (PeSQ): measurement validation and effects on consumer satisfaction and web site loyalty, Managing Service Quality, Vol. 17 No.3, pp 317-40. 9. Dabholkar, Pratibha, Dayle Thorpe and Joseph Rentz (1996). A Measure of Service Quality for Retail Stores: Scale Development and Validation, Journal of the Academy of Marketing Science, 24 (Winter), 3-16. 10. Gagliano K.B. and Jan Hathcote (1994). Customer Expectations and Perceptions of Service Quality in Retail Apparel Specialty Stores, Journal of Services Marketing, 8 (1), 60-69. 11. Gronroos.C (1984), A Service Quality model and its Marketing Implication , European Journal of Marketing, Vol. 18 No.4, pp. 36-44. 12. Hummel, J.W. and Savitt, R. (1988), Integrated Customer Service and Retail Strategy, International Journal of Retailing, vol.3 No.2, pp. 5-21. Mels, G., Boshoff, C. and Nel, D. (1997).The dimensions of Service Quality: the original European perspective revisited, Service Industries Journal, Vol.17 No.1, pp 173-89. 40

13. Kim, Soyoung and Byoungho Jin (2002). Validating the retail service quality scale for US and Korean customers of discount stores: an exploratory study, Journal of Services Marketing, 7 (2), 223-237 14. Landrum, H., Prybutok, V.R. and Zhang, X. (2007), A comparison of Magals service quality instrument with SERVPERF, Information & Management, Vol. 44 Bo.1,pp. 104-13. 15. Mehta, Subhash C., Ashok Lalwani and Soon Li Han (2000). Service quality in retailing: relative efficiency of alternative measurement scales for different product-service environments, International Journal of Retail & Distribution Management, 28 (2), 62-72 16. Parasuraman, A., Valarie Zeithaml and Leonard Berry (1988). SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality, Journal of Retailing, 64 (Spring), 12-40. 17. Parasuraman, A., Zeithaml, V.A. & Berry, L.L. (1985) A conceptual model of service quality and its implications for future research, Journal of Marketing, 49, pp. 41- 50. 18. Parasuraman, A., Berry, L.L. & Zeithaml, V.A. (1991) Refinement and reassessment of the SERVQUAL scale, Journal of Retailing, 67, pp. 420- 450. 19. Parasuraman, A., Berry, L.L. & Zeithaml, V.A. (1993) More on improving service quality measurement, Journal of Retailing, 69, pp. 140147. 20. Reichheld, F.F. and Sasser, W.E.Jr (1990), Zero defections: Quality comes to services, Harvard Business Review, Vol.68 No.5, pp. 105-11 21. Riadh Ladhari (2008) A Review of twenty years of SERVEQUAL research , International Journal of Quality and Service Sciences, Vol.1 No.2, pp.172-198.

22. Subhashini kaul (2005), Measuring Retail Service Quality: Examining Applicability of International Research Perspectives in India, Indian Institute of Management, Ahmedabad, Working Paper No. 2005-10-2, pp 1-19. 23 Sureshchander, G.S., C. Rajendran and T.J. Kamalanaban (2001). Customer perceptions of Service Quality A Critique, Total Quality Management, 12(1), 111-124

24. Van der Wal, R.W.E, Pampallis, A. and Bond, C. (2002), Service quality in a cellular telecommunications company: a South African experience, Managing Service Quality, Vol.12 No.5, pp.323-35.


Consumers perception on Matching Quality of Celebrity and Brand Features in Advertisement

Raja Sr. Lecturer, Dept. of Management Science, Velammal Engg. College, Chennai Dr. N. Magesh Sigma MU-Research Consultancy Sciences, Chennai 1. Introduction
Advertisements of all varieties pop up everywhere on streets, in stores and restaurants, and on public transportation. Each of these advertisements attempts to steal at least a fraction of an unsuspecting persons time to inform him or her of the amazing and different attributes of the product at hand. Because of the constant media saturation that most people experience daily, they eventually become numb to standard advertising. The challenge of the advertiser is to find a hook that will hold the subjects attention and keep them from changing the channel or turning the page. One well-used approach at differentiating advertisements is the use of celebrity endorsements. Using celebrity fame, bought or contrived, has certain advantages and risks. A celebrity-product association can capture a viewers attention, increase the publics awareness of the product, and cause consumers to purchase the product endorsed. In contrast, celebrityproducts associations can be very costly and risky based on the potentially volatile image, nature, and credibility of the personalities used. Celebrities cut through advertising clutter, hold viewer attention, contribute to brand name recognition and transfer positive qualities such as physical attractiveness and likeability to the brand (Dyson and Turco, 1998; Charbonneau and Garland, 2005). The source credibility model suggests message effectiveness depends on the endorsers perceived credibility. Celebrity combines both expertise and trustworthiness. Through the process of internalization, credible sources influence consumer beliefs, attitudes and or behaviour (Kamins, 1990; Ohanian, 1991). The source of attractiveness model proposes that message effectiveness depends on the similarity between source and receiver, source likeability and source familiarity through repeated 42 media exposure. Information from an attractive source is accepted because of the consumers desire to identify with that source (Erdogan, 1999). In the product match-up model, effective advertisement results when the messages conveyed by celebrity image are compatible with product image (Pornpitakpan, 2003). With this background, the present study was attempted to study the matching qualities of the celebrity with advertisement, brand image and consumers perception and relationship between matching qualities of celebrity and advertisement in Madurai city of Tamil Nadu.

2. Methodology
The Madurai city is purposively selected for the present study since it is the predominating trade center for South Tamil Nadu. About 120 respondents were selected by adopting simple random techniques and were interviewed. Information/data was collected by interviewing the respondents by using a pre-tested, well-structured interview schedule. The data and information collected pertains to the year 2009-10. The descriptive statistics, frequency analysis and mean score and ranking were carried out to draw meaningful interpretations.

3. Spearmans Rank Order Correlation

In order to identify the relationship between matching qualities of celebrities and advertisement in celebrity endorsement, the Spearmans rank order correlation was worked out and the formula is; r=1 6 d2

( n-(n -1) )

Where, d = Difference in Ranks n = Number of Pairs.

4. Chi-Square Test In order to study the differences between brand features and perception of the consumers, the Chi-Square Test has been employed and the formula is:
2 =

5. Results and discussion

The general and socio-economic characteristics of consumers were analyzed and the results are presented in Table-1. The results indicated that the majority of the consumers (64.16 per cent) were the age group of 21-30 years followed by less than 20 years and 31-40 Years. About 45.80 per cent of were married while 79 per cent were males. The majority of consumers (49.17 per cent) were postgraduates and about 30 per cent of consumers were under-graduates. The monthly income of consumers were ranging from Rs. 0-5000(85 per cent) followed by Rs.5000- 10000(8.34 per cent). About 70.83 per cent of the consumers have a family size of 4-6 members followed by less than 3 members (25.00 per cent).

Where O = Observed Frequency in each category E = Expected Frequency in the corresponding category d.f = Degree of Freedom (n-1) 2 = Chi Square

Table-1: Socio-Economic Demographic Characteristics of Consumers

Respondents(N=120) Variables with Category Number Age < 20 Years 21-30 Years 31-40 Years 41-50 Years > 51 Years Gender Male Female Educational Qualifications Secondary Higher Secondary UG PG Others 8 12 36 59 5 6.66 10.00 30.00 49.17 4.17 43 79 41 65.80 34.20 16 77 14 8 5 13.33 64.16 11.67 6.67 4.17 Marital Status Married Unmarried Family Size <3 4-6 >6 30 85 5 25.00 70.83 4.17 55 65 45.80 54.20 Per Cent Monthly Income(Rs) 0-5000 5001-10000 10001-15000 > 15000 102 10 4 4 85.00 8.34 3.33 3.33 Variables with Category Number Per Cent Respondents(N=120)

The matching qualities of the celebrity with advertisement were analyzed and the perceptions of the consumers are presented in Table-2. The confident of the celebrity in the advertisement, easy identity of celebrity, worthiness and similarity were the main

qualitative attributes that match the celebrity with advertisement. Besides, advertisement, product-match, positive image and celebrities behaviour were also the important factors that influence the matching qualities of the celebrity with advertisement.

Table-2 Matching Qualities of the Celebrity with Advertisement

Attributes Similarity Identity Confident Worthy Brand Scandal Positive Image Attractiveness Product match Advertising Mean Ranking 0.93 1.21 1.34 1.09 0.98 0.90 0.87 0.86 0.84 0.82 Order of Importance 5 2 1 3 4 6 7 8 9 10

The relationship between matching qualities of celebrity and advertisement, the Spearman rank order correlation was computed and the results are presented in Table-3 The results showed that similarity was positively correlated with identity and confident at one per cent level of significance while similarity was negatively associated with positive image and attractiveness at one per cent level of significance.

The attribute of identity was positively correlated with confident while it was negatively associated with favourite, scandal and positive image at one per cent level of significance and it was negatively correlated with attractiveness at five per cent level of significance. The confidence was positively correlated with brand, favourite and scandal while it was negatively associated with attractiveness, perfect match and celebrity value at one per cent level of significance.

Table -3 Relationship between matching qualities of Celebrity and Advertisement- Spearman Rank Order Correlation
Similarity Similarity Identity Confident Brand Favourite 1.00 0.14** (0.00) 0.35** (0.00) -0.06 (0.20) -0.02 (0.65) 1.00 0.29** (0.00) 0.03 (0.50) -0.13** (0.00) 1.00 0.14** (0.00) 0.11** (0.01) 1.00 0.09** (0.04) 1.00 Identity Confi dent Brand Fav ourite Scan dal Positive Image Attrac tiveness Perfect Match Celebrity Value


Scandal Positive Image Attrac tiveness Perfect Match Celebrity Value

0.08 (0.08) -0.13** (0.03) -0.16** (0.00) -0.00 (0.95) -0.01 (0.88)

-0.14** (0.00) -0.13** -0.11* (0.02) 0.00 (0.99) 0.07 (0.14)

0.13** (0.00) 0.03 (0.52) -0.27** (0.00) -0.10** (0.03) -0.17** (0.00)

0.17** (0.00) -0.03 (0.57) 0.02 (0.65) -0.06 (0.15) -0.20** (0.00)

0.14** (0.00) 0.06 (0.18) -0.08 (0.07) -0.13** (0.00) -0.17** (0.00)

1.00 -.01 (0.75) -0.09* (0.03) -0.03 (0.52) -0.15** (0.00) 1.00 0.06 (0.17) 0.10* (0.02) 0.01 (0.83) 1.00 0.19** (0.00) 0.36** (0.00) 1.00 0.32** (0.00) 1.00

Note: ** indicates significance at one per cent level. *indicates significance at five per cent level The brand was positively associated with favorite and scandal while it was negatively correlated with celebrity value at one per cent significance level and the favorite was positively correlated with scandal and it was negatively associated with perfect match and celebrity value at one per cent level of significance. The scandal was negatively correlated with attractiveness at five per cent level of significance and it was also negatively associated with celebrity value at one per cent level of significance. The positive image was positively correlated with perfect match at five per cent level of significance. The attractiveness was positively correlated with perfect match and celebrity value at one per cent level of significance while perfect match and celebrity value were positively associated at one per cent level of significance. The relationship between brand features and consumers perception was analyzed by computing Chi-Square test and the results are presented in Table-4 The results showed that the Pearson Chi-Square value was 0.0196 and the likelihood ratio was 193.365 indicating that the test statistic was significant at five per cent level of significance thus, there was a significant differences among the consumers perception of the consumers about brand features as noticed by them.

Table -4 Brand Features and Consumers Perception -Chi Square Test

Asymp. Sig. (2-sided) .000 .000

Value Pearson Chi-Square Likelihood Ratio N 0.0196 193.365 2500

df 20 20

6. Conclusion
The forgoing analysis indicated that the majority of the consumers (64.16 per cent) were the age group of 2130 years. About 45.80 per cent of the consumers were married while 79 per cent were males. The majority of consumers were postgraduates and about 30 per cent of consumers were under-graduates. The monthly income of consumers were ranging from Rs. 0-5000(85 per cent) followed by Rs.5000- 10000(8.34 per cent). The results indicated that about 35.84 per cent of consumers occasionally visited the market followed by fortnightly (30 per cent) and about 28.33 per cent of the consumers visited the market at least monthly once. The similarity of celebrity was positively correlated with identity and confident at one per cent level of significance while 45

similarity was negatively associated with positive image and attractiveness at one per cent level of significance. The attribute of identity was positively correlated with confident while it was negatively associated with favourite, scandal and positive image at one per cent level of significance and it was negatively correlated with attractiveness at five per cent level of significance. The confidence was positively correlated with brand, favourite and scandal while it was negatively associated with attractiveness, perfect match and celebrity value at one per cent level of significance. In overall, the brand features of celebrities help me to remember the brand, creditability of the brand, quality of the brand, advertisement of the brand and price of

its products were noticed by the consumers and there was a significant differences among the consumers perception of the consumers about brand features as noticed by them. The consumer looks for a variety of aspects from the endorsement like the credibility and likeability of the endorser. When one endorser endorses many brands, then the recall of the endorsement depends entirely on the power of the brand. There are definitely some brands that go unnoticed and the recall for those stands is at a bare minimum. The company can heighten the advertising content because that grabs a special place in the mind space of the consumer. Since celebrities have the impetus to market the product quickly, they have the advertisers running behind them for various benefits including brand credibility, creating interest; thereby, creating a win-win situation.

8. Erdogan (1999), Celebrity Endorsement: A Literature Review, Journal of Marketing Research, 15: pp. 291-314. 9. Jagdish, A. and Wagner, K.A. (1995), The Economic Worth of Celebrity Endorsers: An Event Study Analysis, Journal of Marketing, 56(3):pp. 56-62. 10. Kamins, Michael A.(1990), An Investigation into the Match Up Hypothesis in Celebrity Advertising: When Beauty May be Only Skin Deep, Journal of Advertising 19(1) : p. 413. 11. Louie, T.A., Obermiller, C. (2002). Consumer Response to a Firms Endorser (Dis) Association Decisions, Journal of Advertising, 31( 4): pp. 41-52. 12. Ohanian, R.(1991), The Impact of Celebrity Spokespersons. Perceived Image on Consumers Intention to Purchase, Journal of Advertising Research, 31(1): pp. 46-54. 13. Pornpitakpan, Chanthika (2003), Validation of the Celebrity Endorsers Credibility Scale Evidence from Asians, Journal of Marketing Management, 19 (1/2): pp.179 - 195. 14. Saleem, Farida(2007), Effect 0f Single and Multiple Celebrity Endorsement on Low Involvement and High Involvement Product Advertisement, European journal of social sciences, 5(3): pp.125-132. 15. Sternthal, Brian, Ruby Roy Dholakia, and Clark Leavitt(1978), The Persuasive Effect of Source Credibility: Tests of Cognitive Response, Journal of Consumer Research, 4: pp.252-260. 16. Tripp, C., Jensen, T.D., Carlson, L(1994). The Effects of Multiple Product Endorsements by Celebrities on Consumers Attitudes and Intentions. Journal of Consumer Research,20:pp.535-547. 17. Walker, M.; Langmeyer, L., Langmeyer, D. (1991), Celebrity Endorser: Do You Get What You Pay For?. The Journal of Services Marketing, 6: pp.35-42. 18. Zafer Erdogan (2001), Selecting Celebrity Endorsers: The Practitioners Perspective, Journal of Advertising Research, 41 (3): p 39. 46

6. References
1. Agrawal,J and Kamakura.W(1995), The Economic Worth of Celebrity Endorsers: An Event Study Analysis, Journal of Marketing, 59: pp. 56 62. 2. Basil, Michael(1996), Identification as a Mediator of Celebrity Effects, Journal of Broadcasting and Electronic Media, pp. 478495. 3. Buhr, T A, Simpson, T L and Pryor, B (1987), Celebrity Endorsers Expertise and Perceptions of Attractiveness, Likability, and Familiarity , Psychological Reports, 60:pp. 1307 - 1309. 4. Caballero, M.J., Lumpkin, J.R., and Madden, C.S. (1989),Using Physical attractiveness as an Advertising Tool: An Empirical Test of the Attraction Phenomenon, Journal of Advertising Research, 29 (4):pp. 16-22. 5. Charbonneau, J. and Garland, R. (2005), Talent, Looks or Brains? New Zealand Advertising Practitioners views on Celebrity and Athlete Endorsers, Marketing Bulletin, 16: pp. 1- 10. 6. Dawra, Jogrook and Katyal, Kanupriya (2006), Brand Celebrity Conformance, The ICFAI Journal of Brand Management, 3(2): p. 6. 7. Dyson, A. and Turco, D (1998), The State of Celebrity Endorsement in Sport, The Cyber Journal of Sport Marketing, 1 (2): pp. 34 - 35.

Customer Loyalty on Telecom Mobile

P.S. Rajeswari, Assistant Professor Dr. P. Ravilochanan, Professor School of Management, Srm University Kattankulathur 1. Introduction
The Indian telecommunications Industry is one of the fastest proliferating sector in the World and India is projected to bench the second largest telecom market globally by 2011.Indicators are clearly representing the increased competition and that induced the customers to hop for low cost options . This in turn entangled with disloyalty and as the industry saturates, it become imperative for the mobile operators to shift their focus from rapid acquisition strategies to strategies which helps to maintain and enhance margins from existing customer base. that influence customer churn. It enables the Telco to understand which customer is likely to leave and why, which in turn can help the company take the necessary measures to counter it. Subject Area: Customer loyalty can be determined through the customer profile, level of satisfaction, and their buying behavior with regard to Indian mobile telecom providers.

Research Methodology 4. Research problem

Indian mobile telecommunication is facing very high churn and disloyalty in the market inspite of its tremendous growth. It is highly critical to analyze the factors influencing customer loyalty and their level of satisfaction on the cellular providers.

2. Impact of the problem

Though many service industries are affected by the churn phenomenon the problem is extremely acute in the telecom industry, with customers joining and quitting in short periods. According to research firm Gartner, Indias churn rate is anywhere between 3.5 percent to 6 percent per month, one of the highest in the Asia-Pacific region. Considering that the cost of acquiring a new customer is as high as Rs 3,000, the losses are immense.

5. Research purpose
The purpose of this research is to determine customer loyalty by identifying the operational factors that are influencing customer buying behavior, level of satisfaction with regard to Indian Mobile telecommunications.

3. Customer loyalty and its significance

Research is all about Customer loyalty on Indian cellular market, is a process by which data from customer behavior is aggregated and analysed to gather the purpose and factors influencing them to be loyal in their purchasing pattern. Recent statistics depicts very high churn in this Industry, is mainly rooted by the Youth segment Hence this study of customer loyalty is mainly focusing on Youth segment to lead not only to better and more productive customer relations in terms of sales and service but also to improvement in supply chain management (lower inventory and speedier delivery) and thus lower costs and more competitive pricing. It facilitates to assess the Customer profitability index and Customer lifecycle, Customer loyalty enables an operator to gain a better understanding of the variables 47

6. Research Objective
Recent trend line shows the growth and prospects of youth marketing and especially in the field of Telecommunications, they are marking tremendous development. At the same time indicators are highlighting very high churn rate in this segment. Hence this Research focuses on Youth segment and Research objectives are listed below. 1. To identify the factors influencing the customer loyalty with respect to Indian mobile telecommunications. 2. To determine the level of customer satisfaction with regard to their perceived product quality, services and values.

7. Research Design
Research design adopted for this study is Exploratory type of research.

Excel were used for statistical analysis to find out the relationship between the customer loyalty and our data. List of Variables taken for the Data Analysis: Totally 10 Dependent variables and 13 Independent variables are taken for the analysis and they are

8. Data collection
The research work is in need of first hand information and also secondary information so as to assess the changes happening in customer satisfaction.. So Primary and Secondary data are collected for this survey.

15. Dependent variables

1. Mobile operators 2. Service quality-quality of phone calls 3. Service quality-quality of coverage 4. Service quality-quality of SMS 5. Service quality-quality of network 6. Service quality-quality of convenience & reliability 7. Service quality-quality of service center and hotline 8. Service quality-rate of pricing for given quality 9. Service quality-score accumulation plan, bonus 10. Service quality-Advertisement

9. Primary Data
Survey method was adopted for collecting the primary data. As mentioned above in the research objective, youth segment falling under the age group of 18 to 34 are selected as the respondents for the research. Questionnaire was designed in the structured objective pattern focusing on the Research objectives.

10. Secondary Data

The secondary data had been collected from the previous Research findings, scholarly reports, telecommunication reports, respective marketing departments and through the different sources of literature such as journals, articles etc.

16. Independent Variables

1. 2. 3. 4. 5. 6. 7. Satisfactory level over performance-in general Satisfactory level over performance-customer services Satisfactory level over performance-billing system /RCV Satisfactory level over performance-tariff rates Satisfactory connectivity Satisfactory level over performance-network coverage Satisfactory level over performancesubscription easiness 8. 9. 10. 11. 12. 13. 48 Satisfactory level over performance-SMS, MMS, VAS Satisfactory level over performance-offers, discounts10. Satisfactory level over Performance-internet services Satisfactory level over performance-ringtones, caller tones Satisfactory level over performance-social responsibility Satisfactory level over performance-ad and other promotional activities level over performance-call

11. Sampling plan

Simple Random sampling has been adopted by the researcher.

12. Sample size

For academic and effective result, the targeted customer base of 200, falling under the age group of 18 to 34 is selected for sampling.

13. Pilot study

The questionnaires were distributed randomly to 30 of the samples.

14. Process of data analysis

In order to analyze all the data collected, SPSS 18.0 and

Table 1 Multiple Regression Analysis

Dependent variables 1.Mobile operators 2. Service quality of Network coverage 3. Service QualityQuality Of SMS Independent Variables Satisfactory level over offers ,Discounts Satisfactory Level Over PerformanceNetwork Coverage Satisfactory Level Over PerformanceSMS,MMS a)Satisfactory Level Over PerformanceTariff Rates b) Satisfactory Level Over PerformanceInternet Services a)Satisfactory Level Over PerformanceInternet Services b)Satisfactory Level Over PerformanceBilling System /Rcv 5.991** .278 3.685** 7.913** .403 5.652** F value 4.538* Beta coefficients .150 t value 2.130*









4. Service QualityQuality Of Network

5. Service QualityQuality Of convenience & Reliability



6. Service QualityQuality Of Service Center And Hotline 7. Service QualityRate Of Pricing For Given Quality 8. Service Quality-Score Accumulation Plan, Bonus 9. Service QualityAd

Satisfactory Level Over PerformanceCustomer Services Satisfactory Level Over PerformanceInternet Services Satisfactory Level Over PerformanceRingtones,Callertones Satisfactory Level Over PerformanceAd And Other Promotional Activities













*at 0.05significance level ** at 0.01 significance level 49

Step 1:-Performed correlation, by taking each one of the dependent variables with all the Independent variables and list of Independent variables extracted from the correlation matrix whose value fell below 0.5 with statistical significance. This is mainly due to avoid multicollinearity among the predictor variables, as these extracted Independent variables are subjected to Multiple Regression analysis. Step 2:-By performing Multiple Regression for each Dependent variable, the list of Independent variables are selected as per the significance.

change in billing service will pose the impact of 0.27 unit change in the Service quality of convenience .Hence for post-paid segment marketers should facilitate billing system for customer accessibility and precision. 6. For every unit change in the satisfactory level on Customer services and Ringtones influencing 0.2 unit change in their service quality .This indicates that customer services and product utilities should get strengthened for attaining customer loyalty 7. Each unit of satisfactory level on advertisements influences 0.16 unit of change on service quality implies Teleco should concentrate on Advertisements to create high loyalty.

17. Interpretation
1. For every unit of change in discounts and offers or promotions, affects 0 .15 unit of change in the mobile operators .Hence Mobile operators can increase their customer loyalty rate and implement Retention strategy based on Offers, Discounts and with other promotional tools. 2. Satisfactory level on Quality of Network coverage influences for its every one unit with 0.469 units of change in the service quality of Network. Therefore Operators should take necessary steps to focus mainly on quality of the network to increase customer loyalty, 3. Every single unit change of Satisfactory level over the performance of value added services influences 0.249 unit change in the service quality of VAS .Since the market taken for the Research is youth, Telecom companies should concentrate on Value added services by giving offers and promotional Recharge coupons with good quality. 4. Service quality of Network is highly influenced by satisfactory level on Internet services and with their tariff rates. Since for every unit of change in the satisfactory level of internet services and with their tariff rates, inducing 0.4 unit and 0.2 unit of change in the service quality of network respectively, marketers have to equip themselves to bridge up the customer mind gap. 5. From the table it is clear that for every unit 50

18. Recommendations
Based on the above analysis, Telecom marketers should prioritize and concentrate on Quality of network coverage and internet services. Web oriented loyalty programs and promotional schemes to be introduced to increase customer loyalty. Marketers should give importance to enrich Customer services, value added services and adding promotional offers for SMS, MMS etc. The fact that youth, especially teens, are the biggest users of SMS and MMS services in markets is drawing increasing attention from marketers. Mobile marketing campaigns for youth audiences are to be devised for everything ranging from new product launches and mobile coupons to wireless community and mobile auctions Joint promotional campaigns can be engaged to ascertain customer loyalty. Successful marketing to youth should entertain and empower, be very responsive to their queries and needs, give them free reign in designing Web content, and engage them in quick-win SMS-based competitions. Marketers can add benefits with RCVs and in Advertisements to capture and sustain customer loyalty.

19. Conclusion
The mobile industry of India is undergoing a vibrant change and the mobile number portability is paving the pathway for the subjective Research. This study is one such attempt to enhance the exposure on customer loyalty and it is also expected to facilitate the marketers

to design the essential operational parameters for designing the retention strategies and to enhance Customer Experience management.

20 References
ACSI: Fornell, C. Johnson, M. D., 1996. The

American customer satisfaction index: Nature, purpose, and findings, Journal of Marketing, 60. 7-19 Ahn, J. H., Han, S. P., Lee Y. S., 2006. Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry, Telecommunications Policy, 30, 552-569.


Customer Shopping Experience in Malls With Entertainment Centres in Chennai

D. Anuradha Asst. Professor, MBA Dept, Vel Tech High Tech Dr.Rangarajan Dr.Sakunthala Engineering College, Chennai & Research Scholar, Anna University 1. Introduction
Today the word Mall has become a part of people living in Metro and big cities. Mall culture is mushrooming across the countrys landscape at a faster pace. Few years before people felt that Malls are for upper middle class people but now Mall mania is common among all people .Also that earlier people had to make a choice among shopping stores or movies but today all that is available under one stop shop with a good shopping experience. Today people believe that the malls are the best place to shop or hang out. Name Spencer Plaza Abirami Mega Mall Alsa Mall Chennai Citi Centre Prashanth Real Gold Tower Ampa Mall Express Avenue The Laurel Mall Mayajaal Isphaani Centre Coromandel Mall Marg Junction Phoenix Market City Velachery Gold Souk Grande Vandalur Grand Velachery Mall Riverside Chandra Metro Mall Prestige Forum Vadapalani Matrix Mall Saligramam Prestige Forum Teynampet Ramee Mall Ten Square Mall Ozone Mall Challa Mall Indi Mall Brook Field Plaza Year 1863 2003 1998 2006 2008 2009 2010* 2010* 2003 2005 2011 2012 2011 2012 2011 2011 2010 2010 2011 2012 2010 2011 2011 1996 2009 52 According to the report by Northbridge Capita, Indian retail industry is expected to grow up to US $833 billion by the year 2013 and reach US $1.3 trillion by the year 2019 at a CAGR 10%. In India the consumer spending pattern has enormously increased and in the last few years, the consumer spending in India has raised up to 75%. As a result of increase in disposable income, Indian retail industry is expected to grow. In fact, malls play a major role in consumers lifestyle (Terblanche, 1999). They have become not only a centre for shopping but also a community centre for social and recreational activities (Ng, 2003). Stores, food courts, restaurants, cinemas, childrens play areas, interactive entertainment, social use areas, relaxation spaces and promotional areas are now major components of any mall (Terblanche, 1999). It has a multiple role in modern culture, with a constant change in its appearance. The concept of globalization has made the customers expose to different types of brands. Also that Indians travel abroad for work and business has made them experience different lifestyle, products and services available there. This has led the retailers in India to develop quality of life in India with a provision of modern retailing. And so, there are many malls upcoming in Chennai trying to match international outlook (The list of malls in Chennai is provided) The Mall growth shows the economic prosperity of the country. The growth in retailing has led to the competition between the malls and the decision of which mall to choose since all the malls have apparent similarity in terms of stores. With the growing number of malls, shoppers tend to be more selective. They are more likely to patronize malls that are more attractive and have a

wide variety of stores and merchandise that match their preferences (Mohammed Ismail El-Adly) . Therefore, it is essential for mall managers to know the extent to which their malls are attractive to their shoppers (Wong et al., 2001). However, mall attributes that are attractive for some shoppers are not necessarily attractive for others. Therefore, the purpose of this paper is to provide an insight of the role of external and internal variables in influencing the choice of Mall and shopping behavior.

Clulow (2004), Retail concentration: a comparison of spatial convenience in shopping strips and shopping centres, the findings yielded three important insights (1) The shopping centre was found to offer consumers greater spatial convenience (2) the findings add support to the notion that the demise of the shopping strip could be linked to its inability to satisfy the needs of a convenience-oriented society. (3) While the shopping strip may be at a competitive disadvantage in terms of spatial convenience, market mechanisms.

2. Review of Literature
Intensive efforts have been made to find the relevant studies in customer shopping experience in shopping malls with entertainment centres. Only a limited study is available in this field especially in India. A summary of literature reviewed is reported here. Machleit A. Karen, Sevgin A.Eroglu (2000), the findings indicate that the broad range of emotions felt in the shopping context vary considerably across different retail environments. They also show that the Izard (Izard, C. E.: Human Emotions, Plenum, New York. 1977) and Plutchik (Plutchik, R.: Emotion: A Psycho evolutionary Synthesis. The findings indicate that in the specific context of the shopping experience, across the retail environments. The Izard measure contains many negative emotion types and may be more appropriate for studies that look at the unpleasant, rather than the pleasant, aspects of shopping. The Plutchik emotion types of expectancy and acceptance also may be particularly relevant in studies of salesperson interactions with shopper. Taylor Lee Susan and Robert M.Cosenza (2002), Profiling later aged female teens : Mall shopping behaviour and clothing choice ,the study was conducted to examine shopping choice behaviour of an important and viable segment of teen market called, Later aged female teen. The results revealed that typical later aged female teen made right choice especially for clothing products. Finally the groups desire to stay and shop at the local mall seemed to be a function of the mall composition and excitement. Reimers Vaughan and Val 53 Michon Richard, Jean-Charles Chebat and L.W. Turley (2005), Mall atmospherics: the interaction effects of the mall environment on shopping behavior, the final results are that Ambient odors positively influence shoppers perceptions only under the medium retail density condition. Also that mood has little direct effect on the perception of product quality. Wesley Scarlett, Melody LeHew, Arch G. Woodside (2006), Consumer decision-making styles and mall shopping behavior: Building theory using exploratory data analysis and the comparative method . The result is that gender is prime antecedents associating with CDM styles i.e. Demographics moderate the influence of consumer decision-making styles on planned expenditures. Preez Du R., E.M. Visser and L. Zietsman (2007), Profiling male apparel consumers : Lifestyle, shopping orientation, patronage behaviour and shopping mall Michon Richard and Jean Charles Chebat (2004), Cross-cultural mall shopping values and habitats - A comparison between English- and French-speaking Canadians, the findings indicate that French are less likely than English shoppers to use the mall for other activities than buying goods and services. Haytko L. Diana and Julie Baker (2004), Its all at the mall: exploring adolescent girls experiences, this study provides insight into young girls patronage behaviors and motivations, the results indicate five characteristics of the mall environment influenced the girls perceptions of their experiences: comfort, safety, retail mix, accessibility and atmosphere.

behaviour .The results of the study are Male apparel consumers differ in terms of price ,quality, selection of shopping mall, they were also media-oriented. Ofir Chezy and Itamar Simonson (2007), The Effect of Stating Expectations on Customer Satisfaction and Shopping Experience. The findings of the research suggest that stated expectations tend not to be met, and explicitly stating expectations influences the likelihood that post experience evaluations would be lower than they would have been had the participants not articulated their expectations. Michon Richard, Hong Yu and Donna Smith (2008), The influence of mall environment on female fashion shoppers value and behaviour, the results indicate that mall atmospherics has no or little effect on the utilitarian value of low- or high-fashion oriented shoppers. Rajagopal (2008) has focused on the impact of growing congestion of shopping mall in urban areas on shopping conveniences and shopping behavior. The findings reveal that the perspectives of shopping mall ambience and shopping satisfaction effectively become a measure of retailing performance, customer attraction and propensity to shop for urban shoppers. The above review gives an understanding that only limited systematic attempt has been made across the world on the select dimensions of the shopping behavior of customers in shopping centres. This is so in India, where no study that focused directly on the issue, shopping experience in malls.

4. Objectives of the Study

The study has the following objectives: To study the profile of the shoppers To determine the relative importance of criteria which influence the overall attractiveness of mall. To assess the reasons for visiting the mall and their expenditure pattern To propose a model depicting Shopping Mall attractiveness

5. Methodology
Most of the previous research on malls with entertainment centers, focused only on one mall, this study has attempted to conduct research across 2 different malls in Chennai. The malls include Express Avenue and Citi Centre in Chennai. Both the malls fit commonly in terms of varieties of entertainment offered such as theatres, rides for children and shopping outlets. The survey instrument used is structured personal interview questionnaire. Interviews was conducted from a random sample of mall shoppers from each of these malls. The questions focus on the following areas Distance traveled to reach the mall, reasons for visit, whether the respondent had visited the mall earlier, amount of time spent/ would like to spend in the mall, opinion about the food court/ theatre/stores, Opinion about the mall atmospherics, etc. The questionnaire was distributed among 115 shoppers who visited the mall; out of this 93 completed questionnaires have been received. As such, the total sample size is 93. The collected data has been processed using percentage, cluster and factor analysis. Likerts scaling technique was used wherever necessary

3. Research Problem Identified

The purpose of this paper is to assess customer shopping experience in malls with entertainment centres in Chennai. This research aims to explore the shopping experience of customers at malls with entertainment centres visit them due to the availability of large scale entertainment centres. The purpose of this paper is to provide an insight of the role of external and internal variables in influencing the choice of Mall and shopping behavior. 54

6. Result and Analysis

a) Profile of the Shoppers: - The profile of the sample respondents is summarized in the following Table no.1

Table No.1
Demographic Age > 18 yrs 19-30 yrs 31-40 yrs 41-50 yrs 51-60 yrs 61 & older Gender Male Female Marital Status Single Married Purpose of Mall Visit Shopping Get-Together with Friends/Relatives Entertainment To spend time Business Travel to the Mall Bus Bike Car Auto / Cal Taxi Others Shopping Companion Alone Companion Shopping Frequency (per month) 1-1 time 2-3 times 4-5 times 6-7 times More than 8 times Expenditure Pattern at Malls 10,001 30,000 30,000 60,000 60,000-1,00,000 1,00,000 & above b) Attractiveness & Reasons for visit to Mall The results reveal the attractiveness of the Shopping mall with entertainment centres. To understand the customer shopping experience at shopping malls, the shoppers in both the malls (Citi Centre and Express Avenue) were asked to mark the reasons why they prefer a shopping 55 Number %

06 41 31 8 5 2 41 52 62 31 24 21 27 19 2 09 39 32 12 1 9 84 21 42 18 10 2 Less than 10,000 51 35 6 1 Nil

6% 44% 34% 9% 5% 2% 44% 56% 71% 29% 26% 23% 29% 20% 2% 9% 43% 34% 13% 1% 9% 91% 23% 45% 19% 11% 2% 55% 38% 6% 1% -

mall for shopping instead of independent outlet. The reasons identified were (in the order of preference): Shopping ambience, Availability of different types of shops, Entertainment offered at Malls, Parking facility, Ease of shopping, Good product quality, Pride and Prestige attached shopping.

The different types of stores visited by shoppers in the Mall apart from the entertainment centres like multiplex theatre, snow bowling, video games are: Apparel store followed by food Services, leather stores, fashion stores, consumer service, professional services, electronic stores, departmental stores, home ware and so on. Internal Variables affecting shopping experience at shopping malls The Internal Variables influencing shopping experience include : Entrance, Exterior Display, Architectural style, Surrounding stores,

Address and Location, Parking availability, Traffic and Congestion, Height, Size and colour of building External Variables affecting shopping experience at shopping malls The External Variables influencing shopping experience include: Flooring/ Carpeting / Painting, Lighting /Music / Scent, Merchandise, Temperature, Cleanliness, Restroom and waiting area. Factors influencing opinion on shopping experience at malls with entertainment centres

Table No.2
Factors and Items Loadings

Factor 1 : Shopping Ambience 1. Pleasant Atmosphere Of This Mall 2. Parking Facility 3. Cleanliness, Lighting and Temperature 4. Address and Location of the Mall 5. Restroom and Waiting area 6. Lift and other Facilities Factor 2 : Layout of Store 1. Ease Of Locating The Mall 2. Overall Convenience Of The Mall 3. Ease of locating the stores 4. Easy access to restrooms 5. Easy access to food court 6. Easy to get around and shop Factor 3 : Variety of Shops 1. Number Of Stores In This Mall 2. Quality of stores 3. Price offered by retailers in the store 4. Fashionability of merchandise Factor 4 : Service offered at Mall 1. ATM , Banking And Other FOREX Facilities 2. Quality of Multiplex Theatre 3. Childrens Play area Factor 5 : Design 1. Architecture is attractive 2. Attractively decorated Factor 6 : Desire to Stay in Mall 1. Enjoy spending time in this mall 2. Felt a sense of adventure 56

0.78 0.84 0.61 0.91 0.80 0.61 0.65 0.75 0.84 0.68 0.61 0.71 0.81 0.84 0.62 0.60 0.92 0.90 0.61 0.60 0.62 0.86 0.81

The dimensions according to which the consumers evaluate the shopping experience at shopping malls with entertainment centres are: Shopping Ambience, Layout of Store, Variety of shops, Service offered at Mall, Design, Desire to stay in Mall, if any. These dimensions describe the factors to which the shoppers evaluate their shopping experience at large shopping malls such as Citi Centre Mall and Express Avenue Mall with entertainment centres in Chennai.

purpose, and they spend additional time at food court, stores in the mall (Salil, 1997). The findings are in supportive of the similar studies across the world. The marketing strategists has to concentrate on the five factors identified in this study such as : Shopping ambience, Layout of the store, Variety of shops, Service offered at Mall, Design, Desire to stay in Mall. The study has the following limitations in terms of one location considered for the study that too with a limited sample size. Therefore generalization of the findings requires enough caution. The researcher recommends that the study may be extended in the following lines: by including large number of samples; covering all the major cities in India; The comparative number of malls may be increased.

7. Conclusion, limitations and directions for future study

The study enables to conclude that the shoppers visit shopping malls with entertainment centres for making use of all facilities under one roof. This indicates that shoppers visit the malls for social and entertainment

Shopping Model


1. Wesley Scarlett, Melody Lehew, Arch G.Woodsire. Consumer decision-making styles and mall shopping behavior: Building theory using exploratory data analysis and the comparative method Journal of Business Research 2006; 535548 2. Michon Richard, Jean-Charles Chebat Crosscultural mall shopping values and habitats A comparison between English- and Frenchspeaking Canadians. Journal of Business Research2004; 883-892 3. Taylor Lee Susan, Robert M.Cosenza. Profiling later aged female teens: mall shopping behaviour and clothing choice. Journal of Consumer Marketing 2002. 393-408 4. Haynes Joel. Consumer shopping experience in Malls with large scale entertainment centres. The Mid-Atlantic Journal of Business. 1997. pp.153 5. Anonymous (2000), Canadian shopping centres head in new direction: Canadian centres need novelty, main street retail to capture youth sales, Canadian Appraiser, Vol. 44 No. 1, pp. 334. 6. Darden WR, Reynolds FD. Shopping orientations and product usage rates. J Mark Res 1971;8:505 8 (November). 7. Deighton J. The consumption of performance. J Consumerism Res 1992;19:36272 (December). 8. Areni CS, Kim D. The influence of background music on shopping behavior: classical versus topforty music in a wine store. In: McAlister L,

9. Rothschild ML, editors. Advances in consumer research 1993. Provo (UT): Association for Consumer Research; 1993. p. 336 40. 10. Areni CS, Kim D. The influence of in-store lighting on consumers examination of merchandise in a wine store. Int J Res Mark 1995;11(4): 117 25. 11. Areni CS, Duhan DF, Kiecker P. Point-ofpurchase displays, product organization, and brand purchase likelihood. J Acad Mark Sci 1999;27(4): 428 41. 12. Babin BJ, Darden WR. Consumer self-regulation in a retail environment. J Retail 1995;71(1):47 70. 13. Babin BJ, Hardesty DA, Suter T. Color and shopping intentions: the intervening effect of price fairness and perceived affect. J Bus Research 2003;56(July):541 51. 14. Bagozzi RP. Advanced methods in marketing research. Cambridge (MA): Basil Blackwell; 1994. 15. Babin BJ, Attaway JS. Atmospheric affect as a tool for creating value and gaining share of customer. J Bus Res 2000;49(2):91 100. 16. Babin BJ, Darden WR, Griffin M. Work and/or fun: measuring hedonic and utilitarian shopping value. J Consum Res 1994;20:64456 (March). 17. Alexandris, K., Kouthouris, C., Andreas, Meligdis, 2006. Increasing customers loyalty in a skiing resort. International Journal of Contemporary Hospitality Management 18 (5), 414.


Drivers of New Product Success

Prof. K. Vijayan Valliammai College of Arts & Science Dr. Jayshree Suresh Dean, School of Management, SRM University, Kattankulathur

1.Introduction Objective
The following are the objectives of the study. 1. To identify factors that are antecedents and predictors of new product success. 2. To determine the impact of factors identified on the success of selected new products. 3. To examine the success of products with reference to FMCG and is consumer durable company. Null Hypothesis : There is no difference in the means of each of the drivers of new product success between company A and B.

Repackaged, price change and new brand. (C. Merle Crawford, 1987) B) New Product by product characteristics 1. Performing an entirely new function. 2. Offers improved performance of an existing function 3. A new application of an existing one 4. Offers additional functions 5. An existing product offered to a new market 6. A product which reaches more buyers through lower cost 7. An existing product integrated into another existing product 8. Marketing components/sub assemblies of a product offered separately 9. A restyled product. (Adapted from Philip Marvin, Product Planning Simplified, 1972)

2. What is a New Product?

A new product has a new FORM attained through TECHNOLOGY which is the power to do work, that delivers BENEFITS that the customer has a need or desire for. Further a new product essentially is of the right quality at the right time at the right cost. (C. Merle Crawford, 1987).

4. Success / Failure Rate of New Products

Different studies have indicated a success rate between 60-70% and a failure rate of 30-40% which involves hundreds and thousands of crores of loss and trauma to the executives and firms that launched the products (that failed).

3. What is a product?
By product we mean anything offered for sale. The newness of the product can be in terms of : 1. Newness to the Firm : a. Improved versions b. Line extensions or companion products c. Brand extensions d. Diversification 2. Newness of the product to the Marketed place : a. Similar to the products in the market b. An improvement c. New to the market/new to the world 3. Newness of product as perceived by buyers / users : 59

The new product success rate is 69% according to Larry and Dwyer (1993), 65-70% according to Crawford (1987) and 80% according to Hopkins and Baily (1971) The variation in new product success failure rates depend on several factors such as the product characteristics, degree of product innovation and on how well the product met its goals (Crawford 1991). Further, the perception of success or failure depends on the performance criterion employed and the time horizon for judging performance (Urban and Hauser 1980). The

new product success, can be explained by the success or performance measures used by Cooper (1985) Larry, Dwyer and Robert Mellor (1993). According to them the following seven measures are used to measure the success or performance of new Products :

8. Firm Strategy Characteristics

6) Marketing synergy is the match between the existing marketing skills of the firm and the marketing skills needed to make and market a new product successfully. 7) Technological synergy or the match between the existing technological skills of the firm and the technological skills needed to execute a new product initiative successfully. 8) Order of entry which is the timing of marketplace entry of a product. 9) Dedicated human resources in terms of focussed commitment of personnel resources to the new product project. 10) Dedicated R & D resources.

5. The Measures of Success of New Products






6. 7.

Percentage of firms sales made up by new products introduced over the past five years. Percentage of new products that succeeded, failed or were terminated prior to market launch. The extent to which the new product program met its financial performance objectives over the past five years. The importance of the program in generating sales and profits for the firm. The extent to which the profits from the new products exceeded the program costs. The successfulness of the program relative to the competitors An overall success rating.

9. Firm Process Characteristics

11) Structured approach in terms of employment of formalized product development procedures. 12) Predevelopment task proficiency with which a firm executes the pre-launch activities of idea generation screening, market research and financial analysis. 13) Marketing task proficiency 14) Technological proficiency 15) Launch proficiency 16) Reduced cycle time or reduction in concept-to-introduction time (time to market) 17) Market orientation or the degree of firms orientation to its internal, competitor, and customer environments. 18) Customer input : Incorporation of customer specifications into the new product initiative. 19) Cross functional integration or the degree of interdepartmental participation in the new product effort. 20) Cross functional communication : Level of communication among department in a new product effort. 60

6. Drivers of new product success

Out of the various possible predictors of new product success studied in over 60 studies, the following 24 factors classified into different categories are found to be predictors more often than others. Therefore they have been selected as the predictors whose effect on product success has been examined in this study.

7. Product Characteristics

1) Product advantage, superiority or differentiation over competitors offerings. 2) The extent to which product is perceived to satisfy desires/needs of the customer 3) Perceived price performance congruency or value 4) Perceived technological sophistication of the product 5) Product innovativeness is perceived newness/originality/uniqueness of the product

21) Senior Management support to the new product initiative.

10. Market Characteristics

22) Likelihood and degree of competitive response to a new product introduction. 23) Degree, intensity or level of competitive response to a new product introduction. 24) Market potential : Anticipated growth in customers/customer demand in the market place. In the past studies on new product success exceeding sixty in numbers the following factors are found to be the dominant predictors of new product success.

as David Henard and David Szymanski (2001) due to reasons including excessive heterogeneity in the values of the individual correlations.

13. Dominant drivers of new product success

In the research mentioned above it was found that 10 factors are dominant drivers of new product success (mean r>40), The dominant factors that emerged are; market potential (r = 0.54), dedicated human resources (r=0.52), marketing task proficiency (r=0.50), product meeting customer needs (r=0.50), product advantage (r=0.48), predevelopment task proficiency (r=0.46), dedicated research and development resources (r=0.45), technological proficiency (r=0.43), order of entry (r=0.41) and the technological sophistication of the product (r=0.41). The new product success phenomenon is complex yet more and more clear in terms of the causal factors. The intricate and multifaceted nature of the new product performance phenomenon is seen from the fact that three predictors that are of product characteristics which are : products meeting customer needs, product advantage and product technological sophistication; two of strategy characteristics, (R & D and human resources); four of process characteristics, (marketing, predevelopment, technological and launch proficiencies) and one market place characteristics; (market potential). The above study aims to assess in the Indian context, as well as to evaluate the most frequently modelled predictors; (n>40 modeled effects), marketing synergy (n=61), market orientation (n=60), cross functional communication (n=58), structured approach (n=53), product advantage (n=44), and marketing task proficiency (n=40). Note : r = corrected mean correlations n = number of times a predictor has been modeled.

11. Major factors that influence new product success

New product introduction is acknowledged as a major factor in the sustainable success of a business. The predictors or drivers of new product success mainly investigated by various researchers, i.e., 1. Product advantage 2. Market Potential 3. Meeting Customer Needs 4. Predevelopment task proficiencies and 5. Dedicated resources have a causal impact on product performance.

12 Measurement Empirical studies on causes of New Product Performance

In the 60 empirical studies that document the statistical relationship between new product performance and the causal factors identified by David.H.Henard and David.M.Szymanski, correlation was the main metric. These researchers emphasized models level correlations (an averaging of reported correlations across all models and all studies to arrive at an estimate of the central tendency of the predictor criterion relationship) rather than the study level correlations (an initial averaging of the correlations reported within the study followed by a further averaging of the mean correlations across studies). A model-level analysis has been followed and advocated by Glass, McGraw and Smith (1989) as well as meta analyses by Assmus, Farley and Lehman (1984) Churchill et al (1985), Sultan, Farley and Lehman (1990), Tellis (1988) as well 61

14. Implementation for the success of the New Product

Key Result Areas (KRAs) need to be emphasized : 1. Ideation-to-launch stage gate system and its effectiveness 2. Cost-Volume-Profit Analysis

3. Effectiveness of proposed advertising 4. The number of households buying the product and repeating purchase 5. New actions such as new packaging that have to be executed. 6. Adequate trial purchase during early launch. 7. Responsiveness of trial purchase to advertising and sales promotions. Competitive Response to the New Product identifying where volume gains have been made is necessary to ensure that the overall strategy for the new product is on track. At this point the following need to be considered. 1) The market share 2) Did the new product attract new category buyers? 3) How much has the market grown on a result of this new product. Long term forecast for the new product. Assessment, long term forecast of the new product future are essential to determine the long term viability of the product as well as to allocate capital needed. The issues to be considered are : 1. What should be the revenue, market share, Return on Capital employed and capital required for factory and equipment. 2 What form/flavour extensions can be considered?

three products of each of the two companies were selected using the seven measures of new product success mentioned earlier and with the type of product in mind. A census survey of all managers in company A, an FMCG company and B, a consumer durable products company was made. In the consumers survey 124 effective respondent consumers of company A, and 33 effective respondents consumers of company B were covered. Both internal data from managers and external data from consumers of both companies were collected. Structured, tested questionnaires were employed in both the managers and consumers surveys.

17. Data Analysis

The data collected was codified, tabulated and analysed. The T-Test on Managers survey data with the Independent Samples Test was carried out. The high and low classification of differences in the means of company A and B are presented in table No.1. The analysis of T-Test of consumer survey data is presented in Table No.2.

18. Findings
T-Test was performed on each of the predictor variables, to test the difference in the means of company A and Company B

15. The Current Study

An effort to find any differences in the predictors of new product success between the product categories of Fasting Moving Consumer Goods (FMCG) and consumer durables significant differences were found between company A and B through the T Test described below and after tests as well.

19. Managers Survey Data T-Test

Ho.: There is no difference between the means of an item (k) with respect to company A and B. Level of significance is 5% In the independent sample test using Levenes Test for equality of variances there is difference in the means of 21 drivers relating to company A and B. In the case of the following categories, there is no significant difference in the means between Company A and B: Technological Sophistication Separate Team working Cross functional Integration 62

16. Data Collection

In FMCG category Company A was selected as it is a company with successful new products; and company B was selected for examination as it was a consumer durables company with successful new products. The

On the basis of analysis, the null hypothesis is accepted for 3 drivers mentioned and rejected for the other 21 drivers. Company A is a Fast Moving Consumer Goods (FMCG) company and company B is a consumer durable product company. 1) In the analysis of T-Test on Managers survey data (Table-1) low differences including very low is found between the means of the following 7 factors (25%) relating to company A and B . Technological Sophistication (Product) More Advantageous (Product) Meets Needs Cross Functional Integration Cross functional communication Senior Management Support Market Potential It is found that there is high difference (including very high) between the means of the following factors : Marketing Synergy Suitable price Product Innovativeness Time of Introduction Separate Team working Market Proficiency Launch Proficiency Customer Oriented Product Development Structured Approach Marketing synergy Technological Synergy Dedicated R&D Success of precious products Technological proficiency Market/Consumer Orientation Reduced Cycle time Likelihood of competitive response Competitive response intensity Thus it is found that in the case of the above 18 variables (72%) their influence on product success is different in the company As products and Bs products. 63

20. Consumers The significance of difference of means of each item with respect to Company A and Company B is given below: Ho : There is no difference between the means of an Item (k) with respect to Company A and B. Level of significance is 5% It is found the there is no significant difference between the means of A and B with respect to the following items: Suitable Price Technological Sophistication Separate Team Working Dedicated R & D Success of Previous Products Market Potential Product Success The consumers of items of both the companies are considered. Total number of consumers = 157. The null hypothesis is accepted for the above 7 drivers (24%) and rejected for the other 10 drivers (76%). It is found that in the case of 9 variables the difference in the means between Company A and Company B are low, while in the case of 9 other variables the difference in the means between the two companies is high, as in Table-2.

21. Conclusion
In Technological Sophistication and Separate Team working belonging to firm strategy characteristics, no significant difference is found in the Managers responses as well as the Consumers responses. In the consumers responses, Suitable Price A Product characteristic and Separate Team Working, dedicated R

& D and Success of Previous Products (Firm Strategy Characteristics) are identified as factors where there is no significant difference between the means of companies A and B. All other factors can be classified as follows : Product Characteristics : Product Innovativeness, Firm Strategy Characteristics : Marketing Strategy, Technological Synergy, Time of Introduction. Firm Process characteristics : Market Proficiency, Launch Proficiency, Customer oriented Product

Development, Structured Approach, Technological Proficiency, Reduced Cycle Time Market Characteristics : Competitive Response Intensity, Likelyhood of Competitive Response. They exhibit high difference between the means of company A and B. This could be attributed in some measure to the type of products (FMCG and Consumer Goods) and in some measure due to factors such as, differences in the products and markets.

Table 1 Analysis of Means

T-Test Managers Survey Data. Difference in the means of company A and B.
Item 1. More Advantageous 2. Meet Needs 3. Suitable Price 4. Technological Sophistication 5. Product Innovativeness 6. Marketing Synergy 7. Technological Synergy 8. Time of Introduction 9. Separate Team Working 10. Dedicated R & D 11. Success of Previous Products 12. Market Proficiency Product 13. Technological Proficiency 14. Launch Proficiancy 15. Market/Custmer Orientation 16. Customer Oriented Product RDevelopment 17. Reduced Cycle Time 18. Structured Approach 19. Cross Functional Integration 20. Cross Functional Communication 21. Senior Management Support 22. Likelihood of Competitive Response 23. Competitive Response Intensity 24. Market Potential 25. Product Success Very Low Low 0.5634 0.4308 ----------------0.4767 0.5653 0.4064 --0.4737 -High Very High

0.1755 ---------------------64

0.9269 -0.7641 --0.8733 0.6335 --0.7953 -0.6335 -0.8460 -0.7953 ------0.7589

---1.0858 1.3664 --1.2368 1.5117 -1.4464 -1.0331 -1.778 ----1.2125 1.4542 ---

Table 2 Analysis of Means

T-Test Consumers Survey Data. Difference in the means of company A and B.
Item 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. More Advantageous Meet Needs Suitable Price Technological Sophistication Product Innovativeness Marketing Synergy Technological Synergy Time of Introduction Separate Team Working Dedicated R & D Success of Previous Products Market Proficiency Product Technological Proficiency Launch Proficiancy Market/Custmer Orientation Customer Oriented Product RDevelopment Market Potential Product Success Very Low ---0.3323 ----0.0791 0.3345 0.3941 -----0.1052 0.0288 Low --0.5269 --------0.5237 --0.6394 ---High ------------0.7319 0.9765 -0.9527 --Very High 1.0327 1.3265 --1.7697 1.3710 1.1429 1.9429 -----------

22. References
1. Assmus Gert, John U, Farley and Donald R Lehman, How Advertising Affects Sales ; Meta Analysis of Economic Results, Journal of Marketing Research, 1984. 2. Booz-Allen and Hamilton (1982) New Product Management for the 1980s New York; BoozAllen and Hamilton. 3. Churchill, Gilbert A., Jr, A Paradigm for Developing Bette, Measures of Marketing constructs, Journal of 1985 Marketing Research. 4. Cooper Robert G, The dimensions of Industrial New Product success and Failure, Journal of Marketing, 1979. 5. Glass Gene V., Barry Mcgraw and Mary Lee Smith, Meta Analysis in Social Research, Beverly Hills, CA, Sage Publication 1989. 6. Larry dwyer and Robert Mellor, Organisational environment, New Product Process Activities 65 and Project outcomes Journal of Product Innovation Management 1993. 7. Philip Marin, Product Planning Simplified, Amercian Management Association, New York, 1972. 8. Fareena, John U Farley and Donald R Lehman, A Meta Analysis of applications of Diffusion Models, Journal of Marketing Research, 1990. 9. Tellis Gerard J, The Price Elasticity of selective Demand; A meta Analysis of Econometric Models of Sales, Journal of Marketing Research., 1988 10. James M., Lattin, J.Douglas Carroll and Paul E.Green; Analyzing Multivariate Data; Thomson Brooks / Cale. 2007. 11. Kothari C.R.Research Methodology. Methods and Techniques; New Age International Publishers 2004.

E-Marketing in Pharmaceutical Business

Sheeja.V.S Lecturer,(Research Scholar) SRM College Of Pharmacy, SRM University Indumathi Lecturer,SRM College of Pharmacy, SRM University Dr. R. Krishnaraj HOD,General Management, SRM School of Management,SRM University 1. Introduction
The pharmaceutical marketing strategies (as well as advertising strategies) are different from other businesses because pharmaceuticals or drugs can negatively affect both- the end consumers or the patients and the health care profession. Also, the advertising strategies included in the marketing plan of any pharmaceutical company are not direct to consumer. Any pharmaceutical marketing strategy targets the health care professionals or the Doctors who in turn prescribe the drugs to the patients (end consumers) liable to pay for the products.

Sponsoring continuing medical education.

Pharmaceutical representatives, also popularly known as medical representatives, are the major players for marketing drugs directly to the physicians. Typically, the expense of this sales force of any pharmaceutical company comprises anything ranging from 15-20% of annual product revenues. However, with changing times and new developments, the pharmaceutical industry faces some serious strategic issues.

The internet and related technologies have revolutionized many aspects of society. For the pharmaceutical industry, as for other sectors, this has brought new marketing opportunities. The internet can greatly expand a companys reach. For example, a popular video on YouTube may potentially be seen by thousands of people. Perhaps more importantly, internet-based technologies are enabling new styles of communication between the industry and its targets, including more interactive and customer-responsive campaigns. Consultancies have been established and books written for the pharmaceutical industry to help in developing internet-based marketing.(1)

3. Need for New Pharmaceutical Marketing Strategies

While most of the pharmaceutical companies successfully employ a host of marketing strategies to target various types of customers, the current business and customer trends are continuously creating new challenges as well as opportunities for increasing profitability. If the pharmaceutical companies want to improve their Return-On-Investment (ROI), they have to adopt new communication technologies (digital media) along with their conventional sales force of medical representatives. They really need to adopt this multi channel marketing strategies for the following reasons.

2. Traditional Pharmaceutical Marketing Strategies

The pharmaceutical companies traditionally adopt four major marketing strategies for promoting their products

Giving drugs as free samples to doctors; Providing details of their products through journal articles or opinion leaders; Gifts that hold the company logo or details of one or multiple drugs and 66

The concept of blockbuster drugs is dying out for big pharmaceutical companies where 2-3 drugs were good enough to pay back the whole investment for a larger number of manufactured drugs. Now the limited prospective for blockbuster drugs (thanks to low investment on R&D and patent expiry) makes it essential to focus on more specialized drugs sold in lower volumes. And when there is low volume products, sales driven marketing strategy (with high cost of sales force) is not feasible

As far as small pharma companies are concerned, they already have small sales force. However, with the use of digital media, having a lower investment cost (both for the company and its targeted customer) they can easily get return on investment. Customer behavior (doctors behavior) is rapidly changing. Doctors, who are getting more and more patients, can be hardly seen by the medical representatives. They are more inclined towards Internet for obtaining relevant information. It is the time for pharmaceutical companies to build their marketing strategies around this digital media. Website marketing, online marketing, blogs, social media, forums, chat rooms and any other such media is an influential means to present the companys products and offers through opinion leaders.

the doctors participated in a clinical trial of a SanofiAventis drug and entered anonymous patient data into the device. The company aimed to build relationships with the doctors, to use the device as an advertising medium, and to gather feedback. The company also reported that these doctors then prescribed more of its diabetes products.(3) An important aspect of e-detailing is that it enables predictive marketing. This means that companies can be more effective and timely in eliciting feedback from prescribers in order to tailor marketing strategies to their individual preferences and needs.(4)

5. Promotion by Corporate blogs and websites

The global reach of the internet means that Australians now have easy access to overseas blogs and websites promoting prescription medicines and other products, and even selling them. Safety concerns have been raised about the purchase of prescription, non-prescription and complementary medicines over the internet.(5), (6) Companies are also using blogs and websites to develop customer relationships. As GlaxoSmithKline says on its corporate blog in the USA for a weight loss product (, it is a place for you to have a conversation with us about weight loss issues. Such conversations may enable companies to gather patient stories and feedback for use in positioning their products. The discussions are not only mined for information (, but also ensure the repetition of marketing messages. Sometimes companies use multiple websites to promote their products and issues to different market segments. For example, GlaxoSmithKline also promotes weight loss issues at Websites are also used for patient support programs and education, although it is not always clear from the website name that who is behind it. In the USA, Pfizer runs such a program ( for varenicline users, providing regular emails and other prompts such as a personalized web page to support their product use. In Australia, the companys advertising and marketing 67

4. Electronic detailing
In the context of drug promotion, detailing has traditionally involved face-to-face contact between a visiting sales representative and a health professional. However, drug companies, especially in North America and Europe, are increasingly adopting electronic detailing as the process to market their products. E-detailing includes diverse strategies, such as videoconferencing, the provision of electronic education modules, and the use of email and related technologies as prompts and to promote two-way communications. It has been used for disease-awareness campaigns, and for customer relationship management. Presentations to a pharmaceutical marketing conference in Europe suggest that e-detailing is not popular with all doctors.(2) However, it is cheaper than traditional sales representatives and can result in a significant return on investment through increased sales. Top companies are providing financial incentives for doctors to participate in e-detailing, such as honoraria, product samples, practice tools, and patient education resources.(3) In Poland, for example, Sanofi-Aventis lent physicians internetconnected hand-held devices which were loaded with clinical support information, drug indexes, abstracts of clinical studies, information from key opinion leaders, and advertising and educational materials. In exchange,

campaign is backed by a consumer website (www. that includes prompts for questions to ask doctors. Meanwhile, a Wyeth Consumer Health Care website ( sounds the alarm on osteoporosis and encourages people to see a doctor if they answer yes to any questions on a one minute risk test, including the question have either of your parents broken a hip after a minor bump or fall?. Company websites can link to other sites that may not meet regulatory requirements. GlaxoSmithKlines Australian website raising consumer awareness of genital herpes and treatment issues ( links to the Australian Herpes Management Forum but advises that external links such as this may not comply with the Australian regulatory environment. The Forum, whose board comprises prominent physicians, aims to improve the awareness, understanding, management and control of herpes virus infections in Australia, and is sponsored primarily by pharmaceutical and diagnostic companies. Pharmaceutical companies are not alone in using the internet to market products and to conduct awareness-raising campaigns that may affect patients interactions with doctors. The complementary medicines company Black mores, for example, has a sophisticated website (, while Nescafe has launched a website ( hcp password: Coffee) supported by advertising in the medical press which promotes coffee as an agent that may help lower the risk of developing type 2 diabetes.

viewers describing their experiences with varenicline. It was unclear whether any of these videos were commercially generated. However, the first one identified by the search ( watch?v=Vx7baviT1DQ) linked to a website whose name suggests it is an individuals personal site (http://, although it appears in fact to be a commercial site. On the other hand, such networks are also being used for public health purposes, including promoting messages about the quality use of medicines. YouTube also includes, for example, a US Food and Drug Administration (FDA) video discussing potential adverse effects of varenicline.(7) Even when listings are clearly commercials, as with a bizarre video on YouTube promoting a new medicine for insomnia, ramelteon, it is not necessarily clear who is responsible for posting them. The video features an insomniac chatting with Abraham Lincoln and a talking beaver over a chess board. These characters also appear in a direct-to-consumer television advertising campaign in the USA. The video was submitted to YouTube in 2006 by lewisusauk, who said: New Rozerem Ad Campaign. Possibly the best prescription drug ad since the FDA relaxed the rules on drug advertising. According to a pharmaceutical marketing blog by John Mack (, lewisusauk is a sock puppet a false identity through which a member of an internet community speaks while pretending not to, like a puppeteer manipulating a hand puppet. Apart from disseminating company-generated content, social networking sites also offer opportunities for companies to insert themselves anonymously into conversations between site users through postings and comments on blogs. John Mack says some of the postings about the ramelteon video on YouTube smack of this practice, and are attempting to hijack the conversation by submitting commercial messages (that is advertisements) disguised as genuine comments from ordinary citizens. Meanwhile, in the Netherlands, an industry-driven campaign conducted via Hyves (a Dutch equivalent of Face book) gathered more than 80,000 signatures in only three weeks for a petition aimed at influencing decisions about funding for human papillomavirus vaccines. According to Dr Ruud Coolen van Brakel, 68

6. Viral marketing and social networking sites

Social networking sites such as YouTube and Face book have been successfully exploited by many consumer product companies for viral marketing campaigns. These campaigns are so named because the transmission of a marketing message through the networks is seen as analogous to the spread of a viral infection in a population. It can be extremely difficult to identify who is responsible for content spread through such networks, and it is not clear how widely the pharmaceutical industry is using them. A recent search for Champix on YouTube (accessed 12 November 2008) identified 46 videos, many of which appeared to be of ordinary

Director of the Dutch Institute for the Proper Use of Medicine, it was a very effective way to create public awareness and commitment to a commercial cause disguised as a public health issue. Pharmaceutical companies are also seeking to capitalize on medical social networking sites. Pfizer, for example, is reportedly collaborating with Sermo Inc, a web venture based in Cambridge USA, where tens of thousands of doctors discuss diagnostic and treatment issues in anonymous postings. The collaboration allows Pfizers doctors to ask questions and respond to posts. Members can also rank postings, which will give insights likely to help the companys development of marketing messages. Sermo is said to be in talks with other companies as well. The site earns money by letting clients such as hedge funds monitor doctors anonymous conversations and thus gain insight into, say, the popularity of certain treatments. Sermo rewards physicians whose input is highly ranked by other members and plans to offer to pay doctors for participating in its clients surveys.(8),(9)

Natural Search or Organic Search. The other being Paid Search related. According to researcher, there are approximately eight hundred million people who access the internet. Out of them, approximately 86% people search for their information via internet search engines. The same researches say that the majority of those seeking search engine help for getting information will only look at the first two or three pages listed by the search engine. So, you want your website as high as possible. The best way that you can achieve a high ranking is by an insistent search engine marketing campaign. This is the better way to find a piece of that eight hundred million people On the Internet, whenever somebody wants to find something, they use Search Engines. Search Engine Marketing is quick becoming the strategic choice for companies who want to reach a global audience 24 hours a day, 7 days a week, either for free or for as little as USD $0.05 per visitor. As the Internet becomes more and more a part of our everyday life, the greater their role becomes in helping businesses connect with their customers at that crucial point in their buying decision process. Right now, there are almost certainly people needs potential customers who are looking for whatever products or services you are offering on any or all of the major Search Engines. When potential customers type in the keywords that they are searching for and press that Search button, do they find you or your competitors instead?

7. Search Engine Marketing

Search Engine Marketing referred to as Search Marketing or SEM, is fast up-and-coming as a great online client achievement feed. A lot of companies are now attracting Search Engine Marketing very acutely because, it has a unbelievable return on investment(ROI) and has incredible potential for

Lead generation Increased sales revenue. Greater brand attentiveness and Better corporate visibility

8. Regulation
The Medicines Australia Code of Conduct attempts to regulate the promotion of prescription medicines on the internet. However, it is difficult to police the anonymous marketing of drugs on blogs and forums, or to regulate consumers access to information from countries where pharmaceutical marketing may be less regulated than in Australia.

Search Engine Marketing is about making sure that your web site appears on the top 20 of search results every time potential customers search for whatever products and/or services that you offer on any of the major Search Engines including Google, Yahoo and MSN which collectively accounts for over 90% of all Search Engine originating traffic. SEM is actually a merger of two core techniques. One is Search Engine Optimization, also known as SEO or 69

9. Conclusion
The ongoing development of internet-related technologies is likely to provide pharmaceutical

manufacturers with further opportunities to influence consumer expectations of health care and prescribing practices. It is also providing new opportunities for those concerned with the quality use of medicines and evidence-based education.(10) Much can be gained from constructive engagement with the world wide web, and 21st century doctors also need to understand its use as a marketing tool.

LN, Hiller JE. Surfing, self-medicating and safety: buying non-prescription and complementary medicines via the internet. Qual Saf Health Care 2003;12:88-92. 6. Armstrong K, Schwartz JS, Asch DA. Direct sale of sildenafil (Viagra) to consumers over the Internet. N Engl J Med 1999;341:1389-92. 7. Food and Drug Administration. Patient safety news: New safety warnings about Chantix [video]. watch?v=ep3U0SVfpW4 [cited 2008 Nov 18] 8. Pfizer becomes latest to partner with fastgrowing online doctors forum Sermo. The Age (Melbourne). 2007 Oct 15. http:// Go to HSL12469 [cited 2008 Nov 18] 9. Johnson A. Pfizer-doctors web pact may get looks. The Wall Street Journal. 2007 Oct 15. Go to HSL12470 [cited 2008 Nov 18] 10. Boulos MN, Maramba I, Wheeler S. Wikis, blogs and podcasts: a new generation of Webbased tools for virtual collaborative clinical practice and education. BMC Med Educ 2006;6:41. [cited 2008 Nov 18]

10. References
1. Dogramatzis D. Pharmaceutical marketing: a practical guide. Englewood (CO): Interpharm Press; 2002. 2. Heutschi R, Legner C, Schiesser A, Barak V, sterle H. Potential benefits and challenges of e-detailing in Europe. J Med Market 2003;3:263-73. 3. Bates AK. Conference Insights: Online marketing and eDetailing: in-depth report from an eyeforpharma conference. J Med Market 2006;6:298-300. [More detailed version available at www.keywordpharma. com] 4. Lerer L. E-business in the pharmaceutical industry. J Med Market 2002;3:69-73. 5. Bessell TL, Anderson JN, Silagy CA, Sansom


Emerging trends in the life style of apparel consumers in India

A . Ram Mohan
Senior faculty, Department of Management Studies, K S Rangasamy College of Arts and science, Tiruchengode

Dr. R. Krishnaraj, MBA, PGDMM, Ph.D. Asst. Professor & Head General Management, SRM School of Management, Kattankulathur 1. Introduction
In the Global business environment, India is considered as a fast growing economy. This paper analyses the changing life style of apparel consumers in India. This paper also deals with the increasing buying power, spending behavior, dominance of fashion, influence of celebrity and media, impulsive buying and online buying.

2. The increasing buying power of Indian consumers

By the end of this decade, Indias income demographics are going to be unrecognizable. These could translate into an enormous buying power for luxury consumption. We are able to feel the emergence of new market. We are able to see that growing number of Indians are enjoying unprecedented levels of affluence. The proportion of disposable income for spending is also found to be increasing significantly.

Table 1 : Mapping Indias Income classes

The Classes Rich (Rs.215,000 +) Benefit Maximizers Own Cars, PCs Consuming (Rs. 45,000-215,000) Climbers (Rs. 22,000-45,000) Cash Constrained Benefit Seekers Aspirants (Rs. 16,000-22,000) New Entrants Destitutes (Less than Rs. 16,000) 1994-95 1 29 48 48 35 1999-2000 3 55 66 32 24 2005-06 6 75 78 33 17

Source: NCAERs MISH Report, as reported in 2003-04 BW Marketing White book

Table 2: Distrbution of Income Classes among Urban Households (%)

Income Low Middle High 1989-90 37.1 59.1 3.8 1992-93 38.4 56.7 4.9 1994-95 33.6 60.4 6.0 1999-2000 15.9 69.1 15.0

Source: NCAERs MISH Report, as reported in 2003-04 BW Marketing White book

Table 3: Urban Indias Income Classes by Size ( All figures in million)

Income Classes The very rich The consuming class The climbers The aspirants The destitute 1995-1996 0.8 16.6 16.8 7.1 5.3 2001-2002 1.9 26.5 17.4 9.9 2.7 2006-2007 4.0 40.8 13.7 0.7 0.9

Source: NCAERs MISH Report, as reported in 2003-04 BW Marketing White book


Table 4: Urban Classification Based on Income Class and number of Families

Consumer Classification Income Class (in Rs. 000) Number of Families (in 000) 3212 1122 454 103 53 Growth Rate (in %) 17.50 19.40 21.30 23.40 25.90

Strivers 500-1,000 Near rich 1,000-2,000 Clear rich 2,000-5,000 Sheer rich 5,000-10,000 Super rich 10,000 + Note: Income figures per annum at 2001-2002 prices. Source: National council for Applied Economic research, India Economists have explained this phenomenon as; the decisions on how much to save and spend depend on expectation of life time income and not on annual income. This is here wealth influences. Consumers who have substantial wealth like financial assets, real estate, etc. are spending despite temporary variations in their annual income. In the future it is expected that the income of the household will increase and thus will have a positive effect on the industry as a whole. Especially, the rich category, which is expected to reach 6 million households in 2007 from 1 million in 1995, will help the niche industry to grow. Also the lower income group will decrease to 17 million households by 2007 from 35 million in 1995. It is also expected that the total households will increase by around 81 million in high income groups during the same period. The households in the low income groups are found to be reducing significantly. This will increase the market potential for the organized retailing in the apparel sector across all income segments.

as the key link between buyer and seller. Studying the demographic shift by 2010 as projected by the Merrill Lynch, there is considerable increase in population in the age group of 20-34 years, which constitutes the major segment of population. Also analyzing the spending behavior in the personal grooming products across different age groups, the age group above 35 years are the major contributors to the apparel segment. We also see from the report that the consumers spending have increased from 6.6% in 2002 to 7% in 2003. Thus we can conclude that there is a huge potential in the future for apparel retailing.

4. Demand for ready-made garments in India: Past & Future

3. The changing spending behavior of consumers

Indias population is around 1170 millions, as on July, 2009. Considering the change of consumer preferences over time, India appears to be a promising market for apparels, with vast potential. Consumer markets are witnessing change at a rapid pace not seen before. Apparel markets also offer new opportunities and challenges. This can be attributed to dramatic shifts in the buying behavior, growing urbanization, emergence of the service sector, changing trends or lifestyle, and most prominently, the increasing power of retailers 72

Year Rs. Billion 2007-08 1162 2008-09 1313 2009-10 1490 2010-11 1676 2011-12 1860 2012-13 2055 2013-14 2270 2014-15 2509 2019-20 4133 (Source: 2004, Cygnus Business Consulting & Research) The demand for ready-made garments is expected to increase nearly 4 times between 2007 and 2020. 5. Ready-made garments: Market growth Period Per cent 2001-02 to 2006-07 11.6 2006-07 to 2011-12 12.5 2011-12 to 2019-20 10.5 (Source: 2004, Cygnus Business Consulting & Research)

rates in India

The market growth rate is predicted to be steady. Ready-made garments: Market structure in India Segment Share (%) Organised (Branded) 25 Informal 75 (Source: 2004, Cygnus Business Consulting & Research) Branded ready-made garments contribute to 25% of the total market.

when she starts selecting her office wear at the retail outlet. Comfort comes second, followed by exclusivity, feminine touch and glamorous looks in the order. So, the garment purchase pattern among Indian women is very much in a stage of transformation. Price as an overriding factor is diminishing. In the garment they look for fit, style and fabric. They want the garment to provide them elegance, comfort and exclusivity (2004, Cygnus Business Consulting & Research).

4. Factors influencing choices of men apparels

Fabrics and textures are found to be the most important factors driving sales of mens shirts; overall looks of the shirt mattered next, followed by pricing and fits in the order (2004, Cygnus Business Consulting & Research).

6. Increase in fashion consciousness

Undergraduate students are very significant in India in terms of both magnitude and spending capacity. The 20-25 million Indian teen to early 20s middle class has extensive spending power and is an important market segment (Bansal, 2004). The most important items purchased by young people are clothes. Clothing purchases are the biggest expenditure in a young persons budget (Sarikisian, Miller, 2003) and more than 85 percent of teenagers have a say in buying decisions of clothes (Tootelian and Windeshausen, 1976). It is important to study clothing purchase behavior of teenagers and youth not only because clothes are the frequently purchased item by them but also because they become trend setters and opinion leaders for dress and living styles (Axford, 1970). Hence over 90 percent of clothing manufacturers target the youth group of 15 to 24 years (Seo and Hathcote, 2001). The youth market is significant to Indian marketers not only because of the size and spending potential but also because they are the trendsetters for the rest of the population. According to Paretos rule, 80 percent of the purchase or usage of a product can be attributed to 20 percent of the population. There is a need to understand their psychographics so that it becomes easy for the marketer to reach out to them or to target and position themselves more appropriately for them. Product designs and communication strategies are considered as vital in fashion business. In he light of the recent view that homogeneity of global youth consumption practices is misconstrued and glocal structural commonalities are manifested in diverse youth culture across nations (Kjeldgaard and Askegaard, 2006) which implies that what is true of youth of USA might not be true for youth of India or 73

5. Factors influencing choices of women apparels

Maximum Indian working women across all age groups prefer to wear Ethnic Salwar-Kameez (34.3 per cent) at the work place, that too tailor-stitched. But the branded offerings are not far behind. Amongst the youngest group of working women, aged 21-25 years formal shirt with trousers emerges as the most widely used dress. The age factor clearly appears to have a positive impact on fashion lifestyles of working women. Formal shirt with trousers is the most widely used office wear among women in the 36-40 age group as well. Format shirts with trousers (28 per cent) are the second most widely used work wear across all age groups except for the age group of above 40years where the women prefer mostly saris. Then comes Indo-Western Kurta (10 per cent) followed by formal shirt with jeans (6.9 per cent), T-shirt with jeans (6.2 per cent) and finally sari (5 per cent). About 72 per cent of the working women had more than 5 sets of salwar-kameez (which includes chridars) in their wardrobe; T-shirts and formal shirts were also plentiful with 66.7 per cent and 91.6 per cent of working women having five or more pieces of these respectively. Saris, trousers and jeans were the other well-stocked items. Now when it comes to liking, women go for the apparel that gives them flattered figure whereas, men go for comfort. Dignified looks emerges as the top consideration on the back of the Indian womans mind

Brazil. Traditional demographic variables like income, education or gender can not identify the complete characteristics of different markets; (Solomon, 2002) because consumers in the same demographic group have very different psychographic make-ups (lifestyles). Generally it has been felt that psychographic or life-style traits should be more directly related to acquisition, use and disposition of goods and services than standard personality traits (Jacoby, 1976). Values affect attitude, which in turn affect behavior (Henry, 1976). Psychological variables, like innovativeness are much more strongly associated with frequent clothing purchase than demographic variables. Frequent clothing buyers are also more exposed to fashion-oriented media and innovative towards new fashion. It would be wise for a clothing company to identify a fashion conscious segment. Youth in general place more emphasis on their appearance than older people and thus clothing occupies a more vital position in their life-style. These young consumers are more likely to wear casual wears. The most frequent buyers of casual wear are found to be fashion conscious. In conclusion it is clear that Fashion-consciousness and Innovativeness are the relevant psychographic traits that predict clothing purchase behavior (Goldsmith. 2002). Innovativeness could be explained as the consumers like to try new and different things. They like trying new things. Their life is determined by their own actions. They enjoy making their own decisions. They like the challenge of doing something they have never done before. Fashion-consciousness could be explained as the consumers want to be considered fashionable. They dress more fashionably than most people. They follow the latest trends and fashions. They like to dress in the latest fashions (Sudas Roy & P. Goswami, 2007). Excitement, respect, warmth, and fun are considered as inner-directed values. Self-respect, security, 74

fulfillment, belonging and accomplishment are described as outer-directed values.

7. Dominance of fashion in apparel business

To the producer, the primary function of fashion is the creation of product obsolescence, i.e. Obsolescence of desirability. Fashion is used as a competitive device by the manufacturer. It serves to differentiate the product of a particular firm and results in non-price rather than price competition. Fashion is used for successful creation of demand for the fashion products. Apparel industry is characterized by perfect competition, where the number of sellers is so large that the actions of one seller have little impact on his competitors. Brand names, which have been used by firms in other industries to maintain their market share, have been less successful in the apparel industry. As a result of the dominance of fashion in apparel, we have a competitive, uncertain, and easy to enter industry in which technological advances have been relatively slow. Thus fashion inflates the price; the consumer pays for the fashion. Finally the dominance of fashion may lead to negligence of performance characteristics by both producers and consumers. Such characteristics, however, determine to a considerable extent consumer satisfaction with the garment during its wear-life. Failures related to durability, appearance retention and ease of care have been cited by consumers often as major sources of dissatisfaction. One recognized benefit is the role of fashion in satisfying the consumers desire for change. In apparel business consumer tastes and preferences are changing continuously. The apparels are of semi-durable nature. Fashion garments are relatively inexpensive. But the cost of product differentiation is usually high (Rachel Dardis). In the market place, the consumers have shown willingness to pay for such product differentiation. We can not over look the limitations like, many low income consumers would find it difficult to participate in the fashion cycle. Another question that arises in our mind is whether fashion is a class phenomenon or a mass phenomenon.

8. Leading fashion brands marketed in India Arrow Allen Solley Van Heusen Louis Phillipe Park Avenue Zodiac Lee Excalibur Flying Machine Ruf n Tuf Newport Peter England Levis Straus Stencil Rod Lever Raymonds Vimal John Miller Playboy Charagdin Double Bull Weekender VIP Lacoste Benetton Tussady Scottish Weave Scabal Old Trafford San Frisco Byford Tamarind Rivolta Killer Lee Cooper Jordachee Shotgun Hoffman Dare Teseas Best Waist Oxemberg Kilroy Sunnex Tommy Hifigur Evisu Diesel Gucci Christion-Dior

Source: Textile Fibres and Products, TX0501, Garments

9. Fast fashion
According to Mintel (2007) the exceptional growth of fast-fashion retailers can be attributed to high impulse buying, an increase in sourcing from lowcost countries and a change in consumer attitude. The appeal of newness remains very alluring to teens and Gen-Y consumers, looking for something different to wear while socializing. Such projection suggest that fast fashion will remain buoyant for the foreseeable future, thanks to its attraction to the young and fashionhungry, as well as its practical appeal to the lower socioeconomic groups. In order to satisfy the consumers apparel marketers are successfully combining Justin-time practice and Quick-response strategy along with Fast-fashion.

of new trends and are sources of inspiration for other consumers when adopting and buying latest styles. Amongst adolescents aged 12-17, there are more females in the innovators and early adopters categories and more males in the late majority and laggards categories. Fashion innovators are well aware of their appearance. They were found to have a unique self-image. They are passionate about dressing style and physical appearance. They tend to shop at the reputed retail stores. They love socializing activities. They have colorful entertaining activities. They take certain amount of risk also.

11. Influence of celebrity and media

Recent research by Birtwistle and Moore (2006) indicates that fashion innovators and early adopters, compared with followers are heavily influenced by fashion media. They are also influenced by in their purchase habits by celebrities.

10. Buying behavior of Fashion Innovators

Research by Rogers (1983) indicates 2.5% are innovators, 13.5% are early adopters, 34% are early majority, 34% are late majority and 16% are laggards. The marketing and apparel literatures are unanimous in reporting that fashion leaders tend in general to be young consumers. When compared with other consumer groups, fashion leaders, or innovators, deem fashion to be of importance to their lifestyles. They have strong opinions about taste, are advocates 75

12. Impulsive buying

When the buyer is influenced by emotional attraction (irrational) rather than rational judgments (such as price) it is called as impulsive buying. According to Rook and

Fisher (1995), impulsiveness is a consumers tendency to buy spontaneously, unreflectively, immediately and kinetically. In impulsive purchases social roles and interactions dominate over the buyers financial capabilities. Fashion oriented impulsive buying occurs as a customer sees the product in an innovative style and decides to buy immediately. Fashion innovators especially male college students are found to be impulsive.

are realigning their activities towards meeting specific customer needs, radically changing business models and exploring new ways of collaboration between buyers and sellers.

15. References
1. Bijapurkar,R (2003), The New Improved Indian Consumer, Businessworld, December. 2. Goswami.P,(2006), Media usage behavior of the college-goers of Kolkata in the era of Globalization: a psychographic study, ICFAI Journal of Marketing Management, No.3. 3. Lall.R.R, (2006), Young India among happiest, The Times of India, November 21. 4. Kim.H.S (2005), Consumer profiles of apparel product involvement and values, Journal of Fashion Marketing and Management, Vol.9, No.2. 5. Sheth Jagdish.N, Bruce I Newman and Babara L.Gross (1991). Why we buy: A theory of consumption values, Journal of Business Research, Vol.22, No.1. 6. National Council for Applied economic Research, India, MISH Report as reported in 2003-04 BW Marketing White Book. 7. Sudas Roy and Paromita Goswami, (2007), Structural equation modeling of valuepsychographic trait-clothing purchase behavior: a study on the urban college-goers of India, Vol.8, No.4. 8. Krishna Das Gupta, Changing Paradigms of luxury consumption in India: A conceptual model, South Asian Journal of Management, Vol.16, No.4. 9. Rachel Dardis, Fashion behavior: A consumerist view, University of Maryland, Advances in Consumer Research. 10. FangWan, Seounmi Youn, Tammy Fang, (2001), Passionate surfers in image-driven consumer culture: Fashion-conscious, appearance-savvy people and their way of life, Advances in Consumer research, Vol.28. 11. Louise R.Morgan and Grete Birtwistle,(2009), An investigation of young fashion consumers disposal habits, International Journal of Consumer Studies, 33. 76

13. Online buying

Consumers who already buy from catalogues would respond positively to online purchases. 46% of online buyers are willing to pay more; 57% stated that Internet shopping saves time (Nua, 2000). Online buyers of clothing regard self esteem and personal style as more important factors than price. One limitation of online fashion retailing would be the touch and feel factor (Enhmann, 2000).

14. Conclusion
Frequent cloth shoppers would place more emphasis on outer-directed values than inner directed values. Outerdirected values significantly influence psychographic traits like fashion-consciousness and innovativeness, which in turn positively influence purchase frequency behavior. The marketer should formulate his product and communication strategies in such a way that it appeals to the fashion-conscious and innovative consumers. For segmenting, targeting and positioning this identification effort would be useful. In the context of marketing communication with frequent clothes purchasers, the marketer should also emphasize outerdirected values rather than inner-directed values (Sudas Roy & P.Goswami, 2007). Clothes purchased for socializing are only worn a few times; meanwhile, work garments are expected to be kept for longer. Fashion followers are more concerned with whether clothing is practical and could be worn again the following season. Intense competition, shifting customer loyalties, aggressive marketing and the presence of global players are some of the salient features that have resulted in the change of industry outlook recently. Companies

12. Ian Phau and Chang-Chin Lo, (2004), Profiling fashion innovators: A study of selfconcept, impulse buying and Internet purchase intent, Journal of Fashion Marketing and Management, Vol.8, No.4. 13. Goldsmith.R.E, (2002), Some personality traits of frequent clothing buyers, Journal of Fashion Marketing and Management, Vol.6, No.3. 14. Nigel Hill & Jim Alexander, (2003), Handbook for measuring customer satisfaction and loyalty. 15. Paul Peter.J & Jerry C.Olson, (2007), Consumer behavior & Marketing strategy, 7th edition. 16. Birtwistle.G & Moore.C.M, (2007), Fashion clothing where does it all end up?, International Journal of Retail & Distribution Management, 35. 17. Assael.H, (1987), Low involvement decisionmaking, Consumer Behavior and Marketing Action, 3rd Ed. 18. Evans.M, (1989), Consumer behavior towards fashion, European Journal of Marketing, Vol.23, No.7. 19. Del I.Hawkins, Roger J.Best, Kenneth A.Coney, Amit Mookerjee, 2007, Consumer Behavior, 5th Edition. 20. Paul Greenberg, (2004), CRM at the speed of light: Essential customer strategies for the 21st century, 3rd edition 21. Kotlet.P, Keller.K.L, Koshy.A, & Jha.M, Marketing Management, 13th edition. 22. Cygnus Business Consulting & Research, (Apr. 2004), Apparel Retailing: Industry Insight. 23. Intecos Ciers , Market forecasts and Indicators: Projections 2010-2020. 24. Bansal.R, (2004), The currency of cool, Business world. 25. Axford.C.B, (1970), How banks can relate

their things to youth,Burroughs Clearing House, Vol.54. 26. Henry.W.A, (1976), Cultural values do correlate with consumer behavior, Journal of Marketing Research, Vol.13, No.2. 27. Jacoby.J, (1976), Consumer psychology: an octannium, in Rosenweig.M.R, and Porter.L.W, (Eds), Annual Review of Psychology, Annual Review, Palo Alto, CA. 28. Kjeldgaard.D, & Askegaard.S, (2006), The glocalization of youth culture: the glocal youth segment as structures of common difference, Journal of Consumer Research, Vol.33. 29. Sarikisian-Miller.N, (2003), TRU, Womens Wear Daily, Vol.8, April. 30. Seo.J.I, & Hathcote.J.M, (2001), Casual wear shopping behavior of college men in Georgia, USA, Journal of Fashion Marketing and Management, Vol.5, No.3. 31. Solomon.M.R, (2002), Consumer Behavior Buying, Having and Being,Prentice-Hall of India, New Delhi. 32. Tootelian.D.H, & Windeshausen.N.H, (1976), The teen-age market: a comparative analysis, 1964-1974, Journal of Retailing, Vol.52, No.2. 33. Mintel, (2007), Clothing Retailing, Mintel Intelligence, London. 34. Rogers.E.M, (1983), Diffusion of rd Innovations, 3 edn. The Free Press, New York. 35. Ehmann.C, (2000), Picture imperfect, available at apparel_concepts/ (30/11/2010) 36. Nua, (2000), Researchers divided on price and branding, available at: NewHome/theoutlook/0004/inthenews.html 37. Rook.D & Fisher.J.R, (1995), Normative influences on impulsive buying behavior, in Bearden.W & Netemeyer.G.R (Eds), Handbook of Marketing Scales, 2nd edn.


Factors Influencing Retail Investors Attitude Towards Investing in Equity Stocks: A Factor Analysis
Research Scholar, Department of Commerce and Financial Studies , Bharathidasan University, Tiruchirappalli Associate Professor and Head , Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli

E. Bennet, Ph.D Dr. M. Selvam

Research in behavioural finance is comparatively less in India, when compared to other foreign countries. Within behavioural finance it is assumed that information structure and the characteristics of market participants systematically influence individuals investment decisions as well as market outcomes. The behavioral finance mainly focuses on how investors interpret and act on micro and macro information to make investment decisions. Behavioural finance is defined by Shleifer, A (1999), a rapidly growing area that deals with the influence of Psychology on the behavior of financial practitioners. The globalization of financial markets has been increasing the retail investors community over the past two decades by providing a wide variety of market and investment options. However, it makes much more complex in their investment decisions process. The retail investors consider their investment needs, goals, objectives and constraints in making investment decisions, but it is not possible to make a successful investment decision at all times. Their attitude is influenced by various factors such as dividend, get rich quickly strategy, stories of successful investors, online trading, investor awareness programme, experience of other successful investors etc. A better understanding of behavioral processes and outcomes is important for financial planners because an understanding of how investors generally respond to market movements should help investment advisors in devising appropriate asset allocation strategies for clients. Hussein et al (2006). The various studies have been conducted in other countries but to the best of the researchers knowledge, the researcher could not find any similar study in Tamil Nadu. Hence this study attempts to find out the factors influencing investors attitude towards investing in equity stocks. 78

2. Review of Literature In this paper a comprehensive literature review about behavioural finance has been carried out. Peter Roger Eiving (1970) carried out a study to identify those factors which motivate (or) Guide the investment decisions of the common stock investors. The study identified the factors (i) Income from dividends (ii) rapid growth (iii) purposeful investment as a protective outlet of savings (iv) Professional investment management. Shanmugam (1990) studied a group of 90 investors to examine the factors affecting investment decision. The study focused its analysis on the investment objective and the extent of awareness on factors affecting investment decision. The study found that the investors are high risk takers. Investors possessed adequate knowledge of government regulations, monetary and fiscal policy. Warren, et. al., (1996) attempted to develop lifestyle and demographic profiles of investors based on the value and types of investment holding. Krishnan and Booker (2002) analyzed the factors influencing the decisions of investor who basically used analysts recommendations to arrive at a shortterm decision to hold or to sell a stock. Merikas et. al., (2003) analyzed the factors influencing Greek investor behaviour on the Athens Stock Exchange. The results indicated that individuals base their stock purchase decision on economic criteria combined with diverse other variables. Hussein A Hassan (2006) identified the factors influencing the UAE investor behaviour. Six factors were found the most influencing factors on the UAE investor behaviour. The most influencing factors were expected corporate earnings, get rich quick, past performance of the firms stock. On the other hand few factors were found to be least influencing like expected losses in international financial markets, family member opinion, gut feeling on the economy. Kannadhasan. M (2006) examined the factors that influence the retail investors decision in investing. The decision of the

retail investors are based on their various dependent variables viz., Gender, age, marital status, educational level, income level, awareness, preference and risk bearing capacity. Glaser, et. al., (2009) tested whether individual investor sentiment was related to daily stock returns by using vector auto regressive models and Granger causality tests. They found out that there exists a mutual influence between sentiment and stock market returns, but only in the very short-run (one and two trading days). The returns have a negative influence on sentiment, while the influence of sentiment on returns is positive for the next trading day. The influence of stock market returns on sentiment is stronger than vice versa. From the above review, it is clear that there are some differences among the retail investors on the factors that influence investors attitude towards investing in equity stocks.

for the study. Totally ten important places in Tamil Nadu were identified (Chennai, Coimbatore, Trichy, Madurai, Karaikudi, Kumbakonam, Hosur, Tirunelveli, Erode and Tiruppur). From each identified places two approved stock brokers were chosen and four investors were contacted with the help of brokers. However, on a detailed scrutiny of the filled in questionnaires, it was found that 3 of them had given incomplete information and hence the responses could not be used for further analysis. Thus, this study is based on 157 selected respondents from the retail investors. 4. Variables Participants were asked to evaluate the importance of 26 variables, identified from the literature and personal interviews as potentially influencing the value of equity shares, by making seven choices for every one of the 26 variables: strongly agree for the variables which had a strong influence on the factors considered to be influencing equity shares and strongly disagree for the variables that does not have much influence on the factors considered to be influencing equity shares. 5. Statistical Tools: The data collected have been analyzed though Descriptive Statistics and Factor analysis. 6. Results And Discussions Factor Analysis: Kaiser-Meyer-Olkin Measure of Sampling Adequacy is employed to examine the appropriateness of the data for factor analysis. High values (between 0.5 and 1) indicate that the factor analysis is appropriate. Further, Bartletts Test of Sphericity is a test statistics used to examine the hypothesis that the variables are uncorrelated in the population. From table 1 it is clear that the data used for the study is conducive for performance factor analysis. It is also evident from Table 1 that the variables are significantly related to the population.

3. Methodology
3.1 Objective of the Study To identify the various factors that influences the retail investors attitude towards investing in equity stock markets. 3.2 Sources of Data: The research design for the study is descriptive in nature. The researcher depended heavily on primary data. The required data were collected from the Retail Investors living in Tamil Nadu. The study was conducted during the period between May and July 2010 through a structured questionnaire. 3.3 Sampling Size and Procedure: The sample size covered 160 retail investors who were spread through ten different places in Tamil Nadu. The important places where large investors are available are identified for this study using purposive sampling method. In order to collect information from the retail investors, the sampling design has been carefully decided and properly chosen

Table 1: KMO and Bartletts Test

Variable Factors influencing investors attitude Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.725 79 Bartletts Test of Sphericity Approx. Chi-Square 2.159 df 325 Sig. 0.000 Significant Result

Table 2 presents the results of factor analysis of the sample data as well as the suggested label for each factor. Factor loading for each item exceeded the minimum threshold level of 0.40 (Kim and Mueller, 1978; Noursis 1985). Table 3 shows the mean value and the standard deviation of each statement that could possibly influence the attitude of the retail investors investing in equity stocks.

The average value of the five top highly influential factors according to the sample retail investors were Investors tolerance for risk with a mean value of 5.53 (SD 1.201), Strength of the Indian economy with a mean value of 5.49 (SD 1.217), Media focus on the stock market with a mean value of 5.46 (SD 1.443), political stability with the same mean value of 5.46 (SD 1.313) and finally Government policy towards business with a mean level at fifth position of 5.43 (SD 1.167).

Table 2: Results of Factor analysis for profitability indicators

Factor 1: Item Cost cutting by companies Technological advancements at company level Investors tolerance for risk Mergers and acquisitions in the corporate sector Performance of Internet stocks Variance explained (%) Eigen Value Cronbachs Alpha Factor 2: Item Total variance of factors influencing retail investors towards investing in equity market explained by two factors = 70.743 Satisfactions with the investments in equity stocks Availability of corporate research Government policies towards business Rate of Inflation Variance explained (%) Eigen Value Cronbachs Alpha Factor 3: Item Performance of the Indian Stock Market Confidence level of institutional investors Greed among investors Strength of the financial sector Media focus on the stock market Variance explained (%) Eigen Value Cronbachs Alpha 80 0.562 0.775 0.656 0.607 0.586 9.793 2.017 0.814 Loading 0.655 0.589 .596 10.824 2.384 0.733 Loading 0.782 0.738 0.814 0.689 0.520 11.838 7.587 0.824

Factor 4: Item Strength of Indian economy vs other countries Access to information Access to tools and technology Low cost of executing trade Variance explained (%) Eigen Value Cronbachs Alpha Factor 5: Item Total variance of factors influencing retail investors towards investing in equity market explained by two factors = 70.743 Stories of successful investor Get rich quickly philosophy Price to earning ratio Variance explained (%) Eigen Value Cronbachs Alpha Factor 6: Item Online trading Political Stability Variance explained (%) Eigen Value Cronbachs Alpha Factor 7: Item Information available on the internet Perception of easy money among investors 0.679 0.729 0.740 0.714 8.368 1.185 0.560 0.806 0.806 0.620 8.941 1.400 0.759 0.537 0.776 0.675 0.599 9.598 1.685 0.780

Variance explained (%) Eigen Value Cronbachs Alpha 81

6.462 1.112 0.759

Table : 3 Descriptive Statistics

Mean My satisfaction with the Investments Dividend Availability of corporate research Government policy towards business Rate of Inflation Stories of successful investors Get rich quick philosophy Price to earnings ratio Information available on the internet Perception of easy money among investors Strength of the Indian economy Access to information Access to tools and technology Low cost of executing a trade Performance of the Indian Stock Market Confidence level of institution investors Greed among investors Strength of the financial sector Media focus on the stock market online trading cost cutting by companies Technological advancements at company level Investors tolerance for risk Mergers and acquisitions in the corporate sector Performance of Internet stocks Political stability The Sample retail investors also felt that the following four factors were given lowest priority or which had low influence on the attitude of the retail investors investing in equity stocks. Stories of successful investors was considered to be the lowest influencing factors among 82 5.33 5.27 5.19 5.43 5.38 4.85 4.94 5.31 4.95 5.15 5.49 5.38 5.42 5.25 5.36 5.38 5.23 5.41 5.46 5.29 4.99 5.29 5.53 5.29 5.39 5.46 Std. Deviation 1.303 1.509 1.321 1.167 1.168 1.610 1.731 1.320 1.353 1.424 1.217 1.258 1.331 1.399 1.167 1.393 1.572 1.524 1.443 1.241 1.403 1.237 1.201 1.520 1.435 1.313

the four with a average mean value of 4.85 (SD 1.610), Get rich quick philosophy with a mean value of 4.94 (SD 1.731), Information available on internet had a mean value of 4.94 (SD 1.353), cost cutting by companies had a mean value of 4.99 (SD 1.403).

7. Conclusion
It was found out that certain factors were influencing the retail investors attitude towards investing in Equity Stocks. The average value of the five top highly influential factors according to the sample retail investors were Investors tolerance for risk, Strength of the Indian economy, Media focus on the stock market, political stability and finally Government policy towards business. Four factors were given lowest priority or which had low influence on the attitude of the retail investors investing in equity stocks. Stories of successful investors was considered to be the lowest influencing factors among the four, Get rich quick philosophy, Information available on internet, cost cutting by companies.

An empirical study of the UAE Financial Markets, The Business Review, Cambridge; Summer 2006; 5,2 PP 225-232. 4. Kannadhasan. M (2006), Risk Appetite and Attitudes of Retail Investors with Special Reference to Capital Market, The Management Accountant, June 2006, pp 448 453 5. Krishnan, R and Booker, D.M. (2002). Investors Use of Analysts Recommendations, Behaviour Research in Accounting, 14, 129 158. 6. Nagy, R.A and Obenberger, r.w (1994). Factors influencing Investor Behaviour, Financial Analysts Journal, 50, 40, 63-68. 7. Petter Roger Ewing., ( 1970): Motivating Factors Guiding the Common Stock Investor; Dissertation Abstracts International Vol 31, No.5 1970 P-1975A 8. Shanmugam, A Study on Investors Awareness of Investment, 1990. 9. Shleifer, A (1999), Inefficient Markets: An Introduction to Behavioral Finance. Oxford University Press. 10. Warren William C. Robert. E. Stevens and C. William Meconky., ( 1996)., Using Demographic and the Life Style Analysis to Segment Individual Investors., Financial Analyst Journal , Volume xxx pp:74-77

8. References
1. Anna A. Merikas, Greece Andreas G. Merikas, Greece George S. Vozikis, Dev Prasad, (2000), Economic Factors And Individual Investor Behavior: The Case Of The Greek Stock Exchange, Journal of Applied Business Research, Vol 20, No 4,PP 93-97. 2. Glaser, Markus, Schmitz, Philipp and Weber, Martin, Individual Investor Sentiment and Stock Returns - What Do We Learn from Warrant Traders? (October 2, 2009). Available at SSRN: 3. Hussein A. Hassan Al-Tamimi, Factors influencing Individual Investor Behaviour:


Impact of Social Media on Global Business

Dr. Sankaran M.Com, M.Phil, PhD,
Associate Professor & Head, Dept. of Commerce, D.B. Jain College, Chennai

T. Ravikumar M.Com,MBA,MHRM,
Research Scholar, School of Commerce & Management, Dravidian University, Kuppam

1. Introduction
Social media is a channel for social interaction, using highly accessible and scalable techniques. Social media uses web-based technologies to turn communication into interactive dialogues. Andreas Kaplan and Michael Haenlein define social media as a group of Internetbased applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content. Businesses also refer to social media as consumergenerated media (CGM). Social media utilization is believed to be a driving force in defining the current time period as the Attention Age. A common thread running through all definitions of social media is a blending of technology and social interaction for the co-creation of value.

2. Accessibility - the means of production for industrial media are typically owned privately or by government; social media tools are generally available to anyone at little or no cost. 3. Usability - industrial media production typically requires specialized skills and training. Most social media does not, or in some cases reinvent skills, so anyone can operate the means of production. 4. Regency - the time lag between communications produced by industrial media can be long (days, weeks, or even months) compared to social media (which can be capable of virtually instantaneous responses; only the participants determine any delay in response). As industrial media are currently adopting social media tools, this feature may well not be distinctive anymore in some time. 5. Permanence - industrial media, once created, cannot be altered (once a magazine article is printed and distributed changes cannot be made to that same article) whereas social media can be altered almost instantaneously by comments or editing. Community media constitute an interesting hybrid of industrial and social media. Though community-owned, some community radios, TV and newspapers are run by professionals and some by amateurs. They use both social and industrial media frameworks. In his 2006 book, The Wealth of Networks: How Social Production Transforms Markets and Freedom, Yochai Benkler analyzed many of these distinctions and their implications in terms of both economics and political liberty. However, Benkler, like many academics, uses the 84

2. Distinction From Industrial Media

People gain information, education, news, etc., by electronic media and print media. Social media are distinct from industrial or traditional media, such as newspapers, television, and film. They are relatively inexpensive and accessible to enable anyone (even private individuals) to publish or access information, compared to industrial media, which generally require significant resources to publish information. One characteristic shared by both social media and industrial media is the capability to reach small or large audiences; for example, either a blog post or a television show may reach zero people or millions of people. The properties that help describe the differences between social media and industrial media depend on the study. Some of these properties are: 1. Reach - both industrial and social media technologies provide scale and enable anyone to reach a global audience.

neologism network economy or network information economy to describe the underlying economic, social, and technological characteristics of what has come to be known as social media. Andrew Keen criticizes social media in his book The Cult of the Amateur, writing, Out of this anarchy, it suddenly became clear that what was governing the infinite monkeys now inputting away on the Internet was the law of digital Darwinism, the survival of the loudest and most opinionated. Under these rules, the only way to intellectually prevail is by infinite filibustering. There are various statistics that account for social media usage and effectiveness for individuals worldwide. Some of the most recent statistics are as follows:

A total of 234 million people age 13 and older in the U.S. used mobile devices in December 2009.

Twitter processed more than one billion tweets in December 2009 and averages almost 40 million tweets per day.

Over 25% of U.S. internet page views occurred at one of the top social networking sites in December 2009, up from 13.8% a year before.

Australia has some of the highest social media usage statistics in the world. In terms of Facebook use Australia ranks highest with almost 9 hours per month from over 9 million users.

Social networking now accounts for 11% of all time spent online in the US.

3. Some of The Big Social Media Network


3. Social Media and its Marketing Strategy

1) Listen to conversation - Tap into the online conversations to find out who is talking about you, what they are interested in and where they are saying it. 2) Establish share of voice - There are millions of conversations online every day. When you tap in to the once about your industry what share of voice do you have. 3) Set goal/Benchmark - Use the information and insight you got to set the goals you should pursue in social media. 4) Find Bloggers and communities - You have to know where the conversations and discussions are taking place so you can allocate your resource for best ROI. 5) Identify Influences - What or who influences people has changed dramatically in the last few years that do your customers trust? 6) Develop a content strategy - Success in social media depends on the quality of your quantity its about engaging people. 7) Pick tools - Should you have a facebook page? Should you be on Twitter? 8) Create and Deliver the content - Once you have content strategy bright ideas will naturally flow about what to create, how to deliver this content. 9) Engage and Facilitate conversation - Social media is about a two way flow of conversation. People are no longer willing to be passive. They went to part of the conversation. 10) Measure Results - Having Mountains of data is all very well but what does this mean is a crucial question? Social Media can be measured. 86

4. Social Impacts
Web based social network services make it possible to connect people who share interests and activities across political, economic, and geographic borders. Through e-mail and instant messaging, online communities are created where a gift economy and reciprocal altruism are encouraged through cooperation. Information is particularly suited to gift economy, as information is a non rival good and can be gifted at practically no cost. Facebook and other social networking tools are increasingly the object of scholarly research. Scholars in many fields have begun to investigate the impact of social networking sites, investigating how such sites may play into issues of identity, privacy, social capital, youth culture, and education. Several websites are beginning to tap into the power of the social networking model for philanthropy. Such models provide a means for connecting otherwise fragmented industries and small organizations without the resources to reach a broader audience with interested users. Social networks are providing a different way for individuals to communicate digitally. These communities of hypertexts allow for the sharing of information and ideas, an old concept placed in a digital environment.

5. Four Ways To Measure Social Media

1: Measuring Social Media Exposure: How many people could you have reached with your message? In social media, this measurement is about as reliable as a print magazines circulation, but knowing your potential audience does have value because it represents your potential sales lead pool. Unfortunately, as of the writing of this post, some of these metrics have to be accounted for manually, so youll have to balance the level of effort to track the metrics versus the value youll receive from them to determine their importance to your overall strategy. A good example of where there can be unreliability in social measurement is when isolating unique users for each of your metrics. You want to avoid counting the same person twice in the list below, but realistically its difficult to do.

Exposure is the top of the brand awareness funnel and represents your potential sales lead pool. #2: Measuring Engagement: How many people actually did something with your message? This is one of the most important measurements because it shows how many people actually cared enough about what you had to say to result in some kind of action. Fortunately engagement is fairly easy to measure with simple tools such as Radian 6, Biz360 and Tweet Effect. These metrics highlight who you want to target to retain on social media channels. #3: Measuring Influence This category gets into a bit of a soft space for measurement. Influence is a subjective metric that relies on your companys perspective for definition. Basically, you want to look at whether the engagement metrics

listed above are positive, neutral or negative in sentiment. In other words, did your campaign influence positive vibes toward the brand or did it create bad moot? You can also use automated tools like Twitalyzer, Social Mention, Radian 6 or Scout Labs to make it a little easier, but ALWAYS do a manual check to validate any sentiment results. Influence is generally displayed as a percentage of positive, neutral and negative sentiment, which is then applied in relation to the engagement metrics and to the metrics for reach where applicable. #4: The Lead Generation Funnel After youve measured through the influence portion of the funnel, youre now creeping into where too many companies are starting their measurement efforts: the lead generation funnel. This is where the brand awareness portion of the funnel ends and the traditional ROI-driven action begins.


Exposure, influence and engagement represent brand awareness in the measurement funnel. Understanding your reach, engagement and influence through these primary social channels will allow you to define your presence and impact, which can then be applied as a model to other social networks. Now that youve tracked all of this information, how do you make it meaningful? Excel is a great tool to help organize your data. Build yourself a standard dashboard in Excel that highlights the key metrics that matter to the organization. Create a tab for a high-level overview of multiple campaigns, and a tab for each campaign for the time period youre reporting on. Ultimately, you should put the information into the same format that youve used to report on traditional brand awareness campaigns, with social media as just another vehicle in the overall marketing mix.

are good to implement in business because they are low in cost as compared to Television and print media. Social media marketing is not difficult at all. It is something everyone can do with some effort and knowledge. It isnt some secret art form that only experts can master. Unlike other skills, social media has a remarkably low barrier of entry. Everyone is invited to the party. No one is excluded. References 1. Socialnomics: How Social media transforms the way we live and do business, Erik Qualman, Anz Publication, New York, 2009. 2. The Whuffie Factor: Using Power of Social networks to build your Business, Tara Hunt, Mc Milan Publication, 2008. 3. Crowdsourcing: Why the power of crowd is driving the future of the business? : Jeff Howe, 2009. 4. Viral Loop: From facebook to twitter, how todays smart businesses grow themselves? : Adam L. Penenberg, 2009.

In conclusion, social media has proved to be effective channel in global marketing. Social media campaigns


Influence of Children Advertisements on Consumer Decision Making

J. N. V. Raghuram, Assistant Professor (Senior) VIT Business School, VIT University, Vellore
School of Management, SRM University, Kattankulathur ,Tamil Nadu, INDIA,

Prof. P. Ravilochanan

1. Introduction
Today the world has become so competitive that in every field, products do require some sought of promotion to make a stand in the market. Days were there when we used to emphasis on the importance of marketing mix, where evaluation on Product feature, price, place and then promotion used to be done. But today marketers are more concentrated on the term promotion. Customers are in a state of confusion in choosing a product, because almost all the companies are coming with more or less the same product features, price and just next to the customers place. Promotion, is a concept where the product is positioned in the minds of customers and done with the help of Ads, hoardings, direct mailing, telephonic, event sponsoring, etc, which are all the various tools used to promote the product depending on the reach to the customers. In fact along with the reach, marketers used to take care of the appeal which really touches the minds of the customers. New types of communication have evolved in the field of marketing for promoting, but none except the TV ads have high impact on the consumer in context to the consumer durables and FMCG products. Advertisements a tool used more to create an impact on the consumers because it really makes a consumer visualize the product and as well makes the consumer to become a character in the ad and be involved. Creating advertisement is now days a very difficult issue as the field of advertisement is involved with increasing talent heads on creativity. Advertising agencies are working hard to create an ad which really positions perfectly in the minds of the consumers. An advertisement is supposed to be in a very short period build ones respect for a company, its supposed to create a feeling of liking for the product and the manufacturer. An

attractive advertisement when directed at adults, in promoting an adult product, tends to aim at building brand loyalty, focusing on product characteristics that are perceived to be of long-term value. But when creating an advertisement for child product the ad has to be updated frequently which enhance on the theme and the characters that garb the attention of a child. Creative advertisement concept is developing on a rapid scale which tells about how a customer looks at an ad and what different tools advertisers should use to attract the consumers. (Mario Pricken, 2008). For business to move in positive direction, both negative and positive methods of advertising are necessary to attract business and to save a business. What type of ad do the customers remember the most and why they do so? And the answers will most likely be the funny ones or the stupid ones even a commercial one complains about still stays in his/her mind! But that is what the ad writers are trying to do, get people to remember their advertisement, with reference to the bottom line is that the person remembers the ad and when making a decision to buy something, that brand name comes to mind first. But this again is good; the entire survival of a company depends on the simple act of buying their product. Advertising may influence consumers in many different ways, but the primary goal of advertising is to increase the probability that consumers exposed to an advertisement will behave or believe as the advertiser wishes. Thus, the ultimate objective of advertising is to sell things persuasively and creatively. The forms that advertising takes and the media in which advertisements appear are as varied as the advertisers themselves and the messages that they wish to deliver. 89

2. Uses of Advertisements
The primary function of an advertisement is to first identify a product and that has to be positioned in the minds of the customer. In the process of position the product has to be differentiated from the other products and make its uniqueness, so that the customer buys that product or remembers that product when the product is displayed in the shop. Apart from differentiation the advertisement should also communicate the attributes and also persuade. Advertisers should struggle hard to find out the best ways of coming out with creativity and make the best ad. A classic example how a mistake done on the production floor can be used for advertisement purpose is, a soap maker at Procter and Gamble left his machine running during his lunch period and returned to find a whipped soap that, when made into bars, floated. The company decided to capitalize on this mistake by advertising Ivory Soap with the phrase It Floats. This characteristic of Ivory Soap served to uniquely identify it and differentiate it from other bars of soap. This how ads took a vital role from promotion and the best tool for promotion. But then of course its just not the concept of what to communicate as in the olden days, but than today, it is all about whom to communicate and who will communicate is more important in advertisement. With these concepts becoming stronger in the ad making process, lot many appeals started coming in the field of Advertisement.

to apply the theories and methods of psychology to its study. Individuals such as Harlow Gale began to conduct experiments designed to determine the power of individual advertisements to attract attention and persuade consumers to buy. First hurdle for an advertiser is to obtain the attention of the consumer. This involves two important actions. First, it is important for the advertiser to know where a communication should be place to increase the odds of reaching a particular type of consumer; this is the media decision. The attention of a consumer who is, in fact, exposed to an advertisement is a significant challenge for advertisers, but at the time advertisers should also take care of the concept like Wear out(Philip Kotler).

5. Information processing by the consumer

Advertisements that are interesting, entertaining, and even irritating can attract attention; however, such advertisements may not result in the consumer attending to or understanding the intended message of the advertiser. It is important when creating the advertisement to understand how consumers think about products and product benefits and to use language that the consumer will understand. Apart from the product, product message should also be the focal point in creating an advertisement. Thats the reason when creating an ad; advertisers should consider the characters and the background very cautiously. The time duration of the ad also will have an impact on the minds of the customers.

3. Role of Advertisements
Advertising became especially important in the second half of the nineteenth century as retailers began to advertise products and prices that would bring customers to their stores. Advertising for patent medicines also played a prominent role in the development of advertising, and by the end of the nineteenth century, the firms that would become advertising agencies had already begun to form.

6. Attitudes formation
Attitudes are predispositions/tendencies to make a consumer behave or respond in a consistent way over time. There is an affect, feeling or dimension associated with attitudes. The goal of advertising is to create a positive impact on attitudes; these attitudes, in turn, influence future behavior. In other words when the consumer next goes to the stores to buy a particular type of product, these attitudes influence the choice of the product.

4. Marketing and Psychology

Marketing means an in depth study of the consumers Attitude, Perceptions, Beliefs, Values, personality and many more components of Consumer Behavior. Psychologists began to recognize that advertising was an important form of communication and began 90

7. Attractive media for Promotion

Today probably more attractive ways of promoting a product is through an Electronic media. In this E-media,

Televisions play a vital role, which have the highest number of spectators and almost all types of consumers or customers. This media can create the advertisement of a product with very attractive figures, background and excellent closures.

bombarded with 1000 of ads every day and at the same time every child is also getting exposed to all these ads from morning to evening till they sleep. In fact children are more susceptible and get easily influenced by advertisements. Kids represent an important demographic to marketers because they have their own purchasing power, they influence their parents buying decisions and theyre the adult consumers of the future. The power of the children on the decision making of the parents is very high. Every parent now a days are more depended on the Childs attractiveness towards the product promotion. Even child is very much sharp to grasp any type of appeal of an advertisement. That is what the power of children to drag their parents towards the products. This power is known as the delighting power or in other words Pester Power. It is well known that every parent only looks at the delightment of his or her child and obliviously buy the product which makes their child delighted. In fact some products are not at all concerned with the child but then still the ads are depicted by the children. Companies are able to craft sophisticated marketing strategies to reach young people by analyzing childrens behavior, their fantasy lives, art work and even their dreams. This is how the advertisers are positioning themselves in the minds of the children. Prahlad Kakkar shared with the audience about old Pepsi commercial showcasing street kids with a mask, which he directed as since street kids do not have the affordability to buy a Pepsi, he was under pressure to use professional child artists or rich kids. But Prahlad insisted that the insight is not to promote Pepsi, but promote the aspirations (Yeh Dil Mange More!) Whilst this child-targeted marketing used to concentrate on sweets and toys, it now includes clothes, shoes, a range of fast foods, sports equipment, computer products and toiletries as well as adult products such as cars and credit cards.

8. Child in an Advertisement
The advertisements now days are more concentrated towards the children rather than the adults. The advertisers are using an appeal which touches the customers minds and makes the sale for the product. An appeal is a tool which creates the attention and then the tension in the minds of the customers and makes him motivates towards the product. Thus lot of changes and various trends are evolving in making an advertisement position perfectly in the minds of a consumer. Ads were earlier or even now sometimes use big celebrities in promoting a product, but of course as the word celebrity it self speaks about huge investments on the advertisement. Celebrity endorsements are as a part of marketing communication strategy, has become common among organizations around the globe. Depending on the status of the Celebrity, endorsements could run into millions of rupees. In fact in one of the research work it was found that the celebrity advertisements made the sales increase for the product and non celebrity ads could get that much of success. But now days many of the marketers shifted from using the celebrities to small kids. What is the reason and how this is effecting the promotion of a product? In using a child in an advertisement the marketer is reducing lot of investment as compared to celebrities ads, which are very much costlier. Apart from cost reduction another interesting issue over here is the target segment. Now targeted segment means who? Is it the consumer or the child?. Over here the child is only a tool in creating an interest to the target segment. Products like Biscuits, Milk, Boost, Bournvita, Johnsons baby products, Chocolates etc can be positioned in the minds of the customers by using children. But today the interesting issue is creating an advertisement for products like washing machine, Paints, Luxury Car by using a 10 year old kid is definitely a new trend in the creation of an advertisement. Every customer is 91

10. Child becoming a customer

Young children are increasingly the target of advertising and marketing because of the amount of money they spend themselves, the influence they have on their

parents spending (the nag factor) and because of the money they will spend when they grow up. Advertising to children has long been a very successful way to build a solid consumer base. Today advertisement towards children has increased globally and the European Union estimates to generate $620 to $930 million a year in revenue from marketing products to children. However these ads not only bring funds but brings out an effect called as NAG Factor (Chetan Choudhari & Milind Marathe). The Nag Factor is when a child sees an ad for a product then cries and complains to a parent until the parent purchases the item. Over the last five years, theres been a substantial increase in the amount of influence kids have on durable goodscars, boats, big-ticket items. The power in the household is being ceded to the children. Kids these days are much more computer literate than their parents. According to McDonald and Lavelle, In todays families, many kids also serve as chief technology officers. When it comes to computers and other electronic purchases, even 7-year-olds may boast more expertise than Mom or Pop. A 1999 survey by Yankelovich found that 60 percent of parents dont shop for technology without consulting their kids. Thats just another reminder of the tremendous positive effects of advertising to children. With children either spending or influencing 500 billion dollars worth of purchases, marketing techniques have been turned upside down. In the past the most effective way to sell childrens products was through mom and dad. Now the opposite is true, children are the focal point for intense advertising pressure seeking to influence billions of rupees of family spending. Advertisers are aware that children influence the purchase of not just kids products anymore, but everything in the household from cars to toothpaste. Thus these adult products are being paired with kid- oriented logos and images. Research also makes clear that childrens purchaseinfluence attempts have a relatively high degree of success. Frequent parental yielding to childrens purchase requests has been reported in studies that rely on parent self-reports as well as unobtrusive observation of behavior in the supermarket. In sum, although the 92

process may be indirect, television commercials that are targeted at children are highly effective at accomplishing their intended goal of promoting product sales. Parents today are willing to buy more for their kids because trends such as smaller family size, dual incomes and postponing children until later in life mean that families have more disposable income .The marketers are using various tools or strategies to attract the consumers or position rightly at right time in the minds of the customers. A huge market with huge investments, but the impact of these Advertisements on the sales of a product may be a debatable.

11. Conclusion
Children are a vulnerable audience, with limited information-processing capabilities that constrain their early understanding of the nature and purpose of television advertising. Because of these limitations, young children are more easily persuadable than are older children or adults. They are more trusting of advertising claims and appeals, and they are more susceptible to commercial persuasion.

12. References
1. Mario Pricken, Creative Advertising: Ideas and Techniques from the Worlds Best Campaigns, Thames & Hudson, (2004). Chetan Chaudhari and Milind Marathe, Marketing To Children: Issues and Remedies, Proceedings on International Marketing Conference on Marketing & Society, IIMK (2007) p.167-168. Prahlad Kakkar, Talk on Advertising, at Manipal Institute of Communications annual communication Festival, in 2009 James U. McNeal, The Kids Market: Myths and Realities, Paramount Market Publishing, 1999 Strasburger, Victor .C, Call it kid-fluence. U.S. News & World Report, July 30, (2001) p.32. McDonald, Marci and Lavelle, Marianne. Call it Kid-fluence. U.S. News & World Report 131. 4 (2001) p. 32 Philip Kotler, Principles of Marketing, Pearson.







Customers Attitude, Satisfaction and Potentiality of Online Shopping in Chennai

Dr. N. Mahesh
Sigma-Mu Research Consultancy Services, Chennai Sadasivan Assistant Professor, School of Management, SRM University, Kattankulathur
New information and communication technologies are constantly emerging, altering business methods, and particularly, the relationship an organisation establishes with its customers. Technological innovations ensure that, as soon as consumer behaviour in any field is on the verge of stability and explainability, new products and services are introduced to destabilise the consumer behaviour model so as to create competitive openings for challengers, niche players, and other contenders (Firat et al., 1995). The popularity of interactive media such as the World Wide Web (WWW) has been growing at a very rapid pace. From a marketing perspective, this has manifested itself primarily in two ways: (1) a drastic increase in the number of companies that seek to use the WWW to communicate with (potential) customers, and (2) the rapid adoption of the WWW by broad consumer segments for a variety of purposes, including pre purchase information search and online shopping (Alba et al., 1997). The combination of these two developments provides a basis for substantial growth in the commercial use of interactive media. Today Internet is not only a networking media, but also as a means of transaction for consumers at global market. Internet usage has grown rapidly over the past years and it has become common means for delivering and trading information, services and goods.(Alan and William, 2003). Considering that Internet shopping, is still at the early stage of development, little is known about consumers attitudes towards adopting this new shopping channel and factors that influence their attitude toward(Eun and Youn, 2004). The consumers attitude towards online shopping is known as the main factor that affects e-shopping potential (Michieal, 1998). That means that, through motivation and perception, attitudes are formed and consumers make decisions. Thus, attitudes directly influence decision making. 93 The proliferation of online shopping has stimulated widespread research aimed at attracting and retaining consumers from either a consumer or a technologyoriented view. The two views do not contradict but rather reinforce each other. Because the success of an electronic market largely depends on consumers willingness to accept it. The consumer-oriented view focuses on consumers attitude about online shopping. The potential benefits of online shopping for consumers include convenience, various selection, low price, original services, personal attention and easy access to information, among others (Vijayasarathy, 2002). A unique characteristic of online shopping environments is that they allow for the implementation of very high degrees of interactivity. It is a multidimensional construct, the key facets of which include reciprocity in the exchange of information, availability of information on demand, response contingency, customization of content, and real-time feedback(Michael and Erik,2001;Rowley, 2000). In the context of computermediated communication, a distinction has been made between person interactivity and machine interactivity (Venkatesh, 1998; Venkatesh, 2003). While the former describes the ability to communicate with other individuals, the latter refers to the ability to interactively access information in an online database (Hoffman and Novak 1996). Indeed, the Internet has not only provides new ways for consumers to learn about and acquire products and services online but has also reshape consumer buying patterns. With this background, the general objective of the research paper is to explore factors that affect potential of online sales of a specific product and to investigate the consumer online behaviour, potential of online sales to identify those factors that influence online potential sales of a specific product.

1. Methodology
Conceptual Foundation and Framework The present research study concentrates on conceptual framework of consumer online behavior and e-shopping. This framework emphasizes the decision variables, which affect potentiality of online sales to specific product. The research framework and conceptualization of the relationship between potential of online sales and affective factors are constructed in the Figure- 1. This particular framework shows that potential of online sales is influenced by three factors including consumer attitudes, product type and familiarity of consumer to the product. In addition, demographic characteristics and environmental characteristics influence consumer attitude towards online shopping and entered into the model as controlling factors. Product type is affected by human sensory attributes. Moreover, familiarity and confidence to the product is influenced by brand name, shopping experience and satisfaction. The hypotheses of the research study are constructed in order to establish the relationships between factors.

Hypotheses H1: The consumer attitude towards online shopping is not statistically significantly different based on consumer demographic characteristics. H2: The consumer attitude towards online shopping is not statistically significantly different based on e-shopping environment. H3: There is no significant difference between influences of human senses in online shopping. H4: There is no significant relationship between shopping experience and familiarity and confidence in online shopping. H5: There is no significant relationship between satisfaction and familiarity and confidence in online shopping. H6: There is no significant relationship between customers attitude towards online shopping and potential of online sales. H7: There is no significant relationship between product type and potential of online sales. H8: There is no significant relationship between familiarity and confidence and potential of online sales.


2. Data Collection
A structure questionnaire was used to collect the necessary data which served as primary data to answer the research questions and objective regarding identified potentiality online shopping in Chennai. The data and information were collected from 200 questionnaires during the year 2009-2010.

5. Logistic Model
In order to investigate relationships in potential of online sales, a Logistic model was developed. As the potential of online sales it is probability in nature and changing between zero and one, so it appropriately treated as a binary or two choices variable the following Logistic equation was estimated. Lij = ij + ij 2 .PCij + ij3 .CAij + ij4 .FCij Where, PC refers to product type, CA refers to consumer overall attitude towards online shopping and FC refers to familiarity and confidence.

3. Statistical Techniques
The descriptive statistics, Analysis of Variance (ANOVA), Friedman Test, Chi-Square test and correlation measures were the statistical techniques which were used to analyze the data and information. For hypothesis testing, overall consumer attitude towards online was measured by Fishbeins behavioural model.

6. Results And Discussion

The age distribution of respondents showed that mean age was 32 years old while minimum age was 17 and maximum age was 45. The gender distribution of the respondents was 75 per cent males and 25 per cent females. Also nearly 55 per cent of respondents were married and the rest of 45 per cent were unmarried. Regarding to the respondents job, the largest group belong to businessmen in IT fields (32.50 per cent), followed by private sector professionals (26.40 per cent), businessmen in non IT fields (20.70 per cent), government servant (9.80 per cent)and others (10.60 per cent). In the term of the family income, families with Rs. 15000 to Rs. 20000 per month were the largest group among the respondents (34 per cent) then families with more than Rs 20000 (18.50 per cent). Also 7.5 per cent of respondents reported that they earn less than Rs. 10000 per month. Furthermore, 93 per cent of respondents had access to the Internet, 76 per cent were aware of e-shopping but 68 per cent have not had any experience in e-shopping. Along with this, 35 per cent said they will purchase online in next six months.

4. Fishbeins Behavioral Model

Measuring attitude in survey studies are widely used in different researches today. Fishbeins behavioural model is one of the most influential and widely researched models about attitude (Shwu-Ing Wu, 2003). According to the Fishbeins model, attitudes of people are formed toward a specific object based on their beliefs (perceptions and knowledge) about these objects. Fishbeins model was constructed to measure persons overall attitude toward some object and could be derived from his beliefs and feelings about various attitudes about the object. This model can thus be used as a multi attribute attitude measurement model. In this study five attributes namely, convenience, information, speed, enjoyment, and customer service were chosen to measure consumer overall attitude towards online shopping. Fishbeins attitude model can be expressed in equation form as: n Ao = bi ei i=1 Where: Ao = the persons overall attitude toward object o. bi = the strength of his belief that the object is related to attribute i. ei = evaluation or intensity of feelings toward attribute i. n = the number of relevant beliefs for that person. 95

7. Demographic Characteristics
The relationships between overall consumer attitudes towards online shopping and consumer demographic characteristics were analyzed by using ANOVA and the results are presented in Table-1. The results indicated that two factors of gender and family income have significant relationship with overall attitude towards online shopping at 95 per cent of confidence level (P 0.05).

Table-1. Analysis of Variance for Customer Demographics Demographic Features F Age 3.245 Gender 9.002** Education 0.765 Marital Status 0.000 Job 0.260 Family Income 3.462**

Sig 0.096 0.012 0.746 1.102 0.986 0.026

Note: ** indicates significant at 5 per cent level.

The relationships between overall attitudes towards online shopping and experiences were analyzed and the results are presented in Table-2. The results showed that three factors viz., internet use, e-shopping experience and willing to e-shopping in future have significant relationship with overall consumer attitude towards online shopping (P 0.05).

8. E- shopping Environment

Table-2. Analysis of Variance for Environmental Characteristics Demographic Features F Internet Access 0.068 Internet Use 4.385** E-shopping Awareness 0.026 E-shopping Experience 3.472** Future Purchase 6.024**

Sig 0.764 0.003 0.899 0.002 0.003

Note: ** indicates significant at 5 per cent level. 9. Product Type

The significant difference between the applicability of human senses and online shopping was analyzed and the result is presented in Table-3. The human senses were categorized then based on the virtual online space. The Friedman Test was used to test significantly differences of ranking human senses. The results showed with 95 per cent confidence, there is significant difference in human senses in online shopping.

Table-3.Friedman Test of Ranking Human Senses in Online Shopping Statistic Value Sample Size 200 Chi-Square 467.802 Asymp.Sig 0.000
Table-4 shows ranking result of effectiveness of human senses. From the table, products which need sense of sight to be chosen online are more likely to be sold online followed by sense of sound, sense of smell, sense of taste and sense of touch.

Table-4. Online Shopping Virtual Ranking of Human Senses Human Sense Mean Rank Sense of Sight 1.54 Sense of Sound 2.32 Sense of Smell 3.16 Sense of Taste 3.98 Sense of Touch 4.35

10. Familiarity and Confidence

Where consumers already know the product brand name and have purchased it before and been satisfied with their experiences, familiarity and confidence for e-shopping is higher. The respondents were asked to report their familiarity with Indian Railways and their previous shopping and satisfaction. Chi-Square test and Spearman correlation were used to investigation significantly of relationships between these variables and the results are presented in Table- 5 and Table- 6.

Table-5. Correlation among Familiarity, Confidence and Satisfactory

Test Chi-Square Spearman Rank Correlation Statistics 102.458 0.286 Sig 0.000 0.019

The results proved that where consumer purchased a product and especially if he/she satisfied of previous purchase, familiarity and confidence of consumers to purchase the product online is increased.

Table-6. Correlation among Familiarity, Confidence and Experience

Test Chi-Square Spearman Rank Correlation Statistics 115.290 -0.469 Sig 0.000 0.000

11. Potential of Online Sales

In order to identify factors affecting potential of online sales of a specific product, the logistic model was developed and the results are presented in Table-7. The dependent variable was the potential of online sales that takes 1 when product has bought online and 0 when product has bought offline. According to the results with 95 per cent confidence, all coefficients were significant. It is mean that potential of online sales has significant relationship with the variables. The constant coefficient of the equation also was significant in same confidence level. The negative value of the variable PC (Products type) indicates that when the dependency of choosing a product to human senses increases, potential of online is decreased. Using analysis of variance and overall attitude mean with 95 per cent confidence and result showed that only two factors, gender and family income had significant relationship with overall attitude towards online shopping (P .05). It reveals that overall attitudes of families with higher income are higher than others. In addition, men have stronger attitudes to online shopping compared with women.

Variables Constant CA FC PC

Table-7. Estimation of Coefficient of Logistic Regression B Wald df ** -3.964 5.102 1 ** 5.987 1 0.086 ** 6.846 1 0.925 7.142 1 -1.432**

Sig 0.035 0.010 0.034 0.026

Note: ** indicates significant at 5 per cent level. 97

The estimation of logistic model shows with 95 per cent confidence all coefficients were significant. It means that potential of online sales has significant relationship with overall attitude towards online shopping, product type and familiarity and confidence. The negative value of the variable PC (Products type) indicated that in online shopping when consumer has to apply physical human senses such as touch and taste, potential of online sales will be reduced.

confuse potential buyers; they should ensure that they provide an efficient delivery service to their customers. The leading telecommunication and internet service providers in Chennai need to provide cheaper internet access in order to encourage more consumers to become internet users. Introduce more affordable high-speed internet access to cater online customers who require high bandwidth in the delivery of digitized products such as computer software, music, videos and games through the internet, which are presently popular and frequently purchased by users of internet shopping. In fact, the potential of e-shopping will get significant privilege when customers will show less traditional culture and shopping behavior attitude.

12. Conclusion And Implications

The forgoing analysis indicated that gender and family income had significant relationship with overall attitude towards online shopping and environment characteristics and there is no any significant relationship between internet access and overall attitudes towards online shopping, but weekly internet use having in e-shopping and willingness to more shopping online have significant relationship with overall attitudes online shopping. It means internet access rate is high among people but few percentages have intention for e-shopping. In addition, results of this study investigated significant differences between human senses in e-purchasing process. The result also proves that there is a significant difference between human senses in online decision making process. Moreover, results concluded from Logistic model and showed strong relationship among the three independent variables with dependent variable which belong to brand familiarity, product types and consumer attitudes for online shopping. These results are significantly different from the electronic shopping test in which attitudes towards online shopping have the strongest influence on e-shopping possibility. Also depart from estimation of the Logistic model and verified that companies present physical product online but need to gain the advantages of famous brand name and sales experience are likely to be successful than those companies offer virtual products without familiar brand name and are new in the market. For online retailers need to ensure that online shopping process through their website is designed and made as easy, simple, and convenient as possible. The web site should also be designed in such way not to 98

13. References
1. Alan D. Smith and William T. Rupp; (2003). Strategic online customer decision making: leveraging the transformational power of the Internet; Online Information Review; Vol. 27 (6): 418-432. Alba, Joseph, John Lynch, Barton Weitz, Chris Janiszewski, RichardLutz, Alan Sawyer, Stacey Wood. 1997. Interactive home shopping:consumer, retailer, and manufacturer incentives to participate in electronic marketplaces. J. Marketing 61 (July) 3853. Brynjolfsson, E and Michael D. Smith, (1999). Frictionless Commerce? A Comparison of Internet and Conventional Retailers, Management Science Vol. 46 (4) 563-585. Charles Dennis, Lisa Harris, and Balraj Sandhu, (2002). From Bricks to Clicks: Understanding the E-consumer, Qualitative Market Research An International Journal, Vol. 5 (4): 281-290 Degeratu, A. M., Arvind Rangaswamy, and Jianan Wu (1999). Consumer Choice Behavior in Online and Traditional Supermarkets: The Effects of Brand Name, Price, and Other





Search Attributes, International Journal of Research in Marketing, Vol.17 (1): 55-78. 7. Dirk Van den Poel and Wouter Buckinx (2004). Predicting online-purchasing behaviour; Working Paper, Faculty of Economics and Business Administration, Ghent University, Belgiu, 03/195. Donnavieve N. Smith and K. Sivakumar, (2004). Flow and Internet Shopping Behavior: A Conceptual Model and Research Propositions, Journal of Business Research, Vol. 57 (10): 1199-1208. Efthymios Constantinides (2004). Influencing the online consumers behavior: the web experience, Internet Research, Vol. 14 (2): 111126. Ellen Mary Gordon and Kathryn De LimaTurner, (1997) Consumer attitudes towards Internet advertising: A social contract perspective, International Marketing Review, Vol. 14 (5):362-375.


Hung-Pin Shih, (2004). An empirical study on predicting user acceptance of e-shopping on the Web, Information and Management, Vol. 41 (3): 351-368. Joshua Chang and Nicholas Samuel (2004). Internet Shopper Demographics and Buying Behaviour in Australia, Journal of American Academy of Business, Cambridge, Vol. 5 (1&2): 171-176. Kaufman, C. Scarborough, (2002). E-shopping in a multiple channel environment, Journal of Consumer Marketing, Vol. 19 (4): 333-350.





18. Leo R. Vijayasarathy, (2002) Product characteristics and Internet shopping Intentions, Internet Research: Electronic Networking Applications and Policy, Vol. 12 (5): 411-426. 19. Michael D. Smith and Erik Brynjolfsson, (2001). Consumer Decision-making at an Internet Shopbot, MIT Sloan School of Management Working Paper No. 4206-01 20. Micheal de Kare Silver, (1998). E-shock the electronic shopping revolution: Strategies for retailers and manufactures, London, Mac Millan Business . Rowley, Jennifer, (2000). Product search in e-shopping: a review and research propositions, Journal of Consumer Marketing, Vol. 17 (1): 20-35



10. Enrique Bigne, Carla Ruiz, and Silvia Sanz (2005). The impact of internet user shopping and demographics on consumer mobile buying behaviour, Journal of Electronic Commerce Research, Vol. 6 (3): 193-209.


12. Eun Young Kim and Youn Kyung Kim (2004). Predicting online purchase intentions for clothing products, European Journal of Marketing, Vol. 38 (7): 883-897. 13. Firat, F., Dholakia, N., Venkatesh, A. (1995), Marketing in a post-modern world, European Journal of Marketing, Vol. 29. No.1, pp. 40-56. 14. Hoffman, Donna L., Thomas P. Novak. 1996. Marketing in hypermedia computer-mediated environments: conceptual foundations.J. Marketing 60 (July) 5068. 99

22. Shwu-Ing Wu, (2003). The relationship between consumer characteristics and attitude toward online shopping, Marketing Intelligence and Planning, Vol. 21 (1): 37-44. 22. Venkatesh, A. (1998), Cybermarketscapes and consumer freedoms and identities, European Journal of Marketing, Vol. 32, No. 7/8, pp. 664676.

Rural Producer and Urban buyer

Mr. D.Subramaniam, B.Sc, MBA, M.Phil, (Ph.D), Asst.Professor, Xavier Institute of Management and Entrepreneurship (XIME), & Research Scholar. Sri Chandrasekharendra, Saraswathi Vishwa Mahavidyalaya University, Kanchipuram,

1. Introduction
Many of the marketing text books have described the various strategies that can be adopted to market a product keeping the profile of people in general. Of late advances have been made and books have been written based on the profiles of the consumer behaviours of the urban and rural population. Marketers have found the necessity to understand the varying needs of the urban and rural buyer in order to succeed in their endeavor. Very recently it has been established that the urban market is reaching a saturation level and the producers have felt the necessity to penetrate the rural population. Especially in India with over 70% of the population living in the rural side, they see a huge potential for their future markets in rural India.

So, one has to have a proper understanding of the rural buyers need before trying to market the product in that sector in order to succeed. Similarly the rural producers when they try to enter the urban market also need to have a proper understanding of the needs of buyers who are in urban sector before entering into urban segment. The kind of rural producers exist are as evidenced by their pattern of occupation as given below;

3. Occupation Pattern Occupation Cultivators Agriculture labourers Trading & craftsmanship Non-agriculture labourers (kivestock,forestry,fishing, hunting,plantations etc) Salary earners Total

2.All India Population distribution

Distribution Total Rural Urban Population 102,7015,247 741,660,293 285,354,954 Population % 100 72.22 27.78

Proportion of rural population % 50 27 10 10 3 100

Source: National Council for Applied Economic Research NCAER 2002 It is also established that marketing strategies that has clinched success for them in urban India is not yielding the same success in rural India. They encounter severe challenges in this regard. A common sense approach will reveal that this difficulty is faced mainly because the profile of the rural buyer differs from the profile of the urban buyer in terms of their literacy level awareness level income level social environment and culture 100

Source: Chart used in the book, rural marketing in India (2004) by KS Habeeb ur rahman, Pg 22) But there are many an item produced in the rural sector and doest not have much of market in the rural side but has huge potential in the urban sector. This is interesting an aspect which calls for the understanding of the urban mind set for these products and accordingly devises the marketing strategies. For example a handicraft is mainly produced only in rural side, doest not have much potential in the rural sector as such. However it has a better market potential in the urban side as urbanites can afford and also have a taste for these kinds of items.

Many of the agriculture products are similarly making their way to urban side for better profit realization. Some of the commonly used items both in rural as well a in urban but produced mainly in rural side also have succeeded commercially well when branded. For example the butter commonly used product has made a huge headway in the form of AMUL from the rural side to many of the urban centers all over the country. Similarly Aavin has succeeded as a milk sachet at the regional level in Tamil nadu though it now has many competitors.

6. Bridging the Gap

If this mismatch in skill is identified and facilitated for their removal the rural products can easily reach the urban sector. This will also enable rural producers to understand the urban buyers expectation and attain the ability to reach them. The so called Gap between the rural producers and urban buyers can thus be bridged. This will transform the rural economy in specific and the whole economy in general. The above responsibility of bridging the skill can best be handled by Government and sometimes the Government can also take the help of NGOs as it calls for massive involvement, plan and resources. Also it requires different approaches at different places with the ultimate goal remaining the same. One important task is to identify the linkages of various variables that have an impact on factors leading to the removal of the negatives as listed above or strengthen the positives of the rural businessmen. For example rural literacy is a function of rural income & urban expenditure is a function of rural income. This phenomenon requires a sort of long term focus to work on these interdependent variables to create a climate conducive for the growth especially of rural side. The nature of variables are such that they can be nurtured only by the Governments in power on a long term basis and private players can be drafted in as additional players to make the development process speedily. Similarly the role of technology in information sharing and its potential to create a powerful impact on rural development is another area which can be handled both by private as well as Government sources. The successes that have been witnessed on account of the scheme e-choupal conceived and developed by ITC in Indian rural side is worth emulating. The user friendly environment that has been enabled was the key factor to the success of this scheme involving technology. Here opportunities exist for both Government and private sector to invest in ITES sector in the rural side. Many firms have tasted success by establishing e-kiosks in the rural side. The ITC a big corporate of India was able to taste success by going in for large scale IT 101

4. Urban Vs Rural divide in business approaches

It has been found that many firms have tasted success in rural areas when they found urban market getting saturated for their products. It has been comparatively easier for these firms as they were able to understand the needs of the customer and accordingly devised their marketing strategies. This is not happening when a rural business tries to enter an urban sector as the rural producers lack such an expertise. This is precisely because they only have a skill to produce but not the skill to market. This necessitates the role of a middleman to fill this gap. If only the rural producer is equipped to acquire the skill to market and to manage the business they will be able to succeed easily. It is more easily said than done.

5. Skill Gap
The negatives of rural businessmen are Generally they are illiterates They lack business acumen They lack money for investment They lack infrastructure

They lack access to information The positives of rural businessmen are They have the creative skill to produce. Generally they are low cost and qualitative They have enough time at their disposal Cheap labour

investment (e-choupal scheme ) in the rural side and by providing the required training to the rural youth they were able to taste success in their business. The technology helped in better sourcing of agricultural products, monitoring of agricultural production, monitoring of their price patterns and planning of logistics etc. Also recently C I I (Confederation Indian Industry) has signed a memorandum of undertaking with Khadi and Village Industries Commission (KVIC) & Ministry of Panchayathi raj to promote a new concept of Rural Business Hubs (RBH). These RBH enable direct business linkage between industry and rural business community. It helps farmers, Artisans, and rural business enterprises to establish market linkages enabling knowledge transfer, enabling reduction in logistics costs etc. The buyer also benefits by way of reduction in procurement cost and standardized sources of supply. There are certain globally proven methods to accelerate the economic growth in the economy such as increased spend on Infrastructure and thereby bringing about growth and development especially in the rural side which again is the domain of the Government. In todays economic scenario where recession is setting in in global economy many countries are resorting to massive investments in infrastructure. For example, Chinese Government has announced a package of $ 586 billion investment in infrastructure and public welfare spending to boost economy and revive employment opportunities. The multiplier effect is supposed to set in and bring growth to the economy. This is one possible action the government can take. This will not only improve the infrastructure but also improve the income in general and rural income in specific. This action addresses some of the concerns listed under the negatives as above. Further one has to understand that mere increased spending in infrastructure alone can not bring in results as such spending has to take place in projects that can help stimulate growth. Hence spending has to take place with increased focus .Also it has to strike a balance between projects that yield quicker results and the projects that are likely to take longer time to yield 102

results. For example spending on rural education is an important action that can benefit the rural economy in the long run. But one has to wait for it to bring success in the long run. The elimination of ignorance and enriching the rural folk with knowledge will lead to bridging the skill gap that is currently depriving him of success. This will eliminate the dependence on the middlemen and enable him or her to be independent. Thirdly the power of information has to be understood in the proper context for achieving success in any business. To-day many companys are spending a lot on information management as they help in qualitative decision making and thereby get a competitive edge in the market. The ERP (Enterprise Resource Planning) is one such investment which will enable capturing information at the source and provide consistent information at all levels of the management hierarchy for decision making. Also the role of technology has to utilize fully to exploit information power. While the type of technology to be used may vary, an appropriate use of technology is inevitable. For example the use of ERP may be appropriate for an established business in the urban area: it may be too much for the asking for a small or medium business of the rural side. But still the business in the rural side also has to use an appropriate IT tool to succeed in their venture. For example the power of internet is exceptional for any upcoming business. This enables a rural educated youth to exploit the opportunities in the market. of course the ERP manufactures have now realized this and hence have brought about new concepts such SaaS (ERP on demand) /Cloud Computing etc to make this technology affordable. The initiatives as discussed above have the potential to bridge the skill gap and make the rural entrepreneur to be independent. Fourthly, the importance of training can never be over emphasized. Here again the initiatives can come from both Government and private sectors. NGOs can also actively contribute. There have been many instances of rural arts disappearing over a period of time due to lack of support for those arts and the younger generation has not been able to inherit the art from their fore fathers. For

example Crafts Council of India has initiated a venture to help rural handicraft artisans in acquiring skills. The government of India Ministry of textiles in their annual report 2000-01 has also listed many initiatives taken for revival of languishing arts like Bamboo Etching in megalaya.Scroll Painting of Manipur etc. Schemes as above can again bridge the skill gaps listed above. Also, there is a linkage between the income levels of urban to the increased manufacturing activity at the rural side especially if the rural product depends upon urban market for its survival. The rural product in such a situation has to depend upon the urban market to have higher income levels more specifically higher personal disposable income for its success. It has been established in several studies carried out that the rural economy is growing faster than urban economy due to higher income level among the urbanites. A study carried out by Roopa Purushothaman, a U S trained economist in their research paper Is urban growth good for rural India has listed the following revelations. - 10 % increase in urban expenditure has lead to 4.8 % increase in rural nonfarm employment. Rs 100 increase in urban spending resulted in increase of Rs 39 in rural income. The rural economy has grown @ 7.3% average when compared to just 5.4 % in the urban economy. The study also reveals quoting central statistical figures indicating the contribution of rural economy as 49 % of GDP in 2000 indicating a high increase in contribution compared to 46%.of period 1993-94. There is a declining trend in the process of urbanization as a result of economic growth. The rural agricultural employment 103

growth was as low as 1% during 2000 and 2005 whereas the non farm jobs have grown by 20% for the said period. The other factor that can bring about success for a rural product is that if the rural location is visited by outsiders such as urban buyers, tourists, floating population etc. This is possible if the rural location happens to be a tourist destination. This will enable direct contact between the buyer and the rural seller. For example, many miniature -versions of TAJMAHAL are made using marble stones which are available locally in AGRA. Since the place is visited by many tourists the rural manufacturer of the above product are able to sell it directly to buyers visiting as tourists. All the above linkages clearly establish the various levels of impact on the rural economy and help in reducing the skill Gaps as listed above.

6. Conclusion
The product produced in rural side has to reach the urban hands as necessitated by the market forces. In order for the above transaction to take place certain skill gaps have to be bridged which act as a bottle neck. Government has a very vital role to play in removing such an obstacle and so also others like private players, NGOs etc. The schemes like investment in infrastructure improvement, cresting a conducive environment for rural investment, rural education, and information accessibility and training opportunities are aimed at addressing these obstacles so that rural economy flourishes.

7. References
1. Azhar Kazmi, 2nd edition, Business Policy and strategic management, Tata McGraw-Hill 2. Dell I Hawkins-Roger J Best Kennet A Coney Amit Mookerjee ninth edition Consumer Behaviour Building marketing strategy The McGraw-Hill Companies. Dr.N.Rajan Nair & Sanjith R.Nair seventh edition,1993, Marketing Sultan Chand & Sons



S.A.Sherlekar,thirteen revised edition, Marketing management Himalaya Publishing House.


Rural business hub, report/


5. K.S.Habeeb ur rehman Rural marketing in India-2004 ICFAI

8. article.cfm


Service Quality Gap In Healthcare Services in India - A Birdseye View Analysis

Asst.Professor& Research Supervisor SRM B-School, SRM University, Vadapalani, Chennai Dinesh Doha, Research Scholar, SRM B-School, SRM University, Chennai
The fruit of SILENCE is Prayer- The fruit of PRAYER is Faith The fruit of FAITH is Love- The fruit of LOVE is Service The fruit of SERVICE is Peace. 2.47 million people in India are estimated to be HIV positive. India is one of the four countries worldwide where polio has not as yet been successfully eradicated and one third of the worlds tuberculosis cases are in India .According to the World Health Organization 900,000 Indians die each year from drinking contaminated water and breathing in polluted air . As India grapples with these basic issues, new challenges are emerging for example there is a rise in chronic adult diseases such as cardiovascular illnesses and diabetes as a consequence of changing lifestyles .There are vast disparities in peoples health even among the different states across the country largely attributed to the resource allocation by the state governments where some states have been more successful than others. Better efforts are needed by the local governments to ensure that the health services provided are actually reaching the poor in worst-affected areas. In the era of globalization all the services are delegated to the private organisations. Like many other basic service Health care facilities are also taken up by both private as well as public sector. Health care facilities provided by private sector vary.

Dr. Y. Lokeswara Choudary

1. Introduction
Health Care in India has can be traced back nearly 3500 years. From the early days of Indian history the Ayurvedic tradition of medicine has been practiced. During the rule of Emperor Ashoka Maurya (third century B.C.E.), schools of learning in the healing arts were created. Many valuable herbs and medicinal combinations were created. Even today many of these continue to be used. During his reign there is speculation that it was attempted for the state to provide health care to all of its citizens. Healthcare in India is the responsibility of constituent states and territories of India. The Constitution charges every state with raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties. The National Health Policy was endorsed by the Parliament of India in 1983 and updated in 2002 .Although India has eradicated mass famines, half of children in India are underweight, one of the highest rates in the world and nearly double the rate of Sub-Saharan Africa. Water supply and sanitation in India continue to be abysmal; only one of three Indians has access to improved sanitation facilities such as toilet. Indias HIV/AIDS epidemic is a growing threat. Cholera epidemics are not unknown. The maternal mortality in India is the second highest in the world. Providing healthcare and disease prevention to Indias growing population of more than a billion people becomes challenging in the face of depleting resources. 105

2. Salient features of healthcare in India

Changes in demographic with nuclear families spring up in ever large numbers leading to more awareness in health related problems. There has been increase in various disease owning to the life style of the people. Increase in population from 1 billion to 1.2 billion will lead to increase in number of treatment from 1.6 bn to 1.9 bn. There has been increase spending power and higher disposable income in personal health by the people. The no of beds is dismally low in India,

currently at 1.5 beds per 000 population as against the world average of 3.3. There are currently 105 million beds in the country, and there will be a need for additional 75 million in 10 years. This will be driven by the need to expand the number of tertiary beds by over 50% to 150 million beds. Indias healthcare industry is currently growing at 17% annually. The growth is being propelled by an increasingly middle-income group of 100 million who are seeking and willing to pay for a higher standard of healthcare. The entry of private insurance companies into India market is expected to transform the healthcare landscape in India increasing the customer base by including people of middle and rural population. At present only 0.25% of the Indian population is covered by medical insurance in any form. It is stated to grow 5 times in the next 6 years. There has been increase in health awareness due to easy access to information through varied media.

multi-specialty private hospitals, characterized by professional management, state-of-the art equipment and world class specialists. Equipment: Foreign manufacturers with extensive service networks (GE, Phillips, Hitachi, Siemens) dominate the high end of the equipment market. Indian manufacturers are producing higher quality medium tech equipment, though local products maintain the stigma of unreliability. The price of imported equipment is bloated by the combination of steep duty tariffs (between from 40-50%) and the weak rupee. Education and Training: In 1998 99 there were 162 Medical Colleges in India. With over 498,689 doctors and 565,696 nurses there is a tremendous stock of intellectual capital in Indian healthcare (source: OPPI, 1998-99 estimates) but there is a pressing need for qualified, specialist nurses. Several private hospitals have invested in nurse education, but are concerned about loyalty: trained nurses often leave India, attracted by the higher wages offered in the Gulf countries. Specialist nurse training will become vital as the number of specialty and multi-specialty hospitals increases. Doctors in India are inclined towards UK medical processes and accreditation bodies such as the Royal Colleges. While private hospitals are attracting the most qualified individuals, entrepreneurial doctors have set up their own private clinics or nursing homes in addition to their hospital work. Management Information: Indian healthcare is plagued by a lack of standardization and accreditation, highlighting the need for information management expertise. This nebulous aspect of the market covers a variety of sectors including public health, insurance, hospital management, clinical research and clinical trials. Information Technology, a core competence of the western and southern regions, facilitates management of information. Healthcare services: Two services that are desperately needed in India are emergency medical services (EMS) and clinical waste management. In both cases there is willingness for the private and public sectors to work together to implement effective systems. 106

3. Features of the Indian Health Care Market

Size of the Market: Government-run hospitals and those operated by charitable organizations were the main providers of subsidized healthcare until the early 1980s. However, the last decade has seen the mushrooming of corporate and privately run hospitals both small hospitals (popularly called nursing homes, which typically have 4 50 beds) and large. Most large trust and corporate hospitals have invested in modern equipment and focus on super-specialties.

4. Key Market Characteristics

Hospitals: These doctors have lacked the funding and management skills necessary to establish large, private multi and super-specialty hospitals. Interest rates on such projects have been prohibitively high and exchange rate exposure has limited foreign investment in hospital construction. Recently, the Apollo Group has succeeded in developing a chain of high quality,

Insurance: Insurance will drive quality consciousness and increase demand for better standards, accreditation and patient/management information systems. Corporations will be the first to subscribe to private insurance schemes, developing the market for third party administration of insurance packages. The major international players will establish networks of affiliated hospitals and may seek direct involvement in the development of new facilities, especially costeffective diagnostic centres. Pharmaceuticals: India became a member of the WTO in January 1995 when it agreed to amend its patent laws to grant product patents. However a 10-year concession has been granted, which means that process patents will continue to be recognized until 2005.

was necessary to incorporate marketing as an integral function in the hospital operations. But the major argument at that time lay in understanding whether this professional orientation was really required for its viability, profitability and sustainability. This argument however became favorable in the late nineties as corporate companies like Wockhard and Max India started venturing into the hospital industry, apart from the ongoing mergers and acquisitions that were already taking place at that time.

7. Categorisation of the Health Care Industry

The Health Care industry is mainly classified into two main heads. Social Commercial Social marketing: This relates to areas of family planning, child immunization and health and family welfare, AIDS etc., mostly carried out by the Government and some NGOs. Mass communication media like TV, print media, cinema, transit advertising, direct mail scheme etc. and personal communication are used in promoting these services. Commercial marketing: According to the law, hospitals cannot advertise their services but can do advertisement with some social message. Competition has forced the private hospitals to take up advertising in print media, encouraging people to take preventive healthcare by having regular check-ups, etc. Several schemes such as medical insurance policies by the GIC, Oriental Insurance, LIC etc. have also been promoted during the last decade.

5. Different types of health care services available in India

Hospitals Pathology Clinics Blood Banks Meditation Centres Emergency services like Ambulances, etc. Online Medical Services Telemedicine Naturopathy Yoga Centres Fitness Centres Laughter Clubs Health Spas

In the Constitution of India, health is a state subject. Central govts intervention to assist the state govt is needed in the areas of control and eradication of major communicable and non-communicable diseases, policy formulation, international health, medical & paramedical education along with regulatory measures, drug control and prevention of food adulteration, besides activities concerning the containment of population growth including safe motherhood, child survival and immunization programme.

8. Marketing Mix Variables for Hospitals

Quality Level: When we talk about marketing hospitals, it is very natural that we are very particular to manage our services in the right fashion. Supportive services play an important role in improving the quality of Medicare. These services, which include laboratory, blood-banks, catering, radiology and laundry, in a true sense determine the quality of services made available by medical and para-medical personnel. 107

6. Marketing in Hospitals
Marketing in unethical was the frequent refrain in the eighties, when very few hospitals realized that it

Accessories: This is a very good way of segmenting customers. Many hospitals provide additional services such as catering, laundry, yoga sessions, cafeterias etc. for customers (patients) who are willing to pay extra. Hospitals have different wards General and Special. Packaging : This is the bundling of many services into the core service E.g. Apollo hospital offers a full health check-up to patients. Similarly other hospitals also offer package deals for health check-ups. Product line : Hospitals offer patients services catering to a wide range of customer needs. Brand name: The hospitals use a brand name to differentiate themselves and their services from others. The intangibility factor of the service makes it all the more important for them to do so.

9. Medical Insurance
Opening of the Insurance Sector: Consultants, Financiers and Insurance Agencies stand to benefit from this boom. The insurers will use PPOs, which will grow into HMOs, to assume insurance risks on the clients behalf. Medical equipment, medical software and hospitals will see the biggest boom. Apart from starting insurance by corporate hospitals, for example government of Tamil Nadu signed up private Health Insurance company to provide quality health care to the people below poverty. Medical Equipment: All the surgical equipment required in this field also contributes a lot to the healthcare industry. Although it forms an inseparable part of this industry, it is not a service but a product. These products sometimes are so expensive to install or maintain that it gives rise to other services in the healthcare industry. This kind of service includes pathological laboratories, blood banks, organ banks etc. Since all the hospitals or small clinics and nursing homes cannot afford to purchase such expansive equipment, they outsource these services.

10. Suggestions for improving health care in India

Setting New Hospital: Going through the huge variation in demand & supply of hospital 108

and growing trend in the industry, there is need of setting of new hospitals, particularly in B class cities. According to a World Health Organization report, India needs to add 80,000 hospital beds each year for the next five years to meet the demands of its population. Tapping the middle income group : The current growth in the healthcare segment is on account of increasing number of middle class population of 100 million who are seeking and willing to pay for a higher standard of healthcare. Thus alliance with private national insurance company can serve a tap the middleincome group. Tie-ups: Alliance with small nursing homes can be undertaken, where in the technology and expertise of the tertiary hospital will be shared with small nursing homes. Tie-ups with existing nursing homes are a less capitalintensive strategy for tertiary hospital as well it benefits small nursing homes. Customer Awareness: Since the service product is intangible more stress must be made to make customer aware of the service product in order to change the perception of the public with regard to the services that are available to them. a. This includes a customer education about the various diseases treatment available, treatment cost, profile of doctors and other related information should be made. Well-informed patients will work as watchdog, leading Hospital to improve upon its services. b. Organizing programmes and awareness campaigns in the community as well as updating the general practitioners about contemporary developments and advancements in the different aspect of healthcare, who can really bridge the gap between the patients treatment needs and providers available service range.

Setting Clinics: Setting a number of satellite centres connected to a common hub (tertiary care hospital) called Hub and spoke model can be preferred as a solution to make healthcare easy and accessible to the vast and diverse Indian population. The hub and spoke model offers great opportunity for vastly improving quality care.

11. Conclusion
Even though Health sector is emerging in India, still quality health care for all is distant dream. India is a place where frequent outbreak of epidemic disease is common. During that time, government is not in a position tackle the situation. When situation arises, private sectors are also not in a position to tackle the

situation. International organizations like world health organization and World Bank emphasis government to consolidate the program with a tighter geographic focus on the poorer states.The Banks work also emphasizes the strengthening of governance in health systems, and the monitoring and evaluations of outcomes. They currently collaborate with the government to improve governance and capacity in the Ministry of Health and Family Welfares focal unit for health sector procurement. There are different types of health care facilities are provided by the private sector. Private sectors effective marketing strategies attracting customers to utilize the services. Unlike other sectors Health services have to go long way to provide effective service delivery.


The Impact of FDI in Retail, More Advantageous

Rabi Jayakumar Retail Consultant

1. Introduction
Amidst todays time of fierce competition and a quest to achieve and enhance a substantial level of economic and social development; each and every nation is trying to liberalize its economic policies in order to attract investments from domestic & International players across the globe. Consequently, people with generous reserves of funds, all around the globe, are expanding their wings and seeking opportunities of investing in different spheres of this lucrative market. The advent of FDI in India was witnessed during the end of 1990s when the Indian national government announced a number of reforms which aimed at helping in the process of liberalization and deregulation of the Indian economy. Since its inception there has been a remarkable surge in the FDI inflows in the country. The total amount of FDI in India came to around US$ 42.3 billion in 2001, in 2002 this figure stood at US$ 54.1 billion, in 2003 this figure came to US$ 75.4 billion, and in 2004 this figure increased to US$ 113 billion. This shows that the flow of foreign direct investment in India has grown at a very rapid pace over the last few years.

According to the latest data released by Department of Policy and Promotion (DIPP) the India achieved a substantial 85% increase in FDI flows in calendar year 2008the highest increase across all countrieseven as global flows declined by 14.5 per cent. Needless to say, but FDI inflows has evidently proved to be very advantageous for the overall development of the Indian economy and inter alia has resulted in increased capital flow, improved technology, notable management expertise and favorable access to international markets. Now coming to the captioned topic of FDI in the Indian retail sector, it is submitted that the scenario of the same is kind of depressing and unappealing, since despite the ongoing wave of incessant liberalization and globalization, the Indian retail sector is still aloof from progressive and ostentatious development. This dismal situation of the retail sector undoubtedly stems from the absence of an FDI encouraging policy in the Indian retail sector. However, it needs to be noted here that unfortunately this dismal situation is there to exist, especially in the light of the recent developments in terms of the abrupt change in the ideology of the political parties.

2. Salient Features of Indian Market

Key Developments Largest democracy, Stable Govt Dominant Private sector Robust banking sector; Capital markets World class IT & telecom infrastructure Yesterday Protected market Small consumer markets Underdeveloped infrastructure One of the fastest growing economies 110 Today Resilient Economy even during global crisis Opening up sectors for investment Promising consumer markets, with 8-9 % GDP Investment in infrastructure development

The key Growth primarily driven by the strong domestic market with domestic savings rate at more than 35%, India projected to be the 5th largest consumer market by 2025, worth over USD 1,500 Bn CAGR of 7.3% (Source: McKinsey Institute)

resources of banks. Inflation has been under strict control and is currently hovering around 5 per cent. Import duties are being increasingly brought down. Currently, these are around 15 per cent, down from a high of over 130 per cent only a decade earlier. India is being sought after as a major destination by international retailers. Even China which until recently was greatly favored, is now occupying a back seat compared to India. Availability of resources, adequate skilled labor at competitive cost, increased purchasing power, the bulging of the middle income group with disposable incomes, reduced transaction costs, improving rural economy helping to create a surge in demand for all goods and certainly demanding FDI, Indian Consumers remain most upbeat in the world despite food price concern at home and improving outlook elsewhere, India registered 129 points in the latest Nielson Global consumer confidence survey

3. Reforms and consumerism

Economic reforms have increased the spending power of the middle-income group which is growing bigger day by day. Consequently, purchasing power is on a high with malls, department stores, discount stores, all springing up in various parts of the country. The consumer today demands value for money. Quality is of prime importance and the consumer is prepared to pay a price for it. Privatization has become a bye-word today in the economy of the country. Cheap loans are being made available to meet the basic needs of shelter. The demand for these loans has outstripped available

Consumer Confidence Index - 2010 Country India Indonesia Vietnam Philippines China Brazil Russia US UK Egypt Spain Japan Lithunia World Average Points 129 119 119 113 103 108 88 87 78 78 69 55 52 93

69% of Indian Consumers think that India has not gone under a recession 92% of Indians are optimistic about their job prospects in next 12 months 85% of Indians consider their state of finance in coming year is good or excellent 59% of Indian consumers think that this is the right time to buy. 63% of Indian put their spare cash in savings 48% love to invest in Stocks and MF 36% spend on technology products 34% love to spend on new clothes 29% spend on home improvements 30% will pay of debts.

The number of shopping malls cropping up across India has made you wonder where they will find shoppers and tenants. The fact is mall culture is still in nascent stages in the country when compared to developed and other developing countries. According to a study done by Asiapac, a Bangalore based real estate development 111

consultancy, only the countrys largest 12 malls qualify as regional malls (5 11.2 Lakh Sq.Ft) while Australia has 75 regional malls besides 15 super malls. Clearly there is room for hundreds of more mega malls as country continues its drive to become a super power economy with a huge middle class market.

4. Modus operandi on Foreign Direct Investment In Retail

Importantly,there is a complete ban on foreign investment inmulti-brand, front-end retail. This has resulted in keeping all the giant corporate backed retailersof the world like Wal-Mart (USA), Carrefour (France), Tesco (UK),and Metro (Germany), who are very keen to foray into Indias retail sector, away fromentering into the country. All of these retailers, therefore, to make their presence feltin the country, have either tied-up or trying to tie-up with local corporate, tooffer theirservices for back-end operations like sourcing, logistics, inventory management, among others, for front-end, multi-brand retail operations of such corporate. The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. AT Kearney, the well-known international management consultancy, recently identified India as the second most attractive retail destination globally from among thirty emergent markets. It has made India the cause of a good deal of excitement and the cynosure of many foreign investors eyes. With a contribution of an overwhelming 14% to the national GDP and employing 7% of the total workforce (only agriculture employs more) in the country, the retail industry is definitely one of the pillars of the Indian economy. According to the Investment Commission of India, the retail sector is expected to grow almost three times its current levels to $660 billion by 2015. It is expected that India will be among the top 5 retail markets then. The organized sector is expected to grow to $100 bn and account for 12-15% of retail sales by 2015. There is certainly a lucrative opportunity for foreign players to enter the Indian terrain. Growth rates of the industry both in the past and those expected for the next decade coupled with the changing consumer trends such as increased use of credit cards, brand consciousness, and the growth of population under the age of 35 are factors that encourage a foreign player to establish outlets in India. However, it is not out of place to mention here that the government policies towards FDI are the only hindering factors that do not make way for foreign players. 112

Retail trade reforms still continue to be in a limbo, nearly seven years after the first report, commissioned by the Department of Consumer Welfare, recommended that permitting entry of foreign direct investment in the sector would result in a win-win outcome for all stakeholders. The conclusion was reinforced by another study by ICRIER, done for the Department of Industrial Policy and Promotion (DIPP). These findings, based on a scientific and unbiased primary enquiry, should have been enough to convince even the biggest skeptics of the need for retail reforms. Yet, the government is unable to muster the political will to liberalize FDI in multi-brand retail, even as it assures all our foreign partners that the reform is just round the corner.

5. Opposing Will Never Work

Those who oppose the reform must understand that they are standing in the way of Indias progress. The country cannot achieve its desired rate of growth while being shackled by a backward trading sector characterized by low productivity, obsolete processes, technological stagnation, unacceptable employment conditions and multiple layers of intermediation that lack transparency in price formation. By contributing to the relatively high prices of wage goods like food grains, vegetables and daily necessities of life, a backward retail trade sector prevents India from achieving higher rates of economic growth while maintaining price stability, an outcome that China has managed by rapidly modernizing its trading practices. The emotive argument made in favour of retaining the status quo is that the small trader, the owners of kirana stores and street vendors and hawkers would fade out shortly, which is nothing but a myth stopping Indias aggressive growth.

6. Big, Small Can Co-Exist

With economic growth of 9% per annum, the size of the retail sector would be more than double every eight years. This will surely leave more than enough space for the growth for the modern and self-organized retailers. In fact, it should be clear that mom and pop stores will not be able to meet the needs of a rapidly growing economy and this will result in a severe bottleneck, as urbanization gathers pace and the burgeoning middle

class demands greater convenience and minimal time and effort to meet its basic consumption needs. The present estimates are that the market share of modern retail will increase from a merely 4% now to 16% in 20 years later, the remaining 84% share that will still remain with the kirana stores will amount to a business output of no less than $800 billion. Despite the fact 100% FDI is allowed or not MNC would exist in Indian market probably with different business arrangements with local partners. Such as Walmart with Bharati and Carrefour with Future Group Without the colored glasses of ideology and of shortterm vested interests, it is clear that both the modern and self-organized sectors can happily co-exist and generate synergies that would enhance both producer and consumer welfare. The consumers, unanimously, want both formats to develop to take advantage of the distinct advantages that the two formats such as Organized and Unorganized can offer. The smaller producers of non-branded manufactured goods will gain because large retailers contract them to improve their bargaining position vis--vis established brands and improve their margins. Empirical studies reveal that farmers get up to 25% higher for their output when supplying directly to retail chains.

down to them. On a survey conducted across 8 Cities in India among traditional retailers, we have found that they have several start up barriers which is confining them to realign to fierce competition which is round the corner. Start up barriers for Unorganized Retailers Base Respondent 1001 Lack of funds 14% Not Sure, if the idea will click in saturated Mkt Involves far too much risk Happy continuing the same job Having no interest in turning big Gestation time - Time taken for execution Time taken for Break-even Lack of experience Not viable in shaky economic environment Sole earning business / No back up No Mentor Total 14% 10% 10% 8% 8% 8% 7% 7% 7% 7% 100%

7. Should small stores fade out?

This is the million dollar question to which everyone almost always thinks the answer is a straight yes. I think there is scope for a counter argument to this. The answer is also likely to vary by category while luxury categories (which most kirana stores do not operate in) may expand the market, specific categories may see consolidation such as electronics Retailing and Grocery Retailing. While organized retail will likely bring differentiation with their marketing investment, they will still likely have to provide competitive service and prices that appeal to the same segment of the population that will shop at the traditional retailers as well. Who may gain are the farmers and end consumers, who are likely to see some of the benefit of the disintermediation trickle 113

8. Benefit to Producers
Moreover, large retailers critically dependent on assured and timely supplies of fresh farm products that meet minimum standards will introduce new seeds and processes to the farmers and attract investments in postharvest logistics and supply chains. Thus, modernizing the retail trade will directly result in modernization of the agriculture sector and give our poor farmers the opportunity to improve yields and incomes. Today at least $25 billion worth of agriculture produce is wasted because of poor handling and lack of post-harvest processing. Even if half of this is saved it would represent major value addition and employment generation. We can ensure that local farmers and producers do not suffer by making it incumbent on retailers to procure

a given share of their supplies from local farmers and producers. And farmers could be encouraged to get into cooperative organizations for achieving better bargaining outcomes when negotiating with the retailers.

9. Modernizing retail in India cannot be interrupted

With rising aspiration of the youth, new mindset and attitude, our entrepreneurial drive has already unleashed the beginning of a new consumption drive. This drive demands new products, new services, alternate uses and myriad of desires. The assortment required to fulfill these desires cannot be fitted into a small 500-800 sq ft store.Somebody within the supply chain has to meet these demands now and in the future. The process of modernizing retail cannot be interrupted in India anymore. The question to ask is how we modernize, who will bring in the capital to modernize and how will the small shops in the current eco system participate in the consumption drive of modern Indians. Sustained capital infusion, expertise in managing modern retail, building the business from scratch and nurturing it to grow to a scale over a 15-25 years period are essential to build and grow modern retail in India. India can achieve high growth only if modern retail is 30-40% of the retail sector and becomes a primary driver of growth and consumption. Even with such high penetration, large modern retail companies may not get into cities and towns of less than half a million population. The size and scale of consumers required for modern retail to survive does not exist in the smaller towns.Therefore the question is not whether we need to allow modern retail to grow, or the current retailers to modernize, but how to allow flow of capital to help modernize retail. We need to create a level playing field for every new business, small or big to enter the retail industry. This will take away the need to distinguish between Indian and foreign or big and small. The impact of small and big, Indian or foreigner on the small shops will be the same. Allowing foreign investors will not only help investment in the front end but also all through the supply chain. We should open up the industry at the earliest so that modern retail can support development of the total retail eco system.Modern retail will help and support the small stores in the next 15-20 years 114

before it starts harming them unless Traditional retailers revamp themselves. Our society will develop in existing localities and in new suburbs. In the existing localities, the infrastructure that small retailers enjoy cannot be duplicated by the modern retailers and therefore new retailers will have to develop cooperation and collaboration with the existing kiranas. By delaying modernizing of retail and not allowing FDI to flow in, we are actually hurting the small retailers. We require many more players and large capital infusion to meet the growing needs of modern Indian Retail.

10. Will Retail FDI harm the Regional Players

Certainly no, take a look at the sheer size and volume of the sector. Total retail business is near Rs 12,00,000 crore, 40 million of our workforce is engaged in Retail sector, It is estimated there are 15 million retail outlets in this country accounting for the highest retail outlet density in the world. Only 4% of our retail outlets have larger than 500 sq feet area. Food constitutes 70% of retail sector, eventually three out every 10 men in the city work in retail sector, these 40 Million labors has mediocre education with no big pay packets hence they deserve a fair deal which would be provided by large retailers who could offer better jobs with lower prices and inflation.

11. Uniqueness of Indian Retail

As India enters its second phase of organized retailing, it is interesting to take stock of first phase learnings. Organized retailing in India took off with great gusto in the early 2000. Capital markets and large business houses saw immense potential in retail as less than 4% of the trade was organized. Capital markets gave astronomical valuations to retail businesses, developers started creating malls everywhere, the best in the industry was lured away offering double of what they were earning earlier, and those who had international exposure of developed retail markets could demand any price. So what has changed in The Second Phase? Why have malls started struggling? According to estimates only about half the retailers in merely 10 of the 200-odd malls make money. Why did Indias first mall in South Mumbai shut down? Why are some key retailers deserting malls? Why are the valuations not robust anymore?

The answer lies in one simple word, execution The retailer-developer-capital markets combine, decided to use fixed benchmarks those of the developed western markets. So the retailers copied the strategies and operating procedures of successful international retailers, the developers planned their pricing based on international sales and the analysts merely took international growth stories and valued Indian brands accordingly. While doing all this, industry ignored one basic element of the chain the consumer, his usage and attitudes, his affordability and most importantly his living conditions. Likewise, there is much hype about tier- 2 and 3 towns. Smaller towns in the US fuel retail growth and so it was believed that the same would apply for India. There was utter disregard to the consumption patterns, propensity to spend, income levels, and socio-economic indicators for the city/area. We now have the experience to script a truly successful story for the Indian retail industry. Clearly, the rules need to be different now. We must understand the hugely heterogeneous Indian customers completely their tastes, preferences, mindsets, regional sensitivities, weather conditions, propensity to spend, their socio-economic outlook etc. The Indian market is very unique, especially so during this phase of rapid economic growth. To be successful here, primary understanding on consumer behavior plays a major role which would take lot of time for MNC to adapt and execute, within this time frame the regional and traditional players have to ensure they adapt to the momentum

2006, suggested that 49% FDI be allowed in the Indian retail sector without any restrictions on the number of outlets or location of stores. The Indian retail boom and the Investment Commissions suggestions renewed the debate on the issue of allowing FDI in the retail sector. The Commission opined that that foreign investment would help in improving the retail and Supply chain infrastructure. Ultimately, the consumers would benefit due to the availability of more product offerings, lower prices, and efficient service. Foreign retailers have to spend sizeable time in the domestic market to capture their market share, before that if Regional and Unorganized players should equip themselves for the competition there is no question of death or fading out from business; there will only coexistence for sure.

13. Employment generation through FDI

The FDI will help to overcome both the lack of experience in organized retailing as well as lack of trained manpower. FDI in retail would reduce cost of intermediation and entail setting up of integrated supply chains that would minimize wastage, give producers a better price and benefit both producers and consumers. From the stand point of consumers, organized retailing would help reduce the problem of adulteration, short weighing and substandard goods. Moreover, it is submitted that in the fierce battle between the advocators and antagonist of unrestrained FDI flows in the Indian retail sector, the interests of the consumers have been blatantly and utterly disregarded. From this point of view, it can inter alia be concluded that the interest of the consumers should take precedence over the interest of the retailer and consequently healthy flow of FDI in retail should be permitted. Further, it would be worthwhile to list down certain advantages from the point of view of consumers which will inevitably flow from the establishment and development of larger stores and supermarkets:

12. Retail Makeover

It is to be noted that lately there has been an remarkable surge in the demand for the liberalization of the Indian retail sector both in domestic and as well as at the international front and it seems that the government is giving the matter a very pensive and careful consideration. Some of the factors that have contributed to this trend are the evident profits in the ever growing but conserved Indian retails sector, reduction in tariff, cheaper real time communications, and cheaper transport. In wake of relentless protests for the opening up of the Indian retail market for the reception of unrestrained FDI, the Investment Commission in July, 115

14. FDI in Retailing Isnt a need of the hour

India is targeting for its GDP to growth of 8% to 10% per year. This requires raising the rate of investment as

well as generating demand for locally produced goods. 1. To reduce gap between farm prices and final retail prices through structural change in distribution - Inflation control mechanism. 2. To acquire market-savvy, market-intelligent and best management practices Provide an aid to Indian agriculture to become lowest cost source of farm produce. 3. India should focus on foreign investment because strong trade base can prosper the economy of India, to increase liquidity by the way of foreign exchange reserves FDI will not just provide access to larger financial resources for investment in the retail sector but simultaneously will rationally allow larger supermarkets, which tend to become regional and national chains (i) to negotiate prices more aggressively with manufacturers of consumer goods and thus pass on the benefit to consumers; and (ii) to lay down better and tighter quality standards and ensure that manufacturers adhere to them. Apart from this, by allowing FDI in retail trade, India will significantly flourish in terms of quality standards and consumer expectations, since the inflow of FDI in retail sector is bound to pull up the quality standards and cost-competitiveness of Indian producers in all the segments. It is therefore obvious that we should not only permit but encourage FDI in retail trade. Reiterating the Indian Council of Research in International Economic Relations (ICRIER), projections that worth of Indian retail sectorto reach$496 billion by 2011-12 and ICRIER has also come to conclusion that investment of big money(large corporates and FDI) in the retail sector would in the long run not harminterestsof small or traditional retailers, hence it can be safely concluded that allowing healthy FDI in the retail sector would not only lead to a substantial surge in the countrys GDP and overall economic development, but would inter alia also help in integrating the Indian retail market with that of the global retail market in addition to providing not just employment but a better paying employment, which the unorganized sector (kirana and other small time retailing shops) have undoubtedly failed to provide to the masses employed in them. 116

15. The sources and advantages in allowing FDI in retail:

1. Only a few global firms possess proprietary expertise in retail trade. They would not transfer their expertise to local firms unless they were allowed to operate in the domestic market. 2. The government needs FDI to meet its foreign exchange requirements. 3. Only global retailers can satisfy the rising and varied demands of Indian consumers. Trade liberalization and improvement in communication systems have increased opportunities for retailers to buy their products from producers worldwide. Some of the factors that have contributed to this trend are the reduction in price, incentives provided to foreign investment, cheaper real time communications, and cheaper transport.

16. Legal Implication on FDI in retail

1. Post-investment protection to Retail companies. 2. Protection of all material and intellectual property of the company 3. Independent and binding disputes settlement mechanisms 4. The right of the company to determine its own ownership structure and provisions on legal, regulatory and administrative transparency

17. Beneficial or Detrimental

Last decade has indeed witnessed tremendous growth in Indian retail industry and has integrated our Indian economy with the world. Retailing in India is progressively inching its way toward becoming the next boom industry. It has emerged as one of the most dynamic and fast paced industries accounting for over 10% countrys GDP. This growth has become major attraction for foreigners to enter in India. The challenge to the retail on the other hand is the requirement of heavy initial investments which leads to difficulty in achieving break even and this is the reason that many of these players have not tasted success so far. However, the growing trend of the market, changes in the lifestyle of consumer segment, increasing per capita income and emerging technologies in operations still promises success in the long run with achievement

of economies of scale. India is the fourth largest economy as far as purchasing power is concerned just behind, USA, Japan and China. Even though 25% of the population lives below poverty line, India has a large and growing middle-income group of over 300 million, making it a strong emerging market.

elsewhere. Hence, both the consumers and the suppliers would lose, while the profit margins of such retail chains would go up. Our burecrats have to become possibilitarian. No matter how dark things seem to be or actually are, raise your sights and see possibilities always see them, for theyre always there. However, it can be said that the advantages of allowing unrestrained FDI in the retail sector evidently outweigh the disadvantages attached to it and the same can be deduced from the examples of successful experiments in countries like Thailand and China; where too the issue of allowing FDI in the retail sector was first met with incessant protests, but later turned out to be one of the most promising political and economical decisions of their governments and led not only to the commendable rise in the level of employment but also led to the enormous development of their countrys GDP. As the Indian Retail Industry has come to a saturation point to evolve consumer experiences hence it is the right time for trying to do something beyond what we have already mastered, otherwise failure is imminent. During a recent study by American Express it is found that 8 out of 10 Indian consumers are willing to pay upto 11% more for products and services if the company provided quality customer service, this shows the sheer attitudinal change of Indian consumers in recent past which open the window of possibility for Retail FDI who are urging to show a difference in consumer service & quality levels to domestic consumers. It is to be noted that FDI in retail would undoubtedly enable Indian Inc to integrate its economy with that of the global economy. Achievement seems to be connected with action. Successful economies keep moving. They make mistakes, but they dont quit.

18. Threats on Retail FDI

1. Threat on unorganized retail players It remains as a threat definitely regional players would coexist; they would die only when they dont adapt to the competition which may also lead to Marginalizing. 2. Huge spread of retail chain stores The financial strength would equip the MNC to negotiate best retail properties which may shoot up the real estate prices 3. Monopoly among suppliers - The suppliers may become monopolist in supplying their brands / goods to respective retailers because they provide huge margin to suppliers to enjoy monopoly displacing domestic players

19. Conclusion
It is submitted that the antagonists of FDI in retail sector oppose the same on various grounds, like, that the entry of large global retailers such as Wal-Mart etc would kill local shops and millions of jobs, since the unorganized retail sector employs an enormous percentage of Indian population after the agriculture sector; secondly that the global retailers would conspire and exercise monopolistic power to raise prices and monopolistic (big buying) power to reduce the prices received by the suppliers; thirdly, it would lead to asymmetrical growth in cities, causing discontent and social tension


A Study of Paradigm Shift in Management of Capital in Flows in Indian Financial System In The Post Liberalization Era
Anli Suresh, Asst. Professor, Madras Christian College India 1. Introduction
In most of the period since the mid-1990s, external sector developments in India have been marked by strong capital inflows. Capital inflows, which were earlier mainly confined to small scale official confessional finance, gained momentum from the 1990s after the initiation of economic reforms. As well as increasing in size, capital inflows have undergone a compositional shift from predominantly official and private debt flows to non-debt-creating flows in the post-reform period. Though capital inflows are generally seen to be beneficial to an economy, a large surge over a short span of time in excess of domestic absorptive capacity can be a source of stress, leading to upward pressure on the exchange rate, overheating of the economy and possible asset price bubbles. This paper elaborates on various aspects of capital inflows to India. as it allowed assessing whether the increase in capital inflows influences new challenges, which in turn affect monetary and exchange rate management.

1.4 Hypothesis
The increase in capital inflows influences new challenges, which in turn affect monetary and exchange rate management.

2. Literature Review
1. The Indian economy is now a relatively open economy, despite the capital account not being fully open. The current account, as measured by the sum of current receipts and current payments, amounted to about 53 per cent of GDP in 2007-08, up from about 19 per cent of GDP in 1991. Similarly, on the capital account, the sum of gross capital inflows and outflows increased from 12 per cent of GDP in 1990-91 to around 64 per cent in 2007-08.i With this degree of openness, developments in international markets are bound to affect the Indian economy and policy makers have to be vigilant in order to minimize the impact of adverse international developments on the domestic economy. 2. Whereas the Indian current account has been opened fully, though gradually, over the 1990s, a more calibrated approach has been followed to the opening of the capital account and to opening up of the financial sector. The evidence suggests that the greatest gains are obtained from the opening to foreign direct investment, followed by portfolio equity investment. The benefits emanating from external debt flows have been found to be more questionable until greater domestic financial market development has taken place (Henry, 2007; Prasad, Rajan and Subramanian, 2007) ii. 3. The rate of increase in foreign exchange market turnover in India between April 2004 and April 2007 was the highest amongst the 54 countries covered in the latest Triennial Central Bank Survey of Foreign 118

1.1Statement of the problem

In India, capital inflows in the post liberalization period increased sharply and have been well above the current account deficit, which has largely remained modest. This has posed new challenges for monetary and exchange rate management. So the problem of this study is to have an insight into the management of capital inflows in India in the post liberalization era.

1.2 Objective of the study

To Study the composition of capital inflows in India in the post liberalization era. To study the capital inflows and exchange rate management in the post liberalization era. To study the capital inflows and monetary management in the post liberalization era.

1.3 Methodology
The preliminary findings of this research, comprising of a literature review, roundtable discussions and focus groups. The analysis improved upon previous work

Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS). According to the survey, daily average turnover in India jumped almost 5-fold from US $ 7 billion in April 2004 to US $ 34 billion in April 2007; the share of India in global foreign exchange market turnover trebled from 0.3 per cent in April 2004 to 0.9 percent in April 2007 iii. i BIS Review 122/2008 Page No.1. ii Henry, Peter Blair (2007), Capital Account Liberalization: Theory, Evidence, and Speculation, Journal of Economic Literature, Vol. XLV, December. - Prasad, Eswar S., Raghuram G. Rajan and Arvind Subramanian (2007), Foreign Capital and Economic Growth, Brookings Papers on Economic Activity, 1. iii Mohan (2007b), Indias Financial Sector Reforms: Fostering Growth While Containing Risk, Reserve Bank of India Bulletin, December.

including short-term borrowings and deposits from non-resident Indians (NRIs). As a result, the proportion of short-term debt in Indias total external debt had increased significantly by the late 1980s. The third phase was marked by the balance of payments crisis of 1991 and the initiation of the reform process. The broad approach to reform in the external sector was based on the recommendations made in the Report of the High Level Committee on Balance of Payments 1991. The objectives of reform in the external sector were conditioned by the need to correct the deficiencies that had led to payment imbalances in 1991. Among the components, since the 1990s, the broad approach towards permitting foreign direct investment has been through a dual route, i.e. automatic and discretionary, with the ambit of the automatic route being progressively enlarged to almost all the sectors, coupled with higher sectored caps stipulated for such investments. Portfolio investments are restricted to institutional investors. The approach to external commercial borrowings has been one of prudence, with selfimposed ceilings on approvals and a careful monitoring of the cost of raising funds as well as their end use. In respect of NRI deposits, some modulation of inflows is exercised through specification of interest rate ceilings and maturity requirements. In respect of capital outflows, the approach has been to facilitate direct overseas investment through joint ventures and wholly owned subsidiaries, and through the provision of financial support to exports, especially project exports from India. Ceilings on such outflows have been substantially liberalized over time. The limits on remittances by domestic individuals have also been eased. With the progressive opening-up since the early 1990s, the capital account in India today can be considered as the most liberalized it has ever been since the late 1950s.The process of capital account liberalisation is managed by keeping in view the elasticity of supply and other responses in the economy, and vulnerabilities or potential shocks. The issue is handled with extreme caution given the potential for sudden capital reversals. 3.2 Composition of Capital inflows in India: Net capital inflows, which increased from 2.2% of GDP in 1990/91 to around 9% in 2007/08, do not, however, 119

3.1. Historical backdrop

For the first four decades after independence in 1947, the economic policies of the Indian government were characterized by planning, control and regulation. Until the 1980s, Indias development strategy was focused on self-reliance and import substitution. There were periodic attempts at market-oriented reform, usually following balance of payments pressures, which induced policy responses that combined exchange rate depreciation and an easing of restrictions on foreign capital inflows. However, these controls were relatively an arrow in scope and had little impact on actual inflows, which remained small. The situation changed dramatically with the onset of reform programs introduced in the early 1990s in the aftermath of the balance of payments crisis of 1991. Broadly speaking, Indias approach towards external capital flows can be divided into three main phases. In the first phase, starting at the time of independence and spanning up to the early 1980s, Indias reliance on external flows was mainly restricted to multilateral and bilateral concessional finance. In the second phase however, in the context of a widening current account deficit during the 1980s, India supplemented this traditional external source of financing with recourse to external commercial loans,

reflect the true magnitude of capital inflows to India. Gross capital inflows, as a percentage of GDP, have undergone a more than fivefold increase from 7.2% in 1990/91 to 36.6% in 2007/08. Much of this increase has been offset by corresponding capital outflows, largely on account of foreign institutional investors (FIIs) portfolio investment transactions, Indian investment abroad and repayment of external borrowings. Capital outflows increased from 5.0% of GDP in 1990/91 to 27.4% of GDP in 2007/08. The gross volume of capital inflows amounted to $428.7 billion in 2007/08 as against an outflow of $320.7 billion. Strong capital inflows to India in the recent period reflect the sustained momentum in domestic economic activity, better

corporate performance, and the positive investment climate, the long term view of India as an investment destination, and favorable liquidity conditions and interest rates in the global market. Apart from this, the prevailing higher domestic interest rate along with a higher and stable growth rate have created a lower risk perception, which has attracted higher capital inflows. The large excess of capital inflows over and above those required to finance the current account deficit (which is currently around 1.5% of GDP) resulted in reserve accretion of $110.5 billion during 2007/08. Indias total foreign exchange reserves were $308.4 billion as of July 2008.

Figure3.1.Foreign Investment Inflows In The Indian Capital Market

900 800 700 600 500 400 300 200 100 0 Series1

of $ US billions





















Source: Reserve Bank of India Economic Survey 2009-10.

3.3 Capital inflows and exchange rate management

In India, with the gradual removal of restrictions on international capital inflows and greater integration of domestic with global financial markets, understanding the precise nature of the causal relationship among capital inflows, the exchange rate, interest rates and reactions of monetary policy has certainly become more complex. The response lag of the exchange rate and domestic liquidity to monetary policy actions in the form of direct intervention in the exchange market as well as changes in the short-term policy rates has important implications for the stability of foreign exchange markets and external price competitiveness. 120

The importance of capital inflows in determining exchange rate movements has increased considerably, rendering some of the earlier guideposts of monetary policy formulation. Capital inflows have been observed to cause overshooting of exchange rates as market participants act in concert while pricing information. In the Indian case, notwithstanding the persistence of a large trade deficit, capital inflows have led to appreciation of the exchange rate, indicating the dominance of capital inflows in determining exchange rate movements. In India, since a market-determined exchange rate system was set in place in March 1993, the exchange rate has been largely determined by demand and supply

conditions in the market. Over the years, transactions in the Indian foreign exchange market have experienced tremendous growth. The increase in foreign exchange market turnover in India between April 2004 and April 2007 was the highest amongst the 54 countries covered in the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the BIS in 2007. According to the survey, the daily average turnover in India jumped almost fivefold from $7 billion in April 2004 to $34 billion in April 2007, whereas global turnover over the same period increased

by only 69%, from $1.9 trillion to $3.2 trillion. Reflecting these trends, the share of India in global foreign exchange market turnover trebled from 0.3% in April 2004 to 0.9% in April 2007. The average daily turnover in Indian foreign exchange market almost doubled from $25.8 billion in 2006/07 to $48.0 billion in 2007/08. Despite interventions by the Reserve Bank in the face of large capital inflows, the exchange rate in the recent period has been marked by significant bidirectional movement, implying greater flexibility.

Figure3.2 Average Daily Volume Of Transactions In The Indian Forex Market

in of $ US billions

Source: Reserve Bank of India Economic Survey 2009-10.

3.3 Capital inflows and monetary management

In the recent period, in India, one of the most serious challenges to the conduct of monetary policy emerges from capital inflows in view of their significantly higher volatility as well as the fact that capital inflows in gross terms are much higher than those in net terms. Swings in capital inflows can have a significant impact on exchange rates, domestic monetary and liquidity conditions and overall macroeconomic and financial stability. In fact, the Indian experience illustrates the tight link between external sector management and domestic monetary management. With a view to neutralizing the impact of excess forex flows on account of a large capital account surplus, the Reserve Bank has intervened in the foreign exchange market at regular intervals. Most techniques to offset the impact of forex inflows can be classified as either market-based or non-market based. The market-based approach involves financial transactions between the central bank and the market, 121

which leads to withdrawal or injection of liquidity, as the case may be. It aimed at neutralizing part or whole of the monetary impact of foreign inflows is termed sterilization. The non-market-based approach involves the use of quantitative barriers, rules or restrictions on market activity, which attempt to keep the potential injection of liquidity outside the domestic financial system. In the face of large capital inflows coupled with a declining stock of government securities, the Reserve Bank introduced a new instrument of sterilization, the Market Stabilization Scheme (MSS) to sustain market operations. Since its introduction in April 2004, the MSS has served as a very useful instrument for medium-term monetary and liquidity management. In recognition of the cumulative and lagged effects of monetary policy, pre-emptive monetary tightening measures have also been put in effect since September 2004 and continued during 2006/07, 2007/08 and 2008/09, in part to manage monetary effects of excess capital inflows.

Figure 3.3 Mss Operations (In billions of rupees)

Interestpayments Outstandingamount 1683.9

642.1 290.6 20.6 200405 34.2 200506 26.1

629.7 83.5 200708


Source: Union Finance Accounts and budget documents 2009.

4. Conclusion
Recent global developments have considerably heightened the uncertainty surrounding the outlook for capital inflows to India, complicating the conduct of monetary policy and liquidity management. In view of the strong fundamentals of the economy and massive injections of liquidity by central banks in advanced economies, there could be sustained inflows, as in the recent past. Hence the study based on the hypothesis that the increase in capital flows influences new challenges, which in turn affect monetary and exchange rate management is proved. The policy makers should focus on this aspect in order to have sustainable financial system in India.

Foreign Exchange Risk. Kluwer Academic Press, Norwell, MA. Periodical Articles 3. Datar, M. K. and Basu, P. K. (2004), financial sector Reforms in India: Some Institutional Imbalances, Conference volume, AWBMMDC, Australia, and July. 4. Nagraj, R. (1996): Indias Capital Market Growth, Trends, Explanations and Evidence, Economic and Political Weekly, Spl. Number, September, pp. 2553-61. Reports 5. International Monetary Fund (2008a), Global Financial Stability Report, October --- (2008b), World Economic Outlook, October. (Mohan, 2007b)Mohan, Rakesh (2006), Coping With Liquidity Management in India: A Practitioners View, Reserve Bank of India Bulletin, April. ---- (2007a), Development of Financial Markets in India, Reserve Bank of India Bulletin, June. ---- (2007b), Indias Financial Sector Reforms: Fostering Growth While Containing Risk, Reserve Bank of India Bulletin, December. 6. Reserve Bank of India Economic Survey 2009-10.

5. Bibliography
Books 1. Ajit Singh (1998): Liberalization, the stock market and the market for corporate control: A bridge too far for the Indian Economy. In I.J.Ahluwalia and I.M.D Little (Eds), Indias Economic Reforms and Development, Oxford University Press, pp.169-191. 2. Jacque, L.L. (1996). Management and Control of


An Empirical Study-Consumers Prefernce Towards Unit Linked Investment Plan (ULIP)

S. Arun Kumar, Assistant Professor, R.Murali , II MBA, & S.Bharath, II MBA
Saranathan College of engineering, Trichy, Tamilnadu , India.

1. Introduction
Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. Unit Linked Insurance Plan (ULIP) provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV).ULIP came into play in the 1960s and is popular in many countries in the world. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. As times progressed the plans were also successfully mapped along with life insurance need to retirement planning. In todays times, ULIP provides solutions for insurance planning, financial needs, financial planning for childrens marriage planning etc., Unit Linked Insurance Plan - is a financial product that offers you life insurance as well as an investment like a mutual fund. Part of the premium you pay goes towards the sum assured (amount you get in a life insurance policy) and the balance will be invested in whichever investments you desire - equity, fixed-return or a mixture of both. In India Insurance Regulatory Development Authority(IRDA) on the recent regulations 1st September 2010 states that the following changes such as Increasing cap on various charges, change in the lock in period from 3 to 5 years and the assured return has been stated as 4.5%.Hence there is a need to understand the consumer perception.

in a family, the need and scope for life Insurance operation has increased tremendously. Life Insurance are not only best suited for the purpose of insuring the life but also are capable of meeting future financial challenges effectively. Hence, this study explores about the customers perception and awareness level of Unit Linked Insurance Policy (ULIP).

3. Objectives of the Research

To study the demographic and rational profile of customers of ULIP To study the Customers Perception towards ULIP To identify those factors which develops a favorable opinion among consumers towards ULIP.

4. Review of Literature Conceptual Review

Unit Linked Insurance Policies [ULIP] was first offered in the United States in 1976, [after being developed and sold successfully in The Netherlands, England, and Canada] in the name of Variable Life Insurance. Basically it was a type of whole life insurance whose values may vary directly with the performance of a set of earmarked investments. A plan which gives complete clarity about the various charges deducted and why its being deducted and so how your fund will grow over time. Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs is allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be 123

2. Problem Statement
With the increase in domestic savings and improvement in awareness of value of life of the earning person

construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs. ULIPs are a category of goal-based financial solutions that combine the safety of insurance protection with wealth creation opportunities. In ULIPs, a part of the investment goes towards providing you life cover. The residual portion of the ULIP is invested in a fund which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund opted by you. Simply to put in nutshell, ULIPs are structured in such a way that the protection element and the savings element are distinguishable, and hence managed according to your specific needs. In this way, the ULIP plan offers unprecedented flexibility and transparency.

half yearly or yearly. Out of the premium amounts, deductions will be made towards Initial administrative charges like, Investment management charges [there will be an extra charge if the policyholder utilizes the switch over (from equity to debt or debt to balance) option], Annual administration charges, Risk cover and the balance will be invested in a selected fund [debt or equity or balance]. In case of death during the premium paying term or the term of the policy, the sum assured [Rs.1 Lakh in example] or value of policy fund, whichever is higher, is paid to the beneficiaries. In case of survival up to maturity, the value of the fund is paid out. The returns on that day [maturity or death] on the plan depend upon the performance of the market, be it equity or debt. So if the fund value falls below amount invested on that day, the policyholder will receive a lesser amount. Hence one can see that the risk here is transferred to the policyholder as nothing is guaranteed. The Net Asset Value [NAV] will reflect the underlying value of assets, which in turn is dependent on the movement of the Sensex. 1. Research Review: 2. According to Agarwal(2010), ULIP helps to manage the risk return profile. With the double advantage of security and investment, ULIPs have become the most popular insurance product from the available range of life insurance policies. With a higher rate of return, ULIPs gives tough competition to traditional insurance products like endowment plans and money back plans.The basic reason for opting for policies other than the term insurance is ensuring highest maturity value for invested sum besides mortality benefits. In maturity value the important factors to be considered is the internal rate of return (IRR) on investment. IRDA has fixed 6% and 10% as the assumed rate of return for projecting future benefits.The general rule for DebtEquity portfolio management in ULIPs is that you should go conservative by increasing your investment in debt when the markets are at their highest, very unstable and likely to start falling any time. Vice versa when the markets are very low and depressed. [1] 3. Dipak Mondal (2010) The minimum sum assured (life cover) in Ulips is five times and most 124

5. Working of ULIPs
It is critical that you understand how your money gets invested once you purchase a ULIP: When you decide the amount of premium to be paid and the amount of life cover you want from the ULIP, the insurer deducts some portion of the ULIP premium upfront. This portion is known as the Premium Allocation charge, and varies from product to product. The rest of the premium is invested in the fund or mixture of funds chosen by you. Mortality charges and ULIP administration charges are thereafter deducted on a periodic (mostly monthly) basis by cancellation of units, whereas the ULIP fund management charges are adjusted from NAV on a daily basis. Since the fund of your choice has an underlying investment either in equity or debt or a combination of the two your fund value will reflect the performance of the underlying asset classes. At the time of maturity of your plan, you are entitled to receive the fund value as at the time of maturity. Unit linked plans provide an opportunity for the discerning investor to benefit from the return available in their capital market without going for direct investments in capital market. 1. Now many markets are offering these ULIPs in children plans [ICICI Smart Kid policy] endowment and retirement plans [LICS Forty Plus policy] also. These plans give an option to the investor to choose between three fund options debt, equity, and balanced. In these products, premiums can be paid quarterly,

policies offer cover between 5-10 times the annual premium which has been the signaling factor for the investors[2] 4. Amar ranu(2010), leading financial conglomerate says that other market related products lags behind ULIPs return by a larger margin in the long term which confirms that investment in ULIPs are ideal investment vehicle for wealth creation in long run. ULIP score over other products in terms of returns and additional benefits such as insurance cover. However it scores below PPF as investment in ULIPs involves high risks. [3] 5. ULIPs are covered under sec 80(C), 10 10(D) of IT Act, hence tax benefits up to a maximum of Rs.1, 00,000 investment can claimed in these plans.( Sanjay Mathew,2010) [4] 6. As per the news published on business line on Monday, December 13, 2010 the changes made by

IRDA on ULIP includes the top-up premium. IRDA said adding all limited premium ULIPs, other than single premium products, shall have premium paying term of at least five years. The premium has also gone up to 10 times of the year premium compared to existing 5 times. All ULIP pension or annuity products will offer a minimum guaranteed return of 4.5% per annum or as specified by the IRDA from time to time. [5] 7. According to Suddhadeb Chakraborti(2010), financial consultant and author discuss about the latest amendments that it provides mortality health cover in which it has been made mandatory to have Mortality Health Cover for all ULIPS apart from Pension and Annuity schemes. No partial withdrawal is available under new ULIPS. This enables a person to stay invested and hence protect his corpus. A guaranteed return of 4.5% has been announced to keep investors happy. [6]


6. Research Methodology
Descriptive research is used. The sampling method is non probability purposive sampling. In that, the sample is chosen so that a particular research purpose is served and is adequate for it. The sample is typical. The sample size is 105 respondents. Content Validity which refers to the extent to which a measurement reflects the specific intended domain of content. Reliability which refers to the confidence we can place on the measuring instrument to give us the numeric value. If the same set of objects are measured again and again with the same or comparable measuring instrument and the results obtained are the same or similar, then the measuring instrument is said to be reliable. Pilot study was carried out were the draft questionnaire was eventually subjected to pilot testing with a total of 30 consumers, and they were asked to comment on any perceived ambiguities, omissions or errors concerning the draft questionnaire. The feedback received was rather ambiguous thus only minor changes were made. For instance, technical jargon was rephrased to ensure clarity and simplicity. Data were collected by means of a structured questionnaire, all the items were presented as statements on the questionnaire, with the same rating scale used throughout, and measured on a five point Likert-type scale that varied from 1 = strongly disagree to 5 = strongly agree. In the subsequent full-scale survey, data were collected from the insurance consumers who have ULIP Transactions. The data collected will be analyzed and interpreted using statistical package for social sciences (SPSS). Statistical tools used namely, Simple percentage analysis, Chi-square test and Factor analysis. Results and Discussions:

Table: 1
Demographic Variables Gender Male Female 18-25 26-35 36-55 Above56 12th Qualification Graduate Post Graduate Government Service Businessman Private Company Self Employed Retired Person Any other Below 150000 150001-250000 250001-350000 350001-450000 More than 450000 Below 10000 10001-25000 25001-50000 50001-100000 More than 100000 126 Categories Number of Respondents 71 34 14 46 33 12 6 53 46 20 11 62 2 9 1 29 36 20 13 7 37 32 16 15 5





Tax Saving Good Returns Investment decision Better Future after Retirement Wealth Creation Any Other Mutual Funds Stocks and Shares Opinion about investment Insurance Schemes Govt. Bonds and Securities Post Office Schemes Investment in Gold and Silver Bank Deposits 1-2 times 3-5 times 5-10 times

19 40 25 19 2 28 21 41 3 2 3 7 57 37 11

How many times do you invest in a year

7. KMO and Bartletts Test: Bartletts test of sphericity indicates that whether the correlation matrix is an identity matrix which would indicate that the variables are unrelated. Table: 2 Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartletts Test of Sphericity Approx. Chi-Square Df Sig. .803 957.632 300 .000

The significance level (.000) gives the result of the test. Very small values (less than .05) indicate that there are probably significant relationships among the variables. A value higher than about .10 or so may indicate that the data are not suitable for factor analysis.

Table: 3
Communalities Investment Decision Opinion About Investment Preferably you would like to Invest in How many times do you invest in a year Insurance Products are susceptible to very low Risk Name the Insurance Company that come to your mind instantly Do you own an insurance policy with regard to ULIP Amount of risk involved in ULIP. Rate of Return is High? Extra Returns for Same Investment 127 Initial 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .825 .701 .571 .772 .748 .695 .761 .784 .690 .711

Tax Benefits are high Compulsory Investment Transmission Gaining and enriching Investment Knowledge Wealth Creation and Accumulation High Maturity Benefits Switching of Options within the fund Risk Coverage Benefits payable after death Partial Withdrawals Minimum Premium Surrender Options Recommendations from friends and relatives Life Coverage Overall I will prefer to have ULIP for my investment, since I am overall satisfied with it

1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000

.671 .506 .637 .676 .652 .589 .764 .685 .800 .780 .662 .802 .669 .668 .733

8. Initial Communalities
Initial communalities are estimate of the variance in each variable accounted for by all component or factor. For principal component analysis this is always equal to 1.0(for correlation analysis).

9. Extraction Communalities
Extraction communalities are estimate of the variance in each variables accounted for by the factors. Small values (0.564, 0.495, 0.497, 0.561, 0.575, and 0.558) indicate variables that do not fit well with the factor solution and should possibly dropped from the analysis.

Table 4.1:Total Variance Explained

Component Total 1 2 3 4 5 6 7 8 9 10 11 12 13 6.944 1.696 1.573 1.520 1.354 1.247 1.136 1.066 1.016 .896 .773 .757 .658 Initial Eigen values % of Variance 27.777 6.784 6.291 6.080 5.416 4.990 4.544 4.265 4.063 3.585 3.093 3.027 2.631 Cumulative % 27.777 34.561 40.853 46.932 52.349 57.339 61.883 66.148 70.211 73.796 76.889 79.916 82.546 128 Extraction Sums of Squared Loadings Total 6.944 1.696 1.573 1.520 1.354 1.247 1.136 1.066 1.016 % of Variance 27.777 6.784 6.291 6.080 5.416 4.990 4.544 4.265 4.063 Cumulative % 27.777 34.561 40.853 46.932 52.349 57.339 61.883 66.148 70.211

14 15 16 17 18 19 20 21 22 23 24 25

.599 .552 .491 .457 .429 .414 .328 .260 .239 .219 .212 .164

2.397 2.210 1.965 1.827 1.715 1.654 1.311 1.040 .957 .874 .849 .655

84.943 87.153 89.118 90.944 92.659 94.313 95.625 96.665 97.622 98.496 99.345 100.000

In the above table principal component analysis is used for the purpose of extracting the data. This table gives Eigen values, variance explained and cumulative variance explained for the factor solution. There are 9 factors or components extracted using rotated Component Matrix.

Table 4.2- Rotated Component Matrix (a)

Variables Investment Decision Opinion About Investment Preferably you would like to Invest in How many times do you invest in a year Insurance Products are susceptible to very low Risk Name the Insurance Company that come to your mind instantly Do you own an insurance policy with regard to ULIP What is the amount of risk involved in ULIP? Rate of Return is High? Extra Returns for Same Investment Tax Benefits are high Compulsory Investment Transmission Gaining and enriching Investment Knowledge Wealth Creation and Accumulation High Maturity Benefits Switching of Options within the fund Risk Coverage .822 .714 129 .702 .585 .548 .519 .624 .804 .781 .792 .691 .805 .850 .800 .654 .811 1 2 3 4 5 6 7 8 .892 9

Benefits payable after death Partial Withdrawals Minimum Premium Surrender Options Recommendations from friends and relatives Life Coverage Overall I will prefer to have ULIP for my investment,since I am overall satisfied with it .573 .786 .608 -.548 .644


Chi-square Test: Table: 5.1 Age Group (in years) * Rate of Return is High. Hypotheses: The age group of the respondent and the rate of return is high H0: There is no significant relationship between age group and the rate of return. H1: There is significant relationship between age group and the rate of return. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 23.174(a) 23.900 .098 105 df 12 12 1 Asymp. Sig. (2-sided) .026 .021 .754

Inference From the above table it is inferred that the calculated P value (0.026) which is less than (0.05), hence null hypothesis (H0) is rejected and the alternative hypothesis (H1) is accepted. Hence the age group has the significant association with the Rate of return. Table: 5.2 Age Group (in years) * Tax Benefits are high Hypotheses: The age group of the respondent and the tax benefits are high H0: There is no significant relationship between age group and the tax benefits. H1: There is significant relationship between age group and the tax benefits. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 23.646(a) 23.652 5.390 105 130 Df 12 12 1 Asymp. Sig. (2-sided) .023 .023 .020

Inference From the above table it is inferred that the calculated P value (0.023) which is less than (0.05), hence null hypothesis (H0) is rejected and the alternative hypothesis (H1) is accepted. Hence the age group has the significant association with Tax benefits. Table: 5.3- Qualification * Compulsory Investment Hypotheses: To test the relationship between the Qualification and Compulsory Investment H0: There is no significant relationship between Qualification and Compulsory Investment H1: There is significant relationship between Qualification and Compulsory Investment Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 17.598(a) 15.288 1.445 105 Df 8 8 1 Asymp. Sig. (2-sided) .024 .054 .229

Inference From the above table it is inferred that the calculated P value (0.024) which is less than (0.05), hence null hypothesis (H0) is rejected and the alternative hypothesis (H1) is accepted. Hence, the Qualification has the significant association with Compulsory Investment. Table: 5.4- Qualification * Gaining and enriching Investment Knowledge Hypotheses: To test the relationship between the Qualification and Gaining and Enriching Investment Knowledge. H0: There is no significant relationship between Qualification and Gaining and Enriching Investment Knowledge. H1: There is significant relationship between Qualification and Gaining and Enriching Investment Knowledge. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association 18.958(a) 23.639 .090 Df 8 8 1 Asymp. Sig. (2-sided) .015 .003 .765

N of Valid Cases


Inference From the above table it is inferred that the calculated P value (0.015) which is less than (0.05), hence null hypothesis (H0) is rejected and the alternative hypothesis (H1) is accepted. Hence the Qualification has the significant association with Gaining and Enriching Investment Knowledge. 131

Table: 5.5- Occupation * Tax Benefits are high Hypotheses: To test the relationship between the Occupation and Tax Benefits are high. H0: There is no significant relationship between Occupation and Tax Benefits are high. H1: There is significant relationship between Occupation and Tax Benefits are high. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 40.346(a) 33.425 .749 105 variables loaded in factor analysis also determine their preference. I f you look at the factor analysis ,39% of variance is explained in factor one ,hence those factors like Tax benefits are high, Transmission, Switching of Options within the fund, Risk coverage, Life Coverage plays a prominent role in bringing customer preference towards ULIP. Df 20 20 1 Asymp. Sig. (2-sided) .005 .030 .387

Inference From the above table it is inferred that the calculated P value (0.005) which is less than (0.05), hence null hypothesis (H0) is rejected and the alternative hypothesis (H1) is accepted. Hence the Occupation has the significant association with Tax Benefits are high.

10. Conclusions
The age groups having significant association with tax benefits availed using ULIP and rate of return and same variables also got loaded in factor analysis, if we analyze the frequency analysis most of them are youth, so their preference is quiet clear on their requirements on tax benefits and good rate of return .Good rate of return denotes the clear youth expectation on ULIP. If you look at the qualification which has significant association with compulsory investments and gaining investment knowledge, as the respondents mostly belong to graduates segment these people expect these variables as a mandatory requirement for making ULIP choice and the same variables got prominence through factor loading. Most of the respondents belong to private company occupations and hence the variable tax benefits really influence the customer in preferring ULIP and also the rate of return 132

11. Recommendations
For the above stated conclusions the marketers need to focus attention on creating confidence among customers about good rate of return and tax benefits by educating them through elucidating the rate of return with clear transparent references and testimonials will help them to attract more customers. Marketers need to educate and bring awareness among customers about the need for compulsory investments and mostly respondents are from private companies they should run promotional programs to them to attract more number of customers, education about the need for insurance policy should be educated to them through various strategies like in house company campaigning programs and focused advertisements strategy reaching those focused graduate segment belong to private companies. Marketers need to bring awareness and build confidence among consumers about the benefits availed on risk coverage and life coverage with focused niche advertisement strategies.

12. Bibliography
1. Agarwal, (n.d.). Long Term Ulip Management. Retrieved December 13, 2010, from http:// Dipak Mondal (Apr 15 2010), The Businessline, , New Delhi., Many Ulips offer life cover of 50 times yearly premium Retrieved December 13, 2010 from insurance/many-ulips-offer-life-cover-50times-yearly-premium-965

in/bw/2010_06_28_IRDA_Issues_Ulip_ Guidelines.html. 6. Suddhadeb Chakraborti (22 nova 2010) New ULIP Guidelines: Benefits and Impact Retrieved December 13, 2010 from http://ezinearticles. com/?New-ULIP-Guidelines:-Benefits-andImpact&id=5398783. 7. Appa Rao. Machiraju Risk Management and Family Economics Yogakshema, April, 1998. 8. Bernstein, Peter L., (1998): Against the Gods, John Wiley and sons, New York. 9. Black, Jr. Kenneth and Harold Skipper Jr. (2000) th edition), Life and Health Insurance, (13 Prentice - Hall, Inc., Englewood cliffs, N.J. 10. Joseph M. Belth Life Insurance a Consumers Handbook Indiana University Press, Bloomington, London. 11. Huebner.S.S. (1927) The Economics of Life Insurance (3rs Edition), Appleton century Crofts, Inc., New York 12. Rejda, George. E (2001), Principles of Risk th management and Insurance, (7 edition), Addison Wesley Longman, Inc., Boston, MS.


3. Amar Ranu, (16 Mar 2010). Invest in ULIPs - A Good Wealth Creator Tool in Long Term Retrieved December 13, 2010 from 4. Sanjay Mathew, (n.d). ULIP-Merits and Demerits Retrieved December 13, 2010 from http:// ULIP-Merits-and-Demerits.html The Business Line (13, 2010, December) IRDA Issues ULIP guidelines Retrieved December 13,2010 from http://www.businessworld.



A Comparative Study Between Ann,Arima And Hybrid of Ann and Arima for Predicting The Gold Rates
Research Scholar, Sathyabama University, Chennai Dept of Mathematics, MNM Jain Engineering College, Chennai


Dr. A. Chandra Babu

1. Introduction
Recent studies have established that non-linearity exists in financial data and artificial neural networks can be successfully used to model the relationship among this data.Since Neural Network can extract valuable information from a mass of historical information and can be efficiently used in financial areas, the applications of neural networks to financial forecasting have become very popular over the last few years[Zhang, et al, 2004, Refenes, 1995; Kate, et. al, 2000, Abu- Mostafa, at el, 2001] Artificial neural networks have a natural way of solving problems that involve learning and pattern recognition. It can detect patterns in data through learning and are much easier to program .New researches suggest that seeing the nature of gold rates, combining two or more computational models synergistically is better approach for prediction problem. The basic idea behind this is that each models unique capability can be used to model different patterns of data.

able to explain this residual variance and produce more reliable predictions of the stock price movements.A hybrid ARIMAANN model for time series prediction synergically combines the advantages of the easy-touse and relatively easy-to-tune ARIMA models and the computational power of ANN.

2. Neural Network Forecasting Model

The Artificial Neural Networks, the well-known function approximators in prediction and system modelling, has recently shown its great applicability in time-series analysis and forecasting . ANN is more effective in describing the dynamics of non-stationary time series due to its unique non-parametric, non-assumable, noise-tolerant and adaptive propertiesRecently neural networks have been used for modeling nonlinear economic relationship because of its ability to extract complex nonlinear and interactive effects. Neural networks are a class of nonlinear model that can approximate any nonlinear function to an arbitrary degree of accuracy and have the potential to be used as forecasting tools in many different areas. There are many different neural net learning algorithms found in the literature. No study has been reported to analytically determine the generalization performance of each algorithm.

1.1 Literature Survey

Contemporary studies show that the techniques of ANN and ARIMA when combined, offer a competitive edge over each of the individual model. The benefits of such methods appear to be substantial especially when dealing with non-stationary series .Results from study (Sallehudin, et al.,2008) show that GRANN_ ARIMA(Grey Relational Artificial Neural Network_ Auto Regressive Integrated Moving Averages) is better than the individual model and conventional hybrid model in terms of accuracy and robustness since it produces small forecasting errors and can work well in both small and large scale data. Technical analysis, (Murphy, 1999) refers to the various methods that aim to predict future price movements using past stock prices and volume information. It is (Mills, 1990; Priestley, 1988) possible that non-linear models are 134

2.1Neural Network Architecture and Design

An Artificial Neural Network (ANN) is an information processing system whose performance characterizes biological neural networks. ANNs are mathematical models of neural biology based upon the assumption that: 1. Information processing occurs at many simple elements called neurons. 2. Signals are passed between neurons over connection links. 3. Each connection link has an associated weight, which multiplies the signal transmitted.

4. Each neuron applies an activation function (usually non linear) to its net input (sum of weighted input signals) to determine its output signal. ANN is characterized by (1)a pattern of connections between the neurons called its architecture (2) Method of determining the weights on the connections called training algorithm and (3) activation or transferring function from one neuron to another neuron. Neurons in ANN are organized in single or multi layers. The current work without emphasizing on these strategies assumes learning rate, momentum, epochs, error tolerance and target randomly. Back Propagation Algorithm is the most commonly used algorithm for developing ANN models for financial data.

(say 0.000001), then stop. Otherwise, reset E=0, and repeat from Step 1 for another iteration.

3.Arima Methodology
The art of ARIMA modeling involves the following st eps:

3.1. Model Identification

The foremost step in ARIMA modeling is to check for stationarity of the series. A cursory look at the graph of the data and the structure of autocorrelation and partial autocorrelation may provide clues for the presence of stationarity. If the model is found to be non-stationary, stationarity can be achieved mostly by differencing the series. The next step in the identification process is to find the initial values for the orders of parameters p, q. They could be obtained by looking for significant autocorrelations and partial autocorrelation coefficients. The autocorrelation function (ACF) and partial ACF (PACF) are very important for the definition of the internal structure of the analyzed series. Theoretically, both an AR (p) process and an MA (q) process should be associated with well-defined patterns of ACF and PACF.

2.2 Back Propagation Algorithm (BPA)

Back propagation Algorithm assumes that there is supervision of training of network. The method of adjusting weights is designed to minimize the sum of the squared errors for a given training data set. ANNs are developed by BPA in following steps. Step 1: Select an input and output variables and decide the architecture of ANN for modeling the variables.x presents the input , y hidden and z output layer. Step 2: calculate the net inputs and outputs of the hidden layer neurons Netjh =

i =1

N +1

wji x i ,yj =f(Net j h )

3.2. Estimation
At the identification stage, one or more models are tentatively chosen that seem to provide statistically adequate representation of the available data. Then we attempt to obtain precise estimates of the model by least squares as advocated by Box &Jenkins.

Step 3: calculate the net inputs and outputs of the output layer neurons Netk0 =

j =1

J +1

v kj yj

,zk =f(Netk0 )

Step 4: update the weights in the output layer (for all k, j pairs) v kj vkj +c (d k - z k )z k (1- z k)yj Step 5: update the weights in the hidden layer (for all i, j pairs) k (dk -zk )zk wji wji + c 2 yj( 1 yj )xi { k = 1 ( 1 z k ) v kj } Step 6: update the error term

Different models can be obtained for various combinations of AR and MA individually and collectively. For the models obtained, perform diagnostic tests using (1) Residual ACF (2) Box pierce Chi-square tests (d)Forecasting: Arima models are developed basically to forecast the corresponding variable. There are two kinds of forecasts-sample forecasts and post sample forecasts. The former are used to develop confidence in the model and the latter to generate genuine forecasts for future planning. Arima model can be used to yield both these kinds of forecasts.

k =1

(dk - zk )2

and, repeat from Step 1 until all input patterns have been presented (one iteration.) Step 7: If E is below some predefined tolerance level


4.Hybrid Model of Ann and Arima (Ann_arima)

In the proposed model there are mainly two stages. In the first stage ANN is used to predict the gold rates using four predictors,namely two yearly moving average,one yearly moving average,six monthly moving average,three monthly moving average.Then the residual generated is provided to the ARIMA which will forecast the error forecast. In the second stage , the predicted price by ANN is summed with the error forecast generated by ARIMA which produces the final forecasted value.

Fig 1.Flow Chart of the Proposed Hybrid Approach (ANN and ARIMA)

5. Data Analysis

The data for analysis is taken from the average monthly gold rates from the June 1999 to April 2010 obtained from World Gold Council. In this study, we used time delay moving average as technical data. The advantage of moving average is its tendency to smooth out some of the irregularity that exits between market days. The predictor that are chosen are two yearly moving average,one yearly moving average,six monthly moving average,three monthly moving average.

Fig 2:Sequence Chart of Gold Rates 136

5.1Modeling using ANN:The neural network model has 4 inputs for 4 predictors,two hidden layer and one output unit to predict gold rate. Historical data are used to train the model. Once trained the model is used for.forecasting . Fig 3:Network Diagram of ANN

Hidden layer activation function: Hyperbolic tangent Output layer activation function: identity

Table 1:Network Details for Multilayer Perceptron model of ANN

Network Information 1 2 3 4 Number of Unitsa Rescaling Method for Covariates Number of Hidden Hidden Layer(s) Dependent Variables Number of Units Activation Function Error Function 137 Layers Number of Units in Hidden Layer 1a Activation Function 1 oneyrMA sixmnthMA ThreemnthMA twoyrMA 4 Standardized 1 1 Hyperbolic tangent goldrate 1 Standardized Identity Sum of Squares

Input Layer


Output Layer

Rescaling Method for Scale Dependents

Table 2:Estimated values of the parameters

Parameter Estimates Predicted Predictor (Bias) oneyrMA sixmnthMA ThreemnthMA twoyrMA Hidden Layer 1 (Bias) H(1:1) Hidden Layer 1 H(1:1) .179 .185 .087 -.612 -.197 .348 -2.135 Output Layer goldrate

Input Layer

5.2.Model Identification, Estimation and Diagnosis in the merged ARIMA The input series is the residual or error generated from the difference of actual and predicted gold price of the indices from ANN model during the same time period. First stage is to verify that whether the series is stationary or not with the help of sequence graphs. It can be seen from the Figure that series is not stationary and requires to be differenced once. ACF and PACF on the input series will help to find out the tentative values of three parameters p, d and q of ARIMA (p, d, q).After analyzing ACF, PACF and performing various iterations by taking different p and q parameter values with d as 1 and best fit was found having minimum Bayesian Information Criteria (BIC) value(Table 3). The best fit was selected after applying various p and q values the model. To check the adequateness of the model the ACF and PACF plots of the error between the input series and its fit were generated. In the process of diagnosis,to determine whether the time series is white noise or not, the Box-Ljung Q statistic is compared with the chi-square distribution with (h-m) degrees of freedom. Here h is the number of lags and m is the number of parameters. Table 3 clearly demonstrates that the Q* statistic has same distribution as chi-square with (h-m) degrees of freedom. The plots and the Autocorrelation generated indicate that the model fits well(fig4).It was found that ARIMA(0,1,0) is the model that fits the residuals generated by the ANN.

Table 3:Model Parameters of ARIMA(0,1,0) model

Model (0,1,0) Gold Rate

RMSE 28.397

MAPE 3.196

MaxAPE 14.895

MAE 19.356

MaxAE Q*Statistics 114.758 6.739



BIC 0.414

18.652 18


Fig 4:Residuals of the ACF and PACF of the fitted ARIMA model

The fit of the input (residual of ANN) series generated by the ARIMA models is summed with the predicted close value generated by ANN. This results in the final predicted value.


Fig 5:Chart of actual versus predicted values.

Fig 6:Chart of predicted versus residuals.

6.Conclusion In the current research attempted to study whether a hybrid model achieves better results than an individual model .Hybrid model was developed using techniques of ANN and ARIMA and comparison is also made between the conventional hybrid approach using ARIMA, ANN and proposed hybrid approach using ANN, ARIMA based on the error measures Mean Absolute Error(MAE),Mean Absolute Percentage Error(MAPE),Mean Square Error(MSE) Root Mean Square Error(RMSE) and Percentage Mean Absolute Deviation(PMAD)(Table 4).

Time Series Plot of gold rate, predANN, PredARIMA, finalhyb

Variable gold rate predA NN PredA RIMA finalhy b

Average Monthly gold rates

900 800 700 600 500 400 300 200 Month Jun Year 2001

Jun 2002

Jun 2003

Jun 2004

Jun 2005

Jun 2006

Jun 2007

Jun 2008

Jun 2009

Fig 7:Comparative Graph showing the plot of actual rates,predicted ANN rates ,predicted ARIMA rates and hybrid ANN_ARIMA rates. Table 4: Error Measures for ANN,ARIMA,Hybrid ANN_ARIMA Error ANN ARIMA Measures MAE 16.82615 19.355 MAPE MSE RMSE PMAD 0.03036 496.8101 22.28923 0.030755 0.03195 798.2354 28.25306 0.035025

HYBRID ANN_ARIMA 6.59235 0.01159 86.6236 9.30718 0.01205

Results show that prediction of hybrid ANN_ARIMA model for the average monthly gold outperformed the traditional ARIMA Model and the contemporary ANN Model in all the error measures.Hence it can be successfully used for forecasting than the ANN and ARIMA models. 7.References 1. Abu- Mostafa, Y. S., et al. (2001). Neural Networks in Financial Engineering, IEEE Transactions on Neural Networks, 12(4): 653-656. 2. Box, G.E.P. and Jenkins, G.M., (1976). Time Series Analysis: Forecasting and Control. San Francisco, CA: Holden-Day. 3. Brabazon, T. (2000). A Connectivist Approach to Index Modelling in Financing Markets, Proceedings of 140

Coil / EvoNet Summer School. University of Limerick, Briys, E., Bellalah, M., Mai, H. M. and Varenne, F. de (1998). Options, Futures and Exotic Derivatives. England: John Wiley & Sons Ltd. 4. Brockwell, P.J., Davis, R. A. (1996). Introduction to time series and forecasting Springer. 5. Fama, E.F. (1965). The Behaviour of Stock Market Prices, Journal of Business, 38: 34-105. 6. Fama, E.F. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work, Journal of Finance, 25: 1465-1468. 7. Granger, C.W.J. and P. Newbold, (1986),Forecasting Economic Time Series (Academic Press, San Diego). 8. Hanke, John E. and Wichern, Dean W. (2007). Business Forecasting. New Delhi: Pearson EducationInc,79-80. Joarder Kamrwzaman and Ruhul A Sarkeg(2003). Forecasting of currency exchange rates using ANN: a case study, IEEE Int. Conf. Neural Networks & Signal Processing,Nanjing, China. 9. Kate A., Simth, Jatinder, N. D, Gupta (2000). Neural Networks in Business: Techniques and Applications for the Operations Researcher, Computer and Operations Research, 27: 1023-1044. 10. Kim, Kyoung-jae and Lee, Won Boo (2004). Stock Market prediction using Artificial Neural Networks with Optimal Feature Transformation, Neural Computing and Application, 13: 255260. 11. Kumar, Satish (2004), Neural Networks: A Classroom Approach, Tata McGrawHill Publishing Company Limited, New Delhi.

12. Mills, T. C. (1990). Non-linear Time Series Models in Economics, Journal of Economic Surveys, 5: 215241. 13. Merh, Nitin, V.P. Saxena and Kamal Raj Pardasani (2008), Artificial Neural Network for Stock Market Forecasting, Nirma University Journal of Business and Management Studies (NUJBMS), 2(3 & 4): 3-19. 14. Murphy, J. J. (1999). Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications. New York: Institute of Finance, 4-5. 15. Nitin Merh, Vinod P. Saxena and Kamal Raj Pardasani(2010).A Comparison between hybrid approaches of ANN and ARIMA for Indian stock trend forecasting. Business Intelligence Journal,23-43. 16. Priestley, M. B. (1988). Non-linear and Non-stationary Time Series Analysis. London: Academic Press. 17. Refenes, A. P., (Ed) (1995). Neural Network in the Capital Markets. England:John Wiley & Sons Ltd, 149-161. 18. Sallehuddin, Roselina., Shamsuddin, Siti Mariyam. and Hashim, Siti Zaiton Mohd (2008). Hybridization Model of Linear and Non-linear Time Series Data for Forecasting. Second Asia International Conference on Modelling & Simulation, IEEE Conference Proceedings, DOI 10.1109/AMS.2008.142, 597 602. 19. Samanta G.P. and Bordoloi, Sanjib (2005). Predicting Stock Market- An Application of Artificial Neural Network Technique Through Genetic Algorithm, Finance India, 19(1): 173-188.


Mutual Funds Motivating Factors Behind Investment. R.A.Rabika Begum, Research Scholar, (Ph.D In Commerce) Mother Teresa Womens University, Kodaikanal Dr. P. S. Valarmathy Head, Department of Management Studies, Vel Tech Institute
To grow is to develop and to develop is to achieve a designed target. Creation of wealth is the primary objective of investors. There are a number of investment opportunities all around the investor to achieve his objectives. There are bank deposits, company deposits, equities, bonds, life insurance policies, small savings scheme, and mutual fund products etc. which create wealth and which in a way compete among themselves for the choice of the investor. A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. actual practice. These expectations of the investors are influenced by their perception and humans generally relate perception to action. Formulation of schemes and marketing of the mutual fund products requires an indepth study of the financial behaviour of the investors. In this paper an attempt is made to identify the major factors that Influence the investors in their selection of the fund/scheme.

4. Need for the Study

Mutual fund is a growing industry and considered as the major mobilizes of financial resources for the stock market and the economy in general. . The rapid growth of the mutual fund industry in India has attracted a number of private players into the market. The various mutual funds companies have been successfully operating in the industry by providing a wide range of products to suit a variety of investors needs. Formulation of alternative schemes by various mutual fund companies has become important to fight the battle and to secure a sound position in the industry. Mutual Fund as an investment Vehicle is capturing the attention of various segments of the society, like Academicians, industrialists, financial intermediaries, investors and regulators for varied reasons and deserves an in-depth study.

2. Scheme of the Paper

Background Information Need For The Study Objectives Of The Study Limitations Of The Study Review Of Literature Analysis And Findings Future Prospectus

3. Background Information
Put not your trust in money put your money in trustis the perfect way by which the concept of mutual funds can be understand. Mutual funds are dynamic financial intermediaries, which pool the savings of numerous individuals and invest the money thus raised in a diversified portfolio of securities. A Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. In financial markets, expectations of the investors play a vital role. They influence the price of the securities; the volume traded and determines quite a lot of things in 142

4. Objective of the Study

To identify the major factors that influence the investors fund/scheme selection

5. Methodology
The required data was collected by means of a structured questionnaire distributed among 60 investors spread over the city of Chennai but only 52 questionnaires which was complete in all aspects used for the study .

6. Limitations of the Study

The data collection procedure was taken up from mutual fund investors of Chennai City only. Personal bias and prejudice of the respondents could have affected the results of the study.

7. Review of Literature
The existing Behavioural Finance studies are very few and very little information is available about investor perceptions, attitudes and behaviour. Ippolito (1992) says that fund/scheme selection by investors is based on past performance of the funds and money flows into winning funds more rapidly than they flow out of losing funds. Goetzman (1997) states that there is evidence that investor psychology affects fund/scheme selection and switching. De Bondt and Thaler (1985) while investigating the possible psychological basis for investor behaviour, argue that mean reversion in stock prices is an evidence of investor over reaction where investors over emphasize recent firm performance in forming future expectations. Kulshreshta (1994) offers certain guidelines to the investors in selecting the mutual fund schemes. Shanmugham (2000) conducted a survey of 201 individual investors to study the information sourcing by investors, their perceptions of various investment strategy dimensions and the factors motivating share investment decisions, and reports that among the various factors, psychological and sociological factors dominated the economic factors in share investment decisions. Madhusudhan V Jambodekar (1996) conducted a study to assess the awareness of MFs among investors, to identify the information sources influencing the buying decision and the factors influencing the choice of a particular fund. The study reveals among other things that Income Schemes and Open Ended Schemes are more preferred than Growth Schemes and Close Ended Schemes during the then prevalent market conditions. Investors look for safety of Principal, Liquidity and Capital appreciation in the order of importance; Newspapers and Magazines are the first source of information through which investors get to 143

know about MFs/Schemes and investor service is a major differentiating factor in the selection of Mutual Fund Schemes. Sujit Sikidar and Amrit Pal Singh (1996) carried out a survey with an objective to understand the behavioural aspects of the investors of the North Eastern region towards equity and mutual funds investment portfolio. The survey revealed that the salaried and self employed formed the major investors in mutual fund primarily due to tax concessions. UTI and SBI schemes were popular in that part of the country then and other funds had not proved to be a big hit during the time when survey was done. Syama Sunder (1998) conducted a survey to get an insight into the mutual fund operations of private institutions with special reference to Kothari Pioneer. The survey revealed that awareness about Mutual Fund concept was poor during that time in small cities like Visakapatnam. Agents play a vital role in spreading the Mutual Fund culture; open-end schemes were much preferred then; age and income are the two important determinants in the selection of the fund/scheme; brand image and return are the prime considerations while investing in any Mutual Fund. Anjan Chakarabarti and Harsh Rungta (2000) stressed the importance of brand effect in determining the competitive position of the AMCs. Their study reveals that brand image factor, though cannot be easily captured by computable performance measures, influences the investors perception and hence his fund/ scheme selection. Since 1986, a number of articles and brief essays have been published in financial dailies, periodicals, professional, research journals, explaining the basic concept of Mutual Funds, and highlight their importance in the Indian capital market environment. They touch upon varied aspects like Regulation of Mutual Funds, Investor expectations, Investor protection, Trend in growth of Mutual Funds and some are critical views on the performance and functioning of Mutual Funds. From the above review it can be inferred that Mutual Fund as an investment vehicle is capturing the attention of various segments of the society, like academicians, industrialists, financial intermediaries, investors and regulators for varied reasons and deserves an in depth study.

8. Need for the Present Study

Even though studies were already made in this subject, the investors behaviour tend to change over a period of time and it also differs among the investors , in this article an attempt is made to study the major factors, which influence the investors in their selection of the fund/scheme. Predominant Factors influencing the investors fund/scheme selection: Factor analysis is applied to identify the factors that influence the investors fund/scheme selection, 19 variables were identified based on theory and past research. The Investors were asked in the questionnaire to express their agreement & disagreement with the motivational factors attributing to investment in Mutual funds from their personal experience. Factor analysis is applied on the 19 variables influencing the investors. This analysis is multivariate tool generally used to condense the greatest number of variables in to least number of factors. The results of factor analysis are presented as follows. FACTOR ANALYSIS The identified variables were classified under the appropriate group. 19 variables have emerged into 5 major factors I Financial Factor/Economic Factor II Brand Image III Quality Factor IV Macro Factors V Investor Services

Table 1.1
I Financial Factors/Economic Factors A1 A2 Mutual Fund products maximizes return Products with tax benefits is an important criterion in choosing Mutual Fund units Factor Loading .77098 .67706


Management fees payable is very low/Cost of record keeping is low / in mutual fund investment



Funds/Schemes past performance/track importance while investing





The above table explains the variable loadings of each factor. The above table denotes that factor 1 has 4 variables which can be uttered as Financial Factor/Economic Factors. I FINANCIAL FACTOR/ECONOMIC FACTOR Lower cost of Investment Tax Benefits High Return Past performance


Table 1.2
II Brand Image B1 B2 B3 Favorable rating by a rating agency influences the investors of mutual fund I make investment in mutual funds based on the reputation of the scheme Investors are mostly influenced by the reputation of the asset management company I am always impressed upon on the expertise of the fund managers in managing money Factor Loading .82341 .73988 .72236



From the above table it is observed that Factor 2 has 4 variables under it Reputation of the Asset Management Company Reputation of the Scheme Fund Managers expertise Favorable Rating by a rating agency The factor can be named as BRAND IMAGE.

Table 1.3

III Quality Factors Innovative features of Mutual Funds attracts customers towards mutual funds Easy entry and exit to and from Mutual Funds Mutual Funds provides good infra structure facilities Investors in Mutual Funds can liquidate their investments at any time The extent of diversification of risk in MF is commendable

Factor Loading

C1 C2 C3 C4 C5

.91859 .87809 .66562 .59579 .52782

It is ascertained from the above table that Factor 3 has the following variables Quality Factor Flexibility Liquidity Innovative features Diversification of Risk Infra structure facilities These Variables can be suitably named as QUALITY FACTOR 145

Table 1.4

IV Macro Factors Declining interest rates on government backed securities shifts small savings to Mutual Funds Uncertain and unattractive bank deposit interest rates makes Mutual Fund investment attractive Mutual funds are well regulated as it is continuously monitored by SEBI

Factor Loading







It is prominent from the listed table that Factor 4 contains the following 3 variables MACRO FACTORS Lower return on Government Securities Unattractive Interest on Bank Deposits Effective Monitoring by SEBI These variables together can be named as MACRO FACTORS IV

Table 1.5
V Investor Services E1 E2 Individual has no time & energy to monitor his portfolio MF operation is very transparent Fringe benefit like free insurance, free credit card, loans on collateral influences investment in Mutual Funds Factor Loading .80358 .76446



It is eminent from the above table that Factor 5 has 3 variables under it V INVESTOR SERVICES Convenient Administration Transparency Fringe benefits This factor can be correctly termed as INVESTOR SERVICES The data for each of the 5 sub-groups were factor analysed using Principal Component Analysis, with the objective of identifying the factor in the sub-group which turns out to be significant in the fund/scheme selection.


FACTOR ANALYSIS PRINCIPAL COMPONENTS ANALYSIS S.No 1 2 3 4 5 Factors FINANCE FACTOR BRAND IMAGE QUALITY MACRO FACTORS INVESTOR SERVICES Eigen Value 4.8925 3.54509 2.03949 1.69851 1.49970 PercentageOf Variance 25.8 18.6 10.7 8.9 7.9 Cumulative Percntage 25.8 44.4 55.1 64 71.9

Findings of the study: The 19 fund related variables were analyzed for their importance. The analysis reveals that the investor considers finance factor as the first influencing factor followed by the other factors .Still all the 19 variables are important in the selection of the fund/scheme. Running a successful Mutual fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investor. This study has made an attempt to understand the financial behaviour of Mutual Fund investors. The post survey developments are likely to have an influence on the findings. Behavioral trends usually take time to stabilize and they get disturbed even by a slight change in any of the influencing variables.

10. Future Prospectus

In the future, Mutual Fund industry has to face competition not only from within the industry but also from other financial products that may provide many of the same economic functions as mutual funds but are not strictly Mutual Funds. Hence, surveys similar to the present one need to be conducted at intervals to develop useful models. Unless the Mutual Fund schemes are tailored to the changing needs of the investors, and unless the AMCs understand the fund selection/ switching behaviour of the investors, survival of funds will be difficult in future. Nevertheless, it is hoped that the survey findings will have some useful managerial implication for the AMCs in their product designing and marketing.


Impact of Financial Crisison Indian Economy A Strategic Route Map to Future

Dr. Y. Lokeswara Choudary
Asst.Professor & Research Supervisor, SRM B-School, SRM University, Chennai

Mr. Yaseen Masvood

Asst.Professor& Research Scholar, School of Management, SRM University, Kattankulathur, Chennai

1. Introduction
The OECD and IMF forecasts for 2009 suggest that for the first time since the 1930s GDP will fall in the industrialized economies that make up the OECD. Yet even these forecasts are based on relatively optimistic assumptions that the financial markets begin to stabilize in the months ahead and that there are not other major shoes to drop in terms of negative financial shocks. History has shown that crises on this scale lead to social and political instability with unpredictable and often tragic results.

A national and global regulatory architecture needs to be built so that financial markets return to their primary function: to ensure stable and cost-effective financing of productive investment in the real economy. Moreover, governments must acknowledge the urgent need to begin work on a more inclusive, just and democratic system for the governance of global markets. To stabilize the present crisis the global economy and governments need to contemplate on the areas which can pave way to fill the gap of present crisis and future economy.

2. Impact on Employment and Social Life

Working families have an enormous stake in the response of governments and the international institutions to this crisis. How protracted and deep the global recession proves to be depends on how timely and well-focused government action is. However, for more than two decades social cohesion has been under stress as a result of growing inequality in most countries. Today, those who are losing homes, jobs and pensions as a result of the financial crisis for which they bear no responsibility, are being called onas taxpayersto bail-out those who are responsible. This produces a strong political cocktail that governments would do well to heed. While shortterm action to save the banking system, stop major companies going under and stimulate demand to help the recovery of the real economy are all necessary, there can be no return to business as usual once the recovery is underway. This is a point OECD appears to accept in principle, but what about in practice, in the analysis and advice they give to their member governments. This most serious economic crisis since the Great Depression must mark an end to an ideology of unfettered financial markets, where self-regulation has been exposed as a fraud and greed has overridden rational judgment to the detriment of the real economy. 148

3. Impact on It And Ites

The current crisis parallels the 2001-2002 bust especially for Indias IT (export) sector. Approximately 61% of the Indian IT sectors revenues are from US clients. If you just take the top five India players who account for 46% of the IT industrys revenues, the revenue contribution from US clients is approximately 58%. About 30% of the industry revenues are estimated to be from financial services. In addition, from a qualitative standpoint, the tentacles of the financial sector business are quite well-entrenched and have significant structural impact as well. The size and maturity of the IT industry today are far ahead of the 2001 days, and the current model has signs of irreversibility and long-term competitive advantage. While GE invented the industry along with Indias biggest IT outsourcing firms, the US financial services and insurance sector (BFSI) was one of the earliest adopters of the outsourcing trend in a big way.

4. Impact of Exchange Rate Risk

The Rupee-Dollar exchange rate benefit for a company that would have done zero-hedging is in the range of 10-12%. However, if we analyze the top few firms, the median seems to be around an offset benefit of around 2-3% on the bottom-line, assuming some hedging. The Rupee has depreciated since the last quarter by more than 10% which has had a positive effect on both top line

and the bottom-line in Rupee terms. This is to an extent countered by the significant hedging done by the IT biggies, the ramifications of which translated into forex losses for them in the June quarter. This may bite them again this quarter. For example, TCS has hedged about US$ 2.2 billion for the year at Rs.45/US$. According to the June quarter results transcript, at Rs.45/US$, the mark-to-market loss on this would be about US$100 million. And, considering the Rupee has moved beyond Rs.47/US$ into the first week of October, this can be far worse.

6. Real Estate Market

The big risk is a possible repeat of what happened in 1996. Projects that are halfway to completion, or companies that are stuck with cash flow issues on businesses that are yet to reach break even, will run out of cash. The big sector that potentially could be hit would be real estate, where building projects are halfdone all over the country and some developers who touted their land banks find now that these may not be bankable. The only way out of the mess is for builders to drop prices, which had reached unrealistic levels and assumed the characteristics of a property bubble, so as to bring buyers back into the market, but there is not enough evidence of that happening.

5. Credit Markets
Inter bank lending has been slow globally. This means that banks are lending to each other at high rates which further implies more expensive credit .In short, capital has suddenly become more expensive than a few months ago and, in many cases, it may not be available at all. Many consumers today in India are quite leveraged. More expensive money means that floating rate loans begin to get more and more expensive.

7. Stock Market
Any uncertainty in global markets always proves to be a poison pill for the stock markets. The drop in real estate and stock prices robs a much larger body of consumers of the wealth effect, which could affect spending on a broader front. The stock market values can fall further if the foreign institutional investors start pulling out money in large numbers over a short period of time.

8. Low Risk And High Potential Economic Indicators of India

Table: Relative Weight of EME in Capital Markets (billions of $)
GDP World Euro Area United States Japan Emerging Markets 54545,1 12202,0 13807,6 4381,6 17281,7 Stock Markets 65105,6 610040,1 19922,3 4663,8 20950,2 Debt Securities 79821,9 23023,8 29879,3 9217,5 7820,1 Bank Assets 84784,5 30137,1 11194,1 7839,4 15003,8 Capital Markets 229712 63461,4 60995,7 21720,6 43774,1

Relative Weight of EME Capital Markets as % of world Euro Area United States Japan Emerging Markets 22,4% 25,3% 8,0% 31,7% 15,4% 30,6% 7,2% 32,2% 28,8% 37,4% 11,5% 9,8% 35,5% 13,2% 9,2% 17,7% 27,6% 26,6% 9,5% 19,1%


The above table clearly indicates the strength of the emerging markets in terms of GDP, Assets holding in stock markets, debt securities, bank assets, and capital markets. Emerging markets play a keen role during crisis when compared to developed economies due to market rational behaviour and conservative approach of investments. This can be a better solution to crisis. Table 2: Showing Inflation trends for food products in India during global financial crisis

The annual Wholesale Price Index-based inflation inched closer to zero in the first week of March, setting the stage for the Reserve Bank of India to cut interest rates further to prop up growth. Despite the decline in the headline inflation estimate to a three-decade low of 0.44 per cent, food products inflation continues to rule high and hurt at the consumer-level. The latest Consumer Price Index for Industrial Workers, to be released on Friday, is expected to be around 10.4 per cent. According to data released by the Ministry of Commerce and Industry here on Thursday, the annual WPI inflation rose 0.44 per cent for the week ended March 7, sharply lower than the previous weeks annual rise of 2.43 per cent. Inflation was recorded at 7.78 per cent a year ago and the sharp dip in the latest reported week has been partially attributed to the base effect coming into play. The drop of 199 basis points in the latest WPI inflation estimate is the steepest since the week ended November 1, 2008. There is no record of inflation dipping this low since 1977-78, according to Government estimates. 150

Deflationary phase: Data released by the Finance Ministry on the contribution of broad commodity groups to the yearon-year inflation during the latest week show that primary articles contributed 227 per cent to inflation, a quadrupling of its share from 56 per cent in the previous week. In manufactured products, the contribution to inflation was 166 per cent in the week under reference, from 90 per cent in the previous week. The fuels group, on the other hand, showed a negative contribution at (-) 289 per cent against (-) 46 per cent the previous week, registering a six-fold drop. Even as analysts predict that inflation is likely to turn negative starting April and could remain so until the end of 2009, the Government, on its part, allayed fears that the economy could be entering a deflationary phase. The International Monetary Fund, earlier this week, said that India should rely more on monetary policy to support the economy as high public debt makes fiscal efforts difficult. The RBI had, on March 4, cut its key repo rate to an all-time low of 5 per cent, having pruned it by 400 basis points since October.

Industrial output as measured by the index of industrial production for January was weighted down by poor output from intermediate goods such as auto ancillaries and chemicals and basic goods, which fell 9.2% and 1% respectively. However, consumer durables output grew 2.5% moving into positive territory after three months of decline, on the back of high growth in automobile sales. But capital goods sector saw strong growth, with output rising 15.4%, led by an impressive expansion in production of machinery and equipment. The improvement in production of consumer goods hints at a demand pick up and improvements in credit availability. The worst quarter is behind as, and on revisions.

relatively year-on-year inflation rates. In the fuel and power group, inflation dipped further to clock minus 6 per cent versus minus 5.1 per cent in the earlier week. In manufactured products, inflation rate decreased to 1.3 per cent in the current week, from 4 per cent last week. Inflation in most sub-groups declined or remained steady relative to rates recorded in the previous week.

10. Strategies to Overcome Crisis

Initiate a major recovery plan to stabilize global capital markets, move economies rapidly out of recession, stave off the risks of a global depression and get back on the track of creating decent work. There should be further coordinated interest rate cuts as necessary. Governments should bring forward infrastructure investment programmes that can stimulate demand growth in the short term and raise productivity growth in the medium term. Now is the time to move forward with a Green New Deal to create jobs through alternative energy development and energy saving and conservation. Tax and expenditure measures should be introduced to support the purchasing power of middle and low income earners. Development assistance budgets need to be maintained to the Least Developed Countries (LDCs) 151

9. Inflation and Price Index

The sharp fall in headline inflation during the latest reported week was on account of an across-the-board dip in inflation levels. In primary articles, the yearon-year inflation dipped to 4.4 per cent for the latest reported week, against 5.8 per cent the previous week. In food articles, inflation fell to 7.4 per cent after being stable at 8.3 per cent in the previous two weeks. Cereals, pulses, salt, milk and sugar, however, clocked high

to help meet the Millennium Development Goals (MDGs) with the adoption of binding commitments and a timetable to meet the UN target of 0.7 % of GDP. Ensure that a financial crisis on such a scale never happens again. For two decades most governments, together with the International Financial Institutions (IFIs) have promoted the lightly regulated new financial architecture that has characterized the global financial markets responsible for this crisis. Governments have now been forced to intervene to save the banking system; the quid pro quo must be properly regulated financial institutions. The agenda must cover: the public accountability of central banks; countercyclical asset requirements and public supervision for banks; the regulation of hedge funds and private equity; the reform and control of executive compensation and corporate profit distributions; the reform of the credit rating industry; the ending of offshore tax havens; the taxation of international financial transactions; proper consumer protection against predatory lending and aggressive banking sales policy; and active housing and community-based financial service public policies. The new system needs to reflect the requirements of all regulators; bank regulators, tax and competition authorities, and governance and consumer bodies in each country. There must be no more piecemeal approaches to reform. Establish a new structure of economic governance for the global economy. This must go beyond financial markets or currency systems to tackle all the imbalances of growth and capital flows that contributed to the crisis. Just as the post-World War II economic settlements included the strengthening of the International Labour Organization (ILO), in parallel with the creation of the United Nations, the new postcrisis settlement must address international economic governance. Governments must start work on the necessary structures. But this debate should not be held between bankers and finance ministry officials behind closed doors. Trade unions must have a seat at the table. Combat the explosion of inequality in income distribution that lies behind this crisis. The new system of economic governance must tackle the crisis of distributive justice that has blighted the global 152

economy. It must ensure more balanced growth in the global economy between regions, as well as within countries, between capital and Labour, between high and low income earners, between rich and poor and between men and women. Fiscal deficits are being cited as constraints, yet there is no choice: governments must step in as investors of last resort as the private sector has seized up. Better to incur deficits to support the recovery of the real economy than to face a collapse of public finances, not to mention investor and consumer confidence, due to the accelerating contraction of the real economy. In the short term, governments have little choice but to continue their efforts to stimulate economic activity. 2009 will be tough. Unemployment is rising, consumers are hesitant and investors are standing on the sidelines. The first and most urgent task for policy makers is to stabilize financial systems while persevering with tax cuts and infrastructure spending to bolster economies by encouraging demand and creating jobs. Working people need action. They require a seat at the table in these meetings and institutions. They have understandably little confidence that bankers and governments meeting behind closed doors will get it right this time. In fact, many business people and governments share this distrust. There must be full transparency, disclosure and consultation. The global union organizations are ready to play their role in this process.

11. Conclusion
The conclusions can be more detailed on the areas where financial market supervision and regulation must be reformedcounter-cyclical capital requirements for banks, reformed executive pay, supervision of credit rating agencies, codes for hedge funds and private equity, reformed accounting standards, tighter regulation and transparency of offshore financial centers. We also need new thinking in other areas, from competition, investment and pensions policies to tackling climate change, social exclusion and poverty. We need to raise productivity while keeping trade and investment frontiers open. We must find ways to spread opportunity and the fruits of future growth more evenly and encourage the low-carbon innovation needed for a green recovery.

Promoting economic co-operation is core to the OECDs mission. For nearly half a century, OECD had worked with governments and with business, labour and civil society to help markets grow, societies advance and countries emerge from poverty. By involving such key world players as Brazil, China, India, Indonesia, Russia and South Africa in this work, together, they are pursuing a collective long-term goal to build a stronger, cleaner and fairer global economy, free of the corruption, tax evasion, fraud, greedy exploitation and resource destruction that have discredited globalization and obstructed the benefits it can bring. Such initiatives will help to build our economy tomorrow. The financial crisis has knocked both us and others off balance. But it has not knocked us off course. There is no time to lose in responding, and we count on business leaders to help us in our efforts. We can take steps together towards such a better future, 2009 could brighten up after all. 2009 marks the Chinese Year of the Ox, a symbol of patience and hard work, and inspiring confidence in others. The crisis has knocked governments off balance, but like the ox, we must not be knocked off course. The long-term job of building a better tomorrow starts now.

4. TED spread Investment Tools Confer Thomas Philippon: The future of the financial industry, Finance Department of the New York University Stern School of Business at New York University, link to blog [1] 5. For this term see: Arrighi, G., & Silver, B. J. (1999). Chaos and governance in the modern world system Minneapolis: University of Minnesota Press. And: [2] John Bellamy Foster: Monopoly finance capital and the crisis. Interview with John Bellamy Foster for the Norwegian daily Klassekampen, conducted on October 15, 2008. 6. Whitney, Meredith (2009-03-10). Credit Cards Are the Next Credit Crunch: Washington shouldnt exacerbate the looming problem in consumer credit lines. Wall Street Journal. SB123664459331878113.html. 7. The Run-Up in Home Prices: Is It Real or Is It Another Bubble?, Dean Baker, CEPR, August 2002 8. Shiller, Robert J. (November 2, 2008), Challenging the Crowd in Whispers, Not Shouts, pp.BU5, http://www.nytimes. com/2008/11/02/business/02view.html, retrieved on 2009-03-08 9. Lohr, Steve (November 5, 2008), In Modeling Risk, the Human Factor Was Left Out, The New York Times: B1, http://www.nytimes. com/2008/11/05/business/05risk.html, retrieved on 2009-03-08 10. Shiller, R. 2006. Irrational Exhuberance Princeton, NJ: Princeton University Press.

12. References
1. Wall Street Journal. TED Spread spikes in July 2007. Wall Street Journal. http://www. 2. Norris, Floyd (August 10, 2007), A New Kind of Bank Run Tests Old Safeguards, The New York Times, http://www.nytimes. com/2007/08/10/business/10liquidity.html, retrieved on 2009-03-08 3. Elliott, Larry (August 5, 2008), Credit crisis - how it all began, The Guardian, http:// northernrock.banking, retrieved on 2009-03-08


Estimation of Appropriate Lambda Value for Indian Markets (Money, Sovereign Debt, Forex and Interest Rate Swap Market)
R. Natarajan
AVP (Derivatives), The Clearing Corporation of India Limited, 5th Floor, C-Wing, Trade World, Mumbai Dr. V. Balasubramanian, Professor, School of Management, SRM University

1. Introduction
Volatility, a variation in asset returns, has become a major concern in the financial arena. Volatility, which once was due to domestic events, now has gone global due to integration of global markets. Volatility, which differs for each asset class, is measured by the variability in the price over time measured as the variance or the standard deviation of the returns on the asset. Variance and standard deviation are statistical measures of the dispersion of returns around the expected (actual) returns. Volatility is also a measure of riskiness of an asset (more the variability, more the unpredictability associated with the returns of an asset).

2. Value at Risk (VaR)

Monitoring market risk is a major concern for financial institutions and banks as the value of their vast portfolio, comprising of various financial products, changes as and when market conditions change. The need for quantifying the financial market risk, which has resulted in many financial disasters in past, has led to a development of Value at Risk (VaR). VaR is a standard method of assessing market risk. It measures the worst expected loss over a given horizon under normal market conditions at a given confidence interval. Value-at-Risk (VaR) has emerged as a widely used tool of financial institutions for measuring and managing volatility. Due to its simplicity, VaR is widely used by corporate treasurers, fund managers and financial institutions. Even regulators use VaR to determine the capital that a bank should keep to reflect the market risk it is bearing. The successful implementation of VaR depends heavily on the accurate estimation of the conditional distribution of portfolio returns. Among various methodologies used to calculate VaR, Simulation method and Variance-covariance method are quite popular. Simulation method can be classified 154

as Historical Simulation and Monte-Carlo Simulation. In Simulation Method, various scenarios are created to generate the entire distribution of future portfolio returns. Variance-covariance method is the simplest way of calculating VaR. This method is a parametric method and assumes that the returns are normally distributed. The most important variable in Variancecovariance method is volatility. Variance estimation can be bifurcated into historical and implied (implicit) approach. Historical approach takes into consideration the past history of the asset returns while estimating volatility. On the contrary, implied approach ignores history, i.e. it estimates volatility by current market prices. Historical approach can be further classified as Simple variance, EWMA variance and GARCH variance. The assumption underlying EWMA and GARCH is that volatilities and correlations are not constant over the period. Sometimes they are relatively low and sometimes they are relatively high. These two models measure the variations in the volatility or correlation through time.

3. EWMA Variance
In EWMA method, greater weight is assigned to most recent returns and the weight goes on decreasing to prior returns. EWMA uses lambda () as a smoothing factor. The value of lambda should always be less than 1. Under this method, the variance forecast is computed using the recursive formula: 2 n = 2 n - 1 + (1 ) U2n-1 Whereas 2 is Lagged variance, U2 is lagged return and is lambda, weight assigned to lagged variance. The limitations associated with Variance-covariance methods are the assumptions considered while

evaluating VaR. This method assumes that the returns are normally distributed but in practice, financial asset returns are not normally distributed. Also, this method is applicable for linear portfolios and hence it has limited usage area.

4. Lambda A time decay factor

RiskMetrics refers Lambda as a decay factor which determines the relative weights that are applied to the observations (returns) and the effective amount of data used in estimating volatility. High value of lambda (nearer to one) indicates slower decay in the series, i.e. shocks are less quickly absorbed due to a smoother series and more historical data is included. Low value of lambda indicates faster decay, i.e. the weights fall off more quickly and fewer data points are used. J.P. Morgan conducted an extensive research to measure the market risks in portfolios of fixed income instruments, equities, forex, commodities and derivatives markets. It launched its study through RiskMetrics Technical document in October 1994. RiskMetrics, in its technical document, has mentioned the methodology to determine an optimum decay factor which would be suitable for any market worldwide. RiskMetrics considered 480 time series across various countries to estimate volatility and correlation. RiskMetrics has adopted Root Mean Squared Error (RMSE) to arrive at optimal decay factor considering all time series. RiskMetrics has chosen optimal decay factor as 0.94 for daily returns and 0.97 for monthly estimates which are globally widely used for estimating volatilities and correlation forecasts. Exchanges and clearing houses in India too are using the lambda value of 0.94 in their EWMA method for computing volatility. It has ignited the curiosity to see as to whether any other lambda value could be more justifiable and which could be arrived at based on the movement of market variables in Indian money market, sovereign debt market, forex market and interest rate swap market. 5. Data To begin the analysis, it was decided to undertake the study the suitable lambda value, proposed to be computed by different methodologies, for the above 155

markets in India. Accordingly, we have considered seven various active benchmark asset classes viz. MIBOR Overnight, MIBOR 12 Months Swap Rate, MIBOR 3 Year Swap Rate, MIBOR 5 Year Swap Rate, INR/USD Exchange Rate, CBLO O/N Rate and G-sec 10-year yield. A look-back period of data for the 500 days was considered for the analysis. While the traded rates were included in respect of CBLO and G-Sec 10 year time series, the rates published by RBI for INR/ USD reference rate was considered for the exchange rate. Similarly, rates published in Reuters for MIBOR 12 Months Swap Rate, MIBOR 3 Year Swap Rate and MIBOR 5 Year Swap Rate and MIBOR overnight rate published by NSE were considered in the time series.

6. Methodology
The lambda value for each of the above time series was calculated by employing Root Mean Squared Error (RMSE) criterion and Normal Likelihood (LKHD) criterion as under:

7. Normal Likelihood (LKHD) criterion

Normal LKHD criterion assumes that returns are conditionally normal, which specifies the joint probability density of returns given a value of the decay factor. The density function for the return on day t is given by: The value for density function is calculated for all 500 days. The conditional distributions for all days are combined to arrive at the following equation.

The above equation is known as the normal likelihood function. The maximum likelihood (ML) principle stipulates that the optimal value of the decay factor lambda is one which maximizes the above likelihood function. This equation can also be written as following:

The lambda can also be calculated by minimizing the above equation.

8. Root Mean Squared Error (RMSE) criterion

According to RMSE criterion, squared variance error is calculated for all 500 days. By combining all the errors, root mean squared prediction is arrived at which is given by:

The above equation is a function of lambda. The optimal decay factor is calculated by minimizing the above equation. The optimal decay factor applied by RiskMetrics is a weighted average of individual optimal factors where the weights are a measure of individual forecast accuracy. Results Using the above two methods, the lambda value for different asset classes and the results are as under:

Table-1: Benchmark-wise lambda values based on RMSE criterion and Normal Likelihood criterion Normal Likelihood Benchmark RMSE criterion criterion MIBOR Overnight 0.3497 0.9351 MIBOR 12 months Swap 0.9390 0.9179 Rate MIBOR 3 year Swap Rate 0.9503 0.8767
MIBOR 5 year Swap Rate CBLO O/N Rate G-sec 10-year INR/USD Xrate 0.9511 0.9601 0.9584 0.9336 0.8958 0.9244 0.8670 0.8234

The optimal decay factor is arrived at by taking weighted average of individual optimal decay factors. Accordingly, the lambda value arrived at based on these two methods is given below:

Table-2: Lambda Value Normal LKHD

Lambda () It is interesting to observe from Table-1 that the lambda value calculated by RMSE method is greater than 0.93 for all assert classes except MIBOR Overnight for which the lambda value is found to be a clear outlier, i.e. 0.3497. However, the lambda value computed as using Normal Likelihood Function, as per Table-1 above, is fluctuating between 0.82 and 0.94. But, the weighted average lambda value has been found to be 0.9497 i.e. 0.95 under RMSE and 0.8885 i.e. 0.89 under Normal LKHD. The lambda value of 0.95 computed using RMSE method is almost closer to the value recommended by RiskMetrics. In order to test the significance of the lambda value computed as per the above methods in forecasting 156 0.8885

RMSE 0.9497

variance, the lambda values so arrived were subjected to exception analysis i.e. how many days that the actual variance exceeds the forecast variance. The actual variance was compared with forecasted variance using such lambda values and an attempt was made to capture the failure rate by counting the number of times that the volatilities fall beyond the limits at 99% Confidence Interval (CI) on distribution. EWMA variances were calculated for all the seven time series followed by the standard deviation. Further, standard deviation was multiplied with z-score at 99% CI to set the limits on distribution. Subsequently, the returns were compared to check as to whether the actual values were within the EWMA values or not and this process was repeated for all 500 data points for all series. The results are tabulated below for comparison.

Table-1: Benchmark-wise lambda values based on RMSE criterion and Normal Likelihood criterion Normal Likelihood Benchmark RMSE criterion criterion MIBOR Overnight 0.3497 0.9351 MIBOR 12 months Swap 0.9390 0.9179 Rate MIBOR 3 year Swap Rate 0.9503 0.8767
MIBOR 5 year Swap Rate CBLO O/N Rate G-sec 10-year INR/USD Xrate 0.9511 0.9601 0.9584 0.9336 0.8958 0.9244 0.8670 0.8234

From the Table-3 above, it can be seen that the failure rate for lambda at 0.9497 computed as per RMSE method was found to be lower as compared to the failure rate for lambda at 0.94 and 0.8885. The volatility forecast using the lambda value of 0.9497 has thrown 3.57% failure as against 3.74% and 4.51% failure in the case of volatility forecast with lambda value of 0.94 and 0.8885 respectively. The Technical Document of RiskMetrics talks about the number of historical observations required by the EWMA Model for a specific decay factor at specific tolerance level. Following table shows the relationship between the tolerance level, the decay factor, and the effective amount of data required by EWMA:

Decay Factor 0.85 0.86 0.87 0.88 0.89 0.90 0.91 0.92 0.93 0.94 0.95 0.96 0.97 0.98 0.99

Table-4: Effective Amount of Data Required Days of historical data at tolerance level 0.001% 0.01% 0.1% 71 57 43 76 61 46 83 66 50 90 72 54 99 79 59 109 87 66 122 98 73 138 110 83 159 127 95 186 149 112 224 180 135 282 226 169 378 302 227 570 456 342 1146 916 687

1% 28 31 33 36 40 44 49 55 63 74 90 113 151 228 458

The above table reveals that while the lambda at 0.89 requires only 40 days at 99% CI, the lambda at 0.94 requires 74 days at same CI. Thus the lambda value of 0.89 gives more weight to the volatility of recent days as compared to lambda value computed by RMSE. Professor Jayanth R. Varma from IIM-A, in his research paper Risk Management Lessons from the Global Financial Crisis for Derivative Exchanges, has talked about the relevance of choosing lambda value as 0.94 over 0.995. He stated that when lambda is 0.94, the most 157

recent 11 days account for half the weights and the most recent 37 days account for 90% of the weights. However, when lambda is raised to 0.995, the corresponding numbers are 138 days and 459 days. Therefore the effect of a wrong initial volatility estimate lasts for about 1-2 years when lambda at 0.995. On the other hand, with lambda at 0.94, the initial value affects the estimates only for the first month or so. It is proposed that when lambda at 0.995 is used, the volatility estimates should be initialized on a date at least 3 years in the past so that

the initial value has a negligible impact on the current volatility estimate. When lambda of 0.89 (generated by LKHD method) is used, it is observed that the most recent 6 days account for half the weights and the most recent 20 days account for 90% of the weights whereas the lambda of 0.95 (generated by RMSE method) is used, it is observed that the most recent 14 days account for half the weights and the most recent 45 days account for 90% of the weights. Conclusion The selection of lambda value primarily depends on the consideration of volatility for the number of days in past. If the market is volatile for longer time in past, then higher lambda value can be selected. With high lambda value, the weight decays at a slower rate and more number of days can be taken into consideration. On the contrary, if volatilities across few days are to be considered then lower value lambda can be chosen. Lower value will cause the weight to decay at higher rate and less number of days can be considered.

RiskMetrics Group found that the variance forecast at lambda equal to 0.94 is more close to realized variance rate than any other lambda value. Our study has found that the lambda value of 0.95 has performed better than 0.94 and 0.89 in the exceptional analysis. Since, the number of research studies on lambda value is very limited, it, at this juncture, appears that the lambda value of 0.94 as advocated by RiskMetrics Group for forecasting of variance is appropriate. Moreover, it also needs to be studied as to whether it would be beneficial to compute the lambda value for each asset class at periodic intervals and also across asset classes by taking into account the correlation factors and use such values for forecasting variance rather than adhering to a single value at all times. References: 1. RiskMetrics Technical Document, 1996 2. Varma J R (2009) Risk Management Lessons from the Global Financial Crisis for Derivative Exchange, February 2009


A study on Cultural intelligence in Cross-Cultural Leaders KALAI LAKSHMI, Senior Lecturer, Dept. of Management Studies, Sathyabama University, Chennai Dr. S. S. Rau, Registrar, Sathyabama University, Chennai.

Culture is developed, transformed and transmitted through the conscious and unconscious activities of every member in the organization. It is however, the leaders driving force and ability to facilitate preferred mind-sets as well as preserve, create, and transmit the essence of existing culture as he leads his subordinates to new challenges. Culture and leadership augment each other in bringing excellence to the enterprise. (Schein, 1997).Cultural intelligence is defined as the ability to interact with others from diverse cultural backgrounds, being aware of our cultural values that drive our attitudes, behaviors, and beliefs. In certain cultures, trust is built quickly and is based on competence, proactive sharing of information, and integrity. In some other cultures, the preference is for deep trust that develops over time, and that is based on compatibility, benevolence, and security. In these cultures, relationships, reputation, and influence are the building blocks for trust. We live and work in a world that is an integrated entity, increasingly influenced by external cultural factors. For those in leadership positions it is not only necessary to have a high IQ and EQ (emotional intelligence), but strong Cultural Intelligence (CQ) is also increasingly regarded as a necessary skill to succeed in todays global business community. Effective global leaders are a vital asset for organizations today (Van Dyne & Ang, 2006). In this global environment, leaders who are capable of understanding, functioning and managing are valuable, rare, and inimitable resource that can offer firms a competitive advantage (Ang & Inkpen, 2008; Barney, 1992). Training and development of global leader competencies is one of the top five organizational practices that significantly influences effectiveness of multinational companies (Stroh & Caligiuri, 1998).


Leaders in global Environment Adapting

Culturally intelligent leaders are comfortable in adapting their behavior to suit different circumstances without changing their inherent leadership style. With stronger awareness they can determine whether, for example, their followers are from an individualistic versus a collectivist culture, whether they work better in an autocratic versus a bureaucratic environment, whether they are motivated by incentives versus punishment, whether they respond to an informal versus formal approach, etc. Successful global leaders spend time with their followers to understand their comfort level and listen to what is said and not said.

Culturally intelligent leaders understand that the way they communicate is critical to their success. Once they are aware of the cultural attributes of their followers and have adapted to their environment, it will be easier to tweak their communication style accordingly. Apart from the obvious need to use clear language, this may also mean determining how much information needs to be imparted in order to achieve the required goal and what the consequences and/or rewards are for the followers. It also means adjusting communication styles to take into account whether the followers culture is one that exhibits an implicit rather than explicit manner, as well as non-verbal communication traits.

The Cultural Intelligence (CQ) Model

Most of us know that IQ or intelligence quotient is a measurement of ones intellectual capabilities. In recent years, weve also seen the significance of EQ or emotional intelligence ones ability to lead and interact with effective emotional sensibilities. Cultural intelligence builds upon some of these same ideas 159

Fig 1: Leaders in global environment

but instead focuses specifically on ones capability to effectively understand and adapt to a myriad of cultural contexts as an additional and essential skill set needed by contemporary leaders (Ng, Van Dyne, & Ang, 2009). Thus, cultural intelligence provides a researchbased model for becoming a more effective leader in culturally diverse settings and across cultural settings.
Cultural intelligence

so we can plan and interpret whats going on in diverse contexts. Its the ability to think about our own thought processes and draw on our cultural knowledge to understand a different cultural context and solve problems in that situation. When meetings involve individuals from different cultural contexts all the rules change thats were metacognitive comes in. Metacognitive includes Awareness o Being in tune with whats going on in ones self and others Planning o Taking the time to prepare for a cross-cultural encounter, anticipating how to approach the people, topic, and situation. Checking o It is the monitoring we do as we engage in interactions to see whether the plans and expectations we had are appropriate





Fig2: Factors intelligence




The factors that are helpful for enhancing overall cultural intelligence.

Motivational CQ (Drive)
The motivational factor of CQ refers to the leaders level of interest, drive and energy to adapt cross-culturally; it gives the energy and self-confidence, to pursue the needed cultural understanding and planning. Motivational cultural intelligence includes

Behavioral CQ (Action)
It provides us with the ability to engage in effective flexible leadership across cultures. It influences whether we can accomplish our performance goals effectively in light of different norms across cultural situations. one of the important aspects of behavioral is knowing when to adapt to another culture and when not to do so. The behavioral factor includes the capability to be flexible in verbal and non-verbal actions Verbal Tone - Loud vs. soft In which words are spoken can convey different meaning across cultures

Intrinsic motivation

The degree to which you derive enjoyment from culturally diverse situations

Extrinsic motivation
The more tangible benefits you gain from culturally diverse experiences and self efficacy-your confidence that you will be effective in a cross-cultural encounter.

Cognitive CQ (Knowledge)

It provides us with an understanding of basic cultural cues. It also includes the overall understanding of the ways that cultures vary from one context to the next. It refers to the leaders level of understanding about culture and cultures role in shaping the way to do business and interact with others across cultural contexts.

The exact words and phrases we use when we communicate specific type of messages.

Feedback loop

Metacognitive CQ (Strategy)
It allows us to draw upon our cultural understanding, 160

Others respond to our behavior; this influences our Motivational CQ; and the cycle starts over leading to further enhancement of overall cultural intelligence.

Hofstedes dimension
Hofstede (1993) identified five cultural dimensions that provide a framework for identifying similarities and differences across cultures. Each of these characteristics will be applied to determine the best cultural fit with leadership theory.

Power Distance
The degree of inequality among people which the population of a country considers as normal: from relatively equal (that is, small power distance) to extremely unequal (large power distance) (Hofstede, 1993, p. 89). In order to be effective, the leader requires significant participation and interaction with employees. Employees must feel free to contribute their thoughts, opinions and recommendations, while leaders must respect these contributions and utilize them as a basis for building a more effective workplace. In a society where each member is viewed as having an important role regardless of his or her social or economic position, or his or her position in the societal or organizational hierarchy, it is expected that there will be a free flow of ideas and discussion, thereby empowering employees to take some control and responsibility in the workplace.

spite of the leader but rather he or she succeeds with the leader. Success requires cooperation between leaders and followers, and it requires cooperation among the leaders themselves .More constructive feedback will be provided when the employee recognizes the importance of each individuals contribution to the success of the team. Organizations are increasingly applying the team concept in the design of work. Leaders today must be effective at managing and leading not just individuals but teams as well. A servant-leader is an excellent fit with the self-managing teams employed in many of todays organizations. These teams are empowered to manage themselves and the leaders role is to assist the team by removing any roadblocks that interfere with its path to success. In other words, the leader is there to develop the employees into leaders and employee development is a key characteristic of the servant-leader. A low to moderately individualistic culture appears to be the best fit for the leader.

The tough values like assertiveness, performance, success and competition with the male role, while he identifies more tender values like quality of life, maintaining warm personal relationships, service, care for the weak, and solidarity with the female role (Hofstede, 1993, p. 90). The effectiveness of the leader depends on his or her ability to develop a personal connection with the employees. It requires that leaders understand the needs and desires of their employees so that they can individualize their jobs, rewards, and training to fit the needs, experiences and desires of those employees. It requires building trust and loyalty so that the leader can empower those employees to take the lead in the workplace. The application of feminine qualities is a way to secure the valued masculine outcomes. The culture rating low to moderate on the masculinity characteristic would provide an environment most conducive to the success of the leader.

Low power distance

Leaders from low power distance countries are much more likely to acknowledge the capabilities of their employees to assume these tasks and complete them successfully.

High power distance

It is unlikely that employees would provide accurate feedback to their managers and it is similarly unlikely that managers would consider it a meaningful and useful source of data for performance improvement.

The degree to which people in a country prefers to act as individuals rather than as members of groups. The leader and the employees work together much more closely as a team. Employees and leaders jointly address issues in the workplace and collectively determine an outcome that is in the best interest of the employees and the organization. The employee does not succeed in 161

Uncertainly Avoidance
The degree to which people in a country prefer structured over unstructured situations (Hofstede, 1993, p. 90). Rather than a traditional workplace where the leader

sets the rules, the quotas, assigns the work and evaluates the performance of the employee, a workplace guided by a leader will push these responsibilities down to the employees themselves. The employees must be prepared to stand up and accept these new responsibilities. For many this will be new territory and there will likely be some reluctance as they are uncertain about how to perform these new roles. But as employees gain experience and confidence, the leader fulfils his or her goal to develop new leaders for the organization. The leader will provide training and guidance to employees as they take on these new responsibilities, and ultimately the employees will experience personal and professional growth and success. A society that shuns new experiences, that resists change and new organizational structures will fail to embrace these new opportunities. Employees who do not develop leadership skills will therefore be trapped in their current roles with no hope of self actualization. Leaders and employees who have a higher tolerance for uncertainty will be more effective. Long-term versus Short-term Orientation On the long-term side one finds values oriented towards the future, like thrift (saving) and persistence. On the short-term side one finds values rather oriented towards the past and present, like respect for tradition and fulfilling social obligations (1993, p. 90). The leader work is to develop the employee in such a way as to maximize his or her long-term potential. The leader seeks to develop each employee by meeting his or her needs in both the short-term and the long-term. This means the leader utilizes immediate rewards (like cash compensation) but also takes a longer-term view of building a more committed and engaged employee and ultimately an organizational leader. The leader will utilize training, career development, challenging job assignments, and educational opportunities to build skills that the employee will need in the long term. Acquiring more skills and higher level competencies that will prepare the employee for future opportunities.

effectiveness, strategic planning, decision-making, negotiation, conflict resolution, team building and information sharing, while working with diverse cultural groups and in new global settings. To be a competitive player in the global scene, incorporating IQ, EQ and CQ competencies is a necessity. Due to the impact of progressed globalization on firms and the factor that lead to effective global leadership, businesses need to embrace cultural and emotional intelligence as portion of their global leadership program. Any cross-cultural leader is not born as a leader and is able to improve the leadership capabilities by training

1. Chen Oi Chin, Ph.D U.S.A. Global Leadership Competence: A Cultural Intelligence Perspective 2. Nerella Campigotto. Cultural Intelligence: The Key to Global Leadership 3. Linn Van Dyne, Soon Ang Nanyang, David Livermore Cultural Intelligence: A Pathway for Leading in a Rapidly Globalizing World Michigan State University, Technological University, Cultural Intelligence Center East Lansing, Michigan 4. Livermore, D. (2009) Leading with cultural intelligence: The new secret to success. New York: 5. Business Horizons (2005), 48 pp501-512 Global leadership success through Emotional and cultural intelligences 6. Maureen Hannay, Troy University, Journal of International Business and Cultural Studies 7. The Cross-cultural leader: The Application of servant leadership theory in the international context.

In order to interact effectively with diverse followers in given situations, effective global leaders require IQ, EQ and CQ competencies. Cultural Intelligence, while not new, is newly recognized. There is much more research required on how it affects leaders communication 162

The Impact of IT Governance Practices & Human Resources on Business- IT Alignment

- Dr. Mu.Subrahmanian, Professor, Dept. of Management Sciences, Velammal Engineering College, Chennai, Lakshmi Vishnu Murthy Tunuguntla, Research Scholar, School of Management, SRM University Chennai,

Information technology (IT) alignment with business has been a significant management concern over the last two decades (Luftman, Kempaiah and Nash 2006). Information systems (IS) strategic alignment is a nebulous concept that has engendered much debate and many definitions (Chan, Huff, Barclay and Copeland 1997). In fact IT Governance is thought out in different organizations and High Level IT-Governance models were created. However developing the High Level IT Governance model to improve Business-IT alignment is only a first step. Much depends on the implementation of this model at the organization level. This paper is focusing on both the parts. IT governance is the organizational capacity exercised by the board, executive management and IT management to control the formulation and implementation of IT strategy and in this way ensure the fusion of business and IT (Van Grem- bergen, 2000). The three layers of IT Governance responsibility is described as shown below.

The Business- IT alignment is described as shown in the below diagram


2. Literature Survey and Critical Governance Practice Identification The IT governance literature has been surveyed and the following IT governance Practices are found to be influencing the Business IT Alignment. The critical ones that have the maximum information were included in the references. 1. 2. 3. 4. 1. Vision for IT department/understanding the Vision for IT Build Enabling Mechanisms Business Value Planning Build and Implement Communication Strategy Objective of the Study Understand and Analyze the relationship between the Business/IT alignment and various factors influencing the Business/IT alignment as listed in the Research model in the Indian context in the entities that are captive IT organizations, system integration and Product development service providers Hypothesis Formulation Hypothesis 1 (H1) - Articulating and communicating the vision for IT would positively influence the IT-Business alignment. Hypothesis 2(H2) - Building enabling mechanisms would positively influence the ITBusiness value alignment Hypothesis 3 (H3) - Performing Business value Planning would positively influence the IT-Business alignment Hypothesis 4 (H4) - Development

5. 6. 7. 8.

Enabling Technology Build Partnership Develop Scope and Implement architecture Develop & Implement Portfolio Management

Practices 9. Develop and Implement IT (Project) Investment management

10. Human resource skills All these IT Governance Practices are organized in to an integrated Frame work as described below. communication strategy would positively influence the IT-Business alignment Hypothesis 5 (H5) - Building relational mechanisms would positively influence the ITBusiness alignment Hypothesis 6 (H6) - Develop Scope and implement appropriate IT architecture would positively influence the IT-Business alignment Hypothesis 7 (H7) - Develop and Implement IT (Project) investment practices would positively influence the IT-Business alignment Hypothesis 8 (H8) - Develop and Implement IT Portfolio Management practices would positively influence the IT-Business alignment Hypothesis 9 (H9) - Build Human resource skills would positively influence the ITBusiness alignment (Dependent and


3. Research Model Independent Variables)




Research & Sample Design

to Business-IT alignment . Sampling Frame or Source List The source list will be consisting of the Program Managers, Directors/ Vice Presidents and top management of the organizations that are sampled Size of Sample 40 organizations which are in to Application development development/Product

Research Design Descriptive research has been planned for this study. The study is a fact finding investigation aimed at presenting the current state against the Independent variables identified from the Literature. Based on the understanding of the current state of the independent parameters, identify a set of IT governance factors that have correlation with Business- IT alignment in the Indian context. Sample Design Type of Population finite universe: In this study, it is planned to cover IT Industry (Captive IT Organizations, Application (Bangalore, Sampling Application India Population The Parameters Role of the Designation, Unit social is unit: product Organization that involved development, Hyderabad, product Chennai, Development organizations) in India Mumbai and Pune)

or Captive units would be chosen . A total population of 300 people are envisaged from the above categories. Sampling Plan - Probabilistic,

purposive / judgmental sampling plan selected in such a way that only the important item representing the true characteristics of the population are included in the sample Desired Outcome Provides the correlation between the listed IT governance factors and Business IT alignment Provides the list of Governance Practices that are effective that could be used by the Industry to improve Business IT alignment in the Indian context.


development or Captive IT units in

Person/ Experience Level in IT/ Business Program Managers, Vice Presidents and top management of the organization in India handling Program Management, Product development and responsible for the value add to the customer contributing 166

9.References 1. A Study of the Causal Relationship between IT Governance Inhibitors and Its Success in Korea Enterprises Chi-Hoon Lee, Jung-Hoon Lee, JongSung Park, Kap-Young Jeong Graduate School of Information, Yonsei University, Seoul, Korea,, 2. Practices in IT Governance and Business/ IT Alignment, By Steven De Haes, Ph.D., and Wim Van Grembergen, Ph.D. 3. Structures, processes and relational mechanisms for Information Technology Governance: Theories and practices Wim Van Grembergen, University of Antwerp & University of Antwep Management School Steven De Haes, University of Antwerp Management School Erik Guldentops, IT Governance Institute 4. 5. Achieving andSustaining Business- IT alignment Jerry Luftman, Tom Brier 9. Framework and Roadmap: How to Plan, Deploy and Sustain for Competitive Advantage Dr. Gad J. Selig, PMP, Managing Partner, GPS Group, Inc & Associate Professor, Management and Technology and Director, Center for Business Information 167 10. 8. 7. jhoonlee@, 6.

Technologies, University of Bridgeport Pete CA A Process Oriented Framework for Waterhouse, Director, Product Marketing, Business Service Optimization,

Assessing the Business Value of Information Technology Mooney, John, University of California, Irvine, Gurbaxani, Viijay, University of California, Irvine Kraemer, Kenneth L., University of California, Irvine A Causal Model Of Strategic Alignment Performance Masadeh, Raed, Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham, UK, raedmasadeh2003@ Kuk, Road, George, Nottingham UK, University g.kuk@ Business School, Jubilee Campus, Wollaton Nottingham, GETTING VALUE FROM IT BEGINS WITH AGILE, RESULTS-ORIENTED IT GOVERNANCE Eric Bartholet, Mark Budd and Fran Turisco Aligning IT to Corporate Objectives: Organisational Factors in Use Ivor Jonathan Farrell Dip.Tech., ASSESSING STRATEGIC ALIGNMENT IN REAL-TIME Raymond Papp, University of Tampa And Firm


IT Governance on one Page, MIT Sloan, Peter Weill, Jeanne W.Ross 13. Ideal patterns of strategic alignment and business performance: Francois Bergeon, Louis Raymond , Suzanne Rivard

12. Why business needs should shape IT architecture Mekinsey on Business TEchnolgy Nov 2010


Monthly Effects in Indian Stock Market

P. Nageswari, Ph.D Research Scholar
Dept. of Commerce and Financial Studies, Bharathidasan University, Trichy Associate Professor and Head, Dept. of Commerce and Financial Studies, Bharathidasan University, Trichy

Dr. M.Selvam

1. Introduction
Efficient Market Hypothesis (EMH) is one of the grossly researched areas of financial economics. One of the significant anomalies of EMH is seasonal effect. It is important that testing for a seasonal effect in monthly returns has been given considerable attention in the financial literature. The existence of the seasonal effect negates the week form of the EMH and it implies market inefficiency of the markup. Several studies and tests investigated the seasonal behavior of monthly stock market returns on all forms of EMH. Some cross sectional differences among stock returns were found to occur with regularity. These regularities in the stock returns have been termed as anomalies. An investigation to these anomalies can be used to frame investment strategy to outperform a nave buy and hold strategy. The different patterns identified in stock returns include the January effect, day of the week effect, different monthly effect like Turn of the month effect, semi month effect, the end of the month effect, etc.

Kiran Jindal (2006) investigated one of anomalies by segmenting pre and post rolling settlement. The result of this study found that the returns of the month effect and semi monthly effect were prevalent in the Indian stock market. Guneratne B Wickremasinghe (2007) using the sample of 75 companies from Colombo Stock Exchange (CSE) found that there are no statistically significant differences among the returns for different days of the week. The analysis of this study indicates that the returns for the month of January are not different from those that of the other months of the year. The study found that daily and monthly patterns of returns cannot be used to devise any method to profit from trading in shares in the Colombo Stock Exchange (CSE). Hareesh Kumar.V and Malabika Deo(2007) analyzed the efficiency of Indian Stock Market by using S&P CNX 500 Index. They found out the presence of Day of the Week Effect in the Indian Stock Market, which affected both the stock returns and volatility, thereby proving the Indian Stock Market to be inefficient. Ushad Subadar Agathee (2008) found that the average returns of Stock Exchange of Mauritius (SEM) lowest in the month of March and Highest in the month of June. The equality means-return tests show that returns are statistically the same across all months. The regression analysis reveals that returns are not independent on the months of the year, except for January. Khokan Bepari and Abu Taher Mollik (2009) investigated the existence of seasonality in return series of DSE of Bangladesh. The study confirmed the existence of seasonality in stock returns in DSE but didnt support the tax loss selling hypothesis. The study found that there was an April effect in DSE and invalidated the paradigm of the efficient market hypothesis in DSE. Anoki Parikh (2009) examined monthly returns of the Nifty index for the period 1999-2008. This 169

2. Review of literature
A brief review of select studies has been presented here to understand research gap and methodologies employed in the research area of calendar Anomalies. Harvinder Kaur (2004) analyzed the nature and characteristics of stock market volatility in India and the US. The study found that the response to news arrival is asymmetrical, meaning that the impact of good and bad news is not the same. The volatility forecast models are used for Sensex and Nifty returns to show that the day of the week effect and the January effect are not present. The return and volatility on various weekdays have somewhat changed after the introduction rolling settlement. There was mixed evidence of return and volatility spillover between the US and Indian markets. B. S Badla &

study used the GARCH (Generalized Autoregressive Conditional Hetroskedasticity) model & Exponential GARCH model to capture the non normality of the return series such as skewness clustering. Nageswari.P and Selvam.M (2010) examined the Day-of-the Week Effect on the Indian Stock Market after the introduction of the Compulsory Rolling Settlement. It was found that the Mean Returns were positive for all days of the week, highest being on Friday for selected indices and the day of the week pattern did not appear to exist in the Indian Stock Market. The above literature provides an overview of valuation of Monthly Effects in various Stock Markets. An attempt is made in this study to analyze the Monthly Effects in Indian Stock Market taking model of above study.

4. Objectives of the Study

The present study intends to accomplish the following objectives To identify the monthly effect exist in the Indian Stock Market, To summarize the findings of the study.

5. Hypothesis of the Study

The present study tested the following null hypotheses NH1: There are no significant differences between the monthly returns.

6. Methodology of the Study

a) Sample Selection For the purpose of this study, S&P CNX 500 Index is considered as sample Index. Besides, this is the best indicator of the performance of the whole economy. The S&P CNX 500 is Indias first broad based benchmark of the Indian capital market b) Sources of Data The required information of the present study were collected from the and prowess, which is corporate database maintained by CMIE. c) Period of the Study The present study covers a period of five-years from 1st April 2005 to 31st March 2010.

3. Statement of the Problem

The firms and Governments generally release good news between Monday and Friday and bad news on the week-ends. As a result, the bad news is reflected in lower stock prices on the next trading day (Mondays) and good news is reflected in higher stock prices on Friday. The investors, who wish to reduce their tax liability, may sell the loss making shares before filing their tax returns in order to set off capital losses against capital gains. This would reduce the share price further. Similarly, in the Month of January, firms release new information pertaining to the previous accounting year. When new positive information reaches the market, the prices become bullish due to buying pressure. The active trading strategies, based on the knowledge of market anomalies, would provide benefits to the investors; but the countervailing arbitrage will also exploit the excess return over time. In the process, observed anomalies will eventually disappear and pave the way to make the market more efficient. In this environment, it is necessary to periodically find out whether these types of Anomalies exist in the Stock Market. Against this background, the present study An Empirical Analysis of Monthly Effects in Indian Stock Market is significant. 170

7. Monthly Effect
When the returns in some months are higher than that of other months, this anomaly is called as monthly effect. January effect is the most studied pattern of month of the year effect. It is defined that the January stock return is higher than the other months of the year, and it is caused normally by a significant low return in December.

8. Tools Used for Analysis

In this study, independence of return series was investigated for Nifty and Sensex index. The following were calculated,

i) Returns: Where,

the monthly patterns we construct almost an identical model. This model has been used e.g. by Mehdian and Perry (2001). Therefore, we employ the following regression: Rit = 1i D1 + 2iD2 + 3i D3 +,, 10i D10 + 11i D11 + 12i D12 + Vit where Rit is the monthly return of the index i as defined

Rt = I n ( Pt Pt 1) * 100
Rt Return at the time t. Pt The closing price of the day. Pt 1 The closing price of the day t-1.

ii) Descriptive Statistics In this part, Statistics of the daily return, Standard deviation, Skewness, kurtosis and jerque-bera tests were analyzed. iii) Kruskall-Wallis Test The Kruskall-Wallis Test is an appropriate one for testing the data typified of non-normality, heteroskedastic variance like security returns (Jason, 1996). The Kruskall-Wallis Test employed for testing the equality of mean returns for different days of the week. The Kruskall-Wallis Test ranks the entire set of observations higher the value, higher the rank and vice-versa and then arranges them into nj x 5 matrix where nj represent the rank of the return and columns represent the day-of-the-week Monday through Friday. The formula for calculating the Test Statistic H is as under:
5 1 2 R2 j X 3( n + 1) N ( N + 1) J =1 n j

earlier in equation 1, D1 through D12 are dummy variables for each month of the year such that D1 takes a value of 1 for all January observations and zero otherwise and so on. The coefficients from 1 through 12 are estimates of the return for each month from January through December. Vit is the disturbance term. Again we can consider our null hypothesis as follows: H = 1 =2 = 3 , = 10 =11 =12= (0) Again, we want to test if stock returns in e.g. January differ from the returns in other months. We reject the null hypothesis if we find some form of monthly seasonality that is statistically significant.

9. Results and Analysis of the Study

For the purpose of this study, the following analysis is made as given below, Analysis of Descriptive Statistics Results of Kruskall-Wallis Test Results of Regression Test 1. Analysis of Descriptive Statistics for S& P CNX 500 Based Monthly Returns Table 1 presents the Descriptive statistics for S&P CNX 500 Index monthly returns on the sample period from 1st April 2005-31st March 2010. In the Table are shown number of observations (N), mean, standard deviation, skewness and kurtosis. Series normality is tested by Jarque- Bera test. The Table shows that there are negative mean returns for the months of January, February, June and October. And positive mean returns for the remaining months. Highest mean return for the month of April (.0032) most negative mean returns for the month of October. This implies that, for the month of March and investors towards the end of the year tend to sell the loss making shares so as to reduce their tax burden putting the downward pressure on the stock prices. In April they again start buying the shares. 171

H = Where: Rj = Sum of the Ranks in the jth Column nj = Number of Cases in the jth Column N= Sum of Observations in all the Columns. iv) Linear Regression Model According to the Monthly effect there appear some systemic patterns in the stock returns depending on the Month. Therefore we test if the monthly returns are statistically different from each other. Basically we do this by using Eviews program and the linear regression model and the ordinary least squares-method (OLS). Brooks (2002) suggests several assumptions for the classical linear regression model. For testing

This April puts the upward pressure on stock prices and it results in higher return in the month. Standard Deviation ranges from 1.4% to 2.5%. The highest (0.0254) Standard Deviation earned for the month of October with negative mean return and lowest (0.0144) Standard Deviation earned for the month of September. It found that the market was more volatile for the month of October and least volatile for the month of September. It also found that there is inverse relationship between return and risk (negative mean return with high Standard deviation). The monthly return distribution was positively skewed for the month of May and negatively skewed for all other months. The Peak of the Monthly Return distribution was leptokurtic for all months and highest (21.32) on for the month of May. Jarque- Bera test which is commonly used method in normality testing. The test shows that the null hypothesis, which suggests that the series are normally distributed, is rejected at 0.01 significance level for each index for all time periods. It shows that either the monthly returns are not so normally distributed. Only the returns for June and April seem to be normally distributed at 1% level. Again, one reason for non-normality could be the kurtosis. Figure 1 clearly indicates that the daily mean returns for the month April is higher than other months of the year. And also clear that there was negative mean returns earned for the month of January, February, June and October. 2. Results of Kruskall-Wallis Test for S&P CNX 500 Index The analysis of Kruskall-Wallis test for S& P CNX 500 Index is also given in Table-1. The Kruskall-Wallis test Statistic of 16.649 was lower than the Table Value of 19.7 at 5% level of significance for 11 degrees of freedom. Thus, there is no evidence to reject the null hypo thesis that there is no difference in the mean returns among the months. In other words, monthly effect did not exist for S&P CNX 500 Index during the study Period. 172

3. Regression Analysis for S& P CNX 500 Based Monthly Returns Results of the regression analysis for S&P CNX 500 Index based monthly Returns during the sample period 2005-2010 are shows in Table 2. The above Table showed the estimated coefficients for each month, t-value and p-value. The F-value measures the equality of coefficients. The coefficients in August seem to be statistically significant at 1% risk level. Other months does not seem to have any statistically significant coefficients. However, based on the F-value we cannot reject our null hypothesis and therefore we are not able to confirm August anomalies in S&P CNX 500 Index during the sample period

10. Summary of Findings and Suggestions of the Study

The following are important findings and suggestions of the study, The study found that the highest mean return was earned for the month of April and most negative mean returns for the month of October during the study period. Therefore, it is suggested that the investors would yield good returns for the month of April. So, it is suggested that April is the best month to invest in the market. The study also found that highest (0.0254) Standard Deviation earned for the month of October with negative mean return and lowest (0.0144) Standard Deviation earned for the month of September. It found that the market was more volatile for the month of October and least volatile for the month of September During the study period, the kurtosis measure of return distribution was leptokurtic for all the months of the year, but the highest (21.3263) being on May. It is to be noted that the return distribution is positively skewed for the month of May and negatively skewed for remaining months.

There is significant negative correlation between the returns of Tuesday-Friday, for S&P CNX 500 Index during the study period. The regression analysis reveals that the coefficients in August seem to be statistically significant at 1% risk level. Other months does not seem to have any statistically significant coefficients for S&P CNX 500 Index during the study period. It found out based on the F-value we cannot reject our null hypothesis and therefore we are not able to confirm August anomalies in S&P CNX 500 Index during the sample period

Seasonality: A study of the Indian Stock market, Electronic copy available at: http:// 4. Bodla.BS and Kiran jindal (2006) Monthly Effects in Stock Returns: New Evidence from the Indian Stock Market The ICFAI Journal of Applied Finance, Vol. 12, No.7, pp.5-13. 5. Goloka C Nath and Manoj Dalvi (2005) Day of the Week Effect and Market Efficiency Evidence from Indian Equity Market using High Frequency Data of NSE The ICFAI Journal of Applied Finance, Vol. 11, No.2, pp.5-25. 6. Guneratne B Wickremasinghe (2007) Seasonality of Emerging Stock Markets: Evidence from the Colombo Stock Exchange The ICFAI Journal of Applied Finance, Vol. 13, No.6, pp.43-65. 7. Hareesh kumar V. and Malabica Deo (2007) Efficiency of Indian Stock Market- A case of Day of the Week Effect SMART Journal of Business Management Studies, Vol.3, No.2, July December2007, pp.28-35. 8. Harvinder kaur (2004) Time Varying Volatility in the Indian Stock Market Vikalpa, Vol.29, No.4, October - December 9. Nageswari.P and Selvam.M (2010),Day-ofthe-Week Effect on the Indian Stock Market : An Empirical Analysis(Ed.)2010, Ed. By Sundarapandiyan.P Research Methods in Social Sciences VHNSN College, pp.99-103. 10. Ravi Anshuman.V and Ranadev Goswami, (2000) Day of the Week Effects on the Bombay Stock Exchange, The ICFAI Journal of Applied Finance, Vol. 6, No. 4, pp. 31-46. 11. Selvarani.M and Leena Jenefa (2009) Calendar Anomalies in the National Stock Exchange (NSE) indices, The ICFAI Journal of Applied Finance, Vol. 15, No.1, pp. 56-67. 173

11. Conclusion
The present study investigates Monthly effect on stock returns for S&P CNX 500 index of NSE. The study found that there is a maximum return for the month of April. The analysis of non-parametric Kruskall-Wallis test found that, there is no evidence to reject the null hypothesis that there is no difference in the mean returns among the months. In other words, monthly effect did not exist for S&P CNX 500 Index during the Study Period. The returns in the stock market are not independent across different months of the year. Thus the investors should be cautious enough to exploit the benefit that they may earn from the strategy i.e., to buy the securities on the Month with the lowest monthly mean returns and sell these with the highest Monthly mean returns. The findings of this study would possibly help in understanding and explaining such seasonality for the Indian stock markets. 12. References 1. Anokhi Parikh, (2009) The December Phenomenon: Month of the year effect in the Indian Stock Market,http://www.nseindia. com 2. Ariel, R.A., (1987) A Monthly Effect in Stock Returns, Journal of Financial Economic, Vol. 18, pp. 161-74. 3. Ash Narayan Sah (2009) Stock Market

Table - 1 Descriptive Statistics for S&P CNX 500 Index for the period of 2005- 2010 Std. JarqueMONTH Observations Mean Skewness Dev. Kurtosis Bera Probability JANUARY 102 -0.0020 0.0222 -1.0277 9.0207 172.014* 0.0000
FEBRUARY MARCH APRIL MAY JUNE JULY AUGUEST SEPTEMBER OCTOBER NOVEMBER DECEMBER K.W Statistics 98 102 94 105 110 108 107 103 102 102 103 -0.0011 0.0010 0.0032 0.0021 -0.0020 0.0024 0.0014 0.0018 -0.0029 0.0018 0.0029 16.649 0.0157 0.0189 0.0153 0.0223 0.0202 0.0191 0.0144 0.0140 0.0254 0.0182 0.0152 Df -0.2679 -0.7283 -0.4250 2.2696 -0.0805 -0.2887 -0.7514 -0.5180 -0.7869 -0.2591 -0.3568 11 5.0107 5.1868 3.7256 21.3263 3.8466 3.9042 4.0283 5.1965 6.7399 4.4213 17.681* 29.340* 4.892 1559.500* 3.404 5.179* 14.783* 25.311* 69.971* 9.727* 0.0001 0.0000 0.0866 0.0000 0.1823 0.0751 0.0006 0.0000 0.0000 0.0077

4.3285 9.760* 0.0076 Asymp. Sig. - 0.1186895

Source: Computed from PROWESS *Significant at 1% level.

Table - 2 Results of the regression analysis for S&P CNX 500 Index for the period of 2005 - 10 Variable Coefficient Std. Error t-Statistic Prob.
JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUEST SEPTEMBER OCTOBER NOVEMBER DECEMBER -0.00187 -0.11554 0.04205 -0.06277 -0.01353 0.072616 -0.03426 0.508502 -0.20921 0.120714 0.085861 0.171086 0.00249 0.150899 0.121203 0.160895 0.139393 0.115907 0.122956 0.170165 0.172973 0.087888 0.128626 0.155563 -0.7521 -0.76564 0.34694 -0.39012 -0.09709 0.6265 -0.27866 2.9883 -1.20947 1.3735 0.66753 1.09978 P-VALUE 0.4541 0.4461 0.7295 0.6975 0.9229 0.5327 0.7812 0.0037* 0.23 0.1733 0.5063 0.2746 0.156

F-VALUE 1.476 Source: Computed from PROWESS *Significant at 1% level.


Figure-1 Monthly Mean returns for S&P CNX 500 Index for the period of 2005 - 2010

0.0040 0.0030 0.0020 0.0010 0.0000

Ma y No v Ma rch Au Fe Se

Ap Ja Ju Ju Oc De c g ril ne b ly p n t

-0.0010 -0.0020 -0.0030 -0.0040

Source: Computed from Table - 1


Mutual Fund Investor Education Program A study on the Awareness, Response and Impact among Individual Investors Asst. Professor, Anna Adharsh College for Women, Chennai Dr. P. Ravilochanan, Professor, School of Management, SRM University
The mutual fund industry in India is unusual because of the dominance of institutional investors. Retail investors account for only 37 percent of the Industry Assets under Management. By comparison, retail contribution to fund assets in markets such as China is 70 percent and US is 86 percent. Focus on institutional investors has led to poor retail penetration particularly in smaller cities and rural India. The question is can the Asset Management Companies (AMCs) operating in India sustain long being heavily dependent on the institutional investors only. It is for a fact that institutional AUM is highly vulnerable. They may all of a sudden find themselves reeling under the pressure of big size redemptions as was seen when the markets crashed following the Global Meltdown. The industry needs to shift focus to retail investors. Mutual fund penetration in India is at present very low. In a country of over 1.1 billion, there are just 4.8 crore mutual fund portfolios. It is forecasted that the retail segment will grow at a compounded annual growth rate (CAGR) of 35 percent to 42 percent in the next 5 years. During this period the mutual fund industry could see an addition of nearly 9 million first time retail customers. Only about 7 per cent of Indian households invest in mutual funds, while in the US 50 per cent of households invest in mutual funds. A January 2010 study of the Indian mutual fund industry by research outfit, Evalueserve, points out that the assets under management (AUM) of the mutual fund industry as a percentage of gross domestic product (GDP) as on December 2008 stood at 8 per cent, while it was 66.5 per cent and 55.5 per cent in developed countries such as the United States and France. Industry officials underscore the importance of awareness among investors as the first step towards the growth of the industry. Investor education also enhances investor responsibility. In this context mutual fund Investor Education and Awareness Programs plays a vital role. Against this background an attempt is 176 made to: 1. Examine the awareness and response of investors to the investor education efforts taken by Securities and Exchange Board of India.(SEBI) and Association of Mutual Funds (AMFI) 2. Analyse the relationship between attending investor education program and the future intention to invest in equity mutual funds 3. Impact of investor education on pre and post investment behavior of mutual fund investors. Research Methodology. The research is based on a survey of randomly selected 606 mutual fund investors of Chennai. The survey instrument was a well structured questionnaire. K-means clustering method was used to classify investors into different segments based on their pre investment and post investment behavior. Non parametric Chi square using the application of cross tabs was used to study the impact of investor education on both enhancing responsible behavior and on the future intention to invest in equity mutual funds. Percentage analysis was done to examine the responses to investor education programs. Analysis and Interpretation of Data Investor education and awareness programs Investor education programs are conducted regularly by SEBI in association with registered investor associations. (e.g., Tamil Nadu Investors Association). Association of Mutual Funds in India (AMFI) has set up an investor awareness committee. Investor education materials are also posted on the websites of AMFI, SEBI and the respective mutual funds. Every Fund house carries out education campaign through investor meets, seminars etc,..The main aim of these materials and programs is to educate the investors with regard to mutual fund investments Evaluating the response of investors to the investor education efforts taken by Securities and Exchange

Anila Mathews

Board of India.(SEBI) and Association of Mutual Funds (AMFI) The respondents were asked to respond to 4 dichotomous questions to study the response towards investor education efforts taken by SEBI and AMFI. Table 1 shows the response.

Table 1 Responses to Investor Education Programs

Investor Education Variables Are you aware of investor education programs sponsored by Sebi Have you read the investor education material posted by Sebi/Amfi/ respective mutual funds. Have you attended investor awareness programs sponsored by Sebi If ,Yes was it useful in enhancing investment knowledge and decision making Response Yes 296 (48) 208 (34) 97 (16) 76 (78) No 310 (52) 398 (66) 509 (84) 21 (22) Total 606 (100) 606 (100) 606 (100) 97 (100)

Note: Figures in parenthesis shows the percentage values. Analysis of the table reveals that only 48 % of the respondents are aware of investor education programs, while only 34 % and 16 % have read the investor education materials posted in the web sites and attended the investor awareness programs respectively. Of the 97 (16%) respondents who have attended the investor awareness programs more than three fourths of the respondents have found that the program has had a positive impact in enhancing their investment knowledge. It can be inferred that both awareness as well as the response to investor education is poor among the respondent mutual fund investors. But a good majority (78 %) who have attended the investor awareness programs have benefited from it. Relationship between attending investor education program and the future intention to invest in equity mutual funds It is generally believed that the vast untapped mutual fund market can be penetrated through investor education. A Non parametric Chi square test was performed on the summarized cross tabulation to determine if a relationship exists between attending investor education programs and the intention to invest in equity mutual funds. Table 2 reveals the impact of attending investor education program on future intention to invest in Equity mutual fund scheme.

Table 2 Impact of investor education program on intention to invest in Equity mutual fund
Intention Program Attended Did not attend Total Will invest 72 (74.2%) 299 (58.7%) 371 (100%) Will not invest 25 (25.8%) 210 (41.3%) 235 (100%) Total 97 (100%) 509 (100%) 606 8.228 0.004 Chi Square Significance


Cross tabulation of attending/not attending investor education program and future intention to invest /not to invest in equity mutual funds reveal that 74.24% of the respondents who attended investor education programs express their intentions to invest in equity mutual funds in the next one year against 58.7% of them who did not attend the program. 41.3% of the respondents who did not attend the program said they would not invest in equity mutual funds in the next one year against 25.8% who attended the program. A non parametric chi-square test performed for the summarized cross tabulation reveals that attending investor education program and intention to invest in equity mutual funds are well associated at 5% level of significance (chi-square value = 8.288 p = 0.004). Hence it can be concluded that investor education programs conducted under the umbrella of SEBI will have a positive impact on retail penetration. Grouping Investors on the basis of responsibility levels

The individual investor, be it the one who takes the direct channel or the one who works with a financial advisor, there is an increased likelihood that better investment decisions will be made and long term investing success achieved if the investor acts in a responsible manner. The respondents were asked to respond to nine statements which best described their behavior prior to and post their investment in mutual fund to assess how responsible they were in their investment behavior. K-means Clustering method was used where the 606 investors were classified into different segments based on their pre-investment and post-investment behavior. On the basis of cluster analysis two segments of investors were formed for each of the classification (pre-investment behavior and post-investment behavior). Each group had clear and differentiated behavioral strengths and weakness. The results of the cluster analysis by clustering variables are presented in Tables 3 and 4

Table 4 Post investment Behavior Final Cluster Centers

Statements I keep track of the NAVs of schemes I have invested in on a regular basis. I ensure that I revive an account statement for the money that I have invested I update myself on the performance of the scheme (e.g. Return, expense, change in fund managers etc) on a regular basis I will not hesitate to approach the investment relation officer of the concerned fund and then the appropriate authorities when I face a problem Number of investors in each cluster Number of investors Percentage of the total Intensity of responsible behavior 430 71 High 176 29 Low Clusters 1 2.62 2.86 2.43 2.60 2 1.84 2.09 1.68 2.33

Like with the pre investment behavior it is observed that investors show clear and differentiated behavioral strengths and weakness in their post investment behavior also. Again we have 2 segments of investors. 178

Cluster 1: High intensity post investment responsible behavior (71%) These investors show a clear and differentiated behavior from the investors in the second cluster. They are very strong on most statements.

Hence they can be classified as investors who exhibit highly responsible post-investment behavior. Cluster2: Low intensity post investment responsible behavior (29%) Relative to the cluster1 this group exhibits weaker post investment behavior on most aspects. Hence they have been categorized as investors exhibiting low intensity post-investment responsible behavior. Cluster analysis reveals that 64.5 percent and 71 percent of the respondent mutual fund investors exhibit high pre investment and post investment responsible behavior respectively. It can be concluded that a good majority of the respondents act in a responsible manner Impact of Investor education programs on investor responsibility Cluster analysis brought out two segments of investors for each of the classification (pre investment behavior and post investment behavior) having clear and differentiated behavioral strengths and weaknesses.

Investors exhibiting moderate pre investment responsible behavior Investors exhibiting high pre investment responsible behavior Investors exhibiting low post investment responsible behavior Investors exhibiting high post investment responsible behavior

To study the impact of investor education program two variables related to this namely, reading of investor education materials posted in the websites of SEBI/ AMFI/respective mutual funds and attending investor awareness programs organized by SEBI were used. The impact of each of these investor education variables on the different segments of investors brought out by the cluster analysis was studied with the help of non parametric Chi-square using the application of cross tabulation. Table 5 show the results of the analysis

Impact of Investor education programs on investor responsibility

Investor Education Behavior P r e i n v e s t m e n t Clusters Behavior Moderate Responsibility High Responsibility Total Chi-square value P o s t investment Behavior Low Responsibility High Responsibility Total Chi-square value Reading investor Education material Yes 65 143 208 No 150 248 398 Tot 215 391 606 %of yes 30 37 Attending investor Education programs Yes 25 72 97 No 190 319 509 Tot 215 391 606 % of yes 12 18

Table 5

2.474 (p=0.116) Yes 50 158 208 No 126 272 398 Tot 176 430 606 %of yes 28 37

4.752 (p=0.029) Yes 23 74 97 No 153 356 509 Tot 176 430 606 % of yes 13 17

3.849 (p=0.05)

1.593 (p=0.207)

An analysis of the above table reveals that


Only 208 (34 percent) of the respondents have read the investor education materials, while 398 (66 percent) have not read any investor education material. A dismally low 97 respondents (16 percent) have attended the investor awareness and education programs conducted by Sebi, while 509 respondents (84 percent) have not attended the programs.

To test whether investor education has contributed towards the enhancement of investor responsibility among the 208 and 97 respondents who have read the investor education material and attended the investor education program respectively, a non parametric chi square is performed using the application of cross tabs. An analysis of the above table reveals that 30 percent of the respondents who read the investor education material fall in the category of investors exhibiting moderate responsible behavior while a higher 37 percent of them fall in the category exhibiting high pre investment responsible behavior. Similarly, with respect to each of the pre investment and post investment behavior against the two variables relating to investor education namely, reading the investor education material and attending the investor awareness programs it was found that investors who have responded positively to these exhibit higher responsible behavior. (37% against30%, 37% against 28%, 18% against 12% and 17% against 13%). The non parametric chi-square values 4.752 for the association between attending investor education program and pre investment responsible behavior is statistically significant at 5 % level. Similarly chi-square values 3.849 for the association between reading investor education material and post investment responsible behavior is statistically significant at 5 %level. It can be inferred from the above analysis that investor education enhances responsible investment behavior. 180

Conclusion It can be concluded from the above study that both awareness as well as the response to investor education is poor among the respondent mutual fund investors. But a good majority who have attended the investor awareness programs have benefited from it. The study also reveals that attending investor education program and intention to invest in equity mutual funds are well associated. More over the study reveals that investor education enhances responsible investment behavior. Hence it can be concluded that investor education programs will have a positive impact on retail investor penetration. A well informed and knowledgeable investor is a boon to the industry. These investors pass on the benefits of their knowledge and experience to peers which could in turn result in an overall expansion of the Industry. Reference Books: Nalini Prava Tripathy, Mutual Funds in India, Emerging Issues, First Edition, Excel Books, New Delhi ,2007. Sadhak H, Mutual Funds in India, Marketing Strategies and Investment Practices, Second Edition, Response Books, A division of Sage Publications India Pvt. Ltd , 2003. Sundar Sankaran, Indian Mutual Funds Hand Book, Vision Books , 2008. Reports Confederation of Indian Industry and KPMG Report, Indian Mutual Fund Industry The Future in a Dynamic Environment Outlook 2015, June 2009. Confederation of Indian Industry and Pricewaterhousecoopers Report, Indian Mutual Fund Industry-Towards 2015 Sustaining Inclusive Growth Evolving Business Models, CII 6th Mutual Fund Summit, 2010. Internet: http://ww http://ww

Qualitative Research in Vamana Industries Limited

Vice President Jamuna Auto Industries,Chennai, India

Mr. N. Divakaran

Profile of the company

Vamana Industries Limited is a single largest manufacturer of under Chassis component as an Automobile Ancillary Tier1 supplier for Commercial Vehicles (CVs) in India. It is a trusted and preferred supplier to all the major CV manufacturers for over 40/50 years .The turnover has been in constant raise by 25/ 30% year after year and now touching 100 crores/ month since last 2 years. Vamana had some kind of technical arrangement with some Asian manufacturer who is pioneers in their Field of Technology, quality and quantity in the World during 90s and even now has some minor holdings by the Asian partner. To bring world class ride comfort for buses, Vamana is tying up some more understanding with, World reputed companies across the Globe for Suspension as well, in the coming future. Vamana has spread its wings across India with multi location customer based operations, The OE supply to After Market supply ratio is 10:1 significantly show the market to be tapped in the market for growth, profitability and expansion. The current SOB of OE Business is over 60% of the market requirements. To take up this expansion in the aftermarket, Vamana has set up a good net work as its subsidy with strong presence of dealers and distributor net work across the Country. With strong OE presence Vamana product command a premium in the aftermarket. Product Criticality and growing demands:Suspension system is a highly critical component in commercial vehicles. It is because of this reason that Vamana places high reliance on constant technological innovation and adoption of the best practices in world class manufacturing in all its Plants. Improvised steel grades developed combined with stringent heat treatment results in higher fatigue life of the product. This warrants a high degree of repeatability and Strong existence of Systems in place, which are proven and acceptable as a process with good sustenance for practice in the manufacturing areas. Vamana has dedicated and highly trained Research and Development team which has won appreciation from CV manufacturers for aiding them in design modification and value engineering, which enhance the vehicles load bearing capacity and overall efficiency. This way concurrent development is ensured which is the need of the modern day Technology and the original equipment manufacturer.

Need For the Research study

The Management has appointed an Expert Mr.Subramaniyan, who has spent more than 2 decades in Auto Industry as its Director-operation, giving responsibility to Study, and implemented plants to a World Class Level, acceptable to the century demands, on the following, Mr.Subramaniyan has worked in various capacity in Tier1 and Auto OEM and has a good exposure on Process and also has successful experience as a full time consultancy for similar capacity earlier. Some key areas of focus are, 1) Standardisation As it always happens, it is no different in Vamana industries where in different Plant and locations has their unique Style of operation, standard. And methods though they make the same product. Standardisation is missing to the extent that different Plants have different ISO certification with different manuals/standards, though the certifying Body is the same. These have caught the management to think in establishing a single 181

standard. With Worlds best Practices in Place to Give Customer confidence on the Capability/ ability of Vamana plants across. 2) Customer growing demands With the view to Equip for the growing Customer demands of More Multinational Players coming in to action, need for quick response quality control tools practice with daily routine management and visual controls are increasing. 3) Consolidation and up gradation Upgrade the factories which are developed over a period of time to meet the growing customer demands in terms of Concurrent Engineering, adaptation of best practices like process approach, First in First out etc. 4) Operational efficiency Improvement. Ensure all wastes are eliminated and stream line operations and improve the plants efficiency in terms of quality, cost and delivery to customers. The Expert has taken the following qualitative research approach. The expert derived two fold approaches of a theory and practical approach was constituted as below. 1) In order to derive a reliable data and bring out the ideas from inside, a questionnaire was framed. The questionnaire contained questions on the concerns, ideas of improvement and why the individual choose to work with Vamana industries. This was tested with over 20 persons from each plant thus ensuring more than 120 persons in the group, covering various levels in each plant and the focus was on to. Conduct an interview with many/ HOD people in each Plant to Bring out the VOICE of each plant, with a prescribed Questionnaire with a view to Find out Ground reality Concerns of Individuals. With respect to. welfare, facility, retention wish list etc Internal Suggestions for improvement for plant 182

function and utility. Management strengths Strength of Systems, bottleneck & Loop holes prevailing. Training and HR activities, to suit regional culture. 2) The second approach was to also have a team to study physically on the shop floor using various quality tools like Value Stream Mapping to identify the gaps in various processes existing in the company/ plants. Towards this a team was... Formed to identify areas of improvement in the manufacturing / operation areas with the application of the following tools Value Stream mapping Root cause analysis with 5W+!H ( why why & How) Identifying the need/ scope of Visual management Policy deployment in respective areas Possibility of standardisation across the plants Practice 5S and kaizens for elimination of wastes 1) Observations and results of the qualitative research were:2) 3) Systems are violated. Factory work 7 days a week and scattered weekly holidays. 4) Dependency on untrained labour is in the increase with a view to keep cost low. 5) Need a good working atmosphere with Good Light, Air Circulation and other infrastructure, like Road, Automation etc in the Plant. 6) Currently factory is working at 60% original equipment Efficiency (OEE) and with 65%

Straight pass. 7) Break Down and machine conditions are to be improved. 8) High level of inventory and First in First Out ( FIFO), traceability of product are missing 9) Need a retirement policy and medical policy,

10) Role and responsibility clarity to improve 11) To avoid Duplication of responsibility Management is Good and easily accessible

Actions initiated by the Management:Mr. Subramaniyan, made a SWOT analysis based on the study and. various action points were derived ensuring Key Important concerns/ improvement areas are addressed out as VOICE of the plants, All the deviations, improvement areas emerged out of the Value stream mapping and other quality tools are in corporate as action points . 1) The management took the following initiatives based on the report and asked the expert to continue implementation of the following 2) Conduct mapping of the Process to eliminate waste across in depth. 3) Train and develop Teams in all the plants as a Cross functional team (CFT) to accomplish the above Task. 4) Took the Change movement as a KRA of the management. Focussed review & steps to Ensure Sustenance were in Place. Results and Benefits Derived 1) Eliminated waste approx 20% and thereby made the Operations more efficient. /effective with incorporation of best Practices. 2) Process across the various Plants are unified, duplication avoided by sharing of solutions across the group. 3) Standardisation of the systems and Knowledge Sharing Across the plants. Vendors selection and cost lowered by consolidating requirements across the 183

group. Approximately saved about 35% on the input costs, quality and less inventory carrying cost. 4) Identified internal Resources for Training and established various training models across the various plants. Sustenance of the plants is ensured with trained man power availability within. Conclusion: Best practices like Daily Routine management at the shop floor to cascade the Objectives of the management, Adapting First in first out practices to ensure traceability of the product, eliminating all the waste by doing the value stream mapping were implemented at Vamana Industries limited. These activities have improved the quality, cost and delivery which has added value for the customers and there by Gained Customer Confidence.

1. Voice of the customer - Wikipedia, the free encyclopaedia 2. The Voice of the Customer - How to get Answers from Your Market 3. 4. Voice of the customer definition Voice of the Customer - Enterprise Feedback Management - Market Research Software 5. 6. Voice of Customer Analysis Voice of Customer - Online Surveys - Enterprise Research Platform - Enterprise Feedback Management - Market Research Software 7. Survey Software, Enterprise Feedback Build

Management, Voice of the Customer

Online Surveys with Qualtrics Survey Software 8. 9. Survey Skills Inventory Database - Online Surveys - Enterprise Research Platform - Enterprise Feedback Management - Market Research Software 10. Market Research Survey Software for Real

Time Customer Feedback 11. Employee Satisfaction Survey - Employee Feedback Survey - Employee Engagement Survey. 12. Survey Research & Enterprise Feedback Management Voice of Vovici Blog

13. Employee Satisfaction Surveys Page 1 Survey Research & Enterprise Feedback Management Voice of Vovici Blog. 14. Survey Research & Enterprise Feedback Management Voice of Vovici Blog


An Impact of Knowledge Management in IT Industry R. Shanmugam, MBA., M.Phil

Research Scholar, School of Management Studies, SRM university,Kattankulathur

Dr. K. Kalpana
Asst.Professor (S.G), School of Public Health, SRM University, kattankulathur

1. Introduction
Knowledge Management penlights a range of practices used in an organization to identify creates, represent, distribute and enable adoption of insights and experiences. Such insights and experiences comprise knowledge, either embodied in individuals or embedded in organizational processes or practice. An established discipline since 1991 KM includes courses taught in the fields of business administration, information systems, management, and library and information sciences. More recently, other fields, to include those focused on information and media, computer science, public health, and public policy, also have started contributing to KM research. Many large companies and non-profit organizations have resources dedicated to internal KM efforts, often as a part of their Business Strategy, Information Technology, or Human Resource Management departments. Several consulting companies also exist that provide strategy and advice regarding KM to these organizations. KM efforts typically focus on organizational objectives such as improved performance, competitive advantage, innovation, the sharing of lessons learned, and continuous improvement of the organization. KM efforts overlap with Organizational Learning, and may be distinguished from by a greater focus on the management of knowledge as a strategic asset and a focus on encouraging the exchange of knowledge. KM efforts can help individuals and groups to share valuable organizational insights, to reduce redundant work, to avoid reinventing the wheel per se, to reduce training time for new employees, to retain intellectual capital as employees turnover in an organization, and to adapt to changing environments and markets. 185

2. History
KM efforts have a long history, to include on-the-job discussions, formal apprenticeship, discussion forums, corporate libraries, professional training and mentoring programs. More recently, with increased use of computers in the second half of the 20th century, specific adaptations of technologies such as knowledge bases, expert systems, knowledge repositories, group decision support systems, and computer supported cooperative work have been introduced to further enhance the such efforts . In 1999, the term personal knowledge management was introduced which refers to the management of knowledge at the individual level . More recently with the advent of the Web 2.0, the concept of knowledge management has evolved towards a vision more based on people participation and emergence. This line of evolution is termed Enterprise 2.0.

3. Research
A broad range of thoughts on the KM discipline exists with no unanimous agreement; approaches vary by author and school. As the discipline matures, academic debates have increased regarding both the theory and practice of KM, to include the following perspectives: Techno-centric with a focus on technology, ideally those that enhance knowledge sharing and creation Organizational with a focus on how an organization can be designed to facilitate knowledge processes best Ecological with a focus on the interaction of people, identity, knowledge, and environmental factors as a complex adaptive system akin to a natural ecosystem Regardless of the school of thought, core components

of KM include People, Processes, Technology (or) Culture, Structure, Technology, depending on the specific perspective (Spender & Scherer 2007). Different KM schools of thought include various lenses through which KM can be viewed and explained, to include: Community of practice Social network analysis Intellectual capital Information theory Complexity science Constructivism Dimension Different frameworks for distinguishing between knowledge exist. One proposed framework for categorizing the dimensions of knowledge distinguishes between tacit knowledge and explicit knowledge. Tacit knowledge represents internalized knowledge that an individual may not be consciously aware of how he or she accomplishes particular tasks. At the opposite end of the spectrum, explicit knowledge represents knowledge that the individual holds consciously in mental focus, in a form that can easily be communicated to others. Early research suggested that a successful KM effort needs to convert internalized tacit knowledge into explicit knowledge in order to share it, but the same effort must also permit individuals to internalize and make personally meaningful any codified knowledge retrieved from the KM effort. Subsequent research into KM suggested that a distinction between tacit knowledge and explicit knowledge represented an oversimplification and that the notion of explicit knowledge is self-contradictory. Specifically, for knowledge to be made explicit, it must be translated into information. A second proposed framework for categorizing the dimensions of knowledge distinguishes between embedded knowledge of a system outside of a human individual (e.g., an information system may have knowledge embedded into its design) and embodied knowledge representing a learned capability of a human bodys nervous and endocrine systems. 186

A third proposed framework for categorizing the dimensions of knowledge distinguishes between the exploratory creation of new knowledge (i.e., innovation) vs. the transfer or exploitation of established knowledge within a group, organization, or community. Collaborative environments such as communities of practice or the use of social computing tools can be used for both knowledge creation and transfer. STRATEGIES Knowledge may be accessed at three stages: before, during, or after KM-related activities. Different organizations have tried various knowledge capture incentives, including making content submission mandatory and incorporating rewards into performance measurement plans. Considerable controversy exists over whether incentives work or not in this field and no consensus has emerged. One strategy to KM involves actively managing knowledge. In such an instance, individuals strive to explicitly encode their knowledge into a shared knowledge repository, such as a database, as well as retrieving knowledge they need that other individuals have provided to the repository. Another strategy to KM involves individuals making knowledge requests of experts associated with a particular subject on an ad hoc basis. In such an instance, expert individual(s) can provide their insights to the particular person or people needing this.

4. Role of HR In Institutionalizing Knowledge Management in an Organization

Impact of HR Processes and Practices in the Knowledge Sharing in a Firm At the stage of induction of new executives into the organization, coaching and mentoring systems are meant to transfer knowledge; exposure during training to variety of functions, units and geographical locations helps knowledge awareness / transfer. Employees will benefit from Mentorship, not only during the initial months but also for a long time after that. The role

Of the mentor in the later period would be to challenge the executive to look beyond the obvious, look for past learning and base decisions on a more informed platform. A. Job rotations Well-planned job (role) rotations across geographic allocations and businesses in a firm help not only people development, but also provide an important vehicle for transfer of knowledge and best practices, even though an organization cannot obviously depend on this as the main source of knowledge transfer. B. Networked organizational networked organization with people playing multiple roles, being part of multiple teamsa vertical team (Business /category) as well a horizontal team (function /knowledge domain), is the way forward to effectively leverage collective knowledge of an enterprise. HR should play a key role in developing such a networked organization, through Sponsorship and or facilitation of knowledge communities(teams), cutting across formal organizational silos. C. Training Learning and knowledge are inter-linked. Knowledge strategies should encompass learning initiatives and knowledge initiatives need to converge with training initiatives. A Companys training program needs to focus nonfunctional and business specific skill development programs. As well as competency development focused programs. Knowledge communities (Teams), as the owners and users of the knowledge, should play an active role in developing suitable course material for the functional and business specific courses. Knowledge management cannot be practiced without a clear focus on learning within the organization. E Learning is online learning. It is made available through company websites (Intranets), and even through CD-ROMs. It allows the learner to enroll into courses or programs of their choice and acquire knowledge at their own pace at the place of their 187

choice. Corporate online universities, exclusive learning space to induct managers or develop future leaders, on going programs for sales personnel and induction into new products and services are some of the e-learning offerings, some of the companies are making available to their employees to develop themselves. E-Learning provides the benefit of convenienceallows the learner to do the learning at his other pace, flexibilityLearner does not have to sacrifice a training program because of its clash with customer or personal visit, and ease of learning.. D. Culture Change Leveraging collective knowledge is possible only when people value building on each others ideas and sharing their insights. Much of this shaped by the culture of the organization. In some cultures, where knowledge is seen as power, knowledge sharing may be seen to be in conflict with the individuals personal interests (individual excellence /competitive advantage). Therefore, institutionalization of Knowledge Management requires HR to focus on managing The culture change mindset of the people to strengthen collaborative team working and knowledge sharing. Other knowledge management strategies for companies include: Rewards (as a means of motivating for knowledge sharing) Storytelling (as a means of transferring tacit knowledge) Cross-project learning After action reviews Knowledge mapping (a map of knowledge repositories within a company accessible by all) Communities of practice Best practice transfer Competence management (systematic evaluation and planning of competences of individual organization members) Proximity & architecture (the physical situation of employees can be either conducive or obstructive to knowledge sharing)

Master-apprentice relationship Collaborative technologies (groupware, etc) Knowledge repositories (databases, etc) Measuring and reporting intellectual capital (a way of making explicit knowledge for companies) knowledge brokers (some organizational members take on responsibility for a specific field and act as first reference on whom to talk about a specific subject) Social software (wikis, social bookmarking, blogs, etc)

target setting, and KM . Measurement and benchmarking show where performance or a team or unit is weak or strong, and shows which other teams or units are stronger performers, and can be sources of knowledge, or weaker performers and therefore potential users of knowledge. The strong performers can help the weaker performers. Target setting is the driver for improvement. Without target setting, teams will do what they have always done and so will always get what they have always got. Targets need to be achievable, but should be set beyond the knowledge of the team. If a team sets a goal which it knows how to meet, it will use only its own knowledge. If a team sets a goal which they know (through benchmarking) is achievable, but is outside their own performance, then they will seek the knowledge to deliver the goal. The targets can be driven by benchmarks - Poland uses 20% less energy than you - I want you To close the gap halfway by year end. Slough uses 80% of the packaging that you do - learn from them, and close the gap halfway by year end. KM is the enabler. Target setting creates the focus of knowledge sharing, while measurement and benchmarking define where that knowledge should come from. KM closes the gap, enabling the production units to learn from Slovenia, from Slough, from Syracuse. The mechanism of learning may be by site learning visits, by Peer Assist, by creating Learning Assets or training courses, or through the operation of Learning Communities. Performance management in operations Performance measurement and benchmarking, target setting and knowledge management can be closely linked in an operation, production or manufacturing environment, as part of a performance management system. Performance measurement allows an operation

5. Motivations A number of claims exist as to the motivations leading organizations to undertake KM effort Typical considerations driving a KM effort include: Making available increased knowledge content in the development and provision of products and services Achieving shorter new product development cycles Facilitating and managing innovation and organizational learning Leveraging the expertise of people across the organization Increasing network connectivity between internal and external individuals Managing business environments and allowing employees to obtain relevant insights and ideas appropriate to their work Solving intractable or wicked problems Managing intellectual capital and intellectual assets in the workforce Debate exists whether KM is more than a passing fad, though increasing amount of research in this field may hopefully help to answer this question, as well as create consensus on what elements of KM help determine the success or failure of such efforts. Performance management Performance management consists of three elements, measurement (and benchmarking), 188

or production unit to track its performance levels on key metrics (energy use per unit, water use per unit, packaging use, throughput, cost per unit, inventory, uptime, etc). Benchmarking those metrics allows it to compare those levels with other units, Identify the areas where it needs to improve, or areas where it can Help others improve Identify the business units from which it can learn, and those which it Can help Target setting allows it to focus on areas for improvement, and motivate the teams to learn Knowledge management allows it to acquire or develop the knowledge it needs in order to meet its targets.

engage can emerge and be made visible through the development of interesting activities and tools involving innovative computer network technologies. We also assume that meaningful activities will arise out of our commitment to engage in participatory design. Processes with teachers. We further assume that the tools will assist teachers in the preparation of their work, which involves tacit, informal, and unwritten or unarticulated rules, knowledge, and practical methods and techniques. Thus, we assume that collaboration with, or sharing of, resources can be helped by facilitating sharing and communication in communities governed by common work and purposes .Teacher Bridge is not just a pile of static Web pages. On the contrary, it is designed to support various teacher activities: Fieldwork: Several classes could take part in monitoring local wildlife and water quality. Data can be collectively updated in Teacher Bridges charts and tables. Online Discussion: Chat workgroups could be set up for students to discuss any number of topics. The chat Window can be integrated with a text or problem to be discussed. These chat sessions can be secured and Monitored by teachers. Class management: The system enables teachers to easily publish assignments, activity guides, due dates, and the like. Curriculum: Teachers can share lesson plan ideas and collaborate on what works/what doesnt within various Contexts. Go Virtual: Additional learning strategies, such as science fairs, gardens, journals, field trips, and Quizzes/tests, can be posted with TeacherBridges Maptool. Online Portfolios: Class projects, as well as group or individual portfolios, can be created and edited within TeacherBridge. Contests: Teachers can post students progress on 189

6. Technologies
Early KM technologies included online corporate yellow pages as expertise locators and document management systems. Combined with the early development of collaborative technologies, KM technologies expanded in the mid-1990s. Subsequent KM efforts leveraged semantic technologies for search and retrieval and the development of e-learning tools for communities of practice. More recently, development of social computing tools (such as blogs and wikis) have allowed more unstructured, self-governing or ecosystem approaches to the transfer, capture and creation of knowledge, including the development of new forms of communities, networks, or matrixed organizations. However such tools for the most part are still based on text and code, and thus represent explicit knowledge transfer. These tools face challenges in distilling meaningful re-usable knowledge and ensuring that their content is transmissible through diverse channels.

7. Knowledge Management Communities of Educators



We are proceeding with the assumption that the formal and tacit technical resources, and the innovative and successful methods and practices in which teachers

oneTeacherBridge site where all students/classes can see Where they stand. WebQuests: Classes/students can organize Internet research with comments within TeacherBridge. In order to make collaborations like the above mentioned achievable through the Web, we must break down the stereotyped conception that the Internet is best suited to passive, uni-directional, read-only media. We need to turn the Web not only into a place to interact but also into a writable medium. Currently, however, publishing Web pages can be problematic: the page must first be downloaded, then modified off-line using special HTML editor tools, and finally reposted onto the server. This annoying download-update upload Cycle makes it difficult for teachers to prepare materials and conduct activities online. Therefore, it is Necessary to eliminate the notion of publishing to the Web as a separate process. The fundamental goals of TeacherBridge are (1) to provide environments that facilitate teacher

participation in knowledge sharing activities and (2) to support teachers in the finding, retrieving, and reusing of materials and activities created by colleagues. As a step in this direction,TeacherBridge makes it extremely easy for teachers to author online a significant portion of materials: it offers an innovative way of direct editing and page creation through (what you do is what you get). Teachers can use either a Web Editor or a Full Editor to edit materials in TeacherBridge. With Web Editor, teachers merely type the text that they wish to add with the assistance of simplified shorthandwithout having to learn HTMLand then just click the Save button. With Full Editor, teachers can interactively edit not only text, but also various non text domain specific objects. In order to use the Full Editor, teachers might want to install an application helper, called Java Web Start , which is a free Java download.

8. Conclusion
It is highly imperative to implement the right techniques of Knowledge management in the organization to enrich their HR practices to obtain the synergy.


Challenges and Learning in Human Resource Management - A Study on Customer Service and Employee Engagement in the Indian Healthcare Industry
Dr. B.Shivraj
Professor, Bahadur Institute of Management Sciences, University of Mysore

Manasa Gangothari,Mysore.

Mr.Bharath C (Ph.D), Manager Human Resource, Aricent Technologies (Holdings) Ltd, Bangalore Dr. B. Rose Kavitha, Professor HR & OB, CMR Institute of Technology, ACES Layout, Bangalore

1. Introduction
HRM has evolved from a number of different schools of thought and is best described as a loose philosophy of people management rather than a focused methodology. The value of this research is in its ability to recognise the organisational policies and practices that are the most important drivers of customer satisfaction in a specific organisation. Human Resources Management (HRM) plays a central role in the exchange relationships between the organisations management and its employees. Work has been organized for a very long time and many issues we find today have been addressed in the past. But each generation finds solutions that fit the culture and beliefs of the time. Ultimately, it is an organizations empowered people who can help an organization achieve its goal.

or services .Customers usually call a business when they need a solution to a problem and secondly when they want to feel special in some way. Several important factors that make a customer feel special are discussed in the following. One of the most important aspects of customer service is speed of delivery. Fast service adds value, and speedy follow-up shows empathy. Also, speed often costs nothing but has to be designed into the processes. Fast service is a distinct source of competitive advantage, especially when some customers are prepared to pay a premium price for quality products to be delivered at exceptionally quick time. Personal interaction with a customer is another important aspect of customer service. It is important to get to know all customers, and to give them full attention. Even the minor things regarding a customer such as likes and dislikes, hobbies and interests do make a difference since this adds new dimensions and richness to the relationship. The risk of defection is considerably reduced when a customer is made to feel special due to the truly personalized service. Here, positive, transparent communication plays a vital role. In particular, courtesy, politeness and manners are keys to building trust, respect and loyalty. Information and keeping the customer informed is another dimension of customer service. One of the most important ways of making a customer feel special is to keep them informed of all changes taking place. For example, the customer should be kept informed of the delivery of a product and the status of a product if it is being manufactured. Also if the customer is awaiting 191

2. HRM and Customer service

Quality is often established in real-time encounters between employees and customers in services, therefore quality is a function of HRM that has placed the right type of people in customer services positions. The service practices apparently associated with this correlation are described, concentrating on HRMs role in creating satisfied employees who are motivated and able service providers Bowen and Schneider (1988). The importance of customizing HRM practices to fit a specific market segment is highlighted in this research. Lalonde and Zinszer (1976), defined customer service as those activities that occur at the interface between the customer and the corporation which enhance or facilitate the sale and use of the corporations products

some information or change, they should be always kept up-to-date on the status of their request. On the other hand, follow-up efforts should also be made regularly, to elicit customer feedback. Ensuring effective two-way communication with the customer ensures more sales and greater customer satisfaction. Another important aspect of customer service is customer expectations. Customer expectations differ from customer to customer, so that it is important to discover what the customers expectations really are. In this context, it is very important to make promises only when one is sure that they can be delivered, and to deliver with high quality. This establishes clear expectations, and the goal should be to exceed them. In particular, quality should be the number one priority, and should be an organization-wide responsibility. This underlines the importance of a good quality management system in delivering customer service, involving establishing customer-focused standards of performance, simplifying of procedures to reduce errors, standardizing systems to ensure consistency, and understanding the processes to pre-empt all problems. Complaint handling is another important area of customer service is. In fact, complaints are opportunities to improve service, involving creativity and commitment. The people who complain are the people who want to stay customers and are looking for reasons to do so. It is important for businesses to be proactive on customer service issues, not reactive. This enables businesses to turn complaints into opportunities. The development of long-term relationships is identified as a part of customer service. A customer will feel special if he/she is rewarded for maintaining a long-term relationship with a company. Studies have shown that many people who have got used to a certain way of being served by a company will not defect to a competitor since the human mind looks to maintaining the same patterns over longer period of time. This explains why some very poor companies continue in business even with very poor service levels. But a business cannot afford to be complacent. Statistics show that 68% of customers switch away if those serving them are indifferent to their needs. In fact, every year 192

businesses typically lose 10%-50% of their customers, and the business does not know who they are. Employees have a direct bearing on customer service. Providing superior quality service to customers cannot be achieved through employee satisfaction alone; it requires employee engagement. The level of commitment and involvement an employee has towards his/her organization and its values is termed as employee engagement. The key factors in engagement are alignment of employees toward strategy, enabling employees to have the capability to engage themselves, and creating the sense of engagement, i.e. creating the sense that individuals are a part of a greater entity. Better leadership and motivational practices would strengthen employee engagement in work, in turn improving customer service. CEO Hal Rosenbluth of Rosenbluth International, a corporate travel agency wrote an excellent book about their companys approach called Put The Customer Second - Put your people first and watchem kick butt. Rosenbluth argues that when you put the employees first, they put the customers first. Put employees first and they will be happy at work. Employees who are happy at work give better customer service because: They care more about other people, including customers They have more energy They are happy, meaning they are more fun to talk to and interact with They are more motivated The present study is an exploratory study examining customer service as a Human Resource function in the healthcare services, and the impact of employee engagement on customer service.

3. Data and Methodology

The data for the present study was collected from a sample of thirty managers/ administrators of different healthcare organizations, and thirty customers of the same healthcare organizations, and from thirty employees of the healthcare organizations. The managers and customers were asked about their perceptions of importance of customer service, and about the different parameters used by them to evaluate quality of customer service.

The employees were asked about the level of employee engagement and its impact on quality of service. The scale used for data collection from employees was a standardized scale for employee engagement, including the following items: 1. I have the materials and equipment I need to do my job efficiently. 2. I receive the information and communication I need to do my job. 3. I regularly receive recognition/praise for doing good work. 4. The benefits offered here are fair and reasonable. 5. The people here are pleasant and co-operative to work with. 6. There is someone at work who encourages my development. 7. My opinions and ideas seem to matter. 8. My supervisor provides me with feedback and guidance. 9. My supervisor helps me know what is expected of me. 10. My supervisor cares about me as a person. 11. Even if I had the opportunity to get a similar job with another organization, I would stay with my present company. 12. In the last year, I have had opportunities to learn and grow. 13. I would recommend the organization as a good place to work.

the core product/service, but also included customer service elements such as providing nursing/care, psychological support, privacy, and ensuring equity (for all patients), balanced with personalized care. Customer satisfaction and feedback (33%) was another important parameter, particularly because of its linkage with word-of-mouth recommendations/referrals. Two important processes directly impacting these were information communication and query handling. Appointments management, particularly relating to promptness of treatment and availability of doctors (especially visiting doctors), and grievance handling were also crucial processes in this context. On the other hand, networking/ancillary services, such as referrals to specialists, complemented the customer relationship processes. Another very important parameter was found to be infrastructural and technological dimension (25%), which included such elements as having state-of-the-art facilities and equipment, ambience, accessibility, and providing pharmaceutical and diagnostic services. Finally, employees and employee satisfaction (10%) were also a factor impacting the effectiveness of customer service. In particular, training was an important parameter in this respect, especially in terms of skills related to handling patients, and in applying emotional intelligence. Attrition was also a source of concern in this context. From the point of view of patients, a similar pattern emerged, but with quite different emphasis. The most important factor influencing customer satisfaction with customer service was found to be interaction/ involvement/hospitality of employees (60%). In particular, this underlined the importance of friendly, cooperative employees in healthcare service delivery, providing personalized care to individual patients. On the other hand, lack of employee commitment and dedication could be easily sensed by patients, for example if employees were rude or did not promptly respond to queries; these contributed to customer dissatisfaction. A related factor was that of administration of the hospital (40%). For example, the role of reception staff in the communication of information to patients was a crucial 193

4. Limitations of the Study

The study has several limitations. The sample size considered for the study was very low (thirty of each group), so that the results of the study may not be representative. Also, the data collection instrument was not lucid. In particular, there may have been confusion between the concepts of employee commitment, dedication, satisfaction, relationship, involvement, and engagement.

4. Analysis and Inference

There were several criteria/factors used by healthcare managers to evaluate the effectiveness of their customer service, and most managers were found to use multiple factors. The most important parameter was found to be the treatment/consultation (40%), which is essentially

factor. In particular, this was found to affect posttreatment services. Another important factor influencing customer satisfaction was the treatment by the doctor (45%) and expertise/professionalism of the doctor (40%). In particular, timely treatment/waiting time/availability of doctors were all of general concern for the patients. Also, the success rate of operations was a cause for concern in this context. The infrastructure, facilities, and technology (45%) were important factors from the patients point of view. This included a wide variety of elements such as food/ canteen facilities, drinking water, diagnostic equipment/ services, pharmacy/availability of medicines, accessibility, lounge/waiting area, rush/crowdedness, and so on. Ambience (10%) and hygiene (15%) were also factors affecting patients perception of healthcare services. These functioned to convey the sophistication

of the hospital. There were also some ancillary services which were found to impact patients perception of healthcare services; for example, critical/emergency services. In terms of the perception of customer service as a supplement to the core product/service, offered free of charge, it was found that 90% of healthcare managers and 96% of patients agreed to this view. Further, in terms of the importance of customer service, 86.5% of healthcare managers rated customer service as very important or extremely important, while 93.5% of patients rated customer service as very important or extremely important. Paired-samples t-test indicated that there was no significant difference of the importance of customer service to healthcare managers and to patients (Table 1). Further, comparing these with the importance of customer service to employees shows that there is no significant difference in the importance of customer service between all three players.

Table 1: The importance of Customer Service to Healthcare Managers and to Patients Mean Std. Deviation Correlation Sig. t

Importance of customer service 4.7600 0.5110 0.0680 0.7240 1.6530 to the managers Importance of customer service 4.5200 0.6340 0.0670 0.7320 1.4320 to the patients in comparison: Importance of customer 4.6400 0.8420 0.0680 0.6230 1.5320 service to the employees Although there was no significant difference about the importance of customer service between

Sig. (2-tailed) 0.1090 0.1020 0.1040 healthcare

organizations managers/administrators and patients, the rating of importance of customer service of patients (93.5%) were relatively higher than that of managers (86.5%). The importance of employee engagement from the managers point of view is shown in Table 2. Table 2: Importance of Employee Engagement (manager point of view) Mean High quality of service is possible form a healthcare organization when 4.76 employee commitment/dedication is high High quality of service is possible form a healthcare organization when employee satisfaction/relationship is high High quality of service is possible form a healthcare organization when employee engagement/involvement is high Superior customer service helps to build effective and efficient healthcare organization 194 4.59 4.41 4.69 Std. Deviation 0.511 0.501 0.568 0.541

All aspects of employee involvement were found to have an enabling influence on quality of customer service from the managers point of view. Employee commitment/dedication was given the highest emphasis, as observed earlier. Healthcare organizations managers/administrators were found to strongly agree with the statement superior customer service helps to build effective and efficient healthcare organizations. However, the same level of agreement with the statement was not found from the employees of healthcare organizations (as shown in Table 4). From the employees point of view, the degree of engagement was found to be quite high. Table 3 shows the levels of the employee engagement variables (from the employees point of view). Table 3: Employee Engagement (employee point of view) Mean Even if I had an opportunity to get a similar job in a different company, I would stay with my present company People are pleasant and cooperative to work with I receive the information and communication I need to do my job Recommend my organization as a good place to work My supervisor helps me know what is expected of me Someone at work encourages my development My supervisor provides me with feedback and guidance I have the materials and equipment needed to do my job efficiently I regularly receive recognition/praise for doing good work My supervisor cares about me as a person My opinions and ideas seem to matter Benefits offered are fair and reasonable I have had opportunities over the last year to learn and grow 4.50 4.43 4.36 4.36 4.29 4.14 4.07 3.93 3.93 3.86 3.79 3.79 3.71 Std. Deviation .650 .646 .497 .745 .611 1.167 1.072 .997 .917 1.167 .893 .802 1.326

All the variables were found to have relatively high average levels. However, the last variable, relating to having opportunities over the last year to learn and grow, was found to have a relatively lower average level, with high variability, indicating a divergence of responses. Table 4 shows the importance of employee engagement from the employee point of view. Table 4: Importance of Employee Engagement (employee point of view) Mean High quality of service is possible form a healthcare organization when employee satisfaction/relationship is high High quality of service is possible form a healthcare organization when employee commitment/dedication is high Superior customer service helps to build effective and efficient healthcare organization High quality of service is possible form a healthcare organization when employee engagement/involvement is high 4.29 4.14 4.07 4.07 Std. Deviation 1.139 1.167 1.207 1.385

The importance of employee engagement to employees showed similar levels as those of the importance of employee engagement to managers, with higher variability. 195

Implications and Discussion: The results of the study show that employee engagement is an important parameter for quality of healthcare services. Though healthcare managers had a low priority for employee involvement and engagement, these were particularly important from the customer point of view. Further, the results show that there is no significant difference in the importance of customer service between all three players. However, there were differences in the perception of managers, employees, and customers towards the impact of employee engagement on quality of service. Healthcare managers/ administrators were found to give more importance to customer satisfaction and feedback (33%) as compared with the importance given to employees and employee satisfaction (10%). This difference may lead to patients dissatisfaction, because dissatisfied employees often give inferior customer service. Infrastructural facilities and technology was given more importance by patients (45%), compared to thatofhealthcare managers/administrators (25%), as these included such elements as food/canteen facilities, drinking water, state-of-the-art equipment/services, ambience, and hygiene, which affect the patients directly more than administrators. Interestingly, the importance of timely treatment/consultation/expertise of doctors was perceived same by both managers/administrators (40%) and the patients (40-45%). This paper contains ideas that have many different roots that do fit comfortably within one coherent and self-consistent body of knowledge. One major point of debate has been the difference - if any - between HRM and traditional personnel management and service quality. The evolution of HRM continues today as new management theories, fashions and fads are developed. There is a vast scope for further research in testing for the impact of employee engagement on service quality. Also, the underlying dimensionality of the quality of customer service may be further analyzed. There is also further scope of research on understanding the characteristics/qualities of healthcare organizations which may provide superior customer service. Some implications for HRM of these choices are outlined in this paper with research implications. Conclusion Finally, it is argued that customer-focused management in general might enhance competitiveness and better 196

service quality and employee satisfaction in the marketplace service quality beings with employees. Every employee who works for a service organization must understand the values, beliefs and overriding objectives of the organization. In this way every employee is working from the same set of beliefs. Overall this is done by creating vision/mission statements or guiding philosophies and then disseminating these to all concerned so that every individual understands what is expected of them as an employee. So one needs to create a right philosophy in the minds of both customers and employees. References Aravinth, S. and Niranjanaa Devi, K., Contemporary Strategies in Customer Satisfaction. Borrill, C. West, M.A., Shapiro, D. and Rees, A. (2000). Team working and effectiveness in health care. British Journal of Health Care, 6(8), 364-371. Carter, A.J. & West, M.A. (1999), Sharing the burden - teamwork in health care settings, in J. Firth-Cozens & R. Payne (Eds). Stress in Health Professionals,. Chichester: Wiley. Kharb, M. (2008) , Creating the Right Service Philosophy. Wall, T.D., Bolden, R.I., Borrill, C.S., Carter A.J., Golya, D.A., Hardy, G.E., Haynes, C.E., Rick, J.E., Shapiro, D.A., and West, M.A. (1997). Minor psychiatric disorder in NHS Trust staff: Occupational and gender differences. British Journal of Psychiatry, 171. West, M.A., Borrill C., Dawson, J, Scully, J., Carter, M., Anelay, S., Patterson, M., Waring, J. (2002). The link between the management of employees and patient mortality in acute hospitals. The International Journal of Human Resource Management, 13, 8. Borrill, C., West, M., Carter, M., and Dawson, J., The Relationship between Staff Satisfaction and Patient Satisfaction: Results from Wolverhampton Hospitals NHS Trust. De Villiers MR, Couper ID, Hugo J, Conradie H, Shaw V. (2005), Tools for busy hospital managers: A guidebook for the district hospital management team, Health Systems Trust. Lalonde and Zinszer, (1976), Customer Service as an element of the Marketing Mix The evaluation of a Descriptive Model of sustomer Service, Ohio State University.

Emotional Recognition Readiness and Leadership

Kavitha Sethuraman Incharge compensation & CSR, FLSMIDTH Pvt., Ltd., Chennai & Research Scholar SRM University

1. Introduction
Emotions are a physical sensation that obliges one to act. This word is derived from a latin verb emovare meaning to move. These emotions act as the basis for body and mind to communicate. We typically view emotions as primitive and instinctive responses that are not associated with complex intellectual or cognitive functions. Certainly, key stimulus elements in the environment can trigger instinctive emotional responses (imagine confronting a large, threatening animal). However, cognitiveemotional interactions are extremely important in the elicitation of everyday emotions. In primates and humans, the brain has a striking capacity to learn and remember the emotional significance of diverse stimuli and events. Furthermore, our cognitive capacity allows us to assign emotional valence to stimuli, and to change the value that was previously assigned to a stimulus. For example, a child may be initially fearful of dogs, but through positive experiences the child may eventually enjoy and approach them. As another example, imagine the emotions associated with a new relationship. Initially, seeing the person may evoke positive emotions of desire and happiness. However, after a nasty breakup, the same person could easily elicit emotions of anxiety, tension, and anger. This second example illustrates two important points. First, the sensory or perceptual analysis of the person is the same. The physical expression of emotion may also be the same (i.e., racing heart, flushed sensations , increased breathing rate). Second, the emotional reaction to the stimuli depends on cognitive processing. In other words, the evaluation of the stimulus (the person) in conjunction with past experiences determines the feelings or the conscious experience of joy or anger. Studies of brain functions reveal that neural pathways exist for these important cognitive-emotional interactions. 197

2. Emotions and Leadership:

The literature briefly described above is representative of a much wider body of knowledge which suggests that feelings serve multiple purposes in human affairs. As will be demonstrated below, it is likely that feelings play an important role in leadership. While George and Bettenhausen (1990) and George (1995) investigated some of the potential beneficial consequences of leader positive mood, it is likely that a diversity of feelings (both emotions and moods) influences leadership effectiveness. Negative moods, for example, foster systematic and careful information processing (Sinclair, 1988; Sinclair & Mark, 1992) and may be advantageous when leaders are dealing with complex problems in which errors carry high risk. As another example, relatively intense negative emotions may appropriately redirect a leaders attention to an issue in need of immediate attention (Frigda, 1988). Leaders who experience anger frequently may have a difficult time building good relationships with followers and engendering their trust (Jones & George, 1998). Similarly, a leader who frequently experiences positive moods on the job may fail to notice and attend to performance. Shorfalls that is less than apparent. Hence, this inquiry into the role of feelings in leadership is not bent on determining the right or effective moods and emotions that facilitate leadership effectiveness. Leaders are obviously human beings with the full range of moods and emotions potentially available to them. Both positive and negative moods and emotions serve numerous functions in peoples lives. Likewise, both positive and negative moods and emotions can sometimes be the cause of human dysfunctions (George, 2000). These emotions in a person will affect his leadership skills, knowing the emotional preparedness (EP1 being

low and EP4 being very high) of the subordinates would contribute to a large extent for effective leadership. For example, if a person has experienced too much of sorrow in his past, his sorrow will be at EP4 compared

to that of happiness; if that person interacts with a leader who is always very happy and excited and tries to communicate to this person with the same excitement then this person might be annoyed.

3. Overview of the Brain and the Location of Emotions:

Source: The limbic system plays a major role in our experience and expressions. This part of brain initially evolved for feeding, mating and defence of territory. This is still the part of the brain we use for evaluating what is happening and generating appropriate physiological reactions in the body. The limbic system consists of five parts namely scanner or Thalamus, evaluator or hippocampus, memory bank or Amygdala, Sensory or information and cortex or thinking cap. Although there are various areas in limbic system the most important areas of the brain involved in emotions are the memory bank and evaluator. The evaluator has an evaluative function to assess context, comparing current information with what has been seen before. We can trigger strong emotions from a relatively minor event. On the other hand Memory Bank determines the emotional significance of events and compares the threat with past events; it has a role in storing emotional memories. If there is a positive match with earlier memories, it is the memory bank which gets involved to initiate a fight or flight response. Hence the limbic system in the brain plays a major role in controlling emotions of a person.The brain produces natural chemical messengers - called neurotransmitters - that send messages from one nerve cell to another. Serotonin is known as the feel good neurotransmitter because it plays an important role in the regulation of mood. Low levels of serotonin can cause excessive feelings of sadness and anxiety. Two other important neurotransmitters - dopamine and norepinephrine - also affect mood. When the brain doesnt produce enough dopamine or norepinephrine, you can feel tired, unmotivated and foggy-headed. There should be a balance of all the three.


4. Art and Science of Leadership:

Leadership is both an art and a science, effective leadership requires that we embrace both dimensions. The science of leadership concerns the observation, study and classification of leadership practices, resulting in a reliable explanation of what makes leaders effective.

Volumes of research, opinions and books have been written on scientific leadership methods and practices. The art is about developing practical experience in the application of the leadership practices and methods resulting from the science of leadership. To me, the art of leadership is about practice! Its about practicing the leadership science until you develop intuition.

5. Linking Emotional preparedness to leadership:

The above frame work can be explained with the following example. If a subordinate with the emotional preparedness 4(EP4) in sadness, it will be from his past experiences stored in the memory bank. These experiences could be a top down processing or bottom up processing in the brain, meaning that the top down processing is the past experiences and memories stored, on the other hand the bottom up processing is the experiences from the external stimuli. The former would be stronger than the latter as it has been experienced in the past and stored in brain. This means that the brain produces excess of Serotonin. As a next step, we form perceptions and thereby respond through actions. As we know Leadership is an attempt to influence people, if leaders are able to understand the emotional balance of their team members they will be in a better position to support and motivate them. An attempt has been made to develop the model objective. It was developed on the basis of literature review and practical 199

experiences. This model can be empirically tested.

6. Reference:
Papez, J.W. (1937). The Neurology of Emotion. Available < http://www. n e u r o a n a t o m y. w i s c . e d u / c o u r s e b o o k / neuro5(2).pdf >. [Accessed 25th November 2010]. George. M. Jennifer. (2000). Emotions and Leadership: The role of emotional intelligence. SAGE Publications, Volume 53(8): 10271055: 013316. Frigda, N.H (1988). The laws of emotion. American Psychologist, Vol 43 PP. 34958. Sinclair, R.C. Mood (1988).Categorization breadth, and performance appraisal: The effects of order of information acquisition and affective state on halo, accuracy, information

retrieval, and evaluations. Organizational Behavior and Human Decision Processes.Vol 42.PP. 2246. Sinclair, R.C. & Mark, M.M (1992). The influence of mood state on judgement and Action: Effects on persuasion, categorization, social justice, person perception, and judgmental accuracy. In L.L. Martin and A. Tesser (Eds), The construction of social judgments. Hillsdale, NJ: Erlbaum, pp. 165 93.

Jones, G.R. & George, J.M (1998). The experience and evolution of trust: Implications for cooperation and teamwork. Academy of Management Review, Vol 23.PP. 53146. George, J.M (1995). Leader positive mood and group performance: The case of customer Service. Journal of Applied Social Psychology, Vol. 25. PP. 77894. George, J.M. & Bettenhausen, K (1990). Understanding prosocial behavior, sales performance, and turnover: A group level analysis in a service context. Journal of Applied Psychology. Vol 75.PP. 698709.


Human Resource Management Socio-Economic Factors Influencing the Success of Women Entrepreneurs in Network Marketing Industry
(With Reference to Amway) Manjula Pattnaik, Research Scholar, University of Madras Balachandra Pattanaik, Asst. Professor, Kalsar college of Engineering, Chennai 1. Introduction
The entrepreneurial spirit has been described as the most significant development in recent economic history. Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled (Timmons 1994). . A good entrepreneur is one who is capable of inspiring confidence in people, and has the ability to motivate them to work with him in fulfilling the economic goals set by her. 1.1 Concept of Women Entrepreneurs: Earlier research tended to focus on those issues that have created barriers to female entrepreneurship and support mechanisms that have attempted to alleviate such problems for the putative female entrepreneur. Though women constitute almost half of the worlds population their representation in gainful employment is comparatively low. global entrepreneurship Monitor (GEM) report (2007) on women entrepreneurship says that women are creating and running business around the world, contributing to the economies that represent more than 70% of the worlds population and 93% of Global GDP. Women entrepreneurship is a key contributor to economic growth in low and middle income countries like India. 1.2 Women Entrepreneurs in Network Marketing: Network Marketing is a subset of direct selling and is also known as multilevel marketing, structure marketing or Multilevel direct selling (WFDSA 2000). Business organizations have long relied on direct marketing to target customers without spending a lot of money on retail distribution. However, the Network (Multilevel) Marketers have taken the direct model one step further i.e. not only they do the sales, but recruit and train new distributors i.e., independent sales persons who are members in the network marketing company. This ingenious method was first popularized by Amway in 1950s. Women are caretakers and are well suited to network marketing. The Direct selling 201 women alliance (DSWA) says that there are about 14 million people in direct selling in united states. There are over 55 million worldwide, doing an estimated 97 billion dollars in sales value. Statistics tell us that women constitute 73% of the total direct sellers in the world. According to the IDSA (Indian Direct Selling Association) report, women constitute 60% of the total direct sellers in India. 1.3 Objective of the study: 1. to study the social as well as economic profile of women entrepreneurs in network Marketing Industry. 2. To analyse microscopically the indispensable HRM competencies of women entrepreneurs of Network Marketing Industry namely achievement motivation, teamwork, customer orientation, organizational commitment and empowerment. 1.4 Hypothesis: The following research hypothesis are formulated and structured for the study : There is no significant difference among factors of HRM competencies. Women entrepreneurs in network marketing industry do not differ in their perceptions.

1.5 Scope of the Study: The study area is restricted to Chennai city as most of the network marketing companies are having their operations in Chennai. The study covers the major HRM competencies of women entrepreneurs in this business, the determinants of entrepreneurship. 1.6 Limitations of the Study: The study focuses on the perceptions of women entrepreneurs about their HRM competencies in select network marketing companies functioning in Chennai city and these perceptions are subject to Change in the days to come. A questionnaire survey is conducted among the women entrepreneurs

of network marketing companies. As it is a perception study, the results cannot be generalize. 1.7 Research Methodology: The Research Methodology of this study based on both analytical and descriptive type of methodology. The study is conducted in two stages format, with a preliminary pilot study followed by the main study. Chennai hosts a number of network marketing companies like amway, Oriflamme, Modicare, Tupperware, Avon and Conybio and many others who have regional offices in Chennai. 1.8 Questionnaire Design: The questionnaire was based on the initial research model and propositions. Primary data were collected through questionnaire survey. The respondents were asked to give their opinion relating to the five major HRM competencies. The first part of the questionnaire comprises demographic factors with optional questions. The second part contains statements about the profile of the business. Some optional questions are included along with the rating questions and also yes / no questions. The third part consists of statements relating to the HRM competencies with Likerts 5 point scale. The fourth part of the questionnaire relates to the profile of entrepreneurship. All relevant statements are included to derive responses. The fifth part comprises statements pertaining to the constraints faced by the respondents and the reasons for the high attrition rate. Data Collection: The sample size was determined by considering the

number of women entrepreneurs attending the meetings of Amway. A total of 100 questionnaires were circulated to the women entrepreneurs. Data Analysis: All data analysis was conducted using SPSS V-15. Sample means, standard deviation and N are presented in the analysis chapter for all the variables of the study. The data were screened in order to obtain the variance between various HRM competencies. Factor analysis, cluster analysis, one way analysis of variance, karl Pearsons co-efficient of correlation, t-test, ranking analysis are discussed here. 1.9Analysis and Interpretation: This Tree analysis creates a flow chart (Trees) based on the classification model. It classifies the cases into groups or predicts values of a dependant target variable based on the values of independent predictor variables. It also provides tools for exploratory and confirmatory classifications. 1. Inability to withstand negative effects: The women entrepreneurs in network marketing industry specified the inability to withstand negative effects as the primary reason for their attrition. But the research needs to ascertain how far the five HRM competencies achievement motivation, team work, organizational commitment, customer orientation and empowerment are attributed to curtail the above mentioned reason for attrition.

Sample Reverse Auction Process ATR 1

Node 0 Mean Std. Dev. n % Predicted 4.087 1.012 412 100.0 4.087

Commitment Adj. P . Value=0.000. F=108.695. Df1=2. Df2=409 <=3.30 Node 1 Mean Std. Dev. n % Predicted 3.493 1.073 203 49.3 3.493 ( Node 0 Mean Std. Dev. n % Predicted 4.556 0.499 132 100.0 4.087 >3.90 Node 0 Mean Std. Dev. n % Predicted 4.087 1.012 412 100.0 4.087

Achievement Adj. P . Value=0.000. F=25.017. Df1=1. df2=201 Node 0 Mean Std. Dev. n % Predicted Node 0 Mean Std. Dev. n % Predicted

4.087 1.012 412 100.0 4.087

4.087 1.012 412 100.0 4.087


From the above diagram, it is found that the attrition reason inability to withstand negative effects diminishes from the mean value 4.087 at Node 0 to 2.985 at Node 4. But it trespasses the two radical branches over the independent variables organizational commitment (F = 108.695) and achievement motivation (F = 25.017). This forces one to conclude that when there is attrition of women entrepreneurs due to the reason of negative effects in their business venture, it is safeguarded by the

two HRM competencies, organizational commitment and achievement motivation in the sequential order. 2. Poor planning / Self confidence: The second reason quoted by women entrepreneurs in network marketing for attrition is Poor planning / Self confidence. The research tries to ascertain how far the five HRM competencies are able to control attrition in the business.

Sample Reverse Auction Process ATR 2

Node 0 Mean Std. Dev. n % Predicted 3.800 0.000 412 100.0 3.800

Commitment Adj. P . Value=0.000. F=130.405. Df1=3. Df2=408 <=3.00 Node 1 Mean Std. Dev. n % Predicted 3.493 1.073 203 49.3 3.493 ( Node 0 Mean Std. Dev. n % Predicted 4.556 0.499 132 100.0 4.087 >3.90 Node 0 Mean Std. Dev. n % Predicted 4.087 1.012 412 100.0 4.087

Achievement Adj. P . Value=0.000. F=25.017. Df1=1. df2=201 Node 0 Mean Std. Dev. n % Predicted Node 0 Mean Std. Dev. n % Predicted

4.087 1.012 412 100.0 4.087

4.087 1.012 412 100.0 4.087

The diagram makes it clear that the attrition reason poor planning / self confidence diminishes from the mean value 3.850 at Node 0 to 2.421 at Node 5. But it trespasses the two radical branches over the independent variables organizational commitment (F 13.405) and empowerment (F = 22.074). So it can be concluded that when there is attrition of women entrepreneurs due to the reason of poor planning / self confidence in their business venture, it is minimized by the two HRM competencies, organizational commitment and empowerment in the sequential order. This makes it clear that if the women entrepreneurs are highly committed to their business and also highly empowered (capability

to make right decisions), they are able to tide over their attrition reason poor planning / self confidence, and become more confident to plan for their future business. 3. Poor performance at the execution level: The third reason given by the women entrepreneurs in network marketing industry for attrition is Poor performance at the execution level. The research tries to ascertain how far the five HRM competencies are able to control attrition in their business. The above mentioned reason for attrition is taken as a dependant variable and the execution of the probabilistic tree model brought out the following results.


Sample Reverse Auction Process ATR3

Node 0 Mean Std. Dev. n % Predicted 3.767 0.917 412 100.0 3.767

Commitment Adj. P . Value=0.000. F=90.326. Df1=4. Df2=407 <=3.00 Node 1 Mean Std. Dev. n % Predicted 2.948 0.000 115 27.0 2.948 ( Node 2 Mean Std. Dev. n % Predicted 3557 0.544 88 21.4 3.557 >3.90 Node 3 Mean Std. Dev. n % Predicted 3.948 0.440 74 18.0 4.176 >3.90 Node 3 Mean Std. Dev. n % Predicted 3.948 0.440 74 18.0 4.176 >3.90 Node 4 Mean Std. Dev. n % Predicted 4701 0.488 77 18.7 4.701

The above diagram makes it clear that the reason for attrition poor performance at the execution level diminishes from the mean value 3.767 at Node O to 2.948 at Node 1. But it trespasses a radical branch of unique independent variable, organizational commitment (F = 90.326). This forces one to conclude that when there is attrition of women entrepreneurs due to their inability to perform effectively, it is minimized by the HRM competency, organizational commitment. This makes it clear that when women entrepreneurs possess very high degree of commitment towards their organization, they are able to break the constraints of poor performance, and try for better performances at the execution level. 1.10 Findings: Strong achievement motivation is a powerful tool to extract significant team work from the women entrepreneurs. A torrent of motivation helps the women entrepreneurs to achieve a value congruency with network marketing industry. Achievement motivation has led to customer activation in order to help the women entrepreneurs to enhance their service quality. It has helped the women entrepreneurs to deliver the product on time as their main focus is on customer satisfaction. The achievement motivation of women entrepreneurs has improved their self-confidence which in turn has led to betterment of their status both socially and economically. The motivated women in network marketing industry feel empowered because of their economic independence. 204

The optimistic co-ordination in team work has made the women entrepreneurs emotionally attached towards the organization. The team work factor synergy has led the women entrepreneurs to have value congruency with the organization. 1.11 Conclusion: Today, there is a greater awakening among women. Given an opportunity, they will deliver the results. In education, they have not only excelled but also become top rankers. Educating women is absolutely essential in strengthening their personality. therefore, encouragements of the growing intensity of motivation amongst educated young women for coming into the entrepreneurial stream and extended support with scientifically designed package of the technical and financial assistance are needed. The non-governmental organizations have a bigger role in stimulating and nurturing the spirit of entrepreneurship amongst women. There are indications, however, that women-owned businesses are only beginning to become involved international trade and other forms of globalization which may be a factor preventing them from reaching their full potential in the networking market. Towards this end, an integrated approach is necessary for making the movement of women entrepreneurship a success. The role and attitude of women entrepreneurs are critical to the success of network marketing industry. A long standing, successful relationship with the entrepreneurs allows the network marketing companies to introduce new and improved advanced products relatively easy to market, using an experienced team which knows the local market very well.

REFERENCE: Alexander Gordon, (2007). Network marketing business for women, MLM leads for India, (www.freelance Allen N.J. & Meyer J.P. (1990). The Measurements and Antecedents of Affective, Continuance and Normative Commitment to the Organization, journal of Occupational Psychology P (1-18). Bateman T.S. amd Strasser.S (1984). A longitudinal analysis of antecedents of organizational commitment. Academy of Management Journal, 27: Pp (95-112). Caputo R and Dolinsky A (1998). Women choices to pursue self employment The role of financial and Human capital of Household members, Journal of small business Management 36 (3) (Pp8-17). Charumathi(1998), Mathur Rahman(1998), Acharya 2001, Developing Women Entrepreneurs in South Asia Problems and Constraints. http// Daisy Johnson (2008). Sprit Driven Success Learn Time Tested Biblical Secrets to Create Wealth While Serving Others http//twindin.

Dalton Marie, Dawn Hoyle, and Marie Watts, (2000). Human Relations, South western Educational publishing, Thomson learning 2nd Edition, Pp 180, 183. evancarmichael. com/ leadership/2946). Feather N.T., and Rauter Kartin.A (2004). Organisational citizenship behaviours in relation to Job status, job insecurity, organizational commitment and identification, job satisfaction and work values, Journal of occupational psychology 77 (81-94). Frederick Herzberg(2003). One More Time, How do you Motivate Employees? Harward Business Review, Hardward Business school press, 2003 P 45-70. Ganesh M.P.(2007). Enhancing organizational commitment among employees : Role of H.R.Practices, GITAM Journal of Management, Vol.5 No.3, Pp 182, 183. GEM Report (2007). http//www., http//www.3. babson. edu Nunnallly J.C and Bernstein I.H(1994). Psychometric Theory (3Edn)New York, Mc Graw Hill Inc.


Impact of Strategic HRM Implementation on Firm Performance: An Empirical Study on the Indian IT Sector
Prof & Head Department of Management Studies, Avadi - IAF Aallim Muhammed Salegh College of Engineering, Chennai

Prof. A. Shameem

1. Introduction
Strategic Human Resource Management (SHRM) is the planned pattern of human resource deployment and activities intended to enable the organisation to meet organisational goals and objectives (Noe et al. 2007). In other words, the definition of SHRM is represented by the degree of participation in core decision-making and partnership undertaken by human resource (HR) department and the specificity and formality that HR departments require in planning and implementing, all of that, to ensure that a firms human capital contributes to achieving firm business goals. Nowadays, it is a common belief in the business world that HR of an organisation can be a source of competitive advantage, provided that the policies and practices for managing people are integrated with the overall strategic goals and objectives. SHRM emphasises the importance of establishing congruence between HR policies and organisational strategic goals.

3. Importance and Justifications of the Study

The importance and justification for conducting this study by the researcher is on account of two reasons. Firstly, as the literature shows, such a study has not previously been conducted in India, especially what is related to SHRM implementation in the IT sector. The research objective is to explore the impact of SHRM implementation on organisational performance of the IT sector in India, which is considered as one of the leading growth sectors of the Indian economy. Secondly, the positive results of foreign studies on SHRM and the interest of renowned thinkers and researchers in this field have prompted this study.

4. Objectives of the Study

The objectives of this study are to gain a deeper understanding of the relationship between SHRM implementation and the organisational performance and to know if the relationship between SHRM implementation and organisational performance is affected by firms size and age.

2. Problem Statement
HRM has been developed into SHRM by researchers seeking to emphasise the importance of the concept to the effective functioning of organisations. To this end, many authors have maintained that SHRM is straightforwardly linked to organisational performance and that high-performing work organisations pay special attention to adopting particular HRM policies and linking these to the strategies of their organisations. However, regardless of the rising popularity of SHRM, there have been very few systematic evaluations of the claims that it is linked to performance and doubts remain as to its theoretical foundations (Harris & Ogbonna 2001). This problem can be particularly examined through answering the research main question How does SHRM implementation affect the Indian IT sector firms performance? 206

5. Literature Review
Within the last two decades, there has been a number of important contributions in the literature dealing with issues pertaining to the management of people. Significant attention has been directed towards HRM, which many have seen as representing a distinct approach to managing people (Guest, 1997). Interestingly, although researchers have highlighted the holistic nature of HRM, much of the initial research into the concept focused on a limited range of issues and has been criticised as `micro analytic (Delery and Doty, 1996). However, in the last decade, researchers have sought to show the importance of HRM in influencing organisational performance and it is from this premise that the current interest in SHRM has developed (Cappelli and Crocker-Hefter, 1996).

Rapid environmental change, globalisation, innovations to provide competitive products and services, changing customer and investor demands have become the standard backdrop for organisations. To compete effectively, firms must constantly improve their performance by reducing costs, enhancing quality, and differentiating their products and services. To improve firm performance and create firm competitive advantage, HR must focus on a new set of priorities. These new priorities are more business and strategic oriented and less oriented towards traditional HR functions such as staffing, training, appraisal and compensation. Strategic priorities include team-based job designs, flexible workforces, quality improvement practices, employee empowerment and incentive compensation (Jing and Huang 2005). SHRM was designed to diagnose firm strategic needs and planned talent development which is required to implement a competitive strategy and achieve operational goals (Huselid et al., 1997). Interestingly, the burgeoning interest in SHRM has not been matched by the development of appropriate theoretical constructs for the concept (Guest, 1997). Indeed, researchers have criticised the underpinning theoretical foundations of SHRM and many have called for the formulation of a theory of SHRM (Dyer, 1985). Two major reasons account for this criticism. The first is that the concept of HRM, from which SHRM originated, has itself been subjected to extensive criticisms for its poor theoretical framework (Legge, 1994). The second, and perhaps more important reason, is that researchers have approached the field of SHRM from a variety of perspectives with little acknowledgement of the differences within them and no attempt has been made to identify the common threads in the perspectives (Delery & Doty, 1996). Such an understanding is important to enable an assessment of the viability and adoption of the concept. A brief discussion is offered in what follows. In an extensive review of the literature, Delery & Doty (1996) identify three categories of researchers and the perspectives that they have adopted in theorising SHRM. They tag the first group of researchers `universalists largely because of their interest in identifying `best 207

practice SHRM policies. Delery & Doty (1996) note that ``these researchers . . . posit that some human resource practices are always better than others and that all organisations should adopt these best practices. It is within this perspective of theorising in SHRM that the present interest in developing `high performance work practices is located (Osterman, 1994). Thus, the assumption is that the adoption of certain SHRM policies is likely to result in increased organisational performance (Kochan & Dyer, 1993). The second strand of theorising identified by Delery & Doty (1996) comprises those researchers adopting a contingency approach. In keeping with the early foundation of the contingency perspective within organisational theory, these researchers argue that the success of HRM policies is contingent upon the achievement of a match between HR policies and other aspects of the organisation. For example, researchers adopting this perspective have demonstrated that different HR policies may be required at different stages in an organisations life cycle (Bird & Beecher, 1995). Delery & Doty (1996) identified a third group of SHRM theorists as adopting a `configurational approach. Delery & Doty (1996) noted that this approach is more complex and consists of researchers who seek to `` . identify configurations or unique patterns of factors, that are posited to be maximally effective. This category of researchers are also said to approach their subject from a more theoretical perspective and many of the phenomena they identify may not necessarily be empirically observable (Doty & Glick, 1994). A consistent theme in all three theoretical perspectives of SHRM is the assumption that SHRM is linked to organisational performance. However, while the literature is rich with claims that both HRM and SHRM are linked to performance, there is little empirical evaluation of this and the theoretical foundations upon which these links are based have been described as inadequate (Guest, 1997). Accordingly, a better understanding of the role of the implementation of SHRM in creating and sustaining organisational performance and competitive advantage should be achieved through further theoretical development and empirical evidence (Jing & Huang 2005).

Recent years have been characterised by an increased interest in examining the added value of HR to a firms success. The literature suggests that HRM can be a source of sustained competitive advantage (Pfeffer 1994; Wright et al. 1994). Huselid (1995), for example, suggested that a proper configuration of HR practices may not only help an organisation sustain its competitive advantage, but may also contribute significantly to a firms performance. The challenge that HRM has to face relates to the outcomes. What is important, says Ulrich (1998), is not so much what HR does, but its deliverables, or its contribution to the overall organisational outcomes. Certain research work has traditionally focused on the impact of HR practices on individuals or, alternatively, on examining that impact using the organisation as the level of analysis. Another possible distinction (Wrigh & Boswell 2002) lies in the number of practices analysed. Many scholars have focused on one or more HRM practices and examined their effect on various performance measures (e.g. Banker et al. 1996; Delaney & Huselid 1996, Delery & Doty 1996; Harel & Tzafrir 1999; Khatri 2000, among others). Studies in the late 1990s have examined the effect of sets of HR practices on performance (Arthur 1994; Becker et al. 1997) and the characteristics and orientation of the HRM function and the link to performance (Huselid et al. 1997; SnellYoundt 1995). The common denominator for these studies lies with the concept of multiple HR practices as a system, borrowing from the paradigms of systems approach. Thus, in the HRM system perspective, the implicit assumption is that a single or isolated HRM practice may have only limited competitive effects on overall performance. In fact, despite voluminous theoretical and empirical literature, no consensus exists among HR scholars regarding the ways in which HRM might have an impact on the firms outcomes (Becker & Gerhart 1996). Moreover, no consensus exists with regard to the right set of contingencies that explain the relationship between HRM practices and performance (Ferris et al. 1998), nor is there general agreement as to the precise policies and practices that comprise any HRM system (Beckert & Gerhart 1996). More importantly, the ways 208

in which HRM system is constructed may be critical to a firms success and the role of HR processes in this construction is often overlooked (Purcell 1999; Monks & Schuster 2001). To make things worse, there is no consensus on what the term performance actually means. While some researchers (e.g. Huselid 1995) concentrate on financial performance, others (e.g. Arthur 1994; MacDuffie 1995), measure productivity and quality. The absence of a widely accepted measure of firm performance construct (in addition to a HRM practices construct) makes it difficult to compare findings across studies (Rogers & Wright 1998). Most of the previous studies focus on one or two of them; subsequently, they do not adopt a more integrated view. It is thus essential to identify profiles or configurations of the essential HR policies and practices that are tied to organisational success measured in terms of financial and performance objective yardsticks.

6. Research Hypotheses
The research hypotheses framed for this study include two main directional hypotheses; and two subhypotheses generated from the first main hypothesis. They are as follows: H1 There is a significant impact of SHRM implementation on organisational performance. H1/1 - There is a significant impact of HR devolvement on organisational performance. H1/2 - There is a significant impact of HR strategic involvement on organisational performance. H2 - There is a significant variation in the impact of SHRM on organisational performance in terms of firm size and firm age.

7. Methodology
A survey method was carried out using a standardised measuring instrument. To differentiate the SHRM implementation level in the targeted firms, a questionnaire was designed based on the definition of SHRM. Additionally, objective and subjective variables were used to measure the organisational performance. The study population was IT firms operating in Chennai city and included 75 HR managers with more than 15 years of experience in the HR field. The researcher has used appropriate data analysis tools.

8. Findings of the Study

The study has shown that there is a significant impact of SHRM implementation on organisational performance. SHRM places new demand on the HR function, but brings about proper alignment of HR goals with organisational goals, improves interpersonal relations among HR and line managers and reduces turnover. HR managers of large-sized firms strongly agree and HR mangers of medium-sized firms agree that implementation of SHRM improves team-based job designs, makes available flexible workforces, improves quality practices, enhances employee empowerment and incentive compensation and helps plan talent development which is required to implement the chosen competitive strategy and achieve operational goals. Thus the study has also shown that there is a significant impact of HR devolvement on organisational performance and that there is a significant impact of HR strategic involvement on organisational performance. On the question of whether there is a significant variation in the impact of SHRM on organisational performance in terms of firm size and firm age it is seen that age and size of firm influence not only what HR does, but its deliverables, or its contribution to the overall organisational outcomes.

effectively, then HR will make a substantial impact on firm performance. A greater use of HR practices is associated with higher levels of employee commitment and contribution and is in turn linked to higher levels of productivity and quality of services.

Bird, A. and Beecher, S. (1995) Links between Business Strategy and Human Resource Management Strategy in US-based Japanese Subsidiaries: an empirical investigation. Journal of International Business Studies (First Quarter), pp. 23- 46. Delery. J.E. and Doty. H.D. (1996) Modes of Theorising in Strategic Human Resource Management: Tests of Universalistic, Contingency, and Configurational Performance predictions. Academy of Management Journal. 39(4): 802-35. Doty D.H, Glick W.H. (1994) Typologies as unique form of theory building: toward improved understanding and modeling. Academy of Management Review, 19:2. pp. 30 -51. Dyer L. (1985) Strategic Human Resource Management and Planning. Rowland K. Ferris G. editors. Research in Personnel and Human Resource Management (Vol. 31), pp. 488- 511. Cappelli, P. Crocker-Hefter, A. (1996) Distinctive Human Resource are Firms Core Competencies. Organisational Dynamic. 24(3). Guest, D.E. (1997). Human Resource Management and Performance: A Review and Research Agenda, International Journal of Human Resource Management, Vol. 8, no. 3, pp. 263-276. Harris, L. Ogbonna, E. (2001) Strategic Human Resource Management, Market orientation, and Organisational Performance. Journal of business research,51, pp. 157-166. Huselid, M.A. Jackson, S.E. and Schuler, R.S. (1997), Technical and Strategic Human Resource Management Effectiveness as Determinants of Firm Performance, Academy of Management

9. Suggestions
Based on the study conducted, the researcher would like to put forth the following suggestion in order to increase the effectiveness of HR functioning. The HR Department has to play the following strategic roles - Business Partner working alongside business colleagues to align HR and business strategy and manage human resources strategically; Innovator developing integrated HR strategies; Change Agent the management of transformation and change; Implementer getting strategies into action.

10. Conclusion
The assumption underpinning the practice of HRM is that people are the organisations key resources and organisational performance largely depends on them. If, therefore, an appropriate range of HR policies and processes is developed and implemented 209

Journal, Vol. 40, pp. 171-88. Jing, W. Huang, T. (2005) Relationship between Strategic Human Resources Management and Firm Performance, International Journal of Manpower, pp. 434-449. Kamoche, K. (1994) A Critique and a Proposed Reformulation of SHRM. Human Resource Management, 4(4):29 - 43. Kochan, T.A. Dyer, L. (1993) Managing Transformational Change: the role of human resource professionals. International Journal of Human Resource Management, 4:569 - 90. Legge K. (1994) Managing Culture: Fact

or Fiction: Sisson, K, editor. Personnel Management: A Comprehensive Guide to Theory and Practice in Britain. Oxford: Blackwell, pp. 397 433. R. Noe, J. Hollenbeck, B. Gerhart, and P. Wright (2007) Human Resources Management: Gaining a Competitive Advantage, 5th.Ed. McGrew-Hill Co. New York. Osterman P. (1994) How common is workplace transformation and who adopts it? Industrial Labor Review, 47:173 - 88.


Analysis And Awareness of IPR in IndiaA Study Among the Graduates in Chennai City
Y.Alfred Benjamin, Research Scholar Dr. Y.Lokeswara Choudary, Research Supervisor
SRM B-School,SRM University, Chennai.

1. Introduction
Intellectual property (IP)is an abstract property which is legally entitled like any other property that refers to creations of mind such as musical literacy , artistic work , inventions, symbols, names ,images , and designs used in commerce , including copyright , trade marks , patents & related rights, industrial designs; geographical indications, layout designs of Integrated Circuits, and protection of Undisclosed Information. Intellectual property surrounds us in nearly everything we do. At home, at school, at rest, at play no matter what we do the fruit of human creativity and invention surrounds us. The law governing the rights for owning this Intellectual Property has taken it vital position in the recent years across the globe. This right empowers the IP owner to have certain exclusive rights in the form of limited monopolistic rights for his/her labor and efforts to these creative works which is covered by it. Though the existence of IPRs is very old it gives the social recognition to its holder with further addition of economic benefits to its holders. 2. IPR Symbol of Pride IPR has taken a status symbol of a county at this globalization phase as it becomes a strategic response for the globalization and liberalization of the economy growth of a country. It also signifies the scientific, technical and industrial development of a nation. IPR drives the industrial change and attracts foreign investment in a nation. Corporate takes IPR as the power that keeps the business moving forward. IPR as tool to maintain their competitive advantage; for significant collaborations; to streamline processes; drive new revenue streams; maximize their profitable investment, reduce risk; drive innovation effectively and efficientlyetc 211

3. IPR Outlook in India

The developed countries have any how embraced the IPR strategy long before and have made their systems align to this but the developing and the underdeveloped countries sees this as a mammoth task and unnecessary. All the developing countries except few always have a dilemma in their outlook when it comes to IPR. Due to their own state policies, lack of knowledge, lack of systems and procedures, unwillingness for change are some of the obstacles stand in the way of the IPR acceptance and implementation. According to The Economic Times Reports Manufacturing cos lead in filing patents. However Among the top 100 tech companies in India, almost 89 have not filed any patent applications as yet. During FY07 and FY08, Indias top two exporters of software services TSC and Infosys Technologies filed 14 and 22 patents, respectively. Though the stats has a raising curve yet when we compare in the global scenario it shows that Indias IPR regime had to go a long way which is not easy.

4. IPR awareness study: Methodology

This study aims to test the knowledge on IPR, its importance and the willingness to adhere and accept IPR among the college students. 7 notable colleges in the Chennai city were picked to answer a questionnaire which was prepared as a study tool for this study. The following briefings show the response to each question in the questionnaire. Q1: When did you come across the term Patent? Since most of the college students participated in the survey are from science background I had a curiosity to know when they came across the term patent in their life. The responses were little bit disappointing. 11.1%

of the students have not come across the term patent so far; 11.1% in the post graduation only; 37.04% in under graduation and 40.74% in their school level itself. As most of the students are in their PG studies this answer is little unexpected as they are the future of a country.

Q2: Correct identification of definition of Patent:

Definition for patent was given in this question and students were asked to identify this against patent, copyright, license and Trademark. 81.48% correctly marked it as patent; 7.41% marked it as copyright; 7.41% marked it as Trademark and 3.7% ticked it as License.

Q3: IPR is abbreviated as Intellectual Property Rights?

To test the knowledge on IPR we first started with the abbreviation related question. Unfortunately many of them i.e 55.56% answered wrongly and only 44% answered correctly. It is a pathetic state as the students participated were mostly in their final year.


Q4: Your knowledge on IPR

This question was framed to know the knowledge on IPR among each individual. As the IPR takes a centre stage in this global world it is good to see our future generation equipped with all its knowledge. There this response shows the work that India has to concentrate on its grass root level if it has to sustain in the future innovative market. Of course nobody can claim that they 100% knowledge in IPR and this survey is not different to that; only 7.41% indicated their knowledge on IPR is 75 to 80%; 29.63% of students responded that their knowledge is between 50 to 60%; 37.04% showed that they had 20 to 40% of knowledge in IPR and 25.93% of students reveal that they dont have any knowledge on IPR. This answer clearly shows that it is high time to act upon our IPR strategy for a better future. Whatever we can do to improve this knowledge to our future base we need to do it immediately. This is a big WAKE UP call for India.

Q5: Suggestions for improving IPR awareness:

We put a question to ask students to suggest on this graving problem of lack of awareness on IPR. The students responded brilliantly like 29.63% felt that this could be suggested as an optional subject in college; 62.96% responded that frequent seminars from corporate like Thomson Reuters and other could be great and 7.41% said other if any. Yes, this is brilliant.


Q6: IPR awareness is important in India:

Finally we tossed the question to read the neediness of the students. 96.3% of students positively revealed that IPR awareness is important in India and 3.70% couldnt answer this but none said that this not important in India. Little encouraging factor right!!!

5. Conclusion
The future growth of the nations is certainly going to be based on innovation and creativity. As this becomes the base of the competition the countries which have adapted, designed, embraced and implemented will certainly have an edge over other countries. India has a long way to go but this not too late. We need to rise up to the occasion and act in unison to make ourselves competent in the global market. One of the most important and basic thing required is the preparation of our future generation. This study reveals rather some of the shocking things for which we need to take immediate action. This is an wake up call for India to gear his future with all that thing required. In this action all the educational institutions, universities, colleges, schools and it is should come forward to take this IPR awareness to the students as they are the future of the nation. Let us make India proud and make her name glorious by joining hands for this cause.


Will Transactional Form of Interdependence Improve Group Effectiveness?

Dr. V. L. Narasimham
Assistant Professor (Selection Grade), University of Petroleum & Energy Studies P.O. Bidholi, via Prem Nagar, Dehradun, Uttarakhand State

1. Introduction
Group categories are not very new in the business and organizational management point of view, research literature has identified self-directed groups, parallel learning groups, cross-functional groups, executive groups, and group-based organizations while mapping respective effectiveness (Cohen, 1997 and literature review there in). As Cohen admits in his research, the terms, group and team may also be understood interchangeably in the following article. Synchronizing diversified personal efforts of the group members, aligning individuals roles to the group objectives, and routine conformity of all natural members to the group decision are some of the determinants that govern the group effectiveness within a given business environment. For example, groups that recommend improvements with the existing system necessarily adapt to a cautious approach among the group members, and in many circumstances, group effectiveness will be politically truthful than absolutely productive. Further, decisions on suggestive improvements will be either delayed or become obsolete over a period of time. On the other hand, built-in independency will demonstrate how conceptual group effectiveness is revealed by a group of members. Incidents such as group rewarding will not always be an irrefutable experience unless qualified competent groups demonstrate and fare poorer in relative circumstances. Different theorists (adapted from Jex, 2002, including McGrath, 1964, Gladstein 1994, Hackman 1987, Campion et al., 1993 and others,) have promulgated group effectiveness with the support of flow-chart models, but for the lack of rational determinants, group effectiveness has not empirically and competitively mapped in different management situations thoroughly. It is also equally important to note that at most of the times, mapping of selected determinants need not necessarily be extended on to a different organization or business situation on the same lines. Hence, conceptual models will largely satisfy at 215

particular organizational level than on to a series of organizations over a greater geographical space. Group effectiveness at educational institutes can be at project level (research projects in the disciplines of genetics, biotechnology, material sciences or polymers) where the group productivity can be empirically demonstrated through quantifiable patents, research publications, new arrival or renewal of research projects. Parallel groups in academic institutes are possible between industry and management education through consultancy and industrial engineering & management development programs. Educational work groups are generally formed through delegation in order to evaluate cumulative outcome than in exclusive terms of productivity and efficiency. Intellectual efficacy is quite uncertain with academic work groups for the reasons include, limited returns in terms of monetary gains to the work groups, relatively under paid emoluments, low social recognition for intellectual professions at selective places, constraints in renewing same work groups. Secondly, the work group efficacy varies with respect to a particular discipline and on how efficiently the results are derived through a particular work group. On other side of academic institutes, management student work teams do form based on convenience than on the conviction, strengths, planning or to resolve a business challenge (eg., competing a business plans, games, or case study deliberations). The returns for such successful outcomes include, one-time monetary awards, and in selected cases, possibility for getting engaged with the sponsor agents over summer internships and employment. In the recent times, management education periodically reviewed and assessed to the modern demands with the help selected management groups or faculty core teams to strengthen course plans, evaluation processes, on the conduction of faculty and management development programs, industry interactions or in initiating international

conferences. These groups can be efficient and functional when group members are aware and appear sound with the intricacies of the management education. However may be the intellectual vacuity, or in contrast, intellectual cartelization, passive endorsement to the mediocre improvements, weak appraisals, personally influenced evaluation schema, and other forms of irrational inputs will result in superficial and politically truthful group effectiveness. When effectiveness is compared at project group level of IT industries, the empirical research highlights annual turnovers, and thereby satisfies the effectiveness and productivity in terms of profits, earned. At manufacturing enterprises level, the productivity may be understood with the help of orders executed against orders received with limited rejections by the parallel groups (raw material procurement, segregating, preparing, assembling, finishing, polishing or packing for exports) responsible for part of the whole organization activity. Management group effectiveness at any industry level is governed through the brand value created by that group through organic and/ or inorganic growth, including, acquisitions or mergers, and joint ventures developed as well as attracted at specific domain level. In spite of relevant success through group networks and from team building exercises (refer to literature survey of Cohen, 1997, and Pescosolido, 2003), the competency of a group under consideration can be clearer when the effectiveness is determined using quantifiable metrics like, productivity, yield, or perceptible output than with how a meticulous planning was done to derive effectiveness (eg., failures of Fortis group acquisition of Singaporean chain of hospitals, RILs bid for North American petrochemical industries or Bharti groups business ventures with MTN, Africa). When agriculture, poultry, tourism or service industries are considered, group efficiency is clear as well as obscure depending upon geographies and groups rationale. For example, the outcomes of protectionist groups against introduction of Bt-brinjal, influencing the government to a minimum supporting price for cotton, sugarcane or wheat, voluntary participation in culling against viral spread through poultry and animals, and effectiveness of parallel groups while campaigning against H1N1/ swineflu, polio eradication, tuberculosis, AIDS or 216

other awareness rising programs may sometimes will be wrongly attributed to the government nodal agencies (unit administrations but rarely in groups) than to the participants involved. In the similar lines, propagating for incredible India campaign has been effective among the overseas tourists where the group that is behind it is hardly noticed. Project groups efficiency may be mapped through the particular activity related stories of 108 emergency teams, sanitary teams of a different municipalities, recue & safety teams, courier/ postal services, logistics supporting teams at ports, inland container depots, railway, road and other mode of transportations, hotel, banking and miscellaneous financial institutions, however, the effectiveness is largely confined to a smaller team, a gang, or a group. At the same time, successful outcomes are shared between groups and its chef, or a manager of an organization. Hence, outcomes are short living, rather mild, and go unnoticed except for using a theoretical term, effective.

2. Group effectiveness on quality outcomes

Group thinking theory has received mixed response (see Turner et al., 1992 and references there in) for the outcomes in terms of creativity, quality, feasibility, significance and competence solutions for the reasons like, i) a group cannot be in a position and initiate cohesively on a creative and quality product unless there has been a primer, manual, guidelines or directional supremacy of an individual who might head such group, ii) possible disruption in group cohesion either by deletion or addition of a member, and henceforth, creativity and quality cannot be directly attributed to the available group at the time of success/ failure evaluation, iii) any form informal communication among the groups cannot be transferred into a measurable outcome of group performance/effectiveness and iv) lack of understanding on seasonal changes, personal ambitions, attitudinal cycles, domestic issues and other unique qualities of individuals in a group that fail to demonstrate group cohesion. When successful group cohesion at academic institutes is revealed through patents, research projects, or research publications, it is imperative to believe that group heads, senior academicians, principal investigators, or research directors are pivotal in bringing in cohesion, managing a particular research group, training the

individuals, assigning research responsibilities, and effective monitoring members performance. Research progress based on Gantt Charts, accommodating interdisciplinary partnerships, attending to project short comings, and other miscellaneous research management issues will also be the part of group effectiveness. Successful executing of research project is largely the onus of the group head than group members with the help of low-profile young group members. However may be the diversification at the individual efficiency/ experience and contribution to a research project, the success (read as patent, research article, or discoveries) of a group and its effectiveness (read as credit) will usually be distributed among the members that remain at the time of final outcome (read as authorship/ patent holders). In such circumstances, group effectiveness cannot always be truthful to the group cohesion that is exhibited through research articles. But many successful outcomes of such research projects will usually be shared among the group members than negative outcomes (media reports on Chandrayan I, PSLV launches, commissioning of power plants, or democratic elections). Similarly, the quality of manufactured products will depend upon existing standards, their interpretation, tolerance set by the management, training extended to the employees (management point of view), automation, consistency of the machinery, their maintenance (manufacturing related), nurtured skills, attrition rate, compensation and other secondary benefits (employee focused) govern group performance efficiency at any particular interval of the manufacturing process. Hence, group efficiency can be a dynamic situation where, product quality is largely based on compliance to the rule book of manufacturing than cumulating effect of individuals efficiency, alone. However, when each level of manufacturing process effectively managed by a group, when operational process does not demand personal concerns and emotion based alterations, long periods of observations on a particular group may yield outcomes as poor, satisfactory or highly satisfactory. Hence, the group effectiveness can be determined with respect to the pre programmed bench marks for a given situation, geographical spaces, product variations, and objectivity of such efficiency determination. 217

Group effectiveness at service industry depends upon time based task execution where, the efficiency of the groups/teams will determine whole efficiency of a particular service industry (courier, postal, health, environmental mitigation due to coastal oil slick, detective and investigative agencies, customs clearance, and other related industries). Since the nature of the tasks do vary at a particular interval of time, the efficiency will directly depend upon the complexity of the task in review. Though many industries have rationalized the complexity, there are certain bench marks with respect to time taking into consideration a general perceivable efficiency of the individuals associated with such tasks. As more and more automation is introduced into service industries, group efficiency can be better understood through the perceivable customer satisfaction levels over a period of time. At places, the group efficiency is either positively or negatively attached to a particular brand (Saravana Bhavan, DHL/GATI Couriers, Subhiksha and others). But customer satisfaction can be a valid metric to evaluate group efficiency when there are more than one service industry is available, when the same customer has experience with both/ or group of the industries, and when customers opinion is equally rational.

3. Directives based Interdependence

Campions synthesis model of Group effectiveness (adapted from Jex, 2002) identifies certain themes like job design, interdependence, composition, context, and process and presumed to be considered as effectiveness criteria while performing productivity judgment. Though there are different models (McGrath, 1964, Gladstein 1994, Hackman 1987, and others) who have given similar such themes for assessing group effectiveness, interdependence is found to be well connected to human nature and to the task complexity. Individuals proactive nature, how extent a member is motivated to the demands of task, personal culture/ belief/ norms/ traditions, trust, and self-esteem will certainly elevate individuals initiative to perform in interdependence work environment. Though returns in terms of monetary gains motivates in the initial stages of a particular interdependency task, a point may disembark where, members will seek respect, honour, be expecting credit sharing, will turn to opportunistic, campaign for impartiality and other such actions that

may alter expected outcomes in terms of effectiveness. Interdependence will also have a bearing with the attitude of individuals towards observational or social learning (Miller and Dollard 1941, Bandura 1969, 1971, 1977, all references adapted from Petri, 1979). Social learning emphasizes vicarious, symbolic and self-regulatory process, and social learning process channelizes individuals ability in multiples and allows an individual to build patterns of behavior without having to resort to trial and error. This quality sometimes nullifies shortcomings through directives based learning and subsequent instructions based interdependence. Directives based learning compartmentalizes the abilities mechanically, and effectiveness of a group will become largely rudimentary. Longer periods of instructional based learning will result into learned helplessness as it was observed in mariners who happen to stay on sea for good length of time, and in those who have not explored opportunities to excel in creative ways of learning. Greater the opportunity for creativeness, the group effectiveness will fall short of productivity and expected outcomes. When instructional or directives based learning is applied in academic environments, group effectiveness, will result certain kinds of outcome, that are both effective and not so effective in fixed length of time (eg., academic calendar that highlights admission to convocation). On the other hand, non-directive based interdependence will result improved self-regulatory conditions for the group (eg., successful product appeals done by advertising agencies, engineering design/architectural professionals, journalistic abilities, cinematography and others). Similarly, in the manufacturing industry, product development, innovation, or introducing multi-purpose tools will take different periods of time depending upon involvement of the individuals in the group. However, when an appreciable outcome/ product/ tool or solutions is/are resulted, the brand will be recognized and recalled first, than the group and its effectiveness in the minds of the customer. Direction based interdependence will be helpful in those environments where, compulsions on the group members in the form of leaned helpless is prevailing. As and when group members initiate learning through

observations, and nurture rational thinking, there can be adverse effect for the directive-based learning and with the anticipated effectiveness. At times, it may totally disintegrate and results in as failed cohesion. In place of such transactional interdependence, introduction of more complexities into the challenges may be thought out. Tasks improvisation, rise in the existing/ anticipated outcomes, heightened expectations and mounting satisfactory levels, sophistication with ease, and multi dimensional applications with sensible utility are some of the recent challenges in which directional interdependence will be of some help while differentiating superior challenges from a routine task.

4. Conclusions
Group effectiveness will be more apparent in certain situations where as, the same will be difficult to measure except through qualitative terms. (eg., satisfactory). Quality outcome may be the term that may be perceived as utility period versus the value in particular context, but group effectiveness is the consistent but distinguishable nature for the group that abides to the task completion or till the outcome achieved through an activity over a period time. Transactional and directive based interdependence will lead to management cartelization of an activity leading to learned helplessness unless tasks improvisations happen from time to time.

5. References
1. Cohen, S. G. (1993) What makes teams work? Group effectiveness research from the shop floor to the executive suit. Journal of Management, v. 23, No. 3, pp. 239-290 2. Jex, S. M. (2002) Organisational Psychology A Scientist-Practitioner Approach pp. 321-551 John Wiley & Sons, Inc ISBN 9812-53-230-7 3. Pescosolido, A. T. (2003) Group efficacy and group effectiveness: The effects of group efficacy over time on group performance and development. Journal of Small Groups Research v. 34, No.1, pp. 20-42. 4. Petri, H. L. (1979) Motivation: Theory and research pp. 200-202, ISBN No. 0-534-00936-0 5. Turner et al., (1992) Threat, Cohesion, and Group Effectiveness: Testing a Social Identity Maintenance Perspective on Groupthink. Journal of Personality and Social Psychology, v. 63, No. 5 pp. 781-796.


An Overview of Support Services to Women Entrepreneurs

Lecturer, Department of Corporate Secretaryship M.O.P. Vaishnav college for women

1. Introduction
It has been well renowned all over the world that womens empowerment is an excellent strategy for their overall economic and social development. The GEM 2000 report showed that among the major industralised G-7 countries, there was a very strong relationship between the level of entrepreneurial activity and annual economic growth.1 There is a positive linkage between entrepreneurship and economic prosperity. The field of self-employment and entrepreneurship has become a viable career option in the recent times. Endowed with the famous female intuition that helps women to make the right choices even in situations where experience and logic fail, women have innate flair for entrepreneurship. Cultivating the skill for entrepreneurship is an area, which promises encouraging results in this connection. By motivating, training and assisting women towards forming and running independent business ventures, it is possible to tackle many of the gender issues. Entrepreneurship is the organisation of an economic activity, with the goal of reaping the benefits and profits that accrue from it assuming all the risk that arise there from. According to Evans Entrepreneurs are person who initiate, organize, manage and control the affairs of a business unit that combines the factors of production to supply goods and services whether the business pertains to agriculture, industry, trade or profession.2 Women have owned and operated businesses for decades, but they were rarely recognized or given credit for their efforts. Often women entrepreneurs were invisible as they worked side by side with their husbands, and many only stepped into leadership positions when their husbands died. But a variety of factors have combined in recent years to contribute to the visibility and numbers of women who start their own businesses. As more women joined the work force, they gained the 219

professional and managerial skills and experience they needed as entrepreneurs. In addition, many women felt they were discriminated against in large companies, which provided them with an incentive to be their own bosses. Some women also have found entrepreneurship to be an ideal way to juggle the competing demands of career and family, and some single mothers have started businesses as a way out of poverty. The greatest deterrent to women entrepreneurs is that they are women. Male chauvinism still exists in oriental countries including India. Women are away from high-flying economic activities, which are supposedly regarded as the preserve of men. Even the financial institutions are skeptical of the entrepreneurial abilities of women to provide funds. The social setting is still not conducive as the men folk are less understanding and less co-operative to women entrepreneurs. Women in non-urban areas have to suffer still further. They have to face not only resistance from men but also of elderly women who are ingrained with this attitude of inequality. Although men and women may be motivated by different goals and expectations women entrepreneurs are just as competent as and better than their male counterparts. Women are more likely than men to admit when they do not know something and ask for help. Women are natural net workers and relationship builders, forging powerful bonds and nurturing relationships with clients and employees alike. They are also more inclined to seek out mentors and develop supportive teams. In business this translates into establishing rapport with clients and providing great customer service. This is the reason why many women tend to launch businesses that are client based or service-oriented. Women typically tend to give away too much and charge too little. Sometimes, however, a lack of training and prior experience can render women entrepreneurs susceptible to a number of pitfalls.

More women are getting enrolled in the Universities and technical institutions and their number is growing. There is evidence of a direct relationship between the growth of womens education and their numbers in the non-agricultural professions. The citadels of academic excellence are no longer the prerogatives of men, in fact women are gradually willing to accept challenges and assume responsibilities in various fields economic, social and political. Recent studies have revealed that several women are willing to become entrepreneurs due to various reasons. These reasons can be broadly classified into two: Pull factors and Push factors. Pull factors imply the factors, which encourage women to have an independent occupation. Under the influence of these factors the women entrepreneurs choose a profession as a challenge and as an adventure with an urge to do something new. Push factors are those which compel women to take up business enterprises to get over financial difficulties and responsibility are thrust on them due to unfortunate family circumstances .3 The latter category forms only a negligible percentage of the total women entrepreneurs in this country. Women start businesses for essentially diverse reasons than their male counterparts. Men start businesses mainly for development opportunities and profit potential, women most often found businesses in order to meet personal goals, such as gaining feelings of achievement and success. In many instances, women consider financial success as an external confirmation of their ability rather than as a primary goal or motivation to start a business, although millions of women entrepreneurs will grant that financial profitability is important in its own right. Their task has been full of challenges and yet they have steered clear of prejudice, oppositions and constraints and have established themselves as successful entrepreneurs. In the 1970s and 1980s women entrepreneurs were confined to kitchen-enterprises the three Ps: pickle, powder (spices) and papad or soft traditionally feminine enterprises, such as garments, beauty care, etc. However, from the 1990s and onwards, with increased levels of education, more women have opted for 220

entrepreneurial careers in plastics, electronics and leather related industries. A majority of women entrepreneurs in India are concentrated in the light manufacturing sector (leather, garments, engineering goods, beauty products). The second most common category is that of services (interior designing, management and placement, consultancy, nursery school). This is followed by the retail trade sector including boutiques, home furnishing, automobile dealing, etc. However, overall women entrepreneurs settle towards ventures with low investment and lesser technological barriers. Women business owners still face greater difficulties in gaining access to commercial credit and bidding on government contracts than do their male colleagues, and pockets of resistance to women entrepreneurs remain strong in some industries and geographic regions.4 It is estimated that women entrepreneurs presently comprise about 10% of the total number of entrepreneurs in India, with the percentage growing every year. If the prevailing trends continue, it is likely that in another five years, women will comprise 20% of the entrepreneurial force.5 With corporate eager to associate and work with women-owned businesses, and a host of banks and non-governmental organizations keen to help them get going, there has rarely been a better time for women with zeal and creativity to start their own business. The government and private organizations have entered the scene on a large scale to encourage women to be selfemployed and succeed by offering training programmes, consultancy services and guidance. . In order to harness their potential and for their continued growth and development, it is necessary to formulate appropriate strategies for stimulating, supporting and sustaining their efforts in this direction. Such a strategy needs to be in congruence with field realities, and should especially take cognizance of the problems women entrepreneurs face within the current system. An entrepreneur stands at the centre of economic activity and whose role as the organizer of human and material resources is most important and pivotal in ensuring the progress of economic development. The government of India has recognized the role of entrepreneurship in solving the problems of urban poverty and unemployment and has formulated a number of employment programmes. Any Women or group of women which innovates, imitates

or adapts an economic activity may be called woman entrepreneur. Several measures are taken by Institutions, Agencies and Governments to encourage and facilitate greater involvement of women at all levels in entrepreneurship. Some of the measures undertaken are listed below. 1. Banks and financial institutions are lending more freely to women entrepreneurs today. In public financial institutions and banks, special cells are opened for providing easy finance to women entrepreneurs. The nationalized banks and state financial corporations advance loans to women entrepreneurs on preferential basis. State Industrial development Corporations and District Industries Centers provide loans, subsidies and grants to small scale and women entrepreneurs. State level agencies assist women entrepreneurs in preparing project reports, buying machinery and building, training and hiring staff. NABARD has been supporting in setting up of Women Development Cells (WDCs) in Regional Rural Banks and Cooperative Banks. NABARD also conducts a number of training courses for women entrepreneurs. The various financial institutions providing finance for women entrepreneurs 6 are 2. Industrial Development Bank of India

(IDBI) Industrial Finance Corporation of India (IFCI) Small Industries Development Bank of India (SIDBI) National Small Industries Corporation (NSIC) State Small Industries Corporation (SSIC) Commercial Banks Co operative Banks Regional Rural Banks (RRB) Gramin Banks State Financial Corporation (SFC) State Industrial Development Corporation (SIDC) 3. In India a large number of training and promotional activities are being organized to develop entrepreneurial skills among women. Some of the programmes are exclusively for the women and the others take women along with their male participants. As self-employment breed entrepreneurship, more and more self employment programmes are undertaken and proper training are carried to bathe rural and urban youths including women. Specialized institutions, which are responsible for training and entrepreneurship development- mainly among small and medium enterprises (SMEs) 7, are Place Hyderabad Guwahati New Delhi Nilokheri Mumbai Jalandhar 221 Activities Training, research and consultancy services Training, research and consultancy services Coordinating and overseeing activities of various institutes /agencies engaged in entrepreneurship development Conducts EDP course Render services to the instrumentation industry Aims at rapid growth of the hand tool sector

Name of Institute National Institute of Small Industry Extension and Training (NISIET) Indian Institute of Entrepreneurship National Institute of Entrepreneurship and Small Business Development (NIESBUD) Integrated Training Centre (Industries) Institute for Design of Electrical Measuring Instruments (IDEMI) Central Institute of Hand Tools

Hand Tool Design Development and Training Centre Central Tool Room Central Tool Room and Training Centre Central Institute of Tool Design (CITD) Product-cum-Process Development Centre for Sports Goods Product-cum-Process Development Centre for Essential Oils Product-cum-Process Development Centre

Nagaur Ludhiana Kolkata Hyderabad Meerut Kannauj

Assistance for improvement in productivity, betterment in quality, high value addition Provides services in the area of consultancy, tool design and manufacture and technical training Training, design and manufacture of complicated precision tools for the telecom industry and other common facility services Training, CAD/CAM centre to train postgraduate trainees, automatic process control unit, and so on Training, process and product development of sports goods, R & D Modernise and upgrade technology status for the essential oils and perfumery industry Provide better technology to small-scale foundry and forging units, process and product development, and provision of design for melting equipment, testing facilities Training, technical and consultancy services Development and adoption of new technologies and products Supply of machinery, marketing assistance, training


Electronic Service and Training Centre Centre for the improvement of Glass industry National Small Industries Corporation

Ramnagar Firozabad New Delhi

Some other organizations engaged in training and Development of SME Entrepreneurs are: Indo-German Tool Room at Ahmedabad, Aurangabad and Indore Indo-Danish Tool Room at Jamshedpur Hand Tool Design , Development and Training Centre, Nagore, Rajasthan Central Machine Tool Institute at Bangalore Central Institute of Plastic s Engineering and Tools at Chennai & Ahmedabad National Institute of Foundry and Forge Technology at Ranchi DICs at District level Small Industries Development Corporations set up by various State Governments. 222

1. Both the Central Government and various State Governments are taking increased interest in promoting the growth of entrepreneurship. Projects such as Rashtriya Mahila Kosh (March 1993) and Indira Mahila Yojana (August 1995) are specially designed for empowerment of the economically backward women through micro-credit in order to promote self-employment. Trade Related Entrepreneurship Assistance and Development of Women (TREAD) scheme was launched in 1998. The scheme envisages development of micro/tiny women enterprises in the country both in the urban and rural areas. The main objective of the scheme is to empower women through development of their entrepreneurial skills by eliminating constraints faced by them in their sphere of trade. A revised scheme of TREAD was launched in May, 2004. The Government of India is implementing various programmes for promotion of entrepreneurship in general and particularly among women.

Scheme Self Employment Scheme for the Registered Unemployed

Details of the Scheme Provides subsidy to a ceiling of 25% of the loan sanctioned by banks. This scheme is in operation in West Bengal. Provides assistance towards margin money for seeking loans from banks and is being operated in Madhya Pradesh. Provides assistance for promoting small self employment ventures & operated in Maharashtra.

Self Employment Scheme

Sanjay Gandhi Swavalamba Yojana

Societies for Training and Employment Promotions (STEP) Society for Training Promotion and Training and Employment These schemes are operated in AP & other States. These Schemes are operated by different departments & ministries of Government of India in all the states. The thrust of all these programmes is mainly in 1.Employment and Income Generation Services 2.Education and Training Services 3.Support Services 4.General Awareness Services 5.Legal Support Services.

Development of Women & Children in Rural areas Rural Landless Employment Programme (RLEGP) Graduate

National Rural Employment Programme (NREP) Integrated Rural Development Programme (IRDP) Training of Rural Youth in Self Employment (TRYSEM)

Prime Ministers Rojgar Yojaja (PMRY)

Loans upto Rs. One Lakh is provided without any security. 10% would be women WDCS identify women entrepreneurs, prepareviable projects, facilitate the availability of credit through banks. Access to credit without collateral and helping women in local sales (Tamil Nadu). Helps in setting up of groups in villages and urban slums operating in 200 blocks in the country. 223

Women Development Corporation Scheme (WDCS)

Working Womens Forum

Indira Mahila Yojana

Indira Mahila Kendra at Anganwadi level Rashtriya Mahila Kosh (National Credit Fund) Mahila Samithi Yojana Khadi & Village Industries Commission (KVIC)

Economic Empowerment by ensuring direct access mobilisation & their actual participation in the development process. Extends credit to poor women (informal credit delivery) Informal Banking Provides training for women & markets products in handloom and weaving, handicrafts, products of wool, marbles, Stone, Semi Precious stones and Metal. Provide Rs. 2 lakhs as term loans & upto Rs. 1 lakh as working capital. Provides seed capital assistance for Voluntary Organisation working for the upliftment of the status of women. Loans upto Rs. 25, 000. No guarantee nor margin money

Indira Priyadarshini Yojana IDBIs Mahila Udyam Nidhi Mahila Vikas Nidhi SBIs Street Shakti Scheme State Financial Entrepreneurs Scheme for Women

Loans provided for acquiring fixed assets such as loans, building, plant & machinery. 3. Women entrepreneurs have to face severe marketing problems. Womens development corporations are holding frequent exhibitions and setting up marketing outlets to provide space for the display of products made by women. Some NGOs have marketing vans to make it even easier. 4. The development of transport and communication throughout the country have helped women entrepreneurs to market their products easily. Infrastructure to set up industries is provided in the form of industrial plots and sheds by state run agencies. Apart from allotting units to women entrepreneurs on priority basis, it is desirable to provide amenities particularly required by them in industrial areas. 5. Individuals are being encouraged to form new businesses and are being provided various subsidies like technical subsidy, know-how subsidy, power subsidy, generator subsidy and concessions like Relief, sales tax exemption, Octroi duty exemption, Electricity duty exemption, stamp duty exemption. 224

1. Government has stressed on women education and special programmes have been introduced. Skill development is being done in womens polytechnics and industrial training institutes. Under various schemes like the World Bank sponsored programme to upgrade polytechnics, separate institutes have been set up for women. At present, emphasis in women polytechnics is laid on traditional skills like embroidery, interior decoration, tailoring, knitting, etc. 2. To organize women in to self Help Groups and equip them with services of awareness generation and income generation through training, employment, credit and marketing linkages to small entrepreneurs etc., programmes like Indira Mahila Yojana (IMY) now recast as Integrated Womens Empowerment Projects (IWEP) and Rural Womens Empowerment and Development (RWDEP) have been launched. Of the total Ninth Plan target of 50000 more than 37000 groups were set up benefiting about 8 lakh women.

6. Many information bureaus have started to help women entrepreneurs in getting the required information. 7. More research programmes are conducted in recent days to analyze and solve the problems of women entrepreneurs.

2. Institutions Providing Assistance to Small / Tiny Entrepreneurs in Tamil Nadu

The following institutions have been established by the Government of Tamil Nadu to extend the assistance to the small /tiny entrepreneurs. Tamil Nadu Small Industries Corporation Ltd. (TANSI) Tamil Nadu Small Industries Development Corporation Ltd. (TANSIDCO) State Industries Promotion Corporation of Tamil Nadu (sidcot) Tamil Nadu Industrial Corporation Ltd. (tiic) Investment

professions like trade, industry and engineering. Women today are more willing to take up activities that were once considered the preserve of men, and have proved that they are second to no one with respect to contribution to the growth of the economy. Women entrepreneurship must be molded properly with entrepreneurial traits and skills to meet the changes in trends, challenges global markets and also be competent enough to sustain and strive for excellence in the entrepreneurial arena. Their role is also being recognized and steps are being taken to promote women entrepreneurship.

3. References
1. (GEM) 2005 Report Entrepreneurship. on Women and

2. Evans G.H. The Entrepreneurs and Economic Theory-American Economic Review. 3. Dr. Mohiueddin Asghaine Entrepreneurship among women Retrospects and Prospects, SEDME, Hyderabad, March 1983, p.1. 4. Sumangala Naik, The need for developing Women Entrepreneurs, Yojana, July 2003, Pp.36-39. 5. Bindu Shridhar, Women as entrepreneurs, The Hindu, Metro Plus, December 14, 2005. 6. Dr. R. Chinnadurai,Women Entrepreneurship and service sector, Kurukshetra, November 2005, Pp.19-24. 7. K. Kamalakannan, The role of Financial Institutions in Development of Women Entrepreneurs, Kurukshetra, April 2005, Pp.10-14.

Tamil Nadu Industrial Development Corporation Ltd. (tidco) Tamil Nadu Technology Mission and

tamil nadu corporation of Development of women ltd. Is exclusively established for implementing the schemes of the government relating to promotion of women entrepreneurs. The role of Women entrepreneur in economic development is inevitable. Women are also willing to take up business and contribute to the Nations growth. Women enter not only in selected professions but also in


Competencies Required by Entrepreneurs in Emerging Economies: Some Research Propositions

AIS St Helens, P.O.Box. 2995, Auckland, New Zealand

Manisha Karia

1. Introduction
Entrepreneurs play a critical role and are considered the prime determinant for business survival and success is the entrepreneur himself/herself (van Praag, 2005). To play this role effectively, entrepreneurs require skills and abilities to not only create new ventures but also for further growth. Man, Lau and Chan (2002) refer to these competencies as the total ability of the entrepreneur to perform this role successfully. According to these authors, entrepreneurial competence encompass the ability to recognise opportunities, developing products and /or services to meet the needs discovered, assuming risk in order to fulfil the identified goals, and employing strategic management skills. Several studies have examined the entrepreneurial competencies (for example, Baum, 1994; Bird, 1995; Baron & Markman, 2003; Chandler & Jansen, 1992; Herron and Robinson, 1993; Man et al. 2002). These studies have found positive relationship between existence of competencies and venture performance. However, it is found that most of the literature on entrepreneurial competencies, and other entrepreneurship areas, are focused on developed countries (Bruton, Ahlstrom & Obloj, 2008). Recognising the importance of the entrepreneurship role in emerging economies, some researchers have shown interest in the recent past (e.g., Ahmad, Ramayah, Wilson, Kummerow, 2010). The economic landscape of emerging economies is different from developed countries. Emerging economies are the low income countries that are experiencing rapid growth and industrialization. (Hoskisson, Eden, Lau, & Wright, 2000). Significant changes in political and market reforms encouraging liberalization, stabilization, and the encouragement of private enterprise have strengthened the market mechanism in these countries putting them on a path of rapid growth and development. 226

Therefore, Bruton et al. (2008) highlight the importance of understanding entrepreneurship in these economies. There is an urgent need to examining the competencies of entrepreneurs operating in emerging markets as the emerging economies have different environment and challenges compared to those in developed countries, and also the emerging markets themselves have diverse sub-groups. Zahra (2007) also recommends adaptation of entrepreneurship theories developed in developed countries to emerging economies. For these reasons, we believe our study in examining the competencies of entrepreneurs in emerging economy fills an important gap. The main purpose of the study is to investigate entrepreneurial competencies necessary in emerging economies. The paper is structured as follows. First, the term competencies is examined in the context of entrepreneurs. Second, a conceptual model is proposed based on review of extent literature. Third, a set of propositions on the entrepreneurial competencies and a conceptual model are presented. Finally the implications of this research are mentioned and concluded.

2. Definitional Issues of Competencies

A review of literature shows that competency has been defined from different perspectives for the purpose of serving the researchers own agendas (Burgoyne, 1993; Strebler, Robinson, & Heron, 1997; Hoffmann, 1999). In the context of entrepreneurship, Bird (1995, p.51) defines entrepreneurial competencies as underlying characteristics such as generic specific knowledge, motives, traits, self-images, social roles, and skills which result in venture birth, survival, and/or growth. According to Strebler et al. (1997) the definition of competencies has two aspects: demonstrable behaviour for effective performance in a job and minimum standard of competent performance. Hoffmann (1999)

suggests that entrepreneurial competencies can be examined from three approaches: inputs, behaviouraloutputs, and standard-outputs. This study considers the behavioural concept of competency which is closely linked to entrepreneurial performance (Herron & Robinson, 1993; Man Lau & Snape, 2008) . As mentioned earlier, Fastr & Van Gils (2007) highlighted the important role of an entrepreneur in venture performance. However, this role is multi-fold such as: being a manager (to efficiently plan and organise resources), a leader (to motivate staff and have a vision for the firm), etc. However, the tasks and roles undertaken by entrepreneurs will indicate the type of competencies required. Further, entrepreneurial researchers (Lerner & Almor 2002; Sadler-Smith, Hampson, Chaston, & Badger, 2003; Man et al., 2002; Harris & Gibson, 2006) believe that the performance of the firm will be higher when the business owner has requisite entrepreneurial and managerial competencies. According to Chandler and Jansen (1992) entrepreneurial performance depends on human/conceptual competence; ability to recognize opportunity; motivation or a drive to pursue the venture; technical/functional competence and political competence or nous.

venture performance economies.



Organising competencies: For establishing and managing a business successfully, Hebert and Link (1989) state that an entrepreneur should be specialized in taking responsibility for and making judgemental decisions that affect the location, form, and the use of goods, resources, or institutions (p.47). Entrepreneurs to have the ability to lead, coordinate, control, monitor, and organise internal and external resources such as finance and human resources (Chandler & Hanks, 1994; Snell & Lau, 1994; Man et al., 2002). Park and Bae (2004) also underscores the entrepreneurs capabilities in organising internal and external resources for organisational performance. In the Indian context, Panda (2002) observe that high achieving entrepreneurs have the capability to organise a large proportion of the fixed capital (over 40 per cent) and arrange for more than 90 per cent of their working capital requirement. This suggests: P2. A higher level of entrepreneurs ability to arrange and organise resources will positively influence venture performance in emerging economies. Strategic Competencies: Much literature in the area of entrepreneurial competency relates to entrepreneurs ability to have a vision in mind for their business (Mitton, 1989; Snell & Lau, 1994; Thompson, Stuart & Lindsay, 1996), to have clear goals, and to formulate and implement strategies to achieve the vision and goals (Man et al., 2002). Bracker and Pearson (1986) found that the performance of the firm was better when entrepreneurs undertook structured strategic planning rather than other types of planning. Stressing the importance of the entrepreneurs ability to be responsive to changing market conditions and customers, Mullins (1996) attested that competency facilitates responsive behaviour thereby enhancing the firms survival rate and increasing its growth potential. Not surprisingly, it was found that low levels of strategic orientation are associated with high failure rates in businesses (Sexton & Van Auken, 1985). This leads to: P3. A higher level of strategic competencies will positively influence venture performance in emerging economies. 227

3. Propositions on Competencies Required by Entrepreneurs

In this section, we examine relevant literature on entrepreneurial competencies and presents propositions that are relevant to emerging economies and a conceptual model that could be used for empirical testing. Opportunity competencies: Timmons, Muzyka, Stevenson and Bygrave (1987) refer to the ability to recognise an opportunity as the core of entrepreneurship. Business founders undertaking the classic entrepreneurial role scan their environments, identify opportunities, and take advantage of these opportunities (Chandler & Jansen, 1992). McClelland (1987) also found in his study of 24 entrepreneurs, from developing countries, that successful entrepreneurs where able to see and act on opportunities. This leads to: P1. A higher level of opportunity competencies will positively influence

Learning Competencies: Man et al. (2008) identified learning competencies as providing supporting role to the six competencies identified by them. Learning competencies include the entrepreneurs ability to learn from a variety of sources and apply the learned skills and knowledge to actual practices (Ahmad, et al., 2010). The ability to learn and apply from past experience is important to entrepreneurs (Bird, 2002, Snell & Lau, 1994). Entrepreneurs should be able to learn from their environment, their own mistakes and from other people (Cope and Watts, 2000; Harrison & Leitch, 2005). If potential entrepreneurs developed the ability of directing and utilising their learning they would be more successful in recognising and adapting to the changing roles of entrepreneurs required for enterprise growth (Bird, 2002). We posit: P4. A higher level of learning competencies will positively influence venture performance in emerging economies. Networking/Relationship Competencies: A key success factor for an entrepreneur has been found to be his or her capabilities to work with others such as employees, business partners, family, friends, customers and so forth. Falter (2007) suggests that entrepreneurs can gain access to business contacts through family members. Further to using familial relationships, entrepreneurs draw upon non-kin networks such as relationships with organizations, professional networks, friends and colleagues (Greve & Salaff, 2003; Hansen, 1995). There is evidence that network density and the proportion of strong ties in the entrepreneurs personal network are linked positively to success in launching a new venture (Davidsson & Honig, 2003) and venture performance (Vissa & Chacar, 2005). To successfully use these contacts, entrepreneurs need to possess relationship competencies such as relationship building, interpersonal abilities, and effective communication skills (McClelland, 1987). P5. A higher level of networking and relationship competencies will positively influence venture performance in emerging economies. Commitment Competencies: Entrepreneurs who strive to achieve long-term goals with strong devotion can be 228

construed to possess commitment competency (Man & Lau, 2000). Other characteristics are taking initiatives (McClelland, 1987) and possessing entrepreneurial drive (Eyre & Smallman, 1998). Neace (1999) found that entrepreneurs who never give up reveal their inner quality of ambition and determination and that this is perhaps the most important controllable behavioural trait necessary to succeed. Entrepreneurs possessing this competency will refuse to let the venture fail and will be determined to make the venture work, while making large personal sacrifices if they have to (Chandler & Jansen, 1992). This suggests: P6. A higher level of commitment competencies will positively influence venture performance in emerging economies. Conceptual Competencies: The entrepreneur requires analytical competency when faced with addressing complex situations (Eyre & Smallman, 1998, Man & Lau, 2000). Based on the tenets of cognitive theory, Palich and Bagby (1995) believe that entrepreneurs view risks positively and interpret them as opportunities while others do not see such potential. These abilities help in cognitive and analytical thinking, decision making, innovating, coping with uncertainty and risk are classified as conceptual competencies (Man & Lau, 2000). Thus, we propose: P7. A higher level of conceptual competencies will positively influence venture performance in emerging economies. Managerial/Functional Competencies: Starting a business venture is the first challenge that the entrepreneur encounters. Entrepreneurs then face new challenges as the new venture moves from one stage of development to another, requiring a different set of skills (Churchill & Lewis, 1983). Therefore, entrepreneurs require competencies that both entrepreneurial and managerial-administrative (Capaldo, Iandoli & Ponsiglione, 2004). Several studies have focused on managerial/functional competencies that business owners require for succeeding (Ibrahim & Soufani, 2002; Huck and McEwen, 1991; Prahalad & Hamel, 1990; Swiercz & Spencer, 1992). Research shows that majority of business failures can be attributed to the lack of management skills/competencies (for example, see

Bruno, Leidecker, & Harder, 1987; Terpstra & Olson, 1993). This leads us to believe that: P8. A higher level of managerial/functional competencies will positively influence venture performance in emerging economies. P9. A higher level of managerial competency combined with entrepreneurial competencies will positively influence venture performance in emerging economies. Business Environment: Entrepreneurs working in an emerging economy face different challenges due to the

institutional and cultural forces (Bruton et al. 2008). They face challenges in the areas of labour, capital, infrastructure, property rights, bribery and corruption etc. While some institutional factors are favourable, others are not (Bruton & Ahlstorm, 2003; Peng & Heath, 1996). Further it is important to understand the values and beliefs of the various cultures and how these factors will moderate the influence of the entrepreneur in starting and growing the business venture. propose: 10. The business environment significantly moderates the relationship between competencies and venture performance in the emerging economies. We

Figure 1: Relationship between competencies and venture performance

4. Conceptual Framework
Based on the review of extant literature, a model is proposed for further empirical investigation (see Figure 1). The model and propositions presented in this paper suggest that venture performance is linked to the competencies of the entrepreneur, moderated by environment and culture.

are more relevant to the context of emerging economy such as India. The role of environmental and other contextual factors could also be examined. Results of such a study will have implications for educational institutions, professional bodies, governmental agencies in designing entrepreneurial education and specific training programmes to improve the competencies of potential entrepreneurs.

5. Implications and Conclusion

Further research is necessary to test the proposed relationships between the variables proposed in this article and to determine which of the competencies 229

6. References
1. Ahmad, N.H., Ramayah, T., Wilson, C., & Kummerow, L. (2010). Is entrepreneurial

competency and business success relationship contingent upon business environment? A study of Malaysian SMEs, 16(3), 182-203. 2. Baron, R. A., & Markman, G. D. (2000). Beyond social capital: How social skills can enhance entrepreneurs success. The Academy of Management Executive,14 (1), 106. 3. Baum, J.R. (1994). The Relationship of Traits, competencies, motivation, strategy and structure to venture growth. Ph.D. Dissertation, University of Maryland, US. 4. Bird, B. (1995). Towards a theory of entrepreneurial competency. Advances in Entrepreneurship, Firm Emergence and Growth, 2, 51-72. 5. Bird, B.J. (2002). Learning entrepreneurship competencies: the self-directed learning approach. International Journal of Entrepreneurship Education, 1(2), 1-28. 6. Bracker, J.S., & Pearson, J.N. (1986). The Impact of Franchising on the Financial Performance of Small Firms. Journal of the Academy of Marketing Science, 14(4), 1017. 7. Bruno, A. V., Leidecker, J. K., & Harder, J. W. (1987). Why Firms Fail. Journal of Management, 7 (27), 50-58. 8. Bruton, G.D., & Ahlstrom, D. (2003). An institutional view of Chinas venture capital industry: Explaining differences of China from the west. Journal of Business Venturing, 18, 233249. 9. Bruton, G.D., Ahlstrom, D., & Obloj, K. (2008). Entrepreneurship emerging economies: Where are we today and where should the research go in the future. Entrepreneurship Theory and Practice, 32(1), 1-14. 10. Burgoyne, J.G. (1993). The competence movement: issues, stakeholders and prospects. Personnel Review, 22(6), 6-13. 11. Capaldo, G., Iandoli, L., & Ponsiglione, C. (2004). Entrepreneurial competencies and training needs of small firms: A methodological 230

approach. Paper presented at the 14th Annual IntEnt Conference, Napoli, Italy. 12. Chandler, G. N., & Jansen, E. (1992). The founders self-assessed competence and venture performance. Journal of Business Venturing, 7, 223-236. 13. Chandler, G.N., & Hanks, S.H. (1994). Founder competence, the environment, and venture performance. Entrepreneurship Theory and Practice, 18(3), 77-89. 14. Churchill, N.C., & Lewis, V.L. (1983). The five stages of small business growth. Harvard Business Review, 61 (3), p 1-12. 15. Cope, J. and Watts, G. (2000). Learning by doing: an exploration of experience, critical incidents and reflection in entrepreneurial learning. International Journal of Entrepreneurial Behaviour & Research, 6(3), 104-24. 16. Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18, 301-331. 17. Eyre, P., & Smallman, C. (1996). Euromanagement competencies in small- and medium-sized enterprises: a development path for the new millennium?, Management Decision, 36(1), 34-42. 18. Falter, J.-M. (2007). Entrepreneurship and intergenerational links in Switzerland. Labour, 21(1), 124-134. 19. Fastr G., and Van Gils, A. (2007). Competence development in entrepreneurship: the role of university education. In M.K. McCuddy et al. (Eds.), The challenges of educating people to lead in a challenging world (pp. 385-398). Netherlands: Springer. 20. Greve, A., & Salaff, J.W. (2003). Social networks and entrepreneurship. Entrepreneurship: Theory and Practice, 28(1), 1-23. 21. Hansen, E. L. (1995). Entrepreneurial networks and new organization growth. Entrepreneurship Theory and Practice, 19(4), 7-19.

22. Harris, M. L., & Gibson, S. G. (2006). Determining the common problems of early growth small businesses in Eastern North Carolina. S.A.M. Advanced Management Journal, 71(2), 39-45. 23. Hebert, R. F., & Link, A. N. (1989). In search of the meaning of entrepreneurship. Small Business Economics, 1, 39-49. 24. Herron, L., & Robinson, R.B. (1993). A structural model of the effects of entrepreneurial characteristics on venture performance. Journal of Business Venturing, 8(3), 281-294. 25. Hoffmann, T. (1999). The meanings of competency. Journal of European Industrial Training, 23(6), 275-85. 26. Hoskisson, R.E., Eden, L., Lau, C.M. and Wright, M. (2000). Strategy in emerging economies. The Academy of Management Journal, 43 (3), 249-267. 27. Huck, J.F., & McEwen, T. (1991). Competencies needed for small business success: Perception of Jamaican entrepreneurs. Journal of Small Business Management, 29(4), 90-93. 28. Ibrahim, A. B., & Soufani, K. (2002). Entrepreneurship education and training in Canada: a critical assessment. Education & Training, 44(8/9), 421-430. 29. Lerner, M., & Almor, T. (2002). Relationships among strategic capabilities and the performance of women-owned small ventures. Journal of Small Business Management, 40(2), 109-125. 30. Man, T.W.Y., & Lau, T. (2000). Entrepreneurial competencies of small business owner/managers in the Hong Kong services sector: a qualitative analysis. Journal of Enterprising Culture, 8(3), 235-254. 31. Man, T.W.Y., Lau, T., & Chan, K.F. (2002). The competitiveness of small and medium enterprises: A conceptualization with a focus on entrepreneurial competetence. Journal of Business Venturing, 17(2), 123-142. 32. Man, T.W.Y., Lau, T., & Snape, E. (2008). Entrepreneurial competencies and the 231

performance of small and medium enterprises: An investigation through a framework of competitiveness. Journal of Small Business and Entrepreneurship, 21(3), 256-276. 33. McClelland, D.C. (1987). Characteristics of successful entrepreneurs. Journal of Creative Behaviour, 21(3), 219-233. 34. Mitton, D.G. (1989). The compleat entrepreneur. Entrepeneurship Theory and Practice, 13(3), 9-19. 35. Mullins, J.W. (1996). Early growth decisions of entrepreneurs: The influence of competency and prior performance under changing market conditions. Journal of Business Venturing, 11(2), 89-105. 36. Neace, M.B. (1999). Entrepreneurs in Emerging economies: Creating Trust, Social Capital, and Civil Society. The Annals of the American Academy of Political and Social Science, 565, 148-161. 37. Palich, L. E., & Bagby, R., D. (1995). Using cognitive theory to explain entrepreneurial risk-taking: challenging conventional wisdom. Journal of Business Venturing, 10, 425-438. 38. Panda, T.K. (2002). Entrepreneurial success and risk perception among small-scale entrepreneurs of Eastern India. Journal of Entrepreneurship, 11(2), 173-190. 39. Park S., & Bae, Z. (2004). New venture strategies in a developing country: Identifying a typology and examining growth pattern through case studies. Journal of Business Venturing, 19, 81-105. 40. Peng, M.W., & Heath, P.S. (1996). The growth of the firm in planned economies in transition: Institutions, organizations, and strategic choice. Academy of Management Review, 21, 492-528. 41. Prahalad, C. K., & Hamel, G. (1990). The Core Competence of the Corporation. Harvard Business Review, 68 (3), 79-91. 42. Sadler-Smith, E., Hampson, Y., Chaston, I., & Badger, B. (2003). Managerial behaviour,

Entrepreneurial style, and small firm performance. Journal of Small Business Management, 41 (1) 47-67. 43. Sexton, D.L., & Van Auken, P. (1985). A longitudinal study of small business strategic planning. Journal of Small Business Management, 23(1),7-15. 44. Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. The Academy of Management Review, 25(1), 217-226. 45. Snell, R., & Lau, A. (1994). Exploring local competencies salient for expanding small businesses. Journal of Management Development, 13 (4), 415. 46. Strebler, M., Robinson, D. & Heron, P. (1997). Getting the best out of your competencies. Institute of Employment Studies, University of Sussex, Brighton. 47. Swiercz, P., & Spencer, B. A. (1992). HRM and Sustainable Competitive Advantage: Lessons from Delta Air Lines. Human Resource Planning, 15 (2), 35-46. 48. Terpstra, D., & Olson, P. (1993). Entrepreneurial start-up and growth: A classification of problems. Entrepreneurship: Theory and Practice, 17,5-20.

49. Thompson, J.E., Stuart, R., & Lindsay, P.R. (1996). The competence of top team members: a framework for successful performance. Journal of Managerial Psychology, 11(3), 48-66. 50. Timmons, J.A., Muzyka, D.F., Stevenson, H.H., & Bygrave, W.D. (1987). Opportunity recognition: The core of entrepreneurship. In N.C. Churchill, J.A. Hornaday, B.A. Kirchoff, O.J. Krasner, & K.H. Vesper (Eds.), Frontiers of Entrepreneurship Research, pp. 109-123. Wellesly, MA: Babson College. 51. Van Praag, M. C. (2005). Successful entrepreneurship: confronting economic theory with empirical evidence. Northampton, MA: E.Elgar. 52. Vissa B & Chacar A. 2005. Leveraging Ties: The Contingent Value of Entrepreneurial 53. Teams External Advice Networks on Indian Software Venture Performance. INSEAD 54. Working Paper 55. Zahra,S.A. (2007). Contextualizing theory building in entrepreneurship research. Journal of Business Venturing, 22(3), 443-452.


Determinants of Income Generation of Women Entrepreneurs Through SHGs

Assistant Professor Velammal Engineering College, Department of Management Sciences, Chennai-600 066.

Ms.RevathiPandian and D.Karthick

1. Introduction
In almost all the societies, women have less power than men, have less control over resources and receive lesser wages for their work. It is unfortunate that because of centuries of inertia, ignorance and conservatism, the actual and potential role of women in the society has been ignored, preventing them from making their rightful contribution to social progress. Women must be empowered by enhancing their awareness, knowledge; skills and technology use efficiency, thereby, facilitating overall development of the society. In various national policies and developmental programmes, emphasis has been given on organizing women in Self Help Groups and thus, marks the beginning of a major process of empowering women (Ashford, 1995). Entrepreneurship development and income generating activities are a feasible solution for empowering women. It generates income and also provides flexible working hours according to the needs of home makers. Economic independence is the need of the hour. Participation in income generating activities helps in the overall empowerment of women. Empowering women through education, ideas, consciousness, mobilization and participatory approach can enable them to take their own decisions, make them self-reliant and selfconfident. The emergence of women entrepreneurship in the past two decades and especially in the second half of the 1990s is not a coincidence. First of all, the entire business environment has changed. Women are being encouraged to participate in various business activities a process that was unimaginable decades ago. Next, the rapid development of computers and information technology makes starting and operating a business easier, with less capital and a lower minimum efficient 233

level of production. Third, the rapid expansion and specialization of the service sector have provided women with new opportunities to pursue their own business careers. Although women are taking on important positions in the business sector, they continue to face barriers to their entrepreneurial activities, compared to their male counterparts. Women still have to struggle with their traditional role in order to balance career and household responsibilities. They have to endure negative social value and cultural bias that lead to unfair perceptions about their ability to operate a business and legal constraints also limit the pursuit of economic independence by women. With this background, the present study was attempted to study the determinants of income generation of women entrepreneurs through SHGs in Tiruvallur district of Tamil Nadu.

2. Methodology
Among the different districts in Tamil Nadu, the Tiruvallur district has been purposively selected for the present study. Among different geographical locations in the district, Madavaram, Manali, Redhills and Tiruvallur have been again purposively selected based on the concentration of number of Self Help Groups (SHGs) and members. The data and information have been collected from the respondents by adopting random sampling technique. The district has been selected purposively followed by geographical location and the sample respondents have been selected randomly thus, multi-stage random sampling technique has been adopted for data collection. The data and information have been collected from the sample size of 500 through pre-tested, structured interview schedule through direct interview method. The primary data collected from respondents pertains to the year 2008-2009.

3. Statistical Techniques Descriptive Statistics and Chi-Square Test

In order to analyze the socio-demographic features, the descriptive statistics has been carried out. Besides, in order to analyze the differences among the socio-economic features, the Chi-Square test is employed and the formula is:

= Intercept i = Partial Regression Coefficients

ei = Random Error or Stochastic Disturbance Term The and i are the coefficients which are to be calculated through Ordinary Least Square (OLS) estimation. 5. Results and Discussion Socio-Demographics The socio-demographic features of women entrepreneurs were analyzed and the results are hereunder discussed. The age distributions of women entrepreneurs were analyzed and the results are presented in Table 1. From the table, the majority of women entrepreneurs (52.80 per cent) belonged to the age group of 30-45 years followed by less than 30 years (41.80 per cent). Only 5.40 per cent of women were in the age group of 45 and above 45 years. The chi square value was 0.01 and it was statically significant at five per cent level of significance indicating that there was a significant difference between age of the women entrepreneurs.

Where O = Observed Frequency in each category E = Expected Frequency in the corresponding category 4. Determinants of Income Generation In order to assess the determinants on income generation of women entrepreneurs, the multiple linear regression analysis by Ordinary Least Square (OLS) estimation has been applied for identified variables. The functional form of multiple liner regression model are given below: Y = + i Xi + ei Where Y = Dependent Variable (Business Income) Xi = Independent Variable(Growth Determinants) i = 1 to 15

Table-1. Frequency Distribution of Age of Women Entrepreneurs

Age < 30 Years 30-45 Years 45 and Above Total Frequency 209 264 27 500 Per cent 41.80 52.80 5.40 100.00 0.010 0.00 Chi Square Value Sig

Source: Primary & Computed Data


The educational qualifications of the women entrepreneurs are presented in Table 2. The results indicated that about half of the entrepreneurs (50.40 per cent) have school education followed by under graduation (42.80 per cent). The post graduation and professionals accounted about only 2.60 per cent while illiterates were only 4.20 per cent. The chi square value was 0.05 and it was statically significant at five per cent level of significance indicating that there was a significant difference between educational qualifications of the women entrepreneurs.

Table-2. Frequency Distribution of Qualification

Educational Qualification School Education Under Graduation Post Graduation and Professionals Illiterates Total Source: Primary & Computed Data The source of income from business for women entrepreneurs are presented in Table 3. The results showed that about 48 per cent of women entrepreneurs earned income in the range of Rs. 50000-1 lakh from their business followed by less than Rs. 50000(33.00 per cent). About 18 per cent of entrepreneurs earned the income in the range of Rs.1 lakh-150000 and only 0.4 per cent earned their income in the range of above 2.5 lakh. The chi square value was 0.02 and it was statically significant at five per cent level of significance indicating that there was a significant difference between business income for the women entrepreneurs. Frequency 252 214 13 21 500 Per cent 50.40 42.80 2.60 4.20 100.00 0.050 0.00 Chi Square Value Sig

Table-3. Frequency Distribution of Business Income

Chi Square Value

Business Income(Rs) < 50000 50000-1 Lakh 1Lakh- 150000 150000-2.5 Lakh > 2.5 Lakh

Frequency 165 240 90 3 2

Per cent 33.00 48.00 18.00 0.60 0.40 100.00




Total 500 Source: Primary & Computed Data

The distribution of sector wise business activity is presented in Table 4. It is clear that about 48 per cent of women entrepreneurs were involving in marketing followed by supplier (23.40 per cent). About 16.60 per cent of the women carried manufacturing activities while, only 12.00 per cent was involving in service sector activities. The chi square value was 0.01 and it was statically significant at five per cent level of significance indicating that there was a significant difference between sector of business activity of the women entrepreneurs. 235

Table-4. Frequency Distribution of Sector of Business Activity

Sector Manufacturing Marketing Supplier Service Total

Frequency 83 240 117 60 500

Per cent 16.60 48.00 23.40 12.00 100.00

Chi Square Value




Source: Primary & Computed Data

The enterprise base of the women entrepreneurs is presented in Table 5. From the table, it is apparent that the enterprise base for majority of the entrepreneurs (60.40 per cent) was semi-urban followed by urban (37.60 per cent). Only two per cent of them, used metropolitan area as their enterprise base. The chi square value was 0.02 and it was statically significant at five per cent level of significance indicating that there was a significant difference between enterprise base of the women entrepreneurs.

Table-5. Frequency Distribution of Enterprise Base

Sector Semi Urban Urban Metropolitan Total

Frequency 302 188 10 500

Per cent 60.40 37.60 2.00 100.00

Chi Square Value




Source: Primary & Computed Data 6. Determinates of Income Generation

In order to assess the determinants on income generation of women entrepreneurs, the multiple linear regression analysis by Ordinary Least Square (OLS) estimation has been applied and the results are presented in Table-6. The results of multiple linear regression analysis through OLS estimation is presented in Table 4.8. The results show that the coefficient of multiple determination (R2 ) is 0.46 indicating the regression model is moderately fit. The independent variables of My past experience strengthens and develops network(X4), Correct business location contributed to my success (X6), I take measures to protect the environment as I grow (X8 ), As I gain more experience I commit less 236 mistakes (X9 ) and Orientation and training assisted me to run my business (X12 ) are statistically significant at one per cent level of significance and these variables are positively influencing the business income of the women entrepreneurs. The factors Capital planning at each stage helped me to develop ( X5 ) and Infrastructure facilities provided by the Government has led to development of the business (X13 ) are also statistically significant at one per cent of level of significance but, these factors are negatively influencing the business income of women entrepreneurs through self-help groups.

Table-6. Regression Estimates of the Variable Determining the Income Generation of Women Entrepreneurs

Growth Determinants Intercept My status improved when I achieved better results My advisers help me in smooth conduct of business My past experience strengthens and develops network Capital planning at each stage helped me to develop Correct business location contributed to my success Incentives, subsidies and concessions provided by Central/State Government are great assistance to me I take measures to protect the environment as I grow As I gain more experience I commit less mistakes Legal status of the organization led to my growth Proper pricing strategy enhanced my growth Orientation and training assisted me to run my business Infrastructure facilities provided by the Government has led to development of the business Liberalization, Privatization and Globalization policy of the Government led to my present growth Quick and prompt decision marking helped me to grow My friendly attitude towards labour led me to my success R2 Adjusted R2 F N Note: ** Significance at one per cent level Source: Computed Data

Regression Coefficients 2.030** -.008 -.008 -.021 .041** -.075** .072** -.035 .037** .038** -.014 -.045 .029** -.095** .038 -.017 0.46 0.28 2.304 500

t-value 11.468 -.247 -.251 -.720 2.224 -2.508 2.376 -1.038 2.145 2.227 -1.058 -1.417 2.842 -2.623 1.105 -.572

Significance .000 .805 .802 .472 .021 .012 .018 .300 .023 .020 .291 .157 .010 .009 .270 .568


7 Conclusion
The forgoing analysis indicted that the sociodemographic features of the women entrepreneurs are significantly different in various aspects. About 52.80 per cent of women entrepreneurs belong to the age group of 30-45 years followed by less than 30 years. It was evident that about 62.42 per cent of women in the business income group of Rs. less than 50000, 55.42 per cent in the income group of Rs.50000-1 lakh and 73.00 per cent in the income group of Rs. 1 lakh-15000 have invested less than Rs.25 lakhs. About 48 per cent of women entrepreneurs were involving in marketing followed by supplier (23.40 per cent). About 16.60 per cent of the women carried manufacturing activities while, only 12.00 per cent was involving in service sector activities My past experience strengthens and develops network, Correct business location contributed to my success, I take measures to protect the environment as I grow, As I gain more experience I commit less mistakes and Orientation and training assisted me to run my business are positively influencing the business income of the women entrepreneurs. Entrepreneurial development should not be left to chance, as is the practice now. The training programmes should include identification and selection of potential entrepreneurs, and their motivation into entrepreneurial career through provision training and other inputs necessary to set up entrepreneurial units. The growth of women entrepreneurs should be encouraged by providing special incentives, tax concessions, reduced rat of interest, transport and fuel subsidies. For creating a healthy entrepreneurial environment, they should also be given orientation about the various tools and techniques of accounting and finance. Lack of coordination among the institutions in providing power, water, communication and finance seriously hinder the growth of women entrepreneurship. To improve this situation, the proper coordination mechanism and monitoring system should be formulated and implemented. 238

8. References 1. Agrawal, S., Technology Model for Womens Empowerment, Kurukshetra, (2003): May, pp. 18-28. 2. Ahmad, M.A., Women Empowerment: Self Help Groups, Kurukshetra,(1999): April, pp. 13-15. 3. Ashford, L., Gender Equality and the Empowerment of Women. Population Bulletin, 50 (1), (1995): pp. 17 22. 4. Batliwala, S., The Meaning of Womens Empowerment: New Concepts from Action. In Sen, G., Germain, A., and Chen, L., (Eds). Population Policies Reconsidered: health, empowerment and rights, Boston, Harvard University Press, (1994). 5. Bharat Dogra,Women Self-Help Groups Kindling Spirit of Entrepreneurship, Kurukshetra, 50(5),(2002): pp. 40-42. 7. Deepti Agarwal, Empowerment of Rural Woman in India, Social Welfare, 48(4),(2001): pp. 3-4. 8. Gain, Raji T.S. and P. Satish,, A Micro Study on Group Dynamics and Group Functioning, Working Paper No. 6, Bankers Institute of Rural Development, (1995).

9. Huq, A. and Richardson, P., Business Ownership as an Economic Option for Middle-Income Educated Urban Women in Bangladesh, Frontiers of Entrepreneurship Research, (1997): pp. 240-241. 10. Kabeer, Naila., Resources, Agency, Achievements: Reflections on the Measurement of Womens Empowerment, Development and Change, 30,(1999): pp. 435-464.

11. Leelamma Devasia, V., V., Devasia, Empowering Women Folk Sustainable Development, Ashish Publishing House, New Delhi, (1994). 12. Manimekalai, M. and Rajeshwari, G., Nature And Performance Of Informal Self Help Groups A Case From Tamil Nadu, Indian Journal Of Agricultural Economics, 56 (3),( 2001):pp.34-46. 13. Morrison, A., Breen, J. and Ali, S., Small Business Growth: Intention, Ability and Opportunity, Journal of Small Business Management, 41(4), (2003): pp. 417-425. 14. Naggayya, D., Micro-Finance For Self Help Groups, Kurukshetra,42(2), August, (2000):pp.15-26. 15. Purithavarthy Pandian, S., R., Eswaran, Empowerment of Women through MicroCredit, Yojana, November, (2002): pp 124132. 16. Reserve Bank of India, Report of the Internal

Group to Examine Issues Relating to Rural Credit and Microfinance, (2005). 17. Senthil Vadivoo, K. and V.Sekar, Self Help Groups a Movement for Women Services: How the Poor in India Could be Better Served?, Kissan World, 31(7): (2004). Pp. 13-14. 18. Sharma, K.C., Micro Financing Through SHGs, Indian Journal Of Agricultural Economic, 56 (3), (2001):. pp. 76-86. 19. Srinivasan, R. and Sriram, M. S., Round Table Microfinance in India: Discussion, Management Review, 15(2), (2003): pp. 5286. 20. Tripathy K.K,Self-Help Groups-A Catalyst of Rural Development, Kurukshetra, 52(8) (2004): pp. 40-43. 21. Vijayanthi, Womens Empowerment through Self-Help Group: A Participatory Approach, Indian Journal of Gender Studies, (2002):pp. 263-273.


Forecasting of Land Price at Madhavaram in Chennai Metropolitan Area

Research Scholar, Sathyabama University

Helen Santhi. M
Principal, Indira Gandhi college of Engg &Tech for Women, Chengalpet

1. Introduction
Economic base of Chennai city has shifted from trade and commerce to administration and services. Buoyant Economy, increased employment rate, high disposable income, cosmopolitan atmosphere and improved life style are instrumental in driving the demand for highrise apartments. The hike in the input cost, demand on developed plots and shrunk in supply leads to hike in land price. Invest on land for a secure future becomes a reality. Investment made on land yields better returns than on apartments and traditional investment options in the past few years, in all part of Chennai. The land price depends on economical, social and physical features and gets stabilized now. The market will see a positive momentum with job security which increases number of end users. Most housing finance companies have kept their home loan rates stable also helps to stabilize the market. Nominal interest rate, increased affordable price supply is reason to predict the market will continue to rise. The revival of Information Technology (IT) sector and increased liquidity is expected to give a positive momentum to land and housing market in Chennai. The study on land price trend is felt important to support the decisions in urban planning issues. The present study focused on assessing the trend of unit land price in the study location by estimating the annual rise or fall of it, to find the interaction effect of land price on selected factors by performing correlation and regression analysis, and forecast the price of land for the forthcoming years by plugging the predicted values of factors in the developed models. The comprehensive review of literature about the factors influencing the land price and the models of land price narrowed down this study to focus on the quantifiable, fundamental economic and social factors as ingredients. After a comprehensive literature review factors are identified and used in the prediction of unit land price. Past 240

monthly data on economic factors are drawn from National statistics published by Reserve Bank of India (RBI) and from the dailies. The monthly average value of the selected factors such as National Gross Domestic Product, cost of crude oil, dollar equivalence to Indian currency, rate of inflation, gold and silver price per gram, Mumbai and National share index, population in the study area, interest rate on home loan, unit cost of construction, guideline value and time factor from the year 1997 to 2008 are collected and used for developing the models. Statistical model and training the factors in NN are made to forecast the unit price of land for the period between 2011 and 2015 with assumption on the future economic conditions. The factors are ranked based on the magnitude of influence it has on the land price.

2. About Chennai Metropolitan Area (Cma) And Study Area

Chennai city and CMA have 55 and 70 lakhs of population respectively in 2009. The contribution of CMA to state GDP is 40 %. Chennai accounts for 30 % of national auto industry, 15 % of software exports and 50 % of leather exports. Land price scouring in city area and the development along IT corridor in South and electronic hardware corridor on West has given a virtual boost to land owners to increase the price. Tidel park, existing industrial estates in Guindy and Ambattur, upcoming Sipcots on the fringes and IT units in West and Southern regions, proposed international airport, rapid transport and metro trains, over bridges, elevated and circular ring roads are the additional power of Chennai realty sector and the land price rise. Madhavaram is selected as the study area, which is a Special Grade Municipality located in the Northern premises of Chennai City about 10 kms away from the Central railway station and George Town. It is

located on the bank of National Highway No.5 and it is the gateway of Chennai from North. It has an area extent of 17.4 and upgraded as Special Grade Municipality in 2008. It comes under Chengalpat region and it has around 127 Kilometer length of road. The total population in the study area is 76793 as per 2001 Census. It has large scale diary form, number of apartments, schools, local markets and hospitals. It can be easily accessed from the major locations in the City and its location in Chennai is shown in Figure 1.

NN is a computing technique from the artificial method. In the development of feasible NN analysis all 13 factors are used to ascertain the effect and to predict the trend of land price. All the input values are normalized using the MinMax Table. The principle behind is: Normalized value, N= [Original value - Minimum value] / [Maximum value - Minimum value], Where, 0 N 1. Back-propagation (BP) NN in MATLAB software is used in the study. A gradient descent rule is adopted in the programme of training set. NN is set to 10000 iterations, learning rate of 0.6, increase in learning rate of 0.9 with 3 hidden layers of 20, 13 and13 neurons and one linear output. Training stops when convergence obtains at the required root-mean-square-error below 0.0001 percent. It takes 54 Epochs to reach the desired target. Forecasts are being made over a period between 2011 and 2015, and the Run dialog box helps to establish the actual output. The share of influence of selected indicators is established using Garsons method. For this, the neural programme has the NN tool box that shows the change in output by weightages. This helps to know which of the factors has the most effect on the output. Share of Influence Input Node, Ii, asserts on the subject Output Node = S i % njj=1 (|wij||oj|) / (ni i=1|wij|) S i = __________________________X 10 (2) ni nj ni i=1 j=1(|wij||oj|) / ( i=1|wij|) Where ni = number of input nodes n number of hidden nodes j = wij = connection weight from input node Ii to hiddennode Hj oj = connection weight from hidden node Hj to subject output node Si

Fig.1.Location of Madhavaram 3. Multiple Regression And Neural Network Modeling Multiple regression allows more of the available information to estimate the dependent variable. More independent variables are added in the model will increases the closeness to real trend. Multiple regression looks at each individual independent variable and test whether it contributes significantly to the way the regression describes the data. Step-wise regression is the most frequently used regression method. The general multiple regression equation is (1) Y = a + b1 x1 +b2 x2 + .. bn xn Where, Y = Estimated value corresponding to the dependent variable a = y intercept x1, x2xn = values of n independent variable b1, b2bn = slopes associated with x1,x2xn respectively. 241

4. Analysis And Results

To measure the magnitude of linear relationship of land price (Y) on individual factor (X), correlation analysis is performed. Correlation analysis is a statistical tool,

which is used to determine the degree of which one variable is linearly related to another. The general form of correlation is given by (x - x) (y y) Correl (X,Y) = _____________________ ( (x - x)2 (y y)2 )1/ (3) The interaction of selected factors on Madhavaram land price per 5.5 cents (2400 Sq.ft.) is studied and the outcome is given in Table 1. Other than Dollar, Inflation and home loan interest all factors show good closeness. Forward regression analysis is performed using Statistical Package on social Science (SPSS) software, with 95 % confidence level and 5 % error significance and the analysis explains the trend very closely with a R2 of 0.9966. The analysis neglects 2 factors such as Mumbai sensex and Crude oil price which has comparatively lesser response with land price. The significant error of factors on the model at which the alternate hypothesis is to be selected is also depicted.

Table 1 Interaction Effect of Factors on Sowcarpet Land Price Factors Correlation coefficient Error significance
Time Gold price Construction cost Guideline value Inflation Dollar equivalence Silver price Home loan interest National sensex Population GDP Mumbai sensex Crude oil price 0.956477 0.952565 0.969179 0.893302 -0.0644 0.123959 0.956484 -0.45344 0.932255 0.97544 0.546645 0.904283 0.859138 0.000 0.006 0.000 0.000 0.000 0.000 0.005 0.000 0.018 0.000 0.002 0.054 0.070

The model outcome of the forward regression on land price in rupees of Madhavaram is given in equation 4 and Table 2 shows the response of model with the real trend of land price by performing analysis of variance (ANOVA). Land price per 5.5 cents (Madhavaram) =1.653E9 - 838036.045 X1 - 550.613 X2 + 1888.852 X3 - 0.274 X4 + 18886.295 X5 - 23913.094 X6 + 12519.754 X7 - 63865.298 X8 + 69.09 X9 + 327.205 X10 + 17442.337 X11 Where X1 = Time factor (Year and Month) X3 = Cost of construction per Square foot X5 = Inflation (%) X7 = Silver price per gram (Rs) X9 = National sensex Index X11 = GDP (%) 242 X2 = Gold price per gram (Rs X4 = Guideline value per ground (Rs) X6 = Dollar equivalence (Rs) X8 = Home loan interest (%) X10 = Population (No.)


R R2 Adjusted R2

Table 2 Model Summery b and ANOVA b Description Forward Regression 0.998a 0.997

Standard error 77519.910 Sum of square 2.244E14 Degree of freedom 12 Mean square 1.846E13 F 3.057E3 Sig. 0.000a a. Predictors: (Constant), Home Loan Int (%), Inflation (%), Doll Equ (Rs), Guideline Price (Rs), GDP (%), Silver Price/gm (Rs), Crude oil ($), Construction Cost/sft (Rs), BSE Index, Population (No), Gold Price/gm (Rs), NSE Index, Time & Month b. Dependent Variable: Market Price of Madhavaram (Rs)

5. Model Performance
The predictive ability of the forward regression and NN solution is compared. The market values and the predicted values using models are shown in Table 3. The model fit with market price is shown in Figure 2 with a close R2 value. The predictions show lesser difference between the model and market prices NN approach

Table 3 Prediction ability of Statistic and Neural model

Year Actual Market Price (L) 2.50 3.00 3.00 4.00 5.00 6.00 10.00 15.00 20.00 25.00 30.00 36.67 43.33 50.00 Forward Regression Model Price (L) 1.64 3.42 3.18 4.02 4.88 7.10 11.05 15.52 20.41 23.68 30.36 36.63 41.71 47.36 243 STDEV 0.6086 0.2988 0.1249 0.0111 0.0822 0.7789 0.7447 0.3718 0.2955 0.9357 0.2588 0.0259 1.1447 1.8642 BP Neural Network Model Price (L) 2.50 3.01 3.03 4.01 4.99 6.00 10.00 15.01 20.00 25.00 30.00 36.93 44.24 52.40 STDEV 0.0000 0.0041 0.0214 0.0065 0.0084 0.0002 0.0021 0.0042 0.0011 0.0006 0.0001 0.1891 0.6378 1.6979

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Fig. 2. Model Fit with Market Price The STDEV column indicates Standard Deviation (SD) from the actual (Market) value which is calculated using the formula (5) SD = [(x2 /n) (x /n) 2] The results of SD are very less (0.54 and 0.184 average respectively) and it confirms that the solutions are acceptable. Another parameter used in this comparative study is the Mean Absolute Percentage Error (MAPE): MAPE = i |(xi Fi) /xi | * 100 (6) ___________ n Where, Xi = historical (Market) price Fi = predicted price n = number of iterations used in the calculation The MAPE values of the statistical and NN solution are just 7.6 % and 0.66 % respectively, which implies that the selected indicators may be used as reliable inputs for modeling of land price and this finding provides further justification that a close relationship exists between land price and the selected factors. Ranking the Influence of Factors j=1 [(|wij||oj|) / ( i=1|wij|)] is the sum of signal transfers from input to output, shown in column 2 of Tables 4.

Table 4 Explanatory strength of indicators in BP Neural model

Indicators Silver price Time Population National sensex Mumbai sensex Construction cost Inflation Guideline value Home loan interest Gold price GDP Dollar equivalence Crude oil price Sum of signal transfer j=1 [(|wij||oj|) / ( i=1|wij|)] 0.614497749 0.60184447 0.540848382 0.518860622 0.501559525 0.499650511 0.478302467 0.478221196 0.468749084 0.436143129 0.411415804 0.397615324 0.332395335 6.280103598 244 Share of Influence 9.784834588 9.583352577 8.612093313 8.261975522 7.986484891 7.95608708 7.616155682 7.614861579 7.464034258 6.944839718 6.551099 6.331349759 5.292832034 100 Classification by ranking the strength of Factors 1 2 3 4 5 6 7 8 9 10 11 12 13 -

NN solution has ranked GDP, Population and Gold price as major influencing factors towards Land price. The influence share of factor ranges form 5.2 % to 10.6 % which show the uniformity in contribution. NN solution emphasizes these 3 indicators because they account for a large change in the land price.

6. Forecast of Land Price

To forecast the future price of land certain assumptions are made on all the factors. The factors such as Gold, Silver and Home loan interest are predicted by polynomial method and the rest of the factors by least square method from 2011 to 2015. The interest on home loan is expected to climb by 2015 and its growth is projected as 9 % annual. Construction cost is believed to rise by 6 %. The GDP is expected to increase by 3.2 %

and the inflation rise will remain at 3.5 % which peaked upto 10 % in the first half of 2010. A marginal annual rise of just 0.6 % on Dollar equivalence and 7 % on crude oil price is expected. Based on the past trends, the Consumption of precious metals, gold and silver show a remarkable increase in price of more than 20 %. As far as increase in stock is concerned, the projected increase is 6.6 % and 7 % on BSE and NSE respectively to reflect a progressively healthy economy. An increase in guide line value is justifiable by the strong demand on land and rise in population in the study area and it is expected as 1.21 % annual rise in population projected in CMDA draft. These above assumption on the factors are plugged in the Reg. model and trained in the NN. The result yields the future price of unit land and shown in and Figure 3.

Fig. 3. Forecast of Land Price (L) form 2011 to 2015 The outcome of the statistical and NN models are validated with the market price in 2009 and 2010 and it shows an average error of 4.5 % and 3.44 % respectively. From the results, the predictions offered an average STDEV of 0.54 and 0.18 which is very marginal between 1997 and 2010. Both the models show a dip in land price in the year 2011 and thereafter there is a annul rise of 8 and 5 %, respectively upto 2015. forward regression) and NN methods are employed to develop models to forecast the land price. The stepwise forward regression model accepts 11 factors and rejects 2 factors, namely BSE and crude oil price. The NN trains the factors towards land price in 54 cycles and identifies silver price, time and population as top 3 contributing factors. The regression and NN models fit with the real market price closely upto the R2 value of 0.9966 and 0.9999, respectively. The NN model performs better than statistical (regression) model in all aspects and the annual land price rise in Madhavaram would be 5 % in the forth coming years till 2015. 245

7. Conclusion
The unit price of land in Madhavaram, Chennai is forecasted between 2011 and 2015. Statistical (Stepwise

8. References 1. Gregs Musings, Factors contributing to an appreciating value of land, http://www., 2000 2. Wilson. I.D, S. D. Paris, J. A. Ware and D. H. Jenkins, Residential property price time series forecasting with neural networks, Journal of Knowledge-Based Systems, 2002, Volume 15, Issues 5-6, pp 335-341. 3. Asabere Paul K and Barrie Harvey, Factors Influencing the Value of Urban Land: Evidence from Halifax-Dartmouth, Canada, Journal of Real Estate Economics,2003, Volume 13, Issue 4,pp361 377. 4. Benjamin D. John , Randall S. Guttery and C. F. Sirmans, Mass Appraisal: An Introduction to

Multiple Regression Analysis for Real Estate Valuation, Journal of Real Estate Practice and Education, 2004,Vol 7, No 1, 5. Newell Graeme And John Macfarlane, The Accuracy of Property Forecasting in Australia, Pacific Rim Real Estate Society Conference, 2006,Auckland. 6. Hannonen, Predicting urban land prices: a comparison of four approaches, International Journal of Strategic Property Management, 2008,Vol.2, pp 20-25. 7. Vandna Singh and Komal (2009), Prospects & Problems of Real Estate in India, International Research Journal of Finance and Economics, 2009,No.24.


Predictive model for success of ERP implementations

Dr. Santhosh Kumar Asst.Professor( SG) & Professor in charge of Research in School of Management Studies, SRM University & R.Dhinakaran Samuel, Research scholar in School of Management Studies, SRM University & HOD of Management Studies, Loyola institute of technology, Chennai

1. Introduction
Enterprise resource planning (ERP) packages exploded into the market during 1990s as a popular way by which companies attempted to integrate their financial, human resource, operation, and customer information. Now after a decade of experimentation, the key business driver for this implementation in most of the companies is increasing the bottom line . They expect to achieve any one of the following business benefits. Provide efficiency gains that reduce overhead or allow the company to do more without adding resources, Put the organization in compliance with legal or contractual requirements, decreases security risk or to reach technology compatible with that of the customers Supports a new strategic initiative Although ERP systems are capable of providing significant returns on investment, they can also cause havoc in an organization if not managed correctly. Unfortunately, the success rate of ERP implementations is only around 50% and approximately 90% of ERP implementations are late or over budget [ one example described in 11 ). Implementing these projects place tremendous demands on organizations time & resources. There are risks associated with this type of investments. It is important for the investor to understand the non-technical complexities before embarking on a new ERP project. This study examines what factors affecting success of ERP implementation projects. It uses case study methodology to compare successful ERP implementation with unsuccessful implementation of a same Project manager. 2. Theoretical background: Critical success factors ( CSF) are the few key areas where things must go right for the implementation to 247

be successful. Twelve CSFs are commonly identified by [1] several researchers which are pertinent for the success of ERP implementation project . These are Project management ( PM) (Coordinating, Scheduling & monitoring of defined activities to ensure the stated objectives of the implementations), Business process re-engineering ( BPR)(Fundamental rethinking & radical redesign of business processes to redesign of business processes to achieve dramatic improvement), User training & education ( UTE)( To make the user comfortable with the system & increase the expertise & knowledge level of the people.) Technology Infrastructure ( TI)( Adequate I.T infrastructure in terms of hardware & connectivity), Change management ( CM) (The way organization do business will change & the ways people do their jobs will change as well), Management of Risk ( MoR) (To minimize the impact of unplanned incident in the project by identifying & addressing potential risk before significant consequence occur.), Top management support (TMS) (Providing leadership & necessary resource), Effective communications (EC) (Sharing information between project team, communicating the whole organization about the goals & progress of the project.), Team work & composition ( TC) (Comprise competent internal & external members on all functional areas.), User involvement (UI) (User participation in the project , at the time of requirement finalization & testing ), Use of Consultant ( UC) (Use of experts who are knowledgeable about the installation & software), Goals & Objectives ( GO) (Clear goals & objectives in terms of scope, time & cost). 3. Conceptual Framework: All ERP implementations go through three phases. Success or failure depends on the activities carried out each of the phases.

Phase Selection

People involved Top management & Vendor Top management, vendor, Positional power users, Knowledge power users, Transaction users, Project team & Consultants Project team & Transaction users

Activities Requirement finalization,ERP selection &Vendor selection Business Analysis, Set up / Configuration, Conference room pilot. Customization, Production set up, Data migration, Security profile, Readiness assessment, Go live Report generations, Monthly / Yearly closing, Refinement expertise, transport & so on . Power does not rest with position, so much as in relation to the change. When faced with change people ask themselves what it will mean for them. In the case study referred there are seven type of people involved in the project , Vendor, Top management, Positional-power users , Knowledgepower users, Project team members, Transaction users, Consultants. Expected behavior from the above for the success of the project are given below: Actual status But in reality, the vendor sales man promises moon from the software & increase the expectation of the management & later it affects the scope of the project. It increase customization resulting costly implementation {12]. Most of the time due to competition the vendor capability is magnified by the sales man & some important information on the implementation is silenced. But in reality , in some cases given least priority & in many places medium priority without affecting production or sales,. But in reality, it is delegated to down the level


Post implementation

There are number of barriers that can slow down the progress of this change process or even stop it altogether. One of the barriers that it is most difficult to overcome centers on the attitude and behavoiur of the people who are affected by the change, either directly or indirectly. The key players associated with ERP implementation & stake holder analysis is described in [2][10].The attitude and behavior of people are likely to depend on the power they have and their perceptions of the effect of the change. Power is the ability to control all types of resources, such as information, people, People involved Behavior Explanation



Vendor should be transparent on the product capability, their consultants capability, resource requirements & project mile stones.

Top management


Top management should show highest priority to the project Managers to involve in the project during design & testing stage. Sharing of knowledge by these users is very vital otherwise it is identified during testing phase in trial & error basis which increases the project time line. 248

Positional power users


Knowledge power users

Knowledge sharing

But in reality, in many organisation there is no Knowledge management systems & we need to relay on individuals

Project team


Project team dedication to the project compensate gaps of internal readiness & reduce project overheads Attitude to change is absolutely required . They should learn & adopt to new way of working

But in reality, the team requires motivation

Transaction users


But in reality, they have to work in both old & new systems, Resulting resistance to change, it requires some motivation. But in reality, they manage with what they know & set their mind only on project mile stone completion.


Customer focus

Consultants to put extra effort to see what is best for the user & configure, test & train

1. Research method : It uses case study methodology to compare four successful ERP implementations with four unsuccessful implementations of a same Project manager ( the second author of this article). The Project manager has implemented ERP systems like SAP, Oracle E-business suite, JDEdwards Enterprise one etc., for more than 15 companies in India & abroad . Many projects were successful and some were failure. Details of the chosen eight companies are enclosed in Annexure-A. Data collected by conducting interviews at various levels of the subject organizations as wells recorded facts from archival. Weighted average scores are taken when multiple people responded to the same analysis. 2. Analysis : Critical success factor analysis were carried out for all this 8 implementations for both successful & failure projects, the analysis shows almost equal score. (refer Annexure B) From that score we will not be in a position to identify the failure projects. Following are the reasons for failure in the eight cases considered for study which explicitly relate to the behavioral model of people involved in the project: 1. Expectation mis-match on scope & capability of the software created by Vendor 2. Lack of support from Knowledge-power users in the organisation 3. Lack of involvement of the users / no dedicated team 4. Lack of customer focus from consultants side. 5. Lack of priority to the project by top management 6. Resistance to change 249

When applying the behavior model on the above 8 cases, the behavior model proved to be more effective in identifying the successful project. (Refer Annexure C) It is inferred that all the successful projects scored more than 7 average points and all the failure projects scored less than 5 average points. Hence we could mark clear demarcation between successful & failure projects through this behavior model.

3. Conclusion
It is evident from the above analysis the commonly indentified CSFs do not pinpoint the real causes of the failure. The behavior model play the most important role. This model can be applied in advance to predict the success of the implementation. All the parameters controlling this behavior models like Vendor transparency, top management priority, Positional power user involvement, Knowledge power user sharing, Project team dedication and Consultants customer focus are predictable factors which can be identified before start of the project.

4. References
1. T.R.Bhatt Critical success factors for the implementation of ERP, Proceedings of the 2nd International conference on Innovation & information technology, IIT 2005 2. Toni M.Somers, Klara G.Nelson, A taxonomy of players and activities across the ERP project life cycle , Information & Management 41 ( 2004), 257-278

3. Esteves, J. and Pastor, J., Analysis of

critical success factors relevance along SAP implementation phases. Proceedings of the 7th Americas Conference on Information Systems (AMCIS), Boston, Massachusetts, USA, 2001. 4. Rao S., Enterprise resource planning: Business needs and technologies, Industrial Management & Data Systems, Vol 100, Issue 2, pp 8188, 2000. Gupta (2000), Enterprise resource planning to emerging organizational value systems, Industrial Management & Data System (100), pp.114 -118, 2000. Davenport, Putting the enterprise into the enterprise system, Harvard Business Review, Vol 76, Issue 4, pp. 121 131, 1998. Subramanian Muthu, Larry Whitman, and S. Hossein Cherag , Business Process Reengineering : A consolidated methodology , Proceedings of The 4th Annual International Conference on Industrial Engineering Theory, Applications and Practice November 17-20, 1999, San Antonio, Texas, USA. Christopher P. Holland & Ben Light, A critical success factors model for ERP implementation, IEEE software, May/June 1999. Robert plant & Leslie will cocks , Critical success factors in International ERP implementations : A case research approach, Journal computer Information systems, Spring 2007..

April 2009 12. Marc N. Haines, Understanding Enterprise System Customization: An Exploration of Implementation Realities and the Key Influence Factors, Information Systems Management, 26: 182198, ( 2008) 13. Mojca Indihar temberger, Vesna Bosilj Vuki, Andrej Kovai , Business process modeling as a critical success factor in implementing a ERP system, SEE journal, Nov 2009. 14. D. L. OLSON* and F. ZHAO, CIOs perspectives of critical success factors in ERP upgrade projects, Enterprise Information Systems, Vol. 1, No. 1, Feb. 2007, 129138 15. ALAN R. PESLAK, GIRISH H. SUBRAMANIAN, GEORGE E. CLAYTON The Phases of ERP Software Implementation and Maintenance: A Model for Predicting Preferred ERP Use, Journal of Computer information systems, Winter 2007-2008. 16. BooYoung Chung; Mirosaw J. Skibniewski; and Young Hoon Kwak, Developing ERP Systems Success Model for the Construction Industry ,JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT ASCE / MARCH 2009 / 207. 17. Shih-Wen Chien , Shu-Ming Tsaur, Investigating the success of ERP systems: Case studies in three Taiwanese high-tech industries, Computers in Industry 58 (2007) 783793. 18. Meg Fryling, The dynamics of ERP success,( Un Published ), Information Science and Policy , University at Albany ,State University of New York. 19. Jiang Yingjie, Critical success factors in ERP implementation in Finland, ( Published ), The Swedish School of Economics and Business Administration, 2005.






10. Hein Ray Chetcuti , ERP Implementation: A multi-stakeholder analysis of critical success factors, WICT proceedings, December 2008. 11. Saad Ghaleb Yaseen, Critical Factors Affecting Enterprise Resource Planning Implementation: An Explanatory Case Study, IJCSNS International Journal of Computer Science and Network Security, VOL.9 No.4,


Annexure A 1 2 3 4 5 6 7 8 Company ( A Glass manufacturing company) SAP implementation in six month period ( A construction group with 9 different company). JDEdwards Enterprise one implementation for one company in six months) ( A medical equipment sales & service organization), JDEdwards Enterprise one implementation in six months) ( A construction company ), JDEdwards Enterprise one implementation in six months ) ( Group with more than 50 Higher sec.schools), Custom developed ERP Prodigy implementation , More than 15 months implementation, project stopped ( An IT services organization), Tried JDEdwards implementation for 4 years failed, then started Oracle E-business suite implementation for one year ( A polymer products manufacturing company ), JDEdwards Enterprise one implementation. Went live in 12 months, implementation team left immediately, Localization module not stabilized, went for re-implementation after six months. ( A needle manufacturing company), JDEdwards Enterprise one implementation , Gone live in 15 months, system crashed, re-implementation started after six months) Status Successful Successful Successful Successful Failure Failure Failure Failure

Annexure B
company 1 2 3 4 5 6 7 8 9 10 11 12 PM BPR UTE TI CM MoR TMS EC TWC UI UC GO 1 8 8 8 8 8 8 8 8 8 8 8 88 2 8 8 8 8 8 8 8 8 8 8 8 88 3 8 8 8 8 8 8 8 8 8 8 8 88 251 4 8 8 8 8 8 8 8 8 8 8 8 88 5 8 8 8 8 8 8 8 8 8 8 4 84 6 8 8 8 5 8 5 8 4 8 8 4 75 7 8 8 8 5 8 8 8 8 8 5 7 81 8 8 8 6 8 8 8 8 5 8 7 4 80

Annexure C 1 People involved Vendor behaviour Transparency Software capability Resource requirement Consultant availability/ capability Project scope Project mile stone 2 Top mgmt Priority Attend review First priority even to loss of business 3 Pos.power involvement Attend all meetings Involve in design 4 Know.power Sharing Assigned key role to play Involved in design stage Involved in the testing stage 5 dedication Full time involved 1 8 8 8 8 8 8 8 8 8 7 6 8 8 8 8 8 8 8 2 8 7 8 8 9 8 9 10 8 8 8 8 8 8 8 8 8 8 3 8 7 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 4 8 7 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 5 4.2 3 6 4 3 5 4 4 4 6 8 4 4 4 4 4 6 8 6 5.8 5 6 4 6 8 2 2 2 2 2 2 1.33 0 0 4 2 2 7 5.4 5 7 4 5 6 6 8 4 5 6 4 4.67 4 6 4 5.5 8 8 3.6 3 4 5 3 3 6 8 4 4 4 4 3.7 3 5 3 2 2


Work extra time voluntarily 6 Trans.users Change Learn with extra effort Work extra hours to complete the load Appreciate benefits in the new system 7 Consultant Customer focus Intention to satisfy customer need Exploit knowledge pool to derive best for the org, Total Final Average

8 7 8

8 8 8

8 6.33 8

8 7 7

4 4 4

2 3.66 3

3 3.66 4

2 4.3 3

5 8 8

7 8 8

5 8 8

7 8 8

4 5 5

5 5 6

4 4.5 5

5 6.5 7

54 7.7

57 8.1

54.3 7.7

55 7.8

33.2 4.7

21.8 3.1

34.7 4.9

30 .1 4.3


A Study On Stress And Anxiety Among The Two Wheeler Riders In Chennai City
Dr.G.Rajesh Kumar Assistant Professor (Sr.G), School of Management, SRM University Rajan Daniel, Assistant Professor (O.G), School of Management, SRM University
A driving behaviors is aggressive if it is deliberate, likely to increase the risk of collision and is motivated by impatience, annoyance, hostility and/ or an attempt to save time. susceptibility to stress. This method was employed because it enabled the survey to be conducted relatively easily over a broad area with respondents from all age groups and also because it was a well-established method generally used to research market trends by quickly obtaining many responses. This survey method was matched to this study, which required sufficiently numerous answer samples to analyze the complex and diverse characteristics of drivers susceptibility to stress. To extract answers that reflect the candid psychology of drivers, the questions used in the survey were designed in a free-answer format as shown below. Through this process, the stress elements could be classified into the following four categories: 1 Trouble (failure, something wrong, bad condition) 2 Performance (acceleration, fuel efficiency, driving stability, braking, traction) 3 Usage (operation, function, storage ability, loading capacity, livability, easy access, easy drive) 4 Sense (somatic sensation, visual sensation, auditory sensation, olfactory sensation, cognitive judgment) The sense as defined in this study, however, includes an addition of cognitive judgment for understanding and judging the information obtained through the senses. Cognitive judgment is, for example, familiarity with driving or perceptions of the distance between vehicles. Efforts to identify predictors of driving anger and aggression have examined both situational and personality explanations but have typically been 254

INTRODUCTION People are subject to stress caused by different environmental factors in their daily lives. Stress induces mental and physical burdens, distortion and pressure. Under a situation involving continued tension, stress animates the sympathetic nerves. This upsets the balance between the sympathetic nerves and the parasympathetic nerves, the latter of which work to keep the bodily functions stable. It is widely known that this is a factor that causes various physiological disorders, such as psychosomatic and psychoneurotic disorders. Driver stress is caused by various factors that can be broadly classified into two categories: short-term factors and long-term factors. One example of short-term stress is sudden emotional one that may be reflected in the drivers driving behavior. Such type of stress typically appears as anger and irritation. Also one example of long-term stress is one that accumulates over time, the typical of which is the stress induced by long-term inconvenience with car use. This type of factors may influence a customers decision when purchasing next vehicle. It is important for automakers to gain an understanding of this driver stress and improve the brand strength of the car by eliminating these factors. In this study, a free-answer questionnaire was distributed on the Web to extract stress factors. The purpose was to identify the relation in characteristics between the drivers

theoretically lean. The majority of research examining situations has explored the impact of traffic congestion or travel impedance, which is conceptually similar. More recent theoretical accounts of frustration-aggression suggest that the causal link between congestion and aggression is likely due to the activation of negative affect and anger trait differences in driving stress have been positively associated with state stress while driving. Trait aggression and stress have been positively associated with number of traffic accidents. The specific behaviors which constitute aggressive driving would include: Tailgating Weaving in and out of traffic Improper passing (eg.cutting in too close in front of vehicle being overtaken) Passing on the road shoulder Improper lane changes (failure to signal) Failure to yield the right of way to other road users Preventing other drivers from passing Unwillingness to extend cooperation to motorists unable to merge or change lanes due to traffic conditions Driving at speeds far in excess of the norm which results in frequent tailgating, frequent and abrupt lane changes Running stop signs Running red lights

There is a need to describe some of these behaviors and the circumstances under which they would occur in greater detail. For example, while tailgating is always included on lists of aggressive driving behaviors, we are never offered a more detailed description of what constitutes an unacceptable gap length between two vehicles. These descriptions can best be obtained through observational studies. The small amount of survey research on aggressive driving indicates that most drivers admit to these behaviors, at least on occasion. However, it appears that survey respondents tend to provide socially desirable responses. It is unclear if the lower incidence of certain behaviors associated with higher collision risks such as running stop signs is due to this tendency rather than to an actual low incidence of such behavior. The driving behavior generally has one or more of the following characteristics: Likely motivated by impatience, annoyance or anger with another road user(s) or with a prevailing traffic condition Calculated to save time at the expense of other road users Shows obvious disregard for other road users Intimidate or be perceived as dangerous by other road users Irritate or anger other road users Force other road users to take evasive action Driven through yellow lights that are turning red Driven 20 kms per hour or more over the speed limit Changed lanes without signaling Tailgated or driven too closely behind another car Flashed high beams at car in front of you Made rude gestures Waited until last second to merge with traffic on highway Pulled into parking space someone else is waiting for Passed on the shoulder of the road Another driver had cut very closely in front me 255

Displays of annoyance or hostility which are not intended to physically harm other road users but likely to intimidate, irritate, anger or provoke them may accompany these behaviors and serve as indicators of the underlying motivation. These behaviors would include: flashing headlights sustained horn-honking glaring at another driver to show disapproval yelling gesturing This list of specific behaviors is preliminary.

Another driver drove very closely behind me Another driver passed me in a dangerous manner Another driver cut me off at an intersection or exit Another driver made an obscene or threatening gesture Another driver wove in and out of traffic

not the only traits that may predispose an individual to engage in aggressive driving behavior. There are other personality traits that may also result in aggressive behavior. Shinar (1998) suggests that drivers possessing traits associated with extroverted or Type a personalities may be more likely to drive aggressively. While Shinars suggestion is certainly plausible, there does not appear to be any published research which reports a significant relationship between these two personality traits and aggressive driving behavior. Much of the road safety research on personality has focused on crash risk, not driving behavior. Greyetal (1989) report that personal factors which have been identified as associated with motor vehicle crashes include generally high levels of aggression and hostility, competitiveness, less concern for others, poor driving attitudes, driving for emotional release, impulsiveness and risk taking. Norrisetal (2000) conducted a prospective study of 500 drivers aged 19-88 and found that the combination of high trait hostility and low self-esteem resulted in significantly higher crash risk. Personality traits certainly appear to have some predictive value. Hennessy and Wiesenthal (1997) interviewed a small sample of 40 drivers who experienced rush hour congestion on a major divided highway in the Greater Toronto Area. They measured each drivers trait stress (i.e. the drivers predisposition to stress) and state stress (drivers exposure to traffic congestion) and interviewed the drivers to determine how these variables affected a drivers behaviour. Observed stress levels were highest in drivers with high trait stress who also experienced higher levels of roadway congestion. The concept of lifestyle refers to clusters of behaviors typically displayed by individuals with certain personalities. Beirness (1996) reviewed the fairly substantial research on the relationship between lifestyle, driving performance and collision risk. These studies, 256

REVIEW OF LITERATURE Individuals have traits which dispose them to behave regularly and persistently in a variety of situations. These traits are said to constitute their personality. Efforts have been made to explain social behavior with personality test results. Personality, however, has been found to be a poor predictor of social behavior. Sensation seeking may be defined as the need for varied, novel and complex sensations and experiences and the willingness to take physical and social risks for the sake of such experiences. A report says that only four of the thirty-eight studies did not find a positive relationship between sensation seeking and risky driving. Much of the research has focused on drinking and driving, but thirteen of the studies reviewed also assessed the effects of sensation seeking on other risky driving behaviors. The Aggressiveness to measure, respectively, sensationseeking and aggressiveness in a sample of 139 young drivers aged 17-18 and 38 adults aged 41-59. They found both personality traits were significantly related to reckless driving behaviors such as driving 20 mph or more over the speed limit, racing and passing in a no passing zone. Sensation-seeking and aggressiveness were significantly correlated, with adolescents scoring higher than adults and male adolescents scoring higher than female adolescents. This study found not only a relationship between trait aggressiveness (a general tendency to be aggressive) and reckless driving, but also found that state aggressiveness (i.e. being in an angry mood at a particular time) is related to episodes of highspeed driving. Sensation seeking and aggressiveness are

which focused primarily on young drivers, found a higher incidence of risky driving behavior and collision involvement in individuals with lifestyles characterized by a favorable disposition towards taking chances, impulsiveness and displaying aggression. These young drivers were more likely to display other delinquent and health-compromising behaviors i.e. drinking, drug use, smoking, fatigue due to late night socializing, poor academic performance and encounters with the police. Forty per cent of the sample was classified as Thrill Seekers. They were tolerant of deviant behavior and were more likely to be influenced by peers. Thirtynine per cent of participants was Conventional and displayed a strong attachment to traditional values, high levels of self-confidence and less responsiveness to peer influence. The remaining was classified as Inadequate and displayed low levels of self-confidence, difficulty controlling anger and frustration, low attachment to traditional values and poor academic performance. By the second year of the study, the Thrill Seeking group scored significantly higher on a risky driving index than either the Inadequate or Conventional groups. By the third year of the study, 27 per cent of Thrill Seeking group, 14 per cent of the inadequate group and 9 per cent of the Conventional were involved in motor vehicle collisions. Research on lifestyle factors has not been applied specifically to aggressive driving behavior. The combined focus on both personality and social factors typical of lifestyle research may improve our ability to understand the motivation of an individual who often displays aggressive driving behavior (i.e. an aggressive driver). Shinar(1999) reports a strong association between environmental conditions and manifest driver aggression. He has reported a fairly strong relationship between the length of the red phase and length of the green phase at an intersection, on the one hand, and the tendency for drivers either run a red light or honk their horns when they are delayed by a vehicle that fails to proceed when the light turns green. Drivers were more likely to run red lights at intersections with long red phases and more likely to be impatient and honk at intersections with shorter green phases. 257

Hennessy and Wiesenthal (1997) found that the most commonly reported behaviours on a divided highway in high congestion conditions were direct coping behaviours (eg. seeking pre-planned routes and listening to radio traffic reports), time facilitation behaviours (eg. listening to music or the radio) and aggressive behaviours (eg. tailgating, swearing and yelling at other drivers and horn honking). While the incidence of aggressive behaviours increased during congestion, these behaviours still ranked third behind both direct coping behaviours and time facilitation behaviours. Formal interest in aggressive driving behavior as a research topic can be traced back to a short monograph by Meyer Parry entitled Aggression on the Road. Parrys work pre-dated that of Leeming by one year. Also writing in England, he suggested that the increasing stress involved in motoring nowadays makes the psychological efficiency of the driver a more important factor than the mechanical efficiency of the vehicle he drives (Parry, 1968). He found that drivers with high scores on tests for anxiety and aggression had a higher crash risk. Parrys work makes it clear that aggressive driving is not a new phenomenon. In a study of aggressive driving, Hauber (1980) defined aggression on the road as actual or intended behavior which the offender supposes will do physical or psychological harm to the victim and which the victim experiences as such. This definition states that the aggressors must have the expectation that their behavior will cause victims to experience physical or psychological harm. Hauber, however, does not provide a list of driving behaviors he would include or exclude from this definition. Mizell (1997) for the purposes of his study, aggressive driving is defined as an incident in which an angry or impatient motorist or passenger intentionally injures or kills another motorist, passenger or attempts to injure or kill another motorist, passenger , in response

to a traffic dispute, altercation or grievance. This definition focuses exclusively on behavior intended to physically harm, or indeed, fatally injure another road user. The Mizell definition is extremely narrow and differs substantially from that offered by the National Highway and Traffic Safety Administration (NHTSA). In testimony before a Congressional subcommittee, then NHTSA administrator Ricardo Martinez defined aggressive driving as the operation of a motor vehicle in a manner which endangers or is likely to endanger people or property. For NHTSA, aggressive drivers are more likely to: speed, tailgate, fail to yield, weave in and out of traffic, pass on the right, make improper and unsafe lane changes, run stop signs and red lights, make hand and facial gestures, scream, honk and flash their lights. NHTSA is currently preparing a more thorough description of the specific driving behaviors that constitute aggressive driving. It has also undertaken research to develop the observational methods necessary to measure the incidence of aggressive driving. From NHTSAs standpoint, Mizell has provided a definition of road rage - an extreme form of aggressive driving behavior. For NHTSA, the behaviors associated with road rage are criminal offences while the unsafe driving practices associated with aggressive driving consist of traffic offences. Using Mizells own statistics, it is clear that road rage is a relatively rare phenomenon on U.S. roads. He reports that violent traffic disputes resulting in homicide and assault are increasing at the rate of 7 per cent per year. Mizells study is based on 10,037 media and police reports of violent traffic disputes over a six year period. These incidents resulted in 218 deaths. Bearing these methodological limitations in mind, it should nevertheless be noted that the incidence of this extreme roadway violence appears to be quite low relative the number of fatalities and injuries resulting from motor vehicle collisions. During the same six year period covered in Mizells study, there were 22,761,000 motor vehicle collision injuries and 290,105 motor vehicle collision fatalities recorded in the U.S. (NHTSA, 1999). According to the frustration-aggression model (the 258

dominant theory of aggression in psychology), aggression is behavior directed at a person with the intention of inflicting psychological or physical harm to that person. All aggressive behaviors are triggered by frustrating behaviors, situations or events. The level of aggression will vary depending upon three important factors. 1) The level of frustration experienced by the driver. Drivers have differing thresholds for how much frustration they will tolerate in a particular situation. Drivers who have extroverted, Type A personalities may have a low threshold and be more inclined to respond with an aggressive driving maneuver. 2) Factor affecting whether aggressive behavior will be displayed is the negative consequences for the aggression. Consequences can be broadly defined to include personal consequences, social consequences or legal consequences. As we shall see, one environmental condition which seems to increase the perception that negative consequences are unlikely is the extent to which drivers feel anonymous (eg. because they are driving at night or on a freeway). 3) Factor is the extent to which the frustration is seen as unfair or inappropriate. Surveys indicate that drivers are particularly annoyed by slow moving vehicles in the left lane of divided highways. Driving slowly in the left lane contravenes accepted driving practice which stipulates that slow moving traffic should keep to the right. Conversely, a slow moving vehicle in the right lane is less likely to irritate other motorists. Shinar identifies two broad categories of aggressive behavior: 1) Hostile: Hostile aggression is characterized by strong emotion and involves behavior intended to make the aggressor feel good. An individual engaging in hostile aggression is venting anger at someone without giving much thought to the possible consequences. An example of hostile aggression might be a driver who

decides to follow a vehicle that cut him off abruptly on the highway. The pursuing driver would be highly emotional and preoccupied with getting even. It is unlikely that a pursuing driver has given much thought to how the chase will affect arrival time at his/her original destination, what would happen if the other driver uses a cell phone to contact the police or how involvement in a fight with another motorist would affect ones personal life or livelihood. 2) Instrumental: Instrumental aggression refers to aggressive behavior which is used as a means to an end rather than an end in itself. This latter form of aggression seeks solely to overcome the frustrating situation or event. The aggressive behavior stops as soon as the source of frustration has been removed. An example of instrumental aggression might be a driver who decides to weave in and out of traffic because s/he is late for a meeting. Other drivers are simply obstacles and the aggression is not characterized by anger directed at a particular individual. The driver has presumably behaved in this way only because s/he is late. Most aggressive driving behaviors are unlikely to be exclusively hostile or exclusively instrumental. We would expect them to have elements of both hostility and instrumentality. Nevertheless the distinction is helpful to researchers because there are clearly aggressive driving behaviors that are more hostile than instrumental and vice versa. Using these concepts, Shinar defines aggressive driving as instrumental behaviors which are manifested in either 1) inconsiderateness towards or annoyance with other drivers (or) 2) deliberate dangerous driving to save time at the expense of other road users. These behaviors would include tailgating, disobeying traffic controls, weaving in and out of traffic, preventing a vehicle from passing, flashing headlights and horn-honking. Shinar also makes an important distinction between aggressive drivers and aggressive driving. Aggressive drivers constitute a small sub-set of the 259

driving population who display aggressive driving behaviors most of the time. Aggressive driving refers to the behaviors themselves which tend to be displayed by most drivers less frequently. Factors which seem to increase the likelihood of aggressive driving behavior are: Being relatively young Being male

Being in a traffic situation which confers anonymity

and/or where escape is high likely. Being generally disposed to sensation-seeking or aggressiveness in other social situations.

Being in an angry mood (likely due to events unrelated to traffic situation) Belief that one possesses superior driving skills Traffic congestion, but only if drivers do not expect it METHODOLOGY USED FOR THIS STUDIES The objective of this research studies are To study the stress among the two wheeler riders during driving in CHENNAI city. To study the behavioral pattern of driving among bikers. To come out of with remedial measures for curbing the stress among bikers. To study the responses of bikers with anxiety . The radom sample method used in this study. The sample collected from 110 respondents at various places of Chennai city through structured questionnaire. Following statistical tools were used in the study for analysis of data. Percentage Analysis Chi-square Method. ANOVA Test Weighted average method ANALYSIS OF STRESS AND ANXIETY Table 1. Gender & Marital status

From the below table it is inferred that, out of the surveyed population, 75 were males (68%) and 35 were females (32%). 86 were unmarried (78%) and 24 were married (22%). It shows that most of the respondents are male and married. MARITAL STATUS GENDER MALE FEMALE TOTAL % UNMARRIED MARRIED TOTAL %

61 25 86 78.2

15 9 24 21.8

75 35 110 100

68.2 31.8 100

Comparative analysis between gender with marital status by using chi- square Ho- There is no significant difference between GENDER & MARITAL STATUS OF RIDERS. H1- There is significant difference between GENDER & MARITAL STATUS OF RIDERS.

Observed Value (O) 61 15 25 9 TOTAL

FORMULA to calculate Experimental Value (86*75) / 110 (24*75) / 110 (86*35) / 110 (24*35) / 110

Experimental value (E) 58.6 16.4 27.4 7.6

(O-E)2 / 0.098 0.12 0.21 0.26 0.69

Calculated value Level of significant Degree of freedom Tabulated value

0.69 5% (m-1)(n-1)= (2-1)(2-1)= 1 3.84

CV< TV, Accept Ho. So there is no significant difference between marital status & gender. Table 2. The daily average duration & travel of two wheelers usage From the above table it is inferred that 24 rides(21.8%) less than 5km on an average, 28 rides(25.4%) 5-10km on an average, 20 rides(18.3%) 10-15km on an average, 38 rides(34.5%) more than 20km on an average. Also it is inferred that 72 rides(65.4%) less than 2hrs, 17 rides(15.4%) for 2-3hrs, 14 rides(12.7%) for 3-4 hrs, and 7 rides(6.5%) for more than 4hrs.


PARTICULARS Less than 5 km 5-10 km 10-15 km More than 20 km Total

RESPONSE 24 28 20 38 110

% 21.8 25.4 18.3 34.5 100

PARTICULARS Less than 2 hrs 2-3 hrs 3-4 hrs more than 4 hrs Total

RESPONSE 72 17 14 7 110

% 65.4 15.4 12.7 6.5 100

Table 3. Statement which best suits your response while driving It is inferred from below table that, 42 of the two wheeler riders strongly disagree that they have night mares, 49 of the rider strongly disagree that they get cold & 55 strongly disagree that their sleep is fitful and disturbed while riding the two wheelers. Also 44.4% riders strongly disagree the symptoms while driving. 1-Strongly Disagree 2-Disagree 3-Neutral 4-Agree 5-Strongly Agree

Statement Nightmare Handshake Sleep fitful Total %

1 42 49 55 146 44.4

2 25 19 25 69 20.9

3 18 19 11 48 14.5

4 15 12 14 41 12.4

5 10 11 5 26 7.8

Total 110 110 110 330 100

Table 4. What extent you perceive the action that caused you to become stress, how stress you become & for how long? It is noted that two wheeler riders perceive the action only sometimes that cause them stressed (43 riders), drivers gets stressed sometimes (55 riders) & even they get stressed they lack only for less than 2 minutes (46 riders).

Particulars Not at all Sometimes Occasionally

Response 23 43 22

Particulars Not at all Sometimes Occasionally

Response 16 55 19

How long they Response get stressed >2 minutes 46 2-5 minutes 5-10 minutes 10-15 minutes 15-30 minutes 16 15 19 4

Frequently 10 Extremely very 12 much

Frequently 14 Extremely 6 very much


Table 5. Status which you belong to while driving It is observed that only sometimes (43 riders) drivers feel danger of being late while driving, they are not at all taking care of their driving (49 riders) i.e. stress affect their driving & 46 riders of drivers are sometimes aggressive in their driving

Danger of being late Not at all Sometimes Occasionally Frequently Extremely very much

Response 9 43 33 16 9

More careful Not at all Sometimes Occasionally Frequently Extremely very much

Response 49 20 15 12 14

More aggressive Not at all Sometimes Occasionally Frequently Extremely very much

Response 12 46 22 17 13

Table 6. Response towards a stressful situation From the below table we infer the first response towards the stressed situation was SLOWED DOWN (60 responses), second response was FLASHED LIGHTS (48 responses), third response was TAPPED OR HIT BRAKES (42 responses).

PARTICULARS Made gesture(s) Yelling Honking Name calling Muttered comments Tailgated Sped up Slowed down Flashed lights Refused lane access to other driver Tapped or Hit brakes No action at all

RESPONSE 5 31 28 15 36 25 17 60 48 23 42 0

Table 7. Comparative analysis between gender with distance travelled by riders by using chi-square test Ho- There is no significant difference between GENDER & DISTANCE TRAVELLED BY RIDERS. H1- There is significant difference between GENDER & DISTANCE TRAVELLED BY RIDERS.


Daily travel in kms Gender Male Female Total

Less 5kms 18 6 24

than 5-10kms 11 17 28

10-15kms 13 7 20

More than TOTAL 20kms 33 5 38 75 35 110

Observed Value (O) 18 11 13 33 6 17 7 5 TOTAL

FORMULA to calculate Experimental Value 24*75/110 28*75/110 20*75/110 38*75/110 24*35/110 28*35/110 20*35/110 38*35/110

Experimental value (E) 16.4 19.1 13.6 25.9 7.6 8.9 6.4 12.1

(O-E)2 / E .16 3.4 .03 1.95 .34 7.4 .06 4.2 18.08


CV> TV, reject Ho.

18.08 5% (m-1)(n-1)= (4-1)(2-1)= 3 7.49

There is no significance difference b/n gender & distance traveled daily.

Table 8. Comparative analysis between marital status with distance travelled by using chi-square Ho- There is no significant difference between marital status and daily distance traveled by riders H1- There is significant difference between marital status and daily distance traveled by riders

Daily travel in Km Marital status Married Unmarried Total Observed Value (O)

Less 5kms 11 13 24

than 5-10kms


More than TOTAL 20kms 5 33 38 23 87 110 value (O-E)2 / E

4 24 28 FORMULA to calculate Experimental Value


3 17 20

Experimental (E)

11 4 3 5 13 24 17 33 Total

24*23/110 28*23/110 20*23/110 38*23/110 24*87/110 28*87/110 20*87/110 38*87/110

5.02 5.9 4.2 7.9 19.0 22.1 16.0 30.0

7.12 0.61 0.34 1.06 1.9 0.16 0.06 0.3 13.45


13.45 5% (m-1)(n-1)= (4-1)(2-1)= 3 7.82

CV > TV, hence reject Ho. There is significance between marital status and daily distance traveled by the riders

Table 9. Comparative analysis between responses with riders, symptoms with riders by using anova test. ROW: H0 = There is no significant difference between the response and riders. H1 = There is a significant difference between the response and riders. COLUMN: H0 = There is no significant difference between symptoms and riders. H1 = There is a significant difference between symptoms and riders.

Strongly Disagree Nightmare Handshake Sleep fit Total 42 49 55 146 Strongly Disagree Nightmare Handshake Sleep fit Total 17 24 30 71

Disagree 25 19 25 69 Disagree 0 -6 0 -6

Neutral 18 19 11 48 Neutral -7 -6 -14 -27


Agree 15 12 14 41 Agree -10 -13 -11 -34

Strongly Agree 10 11 5 26 Strongly Agree -15 -14 -20 -49

TOTAL 110 110 110 330 TOTAL -15 -15 -15 -45

GRAND TOTAL (GT) = -45 1) CF=GT2/Total no. of observation = (-45)2/15 = 135 2) Sum of Square between Column (SSC) SSC= {[(C1)2/observation under c1] + [(c2)2/observation under c2] + [(c3)2/observation under c3] + [(c4)2/observation under c4] + [(c5)2/observation under c5] - CF = {[(71*71)/3] + [(-6*-6)/3] + [(-27*-27)/3] + [(-34*-34)/3] + [(-49*-49)/3]}- 135 = 1680.33 + 12 + 243 + 385.33 + 800.33 - 135 = 3121 135 = 2986 Degree of freedom = (c-1) = (5-1) = 4 3) Sum of Square between Column (SSC) SSC = {[(-15*-15)/5] + [(-15*-15)/5] + [(-15*-15)/5]}-135 = 135 135 = 0 Degree of freedom = (r-1) = (3-1) = 2

4) Total sum of squares = (sum of square of all the terms in the table) - CF = [(17)2 + (24)2 + (30)2 + (0)2 + (-6)2 + (0)2 + (-7)2 + (-6)2 + (-14)2 + (-10)2 + (-13)2 + (-11)2 + (-15)2 + (-14)2 + (-20)2] - 135 = 3293-135 = 3158. 5) Residual Sum of Square = 3158-2986-0 = 172 Degree of Freedom = (c-1) (r-1) = (5-1) (3-1) = 4*2 = 8 6)

Source Between column Between Row residual

7) CV of F?

Sum of square 2986 0 172

DF 4 2 8

Variance 746.5 0 21.5

Let us keep residual value as fixed and compare with column and row. F= 746.5/21.5 = 34.72 => CV DF = (4, 8) at 5% TV => 3.83 265


So CV>TV, Reject H0, There is a significant difference between symptoms and riders. ROW TV =? F = 0/21.5 = 0

DF = (2, 8) at 5% TV = 4.45 So TV > CV, Accept H0 , There is no significant difference between the response and riders. Table 10. Comparative analsis between driving behaviour with riders, response with riders by using anova test ROW: H0 = There is no significant difference between the driving behaviors and riders. H1 = There is significant difference between the driving behaviors and riders. COLUMN: H0 = There is no significant difference between the response and riders. H1 = There is significant difference between the response and riders.

Extremely Not at all Sometimes Occasionally Frequently very much (1) (2) (3) (4) (5) 9 50 13 72 Not at all (1) 43 17 45 106 34 15 22 71 16 14 17 47 8 14 12 34

TOTAL 110 110 110 330

Danger of being late Carefully aggressively

Danger of being late Carefully aggressively

Extremely Sometimes Occasionally Frequently very much (2) (3) (4) (5) 9 -17 12 4 0 -19 -12 -31 -18 -20 -17 -55 -26 -20 -22 -68 -60 -60 -60 -180

-25 16 -21 -30

GRAND TOTAL (GT) = -180 1) CF=GT2/Total no. of observation = (-180)2/15 = 2160 2) Sum of Square between Column (SSC) SSC= {[(C1)2/observation under c1] + [(c2)2/observation under c2] + [(c3)2/observation under c3] + [(c4)2/observation under c4] + [(c5)2/observation under c5] - CF = {[(-30*-30)/3] + [(4*4)/3] + [(-31*-31)/3] + [(-55*-55)/3] + [(-68*-68)/3]}- 2160 = 300 + 5.33 + 320.33 + 1008.33 + 1541.33 - 2160 = 1015.33 266

Degree of freedom = (c-1)= (5-1) = 4 3) Sum of Square between Column (SSC) SSC = {[(-60*-60)/5] + [(-60*-60)/5] + [(-60*-60)/5]}-2160 = 2160 - 2160 = 0 Degree of freedom = (r-1) = (3-1) = 2 4) Total sum of squares = [(-25)2 + (9)2 + (0)2 + (-18)2 + (-26)2 + (16)2 + (-17)2 + (-19)2 + (-20)2 + (-20)2 + (-21)2 + (12)2 + (-12)2 + (-17)2 + (-22)2] - 2160 = 4914 - 2160 = 2754 5) Residual Sum of Square = 2754-1015.33-0 = 1738.67 Degree of Freedom = (c-1) (r-1) = (5-1) (3-1) = 4*2 = 8 6)

Source Between column Between Row residual

7) CV of F? COLUMN

Sum of square 1015.33 0 1738.67

DF 4 2 8

Variance 507.665 0 213.33

Let us keep residual value as fixed and compare with column and row.

TV =?

F= 507.665/213.33 = 2.379 = CV

DF = (4, 8) at 5% TV = 3.83 TV>CV, Accept H0, There is no significant difference between the response and riders. ROW TV =?

F = 0/213.33 = 0

DF = (2, 8) at 5% TV = 4.45 TV > CV, Accept H0, There is significant difference between the driving behaviors and riders


Table 11. Analyysis of response of bikers due to stress by using weighted average method

1 Nightmare Handshake Sleep fit 42 49 55 146

2 25 19 25 69

3 18 19 11 48

4 15 12 14 41

5 10 11 5 26

TOTAL 110 110 110 330

Category of item Nightmare Handshake Sleep fit


Calculation (1*42+2*25+3*18+4*15+5*10) (1*49+2*19+3*19+4*12+5*11) (1*55+2*25+3*11+4*14+5*5)

Value 0.775 0748 0.663


From the above table it is inferred the nightmare is first symptoms given by the drivers while driving.

MAJOR FINDINGS OF THE STUDY It is observed from table 1 that, out of the surveyed population, 75 were males (68%) and 35 were females (32%) riders. 86 were unmarried (78%) and 24 were married (22%) riders. It is noted from table 2 that 24 respondants rides(21.8%) less than 5km on an average, 28 respondants rides(25.4%) 5-10km on an average, 20respondants rides(18.3%) 10-15km on an average, 38 respondants rides(34.5%) more than 20km on an average. Also it is inferred that 72 respondants rides(65.4%) less than 2hrs, 17 respondants rides(15.4%) for 2-3hrs, 14 respondants rides(12.7%) for 3-4 hrs, and 7 respondantsrides(6.5%) for more than 4hrs. It is inferred from table 3 that, 42 riders of the two wheeler riders strongly disagree that they have night mares, 49 riders of the rider strongly disagree that they get cold & 55 riders strongly disagree that their sleep is fitful and disturbed while riding the two wheelers. Also 44.4% riders strongly disagree the symptom while driving. It is cited from table 4 that drivers perceive the action only sometimes that cause them stressed (43riders), drivers gets stressed sometimes (55riders) & even they get stressed they lack only for less than 2 minutes (46riders). Table 5 shows that only sometimes (43riders) feel danger of being late while driving, they are not at all taking care of their driving (49 riders) i.e. stress affect their driving & 46 riders are sometimes aggressive in their driving. It is oberved from table 6 that the first response towards the stressed situation was SLOWED DOWN (60 responses), second response was FLASHED LIGHTS (48 responses), third response was TAPPED OR HIT 268

BRAKES (42 responses). It is noted from table 7 that there is significance between marital status and daily distance traveled by the riders Table 8 cited that there is significance between marital status and daily distance traveled by the riders It is inferred the table 11 that nightmare is first response given by the drivers while driving.

faster, but could prevent you from arriving at all; Dont go hungry - hunger can affect your concentration but dont eat at the wheel; Tell your employer if you think you may be suffering from stress due to your job-its their duty to resolve the problem

RECOMMENDATIONS Try to clear your mind of personal or work problems before driving; Focus on the drive ahead and its hazards be aware that an unexpected hazard could crop up at any moment and if you are not concentrating it could be fatal; Remember that you have a responsibility as a driver to look out for vulnerable road users (pedestrians, cyclists, motorcyclists and horseriders), which requires your full attention; Predict and accept things that bother you on the road and make a decision not to let them wind you up; Calm, controlled breathing helps to release muscular tension and relieve stress; dont drive if youre tired and take regular breaks during long journeys to refocus your concentration (the Government advises breaks at least every two hours for fifteen minutes); Plan your route carefully and allow plenty of time for your journey - rushing will only increase anxiety; Ensure the drivers seat and handle column are correctly adjusted for you; Drive at an appropriate speed within the speed limit driving aggressively, speeding and overtaking are unlikely to get you there much 269

CONCLUSION Driving Psychology is now in the beginning stages and is still evolving in content and method, in response to the new need for managing driving behavior in an industrialized society. The goal of driving psychology is to reverse the natural trend of escalating accidents that occur with a sharp increase in the number of drivers and miles driven. The escalation of accidents, injuries, and their financial cost is a preventable phenomenon, but it requires socio-cultural interventions by government, social agencies, and citizen organizations. It is not preventable or containable by law enforcement methods alone because these are external coercion mechanisms that have only a limited effect. Drivers will revert to aggressive driving styles when detection by police can be avoided. Compliance is dependent on surveillance. Therefore, internal influence is possible only through the voluntary cooperation of each individual. This voluntary cooperation can be engineered by means of the social influencing process that naturally occurs in small groups like the Quality Driving Circles (QDCs). In addition, the new driving norms that these sociocultural methods create in each community, are then spontaneously adopted from their parents by the current generation of children who will form the next wave of drivers in the region.. Thus, driving psychology is also a health-enhancing practice. Driving psychology can draw on the methodology used in allied fields such as behavior management techniques for self-modification. This feature can be used in self-assessment as well as in setting standards for testing, licensing, and rewarding or

punishing (socially, economically, and legally). HASTE MAKES WASTE

REFERENCES 1. James (Jakobovits), L.A. and Nahl, Diane. (1987) Learning the library: Taxonomy of skills and errors. College and Research Libraries, 48 (3), pp. 203-214. 2. Kohlberg, L. (1976) Moral stages and moralization. In T. Lickona (Ed.), Moral Development and Behavior. New York: Holt, Rinehart & Winston. 3. Krathwohl, D.R., Bloom, B.S., and Masia, B.B. (1964) Taxonomy of Educational Objectives: The Classification of Educational Goals. Handbook II: Affective Domain. New York: David McKay. 4. Luria, A. (1961) The Role of Speech in the Regulation of Normal and Abnormal Behavior. New York: Liveright. 5. McKnight, A.J. and Adams, B.B. Driver education task analysis. Alexandria, VA: Human Resources Research Organization, 1970-1 (Volumes I, II, III) (Cited in Michon, 1985)

6. Meichenbaum, D. and Goodman, S. (1979) Clinical use of private speech and critical questions about its study in natural settings. In G. Zivin (Ed.), The Development of SelfRegulation Through Private Speech. New York: Wiley. 7. Michon, J.A. (1985) A critical view of driver behavior models: What do we know, what should we do? In L. Evans and R.C. Schwing (Eds.). Human Behavior and Traffic Safety. New York: Plenum Press. pp. 485-520. 8. Mischel, W. (1991) Personality dispositions revised and revised: A view after three decades. L. A. Pervin (Ed.) Handbook of Personality Theory and Research (pp. 111-134) New York: Guilford Press. 9. Nahl,. Diane (1999) What is Driving Informatics. On the Web at http://DrDriving. org/informatics.html 10. Nahl, Diane. (1998) Novices First Use of Web Search Engines: Affective Control in Cognitive Processing. Internet Reference Services Quarterly 3(2): pp. 51-72. 11. Nahl, Diane. (1997). Information Counseling Inventory of Affective and Cognitive Reactions while Learning the Internet. Internet Reference Services Quarterly 2(2/3): pp. 11-33.


Vertical Integration - Emerging trends and Challenges

Research Scholar, School of Management, SRM University, Kattankulathur Professor, School of Management, SRM University, Kattankulathur

Madhavi Latha Kanniganti Dr. Ravilochanan, P

1. Introduction
Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. Contrary to horizontal integration, which is a consolidation of many firms that handle the same part of the production process, vertical integration is typified by one firm engaged in different parts of production (e.g. growing raw materials, manufacturing, transporting, marketing, and/or retailing). There are three varieties: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration. A company exhibits backward vertical integration when it controls subsidiaries that produce some of the inputs used in the production of its products. For example, an automobile company may own a tire company, a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply of inputs and ensure a consistent quality in their final product. A company tends toward forward vertical integration when it controls distribution centres and retailers where its products are sold. Balanced vertical integration means a firm controls all of these components, from raw materials to final delivery. The three varieties noted are only abstractions; actual firms employ a wide variety of subtle variations. Suppliers are often contractors, not legally owned subsidiaries. Still, a client may effectively control a supplier if their contract solely assures the suppliers profitability. This paper discusses about emerging trends in vertical integration in post recession era and probable challenges there upon.

2. In house Vs Outsource:
Major considerations for the expansion though Vertical Integration would be the In house versus Outsource analysis -to assess what part of supply chain a firm should gain control and make it an in-house versus contract out to a third party or outsource .

3. Drivers for the decision

There are 5 primary assessments which need to be conducted across the supply chain- the key drivers for In house Vs outsource decision Strategic Importance: The product/service or a business process contributing towards uniqueness or intellectual property and gaining competitive advantage due to differentiation cannot be outsourced. Factors impacting short and/ or medium term cost advantage may or may not hold true in longer term. Such assessment is required while evaluating the options. Operational Competence: If the product category / manufacturing technology under assessment is medium to highly sensitive towards quality requirements and requires medium to high technical / resource support the firm may chose to make it an In-house development or control. Supply Depth and Competitiveness: Availability of contract manufacturing options and intensity of industry competition is a relevant factor. Level of product / manufacturing technology differentiation and Level of cost competitiveness relative to firm also may impact the In-house or outsource decision. Potential Bargaining Leverage: Bargaining power of suppliers and / or distributors 271

may impact the firms decision regarding the vertical integration. Bargaining leverage the firm enjoys in its supply chain is a key assessment driver for make or to buy decision. Scale benefit from specialization: Low costs of production (cost per unit or the average cost) can only be achieved if a firm is producing an output level that constitutes a substantial portion of the

total available market. Inbound and outbound logisticsM & A may not be a better choice always. Owning a logistics division for a seasonal and limited Usage may not be an intelligent option rather than outsourcing it. A logistics firm handling operations for various firms may attain cost benefits due to economies of scale and specialization and may pass on that profitability to the outsourcing firms.

In-house Vs Outsource Analysis Drivers

1 Strategic Improtance Is product and / or technology is of strategic importance to the firm?

2 Operational Competence 3 Supply Depth and Competitivences 4 Are the upstream and / or downstream options limited? Does the firm have superior operational capability?

Potential Bargaining Leverage

Does a potential for bargaining exits?

5 Scale benefit from Specializtion Does the firm gain scale benefits from specialization?

1. Pre Recession era Vertical integration is a century old strategy pioneered during the industrial revolution. The old style vertical integration usually crossed multiple industries. With vertical integration, an organization controls the supply of raw materials and the delivery of its products. In other words, it has complete control over its supply chain. More inclined towards In-house development. Later the trend moved towards outsourcing, core competencies and gaining cost reduction due to specialization. Outsourcing has been prospering since the 90s for various reasons such as cost reduction, focus on core competencies, Risk mitigation and a long list of others. 2. Post Recession era But if we have been following the news lately, it is 272

hard to overlook the shift to vertical integration by a number of leading companies such as Oracle, Apple, Arcelor Mittal, GM, Boeing, Pepsi, Tata to name a few. Oracle has been on a spending spree over the last few years by acquiring just about any maker of software, computers, and computer components. The intent is to sell complete systems made of chips, computers, storage devices and software from Oracle. Apple which exited the semiconductor business recently shifted its strategy by silently grabbing small semiconductors suppliers so it can develop its own chips to meet its popular new devices. General Motors, despite its struggle, is also moving towards a lean vertical integration model by grabbing a number of struggling suppliers (e.g. Delphi) and

purchasing factories. The trend towards vertical integration is driven by many reasons such as more control over raw materials (e.g. Arcelor), more control over parts supply (GM, Boeing), more control over beverage distribution (Pepsi), and strategic differentiation (Oracle, apple). Major contribution to this phenomenal shift is sick units being available at through away prices and evolution of few sustained market leaders in post recession era. 3. Emerging challenges Post M&A Integration issues: This new style vertical integration (M & A) will make supply chain much more complex to manage and control. Bureaucratic, cultural and organizational issues have long plagued their supply chains which are often masked by the magnitude of the profits in this industry. Regardless of the degree of vertical integration, supply chains are unlikely to disappear or become easier to manage or control. With multiple acquisitions, organizations end up having multiple supply chains each as complex as the other. The resulting supply chain is slow and bogged by process inefficiencies and limited internal collaboration. Conflicts of Interests: Organizations comprising of multiple business units adopting Vertical integration within one or more of their business units could face challenges in addressing conflicts of interest arising due to multi point competition in related and / or unrelated industries. Challenges due to Dynamic economies: Further, countries such as India and China present unique challenges in that their fast growing economies fuel significant changes over short to medium term. This requires dynamic and agile supply chain systems which pose significant challenges to such a vertical integration. Exit barriers: Another concern is whether the anticipated economic gains will materialize. Before expanding the scope of the firm through vertical integration, management should be sure that the imagined benefits are real. Many 273

blunders have been made by firms that broadened their scope to achieve benefits that did not exist. If the barriers of exit are significant; a firm may be forced to continue to hold the acquisitions of the vertical integration, as the costs of leaving may be higher than those incurred if they continue with the holdings which may not be a desirable outcome.

4. Conclusion
Changing dynamics of economic health Vis- a -Vis evolving requirements of business post recession have fuelled significant changes in trends of vertical integration. While vertical integration is core to business models servicing growth especially in economies such as India. This paper made an attempt at highlighting key drivers which are critical for defining the future trend of vertical integration. Both strategic and operational challenges as highlighted in the paper are likely to influence the emerging trends for such integration. It is hence pertinent that business houses are cognizant of these drivers and suitable risk mitigation steps need to be put in place in order to design a sustainable vertical integration model in line with their growth business needs and addressing risks arising in short to medium term. 5. References: Mansfield, Edwin. Essential Microeconomics: Principles, Cases, Problems. Johnson G, Scholes K and Whittington R, (2006), Exploring Corporate Strategy, Prentice Hall International Bain, Joe S. Barriers to New Competition: Their Character and Consequences in Manufacturing Industries Martin K. Perry. Vertical Integration: Determinants and Effects. Chapter 4 in: Handbook of Industrial Organization. North Holland, 1988. Joseph R. Conlin. The American Past: A Survey of American History. Chapter 27 page 457 under VERTICAL INTEGRATION. Thompson Wadsworth. Belmont, CA, 2007. The Re-rise of Vertical Integration: Mega or Dead Supply Chains? By Farid Harche - Senior consultant Wipro BAS Appendix 1: Acquisition of Shantha Biotechnics by Sanofi Pasteur

Paris, France July 27, 2009 - Sanofi-aventis (EURONEXT: SAN and NYSE: SNY) and Mrieux Alliance announced the signature of a strategic agreement for the acquisition by Sanofi Pasteur of Mrieux Alliances French subsidiary ShanH, which owns a majority stake in vaccine company Shantha Biotechnics based in Hyderabad, India. A new joint committee will be chaired by Alain Mrieux on vaccine strategy for the Emerging Markets. Under the terms of the agreement, Sanofi Pasteur, the vaccines division of the Sanofi-aventis Group, will support Shanthas ongoing development as a platform to address the need for high quality affordable vaccination in international markets. Dr Varaprasad Reddy, the founder of Shantha Biotechnics, will continue to lead the company as Managing Director. Shantha Biotechnics was created in 1993 by Dr. Varaprasad Reddy and is based in Hyderabad, India. Shantha develops, manufactures and markets several important vaccines. Shantha works with supranational organizations like UNICEF and PAHO to supply major international markets including Asia-Pacific, Africa and Latin America. Sanofi-aventis, a leading global pharmaceutical company, offers the broadest range of vaccines protecting against 20 infectious diseases. Every day, the company invests more than EUR 1 million in R & D. Sanofi-aventis has a workforce of 105,000 employees in 110 countries and its net sales were of 29.3 billion in 2009. Sanofi-aventis is listed in Paris (EURONEXT: SAN) and in New York (NYSE: SNY). Mrieux Alliance, the family holding company of Alain Mrieux comprises five companies dedicated to public health that span the full range of healthcare: prevention, diagnosis, prognosis, treatment and clinical follow-up. Strategy of Acquisition For Sanofi Pasteur: Sanofi Pasteur strengthens vaccines position in India through the control of Shantha Biotechnics via Mrieux Alliance. Shantha shall operate as an R & D wing extension and new distribution channel for Sanofi in emerging markets 274

For Shantha: This evolution was rolled out respecting Shanthas philosophy to provide developing countries with international quality level products at an accessible price. Shanthas future development necessitates of bringing a state-of-the-art vaccine manufacturing facility gets a support from a major international vaccine company Alain Mrieux to chair a new Vaccine Strategic Committee of Sanofi Pasteur for Emerging Markets Context of Acquisition Mrieux Alliance acquired the majority shareholding in the Shantha Biotechnics Limited in November, 2006. ( Mrieux Alliance acquired 80% of the stake) Death of Alliance CEOs son who was supposed to take over the charge of Shantha meant the firm lacked managerial guidance and effort for nearly 3 years In 2009, Sanofi-aventis and Mrieux Alliance signed a strategic agreement for the acquisition by Sanofi Pasteur of Shantha Biotechnics. Acquisition particularly focused on successful launch of a pentavalent pediatric vaccine as well as a Cholera vaccine. Its main activity being strengthening a portfolio of new products which are in development: Rotavirus vaccine, Conjugated Typhoid vaccine, and HPV vaccine Present situation Employees have identified more with Mr. Varaprasad than the firm Shantha. Lack of sense of connect with the firm and the acquired brand contributed to many employees leaving the firmAttrition rate rose from 23 % to 73% Within a year of acquisition Sanofi Aventis-owned Shantha Biotech is recalling several lots of its 24 million five-in-one vaccines globally after WHO found it unsuitable for use and raised concerns over its safety. This is estimated to be causing a loss of around $72 million WHO and UNICEF have asked Hyderabad-based Shantha Biotech to determine the root cause of the problem and prepare a corrective action plan within two months, failing which the companys vaccines

will be disqualified from supply to the agency Besides losses from the recall, if WHO disqualifies Shan5, the Indian company could lose a $340-million UNICEF contract to supply Shan5 for 2010-12 This is a setback to Sanofi Aventis, which bought 80% in Shantha in July 2009, valuing the company at 550 million. From past 3 to 4 years Shantha Biotechnics is not in a position to launch a single vaccination Lot of money is being pumped into Shantha by sanofi to get the situation up and running and correcting the organizational disparities both in culture and technology Epilogue In lieu of above discussion it may be concluded that all M& A need not head towards a desired result. Bureaucratic, cultural and organizational issues arising from the M & A have to be taken care of. Management should be sure that the imagined benefits are real by performing an extensive due diligence. Appendix 2: Merger of Axis bank and Enam i-banking arm Axis Bank on Nov 17, 2010 announced acquisition of investment banking and other businesses of Enam Securities for Rs 2,067 crore, a move that will allow the private sector lender expand its footprint in i-banking and retail broking space similar to its rivals HDFC and ICICI banks. Under the deal, Axis Banks first inorganic growth foray, Enams shareholders -- Vallabh Bhansali, Manish Chokhani, Jagdish Master and Nimesh Shah -- will get 5.7 shares of Axis Bank for every one share held which will constitute about 3.3 per cent of the lenders equity base on enlarged capital. Bhansali will also be inducted on to the Board of Axis Bank as an independent Director while Chokhani will be the Managing Director and CEO of the newly formed entity created by the merger. Axis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India 275

(UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank today is capitalized to the extent of Rs. 408.84 crores with the public holding (other than promoters and GDRs) at 53.81%. The Bank has a very wide network of more than 1095 branches and has one of the largest ATM networks in the country. ENAM was founded in 1984 to provide knowledgedriven financial services at a time when the Indian economy was being redefined by market-oriented reforms. The founders - Manek Bhanshali, Nemish Shah, Vallabh Bhanshali and Jagdish Master - were referred to as the Formidable Four of Dalal Street. Being privately owned by professionals contributes to an exceptionally high level of commitment to excellence in client service. Almost all the key decision makers who have joined Enam over the last 20 years are still with it. Enams partnership approach is unique in the Indian context. Strategy of the Axis Bank Axis Bank will use the Enam brand , one of the strongest among the pure-play domestic financial majors, for two years and there will be a non- compete agreement on the merged business for the next five years. The transaction has the potential to create a financial services powerhouse in the country and it combines the investment banking and equities strength of Enam securities and the dominant debt market and commercial banking operations of Axis Bank. Perspective of Enam India is going to see so much capital investments that the landscape is going to change dramatically. There would have been several handicaps for Enam to grow individually since as business grows there would

have been a need for significantly large sums of capital. Enam saw this opportunity to move to the next level. Market situation The M & A deals in India bring in the fees in the range of 1% to 4% of the value of the deal and the market is worth about $800 million (About Rs 3500 crores) in terms of fees, annually On the other hand, Issuance of shares through IPOs, FPO and QIP- bring in fees in the range of 0.5% to 4% of the deal value Axis bank has been growing at about 20-30% annually without strong investment banking wing. Now with strong M& A advisory team and equity issuance issue team under its command and a strong balance sheet to back the deal -will probably make Axis Bank grow at a much faster pace It is clear attempt by Shikha Sharma( Axis bank MD & CEO) to create and integrated financial services firm that will bring banking and investment banking under one roof The deal comes at a time when the government is

planning to sell equity in about 60 state run firms. Although Government deals do not bring in much money, but that takes the merchant banker higher up the M & A league table It is well known fact that being in the top deck in the league table brings in the clients from private sector that pay for the service. Epilogue The combination of capability & capacity of Axis with the talent & experience of Enam in the equities market makes it a strong merger. Through such acquisitions, Axis Bank targets to become a one-stop financial service provider, said Gaurang Shah, assistant vice-president of Geojit BNP Paribas Financial Services. Enam, which is credited for pioneering equity research in the country, enjoys much of its strong reputation for its corporate business. The guarantee that the considerable goodwill enjoyed by Enam would get transferred to Axis Bank is still a question of debate and to be proven by time.


A Study on Sources of Fruit Wastages in Cold Storage and Fruit Processing Industries in Tamilnadu
R. Arivazhagan Asst. Professor, School of Management, SRM University, Kattankulathur Dr. Ravilochanan Professor, School of Management, SRM University, Kattankulathur 1. Introduction
The contribution of agriculture to Indias GDP at the time of Independence was 70% and it accounted for 85% of total employment. The share of agriculture in the countrys GDP has been gradually declining since then. At present, the contribution of agriculture to GDP is about 25%, but it still engages about 70% of the population. The annual average rate of growth of agricultural GDP has also declined from around 3.5% during mid eighties to mere 1.5 % during 2006-07. It is estimated that if the country has to maintain a GDP growth rate of over 8%, the agricultural sector has to grow at the rate of at least 4%. The country has a huge potential for growth in agriculture with about 160 million hectares of arable land and diverse agro climatic conditions, suitable for cultivation of a wide variety of crops. India is the second largest producer of overall fruits. A fresh estimate from the ministry of food processing says a whopping Rs 58,000 crore (Rs 580 billion) worth of agriculture food items get wasted in the country every year. Officials said only 7% of food in India is processed. Out of that the fruits and vegetable processing level in India is estimated to be around 2% as compared to about 80% in Malaysia, 30% in Thailand, and 60-70% in the UK and USA. In spite of being a major producer of fruits, a large quantity is wasted in the absence of storage, logistics and processing support. This study has been conducted in Tamilnadu to find out different sources of fruit wastages in cold storage and fruit processing industries. making agriculture more profitable, through efficient land use, optimum utilization of natural resources and creating skilled employment for rural masses especially womenfolk. Recent efforts have been rewarding in terms of increased production and productivity and availability of much larger volumes of fruit and vegetable crops. As a result India has emerged as the second largest producer of fruits and vegetables in the world. A large variety of fruits are grown in India. India produces over 46 million tonnes of fruits accounting for around 10% of the worlds production. The country ranks first in mango, sapota and acid lime, and in recent years recorded the highest productivity in grape. Some important fruits of India can be seen in the table below: Tropical and subtropical: Mango, banana, citrus, pineapple, papaya, guava, sapota, jackfruit, litchi and grapes Temperate: Apple, pear, peach, plum, almond and walnut Arid Zone: Anola, ber, annona, fig, phalsa Mango is the most important fruit covering 39 percent of the area accounting for almost 23 percent of total fruit production in the country. Indias share in the world production of mango is about 54 percent. Banana ranks second in area covering about 13 percent of total area. Banana contributes nearly one-third of the total fruit production. Citrus ranks third in area and accounts for about 10 percent of the countrys fruit production. Apple is another major fruit in the country with production of about 1.42 million tonnes. There has been steady increase in the area, and production of arid zone fruits particularly aonla, ber and pomegranate as a result of identification and development of suitable varieties and production technologies. The area and production of major fruit crops can be seen in the table below. 277

2. Overview of the Fruits in India

India with its wide variability of climate and soil produces a wide range of horticultural crops including fruits and vegetables. Fruit and vegetable crops have been identified as a means of diversification for

Table 1: Fruit Production in India Area Crop Banana Mango Citrus Papaya Guava Apple Pineapple Grapes Litchi (In Million Ha.) 0.62 1.56 0.56 0.07 0.19 0.25 0.08 0.06 0.05 Production (In Million Tonnes) 16.45 10.64 4.58 1.82 1.68 1.42 1.26 1.10 0.42 Percentage in Total Production 35.3 22.8 9.8 3.9 3.6 3.0 2.7 2.4 0.9

Source: Ministry of Agriculture, Government of India

3. Review of Literature
Major issues that exist in the supply chain of fruits and vegetables include the losses during post harvest handling, processing, packaging and transportation. The loss of fruits and vegetables during transportation is said to be in the range of 20 - 30% in countries like China and India. In many countries including China and India - two largest producers of fresh fruits and vegetables in the world - the existing cold storage facilities, reefer vehicles, product traceability solutions and other infrastructural facilities are insufficient to counter the problem of high supply chain losses. (Source: Articles Base SC #2720238) P.K. Mishra, secretary in the ministrys department of agriculture and co-operation, said at a Fruit and Vegetable Summit organised by Confederation of Indian Industry (CII) in 2008, that the production of vegetables in India is next only to China. The vegetable and fruit production contributes more than 30 percent of the agriculture GDP. The crop diversification has led to rise in horticulture production, which has reached 185.2 billion tonnes last year. But the real challenge starts after 278

the production. More than 72 percent of the vegetable and fruits are wasted in the absence of proper retailing. (Source: CII Fruit and Vegetable Summit - 2008) Agriculture Minister Sharad Pawar also said there were quite a few constraints in the sector. The sector is constrained by widespread fragmentation in the supply chain, low productivity levels, and huge post harvest losses arising out of inadequate storage, cold chain and transport infrastructure, logistics and supply chain management. Only organised and traditional retailing will ultimately drive the growth of the fruits and vegetable sector in the country. Pawar also called for an appropriate policy support for the growth of retail chains for fruits and vegetables in the country. (Source: CII Fruit and Vegetable Summit - 2008) Inadequate infrastructure has been identified as a major constraint in the growth of fruit and vegetable processing industries. Without a strong and dependable cold chain, a vital sector like F&V processing industry, which is based mostly on perishable products, cannot survive and grow. Even at currents level of production, wastage

in F&V is estimated at 35%, major reasons being inadequate storage, transportation, cold chain facilities and other infrastructure support facilities. Government of India has been implementing several schemes for facilitating creation of infrastructure for food processing including the following components relevant for F&V processing sector: Food Parks, Packaging Centers, Integrated Cold Chain Facility, Value Added Centers and Irradiation Facilities. (Source: Ministry of Food Processing Industry (MFPI), Government of India) The Tenth Plan schemes for Packaging Centre, Integrated Cold Chain Facilities, Value Added Centre and Irradiation Facilities have had a low response. Only 12 cold storage/ chains, 3 Value Added Centers, 1 Packaging Centre and 4 Irradiation Facilities have been supported under the four components during the Tenth Plan so far. The weaknesses identified in these schemes are as follows: Keeping in view the National Horticulture Boards Capital Subsidy Scheme for cold storages, the MFPIs assistance is limited to: Cold storages for non-horticulture produce Where the cold storage is an integral part of the processing unit or of the common facilities in the food park Special type of cold storages with Controlled Atmosphere/ Modified Atmosphere facility Integrated solution for cold chain facility from farm gate till consumer is missing. Since precooling units, mobile refrigerated transport including reefer vans etc. have been excluded from the scheme, complete cold chain facilities without any break cannot be supported under the scheme. Exclusion of horticulture produce for assistance under the scheme has created a gap. Since 1999-2000, NHB along with NABARD, NCDC and NAFED have been able to provide assistance for cold chain facilities to the tune of Rs. 273 Crores only, while the total need for investments for cold chain facilities for horticulture produce is envisaged at Rs. 2245 Crores during the Tenth Plan. 279

Another important reason why large-scale investments have not taken place in Indias cold chain infrastructure is that to be viable, investments in cold chain are expected to require not less than 100 days in a year whereas the typical inflow for raw material from agriculture is within the range of 30-40 days for each product.

The failure to build supply chain from the farm to the consumer has prevented any incentive to invest in cold chain. Fruits and vegetables are largely distributed and consumed in the immediate vicinity of production centers, requiring little cooling. It is only when production is surplus to requirements that processing is resorted to. (Source: 11th five year plan report, Government of India)

Around 5 to 10 per cent of vegetables and fruits that arrive at the Koyambedu wholesale market in the city are wasted daily for want of proper temperaturecontrolled storage facilities, according to the traders. The market receives around 3,000 tonnes of vegetables every day. The arrival at the fruits market is anywhere between 1,500 and 2,000 tonnes daily. A governmentrun cold storage facility is available near the market. But its patronage is low as traders say that maintenance of the facility is inadequate. Wholesale trader K. Ponraj said if maintained properly the facility would help in storing at least some amount of the excess produce that arrives in the market. Such storage would also help facilitate price stabilization. Vegetables such as cauliflower, potato and green peas could be stored for about a week. V. R. Soundararajan, one of the members of the Koyambedu Market Management Committee, said different vegetables and fruits have to be stored at different temperatures. But, it is not being followed properly at the cold storage facility. Traders also found the timing of the facility inconvenient. While the bulk of the business in the market takes place between 2 a.m. and 5 a.m., the facility is open only after 7 a.m. As the traders require the stocks from the cold storage before 2 a.m., not many patronize the facility, he said. The cold storage, belonging to the Tamil Nadu Co-operative Marketing Federation Ltd (TANFED), has a capacity to

store 2,500 tonnes. Officials of the Federation said only 60 per cent of the facility is being used and about 300 customers patronize it. The produce is stored between two degree Celsius and four degree Celsius according to the requirements of the customers. The officials complained that private cold storage plants are operated by some of the traders in the market, resulting in low patronage for the government-run facility. Traders said that two or three such private facilities were available to store mushrooms. (Source: The Hindu - Friday, Jun 25, 2010)

Most of the imported fruits have been received through ship logistics. It takes normally one month of lead time. This leads to reduction of shelf life and spoilage of fruits. Spoilage due to this particular reason could not able to determine, because cold storage people dispatch all the imported fruits before their spoilage. Most of the private cold storage people are doing job work for the fruit suppliers and agencies. Hence demand and supply for the private cold storage is more or less equal. So wastage during storage due to lack of demand is 0%. Some of the government based cold storage also doing job work for the suppliers, agencies, whole sellers and retailers on contract basis. Though it is job work, wastage during storage in government cold storage is around 5 to 10% per day due to poor maintenance. Beaten spots in fruits could not able to identify in raw stage. It is due to poor method of harvesting, poor handling, careless transportation etc. During the ripening process it will get directly decay without going for ripening stage. This kind of wastage happening in fruit processing industry is about 2 - 3%. Shelf life of fruits in fruit processing industrys cold storage is very high. For example, one of the mango processing industry is stored their raw materials (Mango fruits) more than 18 months under -16C temperature. Since most of the fruit processing industries are micro, small and medium enterprises, they are doing most of the process by manually. During manual peeling, some quantity of pulp and flesh will stick with outer cover layer of the fruits. Similarly, some quantity of wastage is occurring during seed and some fiber removal stage. Wastage due to manual process is coming around 5-6%.

4. Methodology
Researcher has collected list of 17 different fruit processing industries and 23 cold storages in Tamilnadu. Out of above sampling frame with 40 numbers, researcher has collected data from 25 different people of sample which includes 10 fruit processing industry and 15 cold storages. Data have been collected through telephonic interviews. Questions were asked based on fruit wastages. Researcher has identified some sources of wastages and the same were confirmed with empirical data of the respondents. Respondents themselves also have given some of the resources of fruit wastages. After collecting the data, they were tabulated and analyzed based on simple tool called average method.

5. Findings
Wastage of fruits in cold storage and fruit processing industry is 10 to 15% due to receiving of fruits with poor quality of packages, beaten spots during harvesting and post harvest handling and transportation of fruits, careless handling during processing, manual processing, peeling, seed removal etc. Cold storages are receiving fruits from different parts of India and they are importing some of the fruits from different countries which are less available in our country like apple, orange, grapes, strawberry etc. All the cold storages are felt that domestic packages are poor than the international packages. Spoilage of fruits in international packages is just 1 to 2% whereas in domestic package it is coming around 4 to 7%. Most of the suppliers are not following the terms and conditions of packaging methods and materials which used for packing. 280

6. Discussions and Conclusion

As per our review of literature more than 72% of fruits are getting waste in total production in India. Based on our study, 10 to 15% of fruits are getting waste through fruit processing industry and cold storage facilities. It is very less with compared to total wastage. Major wastage is occurring excluding these two areas. Researcher is now suspecting that major wastage is occurring before reaching in to the cold storage or lack of cold storage facilities. Cold storages are dispatching their

commodities in two different ways. First one is that to fruit processing industry. Second one is that, to market for direct selling and consumption. This study clearly states that, wastages in fruit processing industry are very less. Hence there may be chances of wastages in direct market. So finally researcher has concluded that wastage of fruits might be happen in two different areas. They are, before coming in to the cold storage (Poor harvesting methods and equipments, Poor post harvest handling, logistics and supply chain management and lack of cold storage) and markets (suppliers, agencies, whole sellers and retailers). Moreover it is confirmed that, wastage in cold storage facilities and fruit processing industry is very less. In contrast, they are good resources for reduction of wastages through proper storage and effective utilization of fruits. Though they are good resources for reduction of wastages, they are facing other problems like lack of technology and R&D facilities. If these problems could be reduced, wastage of fruits will become very meager in fruit processing industry and cold storage.

7. References 1. The IUP Journal of 92 Supply Chain Management, Vol. VII, Nos. 1 & 2, 2010 2. Articles Base SC #2720238, www.articlesbase. com 3. Ministry of Agriculture report, Government of India 4. Confederation of Indian Industry Fruit and Vegetable Summit - 2008 5. A report on Indian Food Processing Industry, Corporate Catalyst India 6. Eleventh five year plan, Report of the working group on food processing sector, Ministry of food processing industries, Government of India, November 2006 7. The Hindu - Friday, Jun 25, 2010 8. Food Industry India - Online news magazine 9. Thaindian News Online news portal 10. 11. 12. 13.


An instrument for the measurement of Vendor perceptions of software quality in Off shoring
K. Sankaran and G. Kannabiran
Department of Management Studies, National Institute of Technology,Tiruchirappalli

1. Introduction
Many Indian software companies have become an acclaimed vendor for offshore software development projects due to their delivery capabilities, characterized by quality and cost-effective software to the customers across the globe. Predominantly driven by cost considerations, increasing number of software projects have been outsourced by organizations in the US and Europe to firms in developing countries such as India and China. In recent times, management teams of both outsourcing and vendor firms have realized that cost considerations, generally assumed to be the primary reason for offshore outsourcing, need to be balanced with the focus on high quality. In the past few years, the Indian software industry has pursued the goal of acquiring the highest standards of quality and has thus created a strong value proposition in the software and services arena. India has the largest number of companies in the world that are certified for quality standards According to NASSCOM (2006), over 440 Indian companies had acquired quality certifications with 90 companies certified at SEI CMM Level 5 higher than any other country in the world. This demonstrates the maturity levels achieved in quality by the Indian software industry. Researchers have reported that in view of the decreasing cost advantages, Indian offshore vendors need to change focus from cost to the quality related measures of the software services provided (Carmel & Agarwal, 2002; Davis et al, 2006). Therefore, managing software quality is very important in evolving strategy for both offshore vendors and customers. It is observed that there have been only few comprehensive studies on factors that impact software quality; but quantitative survey-based research is lacking on the subject (Verner & Evanco, 2005). Therefore, this paper empirically evaluates the key factors that determine the quality in offshore 282

software development, through a survey of leading IT Services Company in India. The paper is organized as follows. The review of previous research is presented followed by research objectives and methodology, data analysis and interpretation, followed by the discussion on the relative importance of the determinants. The paper is concluded with implications for practice and directions for future research.

2. Previous Research
The importance of software quality has been stressed by researchers who observed that Software quality can determine the success or failure of a software product in todays competitive market (Tian, 2004; Luftman & Kempaiah, 2008). The need for quality management in software projects becomes highly relevant in this context and quality of software is receiving a great deal of attention. Quality management is one of the methods for reducing the cost of production, by eliminating inefficiencies in the development processes. In an effort to keep costs within budget and simultaneously to meet the scheduled time of delivery, IT firms are adopting various quality management practices (Harter et al., 2000; Wali et al., 2000). The relevant previous research relating to software quality and its determinants are reviewed and presented in the following sections.

2.1 Software Quality [SQ]

Many definitions of software quality [SQ] are in use, which in general agree on what quality means and it can be enshrined by the phrase satisfaction of customer requirements (Xenos & Christodoulakis, 1997). SQ is a multidimensional measure, it is essential to determine what aspects of quality are important to organizations. There are essentially two approaches that can be followed to ensure software product quality, one being assurance of the process by which the product is developed, and the other being the evaluation of the

quality of the end product. The state of the art in software technology does not yet present a well established and widely accepted description scheme for assessing the quality of software products. Much work has been done by a number of individuals to define a SQ model which acts as a framework for the evaluation of attributes of SQ (Behkamal et al., 2009). Traditionally, SQ has been defined to be composed of correctness, reliability, usability, and maintainability (Dromey, 1995). Quality models have been developed in the past, the most widely known of which being McCalls and Boehms, and more recently the ISO9126. In 1991, International Organization for Standardization introduced a standard named ISO/IEC 9126 software product evaluation-Quality characteristics and guidelines for use (Jovanovic & Shoemaker, 1997). Finally, the ISO 9126 model follows the same approach as the other two aforementioned models, with the main difference being that the level of complexity is lower here as the hierarchy is stricter that each quality characteristic is related only to exactly one attribute, with no common attributes between characteristics. As per ISO 9126 standard, quality is defined as the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs (Agarwal & Chari, 2007). SQ has also been defined (Boegh, 2008) in terms of two types of product characteristics: (i) external quality (how the product works in its environment), like usability and reliability, and (ii) internal quality (how the product was developed), such as, software structure and complexity (Gorla & Ramakrishnan, 1997). External SQ attributes is being emphasized as they have been already validated through a study carried out in the recent past (Jung, 2007). A recent study by Gorla and Lin, (2010) on determinants of SQ through a survey of Information system project managers has found that organizational factors are more important than technical factors in impacting SQ. According to ISO 9126 model, there are six major characteristics, namely functionality, reliability, usability, efficiency, maintainability and portability, along with their associated sub-characteristics (Andreou & Tziakouris, 2007). Functionality expresses 283

the ability of a system to provide the required services and functions, when used under specified conditions, while reliability is an indication of the confidence that the software will live up to the expectations. Usability indicates the understandability of software as well as the easiness to learn and operate it (Selfah et al., 2006). Efficiency is related to the performance of software and maintainability to the means provided by the software to be upgraded and customized. In this context, software process improvement (SPI) helps to enhance maintainability of the software (Chen & Huang, 2009). Finally, portability indicates the level of adaptability/installability of a software product to different environments, as well as its conformance to related standards. In our research, since the attribute portability is considered applicable only in software products that need to be implemented on multiple platforms (Glass, 1998), it was not included. Similarly, efficiency attribute is viewed as an internal quality attribute as it deals with time behavior and computing resources consumed (Gorla & Lin 2010); thus, it was substituted by performance of the software in our chosen list of software quality attributes. However, these factors of ISO 9126 model are customized. For example, desirable SQ attributes for web applications are reliability, usability, security, availability, scalability, maintainability, and time to market (Behkamal et al., 2009).

3. Determinants of Software Quality: Vendors Perspective

Based on a detailed review of relevant literature and discussions with the project managers, it is found that the software quality can be measured with the help of six determinants: requirements uncertainty, technical infrastructure, knowledge transfer and integration, process maturity, trained personnel and communication & control. Each of these determinants is examined in the following section.

3.1 Requirements Uncertainty [RU]

Requirements uncertainty [RU] emerges from inability to apply a standardized process to convert requirements into functional specifications (Pressman 2005). Previous studies (Nidumolu, 1995; Harter et al. 2000; Han and Huang 2007) posit RU to be an important source of

poor quality in software development. The effects of RU are magnified in the offshore domain due to barriers of geographical and organizational boundaries between the client and vendor (Gopal & Koka, 2008). Therefore, it may be considered that RU will affect the quality of software in projects.

rework in software development (Harter et al. (2000). Many researchers have endorsed the view that process improvements are vital for improving software quality (Bunse et al., 1998; Li et al., 2000). Higher level of process maturity, invariably, results in the enhancement of SQ (Subramanian et al., 2007).

3.2 Technical Infrastructure [TI]

Technical Infrastructure [TI] is vital in the case of software industries, where the technological advancement is experienced at a very rapid pace and its adaptation is mandatory for the very survival of software organizations. Many researchers have found obsolescence of technologies as the major risk faced by software companies (Barki et al., 1993; Ravichandran & Shareef, 2001). Exposure to latest technology and availability of facilities, including latest hardware and software infrastructure, play a crucial role with respect to SQ.

3.5 Trained personnel [TP]

Prior research has highlighted the importance of personnel competence in developing high-quality software. This effect should be particularly true in the offshore development since there is always a supplydemand mismatch with respect to trained professionals (Shah, 2004). Pressman (2005) observed that trained programmers use better design techniques, are more aware of the link between requirements and systems parameters and are able to write better code. Experienced personnel are also more capable in testing and defect prevention activities, thereby resulting in better quality and more productive use of resources (Krishnan et al., 2000).In offshoring projects, the availability /nonavailability of trained personnel is further affected by the continuity in the staffing of projects (Gopal and Koka, 2008).

3.3 Knowledge Transfer and Integration [KTI]

Knowledge Integration is defined as the process of absorbing knowledge from external sources and blending it with the technical and business skills, knowhow, and expertise that reside in the business and IS units of a firm ( Okhuysen and Eisenhardt 2002; Tiwana & Sambamurthy, 2003). Internal knowledge Integration refers to the extent to which the development team builds on the knowledge of the stakeholders during the development process. External integration refers to the knowledge relating to market needs, regulatory constraints, external environment and business and technical developments that may affect development project (Prahalad & Krishnan 2002). Adopting the development project as the focal point, both external and internal integration are considered to be important in achieving quality (Lyytinen et al.1998).

3.6 Communication and Control [CC]

Communication helps to provide better control of processes, which in turn helps to improve quality (Bunse et al., 1998). A control mode is a formal arrangement practiced by both vendors and customers in software projects facilitating the interaction among the teams. According to (Gopal et al., 2002), communication and control mechanisms in offshore development reduce project uncertainty and thereby improve quality. Communication helps to provide better control of processes, which in turn helps to improve quality (Bunse et al., 1998). 4. Empirical Validation of Software Quality Management Constructs

3.4 Process maturity [PM]

Process maturity [PM] is defined as the indication of how close a developing process is to being complete, and capable of continuous improvement through quantitative measure and feedback. It is observed that quality improvement, cycle time and effort reduction can be simultaneously achieved by fewer defects and 284

4.1 Methodology

Measurement of the perceptions of the project managers of vendors, followed by an empirical analysis of data (by using reliable and valid instruments) is necessary to identify the key determinants of software quality management in offshore development projects, as

perceived by vendors. A questionnaire survey is widely acknowledged as an efficient tool for assessing the perceptions of individuals on a particular subject. A measurement model is specified for each construct, and by using the data collected from respondents of the questionnaire survey, a Confirmatory Factor Analysis (CFA) is run for all constructs for checking convergent validity, unidimensionality, and reliability of the constructs.

4.2 Development of Survey Instrument

For development of the survey instrument for the research, we had interacted with the senior project managers of various software companies to verify the applicability of the various constructs used in our study. First, a review was performed on questionnaires published in the area of software quality management that measured variables similar to those represented in the hypotheses. Few questionnaires were identified (Ravichandran and Rai, 2000; Rajendran et al., 2006; Gopal and Koka, 2008) from which reliable and valid questions were drawn and included as a part of the proposed instrument. This benchmarking process was aimed to reduce the risks of survey failure (i.e., to collect data that may not consistently measure the variables). A comprehensive research questionnaire was constructed to measure the constructs in the proposed research model. Items related to measure software quality attributes viz., Functionality, Reliability, Maintainability, Usability and Performance were measured using a 5-point Likert Scale (Strongly Disagree ,Disagree, Neutral, Agree and Strongly Agree). Similarly, items related to measure the determinants,viz. Requirements Uncertainty, Technical Infrastructure, Knowledge transfer and integration, Process Maturity, Trained personnel and communication & Control were measured using a 5-point Likert Scale. To ensure the correct comprehension of the terminology used and also to level the participants understanding of the concepts, a brief explanation of the research objectives was provided at the beginning of the survey instrument. Thus, basically, the scales of the constructs were developed in following three stages: (1) The scales were based on those used and reported in 285

prior work. The scale development has been based on an exhaustive survey of literature, and a pilot study in India (involving senior executives and project managers in software companies, and academics working in the area of quality management and software engineering), so that the theoretical and conceptual relevance of the constructs could be properly explained and critical dimensions of the constructs could be identified. Thus, the content validity, and face validity of the instrument have been assured in the initial stages of questionnaire development. (2) Prior to a pilot test, the scales were pre tested by two executives, selected from five different reputed software firms, comprising of at least one project manager. (3) A pilot study was conducted involving Senior Managers, Project Managers and/or Leads from a midsize software firm to further refine the scales and develop a survey instrument. Based on inputs from the respondents of the Pilot Study, the modified final research questionnaire was designed. The final research questionnaire was divided into three sections. Section A related to general details regarding the nature of software project like industry vertical, duration, project team size (number of people deployed), technology platform, country of the client and process maturity level of the vendor. Section B covered the software quality which was further subdivided into 5 sub sections namely, functionality, reliability, maintainability, usability and performance , each carrying questions anywhere between 4 6. Section C was pertaining to the independent variables namely, requirements uncertainty, Technical Infrastructure, knowledge transfer and integration, process maturity, trained personnel and communication & control; also, cost and time factors were included. Each variable contained questions in the range between4-9. Personal details relating to the age, nature of job assignment, experience and type of organization were

also collected. The complete instrument consists of 64 items.

4.3 Validity of the Survey Instrument

First, a reliability analysis of the measure of each variable was performed using Cronbachs alpha. Reliability of an instrument is defined as the extent to which any measuring instrument yields the same results on repeated trials (Carmines and Zeller, 1990). It refers to the extent to which a variable or set of variables is consistent in what it is intended to measure. If multiple measurements are taken, the reliable measures will all be very consistent in their values. Reliability differs from validity in that the latter is concerned with how well the concept is defined by the measure(s), whereas reliability relates to the consistency of the measures (Hair et al., 1998).There are several methods to establish the Factor/Construct No of Items

reliability of a measuring instrument. Of all the methods, the internal consistency method is considered as the most effective, especially in field studies. The internal consistency is estimated using a reliability coefficient called Cronbachs alpha () (Cronbach, 1951). An alpha () value of 0.70 or above is considered to be the criterion for demonstrating strong internal consistency of established scales (Nunnally, 1978). In the case of exploratory research, alpha value of 0.60 or above is also considered as significant (Hair et al., 1998). Using the data collected from the respondents to the survey, reliability of the constructs has been checked by computing Cronbachs alpha () value for all the factors. The results are presented in Table 1. It can be seen from the table that all the factors have Cronbachs alpha value above 0.70, which testifies the reliability of the instrument. Cronbach Alpha 0.75 0.79 0.85 0.81 0.80 0.71 0.79 0.81 0.88 0.70 0.82 CFI* 1.00 0.98 0.98 0.78 1.00 0.99 0.99 0.99 0.99 0.95 0.99 NFI** 0.99 0.98 0.98 0.78 1,00 0.99 0.99 1.00 0.99 0.94 0.99

Functionality 4 Reliability 4 Maintainability 6 Usability 4 Performance 5 Requirements UnCertainty 9 Technical Infrastructure 4 Knowledge Transfer and Integration 8 Process Maturity 6 Trained Personnel 4 Communication And Control 6 Cronbagh Alpha Value > 0.7 confirms reliability * CFI=Comparative Fit Index >0.90 indicates Unidimensionality

** NFI=Normed Fit Index(Bentler-Bonnet Index) >0.90 indicates Convergent Validity

4.4 Unidimensionality analysis

Second, a confirmatory factor analysis (CFA) was performed for each construct using principal components. Unidimensionality refers to the existence of a single construct/trait underlying a set of measures (Hair et al., 1998). The most important and basic assumption in measurement theory is that a set of items forming an instrument measures just one thing in common. Items within a measure are useful only to the 286

extent they share a common nucleusthe characteristics to be measured (Nunnally, 1978). The concept of unidimensionality enables to represent the value of a scale by a solitary number. For unidimensionality verification, a measurement model is specified for each construct and Confirmatory Factor Analysis (CFA) is run for all constructs. Individual items in the model are investigated to see how closely they represent the same construct. Computing the Comparative

Fit Index (CFI) value for all the factors tests the unidimensionality of the scale developed in the current study. CFI value of 0.90 or above implies that there is strong evidence of unidimensionality (Byrne, 1994). Using the data collected from the respondents to the survey, a Confirmatory Factor Analysis has been run for all constructs for checking unidimensionality of the constructs. The results are shown in Table 1. The results indicate that all the factors have CFI value above 0.90, which testifies the unidimensionality of the instrument.

4.5 Convergent validity

The evidence for convergent validity is obtained when a measure correlates well with other measures that are believed to measure the same construct (Kaplan and Scauzzo, 1993). Each item in a scale is treated as different approach to measure the construct (Ahire et al., 1996). In other words, convergent validity is the degree to which various approaches to construct measurement are similar (converge). Using confirmatory-factor-analysis technique, the convergent validity can be checked by computing a coefficient called Bentler-Bonett Fit Index (BFI) which is also termed as Normed Fit Index (NFI). A scale with BFI values of 0.90 or above is an indication of strong convergent validity (Bentler and Bonett, 1980).Using the data collected from the respondents to the survey, a Confirmatory Factor Analysis (CFA) has been run for all constructs for checking their convergent validity. The results of CFA are presented in Table 1. It can be seen that all the measures have a BFI value of more than 0.90, thereby demonstrating strong convergent validity for each construct.

offshore vendor. Considering the fact that there are only very few empirical research initiatives in the past on SQ linking the offshore development from vendors perspective, our research has explored and identified the key determinants which need to be addressed for ensuring high quality software. Nevertheless, further quantitative research may be undertaken to validate the variables based on survey of more organizations from IT Industry. Further, it may be interesting to extend and carry out future studies from different stakeholders perspective, especially the quality personnel in the vendor organizations.

6. References
Due to space constraints, the details of references are not included; however, interested persons may correspond with

1. Ahire, S.L., Golhar, D.Y. and Waller, M. A

(1996) Development and validation of TQM implementation constructs, Decision Sciences, 27, 23-56.

2. Ahmed Selfah, Mohammad Donyaee, Tex B

Kline and Harkirat K Padda (2006) Usability measurement and metrics: A consolidated model, Software Quality Journal, 14, 159-178.

3. Andreou, A.S. and

Tziakouris, M (2007)A quality framework for developing and evaluating original software components, Information and Software Technology, 49, 122141 Toward an assessment of software risk, Journal of Management Information Systems, 10, 203225.

5. Findings And Conclusion

All the six determinants used in this research have exhibited strong unidimensionality (CFI0.9), reliability ( 0.7) and convergent validity (BFI0.9), as indicated in Table 1. This implies that the management of software quality in offshore software development can be conceptualized as a six-dimension structure from vendors perspective. Researchers may use this work as a basis for subsequent studies in different countries, with totally different cultures and work conditions. The study has the advantage of being unique as it identified the key determinants which influence the attributes of SQ when the software is developed by the 287

4. Barki, H., Rivard, S and Talbot, J (1993)

5. Behshid

Behkamal, Mohsen Kahani, Mohammad Kazem Akbari (2009) Customizing ISO 9126 quality model for evaluation of B2B applications, Information and SoftwareTechnology, 51, 599609 tests and goodness of fit in the analysis of covariance structures. Psychological Bulletin, 88:588606.

6. Bentler, P.M and Bonett, D.G (1980) Significance

7. Boegh, J. (2008) A new standard for quality

requirement, IEEE Software (March/April) 5762.

8. Bunse,C., Verlage, C., and Giese, V (1998)

Improved software quality through improved development process descriptions, Automatica, 34, 23-32.

Software 80(1), 42-50.

20. Harter, D. E., M. S. Krishnan and S. A. Slaughter

(2000) Effects of Process Maturity on Quality, Cycle Time, and Effort in Software Product Development. Management Science. 46(4), 451466

9. Byrne, B.M. (1994) Structural Equation Modeling

with EQS and EQS/WindowsBasic Concepts, Applications and Programming. Thousand Oaks, USA: SAGE Publications, 1994

21. Ho-Won Jung (2007)Validating the external

quality sub characteristics of software products according to ISO/IEC 9126, Computer Standards & Interfaces, 29, 653661

10. Carmel, E. and

Agarwal, R (2002). The maturation of offshore sourcing of information technology work, MIS Quarterly Executive 1(2), 65-78 and Validity Assessment. USA: Sage Publications, 1990

22. Jie-Cherng Chen and Sun-Jen Huang (2009)

An empirical analysis of the impact of Software Development problem factors on software maintainability, The Journal of Systems and Software, 82, 981-992.

11. Carmines, E.G. and Zeller, R.A (1990) Reliability

12. Cronbach, L.J. (1951) Coefficient alpha and the

internal structure of tests. Psychometrika, 16:297 334.

23. Jovanovic, V. and Shoemaker, D (1997) ISO

9000 standard and software quality improvement, Benchmarking for Quality Management & Technology, 4, 148159.

13. Davis, G.B., Ein-Dor, P., King, W.R and

Torkzadeh, R (2006) IT Offshoring: History, Prospects, Challenges. Journal of the AIS. Vol. 7 (11). 770-795

24. Jovanovic, V. and Shoemaker, D (1997) ISO

9000 standard and software quality improvement, Benchmarking for Quality Management & Technology, 4, 148159.

14. Glass, R.L. (1998) Defining Quality Intuitively,

IEEE Software (May/June), 103 107.

25. Kaplan, R.M. and Scauzzo, D.P (1993)

Psychological Testing: Principles, Applications and Issues, CA: Pacific Grove.

15. Gopal, A. andKoka, B.R (2008) Determinants of

Service Quality in Offshore Software Outsourcing., Information Systems Outsourcing: Enduring Themes, New Perspectives and Global Challenges, 3rd Edition. 2008

26. Krishnan, M. S., C. H. Kriebel, S. Kekre and

T. Mukhopadhyay (2000) An Empirical Analysis of Productivity and Quality in Software Products. Management Science, 46(6), 745-759

16. Gorla, N. and Ramakrishnan, R (1997) Effect

of software structure attributes on software development productivity, The Journal of Systems and Software, 36(2) 191199

27. Li, E.Y., Chen, H.G. and Cheung, W (2000) Total

Quality Management in software development process, The Journal of Quality Assurance Institute, 4, 541.

17. Gorla,N. and Lin, S.C (2010)Determinants of

software quality: A survey of information systems project managers, Information and Software Technology, 52, 602-610

28. Luftman,J. and R. Kempaiah (2008) Key issues

for IT executives 2007, MIS Quarterly Executive,7, 99112.

18. Hair, J. F., Anderson, R. F., Tatham, R. L. and

Black, W. C (1998) Multivariate Data Analysis (5th edition.) Englewood Cliffs, NJ: Prentice Hall, 1998

29. Lyytinen, K., Mathiassen,L. and Ropponen,J

(1998)Attention shaping and software risk-a categorical analysis of four classical risk management approaches, Information Systems Research, 9(3), 233-255.

19. Han, W.M. and Huang, S.J (2007) An empirical

analysis of risk components and performance on software projects. The Journal of Systems and 288

30. Nidumolu, S. ( 1995) The Effect of Coordination

and Uncertainty on Software Project Performance:

Residual Performance Risk as an Intervening Variable. Information Systems Research. 6(3), 191219.

38. Shah, S. (2004) Dwindling Labor. Optimize.

September, 66-71

31. Nunnally, J.C. (1978), Psychometric Theory. New

York: McGraw-Hill.

39. Subramanian, G.H., James, J. J. and Gary Klein

(2007) Software quality and IS project performance improvements from software development process maturity and IS implementation strategies, The Journal of Systems and Software, 80, 616627.

32. Okhuysen, G. and Eisenhardt, K (2002),

Integrating knowledge in groups: How formal interventions enable flexibility, Organization Science,13(4), 370-386.

40. Tian, J. (2004) Quality-evaluation models and

measurements, IEEE Software, May/June, 8491.

33. Prahalad, C. and Krishnan, M.S (2002)

The dynamic synchronization of Strategy and Information Technology, Sloan Management Review, Summer 2002, 24-33.

41. Tiwana,A., Bharadwaj, A. and Sambamurthy,

V (2003) The Antecedents Of Information Systems Development Capability In Firms: A Knowledge Integration perspective, Twenty-Fourth International Conference on Information Systems, 246-258

34. Pressman, R.S. (2005) Software Engineering: A

Practitioners Approach. McGraw-Hill, NY

35. Rajendran, C., Issac,G. and R.N.Anantharaman

(2006) An instrument for the measurement of customer perceptions of quality management in the software industry: An empirical study in India, Software Quality Journal, 14, 291308

42. Verner, J.M. and W.M. Evanco (2005), In-house

software development: what project management practices lead to success?, IEEE Software, (January/February), 8693.

43. Wali, A.A., A.D. Gupta and S.G. Deshmukh

(2000) Quality initiatives in an Indian software organization: a case study, Work Study, 49, 285 291.

36. Ravichandran, S. and Shareef, P.M (2001)

Managing risk in software projects, Indian Management, 40, 56-62.

37. Ravichandran, T. and Rai, A (2000) Quality

management in systems development: An organizational system perspective. MIS Quarterly, 24 (3), 381-415.

44. Xenos, M. and D.Christodoulakis (1997)

Measuring perceived software quality, Information and Software Technology, 39, 417424.


Factors Contributing to Perishability Iin Traditional Fresh Produce Distribution System A Study on Tomato and Banana Chains in Andhra Pradesh
Dr.G.V.R.K. Acharyulu.,M.Tech.,MBA,PhD, Reader, School of Management Studies, University of Hyderabad, Central University Hyderabad AP, Inida 1. Introduction
India is continued to be the worlds second largest producer of fresh produce in last five year. It produced 68.4 million tonnes of fruits and 129 million tonnes of vegetables in the year 2008-09 (IHD, 2009). National horticulture mission statistics forecasts annual production growth is at 8.8 percent for fruits and 10.9 percent for vegetables by 2015. A total consumption of 90 million tonnes of fresh produce is supplied through 7300 wholesale assembly markets and 27294 rural weekly markets (Acharya, 2005). The consumption of fresh produce is expected to reach 140 million tonnes by 2015 (Kumar and Kumar, 2003). The research revealed that the fresh produce accounts for 50 per cent of the food and grocery bill (Kumar, 2001). It indicates there is an enormous growth opportunity in fresh produce sector. India can become market leader in world horticultural produce through the vertical and horizontal integration of different components of the supply chain. The major issue in the supply chain is the inefficient post-harvest management. Cultivable waste of about 24 to 40 per cent is reported due to the inefficiency and the extent of losses of fruits and vegetables in India is estimated at about Rs. 10,000 crore to 12,000 crore per annum(Surabhi,2007). Approximately 20 per cent of Indias fruit and vegetable produce goes waste on account of the lack of cold chains. India has around 1,300 cold storage facilities, of which 50 per cent are being used for potatoes and the rest remain underutilized (CII, 2007). processes to continue. As soon as produce is harvested the processes leading to breakdown begin, and cannot then be stopped. The rate at which breakdown occurs can, however, be slowed up and losses minimized by employing the correct handling methods after harvest. Most fresh produce is highly perishable and if it is to reach the consumer in the right condition it must be marketed properly bearing in mind the most suitable temperature and humidity for each commodity as well as appropriate packaging and handling methods. Failure to address these issues leads to stress to the produce rapidly followed by spoilage and losses. The enormous losses of fruits and vegetables produced in the country are mainly because of the lack of proper infrastructure for storage and transportation under controlled conditions. Effect of Injuries: Injuries take many forms, including cuts, punctures, scraping of outer surfaces, internal and surface bruising, sunburn, heat damage and cold damage. Their effect on harvested produce is to speed up the rate at which water is lost by as much as five times, to provide sites for attack by decay agents such as moulds and bacteria, to increase the rate of heat production at injury sites, to cause dis-colouration due to internal damage and to cause off-flavours to develop. Effect of Pests and Disease: Increase in post-harvest decay occurs where produce is washed before packing. Most moulds and bacteria causing decay require free water to establish infection, particularly where injuries, even though small, are present on washed produce and the washing water is stagnant or recycled. It may also be a problem where condensation occurs on the surface of produce when it is moved from cold stores to high ambient temperatures, or when produce is exposed to rain after harvest. Produce saturated with water, from rain or other causes may become soft and more easily 290

2. Spoilage of Fresh Produce

The fruits, vegetables and root crops are still alive after the harvesting process. They contain 65 to 95 percent water, depending on the type of produce. They also contain food materials which enable living

damaged than when dry. This damage not only provides opportunity for infection by decay agents but may in itself leave unsightly surface damage, leading to downgrading and lower prices. This is often seen in citrus fruits, where fruit harvested when wet develop the skin blemish. It may not always be possible to keep produce dry but field-men should avoid harvesting freshly wet produce.

The data is collected from the AMCs that are located in the selected districts where the respondents participate in the fresh produce distribution activity.

5. Description of Variables
Perishability (y): Perishable products are those that worsen in quality over time, and become lesser in value. Perish able goods decay rapidly, if preservation and pre-cautionary technique is not employed. Common perishable goods include foods, plants and agricultural products. Fruits and vegetables are examples of time and temperature-sensitive perishable products that can rot or spoil easily. Perishable products must be handled and transported by highly efficient distribution channels that can retain the integrity of the produce. Perishability (Y) = Independent variables (x1 to x9): Perishability of the fresh produce will influence with the operational variables such as care during transportation, use of plastic crates, removal of foreign bodies, condition of road, safety packaging, cleaning and washing, and foreign bodies. X1- Damaged during the harvest by the farm men (PR_farm_men). X2- Road conditions causes the physical damage to the fresh produce (PR_physical_damage), X3- Lack of effective packaging (PR_lack_ packaging), X4- Non saperation of living organism like Bacteria, Fungus, insects etc. (PR_living_organism), X5- Non-removal of foreign bodies causes perishability (PR_foreign_bodies), X6- Lack of plastic crates during the transportation (PR_plastic_crates), 291 X7 - Lack of cleaning and Washing (PR_

3. Rationale of the Study

The present study is aimed to identify the various factors that contribute to the perishability of fresh produce which are caused during logistic operations in fresh produce distribution. These activities are mostly human and material oriented and gives a scope for damage to fresh produce. However many other factors contributes to the perishability of fresh produce, the existing activities taken for the study are purely concern with the logistic and supply chain related. The study reveals most contributing factors to perishability using regression model so that the spoilage of fresh produce can be minimized using appropriate mechanism and hence the overall supply chain is strengthened.

4. Methodology
This study is causal in nature and relies on survey method. Andhra Pradesh is chosen for this purpose based on the contribution its share in terms of production and growing area to the national agriculture sector in last ten years and it is also one among the top five produces of banana and tomato states in the country. The study examined the banana and tomato chains which are more susceptible to the spoilage in distribution operations. The study is conducted in three districts for each produce namely, Krishna, Chittoor and Ranga Reddy for tomato and East Godavari, West Godavari and Chittoor for banana. These districts are selected on the basis of Area and production of tomato and banana during 19992009. A total sample size of 305 farmers, 62 traders and 120 retailers are drawn from the population. Different questionnaires are designed for data collection from the target respondents such as farmers, traders and retailers to obtain views and level of agreement on the factors pertaining to fresh produce spoilage during the supply chain operations on Likerts five-point scale.


X8- Lack of enough care while the loading and loading (PR_care_load_unload), X9- Lack of effective care during road transport (PR_packing_perishability),

exists positively with the coefficient value ranging from 0.6 to 1.0 among independent variables. It indicates that there is no multi-collinearity among the variables. Consequently, a multivariate statistical technique, multiple regression method is applied to analyze the data. The enter method is adopted for the running of Regression model. From multiple regression analysis it is observed that Eigen values in the multi-colinearity diagnostic matrix found to be more than 1.0 for all the variables hence no independent variable is dropped from the multiple regression model.

Prior to the carrying out of regression model, the Pearsons correlation statistic has been run to determine the variability among the independent variables. The following correlation matrix table (Table 1) has been generated. The Pearson correlation co-efficient indicates that there is no incidence of strong correlation

Table 1: Correlation
Perishability Farm_ men Physical_ damage Lack_ packaging Living_ organism Foreign_ bodies Plastic_ crates Washing Care_ load_ unload Packing_ perishability


Farm_men Physical_ damage Lack_ packaging Living_ organism Foreign_ bodies Plastic_crates

.623* .732*

1 .346**




.783* .682* .823*

.118* .145* .328**

-0.08 0.098 0.086

0.04 0.013 .167**

1 .168** .234**

1 0.04

Washing Care_load_ unload Packing_ perishability

























The model summary table indicates what predictors are relevant for the R and R2. The word constant in parentheses refers to the intercept. The coefficient of multiple determinations is 0.883; therefore, about 78 percent of the variation in the perishability is explained by its quadratic relationship with the predictors which 292

cause perishability. The regression equation appears to be very useful for making predictions since the value of R2 is close to 1. From the table 2, DurbinWatson value of 1.841 indicates there is no autocorrelation among the independent variables.

Table 2: Model Summeryb

Model 1 R .773a R Square .659 Adjusted R Square .635 Std. Error of the Estimate .286 Durbin-Watson 2.058

a. Predictors: (Constant), PR_packing_perishability, PR_lack_packaging, PR_farm_men, PR_plastic_crates, PR_ care_load_unload, PR_physical_damage, PR_living_organism, PR_foreign_bodies, PR_washing b. Dependent Variable: Perishability The table 3 below shows the ANOVA table for the regression. ANOVA stands for Analysis Of Variance specifically the analysis of variation in the Y scores. At this point we observe the two sums of squares introduced in class the regression and residual (or error) sums of squares. The variance of the residuals (or errors) is the value of the mean square error here it is .085. Also in this table we find the F test. This tests the hypothesis that the predictor (here our only predictor) shows no relationship to Y. The F test has two numbers for its degrees of freedom. These are called the numerator and denominator degrees of freedom of df1 and df2. Here the numerator df (df1) tells us how many predictors we have (it is 9) and the denominator degrees of freedom are n - 1- df1 or n-2 for bivariate regression. The table provides us with the data that need to compute R2. If we compute SS-regression divided by SS-Total, we should get R2. SS (Sum of the squares)-regression / SS (Sum of the squares)-Total = 88.745/ 113.751 = .780

Table 3: ANOVAb
Model Regression 1 Residual Total Sum of Squares 6.337 4.260 10.597 df 9 52 61 Mean Square .704 .082 F 8.595 Sig. .000a

a. Predictors: (Constant), PR_packing_perishability, PR_lack_packaging, PR_farm_men, PR_plastic_ crates, PR_care_load_unload, PR_physical_damage, PR_living_organism, PR_foreign_bodies, PR_ washing b. Dependent Variable: Perishability The table 4 provide a full of information about the model. In which we find the slope (or slopes, in multiple regressions). The values of Constant and Predictors are listed as unstandardized values, and their standard errors (Std. Error) and SE (Beta) are in the second column. The standardized coefficient for the predictor in a multiple regression is simple the correlation. Since neither of the predictor variables has a variance inflation factor (VIF) greater than 10 (All VIFs are less than 2), there are no apparent multi-collinearity problems; in 293 other words, there is no variable in the model that is measuring the same relationship/quantity as is measured by another variable or group of variables. From the table 4, the multiple-regression model is depicted as:

y = .473 + 0.136 x1 + 0.054 x2 + 0.100 x3 + 0.122 x4 + 0.055 x5 + 0.141 x6 + 0.118 x7 + 0.046 x8+ 0.073 x9

Table 4: Coefficients
Unstandardized Coefficients B .473 .136 .054 .100 .122 .055 .141 .118 .046 .073 Std. Error .306 .037 .037 .037 .036 .045 .033 .044 .042 .042 Standardized Coefficients Beta .336 .136 .271 .318 .129 .414 .285 .103 .174 1.547 3.688 1.451 2.742 3.381 1.212 4.290 2.679 1.095 1.715 .128 .001 .153 .008 .001 .231 .000 .010 .278 .092 Collinearity Statistics Tolerance .932 .884 .793 .873 .687 .830 .685 .873 .752 VIF 1.073 1.131 1.261 1.146 1.455 1.205 1.460 1.146 1.330

Model (Constant) PR_farm_men PR_physical_damage PR_lack_packaging PR_living_organism 1 PR_foreign_bodies PR_plastic_crates PR_washing PR_care_load_unload PR_packing_perishability a. Dependent Variable: Perishability


It is clear that Road conditions causes the physical damage to the fresh produce (PR_physical_damage), Non-removal of foreign bodies causes perishability (PR_foreign_bodies), Lack of enough care is not taken while the loading and loading (PR_care_load_unload) and Lack of effective care during road transport (PR_packing_perishability) are showing insignificant effect on the perishability of the fresh produce as their probability value are higher than the acceptable limit of 0.05. It is concluded that from the table 4, which indicates the significant values of predictors that affect the dependent variable. It is found that Damaged during the harvest by the farm men (PR_farm_men), Lack of effective packaging (PR_lack_packaging), Non saperation of living organism like Bacteria, Fungus, insects etc. (PR_living_organism), Lack of plastic crates during the transportation (PR_plastic_crates), and Lack of cleaning and Washing (PR_washing) variables falls under the impacting as their probability values .001, .008, .001, .000 and .010 respectively

of these issues by optimizing quality, safety and by reducing waste. Effective post-harvest management requires adequate and appropriate cooling and packing facilities, hygienic and speedy transportation, careful handling and adequate environment control. This includes aspects such as appropriate temperature, relative humidity, ventilation and sanitation. Difference in prices between the farmer and the retailer is highest in India when compared with other countries.

7. References
1. Acharya S.S (2005), Agriculture marketing and rural credit: Status, Issues and reform agenda, Area, Production and Yield of Principal Crops in India, Directorate of Economics and Statistics, Ministry of Agriculture 2. CII- Cold Chain Summit 2007, organized jointly by Ministries of Agriculture and Food Processing Industries and the CII, March 2021, 2007, CII, New Delhi 3. Indian Horticulture Database (2009). National Horticultural Board. Ministry of Agriculture, Government of India. 4. Kumar, Praduman and Promod Kumar (2003), Demand, Supply and Trade Perspective of Vegetables and Fruits in India, Indian Journal of Agricultural Marketing, Vol 17(3): 121-130. 294

6. Conclusion
The proper integration of post-harvest technology into marketing supply-chain is critical. Post-harvest management not only means reducing waste but also maintaining the quality but also aim to address some

5. Kumar, P. and Donato B. Antiporta. (2001). Expenditure and price elasticities of food and non-food consumption by income groups: region-wise analysis of India. Working Paper.

FAO/RAPP. Bangkok. 6. Surabhi Mittal (2007). Can horticulture be a success story for India? Indian Council for Research on International Economic Relations


Panorama of a Strategic Alliance on Arbitrator Logistics A Peep Into The Chennai Porttrust
Mr.R. Venkatajalapathy, MBA, (Ph.D)
Lecturer, Hallmark Business School, Tiruchirapalli &

Dr. B. Balamurugan

Director, Hallmark Business School, Tiruchirapalli

I. Introduction
There are several instances where the logistics system has become the cause of bottlenecks in the firms overall management. The potential for reducing total cost and for improving the quality of services provided to customers can be increased through the elimination of these bottlenecks. Also, from the social standpoint, an efficient logistics system could offer possibilities to reduce road congestion and environmental pollution, which could result in increased macroscopic economic productivity.

2. 3PL and its functions

Originally, 3PL means outsourcing logistics activities including transportation and warehousing to outside firms, which are not a consignor or a consignee. However, it is not common 3PL practice to outsource a single activity of logistics independently, but to outsource multiple activities from the firms strategic point of view. 3PL (or 3PL provider) has the following features at present: 1. Integrated (or multi-modal) logistics service provider 2. Contract-based service provider 3. Consulting service provider First, a 3PL provider is regarded as an integrated logistics service provider. IT-related activities for controlling goods flow such as order processing, and inventory management, among others are also included in the function of the 3PL provider. However, the 3PL provider need not provide all the services solely. The 3PL provider can outsource some activities to subcontractors. A 3PL provider can be classified into the asset-based and the non-asset-based. The asset-based 3PL provider owns some assets, particularly transport-related assets such as trucks, warehouses, etc., while the non-asset296

based 3PL provider does not own such assets, and usually relies on sub-contractors assets. Examples of non-asset 3PL providers include forwarders, brokers, marketing companies, and information system management companies. Second, the service of 3PL is contract-based. Recently, a contract was written about the way to share responsibilities assuming various situations in detail. Such strict contract would make reliable relationship between the parties, and strengthen the alliance. Third, offering consulting-serv ices to the firms is an important feature of the 3PL. The 3PL provider can make various advises to answer customers requirements concerned with marketing strategy, information system configuration, cooperative transportation, etc.

3. Theoretical Framework
Earlier literatures based on third part party logistics, consider IT as a key factor in the selection of a logistics provider, as it enables coordination across organizational boundaries, integrate suppliers and customers existing to achieve newer levels of effectiveness, efficiency and productivity. (Aghazadeh, 2003; Colson & Dorgio, 2004; Moberg & Speh, 2004; Anderson & Norman, 2002, Lynch, 2000; Langley et al., 2002; Babban & Prasad, 1998). On Time Delivery is another key aspect a prospective logistics user needs to analyse before making the selection. (Mc Ginnis., et al.,1995 & Menon et al., 1998; Effendgil et al., 2008; International Warehouse Logistics Association survey, 2003; Stock et al.,1998; Galtorma & Walters, 1996). Reliability of the firm on the basis of its duration in the logistics business is past performance are key indicators in its selection. (Murphy & Daley, 1997; Effendgil et al., 2008; International Warehouse Logistics Association survey, 2003; Simchi & Levi et al., 2000)

Performance standards and the quality level of service provided by the 3PL provider are key elements that are taken into key consideration(Mc Ginnis., et al.,1995 & Menon et al., 1998; Meade & Sarkis (2002); International Warehouse Logistics Association survey, 2003; Razzaque & Sheng (1999), Thompson(1996), Langley et al., (2002). Geographical Reach of the logistics provider helps in providing to services to various parts of the world in the most effective way. (Colson & Dorgio, 2004; Lieb & Maltz, 1999; Boyson et al., 1999.Also the 3PLs ability to provide assistance with the customs helps 3PLs clients in easy shipment of goods. (Simichi Levi et al., 2000) Unit Operation Cost is another key factor in the selection of 3PL as

that helps in achieving competitive edge in the market. (Effendgil et al., International Warehouse Logistics Association survey, 2003; Stock et al.,1998; Tam & Tummala (2001). Financial Stability of the 3PL is a key factor that goes in its favour; if the firm is financially strong it can weather the hard economic downturns with ease. (Mc Ginnis., et al., 1995, Burt et al., (2004), Anderson & Norman (2002) Boyson et al., (1999). Finally the level of customer satisfaction provided by the 3PL provider in the past is another key factor thats considered before making the final selection of the 3PL provider. (Effendgil et al., Murphy & Daley, 1997; Leahy et al., (1995).

Table 1: Reliability Coefficients for the constructs ( value) 1 2 3 5 6 7 Dimensions Reliability Strategic Partnership Reliability Performance Standards Dimensions Reliability Inventory IT Customer Satisfaction 297 Coefficients 0.841 0.874 0.835 Coefficients 0.843 0.765 0.884

4. Methodology
For the purpose of studying the objectives and to test the hypothesis, a questionnaire was used as an instrument to collect the data. The questionnaire had two parts: the first part to measure the profile of the company, second part to measure the constructs designed. The constructs in the second part captured the factors that part a key role in the selection of a third part logistic provider. Strategic Alliance/Partnership is the key objective of the project, they are analysed against the independent factors. The population for the study was taken from the state of Tamil Nadu. The sample was selected using systematic sampling technique. The total number of respondents to the questionnaire distributed to the various logistics service providers was seventy five. The reason for selecting the state Tamil Nadu for the purpose of research were, (1) it had large number of logistics companies with high expertise in the field, (2) Since the investigator is in Tamil Nadu it is convenient to collect the data in these regions, (3) More significantly the cities in Tamil Nadu have a distinction of being Alpha. Traditionally, the Cronbach coefficient (Cronbach, 1951) has been used to evaluate reliability. The alpha values for the various dimensions are shown in the Table 1. So the items constituting each variable under the study have reasonable internal consistency.

5. Analysis and Discussion

The data collected from the respondents was tabulated and analysed using appropriate statistical techniques in the research methodology. The summary statistics such as average score and standard deviation are performed for the relevant variables to find the level of opinion/ agreement of the respondents on various issues related to the study. The opinion was put under the five points scaling similar to Likert scaling. The results are represented in the following tables with suitable interpretation. The table 2 describes the level of agreeability of the respondents on the various factors that play a key role in setting up a strategic partnership between a firms looking for a 3PL service provider for the purpose of gaining a key competitive edge. It is found that the 3PL providers lay high importance on providing service of the highest quality to their clients (4.27), also they do give due importance in passing on information about the whereabouts any irregularities at the earliest t their clients (4.08), also most of the 3PLs strive for a long term relationship with their clients(4.00). The other important results from the research are that most believe in value based business transactions with their partners (3.99).

Table 2: Summary Statistics- Key for Strategic Partnership Factors Considered Strategic Alliance 1 You strive for a long term relationship with your customers 4 0.637 Average Standard Score Deviation

You believe in value based business transactions with your 3.99 partners You believe in providing service to your partners of highest 4.27 levels You lay high importance for your clients growth





5 6

You play an active role in planning and goal setting of your 2.71 partners You are willing to share the risk associated with the 3 transportation of our goods In case of any irregularities in delivery of goods, in situations like this information would be passed on to your clients on 4.08 high priority basis Valuable inputs would be constantly given by you to improve 3.39 your clients business You help client to increase, just in time capabilities 3.41

0.653 0.637


8 9

0.914 0.807

They do lay high importance on clients growth (3.8) and they have started incorporating practices such as just in time capabilities (3.41) thus providing their clients strategic edge. The least role the 3PLs play are in the planning and goal setting of their clients ( 2.71). Thus we conclude that the basis for a strategic partnership is providing service of the highest quality level to their clients The table 3 shows the agreeability of the respondents on the various factors that influence strategic partnership between the firms and 3PL service provider.

Table no.3: Summary Statistics- Factors affecting strategic partnership Factors Considered Av e r a g e S t a n d a r d Score Deviation
On Time Delivery 10 11 12 13 You deliver goods as per the set time limit The top management of your firm place high importance on delivering the goods on time You have adequate measures to come up with alternatives to meet our business requirements in case of any accidents In the past one year how many times have you missed in meeting the delivery target? Reliability 14 15 You make constant technological changes to provide the competitive edge through your