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Changing Roles and Myth about HRM

By
Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail: cityju@rediffmail.com / rkgupta_india@hotmail.com

The Foremost and prime HR function in any organization is recruiting the right person and then getting
requisite quality and quantity of work (Read productivity) for a reasonable period of tenure, in line with
organizational goals (Do most of organizations and the top HR Bosses themselves know about it?). One
can call it Strategic Human Resource Management, which uses various tools and techniques for
motivation, appraisal, training, cross cultural management, emerging issues in personnel laws like,
sexual harassment and competence mapping, etc.
In fact HR function is main responsibility of a supervisor and not of a HR Department, and higher goes
the role and scope of responsibilities, higher the supervisor in Organization Hierarchy. In many
organizations, for instance, IT industry, one has very loose or flattish hierarchy due to knowledge
workers outfit.
Over the decades HRM became a separated out function graduating from a simple Time Office function
to a high profile Division in organizations until recently when most of HRM functions have been leased
out (Outsourced) and what is left with HR departments is Planning and Strategy. But unfortunately the
supervisors have abandoned their prime responsibility to manage men and think that this better be
taken care of by HR Specialists. This is simply a myth.
Increasing globalization and migration of labor in both directions like the financial capital, the challenges
of staffing, retention and motivation of highly skilled workers from wider canvass and background and
even education background, is really serious issue that better be not ignored by Businesses.
My experience in Corporate sector in India in various types of organizations ranging from Steels to
Textiles, Chemicals and Services sector has been quite amusing and educative as far as the way HR has
been handled by various types of entrepreneurs in India right from SBEs to the so called Large
corporate units.
Majority of Indian businesses still treat employees as commodities and expect them to come trained and
skilled in specific areas they are hired for (Even in US it is not feasible despite Industry Institutes
interface). Hire and fire has been very popular policy in India and suppressing welfare laws regarding
labor has been a favorable pass time, and matter of satisfaction & pride for Indian Businessmen. It was
often observed by me that rapid expansion of businesses were scarcely accompanied by timely
organizational structuring, expansion, training and growth in pace with such expansions and thus most
of such expansions fell flat, even destroying their existing business lines and profitability.
The problem with HRM is that one cannot use clear cut formula that can be applied in particular
situations due to highly subjective, emotional and cultural deviation amongst the employees.
Secondly skilled and committed workers will become more and more scarce commodity due to rapid
global expansion of business, high aspiration levels, fast growth mentality of youth including job-
hopping, mobility of labor across borders and rapidly changing technologies.
This is just too much to handle for traditional HR experts and involvement of Top line functional
supervisors is essential for strategic growth of organizations. Indian businesses have a soft belly there
due to still continuing contemptuous and casual attitude towards employees.
As we move from Time Office to Personnel Management and on to HR Management to Human Asset
management to Intellectual Capital paradigms, drastic changes in HR practices and HR organizations in
Businesses is inevitable.
Another thing to understand is that there is not very strong correlation between wages & incentives and
motivation level of employees as is generally thought. Motivation and stability of employees is rather
complicated task determined by several volatile factors, for instance, cultural background, family unit,
education level and type, age, job satisfaction and so many others still not fully understood.
It is another myth of HRM that giving doses of some foreign trip and 50 or 100 hrs of boring and
stereotyped training sessions (requirement of TQM, ISO 9000 also) will raise motivation, skills and work
style standards of employee. Most important change required is commitment, interest and achievement
motivation within framework of organizational goals.
One thing is very clear from above discussions that Quality and stability of Employees in organizations is
going to be key differentiator and even main foundation for survival of a business in coming times and
that too in highly nebulous environment of labor markets.
The third Myth worth mentioning is that employees always work better by giving better facilities,
rewards and training sessions. I have found it to be doubtful in most situations. In fact the best way to
train and induce employee to work and achieve higher is to create slight stress in work environment and
little bit of job in security. As they say, throw the child in waters and it will pick swimming faster- very
well applies to all human activities. There is no substitute for experience gained repeatedly by varied
situations of decision-making and it is really confounding as to why inexperienced graduates from B-
schools colleges are paid unreasonably high wages. Some one may like to deeply probe the issue
whether such high remunerations are really effective in extraordinary achievements of organizations?
One of the main reason for rise in corruption and materialistic pursuit by public sector employees is
envy towards unusually high wage rates in so called hi-fi and MNC organizations around the globe,
particularly in countries like India that are having poor quality of Public Administration, public awareness
and legal systems.
We can see that there is acute crisis facing the HR Managers who are yet to get their own roles re-
defined and who have to find or create leaders in multi cultural setting in a highly competitive business
environment and tight job market, with very high attrition rates in some sectors, like in Call Centers and
software industries, and developing requisite inner motivation levels and soft skills that are often
neglected in promotions and wage fixations (Here 'wage' is being used as a generic term for all kinds of
compensation structures at all levels).
While loyalty can be developed and maintained in employees, I would like to explode fourth Myth in
HRM by revealing the fact that loyalty also has frequently roots in ethical, community and genetic
background (We may call these attitudes, or inherent attitudes or life positions taken by an employee
during initial grooming in young age). There is need to develop yet more effective psychometric tests or
procedures to sift the candidates for right combination of IQ, EQ and loyalty index (I would like to find a
formula for this term). One big damage globalization has done is to popularize the western materialistic
high-growth rate focused employee culture prevalent in US where employees have little emotional
concern with organizations they work (Even Japan is fast becoming victim to this epidemic!).
Another challenge facing Organizations is to handle legal pressures relating to employee related laws of
newer types like gender bias, racial or caste bias in employment, sexual harassment (At least two very
senior officials of Indian Organizations have already been charges or accused of this in USA), ethical
issues in handling organization information and challenges of multi-ethnic or multi-cultural staffed work
places.
Work place diversity is a good major of challenge in Organizations. This will grow in near future.
According to Thomas (1992), dimensions of workplace diversity include, but are not limited to: age,
ethnicity, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational background,
geographic location, income, marital status, military experience, religious beliefs, parental status, and
work experience.
The future success of any organizations relies on the ability to manage a diverse body of talent that can
bring innovative ideas, perspectives and views to their work. The challenge and problems faced of
workplace diversity can be turned into a strategic organizational asset if an organization is able to
capitalize on this melting pot of diverse talents. With the mixture of talents of diverse cultural
backgrounds, genders, ages and lifestyles, an organization can respond to business opportunities more
rapidly and creatively, especially in the global arena (Cox, 1993), which must be one of the important
organizational goals to be attained.
A key issue that influences success in international arena is the awareness of cultural differences and
thus development of both a business strategy and corresponding HR strategy that is consistent with the
culture of host country. The interface between culture of the organization and culture of host country
become important. Instead of leaving these issues to be tackled by HR personnel, the senior executives
in international business arena have to take the HR strategies and solutions in their own hands.
More and more Informational technology is being used in organizations to deliver HR services (Example
HRSC of IBM) and a good part of these are being outsourced. This is natural outcome in changing
business environment and brings in both advantages of expertise and economics. Large organizations
otherwise also cannot cope with information exchange requirements in huge staffed organization in
traditional manner unless they follow IBM like I nitiatives. The example of IBM HRSC is an attempt to
combine people, technology and customer service, much as it does with its external customers. The
center service about 20 business units in areas including benefits, retirement planning, compensation,
employee suggestions, staffing, job posting, orientation, performance management, EEO compliance,
employee separations, leave of absence, and skill development through 80 customer service
representatives. This will be more or less true for all leading organizations in services sector in particular
in near future. IBM too had repositioned itself as service driven organization.
Impact of technology can be viewed as challenges in:
- Necessary expansion/contraction of work force.
- Training needed to utilize new technology (A major reason of failures in Indian Small & mid size
organizations from 80s to end of 90s)
- Effective change Management
- Impact on work group dynamics and concept of human face
- Costs for hiring, severance, training.
- Unwillingness of entrepreneurs to understand, recognize and adopt technology that can drive
productivity, quality, customer satisfaction and new market opportunities.
- Sliming down of organizations particularly at lower levels and reduced hierarchy.
Another Myth of US based HR Practices is non-relevance of old employees or problem of graying
workforce. The reason could be higher health care costs and perception of lower productivity. This may
be true, but not in all circumstances. The element of loyalty may weigh favorably in favor of older
employees as also their vast experience particularly useful in handling crises and negotiations, grievance
handling within and outside organizations and networking advantage. I strongly decry the US corporate
culture largely derived from social attitudes towards old in devaluing them .One serious disadvantage of
old employees is their resistance to change in practices and call of business environment changes. As
supply of baby boomers exceeds the demand, HR challenge is to handle this tricky issue including
retirement and retraining or rehabilitation plan. US culture simply does not suit Indian culture and ethos
and we should not blindly go for US system.
HRM will not have to deal only with cultural diversity of employees and organization but also issues of
minorities, backward classes and racial preferences in employment.
Neither many-grounded theories are available in HR, nor the traditional HR practices will apply to most
of organizational settings in coming times.
Traditional HR Versus Strategic HR
(From chapter 4, PP 101-102, Jeffrey A Mello
2
)
Indicator Traditional HR Strategic HR
Responsibility for HR
Focus
Role of HR
Initiatives
Time Horizon
Control
Job design
Key investments
Accountability
Staff Specialists
Employee Relations
Transactional, Change follower and
respondent
Slow, reactive and fragmented
Short-term
Bureaucratic-roles, policies,
procedures
Tight division of labor, independence,
specialization
Capital, Products
Cost center
Line Managers
Partnership with internal and
external customers
Transformational, change leader
and initiator
Fast, proactive and integrated
Short, medium, Long (as
necessary)
Organic-Flexible, whatever is
necessary to succeed
Broad, flexible, cross training,
teams
People, knowledge
Investment center
The traditional HR assumes a role of handling transaction as they arise. In India in most of organizations
that are still bossed by 60+ adults from orthodox family business background (Babu ji culture), the role
of HR personnel is not understood by them and they mostly serve as front for the CEO's decisions
ranging from hiring, firing, wages, promotions and all kinds of manipulations. The traditional HR itself
branched out as scientific division of labor relieving line managers from highly subjective, time
consuming and inconvenient activities related to employee and which were not considered crucial to
profit making and growth of organization. Strategic HR plays role of transformational change agent with
focus on and in line with long term or strategic goals of organization.
To become strategic the HR managers will have to be drawn from general Management rather than
specialist training background, have to adopt long term and strategic focus and persuade management
to look beyond current performance. Further, most of senior executives including entrepreneurs
themselves hardly appreciative benefits and possibility of HRM as strategic partner. In fact most
managers view HR with dislike being rule machines that hinder flexibility and carrying out of jobs.
It is surprising but true that most senior executives in India as well as owners view human assets as
liability and not owned by them and therefore a high-risk investment. HR activities in organizations are
mostly taken up to do face lifting and present modernized face of organization because the direct
benefits of HR are difficult to see and quantify. The HR and training budgets get axe first when need
arises to do so.
References:
1. The challenges of Human Resource Management-Dr Alvin Chan-www.Zeromillion.com/business/hrm
2. Strategic Human resource Management- Jeffrey A. Mello, Thomson South Western 2004
3. "Technology, Diversity and Work Culture-Key trends in next Millennium" Harvey B H; HR Magazine
45, (7) July 2000 p 59
4. 'How will the new technology change the HR Profession?'-Workplace Visions, Society for Human
resource Management, No 3, 2000.
Prof. R K Gupta# Director, S.A. Jain Institute of Management !e"hnology
Ambala City, E-mail: cityju@rediffmail.com / rkgupta_india@hotmail.com
Glue of $rganisational Culture
By
Prof. %ileep Kumar M.
Professor (HRD/OB)
MA, MSW, M.Phill, PGDBA, PGDHRM, PGDCA, DLL, DHA, (UGC-NET), PhD (On Submission)
Sinhgad Institute of &usiness Administration Computer Appli"ation
Sinhgad !e"hni"al 'du"ation So"iety
Kusgaon, Lonavala-410 401 Pune (Dist)
Phone: (O) 02114-280204, (M) 9822448810
E-mail: dilmail@rediffmail.com / dileep@scmld.org

Introdu"tion
Culture
Culture is a concept borrowed from the field of Anthropology. Sociologists, Anthropologists and
Behavioural scientists have extensively used the term culture. Culture stands for symbols and values; it
is the strong widely shared core values; and it is regarded as the moral spiritual and intellectual
attainment of man. Culture facilitates a harmonious and balanced cultivation of all the faculties in man,
intellect, emotion, intuition, sense and perception. Culture is the primary and basic thing; it is inside
every human being and is what we are. Culture plays the role of a guide, which makes human being
confirm to accepted ways of life. It is the flesh as well as the spirit. It liberates as well as enslaves him.
It lays down norms of behaviour and provides the mechanism, which secure an individual his personal
and social survival.
Taylor E.B (1987) defined culture as that "complex whole which includes knowledge, belief, art, morals,
law, custom, and any other capabilities and habits acquired by man as a member of a society".
$rganisational Culture
Man spends major part of his life in the organisations within which he works. When people join an
organisation, they bring with them the unique values and behaviours that they have been taught. Any
organisation with firmly established organisational culture would be taught the values, beliefs and
expected behaviours of that organisation. Just as society moulds human behaviour, an organisation also
moulds human behaviour that is in tune with the prevalent set of norms and behaviour. In this process,
certain basic attitudes and beliefs about the people and their work situations are slowly but firmly
accepted in the organisation, which becomes its 'Organisational Culture.'
A strong culture, which reflects the healthy behaviour, is the keenness to work hard and a strong desire
and willingness to contribute to the best. Behaviour towards work-efficiency is largely controlled by
internal ability and willingness to work hard. It is based on sincerity of participation, involvement,
devotion to duty, earnest desire to work, and discharge of responsibilities with confidence and
competence. Here, 'culture act as a blue print influencing all aspect of life.
Culture around a work place provides a comprehensive framework for understanding the various facets
of work behaviour. Human behaviour is the out come of frequent interaction between several value
system and pattern of the interrelation of cultural traits. It is not a self-induced phenomenon.
Employee's attitudes are reasonably, good predictors of human behaviour and the organisational
culture. It provides clues to an employee's behavioural intentions and inclinations to act in a way. The
culture of an organisation is precipated through negative and positive attitudes of organizational
members. A strong culture, which is widely held by the organisational members, indicates a favourable
attitude and a weak culture indicates unfavorable attitude of members towards the beliefs and norms of
the organisation. Employee's attitudes are the beliefs and feelings that largely determine how employee
will perceive their work environment, commit them to intended actions and ultimately behave.
Strong indicator of cultural variations in work environment then can be observed through human
behaviour, which is the precipitation of dominant attitude. Attitudes comprise three elements: affect
(feelings, emotions); cognitions (knowledge, beliefs, values); and behaviour. An integral and important
component of an attitude concerns the values attributed to its contents. Values reflect how positively or
negatively a person feels towards a specific object, event or relationship and, consequently, provide
valuable insights into the nature of the employee-work relationship. Human attitude towards prevailing
value system is then a factor detrimental to organisational growth, organisational development and
success.
$rganisational Culture and 'thi"s
An organization's culture evolves from the values of its members. However, organizational culture and
ethics are more than the sum of their parts. Organizations develop a self-sustaining and durable system
of ethics that exerts a powerful influence on the actions, decisions, and behaviors of all employees.
Ethics in organizations are influenced more by the group ethics system (culture) than by the sum of the
individual personal ethics systems. These "group effects" can have a profound effect on the ethical
behavior and overall culture of an organization.
Ethics reflects the collection of values and behaviour, which people feel are moral. In other words, a
positive work ethics is the collection of the values and actions that people feel are appropriate in the
work place. Since ethics is a collection of values and behaviour which people feel are moral, a positive
work ethics is the collection of all the values and action that people feel are appropriate in the work
place. Ethics at work place is about the standards of proper conduct to be followed by employees and
employers in a work place. Ethical values and conduct at work place includes integrity, loyalty, respect
fairness, caring and citizenship.
(hy a manager should understand the organisational Culture)
Culture is an asset that can also be a liability. It is an asset as it facilitates better cooperation and
communication between management and employees. It is a liability when important shared beliefs and
values interfere with the needs of the business and of the company and the people who work for it.
Hence,
* An understanding of organisational culture is important in the field of organisational behaviour as it
give proper understanding, insight, and feedback to the leaders and management about the present
cultural pattern that facilitate, either to development or constraints to organisational development.
* An understanding of Organisational Culture is important because no organization can operate in
isolation to its cultural environment. In other words, organizations are social systems that must be
inevitably operating to survive.
* An understanding of organisational culture is important as it explore the ethos and managerial
practices at work, which would go a long way in developing positive attitudes, which in turn are likely to
exert positive influence on performance.
* An understanding of Organisational Culture is significant as it establishes the linkage between culture,
leadership and work ethics in building human and social capital and it is trough human beings that
organisations can sustain high performance.
Con"lusion
Individuals arrive at organizations with variant motivations, experiences, and values. These natural
individual differences tend to direct behavior in numerous, often divergent directions. An understanding
of value expectancy of members in an organisation is fundamental to the understanding of managing
organisational culture and behaviour. The value orientation of employees underlies employees and
employers behaviour. Major managerial functions and roles are perceived through value driven
approaches. Knowledge of culture of organisation may help us to understand the power of culture on
human behaviour at work. It helps in better decision making and control of human behaviour at work.
Referen"es
1. Dhingra, O.P.& Pathak, V. K. (1999), ' Organisational Culture and Managers,' Shri Ram Centre for
Industrial Relations and Human Resources, New Delhi.
2. Harrison/Handy. (2001), 'Culture at Work Place', On Line Document.
3. Hofsted. (1991). Hofstede, G. (1991). 'Cultures and organizations', New York: McGraw-Hill.
4. Jai, B. P. Sinha (1997), 'Human Resource in Work Cultures', Indian Journal of Industrial Relations,
Vol, 33, No.2. PP 421-433.
5. Keith Davis. (1999), "Human Behaviour at Work" Tata McGraw Hill publishing company Limited. New
Delhi
6. Kramer and Foy (1974), 'Organisational Culture, a mode of stabilizing Behaviour', In K.K Ahuja.
(1997) 'Organizational Behaviour', Second edition, Kalyani publishers, New Delhi - 110 060
7. Schein, E.H. (1987) 'Organisational Culture and Leadership', Jossey and Bass, San Francisco.
8. Stephen P. Robbins (1998) Organisational Behaviour, 8
th
(Edn.) Prentice Hall, New Delhi.
9. Van Mannen (1989) Van Maanen, and Kunda (1989) - Real feelings: Emotional expression and
organizational culture 2002 mmorten@stanford.edu.
10. Tailor E.B. (1913) Primitive Culture, 2 Vols, (London)

Prof. %ileep Kumar M.
Professor (HRD/OB)
MA, MSW, M.Phill, PGDBA, PGDHRM, PGDCA, DLL, DHA, (UGC-NET), PhD (On Submission)
Sinhgad Institute of &usiness Administration Computer Appli"ation
Sinhgad !e"hni"al 'du"ation So"iety
Kusgaon, Lonavala-410 401 Pune (Dist)
Phone: (O) 02114-280204, (M) 9822448810
E-mail: dilmail@rediffmail.com / dileep@scmld.org
A Study on Choi"e Criteria and Satisfa"tion *e+el of Mobile Phone
Ser+i"e ,sers in India- A Case Study of *udhiana City
By
Sandhir Sharma
Faculty, Dept. of Business Management
Pun.ab College of !e"hni"al 'du"ation
Ferozpur Road, Baddowal, Ludhiana -142021India
E-mail: sandhir@pcteludhiana.org
911613945987, 91-161-2805217/18/19

A&S!RAC!
In the today's business scenario, as competition is tough and ever increasing, it is the service sector
which has shown a tremendous growth, particularly in mobile phone service sector. Nowadays,
information technology development, particularly in Tele-communication plays an important role in
consumption pattern and living style. This research was conducted to determine the choice criteria and
satisfaction level of mobile phone service users in Ludhiana city in Punjab State- so called Manchester
of India.
I/!R$%,C!I$/
Communication with fellow beings is a necessity as well as an inborn need of human beings. With the
passage of time the desire for communicating with fellow beings in far-flung places manifested itself in
the discovery of novel modes like pigeons. Telegraph, Morse code and telex followed this. The invention
of telephone by Alexander Graham Bell in 1876 revolutionized the field of communication. A bigger
revolution of much greater magnitude took place about a hundred years later in the form of cellular
phone. In the last decade of 20
th
century when more than 40% of the global workforce is nomadic,
always on the move whether on the road, in the air, within the city or country or abroad and traffic is
choking up urban arteries. Simultaneously the commercial pace is quickening, forcing executives and
businessmen to always stay in touch with office, suppliers, buyers, the markets and associates. The
solution is little something called the cellular phone that keeps communication lines open in the welter of
chaos, a palm sized electronic gadget that is a panacea of sorts for most of the communication
problems. The cellular telephony offers full-featured telephone services to people on the move without
any restrictions except the geographic reach of the service they subscribe to. On the other hand, there
are many more value added services like recently introduced WAP (Wireless Application Protocol).
Through this service customers can access Internet and also send and receive e-mails through their
mobile phones without having PC.
C'**,*AR !'*'PH$/0 I/ I/%IA
The government of India recognizes that the provision of a world-class telecommunications
infrastructure and information is the key to rapid economic and social development of the country. It is
critical not only for the development of the Information Technology Industry, but also has widespread
ramifications on the entire economy of the country. It is also anticipated that going forward, a major
part of the GDP of the country would be contributed by this sector. Accordingly, it is of vital importance
to the country that there be a comprehensive and forward looking telecommunications policy which
creates an enabling framework for development of this industry.
!e"hnology used in Mobile Ser+i"es
1. Global System for Mobile Communi"ation 2GSM3
4. General Pa"5et Radio Ser+i"es 2GPRS3
6. Code %i+ision Multiple A""ess 2C%MA3
A Mobile Phone System Stru"ture
M$&I*' S'R7IC' PR$7I%'RS $P'RA!I/G I/ *,%HIA/A
* Spice Communications Limited
* Bharti Mobile Limited "Airtel"
* Reliance Telecom Limited
S$M' $8 !H' S'R7IC'S $88'R'% &0 MSPs
1- Multimedia Messaging Ser+i"e 2MMS3 Multimedia Messaging Service (MMS) is a fun packed new
service that allows you to exchange multimedia-rich messages. It allows the user to enrich the
traditional text message by incorporating it with audio images and other rich content.
4- (eb Mail Using Email service, user can access Inbox of any POP3 email system and read emails.
Apart from this user can compose (send), reply, forward or delete email messages. User can setup
his/her POP3 email accounts to retrieve and manage emails.
6- Itemi9ed:%etailed &illing Provides details of all Local/STD/ISD and roaming voice calls made.
;- 7alue Roaming lets the user roam the length and breadth of India, at unbelievably low rates.
Reliance Value Roaming lets you make and receive calls without any Roaming airtime charges, send and
receive SMS, retrieve Voicemails from anywhere outside your home circle all at home tariff plan rates.
The user can roam with a single number on a single network across India. Even more, the user can
experience the same 24-hour Customer Care Service with a single toll-free number, from anywhere in
the country.
<- International Roaming Communication without boundaries. That's what the wireless world means.
And that's exactly what the Reliance IndiaMobile gives. Reliance Infocomm offers GSM International
Roaming through the use of a GSM handset and a GSM SIM card or a Removable User Identification
Module card (RUIM card). A RUIM card can be used on the Reliance IndiaMobile network with a RUIM
Compatible handset - GTRAN or Telson handset.
The world has become a global village. No part is inaccessible. And no country too far. Work or
vacationing could take one anywhere. With 325 operators in 170 countries the Reliance IndiaMobile
ensures that users stay connected anywhere. However, the coverage with a RUIM Card is currently
available in 21 Mobile operators in 18 countries.
=- 7oi"e mail Voicemail service is a personal answering machine that will record messages whenever
user is not reachable. The service can be activated to record messages in the following situations:
When a user is not reachable (e.g. out of coverage area or phone not switched on) or an
incoming call is not answered.
When user is busy on another call.
Alternatively, when a user divert all incoming calls automatically to the voicemail (not
recommendable).
>- Call (aiting Enables the user to receive a second call while he/she is already engaged on one.
When this feature is activated, the user will be able to attend all incoming calls without missing any.
While the user is talking, a beep and the mobile number of the called party will indicate that a second
incoming call is waiting. The (second) caller will get an announcement for 30 seconds.
?- Call Hold Allows the user to put the first call on hold and perform any one of the following functions
from your handset. Make a second call. Receive a second call, which is waiting. Check or send a Text
message. Check your Voice Mail. Use any other feature of the phone.
@- Call %i+ert In case the user is unable to take the calls, this service enables user to divert the calls to
another phone number or voicemail box (VMS) within the SDCA. When activated the incoming call will
land at that particular number (or voicemail box). This feature allows users to make sure that all
incoming calls are handled, without missing any.
1A- 6BCay Call Conferen"ing A subscriber can connect with two (1+2) persons simultaneously and set
up a conference with them using this service. Here the user can include a maximum of three people
including himself in a conference at one point of time. Any party can disconnect to drop-off from the
conference. However, if the initiator of the conference disconnects then all the parties are disconnected
and the conference call ends. Call conference can be done with any number (any service provider).
11- C*IP 2Call *ine Identifi"ation Presentation3 This feature enables the user to view the number
of the caller on his/her phone. If phone number of the person who has called is stored in the phone
book, then the name associated with the number will be displayed on the screen. This service also
allows the subscriber to identify missed calls and redial previous calls.
14- C*IR 2Call *ine Identifi"ation Restri"tion3 This feature enables the user you to hold his/her
number from being displayed on the phone screen of the person to whom the call is made. This
restriction is required when user wants to remain anonymous. When CLIR is activated, instead of your
phone number, a message like "Restricted Number" or "Incoming call" will be displayed. Availability of
this facility is governed by Government of India regulations. Users who wish to get this facility may
please contact their nearest Web World or contact us at 3033 4343. This facility will not be granted
automatically and the organization reserves the right to grant this facility only to certain subscribers
based on certain fixed criteria.
16- International SMS Enables subscribers to send, receive, reply and forward simple text messages
to friends, relatives and business associates across the world.
'DP'RI'/C' 8R$M S!,%I'S C$/%,C!'% I/ PAS!
!heodore *e+itt 21@>;3 said that, "We live in an age in which our thinking about a product or service
is must be quite different from what it ever was before. It is not so much the basic, generic central thing
we are selling that counts, but the whole cluster of satisfaction with which we surrounded it". In this
wording he means to say that today to provide complete customer satisfaction we need to have some
facilitating and supporting services, which provide our service package a competitive edge. The need is
much felt in today's business scenario, as competition is tough and ever increasing.
7 n nenB7ainioBMattila and Ruus5a 21@@? and 1@@@3 adapted Beyer and Holzblatt's (1998)
contextual inquiry (CI) techniques to the study of mobile technology. Using this ethnographic approach,
they and other Nokia researchers have gathered information about user needs, behaviors and practices
by shadowing users in real situations. They have had success in using these techniques to inform the
design of mobile technology.
Christensen et al. 21@@@3 in their study "A methodology Using a Microcamera for Studying Mobile IT
usage and Person Mobility" stated that, mobile communication and information technologies have been
developing in recent years at an explosive rate, and are presenting exciting possibilities for people to
communicate and exchange information regardless of their geographic location. And yet paradoxically,
few evaluations of such systems in actual use have been done. Without a deep understanding of how
users adapt to IT, technology development proceeds in the dark, with respect to human-computer
interaction issues. "Our goal is to understand mobile IT usage, in order to inform the design of mobile
systems, and to study social impacts of the technology. Studying mobile IT usage involves two separate
aspects: 1) to understand the usage of mobile IT in settings outside the laboratory, which enables us to
understand issues such as adoption patterns, problems created by the technology, innovative solutions,
and emerging behavioral or work patterns, and 2) to understand person mobility in different settings".
Harper and !aylor 21@@@3 in their paper "Talking 'Activity': young People & Mobile Phones" presented
a brief overview of findings collected from an ethnographic field study of young people and their use of
mobile telephones. The findings indicate that mobile phones provide young people with a means of
demonstrating their social networks. That is, through owning and using mobile phones, young people
demonstrate their participation in social groupings and define the boundaries of their social networks.
Using activity theory, the findings from this research have been interpreted to produce a number of
preliminary design considerations. This work reflects the first of several stages aimed at investigating a
systematic means of using rich and meaningful qualitative data for the purposes of design.
Mi"hael &arry 21@@@3 in the study EThe Uses And Meaning Of I-Mode In Japan". The article presents a
research about mobile phone and the adoption of the "I-mode" (mobile SMS) in Japan, and brings about
the mobile phone culture among adolescents and youth in this country, showing in particular how the
device is very significant as to the personality build up of its owner. In concrete, the article presents a
great variety of ways that there exist to personalize the mobile phone. As to the I-mode in particular,
the article shows that it is a system very much adapted to Japanese ways, and that the Japanese people
(especially teenagers) have adopted wholeheartedly, that it offers a whole display of services, that they
consider it very safe, all of which justifies, in part, the fears that the Japanese people show in
relationship to the internet. Through the research it was evident that Japanese mobile phone use and I-
mode services are great cultural fits, enormously resonant, satisfying both longstanding and new needs.
I-mode has been successful in Japan not because it offers the "Internet" on a mobile phone, but
because of its near-perfect fit to a set of communication and cultural needs specific to Japan. In
addition I-mode was built on an already strong platform (the mobile phone).
C.&. Jain 24AAA3 stated that the Short Message Service (SMS) launched by Spice Telecom is evidently
running into some teething problems. Many users in the city had expressed their dissatisfaction with the
service. SMS allows one to send "short data message" with up to 160 characters from one mobile to any
mobile in the country or abroad. Many people are using old handsets which do not allow data messages
and many don't know how to operate the service.
Christina James 28ebruary 4AAA3 in the research "Designing the next generation of mobile
communication" concluded "most of the design effort has been to make phones smaller, more powerful,
chock full of more features. This form and function has been targeted at the young, urban, and
technologically savvy. This design path is short sighted; we should be designing for a broader market,
and increasing the customer base. Instead of just adding more desktop features, we should consider
how new mobile device capabilities will let people do new things. And we should challenge ourselves to
answer the question: how can our devices improve human capabilities? In preparing ourselves to
answer this question there are a number of avenues open to us: Government and industry standards, UI
standards and style guides. And of course we have the people for whom we are trying to design".
'ldridge and Grinter 2$"tober 4AAA3 in their study "Studying Text Messaging In Teenagers",
illustrates several methods used to study mobile users (teenagers, in this case) and provides data to
help us understand their text messaging experiences, particularly how and why it provides support for
their fundamental need to communicate with friends. This short study has provided some data on why
and how teenagers use text messaging. It also provides examples of two methods that can be used to
study mobile users: a logging study and discussion groups. Unfortunately for teenagers, and probably
for other mobile users as well, direct observation is not feasible. "We discussed this with several of
them, and they said there was no way they did want to be followed around and watched while sending
messages." Practically this would be difficult, too, since many messages are sent from home (some
while in bed and some while in the bath!) or from school.
JinCoo Kim 24AAA3 made a study on "Analyzing Mobile Internet Users: Results from a monitoring
study, an experiment, and a survey study." In this study it was concluded that
the use of cellular phones and Internet has been spread at an astonishing speed than any other
information technologies and the high popularity of these two technologies lead up to sharp interests on
mobile Internet. Mobile Internet is the usage of Internet via handheld devices such as cellular phones
and PDAs.
Ketola and Roy55ee 24AAA3 in their research "The Three Facets of Usability In Mobile Handsets"
concluded that usability has traditionally been a user interface issue that deals with interaction between
a system and a user. Mobile handsets are devices that extend the concept of a system to be more than
just one device. They are technically complex devices that need a network and services in order to be
useful and usable. In this research they had defined user interface, external interface and service
interface as the three conceptual interfaces that user needs while interacting with a mobile handset. For
each interface they had defined the specific elements that are part of the interface.
Peter Johnson 24AAA3 in his topic "Mobile Interaction; a resource view" founded that the development
of interactive communication technologies as Olsen, 99, has shown, allow us to interact with people and
information in a myriad of ways, across different time zones in different geographical locations. The
devices we use range from mobile phones, wearable and palm-held devices, embedded devices to room
size multi-media environments. With this technological development has come a significant change in
the use of computers from being data processing and information storage devices to becoming
communication and information gathering devices. The challenges are epitomized by the fact that we
are still designing interfaces to a "desk-top" metaphor when the "desk" and "office" are no longer the
appropriate context, focus or medium for our communication needs. Moreover, the desktop metaphor is
impossible to maintain across the different range of computing devices.
Anthony M. !oCnsend 24AA13 in his paper "The Science of Location: Why the Wireless Development
Community Needs Geography, Urban Planning, and Architecture" stated that location-based information
services have the potential to become the killer app which drives widespread adoption of mobile Internet
technologies. Yet, the technology and engineering enterprises driving the development of mobile
computing and communications have yet to engage these disciplines and communities in a meaningful
way. As a result, applications that effectively and productively bridge the gap between virtual spaces
and physical places have been slow to emerge. This position paper argues for an engagement of
wireless developers with the professions of location (geography, urban planning, and architecture)
whose task it is to understand and design the places in which we live, work, and play.
8ortunati and Magnanelli 24AA13 in their study "Young People And The Mobile Telephone" concluded
the pioneering behavior of adolescents and young people in relation to new technologies, as well as new
routes for new generations in the field of self-learning and of transmitting knowledge to other
generations, especially adults. However, if we bear in mind the various psychosocial and economic
indicators relating to the everyday life of adolescents and young people (unemployment, atypical ways
of working, difficulty in emotional relations, etc.), it would seem to be understood that these generations
do not manage to use their "know how" of technologies to acquire greater social power. On the
contrary, this unheard of capability with its complexity runs the risk of simply becoming a greater,
sophisticated social ghetto for them.
Ra5esh Gupta 2Mar"h 14# 4AA13 in an article entitled "Cellmania Launches m-Enterprise, Plans to
Enter WASP Arena." Express Computer reported that Cellmania plans to launch mEnterprise, a mobile
commerce, communication and content enabling platform, next month, and is considering entering the
Wireless Application Service Provider (WASP) space. Rakesh noted, "The product will appeal to
businesses with mobile workforces, such as insurance companies, financial services or consulting firms."
Cellmania is also establishing a software development center in New Delhi to focus on mEnterprise
development.
$lga 7ershins5aya 24AA13 in his study "Mobile Communication. Use Of Mobile Phones As A Social
Phenomenon - The Russian Experience" concluded that Social acceptance of mobile communication by
Russian youth is high and growing. The mobile communication era is just evolving in Russia. High rates
of penetration are characteristic only for big cities at present. The 89 regions are just taking off. A boom
can be seen in the cities - Moscow and Saint Petersburg. The main trends in mobile communication
development seem to be universal: young people are the most active users of mobile phones and make
up the majority of users; mobile telephony was a luxury at first, but as it becomes less expensive, it is
finding its place in the middle class and becomes a necessity. (Specific features of mobile phone use are
not on the surface but can be revealed with the help of international comparisons.)
8inan"ial 'Fpress 24AA43 conducted a survey and founded that value plus services - the thoughtful
touch that makes AirTel the first choice of many. AirTel offers its customers a wide array of extras that
are designed to take care of every need. In keeping with its tradition to constantly innovate, AirTel is
the first cellular operator in Punjab to offer its customers a 32K Sim card which would not only provide
the customer a large memory but also enable them to accesses a host of SMS services like train
information services, gifts, food, travel, hotels, shopping etc. besides the above AirTel also brings you a
number of new services on voice, specially selected for Punjabi keeping their lifestyles and requirement
in mind. Such as immigration consultation, Gurbani wake-up call, Vet online etc.
S.K. Sinha 24AA43 stated that Spice Communication, cellular services provider in Punjab has dropped
its tariff charges. With a drop of 33 percent in incoming airtimes rates, the mobile phone user will have
to pay Rs.1 per minute. The company has also introduced a night slab, called "night hours", where in
users would be charged in minimal amount of 25 paise per billing pulse. This new "night hours" tariff will
be available to subscribers from 11p.m. to 6 a.m. on both incoming and outgoing airtime.
Sandeep Sudershan 24AA43 in his topic "Java in Mobile Phone" stated that Wireless Java technology is
the intersection of two vast worlds, wireless data communications and the Java platform. Java in mobile
phones is widely accepted today vis--vis the early days of the mobile revolution. With 250 million Java
technology-enabled wireless devices from 31 manufacturers deployed over 75 carrier networks, Java
technology seems to be smartly perched in the applications space. The Java framework consists
primarily of the Java 2ME (Micro Edition) platform with its API and various tools for application
management. This white paper explains the J2ME architecture, various APIs provided, methodology for
downloading the applications 'over the air' and various challenges like security, memory requirements
etc. faced by the wireless Java world.
Sinha and Su5umar 24AA43, concluded that "A wire line telephone will become like a wall clock. Every
house will have one. But cellular phone will be like a wristwatch. Every one will have one" ; coming as
they do from a man who heads India's second largest cellular operator, these words could be
constructed as a plug of sorts. But Sunil Mittal's quaint analogy is based, not on hope but on number
that his company Bharti Tele-ventures and the entire cellular accept today: 50 million cellular
subscribers by 2005. Just to put that number in context: one in every 25 Indians will own a cellular
phone by 2005; and achieve this target, the size of cellular industry in the country will double every
year for the next four years. The 50 million forecast - and this does not take into account the mobile
phones based on Wireless Local Loop (WLL). WLL is the way the Gartner Group's estimate of 30.9
million, but then, even tech consulting firm could not have predicted the curious mix of regulatory,
competitive and evolutionary factors that has made 2002, the Indian cellular industry's point of
inflexion. Beginning March 2002, the industry will grow at 100 percent every year.
Staffan &.or5 2$"tober 4AA43 in his paper "Activity-Based Mobile Interfaces: Towards a user model
for Hybrids between Mobile Phones and PDAs" outlines that the basis for an activity-based view of user
interaction on mobile computing devices. PowerCom, a system that provides users with integrated
access to the most commonly used types of information on PDAs (contacts, e-mail, meetings, and
notes) as well as the advanced call handling functionality found on mobile phones, is used to exemplify
some of the requirements for user interfaces that are used in social and collaborative environments.
Guingmiao Hu 2April 4AA63 conducted a research, EMobile phones change traditional
communication", in order to understand how digital media are changing relationships and
communications among Japanese youth. In the research it was founded that; more than 95 percent of
Japanese students are short message and email (mobile phone with internet access function) users,
more than 90 percent of students send over five messages a day, teens send twice as many messages
than 20-something, and they send over 70 messages a month per person, youth generally view and
reply messages right away, older people read messages at a time that's convenient to them or even
wait till the end of the day to read them.
/eil Strother 2May 1A# 4AA;3 in his topic entitled "Service Provider Strategies for Mobile Devices
Operator Priorities, and Competitive Analysis" founded that what do consumers and business users want
from their next mobile phones and what will they pay. Consumers say that they prefer mobile phones
from the leading manufacturers, but many won't pay more than $100, according to the new report titled
"Service Provider Strategies for Mobile Devices: Operator Priorities, and Competitive Analysis." Business
users expect to pay slightly more for mid-tier phones ($100 to $200) than consumers, this report notes.
This report also highlights these findings: - The one feature most users would pay extra for is extended
battery life - Nokia and Motorola remain the strongest brands, with Sony Ericsson and Samsung leading
the second-tier pack - Nextel has the highest overall satisfaction rate.

BBH Arti"le "ontinued on neFt page# "li"5 here BBH
BBH Arti"le "ontinued on neFt page# "li"5 here BBH
Sandhir Sharma
Faculty, Dept. of Business Management
Pun.ab College of !e"hni"al 'du"ation
Ferozpur Road, Baddowal, Ludhiana -142021India
E-mail: sandhir@pcteludhiana.org
911613945987, 91-161-2805217/18/19
A Study on Choi"e Criteria and Satisfa"tion *e+el of Mobile Phone
Ser+i"e ,sers in India- A Case Study of *udhiana City
By
Sandhir Sharma
Faculty, Dept. of Business Management
Pun.ab College of !e"hni"al 'du"ation
Ferozpur Road, Baddowal, Ludhiana -142021India
E-mail: sandhir@pcteludhiana.org
911613945987, 91-161-2805217/18/19

...Continued from pre+ious page
IBB Cli"5 for Pre+ious page
$&J'C!I7'S $8 !H' R'S'ARCH
1. To determine factors affecting the choice of customers for a particular mobile phone service provider.
2. To determine the satisfaction level of users from their existing mobile phone service provider.
M$%,S $PR'/%I $8 R'S'ARCH
The research design used in this research was descriptive in nature. Both primary and secondary data was
used in this research. The secondary data was collected from previous research reports, magazines,
newspapers, Internet, etc. Using structured and undisguised questionnaire collected primary data. All the
questions that were asked were close ended. Further in close-ended questions, dichotomous questions,
checklist questions, multiple-choice questions, ranking questions and rating scale questions were widely
used. Sampling Unit for the study was individuals who use a mobile phone connection and who belong to
age category of 20 years or above in Ludhiana. The time period for the study was January 2004 - May
2004 with 100 respondents. For the purpose of analysis of dichotomous, checklist and multiple-choice
questions percentage method and ranking questions were analyzed as per ranks and scaling questions
were analyzed on the basis of weightage, for that purpose a five-point scale was used.
R'S,*!S A/% %ISC,SSI$/
1. Significance level of various services Expected by Customers
To determine the extent of importance of services that are expected from a mobile phone service provider,
a rating scale question was asked from the respondents and following response has determined:
R'SP$/S'S
Extent Extremely
Important
Very
Important
Somewhat
Important
Not Very
Important
Not at all
Important
Total Score
=J2RatingK
Responses)
Mean Score
=Total
Score/100
Rating Services 4 3 2 1 0
SMS 78 19 2 0 1 373 3.73
MMS 22 44 21 8 5 270 2.70
Voice Mail 24 38 20 12 6 262 2.62
Itemized Billing 40 39 13 5 3 308 3.08
Call Diverting 34 31 21 10 4 281 2.81
Call Barring 19 30 37 7 7 247 2.47
Call Waiting 64 27 9 0 0 355 3.55
Internet Services 26 40 24 4 6 276 2.76
Balance Check 54 34 6 5 1 335 3.35
Line Identification 61 25 10 3 1 342 3.42
Area Information 21 26 28 18 7 236 2.36
Closed Group 19 20 43 6 12 228 2.28
Customer Care 61 32 5 1 1 351 3.51
Free National Roaming 65 21 7 2 5 339 3.39
Pre-activated STD 60 22 10 3 5 329 3.29
Pre-activated ISD 61 17 8 8 6 319 3.19
From the above table following discussions can be made:
Services such as SMS, call waiting and customer care are considered to be extremely important that a user
expect from a mobile phone service provider; Services such as MMS, voice mail, itemized billing, call
diverting, internet services, balance check, line identification, free national roaming, pre-activated STD and
pre-activated ISD are considered to very important that a user expect from a mobile phone service
provider; Services such as call barring, area information and closed group are considered to be somewhat
important that a user expect from a mobile phone service provider.
2. Purpose for Using Mobile Phone
Most of the respondents use their mobile phone connection because of its mobility, followed by those who
use it for business transactions, followed by those who use it because they don't have a landline phone
connection and lastly, those who use it as having a personal phone.
. !actors "ffecting the Choice for a Particular Mobile Phone Service Provider.
Factors Total Score
= (Responses)
Mean Score
= Total Score/100
Rank
Brand Image 293 2.93 3
Tariff Plan 272 2.72 2
Connectivity 209 2.09 1
Coverage 296 2.96 4
Value Added Services 430 4.30 5
(Note: Here Rank 1 corresponds to the most important factor and Rank 5 corresponds to the least important factor.)
While opting for a particular mobile phone service provider; connectivity was considered as the most
important factor, followed by tariff plan which was considered to be of relatively lesser important factor
than as compared to connectivity, followed by brand image which was considered to be of relatively lesser
important factor than as compared to tariff plan, followed by coverage which was considered to be of
relatively lesser importance factor than as compared to brand image and lastly, value added services which
was considered as the least important factor.
#. Most Used Services by Users
Figure above shows that SMS, line identification and customer care services were used by all of the
respondents, followed by roaming, call diverting, balance check, call waiting, area information services
which were used by the majority of the respondents, followed by MMS, voice mail, call barring, closed
group, itemized billing which were used by relatively lesser number of respondents than as compared to
majority and lastly, internet services which was used by the minority of the respondents.
<. Satisfa"tion *e+el of the Respondents
An attempt was made to determine the satisfaction level of the respondents on the basis of services that
they use as provided by their mobile phone service provider, for this purpose a rating scale question was
asked from the respondents and the results collected are as tabulated below.
R'SP$/S'S
Satisfaction Level Highly
Satisfied
Satisfied Indifferent Dissatisfied Highly
Dissatisfied
Total Score
LJ2RatingK
Responses)
Mean Score
=Total Score/
(Responses)
Rating Services Provided 2 1 0 -1 -2
SMS 74 22 2 2 0 168 1.68
MMS 15 33 16 6 1 55 0.77
Voice Mail 11 27 28 4 0 45 0.64
Itemized Billing 14 31 13 2 0 57 0.95
Call Diverting 29 41 21 1 0 98 1.07
Call Barring 7 30 29 4 0 40 0.57
Call Waiting 44 29 15 1 1 114 1.27
Internet Services 1 7 12 0 0 9 0.45
Balance Check 39 36 15 0 0 114 1.27
Line Identification 64 36 0 0 0 164 1.64
Area Information 20 32 11 25 2 43 0.48
Closed Group 17 15 30 0 0 49 0.79
Customer Care 40 38 9 10 3 102 1.02
Roaming 29 50 11 5 0 103 1.08
Respondents were highly satisfied with services such as SMS and line identification; satisfied with services
such as MMS, voice mail, itemized billing, call diverting, call barring, call waiting, balance check, closed
group, customer care and roaming; indifferent or neither satisfied nor dissatisfied with services such as
area information and internet services, which were used by them as provided by their mobile phone service
provider.
C$/C*,SI$/
Today in the fast paced world where 24 hrs. in day falling shorter for everybody to complete all the
activities, mobile phones have really become the dire need of everybody to stay in touch with their near &
dear ones, superiors, colleagues, friends and others. The revolution in the telecom industry has made the
users/consumers HIGH BAND WIDTH HUMAN BEINGS (HBWHB) who are approachable by anybody,
anytime and anywhere. The study concluded if any new mobile phone service provider has to enter into
the market, it has to take following points into the consideration without fail:1. Connectivity 2. Coverage 3.
Tariff 4. Value Added Services 5. Customer Care. The study found that majority of the existing mobile
phone users were satisfied from the services of the existing Mobile Service Providers. It may be assumed
that any new entrant in this field may have to provide minimum what the existing mobile service providers
are providing. The study raises a question and scope for another research with a view that what all is
required to taken care for by any new entrant in the field of Mobile Phone Services in the state.
&I&*I$GRAPH0
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IBB Cli"5 for Pre+ious page
Sandhir Sharma
Faculty, Dept. of Business Management
Pun.ab College of !e"hni"al 'du"ation
Ferozpur Road, Baddowal, Ludhiana -142021India
E-mail: sandhir@pcteludhiana.org
911613945987, 91-161-2805217/18/19
A S"ientifi" Ad+ertising Can Penetrate !he Competiti+e Mar5et
B A Criti"al '+aluation
By
Mr. Ra.ul &hardCa.
(BCA, Msc(Math), MBA)
Sr. Lecturer & HOD
%oon Institute $f Management Resear"h
Shyampur, Dehradun (U.A.)
E-mail: rajul_bhardwaj@rediffmail.com

The time has come when advertising has in some hands reached the status of a science. It is based on
fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well
understood. The correct method of procedure have been proved and established. We know what is most
effective, and we act on basic law. Advertising, once a gamble, has thus become, under able direction,
one of the safest business ventures. Certainly no other enterprise with comparable possibilities need
involve so little risk. Therefore, this research deals, not with theories and opinions, but with well-proved
principles and facts. Every statement has been weighed. The research is confined to establish
fundamentals. If we enter any realms of uncertainty we shall carefully denote them. The present status
of advertising is due to many reasons. Much national advertising has long been handled by large
organizations known as advertising agencies. Some of these agencies, in their hundreds of campaigns,
have tested and compared the thousands of plans and ideas. The results have been watched and
recorded, so no lessons have been lost. Such agencies employ a high grade of talent. None but able
and experienced men can meet the requirements in national advertising. Working in co-operation,
learning from each other and from each new undertaking, some of these men develop into masters.
Individuals may come and go, but they leave their records and ideas behind them. These become a part
of the organization's equipment, and a guide to all who follow. Thus, in the course of decades, such
agencies become storehouses of advertising experiences, proved principles, and methods. The larger
agencies also come into intimate contact with experts in every department of business. Their clients are
usually dominating concerns. So they see the results of countless methods and polices. They become a
clearinghouse for every thing pertaining to merchandising. Nearly every selling question, which arises in
business, is accurately answered by many experiences. Under these conditions, where they long exist,
advertising and merchandising become exact sciences. Every course is charted. The compass of
accurate knowledge directs the shortest, safest, cheapest course to any destination. We learn the
principles and prove them by repeated tests. This is done through keyed advertising, by traced returns,
largely by the use of coupons. We compare one way with many others, backward and forward, and
record the results. When one method invariably proves best, that method becomes a fixed principle.
Mail order advertising is traced down to the fraction of a penny. The cost per reply and cost per rupee of
sale show up with utter exactness. One ad is compared with another, one method with another.
Headlines, settings, sizes, arguments and pictures are compared. To reduce the cost of results even one
per cent means much in some mail order advertising. So no guesswork is permitted. One must know
what is best. Thus mail order advertising first established many of our basic laws. In lines where direct
returns are impossible we compare one town with another. Scores of methods may be compared in this
way, measured by cost of sales. But the most common way is by use of the coupon. We offer a sample,
a book, a free package, or something to induce direct replies. Thus we learn the amount of action, which
each ad engenders. But those figures are not final. One ad may bring too many worthless replies,
another replies that are valuable. So our final conclusions are always based on cost per customer or cost
per rupee of sale. These coupon plans are dealt with further in the further chapters. Here we explain
only how we employ them to discover advertising principles. In a large ad agency coupon returns are
watched and recorded on hundreds of different lines. In a single line they are sometimes recorded on
thousands of separate ads. Thus we test everything pertaining to advertising. We answer nearly every
possible question by multitudinous traced returns. Some things we learn in this way apply only to
particular lines. But even those supply basic principles for analogous undertakings. Others apply to all
lines. They become fundamentals for advertising in general. They are universally applied. No wise
advertiser will ever depart from those unvarying laws. We propose in this book to deal with those
fundamentals, those universal principles. To teach only established techniques. There is that technique
in advertising, as in all art, science and mechanics. And it is, as in all lines, a basic essential. The lack of
those fundamentals has been the main trouble with advertising of the past. Each worker was a law unto
himself. All previous knowledge, all progress in the line, was a closed book to him. It was like a man
trying to build a modern locomotive without first ascertaining what others had done. It was like a
Columbus starting out to find an undiscovered land. Men were guided by whims and fancies - vagrant,
changing breezes. They rarely arrived at their port. When they did, quite by accident, it was by a long
roundabout course. Each early mariner in this sea mapped his own separate course. There were no
charts to guide him. Not a lighthouse marked a harbor, not a buoy showed a reef. The wrecks were
unrecorded, so countless ventures came to grief on the same rocks and shoals. Advertising was a
gamble, a speculation of the rashest sort. One man's guess on the proper course was as likely to be as
good as anothers'. There were no safe pilots, because few sailed the same course twice. The condition
has been corrected. Now the only uncertainties pertain to people and to products, not to methods. It is
hard to measure human idiosyncrasies, the preferences and prejudices, the likes and dislikes that exist.
We cannot say that an article will be popular, but we know how to sell it in the most effective way.
Ventures may fail, but the failures are not disasters. Losses, when they occur, are but trifling. And the
causes are factors which has nothing to do with the advertising. Advertising has flourished under these
new conditions. It has multiplied in volume, in prestige and respect. The perils have increased many
folds. Just because the gamble has become a science, the speculation a very conservative business.
These facts should be recognized by all. This is no proper field for sophistry or theory, or for any other
will-o'-the-wisp. The blind leading the blind is ridiculous. It is pitiful in a field with such vast possibilities.
Success is a rarity, maximum success impossibility, unless laws as immutable as the law of gravitation
guide one. So our main purpose here is to set down those laws, and to tell how to prove them.

Mr. Ra.ul &hardCa.
(BCA, Msc(Math), MBA)
Sr. Lecturer & HOD
%oon Institute $f Management Resear"h
Shyampur, Dehradun (U.A.)
E-mail: rajul_bhardwaj@rediffmail.com

8inan"ial Analysis for the /onB8inan"e 'Fe"uti+es
By
%. Aruna Kumar
Assistant Professor (Finance & Accounting Area)
*o5amanya !ila5 PG College of Management
Ibrahimpatnam, Hyderabad-501 506
Cell: 9849563311, E-mail: dakumars@yahoo.com

The focus of this paper is on Ratio 'nalysis as the &ost )idely used techni*ue of financial state&ent
analysis. It #riefly discusses a#out the standards of co&parison and %arious types of Ratios+ )hich are
)idely used #y the corporates+ )ith #rief interpretations and conclusions.
Introdu"tion-
Management should be particularly interested in knowing financial strengths of the firm to make their
best use and to be able to spot out financial weaknesses of the firm to take suitable corrective actions.
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by
properly establishing relationships between the items of the balance sheet and the profit and loss
account. Financial analysis can be undertaken by management of the firm or by parties outside the firm
like owners, creditors, investors and others.
Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as "the indicated quotient of two
mathematical expressions" and as "the relationship between two or more things". The relationship
between two accounting figures expressed mathematically is known as 'financial ratio'. Rations help to
summarise large quantities of financial data and to make qualitative judgement about the firm's
financial performance. It measures the firm's liquidity. The greater the ratio the greater the firm's
liquidity and vice-versa. The point to note is that a ratio reflecting a quantitative relationship, helps to
form a qualitative judgement.
S!A/%AR%S $8 C$MPARISI$/-
The ratio analysis involves comparison for a useful interpretation of the financial statements. A single
ratio is itself does not indicate favourable or unfavourable condition. It should be compared with some
standard. It consists of:
PAS! RA!I$S- Rations calculated from past financial statements of the same firm.
C$MP'!I!$RS RA!I$S- Ratios of some selected firms, especially most progressive and
successful competitor, at the same point of time.
I/%,S!R0 RA!I$S- Ratios of industry to which the firm belongs.
PR$J'C!'% RA!I$S- Ratios developed using the projected or proforma, financial statements of
the same firm.
C*ASSI8ICA!I$/ $8 RA!I$S-
The parties interested in financial analysis are short and long term creditors, owners and management.
Short term creditors main interest is I the liquidity position or short term solvency of the firm. Long
term creditors on the other hand are more interested in the long term solvency and profitability of the
firm. Similarly, owners concentrate on the firm's profitability and financial condition. Management is
interested in evaluating every aspect of the firm's performance. They are classified into 4 categories:
Liquidity ratios
Liverage ratios
Activity ratios
Profitability ratios
*IG,I%I!0 RA!I$S-
Liquidity ratios measure the firms ability to meet current obligations. It is extremely essential for a firm
to be able to meet its obligations as they become due liquidity ratio's measure. The ability of the firm to
meet its current obligations. In fact analysis is of liquidity needs in the preparation of cash budgets and
cash and funds flow statements, but liquidity ratios by establishing a relationship between cash and
other current assets to current obligations provide a quick measure of liquidity.
A firm should ensure that it does not suffer from lack of liquidity and also that it does not have excess
liquidity. The failure of the company to meet its obligations due to the lack of sufficient liquidity will
result in a poor credit worthiness, loss of creditors confidence or even in legal tangles resulting in the
closure of company. A very high degree of liquidity is also bad, idle assets earn nothing. The firm's
funds will be unnecessarily tied up to current assets. Therefore, it is necessary to strike a proper
balance between high liquidity and lack of liquidity.
Current ratio
Quick ratio
Interval measure
Net working capital ratio
C,RR'/! RA!I$-
Current ratio is calculated by dividing current assets by current liabilities: Current assets include cash
and those assets which can be converted into cash with in a year, such as marketable securities,
debtors and inventories. Current liabilities include creditors, bills payable, accrued expenses, short term
back loan, income tax liability and long term debt maturing in current year. The current ratio is a
measure of firm's short term solvency.
As a conventional rule a current ratio of 2:1 or more is considered satisfactory. The current ratio
represents margin of safety for creditors
CURRENT RATIO = CURRENTS ASSETS/CURRENT LIABILITIES
G,ICK RA!I$-
Quick ratio establishes a relationship between quick or liquid, assets and current liabilities. Cash is the
most liquid asset, other assets which are considered to be relatively liquid and included in quick assets
are debtors and bills receivables and marketable securities. Inventories are considered to be less liquid.
Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial condition
QUICK RATIO: CURRENT - INVENTORIES
CURRENT LIABILITIES
I/!'R7A* M'AS,R'-
The ratio which assesses a firm's ability to meet its regular cash expenses is the interval measure.
Interval measure relates the liquid assets to average daily operating cash outflows. The daily operating
expenses will be equal to cost of goods sold plus selling, administrative and general expenses less
depreciation divided by number of days in the year.
INTERVAL MEASURE: CURRENT ASSETS - INVENTORY
AVERAGE DAILY OPERATING EXPENSES
/'! ($RKI/G CAPI!A* RA!I$-
The difference between current assets and current liabilities excluding short term bank borrowing is
called net working capital or net current assets. Net working capital is some times used as measure of
firm's liquidity.
NET W.C RATIO: NET WORKING CAPITAL
NET ASSETS
*I7'RAG' RA!I$S-
The short term creditors, like bankers and suppliers of raw material are more concerned with the firms
current debt paying ability. On the other hand, long term creditors like debenture holders, financial
institutions etc. are more concerned with firms long term financial strength. In fact a firm should have
short as well as long term financial position. To judge the long term financial position of the firm,
financial leverage or capital structure, ratios are calculated. These ratios indicate mix of funds provided
by owners and lenders. As a general rule, there should be an appropriate mix of debt and owners
equity in financing the firm's assets.
Debt Ratio
Debt Equity Ratio
Capital employed to net worth ratio
Other Debt Ratios
%'&! RA!I$-
Several debt ratios may be used to analyse the long term solvency of the firm. It may therefore
compute debt ratio by dividing total debt by capital employed or net assets.
Net assets consist of net fixed assets and net current assets:
DEBT RATIO: TOTAL DEBT
NET ASSETS
%'&! 'G,I!0 RA!I$-
It is computed by dividing long term borrowed capital or total debt by Share holders fund or net worth.
DEBT EQUITY RATIO: TOTAL DEBT
NET WORTH
DEBT EQUITY RATIO: Long term borrowed capital
Share holders fund
CAPI!A* 'MP*$0'% !$ /'! ($R!H RA!I$-
There is an another alternative way of expressing the basic relationship between debt and equity. It
helps in knowing, how much funds are being contributed together by lenders and owners for each rupee
of owner's contribution. This can be found out by calculating the ratio of capital employed or net assets
to net worth
Capital Employed to Net WORTH RATIO: CAPITAL EMPLOYED
NET WORTH
$!H'R %'&! RA!I$S-
To assess the proportion of total funds - Short and Long term provided by outsiders to finance total
assets, the following ratio may be calculated
TL to TA RATIO: TOTAL LIABILITIES
TOTAL ASSETS
AC!I7I!0 RA!I$S-
Funds of creditors and owners are invested in various assets to generate sales and profits. The better
the management of assets, the larger is an amount of sales. Activity ratios are employed to evaluate
the efficiency with which the firm manages and utilizes its assets these ratios are also called turnover
ratios because they indicate the speed with which assets are being converted or turned over into sales.
Activity ratios, thus, involve a relationship between sales and assets. A proper balance between sales
and assets generally reflects that assets are managed well.
Inventory turnover ratio
Debtors turnover ratio
Collection period
Net assets turnover ratio
Working Capital turnover ratio
I/7'/!$R0 !,R/$7'R RA!I$-
Inventory turnover ratio indicates the efficiency of the firm in producing and selling its product. It is
calculated by dividing cost of goods sold by average inventory. Average inventory consists of opening
stock plus closing stock divided by 2.
INVENTORY TURNOVER RATIO: COST OF GOODS SOLD
AVERAGE INVENTORY
%'&!$RS !,R/$7'R RA!I$-
Debtors turnover ratio is found out by dividing credit sales by average debtors. Debtors turnover
indicates the number of times debtors turnover each year. Generally the higher the value of debtors
turnover, the more efficient is the management of credit
DEBTORS TURNOVER TATIO= CREDIT SALES
AVERAGE DEBTORS
C$**'C!I$/ P'RI$%-
The average number of days for which debtors remain outstanding is called the average collection
period.
AVERAGE COLLECTION PERIOD= NO. OF DAYS IN A YEAR
DEBTORS TURNOVER
/'! ASS'!S !,R/$7'R RA!I$-
A firm should manage its assets efficiently to maximise sales. The relationship between sales and
assets is called net assets turnover ratio. Net assets include net fixed assets and net current assets
NET ASSETS TURNOVER RATIO= SALES
NET ASSETS
($RKI/G CAPI!A* !G,R/$7'R RA!I$-
A firm may also like to relate net current assets to sales. It may thus compute net working capital
turnover by dividing sales by net working capital
WORKING CAPITAL TURNOVER RATIO= SALES
NET CURRENT ASSETS
PR$8I!A&I*I!0 RA!I$S-
A company should earn profits to survive and grow over a long period of time. Profits are essential but
it would be wrong to assume that every action initiated by management of a company should be aimed
at maximizing profits, irrespective of social consequences.
Profit is the difference between revenues and expenses over a period of time. Profit is the ultimate
output of a company and it will have no future if it fails to make sufficient profits. Therefore, the
financial manager should continuously evaluate the efficiency of the company in terms of profits. The
profitability ratios are calculated to measure the operating efficiency of the company.
Generally, there are two types of profitability ratios
1. Profitability in relation to sales
2. Profitability in relation to investment
o Gross profit margin ratio
o Net profit margin ratio
o Operating expenses ratio
o Return on Investment
o Return on equity
o Earning per share
o Dividends per share
o Dividend pay out ratio
o Price earning ratio
GR$SS PR$8I! RA!I$-
It is calculated by dividing gross profit by sales. The gross profit margin reflects the efficiency with
which management produces each unit of product. This ratio indicates the average spread between the
cost of goods sold and the sales revenue.
GROSS PROFIT RATIO= GROSS PROFIT
SALES
/'! PR$8I! RA!I$-
Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit.
The net profit margin is measured by dividing profit after tax or net profit by sales.
NET PROFIT RATIO= NET PROFIT
SALES
$P'RA!I/G 'DP'/S' RA!I$-
Operating expense ratio explains the changes in the profit margin ratio. This ratio is computed by
dividing operating expenses like cost of goods sold plus selling expenses, general expenses and
administrative expenses by sales.
OPERATING EXPENSE RATIO= OPERATING EXPENSES
SALES
The higher operating expenses ratio is unfavorable since it will leave operating income to meet interest
dividends etc.
R'!,R/ $/ I/7'S!M'/!-
The term investment may refer to total assets or net assets. The conventional approach of calculating
return on investment is to divide profit after tax by investment. Investment represents pool of funds
supplied by shareholders and lenders. While PAT represent residue income of shareholders
RETURN ON INVESTMENT= PROFIT AFTER TAX
INVESTMENT
R'!,R/ $/ 'G,I!0-
`Ordinary share holders are entitled to the residual profits. A return on shareholders equity is
calculated to see the profitability of owners investment. Return on equity indicates how well the firm
has used the resources of owners. The earning of a satisfactory return is the most desirable objective of
business.
RETURN ON EDQUITY= PROFIT AFTER TAX
NET WORTH
'AR/I/GS P'R SHAR'-
The measure is to calculate the earning per share. The earning per share is calculated by dividing profit
after tax by total number of outstanding. EPS simply shows the profitability of the firm on a per share
basis, it does not reflect how much is paid as dividend and how much is retained in business.
EARNINGS PER SHARE= PROFIT AFTER TAX
NO. OF SHARES OUTSTANDING
%I7I%'/%S P'R SHAR'-
The net profits after taxes belong to shareholders. But the income which they really receive is the
amount of earnings distributed as cash dividends. Therefore, a larger number of present and potential
investors may be interested in DPS rather than EPS. DPS is the earnings distributed to ordinary
shareholders divided by the number of ordinary shares outstanding.
DPS= EARNINGS PAID TO SHARE HOLDERS
NUMBER OF SHARES OUTSTANDING
%I7I%'/% PA0 $,! RA!I$-
The dividend pay out ratio is simply the dividend per share divided by Earnings Per Share.
DIVIDEND PAY OUT RATIO= DIVIDEND PER SHARE
EARNINGS PER SHARE
PRIC' 'AR/I/G RA!I$-
The reciprocal of the earnings yield is called price earning ratio. The price earning ratio is widely used
by security analysts to value the firm's performance as expected by investors. Price earning ratio
reflects investors expectations about the growth of firm's earnings. Industries differ in their growth
prospects. Accordingly, the P/E ratios for industries very widely.
PRICE EARNING RATIO= MARKET VALUE PER SHARE
EARNING PER SHARE
Con"lusions
Ratio analysis plays an important role in the corporate world. It is a widely used tool of financial
analysis. Ratio Analysis is relevant in assessing the performance of a firm in respect of liquidity position,
long-term solvency, operating efficiency, overall profitability, inter-firm comparison and trend analysis.
Hence, understanding the Ration Analysis is of immense helpful for the non-finance executives in
today's competitive world.
Referen"es-
1. Prasanna Chandra: Financial Management Theory and Practice, 2003
2. I.M.Pandey: Financial Management: 2003
3. M Y Khan and P K Jain: Financial Management -Text, Problems and Cases: 2004
4. James C. Van Horne and John M. Wachowicz. Jr. Fundamentals of Financial Mangement. 1996.
5. John J Hampton: Financial Decision Making, Practice Hall India, 1992.
6. www.indiainfoline.com

%. Aruna Kumar
Assistant Professor (Finance & Accounting Area)
*o5amanya !ila5 PG College of Management
Ibrahimpatnam, Hyderabad-501 506
Cell: 9849563311, E-mail: dakumars@yahoo.com
About the Author-
D.Aruna Kumar, MCom, MBA,(PhD)
The Author is with Lokamanya Tilak P G College of Management as Assistant Professor in the
Department of Business Management in the area of Finance and Accounting. He is working for his PhD
on
"New Financing Instruments with reference to Central Public Enterprises", under the guidance of
Prof. R.K.Mishra, Director, Institute of Public Enterprise, Osmania University, Hyderabad -500 007.
%emystifying Intelle"tual Capital and Intelle"tual Property
Part II
By
G &harathi
Asst. Professor (Economics)
AuroraMs Post Graduate College
Chikkadpally, Hyderabad-500 020
E-mail: bharathishan@rediffmail.com

PAR! II
In the last section we have seen the difference between the terms intellectual Capital, Human Capital,
and Social Capital. In this section after the definition of the term IP, an introduction would be given as
to why there was a need for the property concept of intellectual creation, then the major types of IP
would be discussed and finally the article would conclude by giving briefly the TRIPs agreement and its
impact on Indian economy.
Globalization of the world economies started in the mid eighties culminated in the establishment of a
world organization that championed the cause of free trade between nations. The globalization was
expected to bring about exchange rate stability, expansion of trade between nations, sustainable
economic growth and development, correction of external sector imbalances, adequate flow of
concessional financial and real investment resources, flow of technology across borders, strengthen
multi literalism, and lead to better market access. However all these were not delivered as expected and
lead towards more disparity, dependency and widening gaps between the growth of the developing
countries and developed ones. Of course, there are differing views on this. The latest report of the World
Bank finds that the convergence of the world economies seems to becoming more of a reality and the
main cause of this is openness.
Globalization required cooperation amidst competition for faster economic progress of all those
concerned. In this context of ever-emerging competition a need was felt for protecting the creation of
human mind (intellectual capital). The need of the hour for most of the firms was to improve their
quality of competition in the global market. The aim was also to increase their revenues and profits by
using the intangible assets they have created and generated as a tool of product differentiation.
However the problem was that if the idea moves from person to person, and from country to country
then the creator faces risk that at any given point of time he may not be able to claim the ownership of
his own idea. There was always a chance of misuse and duplication.
The idea or the thought itself could not be protected since it was completely intangible or invisible.
However, the end product of the human thought, the outcome which is tangible could have been
protected, thus the legal concept is created where a capital gets converted into a property. A property
concept gives the owner a clear right over his asset and this is recognized by law. Thus, an intellectual
capital gets converted to an intellectual property when it gets legal acceptance.
Thus, Intellectual property refers to the creations of the human mind and human intellect. Most of the
intellectual capital is protect able by the various forms of intellectual and industrial property rights
created over the last 200 years and governed by international treaties and regional and national laws.
Patents and utility models protect technical innovations. Trademarks protect brands. Design patents or
registrations protect industrial designs. Copyright protects literary and artistic works as well as software.
Circuit design registration protects integrated circuit architecture, and so on. Recent years have seen
certain examples of crossover protection like business method and software patenting. Copyright has
also received increased attention due to the introduction of digital technologies and the Internet.
Intellectual property system is designed to benefit society as a whole, and it strikes a delicate balance to
ensure that the needs of both the creator and the user are satisfied. Intellectual property rights usually
allow the creator to commercially exploit his work exclusively for a limited period of time. In return for
granting such rights, society benefits in a number of ways. Most of the laws confirm that the rights of a
patent holder are placed on a higher pedestal than obligations.
Intellectual Property Rights (IPR) can be in any of the following categories as mentioned below:
(a) Copyrights and related rights.
(b) Trademarks.
(c) Geographical Indications.
(d) Industrial Designs
(e) Patents
(f) Lay out designs of integrated circuits.
(g) Protection of undisclosed information (trade secrets)
Before explaining the economic benefits derived from these IPRs by the economy, firm and individual, it
is imperative to explain each of these IPRs in detail.
As it is quite clear from the above chart that Intellectual Property is divided into two broad heads of
industrial property and copyrights and related rights.
Industrial property is further sub-classified into Patents, Designs, Geographical Indications, Trademarks
and Trade Secrets.
Copyright-
Copyright is given to the creators of original works, which come under the category of literature,
dramatics, music, art etc. Since an idea is always intangible, it cannot be copyrighted unless it gets
transferred in some form, which is tangible. Eg., a book, a CD, music cassette, painting etc., Copyright
prevents copying of only the expression. A copyright is valid throughout the life of the author.
Patents-
It is a monopoly right exclusively granted to an inventor over his invention for a limited period of time
by the government of a country. This is a right of the creator. However, if the inventor or the creator
assigns any other person or any organization under a contract to get the benefit of his creation, then the
patent is granted to the organization/person assigned. For instance, if a scientist or groups of scientists
are working on a new drug development in Dr.Reddy Laboratory for a wage or any other monetary
benefit, the patent of the drug developed is given to DRL and not to the individuals. There can be many
patents or IPR's on the same product. Eg., the grip of the pen, free flow ink, roller tip etc., are
patentable and patented.
An innovation to be granted Patent requires to fulfill three criteria for becoming eligible to get
registration. A patent is granted only on that invention which has the novelty, applicability and which is
non-obvious. A patent is given for a period of 20 years, and the patent expires after this due date if not
renewed. A patent has to be applied in each country separately by the inventor. A patent would not be
granted for the invention, which has already been publicized through various means. Therefore, it is
necessary that an inventor first files patent and then makes his invention public.
!rademar5-
Trademark are words, names, brands, symbols, labels etc. used or proposed to be used by
manufacturer of goods to create a unique identity for their product. Trademark is used for distinguishing
one firm's product from that of another. Trademark is very beneficial for industries operating in a
monopolistic market where customers have high brand loyalty and product differentiation is very
important to operate.
A trademark is represented by the symbol "TM". This is used as soon as an application is filed. It is
replaced by the symbol as soon as the registration is confirmed officially.
%esigns-
Design deals with features, shapes, patterns, etc. applied to an article by an industrial process, manual
or mechanical. Eg., chair is a utility item. However, chair itself does not qualify for IPR, but if special
carvings, embossing etc., is done which increases the value of chair though it's utility remains same, it
becomes eligible for IPR under designs act.
Geographi"al Indi"ation-
It is an indication that originates from a definite geographical territory, which is used to identify natural
and manufactured product. For Eg., pochampally sarees, dharmavaram sarees, madhubani paintings
etc, all qualify for registration under this category. It is valid for 10 years. The application for
registration can be by an association of persons, organization, producers etc.
In case of all IPR's, any or all of the rights of ownership may be transferred by the owner of the right to
any other individual, group of individuals or organization. This is done through a legal procedure.
IPRs confer lots of economic benefits for the innovating economies. Besides providing Protection Against
Piracy and Infringement, this acts as an Incentive to Produce and Share, thus the demand for the
innovated product becomes global Increasing the Exports both in Real and Nominal terms for the firm
that has a patent for the innovated product. This further proves to act on the exchange rate making the
domestic currency appreciate and making Cheaper Imports possible.
The innovating firm reaps Monopoly Profits, the consumers get Better Quality and Variety of Products
and Services, and the society feels good because it has resulted in Sustaining Innovation and Creation.
The industries that provide the inputs and support services to the export sector also grow resulting in
overall and all round economic development of the innovating economy.
The IPR's have a specific significance to the innovating country as it imparts Economic benefits in the
form of the following:
a. The exports of the innovating country tend to increase in real terms as well as in nominal terms the
product in its protection is unique in its own sense.
b. The imports then become relatively cheaper due to appreciation of its domestic currency, the citizens
of the innovative country have the best of the two worlds where they get the best price for their exports
and also get the imports at the cheapest prices.
c. Besides the above two benefits there is every possibility that the monopoly profits are also reaped by
the innovating firm in the short as well as long run.
d. The increase in exports has an obvious impact on the other domestic industries, which have a link
with the exporting industry thus enhancing the overall development of the economy through the forward
and backward linkages.
!RIPS-
The WTO established in the year 1995, based on the principles of Non-Discrimination, Transparency and
Reciprocity served the above purpose aptly and encompassed several agreements to which its member
countries had consented on. The initial agreements were few related to trade in goods and some
included later covered vast areas of trade in services and also that related to capital and labour. Some
of them were General Agreement on Trade in Services (GATS), Agreement on Agriculture (AOA),
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), and The Agreement on
Trade Related Investment Measures (TRIMs). Thus it can be said that in the arena of international trade
before WTO, that is GATT regime, regulation confined to only goods, international conventions ruled the
matters of Intellectual Property Rights (IPR), and Services trade.
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), was an agreement under
WTO, it required all its members to provide a minimum norms and standard of protection for a wide
range of IPR as classified above.
The Agreement sets out minimum standards to be adopted by the parties, though they are free to
provide higher standards of protection. A transition period of five years is available to all developing
countries to give effect to the provisions of the TRIPS Agreement. This period ended on 1.1.2000. No
transitional period is available, however, for grant of national treatment and most-favoured-nation
treatment. Countries that did not provide product patents in certain areas of technology as on 1.1.1995,
could delay the grant of product patents in those areas for another five years i.e. up to 1.1.2005.
India had, along with like-minded developing countries made proposals under this category. In respect
of the TRIPS Agreement, these proposals included the following
2
: -
01. To extend the period for application of non-violation complaints to the TRIPS Agreement.
02. To operationalise Articles 7 and 8 of the TRIPS Agreement by providing for transfer of technology on
fair and mutually advantageous terms.
03.To establish a mechanism for disclosure of the source of origin of biological material used in an
invention and obtaining the consent of the country of origin so that institutional mechanisms could be
established at the national level for sharing of benefits arising out of the commercial exploitation of such
inventions.
This is not all so rosy and easy for the developing economies like India who are net importers of the
products which are technology intensive, more so when the TRIPS Agreement places the rights of a
patent holder on a higher pedestal than obligations. These are specific reasons that many developing
countries including India have highlighted implementation issues and concerns. One of the major
challenges that Indian economy faces is in terms of the changes that are necessitated to meet the
requirements of new regime, some are already compatible while others have to be made so. For eg
Patent act is being modified in phases, the trademark act already revised etc.
Companies will be forced to set new investments in research and development. Companies will also be
forced to target niche markets and tailor their products according to the market requirements. The
implementation of WTO's Trade Related Intellectual Property Rights gives standard protection to
copyrights, trademarks, layout designs and product rights. But there are many possibilities that Indian
exports could even be banned because of the product patents. For instance, exports can be barred if the
product in question violates patent rights in the importing country. Traditional items like basmati rice
will have to be patented. Automobile ancillaries will face product wrangles.
Software programmes and data applications will have to be protected under the patents law.
Pharmaceutical companies will face a series of product patents issues. The Information Technology
Agreement singed under the WTO, Indian hardware and software companies can become major players
in the value-added arena. Availability of high-skilled of IT personnel and low cost of labour and
operation will allow India to compete in the international market. The SSI will be affected, as no reverse
engineering now will be permissible. This may affect its cost competitiveness.
Another problem is the enforcement of these laws; the governments of the developing countries have to
ensure the enforcement with the cooperation of the several groups who are working towards the above
objective. The penalties for infringement (unauthorized usage) should be tough and enough to deter
violations. The dispute settlement procedure to solve the disputes between the nations also should be
put in place so that justice is done to the cause of developing countries. Besides these the remedies
should be appropriately framed along with the rights. The present objective should be to provide
solution expeditiously, legally, predictably, and in a non-burdensome manner. A legal mechanism is
needed to deal with the problems, but it should not open TRIPs agreement for re-negotiation.
IPR standards vary widely across nations affecting the trade between countries, and also encouraging
trade in counterfeit and pirated goods. In a globalized world where exchange of goods have become a
common phenomenon protection of the rights become necessary not only for the inputs and technology.
Therefore, an enterprise requires comprehensive, well thought of and planned structure to manage
intellectual capital. The increase in competition requires the intellectual capital to become the intellectual
property through adequate legal protection. However, there is a huge opportunity in terms of JV's.
Therefore, transparent and balanced rules become an imperative for overall betterment of conditions
across nations. The developed countries argue on the ground of huge expenditure that is incurred on the
research and development of the product that is innovated, however this can be taken care by framing
rules and developing a proper system of IPR's with respect to the Transfer of technology, Licensing and
Joint ventures. This will make the faster technological advancement of the developing countries. This
would help them in creating a competitive edge for them in the global market. 'Beggar thy neighbour'
policy is not applicable in a globalized world where prosperity and poverty of all nations move together.
Globalization is an irreversible phenomenon and a desired evil for India as the membership of WTO and
it's Agreements of TRIPs; it is therefore high time we start looking for opportunities rather than cribbing
about the challenges.

G &harathi
Asst. Professor (Economics)
AuroraMs Post Graduate College
Chikkadpally, Hyderabad-500 020
E-mail: bharathishan@rediffmail.com
%emystifying Intelle"tual Capital and Intelle"tual Property
Part I
By
G &harathi
Asst. Professor (Economics)
AuroraMs Post Graduate College
Chikkadpally, Hyderabad-500 020
E-mail: bharathishan@rediffmail.com

$n %oday&s 'no(ledge )ased Economy* (here the physical assets are losing their significance
as a factor of competitiveness for the firm as (ell as the economy* the terms intellectual
Property and $ntellectual Capital have come to ac+uire greater prominence* these have
become a set of commonly used terms but their meaning and difference least understood by
many, this is a t(o part article (here an attempt is made to demystify the t(o terms in the
simplest manner* the !irst part discusses the difference bet(een several interchangeably
used terms and traces the history of the terms.
%he Second part deals (ith the meaning of the term $ntellectual Property -$P. and the
various types of rights -$P/s. that exist (ith it. %he article also briefly discusses the %rade
/elated $ntellectual Property /ights -%/$Ps. and its implications.
PAR! I
A century ago, business corporations were identified by their physical assets: real estate, buildings and
machinery. Over the course of the next hundred years, management and investor attention shifted
toward businesses' intangible property: brand names, patents, business relationships and employee
culture etc. The emerging knowledge-based economy stresses the importance of knowledge as a source
of competitiveness and growth of firms. The stress has now changed from hard factors to that of soft
ones. What is implied here are that the firms have shifted their focus from the tangible and physical
assets to that of intangible and intellectual assets. Investment in soft factors is referred to as
investment in intangible assets.
The fundamental change of companies' attitudes towards knowledge-based organizations is very clear in
the recent times as these firms have started accounting for and valuing their intangible assets and also
began to show them on to their annual balance sheet. Businesses are investing less in physical goods
such as capital investments, machines, building, etc, and more in soft factors such as human resources,
research and development, organizational development, software, marketing, and relationships.
The expression Intellectual capital started gaining prominence and gathered momentum in the recent
years due to the changes in the environment in which the firms operated. There has been a continuous
shift of trend towards competition in the global market. Due to the increase in intensity of competitive
pressures, the firms are looking for a specific factor that could increase their competitive advantage and
competitiveness in the global market. The factor also had to be such so as to create a differentiation of
their product from that of the competitors.
In this pursuit knowledge has become the most important fact of economic life of organizations; today
the chief component of what they buy and sell and the raw material with which they work is Intellectual
capital - not natural resources, machinery or even financial capital. Intellectual capital has become the
one indispensable asset of corporations. The realization of this has led to the interest in "knowledge
management" to exploit this often underutilized resource. Today the concern of organization along with
earning profits and being economically viable is to retain and exploit the talent of the people who work
in the organization; to gain the loyalty of the customers it serves and learns from; to estimate and
increase the value of its brands, copyrights, patents and other intellectual capital; to harness the
collective knowledge embodied in its systems, to keep its management techniques, and history unique
to itself.
However, the paradox remains that though this intangible is gaining prominence, its measurement is
quite difficult. Several methods and models have been designed and developed in the western world to
account for these assets. In Indian context the firms are yet to use these models effectively since they
need to be modified in Indian environmental context. Moreover, though the firms recognized that the
above mentioned are vital assets that are rarely managed and almost never managed skillfully.
Through the transformation of the global economy these assets of a firm are becoming more important.
The term intellectual capital is used to express the intangible capital of a business unit. The live capital,
natural capital, social capital, intellectual capital, human capital, structural capital and relational capital
are some of the commonly used terms interchangeably without realizing their innate meaning and
purpose. An attempt is made in this paper to deal with the preliminary meaning of these specific terms
and also bring out a relation of each with every other factor.
The concept of tapping knowledge or other Intellectual Capital became prominent since it was
understood that if reaped, managed and nurtured properly it could be a resource, which can be used for
adding value to the organization at various levels. Thus, the first reason for the development of
Intellectual Capital was the concept of training, which made the organizations sure and gave them the
confidence that the given level of Intellectual Capital could be taken further for organizational benefit.
The second factor that led the development of Intellectual Capital is the increasing importance given by
organizations to research and development. Firms started realizing the importance of continuous
innovation to maintain their positions and also move into another orbit of the organizational
development. This was because of the changing profile of the end users of the products and services in
a globalized world.
The Human resource development movement that gained prominence in the recent years is also an
important factor in the development of Intellectual Capital. It was understood that human capital if
managed properly could prove to be effective in increasing competitiveness and efficiency.
This does not imply that human capital management came later and after the development of
Intellectual Capital. It should be well recognized that human capital existed since times immemorial and
with the increase in the prominence of the knowledge the term Intellectual Capital also gained
importance. The major corporate houses across the globe started looking at this capital to harness both
economic and non-economic benefits. Their interest in these areas resulted in lots of studies of better
ways of management of these resources so as to optimize the benefits.
Before entering into the details of ways and means or techniques of management of these capitals let us
understand the dictionary definitions of these terms.
Human capital is the most complex and dynamic asset an organization has to manage. Here are a few
ways in which it can be defined. As per a commonly used dictionary of English Human capital refers, in
macro-economics, to the capacity of a workforce to yield financial capital, in parallel to the way physical
capital yields goods.
Some economic system theories refer to it as labour , one of three factors of production, and considered
it to be a commodity - easily interchangeable. Other analyses, for instance in human development
theory, differentiate social trust (social capital ), sharable knowledge (instructional capital), and the
individual leadership and creativity (individual capital) as three distinct capacities of a human applying
him or her self in economic activity.
The term human "apital thus refers to ambiguous combinations of these, and interactions with the
welfare, education and health care systems can be modelled even past retirement - where, according to
classical and neoclassical analysis, human capital must be zero, as no "labour", "employment" or
"goods" are now involved.
There is a global debate regarding the fair distribution of human capital. This is most pointed with
respect to educated individuals, who typically migrate from poorer places to richer places seeking
opportunity, making 'the rich richer and the poor poorer'. African nations have invoked this argument
with respect to slavery, other colonized peoples have invoked it with respect to the 'brain drain' or
'human capital flight' which occurs when the most talented individuals (those with the most individual
capital) depart for education or opportunity to the colonizing country (historically, Britain and France
and the U.S.A.). Even in Canada and other developed nations, the loss of human capital is considered a
problem that can only be offset by further draws on the human capital of poorer nations via
immigration.
The term human capital constitutes the social capital. The collective nature of human capital translates it
into social capital. So"ial "apital" is a term that refers to the goodwill, trust, and cooperation evident in
any particular organization or society. Social capital has been informally recognized in the worlds of
management and government for some time. Many believe that social capital is an under-leveraged
intellectual capital asset which could be powerfully mobilized within both organizations and communities
to deliver benefit.
Social capital is broadly recognized as an intangible asset of considerable value that resides within our
many respective societies in the workplace, the community, and in our nation. Many believe, social
capital, understood as goodwill and cooperation, can be consciously applied by us each, and thus used
to drive effectiveness within organizations, economic development at the civic or state levels, and, as
the natural result, the generation of the public good, prosperity, and well-being. Social capital also like
any other capital requires management to reap real benefits from it. The human capital is the resource
from which the social capital is generated.
Human capital is primary and acts as a resource and a fundamental base for development. As the
human capital is tapped it results in economic benefits to the owner and also to the society. Thus, the
human capital generates social capital. Here, it can be understood that all human capital may not result
in economic benefits. There may be some human capital that has non economic utilization also.
However, this capital is a part of society therefore, social capital. Thus, the human capital may surpass
the stage of economic capital and end up being just social capital. This capital is secondary. This is
wealth that has been derived from the primary resource of human capital. For e.g. the senior citizens in
every economy constitute a part of human capital who were economically useful to the economy. Now
they form a part of the social capital since they do not perform the wage earning function any more.
However, their contribution to the society can be estimated and accounted in real terms. Thus, they
form a part of the social capital. Similarly, the housewife's contribution is also non-economic but a
inseparable part of social capital.
!abular Representation of the Con"epts
Human Capital Primary Resource Human capital refers, in macro-economics, to the capacity
of a workforce to yield financial capital , in parallel to the
way physical capital yields goods
Social Capital Secondary Wealth So"ial "apital "refers to the collective value of all 'social
networks A social network consists of any group of people
connected through various social familiarities ranging from
casual acquaintance to close familial bonds.
Intellectual Capital Tertiary Asset Intelle"tual Capital it is defined as is any creation which
emerges from the human mind.
Moving on the Intelle"tual Capital it is defined as is any creation which emerges from the human
mind. It is capital because it can be created, transferred and also can be used/reused and most
importantly it is a product of the human intellect. Therefore, intellectual capital is a narrow term when
compared to the human capital since all human capital may not be intellectual, however all intellect
comes from human mind. For example, an agricultural labour or a worker at a construction site is a
human capital, however he is not contributing anything to the existing knowledge pool, therefore not an
Intellectual Capital. However, as far as Intellectual Capital is concerned it comes finally as it can be
seen that all human capital need not be Intellectual Capital, in spite of the fact that they contribute
towards the value addition of a business process. But all Intellectual Capital is human since the point of
origin of all new knowledge is human brain.
History of Intelle"tual Capital
1
-
1@?>B?@- Books about knowledge assets and "the invisible balance sheet", published by Karl- Erik
Sveiby, Debra Amidon and Charles Handy.
1@@1: Leif Edvinsson is appointed the world's first Director of Intellectual Capital at Skandia. First cover
story on IC by Thomas A. Stewart in Fortune. Writings by James Brian Quinn, Ikujiro Nonaka and others
develop the knowledge concept further.
1@@6- Skandia elaborates the IC Navigator and the prototype first IC Report internally.
1@@;- Thomas A. Stewart publishes 2nd cover story on IC in Fortune. Mill Valley Group on IC
Networking meets for the first time.
1@@<- Skandia presents the first public IC Report, to be followed by a new one every sixth month.
Kaplan and Norton expand their work on Balance Score Card.
1@@=- Skandia establishes the first Future Center, an IC lab supervised by Leif Edvinsson. First IC of
Nations report published (C. Stenfelt).
1@@>- Numerous books on IC published by Edvinsson, Stewart, Roos, Sveiby &c. BBC produces video
on IC - The New Wealth of Nations. ICM gathering for IPR start in California, instituted by Pat Sullivan,
Leif Edvinsson and Gordon Petrash. Dr. Nick Bontis presents the world's first Ph.D. disputation on IC.
1@@?- Nick Bontis and McMaster University in Canada arranges first large academic IC conference.
Professor Baruch Lev at New York University arranges first IC accounting conference. Brain Trust
Foundation awards Leif Edvinsson the Brain of the Year prize for his pioneering IC work. SEC initiates
research on Intangible Assets at Brookings Institute, Washington. IC Rating being launched by
Intellectual Capital Sweden AB. 4
1@@@- EU institutes measurement project on IC: Meritum and NIM Cube Future Center ABB
inaugurated.
4AAA- Government of Denmark publishes first guidelines of IC accounting. Skandia initiates IC Vision
and IC Community dot com. Sydkraft Future Center inaugurated.
4AA1- HLEG/EU publishes first major report on Intangible Assets. University of Lund establishes the
world's first professorship on IC and appoints Leif Edvinsson the first holder of the position. Brookings
Institute presents its report "The Unseen Wealth". Future Center Norway inaugurated.
Thus Intellectual Capital is an asset that comes of proper management of human capital, which is the
primary resource. Any organization that wants value creation has to emphasize on human capital
management to harness Intellectual Capital. Thus, Intellectual Capital is the end product for which a
value can be assigned and which can be measured. Any increase in this asset is increase in value for the
firm. Thus a well managed organization is not that only manages its intellectual capital, but that which
harnesses human capital which is a resource from which the social capital is derived as a wealth, further
refinement and churning brings out the real asset in the form of intellectual capital. Though India owns
a rich heritage of intellectual capital generation, it is unfortunate today this concept has been mostly an
area of the research in the developed nations. These researches of the western world consider some
basic parameters to measure Intellectual Capital. According to them the Intellectual Capital constitutes
Human capital, Structural Capital and Relational Capital. The main position that is taken in this paper is
that Human Capital is a much wider concept as compared to Intellectual Capital. The Intellectual Capital
is a part of the human capital and not the other way round. The Human capital is the resource that
creates the Intellectual Capital; similarly the relational capital also emerges from the human resource.
Therefore, the starting point of any analysis of the concept of Intellectual Capital is Human Capital not
otherwise.
1. www.entovation.com
G &harathi# Asst. Professor (Economics), AuroraMs Post Graduate College# Chikkadpally,
Hyderabad-500 020, E-mail: bharathishan@rediffmail.com
Industry eFpe"ts more from &BS"hools
By
Prof. Shubhasheesh &hatta"harya
Faculty Member
IC8AI &usiness S"hool
Plot No 5, Equity Tower, Sanghvi Nagar Road, Aundh, Pune-411007
Phone(O): 020-25889638/51, 25898121/22 , Cell: 9422536509
E-mail: subasishb@rediffmail.com

As per the opinion poll published in Times of India, Pune recently, 60 % of the students feel that syllabi
of the professional courses are not in tune with industry
1
.
The issue is very relevant when we have to answer the question: why is it that one MBA gets a job offer
of Rs. 6 lac per annum and another MBA struggles hard to secure a job fetching him even Rs. 1 lac per
annum? One of the reason for this is relevance factor of the syllabus, as required by the industry.
Here on this issue, we also need to consider few more points. For example, are we talking about the
syllabus of the course of a Govt. aided University ? Or, are we talking about syllabus of the course of
any run of the mill institute. Or, are we talking about syllabus of the course of a particular educational
institute which really means business, which has intention of value-addition, one which has
organisational mission of excellence in educational service, which intends to compete with top class
educational institutes, which is sensitive to the needs of the industry and is flexible enough to design &
redesign it's course as per the requirement of the market and industry.
Educational service providers, basically fall under three categories.
1
st
"ategory : Govt. aided Universities. Except a few of these universities, which are maintaining top
class quality in educational service, others are functioning with typically bureaucratic, rigid, inflexible
approach. Such universities are least bothered about having syllabi of the professional courses which are
in tune with the industries.
4
nd
"ategory : Some private institutes which have mushroomed in last few years, they are said to have
focus on 'making money', rather than focussing on 'excellence' as educational service provider. Such
institutes have least concern and sincerity about updating the syllabi of professional courses, that meets
the needs of the industry.
6
rd
"ategory : There are some private institutes/ universities which really mean business. They are not
mere teaching shops. Faculty in such Institutes put lot of effort in Research Work and hence
continuously improve the quality of teaching. They are sensitive about the needs of the market,
industry. They treat the students as the ambassadors of their institutes. They put-in lot of effort for
value-addition in their students, which will be useful to the industry. They spend a lot of energy & effort
in industry-academic interface. Hence, they are very proactive, flexible, always ready for changing &
updating the syllabi of professional courses.
ICFAI University is one of such Universities/ Institutes, which falls under category 3. In the ranking of B-
Schools in India, ICFAI Business School is ranking 1
st
among University Business Schools. Industry feels
motivated and activated to interact with such institutes. Such institutes get full support from the
industry, in turn.
B-Schools need more number of industry -experienced faculty. Most of the Indian B-schools fail to
attract good faculty and most of them who teach do not have any industry experience. Not only that,
most of them do not make any efforts to get over this drawback through keeping themselves updated
on whatever is happening in Indian business.
It has been observed that B-school students do not have positive attitudes towards behavioural courses
such as business ethics, human resource management and organisational behaviour etc.
Students seem to view these subjects as impractical in today's corporate world. This attitude towards
the behavioural sciences seems puzzling given the fact that CEOs and recruiters have expressed concern
over lack of social skills and relatively poor attitudes among the newly recruited management trainees.
The fact remains that the top corporate organizations are increasingly moving towards & encouraging
it's employees to have ethical practices, value -based management, harmony with environment etc. In
other words, corporates are expecting high level of soft skills in management trainees. So, in order to
meet the expectations of the corporates, students just can't afford to ignore the behavioural aspect of
work-life.
On Industry-Institute interaction and on Research by faculty, Prof. Balachandran says that
2
:
(i) There is an urgent need for developing healthy relationship between B-Schools and Industry for
mutual development and evolving cases in management practices.
(ii) Motivating faculty to write papers on diverse subjects and make presentations before knowledgeable
audience drawn from the Industry and leading business schools'.
'Dr. Shabazz says business-school faculty will be vital to curriculum changes. "We have to convince
faculty that this whole idea of the Internet economy is making a difference in their disciplines. Some of
them don't frankly see that yet. They feel that it's not really impacting them on this level yet. It's going
to take a gradual process to maybe change the way they look at it," Dr. Shabazz says
3
.
Today, the basics are very clear : Relationships between industry and well-meaning institutes are
getting strong. Such institutes are busy preparing quality products (i.e., the students, who have got the
real value-addition to serve the industry and who are in demand in the market). Industry is also
benefitted by tying-up with such institutes and getting supply of high quality human resources.
Referen"es -
1. Opinion Poll, Times of India/ Education Times Dt. 14.12.2004
2. http://www.indiainfoline.com/bisc/sibmfac06.html
3. http://blackengineer.com/PDA/business/HBCU%20business%20schools.htm

Prof. Shubhasheesh &hatta"harya
Faculty Member
IC8AI &usiness S"hool
Plot No 5, Equity Tower, Sanghvi Nagar Road, Aundh, Pune-411007
Phone(O): 020-25889638/51, 25898121/22 , Cell: 9422536509
E-mail: subasishb@rediffmail.com
GroCth of Commer"ial Paper Mar5et in India
By
%. Aruna Kumar
Assistant Professor (Finance & Accounting Area)
*o5amanya !ila5 PG College of Management
Ibrahimpatnam, Hyderabad-501 506
Cell: 9849563311, E-mail: dakumars@yahoo.com

This article proposes to outline the introduction of Commercial Paper (CP)in India, trace its growth,
highlight the policy about CP, indicates its volume and some of the broader issues and lays down the
concluding remarks.
---------------------------------------------------------------------------------------------------
Introdu"tion-
A working group under the chairmanship of Mr. N. Vaghul was appointed by Reserve Bank of India in
September 1986 to study and give recommendations for broad basing the money market and
development of money market instruments. The Committee, submitted its report in January 1987, had
recommended the introduction of Commercial Paper.
The Reserve Bank of India had, with a view to enabling highly rated corporate borrowers to diversify
their sources of short-term borrowing and also providing an additional instrument to investors, made for
the first time a reference to the commercial papers in March 1989 and accordingly, issued detailed
guidelines under "Non-Banking Companies (Acceptance of Deposits through Commercial Paper)
Directions, 1989" through a notification dated 11
th
December, 1989 and these Directions were made
effective from 1
st
January, 1990.
Initially, only top rated corporates with tangible net worth of not less than Rs. 10 crore were allowed to
issue CP with maturity between 3-6 months from the date of issue. Further, issuance of the CP had to
be carved out of the working capital (fund based) limit and it was also stipulated that CP could be issued
in multiples of Rs. 25 lakh and the amount to be invested by a single investor should not be less than Rs
1 crore.
Present Guidelines-
Since the inception, these guidelines had been reviewed from time to time (the RBI policy measures
were listed in chronological order in Annexure I). The present guidelines are as follows;
0ho can $ssue1
Corporates and primary dealers (PDs), and the all-India financial institutions (FIs) that have been
permitted to raise short-term resources under the umbrella limit fixed by Reserve Bank of India are
eligible to issue CP. A corporate would be eligible to issue CP provided: (a) the tangible net worth of the
company, as per the latest audited balance sheet, is not less than Rs. 4 crore; (b) company has been
sanctioned working capital limit by bank/s or all-India financial institution/s; and (c) the borrowal
account of the company is classified as a Standard Asset by the financing bank/s/ institution/s.
/ating /e+uirement
All eligible participants shall obtain the credit rating for issuance of Commercial Paper from either the
Credit Rating Information Services of India Ltd. (CRISIL) or the Investment Information and Credit
Rating Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd. (CARE) or the FITCH Ratings
India Pvt. Ltd. or such other credit rating agencies as may be specified by the Reserve Bank of India
from time to time, for the purpose. The minimum credit rating shall be P-2 of CRISIL or such equivalent
rating by other agencies.
Maturity
CP can be issued for maturities between a minimum of 7 days and a maximum up to one year from the
date of issue.
2enominations
CP can be issued in denominations of Rs.5 lakh or multiples thereof. Amount invested by a single
investor should not be less than Rs.5 lakh (face value).
3imits and the "mount of $ssue of CP
CP can be issued as a "stand alone" product. The aggregate amount of CP from an issuer shall be within
the limit as approved by its Board of Directors or the quantum indicated by the Credit Rating Agency for
the specified rating, whichever is lower. Banks and FIs will, however, have the flexibility to fix working
capital limits duly taking into account the resource pattern of companies' financing including CPs. An FI
can issue CP within the overall umbrella limit fixed by the RBI i.e., issue of CP together with other
instruments viz., term money borrowings, term deposits, certificates of deposit and inter-corporate
deposits should not exceed 100 per cent of its net owned funds, as per the latest audited balance sheet.
Every issue of CP, including renewal, should be treated as a fresh issue.
0ho can "ct as $ssuing and Paying "gent -$P".
Only a scheduled bank can act as an IPA for issuance of CP.
$nvestment in CP
CP may be issued to and held by individuals, banking companies, other corporate bodies registered or
incorporated in India and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional
Investors (FIIs). However, investment by FIIs would be within the limits set for their investments by
Securities and Exchange Board of India. Banks still continue to be a major player in the CP market. As
on November 1,2004, their outstanding investments in CPs amounted to Rs.6,828 crore in the Rs.8500
crore, CP odd market.
Mode of $ssuance
CP can be issued either in the form of a promissory note or in a dematerialised form through any of the
depositories approved by and registered with SEBI. CP will be issued at a discount to face value as may
be determined by the issuer. No issuer shall have the issue of CP underwritten or co-accepted.
CP $ssue Expenses
CP is issued at a discount to the face value. The following costs are involved in the issue of CP:
1. Stamp duty 0.2% - If placed through banks
1.0% - If placed through merchant bankers
2. Rating fees* 0.10% (subject to a minimum of Rs.100,000)
(for a rating from CARE)
3. Issuing and paying agent fee 0.1%
(All charges are on per annum basis and are subject to changes from time to time)
*CARE charges a rating fee of 0.10% of the amount of issue subject to a minimum of Rs.100,000 and a
maximum of Rs.30,00,000. For issues above Rs.500 crore, the maximum fee would be Rs.40 lakh
Re"ent !rends-
Initially, the CP amount outstanding rose from Rs.86 crore as at the end of financial year 1989-90 to Rs.
577 crore as at the end of the year 1992-93 (Table I) and the CP outstanding was declined to Rs.76
crores since typical discount rate was touched to 20.20 - 20.15 in 1995-96. Following various
relaxations in the terms and conditions for issue of CP, CP issuances gathered momentum thereafter
and reached Rs. 7,224 crore by end-March 2002.
Chart 4$
Commer"ial Paper $ut standing Amount
(Rs.in Crores)
During January-October 2003, the market experienced some sluggishness(Chart-I). Issuances of CP
have increased in recent period following increasing investment interests seen from mutual funds and
cost effectiveness in issuances of CP. Accordingly, the outstanding amount of CP increased substantially
from the level of Rs.9,131 crore in March 2004 to Rs. 12,107 crore by December 2004. This is the
highest ever level achieved by the CP market since its inception. The reasons for the growth of CP
market in recent days are companies are raising funds through CP at interest rates which are close to
the rates at which banks lend to the RBI through the daily repo.
%able4$
Commer"ial Paper- $utstanding Amount and Range of %is"ount
0ear ended !otal $utstanding KRate of %is"ount2Per"ent3
1993 March 31 577 15.76 - 16.00
1994 March 31 3264 11.01 - 12.00
1995 March 31 604 14.00 - 15.00
1996 March 31 76 20.20 - 20.15
1997 March 31 646 11.25 - 12.25
1998 March 31 1500 14.22 - 15.50
1999 March 31 4770 10.05 - 11.50
2000 March 31 5663 10.00 - 12.00
2001 March 31 5846 08.75 - 11.25
2002 March 31 7224 7.41 - 10.25
2003 March 31 5749 6.00 - 7.75
2004 March 31 9131 4.70 - 6.50
2005 March 31 13419 5.55 - 6.33
* Range of typical effective discount rate per annum during the fortnight.
Source: RBI Bulletins
A couple of better rated corporates have managed to raise 90 days money in the CP market for as low
as 5.55%, which is just five basis points above the repo rate and ACC and L&T are the two players that
have raised money at very fine rates in 1994. The sudden spurt in volumes could indicate revival of
economic activity. The total outstanding amount as on 30
th
April 2005 is Rs. 15199 and the effective
discount rate per annum during the last fortnight of April 2005 is 5.50-6.65.
Con"lusion-
The concept of raising money through commercial paper was know to the US markets since 20
th
century.
On our country though it was introduced in 1990, the RBI constantly watching the growth of the CP
market and it is modifying the guidelines from time to time. For further development of CP market, the
stamp duty on CP should be abolished since there is no stamp duty in US, UK and France and RBI has
to relax the stringent Credit Rating norms from the present Credit rating P2 of CRISIL to P3, since
credit rating is not compulsory in many countries like US, UK and France.The denominations of CP
should be reduced further for the growth of secondary market for CP.
AnneFure I
Commercial Paper policy changes:

Jan 1990 July
1990
July
1991
July
1992
June
1994
July
1995
Sep.
1996
Feb.
1997
Oct.
2000
Oct.
2004
Tangible Net
Worth
10 Crore 5 Crore - - 4 Crore - - - - -
WCFBL* 25 Crore 15 Crore 10 Crore 5 Crore 4 Crore - - - - -
Minimum Size 1 Crore 50 Lakh 25 Lakh - - - - - 5 Lakh -
Maximum Size 20% of MPBF** - 30% of
MPBF
75% of
MPBF
- 75% of
Cash
Credit
Compone
nt
100% of
Cash
Credit
Compone
nt
100% of
WCFBL
Should
not
exceed
WCFBL
-
Denominations 25 Lakh 10 Lakh 5 Lakh - - - - - 5 Lakh -
Maturity Period 91days - 6
months
- - - 3 months
- 1year
- - - 15 days
- 1
year
7days -
One Yr.
Credit Rating P1+ by CRISIL or Equal grade by
other agencies
- P2 - - - - -

Other Measures

* Working Capital Fund Based Limit
** Maximum Permissible Bank Finance
Source: Various issues of RBI Bulletin
/eferences5
1. Economic Times: 28.10.2004: ' Repo rattle: Rates may rise for short-term loans to cos.
2. Ronald Vikram D'Mellow, Commercial Paper -as a money market instrument -Chartered Secretary.
Vol. No.6, June'90.
3. Sunil Chopra, Commercial Paper Market- Its development in the Indian context -Chartered
Accountant, Vol.39/8, February 1991.
4. N.S. Krishnamurthy, The Commercial Paper. Prajnan '95-96, Vol. 24/2.
5. B.S. Bisht. Commercial Paper in USA, Finance India, Vol. 12/4, 1998.
6. Domestic and International Commercial Paper Market in Industrialised countries. Banker, Vol. 39/2,
1992-93.
7. RBI Bulletin
8. www.rbi.org.in
%. Aruna Kumar# Assistant Professor (Finance & Accounting Area), *o5amanya !ila5 PG
College of Management# Ibrahimpatnam, Hyderabad-501 506, Cell: 9849563311, E-mail:
dakumars@yahoo.com
About the Author-
D.Aruna Kumar, BBM, MCom, MBA, (PhD)
The Author is with Lokamanya Tilak P G College of Management as Assistant Professor in the Department of Business Management in the
area of Finance and Accounting. He is working for his PhD on "New Financing Instruments with
reference to Central Public Enterprises", under the guidance of Prof. R.K.Mishra, Director, Institute of Public Enterprise, Osmania
University, Hyderabad-500 007.
Globalisation and &usiness Management Cith
Spe"ial Referen"e to &angladesh
By
%r. AnCar Hossain
Dean
AI,&
Dhaka, Bangladesh
Sandhir Sharma
Asstt. Professor
%eptt. of &usiness Management# Pun.ab College of !e"hni"al 'du"ation
Ferozepur Road, Ludhiana-142021
E-mail: sandhir@pcteludhiana.org

I/!R$%,C!I$/-
Management is the most important factor for economic development of any country. In today's global
economy the dynamic role of management can hardly be exaggerated. Harnessing the natural
resources, producing crops, exploiting the queries, running business enterprises, and providing the basic
amenities of life and above all utilizing the human resources all depend on effective use of knowledge on
management. In fact management touches every facet of our life. In this contemporary world rapid
progress has been taking place in all spheres of our life due to the splendid synergistic combination of
science, technology and management.
G*$&A*INA!I$/-
We all understand that globalization is a process of interaction among people, business houses and
governments of different countries mainly driven by international trade, investment and augmented by
information technology. If we view the recent trend of globalization we see an amazing change that is
taking place. Volume of world trade grew by 25 times since 1950. Foreign investment in a single year is
now close to 1 trillion dollar. The regional blocks and number of free trade associations like, EEU,
NAFTA, ASEAN, BIMSTEC and SAARC is more than 200. In fact the pace at which globalization is taking
place in today's world it has really become unstoppable.
At present the world is witnessing a rapid change in all fields of human civilization. The world we knew is
shrinking fast paving the way for globalization. In the backdrop of powerful trade and business interests
political boundaries are tumbling, geographical obstacles are being leveled down and cultural barriers
are being won in a highly competitive world of today. Economic integration among regional blocks is
emerging one after another; political boundaries are transcended by such collaboration and cooperation
among nations, governments, business houses and social and cultural organizations. Media is playing a
powerful role in this process of economic and cultural integration. The open sky invasion of the satellite
channel and the cable network has brought the world much closer than before. The overall global trade
is increasing phenomenally every year and after. In business the process of going global is largely
marked by increasing volume of export and import and greater number of licensing, franchising,
strategic alliances, joint venture and setting up of foreign subsidiaries by business houses. Thomas
Friedman while describing the trend of globalization summed it up in one sentence that globalization is
"farther, faster, cheaper, and deeper."
MA/AG'M'/! IMP*ICA!I$/S $8 G*$&A*INA!I$/
Such changes of galvanic proportion stated above demand a dynamic role of management. Management
is dynamic when it is proactive not reactive. A set of managers who smells changes ahead, projects its
path and trajectory and stands right there to face it with preparedness of an impending disaster is the
one to survive. Those who fail to do so are destined to exit from the corporate world. For today's
managers change has emerged as the only constant and the rests are variables. In the backdrop of this
crazy time and crazy world as Tom Peter suggested the life cycle of many products has been reduced
many fold into weeks from years. Naturally this change driven growth leaves no complacency for
management to bask on the sun of their newfound success as some competitor is waiting round the
corner to displace their product and or their business.
Mangers of today must always be on guard and ready to adopt change. Sometimes the changes are
taking place from within sometimes the organizations are being swept away by changes from around
and environment. Fortune smiles on the companies, which can anticipate the wind of change and place
their organization and product in line with that. Those who fail to do that become a memory of the past
and soon pass into oblivion.
Like the flight of capital labour is also flying although at a slower pace. At present about 80.9 million
workers are out in the foreign land. Chinese workers are working in 160 countries of the world so are
Indians, Pakistani's and Bangladeshi's
In this age of cutting edge skill, competition is the name of the game and management must be
dynamic and ready to face the changes squarely. This ability to adjust to the changing environment
makes or breaks a company. Changes might creep in silently or it may come abruptly swamping the
organization like an avalanche and in both cases management must not remain unprepared. How little
preparedness for catastrophe we have has been laid bare by the recent tsunami that struck the tourist
industry by surprise. It will take years for the tourism industry to recoup the losses it suffered.
Management needs to be proactive in anticipating changes that may come from the standpoint of
customers, competitors or from the changes in the technology or environment. In today's world drastic
change is taking place due to globalization and rapid development of technology. The global economy
now witnesses flight of capital from place to place, country to country in search of new market, cheap
labour and wholesome profit. The strong resurgence of Asian economy and the galloping pace of
economic development of China, India, Vietnam and host of other countries in the region has raised the
hopes of millions for a better standard of living and alleviation of poverty. There is no denying the fact
that the engine of growth in these nations had been the private sector and giant corporate house, which
now expanded their businesses to many other countries.
Multinational and transnational companies now dominate the global economy, the popular mode of joint
venture and strategic alliance; licensing and franchising all are indications of global networking.
G$7'R/M'/! P$*ICI'S
Our subcontinent is a perfect testimony to the fact that government policies affect the process of
globalization. To attract global capital or foreign investment countries in our subcontinent have laid
down attractive concessions and investment packages. The government of Bangladesh has set up
Export Processing Zones (EPZ) with most liberal incentives and policies for investment and has obtained
a remarkable success. China and India have also opened up there economy for the foreign investment
with phenomenal success.
R$*' $8 (!$ A/% G*$&A* PAR!/'RSHIP
WTO, which was created by Uruguay Round negotiations to replace GATT in 1995, is a body to deal with
rules of trade between the nations. Since inception it has been an object of controversy with respect to
its dominance by the rich nations. Critics point out to the fact that its obsession to free market economy
and its role to work as catalyst to economic integration will benefit the rich nations rather than the poor
nations. As a platform of 147 nations WTO is the only global organization that deals with rules of trade
among nations. In view of that it can play a major role in building global partnership if the inequalities
are addressed properly and the interests of the developing countries are not bartered away in the name
of free market competition.
P$S! M8A P'RI$%
From the 1
st
of January this year the multi fiber agreement has come into effect removing the quota
system of RMG products in USA. For Bangladeshi RMG companies this is a big challenge. They no longer
enjoy the quota and have to compete with China and India for the same products in a free market.
Although this change was announced much ahead it will depend on the dynamism of Bangladeshi
managers whether they can really survive this challenge. Early statistics show the downward trend in
export order to US market of Bangladeshi RMG products whereas the Chinese RMG export has risen
steeply in the same market. Needless to say that not all changes will come in phases and with prior
warning.
&,I*%I/G G*$&A* PAR!/'RSHIP I/ &,SI/'SS
Obviously business puts top priority on building global partnership in order to expand their market.
Multinational companies are going for huge investment wherever they see profitability. The phenomenal
improvement in telecommunication and information technology has made the world financial market to
grow, expand and intensify at a pace unheard of before. The ease and speed of transaction of money in
the international market has made the international trade deal easier and smoother. The highly
aggressive international banks have truly become global by putting their branches in the streets of far
-flung cities.
The financial network along with the infrastructure development in telecommunications through
submarine cable and satellite connection have revolutionized the system and immensely increased the
scope for building global partnership. Under the new set up the list of possibilities is endless. Global
partnership in the information technology is a reality now where unique features of comparative
advantage exist along with decreasing labour cost.
The horizon of telecommunication is also an open field where much can be done to accelerate the pace
of development of the developing countries where the tele-density is one of the lowest in the world. The
case of Bangladesh can be cited as an example where joint venture between Telenor, a Norwegian tele-
company, Marubeni, a Japanese company and Grameen Bank of Bangladesh have set up Grameen
Phone a cell phone company which already attained a total client of 2.5 million raising the tele-density
of the country to a substantial level and empowered the impoverished village women.
Similarly in context of pharmaceutical industry, biotechnology and genetic engineering building global
partnership can work wonder provided the partnership are forged with more egalitarian relationship
rather than purely commercial motive of profiteering. In 1982 Bangladesh undertook a pragmatic drug
policy, which set the foundation for the growth of its indigenous pharmaceutical industries shunning the
earlier dependence on multinational companies for medicine. The result is that the pharmaceutical
industry of Bangladesh has rapidly developed producing ninety percent of its domestic demand for
medicine and also having surplus for export.
In the case of Agro-based industry I think we should look from the standpoint of the developing
countries where the stakes are really high since the economy of these countries are highly dependent on
agriculture. If I am allowed to take the case of Bangladesh once again where agriculture even now
contributes 24% to the Gross Domestic Production (GDP) but engages 65% of our labour force,
consequently agro based industries are going to touch upon the lives of millions. One should be little
cautious however, before making such observation in view of the fact that the 2004 world indicator
published by world bank while reviewing the world economy stated that by and large developing
countries are gradually shaking off their dependence on agriculture sector and switching over to
manufacturing and service sector as the engine of growth. Agro-based industries offer a big promise for
quick and expansive expansion in manufacturing concern.
Agro-based industries offer a great prospect to the countries like India, Bangladesh, China and Vietnam
having a large mass of population. Marginal and subsistence farmers can obtain relatively higher prices
for their commodities when agri-business thrives. However, the same conclusion cannot be drawn in
terms of labourers of agro-based industries. Although flourishing agro-business industries may provide
job opportunities it may not completely free them from exploitation. (Matiur Rahman & Raymond Wiest,
contest and trends of globalization in Bangladesh: A critical agenda, UPL, 2003)
An interesting feature of agro-based industries in Bangladesh is that its products are exported globally.
Since the ethnic Bengalis living abroad are the primary customers of the Bangladeshi agro-based
products agro-based industries have great export potential. PRAAN a leading agro-based industry in
Bangladesh exports its products to fifty different countries. I am sure same situation prevails with the
agro-based industries in India.
One of the major beneficiaries of increased globalization has been the entertainment industry. It has
really thrived over the years in view of the open access through the sky and the direct link through the
Internet. Millions of viewers can now watch their favorite channels and listen to the music they like. The
industry as such has changed a lot. Joint collaboration in this sector is also driven by the needs of the
people, their taste and their cultural ramifications along with the new technology that has emerged.
Typically there are strong resistances to change. This is quite expected. Many organizations just follow
the dictum, "if it is working don't fix it." But one should also remember " what is working today may not
work tomorrow." Global economy is changing so should the management to adapt to the change. One
should also remember that as there are strong proponents of globalization there are strong opponents
of it as well. Those who oppose globalization blame the rich nations and the giant multinationals for their
hardcore commercialism, brutal exploitation of natural resources and consequent environmental
degradation. They insist that through the process of globalization the rich becomes richer and the poor
poorer. However, the latest world development indicators show that while in 2002 the world economy
grew by 1.9 percent lower- middle-income economies saw the fastest growth.
C$/C*,SI$/
In fact time has come to accept the change and mold it for better rather than resist it and be crushed
under the avalanche of globalization. Our purpose of life will be better served and our wisdom will be
better utilized if we build the bridge of friendship and cooperation, mutual trust and adhere to the age
old golden rule of "win and win' rather than win and lose in a world where we all are mutually
interdependent.
HoCe+er# all that said and done let me share Cith you the +oi"e of the teeming millions Cho
are not represented here today but for all pra"ti"al purpose Cho are our ba"5bone and Cho
deser+e a mu"h better deal than they re"ei+e and "on"lude Cith the folloCing obser+ation.
Globali9ation is Cel"ome if it is for people not for business alone# if it is for reasonable profit
not for eFploitation# if it is for pea"e and not for aggression if it is for impro+ing the Ouality of
our life and not for en+ironmental# moral and spiritual degradation.

%r. AnCar Hossain
Dean
AI,&
Dhaka, Bangladesh
Sandhir Sharma
Asstt. Professor
%eptt. of &usiness Management# Pun.ab College of !e"hni"al 'du"ation
Ferozepur Road, Ludhiana-142021
E-mail: sandhir@pcteludhiana.org
Histori"al Perspe"ti+e in $ptimising
SoftCare !esting 'fforts
By
Ashish Jolly
Lecturer
S A Jain Institute of Management !e"hnology
Jain College Road, Ambala City (Haryana)
E-mail: ashish_jolly_79@yahoo.co.in

Introdu"tion
Chief scientist, Caper Jones, of Software Productivity Research in Massachusetts, estimates that 60
percent of the United State's software work force is dedicated to fixing software errors that could have
been avoided. In addition, he states there are only 47 days in a calendar year dedicated to doing actual
development or enhancement of software applications. Most of the software engineering work is wasted
due to fixing errors or working on projects that are eventually cancelled. It appears product reliability
has fallen to the waste side. The 1980s emphasized quality control, however by the 1990s innovation at
top speed has taken top priority.
The current era of desktop computing will soon pass evolving to a new era of globalization. Software
globalization will form the new infrastructure of our society. It will require desktop computers to be an
essential business tool rather than the occasional productivity enhancer. In essence, this new era will
require high dependability and reliability due to software computing now performing life critical functions
(Morris, 2000). Therefore, there must be a better method to software development without creating
numerous defects.
One approach to developing quality software with minimal defects is Cleanroom Software Engineering
(CSE).
Cleanroom SoftCare 'ngineering 2CS'3 %efined
In days gone by, software development was rife with poor practices. These included ad-hoc, cut-and-try
debugging (often called "unit testing" in practice), bottom-up delivery (code first, documentation last if
ever), and unstructured coding practices.
Those dark days saw many projects with characteristics like:
Blaming testing for late deliveries: code enters test "on time" and never seems to leave.
One "guru," indispensable to a project and hostage to its continued maintenance.
Uncertainty about a delivery date until late in the game.
Eleventh-hour integration attempts to put together something, anything, for a demo or trade
show.
Unexpectedly low reliability resulting in high support costs.
Limited re-use due to unreliability and poor documentation of components.
Market pressure demands for simultaneous improvements in quality and productivity.
Harlan Mills and his colleagues from IBM developed the CSE methodology in the early 1980s. They were
part of IBM's Federal Defense System where software failures could mean millions of dollars and most
importantly, human lives. This software methodology follows the same analogy as cleanroom fabrication
of semiconductors. Instead of trying to clean dirt off the semiconductor wafers after production, the
object is to prevent the dirt from getting into the production environment in the first place.
This realization led Mills and his team to suggest a software engineering approach that was radical, even
shocking at the time. Cleanroom softCare engineering# he proposed, should emphasize defect
prevention over defect removal, and must include development and testing practices supportive of that
emphasis.
CSE focuses on theory-based engineering practices of software development and certification while
using the Capability Maturity Model for Software (CMM) as its framework. This framework (i.e. CMM)
describes the key elements of an effective software process such as planning, engineering, managing
development and maintenance. In addition, CMM establishes a means to measure an organization's
software development process by maturity levels. Nevertheless, the main point is that CSE encompasses
CMM as part of its software development process.
CSE spans the entire software life cycle. It has an 80-20 life cycle. This means 80 percent of the time is
dedicated to design while 20 percent is writing code. In contrast, the traditional life cycle is 40-20-40
where 40 percent is design, 20 percent is coding, and 40 percent is unit testing. There is absolutely no
unit testing as part of the CSE process. The untested software product is expected to work. If it does
not, the defects are analyzed to determine how the software development process should be improved.
Then the defective product is discarded. According to Harlan Mills, the most important tool to CSE is the
wastebasket.
CSE is based on two main principles. They are the design and testing principles. The design principle
consists of mathematical functional verification of the product. Here reviewers of the software product
use mathematical functions to argue the correctness of the original design. The testing principle focuses
on certifying the reliability of software product (i.e. measuring the quality). This technique uses
statistical testing based on expected system usage rather than trying to remove defects.
!he !ruth About Cleanroom- Prin"iples and Pra"ti"es
The focus of Cleanroom involves moving from traditional, craft-based software development practices to
rigorous, engineering-based practices. It is well-documented that significant differences in cost are
associated with errors found at different stages of the software life cycle. By detecting errors as early as
possible, Cleanroom reduces the cost of errors during development and the incidence of failures during
operation; thus the overall life cycle cost of software developed under Cleanroom can be expected to be
far lower than industry average.
The four main components to CSE include the following: incremental development; formal methods of
specification and design; correctness verification; and Statistical Usage Based Testing and Certification.
Figure 1 in Appendix A shows the CSE Model. Each of these components is necessary to develop
software code that prevents errors from the beginning of development.
In"remental %e+elopment
Using cleanroom methodology, software products are developed in a series of functional increments that
sum up to the final deliverable product. These increments represent operational user functions. The
most stable requirements are implemented first, with further steps of requirements resolution
performed with each successive increment. The integration of these increments is done top down. This
approach allows early assessment of the product quality and gives continuous feedback to management
as to the progress of development. When the final increment is integrated, the system is complete.
As each increment is integrated, the evolving system of increments undergoes a new step in statistical
usage testing for quality certification. Statistical measures of quality provide feedback for reinforcement
or improvement of the development process as necessary. Early increments serve as system
prototypes, providing an opportunity to elicit feedback from customers to validate requirements and
functionality. It's not a bad approach for the marketing group either, who can demonstrate core parts of
the product early. As inevitable changes occur, incremental development provides a framework for
revising schedules, resources, and function, and permits changes to be incorporated in a systematic
manner.
In"remental %e+elopment &enefits
Incremental development has many advantages over bottom-up and traditional "waterfall" lifecycles:
risks are addressed and mitigated systematically;
the cost of test scaffolding and drivers for artificial interfaces is reduced;
early quality measurement is meaningful because the "real" interfaces are tested;
every test case is a rehearsal of actual product use;
a user view of the system is seen early in the process;
high-level interfaces are thoroughly tested from the first increment onward;
a running system exists early, and can be delivered if necessary.
8ormal Methods of Spe"ifi"ation and %esign
Cleanroom software engineering is based on a set of formal specifications describing the external
behavior of the system. In the past, there was little incentive to devote much effort to the specification
process. The Cleanroom approach puts much more emphasis on producing a formal specification model.
Cleanroom specifications should provide a complete and precise description of the system behavior.
Although the Cleanroom approach requires formal methods for specification and design, practical usage
has suggested that the level of formality will vary from project to project and even within a single
project.
2i3 8un"tion Spe"ifi"ation Pro"ess- The purpose of the Function specification process is to (a) specify
the complete functional behavior of the software in all possible circumstances of use and
(b) obtain agreement with the customer on the specified function.
Function Specification is based on Software Requirements. Function specification activities include:
Defining the format and notation for specification.
Defining software boundaries and stimulus/response interfaces with hardware, other software
and human users.
Specifying the required external behavior of the software in the black box function form.
The object-based technology of box structures is an effective specification technique for Cleanroom
development. Box structures map system stimuli (inputs) and stimulus histories (previous inputs) into
responses (outputs).
A bla"5 boF is a specification of external behavior of the function for all possible circumstances. Inputs
to the black box are called stimuli and outputs are responses. The responses from the black box are
driven by the stimulus history and the current stimulus. We consider all cases, including unexpected and
erroneous stimuli. This inclusion forces the developer to consider all possible cases of external behavior
instead of a simple English language description of what is required that can be easily misinterpreted
and incomplete. If you have used other development methodologies, you will find that this is not too
different. Structured analysis and design uses data flows instead of stimuli and responses and the
object-oriented approach (OO) uses messages as shown in Figure 3. A small mindset change is required
to start thinking in terms of stimuli/response, but a small one.
A state boF is derived from and verified against a corresponding black box. A state box maps the
current stimulus and current state into a response and a new state. A "lear boF is derived from and
verified against a corresponding state box. In the clear box, the procedures required to implement the
state box transition function are defined, possibly introducing new black boxes for further decomposition
into state or clear boxes.
Box structures of the kind used in cleanroom fixes some of the problems found in object-oriented (OO)
approaches. One example is the attempt to encapsulate data in OO. Encapsulating data at the right level
of abstraction can be difficult: too high a level degrades modularity and too low a level can lead to
redundancies in the data. The cleanroom approach forces the designer to invent only the data needed at
that time in the design. This box-structured approach also allows for intellectual control in an object-
based development environment and forces the concept of top-down refinement and verification. The
aim in doing all this is to achieve the transition from specification to code in small enough increments so
that each step is obviously correct.
Box-structured systems are developed according to the following principles:
(1) all data to be defined and retained in a design are encapsulated in boxes,
(2) all processing is defined by sequential and concurrent use of boxes, and
(3) each use of a box occupies a distinct place in the usage hierarchy of the system.
Clear boxes play an important role in the hierarchy by defining and controlling the correct operation of
box services at the next level of refinement.
The logic behind proceeding in small increments (stepwise refinement) is based on the fact that the
human intellect can only understand complexities when they are linked in close, simple relationships.
Anyone who has gone into a legacy system to make a "simple" change and broke something else can
better understand this. Cleanroom, if done correctly, can prevent this by allowing incremental
development and verification where each black box can be considered totally independent and fixes or
updates can be more isolated.
Referential !ransparen"y is a popular mathematical principle applied in Cleanroom specification. With
referential transparency, reference to the object gives the entire effect of the object itself. Referential
transparency of box structure hierarchies concerns the completeness of specification of the behavior of
lower level boxes at each step in system decomposition.
2ii3 Ar"hite"tural Spe"ifi"ation Pro"ess- The purpose of the architectural specification process is to
define the conceptual model, the structural organization and the execution characteristics of the
software. The Cleanroom aspect of architecture specification is in decomposing of the history-based
black box function specification into state-based state box and procedure-based clear box descriptions.
Corre"tness 7erifi"ation
During software design and development, the software development team conducts a rigorous
verification activity on the design and code using strict correctness verification methods that prove that
the software meets the specification. Verification reviews are held by the team to formally or informally
verify the software using a set of correctness proofs that are standard in a structured programming
environment. This method allows the verification of programs of any size by reducing the verification
process to a manageable number of verification checks. For well-specified, well-structured software,
proof of software correctness can be done by direct assertion. Correctness verification is done before the
software is ever executed, so that the developers are not permitted to get into a "debugging" mode of
operation.
This type of correctness verification can result in a near zero defect level. This process also scales to
programs of any size, because all programs have a finite number of control constructs. This method of
correctness verification allows developers to deliver software without unit testing and produces better
code than the old unit testing way. "No unit testing" does not, however, mean "no use of the machine."
It is essential to use the machine for experimentation, to evaluate algorithms, to benchmark
performance, and to understand and document the semantics of interfacing software.
Elimination of unit testing motivates tremendous determination in developers to ensure that the code
they deliver for independent testing is error-free on first execution. But there is a deeper reason to
adopt correctness verification-it is more efficient and effective than unit testing. Programs of any size
can contain an essentially infinite number of possible execution paths and states, but only a minute
fraction of those can be exercised in unit testing. Correctness verification, however, reduces the
verification of programs to a finite and complete process.
Statisti"al ,sage &ased !esting and Certifi"ation
In the Cleanroom process, statistical usage testing for certification replaces coverage testing for
debugging. Testing is carried out by the certification team based on anticipated usage by customers.
The cleanroom concept asserts that this type of unit testing should be private to the programmer. Unit
testing is actually dangerous because it tends to find many of the superficial defects and lets some of
the other more important errors slip through. Cleanroom uses a formal statistical approach to testing
that can indicate the quality of the software and stopping criteria as well. This approach differs from the
traditional approach, in which testers assume there are errors in the software and set out to find as
many as possible, with the faulty assumption that if enough errors are found and fixed, the software
quality would improve. Cleanroom operates under the realistic assumption that it is not possible to test
quality into a product. Certification (the cleanroom term for testing) is performed to certify the software
reliability, not test the software in the classical sense.
Statistical usage testing involves testing software the way the users use it. This type of testing focuses
on external system behavior, not the internals of the software. Statistical usage testing all starts with
test planning and the development of a usage model. Planning involves developing a usage
specification, which defines usage scenarios of the product. These usage scenarios can be both correct
and incorrect uses of the product. These usage scenarios are used for test case generation, and testing
is done using user profiles.
Coverage testing can provide no more than subjective evidence of reliability. Thus, if many errors are
found, does that mean that the code is of poor quality and many errors remain, or that most of the
errors have been discovered? Conversely, if few errors are found, does that mean that the code is of
good quality, or that the testing process is ineffective? Statistical testing provides scientifically valid
measures of reliability, such as mean-time-to-failure (MTTF), as a basis for objective management
decision-making regarding software and development process quality.
Cleanroom testing involves the following four steps: (1) usage modeling, (2) generation of test cases,
(3) execution of test cases, and (4) reliability estimation.
Ad+antages of Cleanroom SoftCare 'ngineering
CSE has at least three main advantages. They are improved quality, increased productivity, and
improved software maintainability. CSE improves quality by preventing errors in the first place. Thus,
there is a reduction in the overall cost of the program. For example, from 1987 to 1994, software code
developed with CSE only had 2.3 defects per thousand lines of code measured from the first time of
execution. In contrast, industry averages using traditional software development methods were
estimated at 10 defects per thousand lines of code after unit testing.
Another advantage CSE has over traditional software development methods is productivity. Productivity
is increased due to the reduced time required to debug and rework software.
Lastly, software developed with CSE has clear, well-defined specifications with a less-complicated design
allowing for easier maintenance. This is because CSE incorporates team reviews as part of the process
and uses the box structure method for creating specifications. In a team review situation, there is not
the crutch of relying on unit testing to find defects.
Con"lusion
The typical software lifecycle is about 40% design, 20% code, and 40% unit testing. The cleanroom
lifecycle is 80% design and 20% code; no unit test. Cleanroom spans the entire software development
life cycle.
Cleanroom represents the first practical attempt at defining a development process that builds software
without introducing defects. Cleanroom software engineering differs from conventional views in that it
places importance on design specification and mathematically based proofs of correctness. In addition,
the Cleanroom approach relies heavily on statistical usage testing to verify that the software will work
without producing high-impact errors for the users in the field. The Cleanroom approach is unique in
that it replaces unit testing and debugging with correctness verification and quality certification. The
goal of the Cleanroom approach is to be able to build high quality software without increasing the
project's cycle time.
If anything is new to CSE, it is the attitude that near zero-defect software is possible. This paper
provided an in-depth review of CSE including a description of what it is and the advantages of using it.
CSE is still thought of as some mythical software development process. However, more companies need
to make quality software besides innovation as top priority. Further research is still needed on CSE.
More companies need to pilot and publish how CSE was integrated in their current software
development process.
Developing high quality software that is within budget and does not require a massive customer service
staff should be on any software company's objective list. CSE is no silver bullet, however it does provide
a more scientific and measurable process that takes the art out of software development.

AppendiF A
CSE Model
Figure 1. CSE Model (Oshana & Linger, 1999)

Ashish Jolly
Lecturer
S A Jain Institute of Management !e"hnology
Jain College Road, Ambala City (Haryana)
E-mail: ashish_jolly_79@yahoo.co.in
!argeting Hedoni" Persuasion B Current ta"ti" in Ad+ertising
By
Moni5a &hatt
Lecturer (Marketing)
IM'
Sahibabad
E-mail: monasharma4@yahoo.com

Those days are gone when Company's had to spend extra money on what is called as Advertising. Here
I do not mean that Advertising has vanished but it has to try new methods especially for those big
brands as they do not need any introduction or are not dependent on conventional marketing. The
advertising company's of the top brands have to do the out -of -the -box -thinking for marketing them.
The fundamentals being the same that Philip Kotler wrote in his book "Fundamentals of Marketing" way
back in early 20
th
century. Advertiser's strategic move has really revved up the sales of the company's
though they are not able to give the exact figures because of the multi factors effect acting on it.
Advertisement is for creating the awareness amongst the prospective customers or enticing them to buy
the products. The most popular is celebrity endorsement, editorial space in print media, hoardings etc.
etc. and the list is on and on. Kotler in his book has talked about 'Subliminal Persuasion', which means
entering the consumer's unconscious state of mind. The concept was very well utilized by the then
marketer's ' Eat popcorn and drink coca cola' flashed on the screen of theatres just for 30 seconds
during interval it was observed the sales of both increased. Now, as the times are passing this kind of
advertising has taken lots of twists and turns.
The only thing to be watched is the trend and it is made by the younger generation, this young group
has also been redefined as people within the age group of thirteen years to forty five years. This
generation is so unpredictable but has ample of unique ideas and is ready to change. Initially advertisers
flooded the ads. during the serial breaks, later on the era of sponsoring any one particular serial like
Close- up antarkshari, now, Samsung Antarkshari, Bournvita quiz contest etc. etc. In India census says
that the most popular medium for entertainment is movies and these effect the young mind a lot. Like
fashion, style of speaking, body- building (men), perfect body (women) etc. most of the business's in
India are gearing up with the support of Bollywood. Here I would like to quote an example of 98.3 FM
(Delhi's Radio channel popular as Radio Mirchi its hot), in one of there programme they invited small
girls to come dressed up as Kareena Kapoor (as she dressed in any of her films) on her birthday which
was in the month of September. The place to assemble was told and also from where you can get those
dresses. Many girls turned up and finally photographs were clicked and sent to Kareena Kapoor in the
form of collage. What does this show?... technique for marketing channel (98.3 FM), stores and also to
some extent the Celebrity.
So, now industry's inclination is towards bollywood, no not as an advertisement in between the movie
but as the very part of movies this means proper blending of the brand in the movie is required. If you
have watched the latest movies, which were blockbuster in the recent past, you'll then realize what I
mean by a proper blending.
In "Hum Tum" Saif Ali khan is a Times of India cartoonist. Is it the director's mind to give its film a
reality or is it just a technique to manage finances or is it the company's strategic move that brands
along with the films story is blended so well that it becomes the part of the movie. I will call this a smart
move as both the parties are being benefited.
People do not know that unknowingly they are putting brands at the back of the head because of the
stealthy advertisement by the marketer in the movies. This in-content branding is considered to be
thematic brand support as they are projected to be in day to day activities of a common man.
In "Baghban", Amitabh Bachchan is an ICICI bank manager. The companies like Tata tea, Archies, Zip
Telecom, & Ford also have been contextually fit to give movie a real touch.
In "Main Hoon Na", Shahrukh Khan is seen wearing levis apparel, Reebok shoes , eats at Pizza Hut, sips
coffee from Caf Coffee Day, rescues Sushmita Sen from abductors who carry her in Santro, seen
munching Lays (potato chips) & sipping Pepsi. Does it ring bells in your mind, I mean are you able to
find some link with real advertising world and the above mentioned insidious or I must say subliminal
marketing tactics. Yes, you are right SRK is the official brand ambassador of Pepsi, and also Hyundai
Santro Car.
It is clear from above examples that to some extent conventional marketing are taking a backseat and
the subliminal marketing or persuasion is gearing up especially for those brands which no longer require
branding. As said by Sanjay Purohit, General Manager (Marketing ) Cadbury India " Our brands no
longer require mere branding, but need to send out a stronger message". In Hrithik Roshan starrer "Koi
Mil Gaya" Cadbury's India brand team started working with its director Rakesh Roshan for the milk
additive brand Bournvita right at the story stage and if you have happened to watch this movie you'll
see that the product placement is a contextual fit. Bournvita brand is very subtly entering the
subconscious mind of the consumers though the company is engaged with the other conventional
advertising & marketing strategies also.
Above I mentioned about blending of brands in the movie but recently we will be also coming across
some social ads. during the movie itself like in between any hot scene an ad of condoms will be shown.
Any kind of ad with a social message, which fits in the scene, can be shown. People have a mixed idea
about it but most of them are considering it to be beneficial for the society and are positively looking
forward for it. What is your idea about this?

Moni5a &hatt
Lecturer (Marketing)
IM'
Sahibabad
E-mail: monasharma4@yahoo.com
Indian and International A""ounting Standards Pra"ti"es
By
Prof. 7ishCanathan &harathan# Assistant Professor, %oddappa Appa Institute of
M&A# Gulbarga-585103, E-mail: v_bharathan@hotmail.com
Introdu"tion-
Accounting Standards are used as one of the main compulsory regulatory mechanisms for preparation of
general-purpose financial reports and subsequent audit of the same, in almost all countries of the world.
Accounting standards are concerned with the system of measurement and disclosure rules for
preparation and presentation of financials statements. They appear with a set of authoritative
statements of how particular types of transactions, events and other costs should be recognized and
reported in the financial statements. Accounting standards are devised to furnish useful information to
different users of the financial statements, to such as shareholders, creditors, lenders, management,
investors, suppliers, competitors, researchers, regulatory bodies and society at large and so on. In fact,
such statements are designed and prescribed so as to improve & benchmark the quality of financial
reporting.
The rapid growth of international trade and internationalization of firms, the Developments of new
communication technologies, the emergence of international competitive forces is perturbing the
financial environment to a great extent. Under this global business scenario, the residents of the
business community are in badly need of a common accounting language that should be spoken by all of
them across the globe. A financial reporting system of global standard is a pre-requisite for attracting
foreign as well as present and prospective investors at home alike that should be achieved through
harmonization of accounting standards.
Accounting Standards are the policy documents (authoritative statements of best accounting practice)
issued by recognized expert accountancy bodies relating to various aspects of measurement, treatment
and disclosure of accounting transactions and events. As relate to the codification of Generally Accepted
Accounting Principles (GAAP). These are stated to be norms of accounting policies and practices by way
of codes or guidelines to direct as to how the items, which go to make up the financial statements
should be dealt with in accounts and presented in the annual accounts. The aim of setting standards is
to bring about uniformity in financial reporting and to ensure consistency and comparability in the data
published by enterprises.
$b.e"ti+es of the study
The Paper is presented with the following objectives:
1. To understand the various Accounting standards that exit as of now, and the governing bodies of
such accounting standards.
2. To understand the significance of harmonizing global accounting standards
3. To understand the issues in globalizing the accounting standards
A""ounting standards pre+alent all a"ross the Corld-
* Accounting standards are being established both at national and international levels. But the variety of
accounting standards and principles among the nations of the world has been a sustainable problem for
globalizing the business environment.
* There are several standard setting bodies and organizations that are now actively involved in the
process of harmonization of accounting practices. The most remarkable phenomenon in the sphere of
promoting global harmonization process in accounting is the emergence of international accounting
standards.
* The International Accounting Committee (IASC), now International Accounting Standards Board
(IASB) was formed on 29th June 1973, by the recognized professional accounting bodies in Canada,
Australia, France, Japan, Germany, Mexico, Netherlands, United Kingdom and the United States of
America, with its secretariat and head quarters in London.
* National standard setting bodies like Financial Accounting Standards Boards (FASB) of USA,
Accounting Standards Boards (ASB) of UK, and Indian Accounting Standards (IAS) in India generally
frame accounting standards in the line of IASC after due consideration of the local laws and conditions.
* In India the Accounting Standards Board (ASB) was constituted by the Institute of Chartered
Accountants of India (ICAI) on 21st April 1977 with the function of formulating accounting standards.
%o Ce need to harmoni9e the a""ounting standards of different bodies)
Different companies observe it from published annual accounts of various Indian companies that there
are divergent accounting practices for the same transaction. This in effect is defeating the comparability
of financial statements.
The reasons for the different accounting practices may be:
a) Too many alternative accounting treatments in the accounting standards;
b) Lack of harmony among government, standards setting body, and regulatory agencies;
* Adoption of different accounting standards causes difficulties in making relative evaluation of
performance of companies. This phenomenon hinders the valuation and consequently the decision
making process.
* To overcome these problems, harmonization of accounting standards has already been started.
Accounting harmonization is not an end by itself, but it is a means to an end. The ultimate objective of
harmonizing accounting practices among countries is to foster international comparability of accounts.
* But still the harmonization process has a long way to go. Many standard setting bodies and regulators
of different nations are ardent protectors of their local standards, they are in no mood to allow their job
being taken over by a foreign entity.
* Thus winning the consent of these bodies is vital for international accounting standards to don the
mantle of common accounting code, i.e. harmonization of common accounting standards, which will
make implementing countries more competitive internationally.
* Accounting standards vary from one country to another. There are various factors that are responsible
for this. Some of the important factors are
- legal structure
- sources of corporate finance
- maturity of accounting profession
- degree of conformity of financial accounts
- government participation in accounting and
- Degree of exposure to international market.
* Diversity in accounting standards not only means additional cost of financial reporting but can cause
difficulties to multinational groups in the manner in which they undertake transactions. It is quite
possible for a transaction to give rise to a profit under the accounting standards of one country where as
it may require a deferral under the standards of another.
- When a multinational company (MNC) has to report under the standards of both the countries it might
lead to some extremely odd results. For instance, Daimler Benz, who was the first German to secure
stock market listing in the United States, reported a net profit of DM 158 m for the six months to June
1998 based on German GAAP. The U.S GAAP reconciliation statement revealed that the company had
incurred a loss of DM. 949m.
- Similarly, British Telecom Inc. reported a net profit of 1767 for the year ended 31-3-1994 under the
UK GAAP but under the US GAAP reconciliation- the net profit reduced to 1476.
- Although there are different solutions that have been suggested to resolve the problems associated
with filling financial statements across national boundaries like reciprocity and reconciliation, but they
not free from limitations. International accounting standards serves the purpose of reducing diversity in
accounting practices but invites qualitative differences of financial accounting and reporting systems.
* Again these qualitative differences may be removed if a single set of internationally accepted
standards can be used for all cross-border listed financial statements. These differences may be reduced
if the recognized professional accounting bodies of the world arrange a happy marriage between the
national and international accounting standards.
- Issues in adopting global accounting standards: -There seems to be a reluctance to adopt the
International Accounting Standards Committee (IASC) norms in the US?
This is definitely a problem. The US is the largest market and it is important for IASC standards to be
harmonized with those prevailing there. The US lobby is strong, and they have formed the G4 nations,
with the UK, Canada, and Australia (with New Zealand) as the other members. IASC merely enjoys
observer status in the meetings of the G4, and cannot vote. Even when the standards are only slightly
different, the US accounting body treats them as a big difference, the idea being to show that their
standards are the best. We have to work towards bringing about greater acceptance of the IASC
standards.
- How real is the threat from G4?
G4 has evolved as a standard setting body and has recently issued its first standard on pooling of
interest method. (Mergers can either be in the nature of purchase or in the form of pooling of interest
like HLL-BBLIL). It is also expected to publish new or revised papers on reporting financial performance,
business combinations, joint ventures, leases, and contributions. So far, the FASB (the US standard
setting body) was the world's standard setter because of mandatory compliance with US GAAP for listing
on the New York Stock Exchange (NYSE). The US congress had to, however, step in and overrule the
FASB standard on stock option.
!he "urrent status of IAS 2Indian A""ounting Standards3-
In India, the Statements on Accounting Standards are issued by the Institute Of Chartered Accountants
of India (ICAI) to establish standards that have to be complied with to ensure that financial statements
are prepared in accordance with generally accepted accounting standards in India (India GAAP ). From
1973 to 2000 the IASC has issued 32 accounting standards. These standards, as a matter of fact, most
of the countries in the world, which are interested, and confidence in adopting these standards may be
followed. But it is observed that many countries are not adopting the standards in the presentation of
accounting information. With a view to examine the time gap for indianisation of International
Accounting Standards, the information is analyzed and presented in Annexure - I. The table shows that
the average gap for indianisation of International Accounting Standards is 6.13 years. It shows that for
adopting IAS in India, it is taking 6.13 years for one accounting standard. This analysis points out the
poor research work, and development in the accounting field.
A significant criticism of IAS;
* That the standards are too broad based and general to ensure that similar accounting method is
applied in similar circumstances. For Instance, the accounting for expenses incurred under a Voluntary
Retirement Scheme ( VRS ) , in which the methods used range from pay-as-you-go to Amortization of
the present value of future pension payments over the period of benefit.
* It may be noted that in several important areas, when the Indian Standards are implemented, the
accounting treatment in these areas could lead to differences in the restatement of accounts in
accordance with US GAAP . Some of these areas are:
- Consolidated financial statements
- Accounting for taxes on income
- Financial Instruments
- Intangible Assets
* Restatement to US GAAP :
A restatement of financial statements prepared under India GAAP to U.S. GAAP requires careful planning
in the following areas:
- Involvement of personnel within the accounts function and the time frame within which the task is to
be completed.
- Identification of significant accounting policies that would need to be disclosed under U.S. GAAP and
the differences that exist between India GAAP and U.S. GAAP
- The extent of training required within the organisation to create an awareness of the requirements
under U.S. GAAP
- Subsidiaries and associate companies and restatement of their accounts in conformity with U.S. GAAP
- Adjustment entries that are required for conversion of India GAAP accounts.
- Reconciliation of differences arising on restatement to U.S. GAAP in respect of income for the periods
under review and for the statement of Shareholder's equity.
* The timetable for restatement of the financial statements to US GAAP would depend upon the size of
the company and the nature of its operations , the number of subsidiaries and associates . The process
of conversion would normally take up to 16 weeks in a large company in the initial year . It is thus
necessary to streamline the accounting systems to provide for restatement to U.S. GAAP on a continuing
basis. At first sight the restatement of financial statements in accordance with U.S. GAAP appears to be
formidable. However, as the Indian accounting standards are built on the foundation of international
accounting standards, on which a truly global GAAP might be built, there is no cause for concern .
Another reason for the prevailing divergent accounting practices is the Accounting Standards, the
provisions of the Income Tax Act 1961 and Indian Companies Act 1956 do not go together.
2a3 Company laC and A""ounting Standards-
In India, though accounting standards setting is presently being done by ICAI, one could discern a
tentative and halfhearted foray by company legislation in to the making of accounting rules of
Measurement and reporting. This action by itself is not the sore point but the failure to keep pace with
the changes and simultaneously not allowing scope for some one else to do it is disturbing.
A study of the requirement of company law regarding the financial statements reveal several lacunae
like earning per share, information about future cash flows, consolidation, mergers, acquisitions etc.
2b3 In"ome !aF A"t and A""ounting Standards-
The Income Tax Act does not recognize the accounting standards for most of the items while computing
income under the head "Profits & Gains of Business or Profession". Section 145(2) of the I.T. Act has
empowered the Central Government to prescribe accounting standards. The standards prescribed so far
constitute a rehash of the related accounting standards prescribed by ICAI for corporate accounting. On
a close scrutiny of these standards one is left wondering about the purpose and value of this effort.
Examples are application of prudence substance over form, adherence to principles of going concern etc.
2"3 $ther regulations and a""ounting standards-
In respect of banks, financial institutions, and finance companies the Reserve Bank of India (RBI)
pronounces policies among others, revenue recognition, provisioning and assets classifications. Similarly
the Foreign Exchange Dealers Association (FEDAI) provides guidelines regarding accounting for foreign
exchange transactions. Since the Securities & Exchange Board of India (SEBI) is an important regulatory
body it would also like to have its own accounting standards and in fact, it has started the process by
notifying cash flow reporting format. It is also in the process of issuing a standard on the accounting
policies for mutual funds. It appears as if several authorities in our country are keen to have a say in the
matter of framing accounting rules of measurement and reporting. The tentative and half hearted legal
and regulatory intervention in accounting in our country, has come in the way of development of robust,
continuously evolving and dynamic accounting theory and standards.
Con"lusion-
India is slowly entering the arena of accounting standards. But the progress of formulation of accounting
standards has been very slow compared with the developments at international levels. Bringing about
harmonization in accounting practices among countries throughout the world is indeed a very formidable
task. The vision of a harmonized accounting world may inspire many minds but in the practical field it is
hard to go about embracing a situation where accounting principles and procedures are perfectly
harmonized among countries through out the world. The development of harmonized accounting rules
and a uniformity of approach among countries towards education and training of professional
accountants should accompany principles. Further more, the harmonization of accounting rules and
principles among countries should also be accompanied by inter country harmonization in auditing
principles and standards. Harmonization initiatives are now working much more effectively than ever
before. Many of the initial hurdles have been overcome and much progress towards harmonizing
accounting principles and procedures among countries has already been achieved. Differences are still
there but they are narrowing. It is expected that the pace of progress in the sphere of harmonization
will accelerate further in the coming years.
A//'D,R'BI
*ist of Indian a""ounting standards adopted from IASC Cith time gap in years
S. no. of Indian
Accounting
Standards
Year of Indian
Accounting Standards
Corresponding IAS
(International
Accounting Standards)
Year of issue of IAS
(International
Accounting Standards)
Time Gap
(in years)
1 1976 1 1975 4
2 1981 2 1975 6
3 1981 7 1977 4
4 1982 10 1978 4
5 1982 8 1978 4
6 1982 4 1976 6
7 1983 11 1979 4
8 1985 9 1978 7
9 1985 18 1982 3
10 1985 16 1982 3
11 1989 21 1983 6
12 1991 20 1983 8
13 1995 25 1986 9
14 1995 22 1983 12
15 1995 19 1983 12
R'8'R'/C'S-
* Shri A.K. Chowdhury Ph.D., Student, Department of Accounting, University of Western Sydney,
Australia - "Compliance with accounting standards in India, why and how?" (Management accountant,
March 2000, ICWAI.)
* Dr. K. Raji Reddy, reader in Commerce, Department of Commerce and Business Management,
Kakatiya University, Warrangal (A.P) and Shri V Prudvi Raju, Counsellor, SDLCE Study Centre, L.B.
College, Warrangal. - "Accounting standards and Gaps in Practices in India." (Management accountant,
April 2000, ICWAI.).)
* Dr. Jagannath Hati W , and Debdas Rakshit Lecturer in Commerce, Syamsundar College, Burdwan,
West Bengal.- "Integrating accounting standards - A step towards harmonization " (Management
accountant, ICWAI .)
* http://www.icai.org/resource/o_ac_standard.html
* http://www.icai.org/resource/o_ac_standard.html.The Indian Express
* India Infoline Newsletter-Vineet Madan, IMT Ghaziabad "RE-STATEMENT UNDER US GAAP"
Prof. 7ishCanathan &harathan# Assistant Professor, %oddappa Appa Institute of M&A
S.B.College Complex, Gulbarga-585103, E-mail: v_bharathan@hotmail.com
Indian and International Accounting Standards & Practices
By
Prof. Vishwanathan Bharathan
Assistant Professor
Doddappa Appa Institute of MBA
Gulbarga!"!#$%
&'ail( )*bharathan+hot'ail.co'

Introduction(
Accounting Standards are used as one of the 'ain co'pulsory regulatory 'echanis's for preparation of
generalpurpose financial reports and subse,uent audit of the sa'e- in al'ost all countries of the world.
Accounting standards are concerned with the syste' of 'easure'ent and disclosure rules for preparation and
presentation of financials state'ents. .hey appear with a set of authoritati)e state'ents of how particular
types of transactions- e)ents and other costs should be recogni/ed and reported in the financial state'ents.
Accounting standards are de)ised to furnish useful infor'ation to different users of the financial state'ents-
to such as shareholders- creditors- lenders- 'anage'ent- in)estors- suppliers- co'petitors- researchers-
regulatory bodies and society at large and so on. In fact- such state'ents are designed and prescribed so as to
i'pro)e & bench'ar0 the ,uality of financial reporting.
.he rapid growth of international trade and internationali/ation of fir's- the De)elop'ents of new
co''unication technologies- the e'ergence of international co'petiti)e forces is perturbing the financial
en)iron'ent to a great e1tent. 2nder this global business scenario- the residents of the business co''unity
are in badly need of a co''on accounting language that should be spo0en by all of the' across the globe. A
financial reporting syste' of global standard is a prere,uisite for attracting foreign as well as present and
prospecti)e in)estors at ho'e ali0e that should be achie)ed through har'oni/ation of accounting standards.
Accounting Standards are the policy docu'ents 3authoritati)e state'ents of best accounting practice4 issued
by recogni/ed e1pert accountancy bodies relating to )arious aspects of 'easure'ent- treat'ent and disclosure
of accounting transactions and e)ents. As relate to the codification of Generally Accepted Accounting
Principles 3GAAP4. .hese are stated to be nor's of accounting policies and practices by way of codes or
guidelines to direct as to how the ite's- which go to 'a0e up the financial state'ents should be dealt with in
accounts and presented in the annual accounts. .he ai' of setting standards is to bring about unifor'ity in
financial reporting and to ensure consistency and co'parability in the data published by enterprises.
5b6ecti)es of the study
.he Paper is presented with the following ob6ecti)es(
#. .o understand the )arious Accounting standards that e1it as of now- and the go)erning bodies of such
accounting standards.
7. .o understand the significance of har'oni/ing global accounting standards
%. .o understand the issues in globali/ing the accounting standards
Accounting standards pre)alent all across the world(
8 Accounting standards are being established both at national and international le)els. But the )ariety of
accounting standards and principles a'ong the nations of the world has been a sustainable proble' for
globali/ing the business en)iron'ent.
8 .here are se)eral standard setting bodies and organi/ations that are now acti)ely in)ol)ed in the process of
har'oni/ation of accounting practices. .he 'ost re'ar0able pheno'enon in the sphere of pro'oting global
har'oni/ation process in accounting is the e'ergence of international accounting standards.
8 .he International Accounting 9o''ittee 3IAS94- now International Accounting Standards Board 3IASB4
was for'ed on 7:th ;une #:<%- by the recogni/ed professional accounting bodies in 9anada- Australia-
=rance- ;apan- Ger'any- Me1ico- >etherlands- 2nited ?ingdo' and the 2nited States of A'erica- with its
secretariat and head ,uarters in @ondon.
8 >ational standard setting bodies li0e =inancial Accounting Standards Boards 3=ASB4 of 2SA- Accounting
Standards Boards 3ASB4 of 2?- and Indian Accounting Standards 3IAS4 in India generally fra'e accounting
standards in the line of IAS9 after due consideration of the local laws and conditions.
8 In India the Accounting Standards Board 3ASB4 was constituted by the Institute of 9hartered Accountants
of India 3I9AI4 on 7#st April #:<< with the function of for'ulating accounting standards.
Do we need to har'oni/e the accounting standards of different bodiesA
Different co'panies obser)e it fro' published annual accounts of )arious Indian co'panies that there are
di)ergent accounting practices for the sa'e transaction. .his in effect is defeating the co'parability of
financial state'ents.
.he reasons for the different accounting practices 'ay be(
a4 .oo 'any alternati)e accounting treat'ents in the accounting standardsB
b4 @ac0 of har'ony a'ong go)ern'ent- standards setting body- and regulatory agenciesB
8 Adoption of different accounting standards causes difficulties in 'a0ing relati)e e)aluation of perfor'ance
of co'panies. .his pheno'enon hinders the )aluation and conse,uently the decision 'a0ing process.
8 .o o)erco'e these proble's- har'oni/ation of accounting standards has already been started. Accounting
har'oni/ation is not an end by itself- but it is a 'eans to an end. .he ulti'ate ob6ecti)e of har'oni/ing
accounting practices a'ong countries is to foster international co'parability of accounts.
8 But still the har'oni/ation process has a long way to go. Many standard setting bodies and regulators of
different nations are ardent protectors of their local standards- they are in no 'ood to allow their 6ob being
ta0en o)er by a foreign entity.
8 .hus winning the consent of these bodies is )ital for international accounting standards to don the 'antle of
co''on accounting code- i.e. har'oni/ation of co''on accounting standards- which will 'a0e
i'ple'enting countries 'ore co'petiti)e internationally.
8 Accounting standards )ary fro' one country to another. .here are )arious factors that are responsible for
this. So'e of the i'portant factors are
legal structure
sources of corporate finance
'aturity of accounting profession
degree of confor'ity of financial accounts
go)ern'ent participation in accounting and
Degree of e1posure to international 'ar0et.
8 Di)ersity in accounting standards not only 'eans additional cost of financial reporting but can cause
difficulties to 'ultinational groups in the 'anner in which they underta0e transactions. It is ,uite possible for
a transaction to gi)e rise to a profit under the accounting standards of one country where as it 'ay re,uire a
deferral under the standards of another.
Chen a 'ultinational co'pany 3M>94 has to report under the standards of both the countries it 'ight lead
to so'e e1tre'ely odd results. =or instance- Dai'ler Ben/- who was the first Ger'an to secure stoc0 'ar0et
listing in the 2nited States- reported a net profit of DM #!" ' for the si1 'onths to ;une #::" based on
Ger'an GAAP. .he 2.S GAAP reconciliation state'ent re)ealed that the co'pany had incurred a loss of
DM. :D:'.
Si'ilarly- British .eleco' Inc. reported a net profit of E#<F< for the year ended %#%#::D under the 2?
GAAP but under the 2S GAAP reconciliation the net profit reduced to E#D<F.
Although there are different solutions that ha)e been suggested to resol)e the proble's associated with
filling financial state'ents across national boundaries li0e reciprocity and reconciliation- but they not free
fro' li'itations. International accounting standards ser)es the purpose of reducing di)ersity in accounting
practices but in)ites ,ualitati)e differences of financial accounting and reporting syste's.
8 Again these ,ualitati)e differences 'ay be re'o)ed if a single set of internationally accepted standards can
be used for all crossborder listed financial state'ents. .hese differences 'ay be reduced if the recogni/ed
professional accounting bodies of the world arrange a happy 'arriage between the national and international
accounting standards.
Issues in adopting global accounting standards( .here see's to be a reluctance to adopt the International
Accounting Standards 9o''ittee 3IAS94 nor's in the 2SA
.his is definitely a proble'. .he 2S is the largest 'ar0et and it is i'portant for IAS9 standards to be
har'oni/ed with those pre)ailing there. .he 2S lobby is strong- and they ha)e for'ed the GD nations- with
the 2?- 9anada- and Australia 3with >ew Gealand4 as the other 'e'bers. IAS9 'erely en6oys obser)er
status in the 'eetings of the GD- and cannot )ote. &)en when the standards are only slightly different- the 2S
accounting body treats the' as a big difference- the idea being to show that their standards are the best. Ce
ha)e to wor0 towards bringing about greater acceptance of the IAS9 standards.
How real is the threat fro' GDA
GD has e)ol)ed as a standard setting body and has recently issued its first standard on pooling of interest
'ethod. 3Mergers can either be in the nature of purchase or in the for' of pooling of interest li0e H@@
BB@I@4. It is also e1pected to publish new or re)ised papers on reporting financial perfor'ance- business
co'binations- 6oint )entures- leases- and contributions. So far- the =ASB 3the 2S standard setting body4 was
the worldIs standard setter because of 'andatory co'pliance with 2S GAAP for listing on the >ew Jor0
Stoc0 &1change 3>JS&4. .he 2S congress had to- howe)er- step in and o)errule the =ASB standard on stoc0
option.
.he current status of IAS 3Indian Accounting Standards4(
In India- the State'ents on Accounting Standards are issued by the Institute 5f 9hartered Accountants of
India 3I9AI4 to establish standards that ha)e to be co'plied with to ensure that financial state'ents are
prepared in accordance with generally accepted accounting standards in India 3India GAAP 4. =ro' #:<% to
7$$$ the IAS9 has issued %7 accounting standards. .hese standards- as a 'atter of fact- 'ost of the countries
in the world- which are interested- and confidence in adopting these standards 'ay be followed. But it is
obser)ed that 'any countries are not adopting the standards in the presentation of accounting infor'ation.
Cith a )iew to e1a'ine the ti'e gap for indianisation of International Accounting Standards- the infor'ation
is analy/ed and presented in Anne1ure I. .he table shows that the a)erage gap for indianisation of
International Accounting Standards is F.#% years. It shows that for adopting IAS in India- it is ta0ing F.#%
years for one accounting standard. .his analysis points out the poor research wor0- and de)elop'ent in the
accounting field.
A significant criticis' of IASB
8 .hat the standards are too broad based and general to ensure that si'ilar accounting 'ethod is applied in
si'ilar circu'stances. =or Instance- the accounting for e1penses incurred under a Voluntary Ketire'ent
Sche'e 3 VKS 4 - in which the 'ethods used range fro' payasyougo to A'orti/ation of the present )alue
of future pension pay'ents o)er the period of benefit.
8 It 'ay be noted that in se)eral i'portant areas- when the Indian Standards are i'ple'ented- the accounting
treat'ent in these areas could lead to differences in the restate'ent of accounts in accordance with 2S GAAP
. So'e of these areas are(
9onsolidated financial state'ents
Accounting for ta1es on inco'e
=inancial Instru'ents
Intangible Assets
8 Kestate'ent to 2S GAAP (
A restate'ent of financial state'ents prepared under India GAAP to 2.S. GAAP re,uires careful planning in
the following areas(
In)ol)e'ent of personnel within the accounts function and the ti'e fra'e within which the tas0 is to be
co'pleted.
Identification of significant accounting policies that would need to be disclosed under 2.S. GAAP and the
differences that e1ist between India GAAP and 2.S. GAAP
.he e1tent of training re,uired within the organisation to create an awareness of the re,uire'ents under 2.S.
GAAP
Subsidiaries and associate co'panies and restate'ent of their accounts in confor'ity with 2.S. GAAP
Ad6ust'ent entries that are re,uired for con)ersion of India GAAP accounts.
Keconciliation of differences arising on restate'ent to 2.S. GAAP in respect of inco'e for the periods
under re)iew and for the state'ent of ShareholderIs e,uity.
8 .he ti'etable for restate'ent of the financial state'ents to 2S GAAP would depend upon the si/e of the
co'pany and the nature of its operations - the nu'ber of subsidiaries and associates . .he process of
con)ersion would nor'ally ta0e up to #F wee0s in a large co'pany in the initial year . It is thus necessary to
strea'line the accounting syste's to pro)ide for restate'ent to 2.S. GAAP on a continuing basis. At first
sight the restate'ent of financial state'ents in accordance with 2.S. GAAP appears to be for'idable.
Howe)er- as the Indian accounting standards are built on the foundation of international accounting standards-
on which a truly global GAAP 'ight be built- there is no cause for concern .
Another reason for the pre)ailing di)ergent accounting practices is the Accounting Standards- the pro)isions
of the Inco'e .a1 Act #:F# and Indian 9o'panies Act #:!F do not go together.
3a4 9o'pany law and Accounting Standards(
In India- though accounting standards setting is presently being done by I9AI- one could discern a tentati)e
and halfhearted foray by co'pany legislation in to the 'a0ing of accounting rules of Measure'ent and
reporting. .his action by itself is not the sore point but the failure to 0eep pace with the changes and
si'ultaneously not allowing scope for so'e one else to do it is disturbing.
A study of the re,uire'ent of co'pany law regarding the financial state'ents re)eal se)eral lacunae li0e
earning per share- infor'ation about future cash flows- consolidation- 'ergers- ac,uisitions etc.
3b4 Inco'e .a1 Act and Accounting Standards(
.he Inco'e .a1 Act does not recogni/e the accounting standards for 'ost of the ite's while co'puting
inco'e under the head LProfits & Gains of Business or ProfessionL. Section #D!374 of the I... Act has
e'powered the 9entral Go)ern'ent to prescribe accounting standards. .he standards prescribed so far
constitute a rehash of the related accounting standards prescribed by I9AI for corporate accounting. 5n a
close scrutiny of these standards one is left wondering about the purpose and )alue of this effort. &1a'ples
are application of prudence substance o)er for'- adherence to principles of going concern etc.
3c4 5ther regulations and accounting standards(
In respect of ban0s- financial institutions- and finance co'panies the Keser)e Ban0 of India 3KBI4 pronounces
policies a'ong others- re)enue recognition- pro)isioning and assets classifications.
Si'ilarly the =oreign &1change Dealers Association 3=&DAI4 pro)ides guidelines regarding accounting for
foreign e1change transactions. Since the Securities & &1change Board of India 3S&BI4 is an i'portant
regulatory body it would also li0e to ha)e its own accounting standards and in fact- it has started the process
by notifying cash flow reporting for'at. It is also in the process of issuing a standard on the accounting
policies for 'utual funds. It appears as if se)eral authorities in our country are 0een to ha)e a say in the
'atter of fra'ing accounting rules of 'easure'ent and reporting. .he tentati)e and half hearted legal and
regulatory inter)ention in accounting in our country- has co'e in the way of de)elop'ent of robust-
continuously e)ol)ing and dyna'ic accounting theory and standards.
9onclusion(
India is slowly entering the arena of accounting standards. But the progress of for'ulation of accounting
standards has been )ery slow co'pared with the de)elop'ents at international le)els.
Bringing about har'oni/ation in accounting practices a'ong countries throughout the world is indeed a )ery
for'idable tas0. .he )ision of a har'oni/ed accounting world 'ay inspire 'any 'inds but in the practical
field it is hard to go about e'bracing a situation where accounting principles and procedures are perfectly
har'oni/ed a'ong countries through out the world.
.he de)elop'ent of har'oni/ed accounting rules and a unifor'ity of approach a'ong countries towards
education and training of professional accountants should acco'pany principles. =urther 'ore- the
har'oni/ation of accounting rules and principles a'ong countries should also be acco'panied by inter
country har'oni/ation in auditing principles and standards. Har'oni/ation initiati)es are now wor0ing 'uch
'ore effecti)ely than e)er before. Many of the initial hurdles ha)e been o)erco'e and 'uch progress
towards har'oni/ing accounting principles and procedures a'ong countries has already been achie)ed.
Differences are still there but they are narrowing. It is e1pected that the pace of progress in the sphere of
har'oni/ation will accelerate further in the co'ing years.
A>>&M2K&I
@ist of Indian accounting standards adopted fro' IAS9 with ti'e gap in years
S. no. of Indian
Accounting
Standards
Year of Indian
Accounting Standards
Corresponding IAS
(International
Accounting Standards)
Year of issue of IAS
(International
Accounting Standards)
Time Gap
(in years)
1 1976 1 1975 4
2 1981 2 1975 6
3 1981 7 1977 4
4 1982 10 1978 4
5 1982 8 1978 4
6 1982 4 1976 6
7 1983 11 1979 4
8 1985 9 1978 7
9 1985 18 1982 3
10 1985 16 1982 3
11 1989 21 1983 6
12 1991 20 1983 8
13 1995 25 1986 9
14 1995 22 1983 12
15 1995 19 1983 12
K&=&K&>9&S(
8 Shri A.?. 9howdhury Ph.D.- Student- Depart'ent of Accounting- 2ni)ersity of Cestern Sydney- Australia
N L9o'pliance with accounting standards in India- why and howAL 3Manage'ent accountant- March 7$$$-
I9CAI.4
8 Dr. ?. Ka6i Keddy- reader in 9o''erce- Depart'ent of 9o''erce and Business Manage'ent- ?a0atiya
2ni)ersity- Carrangal 3A.P4 and Shri V Prud)i Ka6u- 9ounsellor- SD@9& Study 9entre- @.B. 9ollege-
Carrangal. N LAccounting standards and Gaps in Practices in India.L 3Manage'ent accountant- April 7$$$-
I9CAI.4.4
8 Dr. ;agannath Hati C - and Debdas Ka0shit @ecturer in 9o''erce- Sya'sundar 9ollege- Burdwan- Cest
Bengal. LIntegrating accounting standards O A step towards har'oni/ation L 3Manage'ent accountant-
I9CAI .4
8 http(PPwww.icai.orgPresourcePo*ac*standard.ht'l
8 http(PPwww.icai.orgPresourcePo*ac*standard.ht'l..he Indian &1press
8 India Infoline >ewsletterVineet Madan- IM. Gha/iabad LK&S.A.&M&>. 2>D&K 2S GAAPL

Prof. Vishwanathan Bharathan
Assistant Professor
Doddappa Appa Institute of MBA
S.B.9ollege 9o'ple1- Gulbarga!"!#$%
&'ail( )*bharathan+hot'ail.co'

Indian and International A""ounting Standards Pra"ti"es
By
Prof. 7ishCanathan &harathan
Assistant Professor
%oddappa Appa Institute of M&A
Gulbarga-585103
E-mail: v_bharathan@hotmail.com

Introdu"tion-
Accounting Standards are used as one of the main compulsory regulatory mechanisms for preparation of
general-purpose financial reports and subsequent audit of the same, in almost all countries of the world.
Accounting standards are concerned with the system of measurement and disclosure rules for
preparation and presentation of financials statements. They appear with a set of authoritative
statements of how particular types of transactions, events and other costs should be recognized and
reported in the financial statements. Accounting standards are devised to furnish useful information to
different users of the financial statements, to such as shareholders, creditors, lenders, management,
investors, suppliers, competitors, researchers, regulatory bodies and society at large and so on. In fact,
such statements are designed and prescribed so as to improve & benchmark the quality of financial
reporting.
The rapid growth of international trade and internationalization of firms, the Developments of new
communication technologies, the emergence of international competitive forces is perturbing the
financial environment to a great extent. Under this global business scenario, the residents of the
business community are in badly need of a common accounting language that should be spoken by all of
them across the globe. A financial reporting system of global standard is a pre-requisite for attracting
foreign as well as present and prospective investors at home alike that should be achieved through
harmonization of accounting standards.
Accounting Standards are the policy documents (authoritative statements of best accounting practice)
issued by recognized expert accountancy bodies relating to various aspects of measurement, treatment
and disclosure of accounting transactions and events. As relate to the codification of Generally Accepted
Accounting Principles (GAAP). These are stated to be norms of accounting policies and practices by way
of codes or guidelines to direct as to how the items, which go to make up the financial statements
should be dealt with in accounts and presented in the annual accounts. The aim of setting standards is
to bring about uniformity in financial reporting and to ensure consistency and comparability in the data
published by enterprises.
$b.e"ti+es of the study
The Paper is presented with the following objectives:
1. To understand the various Accounting standards that exit as of now, and the governing bodies of
such accounting standards.
2. To understand the significance of harmonizing global accounting standards
3. To understand the issues in globalizing the accounting standards
A""ounting standards pre+alent all a"ross the Corld-
* Accounting standards are being established both at national and international levels. But the variety of
accounting standards and principles among the nations of the world has been a sustainable problem for
globalizing the business environment.
* There are several standard setting bodies and organizations that are now actively involved in the
process of harmonization of accounting practices. The most remarkable phenomenon in the sphere of
promoting global harmonization process in accounting is the emergence of international accounting
standards.
* The International Accounting Committee (IASC), now International Accounting Standards Board
(IASB) was formed on 29th June 1973, by the recognized professional accounting bodies in Canada,
Australia, France, Japan, Germany, Mexico, Netherlands, United Kingdom and the United States of
America, with its secretariat and head quarters in London.
* National standard setting bodies like Financial Accounting Standards Boards (FASB) of USA,
Accounting Standards Boards (ASB) of UK, and Indian Accounting Standards (IAS) in India generally
frame accounting standards in the line of IASC after due consideration of the local laws and conditions.
* In India the Accounting Standards Board (ASB) was constituted by the Institute of Chartered
Accountants of India (ICAI) on 21st April 1977 with the function of formulating accounting standards.
%o Ce need to harmoni9e the a""ounting standards of different bodies)
Different companies observe it from published annual accounts of various Indian companies that there
are divergent accounting practices for the same transaction. This in effect is defeating the comparability
of financial statements.
The reasons for the different accounting practices may be:
a) Too many alternative accounting treatments in the accounting standards;
b) Lack of harmony among government, standards setting body, and regulatory agencies;
* Adoption of different accounting standards causes difficulties in making relative evaluation of
performance of companies. This phenomenon hinders the valuation and consequently the decision
making process.
* To overcome these problems, harmonization of accounting standards has already been started.
Accounting harmonization is not an end by itself, but it is a means to an end. The ultimate objective of
harmonizing accounting practices among countries is to foster international comparability of accounts.
* But still the harmonization process has a long way to go. Many standard setting bodies and regulators
of different nations are ardent protectors of their local standards, they are in no mood to allow their job
being taken over by a foreign entity.
* Thus winning the consent of these bodies is vital for international accounting standards to don the
mantle of common accounting code, i.e. harmonization of common accounting standards, which will
make implementing countries more competitive internationally.
* Accounting standards vary from one country to another. There are various factors that are responsible
for this. Some of the important factors are
- legal structure
- sources of corporate finance
- maturity of accounting profession
- degree of conformity of financial accounts
- government participation in accounting and
- Degree of exposure to international market.
* Diversity in accounting standards not only means additional cost of financial reporting but can cause
difficulties to multinational groups in the manner in which they undertake transactions. It is quite
possible for a transaction to give rise to a profit under the accounting standards of one country where as
it may require a deferral under the standards of another.
- When a multinational company (MNC) has to report under the standards of both the countries it might
lead to some extremely odd results. For instance, Daimler Benz, who was the first German to secure
stock market listing in the United States, reported a net profit of DM 158 m for the six months to June
1998 based on German GAAP. The U.S GAAP reconciliation statement revealed that the company had
incurred a loss of DM. 949m.
- Similarly, British Telecom Inc. reported a net profit of 1767 for the year ended 31-3-1994 under the
UK GAAP but under the US GAAP reconciliation- the net profit reduced to 1476.
- Although there are different solutions that have been suggested to resolve the problems associated
with filling financial statements across national boundaries like reciprocity and reconciliation, but they
not free from limitations. International accounting standards serves the purpose of reducing diversity in
accounting practices but invites qualitative differences of financial accounting and reporting systems.
* Again these qualitative differences may be removed if a single set of internationally accepted
standards can be used for all cross-border listed financial statements. These differences may be reduced
if the recognized professional accounting bodies of the world arrange a happy marriage between the
national and international accounting standards.
- Issues in adopting global accounting standards: -There seems to be a reluctance to adopt the
International Accounting Standards Committee (IASC) norms in the US?
This is definitely a problem. The US is the largest market and it is important for IASC standards to be
harmonized with those prevailing there. The US lobby is strong, and they have formed the G4 nations,
with the UK, Canada, and Australia (with New Zealand) as the other members. IASC merely enjoys
observer status in the meetings of the G4, and cannot vote. Even when the standards are only slightly
different, the US accounting body treats them as a big difference, the idea being to show that their
standards are the best. We have to work towards bringing about greater acceptance of the IASC
standards.
- How real is the threat from G4?
G4 has evolved as a standard setting body and has recently issued its first standard on pooling of
interest method. (Mergers can either be in the nature of purchase or in the form of pooling of interest
like HLL-BBLIL). It is also expected to publish new or revised papers on reporting financial performance,
business combinations, joint ventures, leases, and contributions. So far, the FASB (the US standard
setting body) was the world's standard setter because of mandatory compliance with US GAAP for listing
on the New York Stock Exchange (NYSE). The US congress had to, however, step in and overrule the
FASB standard on stock option.
!he "urrent status of IAS 2Indian A""ounting Standards3-
In India, the Statements on Accounting Standards are issued by the Institute Of Chartered Accountants
of India (ICAI) to establish standards that have to be complied with to ensure that financial statements
are prepared in accordance with generally accepted accounting standards in India (India GAAP ). From
1973 to 2000 the IASC has issued 32 accounting standards. These standards, as a matter of fact, most
of the countries in the world, which are interested, and confidence in adopting these standards may be
followed. But it is observed that many countries are not adopting the standards in the presentation of
accounting information. With a view to examine the time gap for indianisation of International
Accounting Standards, the information is analyzed and presented in Annexure - I. The table shows that
the average gap for indianisation of International Accounting Standards is 6.13 years. It shows that for
adopting IAS in India, it is taking 6.13 years for one accounting standard. This analysis points out the
poor research work, and development in the accounting field.
A significant criticism of IAS;
* That the standards are too broad based and general to ensure that similar accounting method is
applied in similar circumstances. For Instance, the accounting for expenses incurred under a Voluntary
Retirement Scheme ( VRS ) , in which the methods used range from pay-as-you-go to Amortization of
the present value of future pension payments over the period of benefit.
* It may be noted that in several important areas, when the Indian Standards are implemented, the
accounting treatment in these areas could lead to differences in the restatement of accounts in
accordance with US GAAP . Some of these areas are:
- Consolidated financial statements
- Accounting for taxes on income
- Financial Instruments
- Intangible Assets
* Restatement to US GAAP :
A restatement of financial statements prepared under India GAAP to U.S. GAAP requires careful planning
in the following areas:
- Involvement of personnel within the accounts function and the time frame within which the task is to
be completed.
- Identification of significant accounting policies that would need to be disclosed under U.S. GAAP and
the differences that exist between India GAAP and U.S. GAAP
- The extent of training required within the organisation to create an awareness of the requirements
under U.S. GAAP
- Subsidiaries and associate companies and restatement of their accounts in conformity with U.S. GAAP
- Adjustment entries that are required for conversion of India GAAP accounts.
- Reconciliation of differences arising on restatement to U.S. GAAP in respect of income for the periods
under review and for the statement of Shareholder's equity.
* The timetable for restatement of the financial statements to US GAAP would depend upon the size of
the company and the nature of its operations , the number of subsidiaries and associates . The process
of conversion would normally take up to 16 weeks in a large company in the initial year . It is thus
necessary to streamline the accounting systems to provide for restatement to U.S. GAAP on a continuing
basis. At first sight the restatement of financial statements in accordance with U.S. GAAP appears to be
formidable. However, as the Indian accounting standards are built on the foundation of international
accounting standards, on which a truly global GAAP might be built, there is no cause for concern .
Another reason for the prevailing divergent accounting practices is the Accounting Standards, the
provisions of the Income Tax Act 1961 and Indian Companies Act 1956 do not go together.
2a3 Company laC and A""ounting Standards-
In India, though accounting standards setting is presently being done by ICAI, one could discern a
tentative and halfhearted foray by company legislation in to the making of accounting rules of
Measurement and reporting. This action by itself is not the sore point but the failure to keep pace with
the changes and simultaneously not allowing scope for some one else to do it is disturbing.
A study of the requirement of company law regarding the financial statements reveal several lacunae
like earning per share, information about future cash flows, consolidation, mergers, acquisitions etc.
2b3 In"ome !aF A"t and A""ounting Standards-
The Income Tax Act does not recognize the accounting standards for most of the items while computing
income under the head "Profits & Gains of Business or Profession". Section 145(2) of the I.T. Act has
empowered the Central Government to prescribe accounting standards. The standards prescribed so far
constitute a rehash of the related accounting standards prescribed by ICAI for corporate accounting. On
a close scrutiny of these standards one is left wondering about the purpose and value of this effort.
Examples are application of prudence substance over form, adherence to principles of going concern etc.
2"3 $ther regulations and a""ounting standards-
In respect of banks, financial institutions, and finance companies the Reserve Bank of India (RBI)
pronounces policies among others, revenue recognition, provisioning and assets classifications.
Similarly the Foreign Exchange Dealers Association (FEDAI) provides guidelines regarding accounting for
foreign exchange transactions. Since the Securities & Exchange Board of India (SEBI) is an important
regulatory body it would also like to have its own accounting standards and in fact, it has started the
process by notifying cash flow reporting format. It is also in the process of issuing a standard on the
accounting policies for mutual funds. It appears as if several authorities in our country are keen to have
a say in the matter of framing accounting rules of measurement and reporting. The tentative and half
hearted legal and regulatory intervention in accounting in our country, has come in the way of
development of robust, continuously evolving and dynamic accounting theory and standards.
Con"lusion-
India is slowly entering the arena of accounting standards. But the progress of formulation of accounting
standards has been very slow compared with the developments at international levels.
Bringing about harmonization in accounting practices among countries throughout the world is indeed a
very formidable task. The vision of a harmonized accounting world may inspire many minds but in the
practical field it is hard to go about embracing a situation where accounting principles and procedures
are perfectly harmonized among countries through out the world.
The development of harmonized accounting rules and a uniformity of approach among countries towards
education and training of professional accountants should accompany principles. Further more, the
harmonization of accounting rules and principles among countries should also be accompanied by inter
country harmonization in auditing principles and standards. Harmonization initiatives are now working
much more effectively than ever before. Many of the initial hurdles have been overcome and much
progress towards harmonizing accounting principles and procedures among countries has already been
achieved. Differences are still there but they are narrowing. It is expected that the pace of progress in
the sphere of harmonization will accelerate further in the coming years.
A//'D,R'BI
*ist of Indian a""ounting standards adopted from IASC Cith time gap in years
S. no. of Indian
Accounting
Standards
Year of Indian
Accounting Standards
Corresponding IAS
(International
Accounting Standards)
Year of issue of IAS
(International
Accounting Standards)
Time Gap
(in years)
1 1976 1 1975 4
2 1981 2 1975 6
3 1981 7 1977 4
4 1982 10 1978 4
5 1982 8 1978 4
6 1982 4 1976 6
7 1983 11 1979 4
8 1985 9 1978 7
9 1985 18 1982 3
10 1985 16 1982 3
11 1989 21 1983 6
12 1991 20 1983 8
13 1995 25 1986 9
14 1995 22 1983 12
15 1995 19 1983 12
R'8'R'/C'S-
* Shri A.K. Chowdhury Ph.D., Student, Department of Accounting, University of Western Sydney,
Australia - "Compliance with accounting standards in India, why and how?" (Management accountant,
March 2000, ICWAI.)
* Dr. K. Raji Reddy, reader in Commerce, Department of Commerce and Business Management,
Kakatiya University, Warrangal (A.P) and Shri V Prudvi Raju, Counsellor, SDLCE Study Centre, L.B.
College, Warrangal. - "Accounting standards and Gaps in Practices in India." (Management accountant,
April 2000, ICWAI.).)
* Dr. Jagannath Hati W , and Debdas Rakshit Lecturer in Commerce, Syamsundar College, Burdwan,
West Bengal.- "Integrating accounting standards - A step towards harmonization " (Management
accountant, ICWAI .)
* http://www.icai.org/resource/o_ac_standard.html
* http://www.icai.org/resource/o_ac_standard.html.The Indian Express
* India Infoline Newsletter-Vineet Madan, IMT Ghaziabad "RE-STATEMENT UNDER US GAAP"
7endor %e+elopment and Supply Chain Management
By
7ishCanathan &harathan
Assistant Professor
%oddappa Appa Institute of M&A
S.B.College Complex, Gulbarga-585103
E-mail: v_bharathan@hotmail.com

What is supply chain management?
Supply chain management is the combination of art and science that goes into improving the way your
company finds the raw components it needs to make a product or service, manufactures that product or
service and delivers it to customers.
The following are five basic components for supply chain management.
1. Plan-This is the strategic portion of supply chain management. You need a strategy for managing all
the resources that go toward meeting customer demand for your product or service. A big piece of
planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and
delivers high quality and value to customers.
2. Source-Choose the suppliers that will deliver the goods and services you need to create your product
or service. Develop a set of pricing, delivery and payment processes with suppliers and create metrics
for monitoring and improving the relationships. And put together processes for managing the inventory
of goods and services you receive from suppliers, including receiving shipments, verifying them,
transferring them to your manufacturing facilities and authorizing supplier payments.
3. Make-This is the manufacturing step. Schedule the activities necessary for production, testing,
packaging and preparation for delivery. As the most metric-intensive portion of the supply chain,
measure quality levels, production output and worker productivity.
4. Deliver-This is the part that many insiders refer to as "logistics." Coordinate the receipt of orders
from customers, develop a network of warehouses, pick carriers to get products to customers and set
up an invoicing system to receive payments.
5. Return-The problem part of the supply chain. Create a network for receiving defective and excess
products back from customers and supporting customers who have problems with delivered products.
Of the above Five components, SOURCING becomes the most significant one, which inter-link all other
components.
The objective of sourcing is the identification and selection of the Supplier whose costs, qualities,
technologies, timeliness, dependability and service best meet the firm's needs. Strategic Sourcing is a
systematic process that directs a Supply manager's plan, to manage and develop the supply base in line
with a firm's strategic objectives. It is the application of current best practices to achieve the full
potential of integrating suppliers into the long-term business process.
What is Vendor Development?
Vendor development is one of the popular techniques of strategic sourcing, which improves the value we
receive from suppliers. Vendor Development can be defined as any activity that a Buying Firm
undertakes to improve a Supplier's performance and capabilities to meet the Buying Firms' supply
needs.
Buying Firms use a variety of activities to improve Supplier performance, which includes,
* Assessing Suppliers' operations
* Providing incentives to improve performance
* Instigating competition among Suppliers
* Working directly with Suppliers either through training or other activities etc.,
The Key areas identified for detailed study under the present paper are:
1. Importance of Sourcing in Supply Chain Management
2. Best Practices in Vendor development
3. Collaboration between Customer and Supplier
4. Supplier Development Processes
5. Supplier Development Project Charter
6. Barriers to Supplier Development activities
7. Analyze & understand a Real-time Organization's Supplier development Program
1. Importan"e of Sour"ing in Supply Chain Management
* Sourcing in recent years has become much more proactive than it once was.
* To day, professional supply manager work with the organization's engineers in an effort to ensure that
the firm's supply base will support the firm's technology requirements now and in an uncertain future.
* The Organization's information system allows supply managers to study the aggregation of its supply
requirements.
* The professional supply managers then determine the most appropriate type of buyer-supplier
relationship for each relevant commodity class, study their existing supplier base, and plan action to
ensure that the base will meet the organization's needs efficiently and effectively.
* These activities, frequently called ' strategic sourcing' form the key components of World Class Supply
Chain Management (WCSCM).
4. &est Pra"ti"es in 7endor de+elopment
Following are few of the Best Practices in Vendor development if adopted successfully would enable
World Class Supply Chain Management (WCSCM).
* Creating dedicated supply developments teams.
* Teaching a supplier on the tactics of self-development, after initial guidance from the supplier
development team.
* Focusing on underlying causes of long cycle times.
* Involving suppliers in new product and process development at the buying firm.
* Providing on-line training programs and off-line education programs to suppliers.
* Conducting frequent improvement-focused seminars for suppliers.
* Creating supplier support centers at their locations itself.
* Loaning-out process engineers and quality managers to share their expertise with suppliers.
* Setting 'stretch goals' to encourage radical change as well as continuos improvement schemes for
suppliers.
* Improving proper metrics for supplier development improvements.
* Sharing the savings from supplier development activities with suppliers.
* Last, but not the least, Improving the supplier's supply management system.
6. Collaboration betCeen Customer and Supplier
WCSCM requires a commitment to collaboration between customer and supplier. The commitment must
be approached with mutual benefit in mind. Effective supplier development is more than getting cost
reduction for a particular part; it means helping suppliers remove wasteful costs from their processes.
The strategic intent is to create win-win situation wherein both the buyer and supplier gain.
* Collaboration requires COMMITMENT on the part of the buying firm
- to provide financial assistance for supplier investment needs,
- to share all savings from supplier development projects,
- to educate supplier on waste management techniques, improve quality, better delivery, reduce cycle-
times, reduce costs etc.,
- to treat supplier as if, they are a department within the buying company
* Collaboration requires COMMUNICATION on the part of the buying firm ,
- to ensure that supplier is well informed of all aspects of the supplier development programs.
- to provide a very transparent feed-back system available to suppliers on their reaction to all supplier
development initiatives of the buying firm
* Collaboration requires MEASUREMENT mechanism
- to ensure that all members of the supplier development programs, are benefited
- to ensure success of the collaboration efforts, there must be transparency in sharing accurate costs of
both the parties.
* Collaboration requires TRUST building measures between the parties
- to ensure that mutual beliefs and trust between the two organizations personnel must be present,
while sharing all confidential information.
;. Supplier %e+elopment Pro"esses
A generalized process for managing supplier development projects is presented in following six phases;
Phase-1: Initiating the Project
The main activities are to develop and confirm a preliminary supplier development charter, define the
supplier's processes, assess the cusomer's needs and assess the business environment.
Phase-2: Mapping and measuring
In this phase, the team maps the supplier's process and determines the measurement required.
Deliverable from this phase include: process maps, a final project charter and a baseline of "before"
process improvement status.
Phase-3: Developing the Process
In this phase, a project implementation plan that addresses performance gaps in current processes and
identifies measures to bridge the same. The following critical activities occur in this phase: create
solutions, select solutions, develop new processes, plan implementations and so on.
Phase-4: Achieving Results
The Project team executes the implementation plan, conducting any necessary simulations, pilots and
releases the outcomes. The deliverables from this phase are a new, lean process that has been
implemented, documented and is actually demonstrating results.
Phase-5: Controlling the Process
In this phase, plans and documents are created to ensure consistent implementation of the process with
minimized variation. Ongoing metrics are defined to allow review of the process. A closed-loop
corrective action procedure system is identified to review the process, address gaps in performance, and
continuously improve performance. The deliverables from this phase are a process control plan and a
corrective action plan.
Phase-6: Recognizing the team
The final phase provides team recognition. Activities are organized by the project team, project
champion and process owners to promote the success of the project. In this phase, the team shares the
lessons learned and best practices with the suppliers.
<. Supplier %e+elopment Pro.e"t Charter
The supplier development project charter is a dynamic document that is continually updated during the
planning, execution and completion of a supplier development project. It generally consists of the
following sections:
* Business's Case-A Business case to financially assess the projects estimated savings and other
benefits.
* Situation and goals - a qualitative and quantitative description of the current situation and the goals
for improvement are documented.
* Mission/Vision- The Project's mission and Visions statements need to be identified to be able to
communicate quickly to others on the areas of development, the team is trying to achieve.
* Project scope- Clarifying project scope helps to assure the team has narrowed the project focus by
refining its understanding of the activities required to complete the project.
* Schedule and Deliverables-A common approach in this section is to provide for developing PERT
(Program Evaluation and Review Technique) or Gantt Chart
* Assignments and roles- this sections simply documents who is responsible for what activities.
* Signatures- Signatures are required from the upper management of all participating companies as well
as key participants when establishing the charter as an official document.
=. &arriers to supplier de+elopment
There are many barriers to effective supplier development, such as,
* Poor communication and feedback
* Complacency
* Misguided improvement objectives
* Credibility of customers
* Misconception regarding purchasing power
* Lack of clarity and commitment
* Lack of a unified approach
* Misaligned sourcing and performance metrics
* Concealment problems
* Initiative fatigue
* Resource limitations
* "Blame the supplier" culture
* Lack of trust
* Confidential issues
* Legal issues and
* Imbalance of power in the relationship.
>. Supply Chain Management at Asho5 *eyland limited# Chennai 2Case study3
Based on the above Key areas of supplier development identified, an attempt has been made in this
study to understand the supplier development program followed in a Professional Organisation in real
times. It has been found that the Automobile Giant Ashok Leyland Ltd, Chennai, has got one of the very
successful Supplier development Program as part of its World-Class Supply Chain Management.
Mission Statement of the Company- "Our Vendors are our valued partners in our business
development and we shall work with them in a spirit of mutual co-operation to meet our business
objectives."
* Vendor Development and Strategic Sourcing are handled by Corporate Materials Department (CMD).
- CMD identifies the vendors, rates the vendors based on feedback received from Supplier Quality
Assurance Cell, sends drawings / specifications, calls for quotes with detailed break-up of operation-wise
costs, and negotiates the price at which the parts will be supplied.
- In addition to CMD at Ennore, and the two Units at Hosur, there are Materials Management
Departments (MMDs) for scheduling based on unit production plan.
* Vendor Development of Strategic Sources
- Strategic Sourcing is central to the integrated Materials Management function. Ashok Leyland's policy
is to develop a vendor base committed to continuous improvement to meet quality, cost and delivery
standards.
- Ashok Leyland considers its vendors as partners in progress and believes in establishing mutually
beneficial relationships. Ashok Leyland provides necessary technical assistance in the form of Project
and Production Engineering, to maintain quality levels. In addition, where required, Ashok Leyland also
helps vendors financially.
* Becoming a Vendor to Ashok Leyland is easy, involving just four steps
- Fill the Questionnaire. As this provides the basic inputs required for preliminary study, applicants need
to provide as much information as possible.
- If Ashok Leyland needs the item you would like to supply, CMD will inform Ashok Leyland's Supplier
Quality Assurance Cell (SQA) for an on-site assessment. Otherwise, the Vendor information is stored for
future reference.
- If SQA approves the vendor, then CMD will send the drawings for SQA cleared components to the
Vendor for obtaining a quotation. If, instead of approving the vendor, SQA recommends improvements
to facilities, the Vendor is given adequate feedback and a re-survey is undertaken at a mutually agreed
future date.
- If the Vendor matches Ashok Leyland's expectations in terms of price, quality and delivery, then CMD
places a trial order with the Vendor. Both on-line and off-line inspection may be carried out at the time
of processing the trial order. Based on the outcome of the trial order, CMD may place the Vendor in the
Approved Vendor List.
* Some of the relevant points to note
- Ashok Leyland's Purchasing Philosophy is to maximize bought-out parts. Over 90% of the parts are
bought-out.
- Ashok Leyland believes in global sourcing. Consistent with its operational needs, AL would consider
both domestic (Indian) as well as international vendors. Global sourcing is normally resorted to
overcome local constraints - in the form of technology, quality, capacity or cost effectiveness.
- Ashok Leyland would consider new suppliers for required components, based on Vendors' ability to
meet our specification, price and delivery schedules.
- Vendors are required to have a strong manufacturing base with adequate engineering support for their
own product development activities, as needed by the category of product, viz Proprietary, Bought Out
Finished (BOF), Bought Out Rough (BOR) and Sheet Metal items. Castings and forgings are to be
received in fully finished/machined condition, progressively. Ashok Leyland could make available to the
vendors necessary technical expertise, wherever possible and needed, particularly with regard to
developing the manufacturing process.
- As QS 9000 certified company, Ashok Leyland's Vendors are expected to have a good quality system,
meeting ISO 9000 requirements. Ashok Leyland would be willing to help Vendors in the preparation for
ISO certification by offering necessary technical guidance.
- Vendors' quality system should encompass, at the minimum Cost effective process, Assured process
capability, Continuous improvements based on customer feedback, Compliance of all statutory /legal/
commercial requirements of Ashok Leyland.
- A stage of development where the Vendor can come under Ashok Leyland's self-certification system
tractability - first-in first-out basis and Ashok Leyland has established a transparent periodically audited
Vendor Rating System. Ashok Leyland places emphasis on optimizing the inventory and Vendors are
required to progressively meet "Just-in-Time" requirements. Delivery modes as well as packaging are
required to minimize the handling/loading and unloading time.
- Though not a must, Ashok Leyland would prefer a manufacturing / assembly / support base at close
proximity to the production units. Ashok Leyland encourages its vendors to participate in their e-
servicing project starting fiscal year 2004-05.
8. Conclusion:
Supplier development is one of the most powerful approaches that a firm can engage in / on the path to
World-Class Supply Chain Management. The focus should be on developing suppliers to become self-
sufficient at Developing, Implementing and maintaining World-Class performance. Also supply
management becomes the key to supply chain management ONLY through development efforts, that go
beyond the first tier of suppliers.
R'8'R'/C'S-
* David N.Burt, University of San Diego, Donald W.Dobler, Stephen L.Staling - "World Class Supply
Management - the Key to Supply Chain Management" Tata McGraw-Hill Publishing Company Limited
* www.ashokleyland.com/Web/vendoropportunities.jsp - 26k
* Darwin Executive Guide-Supply Chain

7ishCanathan &harathan
Assistant Professor
%oddappa Appa Institute of M&A
S.B.College Complex, Gulbarga-585103
E-mail: v_bharathan@hotmail.com
8inan"ial %eri+ati+es Mar5et and its %e+elopment in India
By
%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli-365 601 GJ
E-mail: vijaypithadia@lycos.com
Mr. 7ishal Patidar
Lecturer of Accounts & Finance
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli-365 601 GJ
E-mail: vishal_patidar2003@yahoo.com Mobile: 9825718723

Key (ords
Swaps, options, futures, forwards, financial markets
Abstra"t
With globalization of the financial sector, it's time to recast the architecture of the financial market. The
liberalized policy being followed by the Government of India and the gradual withdrawal of the
procurement and distribution channel necessitated setting in place a market mechanism to perform the
economic functions of price discovery and risk management. Till the mid - 1980's, the Indian financial
system did not see much innovation. In the last 18 years, financial innovation in India has picked up and
it is expected to grow in the years to come, as a more liberalized environment affords greater scope for
financial innovation at the same time financial markets are, by nature, extremely volatile and hence the
risk factor is an important concern for financial agents. To reduce this risk, the concept of derivatives
comes into the picture. Derivatives are products whose values are derived from one or more basic
variables called bases. India is traditionally an agriculture country with strong government intervention.
Government arbitrates to maintain buffer stocks, fix prices, impose import-export restrictions, etc. This
paper focuses on the basic understanding about derivatives market and its development in India.
Introdu"tion
Derivatives are financial contracts whose values are derived from the value of an underlying primary
financial instrument, commodity or index, such as: interest rates, exchange rates, commodities, and
equities. Derivatives include a wide assortment of financial contracts, including forwards, futures, swaps,
and options. The International Monetary Fund defines derivatives as ,financial instru&ents that are
linked to a specific financial instru&ent or indicator or co&&odity and through )hich specific financial
risks can #e traded in financial &arkets in their o)n right. The %alue of financial deri%ati%es deri%es fro&
the price of an underlying ite&+ such as asset or index. -nlike de#t securities+ no principal is ad%anced
to #e repaid and no in%est&ent inco&e accrues., While some derivatives instruments may have very
complex structures, all of them can be divided into basic building blocks of options, forward contracts or
some combination thereof. Derivatives allow financial institutions and other participants to identify,
isolate and manage separately the market risks in financial instruments and commodities for the
purpose of hedging, speculating, arbitraging price differences and adjusting portfolio risks.
The emergence of the market for derivatives products, most notable forwards, futures, options and
swaps can be traced back to the willingness of risk-averse economic agents to guard themselves against
uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets can
be subject to a very high degree of volatility. Through the use of derivative products, it is possible to
partially or fully transfer price risks by locking-in asset prices. As instruments of risk management,
derivatives products generally do not influence the fluctuations in the underlying asset prices. However,
by locking-in asset prices, derivatives products minimize the impact of fluctuations in asset prices on the
profitability and cash flow situation of risk-averse investors.
Factors generally attributed as the major driving force behind growth of financial derivatives are:
(a) Increased Volatility in asset prices in financial markets,
(b) Increased integration of national financial markets with the international markets,
(c) Marked improvement in communication facilities and sharp decline in their costs,
(d) Development of more sophisticated risk management tools, providing economic agents a wider
choice of risk management strategies, and
(e) Innovations in the derivatives markets, which optimally combine the risks and returns over a large
number of financial assets, leading to higher returns, reduced risk as well as transaction costs as
compared to individual financial assets.
%e+elopment of eF"hangeBtraded deri+ati+es
Derivatives have probably been around for as long as people have been trading with one another.
Forward contracting dates back at least to the 12th century, and May well have been around before
then. Merchants entered into contracts with one another for future delivery of specified amount of
commodities at specified price. A primary motivation for pre-arranging a buyer or seller for a stock of
commodities in early forward contracts was to lessen the possibility that large swings would inhibit
marketing the commodity after a harvest.
!he need for a deri+ati+es mar5et
The derivatives market performs a number of economic functions:
1. They help in transferring risks from risk adverse people to risk oriented people
2. They help in the discovery of future as well as current prices
3. They catalyze entrepreneurial activity
4. They increase the volume traded in markets because of participation of risk adverse people in greater
numbers
5. They increase savings and investment in the long run
!ypes of %eri+ati+es
Derivative contracts have several variants. The most common variants are forwards, futures, options
and swap.
8orCard Contra"ts
A forward contract is an agreement between two parties - a buyer and a seller to purchase or sell
something at a later date at a price agreed upon today. Forward contracts, sometimes called for)ard
co&&it&ents, are very common in everyone life. For example, an apartment lease is a forward
commitment. By signing a one-year lease, the tenant agrees to purchase the service - use of the
apartment - each month for the next twelve months at a predetermined rate. Like-wise, the landlord
agrees to provide the service each month for the next twelve months at the agreed-upon rate. Now
suppose that six months later the tenant finds a better apartment and decides to move out. The forward
commitment remains in effect, and the only way the tenant can get out of the contract is to sublease
the apartment. Because there is usually a market for subleases, the lease is even more like a futures
contract than a forward contract.
Any type of contractual agreement that calls for the future purchase of a good or service at a price
agreed upon today and without the right of cancellation is a forward contract.
8uture Contra"ts
A futures contract is an agreement between two parties - a buyer and a seller - to buy or sell
something at a future date. The contact trades on a futures exchange and is subject to a daily
settlement procedure. Future contracts evolved out of forward contracts and possess many of the same
characteristics. In essence, they are like liquid forward contracts. Unlike forward contracts, however,
futures contracts trade on organized exchanges, called future markets. For example, the buyer of a
future contact, who has the obligation to buy the good at the later date, can sell the contact in the
future market, which relieves him or her of the obligation to purchase the good. Likewise, the seller of
the futures contract, who is obligated to sell the good at the later date, can buy the contact back in the
future market, relieving him or her of the obligation to sell the good. Future contacts also differ from
forward contacts in that they are subject to a daily settlement procedure. In the daily settlement,
investors who incur losses pay them every day to investors who make profits.
$ptions Contra"ts-
Options are of two types - calls and puts. Calls give the buyer the right but not the obligation to buy a
given quantity of the underlying asset, at a given price on or before a given future date. Puts give the
buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on
or before a given date.
SCap
Swaps are private agreements between two parties to exchange cash flows in the future according to a
prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used
swaps are interest rate swaps and currency swaps.
Interest rate sCaps- These involve swapping only the interest related cash flows between the parties
in the same currency.
Curren"y sCaps- These entail swapping both principal and interest between the parties, with the cash
flows in one direction being in a different currency than those in the opposite direction.
%eri+ati+es Mar5et in India
Derivatives markets have had a slow start in India. The first step towards introduction of derivatives
trading in India was the promulgation of the Securities Laws (Amendments) Ordinance, 1995, which
withdrew the prohibition on options in securities. The market for derivatives, however, did not take off,
as there was no regulatory framework to govern trading of derivatives. SEBI set up a 24-member
committee under the Chairmanship of Dr. L.C. Gupta on 18th November 1996 to develop appropriate
regulatory framework for derivatives trading in India. The committee recommended that derivatives
should be declared as 'securities' so that regulatory framework applicable to trading of 'securities' could
also govern trading of securities. SEBI was given more powers and it starts regulating the stock
exchanges in a professional manner by gradually introducing reforms in trading. Derivatives trading
commenced in India in June 2000 after SEBI granted the final approval in May 2000. SEBI permitted the
derivative segments of two stock exchanges, viz NSE and BSE, and their clearing house/corporation to
commence trading and settlement in approved derivative contracts.
Introduction of derivatives was made in a phase manner allowing investors and traders sufficient time to
get used to the new financial instruments. Index futures on CNX Nifty and BSE Sensex were introduced
during 2000. The trading in index options commenced in June 2001 and trading in options on individual
securities commenced in July 2001. Futures contracts on individual stock were launched in November
2001. In June 2003, SEBI/RBI approved the trading in interest rate derivatives instruments and NSE
introduced trading in futures contract on June 24, 2003 on 91 day Notional T-bills. Derivatives contracts
are traded and settled in accordance with the rules, bylaws, and regulations of the respective exchanges
and their clearing house/corporation duly approved by SEBI and notified in the official gazette.
Sele"ted &ibliography-
1. Richard A. Brealey and Stewart C. Myers, Principles of Corporate Finance, Tata McGraw-Hill Publishing
Company Ltd.
2. Don M. Chance, Options and Futures, the Dryden Press.
3. Chartered Financial Analyst, the ICFAI University Press, December 2004.
4. The Financial Express, December 2004.
5. I.M. Pandey, Financial Management, 8th Edition, Vikas Publishing House, Mumbai, 2002.
%r. 7i.ay Pithadia# Assistant Professor & Kidevices Chair, S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen# Amreli-365 601 GJ, E-mail: vijaypithadia@lycos.com
Mr. 7ishal Patidar# Lecturer of Accounts & Finance, S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen# Amreli-365 601 GJ
E-mail: vishal_patidar2003@yahoo.com Mobile: 9825718723
EInno+ateE or E'+aporateE Health Insuran"e Se"tor in India
By
%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli-365 601 GJ
E-mail: vijaypithadia@lycos.com

Abstra"t-
India has approximated median denomination inhabitants of 250 million of which only 70 million are
insured. Insurance in India is now a US$ 7.5 billion industry and is poised to grow at a rate of 20% per
year as the industry is privatized and opened to the participation of foreign companies. In spite of the
fact that insulated from direct foreign investment in its insurance sector until recently, India has set
amelioration in course through the Insurance Regulatory Development Act (IRDA) which was made
official by the Indian Parliament in late 1999. After studying this lesson, the professional will be able to
grasp the current trends that are going to affect the Health Insurance sector and its impact on the
health status of the society. In the present paper I tried to explain the role of IRDA, and its influence on
the Insurance sectors. The professional can rate highly the role of Health Insurance sector in improving
the quality of health and emblematic of people life it is controlled to contribute in future course of time.
I
There is an ocean of transformation come to pass and going to occur in the Health Insurance sector,
both sublunary and sovereign. Globally, with noteworthy reference to the increasing cost etc., many
large insurance companies are planning to buy up hospitals and run on their won. The experiments are
going on. As a result of which many private organizations, corporate sector leaders drafted plans to
enter in to Health Insurance field. There is little or no surprise to note that the Mediclaim is absolutely
not the answer to the health care needs of the one billion people of this country. And Apollo Group
under the great visionary chairmanship of Dr. Pratap C. Reddy, who also pioneered the idea way back in
1980's, is preparing to make its presence felt substantially. Given the pressure on the Public health care
distribution system and the general shortage of resources being capable by government, private health
care and in turn the Private Insurance companies have large business potential.
What the country to day lacks is a far-reaching health care policy to improve the infrastructure in the
health sector. This will lead to an improvement in the health care segment and will also enable
Insurance companies to extend health insurance cover to a larger segment of the population. If there
are insufficient number of quality hospitals where the policyholders can be treated, then the number of
policies issued will have to be limited. The health care infrastructure can also grow to some extent on
the performance of the health Insurance sector, both directly and indirectly.
II
The New health Insurance players can look towards a substantial portion of the 200-300 million strong
middle classes for health insurance business. This will in turn provide a fillip to the growth of the health
care delivery system, both qualitatively and quantitatively. The poor who are not in a position to pay the
premiums demanded by the private players will have to be looked after by the public health care system
till they graduate to the premium paying stage. The government can help in relieving some burden on
the poorer sections of the society. It is important to note that the private companies should be very
cautious in preparing the organization and the executive channels to take care not to allow any
possibility of formation or development of a nexus between the doctors and the policyholders. The
involvement of experienced and qualified personnel at various levels of organization would be very
useful, and much more so if it is a medical doctor. It is also necessary to develop systematic structures
to provide preventive health care and also too early detection of disease processes, to the policyholders.
This aspect can help the insurer to contain the futuristic expenditure, as well as the risk management.
Since after the nationalization few decades ago, and now opening up of the Insurance sector to private
players, particularly with foreign players (partial participation) the people of India particularly the middle
class (about 200-300 million strong) are looking for a bright future and security throu the insurance
sector. This futuristic hope and expectations are more evident in the field of health Insurance sector,
mainly due to the escalating medical care. Hence Health Insurance and its need for appropriate
development in all respects is a must now and for future. The role of IRDA is going to be very important
in monitoring the activities of insurance at large.
It is to be expected and rightly so, that the to-day's customer // client is gradually becoming aware of
his rights and expects 'QUALITY' and value added services from his vendor. The Health Insurance sector
is no exception. The demands of the policyholders of a health insurance are the same if not more.
People may compromise with any service to some extent, but not with his health and his demand for
quality is rightly acceptable.
III
Are we to-day ready to face such challenging situation? Yes, provided we act fast and keep pace. Keep
up to date. The medical science is subliminal self growing and developing fast and very fast. And as
such the concepts and functioning of Health Insurance also varies. The current trends in the practice of
medical profession, e.g. Defensive medicine is going to tell upon the Health Insurance sector too.
However the IRDA is going to be an effective regulator of all activities and also acts as a guiding
principle in almost every activity.
It is only appropriate to consider here, that the opening up of the insurance sector has raised high hope
among people both in India and abroad. There are high expectations about how private insurer will fulfill
the aspirations of the customers (clients or the insured) in India by catering to all types of Health
insurance including Managed Health care. But the pace at which the privatization modalities, viz.,
granting of licenses and starting of the insurance operation in the last one year has begun to dilute
those expectations. Some of the major Health insurance players of the world like Cigna; Aetna and
others are still watching the Indian Insurance market from the fence. Others, who have got the license
for the general insurance, are not too keen or enthusiastic about the Health insurance, particularly about
the Managed Health Care. If the insurance reforms do not cater to the acute need of the customers for
Health care, the rationale for opening the insurance sector to competition may be at state.
Hence it is necessary that both the IRDA and the private Insurance should move in quickly to promote
the Health Insurance among the needy. Considering the current trends, that are expected to take shape
shortly, the private players are expected to consider seriously The Managed Health care systems to look
after their clients. As a result the third party Administrators (TPAs) are now going to become a main
stay of the Health Insurance Industry. The IRDA recently has notified the draft regulations during May
2001. They are briefly as follows.
1. Third party administrators will be allowed to enter into agreement s with more than one insures for
reducing health insurance services; but as TAPs they are barred from becoming directors of an
insurance company, insurance agents, or an intermediary.
2. The TPA will be required to start with a minimum working capital of Rs. ONE CRORE.
3. The license will be renewed every Third year by the IRDA.
4. TPAS would also have to maintain and report to the IRDA on transaction carried out on behalf of the
insurer. But this would not include trade secrets, including identity and addresses of policyholders.
5. The IRDA has also drawn up a code of conduct' for the TPAs refraining them from trading in
information, submitting wrong information to insures and making advertisement s with out prior
approval of the insurer among other things.
6. A TPA also has to undergo a training of minimum three months in the field of Health insurance and
have access to competent medical professionals to advise the insurance companies and the client on
various matters.
7. The TPA has to spell out the scope of services that it will deliver, while getting in to an agreement
with an insurance company.
The above draft guidelines are open for suggestions till May 15, to develop the guidelines keeping in
view to develop them further to the local requirement, and the final regulations will be published after
wards.
IV
The IRDA is shortly coming out with norms for the policyholders protection and also TPAs for the Rs.
90,000 crore Health Insurance Sector by the end of April 2001 (vide supra). According to IRDA
chairman, N.Rangachary, the regulators are in the process of drafting several norms and it would be
ready by the end of April 2001. Although TPAs initially wanted marketing rights of insurers, he said
there has been some amount of understanding between the insurers and TAPs to develop the health
insurance sector. As mentioned earlier, the IRDA sources said that the health insurance sector in India
was estimated at Rs. 90,000 crore and is, expected to grow by ten percent every year. The TPAs, which
may be hospitals or other agencies, can accelerate this growth rate by assisting insurers through faster
claim settlement, quality hospital services etc. The following data indicates the status of select Asian
Countries, with reference to their National incomes and their Health expenditure both in public and
private sectors.
The data shows the need for an insight in to the Health care expenditures of those countries and also
the necessary steps that may have to be taken to improve the health status of their people. The data
may also suggest the improvements that can be envisaged thro. The Health Insurance sector. It is also
hoped that the efficient and active Health Insurance management may bring down the per capita
expenditure on Health, both at an individual and group level.
/ational In"ome and Health eFpenditure of Sele"t Asian Counties 2in ,S %ollars3

Country
Per capita
income
GNP
Per capital
total health
expenditure
% of GNP
Public sector
Health
expenditure
per capital
% of T.H.E
public sector
Private sector
Health
Expenditure
per capital
% of
T.H.E.
Private
sector
1 2 3 4
3/2
5 6
5/3
7 8
7/3
Korea 2,370 148.37 5.1 17.87 12 130.49 88
Malaysia 1830 58.51 3.5 44.97 77 13.53 23
Thailand 810 32.79 3.8 9.94 30 22.38 73
Papuang 720 26.18 3.8 23.68 91 2.49 9
Philippines 560 14.09 2.4 3.76 27 10.33 7.3
Indonesia 490 10.42 2.4 3.9 37 6.52 63
Sri Lanka 400 9.18 2.3 5.32 58 3.85 42
China 300 11.04 4 2.13 19 8.91 81
India 290 12.51 4.3 4.63 37 7.87

T.H.E. = Total Health Expenditure
V
Begun in 1992, reform of India's Health Insurance sector aims to harmonise the Indian economic and
accounting system with international standards of capital adequacy, prudential regulations, and
accounting and disclosure standards. In the past few years, the worldwide trend of consolidation and
convergence has also begun to manifest itself in the Indian insurance industry. New technology has had
significant impact on India's health insurance sector as new private sector hospital and foreign
collaboration hospitals offer customers the option for better health.
&ibliography
Ahluwalia, Isher J., Industrial Growth in India: Stagnation since the mid-sixties, Oxford University Press,
New Delhi, 1995.
Ahluwalia, Montek S., India's Economic Reforms: An Appraisal, in Jeffrey Sachs and Nirupam Bajpas
(eds.), India in the Era of Economic Reform, Oxford University Press, New Delhi, 2000.
Reddy and S.S. Tarapore (editors), Oxford University press
Bhagwati, J., and Srinivasan, T.N., Outward-Orientation on Development: Are the Revisionists
Davis, Jeffrey, Rolando Ossowski, Thomas Richardson, and Steven Barnett, Fiscal and Macroeconomic
Impact of Privatization, IMF Occasional Paper 194, (2000).
Dev, Mahendra S., and Jos Mooli, Social Sector Expenditures in the 1990s: Analysis of Central and State
Budgets, Economic and Political Weekly, March 2, 2002.
Dreze, Jean, and Amartya Sen, Economic Development and Social Opportunities, Oxford University
Press, New Delhi (1995).
Ministry of Finance Economic Survey 2001-02, New Delhi 2002.
Parikh, Kirit S, "Social Infrastructure: an important Physical Infrastucture", Chapter 7 of India
Development Report, Oxford University Press 2002.
Planning Commission, Report of the Advisory Group on Tax Policy and Tax Administration for the Tenth
Plan, 2001.

%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli-365 601 GJ
E-mail: vijaypithadia@lycos.com
'n+ironment Management A""ounting P'MAQ- An $+er+ieC
By
%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli-365 601 GJ
E-mail: vijaypithadia@lycos.com

Abstra"t-
Many people are willing to pay more for a product that is environmentally friendly. Many companies are
now interested in being "green," as many investors place a high value on environmental responsibility.
The concept of environment management accounting is new for India but the recent policies of Indian
government of liberalization have catalyzed the need or practice of environment management
accounting in India. EMA focuses on costs internal to the company; EMA does not include external costs
to individuals, society, or the environment for which a company is not legally held responsible. More
accurate and comprehensive information to support the establishment of and participation in voluntary,
cost-effective programs to improve environmental performance.
Key Words: Environment accounting, Rigveda, Environmental accounting background and overview,
Reasons for change, External Environmental Auditing, EMA, Evaluation of Facility-Level, Implementing
EMA
Availability of Data: Quoted data and information are available from public sources, which are
mentioned in references.
Environmental costs and obligations are significantly growing and continue to grow as the world
becomes more environmentally conscious. Public corporations are being held more responsible and
accountable to be good environmental citizens. A number of environmental legislations have been
enacted to address the emergence of a worldwide green movement.
In some cases in years past, environmental issues were virtually ignored by both corporations and
individuals. Hazardous waste and other such items were considered a cost of a growing economy. Times
have changed as people now realize the effects of waste products that potentially could damage parts of
the environment. Many people are willing to pay more for a product that is environmentally friendly.
Many companies are now interested in being "green," as many investors place a high value on
environmental responsibility. Some corporations have had to pay to clean up their past environmentally
"unfriendly" behavior. However, most firms have established good reputations as environmentally
friendly.
Conceptual frame work of environment management accounting has been describe in "Rigveda", the
pioneer religion theorem of Hindu Philosophy as according " sky is like a father, earth is like a mother, a
space as their children " Thus Rigveda reflects that environment is to be valued like parents and love
like children. The concept of environment accounting and auditing may be new for western accounting
thinkers. There may be conflicts between understanding and implementation. Few notes started its
relevance for country. Such as establishment of new accounting standards concerning to environment
management accounting in India. Secondly it should require to include into specialized accounting
education syllabus and to create awareness of importance of environmental accounting to the
accounting practitioners for serving its exact purpose.
'n+ironment Management A""ounting- &a"5ground and $+er+ieC
Environment Management Accounting (EMA) is the identification, collection, estimation, analysis,
internal reporting, and use of materials and energy flow information, environmental cost information,
and other cost information for both conventional and environmental decision-making within an
organization. For companies that have the goals of saving money, especially environmental costs, and
reducing environmental impacts, EMA provides essential information for meeting those goals. Key points
to note are:
EMA focuses on costs internal to the company; EMA does not include external costs to individuals,
society, or the environment for which a company is not legally held responsible.
EMA places particular emphasis on accounting for environmental costs.
EMA also encompasses explicit information on physical flows and fates of materials and energy.
EMA information can be used for most types of management activity or decision-making within an
organization, but is particularly useful for proactive environmental management activities.
EMA is not merely one environmental management tool among many - rather, EMA is a broad set of
principles and approaches that provides the materials/energy flow and cost data critical to the success
of many environmental management activities. Terms or tools such as full cost accounting, total cost
assessment, cost accounting, materials accounting, life cycle assessment, life cycle costing, and activity
based costing are associated with EMA.
'MA- Reasons for Change
EMA researchers and proponents recognize the limitations of conventional management accounting
approaches for management activities and decisions involving significant environmental costs and/or
significant environmental consequences/impacts. The unintentional "hiding" of many environmental
costs in overhead accounts
Inaccurate allocation of environmental costs from overhead accounts back to processes, products, and
process lines
Inaccurate characterization of environmental costs as "fixed" when they may actually be variable (or
vice-versa) and
The actual lack of inclusion of relevant and significant environmental costs in the accounting records at
all.
EMA brings many potential benefits to industry including:
The ability to more accurately track and manage the use and flows of energy and materials, including
pollution/waste volumes, types, and fate
The ability to more accurately identify, estimate, allocate, and manage/reduce costs, particularly
environmental types of costs
More accurate and comprehensive information to support the establishment of and participation in
voluntary, cost-effective programs to improve environmental performance
More accurate and comprehensive information for the measurement and reporting of environmental
performance, thus improving company image with stakeholders, such as customers, local communities,
employees, government, and finance providers.
'n+ironment Management A""ounting- Implementing 'MA
EMA provides two types of data to assist companies in making decisions about capital investment,
product/process costing, strategic planning, or other business opportunities. One type is cost
information; the other type is physical flow information (e.g., raw materials use and waste generation
rates). Companies may approach the data collection in different ways. For example, some companies
may simply conduct a more careful examination of existing cost data and combine it with existing
materials flow knowledge to make more informed decisions. Other companies may do actual mass
balances on their processes to better understand previously hidden losses. Some examples of physical
flow information include: quantity of chemical brought on-site, quantity of chemical produced on-site,
quantity of chemical consumed in the manufacturing process, quantity of chemical in the product,
quantity of chemical in the waste, water use, wastewater generation, and energy use.
Sur+eys of Industry Pra"ti"es
The surveys of current industry practices in environment management accountings of major
corporations within a variety of industries and provides a perspective of the current state of the art of
environmental management accounting, as well as some important differences in organizational
approaches. Here the reporting, data handling, and follow-up processes of selected leading
environmental management accounting programs were analyzed in-depth to develop perspectives on
the diversity in audit reporting techniques, formats, and approaches to provide clear and appropriate
disclosure of audit findings. In addition, we have informally surveyed hundreds of companies at our
various audit seminars and workshops.
'Fternal 'n+ironmental a""ounting for the &oard of %ire"tors
Working for a committee of the boards of directors of several major U.S. companies, serve as external
auditors and conduct an independent environmental verification program. As part of these client
assignments, the corporation to further develops and strengthens its internal EHS, and product safety
audit program. The boards of directors find our assistance to be very valuable to them in assuring
compliance.
Audits in Highly Sensiti+e Situations
Working for outside counsel in dozens of highly sensitive situations, we conduct audits of numerous
facilities that pose significant environmental problems. In one such assignment, a team of audit experts
conducted several field visits to independently determine compliance with national, state, and local
environmental regulations; assess whether facility operations and practices pose potentially serious
health or safety risks; and determine conformance with corporate policies and procedures.
'+aluation of 8a"ilityB*e+el 'n+ironmental Complian"e
For a large international manufacturer of industrial/agricultural equipment, we developed a program to
evaluate the environmental compliance and management systems in place at the facility level. The
purpose of the assessments was to identify those areas where environmental risks had not been
identified or had not been adequately addressed and to evaluate the management systems in place to
direct environmental issues. We provided two to six team members with project- and industry-specific
expertise for each assessment. The assessments involved interviews with management, engineering,
maintenance, and operational personnel; inspections of environmental activities and review of
environmental documentation and programs.
'n+ironmental Management Programs '+aluation
Environmental issues have become a key area of management in the highway transportation services
industry. Customers are outsourcing their distribution, in part, to avoid the associated environmental
compliance responsibilities. Regulations affecting highway transportation operations continue to increase
in areas such as storm water runoff, hazardous waste disposal, and fuel storage. After investing
significantly in environmental management for several years and implementing many changes, senior
management of the transportation company retained us to answer a series of questions:
Are the risks being managed effectively?
How does the company's environmental management program compare to others in the industry?
How can the company improve its environmental management?
After gathering detailed information, we recommended that the company engage in a number of
activities to improve performance and to more actively manage environmental risks.
Referen"es-
[1] ABBOTT W F and MONSEN R J On the measurement of corporate social responsibility: self reported
disclosure as a method of measuring corporate social involvement Academy of management journal
September 1979
[2] ALHASHIM D Social accounting in Egypt International journal of accounting Spring 1977
[3] AMERICAN ACCOUNTING ASSOCIATION Report of the committee on accounting for social
performance Accounting review 1971
[4] FREEDMAN M and STAGLIANO A European unification, accounting harmonization, and social
disclosures International journal of accounting 1992
[5] GRAY R and others Struggling with the praxis of social accounting: stakeholders, accountability,
audits and procedures Accounting, auditing and accountability journal 1997
[6] GUTHRIE J and PARKER L Corporate social reporting: a rebuttal of legitimacy theory Accounting and
business research Autumn 1989
[7] P. C. Mishra, N. Behera, B. K. Senapati and B.C. Guru. Advances in Ecology and Environmental
Sciences, Vedams e-Books (P) Ltd., New Delhi, 1995
AppendiF B 1
Environmental Accounting Practices of Listed Companies in Japan
The number of Japanese corporations, which publish environmental reports, has been increasing very
rapidly. According to the ''A Survey of Environmentally Corporate Behavior'' [Ministry of the
Environment (2001a)], the proportion of listed corporations surveyed which disclosed environmental
information showed a rising trend from 35.7 per cent (1998) to 40.9 per cent (1999) to 51.0 per cent
(2000). Out of these companies the proportion of those which published environmental reports also
increased from 30.9 per cent (1998) to 37.3 per cent (1999) to 45.9 per cent (2000). This sort of trend
is likely to increase further, judging from the publication of ''Environmental Reports Guidelines (Fiscal
2000)'' by the Ministry of the Environment (MOE) in February 2001 and the ''Environmental Reporting
Guideline for Stakeholders'' by the Ministry of Economy, Trade and Industry (METI) in June 2001.
The number of companies, which disclose environmental accounting information in their environmental
reports, is also on the increase. During the first half of the 1990s when the word ''environmental
accounting'' was not in general use, only a handful of corporations measured environmental costs.
However, according to the MOE's survey (2001a), out of the above-mentioned listed corporations which
replied that they disclosed environmental information, the proportion which disclosed environmental
accounting information showed a steeply-rising trend from 10.4 per cent (1998) to 20.9 per cent (1999)
to 27.0 per cent (2000). Concerning the question on the introduction of environmental accounting, 17.3
per cent replied that they had already introduced it, while 34.2 per cent replied that they were
considering its introduction. These trends were obviously influenced by the environmental accounting
guideline published by the Environmental Agency (now the Ministry of Environment: MOE) in May 2000.
The draft guideline was published in 1999. Furthermore, both of the MOE's and the METI's
environmental reporting guidelines recommended environmental accounting information disclosures in
the environmental reports. Therefore, more and more companies are expected to introduce and publish
environmental accounting.
Although such guidelines are likely to have a considerable influence on environmental accounting and
reporting practice, they are not mandatory rules, but voluntary. The methods and procedures for
environmental accounting in the MOE's guideline are quite flexible and even ambiguous. The guideline
leaves much discretion to companies. This means that how and to what extent the guideline influence
environmental accounting practice becomes an important research issue. The object of this study is
twofold: to clarify the special characteristics of Japanese environmental accounting practice by
examining the environmental accounting information disclosure by Japanese corporations; and to
analyze the influence on Japanese corporations by the MOE environmental accounting guideline. Before
examining these issues, some main governmental initiatives on environmental accounting and previous
studies on Japanese environmental accounting practices are briefly studied.
AppendiF 4
Governance of Environmental Accounting Practices in USA
Industry accountants must ensure that their firms are in compliance with accounting standards,
including those pertaining to environmental issues. Several rules governing environmental disclosures
have been developed in USA. At the highest level of generally accepted accounting principles (GAAP) are
the Statements of Financial Accounting Standards (SFAS), which are issued by the Financial Accounting
Standards Board (FASB). Some of the key accounting pronouncements that regard environmental
reporting is the following:
(1) SFAS No. 5 states under "Accounting for Contingencies" that a liability should be recognized in the
financial statements if a loss is probable and the amount is estimable. If the loss amount is not
estimable which is often the case, the contingency must be described in the footnotes to the financial
statements.
(2) ETIF Issue No. 90-8 required that all environmental contamination costs be expensed as incurred
unless costs extend the life or increase capacity of the property, costs mitigate or prevent future
environmental contamination (that would otherwise occur), or costs are incurred to prepare a property
for sale.
(3) ETIF Issue No. 93-5 concluded that an environmental liability must be evaluated independently from
any potential claim for recovery. This recovery claim can reduce the liability only if it is probable.
Securities Exchange Commission (SEC) standards state that it is appropriate to net the asset and
liability if the asset's recovery is recognized as probable. The asset and liability should be disclosed in
the notes to the financial statements. The SEC approves discounting of liabilities to their present value.
(4) AICPA Statement of Position (SOP) 96-1, "Environmental Remediation Liabilities," covers auditing
and accounting topics dealing with environmental issues. It details the responsibilities of corporations
involved in environmental cleanup, and responsibilities of corporations to avoid environmental
destruction.

%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli-365 601 GJ
E-mail: vijaypithadia@lycos.com
PR$%,C! %'7'*$PM'/!# P$SI!I$/I/G A/% %I88'R'/!IA!I$/
By
Paresh M. Karia
B.E.(mech.), MMM, MIE, FIV, CE, MIIE, PGDBA
Visiting Faculty at Various MBA College of Pune & Rajkot
E-mail: pkaria89@vsnl.net
PR$%,C! %'7'*$PM'/!
Competitive advantage in the market can only be sustained overtime by creating a continuous stream of
innovative products and services. The accelerating pace of change has hastened the process of product
obsolescence and increase the pressure on new product development.
The increasing specialized demands of customers have led to the market being segmented into smaller
and smaller segments. To gain market share companies are tailoring products for diverse segments to
gain market share. Alvin Toffler' (1970) wrote." Manufactures produce for mini markets". This has
started the drive towards mass customization. The proliferation of new products has seen a rapidly
rising ration of new existing products. Manufacturing companies, especially those in the Engineering,
Automobile industry etc. is investing heavily in the product development capabilities and competencies.
The product development cycle, from concept to market, has come down from years to months.
New products create value for the customer in terms of providing new features. For the manufacturing
company it provides competitive advantage by exploring new markets and the opportunity to capitalize
old investments. It also sets up entry barriers for competitors by crating new industry standards, which
the competitors find it difficult to emulate.
Inside the company, new products build new functional and technical skills, foster inter functional
integration and give the employees a sense of pride and confidence. Nothing could exemplify this better
than the success of Telco in the launching of Indica and Victor by TVS Indica has transformed Telco
from a manufacturer of diesel trucks and bus chassis to a car manufacturer. It has also brought new
competencies in petrol engines and capabilities in design, manufacturing and service. Victor has created
the confidence and ability in Indian manufactures to indigenously design a world-class motorcycle from
scratch in record time.
PR$%,C! P$SI!I$/I/G A/% %I88'R'/!IA!I$/
Today's economies are afflicted with surpluses, and not the shortages. In a super market, there are not
only one brand of toothpaste but also one brand- Close-up, offers a dozens of varieties i.e. is Close-Up
with Gel, Close-Up with Lemon Flavour. Etc. Let us consider money market, now investors can choose
among thousands of mutual funds. Students can choose among hundred's of good B-Schools. For the
seller, this is hyper competition and for the buyer this is over choice.
No company can win if its product and offerings resemble every other product and offerings. Today,
most companies fail in market front because of the undifferentiated strategies. Companies must have
strong, meaningful and relevant position and differentiation strategies. Each company and its offerings
must represent a distinctive big idea in the mind of the target audience and each company must dream
up new features, services and guarantees, special rewards for loyal users, and new conveniences and
new enjoyments.
Positioning
Positioning is the act of designing the company's offerings and image to occupy a distinctive place in the
mind of the target audience. The end result of positioning is successful creation of customer focused
value proposition, a cogent reason why target customers should buy a product. For e.g. Surf has
occupied a distinctive place in the mind of the consumers which is outcome of its strong positioning
strategy.
Company positions the product in the minds of the prospect.
The mind often knows brands in the form of product ladders e.g. Coke-Pepsi or Surf -Ariel- Tide
detergent powder. The top firm is remembered first. This is why companies fight for the number one
position. The "largest firm" position can be held by only one brand. The second brand should invent and
lead in a new category.
Product Differentiation:
The task of positioning is to deliver a central idea about a company or an offering to the target market.
Differentiation goes beyond positioning to spin a complex web of differences characterizing that entity.
I.e. one brand should be differentiated from another brand available in the market of the similar
nature. Differentiation can be defined as " The process of adding a set of meaningful and valued
difference to distinguish the company's offerings from the competitor's offering.
Product development, Product Differentiation and Product positioning are the central theses in the
marketing strategy of a firm & are closely interlinked.
The major attraction and the major benefit of differentiation is that it takes the firm away from a total
price-route competition. In other words, it helps the firm to fight on non-price front with all benefits
associated with it. So, differentiation is a crucial decision for a firm and it forms an integral part of its
marketing strategy.
The companies can achieve differentiation using the product development or distribution method or
promotional aspects. Actually, right from the plant location to the after sales services that company
offers, anything can be used to differentiate an offer and make it "Different"
Through differentiation in product, service or packaging, firm moves to a position wherein it can claim a
premium in the market.
Though the differentiation can be achieved in many ways, the maximum scope for exploiting
differentiation remains with the product. The product forms a core part in the differentiation strategy
amongst the other P's of the Marketing Mix.
Product Differentiation is of vital importance in product management and has potential in forging
successful marketing strategies.
Example:
Procter & Gamble's Head & shoulders is considered among the top brands in Indian Anti-Dandruff
Shampoos, H & S differentiates itself from its close competitor Clinic All Clear Anti-Dandruff Shampoo in
the sense that it is available in different varieties like Menthol, Lemon & Strawberry as well as having a
ZPTO factor in it which makes a USP of H & S and positioning it as one of the best brands in the Anti
Dandruff Shampoo market. Nestle Milk is available in Tetra Pak which des not require any preservation
and it can be stored for a longer time without any refrigeration and boiling which is not the case with
other milks. Ultimately, the company wants it's customers to say "it's different."
References:
1. Toffler, A. (1970), Future Shock, NY Bantam, pg. 272
2. Hayes, R.H. Wheelwright, S.C. & Clark, K.B. (1988) Dynamic Manufacturing: Creating The Learning
Organization, NY the free Press, pp 273-95
3. Wheelwright, S.C. & Sasser, W.E. (1989), New Product Development Map, Harvard Business Review
May-June 1989.
4. Philip Kotler, Marketing management.
Paresh M. Karia# B.E.(Mech), MMM (Pune Uni.), F.I.V., M.I.E., MIIMM,C.E., PGDBA, Visiting Faculty at
Various MBA College of Pune & Rajkot, E-mail: pkaria89@vsnl.net
'mployee 'mpoCerment R is the real need for the "orporates
Author(s):
Prof. M. Subramanian
Faculty, Institute for Technology & Management, Chennai
E-mail: madurai_subbu@yahoo.co.in
%r. A 7en5ata"halam
Director, Dept. of MBA, SVN College, Madurai
M. Jaiganesh
Commercial Executive, Thermax India Ltd, Chennai

I/!R$%,C!I$/
E$ne ma"hine "an do the Cor5 of fifty ordinary men. /o ma"hine "an do the Cor5 of one
eFtraordinary man.E - Elber Hubbard
People are your most important asset of any organization. Competitors can copy your technologies,
products and structures. No one, however, can match your highly charged, motivated people who care.
People are your firm's repository of knowledge and they are central to your company's competitive
advantage. Well educated, coached, and highly motivated people are critical to the development and
execution of strategies, especially in today's faster-paced, more perplexing world, where top
management alone can no longer assure your firm's competitiveness. That's why delegation, employee
empowerment etc., are in the line for any management's success.
(H$ IS A/ 'MP*$0'')
Any individual who works for an organization, in general on a full time / permanent basis, is said to be
the employee of the said organization.
(HA! IS A/ 'MP$('RM'/!)
'mpoCerment is a core concept of the new management model. In the new-generation adaptive
organization, delegation is replaced by empowerment, and responsibility by ownership. Authority and
responsibilities are for&al aspects or organizing. They are based upon organizational properties and not
individual capabilities. Empowerment and ownership are social aspects of organizing, they are based on
efficacy and initiative, and not just on roles and requirements. They belong to people.
'MP*$0'' 'MP$('RM'/! R (H0) R I!S &'/'8I!S IMPAC!
(hy 'mployee 'mpoCerment)
People are your firm's most underutilized resource. In the new knowledge economy, independent
entrepreneurship and initiative is needed throughout the ranks of your organization. Involvement in an
organization is no longer a one-way street. In today's corporate environment a manager must work
towards engaging organization forcefully enough to achieve its objectives.
New knowledge-based enterprises are characterized by flat hierarchical structures and multi-skilled
workforce. Managers assume more leadership and coaching tasks and work hard to provide employees
with resources and working conditions they need to accomplish the goals they've agreed to. In brief,
managers work for their staff, and not the reverse.
Empowerment is the oil that lubricates the exercise of learning. Talented and empowered human capital
is becoming the prime ingredient of organizational success. A critical feature of successful teams,
especially in knowledge-based enterprises, is that they are invested with a significant degree of
empowerment, or decision-making authority.
Equally important, employee empowerment changes the managers' mind-set and leaves them with
more time to engage in broad-based thinking, visioning, and nurturing. This intelligent and productive
division of duties between visionary leaders, focusing on emerging opportunities, and empowered
employees, running the business unit day to day (with oversight on the leader's part) provides for a
well-managed enterprise with strong growth potential.
%e+eloping 'ntrepreneurial Staff
There are two phases in developing an entrepreneurial workplace. Phase I creates the environment
necessary to support and encourage it. Phase II is building your staff's entrepreneurial skills.
'mpoCerment through Coa"hing
The new breed of leaders recognizes that in today's complex business environment autocracy no longer
works; yet the empowerment alone is not enough. Coaching aims to enhance the learning ability and
performance of others. "It involves providing feedback, but also uses other techniques such as
motivation, effective questioning and consciously matching your management style to the coachee's
readiness to undertake a particular task. It is based on helping the coachee to help her/himself through
interacting dynamically with her/him - it does not rely on a one-way flow of telling and instructing.".
'mployee $Cnership of Guality
Quality is not something that management can mandate or dictate. To gain employee commitment to
the quality process, your company's management, control, and reward systems must be modified to
give employees greater responsibility and opportunity to become quality and customer oriented and
motivate them to strive for continuous improvement. Give ownership for quality to your employees,
elicit and listen to their ideas about improvement and empower them to make more decisions and
perform tasks that are quality related.
&uilding and /urturing Customer Relationship
Creating a work environment that encourages rapid response to customers' needs and attentive follow-
through is the key to leveraging the power of the service-profit chain. This is only possible when people
are empowered to make decisions and are motivated to solve problems. By encouraging employees to
go beyond the literal boundaries of their jobs - to make suggestions for improvement - you gain not just
a part, but the full potential of their contributions to the business.
A C$RP$RA!' 'DP'RI'/C' R S,R7'0 R'S,*!S R A! G*A/C'
Following were the employee-employer survey conducted in various organizations (like ITM Chennai,
TVS Chennai, Marc Chennai, iSource Chennai, E-Funds Chennai, Twad Board Chennai) : (Total - 72)
(Q.1) How do you rate the overall empowerment status in your organization on a 10-point scale?
SCA*' R'S,*!
Less than 5 points 63% (46 respondents)
5 points to 8 points 23 % (16 respondents)
8 points and above 14% (10 respondents)
(Q.2) Do you think that delegation of authority is superior to employee empowerment?
0'S /$
34.5% (25 respondents) 63.5% (47 respondents)
(Q.3) Yes there are changes in the behavioral aspects or basic attitude of my peers and colleagues
because of employee empowerment?
SCA*' R'S,*!
Strongly Agree 23% (16 respondents)
Agree 21% (15 respondents)
Neutral 24.3% (18 respondents)
Disagree 17.7% (13 respondents)
Strongly Disagree 14% (10 respondents)
(Q.4) Do you recommend employee empowerment to become a culture of all growing organization?
0'S /$
78% (56 respondents) 22% (16 respondents)
A C*ASSICA* 'DAMP*' *I7' CAS' R General 'le"tri" Co. ,SA
Some years ago, in locations throughout GE, local managers were operating in an insulated environment
with Chinese walls separating them, both horizontally and vertically, from other departments and their
workforce. Employee questions, initiatives, and feedback were discouraged. In the new knowledge-
driven economy, former CEO of GE, Jack Welch, "viewed this as anathema. He believed in creating an
open collaborative workplace where everyone's opinion was welcome." He wrote in a letter to
shareholders: "If you want to get the benefit of everything employees have, you've got to free them -
make everybody a participant. Everybody has to know everything, so they can make the right decisions
by themselves"
*'7'*S $8 'MP*$0'' 'MP$('RM'/!
*e+el 1 B 'n"ouraging the employees to play a more active role in their work.
*e+el 4 R In+ol+ing employees in taking responsibility for improving the way that the things
are done.
*e+el 6 R 'nabling employees to make more and bigger decisions without having to refer to
someone senior.
'mployee 'mpoCerment R Impa"t &enefits
1. !he organi9ation : harnesses individual talents to the full. Changes the managers' mind-set
and leaves them with more time to engage in broad-based thinking, visioning, and nurturing.
4. !he department : team : becomes more enthusiastic, active, and successful. Facilitates
teamwork and harnessing of collective power of employees.
6. 'mployees: entrusted new responsibilities and are stretched beyond what they previously
thought they could achieve. Releases the individual wisdom, creativity and energy of employees.
C$/C*,SI$/
o 'mployee empoCerment is a two-sided coin. For employees to be empowered the
management leadership must want and believe that employee empowerment makes good
business sense and employees must act. Let us be clear about one thing immediately,
employee empowerment does not mean that management no longer has the
responsibility to lead the organization and is not responsible for performance. If anything
the opposite is true.
o Stronger leadership and accountability is demanded in an organization that seeks to
empower employees. This starts with the executive leadership, through all management
levels and includes front line supervisors. It is only when the entire organization is willing
to work as a team that the real benefits of employee empowerment are realized. For an
organization to practice and foster employee empowerment the management must trust
and communicate with employees. Employee communication is one of the strongest signs
of employee empowerment.
o Honest and repeated communication from elements of the strategic plan, key
performance indicators, financial performance, down to daily decision making. If an
organization has not be actively cultivating employee empowerment, it may take
considerable time and effort before employees start to respond. Often the first efforts and
communications are met with employee derision and mockery.
o Those who are only interested in trying the latest management fad will give up when met
with this response. A good rule of thumb for communications to employees is to
enumerate what management considers adequate and then multiple by a factor of ten.
o When considering employee understanding and acceptance of decisions consider how long
it takes for the management team to discuss and then make a decision. Allow several
multiples of this time for employees to think about the issue.
o Management has the obligation to create the environment that fosters employee
empowerment, employees have the duty to accept the opportunity and demonstrate they
are willing and capable.
o 'MP*$0'' 'MP$('RM'/! IS !H' $/' $8 !H' &'S! (A0 !$ S,S!AI/# GR$(
A/% (I/ $7'R !H' C,!!I/G '%G' C$MP'!I!I$/ I/ !HIS %0/AMIC ($R*%.

Author(s):
Prof. M. Subramanian
Faculty, Institute for Technology & Management, Chennai
E-mail: madurai_subbu@yahoo.co.in
%r. A 7en5ata"halam
Director, Dept. of MBA, SVN College, Madurai
M. Jaiganesh
Commercial Executive, Thermax India Ltd, Chennai
GH$S! SH$PPI/G
By
Paresh M. Karia
B.E.(Mech.), MMM, MIE, FIV, CE, MIIE, PGDBA
Visiting Faculty at Various MBA College of Pune & Rajkot
E-mail: pkaria89@vsnl.net

It is also known as "Mystery Shopping industry serves to evaluate the customer service for any
company that deals with customer satisfaction. By sending in anonymous ghost shoppers that form the
base on their visits to client locations. Ghost shopping helps in evaluating the service provided by the
co's channel members to its customers. From this information co. can understand whether it is
meeting, or failing to meet, it's customer's Needs. Ghost shoppers are everyday people who are visiting
stores as anonymous customers, and in the process helping these stores to better understand how they
can meet customers' needs.
A "traditional" Ghost Shop includes and in-person visit to one or more of a business's locations. These
assessments are typically discrete questions along with the correlated point values, as well as some
narratives for clarification. However, due to advances in technology as well as evolving customer service
requirements, the ability to gather data and other materials relating to a customer's experience has
been significantly increased.
Ghost shopping is useful to know about the awareness of that brand, how many outlets are having this
product? Through Ghost Shopping you can get the information about the competitors like their new
product launches, market share, new promotions, campaigns, etc. Even you can check the placement
of the product in the outlet, whether the product has got right place on shelf, visibility of product, how
fast product is moving, impulse buying appeal of the product, etc.
Some of the benefits of Ghost shopping are listed as below:
1. Product Placement
2. Point of Selling
3. Visibility
4. Customer Demand
5. Repurchases
6. Brand Recall
7. Awareness
By Ghost Shopping you can also create a false demand for the product E.g. if the product is new in the
market & 10 people ask for product the Retailer himself feels to keep the product and not to loose the
customer.
.host /hopping can #e done using the different tools(
1. In-Person Assessments
o Text based Report with questions, points and some narrative
o Digital Video or Photographs are included for clarification of assessment circumstances.
o Digital Audio can be captured to provide a more verbatim analysis of a customer's
experience.
2. Phone Surveys
o Text based reporting to describe phone experience
o Digital Audio can be captured to provide data, and tracking and interpreting the moves
the user makes while navigating your site.
3. Online Channel Assessment
Special Behavioral Browser guides user to online assessment objectives, asking appropriate
questions, collecting data, and tracking and interpreting the moves the user makes while
navigating your site.
Example
Many organizations are using this technique to evaluate the satisfaction level of the customers of their
services offerings or to keep an eye on their retail networks activities. Like in the most recent survey
done by ICICI Bank to check the services offered by one of its branches in Pune. It conducted a
telephonic survey asking the ghost shoppers to inquire about the different services provided by the bank
to the different age groups etc.
The companies thus evaluates the responses in terms of a pointer scale which give them the idea about
the fields in which they have to improve in their services to achieve more customer satisfaction.
Likewise McDonald's conducts a survey every month to keep a check on their services through ghost
shopping each activity of its retail outlets. Some of the measures, which they check on is: cleanliness of
the outlet, their politeness with the customers, serving process etc.
But for this Ghost Shopping the shoppers need to be educated well to take on the reading and to scale
them so that the company gets an unbiased report.

Paresh M. Karia
B.E.(Mech), MMM (Pune Uni.), F.I.V., M.I.E., MIIMM,C.E., PGDBA
Visiting Faculty at Various MBA College of Pune & Rajkot
E-mail: pkaria89@vsnl.net
A 8RAM'($RK 8$R %'7'*$PI/G
('& &AS'% I/8$RMA!I$/ S0S!'MS
By
C. M. MARA/
Faculty - Department of Management Studies
!KM Institute of Management
Karuvelil(PO), Kollam-691505 ,Kerala
Tel: 0474-2482465, 2482466
E-mail: cmaran78@yahoo.com / cmaran1978@rediffmail.com

Abstra"t : In this paper the frame work to build web based information system is presented. The frame
work is based on set of rules that define general data storage model independent of underlying database
management system. A set of high level data types, customized and optimized for usage in WWW
environment, is defined in the data storage model. The benefits of using this proposed framework are
independent design and content management, multilingual support, independence from database
management system and automatic support for multimedia information. The proposal of this frame
work is based on RDBMS and has ActiveX Object Oriented programming interface.
KeyCords : Information system, Data Storage, Application Programming Interface, Application layer.
1 Introdu"tion
Web based information system for a city enables the target information about business, tourist, medical,
educational, cultural, sport etc . Implementation of this type of Information system is very complex, so
a framework is proposed, which is based on set of rules that define general database model independent
of underlying database management system. A set of high-level data types is defined in general
database model to simplify development of web based information systems.
A brief description of requirements for a city information system. Implementation of the city information
system is described in section 3 and the conclusions are given in section 4.
4 Goals and ReOuirements
The main goal of the project is to collect information usable for population of a City, for potential tourists
and for business persons in a city. The version of the information system has more information because
the local language is also published on teletext, on cable TV and on INFO terminals. The information is
divided into static which is not changed frequently(city guides, on line maps) and dynamic which is
changed daily (events, sports results , business indexes , news etc)
For static documents such as tourist guides and virtual tour of the city were developed by HTML
documents. Information for dynamic documents is gathered from different sources ( for ex : TV and
radio stations and other daily news to the information server). some information is collected from other
information systems (government servers, municipality servers etc) . Information in the information
system is divided into more than number of entities and it is exported to other information systems.
Each entity has a corresponding class - a definition of structure and behavior. The structure of the class
(for ex: a class describing a hotel) is described with attributes and the context of these attributes is
divided into five categories.
K Required data (address, telephone numbers, name of object etc.)
K Specifically required data (category of hotel, number of rooms etc.)
K Descriptive data (swimming pool, casino, shop, travel agency)
K Statistical data (number of occupied rooms for defined day, months or year, citizenship of tourists
etc.) and
K Detailed description, which is paid by hotel.
To build an efficient and flexible information system, the following requirements are to be fulfilled.
'Ftensibility - It has to possible to add new classes or to changes the structure and behavior of
existing at run-time, without the need to change the application
CrossBreferen"es - It has to be possible to define references between objects of different classes (for
example a class describing a hotel consists of entity for description of building, entity for description of
their accommodation offer, entity for description of their recreation offer, entity for description of their
restaurant offer, entity for their offer of events etc.)
Stru"ture inheritan"e - New classes could be derived out of existing classes. New class would inherit
the structure and behavior of the super class, but new attributes and different behavior could be applied
to them.
Portability and s"alability - The information system should be independent of the data management
system. The data management system should be plugable, so it would be possible to scale the
performance of the information system, simply by changing the DBMS.
%ynami" layout and design - Because the information published in different media, it should be
possible to create customized documents for each type of media.
8ilters - Attributes of the classes have different levels of importance :, internal, local, regional and
international. When attribute is defined the level of importance is selected. The level of importance is
taken into consideration when the replication of data between databases is performed.
Multiple "harset support : Because WWW is not based on a common, well defined charset standard, it
should be possible to produce documents with different charsets.
Definition of authorization for changing data, adding attributes in entities and adding entities to
database.
Multilingual support : Information gathered in the information system should be available in many
languages. While some information is of local interest only and can be available only in local language,
there is information of broad interest and it should be available in different international languages.
Control o+er information - Data in the information system should be automatically checked for
expiration and removed from the information system. Changes of the data should also be detected and
reported.
Import and eFport interfa"es : It should be possible to define data transfer interfaces between this
information system and other information systems.
The information system is open and can be connected with other systems like hotel and ticket
reservations (3), virtual stores, on line selling of used cars and on line selling of real estate.
6. Implementation of the Information System
In the first implementation of the information system (2), the MHTML language has been used. MHTML
scripts are processed server-side and results of their execution are HTML documents. Main features
enabled administrators to create efficient outlook of information system, querying through database and
maintenance of information. Part of the MHTML system is the specialized database management system.
DBMS supports different types and has fixed record length, which is used to speed up the database
operations. It has two level indexes to improve search performance.
However, the first implementation of the information system had some drawbacks :
* Searching through the database has been very slow.
* creating static HTML documents from the database.
* It has been very hard to change the outlook of information system without detailed knowledge on
MHTML language.
* It is impossible to have different designs of the same information system (we need three types of
designs for WWW, separate design for info terminals)
* Only administrator can change the design.
* Translation of documents to different char sets is done off line.
Meanwhile new technologies have emerged and the implementation of the information system.
The information system is divided into three layers : data layer, abstraction layer and application layer.
The data layer represents the data storage, where all the information is gathered and stored. The
abstraction layer is an object-oriented application-programming interface, which is used for accessing
and manipulation of the data storage. The application layer connects with data storage through
abstraction layer to perform functions of the information system.
6.1 %ata Storage
The data storage has been designed to meet the requirements of the information system. It can be
implemented with any DBMS, but this implementation is based on ODBC-compliant RDBMS. This gave
us the possibility to optimize the price/performance ratio in different situations. We use MS SQL Server
6.5 database to run data storage on central data servers and MS Access database to run local data
storage on workstations. Regardless of the actual RDBMS, the data storage always supports these
features.
* %ynami" data di"tionary : New classes can be dined at run-time and are immediately available in
the system.
* Stru"ture inheritan"e : New classes can only be derived out of existing entities and they inherit
their structure. The classes (elements of the data dictionary) are organized in a tree-like structure with
respect to the class/subclass relations between them.
* Multilingual support : The data storage can maintain many versions of the data in different
languages. Through abstraction layer, it is possible to transparently switch between available languages.
* CrossBreferen"es : Cross-references between objects are part of the class definition. One or more
attributes of the referencing class define lookups to other classes ( for example : class describing the
hotel, could have a lookup attribute to class describing the restaurant). Users can select one or more
objects of the lookup class and associate them with the object of the referencing class.
The data storage is responsible only for basic data management ; all other functions are defined and
implemented in abstraction layer.
Data objects are store in the database in an implementation independent format based on XML. XML has
the significant advantage of being both language and platform independent and two major downsides :
the size of the representation and time needed to parse the data.
6.4 Appli"ation Programming Interfa"e
Data Storage Application Programming Interface (DSAPI) is set of COM interface designed to access
objects in the database. In the manner of multi-tiered system, the DS API has bee designed to simplify
manipulation of objects in the data storage and to protect the top layer from design details of the data
storage. If design of the data storage should be modified, only the implementation of the DSAPI would
have to be adapted. With DS API, it is possible to access and manipulate the data storage in a uniform
way, regardless of the actual implementations of the data storage and the DSAPI. Current
implementation of the DSAPI uses ODBC to communicate with the data storage. This is very important
from the perspective of the scalability of the system. It is possible to scale the performance of the
system, simply by choosing a different RDBMS, without changing the DSAPI. If that would not be
enough, then we could still provide an alternative implementation of the DSAPI, possibly using native
DB library and thus eliminating ODBC. In both case, the application layer would continue to work
without changes.
All implementations of the DSAPI have to support these functions.
* Conne"tion Management : Before any other operations on the data storage are issued, a connection
with the data storage must be established. Once the connection is established, all actions issued through
that connection are executed in its context.
* Control o+er data di"tionary : Some of the DSAPI objects are intended to control and manipulate
the data dictionary. With these objects, it is possible to inspect the class-tree or structure of the classes.
It is also possible to create new entities or delete existing ones. The DS API guarantee that consistency
of the data storage is preserved across these operations.
* Insertion# updates and retrie+al of data ob.e"ts : These operations are essential to the
information system. It is possible to retrieve all object of selected class, but it is also possible to limit
the number of retrieved objects by specifying the constraints.
This implementation of the DS API is developed for Microsoft Windows platform and makes heavy use of
technologies like COM/Active X. Microsoft Transaction Server and Active Server Pages. COM is used to
design and implement DS API. The DS API components are exploiting the transaction support and object
management services of Microsoft Transaction Server runtime environment.
6.6 Appli"ation *ayer
The application layer of the city information system divided in two applications. The first is a Win
desktop application running on workstations and the second is a web application developed with
Microsoft's Active Server Pages technology. They both use same implementation of the DS API to
connect with the data storage. The primary purpose of the Win application is to enter and edit data in
the information system, while the web application is focused on searching for the data the information
system.
Each workstation has its own installation of the data storage and the data is replicated between the
workstations and the central data servers on the daily basis. The data storage installed on the
workstations does not contain the whole structure of the information system, but only the entities that
are of interest for the office, where the workstation is installed.
The objects that have expired are removed from the information system once per day, just before the
replication process. Some objects are not removed, but are only marked unavailable, as they will
become interesting after a certain period (like traditional events etc.)
Whenever a new class is added to the data dictionary, web application uses generic scripts to perform
operations upon objects of this class. With built-in customization system, it is possible to customize
these scripts for selected classes. For customized classes, the references to generic scripts are replaced
with references on customized scripts. Creation of new classes and customization are responsibilities of
the system administrator.
6.; Components of a (eb based Information System
We use a web browser on our client PC to connect with a Web Network Server. This server runs web
server software to access and transfer the web pages we request. The website uses a hyper media data
base consisting of HTML (Hyper Text Markup Language) pages, GIF (Graphic Images Files) files and
Video files. The web server software acts as a Database Management System to manage the use of the
Inter Related Hyper Media Pages of the Website.
The framework aims to speed up and simplify the implementation of information systems oriented
towards data gathering and presentation. With the framework, a more generic view on the data is
possible and the changes on the data storage do not cause the changes in the application. Because
every part of the framework is well specified, it is possible to provide different implementations of each
part of the framework ( the data storage and the API). This is leading to a better scalability and good
control over price/performance ratio.
Referen"es-
1. How to build an efficient City Information System, Advanced in Information Technologies : the
business challenge, Jean-Yves Roger, Brian Stanford-Smith, Paul T Kidd, IOS Press.
2. Management Information Systems, Managing Information Technology in the Internet worked
Enterprise, James A O Brien, McGraw Hill 4
th
edn.
3. Management Information Systems, CSV. Moorthy, Himalaya Publications, Millennium edn.
4. Management Information Systems, Laudon and Laudon, MCGraw Hill, 9
th
edn.

C. M. MARA/
Faculty / Department of Management Studies
!KM Institute of Management
Karuvelil(PO), Kollam-691505 ,Kerala
Tel: 0474-2482465, 2482466
E-mail: cmaran78@yahoo.com / cmaran1978@rediffmail.com
&ooming Religious !ourism R A bonan9a for mar5eters to eFer"ise
Corporate Mar5et Responsibility
By
A M Sa55thi+el
Faculty- Marketing Area
%epartment of Management Studies#
P'S Institute of !e"hnology
Bangalore
E-mail : sakkthi@yahoo.co.uk
%r. &ishnu Priya Mishra
Reader in Management
Regional College of Management
Bhubaneswar

Religious !ourism R 5nitting hearts
Religion may be a dicey word in recent Indian political lexicon, yet, unites the country from Kashmir to
Kanyakumari. This article does not discuss the intricacies of religion and its role in India; it does discuss
the economic face of religion in removing economic disparity across the country. Comparing the
different countries across the globe, India is surprisingly possess different religions viz. Hinduism, Islam,
Christianity, Buddhism, Sikhism, Jainism, Persian to name a few, yet, the people embrace different
religions live together. Also, people belong to different religions visit other religions sacred locations
which is very unique and surprising. India is a country of complex culture, yet people live with
understanding and tolerance. It is always an amazing place for researchers who involve in behavioral
science. People belong to different religions; follow different customs, traditions, having different life
style, tastes and preferences, which always pose a challenge for marketers and global companies send
their global managers to India to get trained as it plays a role of potential training ground. Marketers
also focus on encasing the religious believe of the population by targeting religious tourism locations to
market their locations viz. Kumbamela at Varanasi, Allahabad, Rajmundry etc. are the hottest locations
for the marketers to target their potential consumers. These locations woo many pilgrims across the
country and provide a bouquet of potential consumers at one place which provides a platform to
companies to reach the mass at nominal cost of promotion. India possesses many pilgrimage locations
across the country from north to south to east to west which bridges the economic disparity of the
population. Movement of domestic tourists to different places ensures the movement of money to the
required places. For instance, Tirupathi is the famous religious location in Andrapradesh which woos
people across the country and world. It is treated the richest pilgrimage location next to Vatican.
Tirupathi generates employment opportunities to many and supports considerable number of population.
Considering the core competence i.e. the ability of the place to generate employment opportunities with
certain skill sets of the people of Tirupathi, it contains none. Yet, with the famous Balaji Temple, it runs
like a multinational company spins billions in revenues per year.
&onan9a for Mar5eters
Many companies target religious locations to promote their existing and new products which they find
very opt to reach the target group. Even, companies sponsor religious festivals viz. Ramco, Birla, to
name a few, in order to win the hearts and minds of people. Recent 'Kumbhmela in Allahabad and
Rajmundry, paved a root to billions of business to local and multinational conglomerates. These places
are considered special rendezvous for marketers to promote products and services with nominal cost.
Most of the companies set up free food stalls, camping tents, drinking water fountains, medical
treatment camps to serve the pilgrims visit the places. This is an innovative approach normally be
executed to capture the hearts of potential target group. This would provide a mind space for products
and services which they may consider buy these brands in future. These are the practices to create an
experience and attitude about brands before the actual usage.
Role of Religious tourism in balan"e e"onomi" groCth
In India, religious tourism plays a vital role in narrowing economic imbalance. Most of the places,
especially rural areas and the areas which have no core competence or business, survive due to
religious tourism. It provides business and employment opportunities to local population helps to take
care of their requirements. For instance, 'Sulli Karadu' a small dry rural area near Coimbatore,
TamilNadu, India, well known for a rural deity which is very powerful, ought to be worshipped by
offering Camphor in big quantities which is available in nearby shops. Devotees stand in mile long queue
to offer their offerings. It provides livelihood to local population who sell camphor to the devotees which
is supplied by camphor manufacturers. Also, it was interpreted that the whole exercise was orchestrated
by the camphor manufacturers to sell their products which has been banned by TamilNadu Endowment
Board to camphor in temples, by quoting the reason that would spoil the environment. How ever, this is
a classical example on the religious tourism which fed the whole village. Also, a place called "Thadi
Kombu" near Madurai, well known for a deity viz. "Shorna Bairavar" which is very powerful to collect the
bad debts, it is the believe that if a pilgrim visit the place for 8 times in a particular day of the month,
his/her prayers would be answered. This generates employment opportunities in the sleeping semi-
urban small town, also generated business for bus owners who take devotees for charter trips on that
particular day from far off places. These are all the examples of small places which generates business
and employment opportunities for the local population, let alone, many famous places like "Palani",
Madurai, Rameswaram, Kanyakumar, etc. in Tamil Nadu, and well known, "Sabari Malai" in kerala,
which generates millions and provides employment opportunities to many. The whole kerala belt has
been benefiting from lakhs for devotees visit sabari malai during particular seasons. These provide
tremendous opportunities for marketers to focus on these locations to market their products and
services. It is the dual benefit of catering location population as well to promote the products/services.
Strategies to enhan"e religious tourism through Corporate Mar5et Responsibility 2CRP3
Definitely, the marketers would get benefit out of the booming religious tourism as they could find new
territories to sell their products and services. They would also take part in developing these Places along
with local development authorities.
a) Marketers could participate in providing basic sanitary facilities along with they could promote their
products viz. If X company sponsors the Free or Paid Rest room facilities, its products would only be
sold.
b) Marketers could also participate in constructing rooms for devotees to stay and promote their
products
c) Marketers could offer free/paid transportation facilities which will carry the promotion of their
products/ services
d) Pharmaceutical companies could sponsor free medical camps in which their products could be
promoted
e) Food products companies could set up their outlets to sell products with subsidized /actual prices
f) Clothing/Garment companies could set up their stalls to promote their products and services
It clearly shows that there is enough room for marketers to participate in Corporate Market
Responsibility which offers the dual benefit of offering services to the society as well to promote their
products/services. This would definitely provide a lucrative mind space in potential target group in which
would not have done by spending millions on conventional promotion tools. Hence, it is the marketers
and the state and central government could join their hands to concentrate on these locations in order
to generate business and employment opportunities as well to promote their products/services. If this
done, the government would not worry about offering minimum 100 days employment opportunities,
they will take care of themselves. The government could seek help from marketers to offer necessary
infrastructure support viz. transportation, water and sanitation, power and other basic facilities which
ensure the influx and pleasant stay of pilgrims.
A M Sa55thi+el# Faculty- Marketing Area, %epartment of Management Studies#
P'S Institute of !e"hnology# Bangalore, E-mail : sakkthi@yahoo.co.uk
%r. &ishnu Priya Mishra# Reader in Management, Regional College of Management
Bhubaneswar
%igital Signature and 'BRe"ords Management
in Hospital Administration
By
%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli
Mobile: (91)09898422655
E-mail: Vijaypithadia@lycos.com
%r. 7andana Parmar
Associate Professor
%epartment of Anaesthesiology
P%%, Go+ernment Medi"al College
Civil Hospital Campus, Rajkot-360001

The healthcare industry is highly regulated by a complex statutory and regulatory framework at every
level. Electronic commerce in such a highly regulated industry presents some challenges to say the
least. States have approached e-commerce in a myriad of ways, leaving consumers and businesses
confused as to whose law applies. Electronic records and signatures are essential elements of many
electronic transactions, particularly in healthcare. Electronic signatures that can't be forget. It is a
computed digest of the text that is encrypted and sent with the text message.
A digital signature created by use of encryption keys can provide this high level of security because it
ties an originator's identity to an electronically transmitted message by means of an algorithm. The
digital signature is not a computer's "picture" of a handwritten signature, but a condensed mathematical
representation of the message itself that can be created only by the originator using a private encypted
key. Thus, a digital signature provides authentication of data and user.
Signatures and Certifi"ates
A digital signature ensures that the document originated with the person signing it and that it was not
tampered with after the signature was applied. However, the sender could still be an impersonator and
not the person he or she claims to be. To verify that the message was indeed sent by the person
claiming to send it requires a digital certificate (digital ID) which is issued by a certification authority.
See digital certificate. For example:
The sender uses a one-way hash function to compute a small digest of her text message. Using her
private key, she encrypts the digest, turning it into a digital signature. The signature and the message
are then encrypted using the recipient's public key and transmitted. The recipient uses his private key to
decrypt the text and derive the still-encrypted signature. Using his public key, he decrypts the signature
back into the sender's digest and then recomputes a new digest from the text message. If the digests
match, the message is authenticated. Digital signatures are a fundamental component of business in
cyberspace. And numerous laws, state and now federal, have codified digital signatures into law. These
laws are a mistake. Digital signatures are not signatures, and they can't fulfill their promise.
Understanding why requires understanding how they work.
Health "ares information and its use
E-SIGN provides guidance on how records may be stored and retained electronically. If a document is
required to retain by law, an electronic version of the document will be acceptable. The electronic
document accurately reflects the information in the record and is accessible to all relevant people in a
form that may be accurately reproduced at a later date, whether by printing, electronically transmitting
or other means. No specific type of technology is mandated by E-SIGN. The law is technology neutral;
allowing individual parties to choose the technology that best suits their needs. The term "electronic" is
defined broadly in E-SIGN and means related to technology having electrical, digital, magnetic, wireless,
optical, electromagnetic or other similar capabilities. Under E-SIGN, the term "transaction" means an
action or set of actions relating to the conduct of business, consumer or commercial affairs between two
or more persons. The term "electronic record" means a contract or other record created, generated,
sent, communicated, received or stored by electronic means.
Health care records (HCR) include both informations relating to the physical or mental health of
patients, and information regarding the provision of health care by health care practitioners or health
care facilities. Relatives, social workers and other third parties may supplement personal health
information provided by the patient. The provision of health care is recorded in the professional notes,
observations and opinions of health care practitioners and administrative staff. These data are entered
into the health care record not only by the health care practitioners caring for the patient (including
physicians, dentists, nurses and professions allied to medicine) but also by professionals providing
support services, non-clinical staff acting on the professionals behalf and even by patients themselves.
This diversity of origin and use of health care data present problems of security in the conventional and
electronic health care records.
Issues in se"urity of ele"troni" health "are re"ords
EHCR are health care records that are stored, processed or transmitted using computer technology. The
EHCR enables information to be used simultaneously by many individuals who may be remote from each
other and from the patient, but this can be achieved only by use of the appropriate computer
equipment. Thus the user who has no access to the necessary hardware or lacks the skills to operate it
may be denied the information. In contrast, it is possible for those with the skills to examine and alter
computer records without leaving any indication of their actions.
Computerised records can be stamped with the identity of the users who create or modify them,
although the mechanisms by which most computers currently confirm the user's true identity, such as
through password control, leave much to be desired and impersonation is not difficult. To compound the
problem, identical copies of EHCR can be made at will, often without trace, readily transmitted over
networks that now encircle the globe and linked with other data about the same individual to compile
detailed profiles of their life style, health and financial status.
'thi"al and legal aspe"ts
The consequences of using an insecure information system in health care are far reaching. Patients may
be embarrassed by, or socially ostracised following, disclosure of sensitive information about mental
health, sexually transmitted diseases, adolescent care, drug addiction and genetic fingerprints. Their
clinical care may be compromised by inaccurate or missing data as a result of unauthorised
modification, from system malfunction or due to errors in program design. There is the potential for
serious harm or death should such errors remain unrecognised. The EHCR must therefore be designed,
implemented and run in such a way that the potential to harm the patient is minimised. Information
security is a complex and highly technical subject with which even computer professionals are rarely
fully conversant. Very few health care professionals have sufficient understanding of the principles of
information security to confidently assume responsibility for security of information.
If properly designed, access to EHCR can be controlled more comprehensively than is possible with the
conventional HCR. The introduction of the EHCR thus offers the opportunity to comply more closely with
the ethical requirement to respect the individual's right to privacy while not impeding the freedom of
access to information needed by the clinicians involved in delivery of health care.
In either case, We would suggest that the overall responsibility for security of health care data in a
health care facility rest with the most senior clinician (e.g. the medical director or Dean) or delegated
authority. There is no justification for access to health care records to be controlled by the
administrative staff who own or operate the computer system holding EHCR, even though they may
have the responsibility to ensure that the mechanisms controlling access are applied effectively. Regular
audits of these security measures should be conducted but physical controls such as encryption may be
necessary where regular monitoring is not considered feasible.
Spe"ial Consumer Prote"tions
The term "consumer" means an individual who obtains, through a transaction, products or services,
which are used, primarily for personal, family or household purposes. E-SIGN imposes special
requirements on anyone obligated to provide written disclosures to consumers. Those special
requirements are imposed to ensure that consumers can make fully informed decisions about electronic
transactions and to provide some protection for consumers. Essentially, E-SIGN provides that the
consumer must have affirmatively consented to receive the required information electronically.
Under E-SIGN, threshold questions in healthcare are whether a proposed arrangement is a transaction
for purposes of E-SIGN, whether the transaction is affecting or in interstate commerce, whether a
consumer is involved and what exceptions, if any, apply. If it is assumed that E-SIGN applies to
electronic healthcare transactions (and in most cases that may be a reasonable assumption), there still
are many unanswered questions about how electronic commerce in healthcare should be conducted.
Summary
In sum, there is one safe rule to follow when determining which laws or regulations govern a particular
healthcare transaction involving the use of electronic records or signatures: closely consider all of them.
Assuming each is consistent with E-SIGN, it is highly likely each will apply. The healthcare industry could
achieve greater convenience and efficiency by adopting a national standard regarding the use of
electronic signatures. As a term, "electronic signatures" refers to any electronic means to indicate
consent to the content of a transaction (eg, handwritten signatures that are recorded electronically or
digital signatures). The great potential of computerised information in health care will be realised only
when health care professionals and patients alike feel confident about their personal records being held
on computer. It is imperative the health cares professions for quickly to implement such measures to
create a secure environment for the electronic health care record. The time is ripe for creation of a
national electronic-signature standard. Many vendors already require that correspondence be in
electronic form and have received support from state contract law that signatures need not be
handwritten.
Referen"es-
Dick R, Steen E (Eds.) The computer based medical record: an essential technology for health care.
Institute of Medicine. Washington: National Academy Press, 1991
Griesser G, Bakker A, Danielsson J, Hirel JC, Kenny DJ, Schneider W, Wasserman AI Data Protection in
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Bakker AR. Security in medical information systems In Yearbook of Medical Informatics 93 1993.
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legal framework of the seventies. Int J Biomed Comput 1994 35 (Suppl 1): 13-19
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Roger France FH, Gaunt PN The need for security - a clinical views Int J Biomed Comput 1994 35 (Suppl
1): 189-194
DePotter S, Aim F, Sauquet D, Ricour C, Degoulet P. Utilisation du minitel dans UN service de nutrition
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Benhamed M, Clment G, Tournade MF Tel-HBD Suivi tlmatique de patients traits domicile. In:
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Moehr JR. Privacy and security requirements of distributed computer based patient records. Int J
Biomed Comput 1994 35 (Suppl 1): 57-64
Schloerer J. Identification and retrieval of personal records from a statistical data bank. Methods of
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Gritzalis D, Katsikas S, Keklikoglou J, Tomaros A. Determining accesses rights for medical information
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Roger France FH, Noothoven van Goor J, Staer Johansen K. Case-based telematic systems towards
equity in health care. Amsterdam: IOS Press. 1994
Weed LL. Medical records, medical education and patient care: the problem-oriented record as a basic
tool. Case-Western Reserve University Press, 1969
Kerland LT, Molgaard CA, Weigel K M The minimum basic data set and epidemiologic research: the Mayo
Clinic experience. In: Lambert PM, Roger FH (Eds) Hospital Statistics in Europe. North Holland Publishing
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Gostin LO, Turek-Brezina J, Powers M, Kozloff R, Faden R, Steinauer DD. Privacy and security of
personal information in a new health care system. J Amer Med Assoc 1993 270: 2487-2493

%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli
Mobile: (91)09898422655
E-mail: Vijaypithadia@lycos.com
%r. 7andana Parmar
Associate Professor
%epartment of Anaesthesiology
P%%, Go+ernment Medi"al College
Civil Hospital Campus, Rajkot-360001
I! its impa"t on Hospital Management
Information System
By
%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli
Mobile: (91)09898422655
E-mail: Vijaypithadia@lycos.com
%r. 7andana Parmar
Associate Professor
%epartment of Anaesthesiology
P%%, Go+ernment Medi"al College
Civil Hospital Campus, Rajkot-360001

Abstra"t-
In the paper we are tried to focus on digital technology and its impact towards consumer behavior of
hospital management information system. Right now in India such Hospital Organization are doing good
efforts in same areas i.e. All India Institute of Medical Sciences; New Delhi, Sanjav Gandhi PG Medical
Research Center; Lucknow, Apollo Hospitals - Chennai, Escorts Heart Research Center; New Delhi etc.
We anticipate good impact on human beings with reference to health care.
Key (ords-
Digital revolution, Integrating hospital information system, upgrading the Coding System, Verify patient
information, Patient ID System, Inventory of Healthcare Technology
A+ailability of %ata-
Data are available from public sources identified in the study. Introduction:
While the digital revolution has been felt in every industry, nowhere has it been more visible than in
health care. The introduction of wireless and other advanced technologies as critical business tools has
impacted every aspect of medicine--from research to diagnostics, and surgery to record keeping. And,
it's constantly evolving thanks to the advent of new technologies. While this isn't big news, what is news
is how hospital design is changing because of it.
As the first paperless hospitals come online, the industry is moving away from traditional nursing
stations and standard patient rooms. In their place are facilities that respond extremely well to the
actual progress of moving patients. For example, in today's newer hospital a patient admitted from the
Emergency Department would be whisked to an inpatient room that's slightly larger than the old
standard (it's bigger to accommodate diagnostic machines at the bedside). This would all take place in
an unconventionally shaped patient floor that enables busy caregivers to monitor many patients at once.
In addition to mobile diagnostic devices, hospitals are increasingly using handheld wireless units that go
beyond the first generation of computerized provider order entry systems. These can do everything:
track lab specimens, provide up-to-date information on patient tests, communicate with the hospital's
pharmacy, coordinate prescriptions and prevent negative drug interactions. These units rely on either
wireless radio or third-generation cellular technology, which is capable of such wizardry as voice
command communication. This allows caregivers to call for specific assistance without leaving the
patient room.
A nurse can identify the room, the patient and the kind of help she needs just by talking. Sophisticated
communications systems take it from there and notify the proper staff. These automated alert
notifications would prompt staff that emergent care is required, provide reminders for therapy progress
and notify the proper staff.
Integrating hospital information system-
A hospital information systems (HIS) is a computer system that is designed to manage all the hospitals
medical and administrative information in order to enable health professional perform their jobs
effectively and efficiently. Hospital information systems were first developed in the 1960s and have been
an essential part in hospital information management and administration. Hospital information systems
now focus on the integration of all clinical, financial and administrative applications and thus could also
be called an integrated hospital information processing systems (IHIPS).
Components of a hospital consist of two or more of the following:
Clinical Information System (CIS)
Financial Information System (FIS)
Laboratory Information System (LIS)
Nursing Information Systems (NIS)
Pharmacy Information System (PIS)
Picture Archiving Communication System (PACS)
Radiology Information System (RIS)
A look at the list above shows how complex a hospital information system can be. Advancement in
computer technology and the development of information exchange standards i.e. DICOM, make the
task administering and integrating such systems a little more easily.
No hospital information system can be regarded as a success unless it has the full participation of its
users. Thus human and social factors would have to be considered in its design, more often than not,
they could be easily addressed by providing adequate training and education about the system.
Previously, the hospital needed 7-10 days after a typical outpatient visit to process the paperwork and
generate the bill. Now patient data is transferred electronically between the hospital information system
and the coding system, eliminating data re-entry and the need to hand carry documents between
departments. DRG codes assigned by the coding software are electronically uploaded to the hospital
information system and immediately available for billing. Outpatient charges may be billed within 24
hours of the visit.
Patients I% Cards Coding System-
The software also handles the complex APC coding for ambulatory visits. Clinical Coding Expert's APC
Processing feature accurately assigns APC by evaluating the diagnoses and procedure codes and
groupings in accordance with OPPS regulations. Hospital management decided to replace the mainframe
system with networked PCs, needed new business software to replace the mainframe programs, and
needed the new system to be integrated with the coding system.
The evaluation process turned up a hospital information system called Cardinal 2000 from Remote
Support Services (RSS) that met Harper County's requirements. The vendor is a Springfield, MO-based
software Development Company that provides health information systems for small to medium size
hospitals. The use of paper forms to transmit information between departments had been eliminated. In
the past, the hospital used a manual process to assign DRG codes to procedures. Coding was done by
one person who spent 40 hours per week going through patients' charts, looking up their diagnoses and
the services they received in the ICD-9 and CPT-4 manuals, and used a tree to get to the appropriate
DRG.
7erify patient information-
One serious ailment affecting the healthcare industry is uncompensated care. But, thanks to some
recent technological advancement, providers have a number of accurate and reliable methods available
to them for reducing uncompensated care. By harnessing the power of a patient ID verification system,
hospital facilities can now verify demographics, reduce fraud, increase productivity, manage costs, and
more easily comply with paperwork reduction requirements. A patient ID verification system delivers
accurate patient information, such as demographics and financial information, directly to a facility's
registration system, eliminating duplicate data entry and improving the registration process flow. The
validated patient information is obtained from one of the three major consumer credit reporting
agencies - Trans Union, Equifax, and Experian that information is updated on a daily basis and relied
upon for millions of secure financial transactions.
For the same purpose we can use Patient Card System, which provides more patient satisfaction by
providing simple solutions to admission questions. And it reduced admission time and increase accuracy
while strengthening patient loyalty. The flexibility of the Patient Card also permits the storage of
multiple access codes, allowing affiliated hospital sites and clinics with different computer systems to
retrieve vital patient information from the same card.
Ma5ing the Patient I% System-
Each time there is patient contact; the potential exists for mistaken identity. When registration
processes rely on self-reported and subjective patient information, healthcare facilities are more
vulnerable to errors, outdated or mistaken information, and even outright fraud. An example is an
injured, but conscious, patient entering the emergency room without identification or an insurance card.
With a patient ID verification system, the facility could confirm his name, address, and other pertinent
information prior to discharge, enabling the facility to process and submit the bill in a seamless process.
Properly designing and using a patient ID verification solution in clinical applications can streamline
many hospital processes. The healthcare-related areas that can be positively affected by patient ID
verification include admissions, business office, financial counseling, medical records, collections,
discharge, donor programs, and clinical research/follow-up.
Many healthcare institutions are concerned if patient ID verification could affect compliance with the
regulations outlined in HIPAA and EMTALA. In fact, patient ID verification can help a healthcare
organization in following the guidelines by bringing electronic identification solutions to what were
primarily manual processes.
In+entory of Health"are !e"hnology 'PHI-
In order to conduct a risk assessment of sensitive healthcare technology, healthcare organizations will
need to identify all of their sensitive healthcare technology. This would include any healthcare
technology that is used to monitor, diagnose and analyze the health of the patient. In addition, health
information that is generated, stored and/or transmitted by the healthcare technology may require
compliance with privacy and security regulations. Healthcare technologies that are connected to
networks (i.e. LAN, WAN, Interact, Intranet, Extranet, Partner networks or modems) are at higher risk
and should be noted in the inventory.
To conduct a risk assessment of electronic protected health information for regulatory compliance. An
organization must identify all of the business processes and system applications, computers, databases,
and networks that store and transmit PHI, as well as the healthcare technology, which in turn is
monitoring, aggregating, storing (logging), analyzing (diagnosing), transmitting, and/or utilizing
electronic protected health information. The application (i.e. Web servers, databases, etc.), computer
and network infrastructure should also be documented.
The Inventory of healthcare technology and electronic protected health information should be the focus
of this risk analysis. In addition, any security monitoring, protection and detection mechanisms that
have been deployed must be assessed as well. The risk assessment should be conducted from an end-
to-end perspective. For example, follow the electronic protected health information flow from its entry
points through business system applications, handheld devices, workstations, servers, databases,
network devices and internal and/or external networks to its final destination. Particular attention should
be made to the access, storage and transmission of this information.
However, additional steps beyond the electronic protected health information will be required for
sensitive healthcare technology. In this case, the organization will also need to assess both access and
internal controls of the technology. Healthcare organizations should involve safety personnel to
understand the potential risks of death and/or harm to the patient, through accidental and/or intentional
electronic misuse of this technology.
Ris5 Management Strategy-
Organizations must determine what steps will be taken to manage the risks that are identified through
the risk assessment process and/or reported through other channels. There are several strategies that
can be adopted: eliminate, mitigate, insure and/or accept the risks. An organization's risk management
process should include a consistent approach in making the risk management decision. It should also
recognize the existence of privacy and security best practices and standards, security protection and
detection technologies, and early warning and response capabilities.
When determining rite most effective way of mitigating risk, start with the threats, vulnerabilities and
exposures that pose the greatest risk to the particular organization. In most cases, threats cannot be
eliminated. However, many known threats can be detected and/or prevented from exploiting
information and technology assets. Most known vulnerabilities can be corrected. However, the ability to
correct these vulnerabilities will vary within each organization. Most known exposures can also be
eliminated and/or reduced through effective configuration management and protection technologies.
The most cost-effective way to mitigate risks is through automated procedures and mechanisms.
Document and prioritize risk mitigation requirements, identify and document the objectives of the
security technology solution and how to measure its effectiveness, and then identify security technology
solutions from reputable and financially sound security providers. In today's blended-threat
environment, it is imperative to deploy security technology solutions that can interact together too
effectively manage and respond to threats.
Con"lusion-
Each year, healthcare organizations and their professionals become more dependent on technology.
With devices such as tablet PCs, PDA and wireless networks connecting them to electronic patient health
information (PHI), the need to secure the technology from privacy breeches has become a veritable
priority for health information executives. Assessing the threats, vulnerabilities and exposure in an
organization's IT infrastructure is the first step to mitigating risk. Several procedures can be used to
identify the risks to sensitive health information and healthcare technology.
Abbre+iations-
ICD-9: International Classification of Diseases Issue No 9
CPT-4 manuals: Current Procedural Terminology; 4 Manuals
EMTALA: Emergency Medical Treatment and Active Labor Act
HIPAA: Health Care Insurance Portability and Accountability Act
RMA: Records Management Application
DRG: Diagnostic Related Groupings
APC: Ambulatory Payment Classification System
DICOM: Digital Imaging and Communications in Medicine
RSS: Remote Support Services
IHIPS: Integrated Hospital Information Processing Systems
HIS: Hospital Information Systems
EPHI: Electronic Protected Health Information
&ibliography-
[1] Bennett-Clark, J. (1996). Where health information is byte-size: online advice can help you manage
health costs. Kiplinger's Personal Finance, June: 96-97.
[2] Degner, L. (1995) Commentary to the case study 'Protocol "shopping" on the Internet Cancer
Practice, 3: 275-276
[3] Eyebath, G. (2000) Consumer Health Informatics BMJ, 320: 1713-1716.
[4] Fernley, J. (1995) Commentary to the case study 'Protocol "shopping" on the Internet.' Cancer
Practice, 3: 277-278.
[5] Kaplan, B., & Brennan, P. F. (2001) Consumer Informatics supporting patients as co-producers of
quality, JAMIA, 8(4): 398-399
[6] Kenneth, D. M. et al. (2000). Growth and determinants of access in patient e-mail and Internet use
Archives of Pediatrics and Adolescent Medicine, 154:508-511.
[7] Lindbergh, D. A. B., & Humphrey's, B. L. (1998). Medicine and health on the Internet The good, the
bad, and the ugly JAMA, 280: 1303-1304
[8] Robinson, C., Flowers, C. W., Alperson, B. L., & Norris, K. C. (1999) Internet access and use among
disadvantaged inner-city patients [letter]. JAMA, 281:988-989
[9] Silberg, W. M., Lindbergh, G. D., & Mustachio, R. A. (1997) Assessing, controlling, and assuring the
quality of medical information on the Internet JAMA, 277: 1244-1245
[10] Smith-Brbaro, P. A., Licciardone, J. C., Clarke, H. N. F., & Coleridge, S.T. (2001). Factors
associated with intended use of a Web site among family practice patients. Journal of Medical Internet
Research, 3(2): e17.
[11] Tatsumi, H., Mitani, H., Haruki, Y., & Ogushi, Y. (2001) Internet medical usage in Japan: current
situation and issues. Journal of Medical Internet Research, 3(1): e12
[12] Wilson, P. (2002). How to find the good and avoid the bad or ugly: A short guide to tools for rating
quality of health information on the Internet. BMJ, 324: 598-602
[13] Vaitones, V (1995) Protocol 'shopping' on the Internet. Cancer Practice, 3: 274-278
[14] https://www.inderscience.com/offer.php? id=1066

%r. 7i.ay Pithadia
Assistant Professor & Kidevices Chair
S"hool of Management Studies
Shri *au+a Patel !rust College 8or (omen
Amreli
Mobile: (91)09898422655
E-mail: Vijaypithadia@lycos.com
%r. 7andana Parmar
Associate Professor
%epartment of Anaesthesiology
P%%, Go+ernment Medi"al College
Civil Hospital Campus, Rajkot-360001
7alue at Ris5 27aR3 R A birdMs eye +ieC
Author (s)
M. Subramanian
Faculty in Finance
Institute for !e"hnology Management
Chennai
R. SCarnasiyamala Subramanian
Chennai-26
%r. A. 7en5ata"halam
Reader
PG Commer"e %ept# S7/ College
Madurai
Cell: 09443929922
Email: financesubbuu@rediffmail.com / madurai_subbu@yahoo.co.in

Introdu"tion
This article is mainly focused on RISKS (VaR) in INVESTMENTS.
There is no need to say that today's world is highly dynamic and this particular factor leads to change in
situation / environment (internal & external); this change could be either fierce or peace. What ever be
the phenomenon the 'fierce' factor, technically called as ERISKE, is much of talked about all times. Is
there any way to have a foolproof risk shield? The answer is obvious /$. The fact is you could reduce
the degree of risk but you can't eliminate it fully. The risk factor is like 'diabetic' in human body; once a
human being is affected by diabetic, there is no cure but you can control to the best possible extent by
your food habits & regular exercise, with proper medicines. The same fact applies to risk.
(hat is RISK)
Risk can be termed as any variation from the expected level of performance/outcome. The risk factor
could be estimated by applying the probability factor to the future events, which are supposed to
happen. There are ample numbers of ways to estimate the future events; the ways to estimate the
future events differs from organization to organization, individuals to individuals. Risk can be basically
classified into two types, namely: Controllable Risk & Uncontrollable Risk. You can only reduce the effect
of controllable risk, but not the uncontrollable part. Based on this premise only we have submitted our
views in the introduction part.
%is"ussion R (hy# yet again# a neC method of "al"ulating ris5)
Instead of calculating risk factor from traditional methods (like volatility), either by standard deviation
or by beta factor or any other methods, this new science of risk management called "Value at Risk"
makes more sense. The main problems in the traditional methods are: It does not care about the
direction of an investment's movement: a stock can be volatile because it suddenly humps higher. But
investors are not distressed by gains. But VaR makes an attempt to address these problems. It checks
the direction of investment and based on that we do the further value analysis on our investments.
(hat is 7alue at Ris5) 27aR3 Chat are the basi" "omponents of 7aR)
For investors, risk is about the odds of losing money, and VaR is based on that common sense. VaR is
widely used by institutional investors. By assuming investors care about the odds of a really big loss,
VaR answers the question:
"What is my worst-case scenario?" or
"How much could I lose in a really bad month?".
A VaR statistic has three components:
(a) A time period
(b) A confidence level
(c) A loss amount (or loss %)
Con"eptual 'Fample R 'Fplanation of 7aR
Keep these three (time, confidence level & loss) parts in mind as the following examples of variations of
the question that VaR answers:
2a3 What is the most I can - with 95% or 90% level of confidence - expect to lose in money value over
the next month?
2b3 What is the maximum % I can - with 95% or 99% level of confidence - expect to lose over the next
year?
You can see how the "VaR question" has three elements: a relatively high level of confidence (typically
95% or 99%), a time period (a day, a month, or a year), and an estimate of investment loss (expressed
either in money value or in % terms).
!ypes of Cal"ulating 7aR
1. Histori"al Method
(Uses Histogram)
4. 7arian"eBCo+arian"e Method
(Uses Normal Distribution)
6. Monte Carlo Simulation Method
(Uses Simulation)
(Discussion in detail about the types of calculating VaR is out of scope of this article. This article aims at
giving a birds eye view about VaR to investors & readers)
Con"lusion
VaR calculates the maximum loss expected (or worst case scenario) on an investment, over a given
time period and given a specified degree of confidence.
M. Subramanian# Faculty in Finance, Institute for !e"hnology Management# Chennai
R. SCarnasiyamala Subramanian# Chennai-26
%r. A. 7en5ata"halam# Reader, PG Commer"e %ept# S7/ College# Madurai
Cell: 09443929922
E-mail: financesubbuu@rediffmail.com / madurai_subbu@yahoo.co.in
Competen"y Mapping B A !horoughfare
By
K. Murali Mohan
Senior Faculty - Human Resources & Communications
Department of Management Studies
P'S Institute of !e"hnology
Bangalore
E-mail: mkalvakalva@hotmail.com
%r. SaCitha Hari5rishnan
Professor and Head
Department of Management Studies
P'S Institute of !e"hnology
Bangalore
E-mail: sawithah@yahoo.com

Competen"y Mapping B(hat it is
It is about identifying ideal behaviours and personal skills which distinguish exceptional and stupendous
performance from the average. This aids in setting standards of behaviour and thereby performance for
the average work force to follow. Competency maps provide employers with concrete and objective
information usable in all employment decisions. . As a matter of fact competency is a behavioural and
demonstrative ability that is informed to some degree by a conceptual perception.
&rief history
Concept maps were invented by Joseph Novak in the 1960s for use as a teaching tool. Later in 1986
William Trochim developed the concept map into a strategic planning tool for use in the design of
organisational components. Trochim's technique differs significantly from Novak's original school of
thought. While Novak's maps are generated for an individual, Trochim's are generated by a group.
%ifferen"e R Competen"e and Competen"y
A Competency illustrates how a job might be done, excellently whereas a Competence only describes
what has to be done, not how. Consequently the Competences portray the duties of an HR Manager -
such as manage the HR office and the staff of the organisation, prepare salary stack ups and
compensations benefits and rewards, manage recruitment and selection processes and motivate the
office force. The Competencies which might determine excellence in this role could include Problem
Solving and Judgment; Drive and Determination; Awareness of statutory compliances; Inter-personal
skills, leadership skills etc., all of which might be expressed further by Behavioural Indicators concerning
explicitly to that position in that organisation.
Competen"e Competen"y
Based on the work task or job outputs Based on behaviour
Describes the attributes of the job Describes the attributes of the person
Consists of the various skills and knowledge
required t perform a job
Consists mainly of underlying characteristics
of a person which result in effective and/or
superior performance on a job
Are not transferable since each competence
is specific to a single job or a specific range
of jobs
Are transferable from one sphere to another
Measured by performance on the job Measured in terms of behaviour
Are specifically process centric Are typically result-centric
HoC a typi"al "ompeten"y map Could loo5
This consists of clusters 1, 2, 3, 4 and 5. The 1
st
and 5
th
clusters are solitary reapers and the major
clusters that show commonalities of behaviours are 2, 3 and 4.
Now the basic problem of how these graphs can be interpreted and inferred arises. The accuracy of the
representation of the map is rather dicey to analyse and validate with reference to theory. It aids in
breeding fake data with known properties and asses the reliability of the competency mapping exercise.
It surely provides as a workable input to competency mapping.
Interpretations of the data are of course subject to the designer.
(hen to use
The use of Competencies can include:
1. Assessment during recruitment, through specific work-based exercises and relevant, validated,
psychometric tests,
2. Assessment during auxiliary development; as a profile during assessment to guide future
development needs,
3. Succession planning and promotion,
4. Organisational development analysis.
!e"hniOues used to map Competen"ies in"lude
1. Criti"al In"ident Analysis
4. Repertory Grid
6. &eha+iorual '+ent Inter+ieC
;. 'Fpert systems
<. &en"hmar5ing
(hy "ompeten"y mapping
Erudition and training are conducted to ensure that people have the knowledge and skills needed to
excel at their jobs. In order to do this, it is important to map the required knowledge and skills
(competencies) to jobs and to the organization's strategy. It serves as a means to ascertain that an
organization's knowledge and capabilities are in alignment with its strategy.
Increasing recognition of the importance of competency mapping and alignment, many management
systems are including support for this in their systems. But of course it is evident that this is applicable
only to learning organisations.
It is advisable to broaden horizons to link competency maps with content, so that content searches and
purchases can be tightly allied to an organization's strategy.
It makes use of sophisticated mapping between competency taxonomy and multiple content
taxonomies. This kind of multiple mapping between taxonomies requires the use of information
organizations known as ontology.
Competen"y mappingB hoC it "an be implemented
* Through assessment centers
* by means of sample roles and simple mapping techniques
* Use of Psychometric Tests to assess competencies
* experience some of the tools used in Assessment and development centers:
o In-basket exercises: Application, methods of developing and using the tool
o Interpersonal skill exercise: Demonstration Role plays, examination of their potential for assessment
o Leaderless Group Discussions
o Simulation Games , exercises and discussion
Implementing Competen"yB&ased Systems
Competencies are perspective in nature. They answer the question 'What does a star performer look like
in a specific setting?' In other words, effectual competencies are associated to a particular organizational
target or goal. As a result, depending on the context, models may be geared toward various levels in
the organisation:
The total organization (e.g., core competencies or values)
1. An entire function (e.g., marketing, human resources)
2. A career level or band (e.g., individual contributor, team leader, Mid-level manager, strategist, or
executive)
3. A specific role (e.g., HR generalist)
4. A specific job (e.g., compensation analyst)
Applying competencies appropriately endows an excellent engine for raising the slab, endorsing common
standards, and assimilating HR processes. Conversely, competencies should be coupled with other
interventions such as programme offerings and setting objective performance goals to make an
optimum impact.
However, executing competencies in functions manifold through the cross section of the organization
amounts to a large-scale change and necessitates considerable resources and time. In other words,
clarifying the critical success factors or competencies required for the success of future professionals is a
necessary, but not sufficient aspect of functional transformation. More often than not individuals and
organizations hub on defining the specific behaviors that sustain excellence, overlooking restraints to
change such as culture, structural, process and learning systems.
Choosing the a""urate "ompeten"ies
Competency-identification is a dominant organizational exercise. the top management has to establish
what really steers the organisation to success. Scores of imperative attributes and proficiencies can be
articulated.
Every effective performance evaluation system focuses on both competencies and results. But which
competencies should the organization pick to assess? One practical and highly enlightening way to help
top management identify the most important competencies for their organization is to list all of the
possibilities, together with a definition or explanation, on separate index cards. Each senior executive is
then responsible for arranging the cards into three equal lots: ought to, should and preferable.
HoC Could a star performer beha+e)
A glaring error on too many performance appraisal forms is that desired performance is only defined,
not described. It's a cake walk for a student to cut and paste an important idea or concept from the
encyclopedia or the net. But what about its application? How do you identify or classify it? If you
observe a teamwork or leadership master at work, what would notice?
Mastery-narrations are much more precise than definitions: descriptive behaviors of one who has
mastered the area. Mastery descriptions give the appraiser a yardstick against which to evaluate the
actual activities of the individual he is assessing. Even better, it provides the appraisee with an apparent
picture of what the organization precisely expects.
Once the core competencies have been identified, an equally difficult challenge awaits: what is the basis
of evaluating these competencies? What kind of scale should be employed?
Choosing the right values of the scale is a seemingly challenging task. For instance, people are
apprehensive if a numerical scale is chosen (1-2-3-4-5). An attempt to benchmark the performances
against measurable yardsticks would leave ambiguity in the average and below average performers.
They would fail to understand the specifics of the expectations of them (Failed to meet expectations /
met expectations / surpassed expectations. Using an absolute verdict system would invite complaints
about the rating being unfair (Marginal / Fair / Competent / Superior / Distinguished). In order to evade
discontent amongst the performers one of the ratings that we have decided to use is a qualitative scale
(Disagree Strongly (5) Disagree (4) Neutral (3) Agree (2) and Agree Strongly (1)). The results of this
are under a pilot test and shall be discussed at length in our subsequent article.
There are yet other opinions that others hold as an alternative to this - a behavioral frequency scale.
In this the rater errors are minimized or even eliminated as the behavioral frequency scales ask raters
to indicate how recurrently the appraisee behaved like a star performer. Next, think of someone whose
performance you are responsible for assessing, and then ask yourself, "How often does the person do all
the things listed in the competencies dictionary? -rarely, occasionally, frequently or regularly?
Another advantage of the behavioral frequency approach is that it directly guides performance. Instead
of having to site out examples of each of the items on an organisations' competency list, the executive
has to instead review the list with the subordinate and say, "Just do the things on this list and you'll be
a fully acceptable performer." In fact this is something that we are trying to instill in our educational
institution- PESIT Bangalore.
Finally, the behavioral frequency scales gives way to ease out the delivery of bad news. Instead of
forcing the manager to call Naveen a numero uno or a Marginal performer, the manager can say,
"Naveen in this list of business acumen I see you are following certain things listed here, rarely. What is
your suggestion for bringing about an improvement or displaying a frequency of this/these particular
behaviours? In order for me to project a better report?"
There is also an appendage to this. For instance, some assessment items just align with an evaluation
through a behavioral frequency scale. Predominantly, absolute verdicts are essential when it concerns
assessment of the appraisee having met the job description or accomplished the set targets. The best
things that some organisations would do is to use a readily acceptable and intuitively coined verbal
descriptions of behaviours which acts more as a motivator than a demotivator.
&ibliography-
http://www.csse.monash.edu.au/hons/projects/2002/Robyn.Mcnamara/images/trochim.png
Articles by:
Darin Philips
Dr. Stephen C. Schoonover
Dick Grote President of Grote Consulting Corporation in Dallas
And of TManage, Inc.
K. Murali Mohan# Senior Faculty - Human Resources & Communications, Department of Management
Studies, P'S Institute of !e"hnology# Bangalore
E-mail: mkalvakalva@hotmail.com
%r. SaCitha Hari5rishnan# Professor and Head, Department of Management Studies
P'S Institute of !e"hnology# Bangalore, E-mail: sawithah@yahoo.com
R'7'RS' *$GIS!ICS- &'/'8I!S A/% IMP*ICA!I$/S
By
Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409

This is concerned with return of goods to supplier for whatever reasons and efficient handling of the
same through application of logistics systems with or without use of software. In competitive
environment reverse logistics viz. accepting product returns, product recall, product disposal and
product recycling not only result in competitive advantage and differentiation but also increase
profitability of organizations and compliance to ever-stringent environmental protection requirements.
These are bound to take place in Indian economy too as the markets heat up and margins thin out with
Environmental regulations clawing down upon the Industry in near future.
Reverse logistics, the handling and disposition of returned goods, "used to be something that happened
in the back room and wasn't considered strategic," says John Corrigan, VP and CIO at Este Lauder.
"It's now being brought to senior management's attention and viewed as an addressable and important
part of the business."
For a number of reasons, companies including General Motors; Sears, Roebuck; 3M; and a handful of
online retailers have seen reverse logistics emerge from the shadows of the back room to the bright
light of the boardroom. At the simplest level, the disposition of returned goods consists of junking them
or giving them away. But with more sophisticated systems and processes, returned goods can be put
back into inventory, sold at liquidation centers, or broken down to component parts--steps that can cut
costs, increase profits, and improve customer service. Says Gus Pagonis, executive VP of logistics at
Sears, "Logistics is the last frontier for cost reductions."
The logistics design objectives include reverse material flow system to support the life cycle of the
product. In fact, reverse logistical competency is the result of worldwide attention to environmental
concerns. Reverse logistics network can be used for various purposes such as refilling, repairs,
refurbishing, remanufacturing etc. Depending upon the nature of the product, unit value, sales volume,
and distribution channel, reverse logistics can be organized and the system designed in various
situations.
*et see for eFample a feC appli"ations-
1. Refilling of LPG gas cylinders by petroleum companies like IOC, HP etc.
2. Refilling of Glass bottles for cold drinks like Coca Cola, Pepsi etc
3. Product recall like in case of Glaxo Laboratories, Mumbai ,I remember, in 1977 they had to recall
Baby Milk food packs from market due to some variations in formula.
4. In case of Alloy Steel bars supplied to auto and engineering industries, the manufacturing plants have
to frequently take the goods back on account of composition variations or internal defects in product
and reprocess or resale to other types of users from warehouses or taking these right back to
Manufacturing facility.
5. Occasional recall of cars by major Auto suppliers when some defects are found in transmission,
chassis or other parts of automobiles for repair or refurbishing.
6. Waste and packing material recycling is now being strictly enforced in many countries led by
Germany. Here the FMCG manufacturers have jointly promoted the Dealers System Deutschland (DSD),
with common funding, for collection packaging waste of FMCG Products. Same ways in US old batteries
have to be taken back.
One can think of disposal of old computer CPUs and Monitors in US Markets; a phenomenal
environmental concern.
7. Sony, a consumer electronics giant operating in USA uses its regular dealer network for reverse flow
of video and audio systems returned by customers within the warranty period.
We can thus see that reverse logistics addresses several issues in supply chain management and overall
economics and social responsibilities of businesses. Often a successful and well-managed system can
result in improved profitability and Brand image of the companies.
After the Japanese Government passed The Electric Home appliances Recycling Law in April 2001, the
Matsushita group, having brand names National and Panasonic, set up a recycling plant in 2002 for
processing of one million units of various consumer durables (including White goods & Electronics)
8. In second hand item exchange offers now very popular in India, although. The items are normally
refurbished in local areas only, like television sets and Maruti True Value dealers, still these can be
considered as part of reverse logistics system.
!he *ogi" Chart-
(Courtesy: Logistics Europe: April 2004; Steve Butler)
One of the important issue in reverse logistics design is Cost implications in pick up, transport, handling
and processing and also product breakages like in case of empty bottle returns for soft drinks and beer
(as high as 5%). Same way laws regarding excise and sales tax on resale of processed goods also have
to be taken into account. The manufacturer can consider regional warehouses for such system or bring
back material to its Main facility depending upon nature of defects or work required.
One of the major bottlenecks in reverse flow of goods is comparatively small consignment size requiring
cargo consolidation at intermediate points or part shipment, which may escalate costs.
In "ompetiti+e mar5ets# to retain eFisting "ustomers# $rganisations may "reate brandB
sCit"hing barriers by eFtending +alue added ser+i"e to their "ustomers.
The efficiency and effectiveness in logistics operations enhances the service capability of the firms in
satisfying the customer. To remain competitive and differentiated (It is now very difficult to differentiate
on product parameters or advertising alone), more and more firms across the world are showing speed
and reliability in service offering such as:
Replacing defective goods
Repairing used products
Refurbishing return products
Calling back substandard or harmful products
And disposing product waste
These services add to the competitiveness of the company operating in a regulatory environment and
create customer value by providing a clean environment through reverse logistics service without any
extra cost to customers.
$utside Help
Despite the proprietary innovation of some, most companies that have seriously tackled reverse logistics
have done so using a third-party service provider. Sears, for example, contracted with Genco more than
five years ago to handle the reverse flow of goods. When executive VP of logistics Pagonis arrived at
Sears in 1993 the product returns were handled individually by retail stores. Pagonis worked with Genco
to set up three central returns centers to reduce the time involved with returned goods at individual
stores to a minimum. To increase economies of scale, Pagonis consolidated 68 liquidation centers for
appliances to 38. "We used to lose a lot of money when we destroyed goods at stores or didn't get
proper credit from vendors," Pagonis says.
Following is the Logistics services examples of ROADWAY Reverse Logistics, Inc given on their website:

BBH Arti"le "ontinued on neFt page# "li"5 here BBH
BBH Arti"le "ontinued on neFt page# "li"5 here BBH
Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409
R'7'RS' *$GIS!ICS- &'/'8I!S A/% IMP*ICA!I$/S
By
Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409

...Continued from pre+ious page
IBB Cli"5 for Pre+ious page
EPro.e"t 'Famples
Seasonal Items
Timely pickup, return and processing of seasonal items, i.e. after Christmas products or summer lawn
furniture, lawn mowers or winter snow blowers
Round trip produ"t tra"5ing
Monitoring transportation and disposition of the product from the time of shipment to consignee through
the return back to origin, i.e. reusable containers
Produ"t re"alls
Single source expedited collection of product returns from the marketplace
Sto"5 ad.ustments
Consolidation and redistribution of excess inventory for timely, cost effective replenishment
Mer"handise "hangeBouts
Removal of old product from customer locations and replacing with new product within a prescribed
timeframe
%isposal
Regional disposal of product through landfill, incinerator or other means requiring certification
documents
Produ"t re"y"ling
Management of product to be recycled for reuse, i.e. metal and paper
Produ"t buyouts
Occurs when a manufacturer buys out a retailer's supply of a competitor's product, requiring expedited
removal, often sent to a liquidator"
8$R $/*I/' S!$R'S-
Another aspect of reverse logistics is of high importance in $nline stores sales like in case of
Rediff.com# Mumbai. The online stores to build customer confidence give NO Questions Asked return
of goods by customer within a specified time limit of receipt of goods. Since most of these stores use
dropBshipping model for deli+ery, the reverse flow of goods is attached with lot of importance in
proper designing of the system.
&ARRI'RS
Despite the importance and benefits of reverse logistics for an organization, there could be several
reasons for firms not going in seriously for this or not implementing it at all.
S,MMAR0-
The effective management of reverse logistics will no doubt improve customer service levels, support
companies' environmental strategies, meet developing legislative requirements and has the potential to
positively impact profitability and competitive positioning.
Referen"es-
1. Logistics Management: The supply chain imperative; Vinod C Sople ; Pearson education.
2. Handbook of Logistics and Distribution Management; Gattorna John L.; Jaico Publishing House
3. Reverse Logistics By Bruce Caldwell ;Information Week Online April 12, 1999.

IBB Cli"5 for Pre+ious page
Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409

HoC to ma5e hard selling +ery easy R An insight analysis on the
eFperien"e of the (orldMs &est Sales person) Joe Girard
By
A M Sa55thi+el# Senior Faculty - Marketing Area, %epartment of Management Studies#
P'S Institute of !e"hnology# Bangalore, E-mail : sakkthi@yahoo.co.uk
%r. &ishnu Priya Mishra# Reader in Management, Regional College of Management
Bhubaneswar
E0ou "annot sell something Chi"h people do not Cish to buy# and if you do# it Cill ba"5 fireE B
Author
Selling is the bread and butter of any organization in this world. They are many ways to value an
organization viz. Fixed assets hold by the organization, Market capitalization of the organization and
sales generated by the organization. But, the business world considers the only thing, i.e. sales
generated by the organization and why is it important. Fixed assets would always depreciate (except
land) over a period, market capitalization would fluctuate in line with market conditions, and sales is the
only legitimate source that an organization ensures the inflow of cash in the organization which would
happen with proper business model (products and services for specified target group(s) and revenue
model (earn money through this sales). Yet, many sources available to generate and bring in cash into
the organization viz. issue equity, debentures, bonds etc and source term loans, yet the former has firm
obligatory of repayment, either in principal and interest or the dividend to the investors. But, a sale is
the only aspect in which the organization enjoys no obligation and financial strength of the organization
gauge through this. Fortune 500 companies across the globe and in India are considered through sales,
not the fixed assets or market capitalization they hold or enjoy. Hence, the sales is the thing which
every organization in this planet is aspire to achieve and this article would help the readers to
understand and use certain tips to make effective sales through the inside experience of the world's best
sales person!
A""ording to the Guinness &oo5 of (orld Re"ords, Joe Girard is the World's greatest sales person.
Girard, who was the top car salesperson in America for over a decade, sold nearly thousand cars yearly
out of a Detroit Chevrolet dealership. Today, he makes even more money by writing books (e.g., How to
sell anything to anybody), making videotapes, and conducting eight-week training courses for
salespeople.
HoC Girard "ould a"hie+e this '+erest tas5?
Girard has great confidence in himself and works at keeping it. Every morning when he gets out of bed,
he looks in the mirror and says: 67ou are the most terrific* most beautiful guy in the (hole
(orld." He even wears a gold pin on his lapel proclaiming himself as No.1, and as he puts it- ,I a& the
#est. 0u&ero uno,1 0u&#er 2ne3. 'nd you 8no( (hy $&m the best1 $ believe in myself9.$f you
(ant to sell anything* you have to sell yourself* you have to sell yourself* you must have self4
respect* that is* you must believe you are number one".
When he sold cars, he used two full-time assistants. The assistants greeted prospective customers and
took them on demonstration rides. Once the customers were prepped, Girard took over. He took each
customer into a tiny office where they sat 21/2 feet from each other-never more because 6you have
got 8eep the electricity going* maintain close eye contact* shut everything out but me and
(hat $ have got to say. People al(ays loo8 at salesmen li8e they are liars* cheats* out to rob
them of their money. )ut $ am their friend. $ give everyone this button (hich says5 &$ li8e
you* not your money:".
Girard believes in paying close attention to prospects' body language. If their eyes narrow or they
perspire or cross and uncross their legs, he changes the subject and talks about the football game or
politics---anything to make them relax. And then he moves back to business.
Girard insists that he is not a phony. People sniff out phoniness, he claims and elaborates: "No one who
is insincere will ever be a successful salesman. 65% of my customers are repeats. That is because I
treat them the way they want to be treated. I take care of them because if I treat them right, they will
bring in more customers. (To help ensure that they do, he pays a $25 commission for any referral of a
potential car buyer.) "I never stop working," says Girard, "I am the best---I can do better".
Joe Girard Sales !ips for su""essful prospe"ting
1. Let the prospective customer know that you want to be a friend-and do not give a customer a
chance to decline your offer of friendship. Never ask questions that can be answered yes or no.
2. Let the customer try the product to his or her heart's content. Girard tells the prospective buyer to
take any car, and he suggests, 6May be you should drive it by your house and sho( it to your
(ife." According to Girard, ";nce the (ife sees her husband in brand ne( car* she is going to
feel excited. "nd he is bound to feel important". Thus, it is going to be really tough to bring it back
to the dealership.
6. Use flattery* but be certain that flattery is sincere. "How can anyone walk away from someone's
who is interested in him?
4. Never interrupt or attempt to upstage a prospective buyer.
5. Make your customers work for you. The most important selling begins after the sale when you make
sure that the customer is satisfied.
6. Follow through after your sale.
7. Quote a reasonable price, regardless of the customer's knowledge on this point. Sooner or later, the
customer is going to find out whether or not the price was fair, so if you want repeat business and a
good reputation, treat all customers fairly.
8. Never pressure a customer-and not just because it is not nice to do. "I do not use hard-sell
techniques," Girard claims, "because they do not work"
Mr.Girard's approach and tips are definitely eye openers to management graduates who choose sales
career. Sales does not solely belong to those in sales, sales is a pervasive and in this material world,
every human being is a sales man and round the clock , he/she sells ideas, product and services,
irrespective of his/her position in the society. Husband sells his ideas to wife and vice versa, it may be a
social selling, yet, the outcome counts a lot in maintaining harmony in family. Hence, it is evident that
selling is not the thing for organizations, it is also for society.
7arious Approa"hes of Prospe"ting
1. Introductory Approach
2. Mutual Acquaintance, or reference, Approach
3. Customer Benefit Approach
4. Compliment or Praise, Approach
5. Free Gift or Sample, Approach
6. Question Approach
7. Product or Ingredient Approach
8. Dramatic Approach
%he above prospecting approaches may be in academic nature* yet* it is very useful to use in
the field (ith the modifications according to selling situations and the nature of consumers
deal (ith. "bove all* the experience of Mr. <irard (ould provide insights and it is the
experience every potential sales person ought to undergo to be a better sales person* not
only for profession* even for having better harmony in personal life.
A M Sa55thi+el# Senior Faculty - Marketing Area, Department of Management Studies,
P'S Institute of !e"hnology# Bangalore, E-mail : sakkthi@yahoo.co.uk
%r. &ishnu Priya Mishra# Reader in Management, Regional College of Management# Bhubaneswar
Re"ent !rends in Internet &an5ing
By
Prof. 7ishCanathan &harathan
Assistant Professor
%oddappa Appa Institute of M&A
S.B.College Complex, Gulbarga-585103
E-mail: v_bharathan@hotmail.com

(hat is Internet &an5ing)
Internet banking involves consumers using the Internet to access their bank account and to undertake
banking transactions. At the basic level, Internet banking can mean the setting up of a Web page by a
bank to give information about its product and services. At an advance level, it involves provision of
facilities such as accessing accounts, funds transfer, and buying financial products or services online.
This is called ``transactional'' online banking.
There are two ways to offer Internet banking. First, an existing bank with physical offices can establish a
web site and offer Internet banking in addition to its traditional delivery channels. Second, a bank may
be established as a "branch less, Internet only, or virtual bank" without any physical branch.
&an5ing ser+i"es through Internet
(A). Levels of Banking services
Broadly, the levels of banking services offered through INTERNET can be categorized in three types:
(i) The Basic Level Services use the banks' websites which disseminate information on different
products and services offered to customers and members of public in general. It may receive and
reply to customers' queries through e-mail,
(ii) In the next level are Simple Transactional Websites which allow customers to submit their
instructions, applications for different services, queries on their account balances, etc, but do not
permit any fund-based transactions on their accounts,
(iii) The third level of Internet banking services are offered by Fully Transactional Websites which
allow the customers to operate on their accounts for transfer of funds, payment of different bills,
subscribing to other products of the bank and to transact purchase and sale of securities, etc.
Most of the banks providing Internet banking products and services offer, to a large extent, an identical
and standard package of banking services and transactional capabilities.
(B). Structure of Banking services
In general, Internet banking products are offered in a two-tiered structure.
* A basic tier of Internet banking products includes customer account inquiry, funds transfer and
electronic bill payment.
* A second or premium tier includes basic services plus one or more additional services such as
1) Brokerage. 2) Cash management. 3) Credit applications. 4) Credit and debit cards. 5) Customer
correspondence. 6) Demat holdings. 7) Financial advice 8) Foreign exchange trading. 9) Insurance. 10)
Online trading. 11) Opening accounts 12) Requests and intimations. 13) Tax services. 14) E-shopping.
15) Standing instructions. 16) Investments. 17) Asset management services etc.
!raditional &an5ing 7s. Internet &an5ing
In traditional banking, the customer has to visit the branch of the bank in person to perform the basic
banking operations viz., account enquiry, funds transfer, cash withdrawing etc.,
On the other hand, E-banking enables the customers to perform the basic banking transactions by
sitting at their homes or at offices through a desktop or laptop round the clock globally through
electronic media. This is called any time, any where banking. The customers can access the banks'
website for viewing their account details and perform the transactions as per their requirements.
Customers can make use of these services with no restricted banking hours, no queues, no tellers and
no waiting.
'Bban5ing !ransa"tions
The following are some of the basic functions in Internet Banking:
o Account Enquiry
o Fund Transfer
o Payment of Electricity, Water and Telephone bills
o Online payment for transactions actually performed through Internet
o Request for issuance of cheque books, demand drafts etc.,
o Statement of accounts
o Access to latest schemes
o Access to rates of interest and other service charges
Models for 'B&an5ing
To implement effectively E-banking and augment the level of technology the following models have
been suggested:
(i) Complete Centralized Solution (CCS)
(ii) Cluster Approach
(iii) High Tech Bank within Bank
Complete Centrali9ed Solution
Of the above three models, the Complete Centralized Solution (CCS) is the ideal branch network model
on which E-banking activities can be implemented uniformly and efficiently. Under this model, the bank
has to provide web-server and the requisite software which is connected to the main server. The
customers can access the web server for their basic banking operations using any standard browser at
any location.
8eatures of CCS
The following are the features of Complete Centralized Solution:
(i) The entire system software, data for the entire bank etc., are stored in a centralized server with its
hot standby server being placed at a different location and connected through high speed and efficient
network.
(ii) Branches are provided with online nodes to receive requests from customers and to provide services
across the counter.
(iii) The nodes provided at remote branches are connected through effective satellite links with enough
redundancy to provide reliability as well as adequate bandwidth.
(iv) Skilled manpower is required only at the centralised location
Ad+antages of Internet &an5ing
(i) Round the clock banking
E-banking facilitates performing basic banking transactions by customers round the clock globally. In
fact there is no restricted office hours for E-banking.
(ii) Convenient Banking
Customers can perform basic banking transactions by simply sitting at their office or at home through
PC or LAPTOP. No personal visit to the branch is required for routine basic transactions.
(iii) Low Cost Banking
The operational costs have come down due to technology adoption. The cost of transactions through
internet banking is much less than any other traditional mode. There is also much saving on the cost of
infrastructure as the banks can have access to a greater number of potential customers without the
commitment costs of physically opening branches. Moreover, requirements of staff at the banks get
reduced to a greater extent.
(iv) Profitable Banking
The increased speed of response to customer requirements, can enhance customer satisfaction and
consequently can lead to higher profits as a result of handling more number of customer accounts.
(v) Quality Banking
Internet banking allows the possibility of improved quality and an enlarged range of services being
made available to customers.
(vi) Speed Banking
The increased speed of response to customer requirements will lead to greater customer satisfaction
and handling a large number of transactions at a lesser time. Thus, it increases the customers'
convenience to a greater extent and facilitates better customer retention.
(vii) Service Banking
Banks can also offer many cash management products. Instant credit, one day credit, immediate
payment of utility bills, instant transfer of funds etc., is possible under E-banking.

BBH Arti"le "ontinued on neFt page# "li"5 here BBH
BBH Arti"le "ontinued on neFt page# "li"5 here BBH
Prof. 7ishCanathan &harathan
Assistant Professor
%oddappa Appa Institute of M&A
S.B.College Complex, Gulbarga-585103
E-mail : v_bharathan@hotmail.com
Re"ent !rends in Internet &an5ing
By
Prof. 7ishCanathan &harathan
Assistant Professor
%oddappa Appa Institute of M&A
S.B.College Complex, Gulbarga-585103
E-mail : v_bharathan@hotmail.com

...Continued from pre+ious page
IBB Cli"5 for Pre+ious page
Constraints in Internet ban5ing
Although there are obvious benefits in Internet Banking , there are some hurdles in the smooth
implementation of Internet-banking.
(i) Start-up cost : The initial start-up cost for venturing into Internet banking is on the higher side and it
includes the following:
* connection cost to the Internet or any other mode of electronic communication
* cost of sophisticated hardware, software and other related components like Modem, Router, Bridges,
network management system
* cost of maintenance of all equipment, web sites, skill level of employees
* cost of setting up organizational activities
(ii) Training and Maintenance: The introduction of Internet banking involves 24 hours support
environment, quality service to end users and other partners which would necessitate a well qualified
and robust group of skilled people to meet external and internal commitments. Hence the bank has to
spend a lot on training.
(iii). Lack of skilled personnel: It is a well known fact that there is an acute scarcity of web developers,
content providers and knowledgeable professionals to route banking transactions through internet.
(iv). Security: In paperless banking transactions, many problems of security are involved. A security
threat is defined as a circumstansive decision or event with potential to cause economic hardship to data
or network resources in the form of destruction, disclosure, modification of data, denial of services,
fraud, waste and abuse. There are chances that the documents such as cheque, passbook etc., can be
modified without leaving any visible trace. Distortions of information are also possible. Providing
appropriate security may require a major initial investments in the form of application encryption require
a major investments in the form of application encryption techniques, implementation of firewalls etc.,
In spite of implementation of several security measures the possibility of a security breach cannot be
ruled out.
(v). Legal Issues: Legal framework for recognizing the validity of banking transactions conducted
through the ' NET' is still being put in place. Though initial legal framework has been devised for E-
banking activities, it is uncertain as to what possible legal issues may pop up in future as banking on
Internet progresses.
(vi). Restricted clientele and technical problems: The user of E-Banking needs a computer and time to
log on to the site, which means that the target clientele is restricted to those who have a home PC or
can access the 'Net' through the office or cybercafe. Moreover technical constraints due to telephone
connectivity, modem connections etc., may cause constraints.
Se"urity measures
Most of the problems mentioned above are in the nature of teething problems and hence they can be
eliminated over a period of time. However, for venturing into E-Banking, the following major controls
must be ensured.
* Authenticity controls: To verify identity to individuals like password, PIN etc.,
* Accuracy control: To ensure the correctness of the data, flowing across the network.
* Completeness control: To make sure that no data is missing
* Redundancy controls: To see that data is traveled and processed only once and there is no repetitive
sending of data.
* Privacy controls: To protect the data from inadvertent or unauthorized access
* Audit Trail Controls: To ensure keeping chronological role of events that are occurred in the system.
* Existence controls: To make sure that on going availability of all the system resources with the same
throughout
* Efficient: To ensure that the system uses minimum resources, to achieve the desired goal.
* Fire wall controls: To prevent unauthorized users accessing the private network, which are connected
to Internet.
* Encryption controls: To enable only those who possess secret key to decrypt the cyber text.
Con"lusion
E Banking is becoming immensely popular globally, and India is no exception to it. The declining
Internet rates, falling PC prices, broad bandwidth access through cable and digital subscriber lines,
accessing the NET through cable TV etc., would definitely encourage the boom in E Banking in India.
With the globalization of business and services, our country cannot lag behind in niche areas of
Electronic Banking. In the new global era of multi currency, multi-legal and multi regulatory systems,
with the freedom of E-Commerce, banks have to operate like multinational corporations to grow and
survive by adopting E banking.
Parti"ulars of the Author-
Name: Vishwanathan Bharathan, B.Com, MBA, AICWAI
Designation: Assistant Professor
Institution: Doddappa Appa Institute of MBA, S.B.College Complex, Gulbarga- 585103
E-mail: v_bharathan@hotmail.com
Phone: 08472-223367 (College) 08472-262520 (Res.)
Fax: 08472-223367

IBB Cli"5 for Pre+ious page
Prof. 7ishCanathan &harathan
Assistant Professor
%oddappa Appa Institute of M&A
S.B.College Complex, Gulbarga-585103
E-mail : v_bharathan@hotmail.com
'motional Intelligen"e B (hat It Means
By
%r. SaCitha Hari5rishnan
Ph.D., Professor and Head,
%epartment of Management Studies# P'SI!
PESIT Campus, 100 Feet Ring Road, Banashankari III Stage, Bangalore-560 085
E-mail: sawithah@yahoo.com

In the present scenario there has been a remarkable change in the way in which the rules of work are
seen. People are not evaluated by how smart they are, or how intelligent, or the training and expertise
attained, but by how well they handle themselves and each other. This rule is applied for hiring,
appraising, promoting, and even firing. These new rules can predict who is most likely to become a star
performer and who is more prone to derailing.
On looking closely, it is seen that afore mentioned rules have little to do with what we were told in
school in the sense that academic abilities have no relevance to this standard. This new measure takes
for granted the intellectual ability and technical ability required for a job, and instead focuses on
personal qualities such as initiative, empathy, adaptability, and persuasiveness.
Management experts (Carnevale et al.,1996) are of the view that this trend is neither passing fad nor a
nostrum of the moment but based on research studies of tens of thousands of working people, in
callings of various kinds. Especially in a time with no guarantees of job security, when the very concept
of 'job' is rapidly being replaced by what is popularly called 'people skills', these are important qualities
that make and keep people employable. These skills have been referred to loosely by various terms like
'character', 'personality', 'soft skills', 'competence', etc. But with Daniel Goldman's international
bestseller "Emotional Intelligence: Why it can matter more than IQ?" companies are looking to
"emotional intelligence" (EQ) as a priority and a vital component to any management philosophy. Dr.
Reuven Bar-On coined the term EQ and also has developed an instrument known as the &arB$n 'GBI
for measuring EQ.
Emotional Intelligence is seen to be an umbrella term that comprises a broad collection of individual
skills and dispositions, usually referred to as 'soft skills' meaning inter and intra-personal skills that are
outside the traditional areas of general intelligence, technical, and professional skills. Professionals of
the area are of the view that in order to be an adequately functioning member of society, one must
possess traditional intelligence (IQ) as well as emotional intelligence (EQ). The above view fits with the
traditional notion that one needs 'something' more than brains to succeed in life. That 'something' is
what we popularly call "emotional intelligence" now.
Soft S5ills at (or5 Pla"e
The whole concept of "work" is rapidly changing fast. The buzzwords of today are "delayering,
rightsizing, outsourcing" etc to name a few. Against such a backdrop employees are faced with new
demands that are to deliver faster, cheaper and smarter. Promotions too are not viewed as the only
means to grow - people are looking towards moving laterally and spirally. The job market too has
undergone a sea change. Real talent is looking for right work culture, charismatic leadership and close
relationships at work. Companies too are stressing on 'emotional bonds' rather than 'legal bonds' as the
means for retention. Practices like dating allowances, crches for working parents, or even flexi-working
are all geared towards the emotional needs of the employees.
To understand emotional intelligence better one needs to know the dimensions. The following are what
is commonly recognized as its dimensions:
a) Self-awareness: this relates to the competencies of emotional self-awareness, accurate self-
assessment and self-confidence.
b) Self-management: this includes self-control, trustworthiness, conscientiousness, adaptability,
achievement orientation, and initiative.
c) Self-control: this defines the competencies of leadership, influences, communication, change
catalyst, conflict management, building bonds, teamwork, and collaboration.
d) Social-awareness: this dimension relates to empathy, organizational awareness, developing
others, and service orientation.
With the above mentioned dimensions of EQ in mind, it is also necessary to recognize it in oneself! We
have emotional quotient if we have
o The ability to express emotions appropriately and effectively, not just knowing how one
feel or hiding behind one's self-imposed wall.
o The ability to confront people with uncomfortable truths, even if it means not being nice
to them all the time
o The ability to use the right display of emotions at the right time
Hiring and 'G
EQ is also seen to affect the recruitment and selection processes in a company. A study conducted on
4500 men and 3200 women in the US and Canada show that women have better interpersonal skills
(soft skills) than men, while men display better sense of self and tolerance for stress. These findings do
have implications in the workplace because they are able to answer the questions of why women are
seen to occupy higher corporate positions nowadays, something that was not so common in the recent
past.
Soft skills are seen to have some relevance for IT professionals also. IQ alone did not contend for
success in work life. A study conducted on 104 IT specialists using an EQ test showed that IT
professionals had a lower overall score for EQ than the other groups, i.e. the HR group had the highest
score of 110, followed by technical support specialists, the MIS group followed by the programmers at
the bottom rung. It must also be mentioned that the average score for both the groups, namely HR and
IT was 100. Among the IT group, the highest score was obtained by the technical support group. So the
above results disprove the earlier belief that cognitive smartness (high IQ) makes the best technical
performers. Research is also showing that high EQ IT professionals become the real stars. They are seen
to use their interpersonal skills to get more information, to help solving problems, and are generally
liked well by others. These factors may not matter as much to some employers owing to the shortage of
programmers, and IT professionals needed to meet the increasing needs of the software industry. But
now with the crash of the dot coms, we are sure to find programmers trying to differentiate themselves,
looking for jobs. It is then that those with high EQ will prove winners. A study on 150 IT executives of
the 1000 largest companies in the US found that 68% of IT executives felt that 'soft skills' were more
important now than it was in previous years. This has led recruiters to look for 'soft skills' and 'common
sense' while hiring not only salespeople and managers but 'technical people' as well.
'G and Performan"e
It would not be far fetched to say that emotional intelligence is much more than a skill that's nice to
have. Evidence at the work place proves that EQ has a direct relationship to performance and thereby,
the bottom-line.
According to the studies conducted by the Personnel Resources and Development Center, U.S. Office of
Personnel Management, Washington, there is evidence of EQ's relationship to the bottom-line.
o A study of 1171 U.S. Air Force recruiters shows that the best performing recruiters were
those who scored high on assertiveness, empathy, interpersonal relations, problem
solving and optimism.
o A study conducted on 1000 sales personnel from a large, U.S. based international
company demonstrates that the characteristics most predictive of sales success were
assertiveness, empathy, happiness, emotional self-awareness and problem-solving skills.
o Research on 181 jobs at 121 companies worldwide showed that 2 out of 3 abilities vital
for success were emotional competencies like, trustworthiness, adaptability, and a talent
for collaboration.
o Another study on what big and medium sized corporations seek, when they hire MBAs
report that the desired capabilities are communication skills, interpersonal skills, and
initiative- all elements of EQ.
o In another study on computer programmers, it was seen that the top 10% of performers
out did average performers by 320% and that the top 1% superstars produced 1272%
more than the average.
o In an another study of top 500 organizations worldwide indicated that people with high EQ
rose to the top of the corporations, These 'star performers' possessed more interpersonal
skills and confidence than others-again indicators of EQ.
o In a retail chain, ability to handle stress was found to be linked to successful performance
by store managers measured in terms of net profits, sales per square foot, sales per
employee, and per dollar inventory investment.
o New sales persons at Met life who scored high on a test of 'learned optimism' sold 37%
more life insurance in their first two years than pessimists.
o Research by the Center for Creative Leadership has found that the primary causes for
derailment in executives were deficit in emotional competence, difficulty in handling
change, not being able to work well in a team, and poor interpersonal relations.
All the above studies prove beyond a shadow of doubt the importance of developing 'soft skills' for
success at ones job as well as life.
%e+eloping 'G
It took the corporate world some time to come to terms with the fact that personality counts for success
at work. Interestingly EQ can be learned over time. Also, unlike IQ, we can enhance our emotional
quotient. But also keep in mind that EQ cannot be learned as a result of a three-day training
programme. It requires much, much more than a few training sessions.
It is essential to keep in mind that EQ is fundamentally different from the normal 'soft skills' training like
active listening, problem solving, or team building. The difference lies in the fact that other soft skill
training is focused in content while EQ training is oriented towards broader parameters like
organizational and behavioral changes and receptiveness.
Behavioral trainer H. Shekar is of the opinion that "EQ efforts take longer than the average skill
development course because learners need personal time during training to absorb the material and
master it. The change must envelope basic patterns of behaving and reacting. It is not like learning to
work on Microsoft Office."
HR professional who have implemented intensive EQ training in their companies, are of the opinion that
it requires quite an effort. Madhu Grover, Training Manager of a Cosmetics MNC, has completed EQ
sessions for a group of 340 sales executives over a period of two years. She is of the view that in order
to develop a long lasting behavioral changes that impacts the bottom-line one has to:
o Identify various role competencies
o Assess current EQ levels of employees
o Fill in the gaps with EQ training.
o Work towards fulfilling predefined expected, outcomes of the EQ exercise
o Create avenues for employees to improve their emotional competency levels on a regular
basis through feedback, support, follow-up programmes, and role modeling.
The Consortium on Emotional Intelligence at Rutgers University in Piscataway, New Jersey, prescribes
guidelines on how to promote emotional intelligence in the workplace. They advocate the following:
o Determine the organizational competencies that are critical for effective job performance
in each job.
o Identify individual competencies from multiple ratings sources such as 360-degree
assessments that include boss, peer, and subordinate ratings. Locate the gaps between
desired and available competencies.
o Link learning goals to personal values.
o Build positive expectations by showing learners that social and emotional competence can
be proved and that such improvement will lead to valued outcomes. Build and share
realistic goals.
o Foster a positive relationship between the trainers and learners. Trainers who are genuine
and empathetic will be most effective.
o Encourage self-directed change. Allow people to tailor their learning program to their
unique needs.
o Be clear about what the competence, how to acquire it and how to use it at work.
o Break the goals into manageable steps
o Provide opportunities for sustained practice on the job.
o Provide ongoing performance feedback
o Build in support by forming groups, coaches and mentors.
o Enhance insight through self-awareness. Help learners acquire greater understanding
about how their thoughts, feelings, and behavior affect themselves and others.
o Encourage use of skills on the job. Make sure that supervisors, peers, and subordinates
reward learners for using new skills.
o Develop organizational culture to support learning.
o Evaluate the change. Assess impact on important job related outcomes and indicators of
adjustments such as absenteeism, grievances, health status, etc.
Successful EQ training confirm that three basic elements need to be covered in any programmes;
namely, theory, practice and application. It has to start from the background of what EQ is and why it is
important in the work place, to actual skills that people can use to become more emotionally intelligent,
and finally helping people to apply those tools to their situations and needs. And it is interesting to
observe that training sessions in EQ can last from a few days to several weeks. So that means duration
of the training sessions is not important. For example, much of the emotional competence training
consists of techniques to deal with emotions in the work place, especially negative ones i.e., people are
taught a skill called 'freeze frame' which is primarily a stress-busting tool. The process begins with
recognizing and accepting the feeling of stress; and then goes on to diverting attention away from the
negative emotion by recalling memories of a positive emotion from one's life. The learner then goes on
the search for a better response to the stressful situation and follows what his/her heart says. According
to H. Shekar, "Practicing this skill can help people change physiological responses to stress, such as
lowering blood pleasure and slowing down heart rate. In the workplace this is an invaluable skill, to feel
more comfortable and in command of yourself. Ultimately people find themselves performing at high
levels, because they are more relaxed and comfortable." A group of 15 to 20 participants is optimal for
EQ training.
Trainers recommend a heavy dose of practice for EQ learners. Managers from a large American Telecom
Company had a rating of 45% on a stress scale, but after EQ training experienced a drop of 20%. Those
managers also felt more peaceful and empowered and reported fewer problems related to insomnia and
headaches. In turn it also lead them to make other positive changes in lifestyle and health routine like
improved eating habits, more exercises, etc. From the point of view of the company also there were
benefits to reap. Organizations imparting EQ training experienced benefits like lower health care
expenditure, lower turnover, higher productivity, and increased profits.
But still, EQ awareness and training has still a long way to go. Companies only put aside a miniscule
portion of the training budget aside for soft skills. Most of the expenditure is set aside for technical and
computer-related skill training.
To conclude, empathy, flexibility, and self-confidence are not just soft skills to be categorized as
'preferable' on the appointment ad. Emotional competencies of this nature will actually improve the
bottom-line. Yes, Emotional Intelligence will sustain organizations through this millennium.
Referen"es
Carnevale, A.P., (1989), Work place Basics( The /kills E&ployers Want , 'Listening', American Society
for Training and Development, and U.S. Department for Labor, Washington D.C.
Feist, J. F., and Barron.F., (19963+ E&otional Intelligence and 'cade&ic Intelligence in !areer and 4ife
/uccess, Paper presented at the Annual Convention of the American Psychological Society. San
Francisco.
Goleman, D., (19983+ Working )ith E&otional Intelligence, Bantam Books, London.
Goleman, D., (19953+ E&otional Intelligence, Bantam Books, New York.
Kelley, R.E., (1998), o) to #e a /tar at Work, Satisfying Work and Outstanding Performance, Times
Books, New York.
Malhotra, P, (Ed.) (2000) Bench "arking R5 arnessing the Po)er of E6+ Human Capital, Vol.3, No.8.
Tannenbaum, S.I., and Yukl G. (19923+ Training and $e%elop&ent in Work 2rgani7ations, Annual
Review of Psychology, 43.

%r. SaCitha Hari5rishnan
Ph.D., Professor and Head,
%epartment of Management Studies# P'SI!
PESIT Campus, 100 Feet Ring Road, Banashankari III Stage, Bangalore-560 085
E-mail: sawithah@yahoo.com
!urn the Sear"h *ight InCards
By
%r. K.S. Srini+asa Rao
Associate Professor
!.A. Pai Management Institute 2!APMI3
Manipal-576 104 (Karnataka)
E-mail: srinirao35@yahoo.com

One of my ex-colleagues sent a mail by saying that he has gone through a book titled "Mutiny on the
Har+ard &ounty- !he Har+ard &usiness S"hool and the %e"line of the /ationE, by Kenton W.
Elderkin (Elderkin Associates - June 1996). As the title itself suggests, the book is a critical evaluation of
practices at HBS, including classroom design. HBS has about 225 tenured and tenure track faculty
grouped into teams that investigate issues relating to specific countries and industry groups. They have
such groups for Latin America, North America, and so on. It's an interesting practice in HBS and so my
friend may have thought that it must be shared with me. He also indicated that one of the points made
in the book is that HBS professors lack country knowledge because of which their cases are shallow and
unreadable.
If I am right, when Mahatma Gandhi went to South Africa and from there wrote a letter to Ms. Sarojini
Naidu, describing about the ill-treatment of Blacks, then she replied politely by saying "Turn the Search
Light Inwards. In India also we are facing a similar problem - Casteism".
I think nobody appreciate if you try to solve the problems of your neighbour, keeping pending of your
own problems to be solved. First one has to set right his own house.
When I had approached one of my ex-Directors with an output of a case prepared by myself by using
the data of the Institute, he simply said, "I don't like somebody reading the problems of my Institute
and giving their own interpretations. You better approach some companies and collect the data and
make a case out of it which will be useful to the Industry and students".
It was happened long back with one of the premier institutes that when a pharmaceutical company
approached them for some consultancy. After the task got over, the professors made a case out of it
and started using the case for classroom discussion. It was so happened that one of the managers of
the same pharmaceutical company who attended afterwards for a MDP with that premier institute found
that their company became a case in the classroom discussions, he informed later to his boss and the
company almost tried to pull the B-School to court.
In India, whenever B-School rankings come in magazines, we can see the interviews from the directors
of B-Schools, including premier institutes, saying that there is a shortage of good faculty. For majority
the B-Schools the main demanding course is marketing and you can also find more faculty members in
that area in any institute. But theory and practice of marketing are not followed by the management of
B-Schools with reference to the faculty in majority of the Institutes.
Management Institutes are spending a lot of money by giving advertisements in newspapers nation wide
just to get faculty. Good number of the B-Schools is offering better scales and perks with some schemes
to attract the faculty. But, once a faculty joins in these institutes, the treatment is normal and the old
British style of bossism continues in some B-schools. This makes the academicians to think twice before
joining any B-School. Faculty turnover is very high in majority of the management institutes. I have
seen in one institute around seven faculty members left the institute in an academic year. Some of the
basic issues I have mentioned in my article titled "Organisational Behaviour: Technology Vs
Management" quite common in many B-Schools and that made CCC.indianM&A."om to open a
separate faculty article feature (S. No. 01, August 28, 2002) in their website. I am thankful to the
Website Managers who gave me an opportunity to write 100
th
article in the same series (August 28,
2004).
The basic problem is when a new director who joins in any institute. He is not thinking as per the actual
vision of the institute but goes as per his own vision. This disturbs the existing faculty and it becomes
one of the points for turnover. Even though we teach principles of Organizational Behaviour and change
management, majority of the directors treats their faculty in such a fashion that "control" is the
dominating factor rather than mutual cooperation and "friendly" environment.
Another issue in some of the management Institutes is the "cordial" relation between Director and
Deans. I have noticed in one institute that faculty has divided between these two administrative heads
and formed two groups for their survival. If both are indulging in politics, institute goes to dogs. In some
cases if director is doing politics and Dean is a true academician, the later will go on long leave but will
be on rolls, as management of an institute can not throw one director unless he is very bad.
In one institute, in one academic year, around five newly selected faculty members who have undergone
all the process of selection and gave their willingness to join but have not joined. You can understand
the reasons! This makes the Dean to invite any candidate for faculty position desperately and in turn, it
aggravated the situation.
If the faculty is leaving an institute, you will not notice it at all, and the problem is directly to the PGP
chairperson. The students who registered under this faculty before going for summer project, after they
come back, have to be reallocated to another faculty by the PGP Chairperson. This is a painful task in
one way as the students were not earlier registered with the faculty if he/she is there in the institute last
year as there is a possibility that the situation may lead to a step-motherly treatment sometimes. On
the other hand, if the students were assigned to a newly joined faculty, students will create some
problems as they are new to the faculty and the faculty is also new to the Institute.
All these and similar other instances and cases underscore the need for turning the search light inwards.
If any institute is free from above institutional ailments, I appreciate the Management, Director, and
Faculty for having been placed in such an exceptionally better institutional environment.

%r. K.S. Srini+asa Rao
Associate Professor
!.A. Pai Management Institute 2!APMI3
Manipal-576 104 (Karnataka)
E-mail: srinirao35@yahoo.com
&rand *oyalty R A %iminishing Phenomena)
By
A M Sa55thi+el
Faculty-Marketing Area, Department of Management Studies
Tech Park
P'S Institute of !e"hnology#
Bangalore-560 085
Phone : 91-98452 25561
E-mail : sakkthi@yahoo.co.uk

Arri+al of 7alue 8or Money produ"ts
The recent invasion of value for money (VFM) products has been creating a tremendous change in the
way the market was before. Thanks to Chinese (Crouching Dragon.)
Products, hit the Indian market with all power to muster. It resulted the death of many small time
players and led to series of serious of changes in the market structure. The recent phenomena of job
cuts, voluntary retirement schemes, ever falling interest rates on deposits made people scurry for
covers to earn for livelihood. The shrinking of disposable income had a phenomenal impact on the
buying power of people, especially consumer durable.
Mul"handaniMs Cay
The raise and fall of 'Kabir Mulchandani' have had a vital imprint in Indian consumer durable market.
The 'Mulchandani syndrome' have changed the total rules of the game and left all major players to
follow his footprint. Definitely, it brought a bonanza to Indian consumers who long affected and
deceived with inferior quality products at abnormal price. Albeit, presently, Mulchandani is out of the
game, the other Indian players solemnly follow the footprint he left. To add insult to injury, the recent
invasion of Korean FMCE & White goods majors in the Indian soil further changed the structure of the
Indian market. Now, the Korean companies lead the Indian FMCE and white goods and old minnows are
slowly vanishing from the marketing map and many of them already did.
&rand *oyalty R a fa"t liftS
The micro focus on the things happened; many hidden truths would come out. Firstly, the Indian
consumers did not get liberty to choose their likings; secondly, they were deceived and frustrated by the
available inferior goods and ended up paying premium, the money could have saved and could have
spent well, Finally, when the market opened for outsiders, the local 'maharajas' got hit and could not
revamp their products to woo their long deceived consumers. The forced brand loyalty, which created
through lack of competition, would not work any more. Take example, Sony, a brand is synonyms to
quality. But, when the market share of Sony is very meager as compared to its Indian and Korean
rivals. Take another instance, TATA is a household brand in Indian soil, could not induce people to buy
'INDICA' car which faced initial set back resulted the TATA Motors ended up with a huge loss of around
Rs.500 crore and now, its revamped model is taking place in garages of the target group. The morale
learned from the above mentioned examples are that consumers would not buy brands blind fold. They
would evaluate the brands through their performance, such as to satisfy the expectations of users.
&rand is a li+ing thingS
The companies tend to forget the fact that brands are like human beings. They create perceptual filter in
the minds of potential users as they hear the brands that would create an enormous impact on their
buying decision. )rand is an acronym.

Fig 1 Dimension of a Brand
&uild: The first character M&M focuses on the building of trust among the target group on
products/services they intend to buy. This is the preliminary step towards accessing to the perceptual
filter. For instance, a consumer hears the brand of 'Sony', she might think the equivalent of quality and
that could well be extended to other products of 'Sony' product bouquet. This could have happened due
to the experience gained by the consumer through consuming any of products from 'Sony' product
bouquet.
Reliability: The letter 'R' stands for the reliability of a product/service to be entrusted on the target
group. Consumers ought to rely on the product/service would satisfy their needs/wants for they buy.
Reliability is the key factor that modifies consumers' opinion towards any product/service. For instance,
a consumer who intends to have 'Airtel' cellular subscription should have relied on the services offered
by 'Airtel'. Once, if it faded, she would shift to another substitute and definitely ought not develop
apprehension of cellular technology. Yet, she would have apprehension about new services offered by
'Airtel'. It vividly shows the flaw of one service would carry forward to the other services offered by the
same company, need not necessary the other services also have flaws. Hence, the reliability is the vital
factor, which acts a catalyst towards the buying behavior of consumers
Attitude- Attitude is yet another factor, which has a great impact on perceptual filter of consumers,
would result the outcomes of their buying decision. Consumers tend to develop attitude towards
products/services, rather we call brands, either positive or negative. This attitude is the crucial factor
that would definitely facilitate or hamper the buying decision. The attitude development could well
happen through hearsay or eavesdropping or hearing experience of others or gather information or also
the first hand experience gained through consuming any product/service from the product/service
bouquet of the company
/ame: It is very important that name of a product/service plays an anchor in inducing perception filter
of consumers. What is in the name? A million dollar question lingers in everyone's mind. Name is
everything. When 'Nirma' launched the toilet soap in the same name, the consumers could not accept
for a while and forced the company to change its name to 'Nima' to modify the perception of the
consumers as the name embedded the thought of detergent soap in top of the minds of consumers.
How would consumers respond if 'Mortein' launches Pizza under the same name? How would consumers
react if Hindustan Lever Limited launches Biscuits under the name of 'Lux'? Only positive example that
could quote is the market accepted 'Anchor' well known for switches, when they launched the
toothpaste under the same name. Yet, the market reaction towards the brand is not very encouraging in
terms of numbers i.e. sales. Hence, it clearly portrays the outcome that products of internal
consumption could well be extended to products of external consumption (such as 'Amul' represents the
under garments) and definitely, not very positive in case of products of external consumption to internal
consumption. So, the name plays a crucial role in dictating the perception filter of potential users,
needless to say, their buying behavior.
%esire: Desire is the final key aspect that induces consumers to go for a product/service. Brand ought
to inferno the desire in the consumers' hearts, not minds (Mind is normally the thing which focuses
mainly on rational aspects) to buy the product/service. For instance, everyone wants to become a proud
owner of 'Mercedes Benz' or 'BMW' and so on. The power of a brand is to create enormous desire in the
hearts of potential target and takes care of the perception filter. If we look at the AIDA model, the
desire is the last action that induces the Action i.e. purchase. Albeit, the product/service has every
requisite feature/trait that a potential consumer looks for, her buying decision would fully be influenced
by the desire, desire is the force forces a decision. Hence, brand ought to have the trait to induce the
desire of potential users.
&rand loyalty R Changing pa"e
The brand loyalty would be gained through the willingness of consumers to buy or influence their peer
group from one brand albeit many substitutes available. Unfortunately, the present market trends are
not very encouraging to exercise and maintain brand loyalty as the market witnesses the influx of many
new brands. The fact is that the invasion of more brands in the market arena facilitates potential users
to have wide bouquet of choices to choose with. Moreover, present economic condition in the country
made people to become more price sensitive. Also, potential users would gauge the quality of a
product/service through the satisfaction derived from the formed for the price they paid for. These
factors have tremendous influence on breaking of brand loyalty. Yet, brand is a living thing would
always fight to get the top of minds of consumers facilitate their buying decision.
Go Cith the mar5et
The dimension of a brand is only a particular aspect that induces consumers to choose their likely brand.
Yet, the invasion of value for money products and evolving trends in the market keep consumers at bay
for not to pay whooping price on a product/service. Also the sea change in consumer behavior in line
with the present market dynamics would also affect the prospect of brands survival and success. Yet, be
it value for money products/brands or premium brands, the trust and reliability are the most important
factors to influence the target group to open their wallets, it is wide or narrow, it is entirely up to the
performance of products/brands to convince and of course, to satisfy their mounting expectations,
because, they have after all have alternatives to shift. Is it not?

A M Sa55thi+el
Faculty-Marketing Area, Department of Management Studies
Tech Park
P'S Institute of !e"hnology#
Bangalore-560 085
Phone : 91-98452 25561
E-mail : sakkthi@yahoo.co.uk

Indian &udgeting B A Criti"al Analysis of &udget Pro"ess Realities
By
Prof. R K Gupta
Director
Management !raining Centre
Jodhpur
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

Indian &udgeting B A Criti"al Analysis of &udget Pro"ess Realities
Indian budget 2004-2005 is out, with mixed observations. Good, bad and stereo type. Let us face some
hard figures and facts and Analyse the need for better budgeting as Managerial students. We should
also stop kidding ourselves coming out of mental rut in which Indian public Administration is trapped
since decades.
Indian government's income is barely under Rs. 3 lac crores. Which means about Rs. 2900 per head per
year only. This itself is a pittance comparing to most of countries, half of which is eaten off any way by
bureaucracy setup, interest repayments and corruption. So a citizen ON AVERAGE gets benefit of Rs.
1400 per year from central pool. What do we think anyone can do with such small amount? Dig canals,
provide roads, health services, education, pensions? If we think so, it is a fancy dreaming. Most of big
talks in budget are populist and to make people happy for some time till they forget old pains. Indian
budgeting is traditionally cut & Paste technique. Every year make one lobby happy with sops, take some
more money from some items and relax in some others. There is hardly any logical reason in doing so.
For instance, why excise duty is raised on Steel in this budget -no one understands. As regards Direct
taxation, Stop bleeding Indian citizen more and more. Tax rates are already saturated in every thing.
Those who don't pay it anyway continue to do so. Honest are being squeezed dry ( Refer Laffer Curve of
famous US economist) The tax burden is back breaking and how much you will tax the citizen in every
thing? The cost of collecting personal I. Tax is almost as much as the collection, so why not increase
exemption limit to Rs. 2 lacs in one stroke? Instead catch the corrupt and punish them severely who
evade taxes be it I tax or excise or sales tax ( It is almost 50% theft in all states in sales tax -a major
revenue generator). The author's opinion says that there should be just simple taxation tariff structure.
In two slabs in each.
Suggested example:
Income tax: Personal - More than 6 lacs PA- 20%
more than 2 lacs - 10%
below 2 lacs -Nil
Corporation tax -25%
Cut down and withdraw all kinds of rebates and schemes. These only help Chartered accountants and
corrupt IT officials and not the nation. Personal tax otherwise, is very little revenue generator.
Excise duties: 0%, 4% and 8 % and one negative slab of 24%
Coupled with VAT.
Sales tax in States and CST:
CST -2% across board and 1% for essential commodities.
State sales tax- 0%, 4% and 8%. Period. No more.
Service tax - 4 % across board. Period.
Time has come to make government jobs unattractive for which our youth jossle and run into each
other. Every one knows why? Bring marked changes in Prevention of Corruption Act and make systems
IT powered and reduce powers of all types of bureaucrats including police ( one of the most inefficient,
under trained, insensitized and corrupt organisation in the world).
Cut down government size by 1/3rd immediately (excepting Judiciary), out source services to private
organisations including crime detection & investigation services in police department, freeze salaries of
public servants and withdraw their wasteful perks. We can easily save Rs. 10,000 crores this way. The
pension amount of Rs. 15,500 crores every year is mind boggling figure. What their private sector
counter parts get? Nothing. Even PF and MIS rates for public have been reduced driving them to old age
estitution. What good is such development? This money saved as above should be diverted for social
security funds and unemployment allowance and paying good interest rates on small savings
encouraging it which is laggin at 19% instead of desired level of 25-30% . Cut down defense
expenditure by 20% instead increasing it by 23% as proposed. What message we are trying to give to
world and neighbouring countries? The present realities of geopolitics don't call for such heavy
investment now atleast in Indian subcontinent. Diplomacy and flexibility should replace expenditure and
muscle flexing and threats to each other's country. A saving of another Rs. 15,000 crores can be made.
This can be used for education, health care and doubling the capacity of Judges by atleast 2 times
immediately which is very badly required in India. Crime has to be under check and fast and fair
judiciary is foundation of democratic system.
Economics alone does not work. It is social economics or welfare economics that works in country like
India whose budget size is smaller than many states in US but population 3 times of entire US, with 1.5
crores people adding each year. I don't think this beaten track planning will bring any relief to bourgeois
population. It sure will fill up coffers of corrupt and corporate tycoons as usual and some business
lobbies like in Computers, cement and Steel. The inflation rate will sure go up in due course. Interest
rates on savings bank rates should be increased immediately to stop erosion of savings of common
men. It should always be 2% plus, over inflation rate. We should tie up public servants' salaries with
performance and per capita GDP (Which is barely under Rs. 21000 per annum as per ESI 2004, whereas
even a peon now gets Rs. 60000 per annum . The skew in public distribution and wealth distribution is
obvious. Same way upper salary limits should be fixed in private sector too, specially MNCs. It is quite
logical message. Help produce more, make society better place to live and earn more or simply quit.
This is message of public governance productivity. Indian railways which boasts of 1.5 million employees
can very well do with half the strength with modernisation and outsourcing many functions.
India should learn to fix working and monitoring norms in each area of activity including judicial
performance and then do budgeting. Can any economist tell me a better way? Am I asking too much to
fix performance standards for all departments of administration including army and judiciary? If the
judiciary cannot improve itself it has no right to judge others.
The goals can be quantitative/qualitative but mostly, both. Usage norms in line with modern IT based
technology and banchmarked with best run countries should be fixed and achieved. Financial budgeting
is end of it all. It is end result and not beginning. It is nothing great.
Do you think without accountability and monitoring even what has been provided in Budget will succeed
and be achieved? As Rajiv Gandhi once said, 60% funds for rural areas will go out of system into private
and Babus' pockets. Therefore, we should hand over budgeting to Ministry of Planning and Program
Implementation with full powers to a politically independent Planning commission to design budget and
its implementation procedure. Budget is not just financial accounting, it is policy document. Take it off
from Finance Ministry. Treat it as Strategic National document, one annual and one Mid Term for 5 years
period, each blended smoothly into each other with sharply defined performance criteria tagged on top
of each account head.

Prof R K Gupta
Director
Management !raining Centre
Jodhpur
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india
H$( CA/ &,SI/'SS SCH$$* 8$S!'R CSR
By
Reshma Prasad
Lecturer
Centre for Management Studies
%haramsin %esai Institute of !e"hnology
Nadiad
E-mail : prasadreshma@yahoo.com

A number of recent surveys have been conducted in India on CSR (corporate social responsibility) . The
latest survey of that being is by TERI India (Tata Energy Research Institute) called "Altered Images"
which focuses the feedback generated by workers, company executives and the public. This survey
highlights the concerns of environment pollution, good quality products, Employee discrimination /
protection, role of NGOs and other social issues which needs more attention by companies. This is the
latest scenario in India of what people feel about corporate social responsibility. CSR is really going to
be a burning desire if we want to achieve Self Actualization in Business. There is a growing recognition
that good ethics has a positive role to play on the individual's performance. Many statistics support the
view that ethics, values, integrity and responsibility are required in the modern workplace. For consumer
groups and society at large, research has shown that good ethics is good business. Various studies
illustrate the increased emphasis that has been placed on these issues overtime; then, why not
integrate it within the literature of Management Education. Corporate Social Responsibility as a subject
is not only becoming acceptable in the business but it's practically required why?
Each succeeding generation has impact on the next generations values, beliefs, attitudes and behaviour.
Thus our grandparent's values are likely to be reflected in ours, as ours are to be reflected in our
children's and grandchildren's. So the movement towards consciously incorporating ethics in our
curriculum will help our society grow, the cultural pull to be ethical into businesses will be very stronger
too. We always know what is good or bad, or right or wrong. Ethics has always been defined as a
conception of what is right and fair conduct of behavior which can be imbibed in the latest programmes
which are being introduced by various business school where they are making an endeavour to initiate
courses on Entrepreneurship Development , Family Business Management etc.
The efforts are required to integrate CSR into the mainstream of business education, where deans and
professors at business schools and universities can promote new teaching models. Efforts like
advocating philanthropic activities should be encouraged in campus where students can participate in
societal development activities eg: working for slum rehabilitation programmes, hosting relief camps,
earthquake rehabilitation programmes, literacy development programmes, organizing various traditional
festival programmes etc; as a project work which would serve the dual purpose of learning and
governing with social cause. Business schools can foster an ongoing dialogue and partnership between
business leaders, business school leaders and NGOs. There is a need to develop a strong collaboration
between the Institutes and Industry where students can be engaged in a projects on Business ethics.
The need too exists to persuade Business Schools and individual researchers such as Ph.Ds and MBA
students to work on CSR. Business School needs to include small businesses in their research and
curriculum development. More studies are required to be done on companies, which have been wrongly
publicized on account of ethical ground the latest hotly debated of Coca Cola and Pepsi. This has really
generated interest in the society and among the consumer group so we need to find an answer both at a
faculty and student level.
What ever may be the consequences we can have lots more case study examples of various companies
on the ground of CSR, we can show what they are doing and how they are doing. Some are certainly the
role models for eg. companies like McDonalds, Hewlett Packard , TCS, Infosys and Wipro etc. Indian IT
firms have earmarked a sizeable portion of their profit for social cause. Polaris Software Labs, for
instance, spent Rs. 20.94 lakh on social responsibility during 2001-02, compared to Rs. 17.39 lakh the
previous year. Other companies including NIIT, Tata Consultancy Services (TCS), Satyam Infoway and
Congnizant Technology Solutions have also earmarked sizeable sums for CSR.
We all know students are the hot iron rod which can be moulded the way we want and gurus are the
moulders. The growing breed of MBAs and Engineers every year passing out from various institute of
repute can establish a strong credential in this sphere. They are a resource who are unbiased more
prone to learning environment and more conscious for community . One of the research has evidenced a
fact that few students have made an initiative by voluntarily opting to be employed in NGOs or
associated with philanthropic activities somewhere or the other. There are some institutes which have
really started the job and they can be the role models or the forerunner surely for others too. I am
presenting some of the examples of what activities are being performed at present:
IIMC students founded a group called Parivaar with the objective of creating leaders at the grassroots
level. This year, as many as 22 students from IIM Ahmedabad, IIM Bangalore, IIM Calcutta, IIM
Lucknow and IIT Bombay's School of Management are doing their summer internship with The National
Kidney Foundation (NKF) in Singapore. This idea has led many B-schools to take up social issues quite
aggressively. Mumbai-based SP Jain Institute of Management Research (SPJIMR), for instance, does not
follow the traditional route of summer projects like other B-schools. At SPJIMR, all the students do a 6-
week project after their first year with an NGO or the corporate social responsibility division of a
corporate. At IIMA, students have taken several voluntary steps to link up with larger social causes, be
it relief work at earthquake time, or work for communal harmony, says Prof. Anil Gupta, faculty member
at the institute. Students at IIM A have set up nature clubs and management assistance clubs for small
enterprises (SOMA, students organisation for management assistance). IIMC has a centre called
'Management Center for Human Values' (MCHV) to train its students on a range of issues from business
ethics to corporate social responsibility (CSR). These business schools are making an effort to produce
more socially - sensitized MBAs, but the enthusiasm is still lacking . In the year 2002 IIMA had
organized a workshop on 'n+ironment Management "on"epts to be in"luded in management
"urri"ulumE Chi"h was supported by government initiative but how far it has been integrated its still a
big (?) but the effort is recognizable and can be a subject of inspiration . Recently IIMA had organized a
Traditional Food Festival under the functioning of Shristi Special Academy headed by Prof. Anil Gupta
IIMA to boost local food producers . This vision of some of the stalwarts has led CSR to be integrated
into mainstream management curriculum . If this has been possible then why not make it a reality at a
broader level. Management education is more than oft -repeated monetary one. This is really the truth,
the journey is very long but it is for sure that committed workforce of all Business schools in India can
make a beginning for building a strong "socially responsible" Managers of Tommorow.

Reshma Prasad
Lecturer
Centre for Management Studies
%haramsin %esai Institute of !e"hnology
Nadiad
E-mail : prasadreshma@yahoo.com
ACC$,/!I/G R !H' '/CHA/!I/G E*A/G,AG' $8 &,SI/'SSE
Author-
M. Subramanian
Faculty
Institute for !e"hnology Management
Chennai-28
E-mail: financesubbuu@rediffmail.com / smart_subbu@indiatimes.com
CoBauthor-
%r. 7en5ata"halam
Reader
PG Commer"e %epartment# S7/ College
Madurai-19

10ote( This article ai&s at gi%ing a #rief introduction to the field of accounting
8 &ainly focused on ,'ccounting for 0on5'ccounting, executi%es3
Introdu"tion
"Hindi" the national language of India.
"English" the national language of UK and USA.
"Arabic" the national language of Gulf Countries.
"Japenese" the national language of Japan.
"Chinese" the national language of China.
Likewise many languages are there in this world.
The very purpose of any language is "communication". Even though there are thousands of languages
to communicate. Is there any universal language? If you guess and tell the answer that it is English.
you are partly right. there are millions of people in this world, who does not know English.
Con"ept
To the world of business there is one universal language. all over the world the business community
speaks through it. it understands this language easily. that language is called "ACCOUNTING".
Accounting is aptly called as the language of business, as it communicates the results of business
operations to the users/stakeholders.
Accounting is as old as money. If we trace back the history of accounting, Indians have also contributed
significantly towards the development of this language.
The thoughts of Kautilya have revealed the essence and importance of Accounting & Auditing in his
literature called "Arthashastra".
In India we have history of accounting even 23 centuries ago. that's old story/history. I am not here
to bore you by exaggerate the myth/story/history of accounting. but the facts.
Hats off to "Fra Luca Pacioli" the father of modern accounting (double entry system). he was the one
who introduced the balancing act of accounting. he was the one who said that both the aspects of a
business transactions has to be recorded in the books of financial accounting.
The bottom line of accounting system is to provide full fledged information about various business
transactions, which has some monetary value.
Con"lusion B (hy A""ounting)
Today's modern manager relies mostly on proper, correct, relevant and timely information for
decision-making.
Information has been recognized in todays' business world as one of the utmost important
resources used by an organization.
Today's manager is in need of highly analytical and informative information for decision-making.
This accounting as a language of business serves/caters the needs of the business managers and
to various users.
This business language - accounting supplies all the monetary information like:
a. Profit or loss for a business
b. Financial position etc., of a business for the users/stakeholders.
Entire process of any business needs accounting information. thus a depth study on the basics
of accounting is inevitable for all managers. that's why there are compulsory courses like
financial accounting, cost accounting, management accounting, financial management are
included in the B-schools curriculum.

Author:
M. Subramanian
Faculty
Institute for !e"hnology Management
Chennai-28
E-mail: financesubbuu@rediffmail.com / smart_subbu@indiatimes.com
Co-author:
%r. 7en5ata"halam
Reader
PG Commer"e %epartment# S7/ College
Madurai-19
R'!AI*I/G CHA**'/G'S A/% $PP$R!,/!I!'S I/ I/%IA
By
Prof. R K Gupta
Director
Management !raining Centre
Jodhpur
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

Abstra"t-
Retailing otherwise is simple function-It is end of the supply or distribution channel
pipe where customer finally picks the product or service. The customer can be individual or even an
organisation .Mostly it is the family buying unit. The most of retiling research has been built in this are
of family buying behavior, its needs and changing perceptions about life style, shopping and utility of a
product or service. With so many freebies thrown in by almost all retailing outlets mostly backed by the
manufacturing or trading organisations of the product/service, the retailing has become a challenging
opportunity of future, as far as India is concerned-being an emerging market with fast formation of
nuclear family units, urbanization, double income couple, spreading education, influence of TV, global
exposure and fast rising discretionary income at least in urban areas.
The modern shopping malls, departmental stores, one stop shopping centers and the traditional retailers
all lend kaleidoscopic color to retailing, which is by far the biggest sector in marketing in any country.
There is always confusion in terminology which should be clarified once for all. Shopping mall is not a
departmental store owned by one owner as is normally used. It is a shopping centre where a number of
shops are available with some eating places and or entertainment places with its own spacious parking
and infrastructure facilities.
Most of shopping centers being developed by colony developers like Ansals, DLF etc are shopping malls.
On one hand we have single street corner convenience store like your morning grocer for bread , eggs
and milk and on other end you have huge specialty stores that cater to only one commodity like say
electronics or gems and ornaments superstores.
The organised sector retailers bring large volume benefits, better shopping ambience as we call it in
services marketing jargon, technology and large variety of items at one place.
On the other hand the traditional small retailer has virtual no overheads, no big rentals, no air
conditioning and security expenses and intimate knowledge of customers in his/her locality that a
modern shopping store can never match, whatever may be the technology level.
The research conducted by author on more than 500 persons in 3 cities in northern India revealed that
their priorities are clear. For certain type o goods and services they prefer corner shop and for certain
items shopping them prefer to go to the modern shopping complexes or super stores.
The line is clearly drawn and it would be advisable for organisations like Metro, Shoppers Stop to focus
on hose items that give perception of value added items and standardisation required by customer.
Prospe"ts
Having laid down the background let us examine certain statistics:
Even though India has well over 5 million retail outlets of all sizes and styles (or non-styles), the
country sorely lacks anything that can resemble a retailing industry in the modern sense of the
term. This presents international retailing specialists with a great opportunity.
It was only in the year 2000 that the global management consultancy A! Kearney put a figure
to it: Rs. 400,000 crore (1 crore = 10 million) which will increase to Rs. 800,000 crore by the
year 2005 - an annual increase of 20 per cent.
Retailing in India is thoroughly unorganised. There is no supply chain management perspective.
According to a survey by AT Kearney, an overwhelming proportion of the Rs. 400,000 crore
retail market is UNORGANISED. In fact, only a Rs. 20,000 crore segment of the market is
organised.
As much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet in area.
This means that India per capita retailing space is about 2 square feet (compared to 16 square
feet in the United States). India's per capita retailing space is thus the lowest in the world
1source( 9/' Technopak 1I3 P%t 4td+ the India operation of the -/5#ased 9urt /al&on
'ssociates3.
Just over 8 per cent of India's population is engaged in retailing (compared to 20 per cent in the
United States). There is no data on this sector's contribution to the GDP.
From a size of only Rs.20, 000 crore, the ORGANISED retail industry will grow to Rs. 160,000
crore by 2005. The TOTAL retail market, however, as indicated above will grow 20 per cent
annually from Rs. 400,000 crore in 2000 to Rs. 800,000 crore by 2005 1source( sur%ey #y 'T
9earney3
Given the size, and the geographical, cultural and socio-economic diversity of India, there is no
role model for Indian suppliers and retailers to adapt or expand in the Indian context.
The first challenge facing the organised retail industry in India is: competition from the
unorganised sector. Traditional retailing has established in India for some centuries. It is a low
cost structure, mostly owner-operated, has negligible real estate and labour costs and little or no
taxes to pay. Consumer familiarity that runs from generation to generation is one big advantage
for the traditional retailing sector.
In contrast, players in the organised sector have big expenses to meet, and yet have to keep
prices low enough to be able to compete with the traditional sector. High costs for the organised
sector arises from: higher labour costs, social security to employees, high quality real estate,
much bigger premises, comfort facilities such as air-conditioning, back-up power supply, taxes
etc. Organised retailing also has to cope with the middle class psychology that the bigger and
brighter a sale outlet is, the more expensive it will be.
The above should not be seen as a gloomy foreboding from global retail operators. International
retail majors such as Benetton, Dairy Farm and Levis have already entered the market. Lifestyles
in India are changing and the concept of "value for money" is picking up.
India's first true shopping mall - complete with food courts, recreation facilities and large car
parking space - was inaugurated as lately as in 1999 in Mumbai. (This mall is called
"Crossroads").
Local companies and local-foreign joint ventures are expected to be more advantageously
positioned than the purely foreign ones in the fledgling organised India's retailing industry.
These drawbacks present opportunity to international and/or professionally managed Indian
corporations to pioneer a modern retailing industry in India and benefit from it.
The prospects are very encouraging. The first steps towards sophisticated retailing are being
taken, and "Crossroads" is the best example of this awakening. More such malls have been
planned in the other big cities of India.
An FDI Confidence Index survey done by A! Kearney, retail industry is one of the most attractive
sectors for FDI (foreign direct investment) in India and foreign retail chains would make an impact circa
2003.
Fortune 500 for 2004: Wal-Mart stores tops the list with a $26, 3009 million {263 billion} in revenue -
PTI
While three Oil companies and reliance make it to lower end of the list.
All the projects of Wal-Mart have not succeeded though. Their most successful project is Discount
superstores (as Author prefers to call these)
IndiaMs Great Middle Class-

!able I
'stimated households by annual
in"ome
!able II
Stru"ture of the Indian "onsumer mar5et
21@@<B@=3
Annual in"ome
2in Rupees3 at
1@@;B@< pri"es
/o. of
households
2in million3
Annual
in"ome
2in Rupees3 at
1@@;B@<
pri"es
Classifi"ation
/umber of households
2in million3
,rban Rural !otal
<25,000 80.7 <16,000 Destitute 5.3 27.7 33.0
25,001-50,000 50.4 16,001-22,000 Aspirants 7.1 36.9 44.0
50,001-77,000 19.7 22,001-45,000 Climbers 16.8 37.3 54.1
77,001-106,000 8.2 45,001-215,000 Consumers 16.6 15.9 32.5
>106,000 5.8 >215,000 The rich 0.8 0.4 1.2
Total no. of households: 164.9 million Total no. of households 46.6 118.2 164.8
Sour"e- National Council of Applied Economic Research (NCAER). The above presentation has
been slightly modified by IndiaOneStop.Com
We should not again and again confuse between shopping Malls and the departmental of super store
run by a company which offers many consumer goods at one place or under one roof and is owned by
one owner only.
Indian as well as foreign companies have always been fond of Great Indian Middle Class of almost 500
million persons, their fast rising purchasing power and the market size they offer. But many companies
like Kellogg's, Nike etc. initially burnt their figures in the middle class pie of India and many more are
like to do so in future; specially huge Retailing projects and multiplexes that are being planned.
Let us see why Wal-Mart is so immensely successful to be No 1 Fortune Company.
1. Discount stores offering best available prices in market
2. Large network and conveneinetly located stores
3. Large variety with at least 45-50,000 sq ft shopping area.
4. Friendly smile and personalized service (Only Sam Walton new about it. Modern customers don't find
it anymore)
Now let us look at what consumers have to say about some of stores they visit in Delhi and Mumbai.
-Not suitable for ritual or occasion purchases like Marriages
-Costly and don't offer any price benefit over traditional stores
- Except for packaged and standard commodities, these stores try to overcharge the customers by
heaving bigger price tags on known brands or trying to pass their own or other pseudo brands.
- No much personalized services
-Customers are not confident that they are getting fair deal in thee glamorously appointed stores
( Typical Middle Class phobia)
Some Comments on In"ome table shoCn abo+e-
Data on income distribution of households is insufficient in determining market size for different
consumer products in India. This is because of the lack of homogeneity of the consuming class
and the varying prices of a single product in different parts of India. For example, vegetables
generally cost more in Mumbai than in Calcutta, hence vegetable-purchasing power for identical
income groups would be different in the two places even though they are the two biggest cities in
India with comparable populations. In other words, purchasing power is location-specific, not
income specific. Consumption habits of households are therefore better determinants of
consumer market size than income distribution. Of course, other factors are also to be
considered and they are detailed below.
While determining market size for a consumer product, the structure of the consuming class as
seen in Table II above, can be both revealing as well as misleading depending on the kind of
product. For example, any specific consuming class would be fit to be a market for consumer
products like tea or soap, but a product such as vacuum cleaners would find market largely only
in the "consumers" and "rich" segments of the market as defined in Table II above. Furthermore,
even this may not be correct, because a taste for a vacuum cleaner is not necessarily a function
of purchasing power but of culture and/or taste as well.
Identifying a plausible market size for a consumer product is therefore a hazardous task in a
heterogeneous country like India. Yet, the marketer needs some data to come as close to the
real picture as possible. For this purpose, it can be cautiously assumed that purchasing power is
proportional to income despite variables such as location, taste etc. Companies are therefore
advised to plan their consumer product marketing strategies on an area-by-area basis, rather
than on an all-India basis.
Income data is insufficient. Therefore, it must be supplemented by product-specific information
regarding its existing stock in the marketplace (in the case of consumer durables) and existing
rate of purchases.
It is also advisable to further refine the plausible market size by taking into account details based
on social, cultural and demographic factors.
Marketing a super-premium product such as a Rolex watch is relatively easy. Just go for the
income class above Rs. 106,000 per annum (in 1995-96) as per Table I above. This class, Table I
shows, comprises 5.8 million households. But the problem lies in the fact that the 5.8 million
households are spread all over India.
The prime market for consumer products in India is aware of the cost-benefit or value for money,
aspect. Their concept of value incorporates socio-cultural benefits in addition to product utility.
For example, many households in the "consumers" class and the "rich" class (as defined Table II)
may have two television sets, but both the sets may not be top-of-the-line. Thus, while they may
be demand for an additional TV set in many households in the two mentioned classes, it must not
be mistaken as demand for the higher priced TV models. The prime consumer market in India
therefore is not a market for absolute premium products, but for something between the "high
end popular brands" to the "premium brands."
Organisations that wish to enter into retailing will have to be careful in planning projects
depending on location, city and product mix design while keeping overhead costs low.
The author welcomes any organisation that wishes to lend ear to good advice based on hardcore
experience and research in this field based on almost 28 years of retailing experience of his own,
marketing expertise and All India experience.

Prof R K Gupta
Director
Management !raining Centre
Jodhpur
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india
R'!AI*I/G CHA**'/G'S A/% $PP$R!,/!I!'S I/ I/%IA
By
Prof. R K Gupta
Director
Management !raining Centre
Jodhpur
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

Abstra"t-
Retailing otherwise is simple function-It is end of the supply or distribution channel
pipe where customer finally picks the product or service. The customer can be individual or even an
organisation .Mostly it is the family buying unit. The most of retiling research has been built in this are
of family buying behavior, its needs and changing perceptions about life style, shopping and utility of a
product or service. With so many freebies thrown in by almost all retailing outlets mostly backed by the
manufacturing or trading organisations of the product/service, the retailing has become a challenging
opportunity of future, as far as India is concerned-being an emerging market with fast formation of
nuclear family units, urbanization, double income couple, spreading education, influence of TV, global
exposure and fast rising discretionary income at least in urban areas.
The modern shopping malls, departmental stores, one stop shopping centers and the traditional retailers
all lend kaleidoscopic color to retailing, which is by far the biggest sector in marketing in any country.
There is always confusion in terminology which should be clarified once for all. Shopping mall is not a
departmental store owned by one owner as is normally used. It is a shopping centre where a number of
shops are available with some eating places and or entertainment places with its own spacious parking
and infrastructure facilities.
Most of shopping centers being developed by colony developers like Ansals, DLF etc are shopping malls.
On one hand we have single street corner convenience store like your morning grocer for bread , eggs
and milk and on other end you have huge specialty stores that cater to only one commodity like say
electronics or gems and ornaments superstores.
The organised sector retailers bring large volume benefits, better shopping ambience as we call it in
services marketing jargon, technology and large variety of items at one place.
On the other hand the traditional small retailer has virtual no overheads, no big rentals, no air
conditioning and security expenses and intimate knowledge of customers in his/her locality that a
modern shopping store can never match, whatever may be the technology level.
The research conducted by author on more than 500 persons in 3 cities in northern India revealed that
their priorities are clear. For certain type o goods and services they prefer corner shop and for certain
items shopping them prefer to go to the modern shopping complexes or super stores.
The line is clearly drawn and it would be advisable for organisations like Metro, Shoppers Stop to focus
on hose items that give perception of value added items and standardisation required by customer.
Prospe"ts
Having laid down the background let us examine certain statistics:
Even though India has well over 5 million retail outlets of all sizes and styles (or non-styles), the
country sorely lacks anything that can resemble a retailing industry in the modern sense of the
term. This presents international retailing specialists with a great opportunity.
It was only in the year 2000 that the global management consultancy A! Kearney put a figure
to it: Rs. 400,000 crore (1 crore = 10 million) which will increase to Rs. 800,000 crore by the
year 2005 - an annual increase of 20 per cent.
Retailing in India is thoroughly unorganised. There is no supply chain management perspective.
According to a survey by AT Kearney, an overwhelming proportion of the Rs. 400,000 crore
retail market is UNORGANISED. In fact, only a Rs. 20,000 crore segment of the market is
organised.
As much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet in area.
This means that India per capita retailing space is about 2 square feet (compared to 16 square
feet in the United States). India's per capita retailing space is thus the lowest in the world
1source( 9/' Technopak 1I3 P%t 4td+ the India operation of the -/5#ased 9urt /al&on
'ssociates3.
Just over 8 per cent of India's population is engaged in retailing (compared to 20 per cent in the
United States). There is no data on this sector's contribution to the GDP.
From a size of only Rs.20, 000 crore, the ORGANISED retail industry will grow to Rs. 160,000
crore by 2005. The TOTAL retail market, however, as indicated above will grow 20 per cent
annually from Rs. 400,000 crore in 2000 to Rs. 800,000 crore by 2005 1source( sur%ey #y 'T
9earney3
Given the size, and the geographical, cultural and socio-economic diversity of India, there is no
role model for Indian suppliers and retailers to adapt or expand in the Indian context.
The first challenge facing the organised retail industry in India is: competition from the
unorganised sector. Traditional retailing has established in India for some centuries. It is a low
cost structure, mostly owner-operated, has negligible real estate and labour costs and little or no
taxes to pay. Consumer familiarity that runs from generation to generation is one big advantage
for the traditional retailing sector.
In contrast, players in the organised sector have big expenses to meet, and yet have to keep
prices low enough to be able to compete with the traditional sector. High costs for the organised
sector arises from: higher labour costs, social security to employees, high quality real estate,
much bigger premises, comfort facilities such as air-conditioning, back-up power supply, taxes
etc. Organised retailing also has to cope with the middle class psychology that the bigger and
brighter a sale outlet is, the more expensive it will be.
The above should not be seen as a gloomy foreboding from global retail operators. International
retail majors such as Benetton, Dairy Farm and Levis have already entered the market. Lifestyles
in India are changing and the concept of "value for money" is picking up.
India's first true shopping mall - complete with food courts, recreation facilities and large car
parking space - was inaugurated as lately as in 1999 in Mumbai. (This mall is called
"Crossroads").
Local companies and local-foreign joint ventures are expected to be more advantageously
positioned than the purely foreign ones in the fledgling organised India's retailing industry.
These drawbacks present opportunity to international and/or professionally managed Indian
corporations to pioneer a modern retailing industry in India and benefit from it.
The prospects are very encouraging. The first steps towards sophisticated retailing are being
taken, and "Crossroads" is the best example of this awakening. More such malls have been
planned in the other big cities of India.
An FDI Confidence Index survey done by A! Kearney, retail industry is one of the most attractive
sectors for FDI (foreign direct investment) in India and foreign retail chains would make an impact circa
2003.
Fortune 500 for 2004: Wal-Mart stores tops the list with a $26, 3009 million {263 billion} in revenue -
PTI
While three Oil companies and reliance make it to lower end of the list.
All the projects of Wal-Mart have not succeeded though. Their most successful project is Discount
superstores (as Author prefers to call these)
IndiaMs Great Middle Class-

!able I
'stimated households by annual
in"ome
!able II
Stru"ture of the Indian "onsumer mar5et
21@@<B@=3
Annual in"ome
2in Rupees3 at
1@@;B@< pri"es
/o. of
households
2in million3
Annual
in"ome
2in Rupees3 at
1@@;B@<
pri"es
Classifi"ation
/umber of households
2in million3
,rban Rural !otal
<25,000 80.7 <16,000 Destitute 5.3 27.7 33.0
25,001-50,000 50.4 16,001-22,000 Aspirants 7.1 36.9 44.0
50,001-77,000 19.7 22,001-45,000 Climbers 16.8 37.3 54.1
77,001-106,000 8.2 45,001-215,000 Consumers 16.6 15.9 32.5
>106,000 5.8 >215,000 The rich 0.8 0.4 1.2
Total no. of households: 164.9 million Total no. of households 46.6 118.2 164.8
Sour"e- National Council of Applied Economic Research (NCAER). The above presentation has
been slightly modified by IndiaOneStop.Com
We should not again and again confuse between shopping Malls and the departmental of super store
run by a company which offers many consumer goods at one place or under one roof and is owned by
one owner only.
Indian as well as foreign companies have always been fond of Great Indian Middle Class of almost 500
million persons, their fast rising purchasing power and the market size they offer. But many companies
like Kellogg's, Nike etc. initially burnt their figures in the middle class pie of India and many more are
like to do so in future; specially huge Retailing projects and multiplexes that are being planned.
Let us see why Wal-Mart is so immensely successful to be No 1 Fortune Company.
1. Discount stores offering best available prices in market
2. Large network and conveneinetly located stores
3. Large variety with at least 45-50,000 sq ft shopping area.
4. Friendly smile and personalized service (Only Sam Walton new about it. Modern customers don't find
it anymore)
Now let us look at what consumers have to say about some of stores they visit in Delhi and Mumbai.
-Not suitable for ritual or occasion purchases like Marriages
-Costly and don't offer any price benefit over traditional stores
- Except for packaged and standard commodities, these stores try to overcharge the customers by
heaving bigger price tags on known brands or trying to pass their own or other pseudo brands.
- No much personalized services
-Customers are not confident that they are getting fair deal in thee glamorously appointed stores
( Typical Middle Class phobia)
Some Comments on In"ome table shoCn abo+e-
Data on income distribution of households is insufficient in determining market size for different
consumer products in India. This is because of the lack of homogeneity of the consuming class
and the varying prices of a single product in different parts of India. For example, vegetables
generally cost more in Mumbai than in Calcutta, hence vegetable-purchasing power for identical
income groups would be different in the two places even though they are the two biggest cities in
India with comparable populations. In other words, purchasing power is location-specific, not
income specific. Consumption habits of households are therefore better determinants of
consumer market size than income distribution. Of course, other factors are also to be
considered and they are detailed below.
While determining market size for a consumer product, the structure of the consuming class as
seen in Table II above, can be both revealing as well as misleading depending on the kind of
product. For example, any specific consuming class would be fit to be a market for consumer
products like tea or soap, but a product such as vacuum cleaners would find market largely only
in the "consumers" and "rich" segments of the market as defined in Table II above. Furthermore,
even this may not be correct, because a taste for a vacuum cleaner is not necessarily a function
of purchasing power but of culture and/or taste as well.
Identifying a plausible market size for a consumer product is therefore a hazardous task in a
heterogeneous country like India. Yet, the marketer needs some data to come as close to the
real picture as possible. For this purpose, it can be cautiously assumed that purchasing power is
proportional to income despite variables such as location, taste etc. Companies are therefore
advised to plan their consumer product marketing strategies on an area-by-area basis, rather
than on an all-India basis.
Income data is insufficient. Therefore, it must be supplemented by product-specific information
regarding its existing stock in the marketplace (in the case of consumer durables) and existing
rate of purchases.
It is also advisable to further refine the plausible market size by taking into account details based
on social, cultural and demographic factors.
Marketing a super-premium product such as a Rolex watch is relatively easy. Just go for the
income class above Rs. 106,000 per annum (in 1995-96) as per Table I above. This class, Table I
shows, comprises 5.8 million households. But the problem lies in the fact that the 5.8 million
households are spread all over India.
The prime market for consumer products in India is aware of the cost-benefit or value for money,
aspect. Their concept of value incorporates socio-cultural benefits in addition to product utility.
For example, many households in the "consumers" class and the "rich" class (as defined Table II)
may have two television sets, but both the sets may not be top-of-the-line. Thus, while they may
be demand for an additional TV set in many households in the two mentioned classes, it must not
be mistaken as demand for the higher priced TV models. The prime consumer market in India
therefore is not a market for absolute premium products, but for something between the "high
end popular brands" to the "premium brands."
Organisations that wish to enter into retailing will have to be careful in planning projects
depending on location, city and product mix design while keeping overhead costs low.
The author welcomes any organisation that wishes to lend ear to good advice based on hardcore
experience and research in this field based on almost 28 years of retailing experience of his own,
marketing expertise and All India experience.

Prof R K Gupta
Director
Management !raining Centre
Jodhpur
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india
S!A!IS!ICA* !HI/KI/G 8$R S,CC'SS8,* MA/AG'RS
By
%r. Sharad SaFena
Sr. Lecturer (Quantitative Management)
Institute of Management
/irma ,ni+ersity of S"ien"e !e"hnology
Sarkhej-Gandhinagar Highway, Post: Chandlodia
Ahmedabad - 382 481 Gujarat
Phone : 91-2717-241900/01/02/03/04 Ext.641, Fax : 91-2717-241916
Mobile : 91-98983 72722, eFax : 14322047262
E-mail : sharad_stat@yahoo.com

A century ago H. G. Wells commented, "Statistical thinking will one day be as necessary for efficient
citizenship as the ability to read and write." Last two decades have witnessed the major advances in
information technology along with the influence of global competition, and hence there has occurred a
re-emergence of interest in the quality of products manufactured and services delivered. An integral
part of this excellence is the application of certain statistical methods and the use of a statistical thinking
approach on the part of managers throughout a company. Statistical thinking and methods is the key to
unleashing the power of information available in the form of data. Global competition has grown even
more pervasive through the Internet, requiring businesses to improve speedily and continuously.
Statistical thinking thus can be applied to both business operations and methods of management.
Clearly, the need to utilize the statistical thinking for tangible business improvements is greater now
than ever before.
New demands to enrich business processes have created the need for new management approaches,
and a wide range of approaches on how to change have been proposed. Reengineering, Total Quality
Management (TQM), Learning Organizations, Self-managed Work Teams, Benchmarking and Six-sigma
are some of these approaches that widely use statistical methods.
For instance, an integral part of the TQM approach is the application of certain statistical methods and
tools. Statistical thinking, in the context of TQM, can be defined as a thought process that focus on ways
to manage and thereby reduce variation. It includes the recognition that data are inherently variable
and that the identification, measurement, control, and reduction of variation provide opportunities for
quality improvement. Statistical methods can provide the medium for taking advantage of these
opportunities.
Each of these approaches is valuable, and the best facets of each can be integrated with the
management approach an organization is currently using. The result of this is a new management
approach that helps the organization better serve the needs of its customers and complete effectively in
the marketplace. Roger Hoerl and Ronald Snee have discussed in their book "Statistical Thinking:
Improving Business Performance," three common themes run through these management approaches:
Viewing work as a process,
Using data to guide decisions, and
Responding wisely to variation.
These three items are part of the body of knowledge known as statistical thinking. This body of
knowledge and its associated skills are essential for the successful management and improvement of
any business. Statistical thinking is a philosophy of learning and action based on the following
fundamental principles (Statistics Division of the American Society for Quality Control, 1996):
All work occurs in a system of interconnected processes,
Variation exists in all processes, and
Understanding and reducing variation are keys to success.
These core principles are similar to the common themes of recent management improvement efforts and
they work together to create the power of statistical thinking. With knowledge of the process, a
manager would be in a position to take action to improve that process.
In today's global marketplace success - often survival - hinges on an organization's ability to improve
everything it does. Many businesses today find themselves "drowning" in data, yet many managers lack
the ability to employ the data for competitive advantage. Every moment decisions are being made in
businesses that reveal if companies are profitable and growing or if they are stagnating and dying. Most
of these decisions are made with the help of information gathered on the marketplace, the economic
and financial environment, the work force, the competition, and other relevant factors. Statistics is the
tool through which such information that usually comes in the form of data is analyzed and interpreted.
Thus, statistics plays a vital role in the unending saga of decision-making within the vibrant world of
business.
Businesses also employ statistical analysis of data to help in improving their processes. Precisely,
statistical methods help to demonstrate the need for improvements, identify ways to make
improvements, assess whether or not improvement activities have been successful, and estimate the
benefits of improvement strategies.
Thus, the ultimate goal of statistical analysis in business is to improve the performance of business
processes. For instance, we might use descriptive and inferential statistics to compare the risk and
return characteristics of different investment choices in order to improve the way we manage an
investment portfolio, or we might use statistical process control to improve a manufacturing or service
process. Similarly, we might use regression analysis to predict demand for a product in order to improve
the way we manage inventories, or we might use design of experiments to study the effects of several
different advertising campaigns in order to improve how a product is marketed. In each case, we are
improving the performance of a business process by taking informed action on the basis of statistical
analysis. This theme provides the philosophical reason for conducting statistical studies in business.
What should a manager know about statistics? Today successful managers in both the public and private
sectors must have a working knowledge of statistics - not as a general tool of data analysis but as a
specific method for addressing issues and questions in their daily business environment. His knowledge
should include a broad overview of the basic concepts of statistics, with some details. He should be
aware that the world is random and uncertain in many aspects. He should be able to effectively perform
two important activities:
Understand and use the results of statistical analysis as background information in his work, and
Play the appropriate leadership role during the course of a statistical study if he is responsible for
the actual data collection and/or analysis.
To fulfill these roles, a little experience with actual statistical analysis is essential to obtain the
perspective that leads to effective interpretation. This type of experience will also help him to lead
others to sensible outcomes and to understand what they are going through.
In practice today, many managers have the unfortunate, although understandable, tendency to
categorize statistics according to certain predetermined applications. However, statistics should not be
thought of in terms of a set of specific applications but rather as a general aid to the managerial
decision making process. A manager should first consider the concept of managerial problem solving
and then bear in mind how statistics can be employed as part of this process. Many advances in today's
technological tools and equipment can be attributed, in varying degrees, to the use of the statistical
method in attacking business problems. This same methodology can, and should, be used in
approaching many managerial problems. The statistical method to a large extent minimizes the "gut
feel" approach to solving problems and instead concentrates on using information to help make
decisions.
To carry a statistical analysis of a business problem, a manager usually come across four basic activities
of statistics. At the juncture of starting a statistical study, either there are not yet any data or else it has
not yet been decided what data to look closely at. The 'design phase' will put an end to these issues so
that useful data will upshot. Once data are available, an initial inspection is called for, provided by the
'exploratory phase'. A numerical summary of an unknown quantity, based on data, is the result of the
'estimation process'. The last of these basic activities is 'hypothesis testing' that uses the data to decide
what the world is really like in some respect.
A manager should keep in mind that statistical results should be explainable in a straightforward way,
even though their theory may be much more complicated. Andrew F. Siegel gave some general words of
advice:
Trust your judgment; common sense counts,
Maintain a healthy skepticism, and
Don't be snowed by a seemingly ingenious statistical analysis; it may well rely on unrealistic and
inappropriate assumptions.
Statistical thinking can be used in all parts of an organization and in all job functions. A manager makes
"better" decisions when he utilizes all available information in an effective and meaningful way. The
primary role of statistics is to provide decision makers with methods for obtaining and analyzing
information to help make these "better" decisions. It is therefore said that statistics is the art and
science of collecting and understanding data. Statistical techniques should be viewed as an important
part of the business decision process, allowing informed strategic decisions to be made that combine
intuition and expertise with a thorough understanding of the facts available. Use of statistics is
becoming increasingly important in maintaining a competitive edge for success today!

%r. Sharad SaFena
Sr. Lecturer (Quantitative Management)
Institute of Management
/irma ,ni+ersity of S"ien"e !e"hnology
Sarkhej-Gandhinagar Highway, Post: Chandlodia
Ahmedabad - 382 481 Gujarat
Phone : 91-2717-241900/01/02/03/04 Ext.641, Fax : 91-2717-241916
Mobile : 91-98983 72722, eFax : 14322047262
E-mail : sharad_stat@yahoo.com
CR'%I&I*I!0 $8 C'*'&RI!0
By
K.7. Kannan# Faculty-Marketing Area, Institute for !e"hnology and Management# 10,
Venkatakrishna Road, Mandaveli, Chennai-600 028, Phone : (O) 044-24937457, (R) 0424-2212458,
(M) 94435 46434, E-mail : kvkannan4u@yahoo.com
Introdu"tion
Celebrities are famous personalities. They can be film stars, sport stars or TV personalities. The
marketers for promoting their brands have used celebrities. A firm that decides to employ celebrity to
promote its product or service has the choice of using the celebrity to give a testimonial, to give an
endorsement, as an actor in a commercial, or as a company spokes person. The important reason why
celebrity has been used is that the celebrity appeal adds fame, talent, credibility, or charisma to the
product being advertised.
Celebrity Appeals in India
The history for celebrity appeal dates back to fifties, when Lux used Hindi film stars. In 1980's Pataudi a
famous cricket star has been used in advertisements. Similarly various cricket stars like Kapildev for
Palmolive and Boost, Kris Srikkanth for Maltova and TVS Srichakra, Sunil Gavaskar for Dinesh Suitings
has been used. Now we have the famous film stars like Amitabh, Abisekh, Sharukh, Aishwaryarai
endorsing various products. Similarly now we have cricketers like Sachin Tendulkar, Sourav Ganguly,
Rahul Dravid, Zaheer Khan, Yuvraj Singh, Kaif, Virender Sehwag, and Irfan Pathan endorsing various
products. They are endorsing various products that include softdrinks, batteries, paints, mobile phones,
tyres, consumer durables and various other products. As the celebrity appeal has more credibility, the
celebrities having credibility worldwide have been used by advertisers now-a-days. For example, Steve
Waugh, the former Australian cricket captain endorsing AMP Sanmar Life Assurance products in India.
(hy "elebrity appeals)
The major reason for using celebrity appeal by most of the companies is to gain immediate attention for
the product being advertised. For example, attention for Airtel ad has been made possible because of
Sharukh as the ad creates curiosity. India is a place known for its internal diversity where the dialect
differs for every 200 kms. But one thing where the countrymen are unanimous is towards celebrities as
we can see the popularity for Sachin or Dravid or Big - B or Sharukh. Again, approval of a brand by a
star (Boost is the secret of my/our energy) by Kapil or Sachin ensures sense of trust for the brand to
the target audience.
Ma.or draCba"5s of "elebrity appeals
Celebrity appeals are costlier than other type of appeals. Since celebrities enjoy very good image they
have been used by marketers for various brands even then the celebrity seem to be disconnected with
the brand. The target audience also gets confused as the celebrity endorse in more number of ads (for
example, Amitabh and Sachin acted in more than dozen ads and Sharukh in more than half a dozen
ads).
Con"lusion
The celebrity appeals gain immediate attention and adds attraction to the advertisement. So a consumer
can be easily attracted to the celebrity ad. But the marketers also have to prove on quality of the brand
being advertised so that they can enjoy long-term benefits.
K.7. Kannan# Faculty-Marketing Area, Institute for !e"hnology and Management# 10,
Venkatakrishna Road, Mandaveli, Chennai-600 028, Phone : (O) 044-24937457, (R) 0424-2212458,
(M) 94435 46434, E-mail : kvkannan4u@yahoo.com
Should Ce thin5 tCi"e before doCnsi9ing)
Authors-
M. KamesCara Rao
Faculty-HR
E-mail: mkameshrao@yahoo.co.in
K. 8ran"is Sudha5ar
Faculty-Marketing
E-mail: kfsudhakar@yahoo.co.uk
Centre for Management Studies
/ational Institute of !e"hnology
Warangal-506 004 (A.P.)

Should Ce thin5 tCi"e before doCnsi9ing)
* The downsizing strategy of AIR INDIA was to cut almost 1000 jobs by launching VRS.
* As a part of its downsizing strategy, Bajaj Auto will reduce its work force by 4000 by the end of
2003.
* Downsizing was planned at MTNL, Mahanagar Telephone Nigam (Public Sector Telecom Major)
in order to enhance productivity. Over 10,000 employees are eligible to opt for the scheme
announced. This is the largest VRS announced by a Public Sector company.
The major concern for managers in the organizations these days is the effective utilization of work force.
The issue has become increasingly important because of the pressure to reduce the labor costs. The
issue deals with the shortage as well as surplus of employees in an organization. Where there is surplus
of work force, trimming of manpower becomes necessary. Downsizing is opted by most of the
organizations in an effort to right size their human resources. Downsizing literally means to reduce the
size of the organization by cutting down the number of employees presently working in the company.
Downsizing strategies enable a company to rightsize its manpower. The unproductive workers should be
eliminated while retaining the most effective personnel, thereby optimizing the performance of the
workforce.
Downsizings were clearly regrettable but understandable as they helped firms survive during recession
period. Such a large number of workers were certainly unnecessary for a firm doing a smaller volume of
sales, so the workers were released over short intervals of time in large numbers. Downsizing involves
several implications for the short-term profitability and even the long-term growth of the company. It is
a decision on the part of the Management to reduce the overall workforce.
The reasons that force the company to opt for downsizing may be any of the following:
1) Intense competition
2) Technology advancement
3) Automation
4) Outsourcing
5) Strategic alliances
6) Elimination of costs
7) Improve profitability
One of the reasons for the companies to downsize their manpower may be seen as the intense
competition that cuts into the company's revenues. Lower revenues lead to efforts to quickly cut down
the costs and some employees are laid off as a result. The Management of a company adopts
downsizing strategy when less work is done by more number of employees and the potential of
employees is not utilized to the full extent.
The factors that lead to downsizing are the developments in the technology, automation and outsourcing
one or more processes in an organization. The technological change has been a catalyst to an expanded
view of work in many companies. Technological advances have allowed for the expansion of many jobs
by combining multiple functions into a single operation. Workers are presented with a broadened scope
of activities that challenge their skills. The employees who are ready to adapt to the changes in the
environment and as a result, in the organization culture and who moulds themselves according to the
environmental requirements should be retained. As the technology advances, the skills of the employees
become obsolete. Skill obsolescence can be eliminated or at least minimized so that experienced
employees are retained.
Automation or the replacement of man by machine also is one of the major reasons behind downsizing.
The work done by a group of people, say 5 or 6 workers is done by a machine, which can be operated
by a single person. Thus this has initiated the need to reduce the number of employees in the
organization. Companies have opted for downsizing its manpower following the computerization and
automation of several operations.
Outsourcing a department or a particular process is another reasons that force companies to conduct
layoffs in an effort to downsize its human resources. In an organization where an entire department or a
particular process is outsourced by an agency, the employees who belong to that particular department
or those who are involved in the operations of that particular process are laid off. Consider that an
organization has offered its recruitment and selection to an outsourcing agency, the employees involved
in it are to be laid off.
Another reason is the strategic alliance of two or more companies. The joint venture necessitates the
downsizing of the manpower in the companies involved in the venture. The term downsizing was coined
to describe the action of dismissing a large portion of a firm's workforce in a very short period of time,
particularly when the firm was highly profitable. In a standard downsizing story, a profitable firm well
poised for growth would announce that it was firing a large percentage of its workforce. The equity
market would get excited and initiate a buying frenzy of the firm's stock. This goes counter to a
standard micro-economic analysis, in which weak firm anticipate a slump in the demand for its products,
and lays off workers, while strong firm foresees a jump in the demand for its products, and hires more
workers to increase production.
Investors care about downsizing, since it contains severe implications for the short-term profitability and
even the long-term growth of a company. Downsizing is quite unlike a traditional layoff- in a layoff, a
worker is asked to temporarily leave during periods of weak demand. In downsizing, the separation
between a worker and a firm is permanent. Downsizing is not a dismissal for individual incompetence
but rather a decision on the part of the Management to reduce the overall workforce.
The other reasons being intended to improve profitability eliminate obsolete functions and reduce the
overstaffed areas of an organization. As the organizations move towards more strategic workforce
management, downsizing will remain part of the work force landscape, but the catalyst for it will
change. Downsizing began as the strategy of sick companies shedding workers in the face of weak
demand, but soon strong firms looking to boost shareholder value also adopted the policy. Downsizing
can be used as a strategic option that Management can exercise in order to boost the equity value. It
can be perceived as a planned change involving the elimination of the positions, operations or jobs. To
quote an example, the position of secretaries to executives in the organizations have been replaced by
the computers thereby reducing the number of employees which leads to reduction in the labor costs.
The implementation of downsizing strategy should be carefully planned and performed by the
organizations. To begin with, a clear and careful analysis of the effects of the layoffs in the long run as
well as in the short run is to be carried out. If a company performs layoffs in response to the short-term
losses, its long-term survivability may be endangered. Thus before conducting layoffs, the companies
should seek an appropriate balance between short-term and long-term demands. The companies should
be well prepared for downsizing. Anticipating the kinds of human resource problems that crop up
subsequently, help the companies to cope up with this change to some extent.
The employees should be informed well in advance about the layoffs. Prior warning or informing about
the layoffs creates a chance for the employees to revolt against the Management, cause damage or
sabotage to the machinery and valuable assets of the company. This impact can be reduced by
providing the employees with retraining and offering them adequate compensation and benefits.
The major techniques of adopting downsizing strategy are listed below:
2) Layoff
3) Retrenchment
4) Closure
5) Voluntary retirement
Layoff is a temporary measure to reduce the workforce in case the organization faces problems like
shortage of fuel or power, accumulation of raw material and finished stock due to recession, shortage of
working capital, breakdown of machinery or natural calamity. Layoffs were declared illegal by the Labour
Department. Hindustan Motors, one of the key players in the automobiles, in the recent past entered
into a legal course against the order of refusal of permission of layoffs. Another US-based company
Texas Instruments adopted a different strategy to cope up with a recession. It terminated the jobs of
thousands of employees and had to rehire, retrain and motivate the employees when things improved.
Under the Industrial Dispute Act, 1947, an organization can retrench employees for any reason other
than termination of employment due to disciplinary action. The employees can prune the workforce
using this method and pay them the retrenchment compensation as stipulated in the Act. Retrenchment
should be often based on the Last In First Out (LIFO) principle wherein junior-most employees would be
retrenched, even if they were competent. Retrenchment involves a tricky and complex a process for
identifying the non-performers, who are required to be separated from the organization permanently.
A thorough performance appraisal is to be carried out in order to identify the non-performers and
remove them thereby enhancing the profitability as well as productivity. Performance appraisal system
should be well designed so as to identify the most efficient employees so that they can be retained while
conducting the layoffs. Companies must be aware that even their short-term problems may not be
solved by downsizing because of the loss of skills resulting from the departure of the experienced
employees who were offered Early Retirement Schemes and VRS.
An employer can close down the whole or part of a unit if the circumstances that lead to closure are
beyond the control of the employer. In the case of closure on account of unavoidable circumstances
beyond the control of employer, the maximum compensation payable to a worker is his three months
salary.
Companies have been downsizing through the process of a compensation package based on Voluntary
Retirement Scheme or VRS. VRS is viewed as one of the methods for the turnaround of the company
when business cycle is on a declining curve. In many large sized organizations, there is no more lifetime
employment. The symptoms of such decline in the business cycle are seen in gradual decline in profits,
reduction of market shares, loss of monopoly, fast emergence of new technology and the like. When
these symptoms are round the corner, Management must initiate action thorough strategic planning.
One of the most important drawbacks of these methods of downsizing is that they cannot be used at the
discretion of the employer in case of large organizations. Approval of government before layoff,
retrenchment and closure is compulsory. In a country like India, where unemployment is one of the
major problems, the government is very reluctant to give permission for cutting jobs even if the reasons
are genuine. Trade unions also offer stiff resistance.
Having identified the reasons for the present downtrend of the organization and also having decided the
probable actions required for the rectification, the company must compare its vital data for all the
factors with the best company in the same or similar trade. Such benchmarking helps in understanding
the level of efficiency at which the company is presently working. After implementing one of the
downsizing methods and reducing the manpower, the main issue for the Management is to handle the
survivors or the employees who remained in the company after downsizing.
The survivors experience an emotional shock that prevents them from suddenly changing direction. A
decade of downsizing has made it abundantly clear that traditional psychological contract between the
employer and the employee has been forever broken. Not knowing what to do people will wait and see
what happens. They are waiting for leadership, someone to tell them what to do. A good manager has
to have the compassion for human need to cope with the shock and fear that people feel, combined with
a sense of optimism direction and mission will help them through the often painful transition from what
was to what is to be. Thus planned separation is not an end itself. It is essential to plan for working out
schemes that the retained organizational members are not demoralized. A fall out of VRS is that the
retained employees are a scared lot, always afraid and apprehensive that anyone or some of them may
be asked to retire at any time. Though in reality it is not possible to assure all the retained employees
about their retention for all the time in future, Management should demonstrate by its action that
retained employees are considered and treated as the valued members of the organization.
It is important to maintain the morale of the retained staff. It is therefore necessary to maintain close
communication with them and dispel rumors, which are generally rampant in such conditions. Efforts
should be made to build a good deal of counseling services. Counseling should be used as a process to
communicate effectively with the organizational members so that they realize that VRS is the last resort
for the revival and survival of the organization. A good counseling session must include practical advice
about how to use or invest the sum received as compensation. The retained employees shall also need
advice not only on investment but also on income-tax implications. When layoffs are conducted or
perceived to be conducted according to random criteria or on the basis of merit, they may have an
impact on the work performance of the retained employees. They tend to develop a sense of job
insecurity and search for job offers outside.
The companies can reduce the impact of downsizing by retraining or redeployment policies. These help
employees to acquire more than one skill. Also potential employees should be involved in planning the
downsizing process thereby creating awareness among the employees that downsizing is inevitable in
that particular situation facing the organization. Providing good and attractive compensations and
severance packages can soften the impact of downsizing.
Downsizing is also aimed at increasing profitability by reducing the costs as well as enhancing and
improving the productivity of the retained employees. But the fear arises here that the performance of
the retained employees might be reduced because of the job stress they experience due to the
additional workload on them. In fact there is a danger of productivity level going down. In order to
ensure that performance level of the survivors do not go down, they should be motivated and made to
feel that the organization needs them and values them.
Many organizations have been downsizing their manpower over the years. It is just not sufficient to plan
downsizing well but the coping strategies should also be designed properly to handle the implementation
of downsizing. Over the past decade, downsizing has been in full swing and reductions in the workforce
became a fact of life in the world of work. The downsizing strategies adopted by many companies
recently, support the above statement:

M. KamesCara Rao
Faculty-HR
E-mail: mkameshrao@yahoo.co.in
K. 8ran"is Sudha5ar
Faculty-Marketing
E-mail: kfsudhakar@yahoo.co.uk
Centre for Management Studies
/ational Institute of !e"hnology
Warangal-506 004 (A.P.)
PreB"olle"tion pre"autions for data a""ura"y
A study spe"ifi" to Mobile Industry
By
/.M.Shanthi
Ph.D. Research Scholar
%epartment of Management Studies# Anna ,ni+ersity
Chennai
E-mail : shan_venky@yahoo.com

"..but this is not what I got from feedback!" yells a startled Chief Customer care Officer (CCO), of a
cellco giant looking at his quarterly churn figures. Many CCOs, especially in the service industry are
experiencing this situation quite frequently. They are able to sense the enormity of its impact on the
overall operations of the company and hence are sweating out on focused exercises to identify probable
reasons for variation in the actual and projected figures on customer defection, especially when it creeps
much beyond the acceptable range (when it crosses the higher limit. If it is below the lower limit, they
are obviously happy).
With the present day requirement to necessarily hold back the customers for sustainability, companies
frame tailor made strategies on a timeline basis, through vibrant and customized CRM solutions
available with them. They have realized that the cost to retain a customer is not only much lesser than
the cost incurred to get him but also is a high yielding investment for the company's sustainability. "4
loyal customers of today are 400-tomorrow", is the continuously chanted mantra by walls, tables and
chairs of the customer support departments in today's customer-centric organisations.
Conducting constant and well-directed feedback surveys to measure the expectation and satisfaction
levels of the customers, has become an essential part of the customer support activity. Each company
has its own way of conducting feedback surveys. Some follow the standard methodology, while some
design their own methodology, depending on the nature of the product and the size and composition of
the customers. The customer research groups (in-house or external) conduct regular surveys to get the
feedback of the customers, so that measures can be taken to minimize the gap between the expectation
and satisfaction levels of the customers, in order to retain them. CRM strategies get reframed or
modified based on the interpretation of customer expectations as given by the customer feedback
analysis.
Despite all the focus on customer retention, customers defect. A defection rate of 5-8% is generally
acceptable to most of the companies, especially companies with very large customer base due to
unpredictable behavioral patterns. This rate is bound to increase or decrease based on the results of the
customer feedback surveys. With a 5% acceptable variation between the actual and expected rate of
defection, companies predict growth prospects for the future, which form the base for framing enhanced
at the same time target-focused marketing and customer support activities.
Things are not always as green as you want them to be. There are instances when CCOs are left to face
a situation when the variation between the actual and predicted rate of customer defection goes much
beyond the acceptable higher limit. The immediate impact of the disaster falls on the customer care
executives, who are the closest to the customers. A process of corrective measures that follows would
range from upgrading the skills of the executives to reshuffling the groups or even sacking a few for
reasons of incompetence.
While reasons for increased defection could be due to many external factors, there is an important
factor, which could have caused a huge variation between the actual and predicted figure and that is
hidden flaws in the survey methodology. Any methodological imperfections at the grass root level, would
lead to disastrous calculations. No company can claim to have adopted a perfect survey methodology,
but the imperfections, if any could be corrected through statistical adjustments done post-data
collection. In case there are any unintended flaws in the data collection methodology adopted, the
actual figures arrived at may be true but the variations could be due to misleading predicted figures.
There are certain pre-collection precautions, which need to be taken to assure better accuracy of the
data collected.
Customizing questionnaire: The first activity any company would do before implementing CRM
strategies is customer categorization. Customers are categorized into identical groups, based on
their demographic and geographic and product preference and usage characteristic. Each group
needs to be surveyed separately using questions based on unique characteristic they posses.
These customized questionnaires provide better insight into customer expectations and assures
better accuracy.

Changing the questionnaire pattern: The question pattern needs to be changed for each and
every survey, to make it interesting to the respondents. Regular questions make it boring and
would fail to extract the required information.

Deleting obsolete questions: One of the major flaws in the questionnaire used for the survey is
usage of obsolete questions. A question becomes obsolete when all respondents express high
level of satisfaction on that. These questions need to be identified periodically and deleted from
the questionnaire, to avoid misleading inferences.

Method of data collection: Many companies send feedback forms to the customers and collect
them either by mails or e-mails. The response to these kinds of feedback mailers is generally
10%. So it is recommended that direct feedback collection is done to increase the response rate.
An increased response rate leads to increased accuracy in the data collected.

Short questionnaire: Studies reveal that short and focused questionnaire promises better
accuracy than long ones, because long ones test the patience of the customers, and by the time
they reach the last part, which could be the most target focused part of the questionnaire, they
partly of fully lose their interest to answer.

Rating scales and ranking: Care should be taken in selecting the rating scales and ranking list. An
even rating scale like a four point scale can be used without a neutrality point, in order to force
the respondent confirm to a particular positive or negative rating, since neutrality would not give
adequate information about the customer's preferences. As far as ranking is concerned, number
of variables taken to rank should be minimal, so that the respondent finds it easy to rank the
parameters based on his perceptions.

Reframing questions: Using emotionally powerful words like "Fantastic" for "Very satisfied" and
"Disappointing" for "Not Satisfied" would make the questionnaire better focused and interesting.
This would also lead to better understanding of the customer expectation and satisfaction levels.

"Satisfied" are not necessarily loyal: "Satisfied? Who cares?" is the general attitude of all
customer support groups. But, they should realize that customers who profess their satisfaction
switch to rival products in no time. So keeping a constant monitor of the feedback from the so
called "Satisfied" groups is as important, because satisfied need not necessarily is loyal.

Less time gap: The time gap between the data collection and analysis should be very less. In
behavioral studies the data cannot bet stability for a long period. If the data lies in the shelves
for more than 3 months, it is declared dead. Any analysis based on that would only lead to
misleading predictions.
All the pre-collection precautions stated above should necessarily be taken to assure optimum accuracy
in the data collected. If a CCO says that he is been taking all the precautionary measures but still sees
variations, he should definitely check the operational and functional efficiency of his company, by
performing a SWOT analysis. This would enable him to identify the deficiencies, and take corrective
measures to reduce customer defection.
/.M.Shanthi# Ph.D. Research Scholar, %epartment of Management Studies# Anna ,ni+ersity
Chennai, E-mail : shan_venky@yahoo.com
PreB"olle"tion pre"autions for data a""ura"y
A study spe"ifi" to Mobile Industry
By
/.M.Shanthi
Ph.D. Research Scholar
%epartment of Management Studies# Anna ,ni+ersity
Chennai
E-mail : shan_venky@yahoo.com

"..but this is not what I got from feedback!" yells a startled Chief Customer care Officer (CCO), of a
cellco giant looking at his quarterly churn figures. Many CCOs, especially in the service industry are
experiencing this situation quite frequently. They are able to sense the enormity of its impact on the
overall operations of the company and hence are sweating out on focused exercises to identify probable
reasons for variation in the actual and projected figures on customer defection, especially when it creeps
much beyond the acceptable range (when it crosses the higher limit. If it is below the lower limit, they
are obviously happy).
With the present day requirement to necessarily hold back the customers for sustainability, companies
frame tailor made strategies on a timeline basis, through vibrant and customized CRM solutions
available with them. They have realized that the cost to retain a customer is not only much lesser than
the cost incurred to get him but also is a high yielding investment for the company's sustainability. "4
loyal customers of today are 400-tomorrow", is the continuously chanted mantra by walls, tables and
chairs of the customer support departments in today's customer-centric organisations.
Conducting constant and well-directed feedback surveys to measure the expectation and satisfaction
levels of the customers, has become an essential part of the customer support activity. Each company
has its own way of conducting feedback surveys. Some follow the standard methodology, while some
design their own methodology, depending on the nature of the product and the size and composition of
the customers. The customer research groups (in-house or external) conduct regular surveys to get the
feedback of the customers, so that measures can be taken to minimize the gap between the expectation
and satisfaction levels of the customers, in order to retain them. CRM strategies get reframed or
modified based on the interpretation of customer expectations as given by the customer feedback
analysis.
Despite all the focus on customer retention, customers defect. A defection rate of 5-8% is generally
acceptable to most of the companies, especially companies with very large customer base due to
unpredictable behavioral patterns. This rate is bound to increase or decrease based on the results of the
customer feedback surveys. With a 5% acceptable variation between the actual and expected rate of
defection, companies predict growth prospects for the future, which form the base for framing enhanced
at the same time target-focused marketing and customer support activities.
Things are not always as green as you want them to be. There are instances when CCOs are left to face
a situation when the variation between the actual and predicted rate of customer defection goes much
beyond the acceptable higher limit. The immediate impact of the disaster falls on the customer care
executives, who are the closest to the customers. A process of corrective measures that follows would
range from upgrading the skills of the executives to reshuffling the groups or even sacking a few for
reasons of incompetence.
While reasons for increased defection could be due to many external factors, there is an important
factor, which could have caused a huge variation between the actual and predicted figure and that is
hidden flaws in the survey methodology. Any methodological imperfections at the grass root level, would
lead to disastrous calculations. No company can claim to have adopted a perfect survey methodology,
but the imperfections, if any could be corrected through statistical adjustments done post-data
collection. In case there are any unintended flaws in the data collection methodology adopted, the
actual figures arrived at may be true but the variations could be due to misleading predicted figures.
There are certain pre-collection precautions, which need to be taken to assure better accuracy of the
data collected.
Customizing questionnaire: The first activity any company would do before implementing CRM
strategies is customer categorization. Customers are categorized into identical groups, based on
their demographic and geographic and product preference and usage characteristic. Each group
needs to be surveyed separately using questions based on unique characteristic they posses.
These customized questionnaires provide better insight into customer expectations and assures
better accuracy.

Changing the questionnaire pattern: The question pattern needs to be changed for each and
every survey, to make it interesting to the respondents. Regular questions make it boring and
would fail to extract the required information.

Deleting obsolete questions: One of the major flaws in the questionnaire used for the survey is
usage of obsolete questions. A question becomes obsolete when all respondents express high
level of satisfaction on that. These questions need to be identified periodically and deleted from
the questionnaire, to avoid misleading inferences.

Method of data collection: Many companies send feedback forms to the customers and collect
them either by mails or e-mails. The response to these kinds of feedback mailers is generally
10%. So it is recommended that direct feedback collection is done to increase the response rate.
An increased response rate leads to increased accuracy in the data collected.

Short questionnaire: Studies reveal that short and focused questionnaire promises better
accuracy than long ones, because long ones test the patience of the customers, and by the time
they reach the last part, which could be the most target focused part of the questionnaire, they
partly of fully lose their interest to answer.

Rating scales and ranking: Care should be taken in selecting the rating scales and ranking list. An
even rating scale like a four point scale can be used without a neutrality point, in order to force
the respondent confirm to a particular positive or negative rating, since neutrality would not give
adequate information about the customer's preferences. As far as ranking is concerned, number
of variables taken to rank should be minimal, so that the respondent finds it easy to rank the
parameters based on his perceptions.

Reframing questions: Using emotionally powerful words like "Fantastic" for "Very satisfied" and
"Disappointing" for "Not Satisfied" would make the questionnaire better focused and interesting.
This would also lead to better understanding of the customer expectation and satisfaction levels.

"Satisfied" are not necessarily loyal: "Satisfied? Who cares?" is the general attitude of all
customer support groups. But, they should realize that customers who profess their satisfaction
switch to rival products in no time. So keeping a constant monitor of the feedback from the so
called "Satisfied" groups is as important, because satisfied need not necessarily is loyal.

Less time gap: The time gap between the data collection and analysis should be very less. In
behavioral studies the data cannot bet stability for a long period. If the data lies in the shelves
for more than 3 months, it is declared dead. Any analysis based on that would only lead to
misleading predictions.
All the pre-collection precautions stated above should necessarily be taken to assure optimum accuracy
in the data collected. If a CCO says that he is been taking all the precautionary measures but still sees
variations, he should definitely check the operational and functional efficiency of his company, by
performing a SWOT analysis. This would enable him to identify the deficiencies, and take corrective
measures to reduce customer defection.
/.M.Shanthi# Ph.D. Research Scholar, %epartment of Management Studies# Anna ,ni+ersity
Chennai, E-mail : shan_venky@yahoo.com
!ourism Mar5eting R Segmenting Indian !ourism
By
A M Sa55thi+el
Faculty- Marketing Area
%epartment of Management Studies#
P'S Institute of !e"hnology
Bangalore
E-mail : sakkthi@yahoo.co.uk
%r. &ishnu Priya Mishra
Reader in Management
Regional College of Management
Bhubaneswar

%ourism Mar8eting 6enables a country to invite guests spanning across different
cultures* traditions* customs* countries to visit their country* to en=oy their rich
culture* heritage* places sculptures* cuisines* hospitality* entertainment* arts and
architectures* by creating exiting experience through leisure and entertainment for
commercial6.
4444 A M
Sakkthivel
Tourism industry is the largest employment generator of the world. This is the only industry
which requires less or no investment, yet generates billions of foreign exchange to the country's
exchequer. Many small nations viz. Singapore, Srilanka, Malaysia, Thailand etc. woo millions of
foreign tourists and bag billions of foreign exchange. India, albeit, the country houses rich
tourism locations, yet, figured in the bottom of the rank table in wooing foreign tourists.
Considering the above facts, the marketing of tourism plays a vital role in any country's agenda.
Tourism proved to be world's biggest industry, generates massive employment opportunities and
revenues as well. It is unlike, other marketing concepts, it needs a well-planned integrated
approach, because, it is marketing of a country. Positioning and promotion are twin eyes, which
are to be emphasized more, in the minds of international population. It is integrated with leisure,
entertainment, transportation, communication and all service sectors. Traditionally, the job is
usually done by a Government to promote the country.
The whole process has to be revitalized and a full-fledged marketing process to be undertaken.
The same old STP (Segmentation, Targeting, and Positioning) Process can well be used in this
marketing.
It is a hybrid of services/products marketing. It is a marketing of nation.
S!P Pro"ess R !ourism Mar5eting
Segmentation Pro"ess
1. Segment the Potential countries
2. Segmentation of the tourists from the countries
a. Developed Countries
b. Developing Countries
c. Under Developed Countries
3. Segment the visitors in SEC (Socio-Economic Category) and their nature of visits
a. Under SEC
i. Upper class
j. Middle class
k. Lowe class
b. Under Nature of visit
i. Business executives
j. Leisure travelers
k. The delegate
l. Religious travelers,
m. NRI visiting homes
n. Fans for sports
o. International air line crews
p. International ship carrier crews
q. Heritage travelers
r. Travelers for arts & architecture
s. Travelers for Mountain sports
t. Travelers for Wild life camps, bird sanctuaries
u. Beach strollers
v. Interest groups etc.
4. Segment the locations according to the above the segmentation of travelers
!argeting Pro"ess
1. Classify the locations according to the visitors requirements
2. Select the target group of visitors
3. Focus the target group of visitors with the USPs' of locations
Positioning Pro"ess
1. Develop USP (,niOue Selling Proposition) for all tourism locations
a. Mountain sports
b. Wild life camps
c. Heritage place
d. Sprawling beaches
e. Arts & Architecture etc
2. Design proper strategic plan to promote the locations among domestic
and foreign tourists
!he Mar5eting of tourism may be "lassified in to tCo broad "ategories
1. Targeting International visitors
2. Targeting Domestic visitors
The former brings massive foreign exchange and latter helps the equal distribution of their disposal
income to imbalanced sectors. Since, it is a integrated marketing, various industries have bearings n
and from Tourism Marketing. It is a coherent, collective approach. The public and private sector
participation is required for the success of this marketing. So far, the efforts of the Government proved
to be not very fruitful, this lucrative industry can be privatized for better promotion and growth. 8irst#
Ce shall "lassify the players:parti"ipants of tourism mar5eting.
o International/Domestic Airlines
o Local Transportation
i. Rail Transport
ii. Road Transport
iii. MRTS (Mass Rapid Transit Systems - in Major cities)
iv. Inland Water Transport, if any
Hotels/Resorts/Restaurants
Government i.e. to provide safety, taxation policies, visas
Health Industry i.e. to ensure the hygiene requirements
International and Domestic travel agents
Ministry of Tourism, ITDC, STDCs ie Industry watch dogs
International and Domestic promotional organizations (Private sector , Sector-wise, State-wise)
Unemployed educated youths i.e. to be trained to set up Tourism guide/information stations
Telecommunications sector and Information Technology
This marketing caters to attract international and domestic tourists. Main emphasis is to provide to woo
international visitors. It was expected to bring 5 millions by the year 2000, but, actually 2.35 millions
visited in India in that year (Economic Times, 2001), showing unhealthy trend in meeting our targets.
This target is very attractive in context to foreign exchange earnings.
To conclude, India possesses every thing. The rich cultural heritage, sculptures, sprawling deserts,
highest mountains, palaces, temples, delicious cuisine, rare mixture of life style etc, which makes it a
'Cross Cultural Paradise' stays on 'Unity in Diversity'. The Government and private sector need to work
earnestly and with a commitment to develop India, a most attractive tourism destination in the world.
The author touches all the facts and figures, option of marketing, strategies and techniques to woo
international visitors and also to encourage domestic tourism. We have all, yet we may the drive to
work. We should not miss this massive golden opportunity, like we miss for past 53 years. It is a time to
review, analyze and to act.

A M Sa55thi+el
Faculty- Marketing Area
%epartment of Management Studies#
P'S Institute of !e"hnology
Bangalore
E-mail : sakkthi@yahoo.co.uk
%r. &ishnu Priya Mishra
Reader in Management
Regional College of Management
Bhubaneswar
!H' IMP*ICA!I$/S $8 !'CH/$*$GICA* '/7IR$/M'/!
By
Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409

!e"hnologi"al 'n+ironment-
Why is it /o I&portant: /o I&portant:
1. It brings new products, processes, and materials.
2. It directly impacts every aspects of our society (transportation, energy, communications,
entertainment, health care, food, agriculture, industry).
3. It alters the rules of global trade and competition.
Appli"ation of 5noCledge
* Intends to solve practical problems
* consists of:
- Applied resear"h with specific objectives
- De+elopment resulting in workable prototypes
- Engineering defining the knowledge for commercial exploitation
- Commer"iali9ation including mass production
IMP$R!A/C' $8 !'CH/$*$G0?
It is one of the most important driving force post-II world war in shaping up economies of various
countries.
It improves quality of life in the society. New and improved products and processes are made available
in society.
Technology is directly linked to level of scientific knowledge, particularly applied sciences.
Technology is both hard and soft-that is machine, as well as, way of thinking
Technology is thus level of scientific sophistication and level of knowledge in application of sciences to
production processes, be it goods or services (like Heart operations or Aircraft flying, or designing and
fabricating a nuclear reactor).
The changes in Technology are so rapid now that the Industry has to keep track of same and keep
modernizing to remain competitive and in business.
Some of the areas of te"hnology ob.e"ti+es areHH
- Method of manufacturing a product
- Improvement in product design or manufacturing process
- Reduction of waste
- Reduction of manufacturing cost
- Using new raw materials
- Using eco-friendly materials
- Improving process quality and reliability
- Introducing new products and services
- New methods of delivery and distribution
- New ways of management control and information (like ERP, VSAT, Video conferencing, and now
Convergence technology)
Ma.or Challenges in use of te"hnology is the rate at Chi"h it is diffused in the "ountry#
"ompanies and manufa"turing plants# and also the suitable adaptation of the same for the
user of the te"hnology.
Here "omes the issue of the Appropriate !e"hnology.
Some of the new technologies that have vastly impacted the manufacturing sector are:
1) Information technology (Internet). 2) IT enabled services (Call centers). 3) Bio genetics or DNA
Technology (Hybrid agricultural seeds) and genetic based medicines (AIDS Vaccine) 4) Laser. 5)
Robotics (Mechanization or atomization). 6) Superconductivity. 7) Bio-degradable materials replacing
convention materials. & 8) Ceramic materials (Like ceramic engine body)
This has had vast impact on availability of newer and newer products.
The World Economic Forum {WEF} considers technology as one of the 8 factors to evaluate the global
competitiveness of the countries.
The IT and Communication technology has made virtual factories and virtual universities possible. The
computer power has completely changed the warfare methods and defense strategies of Nations.
Knowledge management and knowledge-based industries have thus emerged as sunrise sectors in
economy.
8or utili9ing this B a "ountry needs folloCing>>>
1. Computer literacy and skilled computer programmers
2. Efficient and deep penetration of telecommunication like Land and cellular phone network with high
bandwidth availability
3. Inventory of technically qualified persons in the country
4. World class Education and Training facilities.
5. Innovation Culture (Missing in India vis--vis USA, Japan)
6. In-house R & D facilities with Companies (Ranbaxy)
7. R&D support and Infrastructure by National and State Governments (DRDO, RDSO,CDRI and so on).
8. A network of research Laboratories, training centers, Tool rooms and Incubation centers for
developing entrepreneurship.
9. Strategic global alliances for research and application of technology which in many cases has
prohibitive costs, like in Pharmaceuticals, Genetic Engineering, Space and nuclear research.
10. Incentives for capital to flow into R&D in the country both internal and external investments.
M'AS,R'S $8 !'CH/$*$GICA* '/7IR$/M'/!-
India's Expenditure on R&D is less than 1% of GDP as against 2.5 % of developed nations and the GDP
itself being very low compared to these countries, the absolute investment and expenditure on R&D is
very poor (As against USA 247 Billion $ India had barely 3.5 Billion $s). Apart from this the contribution
of Corporate India is poor (only 15%) in this. A good part of it goes into Strategic research budget like
space and defense.
Another Measure of technological Environment in the country is the Number of International patents
filed by the Laboratories and Firms from a country. Just compare this for India with Lucent Laboratories
USA (Now headed by an Indian), which files more than almost one patent every day.
A third Measure could be the contribution of Capital Goods & Machine tools industry in the GDP of the
Country.
A fourth measure is the number and constitution of premier Technology institutes and Technical training
Centers and Research laboratories in the country, including Communication and Information technology
areas.
For modern industry environment the skill level of workers has gone very high and the countries' basic
infrastructure too is very important indicator.
It is very clear that any business investment will depend on technological Environment in the host
country or a State beside Infrastructure availability, Taxation and Fiscal Incentives. Another important
factor is availability of Power and Energy.
By virtue of above technological Environment limitations, India is attracting second-rate technology
investment. But India has definite advantage in Manual Skill and Knowledge based sectors like Software
development, Call centers, Genetic coding and other such works which make India attractive in terms of
English Speaking, technically qualified low cost workforce and low cost of operations in the country.
Whereas a Dollar has value of Rs 50 in India, It has only value of Rs 22 in USA, based on PPP (Purchase
power parity). That makes outsourcing from India attractive. China has still better advantage than India
on this latter criterion.
Changes in the technological environment
* Induced changes
- Created by social, political, or economic forces.
* Autonomous changes
- Occurred by the independent actions of technology developers in their quest for competitive
advantage.
- And are drivers of fundamental social and economic change.
!heories for autonomous "hanges
* Social- change theory
- Each of social stages corresponds to a specific technology of production.
- See " 'l%in Toffler+ The third )a%e "
* Long- wave theory of economic change -
Stage 1: new discoveries leading to new products and markets
Stage 2: new industries expanding products and markets
Stage 3: technology matures creating excess capacity and a decreasing profitability
Stage 4: business failures, unemployment leading to depressions
Any type of changes in technological environment creates opportunities and threats.
So# firms should tra"5 these "hanges on an ongoing basis.
They have different implications for the management of technology.
For example, they differ in predictability.
Current !rends in the !e"hnologi"al 'n+ironment:
* Globali9ation - Resource allocated to technology development
- Changing location of manufacturing facilities
- Rise of multinationals
- Comparative advantage of nations
* !ime Compression - Shortened product life cycles
- Shortened development times
- Decreasing payback periods
* !e"hnology Integration
- Combining technologies to develop new products
- Combining technologies to commercialize products
Globali9ation
K The process by which the various nations in the world are increasingly being interconnected politically
and economically through international trade.
Globali9ation - Resour"e allo"ated to te"hnology de+elopment
* The greater participation of countries that have been less active in technology development.
* Technology development is now being conducted all over the world, which broaden the scope of
technological environment.
Ex. Japan+ 9orea+ !hina+ Islael+ etc.
Globali9ation - *o"ation of manufa"turing fa"ilities
* Shift in locations of manufacturing facilities from advanced countries to underdeveloped economies.
Western Countries>>To Japan, Brazil, Taiwan, Korea>>ToKorea, China, Eastern Europe>>To China,
South- eastern Asia
Globali9ation- Rise of Multinationals 2M/Cs3
K Multinational Corporation is doing its business in a number of countries. (Manufacturing, marketing,
and even R& D).
* The growing R& D activity outside one's host country.
* More common for European firms than for U. S. firms.
!ime Compression
* Product life cycles
- Time period from introduction to market maturity
34 years (before 1920),
22 years (1920- 1939),
8 years (1939- 1959)
(- By A. Toffler)
!ime Compression
* Development times: Invention to production
1852 fluorescent Tube 82 years
1887 Radar 46 years
1891 Zipper 34 years
1907 Television 29 years
1940 Transistor 10 years
Technology time lags
Many leading firms have enjoyed benefits from decreasing development times in their projects {like by
use of AutoCad Type software).
!ime Compression
* Decreasing payback period
- Capital markets press to yield quick returns in investment in technology development.
- Institutional ownership increased from 8% in 1950 to 60% in 1990.
!ime Compression
* Implication to firms
- There is not enough time to engage in technology development by themselves.
- They also should consider collaborating with others, or to imitate or borrow technologies from other
firms.
Combining te"hnologies to de+elop neC produ"ts-
* Many U. S. firms including those in Silicon Valley have been weaker in this way.
* Japanese firms like Sony, Matsushita, Toshiba and Hitachi have been good to develop new products in
this way.
<Ex> Mobile phone with digital camera, DVD+ Video Combo Dec. etc.
Combining technologies to "ommer"iali9e produ"ts.
* In order to succeed in this way, a firm has to utilize its Process technologies as manufacturing,
marketing, and after- sales support.
* Many a technology- based startup firms often fail to accommodate themselves to this way.
<Ex> New marketing channel such as Web- based shopping.
IT- based transactions of commodities.
!e"hnology Integration-
* Implication to firms
- In- house R& D is not the only source of technologies. Firms should not only farm technologies, but
also gather technologies from outside.
- The main actors will be increasingly interconnected, which help foster the transfer of technology
among institutions.
These trends, globalization, time compression, technology integration, are creating TURBULENT
technological environment for many organizations.
HoC te"hnology en+ironment is "reated?
1. Countries that have high entrepreneurial environment foster technologies better
2. Role of Government in identifying technological areas for National priorities
3. Venture capital Funds Availability
4. Innovation culture in industry and business- Radical, incremental or Next generation
5. Fundamental research in the country
6. Research Laboratories-Like CSIR, CFTRI, DRDO, ISRO in the countries
7. Role of Large organizations and Public sector Enterprises-These serve as nucleus of growth of
technology
8. Premier research Institutes like IIT
9. Mechanism for transfer and absorption of technologies-Commercialization opportunities.
Requires promotional incentives by State.
10. Trained technocrats that have international exposures-like NRIs have significant role in
current technology contribution
11.Testing Laboratories and Tool Room facilities.
Development of technology can take place through slow improvements, need for introducing new
products, and outsourcing of technology from advanced nations.
One important method for creating Technology environment is through creating Industrial
clusters which are product focused like Hosiery in Ludhiana & Tirupur, Steel Rolling in Mandi
Gobindgarh and Electronics in Bangalore and NOIDA.
Inno+ation /etCor5s-
Interconnections among organizations whose missions are widely different to achieve technological
innovation by facilitating the flow of information, resources, personnel, and other inputs.
Interconnections among developers
* Private and private
* Private and public
- Joint research with universities
* R& D consortia
- Sharing resources
- Lowering risks
Interconnections among developers and facilitators:
Three &a;or functions of facilitators
Whatever they are private or public.
- Resource providers - Policy analysts -Linking organizations
Geographical features of the networks:
* Industrial Complex
* Industrial Park
* Industrial Cluster
-Examples of USA:
* Silicon Valley, California
* Route 128, Massachusetts
* North Carolina Research Triangle
* Grand Rapids, Michigan, for Furniture
* Dalton, Georgia, for carpet
* Northern Italy for Weaving
What are benefits from the networks?
1. Networks assist in the diffusion of technology.
2. They create a critical mass of skills that speed knowledge development.
3. They provide a social net for individuals.
In India>>
Ministry of Science and Technology of India through its THREE Principal departments looks after
Technology thrust in India.
Department of Science and Technology (DST), Department of Scientific and Industrial Research
(DSIR), and Department of Biotechnology (DBT).
Role of IT and Computer power in organizations can be easily seen that have transformed the
organizations and these can result in Strategic advantages to the companies.
For example models like CRM (Customer relationship management, ERP and Retail Supply Chain
management have changed the complexion of retailing from Fragmented to Consolidated, from
Local to Global from Traders to Retail Brand Managers and Market Place to Market Space.
Case- !he Ra"e on IC Chips
* The transistor was first invented by U. S. firms in the 1950s. It was primarily used for military
purposes.
* The Japanese were utilizing it into consumer applications during the 1960s, and captured most
consumer electronics market by the mid 1970s
* U. S. also developed IC (Integrated Circuit) during the 1960s. The Japanese did not have IC- related
technology, though making transistors at that time. They have to import IC chips from U. S. to produce
electronics products.
* Recognizing their technological weakness, Japanese industry, in partnership with the government,
began to develop technologies needed to make ICs in 1970, and continued the effort for years.
* By the late 1970s, the Japanese registered about 1,000 patents from the work, and finally have
technological capabilities equal to their U. S. counterparts.
They had become a key player in the world semiconductor market.
Messages from the case:
* Technological development:
- Needs a network consisting of developers and facilitators.
- Occurs in stages. It is often difficult to know what the next stage may be.
- Is determined not only by a developer, but also by national, international and political forces.
8inally-
Concept of technology we use is not one where firms and countries can produce and use innovations by
dipping freely into a general "stock" or "pool" of technological knowledge. Rather, innovation activities
should be seen as fir& specific+ local and cu&ulati%e. These processes - change in main branches of
production, shifts in geographic structure of production and trade - have important effects on the
environment through emissions from production and transportation, which will differ by country and
region.
We report the first results of the application of the method, examining both the likely impacts and the
regional implications of those impacts of three technologies - Information Technology, Biotechnology
and Nano-technology - that are likely to have the most pervasive influence over the next 50 years.

Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409
!H' IMP*ICA!I$/S $8 !'CH/$*$GICA* '/7IR$/M'/!
By
Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409

!e"hnologi"al 'n+ironment-
Why is it /o I&portant: /o I&portant:
1. It brings new products, processes, and materials.
2. It directly impacts every aspects of our society (transportation, energy, communications,
entertainment, health care, food, agriculture, industry).
3. It alters the rules of global trade and competition.
Appli"ation of 5noCledge
* Intends to solve practical problems
* consists of:
- Applied resear"h with specific objectives
- De+elopment resulting in workable prototypes
- Engineering defining the knowledge for commercial exploitation
- Commer"iali9ation including mass production
IMP$R!A/C' $8 !'CH/$*$G0?
It is one of the most important driving force post-II world war in shaping up economies of various
countries.
It improves quality of life in the society. New and improved products and processes are made available
in society.
Technology is directly linked to level of scientific knowledge, particularly applied sciences.
Technology is both hard and soft-that is machine, as well as, way of thinking
Technology is thus level of scientific sophistication and level of knowledge in application of sciences to
production processes, be it goods or services (like Heart operations or Aircraft flying, or designing and
fabricating a nuclear reactor).
The changes in Technology are so rapid now that the Industry has to keep track of same and keep
modernizing to remain competitive and in business.
Some of the areas of te"hnology ob.e"ti+es areHH
- Method of manufacturing a product
- Improvement in product design or manufacturing process
- Reduction of waste
- Reduction of manufacturing cost
- Using new raw materials
- Using eco-friendly materials
- Improving process quality and reliability
- Introducing new products and services
- New methods of delivery and distribution
- New ways of management control and information (like ERP, VSAT, Video conferencing, and now
Convergence technology)
Ma.or Challenges in use of te"hnology is the rate at Chi"h it is diffused in the "ountry#
"ompanies and manufa"turing plants# and also the suitable adaptation of the same for the
user of the te"hnology.
Here "omes the issue of the Appropriate !e"hnology.
Some of the new technologies that have vastly impacted the manufacturing sector are:
1) Information technology (Internet). 2) IT enabled services (Call centers). 3) Bio genetics or DNA
Technology (Hybrid agricultural seeds) and genetic based medicines (AIDS Vaccine) 4) Laser. 5)
Robotics (Mechanization or atomization). 6) Superconductivity. 7) Bio-degradable materials replacing
convention materials. & 8) Ceramic materials (Like ceramic engine body)
This has had vast impact on availability of newer and newer products.
The World Economic Forum {WEF} considers technology as one of the 8 factors to evaluate the global
competitiveness of the countries.
The IT and Communication technology has made virtual factories and virtual universities possible. The
computer power has completely changed the warfare methods and defense strategies of Nations.
Knowledge management and knowledge-based industries have thus emerged as sunrise sectors in
economy.
8or utili9ing this B a "ountry needs folloCing>>>
1. Computer literacy and skilled computer programmers
2. Efficient and deep penetration of telecommunication like Land and cellular phone network with high
bandwidth availability
3. Inventory of technically qualified persons in the country
4. World class Education and Training facilities.
5. Innovation Culture (Missing in India vis--vis USA, Japan)
6. In-house R & D facilities with Companies (Ranbaxy)
7. R&D support and Infrastructure by National and State Governments (DRDO, RDSO,CDRI and so on).
8. A network of research Laboratories, training centers, Tool rooms and Incubation centers for
developing entrepreneurship.
9. Strategic global alliances for research and application of technology which in many cases has
prohibitive costs, like in Pharmaceuticals, Genetic Engineering, Space and nuclear research.
10. Incentives for capital to flow into R&D in the country both internal and external investments.
M'AS,R'S $8 !'CH/$*$GICA* '/7IR$/M'/!-
India's Expenditure on R&D is less than 1% of GDP as against 2.5 % of developed nations and the GDP
itself being very low compared to these countries, the absolute investment and expenditure on R&D is
very poor (As against USA 247 Billion $ India had barely 3.5 Billion $s). Apart from this the contribution
of Corporate India is poor (only 15%) in this. A good part of it goes into Strategic research budget like
space and defense.
Another Measure of technological Environment in the country is the Number of International patents
filed by the Laboratories and Firms from a country. Just compare this for India with Lucent Laboratories
USA (Now headed by an Indian), which files more than almost one patent every day.
A third Measure could be the contribution of Capital Goods & Machine tools industry in the GDP of the
Country.
A fourth measure is the number and constitution of premier Technology institutes and Technical training
Centers and Research laboratories in the country, including Communication and Information technology
areas.
For modern industry environment the skill level of workers has gone very high and the countries' basic
infrastructure too is very important indicator.
It is very clear that any business investment will depend on technological Environment in the host
country or a State beside Infrastructure availability, Taxation and Fiscal Incentives. Another important
factor is availability of Power and Energy.
By virtue of above technological Environment limitations, India is attracting second-rate technology
investment. But India has definite advantage in Manual Skill and Knowledge based sectors like Software
development, Call centers, Genetic coding and other such works which make India attractive in terms of
English Speaking, technically qualified low cost workforce and low cost of operations in the country.
Whereas a Dollar has value of Rs 50 in India, It has only value of Rs 22 in USA, based on PPP (Purchase
power parity). That makes outsourcing from India attractive. China has still better advantage than India
on this latter criterion.
Changes in the technological environment
* Induced changes
- Created by social, political, or economic forces.
* Autonomous changes
- Occurred by the independent actions of technology developers in their quest for competitive
advantage.
- And are drivers of fundamental social and economic change.
!heories for autonomous "hanges
* Social- change theory
- Each of social stages corresponds to a specific technology of production.
- See " 'l%in Toffler+ The third )a%e "
* Long- wave theory of economic change -
Stage 1: new discoveries leading to new products and markets
Stage 2: new industries expanding products and markets
Stage 3: technology matures creating excess capacity and a decreasing profitability
Stage 4: business failures, unemployment leading to depressions
Any type of changes in technological environment creates opportunities and threats.
So# firms should tra"5 these "hanges on an ongoing basis.
They have different implications for the management of technology.
For example, they differ in predictability.
Current !rends in the !e"hnologi"al 'n+ironment:
* Globali9ation - Resource allocated to technology development
- Changing location of manufacturing facilities
- Rise of multinationals
- Comparative advantage of nations
* !ime Compression - Shortened product life cycles
- Shortened development times
- Decreasing payback periods
* !e"hnology Integration
- Combining technologies to develop new products
- Combining technologies to commercialize products
Globali9ation
K The process by which the various nations in the world are increasingly being interconnected politically
and economically through international trade.
Globali9ation - Resour"e allo"ated to te"hnology de+elopment
* The greater participation of countries that have been less active in technology development.
* Technology development is now being conducted all over the world, which broaden the scope of
technological environment.
Ex. Japan+ 9orea+ !hina+ Islael+ etc.
Globali9ation - *o"ation of manufa"turing fa"ilities
* Shift in locations of manufacturing facilities from advanced countries to underdeveloped economies.
Western Countries>>To Japan, Brazil, Taiwan, Korea>>ToKorea, China, Eastern Europe>>To China,
South- eastern Asia
Globali9ation- Rise of Multinationals 2M/Cs3
K Multinational Corporation is doing its business in a number of countries. (Manufacturing, marketing,
and even R& D).
* The growing R& D activity outside one's host country.
* More common for European firms than for U. S. firms.
!ime Compression
* Product life cycles
- Time period from introduction to market maturity
34 years (before 1920),
22 years (1920- 1939),
8 years (1939- 1959)
(- By A. Toffler)
!ime Compression
* Development times: Invention to production
1852 fluorescent Tube 82 years
1887 Radar 46 years
1891 Zipper 34 years
1907 Television 29 years
1940 Transistor 10 years
Technology time lags
Many leading firms have enjoyed benefits from decreasing development times in their projects {like by
use of AutoCad Type software).
!ime Compression
* Decreasing payback period
- Capital markets press to yield quick returns in investment in technology development.
- Institutional ownership increased from 8% in 1950 to 60% in 1990.
!ime Compression
* Implication to firms
- There is not enough time to engage in technology development by themselves.
- They also should consider collaborating with others, or to imitate or borrow technologies from other
firms.
Combining te"hnologies to de+elop neC produ"ts-
* Many U. S. firms including those in Silicon Valley have been weaker in this way.
* Japanese firms like Sony, Matsushita, Toshiba and Hitachi have been good to develop new products in
this way.
<Ex> Mobile phone with digital camera, DVD+ Video Combo Dec. etc.
Combining technologies to "ommer"iali9e produ"ts.
* In order to succeed in this way, a firm has to utilize its Process technologies as manufacturing,
marketing, and after- sales support.
* Many a technology- based startup firms often fail to accommodate themselves to this way.
<Ex> New marketing channel such as Web- based shopping.
IT- based transactions of commodities.
!e"hnology Integration-
* Implication to firms
- In- house R& D is not the only source of technologies. Firms should not only farm technologies, but
also gather technologies from outside.
- The main actors will be increasingly interconnected, which help foster the transfer of technology
among institutions.
These trends, globalization, time compression, technology integration, are creating TURBULENT
technological environment for many organizations.
HoC te"hnology en+ironment is "reated?
1. Countries that have high entrepreneurial environment foster technologies better
2. Role of Government in identifying technological areas for National priorities
3. Venture capital Funds Availability
4. Innovation culture in industry and business- Radical, incremental or Next generation
5. Fundamental research in the country
6. Research Laboratories-Like CSIR, CFTRI, DRDO, ISRO in the countries
7. Role of Large organizations and Public sector Enterprises-These serve as nucleus of growth of
technology
8. Premier research Institutes like IIT
9. Mechanism for transfer and absorption of technologies-Commercialization opportunities.
Requires promotional incentives by State.
10. Trained technocrats that have international exposures-like NRIs have significant role in
current technology contribution
11.Testing Laboratories and Tool Room facilities.
Development of technology can take place through slow improvements, need for introducing new
products, and outsourcing of technology from advanced nations.
One important method for creating Technology environment is through creating Industrial
clusters which are product focused like Hosiery in Ludhiana & Tirupur, Steel Rolling in Mandi
Gobindgarh and Electronics in Bangalore and NOIDA.
Inno+ation /etCor5s-
Interconnections among organizations whose missions are widely different to achieve technological
innovation by facilitating the flow of information, resources, personnel, and other inputs.
Interconnections among developers
* Private and private
* Private and public
- Joint research with universities
* R& D consortia
- Sharing resources
- Lowering risks
Interconnections among developers and facilitators:
Three &a;or functions of facilitators
Whatever they are private or public.
- Resource providers - Policy analysts -Linking organizations
Geographical features of the networks:
* Industrial Complex
* Industrial Park
* Industrial Cluster
-Examples of USA:
* Silicon Valley, California
* Route 128, Massachusetts
* North Carolina Research Triangle
* Grand Rapids, Michigan, for Furniture
* Dalton, Georgia, for carpet
* Northern Italy for Weaving
What are benefits from the networks?
1. Networks assist in the diffusion of technology.
2. They create a critical mass of skills that speed knowledge development.
3. They provide a social net for individuals.
In India>>
Ministry of Science and Technology of India through its THREE Principal departments looks after
Technology thrust in India.
Department of Science and Technology (DST), Department of Scientific and Industrial Research
(DSIR), and Department of Biotechnology (DBT).
Role of IT and Computer power in organizations can be easily seen that have transformed the
organizations and these can result in Strategic advantages to the companies.
For example models like CRM (Customer relationship management, ERP and Retail Supply Chain
management have changed the complexion of retailing from Fragmented to Consolidated, from
Local to Global from Traders to Retail Brand Managers and Market Place to Market Space.
Case- !he Ra"e on IC Chips
* The transistor was first invented by U. S. firms in the 1950s. It was primarily used for military
purposes.
* The Japanese were utilizing it into consumer applications during the 1960s, and captured most
consumer electronics market by the mid 1970s
* U. S. also developed IC (Integrated Circuit) during the 1960s. The Japanese did not have IC- related
technology, though making transistors at that time. They have to import IC chips from U. S. to produce
electronics products.
* Recognizing their technological weakness, Japanese industry, in partnership with the government,
began to develop technologies needed to make ICs in 1970, and continued the effort for years.
* By the late 1970s, the Japanese registered about 1,000 patents from the work, and finally have
technological capabilities equal to their U. S. counterparts.
They had become a key player in the world semiconductor market.
Messages from the case:
* Technological development:
- Needs a network consisting of developers and facilitators.
- Occurs in stages. It is often difficult to know what the next stage may be.
- Is determined not only by a developer, but also by national, international and political forces.
8inally-
Concept of technology we use is not one where firms and countries can produce and use innovations by
dipping freely into a general "stock" or "pool" of technological knowledge. Rather, innovation activities
should be seen as fir& specific+ local and cu&ulati%e. These processes - change in main branches of
production, shifts in geographic structure of production and trade - have important effects on the
environment through emissions from production and transportation, which will differ by country and
region.
We report the first results of the application of the method, examining both the likely impacts and the
regional implications of those impacts of three technologies - Information Technology, Biotechnology
and Nano-technology - that are likely to have the most pervasive influence over the next 50 years.

Prof. R K Gupta
Director
S.A. Jain Institute of Management !e"hnology
Ambala City
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
Phone : 0171-2518670/409
!R'/%S (I!/'SS'% $/ '/HA/C'% S!RA!'GIC A*IG/I/G
(I!H GR$,P '/!I!I'S I/ !H' H$!'* I/%,S!R0
By
Prof. K. G. Rama5rishna
Chairman
%epartment of Commer"e and Management#
Karnata5a State $pen ,ni+ersity
Manasagangothri, Mysore
%r. Padma Srini+asan
A disciple of Prof. K G Ramakrishna and
currently the HR-Head and Company Secretary of a logistics Company, Bangalore.
E-mail: bpadmasrinivasan@yahoo.co.in

Introdu"tion-
The business environment for hotels is found to be hugely susceptible to minuscule changes in the
global conditions. It tempered with significant volatility and plagued by innovative competition. This fact
has brought about trendy marketing strategies to retain the catchment areas. One among such
strategies for revenue maximization is group alignment. Earlier the hotels were formed as a sole trade
or as a firm. Now corporate hotels have increased in number.
PR$M$!I/G I/%IA/ !$,RISM !HR$ MI/CR'%I&*' I/%IA M CAMPAIG/
* In the past 18 months, India has focused on promoting tourism
* It launched an effective international advertising campaign
* India was spared the SARS outbreak, which hurt many Southeast Asian destinations
* Tourist arrivals are up in record numbers
Indian Government has enthusiastically put in a lot of interest and funds to improve tourism revenues.
It has appointed professionals on the job to leverage on the Indian heritage and diverse cultural
treasures. In 2003, India's tourist inflow rose 15.3% and foreign-exchange earnings through tourist
arrivals rose as much as 20% over 2002's figure. In fact, tourism in 2003 exceeded pre-September 11,
2001 levels 1.
The Pacific Asia Travel Association, a trade grouping, in January-September 2003 quotes that the
tourism declined over the previous year by 28.5% in Malaysia, by 12.7% in Thailand and 23.5% in
China; Singapore saw a decline of 23.4 % in January-October 2003. "India's growth has been beyond
expectations. Only once did we see growth of this kind and that was some years after the liberalization
of the Indian economy had begun, but even then it was a corporate-driven boom. This is pure tourism,"
says Vijay Srinivasan, deputy general manager at Le Passage in New Delhi, which arranges high-end
package tours mostly for French tour groups. Most of the five-star hotels are seeing more than 80%
occupancy and some of the lesser-known five-star hotels are overbooked. "Clients who made bookings
several months ago are being bounced and I am getting requests for bookings that I am not able to
cater to. I have also had to move many from five-star hotels to three-star hotels," Srinivasan says.
Several publications in India quoted Conde Nast Traveller's British edition's editor, Sarah Miller, as
saying: "India's result is very exciting and shows the country's increased popularity among sophisticated
travellers. It also reflects very positively on individuals involved in promoting India as a tourist
destination."
In 2003, India's travel-and-tourism industry is expected to have generated 529.4 billion rupees ($10.5
billion), or 2% of the country's GDP, according to a World Travel and Tourism Council report. It adds
that the broader travel-and-tourism economy--that includes the railways, domestic air travel, tourism
infrastructure building, and the like--is expected to total $24.3 billion, which is 4.8% of GDP. If things
stay on course, tourism is set to flourish. The WTTC report says that over the next 10 years, India's
travel-and-tourism industry is expected to achieve annualized real growth of 7.9% to bring in $28.4
billion in 2013. By then the travel-and-tourism economy overall is expected to hit an annual $68.3
billion2.
H$!'* GR$,PS I/ I/%IA
The hotel industry in India has been rewriting the system, processes, approaches, functional orientation
and methodologies the past few years to match the Indian campaign. A new need for proving global
excellence has dominated the recent aligning behaviors.
The role played by the India Tourism Development Corporation, a public sector undertaking, is
significant 3. The Ashok Chain of hotels is the largest chain in hotel industry run by the ITDC. The Ashok
Group of Hotels has been India's gracious and regal host to leading national and international visitors.
The Group is known for its unique mix of traditional Indian hospitality and modern-day systems and
facilities that are beyond compare.
An individual hotel or chain of hotels can represent itself in one of 3 ways:
As a Private label chain, with its own identity: To market a hotel as a Private Label brand is the
most expensive and requires a hotel to develop, build, and market an individual identity.
As part of a marketing brand: A marketing brand allows a hotel to maintain its own identity, but
has to market itself as part of a brand, which may involve adopting the brand logo and collateral
materials
As an individual Hotel under a collective group of representation hotels: A representation can
allow the hotel to maintain its own identity, but be represented as a large group of similar
properties in the distribution channels.
*eading Hotel Chains of India ; : Hospitality industry in India has now firmly established itself as the
provider of world-class accommodation services. This has been made possible by the emergence of
large Indian hotel chains and the entrance of global hospitality players.
Ambassador Group of Hotels: The Ambassador Group of Hotels in India boasts of some of the best
hotels in India. Ambassador believes that a great hotel should offer more than a good night's sleep. It
should create an environment that awakens your senses. It's one of the many intangible qualities you'll
experience at every Ambassador hotel.
Best Western Group of Hotels : The Best Western Group of Hotels in India has of some of the best hotels
in India. The hotels are located the prime tourist locations of India like the marvelous city of Mumbai,
Chennai, Kolkata, Hyderabad, Khajuraho, Dehradun, Varanasi and Kovalam. The hotels run by the Best
Western Group in India offer simple luxury and privacy at the same time.
Casino Hotels : The Casino Group of Hotels are located the prime tourist centers of India. The Casino
Group has hotels in tourist destinations like Casino hotel at Cochin, Coconut Lagoon at Kumarakom, and
many others.
Clarks Group of Hotels: The Clarks Group of Hotels in Agra, Jaipur, Shimla and Varanasi. The hotels run
by the Clarks Group in India offer luxury and privacy.
Fortune Park Group of Hotels: The Fortune Park Group of Hotels in India has some of the best hotels in
India. It is noteworthy that the Fortune Hotels by Welcomgroup ate a wholly owned subsidiary of ITC
Hotels ltd. The hotels are located the prime tourist centre of India like Ahmedabad, Trivandrum.
Holiday Inn Group of Hotels: The Holiday Inn Group of Hotels are located in the city of Agra, Jaipur,
Mumbai, Ooty and Goa.
HRH Hotels: HRH Hotels is the largest owner/manager of heritage hotels in India offering world-class
accommodation options for travelers. Most of these hotels are redone former palaces, mansions, and
havelies of former kings and royalty of India. The royal services and luxury offered by these hotels are
unmatched and an experience not easily forgotten.
ITC Welcome group Hotels: ITC-Welcome group, India's premier chain of luxury hotels in association
with Sheraton Hotels Worldwide brings the global traveler, the best of East and West: traditional Indian
hospitality with contemporary international standards. The ITC Welcome group hotels are present in 41
business and tourist destinations across the country including 8 ITC-Welcome group Sheraton Hotels.
These hotels offer you a gateway to India on business or leisure.
ITDC Hotels: The Ashok Group of Hotels has been India's gracious and regal host to leading national and
international visitors. The Group is known for its unique mix of traditional Indian hospitality and modern-
day systems and facilities that are beyond compare.
Jaypee Group Hotels : The hotels are located the prime tourist places of India. The JayPee Group has
hotels in destinations like Jaypee Palace, Agra, Hotel Vasant continental and Hotel Siddharth, New Delhi
and the Hotel residency manor, Mussoorie. The location of these hotels is such that the tourists get to
appreciate the beauty of nature.
K Raheja Group of Hotels: The K Raheja Group of Hotels in India are located the prime tourist locations
of India like the captivating destination of Kodaikanal, Mumbai and Bangalore. The hotels run by the K
Raheja Group in India offers simple luxury.
Le Meridien Group of Hotels: The Le Meridien Group of Hotels is located at New Delhi, Mumbai, Chennai,
Cochin, Pune and Bangalore.
Man Singh Group of Hotels: Keeping alive the old age traditions of India Mansingh group brings to the
tourist the authenticity of the historic cities of Agra and Jaipur wrapped in the fragrance of the land. The
hotels run by the Mansingh Group in India offer simple luxury and privacy.
Oberoi Group of Hotels: The Oberoi Group, founded in 1934, owns and manages thirty-five luxury and
first class international hotels in seven countries. The Group has two principal brands - the deluxe
Oberoi brand and the first class international Trident brand. Oberoi Hotels & Resorts are synonymous
the world over for providing the right blend of service, luxury and quiet efficiency.
Peerless Group of Hotels: The Peerless Group is a family of hotels, resorts and inns spread out in
Kolkata, Port Blair (Andamans), Mukutmonipur and Durgapur- four destinations of efficient hospitality.
Sarovar Park Plaza Hotels: Sarovar Park Plaza Hotels Group is one of the most recent but one of the
fastest growing hotel chains in India. With 11 hotels already operational in different parts of the country
and 6 more in the offering, the chain is poised to be a big player in Indian hospitality sector. Most of the
hotels managed by Sarovar Park Plaza are located in the medium sized cities, offering the travelers
visiting these places better accommodation.
Sinclair Group of Hotels: The hotels are located the prime tourist places of India like the dream
destination of Darjeeling, Siliguri and Ooty.
Taj Group of Hotels: Launched by Mr. Jamshedji Nausserwanji Tata, the Taj Hotels were started almost
100 years ago. Starting with the now a major landmark of Mumbai (Bombay) the Taj Mahal Hotel, Taj
group now owns around 50 hotels worldwide. The Taj Group of Hotels is grouped into strategic business
units to get consistency across the different units in the same brand and standardize the product and
service across the brands, making them distinct and identifiable. These brands have been classified as
Luxury, Business and Leisure.
Tulip Star Group of Hotels: The hotels are located in gorgeous Goa, Kerala, Maharashtra, Rajasthan,
Delhi, Uttar Pradesh, Uttaranchal, Orissa and Gujarat.
Welcome Heritage Group of Hotels : These hotels are promoting Indian Culture and Heritage and are
situated all over India.
'/HA/C'% S!RA!'GIC A*IG/I/G (I!H GR$,P
The traditional patterns of individually owned hotels are changing in recent years and the industry is
being increasingly associated with hotel groups. The hotel groups normally operate hotels owned by
them or leased by them paying rentals or managed as agents of owners under management contracts.
Franchise agreements are also common.
Ad+antages of groups < : The hotel industry is benefited with accruing advantages like large-scale
economy, risk spreading, financial, marketing and economic ease of management. Of course the hotel
groups shares many problems especially of communication, controlling of costs, accountability of unit
hotels, complex controlling mechanisms and geographical dispersal of hotels.
The author's survey in the Karnataka State included 65% belonging to different groups, which enjoy
common business benefits and sharing of large economies. The remaining 35% belonged to individuals
or partnerships. Many groups operating in the state do not have any branches other than Bangalore,
Mysore and Mangalore, which are the three important business centers of the state. Huge potential
market is awaiting these branches opened in tourist centers, hill stations etc. The nature of the hotel
business and the limits of many hotel markets provide the main explanations for the growth of hotel
companies through groups.
* Financial economies
* Marketing economies
* Economies of buying
* Managerial economies
* Economies of risk- spreading.
Among chain hotels, IHCL has the widest geographical spread, catering to the business traveler with a
presence in all major metropolitan cities through luxury hotels, and with first class business and medium
tariff hotels in other cities of India. The company is equally well established in the leisure segment with
its hotels being located in all the major tourist destinations of the country.
So the hotels are taking cover using the group entity and are trying to keep away the competition of
global giants entering the Indian hotel industry. Hotel majors have just commenced the rat race...
&ibliography-
1. www.tourismofindia.com
2. Shailaja Neelakantan, India Reaps Rich Rewards, www.Tourismofindia.Com
3. www.itdc.ge
4. All the websites of the respective hotels
5. SM Jha, Hotel Marketing, Himalaya Publishing House, 1998 edition, Pages 288-307.
Authors profile-
Prof. K. G. Ramakrishna, Chairman, Dept. of Commerce and Management, Karnataka State Open
University, Manasagangothri, Mysore.
Dr.Padma Srinivasan, a disciple of Prof. K G Ramakrishna and currently the HR-Head and Company
Secretary of a logistics Company, Bangalore.

Prof. K. G. Rama5rishna
Chairman
%epartment of Commer"e and Management#
Karnata5a State $pen ,ni+ersity
Manasagangothri, Mysore
%r. Padma Srini+asan
A disciple of Prof. K G Ramakrishna and
currently the HR-Head and Company Secretary of a logistics Company, Bangalore.
E-mail: bpadmasrinivasan@yahoo.co.in

R'S!R,C!,RI/G !H' R,RA* H$!'*S !$ 8I! !H' '7$*7I/G
R'*A!I$/SHIP S'R7ICI/G
By
Prof. K. G. Rama5rishna
Chairman
%epartment of Commer"e and Management#
Karnata5a State $pen ,ni+ersity
Manasagangothri, Mysore
%r. Padma Srini+asan
A disciple of Prof. K G Ramakrishna and currently the HR-Head and
Company Secretary of a logistics Company, Bangalore.
E-mail: bpadmasrinivasan@yahoo.co.in

Key (ords-
Rural Hotels, Relationship hotel services, Relationship Servicing.
Introdu"tion-
A hotel is defined as a "Place where a traveler can receive food & shelter provided he can pay for it" .
Hotels as a concept originated in the 6
th
century BC in the form of inns. These were run by couples and
provided sleeping arrangements in big rooms similar to today's dormitories in youth hostels. Hotels as is
known today emerged in Switzerland and were patronized by aristocracy, in England inns catered to
mobility and taverns to common man. Hotel industry is also known as the accommodation industry and
the hospitality industry.
In India, history books have been detailing on the functional aspects of hospitality industry. There have
been Dharamashalas and Choultries taking care of the needs for boarding and lodging prior to King
Ashoka's period. The religious minded Buddhist monasteries have been accommodating homeless needy
and ailing persons according Hiuen Tsang's write ups 1, when he visited India between 629 AD-645 AD.
Also "India is in the limelight in every sense of the word," says Arjun Sharma, who runs the Heritage
Village Club in Goa. "Confidence about everything Indian is pretty high. There are Indians at the top of
their professions all over Europe and in the United States and the great Indian economic story is
becoming known all over the world."
Hotels can be categorized into the following types based on their topology 2 viz. Residential hotel,
Commercial hotel, Resort hotel, International hotel, Floating hotel etc., But based on the geographical
situation, the hotels are again be sub divided into Urban hotel, Semi-urban hotel and Rural Hotels.
!he "on"ept Mrural hotel areaM-
Rural areas are sparsely settled places away from the influence of large cities and towns. Such areas are
distinct from more intensively settled urban and suburban areas, and also from unsettled lands such as
outback or wilderness . People live in villages, on farms and in other isolated houses. Rural areas can
have an agricultural character, though many rural areas are characterized by an economy based on
logging, mining, oil and gas exploration, or tourism. Lifestyles in rural areas are different than those in
urban areas, mainly because limited services are available. Governmental services like law enforcement,
schools, fire departments, and libraries may be distant, limited in scope, or unavailable. The hotels
situated in these areas are labeled as rural hotels.
Rural Hotel Strategies-
Hotels grow through an increase either in sales, profit, size or diversification, or by number of customers
or number of employees. One could say that only profit mattered, but there is pride and satisfaction in
growth for the staff as well as the owners. In addition, size and the impetus of growth gives place for a
better chance of survival in the market place. To add to a healthy bottom line, it contributes to
behaviorally based effects on a company, which are as follows: -
* It enhances problem prevention capabilities of a firm.
* It reflects the best available alternatives in case of difficult times hitting the hotel fortunes.
* It aids innovative spread of service offerings
* It improves productivity- reward relationships.
* Gaps and overlaps in activities may promote better understanding of individual and group
needs.
* Reduction of resistance to change.
* Inherent competencies to adopt to enhanced standards.
(H0 IS R'S!R,C!,RI/G !H' R,RA* H$!'*S SIG/I8ICA/!-
In a research study, it has been reported that more than 27% of the hotels in India are not approved by
the DOT (Dept. of Tourism) and are existing in the unorganized sector. They have limited mandatory
compliance and are not pent upon improving their working style and effectiveness.
The rural hotels of India have been plagued with the following difficulties:
* Poor infrastructure and lack of funds
* Lack of vision and mission of management / promoters
* Lack of innovation, marketing and promotions
* Reduced motivation among employees
* Unenthusiastic support from financially poor rural masses especially agriculturists who have
very less money to spend on hotels.
* The rural hotels have wonderful scenic and wide spaces. They are hardly landscaped or fit with
the latest gadgets. Several of them do not even possess even one adding machine or a
computer. Many of them do not accept credit cards for settlement. They do not have email ids to
solicit business online. The employees are usually school dropouts with limited educational
background. Of course, many of them are multi linguistic to pick up conversion with the stray
visitors. Their chief source of room filler will be the autowallah or the ticket collector at the
railway or bus station.
But the rural hotels bring forth the following merits:
* Local hospitality, warmth and artmenship
* Non commercialization of business approach
* Honest attempt to satisfy the customer's need
* Helping the customer beyond the rules of role of employees.
R'*A!I$/SHIP S'R7ICI/G I/ H$!'*S-
The hotels thrive on the profitable relationship with the custom. Every hotel tries to establish a
deliberate, planned and sustained relation with all the stakeholders especially customers and customer's
customers. Word of publicity is the main and significant way of procuring business. All hotels maintain
and update a RDBMS (Relational Data Base Management System) of all their customers. They take the
Opinions of the guests for the betterment of services and keep in touch with them by sending mailers on
the eve of the customers' birthday, wedding anniversary eve and so on.
India was among the top 10 countries in Conde Nast Traveller's British edition's annual Readers' Travel
Awards 2003, published in October. The magazine's readers preferred India to Singapore, Thailand and
Malaysia in Asia and even Greece and Switzerland in the West.
6 S!'PS !$ R,RA* R'S!R,C!,RI/G !$ IMPR$7IN' !H' R'*A!I$/SHIP MARK'!I/G $8 !H'
H$!'*S
Regional SWOT: Understand regional/ area specialties and the strengths emanating from them.
Functional Constraints: The difficulties, hotel and regional specific, must be studied in minute
details to strengthen at the missing link
Business Model: The hotel based on the competitive advantages and individual competencies
build up a business model to
* To focus on the local crowd
* To promote the USP of the hotel
* To fix tariffs of rooms for profitable uptake
* To partner with a promoter who can provide more funds, technology and resources
* To build unique sustainable brand
* To maximize revenue bases and lasting value system
Con"lusions-
Incredible India campaign of the Indian tourism is to focus on domestic infrastructure at India's
numerous heritage sites. They are also now working closely with tour operators and are partnering with
them to provide brochures and other support. Of course, Indian diversity is a challenge, and with the
focused campaign they will be able to highlight the Indian strengths. Well-managed RURAL hotels have
a driving purpose and creed that every one in the hotel knows and is proud to practice. Each successful
hotel exhibits a distinct and widely shared culture that fits its strategy.
&ibliography-
1. www.thingsasian.com
2. SM Jha, Hotel Marketing, Himalaya Publishing House, 1998 edition, Pages 25-27.
Authors profile-
Prof. K. G. Ramakrishna, Chairman, Dept. of Commerce and Management, Karnataka State Open
University, Manasagangothri, Mysore.
Dr.Padma Srinivasan, a disciple of Prof. K G Ramakrishna and currently the HR-Head and Company
Secretary of a logistics Company, Bangalore.

Prof. K. G. Rama5rishna
Chairman
%epartment of Commer"e and Management#
Karnata5a State $pen ,ni+ersity
Manasagangothri, Mysore
%r. Padma Srini+asan
A disciple of Prof. K G Ramakrishna and currently the HR-Head and
Company Secretary of a logistics Company, Bangalore.
E-mail: bpadmasrinivasan@yahoo.co.in

&'HA7I$,RA* 8I/A/C'
E'M$!I$/A* I/7'S!M'/!E R !H' (I!S $8 I/7'S!M'/!
Author(s)
M. Subramanian
Faculty
Institute for !e"hnology Management# Chennai
Contact: financesubbuu@rediffmail.com
Cell No. 09443929922
%r. A 7en5ata"halam
Reader
PG Commer"e %ept# S7/ College# /agmalai# Madurai
Cell No. 09443092892
Introdu"tion
The following finding from the famous "Prospect Theory" of Kahneman and Tversky has been a thought
provoking issue with respect to this paper "Emotional Investment - The wits of investment" Two groups
were asked about the following:
<roup41
In addition to whatever you own, you have been given Rs.1,000. You are now asked to choose between:
A. A sure gain of Rs.500
B. A 50% chance to gain Rs.1,000 and a 50% chance to gain nothing.
<roup42
In addition to whatever you own, you have been given Rs.2,000. You are now asked to choose between:
A. A sure loss of Rs.500
B. A 50% chance to lose Rs.1,000 and a 50% chance to lose nothing.
/esult
In the first group 84% chose A. In the second group 69% chose B. The two problems are identical in
terms of net cash to the subject, however the phrasing of the question causes the problems to be
interpreted differently.
The word investment is prevailing in all walks of life. The reasons behind the investment vary from
person to person depending upon their time & need. For example, if look at Warren Buffet's approach to
investment is to search for fundamental values overlooked by the stock market. He has also followed an
elementally simple rule: Never invest unless you can find something worth buying. The quintessential
pragmatist, Buffet is interested only in realities and is free of any illusions, especially about himself. His
influence on others' stock market behaviour has, therefore, been limited, since markets are driven to a
significant degree by fear, greed and delusions. But his success has demonstrated that common sense
and consistent rationality with the day even in irrational markets.
%hen* (hat does the (ord investment means to an ordinary man1
A theoretical view with a perfect blend of real life gives the meaning of investment as the following
equation:
$nvestment >
-Postponement of current consumption. ?
@Commitment of fundsA ?
@!or a future periodA ?
@$n expectation of good rate of returnA ?
-0ith some degree of ris8.
6)ehavioural !inance6 B (hat is this1
Much of economic and financial theory is based on the notion that individuals act rationally and
consider all available information in the decision-making process.
However, researchers have uncovered a surprisingly large amount of evidence that this is
frequently not the case.
Dozens of examples of irrational behavior and repeated errors in judgement have been
documented in academic studies.
Peter L. Bernstein in Against The Gods states that the evidence "reveals repeated patterns of
irrationality, inconsistency, and incompetence in the ways human beings arrive at decisions and
choices when faced with uncertainty."
' field kno)n as ,#eha%ioral finance, has e%ol%ed that atte&pts to #etter understand and explain
ho) e&otions and cogniti%e errors influence in%estors and the decision5&aking process.
Many researchers believe that the study of psychology and other social sciences can shed
considerable light on the efficiency of financial markets as well as explain many stock market
anomalies, market bubbles, and crashes.
As an example, some believe that the out performance of value investing results from investor's
irrational overconfidence in exciting growth companies and from the fact that investors generate
pleasure and pride from owning growth stocks.
Many researchers (not all) believe that these human flaws are consistent, predictable, and can be
exploited for profit.
8a"t 8ile 2based on the study3 B 'motional In+estment R !he (its of In+estment
Based on serious and sincere study on the emotional behavioural aspects of investors the following were
found:
Investors place different weights on gains & losses and on different ranges of probability.
Investors are much more distressed by prospective losses than they are happy by equivalent
gains.
Some investors consider the loss of Rs.1 twice as painful as the pleasure received from an Rs.1
gain.
Investors respond differently to equivalent situations depending on whether it is presented in the
context of losses or gains.
Few investors are willing to take more risks to avoid losses than to realize gains.
Faced with sure gain, most investors are risk-averse, but faced with sure loss, investors become
risk-takers.
In general individuals tend to feel sorrow and grief after having made an error in judgement.
Typically, investors deciding whether to sell a security are emotionally affected by whether the
security was bought for more or less than the current price.
One of the major finding from the study is that investors avoid selling stocks that have gone
down in order to avoid the pain and regret of having made a bad investment.
Many amateur investors follow the crowd and conventional wisdom to avoid the possibility of
feeling regret in the event that their decisions prove to be incorrect.
Many investors find it easier to buy a popular stock and rationalize it going down since everyone
else owned it and thought so highly of it.
Buying a stock with a bad image is harder to rationalize if it goes down.
Additionally, many investors believe that mutual fund executives and advisors favour well-known
and popular companies because they are less likely to be fired if they under perform.
Investors typically give too much weight to recent experience and extrapolate recent trends that
are at odds with long-run averages and statistical odds.
Amateur investors tend to become more optimistic when the market goes up and more
pessimistic when the market goes down.
Semi-professional investors believe that when high percentages of participants become overly
optimistic or pessimistic about the future, it is a signal that the opposite scenario will occur.
Individuals are overconfident in their own abilities, and investors and analysts are particularly
overconfident in areas where they have some knowledge.
However, increasing levels of confidence frequently show no correlation with greater success.
The study provides evidence that investors prefer local or familiar stocks even though there may
be no rational reason to prefer the local stock over other comparable stocks that the investor is
unfamiliar with.
Individuals often see other people's decisions as the result of disposition but they see their own
choices as rational.
Investors frequently trade on information they believe to be superior and relevant, when in fact it
is not and is fully discounted by the market.
This results in frequent trading and consistently high volumes in financial markets that many
researchers find puzzling.
On one side of each speculative trade is a participant who believes he or she has superior
information and on the other side is another participant who believes his/her information is
superior. Yet they can't both be right.
H$( !$ MAI/!AI/ 'M$!I$/A* &A*A/C' I/ !'RMS $8 I/7'S!M'/! %'CISI$/S)
Striking a right emotional balance between two extremes in terms of money
matters (like investment) is really a challenging task.
To have a right emotional balance between the two extremes, follow the following
steps:
(a) Draw out a practical plan
(b) Stick on to the plan, till you feel it is in your control
(c) Have a practice of Yoga and practice it regularly. It is a good therapy for
emotional balance at all times
(d) Be patient and act smart
ACC'P! !HA! I/7'S!I/G IS A PR$&A&I*IS!IC AR!
Have a state of mind that investing is a probabilistic art.
Investing is not static; it is highly dynamic to the environment.
Investing is too sensitive; accept the feel of feather touch by the external
environment.
Chances of happening of all events are equally distributed - with respect to
investing.
Draw out a probability plan of your investment pattern and have a pucca
monitoring system over it.
R'C$G/IN' A/% A7$I% !H' CIRC,MS!A/C'S *'A%I/G !$ ,/%,' C$/8I%'/C'.
Avoid over confidence and over estimating your abilities.
Recognize and avoid the circumstances leading to undue confidence.
Many times over estimating your abilities are because of peers, friends and
relatives boost you up at the times of your suggestions/views goes in the proper
direction. But all the time your might not be correct.
Try to strike a proper balance of confidence in all times.
%'*I&'RA!'*0 S''K $,! !H' C$/!RAR0 7I'(.
Always try to have a contrary view, but in this kindly know your limits/boundaries.
All times the contrary view may not give desired results, keep an eye over you
view.
Confirm the logic behind your view and hold.
A7$I% *IS!'/I/G AC!I/G !$ G$SSIPS:R,M$RS.
Please avoid listening & acting to gossips / rumors.
Many investors has lost money based on their action to those gossips.
Even though you hear from a reliable source, have second thought before acting to
that information.
HA7' A (RI!!'/ P*A/ 8$R 'ACH P$SI!I$/# 'SP'CIA**0 !H' EI/ 'DI! S!RA!'GI'SE
Have a clear-cut written plan for each position, especially the in and exit
strategies.
Written plans are not enough, but you should stick on to those plans accordingly.
Many a times even after planning it has gone wrong, because of improper
execution.
CR'A!' 8''%&ACK *$$PS !HA! A**$( 8$R PR$C'SS A/A*0SIS A/% IMPR$7'M'/!.
Investors should create reliable feedback loops that allow for process analysis and
improvement in their strategies.
If the feedback system is said to have any loopholes, you may not be able to take
smart decisions.
Before you implement the feedback loops, have test session.
C$/C*,SI$/
What ever be the suggestion and advice, it depends on the individuals how they
react to the situation, that they face.
So it has become more important to be emotionally balanced in money matters.
Why should you waste your hard earned money, just to be washed away by your
emotional investment decisions?
!HI/KT AC!T C$/!R$* 0$,R 'M$!I$/S I/ M$/'0 MA!!'RST I! IS
!$$ HAR% !$ PRAC!IC'T &,! /$ $!H'R G$T !$ PR$!'C! 0$,R HAR%
'AR/'% M$/'0T 0$, HA7' !$ &' PA!I'/! A/% SMAR! '/$,GH (I!H A
PR$P'R S!RIK' $8 'M$!I$/A* &A*A/C'.

Author(s)
M. Subramanian
Faculty
Institute for !e"hnology Management# Chennai
Contact: financesubbuu@rediffmail.com
Cell No. 09443929922
%r. A 7en5ata"halam
Reader
PG Commer"e %ept# S7/ College# /agmalai# Madurai
Cell No. 09443092892
H$!'*BA/ 'DP'RI'/C' R'*I7'% A/% '/RICH'%
By
%r. Padma Srini+asan# Faculty-MBA Finance Area, !he $Fford College of 'ngineering
Bangalore, E-mail: padma@sindhucargo.com
Key Cords-
Customer's experience, Hotel experience, Services Marketing
Introdu"tion-
Hotels as a concept originated in the 6
th
century BC in the form of inns. These were run by couples and
provided sleeping arrangements in big rooms similar to today's dormitories in youth hostels. Hotels as is
known today emerged in Switzerland and were patronized by aristocracy, in England inns catered to
mobility and taverns to common man. A hotel is defined as a "Place where a traveler can receive food &
shelter provided he can pay for it"
Hotels provide the ambience and entertainment a customer requires after a tiring day. It soothes the
minds and gives them an experience wholesome with food, board and shopping to while away his time
gainfully. After all, he carries back these as memoirs with only the hotel bills. The customer also comes
back to the same hotel only because of the earlier experience. All hotels therefore try to give him the
delight he anticipates. It helps the business to grow, to include more services and develop brands that
survive despite global onslaught.
(HA! M$!I7A!'S !H' C,S!$M'R !$ G$ !$ H$!'*S-
The customers visit or stay at the hotels for varied reasons. Some of them could be:
1. Home away from home: The customer may hail from another part of the region/ nation. So to
have the homely comforts, he may visit / stay with the hotel on his personal/business pretext.
2. Business networking: The customer may feel it necessary to meet his business contacts
outside his office premises formally or informally. A hotel may suit his purpose and facilitate the
communication and networks.
3. Professional needs: Due to his work needs or professional aspirations, a customer may visit a
hotel. To gain additional knowledge also, he may visit a conference hall of the hotel or the art
galleries.
4. Esteem needs: At times he wishes to be at the right place to enhance his esteem. So no
longer he goes to hotels for board and lodge.
5. Psychological satisfaction: The customer would just prefer to be around to give him a
Psychological pep and zeal
6. Boredom: The customer may visit a hotel along with his friends / family to while away the
time and rejuvenate his body and mind.
7. Hotel promos: Feeling curious on the ongoing events or a new shop opened, he may visit.
Special themes of promos or food fests may attract him
8. Promoters: When hotel have been floated by famous personalities like Sachin Tendulkar, the
customer may be motivated to go to hotels.
9. Research: Searching for some data/ clues may also motivate a customer to visit the hotel.
10. Themes: The customers may attracted by the theme of the hotel and visit the same hotel
often.
11. Shopping, Bar & multicuisine restaurants, Swimming pool, Spa, Gym, Therapy, Astrology,
Business centers and other exclusive facilities may also motivate the customer to step into
hotels.
12. Special events, celebrations may also make
13. Other unexplainable reasons: Without clearly attributing the reason, the customer may land
into the hotel.
"The Hotel is a Unique Animal" The nature of the hotel beast is that of a living, breathing, 24-hour,
labor-intensive, marketing-intensive animal. Moreover, hotels are real estate properties constantly
under 'short-term leases, and always lag behind economic cycles.
N$/' $8 S'R7IC' 'DP'C!A!I$/ A/% !$*'RA/C' $8 C,S!$M-
The customers tend to expect a service level matching their billing. He may wish to be treated as a King
but knows that he can demand or dictate it. His esteem needs, play a significant motivator,
* Expect that he should be recognized and wished with familiarity at the entrance
* Personal attention of the Front Office manager/ executive
* Initiation with a welcome gift like that of a drink, toast etc
* Convenience in handling his accompanying guests
* Careful handling of his belongings. Some use porters even if they carry light baggages.
* Availability of upward transport and settling in the respective rooms with the activated Air-
conditioning or room heating systems.
So the customers experience precedes his actual stay and the memoirs of the left over magic of the
previous stay.
C,S!$M'RSM M$!I7A$!$RS *'A%I/G !$ '/RICH'% 'DP'RI'/C'S-
Customer motivators/
Type of customers
Economy traveler Business traveler Leisure traveler
Location of hotel 35% 30% 40%
Room rate 20% 8% 12%
Previous experience 10% 10% 17%
Category of hotel 10% 18% 5%
Hotel services 5% 10% 11%
Loyalty program 2% 5% 7%
Advertisements, Promos 8% 5% 4%
Recommendations 6% 10% 3%
Other reasons 4% 4% 1%
* Source: Own survey on the hotels of Karnataka.
So it for the experience that the customer pays the hotel rather than for the intrinsic values of the
service. If a hotel creates an experiential magic web around the customer, he comes back again and
again and again. Welcome and Kudos to Relationship Marketing!!!!
%r. Padma Srini+asan# Faculty-MBA Finance Area, !he $Fford College of 'ngineering
Bangalore, E-mail: padma@sindhucargo.com
H$!'*BA/ 'DP'RI'/C' R'*I7'% A/% '/RICH'%
By
%r. Padma Srini+asan
Faculty-MBA Finance Area
!he $Fford College of 'ngineering
Bangalore
E-mail: padma@sindhucargo.com

Key Cords-
Customer's experience, Hotel experience, Services Marketing
Introdu"tion-
Hotels as a concept originated in the 6
th
century BC in the form of inns. These were run by couples and
provided sleeping arrangements in big rooms similar to today's dormitories in youth hostels. Hotels as is
known today emerged in Switzerland and were patronized by aristocracy, in England inns catered to
mobility and taverns to common man. A hotel is defined as a "Place where a traveler can receive food &
shelter provided he can pay for it"
Hotels provide the ambience and entertainment a customer requires after a tiring day. It soothes the
minds and gives them an experience wholesome with food, board and shopping to while away his time
gainfully. After all, he carries back these as memoirs with only the hotel bills. The customer also comes
back to the same hotel only because of the earlier experience. All hotels therefore try to give him the
delight he anticipates. It helps the business to grow, to include more services and develop brands that
survive despite global onslaught.
(HA! M$!I7A!'S !H' C,S!$M'R !$ G$ !$ H$!'*S-
The customers visit or stay at the hotels for varied reasons. Some of them could be:
1. Home away from home: The customer may hail from another part of the region/ nation. So to
have the homely comforts, he may visit / stay with the hotel on his personal/business pretext.
2. Business networking: The customer may feel it necessary to meet his business contacts
outside his office premises formally or informally. A hotel may suit his purpose and facilitate the
communication and networks.
3. Professional needs: Due to his work needs or professional aspirations, a customer may visit a
hotel. To gain additional knowledge also, he may visit a conference hall of the hotel or the art
galleries.
4. Esteem needs: At times he wishes to be at the right place to enhance his esteem. So no
longer he goes to hotels for board and lodge.
5. Psychological satisfaction: The customer would just prefer to be around to give him a
Psychological pep and zeal
6. Boredom: The customer may visit a hotel along with his friends / family to while away the
time and rejuvenate his body and mind.
7. Hotel promos: Feeling curious on the ongoing events or a new shop opened, he may visit.
Special themes of promos or food fests may attract him
8. Promoters: When hotel have been floated by famous personalities like Sachin Tendulkar, the
customer may be motivated to go to hotels.
9. Research: Searching for some data/ clues may also motivate a customer to visit the hotel.
10. Themes: The customers may attracted by the theme of the hotel and visit the same hotel
often.
11. Shopping, Bar & multicuisine restaurants, Swimming pool, Spa, Gym, Therapy, Astrology,
Business centers and other exclusive facilities may also motivate the customer to step into
hotels.
12. Special events, celebrations may also make
13. Other unexplainable reasons: Without clearly attributing the reason, the customer may land
into the hotel.
"The Hotel is a Unique Animal" The nature of the hotel beast is that of a living, breathing, 24-hour,
labor-intensive, marketing-intensive animal. Moreover, hotels are real estate properties constantly
under 'short-term leases, and always lag behind economic cycles.
N$/' $8 S'R7IC' 'DP'C!A!I$/ A/% !$*'RA/C' $8 C,S!$M-
The customers tend to expect a service level matching their billing. He may wish to be treated as a King
but knows that he can demand or dictate it. His esteem needs, play a significant motivator,
* Expect that he should be recognized and wished with familiarity at the entrance
* Personal attention of the Front Office manager/ executive
* Initiation with a welcome gift like that of a drink, toast etc
* Convenience in handling his accompanying guests
* Careful handling of his belongings. Some use porters even if they carry light baggages.
* Availability of upward transport and settling in the respective rooms with the activated Air-
conditioning or room heating systems.
So the customers experience precedes his actual stay and the memoirs of the left over magic of the
previous stay.
C,S!$M'RSM M$!I7A$!$RS *'A%I/G !$ '/RICH'% 'DP'RI'/C'S-
Customer motivators/
Type of customers
Economy traveler Business traveler Leisure traveler
Location of hotel 35% 30% 40%
Room rate 20% 8% 12%
Previous experience 10% 10% 17%
Category of hotel 10% 18% 5%
Hotel services 5% 10% 11%
Loyalty program 2% 5% 7%
Advertisements, Promos 8% 5% 4%
Recommendations 6% 10% 3%
Other reasons 4% 4% 1%
* Source: Own survey on the hotels of Karnataka.
So it for the experience that the customer pays the hotel rather than for the intrinsic values of the
service. If a hotel creates an experiential magic web around the customer, he comes back again and
again and again. Welcome and Kudos to Relationship Marketing!!!!
MA/AGI/G R'S$,RC'S ,SI/G (AS!' R'%,C!I$/ !'CH/IG,'S
A/% PR$C'SS'S I/ H$!'*S
By
%r. Padma Srini+asan
Visiting Faculty
IC8AI &usiness S"hool
Bangalore
E-mail: padma@sindhucargo.com

Introdu"tion-
The hotels of India have woken to the global call for waste management issues, finally. The WM issue
has gained attention recently due to multitude of reasons. Few of them could be:
* Global tourists in increased numbers have visited India. Their cleanliness standards &
requirements are perceived to be higher.
* Eco consciousness and local clearances have insisted on better waste disposal system.
* Local NGO teams have started working in this direction significantly
* Approvals of the State Tourism Development Corporations are based on these WM systems and
so forth.
/eeds for &etter Caste management system-
Can we think of staying on a railway platform on business? Don't we inspect the cleanliness of the room
when we check in? Can we enjoy staying in a room when the tap leaks in a wash basin? Can we stay in
a room with a trash can overflowing?
But who would turn away from lustrous, picturesque and vast landscape, with a cool drink, when a soft
music is played for background? It sounds heavenly after a day of strenuous work. Who would not stop
to take a deep breath when the clean, musty smells of garden greet you with a breeze?
Considering both the small questioning paras above, the waste management seems a logical choice for
cost management.
(M mandate-
Every business with the global ambitions in the multi dimensional, volatile atmosphere has to introspect
its strategies taking into consideration the strengths, weaknesses, opportunities and threats. The hotel
industry also tags along the line and has to undertake smart and innovative moves to woo its clientele
who expect best possible service at competitive rates. We can understand the serious concern the waste
management poses for on and all from the proceedings of the Parliament recently:
Lok Sabha Unstarred Question No. 2585. Answered on 16.8.2004
Five Star Eco-Hotels, CAT-48. 2585. Shri Kailash Baitha:
Will the Minister of Tourism be pleased to state:
(a) the details of five star Eco-hotels in Delhi / New Delhi along with locations;
(b) whether operation of a five star hotel comes under the purview of industrial activities; and
(c) if so, the details thereof?
A/S('R
Minister of State for Tourism (Independent Charge)
(Smt. Renuka Chowdhury)
(a) Under the Guidelines of the Department of Tourism, Government of India for classification of hotels,
there is no category of five star Eco-hotels. However, all categories of hotels including 5-star in the
country are required to observe eco-friendly practices like energy conservation, water conservation,
waste management, discouraging plastic and facilities for physically challenged persons etc.
(b) and (c) : All hotels including 5-star in the country are regulated by the rules, regulations and laws of
the concerned State Government and Central Government.
!$ %'8I/'TT.
The term WM (waste management) is the
Administration of the reduction, collection, separation, storage, transportation, transfer,
processing, treatment and disposal of wastes.
The reduction in the excessive use or raw materials and water & the reuse/recycling of wastes.
Process of dealing with waste.
Handling, treatment, storage and disposal of waste products.
The factors leading to optimum resource utilization and waste reduction could be:
1. Thematic Missions: The Hotels may be created as an Ecotel or as a Adventure tourism theme. Then
the firm orients itself as the optimal user of all resources reducing waste where ever, how ever and
when ever possible.
2. Flexing to the Global web: The MNCs or the foreign investors normally puts a covenant in their
franchising deed that the environmental clearances have been obtained from the appropriate authority
and waste management system and processes are in place. So also when a international firm, eyes
Indian hotels for acquisition or for co branding or a merger, they tend to pin on such clearances and
systems.
3. Legal Implications: All the Governmental clearances and statutory licenses are obtainable only after
the anti-pollution programs of the hotel are implemented. To receive these without prior approvals have
serious consequences. (both civil & criminal).
4. Risk Frontier: The Hotels will have a tough time during inspections of different Officers like that of
Inspectors of Food and Essential commodities, Usage of artificial flavors, chemicals for preservation,
colorants etc.
5. Poulation Migration: Developing countries, such as India, are undergoing a massive migration of their
population from rural to urban centers. New consumption patterns and social linkages are emerging.
India, will have more than 40 per cent, i.e. over 400 million people clustered in cities over the next
thirty years (UN, 1995). Modern urban living brings on the problem of waste, which increases in
quantity, and changes in composition with each passing day.
6. Usage of synthetic fertilizers & other radical shifts in farming: India's Green Revolution rescued the
nation from famines, but left over 11.6 million hectares of low-productivity, nutrient-depleted soils
ruined by unbalanced and excessive use of synthetic fertilizers and lack of organic manure or
micronutrients. City compost can fill this need and solve both the problems of barren land and organic
nutrient shortages estimated at six million tons a year.
7ISI&*' SIG/S S!'PS !AK'/ !$ R'%,C' (AS!AG'-
* Close taps after use
* Switch of lights and fans before leaving the room
* Use car pool whenever possible
* Use recycled paper etc.
* Reduce the usage of lights
* Us paper bags please.
* Strictly NO SMOKING...
* Use lifts only for ascending the stairs and so on so forth.
Con"lusions-
So wastage of resources in any form has to be discouraged in hotels. A well-defined clear policy on
managing resources using waste reduction techniques and processes in hotels and quicker
implementation of such plans will assure the financial well being of the hotel for long time to come. This
kind of cost reduction will lead to positive changes in the operating style of hotels and, in the due
course, on the profits too.

%r. Padma Srini+asan
Visiting Faculty
IC8AI &usiness S"hool
Bangalore
E-mail: padma@sindhucargo.com
$rganised Retailing in India B An $+er+ieC
By
Prof. Shra+an Rungta
B.Com, MMS, PGDEM, NET
Faculty - Advertising
/ * %almia Institute of Management Studies and Resear"h.
Mumbai
9820572046
E-mail : facultyshravan@yahoo.co.in

Introdu"tion
The word 'retail' is derived from the French word 'retaillier' meaning 'to cut a piece off' or 'to break bulk'.
In simple terms it involves activities whereby product or services are sold to final consumers in small
quantities.
Although retailing in its various formats has been around our country for many decades, it has been
confined for along time to family owned corner shops.
Englishmen are great soccer enthusiasts, and they strongly think that one should never give Indians a
corner. It stems from the belief that, if you give an Indian a corner he would end up setting a shop. That
is how great Indians retail management skill is considered.
!he 8a"ts
Retailing in more developed countries is big business and better organised that what it is in India.
Report published by McKinsey & Co. in partnership with Confederation of Indian Industry (CII) states
that the global retail business is worth a staggering US $ 7 trillion. The ratio of organised retailing to
unorganized in US is around 80 to 20, in Europe it is 70 to 30, while in Asia it comes to around 20 to 80.
In India the scenario is quiet unique, organised retailing accounts for a mere 5% of the total retail
sector. Although there are around 5 million retail stores in India, 90% of these have a floor space area
of 500 sq.ft. or less. The emergence of organised retailing in India is a recent phenomenon and is
concentrated in the top 20 urban towns and cities.
!he Reason
This emergence of organised retailing has been due to the demographic and psychographic changes
taking place in the life of urban consumers.
Growing number of nuclear families, working women, greater work pressure, changing values and
Lifestyles, increased commuting time, influence of western way of life etc. have meant that the needs
and wants of consumers have shifted from just being Cost and Relationship driven to Brand and
Experience driven, while the Value element still dominating the buying decisions.
Also, with the liberalization of Indian Economy in the early 1990's the employment and income from the
service sector has lead to the burgeoning of the so called 'Middle Class Consumers'. The lifestyle and
purchasing power of this segment has fueled the growth of organised retailing.
!he &IG &oys
The level of interest shown by major corporate sector has increased manifold over the last few years.
Large conglomerates like the TATA's, ITC, the RPG group, the Piramals and the Rahejas have invested
heavly into large format retail stores. Organised retailing for some of these business groups is a logical
extension of there businesses. For example Real Estate Major Rahejas have successfully exploited their
expertise in selection and execution of retail establishment in prominent places around metros in the
country. While the ownership remains with them, the day-today running is left to the hands of experts.
Also textile and garments companies like Raymond, Madura Garments and Arvind Denims have
successfully employed forward integration by opening up exclusive outlets for their branded garments.
This reduces their dependence on intermediaries, increases the profit margin and allows them to remain
close to their customers.
Apart from apparel brands, Consumer durables, FMCG products and Sports brands have also spurred
the growth of retails outlets. In fact, so much is the promise of this sector that old Economy major like
Reliance, BPCL and others want to join the band wagon to cash in on their reach and retail space
availability.
Organised retailing in India initially began in south The availability of land at prime locations coupled
with lower real estate prices enabled the construction of multi-storeyed shopping complexes. The growth
of retailing in an expensive real estate places like Mumbai and Delhi was due to the recession in the real
estate sector during the mid-nineties. It was during these times that big business houses like Piramals
and Rahejas took notice of the potential in organised retailing.
!he %esign
Another interesting aspect of Indian Organised retailing market is the evolution of various formats over
a period of time. The traditional grocers by introducing self-service formats and value added services
like Home Delivery and Monthly Credit have tried to differentiate them.
In the late nineties the departmental stores dominated the retail scene; today it's the large formats of
hyper markets and Mega Malls which have conquered the largest retail space in the country.
Although some formats have been successful and others busted, still there is no consensus among
experts as to what would work where. Each formats has its won merits and demerits, and careful
location and assortment planning, accurate consumer insight with efficient supply chain management
will remain the corner stones of any format.
&uilding !he Store &rand
The two major areas where the Retail Store managers face a marketing challenge is one - to create
footfalls, and secondly - to convert footfalls into sales.
Promotional efforts like Advertising and Sales promotions would help in creating footfalls, but in the
longer term it's the positioning and consumer proposition which would build the stores brand. Once the
brand is build, loyalty can be sustained through Direct Marketing or CRM programs.
The store brand would convey the value proposition in terms of what it offers and what it stands for.
For example:
Shopper's stop offers "All lifestyle products under one roof" and it stands for "Feel the Experience While
you shop" attribute.
Similarly Pantaloons Big Bazaar offers "All household products at one place" and it stands for "The best
bargain in town" attribute.
Also RPG's specialty store called Health & Glow offers "Health and Beauty treatment products" and it
stands for "Quality products with expert advice".
!he !e"hnology
Increased competition has lead to tighter margins and greater pressure on profits for retail store
owners. Operating expenses like rentals, salaries, maintenance, electricity etc. have steadily risen as
gross margins have declined. Because of the low-margin nature of most retail businesses retailers will
have to focus on operational efficiency in order to create competitive differentiation.
"India is a big country where preferences change with every 25kms and customer loyalty with every 5
rupees. Hence retails outfits needs technology and systems which can manage and interpret these
dynamics, and thereby help the management to take real time decisions" said one of the pioneers of
Organised Retailing in India, Mr. Kishore Biyani of Pantaloons.
One of the major technological innovations in organised retailing have been the introduction of Bar
Codes, it provides real time information of products sold, which in turn helps online inventory
management and also allows the manufacturer to organise production planning and distribution
management.
Organisations like A C Neilson have come up with Decision Support Services Systems which help in
sophisticated multi-dimensional reporting, data navigation, analytical modeling, graphical presentations
and expert system tools. Also issues like shoplifting have been address to with introduction of sensors
and tags.
Human Resour"e
The HR function in all service sector organizations like Retailing is one of the pillars of success. Proper
Man power planning, Recruitment, Motivation and Retention would be essential to maintain operational
smoothness and consistent service to the customers.
Realizing the need gap existing in this area, major educational institutions are today designing and
offering specialized courses in retail management. Also a lot of management Institutes have retailing as
a full credit course.
!he Ma"ro &enefit
The contribution of a well developed retail industry, to its economy, could be manifold; firstly it will help
in releasing for productive usage large area of lands lying ideal in prime location with governmental and
non-governmental agencies. Secondly, if we look at any major tourists' city in the world it has a well-
developed shopping environment; hence it is obvious that organised retailing would help significantly in
promoting our cities as tourist destinations.

Prof. Shra+an Rungta
B.Com, MMS, PGDEM, NET
Faculty - Advertising
/ * %almia Institute of Management Studies and Resear"h.
Mumbai
9820572046
E-mail : facultyshravan@yahoo.co.in

MA/AG'M'/! GAM'S
2A !ea"hing Methodology for KnoCledge A"Ouisition and S5ill ,pgradation for
& B S"hool Students3
K.7. Kannan# M.B.A., M.F.T., Faculty, Department of MBA, K.S.R. College of Arts S"ien"e
Tiruchengode - 637 209, Tamilnadu, India, Phone : (0424) 2212458, E-mail :
kvkannan_1999@yahoo.com
Introdu"tion
Games are part and parcel of our life. Each of us have our favourite game. Games create enthusiasm for those
who play. The persons who watch others playing the game also get encouraged. Management games are are
conducted at B - Schools and played by B - school students. They aim at improving their managerial skills and
traits. Starting from games for communication and personality development, games are available till strategy
formulation level. As games are interesting, every student voluntarily participates in management games. Hence,
in addition to the regular lecture or case study or discussion method, the faculty members can introduce
management games for increasing the students' participation. A faculty or consultant or trainer who has command
over English (or required regional language for conducting the game) and thorough knowledge in the subject
accompanied by pleasing personality and convincing skill can conduct the management games. There are plenty of
books available for conducting the management games. The trainers (faculty) can make use of those books or can
design their own games. While designing such games, the faculty has to take the participants (students) profile
into consideration, as the games have to be designed according to the nature of participants.
Steps to Condu"t Management Games
Step $5 $dentification of %raining Ceeds
First of all the faculty has to identify the training needs from the students. The training need can be
identified based on a discussion with the students or can be identified with the help of a survey among
the students.
Step $$5 2esigning the Pac8age for the <ame
Based on training needs identified, a faculty can prepare the modules for conducting the management
game. While designing the module, the faculty has to consider the demographic characteristics of the
students. As equipments or toys like ball, balloon etc are used some times, the faculty can also collect
those equipments required.
Step $$$5 "rranging the Programme
As suitable atmosphere without any disturbances has to prevail, the faculty can arrange for a suitable
venue for conducting the management game programme. The venue has to be fixed according to the
number and nature of students. The ideal number required for conducting management game is
between 20 and 30 members at a time. The participants are restricted with minimum numbers as the
faculty can have 100 percent interaction. It is advisable to conduct the management games in an air-
conditioned room if possible as those games reflect real time managerial situations. As the students
have to be exposed to a different environment during the management games programme, the
institutes which doesn't have air-conditioned rooms can opt for any other place, other than the regular
lecture halls (class rooms). The faculty has to ensure that proper audio-visual aids are available for
conducting the management games programme.
Step $D5 Conducting the Management <ame Programme
The reference material if any required has to be given to the students in advance before starting the
programme. During the beginning of the programme, the students can be grouped based on some
icebreaker exercises. Mostly heterogeneous groups have to be formed so that each of the members can
contribute. It is not a compulsory thing to form groups for all type of games as games can also be
conducted without groups or for individual members. After the formation of groups if needed, students
can be revealed about the objective of the programme and then the game can get started. The
students have to be given full liberty while they participate in the management game programme. The
faculty should not criticize the student, rather has to appreciate the students during their participation.
Step D5 !acilitating the 2iscussion
As management games are not just meant for entertainment, a discussion has to take place during the
programme. The faculty has to take the initiative for the discussion and has to stress on the knowledge
acquisition and behaviour modification of students based on the management game being conducted.
Step D$5 !ollo(4up
The faculty has to monitor the students' performance after the programme is over. The behaviour
modification and skill upgradation of student has to be identified.
&enefits of "ondu"ting Management Games
i. The management game method ensures 100 percent interaction as every student find it
interesting and encouraging.
ii. Knowledge acquisition and skill upgradation of the students take place easily and effectively as
100 percent involvement is there from the students' side.
iii. The level of confidence among students gets improved, as the students participate in the
management games voluntarily.
iv. The communication and interpersonal skill of a student consistently gets developed, as the
management games are highly interactive.
Sto"5 Mar5et Game R An Illustration
A small game has been illustrated for the convenience of faculty members and trainers in designing their
own games. The faculty members can design their own games, by taking the following illustration as a
model.
%ime /e+uired5 One Hour
Entry )ehaviour of Students5 Thorough knowledge on Financial Management and Accounting and
Security Analysis and Portfolio Management or students specialized in the Finance Area.
Members /e+uired5 5 to 20 (Ideal)
$llustration -<ame.5 The faculty artificially allocates an amount of Rs.10,00,000/- for each of the students. Every
student is asked to invest in shares according to their own preference for the amount being allocated. Even the
students can keep some amount as cash reserves for their future purchases. After few minutes the faculty can
announce information pertaining to a company or industry or economy or any other factor affecting stock market.
Now, the students can start purchasing and selling the shares with others based on the information. The faculty
can continue with such announcements at periodic intervals. After an hour, the faculty has to calculate the worth of
shares and amount with each of the participants. Based on the students' performance the faculty can facilitate
further discussion for knowledge acquisition part.
Con"lusion
Thus management games act as refreshments for the students. They are found to be entertaining, interesting and
informative. They pave way for knowledge acquisition and skill upgradation. If the University and B - school
faculties introduce management games as one of their teaching methodology, the students' knowledge and skill
gets improved.
K.7. Kannan# M.B.A., M.F.T., Faculty, Department of MBA, K.S.R. College of Arts S"ien"e
Tiruchengode - 637 209, Tamilnadu, India, Phone : (0424) 2212458, E-mail :
kvkannan_1999@yahoo.com
MARK'!I/G $8 *'GA* S'R7IC'S-
'M'RGI/G CHA**'/G'S A/% $PP$R!,/I!I'S
By
Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

A&S!RAC!-
With liberalization launched in India, it was natural that legal services would also be thrown open to
foreign firms like in investment sector and other areas. There is great potential in India for growth or
organized legal services firms particularly in view of fast coming up MNC network in India, increase in
world trade and international trade laws like patents, trade marks, copy right and formation of local
business organisations, besides traditional civil and criminal jurisprudence. This article is addressed to
business sector potential and to those law firms which operate in organized way. There have been in
existence several law firms but as many as in Chartered accountancy or financial consulting business.
With influx of foreign or MNC law firms in India, the legal services market is going tom hot up for local
practitioners. The whole organisation structure in this sector is going to change substantially. The need
will thus arise in focussing on marketing of legal services.
Since we define Marketing as an important professional function of any firm, there are several issues
associated with legal services marketing:
Guestion of 'thi"s- Providing best possible legal know-how and services in best interest of client. But
delaying the suit proceedings in courts, objecting for sake of objection, manipulating facts and court
room procedures and trying to save a client who has actually committed a default or an illegal act do not
construe the professional responsibility of an attorney.
Commer"iali9ation of legal pra"ti"e- Could legal services, which are noble and essential service in
society like education be allowed to be commercialized? There has been criticism of the ways in which
USA attorneys and law firms act and share rewards with clients. Can this be allowed in India; certainly
not.
Within the above framework the legal services firms will have to resort to aggressive and well organized
marketing strategies for meeting international competition, growth objectives and even survival. Like in
typical services marketing scenario, there are many common and simple methods, these firms can
adopt to excel in marketing.
The article is based on research of several well known writings on the subject and direct interactive
experience of the author with legal services in India over last one and a half decade.
!H' /A!,R' $8 MARK'!I/G
Marketing is misunderstood by many solicitors - it is not simply advertising. Advertising is only one
small element of Marketing. A firm's Marketing Policy is part of its strategic business plan and is
essentially a process whereby the firm's ability to supply legal services is brought into balance with
expected demand for its services from present and future clients. This mechanism ensures that the firm
maintains growth and profitability. In an era where in most sectors of legal work cut-throat competition
prevails, no firm can afford to be without knowledge, however basic, of marketing.
!H' /A!,R' $8 S'R7IC'S MARK'!I/G
Marketing services is accepted as more difficult than marketing products. Services have several
qualitative differences and are:-
1. Heterogeneous / customized - in other words they cannot be standardised.
2. Inseparable - Unlike producing for instance baked beans, the production, marketing and
delivery of services is very often the same process.
3. Perishable and cannot be stored. This means that supply and demand must be matched or
production will be lost { Presently it does not apply in India where no one is in hurry in matter of
law implementation, until major legal reforms are embarked upon by Union government which
too is now essential}
4. Intangible - they cannot be seen and very seldom can they be objectively measured.
Some solicitors fail to recognize that only the most sophisticated of clients will be able to value the
functional quality of the legal service. (hat "lients do +alue is the Ouality of soli"itor:"lient
relationship and firms will be judged on such factors as:-
1. Who is interested in them?
2. Who best understands their concerns?
3. Who listens most effectively?
4. Who has the best insight into their situation?
5. Who is most likely to work effectively with them?
It is closer to services of estate and insurance agents. Is not it?
The old adage that# in des"ending order of importan"e# soli"itors must be
1. A+ailableU 4. AffableU and 6. Able# illustrates that technical competence is almost ta5en as read
insofar as the publi" are "on"erned. Today many marketing policies will be based on the "lientB
"entered approa"h.
MARK'!I/G !$$*S
When analyzing your client base, segment it along various different lines such as area of work, local
geography and source of business. This will allow the firm to look at areas of growth and decline and re-
allocate resources where appropriate. In this connection, client questionnaires are very useful.
Another useful concept for analyzing legal work is the Boston Matrix. The Boston Matrix can be applied
to any business and can readily be applied to analysis of a legal business and indeed different types of
legal work within businesses. The matrix recognizes that business and products go through various
phases, namely:- Problem Child (e.g. when a venture is new and requires capital/time); Rising Star
(where the venture becomes successful); Cash Cow (e.g. where the venture is not growing); and Dog
(as where the venture is failing). Legal firms usually provide a wide range of services. The Boston Matrix
can be used to analyze the state of the firm but probably more appropriately the matrix can be used to
analyze the state of individual types of work e.g. domestic conveyancing, civil legal aid, executries, etc.
The key issue is to apply the Boston Matrix to the business operation, to recognize the sector within
which that operation falls and identify what action is required to either maintain or to improve the
business.
Case of a laC firm for strategi" mar5eting plans
Few lawyers at Mint9 *e+in Cohn 8erris Glo+s5y and Popeo PC would ever set foot in court without
exhaustively researching their cases and meticulously planning their arguments.
Until recently, though, such planning never really applied to selling the firm's services.
"In the past, it was a more shotgun approach," said Joseph Curtin, the firm's managing director for
professional practice and business development. "Individuals would identify on their own, a possible
client and they might just go off on their own to see if they could get the legal work."
Today, the firm takes a more formal approach to mapping out when and how to court potential clients.
It's not alone.
Law firms of all sizes across the country are mapping out marketing strategies, said legal consultant Jim
Durham of the Dedham-based Law Firm Development Group.
"It's on everybody's list of things to do this year," Durham said.
The trend is another milestone in the evolution of law firms from collections of individual professionals to
businesses, Durham said.
"Other professional-service firms were probably doing companywide strategic plans 15 years ago and
within different parts of organization were doing strategic marketing plans," Durham said. "That's just
now coming to the law business. It's an industry slow to embrace traditional management and
marketing models."
Local law firms escalated their marketing efforts five years ago after the state loosened restrictions on
advertising for the legal profession.
Hale and Dorr LLP, for example, is one of many local law firms that claim superiority in intellectual
property law. But to distinguish itself among a business clientele that may be unfamiliar with its
litigation record, the firm's IP group began custom publishing a magazine about a year ago.
A!!$R/'0 MARK'!I/G-
CR'%I&I*I!0-
These tools help overcome your prospect's hesitancy if it's due to his lack of trust in you or your ability
to solve his problem or achieve his goal.
(RI!!'/ SCH'%,*' $8 8''S- Prospects feel more comfortable when they see your fees in writing.
Some prospects assume lawyers set their fees based on what they think the prospect can afford.
Handing your prospect a schedule of fees on paper helps overcome this suspicion.
R'PRI/!S $8 AR!IC*'S 0$, (R$!'- Few things boost credibility as quickly as seeing published
articles with your name in the by-line. Prospects immediately conclude you're an expert when they see
that editors have published your writings. And the more well known and respected the publication, the
more credibility they attach to it -- and the more it helps your attorney marketing effort.
!'S!IM$/IA*S 8R$M PAS! C*I'/!S- Like published articles, comments from clients, colleagues and
referral sources cause your credibility to soar. The more testimonials you have, the better. If a prospect
is in doubt about hiring you, show him 10, 20 or 50 testimonials and you'll see his skepticism melting.
(Check your rules of professional conduct. Not all bar associations allow lawyers to use testimonials.)
S'R7IC' G,ARA/!''- Show your client the guarantees you make in writing. You might guarantee to
return phone calls promptly, meet all deadlines, always have a lawyer available, not exceed a quoted
fee, and so forth.
$7'R7I'( $8 S'R7IC'S- In some cases, prospects aren't entirely sure what you plan to do for them.
By having a written overview of what you do for clients -- and a breakdown of the major steps under
each service, you help your prospects see on paper the many things you do in exchange for your fee.
Also, by having these services in writing, you reinforce that what your prospect is asking you to do is
consistent with what you do for many clients.
AC!,A* CAS' HIS!$RI'S- Prospects are persuaded when they see that you have helped other clients
in situations like theirs. The more similar the case history is to your prospect's circumstances, the more
persuasive it will be. Also, the more similar the client is to your prospect, the more your prospect will be
swayed.
8R'G,'/!*0 ASK'% G,'S!I$/S-
You help your client when you have a document that answers questions prospects ask. The more
questions you answer -- before your prospect raises the issues -- the more your prospect trusts that you
are forthcoming with information. If your prospect has to draw information from you, you risk his
concluding that you would not have disclosed these facts had he not asked.
G*$SSAR0- If your prospect doesn't understand the terms you use, he might be happy to receive a
glossary of relevant terms. Often, prospects won't admit when they don't understand. The more you
help them understand, the better they feel.
$,!C$M'S- List on a sheet the various outcomes that could result from your efforts. Ask your prospect
to assume that you will get a positive result, and then ask your prospect to identify whatever choices he
will make at that point. By helping your prospect see past your efforts to future decisions he will face,
he assumes you have already succeeded and is thinking far into the future.
$&J'C!I7'S- Hand your prospect a form that includes a list of the objectives typical prospects want to
achieve. Ask him to identify the goals that are most important to him. This helps clarify to him what
you'll do -- and helps him see that you understand what he wants to achieve.
C$/!AC! I/8$RMA!I$/- Asking your prospect to provide you with his contact information gives him
something easy to write down.
$!H'R 8AC!S 0$, /''%: Regardless of your area of law, you probably need information from your
prospect before you proceed. The easier it is for your prospect to provide this information, the more
helpful it will be in calming his nerves and helping him move forward.
MI/$R %'CISI$/S- If you've read sales books, you may know the story of the car buyer who was
afraid to make the major decision to buy a Mercedes. The salesperson asked, "What initials do you want
me to put on the driver's door?" The man responded by giving his initials and, at that point, agreed to
the major purchase. By asking the buyer to make a minor decision, which he perceived as no big deal,
the salesperson effectively sold the car.
When you educate your prospect -- when he trusts you -- when he understands what you'll do -- when
he knows what you'll charge -- your prospect has no reason not to move forward.
When you use education-based marketing, you don't need to "close the sale." The "sale" closes itself
through your process of answering your prospect's questions. Eventually, your prospect says, "What do
I need to do to hire you?" You show your prospect your agreement, explain it to him, and ask for his
signature and a check -- and you've won a new client.
Yes, in many cases, it really could be that easy.
Marketing legal services is much easier when you keep hidden persuaders at your fingertips. They
increase credibility, urgency, understanding and involvement -- powerful tools as mentioned above that
help every attorney marketing effort.
!H'R' AR' S'7'RA* R,*'S 8$R S,CC'SS8,* MARK'!I/G $8 *A( 8IRM-
It is assumed that the advertising of legal services will be allowed in due course.
Rule 1- If you'd like to get a feature article in a newspaper or magazine, consider approaching a
national publication. Every day, lawyers and business owners compete for space in local publications,
but most never think about nationwide publications. In some cases, it's easier to get into national
publications than local ones. Plus, a widely published article can do a tremendous amount to enhance
your image as an authority {Kapil Sibbal, Ram Jethmalani, Dr. L M Singhvi}.
Rule 4- Trade publications allow you to reach a large number of specific types of businesses. Many
industries and professions have publications and newsletters, even in local areas. Therefore, rather than
getting articles in broad-based media, read by many people who are not in your target audience,
consider specific publications that reach highly focused groups. Most editors respect lawyers and like to
receive their articles, providing they're written in plain English, not legalese.
Rule 6- Display ads in large daily newspapers usually do not pull as great a response as ads in suburban
and small-town papers. This is because people who buy large papers usually scan them, rather than
carefully looking at every page. People who buy small-town and suburban papers read them more
closely, so they're more likely to see and respond to your ad.
Rule ;- Radio commercials & Internet web pages may often work well for lawyers. To make radio work,
you need to prepare information you can send to listeners who respond, or have a web site to which you
can direct them. Either way, radio can reach target prospects quite well and often at a fraction of the
cost of other media.
Rule <- Fancy web sites that take forever to download do more harm than good. Every week, People
complain about slow-to-load web sites. In most cases, the person tells that he chose not to wait and
moved on. The problem arises not only because they didn't wait for your site to load, but also because
they later complain about your site to their friends and colleagues. So rather than creating no
impression, the impression you create is negative. The website should also have a bit of free advice and
should be interactive.
Rule =- A serious photograph that you think is dignified often scares off prospects. If you want to see
bad photos of lawyers, look through the yellow pages. In many cases, lawyers look worse than the
criminals they defend. Hire a photographer to take a professional publicity shot, with direct eye contact
and a warm engaging smile because before you make a stern impression on your adversary, you must
make a favorable impression on your prospect.
Rule >- Long marketing messages work better than short messages, not because they're long, but
because they're complete. Short messages have a place, especially when prospects want a quick
overview and don't have time to digest your entire message. (Then a summary sheet of bullet points
works best.) But when your prospect finds time -- and wants to read what you say -- you're in a much
stronger position when you have (1) answered all his questions, (2) discussed your competitive
advantages, and (3) explained the many benefits of hiring you.
Rule ?- High fees attract better clients than low fees. When creating a marketing argument, it's much
easier to justify high fees based on the depth of your knowledge and experience -- than to explain why
you charge so little. As consumers, we all use price as a quick way of determining quality (In services
particularly). While price is not always reliable, still, we form impressions about the other person based
on what he charges. Most often, people who want low prices get what they pay for and are not the most
desirable clients. On the other hand, clients who want to benefit from your knowledge, skill and
experience know that those qualities don't come cheap.
The future law firms shall have specialist attorneys on various laws that the business houses will have to
deal with.
Patent and Trade mark laws
Public interest and environmental laws
International trade related laws
Routine Commercial disputes and drawing up Agreements of various types.
Constitutional law
Competition Bill and India's internal regulatory laws like Anti-dumping, pollution, unfair trade practices
R'8'R'/C'S-
1. Services Marketing; Christopher lovelock & Jochen Wirtz;Pearson 5
th
Ed.
2. Service Marketing; S M Jha; Himalaya Publishing
3. Marketing Legal Services on the Internet; By Alan Gahtan - December 20, 1994
4. Attorney Marketing at CCC.treyryder."om
5. Marketing Legal Services (Carswell Law Office Management Series) by %onna C. (annop
6. http://www.lawmarketing.com/

Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india
C,S!$M'R *$0A*!0# 'MP*$0''S A/% &RA/%I/G
By
Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

C,S!$M'R *$0A*!0# 'MP*$0''S A/% &RA/%I/G
It has been widely recognised that customer loyalty is built around several important parameters, a few
of which are very important:
1. The intrinsic quality of product or service as a satisfier of consumer need
2. High perceived value of the service benefits to the customer
3. consistency in delivery of product/service
4. After sales service i.e. customer care
5. Bonding of personal relations with service staff
6. Excellent two way communication channel.
7. Listening to customer needs which often change and are widely varying.
8. Technological leadership in delivery of service
9. And that extra bit called Delight in marketing literature.
However it is seen that above areas are scarcely paid attention to by service providers. These are
some of situations that often emerge when a customer establishes first or repeat contact with
service provider
1. Every time a new person attends to the customer making it difficult to establish personal bond
The information given by different people varies with little or no promise and commitment.
2. Delay in responding to first contact or sending required information in expected time frame by
the customer.
3. Rough and indifferent tone and attitude shown. Sometimes even bored attitude. Lack of
reliable information available with the service representative
4. Missing empowerment with the service executive. In other words no authority or clarity of
role is available for faster decision and customer satisfaction
5. Unanswered service enquiries.
Almost every reader of this article must have gone through one or more of above experiences. Sadly
even world class and MNC organisations in India are found lacking basic ingredients for customer
satisfaction which is pre-requisite to loyalty.
Although organisations have inducted call centre technology, CRM databases software, toll free numbers
and big customer care setup, the practical aspects of these are seriously deficient.
The author's personal experience with companies like Compaq, Citibank, GE-Capital Services, Maruti ,
Casio , and likes, is far from satisfactory based on recent interactions to investigate efficiency of
customer care in these leading companies.
The question is- Can a company make a strong brand image and develop customer loyalty? The
principles apply equally well to Manufactured goods, particularly value added and engineering goods
where service component is now a primary differentiator in Brand Equity of competitors.
!hree areas ha+e been identified that point to "auses of Cea5ness:
1. Inefficient induction of modern technology in customer service
2. Lack of product information and authority to take decision, with the customer care executives
3. Lack of training particularly attitudinal training.
It is also interesting to observe high correlation between customer loyalty and the employee loyalty in
most of service organisations. This area is also being seriously neglected by most of companies. This
needs drastic change in work environment, human resource practices and organisation structure of
service providers, which is time consuming and painful process requiring clear top level policies and
commitment.
Some of the rules that can be laid down for building customer loyalty are presented hereunder:
Aggressi+ely see5 out "ustomer "omplaints
For most companies, only 10% of complaints get articulated by customers. The other 90% are
unarticulated and manifest themselves in many negative ways: unpaid invoices, lack of courtesy to your
frontline service reps and, above all, negative word of mouth.
With the Internet, an unhappy customer can now reach thousands of your would-be customers in a few
keystrokes. Head off bad press before it happens. Make it easy for customers to complain, and treat
complaints seriously. Establish firm guidelines regarding customer response time, reporting and trend
analysis. Make employee complaint monitoring a key tool for executive decision making
Stay responsi+e
Research shows that responsiveness is closely tied to a customer's perception of good service. The
advent of the Internet has changed the customer's perception of responsiveness. More and more,
customers are coming to expect round-the-clock customer service.
Moreover, customers now arrive at Web sites time-starved and eager to locate answers. Technology
tools such as customer self-service, email management and live chat/Web callback are proving
increasingly critical for companies as they address the demanding customer's responsiveness needs.
KnoC your "ustomerMs definition of +alue
The loyalty password is "value." Knowing how your customers experience value and then delivering on
those terms is critical to building strong customer loyalty.
But knowing your customer's true definition of value is not easy, because your customers' value
definitions are constantly changing. Invest in customer loyalty research that enables you to understand,
through the eyes of the customer, how well you deliver value.
,se multiple "hannels to ser+e the same "ustomers Cell
Research suggests that customers who engage with a firm through multiple channels exhibit deeper
loyalty than single-channel customers. But take note: this finding assumes that customers get the same
consistent service whether coming into the store, logging on the Web site or calling the service center.
To achieve consistency, your firm must internally coordinate sales and service across multiple channels
so that customer preferences are accessible no matter how the customer chooses to interact. Today's
customers expect to hop from channel to channel, and they expect good service to follow.
Gi+e your frontline the s5ills to perform
Increasingly, for many companies, the employee "frontline" is a call center where agents interact with
customers. These agents will be the "loyalty warriors" of the future. Converged call centers that bring
together multi-channel access points (phone, fax, email, Web) are on the rise.
Gartner Group estimates that 70% of North America's call centers will migrate to multi-channel contact
centers by 2005. This means that those agents need to be as equipped to write a well-written email
reply and navigate the company Web site as they are in being helpful and friendly on a phone call.
Store your data in a "entrali9ed database
Most firms lack a 360-degree view of their customer because they have no centralized database. Billing
departments, sales divisions and customer service centers might all have their own databases, with no
effective means for creating a complete customer-information composite.
To effectively implement a sound customer loyalty strategy, data from all customer touch-points must
be combined into a centralized customer database. Without it, the firm is greatly handicapped in its
efforts to serve the customer.
KnoC your loyalty stages and ensure that your "ustomers are mo+ing through them
Customers become loyal to a company and its products and service one step at a time. By
understanding the customer's current loyalty stage, you can better determine what's necessary to move
that customer to the next level of loyalty. There are six stages of customer loyalty: suspect, prospect,
first-time customer, repeat customer, client and advocate.
If your customer relationship processes and programs aren't moving customers forward, rethink them.
&uild staff loyalty
It's a fact: firms with high levels of customer loyalty have also earned high levels of staff loyalty. It's
darn near impossible to build strong customer loyalty with a staff that is in constant turnover.
Why? Because, customers buy relationships and familiarity. They want to buy from people who know
them and their preferences. Key rule of loyalty: serve your employees first so that they, in turn, can
serve your customer.
In+ol+e Customers and 'mployees
Customers love to stay with the organisations which the customers think they are part of
Same applies to employees. As per Ser+i"es !riangle model of 7alerie Neithaml, the promises
created by the organisation are essentially delivered through the employee. A strong bond between
customer and employee and employee and organisation is therefore a must. Many things can be done,
like rewarding loyal customers, enhancing product value, sharing company performance data with
employees and customers and inviting suggestions and feedback from time to time. The run of mill
loyalty award points are no longer a USP as almost all competitors follow them quickly. It is the
implementation and convenience and the transparency of information that will count.
The companies should share positive results immediately with the employees.
The customer should feel that s/he is valued by organisation and the needs are met with earnestness
and happily.
How often we buy services and products that may not be best in class but have a friendly salesman, a
friendly customer care and a quick response record.
Money back guarantees boost confidence of customers in making buying decisions. Well, not only buying
but repeat buying decisions. That is the key for organisation success and building powerful brands.
&randing "an help "ompanies build "ustomer loyalty
A holistic approach to branding can help companies in many ways, including in building customer
loyalty, ensuring consistency and improving value for stakeholders.
Brand building was not a one-time affair as it created values, goodwill and customer loyalty.
Organisations not taking a holistic view of branding were doing so at their peril, since brands helped to
create a sustainable customer relationship.
Though strong brands promised tremendous benefits and helped to attract good employees, customers
and business partners, they required the companies to exhibit quality, be consistent in what they did
and to continuously innovate. The `India Shining' advertisement series was a good effort at branding
the country, he said
A"5noCledgements:
Customer Loyalty: How to Earn It, How to Keep It; Jill Griffin; The griffin Group, Austin, Texas
The Hindu; Sunday March 14 2004/stories
Who Stole My Customer?? Winning Strategies for Creating and Sustaining Customer Loyalty
by Harvey Thompson (Author)
Creating Consumer Loyalty in Healthcare (Management Series) -- by R. Scott MacStravic; Paperback

Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

&I$*$G0 $R &,0B*$G0)
2avid Ds <oliath40ho (ill be the (inner1
Authors-
Prof. S. Suresh# Asst. Professor, Management Studies, Institute $f Management and
Resear"h# 8th Milestone, Delhi-Meerut Road, Ghaziabad (U.P), Ph: 0120-2788325/2675418(O), 98104-
13396(Mobile), Email: sureshsannapu@yahoo.com
Ms. Ra.ni Chopra# Lecturer, Management Studies, Ra.5umar Goel Institute of !e"hnology
5th Km, Delhi-Meerut Road, Ghaziabad, Mobile : (0) 9811310033, Email: rajni_choprain@yahoo.com
A&S!RAC!
Foreign Companies have been fairly successful in the Indian Market. Their success has been attributed
to various factors. The endeavour of this paper is to present the situation where in even the domestic
companies have not only competed with foreign companies but also have gained the market leadership.
The authors believe that being 'foreign'may have little relation with success but more to do with 'Buy-
Logy'.
There is tremendous relevance to the psyche of consumer. As an organization one ought to comprehend
some of the insatiable demands of today's customer, which are FREE, PERFECT, NOW, it is imperative
for a marketing organization to keep ahead of competitor's strategies and inculcate trust on their ability.
A couple of success stories i.e. Kanpur Trading company (KTC) & Asian Paints have been presented in
the paper.
%'C*ARA!I$/ &0 !H' A,!H$RS
We, Prof. S. Suresh and Ms. Rajni Chopra hereby declare the following paper "Biology or buy-Logy,
David Vs. Goliath-who will be the winner?" is original. All the views expressed in the article are personal
contributions. However, references used have been mentioned along the author's name. This paper has
not been published/submitted for publication elsewhere.
Ms. Ra.ni Chopra
Prof. S. Suresh
&I$*$G0 $R &,0B*$G0)
2avid Ds <oliath40ho (ill be the (inner1
The success of foreign companies in India has been attributed to various factors mentioned as follows:
1. Possessing infrastructural facilities such as wide network of offices. Varied sources of
information. Favourable product image and good market knowledge.
2. Ability to get good agents and distributors.
3. Having the capacity to mobilize money, workers and technology needed for production and
sale of goods.
4. Having the ability to acquire better Knowledge and skills.
5. Capacity to provide better products at lower costs to consumers in developing countries.
6. Being a good source of technology not otherwise available.
7. Providing an element of entrepreneurship and risk taking.
Taking into consideration the above factors, does it mean that foreign companies are going to dominate
the Indian market forever?
The endeavor of this paper is to present the situations where in the "foreign success mantra" has been
defied by successful Indian companies. In fact. The success of a company in the domestic market has
little relevance to being " foreign" and has more to do with what the authors call "Buy-logy".
Consumerism has become almost a truism to claim that buying habit of goods in many ways expresses
consumer psychology, or in other words to study Buy-logy from Marketing perspective is as important
as to study of biology from Science perspective.
To avoid complexities, let's move, into simplification of words.
&uy V *ogy L Selling the goods from "ustomerMs perspe"ti+e.
Of course, innovation and production of something new are intrinsic to consumerism. It is often
suggested by marketers that new ideas identify pleasures and images, which fascinate consumers and
facilitates selling of commodities.
Certainly, it is not feasible to comprehend the psyche of each and every customer and offer a product
absolutely of his kind. However management often display high budgets, staff and logistics on planning,
productivity and marketing of the products successfully taking the customer's interest into
consideration, right from the origin of concept till consumption of commodity.
When a company, whether foreign or domestic, enters into the market, the consumer's perception is
often as follows:
1. I don't know who you are
2. I don't know your company's products
3. I don't know what your company stands for
4. I don't know your company's customers
5. I don't know your company's records
6. I don't know your company's reputation
Now- what was it you wanted to sell?
(Ad: McGraw-hill magazine)
Moral: Sales starts before your salesman calls-with business.
According to Robin Rodin, CEO, Marshall Industries, three insatiable demands of today's customers are
1. They want their product or services "FREE"
2. They want it "PERFECT" and
3. They want it "NOW".
Certainly an organization can think over on its strategies, tactics, values and manpower. Beyond doubt
concrete study lies in the synergy of all these components as success depends on alignments of vital
factors.
From marketing point of view, one ought to have thorough knowledge of power, assets and
infrastructure of one's organization. Technical knowledge may not be enough. One must transcend
techniques so that the art becomes an artless art (Karate Saisetsu Suzuki)
Before moving into customer's premises, one must be clear in mind.
(i) How well he does he know his market
(ii) How proficient and skilful he is
(iii) How much faith he has, in his product and company.
The most important question for a marketing professional is to understand the reasons that make a
customer buy one particular product from one particular supplier.
KA/P,R !RA%I/G C$MPA/0 2K!C3
In this perspective let us look at a fast growing Indian company, Kanpur trading corporation (KTC). The
indigenous marketing machine of KTC is posing a serious threat to the leader HLL in the detergent
market. Kanpur trading Company (KTC), the marketer of Ghari detergent, is a rags to detergent story.
Having started as a crude manufacturing unit, today, after 17 years, is one of the dominant players in
the detergent market.
Ghari has stormed the UP market capturing shops sheleves and godowns. It has crossed the Rs. 550
crore sales mark this year and is the largest selling single brand in U.P and adjoining markets. To give
you the sense of the size of the brand Ghari, it's almost as big as surf, Cadbury, clinic and fanta, twice
the size of dettol and three times that of Ariel by sales. It sold less that Rs. 2 crore worth of detergent in
1990 when nirma and wheel, the two national brands were household names. Today, ghari is the largest
growing brand with a market share of over 40 per cent in U.P and around 10 per cent volume share on
an all India bases.
The success of ghari has been because of the following
1. KTC has consistently maintained the quality at the right price. Ghari was priced 10 percent
lower than that of Nirma and wheel.
2. KTC has used their porters as the salesmen. They have picked up raw hands from lower
middle class families, trained them in sales and distribution and rewarded them well for their
good work.
3. KTC has always been involved in financial assistance to its distributors and supported them
with local advertising to boost secondary sales.
4. Media communication was used to research out a wider consumer audience. While Ghari's
price-value equation figured high in the minds of lower-middle and middle class buyers, the
media blitz proved compelling to consumers on the fringes.
5. Ghari's distribution was not expanded indiscriminately like many regional brands have done
KTC would enter one market, achieve 100% penetration among the retailers there and
consolidate before moving on to the next market.
6. Ghari's growth has been without substantial reliance on carrots like promotions or high retail
margins, both of which are very common in the industry. KTC has avoided using trade and
consumer schemes as a strategic tool. The company gets high turnover which means even at a
low 2.5 percent margin, a distributor gets fairly good returns on investment.
Ghari's sales have seen a compounded annual growth of 25% during the last five years. The brand grew
over 20 percent last year even as the industry saw a decline due to recessionary conditions.
As we look at the success of Ghari, price-value equation is an important factor in consumer decision-
making process. However, apart from price, there are several other factors a marketer can rely on. For
example, once can take into account the emotional factors, which make people to purchase a specific
product.
These include factors such as:
Want to be most admired
Want to appear fashionable/modern
Want to appear authoritarian
Want to look professional
Much of this comes down to one word-image
If one one is aiming to sell cosmetics to young woman. He may wish to present an image of a most
charming beautiful lady. On the other hand a dauntless and rugged image is posed for youngsters and
for older people a traditional friendly image is more appropriate.
ASIA/ PAI/!S
While many companies have created a strong image to succeed in the market. There are others who
have looked toward distribution for success. One such Indian company is Asian Paints (A.P). Which had
overtaken the foreign companies to gain market leadership.
Asian paints. Good lass Nerolac. IICI (India). Berger. Jenson & Nicholson and Shalimar are the leading
companies in the organized sector in value terms. A.P is the Industry leader. With an overall market
share of 33 per cent in the organized sector.
A.P has been consistently turning out a good performance over the years. For more then two decades
now. It has been the market leader.
AP's sound marketing has earned it strong brand equity. It has been able to do it by focusing on product
features that are appreciated by customers. And by ensuring that the products are of high and
consistent quality and are widely available by building a strong distribution system.
The paint industry of India is more then 100 years old. Its beginning can be traced to the setting up of
factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II. The industry consisted of
just a few foreign companies and some small. Indigenous producers. Foreign companies continued to
dominate the industry.
At the time AP entered the Indian paint business. Distribution was the most crucial task for any new
entrant. Both physical distribution and channel management posed formidable challenges. The foreign
companies and their wholesale distributors dominated the business. Also they were shutting the doors
on any new paint company seeking an entry into the business. They concentrated on big cities where
they could make the sales without much investment in distribution infrastructure and market
development.
AP sized up the scenario and formulated a unique strategy. It went in for a strategy that differed totally
from the existing pattern.
Elements of AP's Marketing Strategy
1. AP bypassed the bulk buyer segment and went to individual consumers of paints.
2. AP went slow on urban areas and concentrated on semi urban and rural areas.
3. AP went retail. While its competitors remained content with a handful of wholesale
distributors. AP preferred direct contact with hundreds of retail dealers.
4. AP went in for an open door policy. It broke the prevailing trend in those days. Of limiting the
number of dealers to the barest minimum. And chose to use practically everyone in the trade.
Who was willing to function as its dealer?
5. AP voted for nationwide marketing/distribution. It wanted to have an active presence
throughout the country. In all the geographical zones. States and territories.
Main steps in the implementation Process
1. AP created a large network of dealers.
2. It established a network of company depots to service the dealers
3. It created a marketing organization that matched its distribution
4. It successfully resolved the cost service conflict in distribution with a
A strong commitment to distribution cost control. Without compromising service
level.
Effective inventory management
Effective control of credit outstandings
IT initiatives in distribution cost control
As already mentioned. Asian Paints is India's largest paint company and the market leader in decorative
paints. The story of Asian Paints is a story of marketing excellence. It achieved an enviable leadership
position by mastering the distribution function and gained a distinctive and powerful competitive
advantage.
If by being Indian companies. KTC and Asian Paints could succeed. There is no reason why others
cannot follow suit. Both the companies have shown the mettle required to cope up with foreign
competition in the market. Both have understood the customer and gave them what they wanted. While
KTC maintains a strong price value equation. Asian Paints ensures easy availability and a wide range of
colour choices. In a way. We can say that they talk what the customer likes to listen. They show what
the customer loves to see. They sell what the customer likes to by and make what the customer loves to
be.
R'8'R'/C'S
1. Sutherland Max, Sylvester Alice, Advertising & the mind of Consumer, 2000,268
2. Rodin Robin, Free, Perfect, Now, 2000, 03
3. Oglivey David, Oglivey on advertising, 2001, 118
4. Varshney, R.L. and Bhattacharya B., International Marketing Management. 2001,450-454
5. Rarnashwamy V.S. and Namakumari S., Marketing Management, 2002,452-457
Bhanu Pande, Brand equity- Economic Times, December 25,2002.1-2
Prof. S. Suresh
Asst. Professor, Management Studies
Institute $f Management and Resear"h
8th Milestone, Delhi-Meerut Road, Ghaziabad (U.P)
Ph: 0120-2788325/2675418(O), 98104-13396(Mobile)
Email: sureshsannapu@yahoo.com
Ms. Ra.ni Chopra
Lecturer, Management Studies
Ra.5umar Goel Institute of !e"hnology
5th Km, Delhi-Meerut Road, Ghaziabad
Mobile : (0) 9811310033
Email: rajni_choprain@yahoo.com
&I$*$G0 $R &,0B*$G0)
2avid Ds <oliath40ho (ill be the (inner1
Authors-
Prof. S. Suresh
Asst. Professor, Management Studies
Institute $f Management and Resear"h
8th Milestone, Delhi-Meerut Road, Ghaziabad (U.P)
Ph: 0120-2788325/2675418(O), 98104-13396(Mobile)
Email: sureshsannapu@yahoo.com
Ms. Ra.ni Chopra
Lecturer, Management Studies
Ra.5umar Goel Institute of !e"hnology
5th Km, Delhi-Meerut Road, Ghaziabad
Mobile : (0) 9811310033
Email: rajni_choprain@yahoo.com

A&S!RAC!
Foreign Companies have been fairly successful in the Indian Market. Their success has been attributed
to various factors. The endeavour of this paper is to present the situation where in even the domestic
companies have not only competed with foreign companies but also have gained the market leadership.
The authors believe that being 'foreign'may have little relation with success but more to do with 'Buy-
Logy'.
There is tremendous relevance to the psyche of consumer. As an organization one ought to comprehend
some of the insatiable demands of today's customer, which are FREE, PERFECT, NOW, it is imperative
for a marketing organization to keep ahead of competitor's strategies and inculcate trust on their ability.
A couple of success stories i.e. Kanpur Trading company (KTC) & Asian Paints have been presented in
the paper.
%'C*ARA!I$/ &0 !H' A,!H$RS
We, Prof. S. Suresh and Ms. Rajni Chopra hereby declare the following paper "Biology or buy-Logy,
David Vs. Goliath-who will be the winner?" is original. All the views expressed in the article are personal
contributions. However, references used have been mentioned along the author's name. This paper has
not been published/submitted for publication elsewhere.
Ms. Ra.ni Chopra
Prof. S. Suresh

&I$*$G0 $R &,0B*$G0)
2avid Ds <oliath40ho (ill be the (inner1
The success of foreign companies in India has been attributed to various factors mentioned as follows:
1. Possessing infrastructural facilities such as wide network of offices. Varied sources of
information. Favourable product image and good market knowledge.
2. Ability to get good agents and distributors.
3. Having the capacity to mobilize money, workers and technology needed for production and
sale of goods.
4. Having the ability to acquire better Knowledge and skills.
5. Capacity to provide better products at lower costs to consumers in developing countries.
6. Being a good source of technology not otherwise available.
7. Providing an element of entrepreneurship and risk taking.
Taking into consideration the above factors, does it mean that foreign companies are going to dominate
the Indian market forever?
The endeavor of this paper is to present the situations where in the "foreign success mantra" has been
defied by successful Indian companies. In fact. The success of a company in the domestic market has
little relevance to being " foreign" and has more to do with what the authors call "Buy-logy".
Consumerism has become almost a truism to claim that buying habit of goods in many ways expresses
consumer psychology, or in other words to study Buy-logy from Marketing perspective is as important
as to study of biology from Science perspective.
To avoid complexities, let's move, into simplification of words.
&uy V *ogy L Selling the goods from "ustomerMs perspe"ti+e.
Of course, innovation and production of something new are intrinsic to consumerism. It is often
suggested by marketers that new ideas identify pleasures and images, which fascinate consumers and
facilitates selling of commodities.
Certainly, it is not feasible to comprehend the psyche of each and every customer and offer a product
absolutely of his kind. However management often display high budgets, staff and logistics on planning,
productivity and marketing of the products successfully taking the customer's interest into
consideration, right from the origin of concept till consumption of commodity.
When a company, whether foreign or domestic, enters into the market, the consumer's perception is
often as follows:
1. I don't know who you are
2. I don't know your company's products
3. I don't know what your company stands for
4. I don't know your company's customers
5. I don't know your company's records
6. I don't know your company's reputation
Now- what was it you wanted to sell?
(Ad: McGraw-hill magazine)
Moral: Sales starts before your salesman calls-with business.
According to Robin Rodin, CEO, Marshall Industries, three insatiable demands of today's customers are
1. They want their product or services "FREE"
2. They want it "PERFECT" and
3. They want it "NOW".
Certainly an organization can think over on its strategies, tactics, values and manpower. Beyond doubt
concrete study lies in the synergy of all these components as success depends on alignments of vital
factors.
From marketing point of view, one ought to have thorough knowledge of power, assets and
infrastructure of one's organization. Technical knowledge may not be enough. One must transcend
techniques so that the art becomes an artless art (Karate Saisetsu Suzuki)
Before moving into customer's premises, one must be clear in mind.
(i) How well he does he know his market
(ii) How proficient and skilful he is
(iii) How much faith he has, in his product and company.
The most important question for a marketing professional is to understand the reasons that make a
customer buy one particular product from one particular supplier.
KA/P,R !RA%I/G C$MPA/0 2K!C3
In this perspective let us look at a fast growing Indian company, Kanpur trading corporation (KTC). The
indigenous marketing machine of KTC is posing a serious threat to the leader HLL in the detergent
market. Kanpur trading Company (KTC), the marketer of Ghari detergent, is a rags to detergent story.
Having started as a crude manufacturing unit, today, after 17 years, is one of the dominant players in
the detergent market.
Ghari has stormed the UP market capturing shops sheleves and godowns. It has crossed the Rs. 550
crore sales mark this year and is the largest selling single brand in U.P and adjoining markets. To give
you the sense of the size of the brand Ghari, it's almost as big as surf, Cadbury, clinic and fanta, twice
the size of dettol and three times that of Ariel by sales. It sold less that Rs. 2 crore worth of detergent in
1990 when nirma and wheel, the two national brands were household names. Today, ghari is the largest
growing brand with a market share of over 40 per cent in U.P and around 10 per cent volume share on
an all India bases.
The success of ghari has been because of the following
1. KTC has consistently maintained the quality at the right price. Ghari was priced 10 percent
lower than that of Nirma and wheel.
2. KTC has used their porters as the salesmen. They have picked up raw hands from lower
middle class families, trained them in sales and distribution and rewarded them well for their
good work.
3. KTC has always been involved in financial assistance to its distributors and supported them
with local advertising to boost secondary sales.
4. Media communication was used to research out a wider consumer audience. While Ghari's
price-value equation figured high in the minds of lower-middle and middle class buyers, the
media blitz proved compelling to consumers on the fringes.
5. Ghari's distribution was not expanded indiscriminately like many regional brands have done
KTC would enter one market, achieve 100% penetration among the retailers there and
consolidate before moving on to the next market.
6. Ghari's growth has been without substantial reliance on carrots like promotions or high retail
margins, both of which are very common in the industry. KTC has avoided using trade and
consumer schemes as a strategic tool. The company gets high turnover which means even at a
low 2.5 percent margin, a distributor gets fairly good returns on investment.
Ghari's sales have seen a compounded annual growth of 25% during the last five years. The brand grew
over 20 percent last year even as the industry saw a decline due to recessionary conditions.
As we look at the success of Ghari, price-value equation is an important factor in consumer decision-
making process. However, apart from price, there are several other factors a marketer can rely on. For
example, once can take into account the emotional factors, which make people to purchase a specific
product.
These include factors such as:
Want to be most admired
Want to appear fashionable/modern
Want to appear authoritarian
Want to look professional
Much of this comes down to one word-image
If one one is aiming to sell cosmetics to young woman. He may wish to present an image of a most
charming beautiful lady. On the other hand a dauntless and rugged image is posed for youngsters and
for older people a traditional friendly image is more appropriate.
ASIA/ PAI/!S
While many companies have created a strong image to succeed in the market. There are others who
have looked toward distribution for success. One such Indian company is Asian Paints (A.P). Which had
overtaken the foreign companies to gain market leadership.
Asian paints. Good lass Nerolac. IICI (India). Berger. Jenson & Nicholson and Shalimar are the leading
companies in the organized sector in value terms. A.P is the Industry leader. With an overall market
share of 33 per cent in the organized sector.
A.P has been consistently turning out a good performance over the years. For more then two decades
now. It has been the market leader.
AP's sound marketing has earned it strong brand equity. It has been able to do it by focusing on product
features that are appreciated by customers. And by ensuring that the products are of high and
consistent quality and are widely available by building a strong distribution system.
The paint industry of India is more then 100 years old. Its beginning can be traced to the setting up of
factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II. The industry consisted of
just a few foreign companies and some small. Indigenous producers. Foreign companies continued to
dominate the industry.
At the time AP entered the Indian paint business. Distribution was the most crucial task for any new
entrant. Both physical distribution and channel management posed formidable challenges. The foreign
companies and their wholesale distributors dominated the business. Also they were shutting the doors
on any new paint company seeking an entry into the business. They concentrated on big cities where
they could make the sales without much investment in distribution infrastructure and market
development.
AP sized up the scenario and formulated a unique strategy. It went in for a strategy that differed totally
from the existing pattern.
Elements of AP's Marketing Strategy
1. AP bypassed the bulk buyer segment and went to individual consumers of paints.
2. AP went slow on urban areas and concentrated on semi urban and rural areas.
3. AP went retail. While its competitors remained content with a handful of wholesale
distributors. AP preferred direct contact with hundreds of retail dealers.
4. AP went in for an open door policy. It broke the prevailing trend in those days. Of limiting the
number of dealers to the barest minimum. And chose to use practically everyone in the trade.
Who was willing to function as its dealer?
5. AP voted for nationwide marketing/distribution. It wanted to have an active presence
throughout the country. In all the geographical zones. States and territories.
Main steps in the implementation Process
1. AP created a large network of dealers.
2. It established a network of company depots to service the dealers
3. It created a marketing organization that matched its distribution
4. It successfully resolved the cost service conflict in distribution with a
A strong commitment to distribution cost control. Without compromising service
level.
Effective inventory management
Effective control of credit outstandings
IT initiatives in distribution cost control
As already mentioned. Asian Paints is India's largest paint company and the market leader in decorative
paints. The story of Asian Paints is a story of marketing excellence. It achieved an enviable leadership
position by mastering the distribution function and gained a distinctive and powerful competitive
advantage.
If by being Indian companies. KTC and Asian Paints could succeed. There is no reason why others
cannot follow suit. Both the companies have shown the mettle required to cope up with foreign
competition in the market. Both have understood the customer and gave them what they wanted. While
KTC maintains a strong price value equation. Asian Paints ensures easy availability and a wide range of
colour choices. In a way. We can say that they talk what the customer likes to listen. They show what
the customer loves to see. They sell what the customer likes to by and make what the customer loves to
be.
R'8'R'/C'S
1. Sutherland Max, Sylvester Alice, Advertising & the mind of Consumer, 2000,268
2. Rodin Robin, Free, Perfect, Now, 2000, 03
3. Oglivey David, Oglivey on advertising, 2001, 118
4. Varshney, R.L. and Bhattacharya B., International Marketing Management. 2001,450-454
5. Rarnashwamy V.S. and Namakumari S., Marketing Management, 2002,452-457
Bhanu Pande, Brand equity- Economic Times, December 25,2002.1-2
Prof. S. Suresh# Asst. Professor, Management Studies, Institute $f Management and Resear"h
8th Milestone, Delhi-Meerut Road, Ghaziabad (U.P), Ph: 0120-2788325/2675418(O), 98104-
13396(Mobile), Email: sureshsannapu@yahoo.com
Ms. Ra.ni Chopra# Lecturer, Management Studies, Ra.5umar Goel Institute of !e"hnology
5th Km, Delhi-Meerut Road, Ghaziabad, Mobile : (0) 9811310033, Email: rajni_choprain@yahoo.com
&RA/% ARCHI!'C!,R'
By
Prof. Shra+an Rungta# B.Com, MMS, PGDEM, NET, Faculty - Advertising, / * %almia
Institute of Management Studies and Resear"h# Mumbai, 9820572046, E-mail :
facultyshravan@yahoo.co.in
&rand Ar"hite"ture
It's essentially an approach which defines the relationship of the enterprise and its product and services.
It helps in determining the Identity and Importance of the offering of the enterprise in relation to other
products or services in the organizations portfolio.
Four different approaches:
1. Monolithic approach 2. Primary Endorsement approach 3. Secondary Endorsement approach
4. Standalone approach
M$/$*I!HIC APPR$ACH
Under this approach the enterprise offers all its products and services under its own name, for example:
Samsung, Videocon, LG, SBI etc. When an organization has a strong visibility and history behind it, it
can leverage the same by offering all the products and services in its portfolios under its own name.
One of the major benefits of monolithic approach is that the marketing cost is minimal and the products
and services offered can easily leverage the reputation of the enterprise.
PRIMAR0 '/%$RS'M'/! APPR$ACH
Under this approach the product or service offered has its own identity (name) but it is superseded by
the identity of its enterprise (Mother Brand). For example: Cadburys' DIARY MILK, Toyota COROLLA,
Ford IKON and others. This approach is mainly adopted by enterprise when it launches new product or
the Mother Brand communicate values which are unique to its category (Industry). Like, Toyota is know
for its technology orientation and hence adding the name Toyota to Corolla immediately signifies a
product which is technologically superior.
S'C$/%AR0 '/%$RS'M'/! APPR$ACH
When the enterprise wants to add the assurance value to its new or existing products in order to build
or convey credibility it follows this approach. For example: SCORPIO from Mahindras, AquaFina from
PEPSI, Kinley from COCA-COLA. Secondary endorsement approach aims at assuring the target audience
about the origin of the brand and at the same time maintaining the brands individual identity.
S!A/% A*$/' APPR$ACH
When an enterprise intends to build a brand entirely exclusive from its mother brand, it adopts this
approach. The main reason for such an approach is that either the mother brand (name) is not relevant
to that product category or the enterprise wants to target a totally different audience. It is also adopted
by companies that are in to multiple products and categories. Like Cinthol, Liril, Van Heusen, Peter
England. Brand Architecture provides the framework to an organization wherein all its products and
services can utilize its resources tangible or intangible and play the defined role without any conflicts
with other members of the portfolio of the company.
Prof. Shra+an Rungta# B.Com, MMS, PGDEM, NET, Faculty - Advertising, / * %almia Institute of
Management Studies and Resear"h# Mumbai, 9820572046, E-mail : facultyshravan@yahoo.co.in
A%7'R!ISI/G 7:S SA*'S PR$M$!I$/
&,I*%I/G A SA*'S PR$M$!I$/ P*A/
By
Prof. Shra+an Rungta
B.Com, MMS, PGDEM, NET
Faculty - Advertising
/ * %almia Institute of Management Studies and Resear"h
Mumbai
9820572046
E-mail : facultyshravan@yahoo.co.in

Ad+ertising +:s Sales Promotion
The debate concerning expenditure on advertising versus that on sales promotion has been an
interesting topic of conversation among marketers for decades. The primary reason for the emergence
of this debate is that both advertising and Sales promotion aims to achieve objectives that are many a
times overlapping and complimentary.
Advertising or "Mainline" as it is also called, helps an enterprise to launch a product or service, increase
market share and to compete in the market place by influencing consumer and their decision making
process. Sale promotion or "Below-the-line" activities as it popularly know as also helps an enterprise
inducing trials, increasing off take and thereby enhance the topline.
Both the promotional activities aims at achieving the firms marketing and business objective, however
the duration of results and magnitude of impact varies.
This debate could also be analysed from another view point, the financial commitment and returns. The
advertising agencies demand for more budget to make advertising more effective, through wider reach
and longer campaign duration; whereas the sales and distribution channel demand more spend on sale
promotions to increase off take in the market during a particular period and thereby increase market
share.
Traditionally it has been believed that advertising has much longer term effect on the brand whereas,
sales promotion has more immediate impact on sales figure. Thus, the spend on both these activities
depends upon the goals of the marketing department and the decision maker.
However, in a practical scenario it is observed that, firms advertising and Sales promotion budget
depends upon the influencing power of the agencies on one hand and Channel partners on the other
hand. The ratios of advertising expenditure to that of sales promotion in developed countries like US and
Europe is 30: 70. Whereas in developing countries like China and India is reverse (70: 30), but the
trend seems to be changing in India too, and it is predicted that the ratio would undergo a dramatic
shift in years to come. This would primarily be due to the growing power of retailers on one hand and
immense competition on the other hand, which forces the competing firms to opt for short term gains as
against potential long term profits.
Either way the customer would ultimately have more and more say in the determination of price and
performance of the brand, and the firm which delivers on both counts by judiciously using all forms of
promotion would ultimately stand to gain.

Sales Promotion
%efinition
Sales promotion is a short term activity carried out at regular intervals, to provide direct inducement to
customers, dealers or sales force in order to add value to the product and thereby stimulate immediate
or increased purchase.
While advertising explains the Logic behind buying, sales promotion offers us the incentive to buy
"NOW".
Sales promotion operates basically at two levels:
1. Customer Promotion.
2. Trade Promotion.
&uilding a Sales Promotion Plan
o /ature of Mar5et- A promo for a rural audience could be completely different from one
designed for the urban market. Media penetration is not high in rural areas; therefore
promos work well towards building the brand. Bajaj India launched a rural promo for its
scooters, the top two prizes being 100gm of gold, and a Colour TV, both on the rural
aspirational list.

o !iming- The right time is when the consumer has the desire to spend. The turn of the
millennium was the perfect launch pad for many urban campaigns. Festivals, occasions,
events may be ideal for a rural promo.

o &e on Shelf- Let there be no loopholes in the promo! Inventory Depletion should not be a
problem. The minute the consumer sees the promo; the product should be made easily
available. Bad timing can be disastrous. A leading publication was giving away ten
cassettes with a subscription. Many of the subscriptions were cancelled because it took
more than twelve weeks for the Cassettes to reach the consumer.

o %uration of the Promotion- The duration should be right! It should not last too long to
let laggards in, and also not too short for the early adopters to get a chance to try it out.

o Constru"t- A "construct" is the way a promo is designed. Promotions should be
constructed keeping in mind brand objectives and consumer behaviour. What is the effort
a consumer or a dealer has to put in to get the benefits? Does he/she have to return
crowns to win a free trip, or enter a contest to win something?

Prof. Shra+an Rungta
B.Com, MMS, PGDEM, NET
Faculty - Advertising
/ * %almia Institute of Management Studies and Resear"h
Mumbai
9820572046
E-mail : facultyshravan@yahoo.co.in
!H' A%7'R!ISI/G P*A//I/G C0C*'
By
Prof. Shra+an Rungta
B.Com, MMS, PGDEM, NET
Faculty - Advertising
/ * %almia Institute of Management Studies and Resear"h
Mumbai
9820572046
E-mail : facultyshravan@yahoo.co.in

!he Ad+ertising Planning Cy"le
Devised by Stephen King, the London based Advertising professional, the planning cycle is one of the
most sound and simple ways to study how advertising campaigns are developed.
The Advertising planning cycle helps in isolating the roles of each department in an agency such as
Client Servicing, Creative, Media and Research. It guides the agency through various stages of
formulating, creating, releasing and evaluating an advertising campaign.

The first two questions are research based, the agency needs to find out how the brand is perceived, the
current profile of its consumers and what trends are influencing the segment and the category.
The third question is answered based on the clients' objective and here the advertising strategy comes
into the picture. Research is also carried out to generate and evaluate creative ideas.
The fourth question, is concerned mostly with the creative process of planning and generating themes
for the campaign. The media analysis and planning also plays a major role during this stage.
The final stage involves evaluating the effect of the campaign in the marketplace, in order to improve
upon it or provide guidance for new campaigns. And finally when this stage has been reached, its time
to start the process again.
Reference( ,Behind Po)erful Brands, 8 John Philip Jones 1Tata5"a.ra) ill3

Prof. Shra+an Rungta
B.Com, MMS, PGDEM, NET
Faculty - Advertising
/ * %almia Institute of Management Studies and Resear"h
Mumbai
9820572046
E-mail : facultyshravan@yahoo.co.in
P,RCHASI/G P$('R PARI!0- SIG/I8ICA/C' I/ 'C$/$M0
By
Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

P,RCHASI/G P$('R PARI!0- SIG/I8ICA/C' I/ 'C$/$M0
In economics, the theory of pur"hasing poCer parity (PPP) asserts that, in equilibrium, the exchange
rate that will prevail between two countries will be that which equalizes the prices of traded goods in
each country. Typically, the prices of many goods will be looked at, weighted according to their
importance in the economy.
PPP exchange rates are useful for comparing living standards between countries. Actual exchange rates
can give a very misleading picture of living standards. For example, if the value of the Mexican Peso falls
by half compared to the US dollar, the Gross Domestic Product measured in dollars will also halve.
However, this does not necessarily mean that Mexicans are any poorer - if incomes and prices
measured in Pesos stay the same, they will be no worse off assuming that imported goods are not
essential to the quality of life of individuals. Measuring income in different countries using PPP exchange
rates helps to avoid this problem.
A simple and humorous eFample of a measure of PPP is the &ig Ma" indeF populari9ed by !he
'"onomist# Chi"h loo5s at the pri"es of a &ig Ma" burger in M"%onaldMs restaurants in
different "ountries. If a &ig Ma" "osts W; in the ,S and X6 in &ritain# the PPP eF"hange rate
Could be X6 for W;. HoCe+er# if in the s"enario W1 "ould be traded for X1# the theory of PPP
suggests that o+er time the real eF"hange rate Cill "hange to mat"h the PPP eF"hange rate.
!he '"onomist- !he Hamburger Standard (based on Jan 15, 2003 data)

Country
&ig Ma" Pri"e
A"tual
'F"hange
Rate
1 ,S% L
$+er2V3 :
,nder2B3
7aluation
against the
dollar# Y
Pur"hasing
PoCer Pri"e
in *o"al
Curren"y
in ,S
dollars
United States $2.65 2.65 1.00 - -
Argentina Peso 3.85 1.2811 3.0053 -51.7519 1.45
Australia A$3.20 2.2867 1.3994 -18.5365 1.14
Brazil Real4.50 1.4563 3.09 -44.9838 1.70
Britain 1.99 3.6487 1.8335 37.5138 0.75
Canada C$3.20 2.349 1.3623 -11.1796 1.21
China Yuan9.95 1.2007 8.2869 -54.7479 3.75
Euro area C2.75 3.3582 0.8189 25.7785 1.03
Hong Kong HK$11.25 1.443 7.796 -45.6131 4.24
Hungary Forint 492 2.3873 206.09 -9.7482 186
Indonesia Rupiah16,155 1.74 9284.6 -34.3429 6,096
Japan 263 2.3844 110.3 -9.8821 99.40
Malaysia M$5.10 1.3419 3.8006 -49.4817 1.92
Mexico Peso22.0 1.9236 11.437 -27.4285 8.30
New Zealand NZ$3.95 2.4883 1.5874 -6.1358 1.49
Poland Zloty6.30 1.6607 3.7935 -37.2611 2.38
Russia Rouble40.00 1.3779 29.03 -48.0193 15.09
Singapore s$3.30 1.9417 1.6995 -27.0374 1.24
South Africa Rand14.05 2.1467 6.5448 -19.0197 5.3
South Korea Won3,211 2.7562 1165 3.9485 1,211
Sweden Skr30.0 4.0271 7.4495 51.9565 11.32
Switzerland SFr6.35 5.0674 1.2531 91.525 2.40
Taiwan NT$70.55 2.1049 33.517 -20.5776 26.62
Thailand Baht55.0 1.3548 40.596 -48.8866 20.75
Pur"hasing PoCer Parity 2PPP3: is a measure of the relative purchasing power of different
currencies. It is measured by the price of the same goods in different countries, translated by the FX
rate (or exchange rate) of that country's currency against a "base currency".
HoC to read this table:
In this case, the goods is the Big Mac. For example, if a BigMac costs C2.75 in the countries that use
Euro and costs $2.65 in US, then the PPP exchange rate would be 2.75/2.65 = 1.0377.
If the actual exchange rate is lower, then the BigMac theory says that you should expect the value of
the Euro to go up until it reaches the PPP exchange rate. If the actual exchange rate is higher, then the
BigMac theory says that you should expect the value of the Euro to go down until it reaches the PPP
exchange rate.
The Over/Under valuation against the dollar is calculated as:
(PPP - Exchange Rate)
---------------------------------- x 100
Exchange Rate
Criti"isms of PPP
Critics say it is wrong to assume that the prices of goods should be equal in all countries. People in
different countries usually put different values on the same goods. What is a luxury goods in one
country can be an ordinary daily goods in another country. PPP disregards this.
Take example of this:
In India a cup of coffee in Delhi costs say Rs 15 and same in NY in USA $1.5. The rupee exchange rate
should be 15/1.5 = 10. But it is not so. The exchange rate is 45.It is important which commodities or
services are compared. Luxury goods and value added services may give highly distorted picture.
The exchange rate says how much you can buy in another country with one unit of your own currency.
But the PPP exchange rate has nothing to do with how much you can buy.
Most sources do not state the goods used to measure the PPP, which can be statistically deceptive and
be used to weight the PPP for or against a given country by careful choice of goods.
Guality of *ife and PPP
Even if a correct PPP is used, GDP per capita is still a measure of the economic output of the whole
economy, not a direct measure of the mean or median person's quality of life. Other factors such as the
quality of homes and schools, access to public services, the extent of pollution, and strength of
consumer protection laws are hard to quantify and generally not fully reflected in the GDP. Thus, even a
PPP-adjusted measure of GDP per capita must be used with caution, as it is only one component of
quality of life.
For example, in 2002, the GDP per capita for Japan was about US$40,000 and the PPP was estimated as
$27,000, while in the US, GDP per capita was about $27,500 and the PPP was $36,000. The US has
higher crime rates and a greater extent of poverty and slums than Japan, while Japan has much less
physical space per person and arguably less individual freedom. Ultimately, the quality of life will depend
on subjective judgment and individual preferences.
Per capita income also does not take into account inequalities in wealth distribution.
Statisti"s of India-
G%P- Purchasing power parity - $2.66 trillion (2002.) G%P B real groCth rate- 6% (2003)
G%P B per "apita- Purchasing power parity (PPP) - $2,540 (2002) Actual: $450 {Per annum}
G%P B "omposition by se"tor-
agriculture( 25%
industry( 25%
ser%ices( 50% (2002)
Population beloC po+erty line- 25% (2002)
It has been estimated that if compared to New York and Delhi , a typical Indian family would be more or
less enjoying similar standard of living with monthly income of $ 5000 PM and INR 50000 ( $ 1110) PM ,
respectively. But this figure would sharply drop in a small North Indian town to INR 20,000 or $ 450 PM.

Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india
P,RCHASI/G P$('R PARI!0- SIG/I8ICA/C' I/ 'C$/$M0
By
Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

P,RCHASI/G P$('R PARI!0- SIG/I8ICA/C' I/ 'C$/$M0
In economics, the theory of pur"hasing poCer parity (PPP) asserts that, in equilibrium, the exchange
rate that will prevail between two countries will be that which equalizes the prices of traded goods in
each country. Typically, the prices of many goods will be looked at, weighted according to their
importance in the economy.
PPP exchange rates are useful for comparing living standards between countries. Actual exchange rates
can give a very misleading picture of living standards. For example, if the value of the Mexican Peso falls
by half compared to the US dollar, the Gross Domestic Product measured in dollars will also halve.
However, this does not necessarily mean that Mexicans are any poorer - if incomes and prices
measured in Pesos stay the same, they will be no worse off assuming that imported goods are not
essential to the quality of life of individuals. Measuring income in different countries using PPP exchange
rates helps to avoid this problem.
A simple and humorous eFample of a measure of PPP is the &ig Ma" indeF populari9ed by !he
'"onomist# Chi"h loo5s at the pri"es of a &ig Ma" burger in M"%onaldMs restaurants in
different "ountries. If a &ig Ma" "osts W; in the ,S and X6 in &ritain# the PPP eF"hange rate
Could be X6 for W;. HoCe+er# if in the s"enario W1 "ould be traded for X1# the theory of PPP
suggests that o+er time the real eF"hange rate Cill "hange to mat"h the PPP eF"hange rate.
!he '"onomist- !he Hamburger Standard (based on Jan 15, 2003 data)

Country
&ig Ma" Pri"e
A"tual
'F"hange
Rate
1 ,S% L
$+er2V3 :
,nder2B3
7aluation
against the
dollar# Y
Pur"hasing
PoCer Pri"e
in *o"al
Curren"y
in ,S
dollars
United States $2.65 2.65 1.00 - -
Argentina Peso 3.85 1.2811 3.0053 -51.7519 1.45
Australia A$3.20 2.2867 1.3994 -18.5365 1.14
Brazil Real4.50 1.4563 3.09 -44.9838 1.70
Britain 1.99 3.6487 1.8335 37.5138 0.75
Canada C$3.20 2.349 1.3623 -11.1796 1.21
China Yuan9.95 1.2007 8.2869 -54.7479 3.75
Euro area C2.75 3.3582 0.8189 25.7785 1.03
Hong Kong HK$11.25 1.443 7.796 -45.6131 4.24
Hungary Forint 492 2.3873 206.09 -9.7482 186
Indonesia Rupiah16,155 1.74 9284.6 -34.3429 6,096
Japan 263 2.3844 110.3 -9.8821 99.40
Malaysia M$5.10 1.3419 3.8006 -49.4817 1.92
Mexico Peso22.0 1.9236 11.437 -27.4285 8.30
New Zealand NZ$3.95 2.4883 1.5874 -6.1358 1.49
Poland Zloty6.30 1.6607 3.7935 -37.2611 2.38
Russia Rouble40.00 1.3779 29.03 -48.0193 15.09
Singapore s$3.30 1.9417 1.6995 -27.0374 1.24
South Africa Rand14.05 2.1467 6.5448 -19.0197 5.3
South Korea Won3,211 2.7562 1165 3.9485 1,211
Sweden Skr30.0 4.0271 7.4495 51.9565 11.32
Switzerland SFr6.35 5.0674 1.2531 91.525 2.40
Taiwan NT$70.55 2.1049 33.517 -20.5776 26.62
Thailand Baht55.0 1.3548 40.596 -48.8866 20.75
Pur"hasing PoCer Parity 2PPP3: is a measure of the relative purchasing power of different
currencies. It is measured by the price of the same goods in different countries, translated by the FX
rate (or exchange rate) of that country's currency against a "base currency".
HoC to read this table:
In this case, the goods is the Big Mac. For example, if a BigMac costs C2.75 in the countries that use
Euro and costs $2.65 in US, then the PPP exchange rate would be 2.75/2.65 = 1.0377.
If the actual exchange rate is lower, then the BigMac theory says that you should expect the value of
the Euro to go up until it reaches the PPP exchange rate. If the actual exchange rate is higher, then the
BigMac theory says that you should expect the value of the Euro to go down until it reaches the PPP
exchange rate.
The Over/Under valuation against the dollar is calculated as:
(PPP - Exchange Rate)
---------------------------------- x 100
Exchange Rate
Criti"isms of PPP
Critics say it is wrong to assume that the prices of goods should be equal in all countries. People in
different countries usually put different values on the same goods. What is a luxury goods in one
country can be an ordinary daily goods in another country. PPP disregards this.
Take example of this:
In India a cup of coffee in Delhi costs say Rs 15 and same in NY in USA $1.5. The rupee exchange rate
should be 15/1.5 = 10. But it is not so. The exchange rate is 45.It is important which commodities or
services are compared. Luxury goods and value added services may give highly distorted picture.
The exchange rate says how much you can buy in another country with one unit of your own currency.
But the PPP exchange rate has nothing to do with how much you can buy.
Most sources do not state the goods used to measure the PPP, which can be statistically deceptive and
be used to weight the PPP for or against a given country by careful choice of goods.
Guality of *ife and PPP
Even if a correct PPP is used, GDP per capita is still a measure of the economic output of the whole
economy, not a direct measure of the mean or median person's quality of life. Other factors such as the
quality of homes and schools, access to public services, the extent of pollution, and strength of
consumer protection laws are hard to quantify and generally not fully reflected in the GDP. Thus, even a
PPP-adjusted measure of GDP per capita must be used with caution, as it is only one component of
quality of life.
For example, in 2002, the GDP per capita for Japan was about US$40,000 and the PPP was estimated as
$27,000, while in the US, GDP per capita was about $27,500 and the PPP was $36,000. The US has
higher crime rates and a greater extent of poverty and slums than Japan, while Japan has much less
physical space per person and arguably less individual freedom. Ultimately, the quality of life will depend
on subjective judgment and individual preferences.
Per capita income also does not take into account inequalities in wealth distribution.
Statisti"s of India-
G%P- Purchasing power parity - $2.66 trillion (2002.) G%P B real groCth rate- 6% (2003)
G%P B per "apita- Purchasing power parity (PPP) - $2,540 (2002) Actual: $450 {Per annum}
G%P B "omposition by se"tor-
agriculture( 25%
industry( 25%
ser%ices( 50% (2002)
Population beloC po+erty line- 25% (2002)
It has been estimated that if compared to New York and Delhi , a typical Indian family would be more or
less enjoying similar standard of living with monthly income of $ 5000 PM and INR 50000 ( $ 1110) PM ,
respectively. But this figure would sharply drop in a small North Indian town to INR 20,000 or $ 450 PM.

Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india
Inno+ati+e Channel Strategies in Insuran"e Industry-
An 'Fploration
Authored by
K. Srini+asan
Faculty-Marketing
Jansons S"hool of &usiness
Karumathampatti, Coimbatore - 641659
E-mail : k.srinivasan@jsb.ac.in / scheenu2@yahoo.co.in

Introdu"tion
Suddenly Insurance has come to be a way of life. Even though many of the private Insurance
Companies came into the market during 2001, only now the market is highly dynamic. In India,
Insurance has been synonymous with LIC. Life Insurance Corporation (LIC) was created as an entity in
1956 through LIC Act. Since then, until recently (2000), the insurance sector, both life & non-life was
monopolised by public sector Insurance corporations.
Now, with the impact of LPG (Liberalisation, Privatisation and Globalisation), many private business
houses have come up as joint ventures, with partnerships from multinational insurance companies. The
Private players are introducing innovative insurance products, appointing qualified persons as agents
and advisors. They are aggressively promoting their products and are going for multi-channel
distribution.
Insurance, a service industry needs to address seven marketing mix elements, unlike the 4Ps in
manufacturing industry. The service marketing mix known as 7Ps consists of Product, Price, Promotion,
Place, People, Physical evidence and Process.
Though all mix elements are equally important, the more conspicuous and dynamic mix elements of
Insurance at present are product, promotion and place. A number of innovative products have come up
in the industry and to make the consumers aware, the promotion campaigns fill much of the Insurance
companies' budget. Though there are distinct strategies in product and promotion mixes, this paper
focuses on exploring the innovations in distribution mix.
R'ACH R R'ACH R R'ACH R !he mantraTin Insuran"e industry
Although distribution has its own mix, Insurance, being a service industry the prime distribution mix
element is channel mix. This paper concentrates on the innovative channels surfacing in Insurance
industry.
To deliver the services, players in Insurance take various routes to reach and service the customers.
With just 70 million insured out of 1000 million, there is enormous potential in the industry.
Traditionally, the Channel member has been the 'Insurance agent'. Some private insurance companies
now call them advisors. Never the less agents form the prime front line force with all insurance
companies and they remain to be the most basic and most important channel members to reach the
customers. Tata AIG is one of the major users of agents among the private players. Presently Tata-AIG
has 9000 agents and has already set a medium term target of having an agency force of five lakhs
agents in the next five years.
Apart from agents, the insurance companies take various innovative routes to spearhead their
marketing plans and to capture a larger pie of market share.
Inno+ati+e Channels
"Spreading the tentacles to the longest length and the remotest corner" is the mantra of Insurance
players. To reach this objective, their distribution channel strategies have taken different 'avatars' like
Corporate agents, Bancassurance and Retailassurance etc.
A peep into each of the above would help in understanding them better.
Corporate Agents
Corporate agency is a cross selling type of channel. Insurance companies tie-up with business houses in
other industries to sell insurance either to their employees or their customers.
Insurance industry, during the past 2 years has witnessed a number of such strategic tie-ups and
alliances. Corporate agents have become a major force to reckon with in distributing insurance products.
The following table throws light on the extent of utility of corporate agents.
!able.1. Corporate agen"ies 2*ife /on life3-

Insuran"e pro+ider Corporate agent !ype of Insuran"e
TATA AIG General
CEAT
Personal accident insurance cover
scheme on two wheeler tyres.
HPCL
Motor insurance at petrol fitting
statutory
Thomas Cook Travel Care - a travel insurance
Bajaj Allianz General Maruti Udyog, Hyundai & Ford Auto Insurance
HDFC Standard life JRG Financial Services
Marketing of life insurance & pension
products
AMP Sanmar
Trade wings (a travel agency),
Dhandapani Group
& Karvy Consultants.
Marketing of life insurance policies
TATA AIG Life
Tata Tea, Khaitan's Williamson
Major, Bridge foundation
Rural Policies
&an"assuran"e
Simply put, Bancassurance means distribution of insurance products through banks. This mode of
selling risk products through banks is fast gaining ground. Almost all insurance players have married to
one or more banks for wider reach and increased trust. Bancassurance may sell insurance as
customised solutions or in the form of bundled products along with bank products. Even though banks
are considered as one among the corporate agents, bancassurance has gained a great importance that
it needs to be discussed separately.
The importance can be understood from the fact that even SBI life is associating with public, private
sector and co-operative banks for providing life insurance to the account holders, in spite of being an
offshoot of Indian's largest bank.
Last year's amendment in the Insurance bill allowed bancassurance to piggy back on nearly 66,700
bank branches with over 18 crore accounts. Also, there are advantages of speedy reach to market and
lower infrastructure costs. Banks get 7-15% commission. While bancassurance's share in insurance is
50% in Europe, 20% in US; in India we are utilising <5% of the total number of bank branches. ICICI
prudential is the topper in bancassurance with 15% and with a contribution of Rs.470 crore.
Bancassurance is poised to become a key determinator / differentiating factor in the Insurance industry.
With banks are all set to encourage their staff to sell policies, with enough training, this will take of to
great heights.
Realising the importance of bancassurance, both life and non-life insurance companies have started
piggy backing on banks for pushing their policies.
The present status of bancassurance can be understood from the following display.
!able.4. &an"assuran"e- (inB(in Relationships

Insuran"e Company Partner &an5s 2!otal /o. of &ran"hes3
ICICI Prudential
ICICI Bank, Bank of India (2,524), Citibank (15), Allahabad
Bank, Federal Bank (120), South Indian Bank, Lord Krishna
Bank, Punjab and Maharashtra Co-Operative Bank.
SBI Life SBI (9,000), associate banks (4,000)
Birla Sunlife Insurance
Development Credit Bank (62), Deutsche Bank (3),
Citibank (15), Bank of Rajasthan (348), Andhra Bank,
Catholic Syrian Bank (329), Bank of Muscat (1)
ING Vysya Life Vysya Bank (450)
Aviva Life Insurance
ABN Amro (12), Lakshmi Vilas Bank (212),
American Express (6), Canara Bank (2,421)
Royal Sundaram Alliance
Standard Chartered (63), ABN Amro (12), American Express
(6), Citibank (15)
United India Assurance Indian Bank, South Indian Bank (372), Andhra Bank (1,018)
HDFC Standard Life Union Bank, Indian Bank
Life Insurance Corporation
Corporation Bank (800), Central Bank (3,115), Bank of
Punjab (20), Andhra Bank (1,018), Nedungadi Bank (150)
MetLife
Karnataka Bank (356), Dhanalaxmi Bank (153), J&K Bank
(150)
Retailassuran"e
'Insurance Products are being sold at retail outlets'. This news should convey the message that Indian
Insurance industry is really boiling. Not only the Insurance players but also their distribution partners
are very much interested in this kind of game plan. The office of the Chief Post-Master General,
Chennai has mooted the idea of selling some of the insurance products through Post Offices. With 1.53
lakh post offices in the Country, more than twice the number of bank branches, it can really be a
channel with very great potential. Medicine shoppe, a pharma chain store group and Bajaj Allianz have
tied up to provide free insurance cover of Rs.2/- on every purchase of pharma products worth Rs.1/-.
This scheme is open to 5-25 years age group, and distributed through its 40 outlets.
Also insurance selling has gone the 'corner shop' way, with TATA -AIG's plans to sell the policies at
petrol bunks.
Con"lusion-
It is certain that Indian Insurance players along with their foreign partners are trying to grab the under
explored Indian market. Though these are few innovations in the marketing Channels of Indian
Insurance Industry, it is expected that they will try more innovative Channels as the industry grows.
Innovatively, SBI life has offered group insurance to the employees of public sector companies,
including their spouses. Also similar covers were offered to even the state Governments for their
liabilities. Given the aggression with which they progress, surely these innovations are going to be a big
hit and a metamorphosis of Indian Insurance sector is very much on its course.
Referen"e
1. 'Ceat, Tata AIG Launch Insurance Scheme' Financial Express, April 17,2003.
2. 'Medicine Shoppe to offer free Insurance Cover - ties up with Bajaj Allianz', Hindu Business
Line Feb-22, 2003.
3. 'Non-life insurance Companies Woo banks for Customers', The Economic times, Oct.05' 2002.
4. 'You can buy insurance at petrol bunks too' Hindu Business Line, August 27, 2002.
5. 'Thomas Cook Launches Travel Insurance' Financial Express, May 16, 2002.
6. 'Bajaj Allianz rides piggyback on MUL', The Economic Times, March 07, 2002.
7. 'HDFC standard tapping corporate agency route', Hindu Business Line, January 08,2003.
8. 'ICICI Prudential, Birla Sun Life draw up new plans', Financial Express, December 19, 2002.
9. 'AMP Sanmar to tap small towns in TN', Hindu Business Line, December 5, 2002.
10. 'Insurers find banks very active agents', Business Standard, November 25, 2002.
11. 'SBI Life in Marketing talks with banks', Hindu Business Line, November 14, 2002.
12. 'Tata AIG plans to rope in Group Companies to sell rural policies', The Economic Times
November, 02, 2002.
K.Srini+asan
Faculty-Marketing
Jansons S"hool of &usiness
Karumathampatti, Coimbatore - 641659
'B &usiness Potential for SM's
Authored by
K. Srini+asan
Faculty-Marketing
Jansons S"hool of &usiness
Karumathampatti, Coimbatore - 641659
E-mail : k.srinivasan@jsb.ac.in / scheenu2@yahoo.co.in

Prelude
SME stands for small and medium enterprises. This has become a globally accepted acronym for
discussion on issues relating to this sector. Small and medium-scale enterprises (SMEs) have come to
play a predominant role in the domestic economies of most countries around the world. This is the case
in terms of their relative number in the total population of firms, their share in total employment, or
their contribution to value added and exports. Many economies with a high share of small-scale units
are among the most successful, for example Japan and the Republic of Korea. The SME share in total
exports is almost as much as that of large firms in absolute terms. Several developing countries have
also experienced spectacular growth in the export of manufactures, having captured ever-increasing
shares in both industrialised and developing country markets. This has further increased the significance
of SMEs and the need to keep them technologically competitive. In the emerging global information
economy, it is the smaller firms that could be the most significant winners. This, however, is to a great
extent dependent on the quality and competitiveness of their products in the international market. E-
business offers SMEs exceptional possibilities to compete on global markets and to weave strategic and
networking alliances with other players around the world. The "death of distance" provides enormous
potential for inter-industry trade, cross-border partnerships and strategic alliances. In addition,
Internet-based e-business offers SMEs cost-effective possibilities to advertise their products and to
contact buyers and suppliers on a global basis.
This article discusses the various issues concerning the e- business in SMEs like opportunities
experiences and challenges.
Small and Medium 'nterprises 2SM's3
E-business needs to provide an integrated package which allows them to manage employees, customers
and suppliers, along with setting up shop on the Web. It needs to give the SMEs the power of a larger
business in terms of technology capabilities. The Internet is not necessarily a friend of the smaller
companies - it offers rich rewards only for those who can make it a part of their business. So far, only
the larger companies have been able to afford to do this. This needs to change.
What are SMEs? Generally the definition of an industry as a small or medium depends upon the size of
investment in plant and machinery and fixed assets. Definitions vary, but a reasonable definition is the
following: small enterprises are those that employ 2-99 people; medium enterprises are those that
employ 100-1000 people. Going by the above, in the US, there are about 8 million SMEs. Extrapolating,
we can expect a global market of over 25 million SMEs. In India, we used to define small industries as
having capital investment of perhaps not more than Rs.3 crores in plant and machinery. A medium
industry is bigger than this but still smaller than what is considered as the large industry.
SMEs fall in the turnover range of Rs 0-100 Crore (According to Nasscom, upto Rs.50 Crores) .
First, let us understand some of the characteristics of SMEs. (These are generalizations, and not all may
hold true for every SME.)
SMEs are strongly owner-manager driven. Much of the time of the top person is spent on doing
routine tasks. This is where we need to be able to make a difference. We need to put in place
processes and automation for the basic tasks, so that can free the top person to look at growth
and management by "exception-handling".
SMEs do not have much of a process or structure. They are run by one individual or a small team
who make the decisions. In many cases, they are family/owner-driven. They will invest if they
see value in making investments in the "short-term". So, one has to work on providing
immediate and tangible benefits.
Since there is little process or structure in SMEs, this also provides a mechanism to put in place
"best practice business" processes. SMEs are generally more flexible, and can rejig the way they
do their work around a better solution. SMEs do not favour complex, formal methods of project
management, preferring simplicity and familiarity. ]
Entrepreneurs at SMEs are generally "all-rounders" with basic knowledge of many areas. They
are good at multi-tasking, and since there are many holes in the organization, end up doing
many tasks themselves, perhaps not in the most efficient manner. This is where systems can be
deployed and SMEs moulded.
SMEs are more people-dependent than process-dependent. There are specific people who do
certain tasks, with experience and knowledge driving them. This people-dependency needs to
change - the knowledge needs to be captured in business rules and processes built around these
rules.
SMEs are less sophisticated with their IT infrastructure, since it is much harder for them to
recruit and retain technology professionals. They lack the sophistication and capability to deploy
enterprise-scale systems. They also tend to be somewhat cynical on new technology adoption
unless the benefits are clearly visible, or a competitor adopts it, or they are pushed by one of
their bigger customers.
The focus of SMEs is more on medium-term survival than long-term profits.
Since SMEs don't have the efficiencies, they end up wasting a lot of time and money on SG&A
(selling, general and administrative expenses).
SMEs are so time-pressured that they want just one solid relationship they can count on for top-
quality service. They reward that with loyalty and repeat business.
'B&usiness
E- business basically involves an internet platform to link vendors, suppliers and distributors, banks and
customers wherein information exchange, price negotiation, order placement, delivery confirmation,
billing and payments take place online. It is essentially an evolving set of IT tools and implementation
techniques as well as the business strategies and practices necessary to do business electronically. The
concept that companies succeed by creating value is not new. As well as, e- commerce is not new as a
concept, it existed earlier too. But the way it was carried out was a little different. Hitherto, it was
conducted in a more traditional manner- by telephone, mail, facsimile, Electronic Data Interchange(EDI)
systems.
E-business uses technology and e-commerce processes to build better customer relationship and create
new value propositions. It encompasses the entire business processes and the strategies of the
corporate world. E- business strategies help organisations to distinguish themselves. It is changing not
only the shape of competition , the speed of action, the nature of leadership but also the style of
management and business models of such companies.
Large computer hardware corporations like Intel, IBM, CISCO, Nortel, Dell etc. are the pioneers as well
as leaders in E-business. Though e- business remains to be a strategic tool of corporate giants, it throws
many opportunities for small and medium enterprises also.
'B &usiness opportunities in SM's
As we examine the issue of e-business for the SMEs, the following points become obvious:
1. As India adopts liberal economic policies and becomes more closely linked with the global economy,
we should use the globally accepted definitions for small and medium enterprises for classifying this
sector and evolving appropriate strategies.
2. The electronics business particularly Internet based business, which can be further classified into B to
B, B to C, B to G mostly involves small and medium enterprises. The knowledge economy seems to be a
perfect match and fit for SMEs.
3. In this context the issue of e-business application support for small and medium enterprises becomes
an exercise in optimising the synergy between SMEs and e-business by using imagination and lateral
thinking to the maximum extent. We explore not only e-businesses based on internet which belong to
the new economy but how they can support and interface with what is called as the brick and mortar old
economy. One of the important facts we have to notice today in the area of e-business is that the new
business model for dotcom companies which focussed on venture capital funds and angel funds helping
anyone with the bright idea and then making millions of dollars through the IPO is no longer very
popular. There seems to be a massive correction process taking place in the new economy and many
dotcom companies have lost. Even the model for the companies on the Internet, which involved the
venture capital funds and the angel funds supporting anyone with the bright idea and then making their
profits through IPO, is under severe review. In short, the entire e-business seems to be under-growing a
market correction at this stage.
4. Now is therefore the right time to find out what is the real value addition which internet companies
can make in the B to B, B to C, B to G areas and help the small and medium enterprises. The first
useful role e-business can play is to provide an extended shop window and expand the market reach for
SMEs. The late Dewang Mehta used to highlight the remarkable story of a normal woman in Kutch
whose mirror work embroidery attracted the attention of the US company, Tierack thanks to the
Internet. As a result, the lady got massive orders running into lakhs of rupees for making ties based on
her embroidery work. She made profits, which would just have been impossible in the absence of the
Internet. Extension of the market reach and the networking appear to be one of the important
contributions which e-business companies can make to SME. The very fact that access also is cheaper
and physical presence which is a sin qua non in the brick and mortar world is not required is a great
attraction especially for SMEs which may be short of capital.
5. The next important aspect of e-business impact on SMEs is in-company application of IT, which make
operations more economical. This covers individual operations like the materials management or
personnel management or more importantly optimising productivity through enterprise resource
planning. Information technology can help in small and medium enterprises optimising their productivity
and profitability.
6. One of the attractions of e-business is the chance for changing the distribution channels or even
avoiding them and reaching the customers directly. In fact, one of the issues that is debated in the
context of e-business is the role of Internet in dis-intermediation. However, except DELL, the computer
company, others have not been able to use direct marketing model very effectively. The reason was
that the computer, the PC particularly, was ideally suited for the type of the DELL model because the
bulk of the components were common and customisation was possible within a small range. Perhaps
such a customisation may not be possible in the case of other industries. If the DELL model can be
studied and used as a means of optimising market access and success, perhaps this may help SMEs to
improve their competitiveness and profitability.
7. Perhaps the most important aspect of competition apart from imagination would be the time-based
competition. To what extent IT applications can help in saving time and also optimise the work that can
be out sourced? This will help to make the just in time operations become more profitable.
8. There have been many intiatives to help SMEs in this regard.
Computer associates and Satyam have formed an ASP joint venture to eEnable SMEs in India. The JV
offers cost-effective access to technology helping SMEs to harness the tremendous potential of
eBusiness In India.
The Joint Venture Company has plans to provide access to advanced eBusiness and back office
applications plus implementation expertise and support. The joint venture's initial offerings will include
CA's interBiz products, providing intelligent solutions for supply chain, financial and manufacturing
applications. It will also leverage the Internet to deliver selected applications and services tailored to the
requirements of SMEs.
Companies that are smaller and gearing to make their business grow faster are looking at ASPs as a
great opportunity. However the high potential SME market would make the presence of Application
Service Providers in India a necessity.
Thus, effective application of ICTs in the SME environment can help:
* lower the SME's costs;
* improve timeliness of SME product development and delivery to the market place;
* enhance SME product quality; and
* improve SME innovation of products and processes.
SoftCare for SM's
Larger companies have many options for software to manage and automate parts of their business.
Small and Medium enterprises (SMEs) have fewer options, since they are also harder to reach. Yet, their
need for such e-business software is no less - they too would like to be cost efficient and grow revenue.
This sub-G2K (sub-Global 2000 companies) market is therefore an interesting, diverse and possibly rich
target market.
In fact, one of predictions states that Small Business will emerge as a hot business segment.
One of the fundamental axioms of b-to-b is that the highest levels of value-added services come in
highly fragmented industries. If there were ever a sector that is highly fragmented, it's the small
business sector. Small business ranges from the mom-and-pop grocer to the local dentist, to the flower
shop, to construction companies and a whole host of services. Perhaps the most compelling reason for
all the interest in small business is that the small-business customer has always been difficult to identify
and reach. Because the market is so geographically and functionally diverse, the cost of customer
acquisition has been high. Small business owners seldom have either the resources or time to invest
heavily in building in-house capabilities.
Suddenly, the Internet provides a cost-effective channel for reaching small businesses. Tim Minahan,
analyst with Aberdeen Group, sums up the situation: "The SME (small/midsize enterprise) is definitely a
hot area. The initial thrust in e-commerce was focused on larger companies. The challenge now is how
to productize cost-justified solutions and deliver the benefits of enterprise productivity-type solutions to
small businesses."
But for all the interest in small business, one is well advised to keep in mind one important fact:
Although there are notable exceptions, small business owners tend to be risk-averse and wedded to old
ways of doing business.
The challenge therefore is to provide an SME with the building blocks which are needed to run the
business - the same blocks which a larger organization would have access to, but at a fraction of the
price. These building blocks comprise CRM, SCM, ERP and eCommerce. An SME cannot hire expensive
consultants to customize these building blocks. The challenge therefore is to create a solution which
addresses the need of this hard-to-reach market, and then actually sell it to this audience.
SM' eBbusiness solution
Let us consider the needs of an SME.
First, Communications. An SME needs connectivity to the Internet - reliable, cost-effective, and
reasonably high-speed. Most SMEs still use dial-up to connect to the Net. In addition, SMEs need email
at their own domain name. There are two options: there can be a locally installed mail server (which
would download the emails and make it available on the LAN) or POP/IMAP accounts on the Internet,
which make email accessible from anywhere but need appropriate bandwidth. In the future, it is also
possible that there will be IP phones plugging into the local Ethernet, perhaps a wireless LAN.
Second, Software. SMEs need software to handle internal functions (finance, taxation, HR, admin,
project management, timesheets), collaboration tools (calendar, instant messaging, shared telephone
directory, bulletin board), customer functions (database, relationship management, marketing, trouble
ticketing, one-click history of all interactions) and the website (with shopping cart, content management
and hosting). This needs to be made available to SMEs in "Lego-like" building block modules, and should
be customisable by the SME based on its processes.
Third, Services. SMEs need external assistance in various areas, starting with IT support. It is especially
hard for SMEs to attract and retain technical talent. Hence, the ability to simplify internal technology
needs and have outsourced its management becomes important. Then, there are back-office services
like accounting, taxation, escrow, legal and strategy. These are areas where India is well-positioned to
leverage - the area of IT-enabled services.
Fourth, Marketplace. SMEs need to buy and sell. A market place which can help them reach wider
markets can be very useful. SMEs also buy various non-core items like travel services, stationery, etc.
Being able to offer a portal which can combine offerings of various SMEs on the sell-side and offer an
aggregate of sellers to SMEs can help create a marketplace which can help SMEs some of the benefits
which bigger businesses have managed to get. What needs to be leveraged is the combined buyer
power of the SMEs.
What needs to be done is that all of the above services need to be aggregated and presented as a
solution to SMEs. E-Business is as much for the small businesses as it is for the large ones. Small does
not mean simple. If anything, the challenges for creating an SME e-Business solution are even greater.
Case studies-
Appli"ations of IC!s in Small 'nterprises B Su""essful 'Fperien"es
While the application of ICTs in large and medium enterprises is well documented, not much has been
publicised about ICT applications to enhance productivity and competitiveness in small enterprises. The
following examples from rural India throw light on a few success stories in this sector. One successful
application of ICT has been the use of a microprocessor-based Automatic Milk Collection System (AMCS)
to enhance milk collection in milk co-operatives in Gujarat, India. Electronic technology is used to
measure and transmit the quality and quantity of milk that farmers are delivering. This system makes
the collection and evaluation process faster and more efficient and reduces cheating of farmers by
intermediaries. The Baroda Dairy in Gujarat, India, has installed extensive IT infrastructure for the
computerisation of its function. This includes a Local Area Network with 4 servers and 65 client systems.
The servers are used for e-mail and applications/data services. The computerisation of most of the
functions at the Baroda Diary has not only improved the overall level of efficiency of the organisation
but also resulted in a much better utilisation of its manpower. Regular MIS reports have helped senior
management in the organisation to take informed decisions in time.
The Warana Co-operative Complex in India is one of the finest examples of successful integrated rural
development programmes in India resulting from a co-operative movement through people's
participation. It comprises 25 co-operative societies in the areas of sugar, milk, poultry and house
construction with an annual turnover of US$ 130 million. The Wired Village Project at Warana Nagar in
Maharashtra State in India has been set up to utilise IT to increase the efficiency/productivity of co-
operative societies in order to provide greater transparency in the working of co-operative societies;
provide agricultural, medical and educational information to villagers by establishing networked
facilitation booths in 70 villages, bring the world to Warana through the Internet; provide tele-education
at both primary and higher level educational institutions. It will also develop user-friendly map- based
information systems for better administration and governance.
The Gyandoot Project seeks to take the benefits of ICT directly to the people in rural areas, helping
them in their day-to-day economic and other activities. The project specifications were prepared based
on a detailed study of the needs of the people in villages of the Dhar district. The condition of telecom
facilities in the district was also checked so that village- level connectivity to the network could be
established under the project. Nineteen Gram Panchayats (village-level administrative units) were
identified as serving the needs of the people in the district. One local person in each of these nineteen
Panchayats was identified to act as a resource person, called a Suchak (information provider). These
people were given an adequate level of computer training to run computer booths called Suchanalkayas
(Information Kiosks). The range of services provided include commodity prices at agriculture produce
auction centres; rural e-mail facilities; village level auction sites; government sponsored loan project
preparation; on-line employment exchange; transparency in government working and 'ask the expert'.
KalaNation.com
KalaNation.com is an artist portal from India. Its goal is to train Indian artist of all kind by providing
with traditional know-how, which has formerly been passed down by oral tradition. An additional goal is
to market the artists' products (or services).
Kumbhan
Kumbhan is a project stemming from a village in India where traditional pottery used to be produced.
By influence of cheaper production at industrial sites, almost all craftsmen had lost their skills over time.
The Kumbhan project has been the first attempt to revive those abilities. Today, the potters are
manufacturing traditional-style as well as contemporary pottery for daily use, and are marketing their
products via their home-page. Here, one can find pictures of the products and addresses where to turn
to if one wants to buy them.
Agriwatch.com
Agriwatch.com is providing information and analyses on agricultural products, aiming to close the gap
that exists with regard to an adequate degree of information of the different parties participating in the
production of / trade with agricultural commodities in India. Moreover, it is offering the possibility of
online auctions and e-commerce for the suppliers and demanders of the agricultural sector. The
enterprise is being financed by membership fees and by selling space for advertisements.
DoctorAnywhere.com
DoctorAnywhere.com is a B2B-e-commerce model, providing countrywide access to medical experts to
Indian physicians. By paying a small fee, physicians and other people working in the field of medicine
become eligible to get expert advice on medical questions by request. Those seeking advice are able to
choose an expert from a pool of specialists. DoctorAnywhere.com is also supporting medical
institutions / health centres regarding the purchase and implementation of the hard- and software
necessary to use its service.
Tara Projects
Tara is a project that operates guided by the principles of fair trade. It aims to help artists and
craftsmen to receive a fair income on a regular basis. By posting their products on its web-site, it has
succeeded in increasing sales by 20% in the course of the past twelve months.
Con"lusion
To assist SMEs in developing countries and economies in transition with access to ICTs, it is imperative
that coherent measures and activities consistent with national development strategies are taken. At the
enterprise level, these measures and activities would include effective planning, organisational
capabilities and related managerial skills with regard to ICTs. The establishment of electronic networks,
common databases and various value-added services that speed up transactions is fundamental at the
industry level. Governments have substantial scope to influence the development of the ICT industry
and the promotion of ICT diffusion through actions such as standard setting, outsourcing and application
of competition policies. An enabling environment for introducing ICTs could be ensured also by the
provision of the legal protection for confidential information, security for electronic transactions and
standards.
Ministry of IT has planned and taken initiatives to Promote SMEs as E-Commerce Enterprises.
1. Promoting innovation, supporting entrepreneurs with brilliant & commerciable ideas, providing
business support, create incubation centres are some of the areas where government with the
participation of industry and other sectors have been playing a catalytic and facilitating role. This may
need to be further intensified. Some of the recent initiatives taken include:
2 MIT in association with SIDBI, IDBI and software industry has set up a corpus of Rs. 100 crores ,
named as National Venture Fund for Software and Information Technology Industry (NFSIT). NFSIT is
targeted to provide venture capital to start up software professional and IT units in small scale sector.
3. To provide help to small enterprises, STPI has recently set up business support centre at San Jose,
USA.
4. In various software technology parks as well as other parks promoted by State Government,
Incubation Centres/plug & play facilities are being set up.
5. To release the Indian venture creation and incubation engines, procedures & policies are being
simplified. We need to have many more initiatives.
SMEs can do copycatting or adopt the principle of follower-ship and try to emulate them. Japan became
a model of success through follower-ship in the seventies. While Americans used to focus on
breakthroughs and coming up of new products, the Japanese followed the strategy of copying and being
very effective followers. One need not be a pioneer but one can be a very imaginative and intelligent
follower and improve on the pioneer. This is one type of development that is possible by collection of
data regarding application of e-business models for success in SMEs.
SMEs can apply e-business models is by practising the principles of lateral thinking. To what extent can
cases of success in the application of e-business in SMEs be useful in creating similar success stories in
other sectors and industries? Perhaps there could be dedicated and conscious efforts made in this
direction.
Finally, this very issue of e-business application in small and medium enterprise is very timely in India
today. Firstly, from 1 st April 2001 the quantitative restrictions have been removed. The Indian small
and medium enterprises, which were brought up in a particular environment of protection and
reservation, are today facing greater competition.
Further, the huge imports from China and the competition even in products like fruits is a challenge. It
is here, I think, trying to use the e-business technologies, B to B, B to C or even B to G become
important because from a broad national point of view, one can even consider whether for the Indian
SMEs to survive, they should try to make optimum use of e-business models so that they can face the
immediate problem of intense competition from abroad. It all depends on commitment and imagination.

K. Srini+asan
Faculty-Marketing
Jansons S"hool of &usiness
Karumathampatti, Coimbatore - 641659
E-mail : k.srinivasan@jsb.ac.in / scheenu2@yahoo.co.in

S'!!I/G ,P 'BMARK'!I/G !HR$,GH %R$P SHIPPI/G M$%'*
By
Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

The future challenges in marketing are very clear. With increasing marketing cost, it is often infeasible
in competition for the firms to maintain huge physical marketing infrastructure. An element of
outsourcing concept is entering the marketing function too. Here the drivers are tele-marketing tools,
mainly website marketing. Although it has its own limitations , since, in many product/service categories
customer wants to have feel of goods and meet the salesman or expert to get services, for example a
doctor, an insurance policy or a fashion garment. The customer is also wary of disclosing credit card
details on internet connection due to security threats and lack of confidence in supplier. The delay in
supplies is also an important issue in internet based purchases. The third major issue is quality
guarantee and how it will be executed.
However, notwithstanding all the above mentioned issues/obstructions, there are large numbers of
product categories and services that can be successfully marketed through internet medium, provided
following issues are tackled:
1. delay in delivery of goods
2. Complete specifications available in electronic catalogue on the web
3. Highly standardized quality and product which the customer is already familiar with or can
easily understand
4. Sufficient incentive in terms of price and exclusivity provided by the marketer for online sales.
5. Replacement/quality guarantee and its execution.
It has a win-win situation for all the three players: The marketer (We treat it as contractor or external
salesman to the companies-A specialist virtual super store), The Manufacturers of goods/their
wholesalers or distributors and the end user.
While volumes of sales can be generated by these e sites for a margin, the manufacturer saves money
in reduced distribution chain, particularly smaller wholesalers/stockists and mainly the Retailer which
cuts into profit margins rather heavily.
Companies like &aa9i."om and rediff."om are already success stories. Both are web based marketing
firms. But a number of Tele-shopping firms through TV and radio media failed earlier, a case in point is
Nee !7 . One important aspect is logistics as said earlier including delivery time, and cost of delivery.
However, there is still a missing link in the supply chain management in this business model.
The shipper of goods ordered on the website and highly efficient low cost logistics services including
transport and delivery to customer's doors.
The latter part is being played by many courier services. For example GATI started by TCI was an
attempt for door to door high speed parcel delivery service. This has emerged to a large extent since
then into a well established service model.
Now if we combine this courier service system with strategically located manufactures/warehouses for
various traded products in target geographical markets for the web-marketer what we get is a fast
emerging concept of %rop Shippers.
(hat is %rop Shipping)
Drop shipping can be a very effective and simple way to get involved in e"ommer"e. Many established
online merchants are now turning to drop-shipping strategies as a means of minimizing stock on hand,
decreasing overall shipping costs and cutting down on delivery times to customers. Drop shipping allows
web site owners to send single/low quantity unit orders gathered on their web sites to manufacturers, or
major warehouses, who in turn "drop ship" the items directly to the customers of the web site owner i.e.
you do the promotion and collect the payment, and the supplier looks after order fulfillment. !he roles
are getting polari9ed +ery "learly. But keeping in mind the reach of website to almost all over the
country or globe for that matter, the issue of defining target market segments is very important for
success. You can't supply an individual customer's order sitting in a 100 kms remote village from Jaipur?
Can you. This issue is tackled by preloaded Location window in ordering form so that customers located
in service areas of drop shipper only can place order. If the high rate of daily hits both from existing
premium and regular customers and new visitors on the website can be strategically managed, web
marketing through drop shipping can be highly successful business model in coming times with
economic advantage to all stake holders. For this , several web marketing tools and techniques are now
available. These coupled with carefully planned advertising campaign can drastically reduce the
marketing costs of manufacturing /wholesaling firms in terms of advertising costs, sales promotion
costs and distribution channel costs. But quality of products and service, standardization and speed are
pre- requisites for success of this model. Another major obstruction is brand "onfli"t betCeen the
name of web marketing firm itself and the drop shipping constituents of its marketing setup who supply
goods in their own brand name.
$ne another problem area is to lo"ate and moti+ate the reputed "ompanies:Cholesalers for
+arious produ"ts offered by you to dropBship your "ustomersM orders.
Ad+antages-
Because a warehousing company can buy in huge volumes, they will also be able to offer you the
best prices on products and shipping, which will return a greater profit to you.
There's no capital investment and no danger of you suddenly having a pile of outdated items in
your inventory
Using drop shipping allows you great flexibility in terms of product range - promote a dozen
items or promote a thousand!
Instead of worrying about inventory and delivery, you get to focus on listening to the market and
discovering the products your visitors want - and then being able to rapidly add them to your
site.
Challenges and %angers)
Many companies will have an interest in teaming up with you in a drop shipping arrangement as it's an
easy way for them to generate extra revenue, but there are a number of points to consider and things
to look out for:
Pri"ing
The drop shipping firm may not offer the best deal to web marketer the fist time. One has to shop
around
8ees and "harges
Some companies will have a handling fee over and above freight costs - it's important to know all the
costs involved so you can calculate your profit margins accurately. Any company that wants to charge
you a regular "participation" fee should be avoided - the only time you should have to pay them
*anything* is in connection with a specific order.
Shipping
Are they using " A local sub standard courier or" or FedEx? Do you want and Will they ship international?
You'll want to ensure their shipping methods will see your clients get their products in one piece. {FedEx
and DHL are internationally capable but expensive}>it is prudent to start with domestic supplies and
that too in big potential geographical segments like metro cities.Also bear in mind that you may need a
specific type of shopping cart in order to handle drop shipping. Many shopping carts only allow for one
"ship from" zip code in the configuration for freight calculations. If you are dealing with a number of
drop-shippers you may have dozens of point-of-origin zip codes - and this can be a real headache if
freight is based on distance.
Payments
Will the company automatically debit your credit card on each order you submit, or can you get monthly
payment terms? When you are starting out with a company, they are unlikely to offer credit, but it's
good to check if this will be possible once you've established credibility.
Support# returns and refunds
The last thing you'll want is to be caught up in a nasty situation where you have a number of returns -
and have to foot the bill. Ask the company about their returns policy, what kind of support they'll offer
you for their products and about any guarantees associated with their products - and get it in writing.
Credibility
How long has the company been around for? Do they respond to your requests for information rapidly
and professionally? Young companies have the habit of going belly up quickly, or growing too rapidly
and as a consequence basic good customer service suffers.
Customer Information is 5ey su""ess fa"tor
The FAQs, the customer feedback, complaint replies and most importantly>> Order Tracking system- is
most important for customer satisfaction and repeat purchases. This is only possible through excellent
automated MIS system between Marketer and drop shippers.
HoC does $ne get into dropBshipping mar5eting business)
It's fairly simple:
Set up a web site that includes a shopping cart and credit card processing facilities (Through
secure server facility like 7eriSign ).
Find suppliers of products you wish to sell that incorporate drop shipping as a business method.
Open an account with them.
Gather content and images relating to the products you've chosen, incorporate them on your site
and shopping cart.
Collect the order and payment from your site.
Provide the supplier with the customer details.
The supplier then bills you at the special price you have agreed upon; fulfills the order and sends
it to your client - in most cases with labels referring to your business/web site instead of the
company.
Keep the website interactive and fully informative with Order Tracking Status.
Prof R K Gupta# BE (Hons), MBA, FIE, Ara+ali Institute of Management# Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com- URL : www.Geocities.com/rkgupta_india
Performan"e Challenges for 8amily &usinesses
By
Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india

Performan"e Challenges 8or family &usinesses
There are several issues related to management of modern large corporate bodies: Their shareholding
pattern, the value system and culture, the Mission and Vision plans (which hardly anyone understands
and reads inside or outside the organisation-being considered as vague and decorative show pieces) the
short term and long term objectives of the promoters (Owners) and effective management of these
organisations. There is clear shift in previous Lalaji (Indian nick name for main promoter or his heirs)
cum Manager of the firm model to separating the executive function from the ownership. There has
been an amendment in Indian Companies Act that now requires listed companies to have certain
percentage or number of full time Directors who are executives or professionals. But is separating the
two- the ownership and management strictly possible? There is then ESOP or profit sharing arrangement
in most of top corporate bodies. Can you then call an executive or professional director purely a
professional?
My personal experience in Indian Corporate sector over last 30 years shows that while top corporate
have been able to mange the issue satisfactorily, the smaller organisations do have undesirable
outcomes from Lala-cum-Manager arrangement. It has been seen that these guys are not able to
reconcile to a professional running the enterprise independently or taking decisions without consulting
them (It is difficult to delegate for most of them and let go of day to day controls).It is also difficult for
them to let go of their old bad habits and mindset in deciding on various issues. Even some go to the
extent to envy their own CEO who becomes popular and successful and feel insecure.
However, both the professionals and academicians agree on need to separate executive functions from
Overall Policy making regarding: New Investments, finance, growth and HRM. What one may call
Strategic Decisions vis--vis environmental challenges; and to promote or alter value system in the
organisation. There is thin line between the two. As both tasks depend on each other and overlap.
However, it is clearly seen that the two types of commercial organisations have different problems:
Publicly or Privately held large organisations (Say above Rs 500 crores/$100 Mil. annual Turnover) and
SMEs that may have turnovers from Rs 50 crores to 500 crores/$10 to 100 Mil.
It is also seen that a large number of prominent organisations are family controlled as well as owned
with significant contribution to Top 100 lists and share in GDP of countries like USA and Europe and
even in India. Many are routinely managed by heirs of the original promoters.
It is very difficult therefore to clearly define, as to what is a family Business?
It is difficult to define family business .But all share a few common characteristics:
* A single family controls the company's ownership.
* The controlling family's members are currently active in top management.
* The family has been involved in the company for at least two generations-or seems likely to be.
Probably the best yardstick could be the degree and nature of control and direct involvement of
owners/families on Board room decision making processes, whatever these may be. Even this
definition defies clarity. But we shall accept this for sake of analysis.
Sur+ey of 8amily &usinesses-
According to Rottenberg, 80 percent to 90 percent of all U.S. companies are "family businesses," defined
by his magazine as those in which several generations of a single family have been and remain actively
involved.
Such companies, he noted, account for an estimated 49 percent of the U.S. gross domestic product, 59
percent of the work force and 78 percent of new jobs.
"Family companies tend to be intuitive and instinctive," Rottenberg said. "The business and the culture
is in their blood, which means they don't have to spend a lot of time with analysis, poring through
reports or making decisions."
Some of the top US based family owned businesses are shown in the adjoining table.
As far Indian scenario is concerned, since 1947 several changes have taken places in Economy. First
business Maharajas grew under protective economy of Government and now several new have come up.
A few are first generation entrepreneurs like Narayan Murthy and team of Infosys.
Names like Tata, Birla, and Bajaj became household words. Such companies grew to account for 15% of
the Indian economy, and their products penetrated the lives of consumers in everything from cars to
clothing. When the grand patriarchs died, they handed down their empires to their sons. And when the
sons died, they handed down their empires to their sons. Yet now, with the second and third
generations at the helm, it's a whole new India and a whole new ball game.

1A &IGG'S! ,.S. 8AMI*0BR,/
C$MPA/I'S
1. Wal-Mart ($217.8 billion)
2. Ford Motor Company ($162.4 billion)
3. Cargill ($49.4 billion)
4. Koch Industries ($40 billion)
5. Motorola ($24.2 billion)
6. Viacom ($23.2 billion)
7. Loew's ($19.4 billion)
8. Mars ($16.5 billion)
9. Publix Super Markets ($15.4 billion)
10. Weyerhauser ($14.5 billion)
Source: Family Business magazine.
Companies are ranked by their reported 2001
revenues.
!he !op !en and '"onomi" Profit in India

/an8 <roup <roup Sales !lagships Sales EP MD"
1 Tata 32,615.20 Telco 9,897.59 108.73 6,388.67
Indian Hotels 576.82 69.12 2,453.94
Rallis India 1,162.59 22.03 173.70
Tata Tea 6,89.44 3.39 953.90
Tata Chemicals 1,598.52 (14.32) 1,697.98
Tata Power 1,174.39 (40.90) 995.24
ACC 2,469.22 (126.64) 112.45
Tisco 6,351.46 (478.39) 2,631.88
2 BK-KM Birla 12,452.40 Hindalco 1,308.27 25.51 5,027.32
Indian Rayon 1,641.14 24.00 106.86
Grasim 3,599.77 (65.33) 1,079.14
3 Ambani 9,066.30 Reliance Industries 8,730.33 98.83 12,024.88
4 RP Goenka 4,366.20 Kec International 662.14 7.39 95.41
CESC 1,328.58 (123.70) 556.10
5 LM Thapar 4,304.80 Greaves 800.99 15.77 88.13
Crompton Greaves 1,508.81 (18.97) 30.76
6 Mahindra 4.149.20 M&M 3,458.86 90.94 3,141.64
7 Bajaj 4.011.90 Bajaj Auto 3157.21 184.10 3453.12
8 Chidambaram 3,475.00 Spic 1,810.66 (79.81) (283.55)
9 Hinduja 3,310.10 Ashok Leyland 2,482.45 (79.69) (71.26)
10 Ruia (Essar) 3,242.60 Essar Steel 1,802.80 (250.88) (25.56)
/ource: Compiled from Business Today<s ranking of top 50 business houses, special issue 1998;
and the KPMG-BS study published in The /trategist 6uarterly+ January 1998.
EP stands for economic profit and MVA is market value added
With India increasingly deregulating, the descendants of the founders of its blue-chip dynasties are
faced with a huge challenge: transforming their companies into competitive dynamos that will prosper in
the new global economy. The Indian government is moving toward eliminating tariffs that protect family
monopolies. Competition from multinationals and Indian upstarts alike is coming on strong. ''The burden
on this generation is unlike any other,'' says Gurcharan Das, a former CEO of Procter & Gamble India
and now a consultant. ''They have to become competitive in their own right. This is reckoning time.''
There is no disputing the crisis in business leadership today. It is acute and will probably become worse
before taking a turn for the better. Competition and change are battening down family businesses,
chipping away at profits and market shares. Competitive shock has badly shaken the confidence of
'wise' patriarchs.
Given the importance of family-run businesses in the Indian economy, such news is, to say the least,
worrying. Sixty-six of Business India<s Super 100 companies are family-run. According to Business
Today, family-run businesses account for 25% of India Ink's sales, 32% of profits after tax (pat), almost
18% of assets and over 37% of reserves.
For large corporations the challenge is to develop competent leadership that can take over the reigns
from the outgoing leadership. Another big challenge is to extend operations to global and world class
levels, perhaps including overseas facilities. Third challenge is to cope with fast changing technological
environment throwing new products, processes and ideas every day. The fourth challenge is to create a
trained, competent and committed team of employees. This last one has always been weak point of
emerging Indian corporate sector, because of the work style and inherent mindset as explained earlier.
In fact India has one of the highest rates of Brain drain in the world. The debate on this issue whether
India benefits or not is not scope of this analysis.
8amily &usiness "hara"teristi"s
Various studies have revealed at different points of time that Family businesses typically have lesser
emphasis on Strategic decision making aspects. However there is no such conclusive proof. Many family
businesses have been showing high degree of strategic management capability too. Some of the typical
characteristics that influence Strategy of family businesses can be listed as (Harris, Martinez and Ward:
1994):
- Inward orientation
- Slower growth and less participation in Global markets
- Long term commitment
- Less capital intensive
- Importance of family Harmony
- Employee care and loyalty
- Lower costs
- Generations of leadership
- The Board's influence on implementation
However, the conclusion of authors was that "the assessment of these Family business characteristics
and their influence on strategy leaves more questions than the answers".
Others (Pascarella & Frohnan, 1990) have suggested that stages of the family life cycle may
significantly affect the survival and success of the family firm. This leads to the question of differences
between generational ownership of family businesses. In other words, do family businesses in their
first generation of family ownership have the same dynamics and, therefore, follow similar strategies as
family firms in their third generation of ownership? Anecdotal evidence seems to suggest that this is
not the case. Lansberg (1983) discusses some of the challenges that family firms face as they move
through various stages of their existence. To deal with the human resource issues, the author
recommended that ownership and management should be separated when making these decisions; the
firm is to act more like a nonBfamily than a family business when making business decisions.
Notably, our results indicate that family firms are less innovative, emphasize industry leadership less,
but have a greater prospecting orientation than non family firms. Gudmundsen et.al (1999) similarly
found that family businesses emphasise a higher prospecting orientation, though they also found that
family firm owners emphasize higher industry leadership when selling to consumer markets.
(' "an thus summari9e that-
Family business firms are predominant in any economy over the globe.
Their contribution to capital markets and GDP of country they belong to is significant
Overall the performance of family owned family managed businesses have been at par with non family
corporations.
The fast changing global environment has put lot of stress in evolution of family run businesses in terms
of changing leadership needs, strategic decision making, requirements for globally competitive
operations, development of strategic human resource base, involvement of employees in business
success, induction of professionals at decision making levels, raising financial resources to meet global
competition and absorption of technology which is fast changing.
Some of The US and Indian family owned businesses have shown remarkable elasticity in reorienting
themselves to new environmental realities and the third generations have taken over leadership role
rather quite impressively and smoothly including women heirs( Hindustan times, Thermax, Alfa Laval
and so on).

Prof R K Gupta
BE (Hons), MBA, FIE
Ara+ali Institute of Management
Jodhpur (Rajasthan)
E-mail : cityju@rediffmail.com / rkgupta_India@hotmail.com
URL : www.Geocities.com/rkgupta_india
I. & its i'pact on issues relating to consu'er beha)ior
with reference to healthcare
By
Dr. Vi6ay Pithadia
9 P S .ech- M 9o''- Ph.D.
?ID&VI9&S 9hair-
Depart'ent of Manage'ent Studies
?arpaga' Arts & Science 9ollege
9oi'batore .>
&'ail ( )i6aypithadia+lycos.co' P )i6aypithadia+'ailcity.co'
&
Dr. . A Ven0atachala'
M .ech- MBA- Ph.D.
Professor and Director
Depart'ent of Manage'ent Studies
?arpaga' &ngineering 9ollege
9oi'batore .>

Abstract(
In the paper we are tried to focus on digital technology and its i'pact towards consu'er beha)ior of health
care sector. Kight now in India such Hospital 5rgani/ation are doing good efforts in sa'e areas i.e. Apollo
Hospitals- &scorts Heart Kesearch 9enter- All India Institute of Medical Sciences- San6i) Gandhi PG Medical
Kesearch 9enter etc. Ce anticipate fro' I. and its good i'pact on hu'an beings with reference to health
care.
?ey Cords(
Digital re)olution- Integrating hospital infor'ation syste'- upgrading the 9oding Syste'- Verify patient
infor'ation- Patient ID Syste'- In)entory of Healthcare .echnology
A)ailability of data(
Data are a)ailable fro' public sources identified in the study.
Ac0nowledge'ent
Ce reconcer ;an A Pusy/ns0i QSouth Da0ota School of Mines & .echnologyR- M Gangadhara Kao QGandhi
Institute of .echnology & Manage'entR- Bob G ?ilpatric0 Q>orthern Ari/ona 2ni)ersityR- G 9 Maheshwari
QM S 2ni)ersity of BarodaR- 9harles & Ba'ford Q.e1as 9hristian 2ni)ersityR- Shan'ugasundara' QPeriyar
2ni)ersityR- Kichard ; Ii00a Q2ni)ersity of Cisconsin Ste)ens PointR- 2'a ;ain QAcade'y of HKDR-
9harles & Da)is QBaylor 2ni)ersityR- Pratapsinh 9hauhan QSaurashtra 2ni)ersityR- J)o'e Henderson-
Q9olorado Mountain 9ollegeR- Pari'al Vyas QS P 2ni)ersityR- ?eith G Stanga Q.he 2ni)ersity of .ennesseeR-
Anoop Singh Q>ir'a 2ni)ersityR- A K 9haudhury Q?ent State 2ni)erstiyR- >ageshwara Kao QVi0ra'
2ni)ersityR- A S ?antawala QM S 2ni)ersity of BarodaR- V 9 Ven0atash Q.echnology 2ni)ersityR- Afsad
Irani Q2ni)ersity of >ew Ha'pshireR- De)endra ?u'ar Pant Q>ational 9ouncil of Applied &cono'ic
KesearchR- Sudarsanan Pillai- 9ochin 2ni)ersity of Science & .echnology- ? M Bhuptani QV V P &ngin
eering 9ollegeR & 9arrol Haggard Q=ort Hays State 2ni)ersityR for conception & re'ar0s. Ce appreciate the
efforts of our MBA Students Mani0uttan- Vi'al Bhasi & Ke6i ? M for research 9oad ;u)ancy.
Introduction(
Chile the digital re)olution has been felt in e)ery industry- nowhere has it been 'ore )isible than in health
care. .he introduction of wireless and other ad)anced technologies as critical business tools has i'pacted
e)ery aspect of 'edicinefro' research to diagnostics- and surgery to record 0eeping. And- itIs constantly
e)ol)ing than0s to the ad)ent of new technologies. Chile this isnIt big news- what is news is how hospital
design is changing because of it.
As the first paperless hospitals co'e online- the industry is 'o)ing away fro' traditional nursing stations and
standard patient roo's. In their place are facilities that respond e1tre'ely well to the actual progress of
'o)ing patients through the'not to 'ention the reality of reduced clinical staffthan0s to a co'bination of
design and technology.
=or e1a'ple- in todayIs newer hospital a patient ad'itted fro' the &'ergency Depart'ent would be whis0ed
to an inpatient roo' thatIs slightly larger than the old standard 3itIs bigger to acco''odate diagnostic
'achines at the bedside4. .his would all ta0e place in an uncon)entionally shaped patient floor that enables
busy caregi)ers to 'onitor 'any patients at once.
In addition to 'obile diagnostic de)ices- hospitals are increasingly using handheld wireless units that go
beyond the first generation of co'puteri/ed pro)ider order entry syste's. .hese can do e)erything( trac0 lab
speci'ens- pro)ide uptodate infor'ation on patient tests- co''unicate with the hospitalIs phar'acy-
coordinate prescriptions and pre)ent negati)e drug interactions.
.hese units rely on either wireless radio or thirdgeneration cellular technology- which is capable of such
wi/ardry as )oice co''and co''unication. .his allows caregi)ers to call for specific assistance without
lea)ing the patient roo'. A nurse can identify the roo'- the patient and the 0ind of help she needs 6ust by
tal0ing. Sophisticated co''unications syste's ta0e it fro' there and notify the proper staff. .hese auto'ated
alert notifications would pro'pt staff that e'ergent care is re,uired- pro)ide re'inders for therapy progress
and notify the proper staff- who can then download infor'ation about the patient onto their wireless de)ice as
theyIre speeding to the roo'.
.his onthefly infor'ation download is 'ade possible by electronic 'edical records 3&MK4 that use bar
coded- 'anually entered or )oicedictated data to trac0 patients- caregi)ers and test results. >ew LhurricaneL
or Lclo)erleafL patient floor layouts- which arrange patient roo's on short arras e1tending fro' an
abbre)iated nursing station- e1pedite the physical process. .his layout shortens the distance between patient
roo's- and fro' patient roo's to supply roo's.
.he role of the nursing station is di'inished too- now that paper charts ha)e been replaced with s'all
handheld de)ices and clinical staff is aided in care gi)ing by patientsI fa'ilies. Meanwhile- radiologists can
co''unicate test results 'ore ,uic0ly with both patients and their fa'ilies 3in a day instead of a wee0- for
instance4- than0s to digital i'age sharing.
Integrating hospital infor'ation syste'
Pre)iously- the hospital needed <#$ days after a typical outpatient )isit to process the paperwor0 and
generate the bill. >ow patient data is transferred electronically between the hospital infor'ation syste' and
the coding syste'- eli'inating data reentry and the need to hand carry docu'ents between depart'ents.
DKG codes assigned by the coding software are electronically uploaded to the hospital infor'ation syste'
and i''ediately a)ailable for billing. 5utpatient charges 'ay be billed within 7D hours of the )isit. Chile
this integration is helping i'pro)e the hospitalIs financial perfor'ance- the coding software alone is boosting
producti)ity by speeding a for'erly 'anual chore.
By integrating its hospital infor'ation syste' with diagnosisrelated group clinical coding software- Harper
9ounty Hospital in Harper- ?S- was able to send bills out sooner- resulting in a lower accounts recei)able and
i'pro)ed cash flow. .he hospital includes %" beds for acute care- #" beds for longter' care- and a swing bed
s0illed care unit.
2pgrading the 9oding Syste'
In the past- the hospital used a 'anual process to assign DKG codes to procedures. 9oding was done by one
person who spent D$ hours per wee0 going through patientsI charts- loo0ing up their diagnoses and the
ser)ices they recei)ed in the I9D: and 9P.D 'anuals- and used a tree to get to the appropriate DKG.
.hese proble's- co'bined with a growing )olu'e of coding- led Harper to consider auto'ating the process
by installing software that auto'atically assigns DKG codes. .he hospital chose 9linical 9oding &1pert fro'
IKP Syste's Inc.- Billerica- MA- because in addition to appearing easy to use- its price per 'onth was 'uch
less than other syste's Harper e)aluated.
.he software also handles the co'ple1 AP9 coding for a'bulatory )isits. 9linical 9oding &1pertIs AP9
Processing feature accurately assigns AP9 by e)aluating the diagnoses and procedure codes and groupings in
accordance with 5PPS regulations. Hospital 'anage'ent decided to replace the 'ainfra'e syste' with
networ0ed P9s- needed new business software to replace the 'ainfra'e progra's- and needed the new
syste' to be integrated with the coding syste'.
.he e)aluation process turned up a hospital infor'ation syste' called 9ardinal 7$$$ fro' Ke'ote Support
Ser)ices 3KSS4 that 'et Harper 9ountyIs re,uire'ents. .he )endor is a Springfield- M5based software
De)elop'ent 9o'pany that pro)ides health infor'ation syste's for s'all to 'ediu' si/e hospitals. 9ardinal
7$$$- which fit HarperIs budget- includes 'odules for accounts recei)able- accounts payable- general ledger-
payroll- collections- asset 'anage'ent- clinic and physician billing- 'edical records- electronic KMA-
insurance logs- state agency Syste's pro)ided an interface lin0ing 9ardinal 7$$$ with 9linical 9oding
&1pert. .he use of paper for's to trans'it infor'ation between depart'ents had been eli'inated.
Verify patient infor'ation
5ne serious ail'ent affecting the healthcare industry is unco'pensated care. But- than0s to so'e recent
technological ad)ance'ent- pro)iders ha)e a nu'ber of accurate and reliable 'ethods a)ailable to the' for
reducing unco'pensated care. By harnessing the power of a patient ID )erification syste'- hospital facilities
can now )erify de'ographics- reduce fraud- increase producti)ity- 'anage costs- and 'ore easily co'ply
with paperwor0 reduction re,uire'ents.
Defining the Syste'
A patient ID )erification syste' deli)ers accurate patient infor'ation- such as de'ographics and financial
infor'ation- directly to a facilityIs registration syste'- eli'inating duplicate data entry and i'pro)ing the
registration process flow. Syste's of this type can help pre)ent erroneous infor'ation fro' entering into the
billing process during patient registration.
.he )alidated patient infor'ation is obtained fro' one of the three 'a6or consu'er credit reporting agencies
.rans 2nion- &,uifa1- and &1perian .hat infor'ation is updated on a daily basis and relied upon for
'illions of secure financial transactions.
Ma0ing the Patient ID Syste'
&ach ti'e there is patient contactB the potential e1ists for 'ista0en identity. Chen registration processes rely
on selfreported and sub6ecti)e patient infor'ation- healthcare facilities are 'ore )ulnerable to errors-
outdated or 'ista0en infor'ation- and e)en outright fraud.
An e1a'ple is an in6ured- but conscious- patient entering the e'ergency roo' without identification or an
insurance card. Cith a patient ID )erification syste'- the facility could confir' his na'e- address- and other
pertinent infor'ation prior to discharge- enabling the facility to process and sub'it the bill in a sea'less
process.
Properly designing and using a patient ID )erification solution in clinical applications can strea'line 'any
hospital processes. .he healthcarerelated areas that can be positi)ely affected by patient ID )erification
include ad'issions- business office- financial counseling- 'edical records- collections- discharge- donor
progra's- and clinical researchPfollowup.
Many healthcare institutions are concerned if patient ID )erification could affect co'pliance with the
regulations outlined in HIPAA and &M.A@A. In fact- patient ID )erification can help a healthcare
organi/ation in following the guidelines by bringing electronic identification solutions to what were pri'arily
'anual processes.
In)entory 5f Healthcare .echnology
In order to conduct a ris0 assess'ent of sensiti)e healthcare technology- healthcare organi/ations will need to
identify all of their sensiti)e healthcare technology. .his would include any healthcare technology that is used
to 'onitor- diagnose and analy/e the health of the patient.
In addition- health infor'ation that is generated- stored andPor trans'itted by the healthcare technology 'ay
re,uire co'pliance with pri)acy and security regulations. Healthcare technologies that are connected to
networ0s 3i.e. @A>- CA>- Interact- intranet- &1tranet- Partner networ0s or 'ode's4 are at higher ris0 and
should be noted in the in)entory.
In)entory 5f &lectronic Protected Health Infor'ation
.o conduct a ris0 assess'ent of electronic protected health infor'ation for regulatory co'pliance- an
organi/ation 'ust identify all of the business processes and syste' applications- co'puters- databases- and
networ0s that store and trans'it PHI- as well as the healthcare technology- which in turn is 'onitoring-
aggregating- storing 3logging4- analy/ing 3diagnosing4- trans'itting- andPor utili/ing electronic protected
health infor'ation. .he application 3i.e. Ceb ser)ers- databases- etc.4- co'puter and networ0 infrastructure
should also be docu'ented.
9onclusion(
&ach year- healthcare organi/ations and their professionals beco'e 'ore dependent on technology. Cith
de)ices such as tablet P9s- PDA and wireless networ0s connecting the' to electronic patient health
infor'ation 3PHI4- the need to secure the technology fro' pri)acy breeches has beco'e a )eritable priority
for health infor'ation e1ecuti)es.
Assessing the threats- )ulnerabilities and e1posure in an organi/ationIs I. infrastructure is the first step to
'itigating ris0. Se)eral procedures can be used to identify the ris0s to sensiti)e health infor'ation and
healthcare technology.
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Dr. Vi6ay Pithadia
9 P S .ech- M 9o''- Ph.D.
?ID&VI9&S 9hair-
Depart'ent of Manage'ent Studies
?arpaga' Arts & Science 9ollege
9oi'batore .>
&'ail ( )i6aypithadia+lycos.co' P )i6aypithadia+'ailcity.co'
&
Dr. . A Ven0atachala'
M .ech- MBA- Ph.D.
Professor and Director
Depart'ent of Manage'ent Studies
?arpaga' &ngineering 9ollege
9oi'batore .>
%'!'RMI/A/!S $8 I/%I7I%,A*SMS M$!I7A!I$/ !$ ($RK
By
Mrs. R. /irmala
Research Associate
Goa Institute of Management
Ribandar, Goa
E-mail : nirmala@gim.ac.in / nirmalagopal97@yahoo.co.in

About the Author- R Nirmala is currently working as a research associate with Goa Institute of
Management, Ribandar, Goa, one of the top ranked management institutes in India. Prior to that, she
had put up four years of teaching and four years of experience in the corporate world. She has recently
submitted her Ph.D. thesis to Andhra University, Visakhapatnam, Andhra Pradesh. The author can be
reached at nirmala@gim.ac.in.
Key (ords: Work Motivation, Organisational leadership, Social culture, Work Factors.
Purpose of the study: The study is a resear"h paper that aims to understand the interrelationship
between social factors, work factors and leadership factors on individual work motivation.
Resear"h limitations : impli"ations: The study has been conducted across ten organisations in Goa,
a small multicultural state in India. The study is first of the kind and has much scope for further
research, to quantify the relationships between the different dimensions of study. A similar study can be
conducted in other multicultural areas or across different subcultures in India and elsewhere to
understand if this relationship is valid. An in depth study could be designed to analyse specific impact of
individual variables used in the study.
Pra"ti"al Impli"ations- Managers working in organisations, where people from different cultures work,
should learn of the basic differences in working patterns and take care to motivate different groups of
people differently, to maximise utilisation of human potential. Individual differences can be understood
from their social backgrounds and work behaviour can be analysed accordingly. The strong association
between the different variables leaves a lot of scope for further research in related areas.
$riginality- The whole research work is based on the sole efforts of author and any errors /
miscalculations should have crept in, are her personal responsibility.

%eterminants of Indi+idualMs Moti+ation to (or5
What determines an individual's motivation to work? This is an eternal question in the minds of
managers and a lot of research has been done in the past and this topic still holds interest to the
researchers. Money was considered to be the ultimate motivator during F.W.Tylor's time and mayo
talked of the importance of the other things, recognising the human element for the first time that are
equally important. 'n' number of researchers followed their lead and worked in different circumstances
trying to identify job aspects that motivate employees. Maslow has proved that human need has a very
significant role to play and Herzberg added the concept of "satisfiers and Dissatisfers" to literature. More
sophisticated models had later developed to incorporate larger number of variables, with the essential
objective of identifying 'what makes employees put in that extra effort' that could make a tangible
difference in their output.
It is now accepted that each organisation has a distinct way of functioning that is termed
"Organisational Culture" that affects performance of its employees. Certain organisational factors have
a significant role to play in determining individual motivation - viz., remuneration including pay and
perks, work conditions including the interpersonal relations and physical work atmosphere, support
received from the top management and so on.
Presuming that prejudice and biases do not exist in organisations and that all employees perceive that
they are treated equally (in tune with Adam's theory of Equity), all employees should feel equally
motivated and perform equally well. But it is common knowledge in every organisation that there are
significant differences between individual performances even if same facilities are provided to all. This
paper attempts to identify these factors and to understand the interrelationship.
A study has been conducted on 329 employees in 10 organisations from three industrial sectors based in
Goa, to ascertain this relationship and to understand how they influence the work attitudes of
employees. A survey was conducted using a questionnaire that is based on
1. World Values Survey (2000-2001)
2. GLOBE study on Leadership (2001)
3. Mr. JBP Sinha's study (2002) on Societal Beliefs, Managerial practices and Organisational
factors.
4. Herzberg's two-factor theory as base for developing job context and job content factors, for
individual work motivation.
The three industrial sectors chosen for study include Tourism, Mining and Manufacturing, the three core
industries that contribute maximum to Goan economy. Within these industries, organisations managed
by multinational organisations, those owned by the state government and those owned by the Goan
families are included, to negate the effects of organisational factor influence.
Goa is known for its multiculturalism - with almost 50% of the working population across all sectors
being migrants from other parts of the country. In the present study,
1. A total sample of 187 managers and 142 subordinates are interviewed and responses to the
questionnaire recorded. The sample is selected to ensure equitable distribution among different
managerial levels. Specific respondents with in the managerial levels are chosen at random,
based on their availability and work schedules.
2. Mother tongue of the person is considered as the one important attribute reflecting their
subculture (Goan or a neighbour from Maharashtra and Karnataka who tends to think and
behave more like a Goan and others who had come in from a far off place, essentially in search
of a job). The number of years working in Goa is considered very important to differentiate
respondents as it reflects the extent of internalisation of local values and traditions. Also some
other demographics including age, management level, education level, are collected to facilitate
analysis.
(hat are the interrelationships betCeen these