Professional Documents
Culture Documents
MANAGEMENT TRENDS
TRENDS
An International Bi-Annual Referred Journal of Department of
Business Management
Vol. 10, No. 1-2
June-December - 2013
CONTENTS
19
27
Exploring the Role of Lean Accounting : A Step Ahead from Traditional Costing
Vineeta Arora & G. Soral
34
44
56
69
79
88
96
104
111
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Nageshwar Rao*
Ram Pravesh Rai* *
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This paper aims to analyse Bhagwat Gita in context of various facets of management
dynamics. More specifically, the paper analyses the issues relating to visionary
approach, innovation, mind power, self-management, value oriented work culture,
motivation, leadership etc.
Visionary Approach
Vision is a tremendously powerful force in any walk of life, but in business it is
essential. A vision is a target towards which leaders aim their energy and resources. The
constant presence of the vision keeps a leader moving despite various forces of
resistance: fear of failure; emotional hardships, such as negative responses from
superiors, peers, or employees; or 'real' hardships, such as practical difficulties or
problems in the industry. Equally important, a vision, when shared by employees, can
keep an entire company moving forward in the face of difficulties, enabling and inspiring
leaders and employees alike. Moving toward the same goal, individuals work together rather
than as disconnected people brought together because of having been hired coincidentally
by the same organization. The Gita gives a 'vision of total life' which is deeper and broader
than the western concept of vision. Here, Lord Krishna counsels Arjuna on developing a
broader 'vision of life' for attaining success and happiness. "The quality of our actions and
reactions depend upon our 'vision of life' as envisaged in the Gita. A narrow vision is divisive,
a broad vision is expansive, and the supreme vision is all inclusive.
'The Vision of Life' is extensively explained by Lord in Gita. As explained in
chapter 18th, the three temperaments (gunas)- Satva, Rajas and Tamas fluctuate and mix
in different proportions in our bosom to create differences among individuals in term of
knowledge, karma or works, buddhi or understanding, dhriti or fortitude, and happiness.
Now a days ,the vision about Happiness is gaining vital role both for employees and
management. Lord enlightens Arjuna with the three types of happiness (good, passionate
and dull i.e. sattvic, rajasic and tamasic) in verses. The 'sattvic happiness' is arising
out of the inner self- control and consequent self- perfections which, though painful and
arduous in the beginning, is enduring in the long run, in contrast with the fleeting joys
provided by sense tickling. To discuss the different job perspective for the same job and
how the perspective affects the assignment, we may look at a small story. Three stonecutters were engaged in erecting a temple. The contractor asked them what they were
doing. The response of the three workers to this innocent-looking question is illuminating:
'I am a poor man. I have to maintain my family. I am making a living here,' said the
first stone-cutter with a dejected face.
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'Well, I work because I want to show that I am the best stone-cutter in the country,'
said the second one with a sense of pride.
'Oh, I want to build the most beautiful temple in the country,' said the third one
with a visionary gleam.
Their jobs were identical but their perspectives were different. What Gita tells us
is to develop the visionary perspective in the work we do.
The innovation
Today, organizations are witnessing an unsurpassed change in an increasingly
global, dynamic and competitive marketplace. Their aim is similar to one another that are
achieving sustainable competitive advantage and long-term success over competitors.
But the road to reach out there is severe and more than easy to say. In order to be competitive
in this dynamic business environment, organizations have to be agile, embrace creativity
and innovative. These latter two, creativity and innovation, are the "motto" for every
business enterprise today. These are the new management mantras that, as Peter Drucker
indicated are critical to growth in a competitive environment without which companies
stall and die. This is the reality of today's relentless business environment. And this reality
leads us to most elusive asset of any company, namely the Human Capital.
It is just simply because an organization's creativity and innovation level totally
depend on the potential of their people. This brings an implication for HR professionals
to set their agenda and to design systems for attracting, developing, retaining talent
and engaging them towards getting the most of their human capital potential. It
seems that the only way is to nurture organizational learning, teamwork and collective
intelligence by stimulating free-flow of ideas along with a disciplined and methodical
approach to continuous improvement. Knowledge and experience are tacit when they are
housed in the minds of the employees. Once the knowledge is written down in some form
it is explicit. Structural capital is the ability to convert tacit knowledge into explicit
knowledge so that the organization is able to retain knowledge.
Managing the knowledge and talent of human resource in favour of organisation is
a great path towards innovation. This concept deals with maximizing the available collective
knowledge and relevant level of talents in an organization. Thus the emphasis should be on
acquiring talents by means of attracting and selecting candidates wisely and retaining them
too. Managing the talents towards innovation followings may be the common steps:
Planning of talent needs
Selecting the best talents
Boosting up productivity
Motivating them
Training for updating skills and knowledge
Measures to retain them
Developing culture to enjoy talent mobility across the organization etc
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Now it is very clear that this the game of mind power therefore first of all it becomes
important to understand that the human brain and the mind are not the same things. Both
the mind and mind power are purely a non-physical consciousness (spiritual) that is only
capable of thought, while the brain is the physical tool that the mind uses to carry out a
portion of its intended purpose. The studies have shown that the average person utilizes
only about 10% of their brains capability so, what about the other 90%? The spiritual
principles say that this 90% can be tamed by Dhyan Yoga and Ananda that is widely
discussed in Gita. Thus the power of the human mind is unlimited in its potential for any
kind of innovation.
It is difficult to derive such kind of formula that defines how innovation takes
place. But on the basis of critical observation the innovation process can be derived as:
EXHIBIT: 1 STEPS IN INNOVATION PROCESS
According to Gita, happiness or enjoying the job is the key factor to create ground
for innovation. By this way it is possible to achieve a life of purpose without much struggle
and stress if the perceptions of joy can be developed. By implementing some simple
principles, and following proven, time tested strategies to enhance mind function and
development, one finds that one can literally "attract" and "allow" success to flow in.
Many scientific studies and experiments have been done on the subject of human mind
power and proved that the ability of mind power to reverse and heal illness and disease
that the medical community had previously labelled as irreversible has been developed
by Spiritual faith and Dhyan Yoga. Would our Creator have provided us with mind power
that he had no intention for us to use? That is a valid question. It is a simple formula like
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any other extremely simple things that our Creator has provided us with. Man has converted
this extremely simple concept into extremely complex because their believes are covered
with Maya, and so these simple things have become out of reach of the average person,
there are proven and simple means of developing the human mind to consciously and
consistently achieve by following the simple rules that our creator has told us to do. The
lessons given by Lord Krishna in the Bhagavad-Gita are the way to achieve self-realization
and to realize the ultimate truth. These are very basic Universal principles (Spiritual
Laws) that support and have proven that the average human does have the ability to
create unlimited mind power. Becoming aware of, and developing the understanding of,
exactly how these basic principles operate, are the first steps toward realizing our own
true potential to do so. Thus, on the basis of principles propounded in Gita the following
formula can be illustrated to develop one's innovative capability:
Knowledge+ Thought+ Vision +Will power+ Happiness + Action = Innovative
Capability
The Mind Power
Wise selection and optimal utilization of resources is the important lesson of
management science. An instance to justify this statement may be seen when just before
the Mahabharata War, Duryodhana chosen Sri Krishna's large army for his help while
Arjuna selected Sri Krishna's wisdom for his support. This episode gives us a clue for
being an effective manager ? the former chose numbers, the latter, wisdom or mind
power. In the contemporary management scenario, mind power is strategic to managers.
It assumed that managers should be strong and mentally fearless, hence, many of the
management training programme focuses on this. An untrained mind is very weak and
unstable, as a result even a small obstacle coming in its way may make it lose initiative.
Sri Krishna also mentioned that for one who has conquered the mind, the mind is the
best of friends, but for one who has failed to control their mind, the mind will be the
greatest enemy. In the chariot of the body, the five horses represent the five senses
(tongue, eyes, ears, nose and skin). The reins, the driving instrument, symbolize the
mind, the driver is the intelligence, and the passenger is the self. Managers should use
their will power and Dhyan to control the mind (the driving instrument), they should
not let the mind to be controlled by the senses. Sri Krishna described that from anger,
complete delusion arises, and from delusion bewilderment of memory. When memory
is bewildered, intelligence will be lost and when intelligence is lost one falls down
(B.G. 2.63).The psychology or sound mental health of human resource is a peculiar
factor of any organisation as well as any human activity. An expert describes sound
mental health as that state of mind which can maintain a calm, positive poise or regain
it when unsettled in the midst of all the external vagaries of work life and social existence.
Now it becomes very important not only for managers but for all of us to develop our
mind power and tackle its impediments to sustain it. The Gita tells us that how the
impediments can be tackled, which can be illustrated as follows:
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Impediments to
mind power
Frustration
and anger
Envy
Anguishness
Satisfaction
Greed
Detachment
Egotism
Karma Yoga
Bhakti Yoga
Peace
The speed, greed, ambition and competition are the driving forces of today's ratrace environment. This lead to the erosion of one's ethico-moral fibre which supersedes
the value system as a means in the entrepreneurial path like tax evasion, undercutting,
spreading canards against the competitors, entrepreneurial spying, instigating industrial
strife in the business rivals' establishments etc. Although these practices are taken as
normal business hazards for achieving progress, they always end up as a pursuit of mirage
- the more the needs the more the disappointments.
Gita tells us how to get rid of this universal phenomenon by prescribing the
following mantras:
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Build up an internal integrated reference point to face contrary impulses and emotions
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The Gita elaborated two types of Work Ethic viz. divine work culture and demonic work
culture. Daivi work culture - means fearlessness, purity, self-control, sacrifice,
straightforwardness, self-denial, calmness, absence of fault-finding, absence of greed,
gentleness, modesty, absence of envy and pride. Asuri work culture - means egoism, delusion,
desire-centric, improper performance, work which is not oriented towards service. It is to
be noted that mere work ethic is not enough in as much as a hardened criminal has also a
very good work culture. What is needed is a work ethic conditioned by ethics in work.
Often people comment that the central message in Bhagwat Gita is about the notion
of karma yoga. It will be very useful to understand how this issue is laid out in the Gita.
First of all Lord Krishna establishes a paradigm that there is nothing called "the state of
inaction". He clearly says in chapter 3 that there is nothing likes akarma (no action or
inaction). Why did he say that? Because only then we will focus on the issue of how to do
work correctly. It is natural then for us to ask how to do work. He says enjoy complete
degree of freedom and total joy while engaging in work. That is the idea. While we are in
the thick of work can we enjoy? Gita emphatically replies in the affirmative. Krishna goes
to the extent of saying that with such a perspective to work, we may realize that even
when we do a lot of work, we do not feel like indeed engaging in any.
Management is all about doing work, doing it efficiently and ensuring that results
follow. Viewed from this perspective, Gita offers counter-intuitive ideas on these issues.
The axioms of work have been proposed in Gita is also relevant in modern management
style. There are four aspects to this, which is brought out in this famous shloka in Gita:
Result orientation can make one wary of failures, we may refuse to undertake great
activities. It is much in news that student ended his life because he did not clear the
exam.
We have a tendency to excessively focus on ends instead of means. This is what most
working in Multi-National Companies are busy doing. Modern day managers spend
significant time to manager "performance reports" rather than "performance" itself.
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What are results at the end of the day? They are issues of the future about which we
spend our time in the present. Therefore, we may tend to escape the dynamics of
"present" and go after "future"
The apparent confusion that we have in understanding this shloka is that when we
say you have no right to the results, it merely suggests that take off your pre-occupation
with results and have a process orientation. We have the right to work only but never to its
fruits. Let not the fruits of action are your motive. Nor let our attachment be to inaction.
The first half of this verse is a simple factual statement, which each one of us experiences
in the day to day life. One cannot have an absolute authority over the final outcome of any
action. There is always a possibility of discrepancy between expected result and actual
result. Thus 'Karmanyevadhikaraste' becomes a scientific statement. There is no wonder
that strategic planning methods like 'SWOT Analysis' acknowledge the same scientific
fact. SWOT analysis is a strategicplanning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business venture.
Strengths/ Weaknesses are intrinsic characteristics of the business. Opportunities/ Threats
are impacts of external elements.) Lord Krishna propels Arjuna to perform his duties,
while staying selflessness to success or failure; not thinking of the fruit of action - once in
the field of activity and relinquishing attachment. He who gives up all desires and moves
free from attachment, egoism and thirst for enjoyment, attains peace which is the most
essential thing in life. When the work perspective developed in our thought with antecedent
mind set passes through the pipe line of the karma principle the consequences would be
different, this can be illustrated as:
EXHIBIT: 3 Value Oriented Work Culture
Ethical values
Ethical behaviour
Inculcation of
Karma
Cultural Values
o
Organisational
values
o
o
No Expectation of
results
Emphasis on
working
Moral duty
Selfless action
Institutional
commitments
Job satisfaction
Human values
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ethical process no mind can attain equipoise. The principle of reducing our attachment to
personal gains from the work done or controlling the aversion to personal losses enunciated
in Ch.2 Verse 47 of the Gita is the foolproof prescription for attaining equanimity. The
common apprehension about this principle that it will lead to lack of incentive for effort
and work, striking at the very root of work ethic, is not valid because the advice is to be
judged as relevant to man's overriding quest for true mental happiness. Thus while the
common place theories on motivation lead us to bondage, the Gita theory takes us to
freedom and real happiness. Is it not what the total quality management (TQM) philosophy
is also arguing about? Further, it may be asked, why do we want to take the fixation from
results and instead concentrate on the work itself? The simple answer to it is that by doing
do it lets you literally "get lost in work". When one gets lost into work, the traditional
barriers of efficiency and motivation are broken and the individual treads into extraordinary
performance born out of inspiration. Perhaps, that is how a Nobel Laureate or a great
scientist or a visionary leader would have spent several years of his/her time.
We often say when we do very interesting things in life, "I never knew how time
passed" That is a good indication of our ability to practice Karma Yoga. This is neither an
unknown or impossible idea to mankind. Every day we all practice this when we have
deep sleep. We rise from the deep sleep and remark that we had a sound sleep. By that
what it means is no matter what sound others made in the vicinity I continued to sleep.
Therefore it is hardly surprising that we can draw such alternative ideas and thoughts
from Gita. However, in order to benefit from this immensely, in the domain of management,
we need to step out of the world of rationality and tread into unknown areas. Perhaps a
nearest reference to this idea in modern day is "out of the box" thinking or thinking
"without" the box. This in itself is a paradigm shift in perception that we need to make in
our own mind.
One of the biggest problems that we are facing in our daily life, professional work
and personal life is that we don't seem to enjoy what we are doing. There was no word
like boredom in the dictionary about 400 years - 600 years ago. Today the children say "I
am bored". Young professionals want to adopt the western model of "weekend getaway".
We need weekend getaways if work is perceived as drudgery and an avoidable aspect of
our life. Such a perspective can never get the best from work place that modern business
management is worried about. What is this boredom? Why does it happen? Because we
don't enjoy what we are doing, we get bored. The basic tenet of Gita is antithesis to this
idea that work could be drudgery. First understand there is nothing like state of no work.
We cannot run away from work as there is nothing called "no work".
Further, if we always calculate the date of promotion or the rate of commission
before putting in our efforts, then such work is not detached. It is not "generating excellence
for its own sake" but working only for the extrinsic reward that may (or may not) result.
Working only with an eye to the anticipated benefits, means that the quality of performance
of the current job or duty suffers - through mental agitation of anxiety for the future. In
fact, the way the world works means that events do not always respond positively to our
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calculations and hence expected fruits may not always be forthcoming. It is also criticised
that not seeking the business result of work and actions makes one unaccountable. In fact,
the Bhagavad-Gita is full of advice on the theory of cause and effect, making the doer
responsible for the consequences of his deeds. While advising detachment from the avarice
of selfish gains in discharging one's accepted duty, the Gita does not absolve anybody of
the consequences arising from discharge of his or her responsibilities. Attachment to
perishable gives birth to fear, anger, greed, desire, feeling of "mine" and many other
negative qualities. Renounce attachment by regarding objects for others and for serving
others. Depend only on wisdom (not body, nor intellect), and the dependency on the
world will end. Renouncing attachment is the penance of knowledge, which leads to His
Being - Truth, Consciousness and Bliss. (B.G.4.10) Thus the best means of effective
performance management is the work itself. Attaining this state of mind (called "nishkama
karma ") is the right attitude to work because it prevents the ego, the mind, from dissipation
of attention through speculation on future gains or losses.
There have been many studies examining staff motivation and here are few examples
of what commonly employees feel about their motivational needs or factors:
"
"
Working Conditions - too hot, too cold, no breaks, long hours ,rest etc.
Promotional prospects and job title - lack of promotion, others promoted but not
them
A sense of belonging - Salary - pays poor for job they are doing
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The great teachings of "Gita" come into play, these philosophies teach you all about, how
you should do your duty, how you should lead your life etc. These "Gita" teachings were
given by "Lord Sri Krishna" to his disciple "Arjuna" on the battle field of Kurukshetra in
Haryana state of India in ancient times. "Arjuna" was involved in a war against his enemies
(some of them his own relatives too) but he refused to do his duty of fighting a righteous
battle as he got infatuated & started thinking of his enemies as his own near & dear ones.
He told his master "Lord Sri Krishna" that he is going away from the war & do not want
to fight on the battle field. Arjuna's mentalhealth became weak & he got deeply depressed.
To overcome his disciple Arjuna's depression & to motivate him to fight a righteous war,
"Lord Sri Krishna" gave the great teachings of "Gita" to his disciple "Arjuna". After
listening to all these great teachings, Arjuna's mental health became well & he became
motivated & energetic to fight the war.
The Bhagavad-Gita was delivered by Sri Krishna to boost Arjuna's declining morale,
motivation, confidence to his (Arjuna) intra-personal conflict, which was to fight or not
to fight the war at Kurukshestra. Thus the transformation of Arjuna from a self-centred,
restless person to a conscious, peaceful person is a case of effective motivation. As shown
in the table, the condition of Arjuna before Krishna's voice was
Exhibit: 4 Motivation Process in Gita
Arjuna before Gita's Voice
Gita Professes
Disappointed
Bhakti yoga
Enthusiastic
Fear of sin
Karma yoga
No fear
In dilemma
Jnana yoga
Static mind
Raj yoga
Unable to think
Wisdom
Increase in Thinking
Capability
Family attachment
Duty Consciousness
Disturbed Peace
Immortality of soul
Peaceful brain
very critical but the analysis of the individual character of Arjuna reveals that
Arjuna was the great warrior and able to face toughest circumstances. But the real time
situation at the battle field made his condition critical and after the Gita process he again
becomes well motivated towards his goal. This instance shows the key role of motivational
factor. Hence, the Gita is all about motivation process. And the modern management
principles also support the importance of motivation as key factor. Now it becomes clear
that whether we acquire power, position, money, good mental and physical health etc, but
motivation is badly required to unite all our inner power and transform our self to
enthusiastically face the challenges before us.
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Leadership
The wisdom of the Bhagavad Gita contains many leadership lessons that are similar
to contemporary leadership theories and practices. Many contemporary leadership topics
such as emotional intelligence, situational leadership, character and integrity were already
discussed in the Bhagavad Gita thousands of years ago. These topics were discussed in a
philosophical context, as management science as we know today did not exist then. It is
also intriguing to find other management concepts embedded in the Gita. Thousands of
years before Frederick W. Taylor defined work and worker, and Peter F. Drucker defined
knowledge and knowledge worker, the topics of work and knowledge were already in the
Bhagavad Gita.. He suggests that the Gita provides advice on mission and core values,
the development of new capabilities, the importance of developing business connections
and communication, and the duty of managers to maintain a purpose-centric perspective.
"Whatever the excellent and best ones do, the commoners follow," says Sri Krishna in the
Gita. The visionary leader must be a missionary, extremely practical, intensively dynamic
and capable of translating dreams into reality. This dynamism and strength of a true leader
flows from an inspired andspontaneous motivation to help others. "I am the strength of
those who are devoid of personal desire and attachment. O Arjuna, I am the legitimate
desire in those, who are not opposed to righteousness," says Sri Krishna in the 10th
Chapter of the Gita.
After hearing 575 verses from Sri Krishna in the Bhagavad-Gita, Arjuna was
motivated, energized and acted according to Sri Krishna's instruction. This is transformation
leadership.It explained - "He (Arjuna) stood steady on the ground with bow and arrow in
hand. He lifted his arms ready to fight the war". Sri Krishna demonstrated transformational
leadership qualities in developing and guiding Arjuna to victory in the war. The Gita
represents the struggles encountered by all humans in everyday activities, including the
struggles of leadership. The Bhagavad Gita provides guidance to modern day leaders
regarding important leadership qualities and vision of life which facilitates healthy
organizational behaviour and success.
Management needs those who practise what they preach. This is the leadership
quality prescribed in the Gita. The visionary leader must also be a missionary, extremely
practical, intensively dynamic and capable of translating dreams into reality. This dynamism
and strength of a true leader flows from an inspired and spontaneous motivation to help
others. "I am the strength of those who are devoid of personal desire and attachment. O
Arjuna, I am the legitimate desire in those, who are not opposed to righteousness" says
Sri Krishna . Organizations whose leaders lack vision are doomed to work under the
burden of mere tradition. They cannot prosper and grow as they are reduced to keeping
things the way they have always been. For leaders, a vision is not just a dream; it is a
reality that has yet to come into existence. Vision is palpable to leaders; their confidence
in and dedication to vision are so strong they can devote long hours over many years to
bring it into being. In this way, a vision acts as a force within, compelling a leader to
action. It gives purpose to a leader. Sensing purpose and commitment creates the power
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of vision and inspire the leaders to respond and work. Warren Bennis, having spent many
years working with leaders, concluded "while leaders come in every size, shape, and
disposition--short, tall, neat, sloppy, young, old, male, and female---every leader I talked
with shared at least one characteristic: a concern with a guiding purpose, an overarching
vision. They were more than goal-directed" (Bennis, 1990). Peter Kreeft says that "to be
a leader you have to lead people to a goal worth having-something that's really good and
really there" (Stewart, 1991). That essential "something" is the vision.
The relationship between leadership and the concept of yoga as propounded in
Gita is established below:
EXHIBIT: 5 LEADERSHIP AND GITA
L
E
A
D
E
R
S
H
I
P
Values
ETHICS
(Bhakti yoga)
Skills
ACTION
(Karma
Knowledge
WISDOM
(Jnana yoga)
An effective leader is one who judiciously blends knowledge, skills and values.
The three types of yoga as propounded by Gita confers the same.This gives the leader not
only the mind power,right attitudeand innovative vision but also it promotes and strengthens
his ability to blend task orientation and people orientation(Managerial Grid)
The results of inner discipline and contemplation bring about tranquillity (prasad)
in intellect, and from this tranquillity of the intellect gurgles out the 'happiness', which is
called 'sattvic happiness'. The 'rajasic happiness' arises only when the sense organs are
directly in contact with the sense- objects. In the beginning it is quite nectarine and alluring,
but it creates in the enjoyer a sense of exhaustion and dissipation in the long run. This
temporary happiness provided by the sense- objects is termed as the 'rajasic happiness'.
In 'tamasic happiness', the permanent ever existing goal of life recedes to the background
on account of the non- apprehension of reality (nidra) and this results in simple
sensegratifications at the flesh level. These kinds of pursuits incapacitate the intellect to
think out correctly the problems (alasya) that face it and to arrive at a right judgement.
When theof the higher in us (pramada). Such a 'happiness', which deludes the soul, both
at the beginning and the end is termed as 'tamasic happiness'.
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Conclusion:
The Bhagavad-Gita was delivered by Sri Krishna to boost Arjuna's declining morale,
motivation, confidence to his (Arjuna) intra-personal conflict, which was to fight or not to
fight the war at Kurukshestra Sri Krishna gave not only spiritual enlightenment to Arjuna (
and to all of us) but also the art of self management, conflict management, stress &, anger
management, transformational leadership, motivation, goal setting and many others aspects
of management which can be used as a guide to increase our managerial effectiveness.
Unlike the western approach to managerial effectiveness, which focuses in exploring the
external world of matter and energy, the Bhagavad-Gita recommends a managerial
effectiveness approach, which focuses on exploring the inner world of the self.
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Websites:
o
www.sathyasai.org,
www.en.wikipedia.org
www.gitapress.org,
www.vedanta.og,
www.guruvayur.com
www.bbt.org
www.freeworldacademy.com
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www.bhagavad-gita.us.
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A Study of Impact of Strategic CSR as an Integral Tool For Expanding Rural Markets Through
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(I) Introduction
India's historic freedom struggle was characterized to a great extent by concern
for the problems like mass poverty, protection for farmers, artisans, inflation, the need for
industrialization and reconstruction of entire socio-economic life. During the period of
post independence the image of Indian business leaders was under the criticism for not
being sensitive towards the society. The perception of the society for them was of being
capitalist and adopter of the many unfair practices for increasing profits. On one hand
the business was and have been resting on the hoarding black marketing, adulteration,
profiteering, unethical practices etc, on the other hand social responsibility concept was
also emerging during that phase out of all the darkness. Business leaders like Shri. Arvind
Mafatlal had remarked that "Businessmen and industrialist should discharge their social
responsibilities on a scale and on such diverse lines that they would go beyond the
requirements of various law of the country, it is indeed important that the business grows
the majority of the human being settled at the villages of India, and benefits of the business
must reach to them."
A group of the business leaders started believing that "The tarnished image of the
private business can be improved and brightened only if it discharges social responsibilities
honestly and as a matter of fact a moral duties."
Mid-seventy onwards Social responsibility of business has remained central
business concept among the businessmen, researchers and academicians. With evolution
of business in India, India has turned to one of the fastest growing economy and so as, the
role of CSR has also evolved and now it has not remained just a charitable activity of the
business but it has turned to the one of the most discussed and debated strategic business
management concept."
In the present research paper , we have tried to understand the impact of strategic
CSR on the business organizations' performance , which we have studied through the
case studies of the companies Proctor and Gamble and Hindustan Unilever Ltd.
(II) Research Methodology
For the study of Strategic CSR and it's impact secondary data analysis methodology
has been used with the descriptive research analysis, Secondary data related to study has
been obtained from Hindustan Uniliver Ltd. and the same has been reproduced as a case
study. It has been attempted to study the scope of strategic CSR and impact measurement
through the secondary data analysis and descriptive research. Since the same has been
presented as the case study no hypothesis has been formed.
(III) Review of Literature
(A) Corporate Social Responsibility as Strategic Management Concept.
The understanding of the Corporate Social Responsibility has been evolved with
the time and has widely understood as,
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A Study of Impact of Strategic CSR as an Integral Tool For Expanding Rural Markets Through
21
Milton Friedman (Friedman, 1970). "There is one and only one social responsibility
of business - to use its resources and engage in activities designed to increase its profits
so long as it stays within the rules of the game, which is to say, engages in open and free
competition without deception or fraud"
Peter Drucker (1984) , legend of Modern Management , remarked in his paper
'The new meaning of corporate social responsibility (1984, California Management
Review) "Social responsibility is the term used to assert or assign - leadership responsibility
of the businessman with respect to the "culture" of the community. - Responsibility for
social impacts is a management's responsibility not because it is a social responsibility
but because it is a Business responsibility."
From the various empirical results of various research work carried out to 'assess
the impact' of CSR efforts on the various functions as mentioned earlier, leads to the fact
that there is a direct impact of the CSR activities and approaches of the companies on it's
functional dimensions like , Marketing Management, Human Resource and Financial
Management. Although there are very few results which establish negative co-relations
of the CSR investment on the various functional department, but by and large it is seen
from the study that investment made by the organization in the CSR activities are positively
linked with it's other prime functions like Finance, Human Resource and Marketing
functions mainly. The interlink of the relationship can be diagrammatically represented,
CSR and It's Linkage with Business Functions
Management Trends
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22
(IV) CSR as Marketing Tool and It's Support in Expansion of Rural Market.
Host of research has been carried out to check the impact of CSR on Marketing
Function , to an extent the CSR efforts of the organization often faced the criticism of just
and 'investment for marketing' or 'business investments.' Sighting some of them as,
Holt (1995) , Glazer and Konrad(1996)
Holt founds that consumers product choice sends the social signals regarding their
personality attributes, similarly Glazer and Konrad examine the role of social signals in
the realm of charitable behavior. Their model implies that purchasing CSR- Associated
products , is a specific method of making charitable donations - should also serve as a
social signal.
Varandarajan and Menon (1998)
They categorize CRM among CSR initiatives that "Do Better by Doing Good." In
other words, CRM not only increases the company's revenues but also contributes to
societal welfare. They defined CRM as: 'The process of formulating and implementing
marketing activities that are characterized by an offer from the firm to contribute a specified
amount to a designated cause when customers engage in revenue-providing exchanges
that satisfy organizational and individual objectives.'
Quattrone and Tversky (1984)
On attempt to study on , what specific motivations that drive the decision to purchase
a CSR - associated product , they have found out that people often engage in behaviors in
order to signal to themselves that they possess a particular desire trait , even when there
are no social incentives.
Sen and Bhattacharya (2001)
Most companies than ever engage in CSR activities , however the Research by the
Sen. and Bhattacharya , shows that communicating about CSR activities does not
necessarily results in positive business effect always for the companies. Furthermore, it
shows that the companies that are criticized the most in the area of CSR are also the ones
that are the criticized the most. However it is also found in their research that, products
with a CSR-association are extremely popular among the consumers.
However from the presented literature review it is leading to a clear conclusion
that CSR investments and approaches have a direct impact on the 'Marketing Functions'
mainly to sump up we can say that,
l
CSR investments build the strong and ethical Brand Value of the organizations.
Specifically in India, though the base of Rural Market is wide enough the contribution
in the business in low from the same, therefore many FMCG and Consumer durable
companies uses corporate social responsibility concept in creating brand awareness
and expanding rural markets.
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A Study of Impact of Strategic CSR as an Integral Tool For Expanding Rural Markets Through
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Consumers are often willing to buy the 'socially responsible products' or 'environmental
friendly products.'
It's undoubted fact that the 'Corporate Social Responsibility' approaches of the
organization as well as , Socially responsible behavior of the 'Corporate' indeed has helped
the 'brands' in reaching to the rural markets and expanding rural market which has almost
sixty percentage of Indian population. As a result of that, not only Corporate Social
Responsibility has not only helped the society but it has also helped the business. Select
examples of CSR supporting marketing and rural market expansion have been presented
here in brief.
(IV) CSR of Hindustan Unilever Ltd. And It's Market Impact.
(a) A Case Study of Project Shakti' By Hindustan Uniliver Ltd.
HLL in the year 2001 estimated the rural consumer base for their products as 100
million users by, 2005. With a mission of reaching them through the CSR by approaching
minimum 100000 villages by the end of the year 2005, through the CSR "Project Shakti "
CSR Project Shakti for HLL as a strategic tool to reach rural consumers
A.
Project Shakti is HLL's rural initiative, which targeted small villages with population
of less than
2000 people or less. It seeked to empower underprivileged rural women by
providing income generating opportunities. Project Shakti launched with an aim to
improve the standard of living of the rural community, by providing health and hygiene
education.
In general, underprivileged rural Indian women were target, who were needing a
sustainable source of income. Project Shakti has been a pioneering effort in creating
livelihoods for rural women, organized in Self-Help Groups (SHGs), and improving living
standards in rural India. Project Shakti has been providing critically needed additional
income to these women and their families, by equipping and training them to become an
extended arm of the company's operation.
Started in 2001, Project Shakti had been extended to more than 30000 villages in
196 districts in 11 States during the year 2004, - Andhra Pradesh, Karnataka, Gujarat,
Madhya Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan and
Maharashtra. The respective state governments and several NGOs are actively involved
in the initiative.
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24
Project Shakti already had over 10,000 women entrepreneurs in its fold by the
year 2004. A typical Shakti entrepreneur earns a sustainable income of about Rs.1,000
per month, which is double their average household income. Project Shakti is thus creating
opportunities for rural women to live in improved conditions and with dignity, while
improving the overall standard of living in their families. In addition, it involves health
and hygiene programmes, which help to improve the standard of living of the rural
community.
The project's ambit already covers about 15 million rural population. Plans are
also being drawn up to bring in partners involved in agriculture, health, insurance and
education to catalyze overall rural development. Unilever has allied itself with the State
Bank of India on a microfinance drive in Maharashtra and Karanataka. The pilot phase
has seen 12 of the Shakti Ammas who sell Unilever's goods act as providers of basic
banking services, and 1,000 accounts have been established thus far.
According to the company, 20% of households from the test regions have signed
up, and nearly 80% of participants are women, generally seeking an "accessible" way to
enter the category. "The objective is to bring about financial inclusion in rural areas,"
Hemant Bakshi, HUL's executive director, sales and customer development. The ultimate
intention is to roll out this offering across India in the next 12 months, utilizing some of
the 43,000 existing Shakti Ammas.
(b) LIFEBUOY SWASTHYA CHETANA -- Health & Hygiene Education
Lifebuoy 'Swasthya Chetana' is the single largest rural health and hygiene
educational programme ever undertaken in India. Its objective was to reach rural consumers
for the lifebuoy soap by educating people about basic hygienic habits. It has been
developed around the insight that people mistakenly believe "visible clean is safe clean".
The programme established the existence of "invisible germs" and the associated risk of
infection. In India this is important, because diarrhoea, caused by invisible germs, is the
second largest cause of death among children below the age of 5.
The campaign has been divided into various phases. In the initial phase, a Health
Development Facilitator (HDF) and an assistant initiates contact and interacts with students
and influencers of the community, like village community representatives, medical
practitioners, school teachers etc. A number of tools like a pictorial story in a flip chart
format, a "Glo-germ demonstration", and a quiz with attractive prizes to reinforce the
message are used. The "Glo-Germ demonstration" is a unique tool to make unseen germs
visible and emphasize the need to adopt hygienic practices. The first interaction with
students is then replicated with the rest of the community.
Started in 2002, the programme covered about 15000 villages in 8 states in it's
first phase like -- Uttar Pradesh, Bihar, Jharkhand, West Bengal, Orissa, Madhya Pradesh,
Chattisgarh and Maharashtra; and touched about 70 million people, imparting hygiene
education to over 25 million children.
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A Study of Impact of Strategic CSR as an Integral Tool For Expanding Rural Markets Through
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Post floods in Mumbai in 2005 , Hindustan Unilever Ltd took up a CSR task of
distributing 1.5 Lakhs lifebuoy sops , through UNICEF. It is observed that the good will
and brand image earned by the company through this very small investment and social
initiative was way ahead of 20 sec prime time television advertisement , with a frequency
nothing less that 15 times. Product Promotion benefits were derived was surplus.
(c) FAIR & LOVELY FOUNDATION -- Economic Empowerment of Women
The Fair & Lovely Foundation is HLL's initiative which aims at economic
empowerment of women across India. It aims to achieve this through providing information,
resources, inputs and support in the areas of education, career and enterprise. It specifically
targets women from low income groups in rural as well as urban India. Fair & Lovely, as
a brand, stands on the economic empowerment platform and the Foundation is an extension
of this promise. The Foundation has renowned Indian women, from various walks of life,
as its advisors. Among them are educationists, NGO activists, physicians. The Foundation
is implementing its activities in association with state governments.
In India, low-income families, albeit unwillingly, tend to discriminate against girl
children, in providing opportunities for education and enterprise, because of resource
constraints. The support
provided by Fair & Lovely Foundation has been helping girl children avail
opportunities of higher education and acquire skills in appropriate professions. The series
of projects that have been drawn up to achieve the vision of empowering women include
the areas of Career guidance , vocational professional trainings and education scholarship.
Launched in 2003, Fair & Lovely Foundation impacted the lives of about 5000
women by 2005. And project also created brand awareness of fair and lovely and brand
has been now well recognized and accepted brand in the segment of the cosmetic products.
(IV) Conclusion.
Hindustan Unilever Ltd. Has effectively integrated corporate social responsibility
with it's marketing function and strategic planning of CSR investment not only helped the
society in the development but also supported company in reducing it's brand building
cost through the advertisements and helped in reaching out millions of consumers'
specifically in the rural area. Projects like 'Fair and Lovely Foundation' touched to the
'emotional esteem' of the rural women and not only helped them in achieving their aspiration
of growth but also supported the company in creating it's powerful brand awareness and
impact in the consumers' mind. Fair and Lovely cosmetic products are one of the most
recognized and sold brand in their product category. It is also important to note here that
the company has a thoughtful market and consumer analysis of the rural Indian market
and that has been linked to the strategic corporate social responsibility planning, which
produced effective results as per the companies vision and not only that the, it has pushed
competitors to copy the strategic move of integrating corporate social responsibility to
their marketing plans.
Management Trends
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References :
1.
2.
3.
4.
5.
6.
7.
Website : http://www.hul.co.in/sustainable-living/
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Daksha Pratapsinh
Chauhan*
Management Trends
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28
I. Introduction
Accounting as a "language of business" communicate the financial results and
health of an enterprise to various interested parties by means of periodical financial
statement like balance sheet, profit and loss account etc. like any other language accounting
should have its grammar and sets of rules of accounting standards. The main aim of
accounting standard is to provide the standardized the diverse accounting policy so,
comparability can be possible with high quality of transparency in accounting practices.
Financial statements prepared in different countries with different rules and
regulation. So single set of globally accepted set of accounting standards were demanded
for comparison, analysis and interpretation globally.
The international accounting standard board is working in single set of high quality,
understandable, enforceable and globly accepted IFRS. In order to achieve these objectives
the IASB is coordinating the various stakeholders views on this area.
In this backdrop the ministry of corporate affairs (MCA) GOI set up a high-powered
core group under the chairmanship of secretary (MCA) to study the impact of IFRSs and
to understand the preparedness of the Indian companies for converging with IFRSs. The
road map towers IFRS convergence for corporate from april1, 2011 has been finalized by
the ministry of corporate affairs in January, 2010.
Convergence also entails maintaining consistency with legal and regulatory
requirements prevalent in the country. Towards this end, amendments need t be made to
existing laws and regulations, notably the companies act, 1956 provisions and schedules
that detail the requirements of financial statements need to be harmonized with IFRS
requirements and converged Indian accounting standards need to be notified under section
211 (3c) of the said Act. Additionally there are also issues relating to taxation under an
IFRS converged environment.
There is also a need to improve awareness in general and build technical competence
for the accounting and auditing profession on IFRS. The ICAI has already included a
comparative study of Indian accounting standards with international standards in its
syllabus for CA final advances accountancy and is alsooffering courses and seminars for
its members to update them in the field. The RBI too has been holding periodical seminars
and workshops to educate its staff on IFRS provisions.
II. Review of Literature
A number of studies related to the objectives of this research have been published
in recent years, which shall be considered as follows:
A research paper published by Shailesh.Gandhi, IIM- Ahmadabad, on GAPS in
GAAP; issues in non-profit accounting and reporting in India (2005 March). This paper
recommends the need for developing a uniform accounting and reporting system for all
NPO. In addition to this need for amendment in various act was recommended. In one of
Management Trends
June-Dece - 2013
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the speech given by Dr. K.C. Chakrabarty, Deputy governor of RBI at the national seminar
on IFRS in Mumbai 11 Feb 2011 has given his view on importance of accounting standard,
development of IFRS, lesson from the financial crisis and challenges for the implementation
were discussed. Tokar (2005) focuses on the impact of convergence on auditing firms
and concludes that achieving true convergence of accounting standards is a costly and
time-consuming objective, and will require a huge investment of money and a significant
change in the training of accounting student in near future.Jermakowicz and GornikTomaszewski (2006) argue that the complexity of IFRS, coupled with the lack of guidance
and of a uniform interpretation, can hinder the transition to IFRS. In addition, Jermakowicz
and Gornik-Tomaszewski (2006) provide evidence which indicates that many companies
would have not adopted IFRS if it were not mandatory. Ilse Maria Beuren, Nelson Hein,
Roberto Carlos Klann (2008) analyzed the impact of differences between the International
Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles in
the United States (US GAAP) in the economic-financial indicators of English
companies.According to Karamanis and Papadakis (2008) Greek accountants and auditors
believe that the introduction of IFRS will improve the quality of the financial statements
prepared by Greek firms. In particular, they believe that the implementation of IFRS
improves the understandability, relevance, reliability and comparability of financial
statements. On the other hand, the respondents in the survey expressed some concerns
regarding the difficulties they face when they implement IFRS.Susana Callao, Cristina
Ferrer, Jose I.Jarne, Jose A. Lainez (2009) discovered the quantitative impact of
International Financial Reporting Standards (IFRS) on financial reporting of European
countries and evaluates if this impact is connected with the traditional accounting system
in which each country is classified, either the Anglo-Saxon or the continental-European
accounting system.Robyn Pilcher, Graeme Dean (2009) determined the impact financial
reporting obligations and, in particular, the International Financial Reporting Standards
(IFRS) have on local government management decision making, In turn, this will lead to
observations and conclusions regarding the research question: "Dose reporting under the
IFRS regime add value to the management of local government?"Alfred Wagenhofer
(2009) analyzed the challenges that arise from political influences and from the pressure
to sustain a successful path in the development of standards. It considers two strategies
for future growth which the International Accounting Standard Board (IASB) follows:
the work on fundamental issues and diversification to private entities.Rudy A. Jacob,
Christan N. Madu (2009) examined the academic literature on the quality of International
Financial Reporting Standards (IFRS), formerly International Accounting Standards (IAS),
which are poised to be the universal accounting language to be adopted by all companies
regardless of their place of domicile.John Goodwin, Kamran Ahemed (2010) examined
the impact of Australian equivalents to international financial reporting standards (AIFRS) on the accounts of small-, medium- and larger sized firms.Dennis W. Taylor (2010)
compared the costs to financial statement prepares of making the transition to International
Financial Reporting Standards (IFRS) relative to the benefits to financial statement users
from receiving "higher quality" IFRS-based information (measured as incremental valueManagement Trends
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30
relevance for listed companies in the UK, Hong Kong and Singapore). These countries
had different approaches to harmonization leading up to IFRS adoption.Graeme Wines,Ron
Dagwell, Carolyn Windsor (2011) crirically examined the change in accounting treatment
for goodwill pursuant to International Financial Reporting Standards (IFRS) by reference
to the Australian reporting regime.
This study fills the gap in the literature by focusing on the IFRS and related
implications. the literature review found that the study is related to IFRS, and development
in India etc. but here the researcher made an attempt to review the perceptions of chartered
accountant regarding applicability of IFRS in India.
III. Objectives of the Study
The brooder objective of the study is to know the practical implication of IFRS
and to know the perceptions of Chartered Accountants.
IV. Research Methodology
This study is based on primary data. For this a structure questionnaire was develop
by the researcher on each standard of IFRS and to know their opinion for the related
implications. Here with the 5 point scaling technique data were collected, classified, and
tabulated as per need of the study. At this stage researcher has taken 50 randomly selected
chartered accountants of the Rajkot city. Other information of IFRS implication is collected
from the secondary data also.
Following hypotheses were developed.
i)
ii)
The study is based on the 50 sampled respondents consisting of 38(76%) male and
12(24%) female.The respondents who are unmarried were more than married
respondents in Rajkot city i.e. 68% respondents were unmarried whereas 32%
respondents were married.All the respondents were falling under the age group of
21-30 years and all respondents having professional experience of 1-10 years, and
very less people were shows their readiness to disclose their profession fees due to
professional ethics which is issued by ICAI and due to their personal behavior.
2.
Most of the respondents have sufficient knowledge about IFRS and have a basic
knowledge about the differentiate requirements under GAAP and IFRS. And most
of the respondents believe that IFRS would reduce complexities, encourage outsider
investor and helps for transparency in accounting treatment.
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Most of the respondents have general awareness of IFRS and their implication effects
such that IFRS would lead to create global scale due to IFRS and it is totally based
on principle based approach. Respondents believe that before implementing IFRS
international as well as national body should create for providing sufficient
environment to the concern party.
3.
Most of the respondents have knowledge about the specific awareness of the IFRS:
4.
As per IFRS-1 it could be said that accounting policies adopted for the first time
should follow throughout the period and entity should report comparable financial
statement of GAAP as well as with IFRS. Only few respondents have disagreed for
the same.
5.
As per IFRS-2 it could be find that most of the respondents believe that the entity
should report the entire share based transaction in the financial statements and also
required and disclosed to report the entire share based option granted in the financial
statement. Only few respondents have disagreed for the same.
6.
As per IFRS-3 it could be find that most of the respondents believe that business
combination should be applied with the business combination method and should
not be applied to joint venture and holding transaction. Only few respondents have
disagreed for the same.
7.
As per IFRS-4 it could be find that most of the respondents believe that insurer need
not change its accounting policies for insurance contract and also required and
disclosed to report the sensitivity risk associated with the insurance contract. Only
few respondents have disagreed for the same.
8.
As per IFRS-5 it could be find that most of the respondents believe that the entity
should not report the temporary transaction related with non-current assets held for
sale and noncurrent assets should be repot at carrying amount in the financial
statement. Only few respondents have disagreed for the same.
9.
As per IFRS-6 it could be find that most of the respondents believe that the exploration
and evaluation of mineral assets should be measured at cost and most of the
respondents believe that such an asset subject to impairments in the financial
statement. Only few respondents have disagreed for the same.
10. As per IFRS-7 it could be find that most of the respondents believe that buy or
sale of non financial items should be disclose separately and required to account
all the income and expenses in the financial statement, entity should report the
all type of risk in the financial statements. Only few respondents have disagreed
for the same.
11. As per IFRS-8 it could be find that most of the respondents believe that the operating
segment should apply to the companies whose share or debt are traded in the public
market and such segment aspects should not cover post employment benefits and
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12. As per IFRS-9 it could be find that most of the respondents believe that this IFRS
will cover all the hedge as well as derivative transaction in the financial statement
and also cover hybrid contracts also in the financial statements as a disclosure as a
financial instrument . Only few respondents have disagreed for the same.
13. As per IFRS-10 it could be find that most of the respondents believe that the entity
should report consolidation of structured consolidation financial statements
transaction in the financial statements and also required and assets manager
responsible for all consolidation of financial transaction. Only few respondents have
disagreed for the same.
14. As per IFRS-11 it could be find that most of the respondents believe that the entity
joint arrangement only focused on the right and obligation of the arrangement and it
may also major impact on the real estate industries. Mutual funds and all the venture
capital companies units trust and other related organization at fair value method.
Only few respondents have disagreed for the same.
15. As per IFRS-12 it could be find that most of the respondents believe that the entity
should disclose the interest in their financial statement and report with other financial
statement interested parties. Only few respondents have disagreed for the same.
16. As per IFRS-13 it could be find that most of the respondents believe that the entity
should set out a single IFRS as a framework for measuring at fair value but it is not
required for plan assets. Only few respondents have disagreed for the same.
VI. Suggestions
1.
2.
Majority of the respondents do not believe that IFRS and IASB can complete the
convergence on time. Thus Institute of Chartered Accountants of India should make
an effort to train and upgrade the profession in IFRS.
3.
Majority of the respondents believes that there would be a unified platform and that
too transparent in the global scale. A continuous research is in fact needed to harmonies
and converges with the international standards and this in fact can be achieved only
through mutual international understandings.
4.
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VII. Conclusion
Training, education and skill development is one of the corner stone's of the
successful implementation of IFRS. All the stakeholder need to develop understanding
for IFRS provisions. Institute can play a significant role for thought development process
to meet the challenges and non accounting issues among practicing chartered accountants
and students of this field.
References:
1.
2.
3.
4.
Deloitte Touch Tohmatsu "The Framework for the Preparation and Presentation of
Financial Statements"
5.
6.
Dr. A.L. Saini, "IFRS for India", Snow White Publications Pvt. Ltd.
7.
Dr.S.N. Maheshwari, "A Text Book of Accounting and financial Control", Sultan
Chand & Sons.
8.
9.
Kamal Garg, "Accounting Standards & IFRS", Bharat Law House Pvt.Ltd.
10. P.C. Tulsian, "Accountancy for CA Final Course", Tata McGraw Hill.
11. Smith N.J. (2012), Constant Item Purchasing Power Accounting per IFRS, Ch. 1.22.2
Three Concepts of Capital Maintenance
12. T.P. Ghose, CA SrinavasanAnand, "Guide to Indian Accounting Standards Converged
With IFRS", Taxman Allied Services Pvt.Ltd.
Journals and Reports:
1.
2.
3.
4.
Business India
5.
6.
7.
8.
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Management Trends
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Exploring the Role of Lean Accounting : A Step Ahead from Traditional Costing
35
June-Dece - 2013
36
Objectives:
The purpose of the present study is to contribute an understanding towards the
emerging dimension of accounting i.e. lean accounting. For this purpose, this paper has
been divided into three parts:
(1) To focus on the conceptual review of Lean Accounting and its major aspects.
(2) To review the literature available on Lean Accounting to identify the current state.
(3) To analyze a case study based on lean principle for the problem facing in traditional
standard costing.
Research Methodology:
This research is derived from a specific challenge facing by the companies that
what kind of costing and accounting approach is required to support the accurate product
costing. In order to address the issue, an extensive literature survey has been done to
understand that what is lean accounting and what are its tools, principles and practices.
Also this literature survey identified the problem created by the continued use of traditional
costing and accounting methods.
To capture the last objective of the study, a case study is conducted of a world
leading company of US where standard costing is using as its decision making technique.
The name of the Company is kept anonymous as per agreement with its management to
keep it confidential. Consequently, the studied company is referred to as Anonymous Inc.
It is a leading manufacturer and exporter company of US. The required data have been
collected through convenient sources like e-mails, e-resources available and annual reports
of the company.
(I)-CONCEPTUAL REVIEW
Lean is getting the right thing, to the right place, at the right time, in the right
quantity to achieve the right work flow while minimizing waste, being flexible with greater
customer satisfaction. Lean accounting is a support to the business by controlling the
waste, loss and defects. (Ross Maynard, 2009).
In simple words Lean Accounting:
u
Will provide accurate, timely and understandable information to motivate and increased
customer value, growth, profitability and cash flow.
It uses lean tools to eliminate waste from the accounting processes while maintaining
thorough financial control.
In short, Lean Accounting is a Japanese approach that focuses all activities that do
not add value to the production process such as holding of stock, repairing faulty product
Management Trends
June-Dece - 2013
Exploring the Role of Lean Accounting : A Step Ahead from Traditional Costing
37
and unnecessary movement of people and product around the plan with Continuous
improvement by the shortest, fastest route possible is the ultimate goal of lean accounting
(D. Muthamizh Vendan Murugavel, 2011).
Principles of Lean Accounting:
The five steps process for guiding the implementation of lean techniques is shown
in figure 1. These principles are easy to remember but not always easy to achieve.
Figure 1:
Principles of
lean
accounting
1. Specify value from the standpoint of the end customer by product family.
2. Identify all the steps in the value stream for each product family, eliminating whenever
possible those steps that do not create value.
3. Make the value-creating steps occur in tight sequence so the product will flow smoothly
toward the customer.
4. As flow is introduced, let customers pull value from the next upstream activity.
5. As value is specified, value streams are identified, wasted steps are removed, and
flow and pull are introduced, begin the process again and continue it until a state of
perfection is reached in which perfect value is created with no waste.
Lean principle if followed and lean program if implemented properly will add to
the profit and profitability of an organization through all-round improvement in the whole
cycle from manufacturing to product delivery with less inventories, less wastage, less
space utilized, less cost on the one hand and better quality and greater customer satisfaction
on the another hand.
Management Trends
June-Dece - 2013
38
Value Stream
Management
Cell
Performance
Measurement
Value Stream
Measurement
Continuous
Improvement
i
Box Score
Elimination of
Transaction
Financial
Benefits of
Lean Change
Plain English
Financial
Statements
Value Steam
Costing
Value Stream
Cost &
Capacity
Lean Decision
Making
Features &
characteristic
costing
Sales,
Operations &
Financial Plan
Target Costing
Life Cycle
Costing
Capital project
justification
June-Dece - 2013
Exploring the Role of Lean Accounting : A Step Ahead from Traditional Costing
39
( II )- REVIEW OF LITERATURE
A brief review of work already done on the subject reveals the following findings:
D. Muthamizh Vendan Murugavel (2011) comparing Traditional Manufacturing
to Lean Manufacturing and concluded if the lean production is carried out through efficient
planning and effective management, the manufacturers would surely achieve competitive
advantage of this global market.
Manjunath H.S. Rao and Andrew Bargerstock (2011) exploring the role of standard
costing in lean manufacturing enterprises. The author indicates a three stage path to lean
transformation that should be accompanied by corresponding changes in accounting.
Ideally in stage second of lean transformation, the company must move away from
traditional standard costing accounting and variance analysis.
A. Lakshminarasimha and Vivek Krishna K. (2010) provide an introduction to
lean concepts and discuss the impact of target costing on lean. Suggestions and pointers
for further study are indicated, which would go a long way in practical sustained
implementation of lean practices. A research is has also been conducted to study the
practices of "Lean and Target Costing" in India and they found that to gain competitive
advantage in the global market place is only through lean and target costing combined.
Dan Woods (2009) examines the implications of lean philosophy with standard
cost accounting and got the core difference i.e. Lean Accounting attempts to find measures
that predict success and standard cost accounting measures results after the fact.
P.K. Chakraborty (2008) highlights different aspects of lean thinking as a way to
success. He concluded that lean implementation aims at getting the right things, to the
right place, at the right time, in the right quantity to achieve the right work flow while
minimizing waste being flexible with greater customer satisfaction focusing on more
cash flow, more profit and profitability and delivery of better value added products and
services.
Brian H. Maskell and Frances A. Kennedy (2007) explain why do we need lean
accounting and how does it works. They said that since those companies choosing lean
principles as their basic business model will want to do everything they can do succeed.
This article offers six reasons why accounting methods need to be change before companies
can fully realize the benefit of their lean transformation.
S S Mahapatra and S R Mohanty (2006) revel in their article that lean accounting
is a strategy for organizational effectiveness focusing on waste reduction and
improving productivity through application of various tools. This article find out the
reasons for sparse adoption of the concept of lean in Indian manufacturing
organizations through a cross-sectional survey study which highlights knowledge and
lead to its adoption, benefits derived thereon and application of lean tools looking
into operating environments.
Management Trends
June-Dece - 2013
40
Brian H. Maskell (2005) reveals in his article "What is Lean Accounting?" that
there are several tools included in Lean Accounting and they each work together to create
a framework for the control & management of a lean enterprise. In his article he tried to
give the answer of the question "What will Lean Accounting do for us?" by using simple
examples with the help of Lean Accounting tools.
Mike Rother and John Shook (1998) introduced Toyota's concept of material and
information flow diagrams, in the book "Learning to See", which now called value-stream
maps. This is a simple, direct and accurate way to create financial reports with very few
transactions.
Womack and Jones (1996) in the book "Lean Thinking", provide a simple
description of lean principles-value, value stream, flow, pull, and perfection-along with
stories of companies beyond Toyota that are applying them successfully in North America,
Europe, and Japan. The final section presents an action plan for any company to follow
toward a lean transformation.
Susan lilly and Nick Katho (1995) compared lean accounting with volume based
traditional accounting and specify how can we solve any problem using the Plan, Do,
Check and Act process. Lean accounting focusing on more cash flow, more profit and
profitability and delivery of better value added products and services.
After this background in view, we can say that with launching of the concept of
lean accounting during the mid 1990's, most of the organizations, irrespective of their
capability and understanding of the concept, wanted to jump on the bandwagon in an
attempt to trim the excess out of their organization and improve their bottom line. Now it
become a magical costing and decision making technique with no indirect cost, which are
going to improved and adopted by the society of world. Finally there is a broad
implementation framework for application of lean accounting
(III)- CASE STUDY
The transparency of lean accounting is helpful in demonstrating the benefits of
lean manufacturing initiatives and optimizing day-to-day business operations. Because
standard cost accounting rewards overproduction, using standard methods to try to
demonstrate the value of lean processes that eliminate production waste would be futile.
Lean accounting, on the other hand, reveals savings and costs that might otherwise be
misinterpreted or hidden - the true cost of labor and machinery, for example a study
reported several years ago in the Harvard Business Review concluded that 50% of executive
decisions are made on intuition. Surely that is cause for alarm. Is business decisionmaking necessarily that much of an art? Are executives not well trained in the use of
decision-making tools? Or is it that executives sense that their information and data is
skewed for some reason, and so go on gut feel in order to arrive at a comfortable decision?
To show how lean accounting rather than standard costing can lead to better decisions, a
case study undertook of Anonymous Inc.
Management Trends
June-Dece - 2013
Exploring the Role of Lean Accounting : A Step Ahead from Traditional Costing
41
Manufacturing Anonymous inc. had purchased a large new plant. Its existing
product base would use only 10% of the capacity of the new machine, so the sales force
was asked to approach new customers to capture business that would utilize this plant.
After diligent efforts, the sales people returned to the corporate office with several new
opportunities that would be manufactured using the new plant. However, they were soon
told the orders would not be accepted because the gross margin percentage for the orders
based on standard cost accounting was only 16% - less than its target margin of 25%. So
the controller decided to reject the orders.
After the controller had made the 'thumbs down' decision, the sales force decide
to insight lean picture to uncover what impact these orders would really have. A statement
arranged like this is called a 'plain English' or 'lean' financial statement. Table 1 to Table
4 is showing summary of the statements.
Table 1: Traditional decision factors
$30/unit
Quoted price
$25/unit
Standard cost
$5/unit
Gross margin
16.67%
Gross margin %
23%
Sales
100,000
--
100,000
Material
20,000
--
80,000
Direct costs
18,000
--
18,000
--
39,000
39,000
(39,000)
23,000
Shared cost
62,000
Total
300,000
Material
60,000
Variable margin
240,000
Direct cost
40,000
Profit
200,000
67%
Gross margin %
Management Trends
June-Dece - 2013
42
Shared ($)
Total ($)
Sales
100,000
--
100,000
400,000
Material
20,000
--
20,000
80,000
Variable margin
80,000
--
80,000
320,000
Direct cost
18000
--
18,000
58,000
Shared cost
--
39,000
39,000
39,000
Gross margin
62,000
(39,000)
23,000
223,000
Gross margin %
57.5%
Baggaley, B. and B. Maskell. (2003). Value stream management for lean companies,
Part I. Journal of Cost Management (March/April): 23-27.
Management Trends
June-Dece - 2013
Exploring the Role of Lean Accounting : A Step Ahead from Traditional Costing
43
Fullerton and Kennedy. (2009). Lean manufacturing: costing the value stream.
Industrial Management & Data Systems. Vol. 113, issue 5
Kennedy and Brewer. (2006). The Lean Enterprise and Traditional Accounting-Is
the honeymoon over? Journal of Corporate Accounting & Finance. Vol. 17
Kennedy and Widener. (2008). Functional lean: A new approach for optimizing internal
service function value. Journal of Cost Management (July/August): 5-14.
Manjunath H. S.; Bargerstock, Andrew (2011). Exploring the role of standard costing
in lean manufacturing. Management Accounting Quarterly, Vol. 13.
Schiemann, W. and J. Brewton. (2009). Functional lean: A new approach for optimizing
internal service function value. Cost Management (July/August): 5-14.
Staats, B. R. and D. M. Upton. (2011). Lean knowledge work: The "Toyota" principles
can also be effective in operations involving judgment and expertise. Harvard Business
Review (October): 100-110.
Womack, J. P. and D. T. Jones. (1994). From lean production to the lean enterprise.
Harvard Business Review (March-April): 93-103.
Management Trends
June-Dece - 2013
44
Management Trends
June-Dece - 2013
Disclosure Pattern of Valuation Principles of Raw Material Inventory in Indian manufacturing Industry 45
Introduction
The quality of corporate disclosure influences to a great extent the quality of
investment decisions made by investors. The survey conducted by different institutions
and researchers reveals that the material cost alone contributed about 60-65% of either
sales valve or total cost of the product6. On a save of rupee one ultimately increased the
profitability of the firm. Hence the raw material becomes a significant factor for the
investors to take the decisions, Therefore a proper disclosure of valuation principle is
need of the hour. Singhvi and Desai developed a list of 34 items of information which
they felt should be disclosed in annual reports for the purpose of measuring the quality of
disclosure. Copeland and Frederick studied the extent to which changes in common stock
outstanding were disclosed in annual reports. Carpenter, Francia and strawser surveyed
four user groups in order to determine their perceptions of the importance of, and
information deficiencies for, several problem areas in accounting. Strephen constructed
of 38 items or types of financial and non financial information which might appear in an
annual report. After examining the literature it is observed that research work which has
been done on the disclosure of items in general in annual report but no specific research
work has been done except Manaswee K Samal regarding whether Indian manufacturing
industry disclose the all aspect of raw material in annual report which has been suggested
in AS-2 entitled "Valuation of Inventory." Samal studied confined with analysis of
disclosure of different segments of inventory without formulating and testing the hypothesis
after considering only twenty two sample units. The present study is concentrated with
sector-wise disclosure of principal of raw material only of fifty three companies of ten
sectors along with testing of the hypothesis. The critical operative part of the Accounting
standard-2 (Revised) is that "inventories should be valued at the lower of (a) Cost and (b)
net realizable value". This standard requires an enterprise should disclose the accounting
policies adopted in measuring or valuing inventories including the cost formula used and
the total carrying amount of inventories and its classification appropriate to the enterprise.
Common classifications of inventories are raw materials and components, work in progress,
finished goods, stores and spares and loose tools. Here an attempt has been made to
examine whether such disclosure is followed by sample units or not in relation to raw
material only. We are trying to point out the gap exists between theory and practice in
many sectors of Indian manufacturing industry.
Review of Literature
Peter Harris (2011) examines critically the many disadvantages of LIFO.
Ultimately, the author theorizes that these negatives may collectively explain the
observed research findings of the inverse relationship between LIFO adoption and firm
value/stock price. The elimination of LIFO which seems imminent may result in a winwin situation for all; as the negative and added costs of LIFO may well exceed its tax
advantage, resulting in greater cash flow for the firm, while allowing for the
standardization of worldwide accounting standards and raising additional tax revenue
for the US government.
Management Trends
June-Dece - 2013
46
Bhanawat S. Shurveer (2010) explained in his article that the main factor which
contributes to the cost of production is the cost of material. The results also reveal that on
an average raw material cost as percentage of gross sales is 46.46% for Indian
manufacturing industry. In oil industry it was found 80.78%. Hence, it can be concluded
that raw material cost is a major part of cost structure and it should be properly valued
and disclosed in the annual report.
Bajpayee H.S., Srivastava, Anubha (2010) analyze the compliance of accounting
standards practices in India by various companies. So far as mandatory accounting
standards are concerned all the companies are complying with those all but in case of
optional accounting standards there are some, which are disclosing full information
regarding their compliance with the accounting standards, and on the other hand there are
some companies which are clarifying the true picture. As a conclusion it could be said
that that there must be uniformity in financial statement of companies in order to make
inter -firm and intra- firm comparison easy.
Samal K Manaswee (2005) states in his article that Inventory valuation plays a
significant role in reporting operating results, as well as the state of affairs of a business
entity. Empirical literature suggests that inventory valuation is one of the devices often
resorted to smooth out a firm's operating results.. The findings suggest that the disclosure
of accounting policies regarding inventory valuation in listed Indian companies is more
of a form than of substance, and there is ample scope for improvement in fixing the
valuation norms.
Tim Baldenius examines that the LIFO (last- in-first-out) inventory flow rule is
shown to be preferable to the FIFO (first-in- first-out) rule for the purpose of aligning
incentives. His analysis also finds support for the lower-of-cost-or-market inventory
valuation rule in situations where the manager receives new information after the initial
contracting stage.
Ole-Kristian Hope (2003) investigates that there is relation between the accuracy
of analysts' earnings forecasts and the level of annual report disclose, and between forecast
accuracy and the degree of enforcement of accounting standards. He documents that
firm-level disclosures are positively related to forecast accuracy, suggesting that such
disclosures provide useful information to analysts. He took sample from twenty two
countries.
Objective Sample Design
To examine the disclosure pattern of valuation principle of raw material inventory
in different sectors of Indian manufacturing industry with special reference to Accounting
Standard-2
Hypothesis
There is no significance difference among the different sectors of Indian
manufacturing industry as regard to disclosure pattern of valuation principle of raw material
Management Trends
June-Dece - 2013
Disclosure Pattern of Valuation Principles of Raw Material Inventory in Indian manufacturing Industry 47
Industry
Percentage
Textile
05
11.32
Pharmaceutical
06
9.43
Cement
06
11.32
Automobile
05
7.57
Sugar
04
9.43
07
9.43
Electrical Equipments
05
13.20
8.
06
7.57
9.
Paper
05
11.32
10
04
9.43
Total
53
100
Techniques:
Statistical techniques like mean, standard deviation, coefficient of variation and
chi-square test are used in the present research paper.
Period
A period of five years from 2007-2008 to 2011-2012 has been taken into account
for the purpose of analyzing the disclosure pattern of valuation pattern of raw material
inventory in different sectors of manufacturing industry in India.
Management Trends
June-Dece - 2013
48
S.No
Company /Year
RAW MATERIAL
2007-08 2008-09 2009-10
2010-11 2011-12
Textiles
1
Alok Industry
M1
M2
M2
M2
M2
Arvind Ltd.
M1
M1
M1
M1
M1
Bombay Dyeing
M1
M1
M1
M1
M1
Grasim
Raymond
M2
M2
M2
M2
M2
Pharmaceuticals
6
Aventis Pharma
M2
M2
M2
M2
M2
Cipla
M2
M2
Dr.Reddy's Lab
M2
M2
M2
M2
M2
Orchid
M1
M1
M1
M1
M1
10 Ranbaxy
M1
M2
M2
M2
11 Twilight Litaka
M2
12 ACC Ltd
M2
M2
M2
M2
M2
13 J.P.Associates
M1
M1
M1
M1
M1
Cement
Management Trends
June-Dece - 2013
Disclosure Pattern of Valuation Principles of Raw Material Inventory in Indian manufacturing Industry 49
14 India Cement
M1
M1
M1
M1
M1
15 J.K.Cement
16 Shree Cement
M1
M1
M1
M1
M1
17 Ultratech
M2
M2
M2
M2
M2
19 Hero Honda
M2
M2
M2
M2
21 Maruti
22 TVS
23 Bajaj Hindustan
M2
M2
M2
M2
M2
24 Balrampur Chinni
25 Renuka Sugar
M2
M2
M2
M2
M2
M2
M2
M2
M2
M2
27 BPL
28 Colgate
M2
M2
M2
M2
M2
29 Emami
30 HUL
31 ITC
32 Videocon Inds.
33 MIRC Elec.
M1
M1
M1
M1
M1
34 BHEL
M2
M2
M2
M2
M2
35 Siemens
M2
M2
M2
M2
M2
36 ABB
M2
M2
M2
M2
M2
37 Crompton Greaves
M1
M1
M1
M1
M1
38 Thermax
M2
M2
M2
M2
M2
Automobiles
18 Bajaj Auto
Sugar
Management Trends
June-Dece - 2013
50
39 SAIL
M2
M2
M2
M2
M2
40 Ispat Ind.
M2
M2
M2
M2
M2
42 JSW Steel
M2
M2
M2
M2
M2
43 Tata Steel
M2
M2
M2
M2
M2
44 TISCO
M2
M2
M2
M2
M2
45 Ballarpur (BILT)
46 Andhra Paper
M1
M1
M1
M1
47 J.K.Paper
48 Rainbow Paper
M2
M2
M2
M2
M2
M1
M1
M1
M1
M1
50 Nagarjuna Fertilizers
M1
M1
M1
M1
M1
M1
M2
M2
M2
M2
52 Zuari Industry
53 Deepak Fertilizers
M2
M2
M2
M2
M2
Paper Industry
On examining the above table no. one it is found that only electrical equipment
sector has followed the AS-2 strictly. All the sample units disclosed M2 in their annual
reports during the entire study period. It can be concluded that electrical sector disclosed
that valuation of raw material has been valued at cost or NRV whichever less is. However
a very poor disclosure has been identified in consumer goods and durable sector of Indian
manufacturing industry. Only 28.57% (two sample companies viz., Colgate and Mirc out
of seven) units disclosed either of M 1 or M 2 during entire study period. Colgate Company
and Mirc Company disclosed M 2 and M 1 respectively during entire study period. There is
also no good practice has been observed in automobile industry in relation to disclosure
of M 1 or M 2, as it is evident by above table no.1. The well known companies of automobile
industry viz.Mahindra and Mahindra, Maruti and TVS failed to disclose the valuation
principle of raw material in their annual reports. While other units of automobile industry
Bajaj Auto and Hero Honda companies followed good practice of disclosure during entire
study period.
The consistency has been followed by all the sample units of different sectors
regarding disclosure of either M1 or M2 throughout the study period except in case of
Management Trends
June-Dece - 2013
Disclosure Pattern of Valuation Principles of Raw Material Inventory in Indian manufacturing Industry 51
Alok industry and Ranbaxy. These companies are shifted once from M 1 to M 2 and thereafter
consistency has been maintained. In accordance with AS-1 disclosure must include changes
if any, but here no disclosure is made in the annual report of Alok industry and Ranbaxy
for switching from M 1 to M 2 in 2009-10. Cipla and Twilight Litaka had started to disclose
M 2 from 2010-11 and 2011-12 respectively. It can be concluded that Indian manufacturing
industry also followed the consistency which is the basic fundamental accounting
assumption given in AS-1. Sixteen companies out of fifty three sample units never disclosed
M 1 or M2 during entire study period i.e. 2007-08 to 2011-12. These sample units are
silent regarding disclosure of valuation principle of raw material. Out of fifty three sample
units eleven units disclosed M1 method i.e. raw material is valued either at Cost or NRV
and thirty nine (50.9%) units disclosed m2 method and three units disclosed mix method
of either m1 & m2. It clearly indicates that maximum sample units followed the critical
operative part of the Accounting standard-2 (Revised) is that "inventories should be valued
at the lower of (a) Cost and (b) net realizable value".
Table No. 2: Disclosing sample units for different years in respect of aluation
principles of Raw Material
Year
Type of
2007-08
2008-09
2009-10
2010-11
2011-12
No.
No.
No.
No.
No.
Mean
c.v.
13
24.53
13
24.53
12
22.64
12
22.64
11
20.75
12.2
6.8578
Disclosures
21
39.62
22
41.51
23
43.40
24
45.28
25
Total
34
64.15
35
66.04
35
66.04
36
67.92
36
67.92
35.4
3.22083
19
35.85
18
33.96
18
33.96
17
32.08
17
32.08
17.6
6.4782
53
100
53
100
53
100
53
100
53
100
Disclosers
M1
Disclosures
M2
Non
Disclosure
Total
The above table of year wise classification of M 1 and M 2 shows that the highest
degree (67.92% of sample size) of disclosure has been found in the year 2010-11 &
2011-12 regarding valuation principal of raw material separately. On an average two
third sample units (67.92%) have been disclosed either m1 or m2 valuation principles of
raw material during entire study period. It means one third (32.08%) of the sample units
did not think it prudent to disclose it to stakeholders during study period. On examine the
above table it is noticed that on an average 23.01% (12.2 out of 53) sample units are
disclosing the M 1 and 43.77% of the sample units disclosed M 2 and again it is not known
exactly whether inventory of raw material has been valued either at cost or NRV.
In order to check out the variation between disclosure practice of M1 and M2
methods coefficient of variation (C.V) has been calculated. There is more inconsistency
Management Trends
June-Dece - 2013
52
2007-08
2008-09
2009-10
2010-11
2011-12
No.
No.
No.
No.
No.
Textiles 4
80
80
80
80
80
80
Pharmaceuticals
50
67
67
83
100
73
Cement 4
67
67
67
67
67
67
Automobiles
40
40
40
40
40
40
Sugar
75
75
75
75
75
75
75
75
75
75
75
75
Consumer
29
29
29
29
29
29
Heavy Electrical
100
100
100
100
100
100
83
83
83
83
83
83
Paper Industry
60
60
60
60
40
56
0.15
Total
34
58.49
35
62.26
35
62.26
36
62.26
36
Average
C.V.
65.9
67.6
67.6
69.2
68.9
21.450
20.711
20.711
21.27
24.94
Mean C.V.
0.25
June-Dece - 2013
Disclosure Pattern of Valuation Principles of Raw Material Inventory in Indian manufacturing Industry 53
Average
No. of
companies
(In %)
73
67
40
75
75
29
100
Iron
steel
Paper
83
56
At 5% level of significance our null hypothesis that all ten sectors of manufacturing
industry have same disclosure pattern regarding valuation principle of raw material is
rejected. Since calculated value of ?2 (58.4896) is much grater than table value i.e.16.919.
It clearly indicates that visible difference in the ratio of different sector is not only due to
chance but due to major reasons. Hence, it is matter of further investigation to identify
specific reasons.
Concluding Remark
After analyzing the fifty three sample units of different sectors of Indian
manufacturing Industry the following Conclusions can be drawn
l
Only electrical equipment sector that has followed the AS-2 strictly. All the sample
units disclosed M 2 in their annual report during entire study period. It can be concluded
that electrical sector disclosed that inventory of raw material has been valued at cost or
NRV, whichever is less.
A Very poor disclosure has been identified in consumer goods and durable sector of
Indian manufacturing industry. Only 28.57% (two sample companies viz., Colgate
and Mirc out of seven) units disclosed either M 1 or M 2 during entire study period.
Management Trends
June-Dece - 2013
54
On an average two third sample units (67.92%) have been disclosed either m1 or
m2 valuation principles of raw material during entire study period. It means one
third (32.08%) of the sample units did not think it prudent to disclose it to
stakeholders during study period.
At 5% level of significance our null hypothesis that all ten sectors of manufacturing
industry have same disclosure pattern regarding valuation principle of raw material
is rejected. Since calculated value of ? 2 (58.4896) is much grater than table value
i.e.16.919
References :
1.
2.
3.
4.
5.
6.
Management Trends
June-Dece - 2013
Disclosure Pattern of Valuation Principles of Raw Material Inventory in Indian manufacturing Industry 55
7.
8.
9.
Management Trends
June-Dece - 2013
56
Management Trends
June-Dece - 2013
Influence of Effectiveness of Leadership on Satisfaction of Leadership in Public and Private Insurance Sectors
57
June-Dece - 2013
58
June-Dece - 2013
Influence of Effectiveness of Leadership on Satisfaction of Leadership in Public and Private Insurance Sectors
59
June-Dece - 2013
60
allowed to determine what needs to be done and how to do it, each individual is responsible
for defining their job and leader likes to share his leadership power with my subordinates
are seldom true as perceived by the employees in the LIC.
In ICICI Prudential Life Insurance, the results indicate that employee ideas and
input are sought for an upcoming plans and projects, employees are informed about what
has to be done and how to do it, leader asks employees for their vision of where they see
their jobs going and then use their vision where appropriate, leader delegates tasks in
order to implement a new procedure or process, leader closely monitors employees to
ensure they are performing correctly, leader likes the power that his leadership position
holds over subordinates, leader likes to use his leadership power to help subordinates
grow and Employees seek mainly security are almost always true as perceived by the
employees in the ICICI Prudential Life Insurance.
From the results, it is observed that it is always retained the final decision making
authority within the department or team, it is always tried to include one or more
employees in determining what to do and how to do it, when things go wrong and there
is a need to create a strategy to keep a project or process running on schedule, by calls
a meeting to get employee's advice, employees are allowed to determine what needs to
be done and how to do it, new hires are not allowed to make any decisions unless it is
approved by leader, workers know more about their jobs than me, so leader allows
them to carry out the decisions to do their job, leader allows employees to set priorities
with his guidance, when there are differences in role expectations, leader works with
them to resolve the differences, employees must be directed or threatened with
punishment in order to get them to achieve the organizational objectives, employees
will exercise self-direction if they are committed to the objectives, employees have the
right to determine their own organizational objectives, employees know how to use
creativity and ingenuity to solve organizational problems and employees can lead
themselves just as well as leader can are frequently true as perceived by the employees
in the ICICI Prudential Life Insurance.
Employees always vote whenever a major decision has to be made, for a major
decision to pass in my department, it must have the approval of each individual or the
majority, E-mails, memos or voice mails are sent to get the information and the meeting
is called very rarely. Employees are then expected to act upon the information,
environment is created where the employees take ownership of the project and allow
them to participate in the decision making process, when something goes wrong, leader
tells employees that a procedure is not working correctly and he establishes a new one,
each individual is responsible for defining their job and leader likes to share his
leadership power with my subordinates are occasionally true as perceived by the
employees in the ICICI Prudential Life Insurance and employee's suggestions are not
considered and also no time for them is seldom true as perceived by the employees in
the ICICI Prudential Life Insurance.
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The t-value of 84.146 is significant at one per cent level indicating that there is a
significant difference in perception of leadership styles among the employees in LIC and
ICICI Prudential Life Insurance. Hence, the null hypothesis of there is no significant
difference in perception of leadership styles among the employees in public and private
sector is rejected.
Second Research Hypothesis Test:
H1: There is no significant difference in satisfaction of leadership between public and
private sector
The employee perception on the overall satisfaction of leadership in LIC and
ICICI Prudential Life Insurance are analyzed and the results are presented in Table-2
Table -2:
In LIC, the results show that about 68.00 per cent of the employees are satisfied
with leadership followed by neutral (17.33 per cent), dissatisfied (10.67 per cent) and
highly satisfied (4.00 per cent).In ICICI Prudential Life Insurance, it is observed that
about 66.67 per cent of the employees are satisfied with leadership followed by neutral
(20.00 per cent) and highly satisfied and dissatisfied (6.67 per cent).The t-value of 11.528
is significant at one per cent level indicating that there is a significant difference in
satisfaction of leadership between LIC and ICICI Prudential Life Insurance. Therefore,
the null hypothesis of there is no significant difference in satisfaction of leadership between
public and private sector is rejected.
Third Research Hypothesis Test:
H1: There is no significant difference in rating of overall leadership between public and
private sector
The rating of overall leadership in LIC and ICICI Prudential Life Insurance are
analyzed and the results are presented in Table-3
Table -3:
In LIC, the results indicate that about 40.00 per cent of the employees feel that the
overall leadership is good followed by bad (28.00 per cent), ok (22.67 per cent) and very
good (9.33 per cent).In ICICI Prudential Life Insurance, it is apparent that about 47.34
per cent of the employees feel that the overall leadership is good followed by very good
(19.33 per cent), bad(18.00 per cent) and ok(15.33per cent).The t-value of 9.764 is
significant at one per cent level indicating that there is a significant difference in rating of
overall leadership between LIC and ICICI Prudential Life Insurance. Hence, the null
hypothesis of there is no significant difference in rating of overall leadership between
public and private sector is rejected.
Research Hypothesis Test:
H1: There is no significant difference in the influence of effectiveness of leadership on
satisfaction of leadership styles in public and private sector
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Findings:
In Public sector the leadership improves the interpersonal relation between the
employees, and leadership resolves the strategic differences with management are highly
effective. Leadership is molding a staff, leadership helps in follow-through the functions,
leadership eases the adaptability by the employees, leadership contributes significantly
in employee's development, leadership increases the employee's commitment to the
organization, leadership decides the training and development needs of the employees,
leadership gives and expects the responsibility from the employees, leadership maintains
discipline of the employees, leadership creates the positive attitude among the employees
about their work and organization and leadership creates the awareness among the
employees about their works and changes are effective as perceived by the employees in
public sector. The results also indicate that leadership creates overdependence, leadership
resolves the strategic differences with management, leadership increases the involvement
of the employees, leadership provides consistency, leadership helps in formation of the
mission statements, leadership assists in learning process, leadership provides the
empowerment to the employees and leadership creates the job satisfaction among the
employees are moderately effective as perceived by the employees in the private sector.
In Private sector the leadership improves the interpersonal relation between the
employees, and leadership contributes in strategies formulation, leadership helps in followthrough the functions, leadership creates the positive attitude among the employees about
their work and organization, leadership creates the awareness among the employees about
their works and changes and leadership encourages teamwork are highly effective as
perceived by the employees The results also indicate that leadership creates
overdependence, leadership resolves the strategic differences with management, leadership
increases the involvement of the employees, leadership provides consistency, leadership
helps in formation of the mission statements, leadership assists in learning process,
leadership provides the empowerment to the employees and leadership creates the job
satisfaction among the employees are moderately effective as perceived by the employees
in the private sector.
Suggestions:
For public sector in order to improve the effectiveness of leadership reduces over
dependence and leadership should provide consistency, besides, leadership should enhance
the organizational behaviour and also should assist in learning process. And leadership
should provide the empowerment and create the job satisfaction among the employees.
Leadership should act as catalyst for organizational change. In order to improve the
leadership styles of supervisor, the supervisor should take time to listen the employees
and should provide the employees with sufficient information related to their work and
also must take care of career development of their employees.
For private sector in order to improve the leadership, leaders should prescribe the
behavioural expectations of employees through formalization of rules and regulations
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correctly. In order to increase the standards of leadership styles, leaders should ensure the
employees work together, encouraging team work and also proper handling of employee's
complaints. In order to improve the leadership styles of supervisor, supervisor should
take care of employees' career advancement.
CONCLUSION
The leadership concepts of leader is managing the critical functions of organization
efficiently, leader is facilitating the creativity and innovation on the part of the employees,
leader should create trust among the employees and leader is responsible for creating and
maintaining strong work culture are strongly agreed by the employees of public sector.
References:
l
Afsaneh Bagheri and Zaidatol Akmaliah Lope Pihie, (2009), "An Exploratory Study
of Entrepreneurial Leadership Development of University Students" European Journal
of Social Sciences, 11(1): pp.177-190
Laohavichien, T., Fredendall, L., and Cantrell, R., (2009), "The Effects of
Transformational and Transactional Leadership on Quality Improvement" The Quality
Management Journal, 16(2): pp. 7-24.
Gordon F. Woodbine and Joanne Liu (2010), "Leadership Styles and the Moral Choice
of Internal Auditors", Electronic Journal of Business Ethics and Organization Studies,
15(1): pp.28-35.
Chen, P.Y., and Spector, P.E., (2008), "Negatively Affectivity as the Underlying Cause
of Correlations between Stressors and Strains", Journal of Applied Psychology, 76(4):
pp.398-407
Aamna Shakeel Abbasi, Ali Muslim Bin Aqeel and Ali Naseer Awan (2011), "The
Effectiveness of Leadership, Performance and Employee Involvement for Producing
Competitive Advantage with a TQM Orientation: A Conceptual Framework"
Mediterranean Journal of Social Sciences, 3(4): pp.83-90.
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LIC
Sig
1.56
ST
3.58
FT
2.89
OT
3.92
FT
3.42
OT
3.46
OT
4.64
AAT
2.24
ST
2.44
ST
4.62
AAT
2.04
ST
3.26
OT
4.64
AAT
4.72
AAT
2.42
ST
4.48
FT
3.62
FT
3.46
OT
2.24
ST
3.02
OT
2.35
ST
3.82
FT
4.56
AAT
3.94
FT
3.02
OT
4.62
AAT
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3.12
OT
3.62
FT
3.44
OT
3.42
OT
3.22
OT
4.38
FT
4.04
FT
4.62
AAT
4.82
AAT
4.92
AAT
3.86
FT
4.44
FT
2.16
ST
3.52
OT
4.92
AAT
4.96
AAT
4.64
AAT
4.58
AAT
2.01
ST
3.18
OT
4.92
AAT
4.02
FT
3.32
OT
4.18
FT
3.68
FT
3.64
FT
4.68
AAT
4.62
AAT
3.42
OT
4.02
FT
FT
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Influence of Effectiveness of Leadership on Satisfaction of Leadership in Public and Private Insurance Sectors
Table -2: Satisfaction of Leadership in both LIC and ICICI Prudential Life Insurance
ICICI Prudential Life
Insurance
Frequency
Per Cent
20
6.67
60
20.00
200
66.66
20
6.67
300
100.00
LIC
Satisfaction
Frequency
32
52
204
12
300
Dissatisfied
Neutral
Satisfied
Highly Satisfied
Total
Per Cent
10.67
17.33
68.00
4.00
100.00
t-Value
Sig
11.528
0.01
LIC
Frequency
28
120
68
84
300
Per Cent
9.33
40.00
22.67
28.00
100.00
t-Value
Sig
9.764
0.01
Regression
Coefficients
t-value
Sig
Intercept
1.246
1.139
.194
Organizational Climate(X1)
.528* *
3.864
.011
Comfortability (X 2)
Dynamism (X3)
.524* *
.194
3.946
.488
.011
.049
Development(X4 )
.568* *
3.896
.012
Enhancement(X5)
.047
.057
.610
.750
.352
.488
-.312
-.624
.763
.512
.445*
.813
2.494
.962
.031
.452*
0.68
2.629
.023
R2
Adjusted R 2
F
0.64
4.262
300
Coordination(X6 )
Values(X 7)
Organizational Behaviour(X8 )
Interpersonal Relationship(X 9)
Involvement(X10 )
Source
Note
0.01
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Regression
Coefficients
1.925 **
.608**
.649**
.594**
.218
.192
.459 *
.396
.444 *
.124
0.64
0.59
3.982
300
t-value
Sig
3.862
4.148
4.259
3.852
1.281
.782
2.462
.604
2.320
.682
.013
.011
.012
.011
.346
.412
.021
.624
.024
.624
0.01
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1. INTRODUCTION
Soft drinks are known as non-alcoholic beverage containing syrup essence or fruit
concentrates that are mixed with carbonated water. Soft drinks are thirst quencher, hygienic
and a drink of enjoyment. Soft drinks industries are quit old. Today, Pepsi and Coca - cola
are the famous brands and both are multinational.
The production of soft drinks is based on the franchise system, where the parent
companies supply the concentrates brand name and know how. The franchise unit that is
the bottling unit supplies the production to the market. Hence the bottlers become very
important for the successful operation of the soft drinks brand. The drinks are called soft
drinks, only to separate them from hard alcoholic drinks. This drinks do not contains
alcohol & broadly specifying this beverages, includes a variety of regulated carbonated
soft drinks, diet & caffeine free drinks, bottled water juices, juice drinks, sport drinks &
even ready to drink tea/coffee packs. So we can say that soft drinks mean carbonated
drinks.
Soft drinks are called "soft" in contrast to "hard drinks" (alcoholic beverages).
Small amounts of alcohol may be present in a soft drink, but the alcohol content must be
less than 0.5% of the total if the drink is to be considered non-alcoholic. Fruit juice, tea,
and other such non-alcoholic beverages are technically soft drinks by this definition but
are not generally referred to as such.
Widely sold soft drink flavours are cola, cherry, lemon-lime, root beer, orange,
grape, vanilla, ginger ale, fruit punch, and lemonade.
Today, soft drink is more favourite refreshment drink than tea, coffee; juice etc. It
is said that where there is a consumer, there is a producer & this result into competition.
Bigger the player, the harder it plays. In such situation broad identity is very strong. It
takes long time to make brand famous. Soft drinks are made by mixing dry ingredients
and/or fresh ingredients (for example, lemons, oranges, etc.) with water. Production of
soft drinks can be done at factories or at home.
2. SOFT DRINK INDUSTRY IN INDIA
First soft drink, established 50 years ago before all empowering Coca-Cola entered
the company to dominate the scene. It faced no competition and its euphoric image built
up in western countries helped it get ready clientele and glamour. Parle Export Private
Ltd should be regarded as the first Indian company introducing Limca a lemon drink
complimentary to their well established Gold Spot in 1970 which got moderate success.
However, before this, it had also introduced Cola-Pepino which was withdrawn in face
tough competition from Coca-cola.
Coca-Cola serves in India some of the most recalled brands across the world,
which includes names such as Coca-Cola, Diet Coke, Sprite, Fanta, along with the
Schweppes product range. The acquisition of Thums Up brought some of the leading
national soft drinks like Thums Up, Limca, Maaza, Citra and Gold Spot under its umbrella.
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To add to this, Kinley mineral water was launched in the year 2000. The Soft Drink
Industry consists of establishments primarily engaged in manufacturing non-alcoholic,
carbonated beverages, mineral waters and concentrates and syrups for the manufacture of
carbonated beverages. Establishments primarily engaged in manufacturing fruit juices
and non-carbonated fruit drinks are classified in Canned and Preserved Fruit and Vegetable
Industry. Principal activities and products:
l
Aerated waters
Carbonated beverages
The first marketed soft drinks (non-carbonated) appeared in the 17th century.
They were made from water and lemon juice sweetened with honey. In 1676, the
Companies de Limonadiers of Paris was granted monopoly for the sale of lemonade
soft drinks.
In 2012, soft drinks registered a higher off-trade value growth rate than the review
period average. This growth was attributable to strong double-digit performances in sectors
such as sports and energy drinks, bottled water and fruit/vegetable juice, which had a
good year due to rising mercury levels. Long summers and higher disposable incomes are
the main growth drivers for the soft drinks category.
2.1 Categorisation of Soft Drink Industry
The industry of soft drinks is divided into two main categories namely noncarbonated and carbonated drinks. The non-carbonated drink segments include mostly
mango flavours, squashes and fruit juices, while carbonated drinks include orange, lemon
and lemon flavours. Some of the top brand names in the soft drinks sector in India are
Thumps Up, Pepsi and Coco-cola, Limca, Sprite, Mirinda, 7Up, etc With a view to
meet the requirements of different segments of the society, these soft drinks are being
offered in varied sizes.
2.2 Top Soft Drink Companies in India
Soft Drinks has become part and parcel of the lifestyle of Indians, irrespective of
middle aged people or kids. Particularly, after the arrival of a number of fast food joints
in India, soft drinks have gained more and more popularity. Foods like French fries,
burgers and pizzas go hand in hand with soft drinks. Gone are the days when soft drinks
were preferred only during sunny days, nowadays soft drinks are enjoyed with almost
every meal that is had by people outside their home. In spite of several issues that crept up
with respect to ingredients used in the manufacture of soft drinks, the market remained
stable.
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Coco-Cola India
PepsiCo India
Rasna International
Some of the details regarding these top soft drink manufacturers in India are given
below:
Coco-Cola India
Coco-Cola Company entered into India in the name of Coco-Cola India, which is
its wholly owned subsidiary. The company was launched in India in the year 1993 and
this launch was actually a re-launch since India encouraged foreign investments in different
industries. The company has more than 1.3 million retailers and more than 7000 distributors
in India and their brands are the leading brands in the soft drinks industry in India. Some
of their popular brands in India are Thumps up, Sprite, Limca, Fanta Apple, Fanta Orange
and of course coco-cola. Their recent introduction to the soft drink industry in India is
Minute Maid Juice.
Pepsi Co India
PepsiCo is an international company that entered into Indian soft drink industry in
the year 1989 and within a short period of its entry, the company has started dominating
the Indian soft drink market. The company is operating with the vision of Performance
with purpose and the meaning of this vision is that when the business increases the value
of the shares, they become responsible for improving the society they serve and the
environment whose resources are being used by them. Thus, Pepsico India serves the
society to grow along with it. Some of their popular products are Slice, Pepsi, Nimbooz,
Mountain Dew, Mirinda and 7Up.
Rasna International
Rasna is another popular name in the soft drinks industry in India and this company
has in-depth and adequate information and knowledge on market behaviours, market
sizes, finances, government policies, project viabilities, etc They have emerging and
huge market for their products all over the world and they have made their mark in the
food & beverages industry in India. They have introduced a wide range of ready to make
soft drinks that can be prepared at the comfort of the home of users.
On the basis of pattern of consumption, the pattern of soft drink industry can be
classified into two segments, namely based on the premises in which they are sold like
cinema halls, restaurants, shops, railway stations, etc and the other segment is in-house
consumption, which indicates that soft drinks consumed at home by the consumers. Even
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Characteristics
Quality
Country
Brand
Association
Price
Consumer
Purchase Decision
Producer
Retailer
Staff
Events
Identify the impact of the nine associations on brand association of Soft Drink
purchasing behaviour, as shown in Figure 1 below.
H2:
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the purpose of the study. Findings of the Study The data from the survey were coded and
entered for statistical analysis. The data obtained were analysed by using different
statistics techniques such as Pearson Correlation test was used to uncover association
of each of the nine brand associations with the consumer's Soft Drink spending. A
Regression analysis was used to examine the relationship between brand association
and its constructs.
The mean values for the Brand associations and Association Factors are
presented in Table 1. In terms of brand association have Mean Value (4.17), Staff
gained the highest mean score (4.15), followed by Packaging (4.03) and Characteristics
was perceived lowest with a mean score of 2.79. The mean values for the brand
association dimensions show that respondents associate, Packaging, staff Country
experience higher with their most preferred soft drink brands when compared to the
other dimensions. Their brand association, on the other hand, is somewhat at a
mediocre level.
Indian respondents, therefore, considered Staff as the most important attribute
followed by Packaging while the attribute that they considered least was the
characteristics.
Table 1: Mean and Standard Deviation
Variables
Mean Standard Deviation
Packaging
4.03
0.99
Characteristics
2.79
1.29
Quality
3.50
1.12
Country
3.88
0.97
Price
3.78
1.08
Producer
3.55
1.20
Retailer
3.66
1.11
Staff
4.36
.763
Events
3.00
1.67
Brand association
4.17
.518
Regression Analysis
The study uses simple regression analysis to examine the relationship between
brand association, Packaging, characterises, Quality, Country, Price Producer,
Retailer, staff, Events and purchase Decision. As shown in Table 2, Packaging
(=0.107, p<0.001) and country (=0.114, p<0.001) are positively and significantly
related to brand Association. Also, Price, producer, Retail, Staff Event and Quality
are significantly accounted for Brand association. In addition, Characteristics ((= 0.83, p<0.001) Price (= - 0.62, p<0.001), are negatively and significantly related to
Brand Association and purchase Decision. This brings the results that H1, H2 are all
supported.
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Standardised
Coefficients
Beta
.206
-.206
t
10.09
2.280
-2.228
Sig.
.000
.000
.028
.128
.215
-.129
.008
.076
-.093
.262
1.304
2.154
-.983
.065
.629
-.999
2.881
.000
.000
.328
.000
.000
.320
.000
Correlation
Pearson Correlation test was used to analyse relationships if any between
the nine brand associations (independent variables) affecting Brand association
consumers' soft drink spending (dependent variables). The main hypothesis stated
that all of the nine Independent Variables have an impact on Brand association.
Table 3.
Sig(2-Tailed)
0.001
0.000
0.000
0.000
0.025
0.001
0.004
0.002
0.001
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Pearson result showed that that the independent variables of packaging, product
characteristics, quality, country of origin, producer's brand image, retailer's brand image
and retailer staff qualities are positively related to the dependent variable, i.e., Price of
the brand was negatively related to the dependent variable.
5.
CONCLUSION
The present study has analysed the brand association based on the functions or
benefits that the consumer associates with the brand. The basic objective was to study the
influence of these functions on certain aspects of consumer purchase decision in soft
drink market. For this, we have formulated two hypotheses that relate each of the brand
functions with the consumer's willingness to recommend the brand to others, pay a price
premium for it and accept brand association and the result concluded that brand association
have positive and significant relation with consumers purchase decision process in soft
drink market in India.
6.
The researcher purposes to analyse the relationship of all variables that affect
brand association toward soft drink and to make suggestion. Accordingly, a further study
with two import areas is suggested for future research.
First, further research can be conducted on other important factors that contribute
soft drink industries to its successful business that are not covered in this study. For
example, satisfaction, location, loyalty and other factors, second, a further study focusing
on new target population can be conducted for soft drink users. Soft drink's new target
population is students belonging to the age group of 20 and above.
l
REFERENCES
Ashutosh Nigam, and Rajiv Kaushik, (2011), "Impact of Brand Equity on Customer
Purchase Decisions: An Empirical Investigation with Special Reference to Hatchback
Car Owners in Central Haryana", International Journal of Computational Engineering &
Management, 12
Batt P. J., and Dean, A. (2000), "Factors influencing the consumer's decision", The
Australian & New Zealand Wine Industry Journal (First International Wine Marketing
Supplement), 15(4), 34-41
Chi. Hsin Kuang, Yeh Huery Ren, and Yang Ya Ting, (2009), "The Impact of Brand
Awareness on Consumer Purchase Intention: The Mediating Effect of Perceived Quality
and Brand Loyalty", The Journal of International Management Studies, 4(1)
Del H (2007). "Customer Behaviour", The Tata Mc graw- hill publishing company ltd
Dodds, W. & Monroe, K.B. (1985), "The effect of brand choice information on subjective
product evaluations", Advances in Consumer Research - Association for Consumer
Research.12, 85-90
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INTRODUCTION:
As without efficient management in this area no company can survive. Working
capital is linked with, both, liquidity and profitability of a firm. Working capital ascertains
the firm's ability to continue its operation without endangering the liquidity. Working
capital management is comprised of many important decision makings. Working capital
plays a very important role in business. It acts as lubricant to run the wheels of fixed
assets. Its effective provision and utilization can leads to success of the business while its
inefficient management leads to heavy losses and ultimate downfall of the organization.
* Head, Department of Commerce and Accountancy, S. S. P. Jain Arts & Commerce College ,
Dhrangadhra - 363310 (Gujarat). E-Mail: snransariya@yahoo.com
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REVIEW OF LITERATURE:
The review of literature is:
u
Shin and Soenen (1998) used a sample of 58,985 firm's years covering the period
1975-1994 in order to investigate the relationship between net-trade cycle that was
used to measured efficiency of working capital management and corporate profitability
and found a strong negative relationship between lengths of the firm's net trading
Cycle and its profitability. In addition, shorter net trade cycles were associated with
higher risk adjusted stock returns.
Ghosh and Maji( 2003) in this paper made an attempt to examine the efficiency of
working capital management of the Indian cement companies during 1992 - 1993 to
2001 - 2002. For measuring the efficiency of working capital management,
performance, utilization, and overall efficiency indices were calculated instead of
using some common working capital management ratios. Setting industry norms as
target-efficiency levels of the individual firms, this paper also tested the speed of
achieving that target level of efficiency by an individual firm during the period of
study. Findings of the study indicated that the Indian Cement Industry as a whole did
not perform remarkably well during this period.
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Shailesh N. Ransariya
capital plays a vital role to improve corporate profitability, and unless there is a
minimum level of investment of working capital, output and sales cannot be maintained
- in fact, the inadequacy of working capital would keep fixed asset inoperative.
Singh and Pandey (2008) studied the working capital components and the impact of
working capital management on profitability of Hindalco Industries Limited for period
from 1990 to 2007. Results of the study showed that current ratio, liquid ratio,
receivables turnover ratio and working capital to total assets ratio had statistically
significant impact on the profitability of Hindalco Industries Limited.
Karamjeet Singh and Firew Chekol Asress (2010), concluded that firms which
have adequate working capital in relation to their operational size are performed
better than those firms which have less than the required working capital in relation
to their operational size. If firms actual working capital is below the required working
capital in relation to their operational size, firms are forced to produce below their
optimal scale and this create problem to run day to day activities smoothly, so this
lead firms to generate low return on their investment.
In view of the literature surveyed above, I found that there still is indistinctness
regarding the appropriate variables that might serve as proxies for working capital
management and no significant study was conducted in India on the issue regarding impact
of working capital management components on profitability for Reliance Industry Limited
(RIL).
SIGNIFICANCE AND SCOPE OF THE STUDY:
Very few studies have been made in relation to Working Capital Management
especially in the refinery industry in India for 10 years 2001-02 to 2010-11. Therefore,
the present study is a maiden attempt to analyze the relationship between WCM efficiency
and Return on capital employed in the refinery industry in India. The study covers leading
refinery industry in India RIL), for which an attempt is made to provide an empirical
support to the hypothesized relationship between WCM and profitability.
RESEARCH HYPOTHESIS:
The hypotheses on the basis of objectives of the study are:
H0 : There is no relationship between working capital management and profitability.
H1 : There is relationship between working capital management and profitability.
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SELECTION OF VARIABLES:
The variable of the study are:
Dependent variable:
v
Independent variables:
v
Current Ratio
Quick Ratio
MODEL SPECIFICATIONS:
The basic empirical framework employed in this study is based on a simple model:
ROCE t = + X t + t
Where ROCE refers to Return on capital employed of company i at time t.
X t refers to the vector of determinants of working capital Management which
represents different independent variables for working capital Management of firm at
time t and is the error term. is the intercept of equation.
l
= Current Ratio
QR
= Quick Ratio
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Shailesh N. Ransariya
DER
ITR
DTR
IsTR
FATR
CR
Pearson Correlation
Sig. (2 tailed)
N
QR
Pearson Correlation
Sig. (2 tailed)
N
D/E
Pearson Correlation
Sig. (2 tailed)
N
LD/E
Pearson Correlation
Sig. (2 tailed)
N
ICR
Pearson Correlation
Sig. (2 tailed)
N
ITR
Pearson Correlation
Sig. (2 tailed)
N
DTR
Pearson Correlation
Sig. (2 tailed)
N
Pearson Correlation
Sig. (2 tailed)
N
WTR
Pearson Correlation
Sig. (2 tailed)
N
QR
D/E
LD/E
ICR
ITR
DTR
IN.TR
FTR
WTR
1.000
Sig. (2 tailed)
N
CR
.
10
-.857**
1.000
.002
10
10
-.301
.474
.399
.166
10
10
10
-.857**
.669*
0.250
.003
.049
.517
10
10
10
10
-.714*
.666*
.125
.920**
.020
.035
.731
.000
10
10
10
10
10
.244
-.340
.452
-.233
-.539
.497
.336
.190
.547
.108
10
10
10
10
10
10
.723*
-.762*
- .197
-.439
-.288
.045
.018
.010
.585
.238
.420
.902
10
10
10
10
10
10
10
-.203
-.088
.262
.224
-.122
.685*
-.157
.574
.809
.465
.563
.738
.029
.664
10
10
10
10
10
10
10
10
.792**
-.841**
- .185
-.550
-.416
.176
.971**
-.053
.006
.002
.609
.125
.232
.627
.000
.885
10
10
10
10
10
10
10
10
10
.005
.273
.835**
-.176
-.125
.240
.047
-.138
.057
.990
.445
.003
.651
.731
.505
.897
.703
.875
10
10
10
10
10
10
10
10
10
10
-.065
-.076
- .095
-.544
-.591
.425
-.392
.477
-.285
- .173
.859
.835
.795
.130
.072
.221
.262
.164
.425
.632
10
10
10
10
10
10
10
10
10
10
10
1.00
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
Management Trends
June-Dece - 2013
85
Pearson's Correlation analysis is used for data to examine the relationship between
working capital management components and profitability. Table No.1 shows multiple
correlations of selected companies. Pearson's correlation analysis is used for data to find
the relationship between working capital management and return on capital employed.
The ROCE and CR are negatively correlated but show significance result at 1% level of
significance. Correlation between ROCE and current ratio is negative indicating that high
current ratio involving greater current asset than current liability will reduce the profitability
of the firms. The ROCE and QR also show negative correlation but t-test result is
insignificance. It indicates that the two objectives of liquidity and profitability have inverse
relationships. So, the Indian manufacturing firms need to maintain a balance or tradeoff
between these two measures. The ROCE and D/E shows negative correlation and it shows
significance result at 1% level of significance. The ROCE and LD/E indicates significance
result at 5% level of significance. The ROCE and ICR show insignificance correlation.
The ROCE and ITR show the positive correlation. The correlation coefficient is 0.723
shows that less the time firm take in selling inventory more will be the favourable effect
on its profitability.
Table No.2 (Model of multiple regressions)
Model Summary
Std. Error
Model
R
R Square
Of the
Estimate
1
.990 a
.990
.990
5.000E-02
a. Predictors: (Constant), WTR, CR, FTR, DTR, ICR, D/E, ITR, QR
Adjusted
R Square
Table No.2 indicates the model of multiple regressions which shows that
independent variables like WTR, CR, FTR, DTR, ICR, D/E, ITR and QR have 0.990
effect on the dependent variable (ROCE).
Table No. 3 (Coefficients)
Coefficients a
Unstandardized
Standardized
Model
Coefficients
Coefficients
B
Std. Error
Beta
1 (Constant)
55.280
3.875
CR
-36.799
5.381
-1.948
QR
88.316
10.152
2.664
D/E
-32.902
2.392
-.0847
ICR
-0.651
0.140
-0.898
ITR
-0.784
0.305
-0.348
DTR
-0.429
0.037
-0.601
FTR
-24.497
2.217
-1.563
WTR
-0.193
0.049
-0.266
a. Dependent Variable : ROCE
Management Trends
Sig.
14.264
-6.839
8.700
-13.755
-4.661
-2.575
-11.612
-11.048
-3.938
0.045
0.092
0.073
0.046
0.135
0.236
0.055
0.057
0.158
June-Dece - 2013
86
Shailesh N. Ransariya
I have used the regression analysis to investigate the impacts of working capital
on the profitability. The above table no. 3 shows the result of the model of regression
analysis. The coefficient of CR and ROCE is -36.799 and result of t-test is significance.
Whereas the QR and ROCE shows positive coefficients with positive beta value and t
test result is significant. Coefficient between D/E and ROCE is negative with significant
diffidence of t -test. Whereas ICR, ITR, DTR, FTR and WTR explains negative
coefficient with negative beta value and t test has been significant with 5% level of
significance.
LIMITATIONS AND SCOPE FOR FURTHER STUDY:
1.
The study is confined to ten years data only, i. e. from 2001-02 to 20011-12, therefore,
a detailed analysis covering a lengthy period, which may give slightly different results
has not been made.
2.
3.
Further studies could be made by future researchers in the following aspects and
areas: by inclusion of extraneous variables like profitability ratios (g/p ratio, n/
p ratio, etc) and analyzing the inter-relationship between the WCM and
profitability.
CONCLUSION:
Working capital management is exceedingly significant issue in firm's corporate
financial decision making process and it should be designed to generate higher profit.
Present study investigates the relationship between Working Capital Management (WCM)
and profitability of a Reliance Industry Limited. For analysis purpose financial ratios of
WCM are used to check their effect on the return on capital employed performance. The
method that was used is the multiple correlations and regression analysis in which, liquidity,
accounts receivable, inventories are analyzed for the period of ten years 2001-02 to 201011. It was found from the study that there is negative relationship between working
capital components and profitability during the study period. The findings of the study
suggest that it may be possible to increase profitability by improving efficiency of working
capital.
REFERENCES:
1.
Afza, T., & Nazir, M. (2009), Impact of aggressive working capital management
policy on firms' profitability. The IUP Journal of Applied Finance,vol. 15(8), pp2030.
2.
Management Trends
June-Dece - 2013
87
3.
4.
Falope OI, Ajilore OT( 2009), Working capital management and corporate profitability:
evidence from panel data analysis of selected quoted companies in Nigeria. Research
Journal of Business Management, vol.3: pp73-84.
5.
6.
7.
Raheman, A. & Nasr, M. (2007), "Working capital management and profitability case of Pakistani firms", International Review of Business Research Papers, vol. 3,
no.1, pp279-300.
8.
Shin, H. H., and L. Soenen, 1998. "Efficiency of Working Capital Management and
Corporate Profitability", Financial Practice and Education, Vol. 8, No. 2, pp. 3745.
9.
Singh, J.P. and Shishir Pandey, 2008. "Impact of Working Capital Management in
the Profitability of Hindalco Industries Limited", ICFAI Journal of Financial
Economics, Vol. 6, Issue 4, pp. 62-72
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88
Introduction
"In the true democracy of India, the unit is the Village. True democracy has to be
worked from below by the people of every village. Village unit as conceived by me is as
strong as the strongest. Such a unit can give a good account of itself if it is well organized
on a basis of self-sufficiency. If anyone can produce one ideal village, he will have
provided a pattern not only to the whole country, but perhaps f o r the whole world" Mahatma Gandhi.
* Assistant Professor, Department of Social Work, JVBI, Ladnun, Rajasthan
** Director Om Kothari Institute of Management & Research, Kota
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90
Uttar Pradesh has 71 districts 820 development Blocks, 107452 villages, 51976 Gram
Panchayats and 8135 NyayPanchayats.
At present, there are about 3 million elected representatives at all levels of the
panchayatone-third of which are women. These members represent more than 2.4 lakh
Gram Panchayats, about 6,000 intermediate level tiers and more than 500 district
panchayats. Already the Constitution is amended to make the representation of women
50 percent. Spread over the length and breadth of the country, the new panchayatscover
about 96 percent of India's more than 6.4 lakh villages and nearly 99.6 percent of rural
population. This is the largest experiment in decentralisation of governance in the history
of humanity.
Rural Development
Development of rural areas has been at the core of planning process in the country
and also in the State. Rural Development is a broad, inclusive term which takes in its
consideration socioeconomic and political development of the rural areas. It includes
measures to strengthen the democratic structure of society through the Panchayati Raj
Institutions as well as measures to improve the rural infrastructure, improve income of
rural households and delivery systems pertaining to education, health and safety
mechanisms. Poverty alleviation is a key component of rural development. Government
of India has taken many initiatives for rural development. For this purpose it has setup the
Ministry of Rural Development.
The Department of Rural Development implements schemes for generation of
self employment and wage employment, provision of housing and minor irrigation assets
to rural poor, social assistance to the destitute and Rural Roads etc. Apart from this, the
Department provides the support services and other quality inputs such as assistance for
strengthening of District Rural Development Agency (DRDA) Administration, Panchayati
Raj Institutions, training & research, human resource development, development of
voluntary action etc. For the proper implementation of the programmes.
The 2011 Census estimates that 83.3 crore people, about 69 percent of the country's
total population of 121 crore, continue to live in rural India. A major challenge thus arises
is, how to feed India's growing population with rising incomes with the given land and
water resources. The expansion of income opportunities in the farm sector and progressive
absorption of people into non-agricultural activity have been identified as the most
appropriate solutions to this challenge. For achieving rural development, the present
government has been injecting resources at a massive scale to the rural and farm sector.
Presently, seven major flagship programmes are being implemented to develop rural areas.
They are: Mahatma Gandhi National Rural Employment Guarantee Act (MGMGNREGA),
National Rural Livelihood Mission (NRLM), Indira AwasYojana (IAY), National Rural
Drinking Water Programme (NRDWP) and Total Sanitation Campaign (TSP), Integrated
Watershed Development Programme (IWDP), PradhanMantriGrameenSadakYojana
(PMGSY) and rural electrification, including separation of agricultural feeders and Rajiv
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June-Dece - 2013
92
2.
3.
4.
5.
Decentralization Programme.
6.
7.
8.
9.
10. Construction of PanchayatBhawans for meeting halls and for the residence of secretary
of Gram Panchayat.
11. Construction of GraminKisan Bazaar and Livestock Markets.
12. Construction of underground water drainage system for the objective of environmental
cleanliness.
MGNREGA and PRIs
The Mahatma Gandhi National Rural Employment Guarantee Act (hereafter
MGNREGA) is a law whereby any adult who applies for employment in rural areas has
to be given work on local public works within 15 days. If employment is not given, an
unemployment allowance has to be paid. The employment guarantee is subject to a
limit of 100 days per household per year. The main objective of MGNREGA is to
protect ruralhouseholds from poverty and hunger. MGNREGA can also serve other
objectives: generating productive assets, protecting the environment, empowering
women, reducing rural-urban migration, and fostering social equity, among others. Thus,
MGNREGA is not just an employment scheme: it is a tool of economic and social
change in rural areas.
MGNREGA is perhaps, an opportunity for rural India as it guarantees one of the
crucial rights, right to work envisaged in the Article 41 of the Indian Constitution. The
national rural employment guarantee act has the potential to provide a "big push" in
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93
India's region of distress. Panchayats are having central (Principal authority) role in the
implementation and monitoring of the Schemes under MGNREGA. . Under the
provisions of the Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA), eligible households apply to the Gram Panchayat which, after due
verification, issues the job card. Each district has to prepare a shelf of projects, which
is done on the basis of priority assigned by the Gram Sabha. At least 50% of the works
have to be allotted to Gram Panchayats for execution. Social audit has to be done by
the Gram Sabha. However, for the potential of MGNREGA to be realized , major
interventions are required to enable Panchayats to fulfil their constitutional obligations
to lead economic development and social justice in their areas and major reforms need
to be initiated in its implementation.
It is important that Panchayati Raj Institutions are effectively enabled to govern
the Scheme.In several states of India, the District Rural Development Authorities have
been entrusted with a key role relating to administration of the Scheme, while the critical
role of Panchayati Raj institutions remains to be adequately appreciated and actualized.
In a state like Jharkhand, where elections to local panchayats haven't taken place for
over two decades, the government needs to pro-actively engage traditional gram sabhas
of local communities in operationalization and governance of the Scheme. The role of
institutions like District Rural Development Agency (DRDA) becomes particularly
questionable, when they unilaterally initiate critical processes, e.g. preparation of shelf
of projects, without any local level consultations and involvement of panchayat
functionaries - a common reality in many states where NREGS has been initiated.As
per section 16 (1) of the MGNREGA for the works/projects to be implemented in the
Gram Panchayat area would be undertaken by the Gram Panchayat ensuring active
participation of the gram sabha members. The plan proposals will then move upwards
for approval and consolidation at the above Panchayat levels and District Panchayat
Committee (DPC) will coordinate the preparation of detailed technical estimates and
sanctions. Most of the Gram Panchayats across the districts have not identified the
works to be implemented instead the works to be carried out are allotted to them. Gram
Panchayats play a very limited role in identification and planning of the works. It seems
Panchayats have become mere implementers of the scheme.The first step in the planning
process has to be initiated at the gram sabha level. Even the identification of the
beneficiaries is to be done by the gram sabhas. The gram sabhas have to carry out a
social audit of all the projects, within their jurisdiction.
The Act says that at least 50 per cent of the works in terms of costs will be
allotted to the Gram Panchayat for execution. Intermediate Panchayats and District
Panchayats are among other implementing agencies. The selection of implementing
agencies will have to be indicated in the Annual Plan. Although Panchayats are associated
with the implementation of the works but they play a very limited role in its effective
implementation. Panchayat representatives lack capacities and skills to efficiently
perform their duties as a result of which they get dependent on the government officials
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94
for each and everything resulting in to passive participation in the processes. Lack of
capacity and skills of the Panchayat officials is one of the major critical issues which is
restricting Panchayats from effective participation in the MGMGNREGA. Lack of
technical skills, low awareness of the provisions of the scheme, lack of clarity on their
roles and responsibilities are some of the problems putting off the Panchayats from
active functioning. The Act defines Panchayats as the prime authorities in management
of the MGMGNREGA. The limited role of Panchayats in management of the scheme is
a critical issue in effective implementation of MGNREGA. Due to lack of functionaries,
they have become paralysed and are not able to perform their roles and responsibilities.
Deployment of full time professionals dedicated to MGNREGA at all levels, but most
importantly at block level is vital.
Conclusion
Consequent to the 73rd Constitution Amendment Act political
decentralisationhas taken place in almost all the States where elections have been
held. However,progress on fiscal and functional decentralisation has been mixed.
There are Stateswhich have taken steps to devolve funds, functions and functionaries
to the PRIs. Theprocess of devolution is at different levels of operationalisation across
States.Surprisingly, the States of Madhya Pradesh and Uttar Pradesh who have hadlittle
experience of decentralisation have made the most fundamental changes in thisregard.
Further, it is imperative that the PRIs have resources to match theresponsibilities
placed on them. While State Finance Commissions have submittedtheir
recommendations, very few States have taken the necessary steps to ensure
fiscalviability of the PRIs. Yet, one can be hopeful that the experience of some States
andsome PRIs within States would provide the necessary impetus for greater
devolution in other parts of the country.
Strict monitoring of their performance by PRIs against specific outcomes should
be ensured. Greater convergence is required across departments and Programmes with
MGNREGA so that sustainable livelihoods can be created. Some of these principles,
such as answerability to PRIs, stakeholder participation and social audit, are inherent
in the MGNREGA architecture. But they are yet to be effectively put into place.
References
1. Uttar Pradesh Development Report . Planning Commission, Government of India
2. TFC (2004). 'Report of the Twelfth Finance Commission (2005- 10), Twelfth Finance
Commission, Government of India, New Delhi.
3. Report of Twelfth Finance Commission
4. Rao, Govinda M., H.K.Amarnath and B.P.Vani (2004). 'India: Fiscal Decentralization
to Rural Governments, Report No. 26654- IN (January)', World Bank Rural
Development Unit, South Asia Region, New Delhi.
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Himani Gupta
Himani Gupta*
I. INTRODUCTION
FOREIGN investment refers to investments made by the residents of a countryin
the financial assets and production processes of another country. After theopening up of
the borders for capital movement, these investments have grownin leaps and bounds. The
effect of foreign investment, however, varies from countryto country. It can affect the
factor productivity of the recipient country and can alsoaffect the balance of payments. In
developing countries there has been a great needfor foreign capital, not only to increase
*Assistant Professor, Jagannath International Management School; Address: K-13 A, Ground Floor,
Khirki Ext, Malviya Nagar, New Delhi 110017 E- Mail: tinugupta76@yahoo.co.in
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97
the productivity of labor but also becauseforeign capital helps to build up the foreign
exchange reserves needed to meet tradedeficits. Foreign investment provides a channel
through which developing countriescan gain access to foreign capital. It can come in
two forms: foreign directinvestment (FDI) and foreign institutional investment (FII).1
Foreign direct investmentinvolves in direct production activities and is also of a mediumto long-termnature. But foreign institutional investment is a short-term investment, mostly
inthe financial markets. FII, given its short-term nature, can have bidirectional
causationwith the returns of other domestic financial markets such as money
markets,stock markets, and foreign exchange markets. Entities covered by the term
'FII' include "Overseas pension funds, mutual funds, investment trust, asset management
company, nominee company, bank, institutional portfolio manager, university funds,
endowments, foundations, charitable trusts, charitable societies, a trustee or power of
attorney holder incorporated or established outside India proposing to make proprietary
investments or investments on behalf of a broad-based fund (i.e., fund having more
than 20 investors with no single investor holding more than 10 per cent of the shares or
units of the fund)" (GOI (2005)). FIIs can invest their own funds as well as invest on
behalf of their overseas clients registered as such with SEBI. These client accounts that
the FII manages are known as 'sub-accounts'. A domestic portfolio manager can also
register itself as an FII to manage the funds of sub-accounts.A few large FIIs (less than
3% of all registered ones, according to GOI (2005)), issue derivative instrument s called
'participatory notes' that are registered and traded overseas, backed by the FIIs' holdings
of Indian securities. This arrangement has raised some concerns in regulatory circles
since it makes it difficult to trace the ultimate beneficiary in the funds and may be used
to bring in "unclean" funds (funds generated out of illegal activities) into the Indian
markets. . In this age of transnational capitalism, significant amounts of capital are
flowing from developed world to emerging economies. Positive fundamentals combined
with fast growing markets have made India an attractive destination for foreign
institutional investors (FIIs). Portfolio investments brought in by FIIs have been the
most dynamic source of capital to emerging markets in 1990s. At the same time there is
unease over the volatility in foreign institutional investment flows and its impact on the
stock market and the Indian economy. Statistical records provided by Securities and
Exchange Board of India (SEBI) indicated that both FIIs and domestic institutional
investors together influenced market sentiment.FII exerts a largerimpact on the domestic
financial markets in the short run and a real impact in thelong run. India, being a capital
scarce country, has taken many measures to attract foreigninvestment since the beginning
of reforms in 1991.. There was a surge in capital inflows into India too since 1992 as in
India, the purchase of domestic securities by FIIs was first allowed in September 1992 as
part of the liberalization process, which affects short-term stability in the financial markets.
Hence, there is a need to determine the push and pull factors behind any changein the FII,
so that we can frame our policies to influence the variables that attractforeign investment.
Also, FII has been the subject of intense discussion, as it is heldto be responsible for
having intensified the currency crises of the 1990s in East Asiaand elsewhere in the world..
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Himani Gupta
Table 1 provides a cross section of data on the FIIs inflow and stock market
movement, not necessarily at cause and effect relationship however this is not been tested
by us anyway. The FIIs and hedge funds had pulled out money mainly due to higher
interest rates in U.S. after Federal Reserve increased interest rates to 4.5% under their
new governor. Similar changes and took place many times in the history since opening
and few times in the study.
YEAR
2010:(DEC)
2010:(NOV)
2010:(OCT)
2010:(SEP)
2010:(AUG)
2010:(JUL)
2010:(JUN)
2010:(MAY)
2010:(APR)
2010:(MAR)
2010:(FEB)
2010:(JAN)
II.
FII INFLOW IN $
-1,551
-19,921
28,630
10,449
-440
8,750
871
-491
3,159
5,206
230
3,093
BSE SENSEX
20509.09
19521.25
20032.34
20069.12
17971.12
17868.29
17700.9
16944.63
17558.71
17527.77
16429.44
16357.96
LITERATURE REVIEW
There have been several attempts to explain FII behavior in India. All the
existingstudies have found that equity return has a significant and positive impact on
FII(Agarwal 1997; Chakrabarti 2001; Trivedi and Nair 2003). But given the huge volumeof
investments, foreign investors can play the role of market makers and booktheir profits,
that is, they can buy financial assets when the prices are declining,thereby jacking-up the
asset prices, and sell when the asset prices are increasing(Gordon and Gupta 2003). Hence,
there is a possibility of a bidirectional relationship
between FII and equity returns.Following the Asian financial crisis and the bursting
of the info-tech bubble internationallyin 1998/99, net FII declined by U.S.$61 million.
This, however, exertedlittle effect on equity returns. This negative investment might
possibly disturbthe long-term relationship between FII and other variables such as equity
returns,inflation, and so on. Chakrabarti (2001) has perceived a regime shift in the
determinantsof FII following the Asian financial crisis and found that in the pre-Asiancrisis
period, any change in FII had a positive impact on equity returns. But it wasfound that in
the post-Asian crisis period, a reverse relationship has been the case,namely, that change
in FII is mainly due to change in equity returns. This is a factthat needs to be taken into
account in any empirical investigation of FII.Investments, either domestic or foreign,
depend heavily on risk factors. Hence,while studying the behavior of FII, it is important
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99
to consider the risk variable.Further, realized risk can be divided into ex-ante and
unexpected risk. Ex-ante riskis an observed component and is negatively related to FII.
But the relationship betweenunexpected risk and FII is obscure. Therefore, while examining
the impactof risk on FII, one needs to separate the unobserved component from the
realizedrisk. Trivedi and Nair (2003) have used only the realized risk.Another possible
determinant of FII is the operation of foreign factors such asreturns in the source country's
financial markets and other real factors in the sourceeconomy. So far, however, studies
have found that both return in the source countrystock market and the inflation rate have
not exerted any impact on FII. Agarwal(1997) found that world stock market capitalization
had a favorable impact on theFII in India.A survey of the literature shows that existing
studies do not account for volatility(the ARCH effect), which can be expected in most of
the monthly financial timeseriesdata. Yet given the increase in financial market integration,
both domesticallyand in foreign financial markets, accounting for volatility is unavoidable.
Further,the existing studies either do not incorporate risk in foreign and domestic marketsor
make use of realized risk, an approach that does not always yield robust results.
Literature Review as per foreign researchers on Indian market.
As the Indian equity market is growing, the trend and future prospects in
foreigninstitutional investments has become a topic of great concern. A recent research
survey byJapan Bank for international operation (JBIC), shows that in the next 3 years,
India will bethe third most favoured investment destination for Japanese investors. A
Smith Barney (aCITI group Division) study says estimated market value of foreign
institutional investment inthe top 200 companies in India (including ADRs and GRDs) at
current market prices isUS$43 billion. This is 18% of the market capitalization of BSE
200.It is established in literature that block shareholders influence the firm performance
(Cho &
Padmanabhan, 2001). Governance of listed companies plays an important role in
foreignintuitional investment decisions. Further more management of businesses run by
familygroups plays a distinctive role. When governments become block share shareholder
theirobjective will be quite different from those of private investors.Douma, Pallathiatta
and Kabir (2006) investigated the impact of foreign institutionalinvestment on the
performance of emerging market firms and found that there is positiveeffect of foreign
ownership on firm performance. They also found impact of foreigninvestment on the
business group affiliation of firms. Aggarwal, Klapper and Wysocki(2005) observed that
foreign investors preferred the companies with better corporategovernance. Investor
protection is poor in case of firms with controlling shareholders whohave ability to
expropriate assets. The block shareholders affect the value of the firm andinfluence the
private benefits they receive from the firm. Companies with such shareholderswill find it
expensive to raise external funds. Yin-Hua and Woidtke (2005) found that whencompany
boards are dominated by members who are affiliated to the controlling familyinvestor
protection will be relatively weak and it is difficult to determine the degree ofseparation
of management from ownership. They also observed that firm value is negativelyrelated
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Himani Gupta
to board affiliation in family controlled firms. Li (2005) observed that in case ofpoor
corporate governance the foreign investors choose foreign direct investment (FDI)rather
than indirect portfolio investment. It is generally believed that FDI could be
betterprotected by private means.Dahlquist et al. (2003) analysed foreign ownership
and firm characteristics for the Swedishmarket. They found that foreigners have greater
presence in large firms, firms paying lowdividends and in firms with large cash holdings.
They explained that firm size is driven byliquidity. They measured international presence
by foreign listings and export sales. Theyreiterated that foreigners tend to underweight
the firms with a dominant owner. Covirg etal. (2007) concluded that foreign fund
managers have less information about the domesticstocks than the domestic fund
managers. They found that ownership by foreign funds isrelated to size of foreign sales,
index memberships and stocks with foreign listing.Li and Jeong-Bon (2004) found that
foreign investors tend to avoid stocks with high crosscorporateholdings. They suggested
that FII are likely to be efficient processors of publicinformation and are attracted to
Japanese firms with low information asymmetry. Morin(2000) explored the influence
of French model of shareholding and management on FII.They commented that France
has undergone rapid change from a financial networkeconomy to a financial market
economy. The new pattern has broken the traditional systemof cross holding and
facilitated the arrival of FII who bring with them new techniques anddemands efficient
corporate management.What could be firm level factors that influence foreign capital
from an economic standpointis the question yet to be answered. Outside investors will
lower the price they pay if theyfear consumption of private benefits of control family.
Choe, Kho, Stulz (2005) found thatUS (United States) investors do indeed hold fewer
shares in firms with ownership structuresthat are more conducive to expropriation by
controlling insiders. In companies whereinsiders are dominating information access
and availability to the shareholders will belimited. With less information, foreign
investors face an adverse selection problem. So theyunder invest in such stocks.Leuz,
Nanda and Wysocki (2003) further asserted that the information problems
causeforeigners to hold fewer assets in firms. Firm level characteristics can be expected
tocontribute to the information asymmetry problems. Concentrated family control makes
itmore likely that information is communicated via private channels. Informative
insidershave incentives to hide the benefits from outside investors by providing opaque
financialstatements and managing earnings. Haw, Hu, Hwang and Wu, (2004) also found
that firmlevel factors cause information asymmetry problems to FII. Their paper found
evidence thatUS investment is lower in firms where managers do not have effective
control. Foreigninvestment in firms that appear to engage in more earnings management
is lower incountries with poor information framework. There is a growing literature on
the determinants of global investment flows and allocations.Prior research focused on
international portfolio flows and examined the relationshipbetween portfolio flows and
stock returns. Most of these studies have analyzed global andcountry level factors that
influence investment allocations. This paper investigatedempirically the firm specific
variables, which influence the investment decision of foreigninvestors.
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The present study is based on the secondary data. The data for the net flows of
Foreign Institutional Investors (FIIs) and Sensitivity Index closing points is collected
from http://www.5paisa.com and http://in.finance.yahoo.com for the duration of 4 years
between January, 2007 and December, 2010 excluding days data set which was not
available. A set of 16 samples out of 48 monthly observations from the above mentioned
range of historical data were collected to study the distribution of correlation. MS Excel
has been used for plotting of graphs and analysis of data and SEBI and Centre for
Monitoring Indian Economy (CMIE) Prowess Database has been used for collection of
data otherwise.
The correlation values for samples are calculated through and result it interpreted.
Spearman's Coefficient of correlation for the sample is calculated by
?? ? =
? s ? ?? ? - s ? ? s ? ?
? ? s ? ?2 - (s ? ? )2 ? ? s ? ?2 - (s ? ?)2
- 1 = ?? ? = 1)
Where x and y are the data variables and n denotes the no. of data sets.
IV
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Graph 2: Correlation for Different Samples
June-Dece - 2013
103
Conclusion
Gordon, James and Poonam Gupta (2003), Portfolio Flows into India: Do Domestic
Fundamentals Matter, June, IMF Working Paper No. 03/20.
Chakrabarti, R (2001), FII Flows to India: Nature and Causes, Money and Finance,
Oct-Dec, Vol.2, Issue 7.
Kumar Saji (2006), FIIs Vs. SENSEX: An Emerging Paradigm, Treasury Management,
ICFAI University Press, February.
Singh, Rahul and P N Mishra (2005), Information and Stock Market Volatility: A
Study of SENSEX, Journal of Insurance and Risk Management, Vol. III, Issue 06, pp
105.
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1. Introduction
The duration of trading period in the BSE is 5 days in a week. It starts on Monday
and ends with Friday. The mechanism of rolling settlement is T+2. Consequently, the
deals are to be closed on the next two days of trading. For the purpose of settlement, all
the trades are squared up in their trading positions. Squaring up the transaction means
acquiring the shares in case of short sales or selling the shares if there is no money to pay
for the purchase of shareswhatever the case may be.
If any trader, who is a short seller, is not able to acquire the shares required for
delivery, the position of that trader will be subjected to an auction. This action may result
in a great loss. Thus, there is a pressure on traders for buying or selling of shares as the
* Professor & Principal, Vignanasudha Institute of Management & Technology, Chittoor
- 517 100; mvrsvu@gmail.com +9189850 52430 +9173960 82025
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Last Day of the Trading Period Effect on Volatility in Prices of Stocks of Bombay Stock Exchange Limited
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case may be, at the end of trading period. Further, this pressure may result in fluctuations
in quotations which may be more than the normal expected fluctuations.
2. Methodology
The primary objective of the study is to investigate the effect of last trading day of the
week on volatility in the prices of stock of the BSE. To identify, whether or not the end of
trading period is a factor in causing volatility in the share prices of the BSE, an attempt
has been made to analyse the volatility in the last trading days (LTDs) of 52 weeks (one
year). In the study, Friday has been taken as the proxy of the last trading day of the trading
period. Here, the study period is one year, i.e. 2010. The analysis is presented only as a
case study by assuming that it represents the rest of the period. The volatility for 252
trading days was computed during 2010. The percentage deviation of half the spread
between high-low values of index from the mid-value of high-low spread of index was
taken as a measure of volatility. The volatility on 252 trading days for the BSE sensex and
select sectoral indices were calculated. The values of quartile 1 (Q1), quartile 2 (Q2) and
quartile 3 (Q3) for volatility for 252 trading days were computed. The LTDs which have
the volatility more than that of the value of Q3 is termed as more volatile. The LTDs with
less than the value of Q1 are termed as less volatile and LTDs with volatility between
range of values of Q1 and Q3 termed as average volatile.
3. Effect of last trading day on the volatility in the prices of sensex
To test the effect of volatility on the stock prices, stock prices of sensex at the endof-the trading day of the week are computed. These are presented in Table 1. The Table
reveals the frequencies of LTDs in all the three categories of volatility i.e. less volatility,
average volatility and more volatility. These are shown in terms of absolute figures and
percentage terms. Out of the total of 52 trading weeks, the average
Table 1:
Impact of LTD on the Volatility of Prices of Securities of Sensex during 2010
Category of volatility
No. of weeks
% to total
16
30.77
23
44.23
13
25.00
Total
52
100.00
Source: Annexure-I
volatility exists in 23 weeks or 44.23 per cent of weeks. The less volatility emerges
in 16 or 30.77 per cent of weeks and in the rest 13 or 25 per cent of weeks, the volatility
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Venkataramanaih. M.
is more. It may be concluded that there is no evidence to show that there is high volatility
in the sensex as low and average volatility weeks together accounted for 75 per cent
during 2010.
3.1 Effect of LTD on the volatility of prices of securities of sectoral indices
The effect of LTD of the week on the volatility of prices of securities in the select
sectoral indices during 2010 is evaluated. Table 2 presents the level of volatility in the
prices of BSE100 sector. It can be observed that the average volatility is 26 out of 52
weeks. It accounts for 50 per cent in the total number of weeks. The less volatility and
more volatility weeks were 15 and 11 respectively. These two have together constituted
50 per cent in the volatility weeks. It may
Table 2:
Impact of LTD on the Volatility of Prices of Securities of
BSE100 Sector during 2010
Category of volatility
Less volatility (Volatility <0.3677 %, i.e. value of Q1)
Average volatility ( Volatility between 0.3677 and 0.6906 %
More volatility ( Volatility > 0.6906%, i.e. value of Q3)
Total
No. of
weeks
15
26
11
52
% to
total
28.85
50.00
21.15
100.00
Source: Annexure-II
Be noted that the former forms 28.85 per cent while the latter 21.15 per cent
sequentially. It may be summed up that the LTD of the week has not contributed much for
volatility in the prices of securities under BSE100 sector.
Table 3 shows the range of volatility in the prices of securities of FMCD on account
of LTD of the week during 2010. A look at the Table reveals that the average volatility
spans over 25 or 48.08 per cent of total number of weeks in the year whereas less volatility
weeks are 15 or 28.84 per cent. This sector has experienced more volatility in 12
Table 3:
Effect of LTD on the Volatility of Prices of Securities of
BSE FMCD Sector during 2010
Kind of volatility
No. of
weeks
% to
total
15
28.84
25
48.08
12
23.08
Total
52
100.00
Source: Annexure-III
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or 23.80 per cent in the aggregate number of weeks. It is evident that the average
and less volatility weeks have together accounted for 78.85 per cent in the total number
of weeks. It may be concluded that the LTD of the week has no impact on the volatility of
prices of securities forming part of FMCD sector.
In the case of CG sector, the less volatility is spread over 14 weeks, which accounts
for 26.92 per cent in the total number of weeks in the year (see Table 4). The more
volatility weeks are 14, recording a share of 26.92 per cent in the total. The average
volatility weeks are 24
Table 4:
Effect of LTD on the Volatility in the Prices of Securities of
CG Sector for the year 2010
Category of volatility
Less volatility (Volatility <0.4804 %, i.e. value of Q1)
Average volatility ( Volatility between 0.4804 % and 0.8598 %
More volatility ( Volatility > 0.8598 %, i.e. value of Q3)
Total
Source: Annexure-IV
No. of
weeks
14
24
14
52
% to
total
26.92
46.16
26.92
100.00
or 46.16 per cent. This situation in the CG sector contradicts that of BSE 100 and
FMCG sectors. In other words, the LTD exercises impact on the volatility in the prices of
securities under CG sector.
It can be gauged from Table 5 that the less volatile and more volatile weeks stood
at 15 and 13 serially in the year. Their proportions in the total number of weeks are 28.85
per cent and 23.08 per cent sequentially. The average volatility weeks are 24 or 46.16 per
cent. It may be summed up that LTD has not contributed significantly to volatility in the
prices of securities of FMCG sector since more volatile weeks are less than the lower
volatile weeks during 2010.
Table 5:
Impact of LTD on Volatility of the Price of Securities under FMCG
Sector during 2010
Category of volatility
No. of
weeks
% to
total
15
24
28.84
46.16
13
25.00
Total
52
100.00
Source: Annexure-V
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With regard to HC sector, the less, average and more volatile weeks are 15, 25 and
12 respectively (see Table 6). The share of each of these is 28.85 per cent, 48.07 per cent
and 23.08 per cent sequentially. This trend is similar
Table 6:
Effect of LTD on the Volatility in the Prices of Securities of HC sector during 2010
Category of volatility
Less volatility (Volatility <0.4804 %, i.e. value of Q1)
Average volatility ( Volatility between 0.4804 % and 0.8598 %
More volatility ( Volatility > 0.8598 %, i.e. value of Q3)
Total
No. of
weeks
15
25
12
52
% to
total
28.85
48.07
23.08
100.00
Source: Annexure-VI
to that of FMCG sector. The less volatile weeks are greater than that of more
volatile weeks. Therefore, it may be said that LTD has no impact on the volatility in the
prices of securities constituting HC sector.
A glance at the Table 7 shows that, in the IT sector, less volatility weeks are 15. In
another 15 weeks, the volatility is more. The average volatility is spread over 22 or 42.30
per cent of weeks. It may be noted that the intensity of volatility is relatively more than
that of CG sector. The conclusion which
Table 7:
Impact of LTD on Volatility in the Prices of Securities of IT Sector during 2010
Category of volatility
Less volatility (Volatility <0.4910 %, i.e. value of Q1)
Average volatility ( Volatility between 0.4910 % and 0.9697 %
More volatility ( Volatility > 0.9697 %, i.e. value of Q3)
Total
No. of
weeks
15
22
15
52
% to
total
28.85
42.30
28.85
100.00
Source: Annexure-VII
could be reached here conflicts with the ones drawn in the remaining sectoral
indices leaving CG. Between CG and IT sectors, the effect of LTD on the volatility in the
prices of the latter surpasses that of the former.
Table 8 portrays the pace of volatility in the prices of securities of PSU sector
during 2010. It can be observed that the less volatile weeks are higher than more volatile
weeks. The former and the latter have constituted 28.85 per
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Table 8:
Impact of LTD on the Volatility in the Prices of PSU Sector for the year 2010
Category of volatility
Less volatility (Volatility <0.4910 %, i.e. value of Q1)
Average volatility ( Volatility between 0.4910 % and 0.9697 %
More volatility ( Volatility > 0.9697 %, i.e. value of Q3)
Total
Source: Annexure-VIII
No. of
weeks
15
25
12
52
% to
total
28.85
48.07
23.08
100.00
cent and 23.08 per cent serially. The average volatility covers 25 or 48.07 weeks.
The results show that the effect of LTD on the volatility in the prices of securities
constituting PSU sector is absent.
It can be observed that the LTD has influence over the volatility in the prices of
securities forming part of TECH sector. This is based on the fact that
Table 9:
Volatility in the BSE TECH on Last Trading Day of the Week during 2010
Category of volatility
Less volatility (Volatility <0.4713 %, i.e. value of Q1)
Average volatility ( Volatility between 0.4713 % to 0.8571 %
More volatility ( Volatility > 0.8571 %, i.e. value of Q3)
Total
No. of
weeks
15
22
15
52
% to
total
28.85
42.30
28.85
100.00
Source: Annexure-IX
the average volatile weeks are less than that of the aggregate of less and more
volatile weeks. The less and more volatile weeks are 30 whilst the average volatile weeks
are 22. From the aforesaid analysis, we can deduce that LTD has impact on the volatility
in the prices of securities of CG, IT and TECH sectors only. In other words, the LTD has
no impact on the rest of five sectoral indices. Similar is in the case with securities
constituting sensex.
4. Summary of findings and conclusion
Out of the total of 52 trading weeks, the average volatility in sensex exists in 23
weeks or 44.23 per cent of weeks. The less volatility emerges in 16 or 30.77 per cent of
weeks and in the rest 13 or 25 per cent of weeks, the volatility is more. In BSE 100, the
average volatility is 26 weeks or 50 per cent of total number of weeks. The less volatility
and more volatility weeks were 15 and 11 respectively. The FMCD sector has experienced
more volatility in 12 or 23.80 per cent in the aggregate number of weeks. In the case of
CG sector, the less volatility is spread over 14 weeks, which accounts for 26.92 per cent
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Venkataramanaih. M.
in the total number of weeks in the year. The more volatility weeks are 14, recording a
share of 26.92 per cent in the total. The average volatility weeks are 24 or 46.16 per cent.
The less volatile and more volatile weeks in FMCG sector stood at 15 and 13 serially in
the year. The average volatility weeks are 24 or 46.16 per cent. With regard to HC sector,
the less, average and more volatile weeks are 15, 25 and 12 respectively. The share of
each of these is 28.85 per cent, 48.07 per cent and 23.08 per cent sequentially. In the IT
sector, less volatility weeks are 15. In another 15 weeks, the volatility is more. The average
volatility is spread over 22 or 42.30 per cent of weeks. In PSU sector, the less volatile
weeks are higher than more volatile weeks. The average volatility covers 25 or 48.07
weeks. The average volatile weeks are less than that of the aggregate of less volatile
weeks and more volatile weeks in Tech sector. In this sector, the less and more volatile
weeks are 30 whilst the average volatile weeks 22.
On the basis above discussion it may be concluded that there is no enough evidence
of effect of last trading day of the trading period on volatility in the prices of the BSE.
The IT, TECH and CG sectors are exceptional to this phenomenon. The rest of sectoral
indices including sensex exhibits less volatility during the last trading day of the trading
period. The less volatile days and average volatile days is more than that of more volatile
days in all the sectors. Therefore, it may conclude that the effect of last trading day effect
of the trading period is minimal on the volatility of prices of stocks in the BSE.
References
(1) Cross, F.. 1973, Thebehavior of stock prices on Fridays and Mondays, Financial
Analysts Journal 4. 67-69.
(2) Fama, E., 1965, Thebehavior of stock prices. Journal of Business 38, 383-417.
(3) French, K., 1980, Stock returns and the weekend effect. Journal of Financial
Economics 8, 55-70.
(4) Gibbons, M. and P. Hess, 1981, Day of the week effects and asset returns, Journal
of Business 54, 579-596.
(5) Harris, L.. 1986, A transaction data study of weekly and intradaily patterns in stock
returns, Journal of Financial Economics 16. 99-117.
(6) Keim. D. and R. Stambaugh, 1984. A further investigation of the weekend effect in
stock returns, Journal of Finance 39, 819-835.
(7) Lakonishok, J. and M. Levi, 1982, Weekend effects on stock returns: A note, Journal
of Finance 37, 883-889.
(8) Prince, P.. 1982, Day of the week effects: Hourly data. Unpublished manuscript
(University of Chicago, Chicago, IL).
(9) Rogalski, R., 1984, New findings regarding day of the week returns over trading and
non-trading periods, Journal of Finance 39, 1603-1614.
(10) Scholes. M. and J. Williams, 1977. Estimating betas from non-synchronous data,
Journal of Financial Economics 4, 309-327.
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Introduction
Accomplishment of organizational goal is of the biggest challenges for managers
in this century. Managers have been struggling to experiment with different techniques to
improve organizational performance. Among those suggested techniques, concepts like
Total Quality Management (TQM) and Business Process Reengineering (BPR) earned
recognition from many authors in the second half of twentieth century and were found
helpful in increasing organizational performance by focusing on operational and process
improvements.They were/still being used as tools for management in their effort to plan,
execute and control of the desired changes in the operational quality. The concept of
Employee Engagement is also doing round of late which signifies level of commitment
and emotional attachment of employees towards their organization. Employers now realize
* Director, Shree Swaminarayan Institute of Management, Porbandar - 360578 Email :
prof.viralshilu@gmail.com
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Viralkumar Shilu
that by focusing on employee engagement, they can create more efficient and productive
workforce. Any initiatives of improvement which are taken by management cannot be
fruitful without will ful in volvement and engagement of employees.
Employee engagement is a workplace approach designed to ensure that employees
are committed to their organization's goals and values, motivated to contribute to
organizational success, and are able at the same time to enhance their own sense of wellbeing. Though the concept of Employee Engagement is very comprehensive; this article
limits itself to discuss only the basic concepts on employee engagement based on recent
literatures. The article explores the evolution of the concept, its definition and how it is
different from the earlier concepts such as Commitment, Organizational Citizenship
Behavior (OCB) and job satisfaction. Secondly, the articled is cusses the factors or drivers
leading to engagement. It details the impact of employee engagement on organizational
performance indicators or business out comes such as profitability, customer satisfaction,
company growth, productivity and others pointing out its benefits and importance to
organizations. Finally, the article suggests strategies the companies should take up to
keep employees engaged in their jobs.
Employee Engagement
Employee engagement refers to a condition where the employees are fully engrossed
in their work and are emotionally attached to their organization. One can't achieve anything
unless and until one is serious about it. An employee must be dedicated towards his work
and should take it as a challenge. Work should never get monotonous as it would then be
a burden for the individual.Problems arise when individuals have nothing creative to do
and sit idle the whole day. They start interfering in each other's work and tend to become
negative for the organization. They start finding reasons to fight with their fellow workers
and crib about almost everything.
Additionally, there are differences between attitude, behavior and outcomes in
terms of engagement. An employee might feel pride and loyalty (attitude); be a great
advocate of their company to clients, or go the extra mile to finish a piece of work
(behavior). Outcomes may include lower accident rates, higher productivity, fewer
conflicts, more innovation, lower numbers leaving and reduced sickness rates. But we
believe all three - attitudes, behaviors and outcomes - are part of the engagement story.
There is a virtuous circle when the pre-conditions of engagement are met when these
three aspects of engagement trigger and reinforce one another.It is to be stated that engaged
organizations have strong and authentic values, with clear evidence of trust and fairness
based on mutual respect, where two way promises and commitments - between employers
and staff - are understood, and are fulfilled.Although improved performance and
productivity is at the heart of engagement, it cannot be achieved by a mechanistic approach
which tries to extract discretionary effort by manipulating employees' commitment and
emotions. Employees see through such attempts very quickly; they lead instead to cynicism
and disillusionment. By contrast, engaged employees freely and willingly give discretionary
effort, not as an 'add on', but as an integral part of their daily activity at work.
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Viralkumar Shilu
a particular time frame to earn handsome incentives or lucrative prizes. This way, the
employees would not waste their time and spend their maximum time working and aiming
for the rewards.
Work life Balance: Be friendly with your team. Don't ask them to stay back late
unnecessarily. They are likely to commit more mistakes and eventually lose interest in
work. Let them go back home on time and enjoy their personal lives as well. Rejuvenation
is essential for an individual to remain happy and stress free. More than a strict boss, be
a mentor to them and stand by them always.
Creativity: Encourage your team members to think out of the box. Ask them do
their work in a little different way than they normally do. The employees must put on their
thinking caps at workplace and accomplish the task in the most innovative way.
Such activities help the employees to develop a sense of trust and loyalty towards
the management and stick to the organization for a longer period of time. They consider
the organization's goals as their goals and thus try to achieve them at any cost. The
employees learn to take ownership of their work and do every possible thing which satisfies
them as well as the organization.
Conclusion
Companies with engaged employees have higher employee retention, productivity,
profitability, growth and customer satisfaction. On the other hand, companies with
disengaged employees suffer from waste of effort and bleed talent, earn less commitment
from the employees, face increased absenteeism and have less customer orientation, less
productivity, and reduced operating margins and net profit margins. Most researches
emphasize merely on the importance and positive impacts of employee engagement on
the business outcomes, failing to provide the cost-benefit analysis for engagement
decisions. As any other management decisions, engagement decision should be evaluated
in terms of both its benefits and its associated costs, without giving greater emphasis to
neither of the two, not to bias the decision makers. Thus there is a need to study the cost
aspect of engagement decisions. Findings of various researches suggest their own strategies
in order to keep employees engaged. Here in this article the points or strategies called
the essential tablets were suggested to keep employees engaged. For managers, work
of employee engagement starts at day one through effective recruitment and orientation
program, the work of employee engagement begins from the top as it is unthinkable to
have engaged people in the organizations where there is no engaged leadership. Managers
should enhance two-way communication, ensure that employee shave all there sources
they need to do their job, give appropriate training to increase their knowledge and skill,
establish reward mechanisms in which good job is rewarded through various financial
and non-financial incentives, build a distinctive corporate culture that encourages hard
work and keeps success stories alive, develop a strong performance management system
which holds managers and employees accountable for the behavior they bring to the work
place, focuson top-performing employees and maintain or increase business performance.
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References:
1.
2.
Buckingham M., and Coffman C. (2005). First, break all the rules. Pocket Books,
London.
3.
Coffman, C., and Gonzalez-Molina, G. (2002). Follow this Path : How the worlds
greatest organizations drive growth by unleashing human potential. New York
Warner Books, Inc.
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Melcrum publishing. (2005). Employee engagement: How to build a highperformance workforce. An independent Melcrum Research Report Executive
Summary.
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Rafferty A.M., Maben J., West E., and Robinson D. (2005). What makes a good
employer ? Issue Paper 3 International Council of Nurses Geneva
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