International Journal Of Management & Behavioural Sciences (IJMBS)

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2 ABOUT THE JOURNAL The International Journal of Management and Behavioural Sciences (IJMBS) is a Bi-Annual refereed publication (E-Journal) of Society of Management and Behavioural Science, which is committed to publish scholarly empirical and theoretical research articles that have a high impact on the management and Behavioural science field as a whole. The journal encourages new ideas or new perspectives on existing research. 1

3 International Journal of Management & Behavioural Sciences (IJMBS) ASSOCIATE EDITOR Dr. Shweta Anand Associate Professor, School of Management, Gautam Buddha University, Greater Noida EDITOR- IN- CHIEF Dr. Sunil Kumar President and Executive Director, Society of Management and Behavioural Science (SMBS) CO EDITOR Dr. Rupali Kumar Associate Professor, Bharati Vidyapeeth Deemed University Institute of Management and Research, New Delhi EDITORIAL REVIEW BOARD Dr. Shyam Lata Juyal, Profesor and Head, Department of Psychology, Gurukul Kangri University, Haridwar Prof. Rahul Mishra, Professor, Indian Institute of Planning and Management, Lucknow Dr. SudhirAgarwal, Assistant Professor, Department of Management, Fiji National University, Suva, Fiji Dr. Devinder Sharma, Associate professor, BCIPS, GGSIP University, Delhi Prof. Rajesh S. Pyngavil, Gitarattan International Business School, GGSIP University, Delhi Dr. Ajay Suneja, Associate professor, Department of Commerce, Kurukshetra University, Kurukshetra Dr. Kirti Sharma, Assistant Professor, Management Development Institute, Gurgaon Prof. P. Sinha, JNV University, Jodhpur Prof. C.R. Darolia, Department of Psychology, Kurukshetra University, Kurukshetra Dr. C.P. ShaheedRamzan, Govt. College Kodanchery, Calicut, Kerla Prof. H.K. Manjhi, Bangalore City College & SMSG Jain College, Bangalore Dr. Prashant P. Deshpande, S.N.D.T. University, Mumbai, Maharashtra Dr. OzgurCengel, Associate Professor, Istanbul Commerce University, Turkey Dr. FigenYildirim, Assistant Professor, Istanbul Commerce University, Turkey Dr. RuchiTewari, Associate Professor, Shanti Communication School, Ahmedabad. Dr. V.K. Shanwal, Associate Professor, Dept. of Psychology, Fiji National University, Fiji Dr. N. George Mathew, Asst. Professor, Aljouf University, Aljouf Province, SAKAKA, Saudi Arabia Dr. GaganKukreja, Assistant Professor (Accounting), Ahlia University, Manama, Kingdom of Bahrain 2

4 GUIDELINES FOR SUBMISSION International Journal of Management and Behavioural Sciences (IJMBS) is an online Bi-annual research journal, which is committed to publish scholarly empirical and theoretical research articles that have a high impact on the management and Behavioural science field as a whole. The journal encourages new ideas or new perspectives on existing research. Paper Formatting Guidelines: Please see below for specific paper category guidelines. Categories Suggested Page Limit Suggested Word Count Full Papers Case Studies Text should be formatted for 8.5 x 11 inch paper, 12 point Times New Roman font that is single- spaced, with one inch margins and left justified. References should generally follow Harvard or APA style guidelines. The following is the suggested format for paper submissions: Paper Title ALL authors' Title (e.g. Dr, Mr, Mrs, etc.) & Name, Affiliation, etc Abstract and Keywords Introduction / Background / Objective Literature Review Methodology, Findings, Analysis & Discussion Conclusion, Limitations and Recommendations References - Harvard or APA Style is Required. Tables, figures, etc. in their appropriate location in the paper (if applicable) MANUSCRIPT Copy of the manuscript, typed in double space on A4 size bond paper allowing 1 inch margin on all sides, should be submitted with a soft copy by ed to the editor at or or However, in this case two hard copies of the manuscript have to be sent separately. Manuscripts should follow British spellings throughout e.g. Programme, not program. The length of a paper including tables, diagrams, illustrations, etc., should not exceed 15 double spaced pages or 5000 words. Short communications relating to book reviews, review articles, reports of conferences, summary/views on various government reports, debatable issues should not exceed more than 5 double spaced pages. ORIGINALITY STATEMENT Author(s) is (are) required to give an undertaking that the manuscripts sent for publication in this journal have not been published or sent for publication elsewhere. Each Manuscript must be accompanied by a Manuscript Submission Form, the Format for which can be downloaded from here. REVIEW All contributions submitted will be subjected to peer blind review and the decision of the Editorial Committee will be final at all. 3




8 IMPACT OF GLOBALIZATION ON INDIAN FINANCIAL SERVICES INDUSTRY ABSTRACT Abhishek Tiwari* Globalization, innovation, technological up gradation and modernization has paved way for financial services industry to grow and to achieve success in a new horizon. Globalization and reforms in the financial sector has brought about plethora of challenges and opportunities. Retail Banking is fast emerging as a major driver in the banking industry in India. The article dwells on retail banking, overview, regulatory factors involved and challenges before the banking industry in facing the competition. Indian economy after 19 years of financial sector reforms has strengthened the operating environment for banking industry and financial institutions in India.The most significant achievement of the of the financial sector reforms has been the improvement in capital adequacy, profitability and assets quality and greater attention to risk management in the performance of commercial banks in India. The globalization and deregulation has opened up new opportunities for Indian banks to concentrate on investment banking, insurance, issue of credit cards and debit cards, depository services and securitization etc. In the past 3 years the economic slowdown of advanced countries as led to the economic crisis across the globe, India has an emerging global economy with the largest financial sector and growing banking industry its performance in the time of recession was a growth oriented. Globalization of the financial markets, which offer a wide range of products and enable a better adjustment of the risk profile and the expected return or cost to the preferences of investors and borrowers. KEYWORDS: Financial market, Financial sector, Globalization, Global Economy and Innovation INTRODUCTION ABOUT THE AUTHOR *ABHISHEK TIWARI; ASSISTANT PROFESSOR, RNS INSTITUTE OF TECHNOLOGY, BANGALORE Reforms of the financial sector constitute the most important component of India s programme towards economic liberalization. The recent economic liberalization measures have opened the door to foreign competitors to enter into our domestic market. Deregulation in the form of elimination of exchange controls and interest rate ceilings have made the market more competitive. Innovation has become a must for survival. Many of the providers and users of capital have changed their roles all over the world. Financial intermediaries have come out of their traditional approach and they are ready to assume more credit risks. As a consequence, many innovations have taken place in the global financial sector which has its own impact on the domestic sector also. The emergences of various financial institutions and regulatory bodies have transformed the financial services sector from being a conservative industry to a very dynamic one. In this process this sector is facing a number of challenges. THE CHALLENGES: Among the key IT challenges facing the Financial Services industry today is: Preserving investments in old systems while leveraging new technologies to drive down transactions costs, expand and improve customer service. Integrating enterprise wide disparate systems to gain operational efficiencies Substantially reducing time for deployment of new systems 7

9 Reducing IT costs and obtaining better ROIs for new investments in the long-term Mounting competition, more complex regulation and ever more exacting customer expectations. Only a carefully thought out long-term IT strategy backed by execution, implementation and support capability can meet these challenges successfully. Today's financial services firms face mounting pressures on all fronts: Credit markets are creating industry turmoil Tightening credit guidelines that threaten revenue streams Growing reporting and risk management obligations like Sarbanes-Oxley, Know Your Customer and Basel II The difficulties of sustaining growth in overly-saturated markets Innovative products that address the needs of a diverse client base such as retirees and young emerging and ethnic segments Growing concerns over customer data security and identity management Increasing competition not just from traditional competitors, but from other organizations that expand their service offerings The complexities that arise from mergers and acquisitions and from expanding into the global marketplace Whether we are trying to maintain competitive advantage, looking for ways to position our self better for mergers or acquisitions or expanding into the global marketplace, the challenges are as complex as they are varied. And while we deal with these fundamental concerns, we are met with increasing demands from investors, regulators and customers. HOW TO SUCCEED IN THIS ENVIRONMENT? The first step is to ensure that we have the infrastructure and solutions to support our business strategy. With the right systems in place, our organization can more rapidly comply with regulations, operational risk and security issues. We can also open up new product offerings, reduce customer turnover and minimize fixed costs and maximize productivity. In addition, the companies can leverage outsourcing opportunities to reduce overhead, while still enjoying the scalability they need to support future growth or new initiatives. The process of globalization has paved the way for the entry of innovative and sophisticated financial products into our country. Since the Government is very keen in removing all obstacles that stand in the way of inflow of foreign capital, the potent abilities for the introduction of innovative international financial products in India are very great. Moreover, India is likely to enter the full convertibility era soon. Hence, there is every possibility of introduction of more and more innovative and sophisticated financial services in our country. Realizing all these factors, the Government of India has initiated many steps to reform the financial services industry. The Government has already switched over to free pricing of issues from pricing issues by the Controller of capital issues. The interest rates have been deregulated The private sector has been permitted to participate in banking and mutual funds and the public sector undertakings are being privatized. The Finance Act, 1992 has brought into effect large scale amendments in the tax structure of long term capital gains. The Finance Act, 1994 has given a further boost by lowering the lock in period from 3 years to 1 year, in order to get the entitlement as a long term capital asset. The SEBI has liberalized many stringent conditions so as to boost the Financial Services Industry. SUGGESTIONS ON FINANCIAL SECTOR REFORMS - THE RAGHURAM RAJAN COMMITTEE To provide unique identification system which a key enabler to inclusion. The Committee also recognized the regulatory bandwidth which restricts the creation of nationwide network of the formal financial system and suggested small local banks with appropriate regulatory oversight to serve people in all parts of our country. 8

10 The Committee also suggests a significant expansion of banking correspondent network to supplement the access by including grocery stores and allowing cash transactions to be undertaken at these correspondents outlets. Further, the Committee advocates the early adoption of m-banking solutions to speed up reach and access. The Committee also understood large amounts of money that are supposed to be paid to these people by the government under its various poverty alleviation schemes such Jawahar Rojgar Yojana, National Rural Employment Guarantee scheme, and so on, get mislaid for want of a proper bank account identifiable to each individual. The Committee s recommendations, as can be seen, are addressed to solve the roots of the problem rather than deal with them in an ephemeral manner. Efficient market system that fosters innovation and is able to compete globally as an efficient, transparent, easily accessible and a well-regarded destination for investors the world over. The Committee draws its conclusions on the final recommendations after studying issues affecting Indian markets, and studying various systems around the world and then fashioning a solution uniquely designed to succeed in the Indian context and one that is needed for the renaissance of the Indian financial system. For instance, when dealing with the regulatory architecture, the Committee found that the multiple regulators in the system, while attempting to function in a coordinated manner, are likely to leave gaps with the financial markets growing dynamically in size and sophistication. The Committee, therefore, recommends a unique system of formal supervisory coordination, but does not recommend a single regulator recognising the strong diversity in the various sub-systems such as insurance, pension funds and banking. The recommendation also includes sharper definitions of the regulator s mandate itself so as to impart greater clarity to its role, instead of a catch-all approach of hanging all ills of the market at the regulator s doorstep. Similarly, the Committee found that the ownership of financial players in India did not directly correlate with its ability to play public interest roles. Restructuring the financial sector to allow various entities full freedom to compete for capital, customers and products, while ensuring that policymakers have adequate ability to impose public policy across all players should they think such a measure is in the larger interest of the country, instead of only on public sector banks. Work best in Indian conditions, Questions of implement ability, practicability, serendipity and lack of political will were factored into the solutions where considered desirable by innovative design features. India to march ahead with robust economic growth and hence become bigger, more powerful in the global markets and richer in its national contours. Financial system commensurate with that of a more enabled India, visualizes that the richer, bigger and bolder Indian system will empower future leaders of India to implement more contemporary measures. GLOBALIZATION VERSUS FINANCIAL MARKETS REASONS FOR GLOBALIZATION OF FINANCIAL MARKETS The key factors that brought about the aforementioned changes in capital flows and in the structure of the global financial market comprise the following: Liberalization of national financial markets and the related growing competition among financial institutions Technological progress in IT and telecommunications, Faster flow of information and its standardization Globalization of national economies in their various aspects (commerce, institutions, ownership structure, capital and knowledge). The liberalization of national financial markets has eliminated restrictions in the operations of both domestic and foreign financial entities. Regulations regarding the range of services performed by the banks and other financial institutions have been changed. Legal framework has been established to facilitate the activities of non-banking financial institutions. Restrictions on non-residents access to domestic financial markets have been reduced or removed. However, the factor of the greatest significance from the point of view of globalization of financial markets was the liberalization of capital flows. Removal of restrictions that impaired free capital flow among countries, including in particular. 9

11 Removal of restrictions related to FDI and trade in goods and services with nonresidents. Transition of the developed countries to the floating exchange rate regimes Establishing of the euro area, and other supranational integration initiatives Reduction of tax on cross-border transactions In some countries, liberalization of capital flows and financial markets ensued from the implementation of stability programmes recommended by the World Bank and the International Monetary Fund. As a consequence, a group of countries named emerging markets have appeared on the world economic map. These countries play a vital role both in the global financial system and in the global economy. SOURCE: UNCTAD. The technological progress in IT and telecommunications, in particular the dynamic growth of the Internet and database systems, has significantly impacted the globalization of financial markets. Modern technologies have enhanced the capacity of creating and marketing new, less expensive goods and services. The increased computing power has facilitated valuation of complex financial instruments, such as options, swaps and convertible bonds, which has contributed to a rapid development of derivatives market. The development of IT and telecommunications has streamlined prompt acquisition and processing of information necessary for operations on the financial market. Information used on the financial market has become as much of a commodity as any other (e.g. washing powder). Uniform and commonly applicable standards lower the cost of acquisition and analysis of information and reinforce the financial system stability. The most significant standards include, inter alia, the following: the principles of effective banking supervision, drawn up by the Basel Committee on Banking Supervision (BCBS). International accounting standards, over 100 countries have adopted or based their own accounting standards on the International Accounting Standards (IAS) or the International Financial Reporting Standards (IFRS), Master agreements on executing transactions on the interbank market ISDA,ISMA, statistical methodologies elaborated by, inter alia, The IMF, the BIS, and the WB that ensure compliance of the data gathered with the statistical guidelines and their international comparability, The principles of best practice, elaborated by professional associations of financiers. The development of the modern financial market infrastructure has also covered regulatory changes (e.g. the bankruptcy law) and the establishment of modern transactional systems, payment systems, settlement systems, risk management systems, and information services such as Reuters or Bloomberg. Stock exchanges and brokers have created modern trading platforms which enable prompt offer-matching, executing transactions and straight through processing. Development of the infrastructure has removed barriers to further market globalization. GLOBALIZATION IS BENEFICIAL OR RISKY? The effects of globalization of financial markets are diverse. The openness of economies and free capital flows induce investors to deposit their funds where they can generate the highest rate of return, which prompts financial institutions to execute transactions on new, poorly developed and non-liquid markets. It favours the increase in the liquidity of financial markets and the decrease in the cost of transactions. Globalization has a significant impact on the lower cost of capital acquisition by enterprises. They increasingly often use forms of raising capital alternative to the bank loan, especially the issue of securities on the financial markets. The reasons behind this phenomenon are the decreasing expectations of investors as to the expected rate of return that compensates the assumed risk. At the same time, better transparency of enterprises (monitoring of the senior management, supervision over shareholders, and making them subject to the market discipline) entails a decrease in the agency costs that result from the mismatch of investment objectives between the management and the shareholders. As a consequence, enterprises can more easily raise funds for financing their initiatives. Large companies are more inclined to promote regulations and laws that improve the transparency of financial markets and reduce the asymmetry of information among market participants. In addition, 10

12 institutional reforms that improve the market transparency and the quality of communicated information are implemented, under the influence of investors. The deregulation that is taking place removes artificial market entry barriers and facilitates their smooth operation. Thus, globalization stimulates the financial market development, which in turn gives enterprises easier access to capital. Higher availability of funds may impact investments and in this way stimulate the economic growth. The global financial market enables business entities, including banks, to raise funds for business development from a larger number of investors than it would have been possible on domestic markets. For instance, in many smaller EU countries, a significant number of bank transactions is carried out with foreign partners. Access to the international capital market for banks and other financial institutions translates not only to the possibility of development, but also to the pressure on improvement of efficiency. The growing efficiency and better risk management improves the security of deposits placed with banks. Domestic financial institutions are becoming more efficient, due the new technologies and best practice provided to the market by foreign companies. Integration of financial markets worldwide enables better risk diversification. Residents do not have to invest their savings in their own country and thus they are not exposed to the business cycle risk. They are free to invest in many countries and could obtain a better ratio of expected return to assumed risk. GLOBALIZATION OF FINANCIAL MARKETS [NEW CHALLENGES AND THREATS] The lack of transparency, resulting from asymmetry, raises the risk of speculative bubbles and herd behavior of investors. Uneven access to information in the global markets environment may lead to a negative selection in the financing of the enterprise sector and the moral hazard in a situation where the bankruptcy of a given institution would jeopardize the banking sector. Economic reforms and opening the country to international trade in the emerging markets attract foreign capital, which, however, in the case of deteriorating economic situation, is withdrawn quickly. Credit booms in many countries, often financed by foreign entities and in foreign currencies. Credit booms have thus become a frequent source of banking crises. Banking crises, on the other hand, have generated significant costs for the economy, inter alia, through the necessity of liquidity injections to some banks or through limiting the supply of loans to companies. Increased share of foreign capital in local financial markets raises their sensitivity to the developments on foreign markets. For instance, an increase in interest rates in another country may cause an outflow of short-term capital, and in consequence lead to an increase in interest rates and a decrease in liquidity on a local market. Their bankruptcy may evoke a crisis, even in a steadily growing economy and even in the situation when the financial problems have stemmed from a foreign market. The lack of standard procedure for solving problems of international financial institutions impairs prevention and solving of financial crises. An unfavorable effect of globalization is the centralization of risk management and sometimes even of liquidity management at the bank group level. The process results in transferring operations from small, local markets to more developed ones. FINDINGS: ADVANTAGES, CHALLENGES, THREATS & RECOMMENDATIONS: ADVANTAGES Economic Liberalization opened the door for foreign companies into domestic markets Financial services sector from being a conservative industry to a very dynamic one. Demography is covered Deregulation in the form of elimination of exchange controls and interest rate ceilings have made the market more competitive. 11

13 Operating Financial System OFS puts together its banking practice to help financial institutions improve enterprise performance, comply with regulatory mandates, boost operational efficiency, and better serve their customers. Free to invest in many countries and could obtain a better ratio of expected return to assumed risk. CHALLENGES & THREATS New Technologies to be adopted IT Costs should be reduced Competition makes Banks to think beyond the boundaries Employee Attitude towards Customer should change by cultivating the culture of foreign banks Customer needs concentration Innovative is only the Solution Increasing competition by expanding Services offering Complexities of Mergers and Acquisitions Increasing demands from investors, regulators and customers Rural Language is essential for Rural Customers to fill the forms and to understand the Banking Terminology Entry into Saturated Markets Customer data security and identity management New technology strategically -- to reduce costs, improves efficiencies, and boost revenue-generating initiatives. Renaissance of the Indian financial system. Reduction of tax on cross-border transactions Basel Committee on Banking Supervision (BCBS). Right systems in place. Reduce customer turnover. Minimize fixed costs and maximize productivity. Leverage outsourcing opportunities to reduce overhead. Scalability to support future growth or new initiatives. Investing in new technology strategically -- to reduce costs, improve efficiencies, and boost revenuegenerating initiatives. Requirement of Infrastructure support open up new product offerings, Small local banks with appropriate regulatory oversight to serve people in all parts of our country. Unique identification system which a key enabler to inclusion Expansion of banking correspondent network to supplement the access by including grocery stores Adoption of m-banking solutions Restructuring the financial sector to allow various entities full freedom to compete for capital, customers and products Implement ability, practicability, serendipity and lack of political support Fake Currency control Separate Police force to control & Monitor entering into financial transactions. Controlling Online Frauds/ Cyber Frauds- Fraud Tracing Systems Reducing Signatures and Formats for Customer Compulsory Micro Finance and Micro Credit to develop economy Disclosing / Sharing Common information of Customers to check validity of the customer Controlling the bribe, agents & Middlemen 12

14 CONCLUSION: Globalization of the financial markets, which offer a wide range of products and enable a better adjustment of the risk profile and the expected return or cost to the preferences of investors and borrowers. In this changed context, the financial services industry in India has to play a very positive and dynamic role in the years to come by offering many innovative products to suit the varied requirements of the millions of prospective investors spread throughout the country. To enhance their competitive advantage in this changed environment, financial services institutions are increasingly harnessing new technologies to provide superior customer offerings and streamline internal processes. Today's dynamic marketplace demands that financial services providers emphasize on technologically advanced, feature-rich solutions, that can operate in real-time and with the highest degree of precision and reliability. REFERENCES: 1. Impact of Globalization on Indian Financial Services Industry; Dr.V.V.S.K.PRASAD.,M.Com.,M.B.A.,Ph.D., Posted: Jan 25, Financial Sector Reforms; The Committee on headed by Raghuram Rajan, former Chief Economist at IMF 3. Globalization versus financial markets; Krzyszt of Rybiński, Deputy President of the National Bank of Poland Cracow University of Economics, 20 April, Are foreign banks always the best; Rudra Sensarma 5. Indian Institute of Management, Prabandh Nagar, Off Sitapur Road, Lucknow , Uttar Pradesh, India; 14 June Resetting India`s financial sector; R Ravimohan: Managing Director & Regional Head of Standard & Poor s, South Asia.; The views expressed are personal; New Delhi April 14,

15 ENTREPRENEURSHIP DEVELOPMENT: A MAJOR CHALLENGE IN MANIPUR Thangjam Chandra Devi*, Dr. Nameirakpam Bhupendra Singh** ABOUT THE AUTHORS * THANGJAM CHANDRA DEVI; RESEARCH SCHOLAR, NIT SILCHAR ** DR. NAMEIRAKPAM BHUPENDRA SINGH; ASSISTANT PROFESSOR, NIT SILCHAR ABSTRACT Entrepreneurship is one of the most significant inputs in the economic development of a country. Hence, developing its spirit is necessary. This paper analysed the importance of entrepreneurship development in a small and backward state of northeast India, with special reference to Manipur. It is a known fact that entrepreneurship development is very much related to economic development. And it is also a fact that various reasons like inadequate finance, lack of proper help and support, lack of proper training facilities, low prestige or value in the society, marketing difficulties are hindering entrepreneurship development in this region. In addition to this, extortion by local militants or insurgency groups is also a big factor for slowness in this region. Hence, there is an urgent need for government intervention. KEYWORDS: Entrepreneurship Development, Entrepreneur, Economic Development. INTRODUCTION Entrepreneurship is a multidimensional concept. It can be defined in different ways. Putting it in simplest terms, entrepreneurs refer to those persons who create and grow enterprises taking the risks and, entrepreneurship, to the process. Webster Dictionary defines entrepreneurship as the activity of organising, manages and assuming the risks of a business enterprise. Entrepreneurship is increasingly considered to be important for economic growth but little is known about how best to support entrepreneurship. Entrepreneurship development depends on a number of factors such as education, training and technical assistance, funds and a very supportive environment etc. The entrepreneurs with their ability to scan, analyse and identify opportunities in the environment transform them into business proposition through creation of economic entities. Entrepreneurship involves a willingness to take responsibility and ability to put mind to a task and see it through from inception to completion. Another ingredient of entrepreneurship is sensing opportunities, while others see chaos, contradiction, and confusion. Knowledge also should not be left behind. Knowledge creates the opportunity to notice things that could not be noticed without that knowledge. Entrepreneurial opportunities are not just lying around waiting for someone to notice them, rather they appear and then entrepreneurs rapidly move to take advantage of them. Lack of employment opportunities is directly hindering development. Entrepreneurship development, therefore offers both a challenge and a solution. It also helps to improve the backwardness of the people, to eradicate regional imbalances to utilise natural and human resources optimally and to generate more employment opportunities. Moreover entrepreneurship creates an environment that makes more entrepreneurship possible. Because of its essential role in initiating the process of production, entrepreneurship is identified by some economists as a fourth factor of production, alongside land, labour and capital. A large number of literatures have emerged analysing the impact of entrepreneurship on economic performance. Literatures indicate that there is a positive correlation between entrepreneurship development and economic growth. Joseph Schumpeter, the father of entrepreneurship theory, contribution to our understanding of the mechanisms of technological progress and economic development is widely recognized. He asserts that entrepreneurship is the way to innovation. In The Theory of Economic Development (1934), he emphasizes the role of the entrepreneur as prime cause of economic development. He describes how the innovating 14

16 entrepreneur challenges incumbent firms by introducing new inventions that make current technologies and products obsolete. The relation between entrepreneurship and economic growth is described in several economic literatures. Some involves the general understanding of the role of entrepreneurship in the modern economy, while some analysed the relationship. Great contributions were made by Schumpeter (1934), Knight (1921) and Kirzner (1973). These economists stress different aspects of the role of the entrepreneur. While Schumpeter stresses the innovating aspect, Knight stresses the risk assuming aspect. Kirzner, finally, stresses the role of the entrepreneur in leading markets to equilibrium. Entrepreneurship is an ill-defined concept. It is not synonymous with small business/firms. Certainly, small firms are an outstanding vehicle for individuals to channel their entrepreneurial ambitions. The small firm is an extension of the individual in charge (Lumpkin & Dess, 1996). However, entrepreneurship is not restricted to people starting or operating (innovative) small firms. These small businesses include shopkeepers, franchisees etc. ENTREPRENEURSHIP IN NORTHEAST INDIA Among the 8 states of northeast, Assam is the first to adopt entrepreneurship development programme. During 1973, the government of Assam introduced a scheme called Half a Million Job by setting up district level agencies known as Entrepreneurial Motivation Training Centre (EMTC) under the state planning board. The EMTCs provide training and support services to the entrepreneurs to start and run their own enterprises. After more than 25 years of operations, EMTC have now been merged with District Industries Centres. In the same year, 1973, the North Eastern Industrial Consultation Organisation was set up to organise training programmes on entrepreneurship development. It started its operation from Guwahati. In 1979 Small Industries Extension Training Institute (SIET), Hyderabad set up its north eastern centre at Guwahati. It became NISIET in 1984 and then Indian Institute of Entrepreneurship (IIE) in Some state level organisations and government departments like Directorate of Industries and Commerce, SIRD, ASICD, DRDA etc and other organisations and institutions in the northeast like Tripura Industrial Development Corporation (TIDC), Meghalaya Industrial Development Corporation (MIDC), MANIDCO (Manipur), APSFDC (Arunachal Pradesh), ZIDCO (Mizoram), NIDC (Nagaland), SIDC (Sikkim) etc have been involved for developing entrepreneurship development programmes (EDP) like General EDP, Sector Specific EDP, Area Specific EDP, Urban EDP etc. Besides, there are many other agencies and organisations such as Small Industries and Services Institutes (SISI) and its branches, North Eastern Industrial and Technical Consultancy (NEITCO), North Eastern Industrial Consultant (NECON), and National Small Industries Corporation (NSIC), etc which provide training facilities to the young entrepreneurs. Many organisations like Micro, Small and Medium Enterprises Development Institute (MSME-DI), Khadi and Village Industries Commission (KVIC), etc have also been operating in the region to help and support entrepreneurs and small scale industries. In addition, many NGOs are also helping to develop the spirit of entrepreneurship in these regions. Nowadays there are many other institutions and organisations to provide support by giving proper training, financial aid, advice etc. Table-1: State-wise distribution of Working Enterprises of NER ( ) State Type of Enterprises Total Employment Micro (i) Small (ii) Medium (iii) (i+ii+iii) (total) Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura All India Source: Final Report, Fourth All India Census of Micro, Small & Medium Enterprises : Registered Sector 15

17 In Northeast region, the growth of medium, small and micro enterprises has been largely uneven. Table 1 highlights the number of working enterprises in Northeast Region in , with Assam having the largest number of enterprises. In Manipur, 4492 are units are registered and still working, providing employment to persons. Out of these 4492 units, 4480 are micro enterprises and 12 small enterprises. ENTREPRENEURSHIP DEVELOPMENT IN MANIPUR Manipur is an industrially less develop state in India due to geographical locations and many other factors. But, this region has many micro entrepreneurs. In the valley, two types of industries can be most prominently seen; one is handloom and the other, handicrafts. In this sector, the artisans are mostly women. In this region, it is the tradition for women to weave and they pass it onto generations. And in the hills, logging, cultivation of a few cash crops, handloom and handicrafts are the traditional source of income. Besides handloom and handicrafts, there are also many small agro based food processing industries. Even though constrained by various factors the state still has resources, manpower which can be utilised efficiently. Since the Industrial policy Resolution, 1956, planners increasingly laid emphasis on promotion of small industries. Since then, the government of India has strived to promote this sector through various policies and programmes. The All Manipur Entrepreneurs Association (AMEA) which is a state level organisation is also working in various entrepreneurial development and promotional activities ranging from giving training, awareness programmes, organising seminars, workshops, conferences etc. The AMEA is also a member of the Small Scale Industries Board, Ministry of Industry, government Of India and advisory committee of the Small Industries Services Institute, Imphal. This AMEA also participates in many state and national level meetings including pre budget discussions under ministry of finance, government of India. The AMEA consultancy cell conducts market surveys, and also prepares techno-economic feasibility reports. The training division of AMEA provides entrepreneurship development training to educated unemployed youths of Manipur. Besides organising various seminars and workshops on entrepreneurship development, it also organised various state level trade fairs and also participated in India International Trade Fair. It also encouraged local entrepreneurs by giving awards to the best entrepreneurs. Small Industries Service Institute (SISI) was set up as a branch in Later on 1977 it was upgraded as a fully fledged institute with jurisdictions over the state Manipur and Nagaland. It provides consultancy services and training to the entrepreneurs and small scale industries of this region. There are two workshops attached to SISI Imphal and branch SISI, Dimapur. These workshops extend common facility services machine shop practices, carpentry, cutting grinding and welding. Prime Minister s Rozgar Yojana (PMRY) was implemented in Manipur during This scheme was sponsored by the Govt. of India for generating employment opportunities to the educated unemployed youths of the country. Under this scheme, various training programmes were conducted to enhance technical knowhow, skill development and management etc. The Manipur Industrial Development Corporation (MANIDCO) formerly known as Manipur Small Industries Corporation Ltd (MSIC) is the only financial institutions doing twin functions in the state. It gives long term financial assistance to tiny, cottage, SSI, SVO and medium industries in the state. It also provides scarce industrial assistance and develops infrastructure for development purposes and execution of engineering works. According to live employment exchange more than 6.5 lacs youths are unemployed (2008 figure). There are still many who have not registered. Agricultural sector is the main source of employment in Manipur. Besides agriculture, Government services, retail trade also generates maximum employment opportunities in the state. Nowadays, there is also a trend for construction contractors coming up. However, active choices of becoming an entrepreneur to start a new business based upon the perception of unexploited or under exploited opportunity are less; rather becoming an entrepreneur because of lack of other option dominates. It seems like becoming an entrepreneur is the only last option available. Also, almost all the parents prefer their children to get government jobs. It is also the socio cultural environment that has been a hindrance in the growth of entrepreneurship in this region. It is social status that counts while making choice of a career. There are many reasons for Poor performance of EDP in this region. Lack of awareness or information, unsupportive environment, lack of adequate financial, marketing and R & D support, inadequate investment, 16

18 lack of family support, low prestige or value of entrepreneurs in the society are some of the main reasons for low performance. CONCLUSION Entrepreneurship is the engine of job creation, growth and prosperity. Entrepreneurship helps the economy to move towards the desired goal. But, in a backward state like Manipur, it remains more likely in theory only. Lack of awareness, information, inadequate finance, lack of marketing facilities and unsupportive environment are some major reasons for slow progress of entrepreneurship in this region. Besides, majority of parents want their children to take up well salaried government jobs. In addition to this, extortion by local militants or insurgency groups is also a big factor for slowness in this region. Hence, there is an urgent need for government intervention. The state governments are also taking various measures with the help of various NGOs and organisations. Universities had already introduced entrepreneurship as a course in their post graduate study. Various institutions had organised workshops and training programmes in entrepreneurship development. Considerable progresses have been made in this field, but, we have a long way to go. REFERENCES 1. Awasthi, Dinesh. Approaches to Entrepreneurship Development: The Indian Experience. Journal of Global Entrepreneurship Research 1 (Winter and Spring, 2011): Web. 2. All Manipur Entrepreneurs Association. Web. 17 Jan Caree, M. A, and Thurik, A. R. The Impact of Entrepreneurship on Economic Growth. International Handbook of Entrepreneurship Research, Ed. Zoltan Acs and David Audretsch. (July 2002): Print. 4. Govt agencies give colour to entrepreneurial dreams. < Web. 17 Jan Holcombe, Randall G. Entrepreneurship and Economic Growth. The Quarterly Journal of Economics 1.2. (Summer 1998) Print. 6. Huang, Kevin Shihping, and Wang Yu-Lin. Entrepreneurship and Innovation: A Review of the Theory and Literatures. International Conference on Economics, Trade and Development, Singapore, (2011). IPEDR vol.7. IACSIT Press. Print. 7. Kirzner, Israel M. Entrepreneurial Discovery and the Competitive Market Process: an Austrian approach. Journal of Economic Literature 35.1 (March 1997): Print. 8. Lumpkin, G. T, and GregoryG. Dess. Clarifying the entrepreneurial Orientation Construct and linking it to Performance. Academy of Management Review 21.1 (1996): Print. 9. Nazir, Muhammad Amjad, and Muhammad Ramzan. Contribution on Entrepreneurship in Economic Growth. Interdisciplinary Journal of Contemporary Research in Business 4.3 (July 2012). Print. 10. North Eastern Development Finance Corporation Ltd. < Web. 17 Jan Mali, D. D. Entrepreneurship Development in North East. Kurukshetra June: Print 12. Rahman, Mizanur, and Nikhil Bhusan Dey. Micro and Small Enterprises in Northeast India: Problems and prospects. India: Eastern Book House, (2010). Print. 13. Saikia, Kr Sunil. Entrepreneurship Development- key to Socio Economic Growth. Yojana A development Monthly (Dec 2012): Print. 14. UNCTAD, Entrepreneurship and Economic Development: The Empretec Showcase. Geneva: (May 2004). Print. 17

19 HUMAN RESOURCE MANAGEMENT IN THE CO-OPERATIVE CITY BANK LIMITED, GUWAHATI, ASSAM Mrs. Bidisha Lahkar Das* ABOUT THE AUTHOR * MRS. BIDISHA LAHKAR DAS; RESEARCH SCHOLAR, KKHSOU, GHY ABSTRACT Human resources are an important element in the success of any organisation. This is the only resource which can produce limitless suggestions and ideas for the betterment of the organisation and society. Human resources can be viewed as the sum of knowledge, skills, attitudes, commitment and values of the people in the organisation. Today, it is virtually impossible to read a business periodical or newspaper anywhere in the world without seeing stories detailing the success of a company or business organisation due to how effectively it manages its people. As the environment becomes more global, managing people also becomes more challenging, more unpredictable and uncertain and more subject to rapid change and surprise. That is why the area of human resource management is getting more importance now a day. Trends like globalization and technological innovation are changing the way firms are managed. Organization must grapple with revolutionary trends: accelerating product and technological change, globalized competition, deregulation, demographic changes, and trends toward a service society and the information age. These trends have changed the playing field on which firms must compete. Taking this into account in the study an attempt is made to highlight the various human resource practices adopted by a local bank in the city of Guwahati which is named as The Co-operative City Bank Limited. Since the area of human resource management is very wide, in the study only some specific areas which is relevant for the bank is discussed. KEYWORDS: Human resources, Human Resource Management, Human resource practices. INTRODUCTION In common parlance human resources mean the people. However, different management experts have defined human resources differently. For example, Michael J.Jucious has defined human resources as a whole consisting of interrelated, interdependent and interacting physiological, psychological, socoilogical and ethical components. From national point of view, human resources are knowledge, skills, creative abilities, talents and attitudes obtained in the population; whereas from the view point of the individual entropies, they represent the total of the inherent abilities, acquired knowledge and skills as exemplified in the talents and aptitude of its employees. The National Institute of Personnel Management (NIPM) of India has defined human resource/ personnel management as that part of management which is concerned with people at work and their relationship within an enterprise. Its aim is to bring together and develop into an effective organization of the men and the women who make up the enterprise and having regard for the well-being of the individuals and of working groups to enable them to make their best contribution to its success. An organization is made up of four resources, namely, men, material, money and machines. It is human/people that make use of the non-human resources in an organisation.hence people are the most significant resources in an organisation.if human resources are properly recruited, selected to fit with the organization culture, properly trained, remunerated, motivated and properly handled then obviously it will show some positive results. Keeping in view the importance of human resources in an organization, we have taken up in our study an Urban Co-operative Bank in the city of Guwahati namely the Co-operative City Bank Ltd.We have taken up an Urban Co-operative Bank because,this is one of the most unpopular sector in our economy. Although it is not as popular as the Commercial Banks but even then the Co-operative City Bank Ltd is financially very strong and are 18

20 moving in the right direction. In our study we have made an attempt to examine the various human resources practices adopted by the Bank. REVIEW OF LITERATURE Khatri (1999) stated that one of the most important factors providing flexibility and adaptability to organizations are the human beings. Barney (1991), Lado and Wilson (1994) found that managing people is more difficult than managing technology or capital. Wright et al., (1994) was of the view that those firms or organizations that have learnt to manage their human resources I a proper manner would always have an edge over others for a long time to come because acquiring and deploying human resources effectively is cumbersome and takes much longer. Koch and McGrath (1996) expressed that HRM has many advantages; it can help firms improve organizational behavior in such areas as staff commitment, competency and flexibility, which in turn leads to improved staff performance. Attempts have been made from time to time by different researchers and scholars to identify the type of HRM practices in different sectors. Pfeffer (1994) identified 16 practices which has been denoted as best practices. This was later confined to the only seven practices which are employment security, selective hiring, self-managed teams/team working, high compensation contingent on organizational performance, extensive training, reduction in status difference and sharing information. Saxena and Tiwari (2009) examined the HRM Practices implemented by leading IT Companies such as TATA, Infosys and Wipro in India. They developed the 3cTER Framework of HRM practices and identified training and development, employer-employee relations, recognition through rewards, culture building, career development, compensation and benefits as important HRM Practices. OBJECTIVES OF THE STUDY The present investigation is taken up to study how the most valuable asset of an organisation, i.e, how the human resources are handled and managed by the Co-operative City Bank Ltd.While looking into the human resources practices, we have examined only few areas such as recruitment and selection, training and development, salaries and wages, promotion policy, performance standards and other such areas. RESEARCH COVERAGE In the study we have examined the human resource management in the Co-operative City Bank Ltd.This bank is very small with only six branches in the city of Guwahati.The area of operation of the bank is limited to Guwahati city only. RESEARCH METHODOLOGY The study is descriptive and exploratory. Data and information required were collected from primary and secondary sources. Primary data were collected through personal interview with some of the officials and staff members of the bank. A questionnaire was also prepared and given to some top officials and a few staff members of the bank to be filled up by them. The questionnaire was designed in such a way that it could be easily understood and responded. Relevant books and journals as well as internet constitute the various secondary sources of data LIMITATIONS The investigation is not free from limitations. Some of them are summarized below. Limited time acts as a big constraint in this type of study. Most of the information relating to the human resources was collected through personal interviews and questionnaire survey, as published data were not available with the Bank. The bank does not have any separate Personnel Department as a result of which collecting data on Human resource practices difficult The interview with the officials of the Bank was brief due to their busy schedule. The top officials of the Bank did not exhibit positive response to reveal many crucial information relating to the investigation as they considered them confidential. BRIEF HISTORY OF THE BANK. The Co-operative City Bank Limited was born on November 4th, 1981.Many hurdles had to be crossed to get the license from the Reserve bank of India on 21st September 1981.Prior to that, the registration of the bank was completed on 23rd September 1980 with the Registrar of the Co-operative Societies Assam. A common question in those days was whether there was any need to set up another Urban Cooperative Bank when there 19

21 were branches of so many nationalized banks in Guwahati.A long felt need was certainly there. Because in spite of having branches of a number of nationalized banks at Guwahati, they failed to meet the needs of the weaker sections of the society to the extent desired. The foresight, enthusiasm, single minded devotion and never-saydie attitude of the aforesaid likeminded individuals led by late Thaneswar Barooah, a professional banker par excellence with sound knowledge of the Cooperative movement, ultimately paved the way for the birth of the Bank. HUMAN RESOURCE MANAGEMENT IN COOPERATIVE CITY BANK LTD Good performance of banks depends upon the best human resource practices adopted. Human resources will be effective only when they are fully satisfied with the job. Job satisfaction gives birth to commitment which in turn affects the performance of the bank. Employees of a bank are fully committed when they are happy with work place. The Co-operative City Bank Ltd has no separate personnel department or HR manager to look into the human resources of the Bank. RECRUITMENT AND SELECTION POLICY OF THE BANK Present employees i.e., employees already working in the Bank are mainly preferred to fill any vacancy in the higher posts. Promotions and transfers are the main techniques which are employed to fill these vacancies. The bank prefers present employees for higher positions because higher positions carry more risks and responsibilities and as such the Bank prefers to take up that person who is well acquainted with the banking operations of the organization as well as other aspects of the organization and know his duties and responsibilities very well. To fill up vacancies in the clerical posts and fourth grade posts the Bank mainly prefers two external sources which are employment exchanges and advertisements in some local daily newspapers. TRAINING AND DEVELOPMENT Various training programmes and refresher courses are given by the bank to the staff members at regular intervals to improve their skills and knowledge in the banking operations.infact the Directors of the Bank must also undergo training in various aspects of bank management. Training programmes are generally held once in a year. The minimum duration of a training programme is one week whereas the maximum is of three months. The training programmes for the Bank are mainly conducted by the Indian Institute of Bank Management(IIBM).Training is also conducted by the College of Agricultural Banking(CAB),RBI,Pune.In the staff training centers, orientation programmes for junior officers, clerks and sub-staff are conducted and specialized courses like financial services, marketing,hrd,etc are introduced. SALARIES AND WAGES Wages and salaries have their impending bearings on employee performance and in turn organizational performance. The Cooperative City Bank Ltd has fixed a salary structure for different cadres of its staff members which changes after every five years. The salary includes variable dearness allowance, HRA, CCA, medical allowance, tiffin allowance. The bank also provides the following incentives such as yearly bonus, pension, CPF, gratuity, LTC, housing loans, free medical treatment for specified diseases, loans to meet unforeseen expenses etc. PROMOTION POLICY The promotion policy of the bank is based on seniority cum efficiency criteria which is a positive aspect for the staff as well as for the Bank. The staff vies for performing better to have some plus points on their Annual Credit Report, which is compiled in respective branches and kept in the Head Office of the Bank. Most of the staff is young and possibility of getting early promotion to next cadre, even if highly efficient, is low. This may lead to lethargy or decrease in efficiency level of the clerical or junior level staff. EMPLOYEES ASSOCIATION The staff members of the Bank have formed into an Association which is affiliated to the Assam Provincial Bank Employees Association. The Association keeps a close eye in the day to day management as well as welfare of the Bank as a whole. As far as the relations of the management with the Employees Association are concerned, both sides revealed that their relationship is good and no problem has arisen so far. The Employees Association does not take part in making policies as this power is fully concentrated in the hands of the Board of Directors. But where discussion is required on important matters relating to human resources, the Employees Association takes active part. 20

22 EMPLOYEE GRIEVANCES In the bank a Staff Committee of the Board is there to meet the grievances of the employees. As the members of the staff are duly taken care of in respect of salaries, allowances, retirement benefits, leave facilities and other amenities, there hardly arises any cause of grievance. The Bank is very small and the number of employees is also less as such grievances are almost nil. EMPLOYEE TURNOVER AND ABSENTEEISM The employee turnover of the bank is nil. The employee absenteeism per year is also negligible. It is around 1% to 2%.The problem of absenteeism is not there because the employees of the Bank enjoys enough leave and holidays. In case due to unforeseen situations and emergency, any one remains absent, then his/her part of work is taken care of by the immediate superior or a person of the same cadre without hampering his/her own work. No room is left for pending work. FINDINGS From the study we have got the following findings. It is true that the Bank is small with a limited area of operation, but still each year the bank spends enough money in managing its human resources. The human resources of the Bank are given regular training for acquiring new skills and the staff members have declared that they are immensely benefitted from such training. The promotion policy of the Bank is satisfactory as it is based on efficiency cum seniority. The recruitment and selection policy of the Bank is also satisfactory as it provides an opportunity to the present employees for an upliftment in their career. The policy also takes care that new blood and new ideas are injected into the organization. The employees of the Bank are properly motivated and encouraged as the employee turnover rate and absenteeism is nil. CONCLUSION: Human resources are of paramount importance for the success of any organisation.human resources are the wealth of any organization which can help it in achieving its goals and objectives. The Co-operative City Bank Ltd has taken care of all the important aspects of human resource management. They strongly believes in the mantra that, You take care of our organization and we will look after your needs. Due to proper management of human resources a good congenial environment is created in the Bank. Enough scope for upliftment in their careers as well as proper motivation has led to the efficiency and effectiveness in the performance of the personnel. REFERENCES: 1. Annual Reports of the Co-operative City Bank Ltd. from to Barney, Jay, (1991) Firm Resources and Sustained Competitive Advantage, Journal of Management, Vol.17,pp Bhatia, S.K., Management of Change and Organization Development, Innovative Approaches and Strategies, New Delhi, Deep and Deep Publications Pvt.Ltd. 4. Dessler, Gary, Human Resource Management, New Delhi, Prentice Hall of India Pvt.Ltd., 1998(Seventh Edition). 5. Dessler, Gary, Human Resource Management, 482 F.I.E., Paharganj, Delhi, Pearson Education (Singapore) Pvt. Ltd., Indian Branch, 2003(Eighth Edition). 6. Kothari, C.R., Research Methodology & Techniques, New Delhi, New Age International Pvt. Ltd.(Second Edition) 7. Khanka, S.S., Human Resource Management, Text and Cases, New Delhi, S Chand and Company Ltd., Khatri N. (1999), Emerging issues in Strategic HRM IN Singapore, International Journal of Manpower, Vol.20,No Koch M.J. and McGrath, R.G. (1996) Improving Labor Productivity: Human Resource Management Policies Do Matter, Strategic Management Journal, Vol.17, Lado.Augustine A. and Mary C.Wilson, (1994), Human Resource Systems and Sustained Competitive Advantages: A Competency Based Perspective, Academy of Management Review, Vol Mamoria,C.B.,Personnel Management, Himalaya Publishing House,(Reprint), Michael, V.P., Human Resource Management & Human Relations, Himalaya Publishing House, 1995 (First Edition) 13. Pfeffer,J.(1994), Competitive Advantage through People, Harvard Business School Press, Boston, A 14. Saxena Karunesh & Tiwari Pankaj (2009), A Study of HRM Practices in Selected IT Companies of India, AIMS Journal of Management, Vol.1, No.3. 21

23 A STUDY OF THE DETERMINANTS OF SUCCESS IN UNORGANISED SME S OF INDIA: A FACTOR ANALYSIS APPROACH Chanduraj pious Kapse*, Dr. Manoj Kumar Dash** ABOUT THE AUTHORS * CHANDURAJ PIOUS KAPSE; RESEARCH SCHOLAR, ABV- INDIAN INSTITUTE OF INFORMATION TECHNOLOGY AND MANAGEMENT, GWALIOR (INDIA) ** DR. MANOJ KUMAR DASH; ASSISTANT PROFESSOR, ABV- INDIAN INSTITUTE OF INFORMATION TECHNOLOGY AND MANAGEMENT, GWALIOR (INDIA) ABSTRACT Small and medium enterprises (SMEs) play a vital role in the economies of both developed and developing countries, representing well over 90 per cent of all manufacturing enterprises in the world. Nevertheless, the folklore is that some of these enterprises collapse within a few years of their start up. Of those operating, some have grown rapidly, while others lagged behind or grew slowly. Therefore, it is important to identify the causes of failure as well as the factors contributing to the success or growth of these enterprises. Furthermore, the causes of failure and factors of success may vary from country to country, depending on their economic, geographical and cultural differences. Therefore, empirical investigation into these aspects of SMEs in different countries is important. The findings of this research will be useful to economic development planners as well as to individual entrepreneurs. Small and medium enterprises (SMEs) play a vital role in the economy of India. Despite the ethnic unrest prevailed in the country, manufacturing SMEs have shown a striking progress over the past two decades. This paper attempts to analyse the main factors that are perceived to have contributed to the progress or success of these enterprises. The analysis will be based on the perceptions of owner/managers who responded to a questionnaire survey conducted on a sample of manufacturing enterprises in Greater Noida, Noida, Ghaziabad and Faridabad. The statistical technique of factor analysis will be use for analysing the data. The results may indicate a set of identifiable factors that have positive and significant impact on the success of the sample firms. These factors will be ranked in their order of importance for the success of SMEs. KEYWORDS: SMEs, Productivity, Capital accessibility, Supportive environment, Manufacturing sector. INTRODUCTION Small and medium enterprises (SMEs) play a vital role in the economies of both developed and developing countries, representing well over 90 per cent of all manufacturing enterprises in the world (Wijewardena and Cooray, 1995). Nevertheless, the folklore is that some of these enterprises collapse within a few years of their start up. Of those operating, some grow rapidly, while others lag behind or grow slowly. Therefore, it is important to identify the causes of failure as well as the factors contributing to the success or growth of these enterprises. Furthermore, the causes of failure and factors of success may vary from country to country, depending on their economic, geographical and cultural differences. Therefore, empirical investigation into these aspects of SMEs in different countries is important because the findings of such research are useful to economic development planners as well as to individual entrepreneurs in the countries concerned. Although there has been a sizeable amount of literature on the determinants of success in SMEs in developed countries, empirical investigation into such factors in developing countries is extremely sparse. Therefore, the purpose of this study is to examine, through an empirical investigation, factors that would contribute to the 22

24 success or growth of manufacturing SMEs in a developing country. The data for the study were obtained from a questionnaire survey conducted on a sample of manufacturing SMEs in India. METHODOLOGY For the questionnaire survey, a sample of 350 manufacturing enterprises was drawn from the India Telecom Telephone Directory (Yellow Pages). Since the telephone directory did not list the SMEs separately, the sample included manufacturing firms belonging to all three sizes small, medium and large. The strategy was to identify the SMEs at the time of recording responses to the questionnaire. Moreover, the authors wanted to include large firms also in the survey as some data representing all sizes of firms could be used for another study. In addition to the general questions on the nature and performance of each firm, 25 factors that would be likely to contribute to the success or growth of manufacturing SMEs in a developing country like India were included in the questionnaire. The complete questionnaire was pre-tested on a small group of manufacturers and finalized before it was utilized for the survey. Three hundred fifty copies of the questionnaire along with a letter of request addressed to the chief executive officer (CEO) of each firm were mailed to the sample firms.. Respondents were asked to indicate their perception on each of these factors according to a five-point Likert scale. The scale for each factor ranged from 1 = Least important to 5 = Most important. The questionnaire and the letter of request were provided in both Sinhalese and English. A stamped envelope was also sent for facilitating the return of the completed questionnaire. A total of 262 firms responded to the questionnaire, giving a response rate of 75 per cent. Since 14 responses were not useable due to incomplete data and 80 responses were from large firms, the total useable responses representing SMEs amounted to 168. This criterion was based on a widely used method of classifying manufacturing firms with employees as small-scale industry and those with employees as medium-scale industry (Chusokigyo, 1981). The profile of these 168 firms is displayed in Table 1. All industry groups were fairly well represented by the sample firms. While chemical, petroleum, rubber and plastic products accounted for 25 per cent of all firms, the textile and wearing apparel group and the food, beverages and tobacco products group were the next two dominant groups in the sample. The number of small and medium firms included in the sample was 52.4 per cent and 47.6 per cent respectively. The majority of these firms (66.6 per cent) were private limited companies with the others comprising sole proprietorships (17.9 per cent) and partnerships (15.5 per cent). This indicates that private limited company has become the most popular form of business organisation among manufacturing firms in India recent years. TABLE 1: PROFILE OF THE SAMPLE FIRMS Type of Industry Firms % Chemical, petroleum, rubber and plastic products Electronic and electric equipment Fabricated metal products, machinery and transport equipment Food, beverages and tobacco products Furniture, fixtures, lumber and wood Machinery, computer, and transportation equipment Paper and paper products Stone, clay, glass, and concrete products Textile and wearing apparel Miscellaneous All firms Forms of Organisation Firms % Employees Firms % Sole proprietorship Partnership Private limited company All firms Total

25 RESULT ANALYSIS The statistical analysis of data was carried out in two stages. Firstly, the technique of factor analysis was utilised to reduce the number of variables to a few meaningful factors, each representing separately identifiable characteristics that could be considered as a set of principal components or determinants of success in manufacturing firms. Factor analysis has the ability to produce descriptive summaries of data matrices, which aid in detecting the presence of meaningful patterns among a set of variables (Dess and Davis, 1984, p. 472). However, before using the factor analysis, a number of initial tests were conducted to determine the suitability of our data for such an analysis. The correlation matrix produced by SPSS showed a considerable number of correlations exceeding 0.3. The Bartlett test of sphericity was significant (P=.000). Furthermore, the anti-image correlation matrix revealed that all of the measures of sampling adequacy were well above the acceptable level of 0.5, confirming the suitability of our data for a factor analysis. Secondly, descriptive statistics were used for ranking the factors in their order of importance. When the original 25 variables were analyzed by the principle component factor analysis with varimax rotation, a six-factor solution emerged in 26 rotations, with an eigenvalue of 1. Then, two variables were dropped from the analysis because of their low loadings and difficulty of interpretation. The analysis of the remaining 23 variables yielded six significant factors, which explained 61.1 per cent of the total variance. These factors were also considered satisfactory according to the reliability test of Cronbach s alpha with a value greater than 0.6 (Cronbach, (1951). These six factors and the variables loaded against each, along with the relevant statistical values, are given in Table 2. The factor loadings have ranged from to The higher a factor loading, the more its test reflects or measures a factor. The literature on factor analysis shows that loadings equal to or greater than 0.40 are considered large enough to warrant interpretation (Kerlinger, 1979, p.189.). Thus, only factor loadings greater than 0.4 are shown in Table 2. Table 2: Principal Components Factor Analysis Varimax rotation Factors contributing to the success of manufacturing enterprises Variable Factor 1 Factor 2 Factor 3 Factor 4 Efficient management Efficient team of management Production efficiency and productivity Strong and exemplary leadership Systematic planning for the future Acquiring high-calibre workforce Marketing strategy Customer orientation Good relations with employees Effective cost management Advertising and promotional activities Use of external advisory services Emphasis on specialised markets New product development Commitment to customer satisfaction Good relations with customers Good service and delivery system Competitive prices of products Open economic policy of the government Political stability & peaceful environment Supportive environment Government assistance/tax incentives Factor 5 Capital accessibility Factor 6 Product quality 24

26 Availability of capital Availability of bank loans & other credit Availability of quality raw materials Use of new technology and automation Maintaining high quality of products Eigenvalue Proportion of Variance Explained 15.9% 11.5% 10.6% 8.5% 7.8% 6.7% Cumulative Variance Explained 15.95% 27.4% 38.1% 46.6% 54.4% 61.1% Alpha FACTOR 1: EFFICIENT MANAGEMENT. This factor was represented by seven variables with factor loadings ranging form.728 to.507 (Cronbach s alpha =.85). They were efficient team of management, production efficiency and productivity, strong and exemplary leadership, systematic planning for the future, acquiring high-calibre workforce, good relations with employees, and effective cost management. Although the variable good relations with employees was correlated fairly highly with Factor 3 as well, considering its higher loading and importance it was included in Factor 1. This factor accounted for 15.9 per cent of the rated variance. FACTOR 2: MARKETING STRATEGY. Four variables with loadings ranging from.761 to.569 (Cronbach s alpha =.86) belonged to this factor and they included advertising and promotional activities, use of external advisory services, emphasis on specialised markets, and new product development. This factor explained 11.5 per cent of the rated variance. FACTOR 3: CUSTOMER ORIENTATION. This factor comprised four variables representing commitment to customer satisfaction, good relations with customers, good service and delivery system, and competitive prices of products. Factor loadings of these variables ranged from.786 to.450 (Cronbach s alpha =.77). A variance of 10.6 per cent was explained by this factor. FACTOR 4: SUPPORTIVE ENVIRONMENT. Three variables were included in this factor. They were open economic policy of the government, political stability and peaceful environment in the country, and government assistance and tax incentives. Their factor loadings ranged from.703 to.574 (Cronbach s alpha =.72). The factor explained 8.5 per cent of the variance. FACTOR 5: CAPITAL ACCESSIBILITY. This factor comprised two variables, namely, the availability of capital, bank loans and other credit. They carried factor loadings of.787 and.777 respectively (Cronbach s alpha =.69). The factor explained 7.8 per cent of the variance. FACTOR 6: PRODUCT QUALITY. This last factor consisted of three variables relating to the high quality of products. They were the availability of quality raw materials, use of new technology and automation, and high quality of products. Their factor loadings ranged from.739 to.534. The variance explained by this factor amounted to 6.7 per cent. Although the reliability of this factor with a Cronbach s alpha coefficient of.59 was marginally below the minimum acceptable level of.6, considering the nature and importance of the variables involved, it was included in the analysis. Further, although the variable use of new technology and automation was loaded fairly highly on Factor 2 as well, because of its higher loading and greater relevance it was also included in this factor. RELATIVE IMPORTANCE OF FACTORS Ranking of the above six factors in order of their importance, along with mean and standard deviation, is shown in Table 2. The importance of these factors, as perceived by the respondents, has been ranked on the basis of their mean values. The closer the mean to 5, the higher is the importance of the factor. Accordingly, the ranking followed the following order: (1) customer orientation, (2) quality products, (3) efficient management, (4) supportive environment, (5) capital accessibility, and (6) marketing strategy. Their means ranged from to

27 Table 3: Ranking of Factors according to their Importance Factor No. of variables Mean S.D. Rank Factor 1: Efficient management Factor 2: Marketing strategy Factor 3: Customer orientation Factor 4: Supportive environment Factor 5: Capital accessibility Factor 6: Product quality DISCUSSION The results of the factor analysis show a set of six separately identifiable factors that have positive and significant impact on the success of manufacturing enterprises in India. Although efficient management and marketing strategy emerged as the first and second most highly loaded factors respectively, customer orientation has been ranked by our respondents as the most important factor for the success of their enterprises. Similarly, product quality (Factor 6) and efficient management (Factor 1) have occupied the second and third highest levels of importance, while supportive environment (Factor 4), capital accessibility (Factor 5), and marketing strategy (Factor 2) have been perceived as the fourth, fifth and sixth important factors respectively. However, since the means of these factors have dispersed within a short range ( ), the differences between ranks are quite small. The following discussion focuses on each of these six factors and relates the results to those reported in the existing literature. CUSTOMER ORIENTATION As perceived by the CEOs who responded to our questionnaire survey, customer orientation is the most important factor for the success of their enterprises. This factor is characterised by four variables, namely, commitment to customer satisfaction, good relations with customers, good service and delivery system, and competitive prices of products. Customer orientation, which is often synonymous with market orientation, has been defined in the literature as an enterprise culture or philosophy that characterises an organisation s disposition to deliver superior value to its customers continuously (Slater and Narver, 1994). Peter Drucker (1954), the well-known management expert, emphasised this customer-oriented philosophy to American manufacturers almost half a century ago by stating that the sole purpose of a firm was to create and keep customers. As interpreted by many of his disciples, this meant that in order to be successful, organisations must ascertain the customer s needs and wants and then produce the products and services that will satisfy these needs and wants (Berthon, at al, 1999). However, only a few American manufacturers took Drucker s advice seriously until 1980s because income generation could be best accomplished by the mass production paradigm which was so successful after the world war when pent-up demand required little market planning. Its essence was to produce first and then advertise heavily until a product caught on. This was the path pursued in that era to achieve profitability and success. In the late 20th-century, however, as a result of the increased competition and international trade coupled with many technological developments, the high production-high profits paradigm followed by many Western manufacturers became ineffective and out-dated. Consequently, in the 30-year period from 1950 to 1980, the United States s share of the motor vehicle market plummeted from 76 per cent to 21 per cent. In 1980, Ford lost $1.54 billion and General Motors 763 million. The motor vehicle manufacturers did not grieve alone. Other backbone industries throughout the US economy suffered similar fates. On the other hand, from about 1950s, Japanese manufacturers have been practising a customer-driven philosophy known as kaizen. Central to kaizen is listening to the voice of the customer, designing products which meet his/her expectatons and continually improving all organisational processes that lead to customer satisfaction. For example, Toyota, which followed this philosophy closely, was sitting on $22 billion in cash at the beginning of This was enough to buy both Ford and General Motors at then current stock prices and still have $5 billion left over (Romani, (1977). 26

28 Today, many manufacturers in both the West and the East have realised from their own experiences that by adhering to a customer-oriented enterprise philosophy, possibilities for success can be enhanced greatly. Thus, the perception of Indian manufacturers that customer orientation is the most important contributor to their success is undoubtedly a realistic one. Since Indian manufacturers have begun to face increasing competition both internally and externally as a result of the country s outward-oriented industrialisation concept and the open economic policy, the customer-oriented enterprise philosophy should help them greatly in successfully facing this competition and achieving sustainable growth performance. PRODUCT QUALITY Product quality has been perceived as the next most important success factor. This factor is associated with three variables: availability of quality raw materials, use of new technology and automation, and maintaining high quality of products. In a highly competitive market environment, customers obviously look for high quality products at reasonably low cost (Chaganti and Chaganti, 1983). According to the findings of a survey conducted in Japan on a sample of successful small manufacturing enterprises, high quality of products has been perceived by their owner/managers as the second most important success factor (Wijewardena and Cooray, 1996). It is common knowledge that in response to the increased participation of Indian manufacturers in export trade and the availability of many different varieties of imported products on the local market, the importance of achieving and maintaining high quality of products in local industry has increased greatly in recent years. As shown in Table 1, 64.5 per cent of our sample firms participated in export trade with 24.2 per cent selling their products only to overseas customers. Since overseas customers usually have a greater choice of products to select from, they are most likely to pay a greater attention to product quality than their local counterparts. Thus, it is realistic to see that our respondents have attached a high degree of importance to product quality. EFFICIENT MANAGEMENT Another most highly rated success factor is efficient management. This finding is consistent with the universally accepted phenomenon that efficient management is crucial for the success of any type of organisation. Moreover, while a sizeable amount of studies have identified poor management as a major cause of business failures (Zacharakis, et al, 1999; Bruno, et al, 1896; Gaskill, et al, 1993), many studies have found that efficient management is the key to business success (Aquino, 1990; Bharadwaj and Menon, 1993; Steiner and Solem, 1988). Efficient management in our analysis consists of seven variables, namely, efficient team of management, production efficiency and productivity, strong and exemplary leadership, systematic planning for the future, acquiring high-calibre workforce, good relations with employees, and effective cost management. The positive relationship of the above variables to the success of Indian manufacturing enterprises is further confirmed by the fact that these variables have been widely cited in management literature as key contributors to profitability and enterprise growth. For example, a survey conducted in Singapore has found that good team of management was one of the major success factors for Singaporean SMEs (Ghosh, et al, 1993). Similarly, a survey conducted on a sample of small mature firms in the United States has reported that sophisticated planning has been a major contributor to their high performance (Bracker and Pearson (1986). Acquiring high-calibre workforce and maintaining good relations with employees have also been reported as two important success factors for Japanese manufacturers (Wijewardena and Cooray, 1996). Moreover, it has been widely cited that the effective cost management system of Japanese manufacturers was a major contributor to the miraculous industrial and economic development achieved by Japan in the recent past (Worthy, 1991). These examples well confirm the validity of the efficient management variable as a key to enterprise success. SUPPORTIVE ENVIRONMENT This factor is made up of three major sources of support that are crucial for the success of Indian manufacturing enterprises. They are the open economic policy of the government, political stability and peaceful environment in the country, and government assistance/tax intensives. Our respondents have perceived this factor as the fourth most important contributor to the success of their enterprises. It is evident from the published statistics that the open economic policy and its outward-oriented industrialisation strategy introduced in 1977 has already resulted in impressive growth performance in the manufacturing sector of India. The average annual growth of manufacturing output during the first two decades after initiating these liberal policy reforms was 11.7 per cent whereas it was only 1.3 per cent during the period, which was the last six years of the inward-oriented and highly regulated economic policy regime who followed an import-substitution based industrialisation strategy. Similarly, the ratio of manufacturing exports to 27

29 output was 54 per cent in 1995 compared to a mere 3 per cent in the mid 1970s (Athukorala and Rajapathirana, 2000). It is a well known fact that India s Industrial transformation and economic development have been hampered by the continuing ethnic war since 1983 and the radical youth uprising during Many public utilities, infrastructure facilities and safety of property and employees in business enterprises have been damaged or threatened by these adversities. The fear of civil unrest as well as the political uncertainty created in the minds of both existing and potential investors with regard to the continuation of the open economic policy and private sector-led industrialisation had a significant adverse effect on the development of manufacturing enterprises in the country. In view of these unfavourable experiences, it is realistic that our respondents have perceived the political stability and peaceful environment in the country as a strong supporter for the success of their enterprises. The next important ingredient of the supportive environment includes various forms of government assistance such as tax incentives, infrastructure facilities and industrial zones, and loan facilities through state banks particularly for small and medium-scale industries. These different forms of government assistance undoubtedly contribute to the development of manufacturing enterprises in the country. CAPITAL ACCESSIBILITY Obviously, capital accessibility is an essential prerequisite for setting up and successfully operating a manufacturing business. Therefore, the lack of capital has been widely cited in the literature as a major constraint particularly for the development of small manufacturing enterprises throughout the world. For example, according to the results of a survey conducted on a sample of small and medium enterprises, the shortage of capital is the most critical problem faced by emergent businesses in Singapore (Ghosh, et al, 1993). Similarly, the lack of access to capital has been reported by Levy (1993) as the most severe constraint faced by small manufacturing firms in India and Tanzania. His findings were based on a world bank study on 38 leather manufacturers in India and 20 furniture manufacturers in Tanzania. In addition to the capital invested by owners in the form of equity or share capital, manufacturing enterprises often need both short and long-term funds in the form of loans and overdrafts to finance numerous capital projects and day-to-day operations. The Indian government has set up several financial institutions such as the Industrial Development Bank and the Development Finance Corporation for helping manufacturers in financing their long-term capital investment projects while many commercial banks also provide both short and long-terms loan facilities to businesses. Nevertheless, small manufacturers are handicapped by the shortage of capital because of their relatively low investment capability and the lack of collateral needed for borrowing. Accordingly, as shown in Table 4, the respondents in SMEs of our sample have attached a greater degree of importance to this factor than their counterparts in large enterprises. The importance of this factor for the success of manufacturing enterprises in Indiais particularly evidenced by the fact that the impressive inflow of foreign direct investment (FDI) in response to the policy reforms initiated in 1977 has been a major contributor to the expansion of manufacturing industry in the country during the past two decades. Total annual net capital inflow has increased from $0.2 million during to $120 million during (Athukorala, 1997). This has resulted in setting up of many new manufacturing enterprises in collaboration with foreign investors. MARKETING STRATEGY It is universally recognised that a marketing strategy based on the four basic elements of selecting the right product, charging the right price, using the right promotion, and taking the product to the right place or market is universally accepted as an extremely important factor for the success of a manufacturing enterprise (McCarthy and Perreault, 1993). Information needed for selecting and designing a product that will be attractive to customers primarily comes from marketing research. For firms operating in a competitive environment, fixing the right price is as important as producing the right product. Similarly, using advertising or any other suitable promotional devices is necessary for manufacturers to let the target market know about their products. Delivering the product on time and providing the related services efficiently also add to customer satisfaction. All these aspects of marketing are believed to be greatly beneficial to manufacturers. The factor referred to as marketing strategy in our study encompasses four specific variables, namely, advertising and promotional activities, use of external advisory services, emphasis on specialised markets, and new product development. The use of external advisory services seems to be relevant to this factor because it is common among some manufacturers to use such services in designing and implementing their marketing strategies. 28

30 Placing emphasis on specialised markets is believed to be particularly beneficial to firms engaged in export trade. Similarly, it is realistic to see that the CEOs in our sample firms have attached a high degree of importance to new product development as a part of their marketing strategy because gathering information on customer reaction to the existing product in order to introduce quality improvements or to design a new product is necessary for overcoming the problems associated with product obsolescence and resultant declines in sales. CONCLUSION: Through an empirical investigation, this study has identified six principal factors that are perceived to be major contributors to the success or growth of manufacturing firms in India. These factors in their order of importance are customer orientation, product quality, efficient management, supportive environment, capital accessibility, and marketing strategy. Some experiences of Indian manufacturers in the recent past and the existing literature on studies conducted in several other countries provide ample testimony to the validity of these factors. However, it should be noted that the above conclusions should be treated with caution, as the results of this exploratory study stem from the perceptions of CEOs who represent only a small sample of manufacturing firms in India. Similarly, the small sample size does not permit generalisation of results to all firms in the manufacturing sector. Moreover, since the sample firms have been taken only from the Greater Colombo Area, they may not be representative of manufacturing industry throughout India. In addition, the results of this study were subject to the limitations commonly associated with all mail surveys in respect of the reliability and accuracy of information. Despite these imperfections, the study provides some useful insights to manufacturers and policy makers in India and other developing countries on some factors that may be considered as important contributors to the success of their manufacturing enterprises. Finally, it is important to note that there is a need to replicate this study by using more measures and a larger sample that covers manufacturing enterprises operating in different geographical areas of the country. A comparison of Indian firms with their counterparts in other developing countries would also be a fruitful future research avenue. REFERENCES: 1. Acquino, N.R. (1990) Success Secrets, Business and Economic Review, 36(4) July-September, Athukorala, P. and Rajapathirana, S. (2000) Liberalisation and Industrial Transformation: Indiain International Perspective, Oxford University Press. 3. Bharadwaj, S.G. and Menon, A. (1993) Determinants of Success in Service Industries, Journal of Service Marketing, 7(4): Bracker, J.S. and Pearson, J.N. (1986) Planning and Financial Performance of Small, Mature Firms, Strategic Management Journal, 7: Chaganti, R. and Chaganti, R. (1983) A Profile of Profitable and Not-so-profitable Small Businesses, Journal of Small Business Management, 21(3): Cronbach, L.J (1951) Coefficient Alpha and the Internal Structure of tests, Psychometrika, 16(3): Dess, G. and Davis, P. (1984) Generic Strategies as Determinants of Strategic Group Membership and Organisational Performance, Academy of Management Journal, 27(2) Drucker, P.F. (1954), The Practice of Management, Harper & Row: New York 9. Gaskill, L.R., Van Auken, H.E. and Manning, R.A. (1993) A Factor Analytic Study of the Perceived Causes of Small Business Failure, Journal of Small Business management, 34(4): Ghosh, B.C., Teo Sock Kim and Low Aik Meng (1993) Factors Contributing to the Success of Local SMEs: An Insight from Singapore, Journal of Small Business and Entrepreneurship, 10(3): Levy, Brian, (1993) Obstacles to Developing Indigenous Small and Medium Enterprises: An Empirical Assessment, The World Bank Economic Review, 7(1): McCarthy, E.J. and Perreault, W.D. (1993) Basic Marketing: A Global-Managerial Approach,.: Irwin: Homewood, Ill. 13. Romani, Paul, N. (1977) Satisfying Consumer Wishes: A manuscript for Success, Supervision, June: Slater, Stanle, F. and Narver, John, C. (1994) Does Competitive Environment Moderate the Market Orientation-Performance Relationship? Journal of Marketing, 58 (January): Steiner, M.P. and Solem, O. (1988) Factors for Success in Small Manufacturing Firms, Journal of Small Business Management, 26(1): Wijewardena, H. (1982) The Growth Patterns of Small and Medium-scale Industries in India, Unpublished PhD thesis, University of Sri Jayewardenapura: India. 17. Wijewardena, H. and Cooray, S. (1996) Factors Contributing to the Growth of Small Manufacturing Firms: Perceptions of Japanese Owner/managers, Journal of Enterprising Culture, 4(4):

31 MANAGEMENT ISSUES IN MULTINATIONAL COMPANIES (MNCS) ABSTRACT Ms. Rama Mittal*, Dr. Ruchi Singhal** In present era, businesses are set in a global environment. Companies not only regard their locations or primary market bases, but also consider the rest of the world. In this context, more and more companies start to run multinational business in various parts of the world. The companies which run business in different countries with their subsidiaries operating in host countries are to be characterized as Multinational Companies'. By following the globalization campaign, multinational companies the supply chains can be enriched, high costs work force can be transformed and potential markets can be expanded. Consequentially, competitive advantages of companies can be strengthened in a global market. Otherwise, some problems are met in the changed environments in foreign countries at the same time. The changed environments can be divided into four main aspects, namely, cultural environment, legal environment, economic environment and political system problems. All the changed environments make problems to multinational companies. In particular, problems which are caused by changed culture environment are the most serious aspect of running a multinational business. It is easy to know that every nation has different cultural preferences, national tastes and value standards. These factors impact on every part of management in multinational companies, especially on marketing management, human resource management and alliances management. Thus, multinational companies have to consider these issues when they run their multinational activities. This paper is an attempt to discuss these problems and finding some solution for them. KEYWORDS: Globalization campaign, Supply chains, Global market. INTRODUCTION A multinational corporation (MNC) is a corporation that operating in two or more countries, known as host countries but managed from one country, known as home country. ndia has branded itself as one of the favorite destination for application development outsourcing, owing to a great combination of lower cost and high quality IT. It has been playing a major role in the global market and has claimed the benefits of the globalization opportunities in a wider way. Today it is common for MNCs to announce a major expansion or setting up new operations in India. Companies are investing valuable time, resources and have even deputed key managers to manage things on the ground. Top management at the headquarters often do not have a complete picture of the challenges that needs to be conquered to succeed in host country (India). Expatriate managers are often tied up grappling with the enormous challenge of setting up operations: Legal challenges, Location choices, recruitment challenges, managing workforce effectiveness etc. Often times these challenges are not accounted to in the initial planning. As a result, the operations in India will have a series of false starts which causes anxiety, stress and frustration throughout the organization. MANAGEMENT ISSUES WITH MNCs It has been observed that the most common challenges facing Multinational companies when expanding in India are: ABOUT THE AUTHORS * MS. RAMA MITTAL; JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL, NEW DELHI ** DR. RUCHI SINGHAL; JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL, NEW DELHI OFFICE & INFRASTRUCTURE CHALLENGES: Selecting a suitable workplace in view of the current and future requirement is a major challenge. It is a common practice of MNCs to lease an office space rather than own it. The demand for office space is so huge that companies are forced to book office spaces even before the building is completed and companies are forced to lease out a larger 30

32 space in view of future expansions. And when the current office space runs out, companies are required to look at other locations. For example HP has rented out more than 20 office spaces all over the Bangalore and this is still not enough. HP is currently building its own campus in Electronic City. The challenge of office infrastructure is forcing companies to get involved in real estate development business which was not their original intention when entering India. Locational choices are also restricted by the fact that Internet Connectivity and utilities are not available in all areas of the country. India has identified few Industrial townships where all infrastructures are made available thus forcing companies to operate from those areas only. Choosing a right location in view of all the future requirements poses a significant challenge. The best solution is to partner with a real estate developer who can offer best services e.g.: ITPL, GTP, DLW etc. Or to own and develop a large piece of land in designated software or industrial parks which provide adequate space for future requirements. RECRUITMENT CHALLENGES: Recruitment Challenge is a more recent phenomenon. India has the largest pool of English speaking professionals in the world. India graduates 2,60,000 engineers a year and about 2 Million graduates (20 lakhs); there is a shortfall of talent. With India becoming a centre of all IT/Software/Financial Services industry, the competition to attract the best talent has heated up. The demand for talent is estimated to reach 4 Million by 2008, the quality of college graduates vary greatly. This forces companies to develop complex recruitment process to reach out to this vast pool of talent. Infosys for example receives 1.4 million job applications and interviews 67,000 candidates and hires 26,000 per year. Often times, MNCs have to develop a completely new recruitment process that is tailored for India. The recruitment process is so competitive in major cities (Bangalore, Delhi, Hyderabad, Mumbai etc.) that companies often have to interview 50 potential candidates before getting one employee on board. In addition to initial recruitment, companies have to work on employee retention as well. Attrition rates in India are far higher than in US and European Market. Given the demand of talent, almost all companies are going after the same set of people this implies that every employee in a company will be approached by a recruiter from another company. The retention policies and practices have to be uniquely developed for India. The policies of the home country (either US or EU) are rarely applicable in India. EMPLOYEE TRAINING & SKILL ENHANCEMENT CHALLENGES: A trained workforce is a more productive workforce. This implies that the company must have a planned training program. One needs to have a planned training program. Many employees in India may be good in written English, but they may need training in verbal communication skills. BPO operations or call centres need to provide voice/accent training programs. Even software engineers have to be trained in basic business etiquette and the standard business communication skills. The training programs have to be tailored to address the deeper cultural issues that enable new employees in India to communicate effectively with their US/EU counterparts. The training programs must be tailored by experts who understand the local Indian work culture and work culture of the parent organization. In addition, new employees have to be trained in technical tools to make them productive in the actual work environment. TEAM COORDINATION CHALLENGES: Teams working across geographies working across different time zones, drawn from different cultures will take time to integrate. During this time, there will be lots of coordination issues. Teams will spend lot of time storming rather than performing. In this phase, management should take care to minimize the mistrust, miscommunication, and minimize work stress among team members. The challenges of coordinating cross-cultural teams are complex and cannot be easily dealt with company policies. Often times companies need to resort to cross cultural consultants to help build more productive teams. CHALLENGES OF WORKING ACROSS CULTURES: Ethnocentrism and Parochial attitude is the result of interaction with a different culture. Managers who are often sent abroad have little knowledge or experience in dealing with a foreign culture. As a result, these expatriates (managers) tend to respond to cultural differences which can be called as "Ethnocentrism" and "Parochial Attitude". Ethnocentrism results when managers recognize the differences in cultures - but have a tendency to think that their culture and their way of doing things is the right way, their way of doing things is the only and best way. Any deviation from their culture or from their way of doing things is seen as "distortion" or as a "mistake" or as "Wrong way". Most people have the tendency to follow 31

33 ethnocentrism. Americans, Japanese, Chinese, Germans, French, Scandinavians, and Russians are more prone to ethnocentrism than other cultures - when compared to other Asians, Latin Americans, British, Australians, Africans and Indians. US today refers to non- Americans as "Aliens" - a term which shows the ethnocentric attitude. Parochial attitude refers to a persons inability to see cultural differences. This is exactly the opposite of ethnocentrism. Managers who are sent abroad often meet people who are also dressed in suits and speak their language - this prompts them to ignore all other cultural differences and make them think that all others are "just like us". In today s business world, most people tend to dress similarly in suits or other formulas and talk in English, but it does not mean that all people have the same culture - but people often only see the surface and assume that the other person shares the same cultural values. Expat managers from US/UK often tend to display a strong parochial attitude - mainly because the people with whom they interact on regular basis can speak English and are dressed similarly in suits or western dresses. IMPACT ON BUSINESSES: Often times, expat managers tend to display both parochial attitude and ethnocentrism at the same time. Problems in the organization are often blamed on cultural differences or on the culture of the local employees while successes are attributed to the culture/practices at the head office. The inability of the managers to recognize the benefits of cultural differences puts these expat managers in a constant state of cultural blindness which at first seems to have no negative impact on the organization. This initial success is often due to the fact that the local employees tend to play the role of a gracious host - and accommodate the demands of the expat manager. But over a longer period, local employees tend to settle down to their usual practices and that's when the expat managers find it difficult to manage. It demotivates local employees and trouble starts in the local operations. Parochial attitude forces the expat managers to ignore local culture and in the process his/her behavior would have offended local sensibilities - thus creating discontent among the local staff. Companies - especially MNCs tend to openly display their Parochial Attitude and Ethnocentrism. Examples of this are: 1. Use of common company wide HR policies 2. Use of common operating procedures 3. Use of Common language of communication 4. Use of common posters, advertisements and other PR material MINDSET ABOUT MANAGEMENT HIERARCHY: In American business culture, rank and title aren't as important as they are in India. Hierarchical forms of behavior are frowned upon. The expectation is that subordinates will speak up, offer suggestions, push back and take initiative rather than just do what they're told. Decisions tend to be less top-down, authority is more delegated, and managers expect team members to take responsibility and assume ownership of results. ATTITUDES TOWARDS APPOINTMENTS AND DEADLINES: For Americans, strict adherence to time commitments is seen as a basic principle of professionalism and courteous behavior. Because everything tends to be strictly scheduled, delays in one appointment or deadline can have a serious ripple effect on a colleague or customer's other work commitments. The more flexible and open-ended approach to time of Indian business culture can create tensions and unfavorable impressions on American counterparts. RESULTS VS. PROCESS ORIENTATION: In Indian business culture, following the rules and implementing correct processes is highly valued, but in American business culture, it's all about results. There is impatience with individuals who come across as more concerned with following established processes correctly than with achieving the desired goal. Americans don't like to be told all the procedural reasons why something can't be or hasn't been done. ETHICAL ISSUES: Every company doing business abroad faces numerous legal and ethical issues. The multinational corporation (MNC) faces legal issues raised by home country laws, host country laws, regional regulations or directives, bilateral and multilateral treaties, and international standards and certifications. Ethical issues become entwined in various legal options, and local customs and norms add another layer of complexity to the question of how to act both legally and ethically in an unfamiliar environment. MNCs are wise to focus on four kinds of ethical challenges: these are (1) bribery, competition, cronyism and public governance as they relate to supporting competitive market capitalism; (2) human rights issues; (3) environmental issues; and (4) social equity issues. In order to 32

34 secure the future of their operations in the host country, MNCs must successfully establish ethical practices in the host country. CONCLUSION: As all of us agree with the quote that Different laws and culture causes problems but then diversity creates competitive advantages also. Few global firms have realized the advantages of cultural diversity and have fully embraced it. US based firms such as Intel, Cisco, HP, Microsoft, Oracle, etc., have become truly multicultural these companies have learnt to overcome the problems of diversity. But for companies which are just starting out in this workforce and cultural diversity path, the challenges are frightening. The solution is not easy frontline managers and top management must embrace the need for diversity and have policies, procedures and practices to manage it strategically. The best solution is to initially hire business consultants or senior managers who have experienced these challenges in the past so that these problems can be solved in the initial stage. Business consultants should be especially trans-cultural consultants, cross-cultural business consultants or organization development consultants so that they can be helpful for MNCs. At the end we can say MNCs should anticipate the reaction of host nations and their people to any change before initiating it. REFERENCES: 1. Deresky. H (2008) International management: managing across borders and cultures, Pearson Prentice Hall 2. Ferrell. O. C., Fraedrich. J. & Ferrell. L (2010) business ethics: Ethical Decision and Cases, Cengage Learning 3. Fisher, c. d., schoenfeldt, l. f., and shaw, j. b. human resource management,4th ed. houghton mifflin company, Pitelis, Christos; Roger Sugden The nature of the transnational firm. Routledge.2000:72. 33

35 DEVELOPMENT OF E-COMMERCE IN DEVELOPING COUNTRIES (I.T. - MANAGEMENT) Dr. Ruchi Singhal *, Ms. Rama Mittal **, Ms. Seema Agarwal*** ABOUT THE AUTHORS * DR. RUCHI SINGHAL; JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL, NEW DELHI ** MS. RAMA MITTAL; JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL, NEW DELHI *** MS. SEEMA AGARWAL; JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL, NEW DELHI ABSTRACT As all of us are aware that Electronic Commerce is used to improve efficiency and productivity in many areas and, therefore, has received significant attention in many countries. However, there has been some doubt about the relevance of ecommerce for developing countries. The obstacles to reaping the benefits brought about by e-commerce are often underestimated. We can use the E-Commerce only when telephones and computers with the facility of Internet are available, but these technologies are still in very scarce supply even in developing and growing countries. In addition to this problem, Internet access is still very costly both in absolute terms and relative to per-capita income. While computer as well as Internet prices have fallen dramatically over the last decade, they remain beyond the reach of most individual users and enterprises in developing countries The absence of adequate basic infrastructural, socio-economic and the lack of government national strategies have created a significant barrier in the adoption and growth of e-commerce in developing countries. In this paper, we present and discuss the issues related to the development and hindering e-commerce adoption in developing countries. KEYWORDS: Developing countries, e-commerce, internet, technology, information technology. INTRODUCTION As we know that E-commerce i.e. business to business (B2B) has taken a radical change in the way that firms trade with one another. Before 15 years back, B2B e-commerce applications were being promoted as tools that would facilitate the access of producer firms in developing countries to global markets which have been driven by the idea that the internet provides an opportunity for firms to trade directly with each other, buying and selling Products online, bypassing intermediaries and gaining much easier access to world level markets. The internet would enable firms in developing countries, including small and medium-sized business, to find new customers quickly and cheaply. These expectations were not based on hard evidence of profit making e-commerce used in developing countries. An analysis of B2B e-commerce is based on a study of internet-based e-marketplaces and the use of the internet for business purposes. But some countries lead to a very different conclusion. There is a fact that firms are using the internet to find new customers and suppliers, or to buy and sell goods through e-market places. Nevertheless, the internet is becoming an important business tool as it is going to be an important means of managing and coordinating business between firms with established business relationships. The way of business uses of internet based applications was created by the communication advantages of the internet and its large disadvantages in creating trust between firms. E-market places have not been able to develop trust mechanisms, and the costs of transacting business online remain very high. EXPECTATIONS FOR B2B E-COMMERCE As we know that approximate Before 15 years, many analysts believed that B2B E-Commerce would lead to a rapid change in the way that enterprises trade with one another. The rising competitiveness with the use of internet would become essential for access to global markets. Use of the internet was expected to reduce the effect of geographical distance, providing better information on profit achieved through markets and lowering 34

36 the cost of production in global markets. This was expected to lead to substantial benefits in the form of improved access to international markets and strengthened competitiveness. The ability of internet-based B2B e- commerce systems to facilitate business linkages across the world seemed to open up new possibilities even for small and isolated rural enterprises and communities. The way B2B e-commerce was expected to operate can be summarised in four propositions named as: 1. E-commerce works through many-to-many e-marketplaces. Many-to-Many e-market places would become the dominant component of e-commerce. E-markets involve a large number of buyers and sellers that engage in many-to-many transactions and relationships. They create a trading community in which buyers orders are matched with sellers offers and the trading partners benefit from other forms of collaboration. 2. E-market places would provide the information and services needed by buyers and sellers so that they can decide to carry out a transaction online and then make arrangements for payment and delivery. 3. E-commerce also offers the advantage of less costs of e-commerce related transaction which are very sensitive to distance than traditional marketing channels, so access to global markets is made easier. 4. It particularly helps in entrying the smaller firms to global markets. Reductions in the costs of accessing global markets are particularly important. E-trade opens new commercial opportunities to the exportoriented enterprise. This view of how B2B e-commerce works has analogies to business-to-consumer e-commerce sites such as Amazon. E-commerce is seen as essential for maintaining and increasing access to global markets. Governments have particular responsibility for two aspects of the environment needed for effective online trading. 1. Some E-commerce transactions are complex and information-intensive, requiring a quantum leap in telecommunications capabilities. Governments should ensure that telecommunications capabilities are sufficiently developed to provide low-cost network access. This could best be achieved through competition, Market liberalization and reducing tariffs on ICT hardware and software. 2. Online trading has to be supported by a legal system that recognizes and enforces the validity of online contracts through such mechanisms as digital signatures, secure settlement procedures, anti-fraud measures and mechanisms for redress. Developing country governments should invest resources in developing and promoting these capabilities. Otherwise, firms might find themselves at a disadvantage and be marginalized from the internet boom. ANALYZING THE DEVELOPMENT OF E-COMMERCE During the last few years, the world has experienced a revolution that is affecting several industries. It is changing the way relationships between business partners are made. The last 20 years have seen risen of computing power per dollar by a factor of more than 10,000. The Internet is growing at a phenomenal pace. Emerging digital mobile terrestrial services and technologies are bringing data services to hundreds of millions of users worldwide Some industrialized countries are already providing 2.5G mobile terrestrial services and are in the process of building their infrastructure for 3G mobile. As early as 2001, handheld digital mobile devices on 3G mobile networks and the communication and application environment for handheld devices provided by Wireless Application Protocol (WAP) will provide high-speed Internet access. Internet appliances and pervasive computing are reducing the technical requirements for network services and are creating direct relationships between businesses and consumers. While mobile network operators are providing e-payment services to their consumers, and threatening traditional financial institutions (such as credit card companies), digital TV is emerging as a new channel for distributing products and services to end-consumers. New economic leaders are emerging from companies that did not exist a few years ago. The main question being asked today is not "what business you are in?" but "what is your business model?" The digital revolution is bringing down geographical and time barriers. It is bringing together companies from the financial, computer networking, broadcasting and telecoms sectors to forge alliances and create new types of services. A global electronic economy is being created where changes in one part of the globe affect many other parts. E-Business commerce is one of the main factors driving the digital revolution. It is creating new business models in industrialized countries and at the same time, presenting very new challenges to developing countries that still lack some of the basic technologies, policies and legislative framework to be part of this revolution. 35

37 TECHNOLOGY REQUIREMENTS AND COMPONENTS FOR E- BUSINESS: The infrastructure needed to provide e-business services includes trust, secure transaction and e-payment components (amongst others that are beyond the scope of the discussion). The faceless nature of e-business requires that transactions between two parties be secured. Some of the technology requirements will be further elaborated by separating them into e-security and e-payment components. The poor banking services, inadequate Information and Communication Technology (ICT) infrastructures and absence of legislative and regulatory framework for e-business in developing countries require a slightly different approach for implementing e- business. The section below explains some of the main e-security features followed by a discussion and analysis on the technology requirements and the role e-security plays in the e-business strategy for developing and least developed countries. TECHNOLOGY SERVICES 1. Intermediate Authentication: This involves making sure that the identities of the parties to a transaction can be established and verified. Authentication requires the use of digital certificates, passwords and electronic tokens that can be implemented using both hardware and software. 2. Data Confidentiality: Confidentiality provided through the use of encryption technology enables only the intended parties to be able to view the contents of the transaction. 3. Data Integrity: It is fundamental that the contents of a transaction remain unchanged. Data integrity uses a combination of hash functions and public key cryptography to provide mechanisms to verify the integrity of the data. Any changes are detected and such data is rejected by the other party. 4. Non-repudiation: Like in traditional business transactions, a mechanism needs to be put in place to ensure that transactions can not be denied after their execution. Non-repudiation is achieved using a combination of both digital signatures and hash functions FACTORS HAMPERING E-COMMERCE ADOPTION IN DEVELOPING COUNTRIES The study identified specific infrastructural barriers hindering the adoption of e-commerce in developing countries. There is a wide range of reasons why e-commerce adoption in developing countries is hindered. Reasons vary widely among countries and are most commonly related to these: enabling factors infrastructure (technology, network availability of ICT skills, qualified personnel); cost factors (costs of ICT equipment and networks); and security and trust factors (uncertainty of payment methods, and legal frameworks), poor distribution logistics, lack of feel-and-touch associated with online purchases, problems in returning products. A. INFRASTRUCTURAL BARRIERS The study identified specific infrastructural barriers hindering the adoption of e-commerce in developing countries. Some of the barriers include lack of credit cards and convenient payment means, poor distribution logistics, lack of specialized, trust-worthy online merchants of reasonable size, imperfect legal system, and lack of large scale telecommunication transmission capability(broadband), Internet security, lack of feel-and-touch associated with online purchases, problems in returning products, and selection (product availability and breadth). a. TECHNOLOGY There are serious infrastructural hindrances related with access to technology such as computers, connectivity, and gateway to Internet, limited bandwidth, which reduces the capacity to handle audio and graphic data; poor telecommunications infrastructures (most of which are still analogue and can only transmit voice) and unreliable electricity supply. b. HIGH ACCESS COST The cost of the Internet access makes it inaccessible to most users in developing countries. The priority for most developing countries is to put in place the necessary infrastructure and a competitive environment and regulatory framework that support affordable Internet access. The monthly connection cost of the Internet far exceeds the monthly income of a significant portion of the population. The availability of a wide range of Internet connections and other communication services, preferably at competitive prices, may affect citizens of developing countries decisions to adopt ecommerce and allows users to choose different and appropriate services according to their specific needs and expectations from on-line activities. Broadband 36

38 faster speeds to improve the overall on-line experience for both individuals and businesses, encouraging them to explore more applications and spend more time on line. c. ACCESS TO COMPUTER EQUIPMENT There is still a low level of PC penetration and the cost of Internet access is too high. Majority of developing countries population lacks the income required to have telephone services, especially the low-income and rural populations. The cost of computers far surpasses the monthly wage of the average person in developing country. For example, average person in developing country neither owns a computer nor has access to a computer connected to the Internet. The prohibitively high cost of computer equipment is seen as one of the barriers to the wide use of computers. Without computers, one cannot have Internet access. The presence of an adequate Internet infrastructure is a necessary but not sufficient condition for the development of ecommerce. d. TELECOMMUNICATION (NETWORK) The Internet connection in most developing countries is unreliable because of the poor telephone communications and the erratic power supply. The majority of developing countries are not ready for ecommerce, because of their lack of network infrastructure especially among individual users and entrepreneurs. E-commerce success relies heavily on a number of Barriers hindering e-commerce adoption and diffusion in developing countries Technology infrastructures. Telecommunication infrastructures are required to connect various regions and parties within a country and across countries. In most developing countries, outmoded and unreliable telephone connections in many countries result in narrow bandwidths offered by many ISPs, with consequent low connections. B. SOCIO-CULTURAL BARRIERS Most cultures in developing countries do not support ecommerce and the conditions are not ripe because of lack of confidence in technology and online culture.the social and cultural characteristics of most developing countries and the concepts associated with online transaction pose a much greater challenge and act as a major barrier to adoption and diffusion of ecommerce. Even though online transaction that are pre-cursors to e-commerce, such as catalog and telephone sales, have existed in developed countries and have been used by the public for an extended time period, such systems are new and novel approaches in developing countries and is not suitable to the culture and way of doing business. We identified some socio-cultural characteristics such as level of trust in institutions, shopping as a social place, limitation on personal contact and language/content as barriers hindering ecommerce adoption in developing countries. a. TRANSACTIONAL TRUST (ORDERED GOODS WILL ARRIVE, PAYMENT WILL BE MADE): E-commerce is a radical behavior that goes contrary to experience and culture. The move to electronic commerce challenges many of the basic assumption about trust. Confidence and trusts an essential requirement for secure electronic trading. The question of trust is even more prominent in the virtual world than it is in the real world. The geographical separation of buyers And sellers often coupled with a lack of real-time visual or oral interaction creates a barrier to ecommerce adoption in developing countries. Contracts are expected to change and promises may be broken; a strong individual relationship is often the only indispensable ingredient that is required for the implementation of a contract. The sheer number of people conducting business on the Internet becomes a deterrent. When you find potential partners, do you trust these sellers or buyers to be reliable, their products to have satisfactory quality, and payments to be truthfully carried out? There is no western honor system in most developing countries In the developing world, trust is established and reinforced through family association, repeated personal contact and interaction. b. SHOPPING AS A SOCIAL PLACE In developing countries, shopping is seen as a social place where friendly conversations between the vendor and the customer. The success of doing business depends heavily on the quality and sometimes the quantity of personal relationships. A strong individual relationship and long term association between the parties provide a sense of community and enhances social bonding. Most of the business is conducted through small enterprises and it is local. A typical company in developing country is a socio-economic entity and not just a pure economic one. 37

39 c. LIMITATION ON PERSONAL CONTACT In most developing countries, people consider shopping as a recreational activity. The idea of buying goods that one cannot see and touch and from sellers thousands of miles away may take some "getting used to" for those who are used to face-to-face transactions, familiarity with the other party, getting satisfaction from winning business negotiations. As one person stated I like buying over the Internet, but it does not beat going to an actual shop where you can see what you are buying and make sure it's what you want. The interpersonal relationships with people located at a distance when shopping online is an alien culture to most people in developing country. The face-to-face contact is irreplaceable, you can't replace going to see people; you can't beat having face-to-face interaction for selling or buying products. The limitation on personal contact as a barrier to ecommerce adoption is a reflection of people in developing countries that prefer more direct and individual contact with their developing country, there is still a suspicion of technology that is perceived to destroy their culture and way of life. d. LANGUAGE/ CONTENT Language is another important hindrance to ecommerce adoption. Language has been identified as a socio-cultural barrier that hinders both access to information and to the Internet and participation in ecommerce. Most people in developing countries are illiterates and uneducated people tend to have limited access to access information on the web because information is either in a language, which assumed some degree of education. The less educated and illiterate could not read nor understand the languages that are used to disseminate information on the Internet. Therefore, many people are unaware of how their quality of their lives and their incomes could be improved by skilful use of computer technologies such as the Internet and on-line trading. The issue related to language is important because it is a gateway of information and knowledge transfer in the digital world. English is a primary language used in many Western countries where new technologies originate. It is the predominant language for development of IT and ecommerce and it is the main language used on the Web. C. SOCIO-ECONOMIC BARRIERS Developing countries need to address a number of socioeconomic and regulatory barriers before they can participate in electronic commerce. We identified various socioeconomic characteristics as barriers hindering ecommerce adoption in developing countries. Among the most pressing are economic condition, educational system, payment systems for enabling transfer of funds, and distribution systems for physical transfer of goods a. ECONOMIC CONDITION Economic condition in developing countries is widely recognized as a major hindrance for ecommerce adoption. The GDP and income per capita are common indicators for the economic condition of a country. Since ecommerce relies on some technology infrastructures which are relatively expensive for many developing countries, and they have unfavorable economic condition and are not likely to be involved in ecommerce. For example, the initial and continuing cost of Internet access has dropped in recent years, but it remains a significant barrier to ecommerce adoption in developing countries. Consequently, large entry and ongoing costs are a great disincentive to internet usage and therefore to the development of ecommerce business both within a country and for international trade. The access charge relative to income affects Internet use. Monthly Internet access charges are still very high in most developing countries. The inequalities in income distribution means the Internet is not affordable for a large proportion of the population in rural areas. The common pattern found across developing countries is the dichotomy between the urban and rural areas in terms of technology use. In urban areas, ICT use is fairly common; while in the rural areas of some developing countries, many small enterprises do not even have computers yet, talk less of Internet access. b. EDUCATIONAL SYSTEM The poor state of educational system in most developing countries is seen as barrier to ecommerce adoption. Lack of ICT skills and business skills are widespread impediments to effective adoption of ecommerce. The lack of appropriate IT education is perceived to be a reason why the potential value of computers and the Internet as a means to participate in 38

40 ecommerce is not appreciated. In most developing countries, school curriculum does not include computer education for increasing the business shares at world level. There is a need for early computer education so that people could become computer literate in school. It is argued that computer literate populations have greater potential to appreciate and participate in ecommerce. If the Internet is to be of any real benefit to developing countries, it must focus primarily on the needs and problems of the majority of populations (i.e. those who are traditionally deprived of education and opportunities for personal and community development). People would have to be comprehensively trained and educated before they could benefit from the advantages offered to them by the Internet and ecommerce. c. PAYMENT SYSTEM An institutional environment that facilitates the building of transactional integrity is critical to the development of ecommerce in developing countries. This infrastructure makes payment over the Internet possible (through credit, debit, or Smart cards, or through online currencies). It also makes possible the distribution and delivery (whether online or physical) of those products purchased over the Internet to the consumer. Its growth further requires the establishment of reliable and secure payment infrastructures to avoid frauds and other illegal actions. A supportive electronic payments infrastructure is crucial to promote ecommerce, which exposes a key link between ecommerce and the financial foundation of the economy. Few people in developing countries have credit cards, most banking sectors in developing countries lack a national clearing system and potential customers are suspicious of being cheated. In most developing countries users may be unable to purchase online because credit cards are not accepted without a signature. Beyond individual transactions, full efficiency and realization of the benefits of ecommerce depends on rapid authorization, payments, and settlement of accounts. d. LOGISTICS (SPEED AND TIMELINESS OF DELIVERY) Ecommerce relies on efficient logistic infrastructures within a country. Inefficiencies in essential services such as postal service along with delivery required in an international transaction can frustrate the success of the transaction itself. The distribution and delivery systems are key components to develop e-commerce. It is also necessary for an enterprise to have in place the distribution and delivery channels capable of meeting customer expectations. Speed is one of the most important manifestations of ecommerce. Overnight delivery, just-in-time processing, 24/7 operations all are examples of how much faster and more precisely timed economic activities are in the e-commerce world. The inefficient distribution and cumbersome delivery systems and the lack of good transport, and postal system are primary obstacles to the growth of electronic commerce in developing countries. D. POLITICAL AND GOVERNMENTAL BARRIERS The lack of a policy to guide ecommerce expansion in developing countries is a major hindrance to the adoption of ecommerce. The poor state of most developing countries telecommunications infrastructure is the major barriers hindering the adoption of ecommerce. The lack of telephone lines, low quality, slow speed and high cost of bandwidth and security concerns needs to be addressed before users and enterprises in developing countries can think of participating in ecommerce. Most developing countries do not have ICT policies to guide the provision of Internet services. No progress is possible in the absence of clear policies and the determined implementation of such policies. Government initiatives are important in the adoption of ecommerce and other ICT in general. They can be in terms of promotion of ICT usage, education and the establishment of adequate regulatory framework for ecommerce. Competition, both for telephone access as well as among ISPs is a key area where government policy can make difference in access and adoption of ecommerce. It is very crucial in developing countries Governments to ensure open and competitive telecommunication markets that offer a range of interoperable technological options and network services (particularly broadband) of appropriate quality and price, so that users can choose among various technologies and services for high-speed Internet access. Other issues that are seen as barriers to ecommerce adoption are free trade, the monopoly which national governments exercise over national telecommunications, import duties on IT equipment like hardware and software. Changes in government policy are perceived as being critical to create an environment for the broad use of the Internet in many sectors of developing countries. The commitment and participation of Government in Internet service provision and the reduction of import 39

41 duties will lead to the reduction of costs which will in turn make equipment more affordable and encourage connection to the Internet. They also urgently need to formulate information policies that will provide a framework for efficient, widespread and cost-effective use of the Internet. There is neither a government policy on Internet provision or on the future of ecommerce in most developing countries nor any comprehensive information policy. But lastly one thing more that the absence of national information policies in developing countries means that the government is not involved in Internet provision. CONCLUSIONS Lastly I would like to conclude that the Internet is not yet a universally accessible resource in developing countries. Most countries lack the necessary policies and infrastructure that would enable widespread usage of the Internet. In spite of the fact that the necessary conditions for supporting internet usage are not in place in most developing countries. The Internet has enormous potential as a tool for development. The extent of adoption is hampered by a ranges of obstacles including the unavailability and/or unreliability of infrastructure, the absence of government policy frameworks, the lack of banking facilities and amenities (such as credit cards), and ignorance on the part of possible users about the enormously beneficial potential of ecommerce. The level of education, the availability of IT skills, the level of penetration of personal computers and telephone within the society hinders adoption of ecommerce. Despite the limitations of most developing countries, it appears that ecommerce is indeed relevant to developing countries, despite the current limitations with the existing infrastructure and other issues related to the economical and socio-cultural conditions. Ecommerce can be an extremely beneficial tool in developing countries provided that certain problems are resolved and provided that the governments of developing countries demonstrate that they have the political will to remove the barriers that currently stand in the way of widespread adoption. But in spite of these barriers we are having some issues which we can consider for developing successful policies in E-Commerce. Some of them are: Develop a foreseeing scenario of which technologies will be in use (with regard to ecommerce) in the next coming ten years. Deeply examine and assess the available technologies to be used, including their obsolescence. Fully assess the providers of the technology, procedures, and the transfer to local firms and institutions. Develop the necessary human capital capacity in order to successfully transfer the technology to local developers. Create a bid process for technology acquisition to include as many technology providers as possible and to reduce the price of the technology. Assess the implications and effect of the implementation of these technologies in different industries Allow adequate time for a legal framework to be developed and enacted. Seek advice of international organizations and institutions with authority in the issues. Establish domestic controls on the use of encryption technologies as well as on their import. Investigate who will buy digital signatures, how many owners there will be? Define the role of the government in encryption processes (as a certifying entity). Create a transparent process of technology licensing with respect to digital signatures with international standards. Create laws that fully protect the rights of the consumers utilizing these new technologies. Much remains to be done by many stakeholders if e-commerce in developing economies is to experience the type of growth evident in more developed countries. As this paper has shown technology is one factor among development and growth of a country but at the same time the same technology is not producing the desired and expected one. REFERENCES 1. Clapham, Christopher (1985) Third World Politics Madison: University of Wisconsin Press. 2. Daniel, Elizabeth, Wildon, Hugh and Myres, A.(2002), Adoption of E-Commerce by SMEs in the UK Towards a Stage Model, International Small Business Journal, Vo.l 3. Humphrey J, Mansell R, Paré D and Schmitz H (2004). E-commerce for Developing Countries: Expectations and Reality. IDS Bulletin, 4. Carol Ann Charles, "Building the Global Information Economy", A GIIC Report, September Alexander Ntoko, "Electronic Commerce for Developing Countries" Business Briefing: Electronic Commerce, World Market Series, August Council of the European Union, Directive on Electronic Commerce, Legislative Acts and Other Instruments, Feb

42 GENDER GAP IN ENTREPRENEURIAL ERA Mrs. Gurpreet Kaur* ABOUT THE AUTHOR * MRS. GURPREET KAUR; LECTURER, GURU NANAK INSTITUTE OF MGT & IT PUNJABI BAGH, NEW DELHI ABSTRACT Gender based differences are always a part of discussion in entrepreneurship especially in relation to women entrepreneurs. The new perspective of entrepreneurship is rooted through psychological and sociological theory. The aim of the paper is to investigate gender based differences in the field of entrepreneurship. It also figures out the comparison between the past and the present. The push and pull theory has been applied along with comparative difference approach to ascertain the motivational factors. The cultural beliefs about gender and entrepreneurship can be concluded through face to face interviews of 50 entrepreneurs(25 we, 25m.e).It also includes the various problems involved in business start ups. The findings suggest that there is a good progress of women entrepreneurs in society from past decades. Women and men appeared similarly motivated by combination of push and pull factors but according to the cultural beliefs women are significantly less likely to perceive themselves as able to be an entrepreneur. Additional analyses reveals that significant gender difference in self assessed ability persist among established business owners. KEYWORDS: Gender Gap, Cultural Beliefs, Job Satisfaction INTRODUCTION ABOUT ENTREPRENEURAL ERA Entrepreneurship is one of the four mainstream economic factors i.e. Land, labour, capital and entrepreneurship.entrepreneurship is the tendency of a person to organize the business of his own and to run profitability, using all the qualities of leadership, decision making and managerial caliber etc. It is considered as the propensity of mind to take calculated risks with confidence to achieve a predetermined business or industrial objective. According to Peter Drucker, there are four strategies of Entrepreneurship: 1. Being Fustest with the Mostest ; 2. Hitting Them Where They Ain t ; 3. Finding and occupying a specialized ecological niche ; 4. Changing the economic characteristics of a product, a market, or an industry. In short entrepreneurship is the concept of doing things in a different way although certain gaps and bridges are there The Talent(entrepreneur) has to be strong enough to face all adverse situations by climbing higher and higher. Talent has to cope up with all storms. The Japanese proverb applies here i.e. Fall seven times, standup eight. GROWTH OF ENTREPRENEURSHIP IN INDIA The growth of entrepreneurship in India is therefore presented into two sections viz. Entrepreneurship during pre-independence and post-independence. ENTREPRENEURSHIP DURING PRE-INDEPENDENCE The evolution of Indian entrepreneurship can be traced back to even as early as Rigveda when metal handicrafts existed in the society but the actual emergence of manufacturing entrepreneurship can be noticed in the second half of the nineteenth century. The emergence of managing agency system which made its own contribution to the Indian Entrepreneurship can be traced back to 1936 when Carr, Tagore & Co. assumed the management of Calcutta Steam Tug Association. The credit for this initiation goes to an Indian, Dwarkanath Tagore, who encouraged others to form Joint stock companies and invented a distinct method of management remained in the hands of the firm rather than of an individual. 41

43 ENTREPRENEURHIP DURING POST-INDEPENDENCE After taking a long sigh of political relief in 1947, the Government of India tried to spell out the priorities to devise a scheme for achieving balanced growth. For this purpose, the Government came forward with the first Industrial Policy, 1948 which was revised from time to time. The wave of entrepreneurial growth gained sufficient momentum after the Second World War. There are few examples that some entrepreneurs grew from small to medium scale and from medium scale to large scale units during the period. The family entrepreneurship units like Tata, Birla, Mafatlal and others grew beyond the normally expected size. The Entrepreneurship Pyramid in India (in terms of sectors and numbers of people engaged) is made up of the following: Level 1: Agriculture and other activities: Crop production, Plantation, Forestry, Livestock, Fishing, Mining and Quarrying. Level 2: Trading services: Wholesale and retail trade; Hotels and restaurants. Level 3: Old economy or traditional sectors: Manufacturing, Electricity, Gas and Water supply. Level 4: Emerging sectors (including knowledge intensive sectors): IT, Finance, Insurance and Business services, Construction, Community, Social & Personal Services, Supply Chain and Transport-Storage- Communications etc. Entrepreneurship Pyramid Level 4 Level 3 Level 2 Level 1 WOMEN ENTREPRENEURSHIP According to Pandit Jawaharlal Nehru When women moves forward, the family moves forward, the village moves forward and the nation moves. Women in India constitute around half of the country s population. Hence, they are regarded as the better half of the society. Our society is still male-dominated and women are not treated as equal partners both inside and outside the four walls of the house. The much low literacy rate(40%), low work participation rate(28%) and low urban population share (10%) of women as compared to 60%, 52% and 18% respectively of their male counterparts well confirm their disadvantageous position in the society. In India, Kerala is a state with highest literacy reflecting a congenial atmosphere for the emergence and development of women entrepreneurship in the state. According to government of Kerala, women industries department, Trivandrum, the number of women s industrial units in Kerala was 358 in 1981 which rose to 782 in March These 782 units included 592 proprietary concerns, 43 partnership firms, 42 charitable institutions, 3 joint stock companies and 102 cooperative societies covering a wide range of activities. According to the study conducting by IIT, Delhi: I. Women own one third of small business in USA and Canada. II. Women make 40% of total workforce in Asian countries. III. In Japan, the percentage of women entrepreneur increased from 2.4% in 1980 to 5.2% in

44 IV. Britain has seen an increase of over three times of women in workforce than that of men even since V. The result of former surveys shows that 5.15% of the enterprises were owned and managed by women. PROBLEMS OF WOMEN ENTERPRENUER DUE TO GENDER GAP (IN START-UP OF BUSINESS) There are various problems which are faced by the talented women entrepreneurs either due to the cultural beliefs or due to the various restrictions of the society. I. Patriarchal Society: Male preserve and Idea of women of taking up any entrepreneurial activities is considered as a distant dream. II. Absence of Entrepreneurial Aptitude: The involvement of women in the small sector as owners stands at mere 7%. Women are imparted from training. III. Marketing Problems: Women entrepreneurs by and large continue to face the problems of marketing their products. For marketing their products women entrepreneurs have to be at the mercy of middle men who pocket the chunk of profit. IV. Financial Problems: According to UNIDO i.e. (United Nations Industrial Development Organization) Despite evidence shows that women loan repayments rates are higher than men, women still face more difficulty in obtaining credit often due to discriminatory attitude of banks and informal lending groups. V. Family Conflicts: Women also face the conflicts of performing of home role and professional role she can t devote much time at home with their family. So, that creates imbalance between family life and professional life. VI. Credit Facilities: Though women constitute about 50% of population, the percentage of small scale enterprise where women own 51% of share capital is less than 5%. VII. Shortage of Raw Material: Women entrepreneurs encounter the problem of shortage of raw material the failure of many women co-operations in 1971 such as those engaged in basket making were mainly because of the inadequate availability of forest based raw material. VIII. Heavy Competition: Women entrepreneur faces severe competition from organized industries due to this heavy competition and less risk tolerance ability, the women entrepreneur can t compete well into the market. IX. High Cost or Production: (HCP) It undermines the efficiency and stands in the way of development and expansion of women enterprises. They also face the problems of Labour, Human Resource, Infrastructure and other legal formalities etc. X. Social Barriers: A Women entrepreneur faces various restrictions related to the social boundaries. More in rural areas due to various casts and religious domination. NEW PERSPECTIVE OF ENTREPRENEURSHIP ROOTED THROUGH PSYCHOLOGICAL AND SOCIOLOGICAL THEORY According to psychological theory of entrepreneurship money is not what ultimately motivates the entrepreneur; the thing that matters is the behavior. Joseph Schumpeter states that the entrepreneur is mainly motivated and driven by three things: I. The dream and will to found a private kingdom. (Power and Independence) II. The will to conquer. (Succeed) III. The Joy of creating. (Satisfaction) According to sociological theory of entrepreneurship, entrepreneurship is conceptualized as a social movement and entrepreneurs exist not only in the economy but in other spheres of society as well. According to S.M. Lipset the two things are there that deeply affect entrepreneurship i.e. cultural values and the level of economic development. Another thing that is must in it is the role of trust in entrepreneurial ventures. According to Cochran, the entrepreneur give represents society s model personality. His performance depends upon his own attitudes towards his occupation and society s values. 43

45 MOTIVATIONAL FACTORS MOTIVATING WOMEN ENTREPRENEURS Women set up an enterprise due to economic and non-economic reasons as well. Various reasons can be due to: I. Motivational Factors. II. Non- Motivational Factors. MOTIVATIONAL FACTORS: i. Economic Necessity. ii. Self Actualization. iii. Independence. iv. Education and Qualification. v. Government Policies and Progress. vi. Employment Generation. vii. Family Occupation. viii. Role model to others. ix. Success stories of friends and relatives. x. Self identity and social status. GENDER BASED DIFFERENCE (PAST AND PRESENT) According to the source of overcoming the gender gap women entrepreneurs as economic 2011 by the Ewing Marion Kauffman Foundation The entrepreneurship gender gap (Room for Improvement) Numerous statistical studies in the United States tell the same story. There is a room for improvement in women entrepreneurship with vastly more room as one goes up the scale into building growth companies. Women Here is Quick Summary of Some major recent findings Men 0.24% Entrepreneurial activity, by gender, as percentage of the working age population involved in starting a business in a given month, on an average. 0.44% 35.3% Share of total entrepreneurial activity. 64.7% 36% 19.8% Employer firms (those that create jobs for people other than the founder), as percentage of startups. Percentage of firms with more than $100,000 annual revenue, three years from starting. 44% 32.8% 1.8% Percentage of firms with more than $1 million revenue. 6.3% 4.12% 5.65% 6.5% METHODOLOGY Significance of the published research by life science faculty of each gender (gender different in patenting). Percentage of above faculty of each gender who obtain patents on their research, often a first step to starting a firm. Percentage of above faculty of each gender who are science advisory board members of high tech firms. 4.06% 13% 93.5% COMPARATIVE APPROACH PUSH AND PULL ENTREPRENEURSHIP I distinguish between two types of entrepreneurs based on their motivation to engage in entrepreneurial activity. Push entrepreneurs are those who are dissatisfied with their positions, for reasons unrelated to their entrepreneurial characteristics pushes them to start a venture. Pull entrepreneurs are those who are lured by their new venture idea and initiate venture activity because of the attractiveness of the business idea and its personal implications. 44

46 Statistical analysis of data obtained through interviews (25 male entrepreneurs and 25 female entrepreneurs) reveals that women and men appeared similarly motivated by combination of Push and Pull factors. Table 1 Summary of Response Results Sample Size 50 Male Entrepreneurs Female Entrepreneurs Total The interview has been conducted for doing a research related to Push and Pull motivational factors both with male and female entrepreneurs. There are four questions that were asked by them interviewees has to answer on the following statements i.e. strongly agree or strongly disagree. The questions were as follows: 1. I felt frustrated at my previous employment since my employer was not doing the things in right way. 2. There wasn t enough challenge and stimulation at my most recent job. 3. I felt I could make much more money by starting a new venture. 4. My new venture idea was rejected by my employer and I wanted to realize my business concept. An entrepreneur who agreed (or strongly agreed) with the first two statements was Pushed out of employment to become self employed because of frustrations and lack of challenge, while an individual agreeing with the last two statements was Pulled out of employment because of the lure of becoming self employed making more money and realizing his venture idea. I used a five point likert scale:- The scale of (-2, -1, 0, +1, +2) was applied for Push statements while (+2, +1, 0, -1, -2) was used for the Pull statements. For example, an individual who strongly agreed with the third statement received the score of +2 for this statement, while agreeing on the first statement would yield the score of -1. Thus, a negative average for the four questions for an individual signifies the fact that he/she is of a Push type while a positive average score implies a Pull type individual. We labeled these individuals Push and Pull entrepreneurs, respectively. Out of 50 interviewees (25 male and 25 female entrepreneurs). S. No. Category 1 2 Male Entrepreneurs Female Entrepreneurs Performance of Push and Pull entrepreneurs Push Pull Total Push % Pull % Entrepreneurs Entrepreneurs % 60% % 52% Total % 56% FINDINGS AND CONCLUSION From the above table it is concluded that the Pull entrepreneurs are on the higher side than Push entrepreneurs. Male and Female entrepreneurs are equally motivated towards Push and Pull factors of entrepreneurship. According to the investigation of gender based difference in the field of entrepreneurship, along with the comparative approach the cultural beliefs about gender and entrepreneurship can be concluded. It also elaborates the various problems faced by women entrepreneurs in start up their business. The findings suggest that there is a good progress of women entrepreneurs in society from past decades. Women and men appeared similarly motivated by push and pull factors but according to the cultural women are significantly less likely to perceive them as able to be an entrepreneur. Additional analysis reveals that significant gender difference in self assessed ability persist among established business owners. 45

47 REFERENCES 1. Kepler, Erin, and Scott Shane. Are Male and Female Entrepreneurs Really That Different? U.S. Small Business Administration Working Paper. 2. September The American Express OPEN State of Women-Owned Businesses Report. American Express OPEN, March Ding, Waverly W., Fiona Murray, and Toby E. Stuart. Gender Differences in Patenting in the Academic Life Sciences. Ewing Marion Kauffman Foundation, Mark K. Feigener, S&E Degrees: , National Science Foundation, NSF , June. 6. Baines, S. and Wheelock, J. (1998). Reinventing traditional solutions: job creation, gender and the micro-business household. Work, Employment and Society, 12, Web of Science Times Cited: Bannock, G. (2005). The Economics and Management of Small Business: An International Perspective. London: Routledge. 9. Bennett, R. (2008). SME policy support in Britain since the 1990s: what have we learnt? Environment and Planning C: Government and Policy, 26, Gartner, W.B. (2001). Is there an elephant in entrepreneurship? Blind assumptions in theory development. Entrepreneurship, Theory and Practice, 25(4), Gartner, W.B. (2006). Are you talking to me? The nature of community in entrepreneurship and scholarship. Entrepreneurship, Theory and Practice, 30(3), Entrepreneurial in India by S.K. Sood (An Indian Author). 13. Entrepreneurial development in India by S.P. Gupta 46

48 VALUE OF INTERNAL MARKETING IN LIFE INSURANCE CORPORATION Dr. Aruna Panchumarthi* ABOUT THE AUTHOR * DR. ARUNA PANCHUMARTHI; PRINCIPAL, S.K.S.D. MAHILA KALASALA, W.G.DT, AP, TANUKU, INDIA ABSTRACT The concept of internal marketing in Life Insurance Corporation (LIC) is studied. Internal marketing identifies the importance of employees in attaining the goals of organization. The success of any organization depends on proper goal attainment of the employees. Employees of the organization are the first market and therefore, goods and services as well as specific external marketing campaigns have to be marketed to employees before they are marketed externally. The strategies adopted for internal marketing are presented along with the study of full time and part time marketers. In particular, LIC India employee classification is studied with respect to the growth of the corporation. The requirements of the organizational benefits like training, communication, education, allowances, financial help and medical benefit roles are thoroughly studied to win the employee s confidence on the organization which improves the marketing capabilities of the organization. KEYWORDS: Internal Marketing; Lic; Employee Support; Marketing Strategies INTRODUCTION ABOUT ENTREPRENEURAL ERA The concept of internal marketing identifies the importance of employees in attaining the goals of organization. The success of any organization depends on proper goal attainment of the employees. Employees of the organization are the first market and therefore, goods and services as well as specific external marketing campaigns have to be marketed to employees before they are marketed externally. According to Gronross (1983) The Internal Marketing concept states that the internal market of employees is best motivated for service-mindedness and customer oriented performance by an active marketing like approach where a variety of activities are used internally in an active, marketing like and coordinated way. The first and foremost point in internal marketing is that the employees are the first internal market for the organization. Internal marketing in all its forms was recognized as important activity in contributing to the people s element of the marketing mix and in developing a customer-focused organization. In practice, internal marketing is concerned with communication, developing responsiveness, responsibility and unity of purpose. Fundamental aims of internal marketing are to develop internal and internal customer awareness and remove functional barriers to organizational effectiveness (Payne, 1998). There is concrete evidence that satisfied employees make satisfied customers and satisfied customers can in turn enhance employees sense of satisfaction in their jobs. Some have opined that unless service employees are happy in their jobs, customer satisfaction will be difficult to achieve (Schlesinger and Heskett, 1991). Among the most demanding jobs in service business are so-called boundary-spanning positions, where employees are expected to be fast and efficient at executing operational tasks as well as courteous and helpful in dealing with customers. As a result, many service encounters have the potential to be a three-cornered fight among the needs of partially conflicting parties; the customers, the server and the service firm. In case the job is not designed carefully or the people who are not interested in are picked to fill it, there is a great risk that employees may become stressed and inefficient (Lovelock, 2001). The purpose of internal marketing is to impart multiple function of the firm and operate through service firm as the holistic management process. Internal marketing makes the employees understand and experience various business activities and campaigns and also prepare and inspire them to act in a service-oriented manner. The essential condition is that the internal exchange between the organization and its employees must be operating efficiently before viewing external markets (Rao, 2003).Service marketers need to develop a high level of interpersonal skills and customer-oriented attitude in employees for the simple reason that employees in services are key to the service experience (Verma, 1993). 47

49 As like the kind of effort, service firms put in for designing a service product for the external market to respond, they have to make efforts for designing a product for internal market too. While customer satisfaction is the orientation for external market, employee satisfaction should be the orientation for internal market. The needs and wants of the employees should be studied carefully along with their expectations to design a package of benefits that are capable of satisfying them. The internal product consists of a job and a work environment which motivates the employees to respond favorably to management s demands for customer orientation and good interactive marketing performance as part time marketers and which more over attracts and retains good employees. In order to ensure proper design of an internal service product there is need to make the concept of internal marketing as part of the strategic management philosophy. Internal marketing is a philosophy of managing personnel and developing and enhancing a service culture systematically. INTERNAL MARKETING STRATEGIES The activities of internal marketing should promote service mindedness and customer orientation. Most of the internal marketing activities are part of human resource management and development. The strategies adopted for internal marketing include hire the right people, develop people to deliver service quality, provide needed support systems, and retain the best people. The employees of service organizations can be broadly classified into two classes namely fulltime marketers and part - time marketers. Fulltime marketers are fully involved in marketing policies of Life Insurance Corporation (LIC) and part-time marketers are those who are engaged in some other work and as and when occasion comes whenever they find free time they will be involved in policy sales. Employee should also be able to get any information from the policy holders in order to get them involved in the policy process. Insurance employees should act like a close associate, friend, salesman, assurer to the policy holders and agents. LIC India has a large force of employees commensurating its size in different positional hierarchy namely Chairman, Managing Directors, Executive Directors, Zonal Managers, Regional Managers, Senior Divisional Managers, Divisional managers, Assistant Divisional Managers, Administrative Officers, Assistant Administrative Officers, Development Officers, Higher Grade Assistant, Assistant, Record Clerk and Peon respectively. EMPLOYEE CLASSIFICATION AND STATISTICS In LIC, there are four classes of employees. Class I officers (divisional manager and above up to (ADMs), class II officers (Development Officers), class III employees (superintendents, HGA, section head stenographers, assistant/cashier/mpo/projectionist and record clerk) and class IV employees (driver, sepoy, head peon, light men, sweepers and cleaners). The LIC has both centralized and decentralized recruitment and selection system for giving employment to the different classes. For class I and class II employment, the recruitment and selection process is centralized at the zonal level. An advertisement will be given in daily newspapers for inviting application to the required positions. After processing the applications a written test will be conducted for all the eligible candidates. Basing on the results of the written test, those who qualified will be called for an interview. Basing on the performance in the interview, final selection will be done at the Zonal level. For class III employees a written test will also be conducted along with interview. The candidate will be selected for the post depending on the performance of both written test and interview. The date relating to the number of employees of LIC in various cadres is shown in the Table 1. The number of employees as 1, 23,785 in The number was reduced to 1,17,138 by The downward trend is particularly seen from the year The table indicates that LIC is reducing its size of employment gradually at a slow pace. Table 1. Number of Employees during to Year No. of Employees K Source: Annual Reports of LIC 48

50 LIC is following traditional approaches in recruitment and selection. Being a public sector organization it has to follow the government rules of reservation and other conditions in manning the organization. Within the given constraints it can introduce new systems of recruitment and selection to have high quality personnel with technical, social and interactive skills beside service inclination. Campus interviews prove to be a vital source to get the young quality talent. It is suggested, therefore, that the LIC should compete with other life insurance organizations in taking talented personnel from educational institutions in order to build a strong team of performers. EMPLOYEE DEVELOPMENT STRATEGIES To improve the service quality, LIC has concentrated on employee growth and quality by providing following benefits to the employee. TRAINING Training is the major approach for developing the employees of the organization to perform efficiently and to deliver service quality. The word training has been used in LIC specifically to signify a refresher course of short duration. Such training course is given at the in-house training center of LIC such as STC, ZTC, and MDC. It is also given at some independent institutions like IFSERT (pune), Jeevan Vidya Trust (Jaipur) and College of Insurance (Hyderabad) etc.; however, the module of the training course is prepared by such institutes in consultation with LIC. The refresher courses of a short duration are meant for imparting professional knowledge to the employees. The employees are given training at every level of positional hierarchy and also periodically in the same position. The focus is to develop technical and managerial skills in employer due to its monopoly status LIC over the years did not provide. Adequate focus on quality of interactions between employees, customers and agents. In the changing business scenario high quality is perceived particularly on the movements of interactions. It is necessary to focus on providing training on interactive skills, team work and group cohesiveness. Training helps to develop new culture in the organization. LIC needs to realize the quality gaps in this respect and design such kind of mechanisms to fulfill the gaps. Development Officers play a vital role in the marketing of insurance services. They are the field sales personnel; basically promote sales through building agency network for the company. LIC realized the importance of this group of employees and provided specialized training for them. The data presented in Table 2 shows the details of number of development officers who were given training during to The development officers were given apprentice training, confirmed D.O. training, extension training and special training at zonal training centers. During the period years under study 12,819 development officers were given apprentice training, 9447 officers were given confirmed, 9321 officers were given extension training and officers were given training at zonal training centers. Table 2. Development Officers Trained during to Year Apprentice Confirmed D.O. D.O. D.O. Ext-1 ZTC K Source: Annual Reports of LIC of India SUPPORT SYSTEM AND EDUCATION The Corporation has established support systems to provide necessary information to the employees. For internal communication, the theme of LIC has been insured is the master and insured comfort is above all else. The Corporation regularly under take unit level classes under workers education schemes. DAILY ALLOWANCE Class I & II employees are paid daily allowances while on official tour as shown in Table 3. 49

51 Table 3 Daily Allowance Payable to Class I Employees of LIC City A B C (Rs) (RS) (RS) MD,ED,ZM,DZM,SDM & DM ADM,SBM,AO,BM,AAO&ABM Source : Records of LIC of India Similarly Class III and IV employees are paid daily allowances while on official tour as shown in Table 4. Table 4 Daily Allowance Payable to Class Iii & IV Employees of LIC City A (RS) B (RS) C (RS) HGA OTHER CLASS OTHER CLASS Source : Records of LIC of India HOTEL CHARGES Hotel charges payable for different cadres of employees of LIC as shown in Table 5. Table 5. Hotel Charges Payable CADRE MAJORITY CITIES (RS) OTHER CITIES (RS) DM/SDM AO/ADM/BM/SBM AAO/ABM CLASS CLASS CLASS Source : Records of LIC of India TRAVEL ALLOWANCES Class II&III employees whose basic pay is less than Rs 5325/- are eligible to travel in second-class sleeper in Indian railways. If they travel for a minimum of 41/2 hours during night (between 8 pm to 6 am), they are entitled to first class or second a/c sleeper. Class IV employees are entitled to second-class sleeper if night journey is involved. THE FINANCIAL BENEFITS The financial benefits to the employees are offered in the form of monthly salary. The pay scales are being revised once for every 4 or 5 years. Meanwhile dearness allowances will be allowed as percentage to the basic pay. The percentage of dearness allowances will be enhanced for every six months. As already mentioned, there are four classes of employees in LIC. Each type of scale is applicable to each class. Class I scale is applicable to Assistant Divisional Manager (ADM), Senior Divisional Manager (SDM) and Administrative Officer (AO), Branch Manager (BM). Class II scale is applicable to Development Officers. Class III scale is applicable to Superintendents, Higher Grade Assistant (HGA), Section Head, Stenographer, Assistant/Cashier/ (MPO)/Projectionist and Record Clerk. Class IV scale applicable to Driver, Sepoy, Head Peon, Liftmen, Sweeper and Cleaners. During the study period the pay scale of LIC employees were revised two times. It is the policy of the Corporations to revise the pay scale once for every 4 or 5 years. In order to retain the people LIC is undertaking the following welfare activities in addition to the payment of monthly salary. FESTIVAL ADVANCE Some festivals like Pongal, Ugadi, Vinayaka Chathardhi, Sri Krishns Janmastami, Dasara, Diwali, Easter, Bakrid, Ramjan, Christmas, Tamil New Year day are approved for festival advance. The amount of advance varies with cadre and gross pay of the employee. LOANS FOR CARS The facility of purchase of four wheelers is extended to AAO/AOS. Full vehicle loan is granted up to Rs 5% interest is charged and 9% interest is charged on the remaining amount. 50

52 LOAN FOR TWO WHEELERS Employee with a minimum of five years experience is eligible for this loan. Advance payable is Rs 35000/at 5% simple interest. 12% per annum is charged for advance over and above Rs 35000/-. Advance may be granted once in 7 years maximum two times in the entire service. LOAN FOR COMPUTER Computer loan is applicable to employee with a minimum 5 years service. 80%of basic cost of computer i.e. Rs 36000/- whichever is less at 12% interest. TERMINAL BENEFITS Class I and class II employees are paid gratuity, additional gratuity, GSLI savings portion and, PL encashment, PF, monthly pension and commuted value of pension on retirement. Class 1 & 2 employees were paid gratuity, group insurance, GSLI sum assured and savings portion, compensation for un availed PL, PF, family pension on death of the employee. Gratuity is paid to class 3 & 4 employees who have been in continuous service of the corporation for not less than 15 years. SPORTS ACTIVITY LIC will conduct sports in various disciplines like chess, caroms, table tennis, shuttle badminton, athletics and volleyball. The entry fee is Rs 20 per event. FREE INSURANCE Free insurance paid to class III and IV employees. Rs 3750/- for class 3 and Rs 3000/- for class 4 as premium. If death occurs for class3 Rs 12000/- is paid and for class 4 Rs 6000/- is paid. STAGNATION INCREMENT After an employee reaching the maximum in the scale of pay applicable to the post, he may be granted an additional increment for every two or three completed years of service subject to the work record being satisfactory. MEDICAL FACILITIES TO EMPLOYEES AND THEIR FAMILIES Cash medical benefit for class III & IV employees is Rs 1070/- (for employees having 5 years service and more than five years service) and Rs 870/- to employees having less than 5 years service. Class I officers are also eligible for cash medical benefit. The data presented in Table 6 shows the salary expenditure of LIC during to The total expenditure on salaries was Rs crores in The expenditure on this head increased to Rs.3, crores in recording a rise of 272 per cent. LIC has developed mechanism for recruitment selection, training, rewarding, motivation and other human resource development activities. The discussions with various cadre employees of the organization reveal that there was little focus on employee empowerment and training on contemporary issues and skills. Employer involvement in policy decisions and other operational issues is also not felt by the employer. Process reengineering was not done to the desired level because of the noninvolvement of employees at the grass root level. It is suggested therefore, the LIC should take measures to empower employers and involve them in policy and operational decisions. The abundant knowledge and unexploited expertise should be put to use and therefore it drives the organization on the lines of speedy progress. Table 6. Salary Expenditure during to Year Rs. In crores K Source: Annual Reports of LIC 51

53 CONCLUSIONS Internal marketing in all its forms was recognized as important activity in contributing to the people s element of the marketing mix and in developing a customer-focused organization. Internal marketing is concerned with communication, developing responsiveness, responsibility and unity of purpose. The activities of internal marketing promote service mindedness and customer orientation. The strategies adopted for internal marketing include hire the right people, develop people to deliver service quality, provide needed support systems, and retain the best people. The employees of service organizations are classified into two classes namely fulltime marketers and part - time marketers. The LIC has both centralized and decentralized recruitment and selection system for giving employment to the different classes. The current research indicates that LIC is reducing its size of employment gradually at a slow pace. To improve the service quality, LIC has offered several benefits to their employees including training, educational support, daily allowance, travel and festival allowance, personal loans and loans to cars and computers. REFERENCES 1. Gronross, C. (1983), The Internal Marketing Function, Strategic Management and Marketing in the Service Sector Report, Science Institution, Cambridge, p Lovelock, C. (2001) Services Marketing, Addition Wesley Long Man (Singapore) pvt. ltd., Indian Branch, Delhi, p Payne, A. (1998), The Essence of Services Marketing, Prentice Hall of India, New Delhi, p Rao, R. M.K. (2003) Lessons on Services Marketing, op.cit., p Schlesinger, L., and Heskett, J. (1991) The Service Driven Services Company, Harvard Business Review, sep-oct p Verma, V.H. (1993) Marketing of Services, Global Business Press, New Delhi, p

54 DEVELOPING PROFICIENCY THROUGH STRATEGIC MANAGEMENT - AN INNOVATIVE PRACTICE FOR SMALL FIRMS TO GAIN COMPETITIVE ADVANTAGE Dr. Uma Gulati * ABOUT THE AUTHOR * DR. UMA GULATI; ASSOCIATE PROFESSOR, GITARATTAN INTERNATIONAL BUSINESS SCHOOL, MADHUBAN CHOWK, ROHINI, NEW DELHI ABSTRACT Strategic planning in small organizations is considerably different from large organizations. In most of the cases of small organizations, entrepreneurs are the sole decision maker. Their perception is that it is one man show. Strategic planning requires strategic leaders with excellent strategic vision. The owner might have qualities to run organization on grounds of managerial skills but today it requires a leader with strategic vision, who can carry strategic planning effectively. The core requirements of strategic leadership are to view the market and opportunities and meet the challenges and threats. No doubt those small enterprises have developed proficiency and competency to work on uncertain conditions, largely to meet the demand and preferences of their customers. While maintaining this skill, they should gradually construct strategic leaders with strategic vision who can carry strategic planning. This can further enhance their capability and preparedness to deal with changes in the growing competitive market in not only in India but also in international markets. PURPOSE The purpose of this paper is to examine the use of Strategic Management in Small Enterprises and its importance to small enterprises in gaining competitive advantage. METHODOLOGY The study examines the concept of strategic management, relevant literature, strategic management and its importance to small enterprises. The study is based on questionnaire-based data from a sample of 30 small enterprises drawn from the garment manufacturing industry in Delhi region. FINDINGS It was found in research work that firms want to be competitive in the market but was not aware of strategic planning. It was found in the study that though the small entrepreneurs want to showcase their business and products in the practical world but the remoteness and boundaries in the acceptance of innovation is a big constraint. They lack in strategic planning, because of scanty managerial skills, compact strategic vision and inept leadership. RESEARCH LIMITATIONS/IMPLICATIONS Analyses conducted and conclusions reached in this research are based on a very limited sample of small enterprises located in one region of one country. Broader sampling would help in generality and overview of the findings. ORIGINALITY/ VALUE This research fills a gap in the literature relating to the influence and importance of strategic management in small enterprises. The paper also identifies gaps in the knowledge base of small entrepreneurs on strategic management. This paper would help small entrepreneurs to understand that strategic management can work as success tool for them. KEYWORDS: Competitive advantage, strategic planning, managerial skills, strategic vision, strategic leadership 53

55 INTRODUCTION It has been revealed through many studies that the future of small enterprises lies in technological improvements, assured access to low-cost finance, and improved marketing linkages to make them internationally competitive. Many of the researchers and research firms have gazed at various problems and tribulations faced by these units and come away with the conclusion that the sector suffers from a shortage of raw material, finance, and marketing of products and a scarcity of technological input. We have been talking about the production problems, marketing problems, finance problems, labor problems and infrastructure problems. Post liberalization economic environment has produced massive growth prospect for the small enterprises. The expansion in computer and telecommunication technology, addition of e- commerce, opening up of markets due to WTO, mergers and acquisitions, improved infrastructure have all contributed to the growth of Small units. The government has also supported the small scale industries by the way of implementing policies like investment ceiling for the SSI sector and priority lending. The creation of WTO in 1995 resulted in a key challenge to the well being of the SSI. It was found that if the SSI upgrades the technology, implement better management practices, reengineer the factories to pick up productivity and offer qualitative product; they would be competitive in the post WTO scenario. Here the issue is whether these industries have become competitive or lack on various grounds and the results were not fruitful. If we notice the trend today we cannot stand alone on this plank that we should feel pity on their performance. Still there are immense unexploited markets in many sectors which are yet to be exploited and are far reach of multinationals because domestic firms are in a better position to capture them as they enjoy better knowledge of their home markets. But small firms are not competent enough to exploit the opportunities as they actually do not know where they are and where they want to reach. They are not aware of their strengths and weaknesses. They keep on out crying that they know the solution but they are really not aware of the problems, which clearly indicate that they lack in confidential management and strategic insight. Lack of managerial skills and strategic planning is the root cause of all other problems. They have to work on the derivative of all the problems and pitiable growth of their firms. REVIEW OF LITERATURE Small enterprise growth is one of the long-standing puzzles in management research (Davidsson et al., 2005). Small businesses make up the largest business sector in every world economy (Culkin & Smith 2000) and, since the 1970s, have replaced big business as key drivers of employment and economic growth in most OECD countries (Peacock 2004). In spite of their dominance (both in terms of absolute numbers and contributions to economic activity), small businesses are generally plagued by high failure rates and poor performance levels (Jocumsen 2004, p.659). To make certain about unrelenting development of the small business sector, extensive research has examined why some enterprises are more successful than others. Findings generally show that strategic planning is a vital ingredient in small business development, competitiveness and success (Vicere, 1995). Regrettably, the majority of small businesses do not strategically plan. Their planning is not advantageously done. Strategic planning refers to the setting of long-term business goals, and the developing and implementing of formal plans to achieve these goals (O'Regan & Ghobadian, 2004; Stonehouse & Pemberton, 2002). Small businesses that strategically plan (compared to those that do not) are more likely to be those that achieve higher sales growth, higher returns on assets, higher profit margins and higher employee growth (Berman, Gordon, & Sussman, 1997; Bracker, Keats, & Pearson, 1988; Carland & Carland, 2003; Gibson & Casser, 2005). Small businesses that strategically plan are also more likely to be those that are innovative, those that achieve international growth (Beaver & Prince, 2002; Gibbons & O'Connor, 2005; Stewart, 2002; Upton, Teal, & Felan, 2001) and those less likely to fail (Gaskill, van Auken & Manning 1993; Perry 2001). Kraus (2007) has suggested that it might be the 'right kind of planning' rather than the mere fact that formal planning is exercised which distinguishes growing enterprises from non-growing enterprises. From the mid seventies we can note that scholars makes the distinction between small and large businesses in terms of needs, level of sophistication and range of strategic planning. Bracker and Pearson (1988), Rue and Ibrahim (1998), Perry (2001) and Wijewardena, Zoysa, Fonseka and Perera (2004) all formulate definitions of strategic planning which take the uniqueness of small businesses into account and allow for the fact that small businesses cannot draw on management and material resources in a manner similar to that of large organization. Given all the substantiation on the benefits of strategy and planning however, most small businesses do not strategically plan. In practice, the primary focus of small business operators is on short-term operational rather than long-term strategic issues, and their decision-making is generally reactive and intuitive rather than proactive 54

56 and deliberates (Brouthers, Andriessen, & Nicolaes, 1998; Gaskill, van Auken, & Manning, 1993; Jones, 1982; Mazzarol, 2004; Stonehouse & Pemberton, 2002). For those operators that do plan, planning is frequently ad hoc rather than formal and subsequently provides little basis upon which business performance can be measured or analyzed (Kelmar & Noy, 1990). Research into why small businesses generally do not engage in strategic planning has suggested that operators may be hindered or discouraged by planning barriers such as a lack of time, a lack of specialized expertise, inadequate knowledge of the planning processes, or a reluctance to share strategic plans with employees and external consultants (Robinson and Pearce 1984). The enlargement of economic liberalization in India has created many opportunities for the growth and development of small manufacturing organizations and has also thrown many challenges. Many small firms have also started looking for new markets, new product offerings and have started realizing that strategic vision is required to face competition and to take butter of the market. But the realization won t solve their purpose of being competitive in the market they have to plan strategically. The major reasons for sickness in small manufacturing organizations are inadequate management and such as non-availability of raw material, ineffective marketing, infrastructural bottlenecks, inadequate finance and gaps in entrepreneurial skills (Khandwalla, 1989). The organizational spinning starts with the makeover in the environment and/or in the characteristics of the organization. In many cases, the entrepreneur does not explore the environmental factors influencing profitability or growth of the business because they do not have strategic vision. It has been noticed that their definition of growth is totally different. Let us examine the concept of strategic planning and factors which have become the grounds for pitiable strategic planning. OBJECTIVES OF THE STUDY The objectives of the study are: To investigate to what extent small businesses make use of formal long-range planning or strategic management in bettering their chances of survival. To evaluate whether strategic management can help small enterprises in gaining competitive advantage. To find out what entrepreneurs and managers can do to become strategic leader. METHODOLOGY Strategic management is not as complicated as it sounds but the study of strategic management in small enterprises is complex and extremely difficult to do well. The word is still unknown to small entrepreneurs. The aim of this paper is to study the strategic management and its application in small enterprises. For this reason, a structured questionnaire was administered to a convenience sample of 30 entrepreneurs of small scale garment industry through direct mode in New Delhi region. The present research process begins with the identification of the research objectives. The main component of the research was identified i.e. owners/managers of small enterprises. After identifying above vital constituent of the research, an effort was made to develop an appropriate questionnaire to extract maximum information from this constituent. After finalising the questionnaire, the type of industry to be surveyed was decided. Garment industry was specifically selected as it is highly competitive which really requires innovation to line up with the customers and inform them regarding day-to-day fashion. To them strategic management is boon if they use it as a success kit. The primary data was collected using direct interview method. At first instance appointments were taken and questionnaires were personally given to the owners/managers at their offices. It was decided to follow up the questionnaire after 15 days. To increase the response rate, again appointments were taken to personally interview and meet the concerned persons at their offices. To get the complete information, repeated visits were made to the selected units in the selected region. The units were selected on the basis of the convenience and judgment sampling for reasons of non availability of the complete list of small-scale units and the nature of the study. To fulfill the objective of the research, secondary data related to topic was also collected.the responses collected from respondents were classified and analysed. Finally conclusion was made. FINDINGS The contributions of this research is with regard to entrepreneurial involvement in adopting strategic management, as this research could enhance the understanding of owners of Small businesses, how to support 55

57 strategic management practices in order to increase the organizational innovativeness and gain competitive advantage. It was found in research work that firms want to be competitive in the market but was not aware of strategic planning. It was found in the study that though the small entrepreneurs want to showcase their business and products in the practical world but the remoteness and boundaries in the acceptance of innovation is a big constraint. Today, Indian small enterprises are moving up the global value chain. It was found in the study that they lack in strategic planning, because of scanty managerial skills, compact strategic vision and inept leadership. In the present global scenario there is imperative call for competitive and aggressive human skills who can work on formulating and implementing strategies for their firms. Once they learn how to manage they would be able to tackle other problems. No doubt complex roads are ahead of small enterprises, where there is intense competition from large firms. They should be made understand the global scenario. It is true that entrepreneurs are born they are not made but this is also true that we can enhance and polish the qualities of a person to make him innovative entrepreneur. They require strategies which can make them competitive. They should distinguish their competitive advantages as well as key advantages to adapt to competitive environment. Their mission, vision and strategic intents should be clear. Understanding of a particular line is valuable but acquaintance of innovative and efficient management techniques is equally important. Efficient management techniques have become pre-requisite for strategic planning. It was found in the study that out of 30 units, only 11 units were found to be efficient in management techniques. This indicates that 37% of the units have owners/managers, who are equipped with management techniques, rest 63% are not clear of management techniques. Owners are liberal on this issue and this is the reason that they are not energized about their staff to be efficient in management techniques. It was again found in the study that owners/mangers in 15 units i.e. 50% units carry this notion that strategic planning is not adequate for them as it doesn t indicates any assurance of the similar results as in case of large firms. This is the reason that very few firms have transformed themselves from small organization to big corporate. They should remove this misconception and understands that there is relationship between performance and strategic planning. Long term survival of any business depends on strategic planning. It has become life blood of all organizations than how small firms can keep them away from it. Strategic planning depends on various factors but the more important factors are tremendous managerial skills, strategic leadership and strategic vision. These factors can create strong pillars for the small firms to stand in intense competition. Now the question is- do these firms are characterized by these factors? Generally small enterprises are characterized by scanty managerial skills, inept leadership and compact strategic vision. The result is deficiency of strategic planning. SCANTY MANAGERIAL SKILLS We have been educated that an entrepreneur is a person who works with scarce resources. Why these units were not able to give maximum output from minimum input? Why we will always blame the financial, technical and marketing problems as the only problems for the failure of these units in facing competition? If they knew how to manage with scarce resources, all the problems could have been handled wisely. They actually lack in what is called as managerial skills. Scanty management skills are one of the reasons for the malfunctioning of these industries. At this point the justification of managerial skill is essential as it haul many terms with reference to small scale units. It has been noticed that these units are characterized by stumpy use of installed capacity, problem of specialized training and guidance, problem of trained and experienced management, less advance and innovative actions in these units, lack of knowledge and understanding of global trade laws. They lack in basic business management which is crucial to run a unit. An entrepreneur should be capable of creating new resources or bestow existing resources with improved potential. Innovation lacks in their products, processes and even organization. It was found during study that only 37% of the units had owners/managers equipped with efficient management techniques and 40% of the units had trained and specialized employees. In 53% units, the presence of logical decision making skills was not found with the owners. To researcher logical decision making is innovative solutions for hard choices which is so important in garment industry where every other day fashion changes. Those who have logical decision making skills can think of something new with change in industry. Units badly lacked in basic business management and they didn t know how to manage with scarce resources. An innovative entrepreneur must know that market information is related to new product, technology developments, needs of consumers, consumer requirements etc. they not only lack in domestic market information but also information about global trade laws. Many owners of small businesses are beleaguered by a 56

58 lack of high-quality management talent. Most small business owners rely on their own decision-making and managerial judgment, because they cannot afford to hire management experts. Actually, failure in various areas may be directly linked to poor management practices. What appears to be an inopportune and unfortunate economic development might have been overcome by more appropriate and informed management. There are number of other correlated factors, if enhanced can trounce some management related problems. One of the ideologies of entering into any new business should be to gain experience before hopping into a business venture. Most of the entrepreneur s have false impression that it is a one man show. Most of the entrepreneurs by no means want a blow to their self esteem. They have difficulty in keeping good people and small businesses drop talent and aptitude. If they want to stay one step ahead of competitor, they should either enhance their skills or hire talented people. All the above problems are associated to what is so called as poor management. Lack of managerial skills has resulted into a deep downfall of the small enterprises. INEPT LEADERSHIP Strategic thinking should not be related to just the work of head of the organization. Among performance requirements at the strategic level, there is a critical requirement for strategic vision and to have that strategic vision, a strategic leader is required. Strategic leaders are required to set long term directions which are essential part of large organizations but absent in small firms. It is a risky business as leaders have to have clear vision for strategic decisions which is full of uncertainties. Small firms have limited resources and strategic leadership requires a selection of most competing alternatives. A strategic leader has to find out the best alternative so that resources can be allocated to that alternative but cannot be allocated to other later on. This situation is difficult to handle in small firms which are always on a work of balancing present and future outlook. In small firms it becomes a strategic responsibility of strategic leader to trade off between present and future. Strategic leadership has emerged as a vibrant thought of strategic planning. This requires openness to new ideas and thoughts and effectual communication skills. In 53% units, the environment of uncommunicativeness was found. In fact a restraining environment was noticed in some units. The owner/managers straight away explained that they never invite ideas from their employees. In 67% units, owners were not impressive in communication skills. Many of them still believe that the louder you shout the more you produce. They were found incompetent to deal not only with outside parties but also internal employees. In this global scenario, small firms are finding too difficult to fight with competitive environment and therefore they require future oriented leaders with good judgment of time. They also require leaders who can scan uncontrollable variables of environment and quickly produce an action which is a timely action. These leaders have to work as protector, prospector and planner. Small firms must understand that the definition of these leaders is little different from those of large enterprises. Strategic leaders should have 3P s or we can define as: STRATEGIC LEADER = PROTECTOR + PROSPECTOR + PLANNER COMPACT STRATEGIC VISION The value of long-term vision is essential to the continuing health of any organization. At all levels, leaders must make crucial decisions, generally with the use of resources. Decisive trade-offs reflect a choice between current effectiveness and projected future effectiveness. Each decision is bounded by risk, imposed by cost and the uncertainty of future developments. Strategic leadership is a matching and balancing act, between present and future Resources all gone today in the wrong direction becomes a loss. This is why strategic vision is crucially important to organizations and especially to small firms. Out of 30, owner/manger in 21 units feels they have to struggle hard to solve the present competition with scarce resources so it is difficult for them to have strategic vision. This indicates that 70% of the units are suffering from myopia. Globalization has posed immense challenges as well as opportunities to small enterprises. International business is no longer limited to giant multinational enterprises. Many small firms are also moving beyond their domestic boundaries. But it of requires such a sight that can see major drivers of globalization. But most of the small enterprises have compact strategic vision that they are unable to watch technology, information, key markets, Product development, investment and various other related factors. They have to be careful about the innate risk in the global market as it is not only difficult but challenging job. The strategic vision can help small enterprises to be successful in hard global markets. Number of strategic programs is required by strategic leaders which in turn require the strategic vision to observe those programs. Small firms should be able to protect themselves form the risk and uncertainties. They should start from their domestic boundaries. They should face competition in their home country and tap the growing markets which are still untapped by large firms. 57

59 CONCLUSION Strategic Management as a management tool has long been used, with big achievements, in large national and multi-national organizations to help them in managing uncertainties, exploiting opportunities and to better position these organizations for long-term growth and profitability, but in small firms too it can act as success kit to gain competitive advantage and competitive sustainable growth. Competitive sustainable growth has become hallmark of organizations. Large organizations have realized it carrying it through formal strategic planning but small enterprises only follow it during emergent process. Every business today calls for clear understanding of multiple areas. Formal planning is necessary in place of informal planning. A regular activity of formal planning can lead to small firms on path of competition where they can realize their competitive strength and later on their capabilities. Small is attractive, small is manageable, small is controllable but this small has to transform it to large because large is eye catching. REFERENCES 1. Berman, J. A., Gordon, D. D., & Sussman, G. (1997). A study to determine the benefits small business firms derive from sophisticated planning versus less sophisticated types of planning. The Journal of Business and Economic Studies, 3(3), 1-11.Berry, M. (1998). Strategic planning in small high tech companies. 2. Bracker, J. S., Keats, B. W., & Pearson, J. N. (1988). Planning and financial performance among small firms in a growth industry. Strategic Management Journal, 9(6), Brouthers, K. D., Andriessen, F., & Nicolaes, I. (1998). Driving blind: Strategic decision-making in small companies. Long Range Planning, 31(1), Carland, J. C., & Carland, J. W. (2003, 5-8 Mar). A model of entrepreneurial planning and its effect on performance. Paper presented at the ASBE Annual Conference - Building Bridges to the Future, Houston, Texas. 5. Davidsson, P., Achtenhagen, L. and Naldi, L. (2005): "Research on small firm growth: A review", Proceedings of the European Institute of Small Business, Fadahunsi, O. (1992), Entrepreneurship and Small Industry Development, Nigerian Management Review, 17, 1 and 2, Gibson, B., & Casser, G. (2005), Longitudinal analysis of relationships between planning and performance in small firms. Small Business Economics, 25(3), Jocumsen, G. (2004). How do small business managers make strategic marketing decisions? A model of process. European Journal of Marketing, 38(5/6), Jones, W. D. (1982). Characteristics of planning in small firms. Journal of Small Business Management, 20(3), Kelmar, J. H., & Noy, S. (1990, Jun). Perceptual differences in small business strategic planning. Paper presented at the, The Growing Small Business - Proceedings of the 5th National Small Business Conference, Toowoomba. 11. Kraus, S. and Schwarz, E.J. (2007): "The role of pre-start-up-planning in new small business", International Journal of Management and Enterprise Development, 4 (1), Mazzarol, T. (2004, Sept). Strategic management of small firms: Aproposed framework for entrepreneurial ventures. Paper presented at the 17th Annual SEAANZ Conference - Entrepreneurship as the way of the future, Brisbane, Queensland 13. O'Regan, N., & Ghobadian, A. (2004). Re-visiting the strategy-performance question: An empirical analysis. International Journal of Management and Decision Making, 5(2/3), Peacock, R. W. (2004). Understanding small business: Practice, theory and research. Adelaide: Scarman Publishing. 15. Perry, S. C. (2002). A comparison of failed and non-failed small businesses in the United States: Do men and women use different planning and decision-making strategies? Journal of Developmental Entrepreneurship, 7(4), Robinson, R. B., & Pearce, J. A. (1984). Research thrusts in small firm strategic planning. Academy of Management, 9(1), Stonehouse, G., & Pemberton, J. (2002). Strategic planning in SMEs some empirical findings. Management Decision, 40(9), Stewart, K. S. (2002). Formal business planning and small business success: A survey of small businesses with an international focus. Journal of American Academy of Business, 2(1), Upton, N., Teal, E. J., & Felan, J. T. (2001). Strategic and business planning practices of fast growth family firms. Journal of Small Business Management, 39(1), Vicere, A. A. (1995). Executive education and strategic imperatives: A formula for crafting competitiveness. American Journal of Management Development, 1(2),

60 DETERMINANTS THAT INFLUENCES PHARMACEUTICAL COMPANIES IN THE SELECTION OF WHOLESALE DISTRIBUTORS - A CASE OF KARIMNAGAR DISTRICT OF ANDHRA PRADESH Swati Alok*, K Ravali Reddy** ABOUT THE AUTHORS * SWATI ALOK; LECTURER (DEPARTMENT OF ECONOMICS & MANAGEMENT) BITS-PILANI, HYDERABAD ** K RAVALI REDDY; STUDENT, FIRST YEAR, IIM BANGALORE ABSTRACT The purpose of this paper is to identify the major determinants that influence pharmaceutical companies in the selection of wholesale distributors. This study is focussed on manufacturers - distributor s interference of the pharmaceutical supply chains in Karimnagar district of Andhra Pradesh. Focus group discussion with wholesale distributors and representative of manufacturers resulted in deriving major determinants for selection preference. Building upon the literature review and outcome of group discussion the determinant that manufacturers consider important in their distributors and the performance of each of the distributor is evaluated on multiple fronts by stakeholders at both the ends of supply chain through questionnaires and in-depth interviews. This questionnaire was surveyed among representative of four pharmaceutical manufacturer namely Ranbaxy, Merck, Aristo and Cipla and six major distributors namely Triveni, Saraswati, Balaji, Veeranjanya, Srivasi and Krishnasai. This was followed by comparative analysis of manufacturer s expectations with their major distributors competencies.. The outcomes have been compared and contrasted to evaluate the extent to which manufacturers expectations matches with distributors performance. Selection of distributors involves both tangible factors like financial strength, market penetration, dumping system, formula diversity, concentration of products as well as intangible factors like relationship intensity, feedback mechanism. Distributors performing well with respect to all the four determinants will be the market leader for most of its manufacturers. Medical distributors can focus on the determinants that are important for its manufacturer and overlook which are not been prioritized by its major manufacturers. This study will assist managers in pharmaceutical distribution companies to gauge, manage and improve supply chain efficiencies. KEYWORDS: Pharmaceutical manufacturers, Distributor, Formula Diversity, Dumping system, Distribution sharing, Inventory range INTRODUCTION Increased competition, proliferation of products, increase pressure to reduce health care costs are driving pharmaceuticals companies to finally focus on improving supply chain efficiencies as a means of optimizing operating margins and financial performance. In today's global marketplace, individual firms no longer compete as independent entities but compete as an integral part of supply chain links. Key aspect of business is that supply chains compete, not companies. Organizations do not work in isolation; they act as a customer when buy materials from their own suppliers and act as a supplier when they deliver materials to their own customers. A wholesaler for example acts as a customer when buying goods from manufacturers, and then acts as a supplier when selling goods to retailers. It is important to satisfy each member of the supply chain. There is a change in the landscape of supply chain management in recent years and satisfaction of each member of the supply chain can be increased only by putting aside the traditional arms-length relationship and by developing closer partnership type the development of such partnership there is need to understand each other s priorities and preferences. 59

61 80 percent of the total sales in pharmaceutical industry are being carried out through distributors. Because of the major role they play in the supply chain and the dynamic environment they live in, it is very difficult to survive in the market unless distributors keep themselves abreast of the manufacturers priorities and preferences.this study focus on identifying the major determinants that influences the pharmaceuticals manufacturers in the selection of its distributors in the Karimanagar district of Andhra Pradesh. The objective of this study is To design the major determinants that influences the pharmaceuticals manufacturers in the selection of medical distributors. To identify three important determinants from manufacturers perspective To identify three important competencies of their major distributors To compare the manufacturers preference factors with distributors competencies Major determinants were identified through focus panel discussion and literature review which is been explained in the Sec1. Instrumental design and sampling technique is explained in the Sec2. Manufacturer s perspective, major distributor s competencies and comparative analysis are explained in detail in data analysis. Last section explains the suggestion and conclusion of the study. SEC 1: DETERMINANTS THAT INFLUENCES MANUFACTURERS IN SELECTION OF DISTRIBUTORS (OUTCOME OF PANEL DISCUSSION AND LITERATURE REVIEW) Siddiqui (5) suggested various determinant of manufacturer s selection of distributors. Literature review was followed with focus group discussion for refinement. In depth interview and focus group discussion with wholesale distributors and representative of pharmaceutical manufacturers resulted in few more variables. Determinants that resulted from literature review and the panel discussion is explained in the following sections. 1.1 FIRM INFRASTRUCTURE: Firm Infrastructure is a major factor the manufacturer considers in selecting a distributor. Distributors need to have enough market knowledge and influence to convince the retailers to carry their product.[5] Since the pharmaceutical market is very competitive where the manufacturers often switch their distributors, a good infrastructure makes a firm financially strong, trustworthy, better ability to access to market information and ability to recover when the sales drop. 1.2 MARKETING CAPABILITIES: Marketing capabilities refer to how a distributor adds value to a product in the supply chain. Distributor/manufacturer relationships are governed by contract which stipulates the distributor margin and requires the distributor to implement various trade and consumer promotional activities for the manufacturer [5]. The core of this capability lies in the accuracy to reach the target market efficiently and at the right time. Distributors choose the right target market and penetration based on the product s brand image; the magnitudes of the sales, the proportion of the manufacturers products they deal with depend on firm s marketing capabilities. 1.3 RELATIONSHIP INTENSITY: It refers to the cordial relationship and friendliness between distributor and manufacturer. Most manufacturers prefer to work with the distributors with good communication, leadership skills and who can maintain good relationship with their customers. The development of a manufacturers relationship with its channel members greatly affects channel cooperation, channel efficiency and the manufacturers competitive advantage [5].Research also shows that sales show positive growth with relationship intensity. If a manufacturer chooses such distributor, the distributor, being at lower end of supply chain, provides accurate feedback about their product, the market trend and the customers choices. 1.4 LOGISTICS CAPABILITIES: It refers to optimization of the input costs to get the maximum profit. How the distributor orders the right amount of stock which gives neither inventory nor backordering to the manufacturer, optimizing number of storage units, number of stock boys. For example, some distributors use formulas such as inventory = turnover 2*rack stack to calculate their required inventory. A well-managed logistic services handled by a distributor not only brings financial advantage, but also the operational efficiency and flexibility [5].A distributor with better logistics capabilities prevents unnecessary cost to the manufacturer and maximizes his profit 60

62 SEC 2: INSTRUMENTAL DEVELOPMENT & MEASURES FIRM INFRASTRUCTURE CAPABILITIES were measured using following variables. No. of employees, annual turnover, experience, no. of manufacturers it serves, investment on major suppliers and annual turnover from its major suppliers. The manufacturers of a distributor from whom they get a turnover of 50 lakhs were considered as market leader to the distributors. Annual turnover is defined as the average of the annual turnover for the past three years. The average of the investment of its major suppliers (pharmaceuticals manufacturer) for the past three years were considered as one of the measure for assessing firm infrastructure Also turnover on its major suppliers ie the average of the turnover on its major suppliers ((pharmaceuticals manufacturer) for the past three years were measured under this factor. MARKETING CAPABILITIES were measured using following variables: sales market penetration, no. of retailers, formula diversity, promotional schemes, sales boys minimum experience and sales boys minimum education. Market Penetration was considered in district, mandal and villages level. Other variables considered under this factor include number of retailers (the direct customers of a distributor) each distributor supplies to. Though a distributor works with a manufacturer, the number of products (formula) of the manufacturer it supplies may vary. The number of sub-units under a manufacturers product is called formula diversity. Promotional Schemes: In order to prevent their retailers switching to other manufacturers, distributors come up with some promotional schemes. Although each distributor follows every scheme at some point of time, the most commonly adopted like providing gifts, extra discount system, are been measured. Providing better service and pro-activeness can be measured considering sales boy s abilities and experience. Sales boys e minimum education and experience the sales boys in their firms generally have. This includes the efficiency with which sales boys deliver the goods and the negotiation skills of the sales boys. The variables used in this study to measure the factor of the relationship intensity were: ordering and payment procedure, minimum sales quota and feedback mechanism. Some of the orders are carried by checks, some by DDs. Some of the manufacturers offer a discount of 2% if the DD is delivered in advance. Some others use bank guarantee where a bank assures the manufacturer that their money would be delivered within 21 days. This all is been measured under the variable name ordering and payment procedure. Each distributor is given a sales target for every month by their manufacturer. Higher the sales quota, higher the responsibility and trust manufacturer places on the distributor. This activity is been measured in this study using variable Minimum Sales quota. Distributors inform the manufacturers continuously about their sales and products. The effective feedback mechanism is, the higher co-ordination between manufacturer and the distributor. Thus feedback mechanism forms important variables for measuring the relationship intensity factor. Variables to measure the logistics factors include: dumping system, distribution sharing and inventory range. Sometimes, manufacturers, in order to reach their sales quota offer discounts to the distributors on bulk purchases. They may also force the distributors to buy the extra stock which adds to their inventory. Distributors with planned and effective logistics don t follow this while distributors with effective feedback mechanism adopt this. This variable measures the existence of dumping system within the distributors premise. When the supply from manufacturer varies suddenly, the distributors liquidate the stock to the sub-distributors. This is called distribution sharing. It is one of the strategies to cut the intermediary costs. Presence of this variable indicates better logistic management. Some distributors keep their inventories fixed, while some vary it according to the needs of the manufacturer and the inventory range measures whether the distributors follows fixed or flexible policy. 2.2 SAMPLE AND SAMPLING COMPOSITION This survey is conducted in the region of Karimnagar district of Andhra Pradesh with local distributors and representatives pharmaceutical manufacturers within the local and rural areas of the district. Six distributors selected were: Triveni medical agency, Saraswati medical agency, Srivasavi medical agency, Veeranjaneya medical agency, Balaji medical agency, Krishnasai medical agency. Representatives of following drug manufacturers: Ranbaxy, Merck, Cipla, Aristo were surveyed. Questionnaire survey with six distributors as well as representative of manufacturers were used to identify the most important factors affecting the manufacturers choice of particular distributors.. A manufacturer answered several questions about their top three distributors and the factors of their priority in the choice of distributors.a similar kind of questionnaire was prepared for distributors asking about various aspects of their firm and their top three suppliers. This was followed by comparative analysis of manufacturers expectations with their major distributors competencies. 61

63 DATA ANALYSIS MANUFACTURER S PERSPECTIVE Table 1.1: The rows represent the manufacturers and the columns represent the various factors that a manufacturer considers in choosing a distributor. The choices of each manufacturer are ranked from 1 to 5 with 1 been the topmost priority and 5 been lowest. Logistic capabilities Concentration of products Financial strength Market penetration Feedback Ranbaxy Merck Aristo Cipla ANALYSIS: There are three types of factors classified on their importance by the manufacturers. The factors can be critical, supporting or maintaining. Critical factors are those without which the firms cannot function effectively. Supporting factors are of secondary importance while maintaining factors come next. Here variable financial strength of factor Firm Infrastructure, logistics capabilities and feedback mechanism of factor Relationship Durability were considered to be critical factors. Market penetration is considered supporting factor and formula diversity or concentration of product the maintaining factors. 2. DISTRIBUTORS PERSPECTIVE FIRM INFRASTRUCTURE 2.11: Number of employees employed under each distributor triveni veeranjaneya srivasavi saraswati balaji krishnasai 0 no. of employees in the agency Table 2.12:Annual turnover of a distributor on each of their major supplier alchem aristo cipla johnson mankind merck novartis ranbaxy reddy's 62

64 Table 2.13: Annual turnover of a distributor on each of their major supplier (in lakhs) 120 alchem 100 aristo cipla 40 johnson 20 mankind 0 merck novartis ranbaxy Table 2.14: Annual Investment of each distributor on each of their major suppliers (in lakhs) alchem aristo cipla glaxo johnson merck mankind novartis 2.2 MARKETING CAPABILITIES Figure 2.11: Extent of market penetration: Table 2.12: This table explains shows the strategies followed by distributors in promoting and marketing the products to retailers. Though all distributors follow almost every strategy under various circumstances, only the most frequent and preferred ones are denoted by a tick mark. Triveni Balaji Through sales boys Extra discount system Assuring a better service Providing gifts 63

65 Veeranjaneya Krishnasai Saraswati Srivasavi ANALYSIS: Since the supply and demand always fluctuates in pharmacy industry, there will be shortage of stock sometimes. In such cases, most distributors assure a better service next time to prevent the switching of the retailer to other distributor. While hiring them, Srivasavi and Triveni look for sales boys who are efficient and with good negotiation skills. So, it helps it to reduce the expenditure on gifts and extra discount systems. 3.1 CORE COMPETENCIES Table 3.11: This table gives us an overview from distributors point of view. The table shows the factors that Triveni Balaji Veeranjaneya Saraswati Srivasavi Krishnasai Financial strength dumping system distributors perceive to be their core competencies. Formula diversity Feedback of the products Logistics Inventory Concentration of products ANALYSIS: Srivasavi opted for formula diversity of products and an effective feedback mechanism with the manufacturer and considers it as its core competency. It believes in serving the same manufacturer irrespective of their local turnovers and even if they are left with much of the manufacturers, inventories. This earned it manufacturers trust and they gradually expanded the range of distributed products laterally. Veeranjaneya follows a totally different strategy. Its target is to have zero inventories. In spite of following a narrow strategy, it is still one of the best because whatever it does, does it with quick response, jointly managed inventories and strategic alliances to have minimum risk. Table 3.12: The X-axis represents the medical distributors whereas the Y axis represents the various manufacturers. We have considered top three manufacturers for each distributor to measure its overall performance of distributors. A tick marking the box implies that the manufacturer is among the top three to that particular distributor and ML implies that the distributor is the local market leader for those manufacturers products Merck Aristo Cipla Novartis Ranbaxy Triveni (ML) Saraswati (ML) Balaji (ML) Veeranjaneya (ML) *Srivasavi (ML) Krishnasai (ML) *Also market leader to Glaxo and Dr. Reddy s Table 3.13 COMPETENCIES OF VARIOUS DISTRIBUTORS DETERMINANTS Srivasavi Saraswati Triveni Balaji Viranjaneya Krishnasai 1. Firm infrastructure No. of employees Annual Turnover 1-1.8cr >1.5cr cr 1cr cr 1-1.2cr Experience Market leader to CIP/GLX/RDY SUNPHR/NOV RAN/MER MER CIP/INDICO ARISTO Investment on major suppliers 61 lkhs 63 lakhs 60 lakhs 35 lkhs 40 lkhs 48.5 lkhs Turnover on major suppliers 70 lkhs 80 lkhs 72 lkhs 50 lkhs 45 lkhs 60 lkhs 2.Marketing Capabilities Market penetration Dist/Mand/Vil Dist/mand Dist/mand Dist Dist/mand Dist No. of retailers > Formula diversity high high high low medium medium Sales competence good medium good medium good medium 64

66 a)promotional schemes through sales boys providing gifts extra discount system assuring a better service extra discount system assuring a better service b)sales boys min eduction Intermediate SSC Intermediate SSC SSC SSC c)sales boys min exprnce 2 yr min 1yr 1-2yrs 1yr 1 yr <1yr 3.Relationship intensity ordering, payment procedure advance dd bank surity dd/check check dd/check bank surity minimum sales quota 35 lkh/m 32 lkh/m 28 lkh/m 25 lkh/m 30 lkh/m 22 lkh/m Feedback mechanism high medium medium low low medium 4. Logistics capabilities Dumping system no yes yes no no yes Distribution sharing yes yes no no no yes inventory range fixed/flexible fixed flexible fixed fixed flexible Core competencies feedback, formula diversity good financial strength effective logistics capabilities concentration of products inventory management dumpimg system Table 3.14: Manufacturers rank each of their distributors on the following factors. We can find the distributors competencies from manufacturers perspective. DETERMINANTS Srivasavi Saraswati Triveni Balaji Viranjneya Krishnasai Firm Infrastructure Business Profile Financial strength Marketing Capabilities Market penetration Relationship Intensity Co-op& co-ordntion Marketing capabilities Delivery efficiency Pro-activeness of sales boys Table 3.15 Comparative analysis of manufacturer s expectations and distributors competencies (from table 3.12 ;3.13;3.14) Distributors Distributors Core competencies Local market leader to Manufacturer's top preferences Does critical determinant matches (Y/N) Recommendation to Distributor Srivasavi Firm Strength Cipla firm strength Y Maintain its strength Triveni Relationship intensity Ranbaxy Relationship intensity Y Maintain it strength Logistic capabilities Balaji (concentration of product) Merck Delivery efficiency Y Maintain it strength Viranjanya Firm strength Cipla Firm strength Y Maintain it strength Krishnasai Logistic capabilities (Dumping system) Novartis followed by Aristo Aristo look for Logistic capabilities, financial strength Consider to be market leader for Aristo along with Novartis Y Relationship Intensity N * Saraswati Firm Strength Ranbaxy *Saraswati should enhance market penetration from district to mandal level, also need to enhance feedback mechanism to retain Ranbaxy as its market leader. Financial strength been its core competencies, Saraswati should consider themselves to be distributors of Cipla. SUMMARY OF THE FINDINGS Cipla consider firm strength (table1.1) as its topmost determinant for distributor s selection. Our study revealed that Srivasavi s and Viranjanya s core competencies (table 3.14) is its financial strength. This resulted in both the distributors been local market leader for Cipla. Ranbaxy consider relationship intensity specially feedback mechanism (table1.1) as its topmost determinant for distributors selection. Our study revealed that Triveni s core competencies (table 3.14) are its feedback mechanism. This resulted in Triveni been market leader for Ranbaxy in Karimnagar 65

67 Merck consider logistic capabilities (table1.1) as its topmost determinant for distributors selection. Our study revealed that Balaji s core competencies (table 3.14) are its concentration of product and delivery efficiencies. This resulted in Bajaj s been local market leader for Merck. Srivasavi ranks top in almost all the four determinants. Hence it is local market leader to Cipla, Dr. Reddy s and Glaxo CONCLUSION The case study in the Karimnagar district of Andhra Pradesh indicates that selecting right distributors based on preferences can improve not only manufacturers performance but even can increase its competitive advantage. Selection of distributors involves both tangible factors like financial strength, market penetration, dumping system, formula diversity, concentration of products as well as intangible factors like relationship intensity, feedback mechanism. Finding competent distributors is important issue for manufacturers. Distributors performing well with respect to all the four determinants will be the market leader for most of its manufacturers. There is also need for distributors to assess manufacturer s preference and priorities and assess its own core competencies before starting business with the manufacturers. REFERENCES 1. Sunil Chopra, Peter Miendl,D.V.Kalra, Supply Chain Management Strategy, Planning and Operation Jiun-Sheng Chris Lin, Ching-Rung Chen, (2008) "Determinants of manufacturers' selection of distributors", Supply Chain Management: An International Journal, Vol. 13 Iss: 5, pp Ahmad Nabeel Siddiquei, Hayat Muhammad Awan &Khuram Bukhari,(2013) Determinants of Manufacturers Selection of Distributors A case from Pharmaceutical and Electronic Appliance Industry :International Journal of Contemporary Business Studies Vol: 4, No: 1. January, 2013 ISSN

68 ERP: AN EFFECTIVE RESOURCE UTILIZATION TOOL FOR ORGANIZATION Prof. Amar R. Mudiraj * ABOUT THE AUTHOR * PROF. AMAR R. MUDIRAJ; ASSISTANT PROFESSOR, MARATHWADA INSTITUTE OF TECHNOLOGY, AURANGABAD (MH) ABSTRACT In today s era of fast growing organization, every organization is facing the problem of resource utilization, is one of the most difficult and challenging job for the organization. An organization needs an automatic tool for the resource utilization activities. ERP is one of the latest technologies that many organizations have undertaken. Typically, Enterprise Resource Planning (ERP) systems are software packages composed of several modules, such as human resource, sales, finance and production providing cross-organizational integration of transaction-based data management throughout embedded business processes support. ERP supports in different levels of management and different modules are implementing. This research paper is highlighting the important features of ERP in the perspective of effective resource utilization tool for organization. Here, I have identified pre and post implementation details in the layout sub-components of ERP. KEYWORDS: ERP, Resource Utilization, ERP module INTRODUCTION In today s era is rapid development era where everyone looking for fast growth in their work and simultaneously the organization also want better utilization of resources. Every organization tries to keep limited number of resource while running any project to control the cost of the project which will also help to increase their profitability. The resource utilization is one of the most difficult and challenging job for any organization and every organization tries to reduce the human dependency plus needs an automated tool which helps to increase the effectiveness in integrity between all different functional aspect of the organization and decrease the human efforts which might affect the accuracy and rapid response during dynamic situation during workflow. To face and fulfill all above aspect the organization require an integrated, automated, fast, feasible computerized tool which help in decision making, strategy planning, monitoring and controlling all the activities done during organization work. The above all aspects are having one common solution i.e. ERP. Enterprise Resource planning (ERP) is latest high-end solution, information has lent to business application. The ERP solutions seek to streamline and integrate operation processes and information flows on the company to synergize the resources of an organization namely men, material, money and machine through information. ERP serves many industries and numerous functional areas in an integrated fashion, attempting to automate operations from supply chain management, inventory control, manufacturing scheduling and production, sales support, customer relationship management, financial and cost accounting, human resources and almost any other data oriented management process. ERP systems are designed to enhance organization s competitiveness by upgrading an organization s ability to generate timely and accurate information throughout the enterprise and its supply chain. A successful ERP system implementation can shorten production cycles, increases accuracy of demand for materials management & sourcing and leads to inventory reduction because of material management, etc. Moreover it can be used as a primary tool for re-engineering. ERP Implementation process: - ERP implantation processes have three main phases, firstly Preimplementation phase, secondly In-implementation phase and finally Post-implementation phase.every phase is unique but interdependent to each other, following table shows ERP implementation in very detail; Phase Pre-implementation phase In-implementation phase Post-implementation phase. 67

69 Process Activity BPR + BE Analysis Business engineering TQM Business modeling Development Approach + SDLC Planning Design Implementation Testing Deployment Training Use Monitoring + maintenance Review Monitor Resolve Control Maintenance outcome Ready to implement ERP ERP is ready to use ERP Results and Reviews Table1.1: ERP implementation model In the above mention activity every phase has different sub-activities; in pre-implementation phase the organization doing Business Process Reengineering (BPR) in which analysis current business process to achieve dramatic improvement, in critical, contemporary measures of performance such as cost, quality, service and speed. Ultimately BPR decide the strength and weakness of the organization and give the result to management need for some improvement in their old and traditional way of working. After getting idea from BPR the organization has to do Business Engineering (BE) where emerging two concept namely Information Technology and Business Process Engineering, which helps to maintain total quality management to maintain the quality in their existing working system and then the business management and modeling has to perform which gives an idea about different modules of organization and their internal relationship, where the organization gets the different data models and information which gives the resource requirement and utilization needs through some automated tool i.e. ERP. After analyze the need of ERP in organization In-implementation Phase, where actual Software development life cycle (SDLC) going to implement, ERP implementation is the special and sensitive process for organization. It brings together in one platform, different business functions, different personalities, procedure, and ideology with an aim to pool knowledge base to effectively integrate and bring worthwhile and beneficial changes throughout the organization. In implementation phase first and most important process is analysis of the current state and working environment, information, need, resources, objective and goals of the organization. After analysis the design step going to implement where all the different functional and modular information gathered together logically. Next process is development of software according to its design using some appropriate software tools e.g. SAP, BAAN, OracleSoft etc. by getting actual package development.the most and crucial process is testing, where we have to check whether the ERP is implemented according to its objective or not in different prospective like functional, managerial, operational etc. if everything goes as per plan then the deployment of the software package in organization is for actual use. Before handover the ERP into the organizational people, the ERP development team has to provide special training to give some motivation to the organizational employee to ERP specifications and the usability terminology. Finally the technical team at organizational side will use the ERP, for which it is actually implemented. The Post-implantation phase also continuous, dynamic and time consuming process in nature because none of the team member guaranty about the problems which may come after the ERP implementation. This phase reviews the ERP tool and monitor regularly, if any technical issue may arise then according to its nature the suitable resolving get done for maintaining continuous control over the ERP system. ERP (Enterprise Resource Planning) is an industry term for the broad set of activities supported by multimodule application software that help a manufacturer or other business managers [6]. Originally, ERP packages were targeted at the manufacturing industry. ERP is a massive software engine that seeks to provide one seamless interface to all departments, systems and existing data within the organization. Enterprise Resource Planning systems are commercial software packages that enable integration of transaction-oriented data and business processes throughout the organization and perhaps eventually throughout the entire inter organizational supply chain [4]. A typical ERP system integrates all of a company s functions by allowing the modules to share and transfer information freely [3], [2]. In this paper, the basic objective is to study and analyze the current ERP module, specifically Human Resource management to get the difference between traditional workflow and ERP module workflow. OBSERVATION AND INTERPRETATION To get the idea for traditional workflow of the HR system before the ERP implementation I study survey reports and some literature the HR department s functional process. 68

70 The Human Resources module consists of all master data, system configuration, and transactions to complete the Hire to Fire/Retire process. It providing solutions for planning and managing the company s human resources, using integrated application that all personal management tasks and help simplify and speed the process. The Human Resources module has following information and processes. Personal Management Personal Administration Travel Management Time & Attendance Management ERP (SAP) Human Resource Sub- Components Recruitment Training Payroll Personal Development Termination and Retirement Management Compensation Management Organizational Structure Figure 1.1 Human Resources modules Components: HUMAN RESOURCES MODULES COMPONENTS: Personnel Management Personnel Administration Recruitment Organization Structure Compensation Management Personnel Development Organizational Management Travel Management Time Management Payroll 69

71 Sub-Components Pre-implementation Post-implementation Personnel management Continues monitoring over the employee to get his performance Performance appraisal collected online and compare their performance with organizational goals for better evaluation Personnel Administration Till the employee will not give any personal data by its own, it is very difficult to get this data. Recruitment This was very long procedure right from advertisement, application receiving, scrutinizes the form, call for interview, evaluate them according to their performance in personal interview and then take the decision for recruitment. Organization Structure Continues monitoring over the employee to get his performance and this become very difficult to take the comparative analysis of different employee Compensation Management Very long term process as collection of data, compare his performance with organizational policies and make the decision. Personnel Development Continues monitoring over the employee to get his performance and this become very difficult to take the comparative analysis of different employee Training Long and manual process Finding eligible candidates for training then train them, evaluate their performance for evaluate the results with total cost of training and its returns. Maintaining employee personal data, family information, number of dependant which help to maintain his personal data management by the organization This ERP module used to maintain the record of college visits for recruitment process, candidates from consultancies and their resumes; list of candidates available for full-time or Part-time work etc. This HR module can be integrated with training management to link with the initial process of the selected candidates. This module highlights those employees who are well qualified at work and could be moved to the next level of hierarchy. This module, the top performed employees are targeted and supported with the compensation and retention scheme as the planned objective of the company. This package includes retention risks, cost replacement, and noticing a successor. ERP performance module basically maintains the history of employees' performance and determines the number of employees eligible for reaching certain level of hierarchy. This module tracks the newly enrolled candidates who are under training process. It also maintains the course description, course availability, review course assessment, traces the training cost and fixes a training budget. The most important thing about this module is that, the e- learning training sources are connected to the employee's desktop which can be used on requirement. Finally, ERP records the employee's performance during the training period which will be 70

72 useful to be reviewed by the training supervisors Travel Management Long and Manual process This module is integrated with personal and organizational development where the total expense on the employee organization and their outcome get compare with its cost Time and Attendance Management Time consuming process difficult to control because of following reason like Fake Attendance, proxy attendance in work Payroll Manual and difficult job for account department like calculate monthly attendance, calculate his monthly salary according to its attendance, distribution of salary personally Termination and Retirement Management This module is integrated with Payroll module. Apart from the roles of Payroll systems, it also concentrates on the sick leave of the employees. Time and attendance are easily recorded to the system by scanning the employee barcode which is located in every employee's identity card Employee s attendance and their time of entry to work and exit are entered in the system to determine the number of work hours. This module tracks, check and reports both the hours of work and respective wages of employees. Payment is directly transfer into employees bank account create transparency in Payroll system It also includes the process of calculating the taxes and deducts from the salary and also garnishee wages for charity purpose like child support and for cancer patients. Continues monitoring over the Depend upon the feedback employee to get his performance and report from different level the this become very difficult to take the organization can make the comparative analysis of different decision whether the employee employee should continue in his job or get terminate Also it help to get the decision at the time of his retirement any additional compensation like bonus or any pension scheme should provide according to his service done in the organization Table 1.2 Workflow change Difference between Pre-implementation and Post-implementation LIMITATION The ERP is very vast and broad area for research and it also has multiple number of different module and again these module further divide into sub-module so my research is get restrict to only at HR module and that research at primary level of considering very basic and core aspect of HR module. FUTURE SCOPE As in previous section, I have mentioned the ERP is very vast and broad area for research and it also has multiple numbers of different modules. This literature covers introductory aspect and it requires extending at different modules of ERP like finance, sales, Production etc. 71

73 This literature also helps to consider primary aspect of ERP with special reference to SAP. There are some other vendors who implement ERP tools like BAAN, OracleSoft etc. So, their might be some changes may find. Their might be get to consider some different ERP implementation methodology that may change the workflow, mentioned in this paper. CONCLUSION Human Resource is a vital part of every successful organization. The information received from this section is required to have a continuous flow and accurate evaluation for the professional development and for the social welfare of the workers. Thus, ERP is represented as a useful tool to help and make the users easier and focus their work in a direct relation with staff, skills and aspiration of an individual related to the objectives and the goal of the company. In today's emerging business environment, large companies have no options to avoid such massive IT packages. Basically its aim is to mechanize work flow and generate cost savings. For the present competitive scenario, lagging ERP technology seems to be unsuccessful for a firm. Thus, ERP systems have the possibility either to confine or expand the organization's capabilities and lead a pathway to competitiveness. REFERENCES 1. Alexis Leon, ERP Demystified Tata McGraw Hill Publication, Chen, I. J., Planning for ERP Systems: Analysis and Future Trend, Business Process, Management Journal, 7(5), , Hicks, D. A., & Stecke, K. E., The ERP Maze: Enterprise Resource Planning and other Production and Inventory Control Software, IIE Solutions, 27(8), 12-16, Markus M. L., & Tanis, The Enterprise Systems Experience-From Adoption to Success, In R. W.Zmud (Ed.), Framing the Domains of IT, 2000 Management: Projecting the Future- through the past, pp , Cincinnati, OH: Pinnaflex 5. Shankar Ravi and S.Jaiswal, Enterprise Resource planning, Galgotia Publications, Sharma Dhiraj, Foundation of Information Technology, p399, Vinod Kumar Garg & N.K.Venkitakrishnan Enterprise Resource Planning, Prentice Hall of India, G.S.Vijaya, Utpal Baul & Hari Haran, Enterprise Resource Planning (ERP) an innovativekey for the Success of an Organization Interscience Management Review (IMR), ISSN: , Volume-2, Issue- 3, Andreson,V. (2004), Research methods in Human Resource Management, Chartered Institute of Personnel Development, London; pp Bratton,J. and Gold,J. (2003), "Human Resource Management: Theory and Practice", 3rd ed., Hampshire : Palgrave Macmillan. 11. Fui-Hoon, F. (2002), "Enterprise Resource Planning Solutions and Management", Idea group Inc (IGI), pp Diagrams and Tables:- a. Table1.1: ERP implementation model b. Table 1.2 Workflow change Difference between Pre-implementation and Post-implementation c. Figure 1.1 Human Resources modules Components: 72

74 THE IMPACT OF GLOBAL ECONOMIC CRISIS ON INDIAN ECONOMY Shubhadeep Chakraborty* ABOUT THE AUTHOR * SHUBHADEEP CHAKRABORTY; FACULTY MEMBER (FINANCE); AMITY GLOBAL BUSINESS SCHOOL, PATNA ABSTRACT In the wake of the current economic uncertainties, the emerged economies have been badly battered. It is not so that the Indian economy have been lest unaffected but the quantum of damage have been less as compared to the developed counterparts. Two of the main reasons are that, firstly, the banking regulations are very stringent which disallows any sort of unmindful speculation and secondly, India s non emergence as a major exporter has proved to be a blessing in disguise. The ongoing crisis can help transform India into a major player in the global scene and at the same time improve her GDP due to the huge portfolio and capital flows entering the economy. At the same time, a certain degree of resolution is also required from the end of the Government in the form of controlling firmly the twin deficits in the form of Fiscal and Current account deficits. KEYWORDS: Fiscal discipline, Global economic crisis, Savings rate, Inflation INTRODUCTION The recent twin economic crises in the form of the U.S. Subprime crisis and the Euro zone fiscal indiscipline crisis have brought about misery of unprecedented magnitude upon the entire world. Post the era of liberization,and globalization in the 1990 s, India economy was cocooned and shied away from the rest of the world. For this India even paid a price by running into a balance of payment crisis. Post liberization things not only turned positive but also there was a remarkable turnabout in the current account and the capital account of our country. Current account flows increased from 20% in FY to 53% in FY ]) Due to the rationalization of procedures and conditions for foreign investment, India has emerged as an attractive investment destination. Foreign portfolio investment inflows grew from US$2 billion in FY to US$29 billion in FY Foreign direct investment (FDI) inflows have also gone up significantly in recent years, having risen to US$34.3 billion in FY from US$6.1 billion in FY At the same time, Indian corporations have also ventured into the global market for mergers and acquisitions, resulting in some capital account outflow from India. As a result, two-way flows of portfolio and direct foreign capital have gone up from a mere 12% of GDP in FY , to 64% of the GDP in FY With India's increased trading terms with the world economy, India could not be expected to remain unaffected to the global crisis. The Indian banking sector remained largely unaffected because of a visionary leadership and its very limited operations outside India or exposure to sub-prime lending by foreign investment banks, the global crisis has affected India through three distinct channels. These channels are financial markets, trade flows, and exchange rates. IMPACT OF GLOBAL CRISIS ON INDIAN ECONOMY The financial sector includes the banking sector, equity markets (which are directly affected by foreign institutional investment [FII] flows), external commercial borrowings (ECBs) that drive corporate investments, FDI, and remittances. The global crisis had a deep impact on these various sub-sectors of the financial sector.given prudent regulations, the Indian banking sector has remained more or less unaffected, at least directly, by the global crisis. The imposition by the RBI of a higher provisioning requirement on commercial bank lending to the real estate sector helped to curb the growth of a real estate price bubble. This is one of the few global examples of a countercyclical capital provisioning requirement by any central bank. In general, Indian banks were not overly exposed to sub-prime lending. Only one of the larger private sector banks, ICICI Bank, was partly exposed but it managed to thwart a crisis because of its strong balance sheet and timely action by the government, which virtually guaranteed its deposits. The banking sector as a whole has maintained a healthy balance sheet. Against an absolute decline in the profitability of non-financial corporate enterprises, the banking 73

75 sector witnessed a jump of 43% in its profitability. A ban on complex structures like synthetic securitization coupled with a close monitoring of appropriate lending norms by RBI also ensured a better quality of banking assets. The non-performing assets as a ratio to gross advances have remained well within prudential norms. Further, with an average capital risk weighted assets ratio (CRAR) of 13%, Indian banks are well capitalized and better placed to weather the economic downturn. Unfortunately, the ongoing financial crisis has affected the Indian banking sector indirectly. The liquidity squeeze in global markets following the collapse of Lehman Brothers compelled Indian banks and corporations to shift their credit demand from external sources to the domestic banking sector. This move exerted a lot of pressure on liquidity in the domestic market and consequently short-term lending rates shot up abnormally. The inter-bank call money rate shot up to 20% in October 2008 and remained high for the next month. This credit crunch, coupled with the loss of confidence that followed the Lehman Brothers episode, increased the risk aversion of Indian banks and eventually hurt credit expansion in the domestic market. Contrary to the trend, non-food credit expansion started declining in November 2008 and became negative in January. After an impressive performance for nearly five years, foreign capital inflows lost their momentum in the second half of The most significant change was observed in the case of FIIs, which saw a strong reversal of flows. Against a net inflow of US$20.3 billion in FY , there was a net outflow of US$15 billion from Indian markets during FY as foreign portfolio investors sought safety and mobilized resources to strengthen the balance sheet of their parent companies. This massive outflow of FII created panic in the stock markets. Consequently, equity markets lost more than 60% of their index value and about US$1.3 trillion of market capitalization from an index peak of about 21,000 in January 2008 to 8,867 by 20 March This bad run at the Stock Market wiped out the primary market completely, which had been flourishing before the onset of the crisis. Between FY and FY , fund collection through the primary market declined by 63%. In 2007, 106 initial public offerings (IPO) were issued and raised a total amount of about US$11 billion. In contrast, only 38 IPOs were issued in 2008 and resulted in accumulations of only US$3.8 billion. Given the presence of unutilized liquidity in the global market, and India being one of the few countries with positive growth, FIIs have once again started flowing back to India.During the first two months of the current financial year (April and May 2009), Indian equity markets received net FII inflows of more than US$5 billion. Consequently, equity markets have partially gained their lost value. However, owing to prevailing uncertainties, the primary market has still not shown any sign of recovery. Most of the companies have put their IPOs on hold. The excess liquidity originating from the developed economies due to the near zero interest rates, found their way into the Indian markets with an expectation of earning a higher return on investments due to the higher interest rates prevailing in India. This sudden inflow of funds in India shot up the commodities prices as well as the input costs. This created sudden inflationary conditions in the economy. The economic boom in India from FY to FY has also been accompanied by a substantial increase in the inflows of FDI and external commercial borrowings. The inflows of FDI increased from US$6 billion in FY to US$34.3 billion in FY The surge in FDI not only improved the domestic rate of capital formation but also helped many industries improve in a technological capacity due to the technology inflows that accompanied these FDI inflows. Like FDI, the inflows of ECBs also went up from US$9 billion in FY to US$30.3 billion in FY , registering a threefold increase over four years. The spurt in ECBs benefited Indian entrepreneurs in two different ways. First, it supported them in their overseas mergers and acquisitions, making it easier for them to gain a market presence in target countries. Secondly, the influx of ECBs allowed Indian firms to finance their domestic capacity expansion at relatively lower capital costs. Both FDI inflows and ECB volumes have been adversely affected by the turmoil in the financial markets in advanced economies. Given the credit crunch in the global markets since September 2008, Indian corporate managed to raise only US$18 billion in FY as commercial credit from the overseas market, which is 41% less than the amount raised in the previous year. The fall was rather phenomenal during the second half of FY , when ECB approvals declined from US$3 billion in September 2008 to less than US$0.5 billion in February Likewise, though not to the same extent, FDI inflows have also taken a hit. For the first time in last six years, FDI inflows witnessed a negative growth of 2% in FY Remittances are another source of inward foreign capital flows that in the past have helped to balance India's large trade account deficit and keep the current account deficit at a reasonable level. The remittances from overseas Indians started feeling the impact of the global crisis during the third quarter of FY when, on a year-on-year basis, they declined by 0.5%. The impact becomes more evident in the fourth quarter of FY when the inflow of remittances declined by more then 29% as compared to the same period in previous 74

76 With the poor economic outlook for oil producing economies in the Gulf and West Asia, coupled with rising pressure against immigration in advanced countries, it is expected that remittances will further decline in the coming quarters. The sluggishness of the inflows of FDI, ECBs, and remittances combined with the massive outflow of FII has resulted in the significant deterioration of India's capital account in FY From its peak in September 2007, the capital account surplus as percent of GDP started to decline and disappeared completely by December.This is the first time after a long period that the capital account component of India's BOP has been negative. The second transmission of the global downturn to the Indian economy has been through the steep decline in demand for India's exports in its major markets. Gems and jewelry was the first sector to feel pressure at the very beginning of the global meltdown. In November 2008, it witnessed a sharp decline in export orders from the US and Europe, which resulted in a retrenchment of more than 300,000 workers. Since then, the negative impact has expanded to other export-oriented sectors such as garments and textiles, leather, handicrafts, marine products, and auto components. Merchandise exports have registered a negative average growth of 17% from October 2008 to May The decline in exports has been accelerating, falling by 29.2% in May 2009 as compared to the same month in 2008 in all likelihood; it seems difficult for merchandise exports to recover within this calendar year. Like merchandise, exports of services are also facing a rather steep downturn. During the third quarter of FY , growth in service exports declined to a mere 5.9% as compared to 34.0% in the corresponding period a year back. The earnings from travel, transportation, insurances, and banking services have contracted, while the growth rate of software exports has declined by more than 21 percentage points The real shock came in the fourth quarter of FY when service exports witnessed a contraction of 6.6% as compared to the same period in the previous year. Though exports of both goods and services still account for only about 22% of the Indian GDP, their multiplier effect for economic activity is quite large as the import content is not high, unlike Chinese exports. This is reflected in the manufacturing sector output experiencing a sharp slowdown in recent months, during which exports have also shown a decline. The index of manufacturing sector output (Manufacturing IIP), which had grown at 9.6% during FY and by 5.3% in the first half of FY , slowed down to 0.5% in the third quarter and further to -0.16% in the fourth quarter of FY Therefore, the export slump is expected to have a significant impact on GDP growth in the coming period. With the outflow of portfolio investments and higher foreign exchange demand by Indian entrepreneurs who are seeking to replace external commercial borrowing by domestic financing, the Indian rupee has come under pressure. During last 12 months (from April 2008 to March 2009) the Indian rupee has tumbled by 27% vis-à-vis the US dollar. At the same time, foreign exchange reserves have also fallen by US$60 billion. However, with foreign exchange reserves remaining at 110% of total external debt at the end of December 2008, investment sentiments should not be unduly affected in the near term. The nearly 25% depreciation in the Indian rupee's exchange rate has partially nullified the benefits from the decline in global oil and gas prices and has increased the cost of commercial borrowings. The weaker Indian rupee should, however, encourage exporters and it is possible that with imports declining as sharply as exports that the country's trade deficit may actually improve in the short run. The timing of the external shock arising from the global economic downturn has been rather unfortunate. The Indian economy was already in the middle of a policy-induced slowdown and the crisis has further aggravated it. The impact of the global crisis on the real economy became evident in the third quarter of FY , belying the optimistic official pronouncements and expectations of some economists, when the Indian economy registered a modest growth rate of 5.3%, significantly lower than 8.9% achieved in the corresponding period in FY , and after having achieved a 7.8% growth in GDP in the first half of FY At the sect oral level, robust growth in community, social, and personal services (22.5%) and financial, real estate, and business services (8.3%) enabled the services sector to maintain healthy growth despite the sharp decline in trade, hotel, transportation, and communication services. The secondary sector in general and the manufacturing sector in particular performed extremely badly. In the wake of a decline in domestic and export demand, the manufacturing sector witnessed a moderate growth of 0.9%, while growth in construction slowed down significantly from 9.7% to 4.2%. 75

77 CONCLUSION In the end it can be said that the onus lies on the Government to push forth the reforms and ensure that the issues of supply side bottlenecks, Infrastructural development, human resources mobilization & development etc are duly addressed. It is extremely important for the Government to impose strict fiscal discipline and ensure that fiscal deficits are kept under control. More emphasis should be given to the fact that the deployed funds should generate revenues for the Governments. At the same time inflation levels should be kept under control so that the savings rate can be increased which will generate investments into various projects which will generate employment and the factor income. This will also increase the current account and stabilize the rupee. Exports should be increased with a greater resolve and it should form a substantial part of the total GDP growth of India. This will not only give us an international competitive advantage but also earn valuable foreign exchange reserves for us. REFERENCES 1. The Economic Times 2. The Hindu 76

78 THE STUDY ON CONSUMER BEHAVIOUR & CUSTOMER SATISFACTION IN MARKETING Ms. Behnaz Behrooji* ABOUT THE AUTHOR * MS. BEHNAZ BEHROOJI; MASTER OF COMMERCE FROM BHARATI VIDYAPEETH DEEMED UNIVERSITY, PUNE & M.B.A. FROM MANIPAL UNIVERSITY ABSTRACT In today s competitive world, the main focus is on company s customers and customer s satisfaction is the main business organisation competitive advantage. Unsatisfied customers may show their dissatisfaction in practice. These actions will affect the company s profitability. It is necessary to satisfy the customers by meeting their needs completely, to identify their requirements, tendencies, abilities and their limitations for buying the products. How to show the impact of emotions on customer s satisfaction and therefore on consumer s behaviour? There are basically two approaches in this field: one approach is based on individual s capacity and the other is based on specific emotions. The authors show in practice and theory that the diagnosis of these cases is in view of services. The skilled advertisers and the adroit marketers know that sales isn t the end of relationship with customers, actually it is the beginning of a long term relationship to encourage them for next purchases and development of brand reputation among other consumers through the recommended products. In this regard, dimensions of the customer s orientation and their relationship with marketing mix are essential. So, in this paper, we review the literature on theories of management, the concept of marketing mix and its evolution, from beginning till now, that has been accurately explored and these studies provided a mix of modern marketing and in the following discussion, the consumer purchase behaviour is considered with special attention. KEYWORDS: Customer, Consumer, Satisfaction, Attitude, Marketing INTRODUCTION Consumer behaviour deals with the study of all the processes of selection, use, Withdrawal products and services, experiences or ideas by individuals, groups and organizations in order to satisfy needs and the impacts of these processes on the customers and society. This approach to consumer behaviour is broader than the traditional approach. In traditional view of consumer behaviour, the more emphasis is on the buyer, background and the results of the process of purchasing goods. In the topic of consumer behaviour we show that How organizations under certain circumstances, be able to put together some combinations and components and finally have achieved success. However, sometimes with the change of circumstances, the quantity and components of this composition will vary for achieving the success. Trust and satisfaction are two important principles for successful long-term business relationship with customers. Satisfaction in various cases such as psychology, marketing, and management, information systems are also used (Kim, 2010, 57). Customer satisfaction has a direct impact on an organization's current and future performance. Previous studies show that customer satisfaction is the main source of competitive advantage that often lead to customer loyalty and repurchasing. Interests include customer satisfaction, increase revenue, reduce transaction costs and decrease in price elasticity is loyal buyers (Lewin, 2009, ). The last decade witnessed a lot of action on customer satisfaction in many countries such as Sweden, Germany, United States, Norway and the Union of Europe. This action has the potential that can include abundance 77

79 indices for managers and policy makers such as Classification of a corporation by its actions, placing an industrial in an economy, placing an economy in contrast to other economies (Johnson & et al, 2002, ). Increase in competition s condition is the reason for Organizations to increase the feeling of need to marketing. They found that focus on the needs of consumers and identifying the consumer s behaviour is the key assumption of marketing orientation. Studying and exploring the needs of consumers, the analysis of consumer behaviour and prioritize the factors that influence this process is the major tasks of marketing management. As a result of market orientation in terms of the parameters of age, income, tastes, and different levels of education that are different, identified and the appropriate product or service is supplied. When a product is purchased, Consumers expect certain results from their purchase. This article studies on the behaviour of consumers after buying with approach to their satisfaction and loyalty, their complained behaviour and change in use of a specific brand name. STATEMENT OF THE PROBLEM Today many of the institutions and successful organizations have accepted the basic and new concepts of marketing and act accordingly. They have found that focus on customers' needs means attention to product s quality and customer services. Today, organizations have realised that the most desirable and most successful products if does not satisfy the wants and needs of customers, they won t be requested. On the other hand, the results of a company s marketing strategies in dealing with consumers decision-making process are formed and only if a product s consumers can satisfy their feeling of needs with its purchase, they select it as the best choice and buy it (Hawkins & Colleagues, 2006, 27). In this article, the impact of consumer satisfaction on behavioural intentions and their decisions has been studied. To measure consumer behaviour trends, such as advertising, word of mouth, purchase intention, price sensitivity and complaining behaviour has been used. Barry and Parsvman in their research concluded that five items can be used to measure the customer s satisfaction. These five items are: reliability, tangibles, responsiveness, assurance and empathy (Lee & Kim, 2010). So in this paper, Investigate the impact of reliability, tangibles, responsiveness, assurance and empathy on consumer behavioural trends are examined. Word of Mouth Advertising Tangible factors Reliability Buy Decision Price Sensitivity Behavioural Tendencies Responsiveness Assurance Empathy Complained Behaviour Figure 1) Behavioural Tendencies Customer Satisfaction CONSUMER BEHAVIOUR Consumer behaviour is the study of all the processes of selection, use, Withdrawal of products and services, experiences or ideas by individuals, Groups and organizations for the fulfilment of needs and the effects of these processes on customers and society. (Hawkins & Best & Connie, 2006, 6) 78

80 Consumer behaviour is the study of: How do people purchase? And what do they purchase? And why do they purchase? (Khajeh Nassiri, 2008, 1) Consumer behaviour means the study of purchase units and processes of exchange; involved in the acquisition, use and disposal of goods, services, trade and ideas. (John Mvvn & Michelle Minor, 2009, 16) Behavioural tendencies of an appropriate index for measuring consumer behaviour are innate and spiritual (et al., Tang, 2008). However, in most cases the identification of actual consumer behaviour trends can be difficult (Fullerton & Punj, 2004), but to understand and predict consumer behaviour is one of the most important marketing tasks. Another definition of consumer behaviour is described as: Set of activities that directly toward the acquisition, use and disposal of goods and services are done. These activities include the decision process that before and after accepting the practices are done (Golchin Far Bakhtaey, 2006) CONSUMER PURCHASE DECISION PROCESS When goods are purchased Consumers often follow the decision-making process, which is referred to below. 1) Identifying the Problem 2) Data Collection 3) Evaluation of Alternatives 4) Purchase 5) Evaluation of Purchase These five steps represent a general process that Consumers do during identification a required product or service to evaluate and Purchase it (McDaniel, 2000). This is a guide to show the consumer, the process of decision making for buying goods or services. To remember that it isn t necessary consumers pass all this process in their decision making. In fact, the consumer may at any time terminate the process and may even does not purchase. Another implication is that the buying process begins before reality of buying and after doing it continues. Therefore, the marketers should notice on the whole process of consumer buying behaviour instead of factors that makes buying decisions (Piter, 1999). CUSTOMER SATISFACTION AND FULFILMENT We should keep in mind that only satisfied customers are not enough and pleased customers for meeting expected Consistent behaviour Such as loyalty or effective oral advertising are needed. Customer Satisfaction is different from Customer pleased because pleased comes from satisfaction and more emotional responses, Such as pleasure. All products or services are not able to satisfy customers. Only Products or services please customers that their benefits are greater than their expectations (Fuller & Matzler, 2008, ). In fact, satisfaction is a consumer emotional response that comes from use of product. Satisfactory comes from different perception between consumer expectations and the actual performance of the product. Previous experience of consumer in use of product, in forming his expectations, Play a key role. Thus, consumer s satisfaction, will affect their future Reactions toward products (Kavoosi & Saghaei, 2004, 5-6). It is difficult to measure customer satisfaction because it is difficult to determine the level of satisfaction. Customer satisfaction is a new method to show the quality level of the organization and a culture and customercentric management develops. The measurement of Customer satisfaction is rapid feedback, purposeful and meaningful about the preferences and expectations of the customer (Johansson, 2005). Retailers have come to the conclusion that customer satisfaction plays a key role in business success. What remains unclear in the nature of this role this is, how Satisfaction should be managed and the managerial efforts aimed at increasing Satisfaction will lead to more sales. Today managers in the retail sector are committed to great efforts to satisfy customers (Gomez & et al, 2004, ). Since many of the customer s behavioural status, involves a certain amount of risk, Customers looking to reduce risk, such as buying goods with known brand names or Loyalty to Products and over the last brands that has won their consent. Although the mechanism of risk reduction is not limited to early customers, but for guarantee program of the product s quality and customer satisfaction policy after purchase from retailers such as assurance of refunding money, replacement or exchange of goods can also play an important role in ensuring customers (Astous, 2008, ). 79

81 In industrial markets, the importance of customer satisfaction is extremely important. Factors which cause satisfaction and loyalty must be known. Any company due to limited resources has certain limitations, so you must decide which resources should be used to create the highest level of Satisfaction (Matzler, 2004, ). MARKETING MIX, MARKETING TECHNIQUES AND PRACTICES With this path of research, Segmentation and target market selection and setting up useful proposals, is turn of activities that support the techniques of marketing mix. Tools are four important factors (Cutler, 2007, 80). Marketing mix elements are Set of elements that are controlled by the organization and organizations can incorporate them as well to achieve their goals. So the components can act as the parts of a system to achieve the objectives of the organization. The purpose of marketing mix is it should be possible to determine how these factors can combine. Usually, these factors are classified into four groups including product, distribution, price and promotion (Hack, 1998, 89). Marketing strategy means planning and execution of the marketing mix, tools and tactics (Farhang, 2004, 7). The purpose of mix is that a systematic and coordinated approach between these components must be maintained in order to be effective in influencing and persuading customers. In other words, a good product with reasonable price for customers with proper distribution and application of appropriate communication methods all act together. If any of these components is inconsistent with others the result is in decreased of effectiveness and efficiency of the system and the company cannot achieve its goals. But the tactics and tools are tools that companies use it for fighting in market and more success to other competitors are these factors (Drgy, 2005, 5). Jerome McCarthy in the early 1960s classified the marketing mix with known variables four P that include product, price, distribution (place) and promotion that any of these marketing tools have a subset. When we talk about the product it means the mix of goods and services that the company offers to the market, these subsets include: product variety, the quality of design, features, brand, packaging, sizes, services, guarantees, support, returns and so on. When we talk about the prices it means the amount of money that the customer must pay for a product, the subsets include price lists, discounts, special assistance, payment period, credit terms and etc. When we talk about distribution it means the activities that must be done to make the products available to consumers. Subsets include distribution channels (wholesalers, retailers, representatives and branches), coverage rate, and combination and comport of the product, the amount of inventory, transportation, supplies, and so on. When we talk about promotion it means activities that that company do in order to give buyers good information about the value and desirability of the product. So from available products in the industry, they buy the product that our firm offers, subsets include advertising, public relations, sales promotion, personal selling and direct marketing. CONSUMER ANALYSIS AS A BASIS IN MARKETING MANAGEMENT The importance of understanding the consumer in marketing defined as human activity directed at satisfying needs and wants through exchange processes are found (Saleh Ardestani, 2003, 98). As Peter Drucker, one of the most renowned scientists in the field of management explains: Marketing means doing all of the business terms at the point final outcome, it means the view point of the consumer. From this definition, two key activities related to marketing appear. First, the seller tries to satisfy the needs and wants of the target market. Second, marketing is involved with the study of this exchange process through the parties which will transfer resources to other. Marketers for success in exchange process should have proper understanding from the factors that affect the consumer's wants and needs (John Mvvn & Michelle Minor, 2007, 25). In fact the priority of consumer is a turning point that marketing areas is based on (Hopkins, 2007, 356). THE CONSUMER PROTEST BEHAVIOUR PROCESS Customers protest behaviour is a dynamic process. It means some reluctant customers seek for compensating but others do not reflect their complaint to the seller. Some of them immediately began negative oral publicity and some give a chance to sellers to solve their problem before talking to their friends about their dissatisfaction. Retailers and service providers must recognize the fact that dissatisfied customers don t give the chance to sellers to fix the problem because they feel that the seller does not want to solve their problems. So instead of compensation many customers leave the store and they promise not to return to that store again. And they begin to interpreting negative advertising and talk with others about their dissatisfaction (Blodgett & et al, 1995, 33). 80

82 It is important for retailers and service providers, because by understanding the underlying factors about the process of customer complaints behaviour, effective policies and procedures, they can develop customer complaint handling. So they can train the employees to keep pleased, dissatisfied customers. Dissatisfied customers that are pleased with the outcome of their complaint, may be loyal customers and resulting in increase the profits and sales to retailers (Ibid, 1995, 36). STRATEGIES USED BY THE CUSTOMER AFTER THE INITIAL EVALUATION Evaluation process enables the customers to mix the cognitive and emotional responses (Gwinner, 1998, 178). Consumers apply a variety of strategies as a response to the feeling of satisfaction or dissatisfaction (Andreassen, 1988, 157). Research indicates that Positive and negative emotions that will affect on the degree of customer satisfaction from the experience of consumption of goods and services. In addition to overall satisfaction, emotions such as anger, hatred, contempt and frustration are affecting consumer behaviour (Blodgett & et al, 1995, 38). Based on response to initial dissatisfaction, customers employ strategies to reduce stress (Mattila, 2001, 584). So, the four types of strategies are plausible: 1) Nothing is done (stillness & Immobility). 2) Interpreting the negative advertising about the service provider. 3) Direct protest or appeal to the service provider. 4) Protesting to the third party (Zeelenberg & Pieters, 2004, 446). Usually customer satisfaction in the face of services, from the personal experiences of the past is influenced by the service provider. Emotional links or communication may give customers more satisfaction when they are faced with poor services (Ibid, 991). Also if loyal customers feel the service provider has betrayed them, may seek to avenge (Gregoire & Fisher, 2008, 250). In contrast, customers with less emotional connections and links, May be more generous to the service provider (Mattila, 2003, 138). Faced with poor services often leads to negative feelings, especially when you see the lack of effort to improve services (Mattila & et al, 2010, 985). Previous Investigations reviewed the effect of intermediary emotion in the relationship between perceived justices on loyalty in service recovery (Chebat & Slusarczyk, 2005, 669). Recent researches also indicate that emotion adjusts the relationship between justice and behaviour after objection (Blodgett & et al, 1995, 39). DATA COLLECTION AND METHODOLOGY Only the secondary sources are used for data collection. The secondary data are collected through published form such as Annual Reports, Journals, Newspapers and Periodicals, and many of Books. RECOMMENDATIONS With attention to approval of relationship between customer satisfaction and its dimensions, with behavioural tendencies is suggested that to improve perceived quality, adequate training of staff to improve relationships of employees with customers, Politeness, friendly demeanour and common sense of service providers can be influence on customer behaviour tendencies. Also the company with adequate training, technical and specialized skills can attract the confidence of customers to specialty of staff. Favourable after-sale services and presenting appropriate information to the buyer by the company can be important factors in this regard. Nowadays, companies are in a phase that is known as Customer Orientation, it means all activities of a company ultimately lead to customer. As a result, firms can determine characteristics, preferences and dependencies of each customer and design a system that could easily have a long-term relationship with their customers. The best way to establish this system is CRM (Customer Relationship Management). Customer Relationship Management is a work strategy with customers, according to their conditions and behaviour patterns can establish sustainable and long-term relationships that will create value for both parties. In fact, this strategy can lead to improved customer relationship that resulted in the identification and understanding of customer needs and use methods which will lead to increased satisfaction and the long-term satisfaction leads to customer loyalty. 81

83 CONCLUSION The overall research purpose of this study was to describe Consumer Behaviour & Customer Satisfaction in Marketing. Impact on feelings of satisfaction and dissatisfaction can be related to different positive or negative emotional experiences. Satisfaction, dissatisfaction and related behaviors by using related feelings are better understood, so that different emotions with the same capacity may have non-conventional effects. Two factors: disappointment and withdrawal will impact on customer satisfaction and dissatisfaction. So we can create a positive emotion and perception to customer that it helps to customer s consent of products and services. With providing more facilities in goods and services it can be achieved more customer satisfaction, and from dissatisfaction to satisfaction and finally the customer will be happy and satisfied. Retailers and other service providers can consider the protest process as an opportunity to reinforce their relationship with customers and establish policies and procedures for objections and complaints control in order to reach maximum customer satisfaction. More than half of consumers are willing to pay more for their main brand. This issue is a positive point for companies to raise prices and increase profits; it also indicates the importance of loyal customers. REFERENCE: 1. Anderson, E.W., Sullivan, M., (1993), The antecedents and consequences of customer satisfaction for firms Mark. Sci. 12, Cronin J.J., Brady, M.K. and Hult, G.T.M., (2000), Assessing the effects of quality, value, and customer satisfaction on customer behavioural intention in service environments, Journal of Retailing, Vol.76 No.2, pp Fullerton, R.A., Punj, G., (2004), Repercussions of promoting an ideology of consumption: consumer misbehaviour, Journal of Business Research. VOL. 57, PP Kim, Y.H., Lee, H.R., (2010)," Customer satisfaction using low cost carriers", Journal of Tourism Management, PP Johansson, J., Sparredal, J., (2005), CRM in e-business, department of business administration and social sciences division of industrial marketing and e-commerce. 6. Tang. T.L., Chen, Y.J. & Sutarso, t., (2007), The love of money, Machiavellianism, risk tolerance, and unethical behaviour, Management Decision, Vol.46 No.2, pp Allan and Lun, (2004), "Customer Satisfaction Measurement Practice in Taiwan Hotels", International Journal of Hospitality Management, Vol.23, pp Aydin and Ozar, (2005), "National Customer Satisfaction index", Journal of Marketing Intelligence and Planning, pp Bandyopadhyay S. and Michael Martell, (2007), "Does attitudinal loyalty influence behavioural loyalty? A theoretical and empirical study", Journal of Retailing and Consumer Services, No.14, pp Biggs and Swailes, (2006), "Relation Commitment and Satisfaction in Agency Workers and Permanent Workers", pp Bowen, J.T. and Chen, S.L., (2001), "The relationship between customer loyalty and customer satisfaction", International Journal of contemporary Hospitality Management, Vol.13, No.5, pp Evans, Martin; Jamal, Ahmad; Foxall, Gordon. "Consumer behaviour". 2nd Edition. England: John Wiley and Sons, Ltd., Publication, Larson and Susanna, (2004)," Managing Customer Loyalty in the Automotive Industry", Department of Business Administration and Social Sciences, p David Stokes, (2002),"Marketing, Third Edition, continuum", p: Carl MC Daniel, Charles Lamb, Joseph Hair, "Marketing, 5th", south-western 16. Carrete Lucero. (2008), "A relationship model between key problems of international purchasing and the post-purchase behaviour of industrial firms", Journal of Business & Industrial Marketing, Volume 23 Number 5, p: Carter, J.R. and Vickery, S.K. (1988), Managing volatile exchange rates in international Purchasing, Journal of Purchasing and Materials Management, Vol. 24 No. 4, p: Michael Solomon, (1999) "consumer Behaviour"; 5th: prentice Hall, p: Paul peer, Jerry Olson, Klan's grunter, consumer Behaviour and marketing strategy, McGraw hill, 1999, p: Philip Katler, Gray Armstrong, john Saunders, veronica Wong, principle of Marketing: 3th; prentice-hall, 2001, p:

84 A HOLISTIC MODEL DEVELOPED BY COLORSS FOUNDATION FOR REHABILITATION OF THE COMMUNITY WOMEN IN GUJARAT, INDIA ABSTRACT Ms. Pavithra Rajan*, Mr. Anand Koti** ABOUT THE AUTHORS * MS. PAVITHRA RAJAN; HEAD OF RESEARCH WING- RISACHI, COLORSS FOUNDATION, NGO, VADODARA, GUJARAT ** MR. ANAND KOTI; FOUNDER, COLORSS FOUNDATION, NGO, VADODARA, GUJARAT Colorss Foundation had initiated programs on skills education and economic sustainability in the slums of Vadodara, Gujarat. Since 2011, many projects have been initiated for the slum women, including income generation, skills education and knowledge dissemination. In 2012, a physiotherapy workshop was conducted for these slum women in order to empower them with knowledge and good ergonomic behavior so as to alleviate their musculoskeletal aches and pains. Twenty women were assessed for their ergonomic behavior using a validated tool. It was seen that the slum women who attended the workshop (intervention group) had better ergonomics as compared to those who did not (control group), although the intervention group reported presence of musculoskeletal pain, while the control group did not. One major limitation of the study was less sample size. Such workshops should be conducted for slum women who have no pain, as these women seem to demonstrate worse ergonomics. A cost effective workshop to promote musculoskeletal health in slum women proved effective in encouraging good ergonomic behaviors for longer time periods. It is necessary to conduct such workshops in healthy slum women so as to prevent musculoskeletal pains. In addition, the income generation projects have promoted independence in these women and it can be said that the holistic approach of Colorss Foundation toward slum rehabilitation is not only cost effective but also has added value to the existing conditions of the slum women in Gujarat, India. Thus, the holistic model developed by Colorss Foundation has promoted medical, social, and economic progress in the community women of Gujarat, India. KEYWORDS: Slum rehabilitation, holistic model, India, underprivileged women. INTRODUCTION Colorss Foundation is a NGO based in Vadodara, Gujarat and was founded in 2008 with the aim of rehabilitation of disadvantaged women and children. Colorss started its vocational training program Project Urja (Urja meaning vigor in Sanskrit) early 2011, with the aim to be that spark that can ignite the energy within the women in the society and help them to become self sufficient and social entrepreneurs themselves. Project Urja is aimed at empowering the women of the society by helping in developing their vocational skills assisting them in breaking free from the vicious cycle of poverty helping them become self sufficient strengthening their financial and social independence opening up opportunities to improve their skills and develop new ones giving them the confidence to become productive members of the society Project Urja is a holistic project that not only focuses upon vocational skills; it also takes care of the education, health and psychological needs of the community. The children of these women are in our educational program. Frequent psychological workshops are conducted for the better mental health of these women in training. 83

85 The vocational training program manufactures paper quelling earrings, designer paper quelling envelopes, jute mobile bags, copper-wire earrings, beads earrings, designer bags purse and daily utility bags made of cloth, paper gift boxes, and paper origami flowers, among others. On interacting with the slum women during skills education and income generation projects, it was observed that the health of the women is suffering mainly because of lack of knowledge about healthy living, more than lack of access to health care facilities. In addition, the children living in these slums are prone to substance abuse and unhealthy practices at very young ages. Hence, it was necessary to focus on health education, apart from the other projects of women empowerment. The holistic model developed by Colorss Foundation involved not only skills education and knowledge dissemination, but also education about health and sustainable employment (see Figure 1). This model was aimed to effectively address the problems faced by the women living in the slums of Vadodara, Gujarat and also to ensure equitable progress in all the spheres of their lives. Figure 1. Figure showing the holistic model developed by Colorss Foundation for over all development of slum women in Vadodara, Gujarat Education Slum Women in Vadodara, Gujarat Health Income generation LITERATURE REVIEW In India, the slum women are likely to suffer from various conditions affecting health like mental disorders (Silvanus et al, 2012, Dasgupta et al, 2013), domestic violence (Dasgupta et al, 2013; Sinha et al, 2012; Shrivastava and Shrivastava, 2013) malnutrition (Panigrahi and Sahoo,2012; Chopra et al, 2012; Gaur et al, 2013), and diabetes (Singh et al, 2012) among others. Slum women in India continue to remain in the lower sections of the society due to lack of knowledge, poor living conditions and poor health. Musculoskeletal health is a global health problem and has been studied across the globe in urban poor women. The women from poor communities are especially prone to many musculoskeletal disorders (Haq et al, 2005). In a survey done by Haq et al in 2005 on urban slum in Bangladesh, 1317 adults residing in urban slums in Bangladesh were covered using a door-to-door survey. It was found that women (27.5%) had higher prevalence of musculoskeletal pain as compared to men (22.6%), most common sites being low back, knees, hip and shoulders. In another study by Habib et al in 2005 on poor women from Lebanon, it was seen that out of 1266 married women, 19% reported presence of musculoskeletal disorder (Habib et al, 2005). There has been seldom research on musculoskeletal health in slum women living in cities. In an isolated study in the slums in Kolkata, India, it was found that slum women laborers suffered from musculoskeletal aches and pains (Roy and Dasgupta, 2008). In another isolated study by the authors in the urban slums of Vadodara, Gujarat, India (Rajan, P and Koti, A., 2012, unpublished work), it was seen that there is high prevalence of musculoskeletal aches and pains in urban slum women. Hence, a workshop was conducted in July 2012 to increase awareness about maintaining musculoskeletal health and using good postures and ergonomics while performing activities. Empowerment in these women about their health and other important issues like nutrition and hygiene was done. However, it was of interest to check the effectiveness of the workshop by assessing the ergonomic behavior of these women using a validated tool. OBJECTIVES The primary objective of the current paper was to assess the ergonomic behavior of these women and compare it with controls. Secondarily, it was of interest to see if presence of pain influenced the ergonomic behavior. In addition, it was important to study the overall progress of these women in other spheres like economic independence and education. 84

86 METHODS Ethics approval was obtained from the Board at Colorss Foundation. Informed consent was obtained from the subjects prior to the process of data collection. The subjects were explained the research procedures in the local language. Two volunteers collected the data and were blinded to the expected outcomes of the project. The current study is divided into two parts, namely, Musculoskeletal Education and Health Empowerment Study and Income Generation/Skills Education and Economic Empowerment Study. The methodology and findings from the pilot study on the musculoskeletal health education and empowerment is discussed first followed by the assessment of skills education and income generation projects. MUSCULOSKELETAL EDUCATION AND HEALTH EMPOWERMENT STUDY SAMPLE SIZE Twenty two slum women attended the workshop in July Out of these, 9 families moved to other slums and 3 families were away. Hence, the assessment of 10 women (intervention group) was planned. Hence, a total sample of 20 women (10 cases and 10 controls) was planned for this study. PROCESS OF DATA COLLECTION The data collection took place in the slums where the women resided. The volunteer who assisted with the data collection was trained in the use of the tool for assessment of ergonomic behavior. Four activities, in which the slum women demonstrated bad ergonomics (in July 2012), were assessed using a validated tool. Thus, the activities that were assessed were lifting objects from the floor, sitting with a straight back, sweeping and mopping the floor. 10 women who had attended the ergonomic workshop in 2012 were assessed. 10 other randomly selected women were included as controls. The control group was chosen such that none of the women had pain. This was done in order to look for differences in ergonomic behavior due to presence of pain. ERGONOMIC SCORING Every subject was asked to perform each activity and was scored out of possible 2 (Score 1 for bad ergonomics and score 2 for good ergonomics). Thus, each subject would get a minimum score of 4 and a maximum score of 8. Scores 5 and above were considered as good ergonomic behavior. RESULTS 20 women were assessed. The intervention and the control groups were similar in their background characteristics (see Table 1). Table 1. Table 1 showing the baseline characteristics of the two groups Characteristic Intervention group Control group Age (years)* 46.8± ±14.3 Years of education* 6.7± ±4.5 Number of children* 2±1 2±1 Occupation *Expressed as average ± standard deviation Home maker- 5 Maid help - 5 Home maker- 6 Maid help - 4 Among the 10 women in the intervention group, 5 reported presence of only back pain, 4 of them had knee and back pain and one woman complained of solely knee pain (see Figure 2). When enquired about the duration on pain, two reported a duration of less than one year, four having pain from one to 3 years and rest of them having the pain for more than 3 years. Four of them were on prescribed medications for pain, while none has undergone any musculoskeletal surgeries. Figure 2. Figure showing the percentage wise distribution of location of pain in the intervention group 85

87 ERGONOMIC ANALYSES The intervention group had an ergonomic score of 5.2, while the control group had an average score of 4.8. When the individual activities were assessed, the picture was mixed. For the activity of lifting objects from the floor, it was seen that in the control group, 9 demonstrated bad ergonomics as compared to 8 in the intervention group. When it came to assessment of sitting with a straight back, all women in the control group had a slouched posture while only 50% in the intervention had poor ergonomics for this activity. When it came to assessment of the activity of sweeping the floor, 9 demonstrated bad ergonomics in the control group while 7 from the intervention group had poor ergonomics with this activity. For the last activity of mopping the floor, both the groups had similar findings- 2 in each group demonstrated bad ergonomics. There were some interesting compensatory strategies. Few women with pain used domestic help. Another women from control group quoted, While doing the activity (of lifting objects), it depends on the weight of the object- whether it is light in weight or heavier. When lighter, I just bend from the back- it s easier. INCOME GENERATION/SKILLS EDUCATION AND ECONOMIC EMPOWERMENT STUDY SAMPLE SIZE Five randomly selected slum women were interviewed. PROCESS OF DATA COLLECTION A blinded volunteer conducted one-to-one interviews with the study participants and the qualitative data was collected on the feedback about the income generation projects and skills education endeavor started by Colorss Foundation. RESULTS Five women from the slums of Vadodara, Gujarat completed the interviews. There were three women in their mid thirties and two post menopausal women. The average age was 42.4±11.8 years. All the women were house wives and they were being rehabilitation by Colorss Foundation for an average of one year. QUALITATIVE FEEDBACK The community women had interesting and diverse feedback to offer. In the words of one of the women, I was not very skilled initially to begin with. It was a big struggle but with the support of Madam (Colorss volunteer) and other women, I started getting better and better slowly and I feel good about myself I am self employed and can make things by myself. One of the most important gains from the income generation project was the flexibility to work from their homes as well and feeling empowered as one of the monetary contributors to the family. Another woman commented, I feel good about this project. I learnt to make jewellery, especially using paper to make jewellery. I see myself as an important part of home, as I can make jewellery at home and get monetary benefit for the family. The variety in the projects for the community women was another feedback that was received. The skills of bag and jewellery making were especially appreciated by the women. One of the older women in the slums 86

88 commented, Being a part of Colorss is like having new ideas, new from jewellery making like paper earnings and other things like Diwali cards, bags etc. Lastly, it was appreciated by all the ladies that they have indeed learnt new set of skills which has proved very useful to them, not just monetarily but has also instilled the values of self dependence and confidence into them. DISCUSSION The holistic model developed by Colorss Foundation for the slum women in Vadodara, Gujarat involved emphasis on education, health and economic independence. The feedback from the slum women, including health assessments, revealed that these women are empowered with knowledge about health and are economically independent. The pilot study on assessment of musculoskeletal health was done in order to assess the effectiveness of the ergonomic workshop conducted for the slum women. It was seen that the slum women who attended the workshop had better ergonomic behavior as compared to those who were not part of the workshop. In addition, pain did not seem to interfere with ergonomic behavior, since those without pain demonstrated worse ergonomic behavior. It was worth noting that the assessment was conducted 8 months after the workshop was conducted. So, it can be said that the workshop was effective in improving the ergonomics of the slum women. The ergonomic behavior was better in the intervention group as compared to the control group, although only marginally. It was also noted that those without pain demonstrated not only worse ergonomics as compared to those with pain, but also lacked knowledge. One of the reasons for this could be that those with pain were in the intervention group and were empowered with the required knowledge. Also, it has been seen that those patients who are in pain are able to better anticipate the postures that cause excessive strain on the joints and avoid those postures, thus adapting to better ergonomics (Brumagne et al, 2008). A cost effective method was used in order to impart knowledge about musculoskeletal health and ergonomics among slum women (Rajan, P. and Koti, A., 2012, unpublished work). The importance of cost effective rehabilitation methods in resource limited countries like India cannot be more emphasized (Davies, 2012). It can be said that the ergonomic workshop was effective in imparting good health practices in the slum women. In addition, it seems necessary to conduct such workshops with slum women who have no pain, as these women seem to demonstrate worse ergonomics. The income generation projects were well received by the slum women. The income generation project has helped the women. There has been a substantial difference in their self-esteem, confidence and motivation. Family relationship, spouse relationship and societal acceptance have shown positive changes. There has been a tremendous positive response of the on-going project. Other women staying in the slums want to be a part of this social-change project. The holistic nature of the model has been effective and the changes observed, felt and reflected are truly inspiring the other community members. Economic instability has been seen to cause hindrance in the progress of slum women, including health of the woman and her family (Chambers et al, 2009). Thus, it can be said that in order to ensure a holistic development approach for the urban slum women, the three prongs of health, education and economic stability need attention and an isolated approach might not yield the best results. Colorss Foundation designed a model for the development of the slum women on all the three fronts and this model has proven to be effective in complete rehabilitation of this underprivileged section of the society (see Figure 3). The women reported that they feel more confident about facing the challenges in life since they are empowered with knowledge and self dependence. It has been seen that a holistic approach is the most effective way to deal with the problems existing in a community (Schwerman N, and Stellmacher J, 2012; McElligott et al, 2010; Vargas-Lombardo et al, 2012). In our study, the continued interactions with the slum women helped to identify the problems at an early stage and tailor the programs as per the requirements. This not only ensured co-operation from the slum women but also helped in maximizing the benefits. In addition, the holistic team consisted of vocational trainers, community physiotherapist, psychologists, social workers and volunteers from a diverse background (like management, psychology, social work, among others). The diversity in the team helped to address the specific issues and, in turn, produce effective solutions. Figure 3. Figure showing the outcomes of the model of rehabilitation developed by Colorss Foundation 87

89 Increased knowledge Better Ergonomics with day-today activities Increased support from community members Better Motivation Slum Women in Vadodara, Gujarat Economically more stable Better Musculo skeletal Health Improved Self Esteem This study had few strengths. Firstly, the volunteer, who collected the data, was blinded to the outcomes of the study, thus reducing bias. Secondly, the time gap between conducting the ergonomic workshop and the assessment of the slum women was 8 months, avoiding recall bias. LIMITATIONS The study had one major limitation. The sample size was only 20 for musculoskeletal study and 5 for income generation feedback study. Nevertheless, this was a pilot study and it brought to light the probable positive effects of the model developed by Colorss Foundation. Future studies could be done on a larger sample size. RECOMMENDATIONS The holistic model developed by Colorss Foundation could be used on other needy sections of the society. Replication of this model could be done not only to check its effectiveness but also to benefit underprivileged women living in similar urban slums. CONCLUSIONS The holistic model developed by Colorss Foundation helped in the complete rehabilitation of the community women living in the slums of Vadodara, Gujarat. A cost effective workshop to promote musculoskeletal health in these slum women proved effective in encouraging good postures and ergonomic behaviors for longer time periods. It is necessary to conduct such workshops in healthy slum women so as to prevent musculoskeletal aches and pains. A constant interaction with the slum women is needed to identify the problems at the earliest and suggest effective solutions for the same. In addition, constant feedback from the women helped tailor the projects as per the need of the hour. ACKNOWLEDGEMENTS The authors would like to thank Ms. Ketki Takle and Ms. Sonal Rajyaguru for assisting with the process of data collection. Deep gratitude to all the women who were part of the study and took time to provide useful feedback and insights. CONFLICTS OF INTEREST The authors have no conflicts of interest to declare. REFERENCES 1. Silvanus V, and Subramanian P. Epidemiological study of mental morbidity in an urban slum community in India for the development of a community mental health programme. Nepal Med Coll J. 2012; 14(1): Dasgupta A, Battala M, Saggurti N, Nair S, Naik DD, Silverman JG, Balaiah D, and Raj A. Local social support mitigates depression among women contending with spousal violence and husband's risky drinking in Mumbai slum communities. J Affect Disord. 2013; 145(1): Sinha A, Mallik S, Sanyal D, Dasgupta S, Pal D, and Mukherjee A. Domestic violence among ever married women of reproductive age group in a slum area of Kolkata. Indian J Public Health. 2012; 56(1): Shrivastava PS, and Shrivastava SR. A study of spousal domestic violence in an urban slum of mumbai. Int J Prev Med. 2013; 4(1):

90 5. Panigrahi A, and Sahoo PB. Nutritional anemia and its epidemiological correlates among women of reproductive age in an urban slum of Bhubaneswar, Orissa. Indian J Public Health. 2011; 55(4): Chopra H, Chheda P, Kehoe S, Taskar V, Brown N, Shivashankaran D, Subbulakshmi G, Rao S, Gandhi M, Muley-Lotankar P, Potdar R, Margetts B, and Fall C. Dietary Habits of Female Urban Slum-dwellers in Mumbai. Indian J Matern Child Health. 2012; 14(2): Gaur K, Keshri K, and Joe W. Does living in slums or non-slums influence women's nutritional status? Evidence from Indian mega-cities. Soc Sci Med. 2013; 77: Singh AK, Mani K, Krishnan A, Aggarwal P, and Gupta SK. Prevalence, awareness, treatment and control of diabetes among elderly persons in an urban slum of delhi. Indian J Community Med. 2012; 37(4): Haq SA, Darmawan J, Islam MN, Uddin MZ, Das BB, Rahman F, Chowdhury MA, Alam MN, Mahmud TA, Chowdhury MR, and Tahir M. Prevalence of rheumatic diseases and associated outcomes in rural and urban communities in Bangladesh: a COPCORD study. J Rheumatol. 2005; 32(2): Habib RR, Hamdan M, Nuwayhid I, Odaymat F, and Campbell OM. Musculoskeletal disorders among full-time homemakers in poor communities. Women Health. 2005; 42(2): Roy S, and Dasgupta A. A study on health status of women engaged in a home-based "Papad-making" industry in a slum area of Kolkata. Indian J Occup Environ Med. 2008; 12(1): Brumagne S, Janssens L, Janssens E, and Goddyn L. Altered postural control in anticipation of postural instability in persons with recurrent low back pain. Gait Posture. 2008; 28(4): Davies SE. The challenge to know and control: disease outbreak surveillance and alerts in China and India. Glob Public Health. 2012; 7(7): Chambers EC, Duarte CS, and Yang FM. Household instability, area poverty, and obesity in urban mothers and their children. J Health Care Poor Underserved. 2009; 20(1): Schwerman N, and Stellmacher J. A holistic approach to supporting staff in a pediatric hospital setting. Workplace Health Saf. 2012; 60(9): McElligott D, Capitulo KL, Morris DL, and Click ER. The effect of a holistic program on health-promoting behaviors in hospital registered nurses. J Holist Nurs. 2010; 28(3): Vargas-Lombardo M, Jipsion A, Vejarano R, Camargo I, Alvarez H, Mora EV, and Ruíz EM. Technologies to better serve the millions of diabetic patients: a holistic, interactive and persuasive ICT model to facilitate self care, in extremely poor rural zones of Central America. J Med Syst. 2012; 36(2):

91 NEED FOR TODAY: CRISIS MANAGEMENT ABSTRACT Pratik Dwivedi * ABOUT THE AUTHOR * PRATIK DWIVEDI; RESEARCH SCHOLAR, DEPARTMENT OF BUSINESS ADMINISTRATION, SINGHANIA UNIVERSITY RAJASTHAN, INDIA Sequence of sudden unwanted events leading to major disturbances at the workplace is called crisis. Crisis arises on an extremely short notice and triggers a feeling of fear and uncertainty in the employees. It is essential for the superiors to sense the early signs of crisis and warn the employees against the same. Once a crisis is being detected, employees must quickly jump into action and take quick decisions. A Crisis Management is formed to protect an organization against the adverse effects of crisis. In this paper i would begin by providing an account of my view of crisis and its varying nature and characteristics and then continue by considering the key elements, systems, skills and cultural implications of Crisis Management and its implementation, including its relationship with crisis communications. KEYWORDS: Crisis, Crisis Management, corporate resilience etc. INTRODUCTION Crisis management has always been a feature of good public management. The study of crisis management originated with the large scale industrial and environmental disasters in the 1980s. But in recent year s national and international events and the impacts of globalisation in areas such as pandemics, climate change and terror attacks have raised the importance of good crisis management. In contrast to risk management, which involves assessing potential threats and finding the best ways to avoid those threats, crisis management involves dealing with threats before, during, and after they have occurred. It is a discipline within the broader context of management consisting of skills and techniques required to identify, assess, understand, and cope with a serious situation, especially from the moment it first occurs to the point that recovery procedures start. I choose to start with meaning of crisis so that readers will understand how this paper approaches the subject. Crisis: A crisis is a change, which may be sudden or which may take some time to evolve, that results in an urgent problem that must be addressed immediately. In other words, crisis is defined as any emergency situation which disturbs the employees as well as leads to instability in the organization. Crisis affects an individual, group, organization or society on the whole. UK Department for Business Innovation and Skills (BIS) An abnormal situation, or even perception, which is beyond the scope of everyday business and which threatens the operation, safety, and reputation of an organisation. Thus, for the purposes of this paper, it is suggested that a crisis is: critical moment or turning point. CRISIS MANAGEMENT The art of dealing with sudden and unexpected events which disturbs the employees, organization as well as external clients refers to Crisis Management. In other words,crisis management is the task for creating and implementing a business plan that can be implemented quickly in the face of a crisis. Crisis management can be defined as a, "Holistic management process that identifies potential impacts that threaten an organisation and provides a framework for building resilience, with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand, and value-creating activities- as well as effectively restoring operational capabilities." Effective crisis Management: A useful way of understanding the demands of crisis management in terms of different phases of a cycle, as displayed in Figure 1. The phases are: Preparation dealing with issues such as planning, simulations and training Management dealing with issues such as allocation and deployment of resources, command systems and communications. 90

92 Evaluation dealing with issues such as post crisis lesson learning, debriefing and accountability. WHY CRISIS MANAGEMENT Crisis Management prepares the individuals to face unexpected developments and adverse conditions in the organization with courage and determination. Employees adjust well to the sudden changes in the organization. Employees can understand and analyze the causes of crisis and cope with it in the best possible way. Crisis Management helps the managers to devise strategies to come out of uncertain conditions and also decide on the future course of action. Crisis Management helps the managers to feel the early signs of crisis, warn the employees against the aftermaths and take necessary precautions for the same. ESSENTIAL FEATURES OF CRISIS MANAGEMENT Crisis Management includes activities and processes which help the managers as well as employees to analyze and understand events which might lead to crisis and uncertainty in the organization. Crisis Management enables the managers and employees to respond effectively to changes in the organization culture. It consists of effective coordination amongst the departments to overcome emergency situations. Employees at the time of crisis must communicate effectively with each other and try their level best to overcome tough times. Points to keep in mind during crisis Don t panic or spread rumours around. Be patient. At the time of crisis the management should be in regular touch with the employees, external clients, stake holders as well as media. MODELS FOR CRISES MANAGEMENT Three stage crises cycle In the three-stage crisis cycle, post-crisis learning informs pre-crisis preparation so the organization should be assessing the potential crisis differently than before the last crisis. 91

93 LEARNING BARRIER MODEL The Learning Barrier Model shows how rhetorical barriers inhibit individuals and organizations from seeing warning signals in time to prevent failure or crisis. Learning only occurs following failure or the recalcitrance of a crisis. Learning is likely to be single-loop or double-loop and the cycle of missing warning signals will continue. MINDFUL LEARNING MODEL The Mindful Learning Model shows the operation of a mindful culture that recognizes warning signals and learns from them to prevent failure and crisis. The rhetorical barriers to learning still exist, but mindful learning filters through the routines and training to draw attention to what does not match expectations. A mindful culture encourages constant adaptation of the routine processes as warning signals are recognized. MOVING FROM THE LEARNING BARRIER MODEL TO THE MINDFUL LEARNING MODEL Creation of a mindful culture requires third-order change or full cultural readjustment to move from the Learning Barrier Model to the Mindful Learning Model. CRISIS COMMUNICATIONS & MEDIA MANAGEMENT Crisis Communications has largely been represented as comprising what is said by an organisation in the media during and after a crisis. While Crisis Communication and Media Management are important facets of Crisis Management, they focus almost entirely on outward facing activities. Any organisation in crisis also tends to have a range of internal needs that require resolution; therefore an effective and timely crisis response consists of 92

94 disseminating information at appropriate times both internally as well as externally. Every crisis team has a Communications, PR or media specialist (or several) on the team to manage the delivery of suitable strategies for those areas, at the behest of the team leader. Internal communications and the sharing of new, critical, or developing information across the organisation are particularly important to prevent escalation of a crisis, ill informed decision making, and the spreading of rumours among staff members. Gaining an internal understanding of what is happening, why it matters, what is being done about it, to what ends, and why it is being managed in a particular way is critical in shaping coherent activity towards strategic objectives. External communication management during a crisis is likely to be very different from business as usual communications, where communication is much more controlled by the organisation dealing with business reporters and editors. In a crisis situation it is likely that there will be difficult questions posed from stakeholders, as well as tabloid and investigative reporters who are seeking an interesting story and have no regard for the sensitivities of the organisation. This is particularly true with the modern use of social media, where everyone is a journalist, information is shared at an extremely fast rate, and fact checking does not occur. Stakeholder and rumour management are therefore an increasingly integral part of effective Crisis Management. Consistency, the use of non contradictory information, and transparency within the messages communicated publicly during a crisis will enhance organisational legitimacy and accountability; while inconsistency or a failure to communicate can severely damage credibility, or create an image of passivity or concealment of information, which can sour stakeholder relationships and decrease trust. To ensure coherence and uniformity of messages, every organisation must have a Crisis Communications plan as well as a Crisis Management plan. All too often, Communications Teams appear to feel that Crisis Communications is merely an extension of their day job (or in some cases the same thing) and subsequently find themselves overwhelmed in any exercise or rehearsal as the pace, scale and complexity rushes over them. It is critical that the Crisis Communications Plan is aligned with the Crisis Management Plan to ensure activities that are mutual or reliant upon one another are developed in concert and not in isolation. The input of up to date information on the crisis into press releases, the appropriate sign off of statements, etc., all require a joined up and coherent approach that has been built as a part of an overall response. It can be easily understand with the help of Seven Steps to an Effective Communication Plan during Crisis: 1) Conduct a capability analysis: A capability analysis will help determine the strengths and weaknesses of your communications team. Include an assessment of skills and experience for each member of your team, an inventory of the equipment and the physical space needed to support communications operations. 2) Select a likely operational crisis scenario: Prepare an operational crisis scenario likely to occur in your organisation based on its purpose or business to give context to this process. 3) Determine the ideal response sequence: conduct a tabletop exercise using the scenario you selected. A tabletop exercise is a type of crisis training in which participants typically sit around conference table and discuss responses to a developing crisis, hence its, name. 4) Create a resources needed list: Based on the results of the tabletop exercise conducted in step 3, prepare a list of the resources needed to implement the plan, which may include a satellite phone, spare laptops, or food for safer. Appoint someone on the communications team to manage the procurement process. 5) Test the Plan: Now, using the scenario in step 3, conduct another tabletop exercise to test and evaluate your fledgling draft communication plan. Don t forget to incorporate the actions and decisions identified in this exercise in your plan. 6) Repeat the process: Create third tabletop exercise, this time using a non-operational scenario that could occur in your organisation such as fraud, executive malfeasance or decisions, actions and resources needed in your plan. Incorporate the actions, decisions and resources identified in this exercise to your plan. 7) Repeat the process again: Conduct a fourth tabletop exercise this time using a worst case scenario that could befall your organisation. 93

95 CONCLUSION: It is difficult to still all that is known about crisis management into one, concise entry. I have tried to identify the best practices and lessons created by crisis management researchers and analysts. Conceptual analysis bridged a theoretical gap by connecting current crisis management literature to rhetorical theories that identified barriers to learning. Two connecting models were proposed to outline the barriers, include learning throughout the crisis cycle, and encourage the adoption of a mindful culture. Crisis models were described and an explanation of the similarities between Burkean philosophy and crisis research was presented through the proposed Learning Barrier Model. The Mindful Learning Model was introduced to demonstrate how, if barriers are overcome, learning can not only lessen the impact of a crisis but also potentially prevent a crisis from occurring. Finally, the models were reviewed to outline future research. The analysis justifies a need for further research to determine if the barriers identified can be seen along with the warning signals in time to prevent future crises. While crises begin as a negative/threat, effective crisis management can minimize the damage and in some case allow an organization to emerge stronger than before the crisis. However, crises are not the ideal way to improve an organization. But no organization is immune from a crisis so all must do their best to prepare for one. This entry provides a number of ideas that can be incorporated into an effective crisis management program. REFERENCES: 1. Hearit, K. M. (2001). Corporate apologia: When an organization speaks in defense of itself. In R. L. Heath (Ed.), Handbook of public relations (pp ). 2. R. L., & Millar, D. P. (2004). A rhetorical approach to crisis communication: Management, communication processes, and strategic responses. In R. L. Heath & D. P. Millar (Eds.), Responding to crisis: A rhetorical approach to crisis communication (pp. 1-18). Mahwah, NJ: Lawrence Erlbaum. 3. Krieger, J. L. (2005). Shared mindfulness in cockpit crisis situations. Journal of Business Communication, 42, Smudde, P. (2001) Issue or Crisis: A rose by any other name. Public Relations Quarterly 46 (4) Zyglidopoulos, S. C. (2003) The Issue Life Cycle: Implications for Reputation for Social performance and Organizational Legitimacy. Corporate Reputation Review 6 (1)

96 BUSINESS PROCESSING REENGINEERING: AN EMERGING CONCEPT OF FINANCE ABOUT THE AUTHOR * PRIYANKA DIXIT; RESEARH SCHOLAR, MANGALAYATAN UNIVERSITY, ALIGARH ABSTRACT Priyanka Dixit * Global competition, sluggish economies and the potential offered by emerging technologies have pushed firms to fundamentally rethink their business processes. Business Process Reengineering (BPR) has become recognized as a means to restructure aging bureaucratized processes to achieve the strategic objectives of increased efficiency, reduced costs, improved quality and greater customer satisfaction. The remainder of this paper is organised as follows, it start with a short introduction to business process reengineering, followed by an illustration related to application of BPR. And In the latter part of the paper focused on the significance and role of information technology (IT) in BPR, especially IT systems. KEYWORDS: Business Process Reengineering, Redesign, Methodology etc. INTRODUCTION The globalization of the economy and the liberalization of the trade markets have formulated new conditions in the market place which are characterized by instability and intensive competition in the business environment. Competition is continuously increasing with respect to price, quality and selection, service and promptness of delivery. Removal of barriers, international cooperation, technological innovations cause competition to intensify. All these changes impose the need for organizational transformation, where the entire processes and organization climate and organization structure are changed. Business process re-engineering (BPR) began as a effective technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. Business Process Reengineering is the combination of three words, Business+Pocess+Reengineering. Before going ahead with this topic firstly, I want to be discuss the meaning of these words. BUSINESS PROCESS: A Business Process is a collection of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how the work is done within an organisation, in contrast to a product s focus. A process is thus a specific ordering of work activities across time and place, with a beginning, an end, and clearly defined inputs : a structure for action. Davenport & Short (1990) define business process as "A structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organization". Processes are generally identified in terms of beginning and end points, interfaces, and organization units involved, particularly the customer unit. High Impact processes should have process owners. Examples of processes include: developing a new product; ordering goods from a supplier; creating a marketing plan; processing and paying an insurance claim; etc. WHAT IS REENGINEERING? Reengineering is about reinvesting the organization and not improving or enhancing it. So old structure and procedures might have to be disregarded and new ways of accomplishing work has to be invented. If the company needs only small improvements then it needs to do only process improvement and reengineering. Reengineering ha to be employed for large-scale improvements. In reengineering the focus should be on the process and not on the tasks. Several definitions of Business Process Reengineering can be found in the litterateur, some of them are given below: 95

97 Hammer & Champy (1993) defines, Reengineering is the fundamental rethinking and radical redesign of Business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed. BUSINESS PROCESS RE-ENGINEERING Reengineering business processes means tossing aside existing processes and starting over. In other words, Business Process re-engineering refers to the analysis, control and development of a company s systems and workflow. BPR father, Davenport (1993), describes business process redesign as: the analysis and design of workflows and processes within and between organisations. Business activities should be viewed as more than a collection of individual or even functional tasks; they should be broken down into processes that can be designed for maximum effectiveness, in both manufacturing and service environment However we should note that BPR is concerned with customer-orientation. Thus the outputs of business processes should not only achieve the company s objectives, but also need to satisfy customers requirements. From these definitions we can conclude that business processes start and end with customers, and the value of business processes is dependent upon customers. It can be easily understand with the help of this model: AN EXAMPLE OF BPR APPLICATION A typical problem with processes in vertical organizational structure is that customers must speak with various staff members for different inquiries. For example, if a college student enters into the college determined to apply for admission, apply for fees exemption and make an identity card, most probably must visit three different desks in order to be serviced, as illustrated in figure 1. When BPR is applied to an organization the customer communicates with only one person, called "case manager", for all three inquiries, shown in figure 2. Manager completes an application for admission in electronic form, which in turn is submitted through the network to the next team member, the information control director, who examines the status of the student. If the status is not satisfactory the rejection of the admission is approved by the information manager and a rejection form is filled and it is returned to the case manager. The case manager explains to the student the reason that his application was rejected. On the other hand, if the status of the student is satisfactory, the application is submitted electronically to the next team member. The approval of the application along with the other necessary document delivered to the student by the case manager. Admission Fees Identity card 96

98 Admssin Application Form Figure.1. Three inquiries three waiting queues Fess Process Identity cards Process Figure 2. One Step Service for all three inquiries Most importantly, while the admission application team was processing the admission application, the case manager "triggered" the account team to open a student account and the identity card team to supply the student with an identity card. The student leaves the documentation section having a response for his admission application, a new fees account and an identity card, and all these without having to move around the desks for signatures and documents. All the customer's requests were satisfied at the same time in parallel motion. INFORMATION TECHNOLOGY & BPR Having the management commitment for change, another very important factor for implementing BPR, is the enabling role of Information Technology. The way that businesses are organized around departments is very logical since, for instance, there were physical barriers in the communication of the accounting department with production department. (The warehouse could be in another location in the part of the city). So it wasn't possible for a cross-functional team to communicate efficiently. In the 90s when telecommunication technologies were becoming abundant and low costing BPR was becoming a world-wide applicable managing technique for business upgrade, enabled by the technology. Employees can easily operate as a team using intranets/extranets, workflow and groupware applications, eliminating distances. We can work together even though we are located in different places. Thus we see that it is not possible to reengineer without IT support. IT is not only an enabler for reengineering it has also become an essential and integral part of all reengineering efforts. In the implementation of reengineering IT is crucial and it provides the skills and tools that are needed to effectively reengineering. Empowering people: Empowerment means giving people the ability to do their work the right information, the right tools, the right training, the right environment, and the authority they need. Information systems help empower people by providing information, tools and training. Providing Information: Providing information to help people perform their work is a primary purpose of most information systems although they provide information in many different ways. Some systems provide information that is essential in informing a business process, such as the prices used to create a customer s bill at a restaurant. Other systems provide information that is potentially useful but can be used in a discretionary manner, such as medical history information that different doctors might use in different ways. Providing Tools: In addition to providing the right information, empowering people means giving them the right tools. Consider the way planning analysts produce consolidated corporate plans based on plans of individual divisions and departments. If the plans are submitted on paper, it is a major task to add up the numbers to determine the projected corporate bottom line. When the plan is changed during a negotiation process, the planning analyst has to recalculate the projected results. With the right tools, the numerical parts of the plans arrive in a consistent, electronic format permitting consolidation by a computer. This leaves the analyst free to do the more productive work of analysing the quality of the plan. Providing Training: Since information systems are designed to provide the information needed to support desired work practices, they are often used for training and learning. As shown by an expert system and a decision simulator, they sometimes provide new and unique training developed an expert system for fixing computer disk drives. The expert system was an organized collection of the best knowledge about fixing these disk drives, and it fostered rapid and efficient training. Before the system was developed, technicians typically took between 1 and 16 months to become certified, but with the expert system, training time dropped 3 to 5 months. Eliminating Unproductive Uses of Time: Information systems can reduce the amount of time people waste doing unproductive work. A study of how professionals and managers at 15 leading U.S. corporations 97

99 spent their time concluded that many professionals spent less than half of their work time on activities directly related to their functions. Although the primary function of salespeople is selling, the time breakdown for salespeople averaged 36 percent spent on prospecting and selling, 39 percent spent on prospecting an selling, 3 percent on servicing accounts, 19 percent on doing administrative chores, and 6 percent on training. Better use of information systems could save much of their unproductive time performing chores such as collecting product or pricing information, determining order status for a customer, resolving invoice discrepancies, and reporting of time and expenses. Eliminating Unnecessary Paper: One common way to improve data processing is to eliminate unnecessary paper. Although paper is familiar and convenient for many purposes, it has major disadvantages. It is bulky, difficult to move from place to place, and extremely difficult to use for analysing large amounts of data. Storing data in computerized form takes much less physical space and destroys fewer forests, but that is only the beginning. It makes data easier to analyze, easier to copy or transmit, and easier to display in a flexible format. Compare paper telephone bills with computerized bills for a large company. The paper bills identify calls but are virtually impossible to analyze for patterns of inefficient or excessive usage. Eliminating Unnecessary Variations in the Procedures and Systems: In many companies, separate departments use different systems and procedures to perform essentially similar repetitive processes, such as paying employees, purchasing supplies, and keeping track of inventories. Although these procedures may seem adequate from a totally local viewpoint, doing the same work in different ways is often inefficient in a global sense. Whenever the systems must change with new technology, new regulations, or new business issues, each separate system must be analysed separately, often by someone starting from scratch. Minimizing the Burden of Record Keeping: Data Handling, and General Office Work. Since processing data is included in most jobs, improving the way people process data is an obvious place to look for information system applications. Focus on basic data processing tasks: Reducing the burden of record keeping means being more efficient and effective with the six components of data processing. Those components are capturing, transmitting, storing, retrieving, manipulating, and displaying data. Capture data automatically when generated: Capturing data automatically at the time of data generation is especially important in minimizing the burden of record keeping. Thus we see that IT can help make the changes promoted by reengineering, and it can be considered as an enabler of BPR. CONCLUSION BPR is a methodology by which important improvements are obtained, although it requires big changes in organization and work style. This involves the need to change or even increase working styles, job functions, needed knowledge, and organization values. In this way, reengineering requires long-time dedication, resources, and effort. These are made easier by using elements called enablers. This paper has discussed the importance of IT as a facilitator. Its role is crucial because it allows a company to alter processes in two ways: collaboration grade increase and mediation grade decrease through the implementation of shared databases and communication technologies. So, IT may help companies to obtain important improvements on variables such as costs, quality, and delivery time. Although these are not the only important elements, also bear in mind structural changes, company culture, and human resources. So it can be concluded that BPR & IT is complementary to each other. REFERENCES: 1. Hammer, M., Champy.J. (1993), Reengineering the Corporation: A Manifesto for Business Revolution, Harper Collins, and London. 2. Harrison, Brian.D. Pratt, Maurice.D. (1993), A methodology for Reengineering Business., Planning Review 21 (2), Yoon, Y., Guimaraes, T. and Clevenson, A., (1998), Exploring expert system success factors for business process reengineering. Journal of Engineering and Technology Management JET-M, D. Morris and J. Brandon. Reengineering your business. McGraw-Hill, New York, 1993.[22] 5. T. Murata, (1989) Petri Nets: Properties, Analysis and Applications. Proceedings of the IEEE, 77(4): Michael L. Dertouzos, Robert M. Solow and Richard K. Lester (1989) Made In America: Regaining the Productive Edge". MIT press. 7. Hussein, Bassam (2008), PRISM: Process Re-engineering Integrated Spiral Model, VDM VerlagGemba Research. (2003). 8. Gemba: Where the Value is created. Retrieved February 16, 2004 from 98

100 DESIGNING HAPPY WORKPLACE FOR ENHANCING PRODUCTIVITY OF EMPLOYEES Dr. Azra Ishrat * ABOUT THE AUTHOR * DR. AZRA ISHRAT; ASST. PROF.(HR), AMITY BUSINESS SCHOOL, AMITY UNIVERSITY, LUCKNOW ABSTRACT Most of us get up in the morning being nervous, irritated, cribbing about workday ahead of us. At workplace we feel stressed and harried and spend 60% of our time in unproductive work wishing that office closes quickly. The reason is simple that we do not like our job or the system at workplace. In short we do not feel happy about our work/ workplace. This in turn affects our productivity at workplace and for any organization high employee productivity is the heartbeat of a successful business. When employees are distracted and unhappy, their work suffers, and ultimately so does the company. When employees experience problems, they don't perform to their highest potential. Troubled employees often call in sick or aren't mentally present when they attend work. Thus, we need to understand the organizational factors of employee unhappiness and try to minimize the impact of that factor on employee productivity. The question of whether happy workers matter to organization and whether it has anything to do with employee s productivity has been asked for nearly a century. A research conducted by a consultancy firm iponer revealed that the happiest workers are most productive, spending 80% of their working week focusing on what they are paid to do. By contrast, the least happy employees only spend 40% of their time being productive. In concrete terms that means that the unhappiest employees are working only two days a week, while their happiest colleagues are grafting a full four days in comparison - allowing for the usual interruptions caused by frozen screens, coffee, chat, calls and meetings. Studies conducted on similar lines suggest that happy employees are more sensitive to opportunities in the work environment, more outgoing and helpful to co-workers, more optimistic and confident, more productive, creative and motivated. Apart from this, they are also happier in life. Similarly, happy organizations find that they are more efficient, innovative and make more money than their unhappy competitors make. Therefore, assuming that happiness is a personal matter will do no good. To win customer heart an organization needs to engage employees who actively transmit their enthusiasm to customers as satisfying customer is crucial to a business. In order to have happy, satisfied and loyal customers, org need to have happy satisfied and loyal employees. Hence executives and employers too need to direct their attention to happiness as a workplace issue and management strategy. It is important to organizations for employees to be happy, and not just for the employees themselves as The greatest competitive advantage in the modern economy is a positive and engaged workforce, (Achor, 2010). The paper deals with the issues related to why it is important to pay attention to happiness at workplace, what generates happiness at workplace, how can we cultivate a happy workplace and how it can enhance effectiveness and efficiency of the employees? KEYWORDS: Productivity of Employees, Happy Workplace, Cultivate a Happy Workplace WORKPLACE HAPPINESS AND FACTORS CONTRIBUTING TO UNHAPPINESS AT WORKPLACE Happiness is an entirely subjective feeling of well-being experienced by the person, characterized by the presence of positive emotions and the absence of negative emotions. It is subjective in that the person can report whether or not he or she is happy, but an outside observer will not be able to make that same judgement, because wellbeing is entirely in the mind of the subject. Happiness therefore needs to be inferred through various latent 99

101 behaviours like cooperative behavior, good interpersonal relation, zeal, enthusiasm, commitment, loyalty towards workplace. In this paper happy employees are refered to those individuals are those who frequently experience positive emotion with respect to their professional lives happiness at workplace refer to strategy or mechanism by which organization promotes and ensure happiness of employees Happiness at work is about mindfully making the best use of the resources you have, to overcome the challenges you face. Actively relishing the highs and managing the lows will help you maximize your performance and achieve your potential. And this not only builds your happiness but also that of others who will be affected and energized by what you do. ( Achor, 2010) It is important to understand the factors, which destroys happiness at workplace and creates unhappiness at workplace. Unhappiness at work seems to come from the following source: 1) NATURE OF JOB: Most of the times employee experience unhappiness at workplace due to their job characteristics which includes performing boring or repetitive tasks, having no autonomy/ discretion over what you do, inability to take on job decision, engagement of work preference etc a. Engagement of work preferences: It simply means matching our work preferences to the critical demands (work functions) of the job we have to Preference refers to letting one does what he/she likes to do based on our personality and skills, which in turn would ensure success of a particular job. If we are more extroverted, we like work where there are opportunities to interact with large number of people both inside and outside the organization like a marketing job or PR job. If we are more introverted, then we like conditions where we can work on our own with few interruptions and a minimal requirement for meetings. Where the match is high, our energy flows freely, we are more likely to enjoy our job, stress is lower and we feel happier at work. If a creative person isasked to job, which has nothing to do with creativity he will experience high level of stress, which would in turn lead to unhappiness with the job. b. Autonomy at work: Employees experience unhappiness when they do not have enough discretion in how they do their job. The employees feel frustrated when they are not given enough freedom to decision specially pertaining to what they do. Often they find certain elements in their work as redundant and obsolete yet they are supposed to perform it just because the rulebook says so. What adds to their irritation and frustration is the fact that in such organization they are held accountable for their work they but have do not have complete freedom over their work. Individuals should have autonomy and control over their work Many employees don t like working within a certain organization because of the lack of freedom. They feel chained to their cubicle. What many employees do not realize is that they do not have autonomy. People need to believe that the work they do is worth doing. Otherwise, they see no point in putting in extra effort. c. Participation in Decision Making: Another factor, which contributes to unhappiness, is that often employees although, participate in the decision making process yet they do not have any say in the decision. Decision making over here refers to routine decision rather strategic decision. When employees do not to participate in routine decision making, neither they feel committed to the decision taken nor do they feel accountable for the result. When they are made to participate, they are just made to share their views on the issue nothing beyond that. Employees feel unhappy when they are not consulted in decision, which has direct bearing on them. As such, when management is not open to listening or implementing employees viewpoint that would make life easier or more efficient for workers, it is be perceived as coldhearted or uncaring, and lose the respect of the employees. These things create frustration in employees they do not see the relevance of participating in decision. d. Performing boring or repetitive task: Most of the times employees do not enjoy their work for the simple reason that most of the time they are required to things which is monotonous, repetitive and boring in nature. The employees are supposed to display limit set of skills in their job. Often the task does not possess the characteristics, which makes it meaningful. 2) VALUES: A lot of unhappiness is generated at workplace when there is no alignment between personal and organizational values. Values are fundamental concepts or beliefs, which people use to 100

102 guide their behaviour in the workplace. Values drive decision-making and cause us to summon up energy to preserve what we believe in. They go beyond specific situations and determine how we view people, behaviour and events. Often, major sources of conflict and disillusionment are due to mismatched values. If the organisation does not support an individual s values, then happiness and contentment at work gets affected and this has an impact the bottom line. Where alignment of values is high, people are more likely to find their work meaningful. A good overlap between organisational values and personal values can therefore improve motivation, job satisfaction and even performance. 3) BAD RELATIONSHIPS: The greatest cause of workplace unhappiness has been attributed to bad relations between managers and their subordinates. Employees who love the people they work with are highly likely to be happier overall in their jobs. Eighty percent of employees who mentioned that they love their co-workers also rated themselves as happy or very happy in their jobs overall.the majority of employees are unhappy because of their colleague or immediate manager. People with poor management skills tend to underestimate the value of happiness at work and view happy staff with suspicion and as unprofessional. Often they are unhappy themselves and use hierarchical leadership styles, control mechanisms and autocratic leadership to manage their staff. Some causes of bad relationship are - taking the credit of their subordinate's work or ideas, belittling staff in front of their peers, spreading false rumors about subordinates they dislike, managing through fear and intimidation, abusing the power of their position by practicing nepotism and cronyism and surrounding themselves with sycophants. This creates fear, resentment, disillusionment and discontent. 4) WORK ENVIORNMENT: The can be number of things in work environment which causes unhappiness. A faulty or biased appraisal is another biggest cause of unhappiness at workplace. Too many companies confuse activity with productivity. They reward the people who appear busiest, yet overlook those that are most impactful. Another factor is that companies often overlook how the physical work environment affects their employees ability to work organization need to need to check if the workspace is adequate or is it too noisy? Or quiet? Too hot or too cold? Too many interruptions? Etc. in addition to all this uncomfortable and rickety furniture creates lot of frustration at workplace. IMPACT OF HAPPINESS ON PRODUCTIVITY OF EMPLOYEE Employee productivity is a particularly important issue to managers and supervisors as the primary purpose of their job is to get the most out of the people they that are responsible for. Employee productivity and happiness go hand in hand in making an organization successful. An employee s morale can quickly build or break a company s success. Happy employees are crucial to the future success of a business and that building on what makes people happy at work is more effective that just fixing what makes them unhappy. The Wall Street Journal examined the role that happiness has in workplace productivity, and how both employees and employers can improve workplace satisfaction, motivation, and output. Considering the fact that, according to The Wall Street Journal, happy employees are 36% more motivated, 31% more successful in achieving their goals, and 33% more likely to assist their coworkers when compared with their unhappy counterparts, workplace contentment is an important objective for many companies. Thus, employees, who enjoy good working relationships, receive proactive career development, feel valued by the organization and well treated in times of change, are likely to be contributing the most to a business. Furthermore, they will be ambassadors for the organization, sending out positive messages to the outside community and enhancing the employer brand. A happy employee can find positives out of negative circumstances as well. If an employee enjoys his/her job or the work, s/he will find out ways to accomplish the task even under most demanding and challenging situations. It is, therefore, argued to love thy job. If the employee is happy and enjoys the work, even the toughest of jobs or situations can be dealt with easily. Noticeable difference can be observed in the behavioral pattern and negotiation skills of happy and unhappy workers. Whereas unhappy employee may be short tempered or may get irritated at slightest of pretext or be pessimistic about the results, happy negotiators have been found to be initially more optimistic about the outcome of negotiations. Happy people are more satisfied with their jobs and report having greater autonomy in their duties. They are less dependent on others. They even do not complain or blame the external factors for the delays or failures. They also do not easily give up under demanding situations. They perform better on assigned tasks than their less happy peers and are more likely to take on extra role tasks such as helping others. If an employee is happy at work, s/he may ignore minor shortcomings or undesired behaviors. But if the employee is dissatisfied or unhappy, even minor happenings may spark discontentment resulting into unwarranted acts or behavior, thereby incurring huge losses 101

103 When individuals experience happiness, they become more motivated to invest time and effort, and overcome obstacles when pursuing their career goals, in part because they believe they have more control over attaining their career goals Happy employees fix problems instead of complaining about them. When someone does not like his or her job, every molehill becomes a mountain. It becomes difficult to fix any problem without agonizing over it or complaining about it first. Happy employees learn faster. Happy and relaxed, they are much more open to learning new things at work and thereby increase productivity. It has been found that happy employees are likely to be more motivated, engaged, committed, and loyal to their employers. They also tend to go the extra mile for customers and are favorable about their organization they are advocates for their employer. Happy employees are more optimistic and have a more positive outlook. That "can-do" attitude tends to make employees a magnet to others in the company. This would have a positive effect on productivity and therefore profitability. Happier people tend to outperform less happy people in several different ways. To begin with, they tend to get better job in terms of high levels of autonomy, meaning and variety. Happier employees are less likely to be distracted and less complaining. Whenever they encounter problem they try to solve it rather than crib over it. An unhappy employee finds it is difficult to pay attention at work because he is disturbed about something. Happy employees worry less about making mistakes-and consequently make fewer mistakes. The occasional mistake does not bother them very much; they learn from it and move on. This relaxed attitude means that fewer mistakes are made, and that you are more likely to learn from them. People who are in good mood also tend to be generous and are inclined to help their fellow workers whom may need assistance. They are inclined to, resolve conflict with them, and work carefully with others. Happy individual are less bothered when their peers do better than they whereas unhappy people are disappointed in their peers accomplishments Unhappy people operate in permanent crisis mode. Their focus narrows, they lose sight of the big picture, their survival instincts kick in and they re more likely to make short-term, here-and-now choices. Conversely, happy people make better, more informed decisions and are better able to.happy employees make better decisions. Unhappy employees operate in permanent crisis mode. Their focus narrows, they lose sight of the big picture, their survival instincts kick in and they are more likely to make short-term, here-and-now choices. Conversely, happy employees make better, more informed decisions and are better able to prioritize their work. They are more creative in their decision-making process.research suggest that when people are feeling good they are more flexible, fluent, and original thinking. MAKING WORKPLACE A HAPPY PLACE A happy office is all about a place that inhabits smiles, orderliness, friendly disposition and satisfaction and as a result, it increases the productivity making workplace orderly and efficient. A happy work environment attracts good people and helps the people who work for you do the best for the company. To create that kind of environment, it takes a strong top down and bottom up approach. Creating happy workplace is not the responsibility of top management or handful people it is shared responsibility of each employee. Following are some of the ways by which we can create a happy workplace. 1) Good Relationships with immediate supervisor/ Colleagues: A recent poll found that, among other things, an employee s happiness and productivity is determined by their relationship with their immediate supervisor. When the bad boss fails to keep promises, never gives credit when due, makes negative comments, or blames others for their mistakes, the productivity level of their employees is significantly impacted. Thus, we need managers with better social and interpersonal skills, who manage people by praise and reward and not fault-finding.managers who are really interested in fostering and maintaining an environment that is happy, productive and where employees conduct themselves professionally do this by setting the example and the tone especially in how they handle stress and frustrations. a. Understand the people: It is important to know your employees strengths and weaknesses. Its gives one idea related to work preference of the colleagues, likes and dislikes. This makes it easier, to assign work to an employee who, enjoys the task. This in turn lead to emplyee respecting and appreciating the supervisor or boss. The happier you make them, the higher quality their output will be. It is a simple concept, but one many managers ignore. Secondly as 102

104 boss, they need to be sensitive to the needs and problems of the employees. People often complain just so they will be heard. They do not necessarily want solutions they want empathy.most of the time they just need an emotional boost, rather than a fix to their problem. When the employees face problem at workplace boss needs to listen to them, and show that they care about them, this has magical effect on the employee they feel important and valued by the organization but more importantly feel as part of the organization. When it does not happen employees either leave or become disengaged in their work. Thus, it is important to empathize with people who face problem at workplace b. Trust, Respect and Recognition: These are three simple things, which affect the employee s happiness at workplace. Every human being likes to be treated with respect and dignity. As boss or as colleague it is important that need to be able to respect them for their knowledge and experience Employees find it difficult to work in an organization where they are treated with disrespect. Making sarcastic comments on personal and professional competencies, making fun of their ideas, humiliating in front of subordinates is something, which creates lots of stress in worker. The fundamental of creating happy workplace is to give respect to the employee and treat them with dignity. Unhappiness escalates when employees feel that their work is not appreciated. Employees look forward to be appreciated or praised for their work or effort he puts in his job. Boss and supervisors go out of the way to tell employee that they have done wrong but hardly make a simple effort of appraising the same employee when he does good job. It is important to appreciate when employees work hard; this leads to employees enjoying the process. When only result is appreciated the employee confidence and moralegoes down. Therefore, it is important for boss to show that they care about employees effort not just the result. Appreciation, recognition and praise have a great impact on the employee morale. They feel happy and willing to contribute their best to the organization. A sincere thank you or short note often means a great deal when it is recognizing an accomplishment or specific effort. These simple gestures could lead to improve in productivity. Most of the time boss/ colleagues do not trust its eachother. When there is mistrust, it diverts the entire energy and focus on differences in members interest, making it difficult for people to visualize common goals. People respond by concealing information and secretly pursuing their own interest. If organizatiion wants it employee to be happy they need to ensure that there is a climate of trust. 2) Be Honest, fair and Transparent in Practice: The happiest employee are of those organization, which are honest, fair and transparent in their practices. Nothing is more stressful than working in an organization, which has biased practices. Employees stay engaged when as organization maintains transparent, open and vibrant communication. When there is openness throughout the entire office, it is sign of happy workplace. 3) Job needs to be meaningful: Meaningful work is work that is autonomous, work that is complex, occupies your mind and work where there is a relationship between effort and reward for everything you put in, you get something out. Employee feels happy when they find whatever they are doing is meaningful, relevant and contributing to the organizational goals. They are most happy when they are satisfied with their immediate work role and career opportunities. It is imperative for the organization. Happier, more effective workers developing more of a sense of meaningfulness in their work, and People who feel their work is meaningful becoming happier and more effective. 4) Create relaxed and fun filled work environment: With the changing nature of work employee spend more than 9-10 hours in office and are doing work, which requires multitasking and is more stressful in nature. In such scenario, organization needs to create an environment, which is relaxed and give them opportunity to pursue their interest and have fun. However, fun activities alone need not transform an office into a happy workplace. Employees are happy when they find meaning in their work. Another thing, which appears insignificant but has an important impact of employees happiness, is infrastructure. Creaky chairs, broken desk drawers and slow computers give the employee a reason to be negative. By removing negatives from your work environment, you give your employees more reason 103

105 maintain a positive attitude. It may be costly affair but in long run employees would be happy and show it by working harder and earning your business more money. 5) Develop Positive attitude: Our individual attitudes and actions really do make a difference. Taking a more positive approach at work does not just increase your own happiness; it affects those you work with too. Being business leader or line manager, they have a huge influence over how they make others feel. It s a known fact that people work best when they feel good and that happier organizations outperform their peers." This can range from developing consistently positive attitudes to deadline and pressures at work. INITIATIVES BY INDIAN CORPORATE Indian corporate notably those with a young workforce are going beyond mere lip services to the aspect of fun and happiness at workplace now. The signal sent out by corporates is to be believed dedicated efforts towards happiness at workplace would be institutionized and effective in future for those organization which have not started it as yet. igate Patni, for instance has included happiness in its competency framework and has small team that carries out these activities. It has already on its roll PhDs in the area of positive psychology who provide a scientific directions to such efforts, So it employees have numerous fun activities to look forward to they are taught the positive effect of mindful meditation and are also given gratitude cards and diaries. The senior group manager, operations at igate Patni in Mumbai, looks forward to musical performances by his colleagues in the office cafeteria every Monday. These are impromptu antakshari sessions over free coffee; Thank God It's Monday (TGIM) is one of the many structured programmes that his company has initiated to improve the happiness quotient of its members. In a Finance Consultancy firm Employees at a financial services firm are not staring at a computer in front of them and endlessly typing s. They are seen walking up to one another's cubicle and talking about everyday work and queries. If you thought that the employees' computers are under repair, you are wrong. It is a 'no-mail' day in office. This initiative is part of a series of initiatives by employee engagement firm Never Grow Up that deals with keeping employees happy. Asif Upadhye, Chief Fun Officer of the company says, "We are a fun loving company dedicated to the pursuit of keeping employees & teams wilfully engaged in an attempt to create a strong employer brand while enhancing the culture of the workplace leaving employees happier." The concept of employee engagement has been existent in the Indian workplace since a long time. However, companies are now tying up with specialist agencies to make the workplace more engaging for individuals. While human resource consultants also these services as a part of the deal with a client, companies are increasingly taking assistance of specialist services offered by firms like Never Grow Up. Never Grow Up works with companies across sectors like media, retail, manufacturing and BFSI. People can be very happy if they love their work. In a hospital in Madurai, a group was created called the Madurai Veerans, a powerful band of corporate commandos. They were intensely, joyfully, happy. They were bonded into teams to pursue strategic goals. They chose problems and developed innovative solutions to solve them. Implementation was a result of deep engagement and commitment. Comviva, a mobile solutions company has assigned Happiness Office as KRA to designated HR team members.they believe that success at work can give occasional feeling of happiness but if supplemented by series of fun activities a typical corporate day can be turned around. Shekhar Arora Executive Director, HR Ashok Leyland, started the initiative of sharing compliments and affirmations on the website through the You made my day! web page ushered in a wave of happiness. The page had 11,000 hits! he said, We need to bring back fun in the workplace, he concluded CONCLUSION The most efficient way to increase the productivity is to be happy at work. Workplace happiness is not only going to benefit the employee but also the organization. From employee perspective happy people work better with others, are more creative, fix problems instead of complaining about them, have more energy, are more optimistic, are way more motivated, get sick less often, learn faster, worry less about making mistakes and consequently make fewer mistakes, and make better decisions. From the organizational point of view, having 104

106 happy and contended workforce helps in increased production, decision making ability enhancement, and clients experience happiness, decreased absenteeism and sick leave etc. Thus a combined effort on the part of employers and employees is needed to make a positive difference in the overall happiness and productivity of a company as without happiness can create irrational optimists who will be spending time in office but doing nothing which can be term as constructive or productive. REFERENCE 1. Achor, Shawn (2010) The Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work 2. Sharon S Andrew (2011) S.M.I.L.E.S. The Differentiating Quotient for Happiness at Work, 13 June Argyle M., (1987) The experience of happiness, London: Methuen 4. McCann, Dick (2006).Secrets of Happiness at Work, Human Capital, November- December Chun, Rosa and Davies, Gary (2009). Employee Happiness Isn't Enough to Satisfy Customers, Harvard Business Review, April Cropanzano R., & Wright T.A., (2001) When a happy worker is really a productive worker: a review and further refinement of the happy-productive worker thesis. Consulting Psychology Journal: Practice& Research, 53, Kaitlin Louie (2012) Happiness in the Workplace is Key to Employee Productivity, Study Says. 8. Jacquelyn Smith (2012) Can Money Buy You Career Happiness?, November 14, 9. Michael De Groote (2012) It's too much: One-third of workers say stress their biggest complaint, according to Gallup poll,, November 15, 10. Jessica Pryce-Jones (2012) Ways to Be Happy and Productive at Work,, November 25, 2012, 11. Cheryl Stein ( 2011) 7 Simple Way To Happy Workplace. 105

107 HRIS: AN EFFECTIVE TOOL FOR STRATEGIC HUMAN RESOURCE MANAGEMENT Saloni Devi * ABOUT THE AUTHOR * SALONI DEVI; ASSISTANT PROFESSOR, THE BUSINESS SCHOOL, UNIVERSITY OF JAMMU, JAMMU ABSTRACT Information technology is expected to drive Human Resource (HR)'s transition from a focus on Human Resource Management (HRM) to Strategic Human Resource Management (SHRM). This strategic role not only adds a valuable dimension to the HR function, but also changes the competencies that define HR professional and practitioner success. The study aims at investigating role of Human Resource Information Systems (HRIS) in SHRM. It attempts to examine how HR professionals and managers in different organizations see the effects of HRIS on strategic HR tasks and job roles. This paper reports the result of literature reviewed the results of the literature reveal that HR professionals not only consider HRIS usage as a support for strategic HR tasks but also perceive it as an enabling technology. Moreover, there was no significant difference in proportion to the size of a company regarding HRIS usage in support of commitment management and managing trade union relations with organizations. This paper tries to explore the role of HRIS in strategic human resource management. KEYWORDS: Human Resources, Human Resource Management, Strategic Human Resource Management, Human Resource Information Systems, Strategic Human Resource Tasks, Enabled Technology INTRODUCTION Human resource management (HRM) issues have been major concern for managers at all levels, because they all meet their goals through the efforts of others, which require the effective and efficient management of people (Dessler et al., 1999). According to Stewart (1996), the human resource management function has faced a brawl in justifying its position in organizations. Firms easily justify expenditures on training, staffing, reward, and employee involvement systems in favourable conditions, but when faced with financial difficulties, such Human Resource (HR) systems become prime target for cutbacks. Nonetheless, introducing strategic human resource management (SHRM), in exploring HR s supportive role in business strategy, presented a possibility for demonstrating its value to the firm. Consequently, Walker (1978) called for a connection between strategic planning and human resource planning marking the commencement of the field of SHRM, but it was not until early 1980s before extensive work was carried out on this proposed linkage. For instance, a comprehensive study by Devanna, Fombrum and Tichy (1984) was devoted to exploring the link between business strategy and HR. Since then, SHRM s evolution has consistently been followed by a few years of developments within the field of strategic management. A very good example is Miles and Snow s (1978) organizational types that were later expanded to include their associated HR systems (Miles and Snow, 1984).SHRM researchers used Porter s (1980) model of generic strategies later to explain the Schuler, 1987; Wright and Snell, 1991).Lately, the increasing pressure to support strategic objectives and the greater focus on shareholder value have led to changes in both job content and expectations of HR professionals (Storey et al., 2000; Ball, 2000). Similarly, Schuler et al., (2001) and Mayfield et al., (2003) noted that one such major changes included contemporary use of Information Systems (IS) in support of the HRM process. More so, a careful analysis indicated that increased human resource information systems (HRIS) usage enabled improved professional performance and thus facilitated involvement in internal consultancy activities (PMP (UK) Ltd 1997). In addition, according to Ulrich (1997), HRIS provides value to the organization and improves HR professionals own standing in the organization. In another development, Brock bank (1999) suggested the need for HR to become a strategic partner. 106

108 HRIS provides management with strategic data not only in recruitment and retention strategies, but also in merging HRIS data into large-scale corporate strategy. The data collected from HRIS provides management with decision-making tool. Through proper HR management, firms are able to perform calculations that have effects on the business as a whole. Such calculations include health-care costs per employee, pay benefits as a percentage of operating expense, cost per hire, return on training, turnover rates and costs, time required to fill certain jobs, return on human capital invested, and human value added. It must be noted though, that, none of these calculations result in cost reduction in the HR function (Gerardine DeSanctis, 1986: 15). The aforementioned are as however, may realize significant savings using more complete and current data made available to the appropriate decision makers. Consequently, HRIS are seen to facilitate the provision of quality information to management for informed decision-making. Most notably, it supports the provision of executive reports and summaries for senior management and is crucial for learning organizations that see their human resource as providing a major competitive advantage. HRIS is therefore a medium that helps HR professionals perform their job roles more effectively (Grallagher, 1986; Broderick and Boudreau, 1992).Further, various studies had offered a conclusive evidence to affirm the role HRIS plays in support of strategic decision-making. There has been a dramatic increase in HRIS s usage. For example, Lawler and Mohrman (2001) in Hussain et al., (2007) established that the use of HRIS had consistently increased over the previous years, irrespective of the degree of strategic partnership held by the HR function. Definitely, HRIS usage had increased substantially even in firms where HR had no strategic role. They cautioned, however, that HRIS usage and, in particular, fully integrated HRIS systems, did not necessarily ensure that HR would become a full strategic partner. Even though, numerous studies in this area have provided substantial empirical and theoretical contributions to the field of HRIS this area of investigation is still in its infancy. RESEARCH OBJECTIVE To explores the role of human resource information systems (HRIS) in strategic human resource management (SHRM). CONCEPTUAL ANALYSIS SHRM SHRM has grown considerably in the last years. Schuler et al., (2001) described the evolution of SHRM from personnel management in terms of a two-phased transformation, first from personnel management to traditional human resource management (THRM), and then from THRM to SHRM. SHRM was designed to diagnose firm strategic needs and planned talent development, which is required to implement a competitive strategy and achieve operational goals (Huselid et al., 1997). In spite of the increasing attention paid to SHRM, the term remains unclear. Some scholars have described SHRM as an outcome, others have described it as a process, and others have considered it a combination of process and outcome. As an outcome, Wright and McMahan (1992) considered SHRM the pattern of planned HR deployments and activities intended to enable a firm to achieve its goals. Similarly, Wright and Snell(1991) considered SHRM to be organizational systems designed to achieve sustainable competitive advantages through people. As a process, Ulrich and Lake (1991) described SHRM as a process of linking HR practices to business strategy. Moreover, Bamberger and Meshoulam (2000) argued that SHRM is a competency-based approach to personnel management that focuses on the development of durable, imperfectly imitable, and other non-tradable resources. Considering both process and outcome together, Truss and Gratton (1994) defined SHRM as the linkage of HR functions with strategic goals and organizational objectives to improve business performance and cultivate an organizational culture that fosters innovation and flexibility. An organization s human resource management policies and practices must fit with its strategy in its competitive environment and with the immediate business conditions that it faces. Based on the broad agreement among the central features of SHRM, and the determinants of HRM as strategic, this is how this study defined SHRM. The degree of participation in core decision-making and partnership played by HRM departments, and the specificity and formality that HRM departments require in planning and implementation, all of which are designed to ensure that firm human capital contributes to achieving firm business goals (Bratton and Gold, 2003: 37). HUMAN RESOURCE INFORMATION SYSTEMS (HRIS) HRIS shape an integration between human resource management (HRM) and Information Technology. HRIS support planning, administration, decision-making, and control. The system supports applications 107

109 such as employee selection and placement, payroll, pension and benefits management, intake and training projections, career-pathing, equity monitoring, and productivity evaluation. These information systems increase administrative efficiency and produce reports capable of improving decision-making (Gerardine DeSanctis, 1986: 15). Tannenbaum (1990) defines HRIS as a technology-based system used to acquire, store, manipulate, analyze, retrieve, and distribute pertinent information regarding an organization s human resources. Further, it merges HRM as a discipline and in particular basic HR activities and processes with the information technology field (Gerardine DeSanctis, 1986: 15). Functional HRIS must create an information system that enables an assimilation of policies and procedures used to manage the firm s human capital as well as the procedure necessary to operate the computer hardware and software applications (Hendrickson, 2003).HRIS is an effective and efficient catalyst for integrating human resource management and Information Technology. The composition of HRIS includes input, maintenance, and output. Input function enters personnel information into the HRIS. The maintenance function updates and adds new data to the database having entered data into the information system. The output is considered the most visible function of an HRIS. HRIS process that output, adjust it in such a way that it is understandable. The three major groups that make use of HRIS are HR professionals, managers in functional areas, and employees. Whiles HR professionals rely on the HRIS in fulfilling job functions, managers rely on the HRIS s capabilities to provide superior data collection and analysis, especially for performance appraisal and performance management. Consequently, information validity, reliability and utility constitute a comprehensive HRIS, and should always be the pivot for every HRIS implementation. REVIEW OF LITERATURE The reviews of various related studies conducted in this important field of research is presented. Ball, (2000) reviewed the issues surrounding the use of HRIS by personnel and human resources departments in smaller organizations. The study enquired as to the nature of information stored electronically in three core areas: personnel, training and recruitment. Additionally, the paper evaluated system usage in terms of previous research, its sophistication, and other debates, which apply to larger firms. The researcher revealed that the more people employed in an organization, the more likely the HR function was to hold information electronically both on the individual and the organization. Hussain et al., (2006) studied the use and impact of human resource information systems on human resource management professionals. The aim was to assess and compare the specific areas of use and to introduce a taxonomy that provides a framework for academicians. Ordónez de Pablos (2004) studied Human resource management systems and their role in the development of strategic resources empirically revealed evidence provided a conceptual framework linking human resource management, organizational learning and knowledge management. This was in line with the conceptual framework developed and the literature on HRM, which proposed a link between HRMS, strategic organizational resources and the creation of a sustained competitive advantage (Pfeiffer, 1994; Miles and Snow, 1992; Youndt and Snell, 1998; Youndt et al., 1996). Gardner et al., (2003), in their research work, Virtual HR: the impact of information technology on human resource professional, investigated the extensive use of IT Additionally, they sought to examine how HR professionals handled HR information as well as the expectations placed on them resulting from an increased reliance on IT. The study suggested that IT related to two distinct aspects of HR professional roles: enabling aspects as well as time shifting aspects. The study however noted the likelihood that additional factors may influence the relationship between IT use and the job of HR professionals. Gardner et al., (2003) revealed that, in spite of the research limitations, the results provided important support for theoretical framework suggested by Zuboff (1998) and demonstrated its usefulness in assessing the impact of IT on the job role of the professional worker. The findings suggested that IT could lead to profound changes in the nature of professional work by reducing routine work whilst also allowing greater information responsiveness to clients and affording greater autonomy with respect to information handling. Ngai et al., (2004) presented a comprehensive literature review of human resource information systems and reported the results of the survey on the implementation of HRIS in Hong Kong. They also aimed at examining the use and applications of HRIS. Moreover, the purpose was also to identify the perceived benefits of, barriers to, and implementation of HRIS. Moreover, there was statistically significant difference between HRIS adopters and non adopters, and between small, medium and large companies, regarding some potential benefits and barriers to the implementation of HRIS. They revealed that the size of a company might have an impact on the achievement of a number of benefits and on the obstacles faced when implementing HRIS. Again, they indicated that support of top management was one of the most important factors in successful implementation of HRIS. The study therefore provided some insights into the implementation of HRIS, which might help HR practitioners, acquire a better 108

110 understanding of the benefits and barriers to the implementation of HRIS. Shrivastava et al., (2003) in their study on the topic Liberating HR through technology introduced a model describing technology implementation process. The aim was to use the model to highlight various issues that merited the attention of academics and practitioners. The researchers used an exploratory method of research. They designed a Descriptive Model for HR technology installations. The model was partitioned into three phases. They are adoption, implementation, and institutionalization. Moreover, Samir et al., (2003) found out that there was universal agreement that large-scale technology projects failed due to managerial and not technical reasons. Additionally, they identified that climate conduciveness for technology implementation related positively to the extent of neutralization of inhibitors. Inconsequent, they realized that firms needed effective facilitating strategies in order to create a climate conducive for implementing technology. Moreover, they revealed that phase or incremental implementations had a plain vanilla that bias business process reengineering effort. Consequently, they identified that firms that undertook technology initiatives with the view to enable the HR function to focus more on value-added activities were the ones most likely to realize the full potential of technology. This was in confirmation of Lutz s (1996) assertion that by automating basic HR transactions, companies have empowered employees to engage in self-service and freed their HR to deal with more strategic and value-added issues. Lando et al., (1994) in their study dubbed Human Resource Systems and Sustained Competitive Advantage : A Competency-Based Perspective, explored within a system s perspective, the organizational competencies that might be sources of sustained competitive advantage. In addition, they discussed how HR systems facilitated the development and utilization of organizational competencies and how HR systems could destroy those competencies or inhibit their exploitation. The aim was also to examine the extent to which HR managers and professionals could enable or constrain the strategic decision-making process by providing or withholding critical information concerning people-related business issues. The research was based on a stream of literature reviews. They drew on the theoretical insights from the resource-based view of strategic management to examine the potential of human resource management and organizational competencies. The resource-based view suggests that human resources systems can contribute to sustained competitive advantage through facilitating the development of competencies that are firm specific, produce complex social relationships are embedded in a firm s history and culture, and generate tacit organizational knowledge (Barney, 1992; Reed and De Fillippi, 1990;Wright and McMahan, 1992).Lando et al., (1994) realized that conditions in the firm s external and internal environment might enable or constrain the capacity of HR systems to develop and exploit organizational competencies. Moreover, they noted that decisions made in firms with an overriding concern for legality and avoidance of potential litigation might overlook other important decision criteria. This was also in conformity with Sitkin and Bies (1993) findings. Furthermore, they identified that their competency-based view complimented and extended the behavioural perspective of strategic HRM, which had emphasized observable and transferable role behaviour of employees as the basis for creating competitive advantage (Schuler and Jackson, 1987). ANALYSIS AND DISCUSSION HRIS represent a large investment decision for companies of all sizes. However, organisations are increasingly failing to use HRIS in support of strategic HRM tasks. This will enable a careful analysis and diligent consideration of HRIS application to strategic HR tasks since a successful execution is rewarded with numerous benefits including improved accuracy, provision of just-in-time information, and costs saving (Lederer, 1984; Wille and Hammond, 1981). An in-depth study on HRIS usage in support of trade unions relations with organizations needs further examination. Finally, HRIS becomes an increasingly vital component of SHRM tasks performance; researchers must expand their efforts to understand the opportunities and threats that it fosters. Human resource information systems may be a key enabler allowing HR professionals to balance successfully the competing roles of administrative expert, employee champion, change agent, and strategic partner (Ulrich, 1998). There is also a risk that large investments in HRIS will not improve HR professionals satisfaction or render the SHRM tasks performance a more efficient cost centre. This may be out growth of low technology-acceptance among intended users, inappropriate technology choices, or other factors. Until more is known, investments in these innovations should proceed with caution. Drawing from the above-mentioned HRIS capabilities in integrating HR functions (example: planning, recruitment, selection and training) through HR technologies, it can be argued that HRIS applications will not be limited in its operations regarding the shift from HRM to SHRM. Moreover, it takes too long to implement, and sometimes exceed expected costs due to lack of clarity and common understanding. However, a pains taking planning of HRIS will yield favourable results, especially if certain critical factors are considered (Brown, 2002; Ngai et al., 2004; Beckers). 109

111 CONCLUSIONS This study aimed at exploring HRIS role in SHRM. The study attempted to examine how HR professionals or managers in different organizations see the effects of HRIS on strategic HR tasks, and job roles. HRIS play a key role in strategic HR tasks. This is an indication that HRIS capabilities in shaping the integration between HRM and IT (Hendrickson, 2003) are also applicable to SHRM. This means that HR professionals would be able to cope with their new roles without panicking because their new role, SHRM, is still supported by HRIS. However, in the case of specific strategic HR tasks, the degree of the support depended on the type of organization. Larger firms/companies experienced a great deal of HRIS support in most of the strategic HR tasks namely communication, human resource development and workplace learning, career management, business process reengineering, and decision-making. On the contrary, HRIS usage in support of commitment management, and managing trade union relations with organizations did not reveal any significant difference in proportion of users in SME and large companies. It implies that users of HRIS need to identify their strategic HR tasks and organization type before embarking on any HRIS implementation in order to enjoy the full benefit of using HRIS both to HR professionals and to the organization as a professionals considered that HRIS are used in support of strategic HR tasks. This might be explained by the fact that increased uses of HRIS allow professionals to achieve improved performance and thus facilitate participation in internal consultancy (PMP (UK) Ltd 1996; and 1997). The results confirmed Gardner et al., (2003) revelation, that extensive use of IT enables HR professional to have more information autonomy. This disclosure implies that firms will more or less need to rely on HRIS technology for effective and efficient performance of their strategic human resource management tasks. This calls for total commitment on the part of both management and HR professionals towards a successful HRIS implementation. In a dynamic global market where IT is the order of the day, firms without this technology might not only find it difficult attracting HR professionals who are yet to acquire HRIS skills and seeking for one on the job but also lose those HR professionals who have these skills and might want to develop and improve upon them. Notably, the study suggested that HRIS are likely to be used even more for strategic HR tasks in the future; this was a strongly held belief by both SME and large sized companies. The response from the large companies were however, remarkably more positive than those from the SMEs. Large companies have well-established facilities such as intranets and extranets to access the required personnel information quickly and efficiently (Ngai et al., 2004). SMEs generally lack the capital and technical resources to implement HRIS (Ibid). While it is incumbent upon all organizational types to stay abreast with HRIS dynamics by keeping system updates SMEs are the most vulnerable due to the incidence of cost. A more feasible way to start may be to use pre packaged HRIS software. Implementing HRIS is very costly but a successful implementation contributes to cost reductions, quality/customer satisfaction, and innovation, which eventually lead to competitive advantage (Broderick and Boudreau, 1992). It therefore implies that SMEs especially will need to consider a vigorous positive change in policy regarding HRIS applications to strategic HR tasks regardless of the cost involve because the cost of non-implementation may be relatively more expensive. The study again showed that HR professionals agree that the HRIS usage for strategic HR tasks leads to enhance professional standing in the organization. This was in line with Brockbank s (1999) findings that HR professionals both provide value to the organization and improve their own standing in the organization by using HRIS. The implications of this disclosure are that HR professionals will need to develop their IT skills and become abreast with HRIS technology in order to remain competitive in the labour market. This means that firms will also need to develop and plan HRIS training programs for both prospective and existing HR professionals in line with specific strategic HR tasks since enhanced professional standing implies effective and efficient work-force which leads to improved performance and increased output resulting to higher profit margins and acceptable returns on investment (ROI).Interestingly, the study showed a lack of HRIS support for managing trade union relations with the organization. This was very much the case irrespective of the type of organization. However, the lack of HRIS support in managing trade union relations implies no standard way of communicating just-in time information between the parties. This might make conflict resolution difficult. The inability to resolve conflict leads to strike actions, the ultimate results of which are, output reduction, low returns, slow growth and expansion, lost of skilled employees, high employee turnover, and other resultant effects. Overall, the study suggested that HRIS play a key role in SHRM, but the degree of the role was also very much dependent on the type of organization. REFERENCES 1. Alan Price: Human Resource Management in a Business Context, second edition Bratton John and Gold Jeffrey (2003) Human Resource Management: Theory and Practice third edition London: Palgrave Macmillan 110

112 3. Cornelius N.E., Human Resource Management: A Managerial Perspective, second ed.,int. Thomson Business Press, London, De Cenzo David A. and Robbins Stephen P. (1996) Human Resource Management fifth edition. Canada: John Wiley & Sons Inc 5. Dessler Gary, Cole Nina D., and Sutherland Virginia L. (1999) Human Resources Management In Canada seventh edition. Prentice-Hall Canada Inc. Scarborough, Ontario 6. Fein Steve Preface In Alfred J. Walker ed. Web-Based Human Resources. New York:McGraw Hill 2001 VIIX 7. Fombrun C. J., Tichy N. M, & Devanna M. A., (eds) (1984) Strategic Human Resource Management. New York and Chichester: Wiley 8. Fraser, Hamish W. (1974) Trade Unions and Society (The Struggle for Acceptance, ). New Jersey: Rowman and Littlefield 9. Gallagher M., Computers in Personnel Management, Heinemann, UK, Greer C.R., Strategy and Human Resources: A General Managerial Perspective, Prentice Hall, New Jersey, Kochan T. E. & Dyer L. (1995) HRM: an American view. In J. Storey (ed.), HumanResource Mangement: Critical Text (332-51) London: Routledge 12. Lengnick-Hall Mark and Lengnick-Hall Cynthia A. Human Resource Management in the Knowledge Economy New Challenge; New Roles; New Capabilities San Francisco: Berrett-Koehler Publishers, J. Storey (Ed.), Human Resource Management: A Critical Text, second ed., Thomson Learning, London, Storey, J. (ed.) (1989) New Perspectives on Human Resource Management London: Routledge 15. Storey, J. (ed.) (1995a) Human Resource Management: A critical text London: Routledge 16. Torrington D., Hall L., and Taylor S. (2005) Human Resource Management sixth Pearson Education Limited 17. Ball Kirstie S. (2000) The use of human resource information systems : a survey 18. Ball K., The use of human resource management systems: a survey, Personnel Review 30 (6), 2000, Bamberger P. and Meshoulam H. (2000), Human Resource Strategy: Formulation, Implementation, and Impact, Sage, Beverly Hills, CA 20. Baran Muhtesem, Karabulut Elif, and Pekdemir Isil (2002) The new HR practices in changing organizations : an empirical study in Turkey. 21. Bartlett C.A and Ghoshal S. (2002) Building Competitive Advantage through people MIT Sloan Management Review, winter, Beer M., Spector B., Lawrence P. R., Quin Mills D. and Waltson R.E., (1984) Managing Human Assets. New York: Free Press 23. Brockbank W., If HR were really strategically proactive: present and future directions in HR s contribution to competitive advantage, Human Resource Management 38 (4), 1999, Broderick R., Boudreau J.W., Human resource management, information technology and the competitive advantage, Academy of Management Executive 6 (2), 1992, 25. Buckle Patrick y, Minette Kathleen, Dennis Joy and Michaels Jeff (2004) The use of an automated employment recruiting and screening system for temporary professional employees : A case study 26. Davenport, T.H. (1993), Process Innovation, Harvard Business School Press, Boston,MA. 27. Dixon N. (1992) Organizational learning A review of the literature with implications for 28. HRD professionals Human Resource Development Quarterly 3(1): Florkowski Gary W. (2006) The diffusion of human-resource information technology innovations in US and non-us firms 30. Forsa Cipriano (2002) Survey research in operations management: a process-based perspective. International journal of Operations & Production management, Vol. 22 No.2, pp Gardner Sharyn D., Lepak David P., and Bartol Kathryn M. (2003) Virtual HR: theimpact of information technology on human resource professional 32. Gascó José L, Llopis Juan and González M. Reyes (2004) The use of informationtechnology in training human resources - An e-learning case study 33. Gerardine DeSanctis Human Resource Information Systems- A Current Assessment MIS Quarterly Vol. 10, No.1 (March, 1986), pp Gupta, A. (2000) Enterprise Resource Planning: the emerging organizational valuesystems, Industrial Management and Data Systems, Vol. 100 No.3 pp Hendrickson R. Anthony Human Resources Information Systems: Backbone Technology of Contemporary Human Resources Journal of Labor Research Vol. XXIV No.3 Summer Huselid, M.A., Jackson, S.E. and Schuler, R.S. (1997) Technical and strategic human resource management effectiveness as determinants of firm performance Academy of Management Journal, Vol. 40, pp Keep E. (1989) Corporate training policies: the vital component. In J. Storey (ed.) New Perspectives in Human Resource Management (109-25) Routledge: London. 111

113 THE IMPACT OF ORGANIZATIONAL CHANGE AND CHANGE STRATEGY ON THE DEVELOPMENT OF PREVAILING ORGANIZATIONAL CULTURE ABOUT THE AUTHOR * DR.MUNIR THEEB; UNIVERSITY OF ZAWIA ABSTRACT Dr.Munir Theeb* Organizational culture is a set of basic values and ideas and beliefs that form the organization of individuals trends, affect the behaviour and performance of daily work and affecting their plan to cope with any changes, whether internal or external, in order to maintain the survival and continuation of the organization. Moreover, the development of effective organizational culture includes the values, principles and traditions governing the behaviour of both individuals and groups and organizing their relationships and transactions. Thus, the capacity of organizational culture that could be used either to facilitate or impede the process of change, to have any positive or negative impacts on the organization and its culture and its members, depends on its relationship with the regulatory environment and the nature of the intended strategic change, and also the results and unintended consequences. This paper tries to shed light on the importance of ensuring individual motivation towards change, culture and value systems - as a pivotal idea for the success of a major change - and strategies proposed by the experts for the development of the planned change, which depends on the development of individual personality and values, leading to a strategy change and the continued success through the efforts of change and through development of the values and principles of change. Therefore, the success of organizations depends on their ability to lead change and to take methods of successful change, through the exploitation of opportunities for success which most appropriate to their circumstances, and potential to reach competitive edge. The paper also attempts to explore the impact of organizational culture on the strategic vision of organizational change through multiple dimensions is a very important concept; is the affect of organizational culture on the strategy, and vice versa. Subsequently, the relationship between them is mutually influential; the organizational culture such as change processes, both of them are independent, realistic, durable and profoundly meaningful. The characteristics, nature and meaning of organizational culture are discussed from a practical point of view before introducing the dimensions of organizational culture and criteria for assessing the components of the prevailing organizational culture. KEYWORDS: Change Strategy, Cultural Patterns, Organizational Change, and Organizational Culture. INTRODUCTION Organizational culture refers to the effects of the internal and external environment surrounding the organization, which produces the principles and concepts of collective values and philosophy, the modus operandi and formal and informal activities. The idea of studying the organizational culture has prevailed in management research, especially in the eighties and nineties. It is represented as a very important issue today because there have been periods of rapid change in the world of competitive organizations. The awareness of the importance of organizational culture is one of the key factors in promoting a culture change and continuous development, in order to obtain long-term facilities in organizations for the development and implementation of the change model. Moreover, organizational culture is a source of a sense of common vision and objectives for the organization s future. The rules contained in organizational culture have an important impact on the organization s ability to change; they reflect the ability of management to adapt to any change emergency (Atamenh,2000). There was no 112

114 great interest in the common values contained in the organizational culture before in It began to industrial organizations in Japan by focusing on the large and growing importance of organizational culture. It seemed important to understand more clearly the success of any strategy shift in the organization, through action to support this culture and strengthen it continuously, since the change of culture and its appreciation is clearly a matter of urgency to achieve success in future quality and competitiveness. Since most organizations are in dire need of an organizational culture that is working on the consolidation of organizational development and effective organizational performance, they need to develop a culture supportive of increasing the ability to innovate and develop the spirit of partnership and cooperation among team members, and the development of association and solidarity among them, giving a sense of vision for the organization and the continuing trend towards them, as well as strengthening the regulatory climate to cope with the constant external variables, and adjusting internal conditions and development through strategic thinking. The organizational culture plays a very important role in providing a framework to guide the behaviour of the organization and motivate less committed workers, and an important role in the cohesion of workers and all members of the organization and creating harmony through the system of the values, beliefs and assumptions. ORGANIZATIONAL CULTURE APPROACH Given the impact of organizational culture trends and behaviour of workers, it can not separate the impact and its implications on the performance and level of overall achievement of the organization (Geert, Bram, Denise and Geert, 1990). Change in organizational culture and bureaucracy of traditional and adapt to the new philosophies of change and development the total quality management methodology applied the Organizations which is regarded as innovative management philosophy, a new way of thinking to a change in values and develop in different levels of behaviour management, and achieving of continuous improvement. Philip (1996) has warned of the need for all organizations to change strategic events based on a real move towards the philosophy of appropriate verification structure, leadership to the requirements of the current era, commitment to quality and training, and effective participation in the management of the organization by all employees in the organization. He also talks about strategies that focus on customers rather than focusing on the product, including pay more attention to total quality strategy for achieving self-sustained development of organizations and employees, and continuous improvement, respecting and developing good relations with workers; belonging to win, changing and developing a cultural organization helps the prosperity and development of individuals, and makes them wish to continue in the organization, where there is a real opportunity to develop common core values and coexistence with the conditions of constant change. The most important functions of organizational culture are reflected in creating a sense of identity among workers and collective agreement on objectives, standards and methods used to identify acceptable and unacceptable conduct in the organization. These are tools for change and development, and a significant means of organizational development to maintain the continued survival of the organization and its adaptation to the surrounding environment (Khattab, 2001). Moreover, Achieving customer satisfaction is the highest value to the workers, as a strategic objective of continuous improvement (Naceur, 2001). Organizational development is intended (Amer & Abdel Wahab, 1998 ) to change the overall organization focusing on the distant future, and includes mainly the culture of the organization and its capabilities in problem-solving, decision-making and adapting effectively with the surrounding environment in order to become capable of change when circumstances require and to acquire the ability to adapt and change. The development of effective organizational culture includes the values, principles and traditions governing the behaviour of both individuals and groups and organizing their relationships and transactions. Organizational development is the beginning of a process of change and development in the values and beliefs and perceptions and behaviour of individuals, their skills and their roles, and in the structure of management and organizational relationships where there is a clear relationship between organizational development and organizational culture. The main entrances in the building of organizational development and to encourage team spirit including deepening the values of participation, cooperation and sense of belonging and commitment (Mustafa, 1992). CONCEPT OF ORGANIZATIONAL CULTURE AND ITS DEFINITION Pool (2000) describes the culture as a set of processes that bind members of the organization based on the pattern of the common core values, beliefs and assumptions in the organization, which allows the organization to face problems of lasting change, to adapt to the external environment and internal integration in the 113

115 organization s resources and policies to achieve external adjustment and the integration procedure. Khattab,Sayed, Nakla and et al, (2000) know it, as a social system containing a collection of basic assumptions, established beliefs, customs and habits which constitute values, and trends for workers in the organization that affect their behaviour, performance and methods of facing internal and external changes to work on the organization s success and growth and continuity. Hawwari (2000) defined it as a pattern or a way of thinking and behaviour, habits and values and convictions and the prevailing sentiment among workers in the organization. Zainuddin (1996) knows it as a set of values and prevailing beliefs in the organization, governing the acceptance of the idea, which represents the organization s ability to adapt to any emergency. The author believes that the organizational culture is a deep-rooted phenomenon in the life of organizations, which includes a common set of values, beliefs, behaviour models and assumptions. It interprets employees values and the organization s, its characteristics and philosophy, particularly the organization s administrative mode and distinguishes them from other organizations. However, there is a set of reasons for increased interest in the study of organizational culture, are 1) Organizational culture provides a framework for the organization and direction of organizational behaviour. 2) Organizational culture is a powerful force within the organization, which stimulates and discourages specific types of individual and collective behaviour within organizations. 3) Culture plays an important role in the cohesion of workers and harmony through shared system of values and beliefs, as a source of a sense of common vision and future organizational goals. 4) Prevailing cultural norms affect the organization (s ability to change; they reflect the ability of the organization to adapt to change in any emergency or undesirable situation. 5) Organizational culture assists the management in its decision-making and development capabilities, contributing to the formation of the organization and behaviours affect the rest of their group work. (Khoas,2002) Organizational culture is a guide for the behaviour of employees in their roles as chairmen of the subordinates and colleagues, through: 1) Organizational culture harmony with the values of personal factors and the prevailing social values. 2) Harmony of organizational culture with personal needs, systematic with the current structure of the workforce and personal goals. 3) Examining the organizational culture and identify its needs for change and development, because it helps to develop organizational behaviour and change, and cope with the aspirations and development goals. (Mustafa,1992) Within the framework of definitions and previous concepts, the author found that there is no specific agreement on the definition of organizational culture: some define it through component elements, and others by the impact of these elements on behaviours; others define it by its functions. The reasons for these different points of view are due to the writers or researchers goals. In general it can be said that: 1) Organizational culture reflects the values, principles and beliefs and organizational symbols and ideals, as well as the growth and progress of the organization. 2) Organizational culture is an expression of the set of factors which arise and change and evolve through and for the individuals in the organization. 3) Organizational culture is one of the basic components of an organization and one of the important inputs to the system s overall organization. The author believes that within the context of the integration of the previous three components organizational culture can be defined as a set of values and entrenched basic ideas, and beliefs with ancient roots that form trends in individual organizations, affecting the behaviour and performance of the work day, and affecting the way they face any changes, whether internal or external, to preserve the survival and continuation of the organization. However, this culture may be a source of strength and motivation for the success of the organization and leadership in the labour market competition; it may also be a source of weakness and an obstacle to its development. The importance of organizational culture is due to its impact on the effective functioning of individuals and the overall performance of the organization, as: 1) The obvious and strong culture in any organization is supplying individuals a clear vision and a deeper understanding of the method to perform tasks. 2) Providing the appropriate cultural framework to the organization for stability in employment, a low work rotation rate and a quick response to the decisions of senior management. 114

116 3) Organizational culture defines a distinct role for the organization from other organizations, and develop a sense of belonging to the organization in the employees; it develops collective interests rather than individual interests, and leads to a constant stable social culture and narrowing of the gap between individuals beliefs and their actions, helping to create an effective system of control over the attitudes and behaviour of individuals. 4) The existence of an effective framework of the organizational culture contributes to strengthening of the communications systems, the systems of human relations and improvement of customer service (Gadaraab, 1997). CHARACTERISTICS AND LEVELS OF ORGANIZATIONAL CULTURE From the definitions and concepts associated with organizational culture it is evident that it has the following characteristics: 1) Culture is a complex system: it consists of several components and sub-components interacting with each other in the formation of a culture of the organization. 2) Culture is an integrated system: it is moving constantly to create harmony between its different elements; any change made in one aspect of lifestyle is reflected in the rest of the components of the cultural pattern. 3) Culture is a cumulative system; it is correlative, continuous: where each generation in the organization delivered to subsequent generations are learning and inheriting through education and simulation, and growing culture through generations add to the components of the elements and characteristics ( Afifi, Mohamed & Mustafa,2002) 4) Culture is an inherited, changing and evolving system: continued culture is just passed through the generations as it is, but is in constant flux, with intervention by new features. This vision is not quite compatible with what Schein refers to, that the organizational culture is difficult to change only when it is unsatisfactory (Schein, 2000). 5) Culture has features of adaptation: culture is characterized by flexibility and the ability to adapt in response to the demands of individuals biological and psychological, in order to be environmentally friendly, and respond to the evolution of the surrounding cultures of the individual and in response to the characteristics of an organization and what is happening where each change the other. Schein (1994) pointed out that the vision of organizational culture by scholars and organizational thought schools, being within three points of view, are: 1) Integrated perspective: Which contains strong values make an integrated individuals, and innovative thinkers? 2) Differentiation perspective: There are differences in the hierarchical sequences, and differences in work groups associated with hierarchies progressive and diverse. 3) Multi-perspective: Fragmentation shows that the individuals in the organization are unrealized to the values and beliefs of others. CORRELATION OF ORGANIZATIONAL CULTURE WITH ORGANIZATIONAL CHANGE Organizational culture works as an assistant or impediment for the organizational change process. It represents the concept of work on a process of integration between the parts of the organization and its members, distinguished from other organizations and orienting itself by adapting to the environment in which it operates. It has been found that could not bring about effective organizational change without an overlapping relationship with the organizational culture, (King & Anderson و 2004)) or without substantial change and profound impact on the organizational culture at the macro level of the organization. There are two major ways of thinking about the relationship between organizational culture and organizational change; the first is a change in the organization through cultural change, which includes finding the organization is culturally creative, and the second is the promotion and development of the organization, including its members or sections, enabled through the support and development of organizational culture, and preservation of this support and development strategies and operations after the change (angbert, M. (1990). The planned change can be seen from two important perspectives: the first is the relationship between the organization and its surrounding environment according to the concept of open systems, and the second is the concept associated with the phenomenon of organizational culture and the role played by this culture in encouraging the adoption or rejection of organizational change. 115

117 In implementing the change in organizational culture the following is taken into account: First: change events in organizational culture will develop the flow of orders from the top to the bottom; the managers, when aware of the importance of the many examples that affect the behaviour of subordinates workers. Second: the change in organizational culture must be reflected in employment, education and training sessions that could occur externally, as well as can testing the new and evolving culture in the work environment, perhaps to promote the cultural change required, and this leads to change attitudes towards work (Wissema, 2001). In spite of the difficulty of measuring the amount of change and development in the organizational culture (because of the quality of its nature) it can take the behaviour of employees and cooperative efforts among them as indicators showing the need to adopt an effective strategy for change and cultural development. The author s view is consistent with that of Hildebrandt (1991) that despite the difficulty of bringing about change in the organizational culture outside the concept of social anthropology, the academic theorists have stressed the importance of organizational culture as a tool that includes important elements of organizational change events. However, culture is the core and essence of the concept of response being respond to stimuli. Whether the topic is strategy or structure or process or cultural change, the culture assists the organization in the development and implementation of models of change. It does not need permanently to undergo surgery, but the organizational culture at times faces difficulty in continually adapting to the changes and developments in the surrounding environment (Marcussen, 2003). THE IMPACT ON THE DEVELOPMENT STRATEGY CHANGE THE ORGANIZATIONAL CULTURE Strategy changes are closely linked to the culture of the organization; this has been demonstrated in research studies associated with the concept of organizational development and strategic concepts, change and organizational culture. The author presents in this paper the impact on the development strategy of change in organizational culture by reviewing the impact of many dimensions of the strategy change as creators in developing organizational culture such as values, themes, common administrative behaviour patterns. CORRELATION OF THE CHANGE STRATEGY WITH ORGANIZATIONAL CULTURE Culture does not refer to the way the performance of the organization works, but to values, beliefs and behaviour and mechanisms of action, lifestyles and trends, including those affected by the changes within the organization and outside it.the failure of organizational change in an organization is due to lack of attention to organizational culture, as well as a lack of awareness of the importance of change and its affects and potential dimensions. Joyner (2001) also pointed to the need to measure the evolution of organizational culture through some important aspects associated with it, such as: o Does the organization develop a clear vision for its future and desires? Does it understand this vision and determine the feasibility of its implementation and commitment? o What are the principles and patterns of successful leadership applied in the organization? o Are there any training programmes and the empowerment of reaching organizational and individual success? Do practices encourage organizational learning, risk and innovation? o How can it obtain the data necessary for effective functioning? Will it be shared by the o organization and utilized and converted into decision-making positions? What are the extent of assisting workers to achieve their goals and harmony between them and organizational goals? Abdulrahman (2001) states that strategic development must be in a manner that achieves the best benefits possible through change. It is important to set priorities for organizational development under factors affecting the process of change through strategic interest in the skills and resources, structure, systems and culture, style and values prevailing in the organization. It can be a successful strategy in the development of any organization through the political, economic, social and cultural environments to compatible with the many surrounding variables. Here is highlighted the imperative need for change in the surrounding environment with the aim of creating the appropriate environment to increase the effectiveness of organizational performance (Ala edeen 1993). Moreover, organizational cultures must be consistent with their strategies because that is the key to success, and therefore it is necessary to realize that in designing a strategy that any major shift in the 116

118 organization s strategy, both at the macro level or partial, will require the support of culture to bridge the gap between old and new strategy (Abdulrahman 2001). Strategies of change affect some organizational characteristics, such as: work requirements and organizational arrangements, social factors, technology. These characteristics affect individual behaviour within the organization, which affects the organizational performance and development of individual and social factors, including organizational culture, the content of values and beliefs, models, pattern of administrative operations, interactive joint and formal models and interactive networks and individual characteristics (Albers, 1994). Coram & Burnes (2001) pointed out that through a planned change and organizational development great attention can be given to the human resources available, and draws on the largest humanitarian aspects, democracy, in order to increase organizational effectiveness. Cultural entrances of change draw attention to the human aspect more than organizational structures, markets and technology, by influencing the values, beliefs and behaviours. Dierickx & Cool (1989) say that in their beginning stages programmes of organizational change are aimed at achieving further development of potential organizational culture, which gives the workers a great deal of responsibility to deal with the changes, which aim to change the organizational culture to find a pillar of required central values to achieve a greater commitment and long-term affiliation.saka (2003) indicated that 'through embracing the internal agents of change are patterns of change management partnerships, which lead to solving the problems, they want to arrive at a set of political and cultural assumptions that play an important role in efforts to change, and embrace a set of values which are associated with the management of organizational change and strategic change. The role of management is changing, where previously it did not care about social, emotional and motivational conditions in the working environment. Empowerment is a very important part of the management organization; all managers must be aware of the need to motivate workers and raise their stimulation to obtain a better environment working under the pressure of competition, and the need to shift managers to strategic leaders realizes the importance of education. Therefore, the transforming of the management pattern to an effective strategic pattern enables them to deal honestly and sincerely with the workers and the motivators and raise their efficiency and capacity-building, and making the existing relations of the organization more pleasurable, realizing that the human resources are the most profitable component of the organization ( Khalifa 1998). It can be said that the impact of the change strategy in the organizational culture development and organizational performance comes through basic components or dimensions which underly the process of change strategies. THE IMPACT OF STRATEGY CHANGE ON THE DEVELOPMENT OF PREVAILING ORGANIZATIONAL CULTURE THE IMPACT OF CLARITY OF VISION ON THE DEVELOPMENT OF PREVAILING ORGANIZATIONAL CULTURE The process of change requires a deep sense of the values and behaviour of individuals, and of structure, processes and visions to manage relations required to achieve coherence of workers ( Hackett & Spurgeon 1996). A lack of clarity in this area creates a climate of high pressure that can cause many problems with regard to job satisfaction, organizational affiliation performance, and can impact on workers and their motives and stimulation, resulting in high absenteeism and the desire to leave work (Khatab,1994) and therefore Hackett and Spurgeon (1998) confirm that the organizational vision possesses substantial power, and the upgrade will enhance their employees and place them in a new world full of opportunities and challenges. On the other hand, (Snyder & Graves 1994) refer to the vision giving managers and leaders clarity and strength and dedication in the performance of their work and creating it for others, including feelings of affiliation and commitment. Unity of purpose is the idea of a process to reduce resistance to change, and organizational learning through all levels of hierarchy, good communications, client focus, and participation in knowledge for effective and advanced performance all that is necessary to understand the concept of organizational culture positively and the efficient implementation of organizational change (Saka 2003). Hawwari (1999) stressed the need to provide important conditions for the vision to be a strong and ambitious verification of the members of the organization, and create energy and sympathy for them, along with the participation of conscience and a strong commitment and allegiance to their organization, and explained the values necessary for the performance of regulatory effectively, so as to determine the 117

119 standards of acceptable and unacceptable conduct. Johnson & Bell (1987) pointed out to the concept of a bilateral vision means focusing on (mission & the overall objective), which is a bridge between the present and the desired future. It is a vision of capabilities that can provide quick response for organizations and make them accountable for achieving goals. In their study of the American National Bank, the authors emphasized the need to formulate a strategic plan to contain the new vision as follows: 1. Developing a culture of the organization, and create shared values among the new members. 2. Reaffirm the need to achieve high quality services to customers. 3. Provide individuals with the ability to recognize the surrounding environment. 4. Focus on human resources as a cornerstone in the organizational vision. REALIZATION OF THE IMPORTANCE OF THE IMPACT OF THE CHANGE ON THE DEVELOPMENT OF PREVAILING ORGANIZATIONAL CULTURE Donnelly et al. (1998) confirms that it affects the coverage of the efforts of change management, namely: changing leadership and management style, organizational relationships and the organizational culture. The leadership climate refers to the nature of the work and its resultant surroundings by the leadership style, administrative and management implementation to the public supervisors, the change in strategy or programme discovered the support and commitment by management will result in little chance for the success of the efforts of change, the managers being at least impartial or neutral towards change. Organizational work and formal relations must be synchronized with the proposed change. This requires impact on the environment resulting from the philosophy, policies and management scenarios, in addition to legal procedures, organizational structure and control systems and control, which could be influential sources subject to change and development, and any influence in one of the major other sources. Change management is through innovation, which imposes on the organization the need to recognize a change strategy that allows the existence of deliberate and successful results, where the strategy change adapted show innovations and inventions, and the realization of the need to create a working partnership between members of the organization over the efforts to achieve strategic goals (White 2000). Change strategies are based on improving quality and customer service and creating integration between existing intellectual models for understanding organizational events and other variables surrounding the activities and take effective quality management fully through members of the organization as a whole. It is necessary to examine the organization on the problems of development and regulatory aim is not only to solve problems. Therefore, there is a need to manage distinct patterns of managerial change and be aware of its importance; it plays various roles in achieving effective change in the light of technical skills and behavioural, cognitive and administrative areas through the solution of different organizational problems. Moreover, Strategy is aimed at understanding the organization and access to long-range goals. The organization is part of the environment in which they operate; the managers and workers must understand the environment surrounding their organization, and realize that it continuously changes. Thus the Director is capable of making decisions on behaviour modification and other workers, with a view towards the future leadership of the organization desired. MANAGEMENT SUPPORT FOR A SYNCRETISING BETWEEN INDIVIDUAL AND ORGANIZATIONAL GOALS, AND ITS EFFECT ON THE DEVELOPMENT OF PREVAILING ORGANIZATIONAL CULTURE Najjar (1991) says that access to the ideal organizational goals can be achieved through the implementation of the principle of interdependence between organizational goals and individual ones, and the need to promote harmony between the objective s complex multiple levels. Khattab (1994) affirms that matching the goals of individuals with the objectives of the organization is an important element in achieving success; the ambiguity of management objectives and policies under the change lead to the mismatch between the individual and organizational goals, and to individuals seeking to achieve through a personal profession to which they belong and not through their organization. 118

120 This affects the amount of effort made to achieve the objectives of the organization, and the desire to leave work, and the emergence of feelings of hostility and mistrust, thus impacting negatively on organizational performance, and therefore the organizational culture. Banwell (2004) confirmed the trend towards a broad base of individuals, and ensuring the growth and development of human values and development by the organization, and the patronage by the organization of the values of humankind, moderation, openness and choice, and the balance between constraints and independence, all this in the cause of improving organizational efficiency. The author finds that there is a need to believe in change of the organization and the building of developmental abilities as a result of personal growth and not ignoring the human element; a need to analyse the dynamics of complex values and encouraging the discovery of the central role played by values in the personal and organizational view of a successful culture. CONCLUSION The success of organizations depends on their ability to lead change and to take methods of successful change, through the exploitation of opportunities for success which most appropriate to their circumstances, and potential to reach competitive edge. It should know the extent of links between organizational development and change management and strategy change, where the organizational development refers to planned systemic efforts to improve the effectiveness of the organization through the implementation of concepts and behavioural sciences theory; change efforts are based on the method of restructuring the organization and behaviour of employees or technology used, upgrading the regulatory method for change in the structures and processes, activities and relationships and jobs and roles, skills and management patterns, culture, attitudes and technology, so as to be less stereotypical with a view to alleviating the challenges and obstacles which face the organization (Donnelly, Gibson & Ivancevich, 1998). Therefore it is necessary to be compatible with each other and that there be harmony in the components of a strategy change, whatever the change efforts made through various influential sources. Sieged (1996) pointed out that willingness to change and organizational loyalty and motivation to change comes through individuals feeling of inability to adapt and not harmonise with regulatory requirements or reach compliance with them; motivating them to test their need for change requires considerable impetus and the willingness to accept change and efforts towards it success. With the passage of time, these values become the important and profound values of the leaders and individuals and the assumptions and beliefs within the organization, with the managers finding and promoting a flexible and sophisticated organizational culture, making the organization capable of adaptation, evolution and competition, so integrating fully in the process of developing organizational culture rather than interacting with the organizational change. REFERENCES 1. 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121 15. Khalifa, A I. (1998) The strategic CFO. Strategic Direction, 20(3), pp p: Khoas, A M. (2002) The extent of appropriateness of the organizational culture in the governmental administration organizations of the implementation of total quality management. Cairo: Afaq Jadeeda, Faculty of Commerce - University of Menoufiya, the Fourth year, No (3)3,p King N., Anderson N. ( 2004) management of change and innovation activities. Translation- Hosni, M H., Mars Publishing House, Riyadh, p: Langbert, M. (1990) in search of compensation: A comparison of executives in peters and waterman`s excellent and fortune`s least admired firms", Benefits Quarterly, Second Quarter, 6 (2) pp.23-36, p: Marcussen, M.(2003)The power of culture. Executive Excellence, 20(10), p Najjar, F. ( 1991) Strategies of change and organizations development - the role of organizational development experts, and agents of change in organizational development efforts. (Cairo: Waid Serfisse Center, p Saka, A. (2003) Internal change agents` view of the mnagement of change problem. Journal of Organizational Change Management, 16(5), pp , pp Schein, E H. (2000, Sep/ Oct) "Don't make culture another item on the KM checklist", Knowledge Management Review 3 (4) pp.8-9,p Schein, E H Cultures in organizations: three perspectives, Administration Science Quarterly, 39(2), pp Siegal, W. (1996) Understanding the management of change An overview of managers` perspectives and assumptions in the 1990s, Journal of Organizational Change Management, 9 ( 6),pp.54-80, p: Snyder, N. H. & Graves, M., Leadership and vision. Business Horizons, Greenwich, 37(1), pp. 1-7.p Wissema, J. G.(2001) Offensive change management with the step-by-step method, Journal of Change Management, 1(4), pp Banwell, E. (2004) Balancing individual and organizational values: Walking the tightrope to success, Journal of managerial psychology, 19(2), pp Donnelly, J. H., Gibson, J.L., & Ivancevich, J.M., (1998) Fundamental of management, New York, Bosten ; McGraw Hill : Massachetts, p White, L. (2000) 'Changing the Whole System in the Public Sector', Journal of Organizational Change Management, 13 (2) pp p: Amer, S & Abdel Wahab, A. (1998) The Contemporary Thought in organization and management - Organizational Development, 2nd ed., Cairo: Waid Service Centre, p Geert, H ; Bram, N ; Denise, O ; Geert,S ( 1990) Measuring organizational culture: A Qualitative and quantitative study across twenty cases", Administrative Science Quarterly, 35(2) pp Hawwari, S. (2000) Administration - assets and scientific foundations for a century of 21. Cairo: Ain Shams Library, and major libraries in Egypt and the Arab World, 12th. ed., p Khattab A S ;Sayed M., Nakla A ; et al, (2000) behavioural sciences; culture of the organization, Cairo: Dar Al-Quba for Printing, Publishing and Distribution,, p Khattab A S. ( 1994) strategies of change - the humanitarian problems under conditions of integration, Paper presented at the Fourth Annual conference for the change Strategies and organizations development, Cairo: waid service Centre, p506. p Khattab, A S. (2001) Globalization and the problems of human resource management, Cairo, Dar Thought, p Mustafa, A S.(1992) Cultural behavioural dimensions to create the human resources required for change., Paper presented at the 2nd Annual conference for the change Strategies and organizations development, Cairo: waid service Centre p219, p Naceur J. (2001) Values underlying continuous improvement, The TQM Magazine, 13(6) pp , p: Philip, A, (1996) Total quality management ; Translation : Numani A.; Tawfiq A, (Cairo: Professional Management Experience Centre),"PMEC", p.: Pool, S W. (2000) Organizational culture and its relationship between job tension in measuring outcomes among business executives. Journal of Development, (1), pp.32-49, p: Zainuddin, F.(1996) The scientific method for the implementation of total quality management on the Arab institutions. Cairo: Dar Alnahda Arab, p

122 CHANGES AND STRATEGIC CHALLENGES IN HIGHER EDUCATION INSTITUTIONS ABOUT THE AUTHOR * DR. MUNIR THEEB; UNIVERSITY OF ZAWIA ABSTRACT Dr. Munir Theeb* Higher education (HE) is currently facing numerous changes and strategic challenges that require review of its objectives, philosophy and regulations, curriculum, tools, and its relationship to the society in which it operates, and evaluation in line with the concept of comprehensive quality, in order to establish an integrated education system capable of meeting the global changes and challenges of the twenty first century. Moreover, strategy change in higher education institutions (HEIs)wishing to preserve their integrity and balance in the world today require the adoption of the concept of effective training and organizational learning, which would enable them to develop a set of ideas, values and behaviours, competencies and working methods help them to meet the requirements of change implementation.therefore, the challenge in higher education management system requires the ability to develop compatibility in the development of appropriate individuals in the right place, to optimize the exploitation of their skills, developing potential partnerships with others, and improving the way creative ideas flow within the organization to support organizational success. The purpose of this paper is to develop a plan for the future development of higher education as the methodological foundations of strategic planning in higher education institutions, through the adoption of a strategic planning for the development of university education, identifying goals and objectives of university education and operational mechanisms to achieve them, identifying key issues, problems and challenges facing university education and formulating remedial plans to address them. KEYWORDS: Challenges, Higher Education, Strategic Planning. INTRODUCTION The higher education sector in both developing and developed countries is one of the most important sectors, since it serves the interest of large segments of the populace. Most states attach great importance to it, whether in terms of increased expenditure, or in terms of directing more supervision and control over it and building different evolutionary platforms, so as to ensure the achievement of the desired objectives efficiently and effectively. Therefore, changes occur in an environment of higher education on an ongoing basis, leading to a reorientation of the administrative responsibilities and the accounts, interpretations and concepts of strategic management at the universities. This leads to the integration of most workers in the functions and responsibilities of organizational strategy in addition to their normal roles, and leads to a change of their perceptions, expectations, values, realization and roles. The current administrative systems for universities have numerous shortcomings and weaknesses, producing many of the negatives on the overall performance of universities, which comes in the forefront of central-level academic institutions. Poor compliance with the laws, regulations and systems, and weak commitment to academic traditions and the direct role played by some Ministries of Finance on the expenditure side through financial controllers exacerbate this. All of these reasons have led to a lack of flexibility, complexity of procedures and slow decision-making, making university leaderships unable to take the decisions necessary for the conducting their universities affairs effectively. The shortage of expertise, managerial skills and leadership abilities among some leaders of universities has led to the erosion of independence and to inappropriate decision-making, resulting in a weak overall performance of universities. The universities find it difficult to contribute to comprehensive development, or to face the challenges of the future through its structures and traditional patterns, where many of the features that stress the 121

123 inappropriateness of these current patterns and receiving non-compliance with the requirements of the implementation of total quality management entrance. Continuation of the structure of universities on state government lines since the eighties without effective development compatible with the requirements of each stage. Continuation of the many changes in the composition of the organization and governance of universities and internal administrative structure, which leads to some unsatisfying implications and raising constraints of the reforms inside the universities. STRATEGIC CHALLENGES FOR HIGHER EDUCATION Despite improvements on many development areas, the structural and long-term development challenges facing higher education have undermined the efforts of the HE management system, continues to face considerable development challenges towards the development and implementation of change process. Many studies concluded there are a series of challenges and educational content to the globalization of the economy relevant to higher education. It is well known that the challenges facing higher education are almost similar in many countries in the world, which can be considered a justification and reason for the development of higher education through a method of strategic planning. These challenges contain the following: Issan (2006) states a number of challenges and constraints facing higher education, including: 1. Similarities and stereotypes in the systems and structure of programs and curricula of similar faculties, which may lead to future recurrences of past mistakes and swell the numbers of graduates in unrequited disciplines or those the market cannot absorb. 2. Shortage of faculty members, particularly in certain disciplines, leading to the scarcity of holding advanced degrees in some disciplines, and lack of incentives such as job security, low salaries and incentives. 3. Development in HEIs is unit-directional, issued from the top, overlooking the lower levels. It has been proved that the best form of development is bi-directional, where lower levels express their opinion and they are studied by the higher levels, which then give implement directives at lower levels. 4. Absence of thought in the process of institutional development; since the idea of the renewal of personnel If the instigators of policy remain in power their decisions and resolutions can be developed, but if they leave new policies are introduced and these decisions demolish all previous efforts. The study of Abdul Majeed (2006) has shown the most prominent challenges facing university education in the Arab world generally, which are: 1. Globalization and global competition, have changed the course of university education due to the new conditions imposed on all countries, including products that can compete in the global market. 2. Promoting education to the needs and requirements of society. 3. The information revolution, and its significant impact on the growing gap between North and South. 4. Availability of government funds, which are decreasing in comparison to growing demand. This is attributed to rapid population growth as increasing numbers of students are in the age of public education, thus increasing the number wishing to attend institutions of higher education. Moreover, there is the high cost of students at the university level compared with the cost of any other stage. STRATEGIC PLANNING FOR HIGHER EDUCATION Strategic planning focuses on development of the institutions capacity and ensures a strong and sustainable institution as an important outcome, promoting closer relations between the educational institution and its outputs, taking advantage of recent developments in science and information technology tools in the service of the educational message to provide advanced services to the community, development of financial resources for higher education, strengthening the role of the council of higher education to draw up plans and policies with special attention to the follow up of the plan, and development of the university faculties system. The strategic plans are aimed at the needs of university education, patterns and quality of output and methods of funding, with implementation mechanisms, to identify tasks in a number of studies on the issues facing higher education, such as acceptance and assimilation, the labour market, cost and funding, infrastructure, management and administration, the educational process, Graduate Studies and Scientific Research, and community service. Among the goals of future planning and its objectives are raising the level of higher education culture of strategic planning, providing opportunities for adequate and appropriate access to university education programs, improving the level of internal and external efficiency of institutions of higher education, human resource 122

124 development of faculty members and their assistants, supporting the development of human capacity, improving the learning environment, improving the output of HEIs and improving the level and quality of operational performance towards successful practices of planning and implementing a change model. However, the strategy provides three main axes: Description of the current situation, including the strengths, weaknesses, problems and challenges facing higher education. This link has been included on the following elements: Institutional building of higher education institutions; university Governance, organisation and management structure; sources of finance; improve the institutional performance human and material resources; students; equal opportunities; disciplines; the outputs of universities; teaching methods; quality; scientific research; service to society. Description of future ambitions of the higher education management system, which included: vision, and mission, and strategic goals. Identify policies and procedures for the transition from the current situation to the hoped status quo as vision contained in the strategy. DEVELOPMENTAL STRATEGIES 1. Build competitiveness of the university s surroundings in local and regional levels; work on building central competitive forces in the surroundings local and regional levels; and the creation of new scientific programs with the assistance of foreign expertise, the work programme for distinguished students promoted inside and outside higher education institutions. Establishing centres of excellence attached to HEIs concerned with the degree of dependence on overseas funding, with the assistance of foreign expertise in relevant areas of specialization. Establish programmes, as well as promote research on the collective work; strategic alliances with universities worldwide to offer joint programs in accordance with international standards, especially in the field of postgraduate studies; other programmes and projects with new staff competencies. 2. Building strategic partnerships to support the qualitative transformation. Qualitative expansion, without numerical expansion, for the University as a whole, especially with regard to building strategic partnerships with counterpart institutions; the establishment of branches of the University, or aiding in the establishment and/or management of universities or colleges; recruitment and research projects and consultancy surrounding the business community and international organizations; building a strong network of professional relationships internally and externally to provide additional resources for the University. 3. Institutional transformation destruction: an institutional transformation in the comprehensive management models universities purporting to produce a quantum leap in the overall performance of all work and university. It includes a quantum leap in educational performance, performance research, postgraduate performance, performance on student activities and financial and administrative performance. It also includes changing the prevailing institutional culture in support of excellence and continuous improvement. This requires the restructuring of institutions of higher education, the number of students and addressing inflated administrative machinery. 4. Internal restructuring: rebuilding and restructuring the internal situation of HEIs organizationally, financially, administratively and academically, and developing their human resources and the direction and results-oriented planning, evaluation and financial resource development and decentralization. It should be directed restructuring to process the events of a qualitative leap in the work system in universities. Moreover, an integrated plan should be developed to attract external resources for the requirements of restructuring and rehabilitation of the administrative and academic staff members; and internal and external opportunities should continue to be exploited. It is important to start rebuilding and restructuring the administrative sector of HEIs as a basis for reforming and developing the academic sector. JUSTIFICATIONS FOR INTRODUCING CHANGE IN HIGHER EDUCATION The rapid change in the principles of economic, technical and social demographics present a pressing demand for change management and the effectiveness of this change. Higher education has been witnessing at the present time many of the changes observed in various areas, requiring administrative organizations to change the traditional methods of management, adopting modern management concepts if they are to achieve their 123

125 objectives efficiently and effectively. Nashwan (2000) identified the most important of these justifications, which required a change processes in Arab education the most important of these reasons are as follows: 1. The information revolution: this era is called the information age due to the emergence of vast amounts of information in all areas, and the accompanying technological implementations that have made a difference in lifestyles. This requires that an information system is essential in all institutions, especially the education system, and management information systems could benefit in several areas. The change required is certainly needed to provide a high potential for physical preparation and the quality of graduates commensurate with the great effort required of them in the future. 2. Technology Management: Technology Management is one of the foundations upon which contemporary thought in the administrative process is based; the implementation of knowledge in practical purposes including machine technology, and social technology. 3. Modern administrative methods:, many of the modern administrative methods emerging in the late twentieth century increased the effectiveness of management in improving performance in tasks and development, including management by objectives, style systems, the proliferation of operations research, Bert style, style tree-making. HE as format of formal education is a reflection of the social and economic context. It is not surprising that HEIs suffer significant problems, as they face challenges arising from changes that created a new world depending scientific and technological development on accelerated basis, based on the techniques of high progress and excellence. These leave no room for hesitation in commencing comprehensive programmes of development and modernization of the educational institutions to ensure the Higher education ability to overcome its problems and weaknesses. Jawher (1984) says that the innovation and development in the areas of education is progressing very slowly when compared with that existing in other areas, such as industry, transport and trade. The slow adoption and spread of new techniques and innovations in the areas of education are due to the following: The first reason: lack of incentive for creative educators; a general feeling among workers that innovation and development are not encouraged; established rules and patterns are followed at the expense of the educational process. The second reason: decisions taken on development and innovation are imposed on the teacher or institution; a new or updated regulatory method must gain acceptance with higher authority in educational organs before they impose it on the system. The third reason weakness of cost/benefit analysis delays deployment of new ideas. A fourth reason is closely linked to the nature of education itself: any renewal or development bears fruit only after relatively long periods of time in most cases. However, the increasing population growth, especially in the developing countries and the Arab countries, represents a significant threat to economic social and cultural growth, and especially the growth and development of education in these countries. This rapid growth is a major threat to the evolution of the education process; this increase constitutes a major challenge to the regulations of Arab States in all service areas, especially education, since this represents a considerable burden on the educational process where institutions do not have the necessary capacity to deal with the growing number of students. Jawher (1984) identified the factors driving change and development in the life of institutions: First: the factors emanating from within the institutions 1. Institutional leadership practices that will help staff to gain the knowledge and skills to lead them more readily to accept change efforts. 2. Financial pressures faced by the institution. 3. Growth occurring in the enterprise pushes it to change and develop their old working methods. Second: factors arising in the external environment 4. Changes in community needs that require change and adjusting production to satisfy the new requirements better. 5. Economic pressures stemming from society, as in periods of recession or economic prosperity, forcing institutions to conduct many changes and adjustments. 6. Decisions taken by unions or similar organizations, which would introduce amendments or development in the member institutions or organizations in their production methods. The HEIs, in interacting with the types of work environments, are different from those that prevailed in the last century, and these work environments are characterized by change and rapid evolution. It can identify environment characteristics which interact with the HEIs as follows: 124

126 Complexity: indicates the political, social, economic, cultural, educational and technological forces in play, which are all inter-connected, making it difficult to separate them. Dynamism: Any environment that these institutions are changing rapidly in an unprecedented manner which impedes their work. Hostility & Ambiguity: This refers to any change that carries with it a threat to the existence of these institutions, and the insufficient understanding of such change and how to deal with it. Globalization and its impact on the programmes and disciplines offered by these institutions to remain competitive; to prepare graduates to become more capable of competition in the global labour market. Since the beginning of work on developing an overall strategy for higher education in general, the HE has diagnosed challenges facing the higher education system: these have been classified into four areas: 1. The challenges of ensuring and improving quality. 2. Challenges related to finance: this highlights the continuing heavy reliance on government funding, limited support for other alternatives to this source, and the need for a systematic and transparent distribution of resources to public education and higher education in a balanced manner so as to ensure increased opportunities for students in education. 3. Challenges for the management of education: namely, the need for change in the educational structure to ensure coordination between the systems of public education and higher education, and the multiplicity of actors, which oversees higher education institutions; the absence of a collaborative framework to ensure a highly integrated and coordinated system of education; the natural topography of Higher education, which makes delivery of educational services to some residential areas difficult and costly in material terms. 4. Challenges for students: highlights the limited absorptive capacity of institutions of higher education compared to the social demands; the difficulty of dealing with higher education institutions output of general education; developments in the curricula and programmes; and weak capacity of the labour market to provide employment opportunities for higher education of different outputs. 5. The challenges of global competition: the weakness in the ability of graduates to compete in the global context, participation in global economic activity based on new knowledge. To eima and Bandari (2004) point out that of the classic division of the three functions of the university research, teaching and community service preference should not be given to one over the others, but they should receive equal attention. The predominance of the teaching posts upon both previous functions in university, is a kind of imbalance in the job, it may not be limited to two but extends to the post of teaching itself. The quality of higher education and university defines the ability to make it suitable in terms of: its role and stature in the community; its educational and research functions, service, productivity, international relations, and public financing; its interaction with levels of education for the needs of modern economics graduates are able to continuously develop their knowledge and show the characteristics of authors and employers In a constantly changing market (Hassan, 1999). The report of the Ninth Conference of Ministers Responsible for Higher Education and Scientific Research in the Arab World explained the reasons for the waning effect of the higher education system, summarized as follows: 1. Weakness of potential and financing. 2. Errors in the methods of admission to higher education, and in assessing students. 3. A decline in some indicators of equal opportunity for scholars, and the decline in the targeting of competitiveness at the global level 4. Low level of academic freedom. 5. Receding of the level of teachers, trainers and educational material. (ALESCO, 1999) On the overlap between local and global Li and Huey (2003) find that education based on local perception cannot achieve its goals even if these goals are local. They also stress the importance of theories of political and economic order of a global nature and objectives at the level of local programmes, and underline the importance of the relationship between local education and globalization because overlap and interaction between them requires taking into account the requirements of individual and social order to achieve the project of globalization. This opinion must be taken into account when considering development objectives, policies and programs of HE: not just taking the side agreeing on output quantity, quality and requirements of local community development and global requirements, in line with the perspective and philosophy of sustainable global development. We must also develop institutions of higher education with consideration to future 125

127 horizons, which focuses on preparing and training students in a changing and complex era and to prepare them to face all circumstances and variables. It is still our institutions to prepare students for the reality of retirement, and build educational policies and programmes in accordance with short-range requirements, leading to inflated numbers of graduates in programs not required by the local market. The institutions did not take into account preparing graduates to be able to compete at regional and global levels. The external environment of higher education is being changed: in addition to being outside the control and influence of these institutions or any other organization and impact of this is affecting them in the long term rather than immediately, and change in the environment of higher education is divided into three classifications: 1. Stable Environment: in the basic forces of population statistics, economic, technological, law and culture, it is somewhat fixed. 2. Slow Development Environment: has a slight change which is expected and predictable; necessary steps can be taken to address it: the increase or decrease in the number of applicants to the university or college. 3. Turbulent Environment: This is facing unexpected, and sometimes essential, environment changes( Kotler & Fox 1985) The need for planning requires awareness of the changes in university and higher education at the global level in light of the four themes highlighted by Madeni (2002): 1. Expansion policies in education: education as the key to social mobility, economic opportunity and prosperity, and meeting the needs of the advanced economy and providing practical elements of the modernization of society. 2. Updating systems and methods of university study: information technology and computers drastically affected the university teaching systems and methods, which prompted the university to help students acquire the skills of learning and self-learning special techniques, and paid for professional development for faculty members to improve the effectiveness of student and the university. 3. Directing scientific research at universities to serve the community: in the light of global changes and transformations universities make several attempts to link scientific research issues as community organizations help in the process of decision-making, policy analysis, the composition trends among students and authors to search and the ability to solve problems by using available knowledge and the ability to self-learn and others. 4. The tendency to quality higher education: the need to adopt the trend of universities and evaluate the performance of systems made for achieving quality and efficiency in the university system. STRATEGIES IN THE DEVELOPMENT OF UNIVERSITY EDUCATION Development of university education is a fundamental requirement in today s world, and recalls the concept of radical change in the system of university education in different disciplines. The process of comprehensive development of university education is based on a clear vision of all the variables at local, regional and global levels, in all aspects of scientific, technological, political, social, economic and cultural systems, each with a study of impacts of information technology and the extent of their interaction and their impact on the development of university education, in addition to studying the impact of information technology and how it interact and influence on the development of university education. DEVELOPMENT AXES IN UNIVERSITY EDUCATION: o First axis - the students 1. Improve the quality of students at the stage of pre-university education as an input system of university education. 2. Improve the quality of services provided to students. 3. Improvement and development of systems of admission to universities, which results in raising the level of university enrolment. o Second axis - faculty members and their supporters 1. Strike a balance between the number of faculty members and burdens of scientific research to be carried out. 2. Create the appropriate atmosphere for faculty members and their collaborators to improve production quality and scientific research. 3. Improving the ratio between the number of faculty members and students to improve performance efficiency. 126

128 o o o o o o o 4. Appropriate atmosphere for full-time faculty members and their collaborators in education and research. 5. Create sophisticated systems to prepare materials for faculty members to ensure development and improve their performance. Third axis - the curriculum 1. Curriculum development consistent with the needs of students and faculty members and the labour market. 2. Ensure continuous improvement and development of the curricula. Fourth axis - Ways and teaching methods 1. Develop ways and methods of teaching and knowledge transfer and use of educational media that contribute to facilitating the educational process. 2. Termination of teaching methods that rely on memorization and build a philosophy that depends on the development of creative and innovative capacity of the students. 3. Develop systems for evaluating students, including the ability to measure the creative capacities and capabilities, as well as contributing to diagnosing weaknesses and strengths of students and also in the methods of teaching. Fifth axis - the university administration Reformulate the basic philosophy of university education and modernizing the vision and mission of the university in light of the new changes. Modernize and develop the university administration on the basis of: 1. Senior management s commitment to quality. 2. Re-engineering administrative process systems and procedures to improve performance. 3. Emphasis on financial and administrative autonomy of universities. 4. Support the concept of decentralization and devolution to the extent that helps improve the performance of university. Sixth axis - material resources 1. Development of financial allocations and diversification of funding sources outside the scope of state budget. 2. The development of libraries, laboratories and workshops commensurate with the requirements of the educational process and research in the era of information technology and satellite channels. 3. Development of classroom buildings and sites operated by units of university education, leading to quality in the educational process and increased student satisfaction. Seventh axis - the university and the society Positive interaction between university education and society through: 1. The link between academic disciplines and qualifications and labour market needs. 2. Linkage between scientific research in universities and community problems. 3. Development of regional universities so as to achieve full connectivity between them and the local development plan. 4. Find formulas for cooperation between the various work sectors and universities in research, training and operation. Eighth axis - Laws and University Regulations Development of the law organizing the universities in line with the variables of local, regional and global contemporary issues; support of the financial and administrative autonomy of university; harmony with the universities role in serving the society; and creating the appropriate atmosphere for improving the quality of operational performance. Ninth axis - Evaluation of university performance 1. Providing an integrated information system. 2. Develop precise criteria for assessing the performance of all elements of the university both in academic or administrative and financial terms. 3. Development and constant updating of these standards. These axes are illustrated in the figure below: 127

129 Evaluation of university performance the students faculty members and their supporters Laws and University Regulations the curriculum Laws and University Regulations Ways and teaching methods the university and the society material resources the university administratio n Figure 1 Strategies in the development of university education Higher education in most developing countries is relatively young universities need time to establish institutional structure and improve the output quality. in the framework of higher educational policy particularly in other phases education strategy has focused on improving the quantity and quality of education and raising efficiency to serve the development needs of various disciplines. This requires a long-term strategy for educational services to make improvements in structural quality with the continued expansion to meet basic education goals; satisfying the needs of the individual and working to develop his personality, and with the second the aim of developing economic, social and cultural productive forces to provide educated and qualified graduates. At this stage of education the most important elements of the strategy are as follows: 1. Universities operating on the provision of science for large segments of society through the Open University programs. 2. Expansion of acceptance in universities and scientific studies, technical and practical, to provide skills and expertise which will meet the demands of the next stage of progress, especially in the sectors of industrial and agricultural development, and encourage the acceptance of higher technical institutes. 3. Providing an individual with enough knowledge and skills and the necessary preparation to play a more effective role in society. 4. Linking education requirements to economic and social development can not be viewed in isolation; the development of education is an integral part of it. Higher education is generally driven by supply rather than demand; the emphasis is on quantity instead of quality, and there is a weak response to the requirements of the labour market in higher education systems regarding the disciplines needed by enterprises and productive sectors, which led to some bottlenecks in student skills and unemployment among the educated. Despite the efforts made to increase the output of science graduates the ratio of applied sciences, especially interdisciplinary subjects, is small compared to humanitarian sciences. CONCLUSION Statistics point to rising demand for higher education over the next two decades, from four to five times more than it is currently, so universities must plan to accommodate this expected increase in demand through preparation of large investment programmes, diversification of funding sources and other methods. The Government plans to develop the non-university higher education sector, such as colleges, to absorb some of this expected demand. Some of the strategies of higher education can be applied without major changes in the structures or legislation, but in practice only within the framework of the current situation. But there are some tasks and other proposed 128

130 amendments that may require essential legal or structural changes. Also, many of the proposed changes do not have any financial implications, but some are in fact providing some financial resources. However, there remain many other tasks proposed here that would require substantial financial costs in implementation. Note that the reform of the higher education to reach the required level requires considerable expense, but the exorbitant cost will come through expansion of the system in response to what is expected of the growing demand for higher education. Natural GDP growth will cover a portion of this additional expense, but significant growth in overall resources is required over the next decade to cope with the expected increases. Moreover, the developments in prevailing material means for performing of various administrative tasks in the areas of economy, services and other aspects make the university one of the fields to accommodate these modern techniques. Consequently, most universities find it hard to leave behind traditional methods. The introduction of large-scale computer systems and business software, Therefore, the introduction of large-scale computer systems and business software is characterized by support a wide range of most of educational and business activities in most universities and workplaces. In light of the spread of modern terminology associated with the advancement of modern management and development of information technology, such as the virtual university, automation and methods of rapid transmission of information.therefore, the HEIs need an in-depth reconsidering of universities organization and labour specialization and further review of the objectives, responsibilities, philosophy, methods and ways of organizing of the universities. The operation of any successful modern project requires the provision of management information in full, and universities are not exempt from this. In this regard we find many governments particularly in developed countries have developed a master plan for the development of Information and Communications Technology (ICT) that would greatly assist universities in their management, which must be achieved as soon as possible. It seems that the developing countries are in dire need of management information systems operated by a qualified staff, so that the senior leadership in universities can function in the best possible way. REFERENCES: 1. Abdul Majeed, M.S. (2006) Law on the Organization and the quality of university education. A field study presented to the Second International Conference of the Department of Psychology - human behaviour and the challenges of the times, Egypt: Minia University. 2. ALESCO (Arab Organization for Education, Culture and Science) (1998 ) Towards the development of the reality of the composition of the teacher in the Arab world in the light of global developments and experiences, Doha: meeting of deans of faculties of education, directors of teacher training service. 3. Hassan, A H. (1999) The issue of modernization of higher education in Egypt. Accessed from: technolpgy/s1.htm 4. Issan S A. (2006 ) Compatibility between the outputs of higher education and the development requirements. Paper presented at the regional workshop on the education response to the requirements of social development, Muscat: The Islamic Organization for Education, Science and Culture. 5. Jawher, S. (1984) Introduction to the management and organization of education. Cairo: Ain Shams Library. 6. Kotler, P. & Fox, K. (1985) Strategic Marketing for Educational Institutions. Englewood Cliffs, NJ: Prentice Hall Inc. 7. Li, Huey-Li (2003) Bioregionalism and global education theory, Educational Theory, 53 (l) p Madani, A. (2002) Development of higher education as one of the tributaries of human development, Paper presented at the symposium on the Future Vision for the Saudi Economy (2020). Riyadh, Ministry of Planning. 9. Nashwan, J. (2000) Education in the Arab world on the threshold of the twenty-first century. Gaza: The Mekdad Press. 10. To eima, A.R. & Abanndri, M.S. ( 2004) University education between the monitoring of reality and visions of development (1st ed.). Cairo: Dar Al-Fikr Al-Arab. 129

131 GENERIC RISK DATABASE CREATION AND MITIGATION STRATEGIES FOR SMALL SOFTWARE DEVELOPMENT ORGANIZATIONS Ms. Kathak Mehta* ABOUT THE AUTHOR * MS. KATHAK MEHTA; DOCTORAL STUDENT, INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY, AHMEDABAD ABSTRACT No software project is executed without adverse external influences. These influences constitute risks to a project in as much as they may affect the project in terms of delaying the timely completion, of increasing the cost and possibly of reducing the quality of the products of the project. Surprisingly, risks and their effects on a project are rarely taken into account systematically in respect to their effect on a project. It is accepted that there are risks that threaten a project. But in reality risks are either not included in an estimate of cost and duration or a very simple method is used as a substitute for a detailed risk assessment. Risk management is the process that allows Information Technology (IT) managers to balance the operational and economic costs of protective measures and achieve gains in mission capability by protecting the IT systems and data that support their organizations missions. Therefore, identifying risks and studying the mitigation measures would make firms watchful, save extra costs and enable safer operations. The success of a software development project is directly connected with the involved risk, which implies project risks should be successfully mitigated. Also, development of a software solution within a given time is a process associated with varying risk impacts. In this work, Generic risk database has been created for small software development companies and mitigation strategies for these risks have been put together. Software risk management is a daunting task, and those organizations that fail in this effort may turn out unsuccessful. The nature of software projects creates many risks that must be managed diligently to avoid the common drawback of many projects. KEYWORDS: Risk management, IT risk, software risk, risk mitigation, generic risk. BACKGROUND No project, and especially no software project, is executed without adverse external influences. These influences constitute risks to a project in as much as they may affect the project in terms of delaying the timely completion, of increasing the cost and possibly of reducing the quality of the products of the project. Surprisingly, risks and their effects on a project are rarely taken into account systematically in respect to their effect on a project. It is accepted that there are risks that threaten a project. But in reality risks are either not included in an estimate of cost and duration or a very simple method is used as a substitute for a detailed risk assessment. Risk management is the process that allows Information Technology (IT) managers to balance the operational and economic costs of protective measures and achieve gains in mission capability by protecting the IT systems and data that support their organizations missions. Therefore, identifying risks and studying the mitigation measures would make firms watchful, save extra costs and enable safer operations. Like we know, risk cannot be avoided but it can be reduced. Unfortunately, risks are often ignored. By abolishing constraints and reducing ambiguities, risk can be minimized to an acceptable level. Project risks may be accidentally overlooked by those who just do not have time to look into it or those who want to avoid serious 130

132 delays. Others may be terrified to look into it because if risks were to be uncovered, the team may look incompetent in managing the project. To manage the risk that has been exposed, there is a need to fix that risk and to fix that risk, it will cost more money, a resource that a project usually lacks. Risk management should be conducted throughout the whole project lifecycle from the initiation phase till the decommissioning of the project. Risk Management could often contribute to project success through improvements due to the loopholes it uncovered (Yusuff, 2011). Current perceptions about risk management from majority of software project organizations contributes to the lack of project stability in addition to the inherent challenges posed by the nature of software projects. (Y.H. Kwak, 2004) Identified risk management as the least practiced discipline among different project management knowledge areas. Boehm and DeMarco (1997) mentioned that our culture has evolved such that owning up to risks is often confused with defeatism. In many organizations, the tendency to shoot the messenger often discourages people from bringing imminent problems to the attention of management. This attitude is the result of a misunderstanding of risk management. PURPOSE OF THE STUDY With software becoming a major part of enterprise business, the significance of software is growing along with the progress of technology. Software development is connected with advanced technology and high level of knowledge. Every software development project faces a significant amount of uncertainty that is usually manifested as possible risk materialization. The success of a software development project is directly connected with the involved risk, i.e. project risks should be successfully mitigated. Also, development of an advanced software solution in the shortest possible time is a process associated with an extremely high number of risk impacts. (Marija Boban, 2003) Software risk management is a daunting task, and those organizations that fail in this effort may turn out unsuccessful. The nature of software projects creates many risks that must be managed diligently to avoid the common drawback of many projects. The perceptions and attitudes towards risk management activities compound difficult challenges for implementing a risk management strategy. The complexity of IT makes it very difficult to understand and make good decisions about IT risks. For small software development organizations managing software risks are a very difficult task to do so such organizations tend to avoid risk management. (Marija Boban, 2003) Subsequently, the purpose of this work is: 1. To study existing risk management in the software development industry within Ahmedabad and to identify the prominent generic risks in software development. 2. To create a generic risk database for small software development companies. 3. Identify mitigation strategy for these risks. RESEARCH QUESTIONS This research paper thereby addresses the following research questions: 1. What are the generic risks in software development projects? 2. How can these risks be analyzed qualitatively? 3. How to mitigate these risks? SCOPE OF WORK The study covers software development organizations in Ahmedabad having employees less than 50. Following people in these organizations were interviewed in the process, to create generic risk logs and devise mitigation measures: a) Senior management, who ensure the implementation of risk management, the security provided for these IT systems b) Business Development managers c) Technical support personnel (e.g., network, system, application, and database administrators; computer specialists; data security analysts) d) Security programmers who develop and maintain code that affects system and data integrity 131

133 INTRODUCTION TO RISK Risk is any potential situation or event that could negatively affect a project's ability. A risk is an exposure to loss or injury or a factor, thing, element, or course that involves uncertain danger (Hooman Hoodat and Hassan Rashidi, 2009). According to Kent Miller (1992) risk constitutes an unanticipated variation or negative variation (downside risk) in business outcome variables like revenue, costs, profits, and market share; and also an upside risk, that is the potential for events and consequences that constitute opportunities for benefits. Risk is a product of the uncertainty of future events and is a part of all activity. It is a fact of life. We tend to stay away from those things that involve high risk to things we hold dear. When we cannot avoid risk, we look for ways to reduce the risk or the impact of the risk upon our lives. But even with careful planning and preparation, risks cannot be completely eliminated because they cannot all be identified beforehand. Even so, risk is essential to progress (STSCC, 2003). The opportunity to succeed also carries the opportunity to fail. It is necessary to learn to balance the possible negative consequences of risk with the potential benefits of its associated opportunity. Risk may be defined as the possibility to suffer damage or loss. The possibility is characterized by two factors: 1. The probability or likelihood that loss or damage will occur. 2. The magnitude of the negative impact that can result from its occurrence. The seriousness of a risk can be determined by multiplying the probability of the event actually occurring by the potential negative impact to the cost, schedule, or performance of the project: RISK MANAGEMENT Risk management is the total process of identifying, measuring, and minimizing uncertain events affecting resources (Meritt). Project managers recognize and accept the fact that risk is inherent in any project. They also recognize that there are two ways of dealing with risk. One, risk management, is proactive and carefully analyzes future project events and past projects to identify potential risks. Once risks are identified, they are dealt with by taking measures to reduce their probability or reduce the impact associated with them. The alternative to risk management is crises management. It is a reactive and resource-intensive process, with available options constrained or restricted by events (STSCC, 2001). Effective risk management requires establishing and following a rigorous process. It involves the entire project team, as well as requiring help from outside experts in critical risk areas (e.g., technology, manufacturing, logistics, etc.) Because risks will be found in all areas of the project and will often be interrelated, risk management should include hardware, software, integration issues, and the human element (STSCC, 2001). While risk management approach should be tailored to the needs of the project, it should incorporate these fundamental characteristics. The process is iterative and should have all the components shown in the figure. Note that while planning appears as the first step, there is a feedback loop from the monitoring activity that allows planning and the other activities to be redone or controlled by actual results, providing continual updates to the risk management strategy. According to Reddy and Basu (2008) the process of risk management can be clearly segregated into the following four parts: Figure The process of risk management (Source: Reddy and Basu, 2008) 132

134 RISK IN SOFTWARE DEVELOPMENT PROJECTS The risk problems in IT projects, especially in software development projects become more and more concentrated in software project management. So risk analysis in the area of software development project becomes increasingly important. RISK ASSESSMENT Risk assessment incorporates risk identification and risk analysis. Many risk assessment methodologies exist [Aagedal J. O. et al] that focus on different types of risks. Risk assessment requires correct descriptions of the target system and all security features. For assessment to be useful, a risk referent level must be defined. For most software projects; performance, cost, support and schedule also represent risk referent levels [Ayad Ali Keshlaf et al]. QUANTITATIVE VERSUS QUALITATIVE ASSESSMENT In conducting the impact analysis, consideration should be given to the advantages and disadvantages of quantitative versus qualitative assessments. The main advantage of the qualitative impact analysis is that it prioritizes the risks and identifies areas for immediate improvement in addressing the vulnerabilities. The disadvantage of the qualitative analysis is that it does not provide specific quantifiable measurements of the magnitude of the impacts, therefore making a cost-benefit analysis of any recommended controls difficult. The major advantage of a quantitative impact analysis is that it provides a measurement of the impacts magnitude, which can be used in the cost-benefit analysis of recommended controls. The disadvantage is that, depending on the numerical ranges used to express the measurement, the meaning of the quantitative impact analysis may be unclear, requiring the result to be interpreted in a qualitative manner. Additional factors often must be considered to determine the magnitude of impact. These may include, but are not limited to An estimation of the frequency of the threat-source s exercise of the vulnerability over a specified time period (e.g., 1 year) An approximate cost for each occurrence of the threat-source s exercise of the vulnerability A weighted factor based on a subjective analysis of the relative impact of a specific threat s exercising a specific vulnerability. RISK IDENTIFICATION Risk identification involves pinpointing the risks that may affect a project. Risk Identification has to be conducted at regular intervals throughout the life span of the project. Risk Identification has to take into consideration internal and external factors. Internal factors involve risks that the group which is handling the project can manage some examples of internal factors are the delegation of work, freezing of vacation leaves and budget allocation. External factors involve risks that the project personnel are not in command of. Some examples of external factors are economic fluctuations, policy restructuring or natural disasters (William R Duncan 1996). RISK ANALYSIS The other half of assessment is risk analysis. This is the process of examining each risk to refine the risk description, isolate the cause, quantify the probability of occurrence, and determine the nature and impact of possible effects. The result of this process is a list of risks rated and prioritized according to their probability of occurrence, severity of impact, and relationship to other risk areas (STSCC, 2003). 133

135 Figure Risk Analysis Flow (Source: The Risk IT Practitioner Guide, ISACA, 2009) Once risks have been defined, with probability of occurrence and consequences assigned; the risk can be rated as to its severity. This facilitates prioritizing risks and deciding what level of resources to devote to the risk. There are a few well-known types of risk analysis that can be used [C.Ravindranath Pandian]. In software engineering, risk analysis is used to identify the high-risk elements of a project. It provides ways of documenting the impact of risk mitigation strategies. Risk analysis has also been shown to be important in the software design phase to evaluate criticality of the system, where risks are analyzed and necessary countermeasures are introduced [Yudistira Asnar, Paolo Giorgini]. The purpose of risk analysis is to understand risk better and to verify and correct attributes. A successful analysis includes essential elements like problem definition, problem formulation, data collection [Bryan McKinney, David Engfer]. UNDERSTANDING QUALITATIVE RISK ANALYSIS The objective of conducting a qualitative1 risk analysis is to acquire safety against recognized risks and to increase the alertness of management, team members, and all personnel who are vulnerable to them. This method of risk analysis is designed to identify issues that are looked upon as project management impediments, but have the potential to become definite risk factors. It improves awareness of security problems and the posture of the system being analyzed. Whereas quantitative analysis relies on complex formulas and monetary or frequency values for the variables, qualitative analysis relies on the subjective judgment of the security risk assessment members to determine the overall risk to the information systems. The same basic elements are required to determine risk, such as asset value, threat frequency, impact, and safeguard effectiveness, but these elements are now measured in subjective terms such as high or not likely. UNDERSTANDING QUANTITATIVE RISK ANALYSIS Quantitative risk analysis is more focused on the implementation of safety measures that have been established, in order to protect against every defined risk. By using a quantitative approach, an organization is able to create a very precise analytical interpretation that can clearly represent which risk-resolving measures have been most well-suited to various project needs. This makes the quantitative approach favored by many management teams since risk assessments can be clearly represented in the empirical forms like percentages or probability charts, since it emphasizes using tools such as metrics. 134

136 The quantitative methodologies usually calculate the impact and frequency of threats mathematically. It involves identification of where security controls should be implemented and the cost envelope within which they should be implemented. Quantitative analysis is an approach that relies on specific formulas and calculations to determine the value of the risk decision variables. There are several formulas that are commonly associated with quantitative security risk analysis. These formulas cover the expected loss for specific risks and the value of safeguards to reduce the risk. HYBRID METHOD A selected combination of these two methods can be used to implement the components utilizing available information while minimizing the metrics to be collected and calculated. It is less numerically intensive (and less expensive) than an in-depth exhaustive analysis. (Source: QUANTITATIVE V/S QUALITATIVE ANALYSIS Qualitative analysis is simpler and widely used. Qualitative analysis helps in the identification of the assets and resources at risk, vulnerabilities that might allow the threats to be realized, safeguards already in place and those which may be implemented to achieve an acceptable level of risk and increase overall awareness. Quantitative analysis does this as well as identifies the specific envelope in which the losses and safeguards exist. It is based substantially on independently objective processes and metrics and requires an accordingly increased degree of effort be placed in deterring the cost values and an increasing amount of effort be placed into the calculations. It does, however, present its results in a management-friendly form of percentages, and probabilities. To select the proper analysis approach is really dependable on the time, scope and quality of the risk assessment. The below table depicts some of the advantages and disadvantages of both Quantitative and Qualitative approaches for the risk analysis. RISK MITIGATION Risk mitigation, the second process of risk management, involves prioritizing, evaluating, and implementing the appropriate risk-reducing controls recommended from the risk assessment process. (Gary Stoneburner, 2002) Because the elimination of all risk is usually impractical or close to impossible, it is the responsibility of senior management and functional and business managers to use the least-cost approach and implement the most appropriate controls to decrease mission risk to an acceptable level, with minimal adverse impact on the organization s resources and mission. RISK MITIGATION OPTIONS Risk mitigation is a systematic methodology used by senior management to reduce mission risk. Risk mitigation can be achieved through any of the following risk mitigation options: Risk Assumption. To accept the potential risk and continue operating the IT system or to implement controls to lower the risk to an acceptable level Risk Avoidance. To avoid the risk by eliminating the risk cause and/or consequence (e.g., forgo certain functions of the system or shut down the system when risks are identified) Risk Limitation. To limit the risk by implementing controls that minimize the adverse impact of a threat s exercising a vulnerability (e.g., use of supporting, preventive, detective controls) Risk Planning. To manage risk by developing risk mitigation strategies that prioritizes, implements, and maintains controls Research and Acknowledgment. To lower the risk of loss by acknowledging the vulnerability or flaw and researching controls to correct the vulnerability Risk Transference. To transfer the risk by using other options to compensate for the loss, such as purchasing insurance. RISK MITIGATION STRATEGY Senior management, the mission owners, knowing the potential risks and recommended controls, may ask, When and under what circumstances should I take action? When shall I implement these controls to mitigate the risk and protect our organization? The risk mitigation chart addresses these questions. Appropriate points for implementation of control actions are indicated in this figure by the word YES. 135

137 Figure Risk Mitigation Action Points (Source: Risk Management Guide for Information Technology Systems, NIST Special Publication ) RISK MITIGATION METHODOLOGY FLOWCHART 136

138 Figure Risk Mitigation Methodology Flowchart (Source: Risk Management Guide for Information Technology Systems, NIST Special Publication) INDIAN SOFTWARE DEVELOPMENT INDUSTRY ORGANIZATION Adolescence is a period of transition from childhood to adulthood. It is a period of intensive growth and change in nearly all aspects of a child's physical, cognitive, social, and emotional life. Transition from one period to another is always associated with some problems. When child enter in this stage he or she has to readjust to home, school and social life. So it is very necessary to give proper guidance and direction to adolescents for their better adjustment. It has been found from various studies that emotional intelligence and self-efficacy have significant and positive influence on the adjustment of adolescents. Keeping this view in mind, the present study is conducted to investigate and examine the impacts of emotional intelligence and self -efficacy on the adjustment of adolescents. 137

139 With the growth of technology, India has become one of the emerging IT lands in the global market. A number of software development companies in India with teams of qualified and skilled software professionals work in the areas of IT services with focus on software development, Information Technology Consultancy, Web design and development, Offshore Outsourcing, Business process outsourcing, Knowledge process outsourcing, Enterprise Resource Planning Development and Implementation, Multimedia and custom software applications etc. The Indian software industry has a pyramidal structure, with a few large indigenous firms dominating the sector. Among the 3000 firms, exporting software from India, the three largest firms have market leadership. At the other end of the spectra, the smallest 2,900 firms have annual sales of less than $10 million, with most less than $2 million (Bhatnagar, 2003). Smaller firms play a more significant role in the domestic market where they supply software services to small and medium sized domestic firms in different sectors. For their export contracts, the smaller firms have primarily entered into a variety of linkages with individuals and small companies abroad for marketing access. There are few horizontal partnerships between small and large vendors. Some early efforts by established firms to subcontract to smaller ones failed because the smaller partner tried to make direct contact with overseas clients. In recent years, a few small firms have developed products for their domestic market with some success but exports have been very limited. Multinational companies arrived in India relatively late and account for only about a quarter of exports. Multinational firms use their Indian operations primarily as export platforms. Increasingly, multinationals are setting up shop in India to conduct sophisticated software development activities and as a captive source of R&D, utilizing India s pool of highly trained engineers. Many Indian firms have been started by entrepreneurs who acquired some wealth and experience working in larger established firms and then set up new companies. Many of the corporate leaders did their graduate study in United States and/or worked in Silicon Valley so they have a keen understanding of the software development process. The high profitability and a relatively low risk of the industry has attracted a large number of professionals. Also, entry costs are relatively low (Bhatnagar, 2003). RESEARCH METHODOLOGY RISK IDENTIFICATION METHOD ADOPTED For risk identification, a questionnaire was prepared after discussions, interaction and brainstorming with people within software development companies. These questionnaires were given to 30 software development companies in Ahmedabad. The collected data was used to identify risks which were further analyzed. RISK ANALYSIS METHOD ADOPTED: QUALITATIVE During the risk analysis step, each risk is assessed to determine: Likelihood: the probability that the risk will result in a loss Impact: the size or cost of that loss if the risk turns into a problem For this study Qualitative risk analysis has been adopted. Qualitative risk analysis technique is used to determine which risks are important enough to manage. The technique is "qualitative" since it is an approximation and doesn't reflect the rigor of a detailed, numerical analysis. Qualitative risk analysis is done by evaluating each risk and designating each risk as high, medium, or low, depending on two criteria -- the impact and the probability of the event occurring. DATA ANALYSIS The standard risk model is used for data analysis in this study: RISK = LIKELIHOOD * IMPACT Using qualitative risk analysis each risk has been evaluated and designated as high, medium, or low, depending on two criteria--the severity of impact and the probability of the event occurring. Here are the steps involved in this technique: Identify the severity of the impact to the project in terms of high, medium, and low. Estimate the probability of the risk occurring in terms of high, medium, and low. 138

140 RISK MATRIX Chart Risk Probability/Impact Matrix High (Critical) Medium Low (Noteworthy) CONCLUSION We have always faced many challenges in dealing with risks. Successful risk analyses require scientists and engineers to undertake assessments to characterize the nature and uncertainties surrounding a particular risk. One also needs social scientists to characterize the factors that influence the perception of a risk by individuals, groups and organizations. Given the challenges in processing information on these risks as well as the interdependencies between individuals and firms which create negative externalities, it is necessary to develop risk management strategies that will reduce future losses efficiently. The success of a software development project is directly connected with the involved risk, which implies project risks should be successfully mitigated. Also, development of a software solution within a given time is a process associated with varying risk impacts. Generic risk database has been created for small software development companies and mitigation strategies for these risks have been put together. (Refer: Table 2 below). Software risk management is a daunting task, and those organizations that fail in this effort may turn out unsuccessful. The nature of software projects creates many risks that must be managed diligently to avoid the common drawback of many projects. RISK DATABASE WITH LIKELIHOOD, IMPACT AND MITIGATION ID Risk Likelihood Impact Likelihood H/M/L Impact H/M/L Mitigation Strategies R1 Lack of cost estimation in projects 66.7% 0.77 H H Look at the major requirements and try to quantify the value of the various deliverables and document intangible benefits that the project will achieve. Review previous similar projects to see how the benefits were quantified All the assumptions made while cost estimation should be documented This risk can be mitigated by early selection of best available cost estimation relevant to the project characteristics: utilize historical data about past projects. It should be evaluated if sufficient historical data about the same kind of projects (similar processes, similar technologies, similar requirements) is available or not. Accurate measurement of project size is very essential as it leads to the accurate cost estimation of 139

141 R2 Inadequate budget R3 Lack of provision for variation in budget R4 Lack of defined schedule (milestones and operational dates) R5 Lack of flexibility in schedule R6 Inadequate infrastructure R7 Inadequate team size the project. Size of the project should be measured considering detailed Work Breakdown Structure so that cost estimate may encompass every area of cost and effort. It should be kept in mind that relationship between cost and system size is not linear. Cost tends to increase exponentially with size. Cost estimation must be approved by all the stakeholders. The inaccurate factors should be clearly explained to all stakeholders. Experienced cost estimators should be appointed to avoid errors during process of cost estimation 76.7% 0.70 H H Have contingency budget allocated for the project Have master buffer resources allotted for all current projects The project budget must be determined and agreed upon by all the stakeholders in the very initial stages of the project life cycle Requirement changes should be minimized 53.3% 0.81 M H Focus on firming up scope before budgeting Define various components of scope, such as what organizations are affected, what deliverables are expected, what type of information is required for budgeting. Such detailed scope definitions would enable to recognize the probable variability in budget All the assumptions made while budgeting should be documented to identify the parameters that may vary Provide for contingency in budget 60.0% 0.77 M H Close project monitoring should be implemented continuously throughout each phase of the project Project management tools (such as MSP, Manymoon) should be employed to make scheduling efficient Break the project into smaller, shorter subprojects Identify clear milestones to check that the project is on schedule Strive to get ahead of schedule as early as possible Ensure all major deliverables are formally approved with the involvement of all stakeholders, so that change management can be invoked afterward In case project is over running, to recover in time, employees may be asked to work overtime as and when possible, in rarest of cases Proper tools and methods of configuration management shall be well in practice so that any requirement change may well incorporated and may not result in the delay Make technical design and architecture decisions as flexible as possible to account for potential changes 43.3% 0.60 M M 50.0% 0.70 M H Ensure the project definition and business requirements are formally approved and signed and accordingly, sufficient infrastructure is available Infrastructure sharing tie-ups with complementing needs for mutual gain Outsourcing arrangement in case of need 43.3% 0.73 M H Develop arrangements with freelancers from various channels Establish network with educational institutions to recruit trainees/interns 140

142 R8 Lack of established system development methodology R9 Lack of established client-user review and approval schedule R10 Lack of subject matter expert R11 R12 R13 R14 R15 Client's management's support affect on outcome of project Lack of experience of project leader with similar projects Lack of project team's functional knowledge of the clientuser s business Lack of experience of project team with the hardware being used Lack of experience of project team with the tools and techniques Identify channel partners for body shopping Paid Overtime in cases of urgency 33.3% 0.68 M H Define the overall system in terms of flowcharts and figures and have it approved Utilize system and technical design documents to clearly lay out how the technology fits together Use products that utilize open standards to reduce the risk of integration problems Try to substitute more proven and familiar technology in system development Ensure close collaboration and open communication between team members Standard documentation procedure should be set and followed for all projects 56.7% 0.60 M M Identify all stakeholders of the system Create an aggressive communication plan to ensure the team communicates effectively Hold regular meetings with client where the entire team meets face-to-face Update each task completion in Project management software used Review schedule after each milestone achieved and also ensure proper review feedback 30.0% 0.67 L H Designate senior subject expert to coach and mentor the project manager Invite external experts for training/guidance if need be Develop in-house experts through training and knowledge transfer 83.3% 0.50 H M Seek client s management s active participation and approval in planning and requirements gathering Have an extensive communication plan to keep client-management engaged Schedule meetings/interaction with clientmanagement after each milestone Communicate the business benefits to the management to make them feel connected Keep the client s management informed about the regular progress through mails 20.0% 0.65 L M Project Leader should be appointed very carefully selecting one who has good experience on the tools and technology being used for the project Provide up-front training Designate a more senior person to coach and mentor the project leader 53.3% 0.73 M H Training on client s project domain should be built into the project schedule The project team should spend substantial time getting introduced to the client s business initially itself The team should go through various material which would give functional knowledge of the client s business 40.0% 0.52 M M Provide up-front relevant training to employees on regular basis Have all the hardware manuals archived and organized for quick reference of employees Assign an external expert/amc who would be available when required for assistance with hardware 43.3% 0.71 M H Experienced staff should be allocated to critical task which may ensure that no delay is expected and hence ensure the smooth and efficient completion of the project. Regular seminars and workshop may be arranged 141

143 R16 R17 R18 R19 R20 being used No provision for back up personnel Lack of availability of adequate computer resources and development tools Continuously changing requirements Incompletely specified requirements Implied (unwritten) requirements of clients to facilitate the employees in term of learning new technologies, and new staff must be deputed to assist the senior members. The employees should be provided the opportunity to meet the seniors informally, in order to gain social and technical knowledge and wisdom. Provide up-front relevant training to employees on regular basis 53.3% 0.76 M H Arrange a channel to avail Freelancers on need Work with the project team to determine how to get around the shortage Try to get cross-project experience or external support on a temporary basis Document staffing gaps and secure approval to address them Provide cross-training to employees 43.3% 0.72 M H Develop a strong relationship/association with the hardware and software vendors Maintain a database of alternate hardware and software vendors Have external mutual co-operation arrangements which can be leveraged in case of urgent need 93.3% 0.85 H H Seek formal approvals for each milestones to bridge the communication gap with the client so they cannot claim about their requests being misunderstood resulting in rework of demands to be implemented. 66.7% 0.71 H H 66.7% 0.66 H M Divide the client employees into specific groups based upon organizational hierarchy and target each group separately. As each group would be having different requirement based upon their set of duties. For example managers would be interested in decision support tools where as operational work force would be interested in convenient transaction processing. Use every possible method to understand what user says and what the analyst comprehends out of that, so that the requirement shall be validated by the end user. Define various components of scope, such as what organizations are affected, what deliverables are expected, what type of information is required. Begin to define business requirements at a high level and then narrow down to define scope Clearly define what is out of scope for the project Document all scope assumptions when providing estimates of work, cost, or duration Prototype Demos can be showed to the user to avoid ambiguities. Confirmed user requirements should be documented and signed by all stake holders. Use pictures or diagrams to communicate scope and options and ensure that the final business requirements are approved in writing with a change management procedure All stake holders especially client must be told very clearly about the feasibility of particular requirement; Decide on conflicting scope statements Joint Application Development (JAD) is a group based requirement elicitation and design technique. JAD mainly features an intensive structured workshop. 142

144 R21 R22 R23 R24 R25 R26 R27 Lack of documentation of activities and design of project Scope for human error Lack of defined project standards No contingency plan for unanticipated circumstances Lack of reassessment activity after milestones Lack of involvement of end-users of the system being developed Lack of contingency plans for power failure Expected end users, Analysts, Developers and Projects managers attend the workshop. The workshop is headed by an experienced leader who conducts meetings with managers and end users to clearly define the domain, scope and objectives of the project. 63.3% 0.78 M H Standard operating procedures and templates should be set up for documentation of each activity and task of the project Create a central repository to hold the project documentation that all team members can access Create system and technical design documents 96.7% 0.78 H H Employment of experienced programmers can reduce and prevent too many errors in the application modules Application must be tested concurrently (by code review/ peer review) for such types of errors, to detect at an earlier stage. Errors can result in worst loss if detected after deployment of the system at the user end, as cost to fix errors after deployment is too high. Hence all possible errors should be tested and verified carefully prior to system delivery Regular reviews would reduce the scope for human errors to be carried forward Monitoring activities should be arranged frequently and employees should be trained for the same 36.7% 0.52 M M Company and employees must agree on and implement some standard framework for project management to have organized project management Adopt the most suitable project standards for each project which will enable save cost and time 66.7% 0.73 H H Schedule meetings for risk management regularly Company assets must be insured against theft to retrieve the loss Back up should be taken on regular basis to prevent data loss in unanticipated circumstances. Some authority should confirm that backups are taken regularly and intermediate versions of data are not ignored or lost. More over backups can be kept at multiple places. For this multiple back up servers can be employed at different geographical locations Announce the possibility of unanticipated risks and prepare the team to remain composed in any such case 40.0% 0.60 M M Establish a change control board to help review the project after each milestone and approve changes Close project monitoring should be implemented continuously throughout each phase of the project Client should be involved in periodic reassessment and internal reviews should be supervised by team leaders 63.3% 0.65 M M Identify all stakeholders and review expectations. Put them in writing and secure agreement by all Establish proper communication media with the end-users to understand their expectations Set up customer reviews at key milestones to ensure expectations are being met Use of internet to understand the user behaviour and trends and also keep them engaged throughout the process 56.7% 0.45 M M Identify the effect of power cuts on project schedule and include provisions for the same Equipment like UPS should be set up which provides instantaneous or near-instantaneous 143

145 R28 R29 R30 Lack of contingency plans for theft Lack of contingency plans for natural calamities Lack of contingency plan for political/econ omic instability protection from input power interruptions and would lessen the effect of an unexpected power disruption which could otherwise cause injuries, fatalities, serious business disruption or data loss Use of generators would reduce loss from unforeseen events like power failure Back up should be taken on regular basis to prevent data loss in such situations. Some authority should confirm that backups are taken regularly and intermediate versions of data are not ignored or lost. More over backups can be kept at multiple places. For this multiple back up servers can be employed at different geographical locations. Introduce shift based work hours to reduce the impact of power cuts 46.7% 0.51 M M Company assets must be insured against theft to retrieve the loss Data theft by internal personnel is also a risk in case of IT projects. This can be avoided by surety bond filled by the employee that he/she may not take away the technical material or shall not sell to other outside parties. If so, there shall be some legal penalty to prevent such theft 80.0% 0.49 H M Develop robust disaster recovery procedures Back up should be taken on regular basis to prevent data loss in such situations. Some authority should confirm that backups are taken regularly and intermediate versions of data are not ignored or lost. More over backups can be kept at multiple places. For this multiple back up servers can be employed at different geographical locations. Introduce standard procedure for regular recovery checking Schedule meetings for risk management regularly 100.0% 0.47 H M Business and projects should be geographically diversified. This would ensure various revenue streams from different countries and thereby not hold back business altogether Identify new business opportunity channels in different economies Schedule meetings for risk management regularly Table Risk Database with Mitigation Strategies ANNEXURE Data analysis computation RISK = PROBABILITY OF OCCURRENCE * POTENTIAL IMPACT Probability of Occurrence was computed based on the number of respondents who indicated the risk. Impact (on a scale of 1 to 5) was computed as the average of the impact (1-5), with corresponding value of scale, indicated by each respondent in the impact questionnaire. Glossary of High / Medium / Low For Probability of Occurrence Probability of Occurrence > 66.6% à High Probability of Occurrence > 33.3% & Probability of Occurrence < = 66.6% à Medium Probability of Occurrence < = 33.33% à Low For Impact Weighted average IMPACT > 0.66 à High Weighted average IMPACT > 0.33 & Weighted average IMPACT < = 0.66 and à Medium Weighted average IMPACT < = 0.33 à Low 144

146 Overall Risk The following shows the classification used for high, medium and low. The first line shows a risk that is highly likely to occur and has a high impact to the project. This is obviously a high overall risk. On the other hand, the last line shows a risk that has a low impact and is not likely to happen anyway. This would certainly be considered a low risk. The other combinations fall somewhere within this continuum: High negative impact to project / Highly likely to occur -- high risk High negative impact to project / Medium likely to occur -- high risk High negative impact to project / Not likely to occur -- medium/low risk Medium negative impact to project / Highly likely to occur -- medium risk Medium negative impact to project / Medium likely to occur -- medium/low risk Medium negative impact to project / Not likely to occur -- low risk Low negative impact to project / Highly likely to occur -- low risk Low negative impact to project / Medium likely to occur -- low risk Low negative impact to project / Not likely to occur - low risk REFERENCES: 1. Aagedal J. O., d. B. (2002). "Model-based Risk Assessment to Improve Enterprise Security". International Enterprise Distributed Object Computing Conference. 5th, pp Switzerland: IEEE. 2. Alex Down, M. C. (1994). Risk Management for Software Projects. 3. Armstrong, K. &. (n.d.). 4. Ayad Ali Keshlaf, K. H. (2000). A Model and Protorype Tool to Manage Software Risks. Asia Pacific Conference. 1st. IEEE. 5. Bhatnagar, S. (2003). India's Software Industry. IIMA. 6. Boehm, B. D. Software Risk Management. IEEE Software, 14 (3), Boehm, B. W. (1989). Tutorial: Software Risk Management. 8. Bryan L. McKinney, D. R. (2004). Formulating Risk into Research and Engineering Projects. Crystal Ball User Conference. 9. Chapman, C. B. (1983). Risk analysis: testing some prejudices, European Journal of Operation Research. 14, pp Gary Stoneburner, A. G. (2002, July). Risk Management Guide for Information Technology Systems. NIST Special Publication. 11. Gilb, T. (1988). Principles of Software Engineering Management. 12. Haimes, Y. Y. (2004). Risk Modeling, Assessment and Management. 13. (2001). Life Cycle Software Project Management. Software Technology Support Centre Course. 14. Marija Boban, Ž. P. (2003, November). Strategies for successful software development Risk Management. UDC: : Meritt, J. W. (n.d.). National Institute of Standards & Technology. 16. Miller, K. D. (1992). Framework for Integrated Risk Management in International Business. Journal of International Business Studies, 23 (2), Pandian, C. (2007). Applied Software Risk Management a Guide for Software Project Managers. 18. Rashidi, H. H. (2009). Classification and Analysis of Risks in Software Engineering. World Academy of Science, Engineering and Technology. 19. Reddy, T. K. (2008). Risk Management in the Indian Petrochemical Industry (with special reference to Haldia Petrochemicals Ltd.). DLSU Business and Economics Review, 18 (2), Ronald P. Higuera, Y. Y. (1996, June). Software Risk Management. 21. The Risk IT Practitioner Guide. (2009). ISACA. 22. Veetil, A. (2009, June). Risk Analysis on IT Assets using Case-Based Reasoning. 23. Waring, A. a. (2005). Mananging Risk. 24. Westerman, G. (2007). IT Risk Management: From IT necessity to Strategic Business Value. CSIR WP. 25. Westfall, L. (2001). SOFTWARE RISK MANAGEMENT. 26. Y. H. Kwak, J. S. (2004). Project risk management: lessons learned from software development environment. Technovation, Y.H. Kwak, J. S. (2004). Project risk management: lessons learned from software development environment. 28. Yudistira Asnar, P. G. (2007). Risk Analysis as part of the Requirements Engineering Process. 29. Yusuff, M. N. (2011, January). CONTEMPORARY APPROACHES TO PROJECT RISK MANAGEMENT ASSESSMENT & RECOMMENDATIONS

147 WORKFORCE DIVERSITY AND ORGANIZATIONAL COMMUNICATION: ANALYSIS OF HUMAN CAPITAL PERFORMANCE AND PRODUCTIVITY Priyanka Pandey *, Fahad Khan** ABOUT THE AUTHORS * PRIYANKA PANDEY; ASSISTANT PROFESSOR, DEPARTMENT OF COMMERCE, SAPKM, KICCHA, DIST US NAGAR, UTTARAKHAND ** FAHAD KHAN; ASSISTANT PROFESSOR, DEPARTMENT OF COMMERCE, SAPKM, KICCHA, DIST US NAGAR, UTTARAKHAND ABSTRACT The twenty-first century organizations are increasingly becoming multicultural workplaces for communication. This paper explores recent literature on the increasing global influence of workforce diversity and its effect on workplace communication. It provides a model for the discussion of the opportunities and challenges of diversity in the workplace. Human capital (HC) programs represent a significant investment of an organization s resources. However, evaluating the programs impact on organizational performance can be challenging. The paper then provides an analytical framework that guides readers with practical ideas that can assist them in their endeavors to effectively communicate in a globally diverse work environment. The paper stresses that effective communication in a diverse workforce ensures a high level of performance and productivity for human and intellectual capital and provides business organizations a competitive advantage in their expanded markets and in the global economy. KEYWORDS: Workforce Diversity; Organizational Communication; Global Economy; Cultural Differences; Intellectual Capital. INTRODUCTION A diverse economy is integral to a strong economy. Businesses that embrace our nation s changing demographics reap the economic benefits of a diverse and inclusive workforce. In an increasingly competitive economy where talent is crucial to improving the bottom line, pooling from the largest and most diverse set of candidates is increasingly necessary to succeed in the market. Businesses that recruit from a diverse workforce are better able to find the best and the brightest talent needed to compete in an increasingly competitive economy. By bringing together our different backgrounds, skills, and experiences, businesses are better able to breed the type of innovative and creative solutions needed to succeed in an increasingly competitive economy. Businesses that embrace diversity also realize significant increases in workforce productivity and job performance. More broadly, a diverse workforce drives economic growth, as more women, racial and ethnic minorities, and gay and transgender individuals enter the workforce.ober(2006) explained that effective communication both internally and externally,is essential for any organization wishing to excel in today s internationally competitive corporate environment and global business and competitive advantage would not be achievable without effective business communication. DIVERSITY IN BUSINESS ORGANIZATIONS A diverse workforce combines workers from different backgrounds and experiences that together breed a more creative, innovative, and productive workforce. And businesses have learned that they can draw upon our nation s diversity to strengthen their bottom line. In this way, diversity is a key ingredient to growing a strong and inclusive economy that s built to last. Diversity is one of those topics in which many people, many companies, they hear the anecdotes and they think they are the exception to the rule, David Thomas, dean of Georgetown University s McDonough School of Business According to a 2011 study from Forbes Insights, "diversity is no longer simply a matter of creating a heterogeneous workforce, but using that workforce to innovate and give it a competitive advantage in the 146

148 marketplace." In the study of 321 companies with more than $500 million in revenue, 85 percent of those surveyed agreed or strongly agreed that diversity is key to driving innovation in the workplace. Workforce diversity has the potential to improve service delivery and performance by way of understanding the values and norms of target populations the organization serves, particularly for public employees in service delivery organizations. Recognizing the importance of diversity, many organizations have developed policies and professional development initiatives to attract, retain, and develop employees, as well as facilitate communication and understanding among employees. Recognizing the various factors that make organizations unique (e.g., purpose, size, structure, location, etc.), diversity management initiatives vary. DIVERSITY AND INCLUSIVENESS In today's competitive and global business environment, the strategic logic for creating an organisational culture that attracts, develops and retains talent from diverse backgrounds is compelling. It would strengthen leadership capabilities and skills; it would enhance the ability to identify and create new business opportunities; it would allow for new ideas and "out of the box" thinking and in particular it would enable the meaning and impact of decisions to be understood against varying perspectives. ECONOMIC BENEFITS OF WORKPLACE DIVERSITY A diverse workforce drives economic growth. Our nation s human capital substantially grows as more women, racial and ethnic minorities enter the workforce. women went from holding 37 percent of all jobs to 47 percent over the past 40 years has accounted for about a quarter of current GDP.By bringing together individuals from different backgrounds and experiences, businesses can more effectively market to consumers from different racial and ethnic backgrounds, women, and consumers who are gay or transgender. It is no surprise, then, that studies show diversifying the workplace helps businesses increase their marketshare.recruiting from a diverse pool of candidates means a more qualified an increasingly competitive economy where talent is crucial to improving the bottom line, pooling from the largest and most diverse set of candidates is increasingly necessary to succeed in the market. A diverse and inclusive workforce helps businesses avoid employee turnover costs. Businesses that fail to foster inclusive workplaces see higher turnover rates than businesses that value a diverse workforce because they foster a hostile work environment that forces employees to leave. The failure to retain qualified employees results in avoidable turnover-related costs at the expense of a company s profits. Having a diverse and discrimination-free work environment helps businesses avoid these costs.diversity is a key aspect of is needed to leverage a company s full potential. WORKPLACE DIVERSITY HINDERED BY FAILURE TO COMMUNICATE Effective communication and effective teamwork don t occur automatically. When people from different backgrounds work in teams, many problems related to team interaction can occur, including disorganization, miscommunication and misunderstanding, and inadequate participation in the process for and development of procedures for problem solving (Cooley, 1994). The gaps in diversity stemmed from one issue, study authors concluded -- a failure to communicate. You don t provide the feedback you would give to the people who look like you Ultimately you re discriminating because you re not allowing that person to improve and get ahead, he said, explaining how despite the fact that respect for a colleague may prevail, too many managers fear that any criticism or discussion of race or gender will likely get them in trouble, so they avoid it entirely. Research indicates that teams that use efficient communication strategies and techniques achieve higher levels of decision making performance (Jeffery, Maes, & Bratton-Jeffery 2005, p. 44). THE INDIAN CONTEXT India s workforce is predominantly young. Large numbers are entering the professional workforce at a time of rapid economic expansion that provides increased opportunity for the well qualified and well connected. However, access to professional education, socialization, and entry and career advancement is still disproportionately concentrated among social groups that have traditionally dominated the professional fields. Despite its much strength, the educational system doesn t provide sufficient trained talent for the job market, particularly the IT sector that is the new economy s engine of growth. This puts special pressures on employers in India around finding, competing for, holding and cultivating the skilled employees they need. 147

149 Diversity in the Indian workforce has a spectrum wider than just age or gender; a country where Seventy-two percent of the population is Indo-Aryan, 25 percent Dravidian, and 3 percent Mongoloid and other. An estimated 850 languages are in daily use, and the Indian Government claims there are more than 1,600 dialects. A Manager who wishes to efficiently manage an Indian workforce needs to consider the diversity in his team on a case to case basis. For example the holidays that one would declare could also be a cause of dissatisfaction among the employees of a particular organization as different festivals are celebrated with varying pomp and show round the country. The Indian workplace is no different from global MNCs. Infosys announced an intake of 300 graduates from universities in the US in 2006 and about 25 from universities in the UK in 2007 as part of its commitment to create a diversified workforce. The new employees will develop their engineering skills at Infosys Development Centers across India for six months before returning to Infosys offices in the US. TCS has announced plans to hire about 4,000 people from across the world. MAJOR ISSUES TO CONSIDER FOR WORKPLACE DIVERSITY Diversity in the workplace presents benefits and challenges, both of which come with issues thatyour company can resolve through training your managers and employees. A great amount of people in our ever changing and globalising world view diversity as an advantage. There are however those of us who find it difficult to deal with and prefer not to make the extra effort, and instead to settle for the familiar. It is natural for individuals to feel more comfortable with a slightly altered version of themselves. This would, to a large extent, prevent communication difficulties, and save people the effort of having to consider and get acquainted with someone different to them. In reality we have no choice but to embrace differences in culture, origin, language, etc. This is especially true in the field of management. This is one of the areas which are most affected by globalisation and the increasing need for coping with diversity. Diversity in the workplace include benefits and drawbacks; however, broaching sensitive topics, such as race, color, religion and other traits unrelated to your employees' qualifications, sometimes becomes an issue. The issue of diversity in the workplace isn't exactly "resolvable." It's a reality given the shift in demographics that include generational, religious, genetic and sexual orientation differences within the population and the work force. BALANCING WORKPLACE DIVERSITY ISSUES Interaction with co-workers of varied cultures, races and generations provides your work force with an exposure they might never have had if they were not employed with your company. Diversity can enlighten your staff and encourage colleagues to explore alternative ways of developing interpersonal relationships, learning different work styles and understanding communication differences among co-workers. In addition, and probably the most profitable of all advantages, a diverse workplace enables you to broaden your client base. EXPANDING GLOBAL BASE The increased impact of the global marketplace has prompted many organizations to move from a multinational strategy to a global one. This change in strategy requires that organizations have a plan for understanding and improving global intercultural communications (Harvey & Griffith, 2002). Business educators must equip their students with the knowledge and skills to succeed in these organizations. Strategies for teaching students the most effective methods of intercultural communication coincidentally should include instruction about the barriers to communication created by cultural differences. Cultural differences can create *the+ potential to make interculturalcommunication very difficult, and sometimes impossible (Chitakornkijsil, 2010, p. 7). With globalization comes the challenge of communication among people with different cultural and racial backgrounds. For example, Martin and Nakayama (2007) note that for many people, communication encounters with diverse people from different ethnic, race, and national backgrounds occur most frequently in the workplace. Small businesses and large corporations are now able to expand their client base to tap the global market thanks to technology that permits you to conduct business with customers around the world. The challenge of globalization becomes a diversity issue if your organization's goal is to broaden its reach. Diversity within your work force can help your organization address this issue--you can benefit from workplace diversity through the diverse communication styles and languages to enhance your appeal in a global market. A diverse staff may be better able to communicate with others who share the same language, nationality and culture. Wilson Reyes, contributor to "Indiana Business Magazine," says, "Employees from diverse backgrounds bring different talents and experiences that can foster new ideas, address changing markets and customer demands, 148

150 and add skills that were not there before." This is one of the many reasons globalization is gaining strength-- through reaching into areas not previously considered. Many proponents of diversity believe a diverse workplace can experience greater profitability, global appeal and a positive reputation among the community your organization serves. Sadri and Tran (2002) found that improvements in supervisor-subordinate communication would prompt workplaces to manage diversity and cultural differences by encouraging integration and equality in the workplace. Researchers have noted that ignoring the implications of workforce diversity can affect productivity and performance as well as undermine the overall goal business performance. POSITIVE EFFECTS OF WORKFORCE DIVERSITY Workforce diversity has many advantage such as it improves corporate culture & Employee morale, as well as increases the creativity of the employees. It also increases the productivity & reduces the training costs. Its major advantage is that it enables and strengthens the organization to move into the emerging markets. Publisher Malcolm Forbes once said that 'diversity is the art of thinking independently together.' Organisations can't thrive and grow if everyone in them thinks and behaves the same way. Having a diverse workforce with people from different racial, educational and social backgrounds and a diverse age range opens up a wealth of possibilities and helps to encourage creativity and foster innovation. There's also a clear competitive advantage to be gained from employing a diverse workforce. An organisation with a diverse range of employees is well placed to understand the needs of a wide range of customers, and can interact with a broad client base. Not only that, but it is also in a good position to recruit and retain staff in an increasingly diverse and competitive labour market. Embedding diversity of thought throughout an organisation also means that talent can be properly recognised and nurtured - wherever it may be.the best starting point for any organisation is to develop a good equality and diversity policy, backed up by a concrete plan of action NEGATIVE EFFECT OF WORKFORCE DIVERSITY Although employing a diverse workforce has many advantages, it comes with some disadvantages as well. A company that recruits and employs a diverse workforce must create a culture that promotes dignity and respect to avoid tension between employees. In addition, communication may be adversely affected if employees' first language is not English. Existing employees may leave the organization if their personal prejudices prevent them from working with colleagues from a different background. As another disadvantage, the investigation of employee complaints regarding negative attitudes and harassment can take up a considerable amount of management time, whether or not they are upheld. COMMUNICATION IN A DIVERSE WORKPLACE Diversity awareness is an integral component of any diversity training or education program. Generally, people consider three dimensions (characteristics) of diversity race, gender, and ethnicity when discussing diversity. However, the dimensions of diversity include all the ways in which people are different. Bucher (2000, p. 15) describes diversity as including whatever we think distinguishes us. Awareness of one s own diversity is the first step in the process of becoming aware of the diversity of others. Increasing one s diversity awareness can impact one s ability to interact with others. According to the US Bureau of Labor Statistics (2001) report Working in the 21st Century, the labor force is getting older, more women are working today than in the past, and minorities are the fastest growing part of the labor force. As our countries, communities, schools, and workplaces become increasingly diverse, a person s ability to be aware of one s own diversity as well as the diversity of others is exceedingly important. According to Milliken and Martins (1996), diversity in the workplace focuses on observable attributes such as race/ethnicity, nationality, age, and gender, as well as underlying attributes such as values, skills, knowledge, and cohort membership. These attributes form our identity and influence our relationships in the workplace [and] our identity and our relationships form and are formed by our communication with one another (Thomas, 1996, p. 371). Among the barriers impacting communication in a diverse workplace are international issues, intercultural issues, intergenerational issues, and gender issues (Lehman &DuFrene, 2008). 149

151 STRETEGIC FRAMEWORK FOR THE IMPROVEMENT IN ORGANIZATIONAL PERFORMANCE According to the book Intercultural Management by Nina Jacob, leading companies choose to globalise themselves internally in order to achieve a good cohesion with their regions of activity, and thus obtain the best possible results in their operations. There are many considerations when dealing with multicultural working environments. Managers must be aware of the numerous peculiarities of diverse groups. If run well, such teams can have astounding success. In order to do this however, there are certain prerequisites. These include awareness, knowledge of hard cross cultural facts, and perhaps most important a firm hand when enforcing tolerance, understanding, and facilitating effective communication. Introducing decision-making strategies to team members can enhance the effectiveness of team communication, thus leading to better decisions. CONCLUSION Managing the workforce diversity is critically important in today s world as there are many benefits associated with it such as it improves corporate culture & Employee morale, as well as increases the creativity of the employees. It also facilitates the productivity of employees and the organization & reduces the training costs. Its major advantage is that it enables and strengthens the organization to move into the emerging markets. Balancing the workforce diversity is a challenge for most of the organizations because mostly the employees are from different religions, cast, creed & color. Thus there can be a situation of miscommunication & misunderstanding, which should be looked upon & minimized by an effective communication by the people of the organization. The organizations should maintain the Workforce Diversity and try to maintain its positive effect on workplace communication. REFERENCES: 1. Lehman, C. M. &DuFrene, D. D. (2008). Business Communication, 15th Ed. Mason, OH: Thomson South-Western. 2. Anderson, J. A. (1993). Thinking about and Development, 49, Bovee, C. L., &Thill, J. V. (2008).Business communication today (9th ed.). Boston: Prentice Hall. 4. Bowes, B. (2007, December). The business case for workplace diversity.cma Management, 81(8), Retrieved June 24, 2011, from ABI/INFORM Global. (Document ID: ). 5. Devoe, Deborah. (1999). Managing a diverse workforce. San Mateo, CA: InfoWorld Media Group. 6. Jeffery, A. B. &Maes, J. D. (2005).Improving team decision-making performance with collaborative Performance Management, 11(1/2), Matveev A. V. & Nelson, P. E. (2004). Cross cultural communication competence and multicultural team performance: perceptions of American and Russian managers. International Journal of Cross Cultural Management, 4(2), Sadri, Golnaz& Tran, Hoa (2002) "Managing your diverse workforce through improved communication", Journal of Management Development, Vol. 21 Issue: 3, pp Florida, Richard and Gary Gates (2001). Technology and Tolerance: the Importance of Diversity to High-Technology Growth. Washington, D.C.: The Brookings Institution. 10. Cox, T.H. & Blake, S. (1991). Managing cultural diversity: Implications for organizational competitiveness. Academy of Management Executive, 5(3), Ober, S. (2006). Contemporary Business Communication (6th Ed). Boston: Houghton Mifflin Company. 12. Roberson, Q.M., & Park, H.J. (2007). Examining the link between diversity and performance: The effects of diversity reputation and leader racial and Organization Management, 32(5), Thomas, D.A., & Ely, RJ. (1996). Making differences matter: A new paradigm for managing diversity. Harvard Business Review, 74(5), Schermerhorn, Hunt, & Osborn (2007). Organizational behavior.wiley Publishers, NJ. 15. Ferrell, Hirt, Ferrell (2008). Business: A changing world. McGraw-Hill, Boston. 16. Flatley, M., Rentz, K., & Lentz, P. (2012). Business communication (2nd ed.) New York: McGraw-Hill. 17. Garvin, D. A. (1993). Building a Learning Organization. Harvard Business Review 71(4),

152 OLD AND SPARE COMPUTERS: IGNORED PART OF INFORMATION TECHNOLOGY Dr. Sonia Vatta * ABOUT THE AUTHOR * DR. SONIA VATTA; ASSOCIATE PROFESSOR & DEAN; SCHOOL OF COMPUTER SCIENCE AND ENGINEERING; BAHRA UNIVERSITY, WAKNAGHAT, SOLAN H.P., INDIA. ABSTRACT This paper presents the work done on old and spare computers which is an important issue but being ignored. This issue may cause problems to health and environment. The basic aim of this work is to create awareness on computer recycling and other issues related with it. KEYWORDS: Computer, Recycling, Awareness, Health, Environment INTRODUCTION The computer sale in India is all time high. In India the computer sale was 10.8 million units in the year 2012, which was increased by 16% as compared to the year The sale of desktops was 6.7 million units in the year 2012, which was increased by 11% as compared to the year 2011 while the sale of laptops was 3.7 million units, which was increased by 27% as compared to the year As per industry experts, the forecast is that in India, the computer sale will touch to 12.4 million units by the end of the year But what people do with old computers? Researchers are not much worried on this issue. People buy new computers frequently as the need and technique both are changing very fast. Usually, people do the following with old computers. 1. Gift it to one of the family members like husband / wife / son / daughter / parents. 2. Try to resale it in the market and expect the price near to on what they bought it a few years ago. 3. Try to upgrade the existing system into parts and sell it into parts, if it is a desk top. 4. Keep it at home as a show piece or a status symbol. 5. Give it to the scrap dealer. Recently Mac Book has been launched in the market, which is a product of Apple. Its starting price is Rs /- and Apple is expecting the sale of one Million units in the 1st year, so it means again we will have 1 million laptops which will be extra in the country by any way. LAW, A PROBLEM The main problem is that the law is silent on recycling of computers and does not instruct how to dispose of them. It offers simple kinds of warnings such as Dispose of Carefully or Keep away from the reach of children, but there is no punishment in law for violation of the above. The law is hard for corporates on disposing of computers and related parts, while it is soft for individuals on the same issue. COMPOSITION Computer is composed of almost entirely non-recyclable materials, some of which are hazardous not only to the environment but also to the human beings. Circuit Boards which are the important part of computers consist of a lot of lead that makes up of the solder that is used to solder the components in place. Cadmium is being used excessively in contacts and switches, which is harmful. The old laptops use Ni-Cd (Nickel Cadmium) batteries, which is dangerous as well. Also the inhalation of cadmium oxide has severe adverse effects on the human respiratory system. Mercury is used in flat screen monitors that can enter into water bodies and do a considerable amount of damage to the environment. Bromine is present on motherboards and printed circuit boards in the form of TBBPA (tetrabromobisphenol a) has been shown to intervene with the animal body development which is linked to impaired memory function. A lot other materials are considered toxic inside an ordinary house computer and when a person thinks their computer is just too old or broken they just toss it in a dump instead of properly disposing of these dangerous materials. 151

153 Many profitable businesses have sprung up in India that deal with electronic waste and remove profitable materials out of old computers (Schults et al., 2008). Copper is hugely used in electronics for low resistive wiring and cooling of components that produce a lot of heat during their operation. OBJECTIVES OF STUDY The objectives of this study are as described below: 1. Creating awareness on recycling and protection of environment. 2. To have knowledge of people s behavior and reaction on computer recycling. 3. To know about the networks of existing computer recycling programs. 4. To know about the people s awareness on hazardous materials used in computers. The history of computer recycling has been examined and the recycling behavior has been studied to fulfill the objectives. Then the data has been collected on these issues to find out the results. COMPUTER RECYCLING Schiffer (1996) in his book Formation Processes of the Archeological Record defined how to reuse materialistic objects. According to him the computer recycling has been classified in the following four categories: 1. Lateral cycling 2. Re-Manufacturing 3. Secondary use 4. Conservatory practices Lateral Cycling means the ownership is transferred from one to another, without charging any money. For example parents give used computers to their children. Re-Manufacturing is a variable concept. It means to reuse the same thing but in an upgraded format. For example, we upgrade an old PC to a new PC, but keep the basic structure same or it could be the selling of computer in various parts. Secondary use means, not fulfilling the primary objective but using it as an alternative. For example, we keep computer as a show piece. Conservatory practices mean that we preserve the object for any reason. RESEARCH METHODOLOGY The field work has been conducted to accomplish the research work. The research work was consisted of surveys, personal interviews and literature review. NGOs, Private Educational Institutions and Recycling Businessmen were used for data collection. method was also adopted to collect the data. 10 NGOs, 3 Universities, 5 Colleges, 5 Schools and 10 Recycling Businessmen has been taken into consideration to collect the data. The study was conducted in the area between Chandigarh and Baddi (H.P.). It has been analyzed that the network of computer recycling professionals is very small. The data from paper and online system has been collected, compiled and analyzed to find out the results. From respondents, 37% were graduates, 12% were non-teaching faculties, 32% were teaching faculties, 18% were scrap dealers and 11% were others. Finally 92% people have been come up and owned at least 1 computer at home. The surveys and interviews which have been conducted, involved many interesting questions in a broader sense which include the following: 1. How long people are using computers? 2. Their interest in recycling. 3. Environment and health issues due to non- recycling. 4. Attitude and trends on recycling. 5. The facilities available for recycling. 6. Issues in recycling. 7. Interest in donation to poor students. Recycling type and respective response Recycling Type Response 152

154 Lateral Recycling 38% Re-Manufacturing 32% Secondary use 18% Conservatory Practices 12% 18% 12% 38% Recycling type and response Lateral Recycling Re Manufacturing 32% Secondary Use Conservatory Practice UNWANTED COMPUTER MODELS It was noticed that all unwanted computers are very old, like processor 486, Pentium 1, Pentium 2, systems with defects and others. Category Percentage of Unwanted Models % P1 42% P2 16% Defectives 11% Others 8% It was observed that people are money minded and they try to get maximum cash instead of adopting any recycling method. It was also observed that computers which are thrown out are mostly from businessmen or institutions including NGOs, rather than individuals. It was also noticed that 15% of computers which are thrown out, could have been used for the education of poor students. These can also be used for donating to nonprofit institutions, Charities and like that (Rob Pegoraro, 2011). ENVIRONMENT Computers and their parts which are thrown out in dust bins are very dangerous as they release lead which can contaminate ground water. Monitor screens are composed of two pieces of heavy glass fused together with a lining of lead between them, which is dangerous. Also other parts make up of materials which are harmful for the environment (De Young, Raymond, 2010). But in India the law is silent on the issue that how to dispose of computers and their parts. DANGER FROM OLD COMPUTERS Category Awareness of danger Not aware of danger Knowledge of danger 42% 58% Knowledge of e-waste provisions 29% 71% In India, we have many Government offices, where un-used computers and printers are lying simply, but due to the lack of Government policy, these cannot be disposed of properly. Their re- sale is a big issue and moreover throwing out of them is a bigger issue. As it is not illegal to throw the computers and other related materials in dust bins, so people are into this kind of practice. This issue has also been discussed with Mayor of Chandigarh Municipality, who confirmed that it is difficult to give an exact data on finding old computers from public dust bins, but there is increase in finding of computers and other related parts from public places. 153

155 LACK OF INTEREST OF BUYERS It has been noticed that good buyers are not available in the market. If an individual will go to sell an old computer in the market, he / she will prefer to keep it unused rather than selling it on a very low price. Cost of New and Old Computers Type Price New Desk Top Rs. 15,000 to Rs. 25,000 Old Desk Top Rs. 5,000 to Rs. 8,000 New Laptop Rs. 25,000 to Rs. 40,000 Old Laptop Rs. 8,000 to Rs. 12,000 WHAT IS SALABLE? Some people are doing millions of transactions by recycling computers. The following parts can be sold at a good price. 1. Color monitors can be sold at a good price in market. 2. Aluminum and copper. 3. Circuit boards. 4. Very old PCs, dot matrix printers and other old material can be exported to third world countries. 5. Plastic is difficult to recycle, so plastic parts can be taken out and sold separately to plastic recycling companies. 6. Glass can be taken out and re-used easily for manufacturing of other items. 7. Likewise other metals can also be taken out and sold separately. CONCLUSION AND SUGGESTIONS 1. Monitors are very difficult to recycle as they are bulky and contain lead, which is dangerous, so we must be careful while disposing of them. With the new trend of slim LCD / LED screens, people are not much interested in old monitors so they need to find out the proper ways to dispose of them. 2. The spare parts must be kept away from the reach of children. These parts may contain some hazardous material which can be dangerous for children. 3. The old computers and other related material can be sold to third world countries, but there will be a problem of transferring them from one place to another. There is need to find out the ways of how this can be done in a proper manner. 4. Normally metal dealers do not take monitors, so they do not help general public in disposing of the monitors. Government is advised to keep e-waste bins at certain places and make the general public aware of that. 5. General public is advised to dispose of e-waste at mentioned places only, so that it can be collected properly from those places for recycling. 6. Another issue is software licensing and fees. It becomes difficult for people to recycle the computers because some of them do not have full rights to do it. Some of the softwares are duplicate or copied. 7. Businessmen and other people who change their computers frequently can help the society by donating the old computers to poor students, nonprofit institutions, charities and like that. All businessmen and other people should be encouraged to come forward and help the poor without investing anything extra. 8. In next 1-2 years, cheap computers like Akash are coming and the computer sale in India is expected to be double in next 2-3 years. So people must be aware of effects of computers on health and environment. It is the responsibility of government to guide users on environmental and health issues. Government should make certain proper arrangements or design certain policy on these issues to help general public. 9. There should be awareness programs on these kinds of issues into the interest of general public, so that the public can take benefit from these kinds of programs and update themselves. 10. It should be the responsibility of general public as well to educate themselves on these issues, so that they can contribute in keeping themselves, their family members, society and environment healthy. 154

156 REFERENCES 1. Corral-Verdugo, Victor, Dual, 2012, Realities" of Conservation Behavior: Self-reports vs. Observations of Re-use and Recycling Behavior. 2. Derksen, Linda and John Gartrell, 1993, The Social Context of Recycling. American Sociological Review, 58: De Young, Raymond, 2010, Some Psychological Aspects of Recycling. Environment and Behavior. 4. Duran, Rachel, 2000, Recycling Old Computers? Here are $1.2 Billion Reasons you should know. 5. Heim, Judy, 2001, New Life for Old PCs. PC World, October: Melanie Kozlan, 2 November 2010, What is 'E-Waste' & How Can I Get Rid Of It? Four Green Steps. Retrieved 4 November Rob Pegoraro, January, 2011, Help File: Recycling Old Electronics, The Washington Post, retrieved 7 April Schiffer, Michael B., 1996, Formation Processes of the Archaeological Record. Salt Lake City: University of Utah Press. 9. Schults, P W, Oskamp S and Mainieri Penn T, 2008, Computer Recycling, Who Recycles and When? 10. Werner, Carol M and Eeva Makela, 1998, Motivations and Behaviors that Support Recycling. Journal of Environmental Psychology 18(4):

157 A STUDY OF SOME SELECT KEY ISSUES OF PRODUCTION SYSTEM LIFE CYCLE Rajesh Attri *, Sandeep Grover** ABOUT THE AUTHORS * RAJESH ATTRI; ASSISTANT PROFESSOR, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ** SANDEEP GROVER; PROFESSOR, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ABSTRACT In product life cycle, the product goes through distinct stages such as introduction, growth, maturity, decline and death. The same concept is extended to a production system as a whole. In the introduction stage of production system, product and its design is selected. For the manufacturing of product, manufacture has to provide facilities. After a certain period of time, the production system becomes steady. Here, the system is slightly influenced by internal and external environmental changes. When there are radical changes in external environment, and the production system finds it difficult to adopt those changes, the system comes to end. At this time, the system is either phased out intentionally or it is sold or merged over a period of time. The main objectives of this paper are to discuss the key select issues of production system life cycle. KEYWORDS: Production system, life cycle, stage, issues INTRODUCTION The objective of an enterprise is to provide goods or services, and to earn some profit. These days, many firms are focussing on continuous improvement and customer delight. A continuous search for areas of improvement in the production system is needed. For this, a clear understanding of recent developments in production system is necessary. To achieve these objectives, the firms need to convert some inputs like men, material, money, energy, information etc., into useful outputs like finished products and services in required quality and quantity. The transformation of inputs into pre-specified outputs is achieved through production process (Shankar 2007, Attri et al. 2012). The production system is that part of an organisation, which produces products of an organisation. It is that activity whereby resources, flowing within a defined system, are combined and transformed in a controlled manner to add value in accordance with the policies communicated by management (Kumar and Suresh 2009). A simplified model of production system is shown in Figure 1. Figure 1: Simplified production system (Kumar and Suresh 2009) 156

158 Kotler and Keller (2006) discussed that in product life cycle, the product goes through several distinct stages such as introduction, growth, maturity, decline and death. In each stage, certain decisions have to be taken. The same concept is extended to a production system as a whole. The production system can also be regarded from its own life-cycle, from initial planning of the system design to phase-out (Bellgran and Säfsten 2010). The main objective of this paper is to discuss the select key issues of production system life cycle. PRODUCTION SYSTEM LIFE CYCLE The life cycle of a typical production system shows the advancement of production system from the inception to the termination of system. A production system is generally designed to produce a product that originally derived from an idea. The idea of the product is examined in terms of marketability, producibility and capital requirements. After the selection of the product, the product is designed in terms of shape, size and other requirements. Here the key output of the product design is the product s specification. Next, process selection is done by which raw materials inputs are transformed into products output. Then afterwards, the major strategic decision i.e. plant location is made by the organization. After the selection of the plant location, the layout is designed according to the processing requirements. Required machines are purchased by the purchasing department. Production, inventory, quality control systems are designed. After this, tasks are designed for deciding the manpower requirements, recruitments are done accordingly and production is commenced. Once the production system comes into operation, problems are identified and rectified. During this period, production system is affected by a number of external factors such as change of technology, introduction of new product, shifting of market. For the adjustment of these changes, a revision may be carried out to bring the system in line. This process may be carried out a number of times. If the production system fails to adjust these changes, the system will terminate. Figure 2 shows the life cycle of a production system along with the key decision to be made in each stage of cycle. Figure 2: Production system life cycle (Attri et al. 2012) 157

159 KEY ISSUES IN PRODUCTION SYSTEM LIFE CYCLE In this section, the major key issues related to the production system life cycle are discussed in detail. 1. Design and development of production system: The design of production systems involves defining the problems, objectives and outlining the alternative course of action (problem-solving), and the evaluation, choices among alternatives and detailed design of proposed production systems (decision-making). The result of the design work is a description (specification) of the production system (Bellgran and Säfsten 2004). A general framework describing the phases in the design process is suggested by Wu (1994). Figure 3: General design framework (Wu 1994) Bellgran and Säfsten (2010) and Bellgran and Säfsten (2004) have discussed three types of approaches i.e. concept-generating approach, customer-driven approach and supplier design approach of system design. 2. Effective utilisation of production system: Ericsson (1997) have defined the following eight factors for the effective utilization of the production system: Personnel related measures to utilize and develop the abilities of the workforce for example by education and organization. Technology for example flexible machinery or maintenance. Material for example by developing the computer system so that the material is available in right quantity at the right time. Design by working with DFM (Design for Manufacturing) so that the product is easy to manufacture. Working time by working in shifts with time in between or taking brakes in shifts. Batch at constant cycle-time and set-up time there is a direct relation between batch size and utilization. Product mix the utilization is greatly dependent on the product mix, for example products produced in a specific sequence effect available material. Order of production the way different products are manufactured effects the set-up time. If one product is manufactured before another it may greatly effect the utilization of the production system. 3. Performance measurement of production system: The performance measurement of a company can be defined as the sum of each strategy of its component functions such as manufacturing, finance, marketing, service, research and development, etc. (Miltenburg 1995). Chin and Saman (2004) have discussed that following five performance measures for different production systems. 158

160 a. Cost: Cost is of utmost important to manufacturers of commodities which are manufactured to standard specifications and sold under standard delivery terms. b. Quality: In manufacturing strategy, quality is associated with conformance to specifications and critical customer expectations. c. Performance: Performance is associated with features of the products as they affect the products ability to do what other products cannot. d. Delivery time: Delivery time is the amount of time a manufacturer requires to supply a product to a customer. e. Flexibility: In manufacturing systems, flexibility means to what extend the volumes of the existing products can be increased or decreased to respond quickly to the needs of the customers. f. Innovativeness: Innovativeness means the ability to introduce new products or make design changes to the existing models. 4. Termination of system: The system is terminated when production ceases permanently or when a system is so greatly revised that the major portion of the original design is no longer relevant to its subsequent operations (Chase and Aquilano 1977). Moreover, Chase and Aquilano (1977) discussed that the system can be terminated by two ways: a. Temporary termination: It refers to a situation in which a system is so greatly revised that the major portion of the original design is no longer relevant to its subsequent operations. The main reasons associated with such type of termination are major technological change, vertical integration and major changes in output requirements. b. System blending: It denotes the dovetailing of one system with another. c. Permanent termination: It refers to the permanent closing of a production system. CONCLUSION The production system life cycle displays the progress of system, from initial planning of the system design to phase out. Generally, new production systems are designed in parallel to the old systems which are still in operation, which enables to make use of previous experiences efficiently. The nature of the production system varies during the different stages of production system life cycle, which necessitates the prediction of current position of the system. In this paper, the important issues of the production system life cycle such as design & development of production system, effective utilisation of production system, performance measures of production system and termination of the system are discussed. These issues play a critical role in the life cycle of production system. REFERENCES 1. Shankar R. Industrial Engineering and Management. Galgotia Publications: Delhi, Kumar S A, Suresh N. Operations Management. New Age International (P) Ltd., Publishers: New Delhi, Attri R, Grover S. A comparison of production system life cycle models, Frontiers of Mechanical Engineering, vol. 7, no. 3, pp , Kotler P, Keller K L. Marketing management. Pearson Education, Inc.: India, Bellgran M, Säfsten K. Production development: Design and operation of production systems. Springer-Verlag London Limited: New York, Bellgran M, Säfsten K. Production system design and evaluation for increased system robustness. Proceedings of Second World Conference on POM and 15th Annual POM conference: Cancun, Mexico, Wu B. Manufacturing Systems Design and Analysis: Context and Techniques. Chapman & Hall: London, Miltenburg J. Manufacturing Strategy, Productivity Press: Portland, Oregon, Chin H G, Saman M Z M. Proposed analysis of performance measurement for a production system, Business Process Management Journal, vol. 10, no. 5, pp , Chase R B, Aquilano N J. Production and operations management: A life cycle approach. Richard D. Irwin, Inc. Homewood, Illinois, Ericsson J. Störningsanalys av Tillverkningssystem Ett Viktigt Verktyg inom Lean Production, Lund University, Dissertation No. LUTMDN/(TMMV-1034)/1-227(1997), Department of Production and Materials Engineering, Lund,

161 SELECTION OF TOOL INSERT FOR CNC TURNING PROCESS USING GREY RELATIONAL ANALYSIS Rajesh Attri *, Nikhil Dev **, Krishan Kumar***, Amit Rana**** ABOUT THE AUTHORS *RAJESH ATTRI; ASSISTANT PROFESSOR, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA **NIKHIL DEV; M.TECH STUDENT, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ***KRISHAN KUMAR; M.TECH STUDENT, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ****AMIT RANA; M.TECH STUDENT, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ABSTRACT Cutting tool insert selection is a multi-attribute decision making problem as the decision maker has to assess a wide range of alternative options and selecting one based on a set of conflicting attributes. There is a need for simple, systematic and logical method or tool to guide the decision makers for making the correct decision. This paper presents uses a new multi-attribute decision making (MADM) method, grey relational analysis (GRA) for selecting the tool insert for a given set of conditions. Example from literature is presented to demonstrate and validate the applicability and potentiality of GRA in selecting tool insert. It is observed that relative rankings of the alternate tool inserts obtained by GRA method match quite well with those as derived by the past researchers. KEYWORDS: GRA, CNC tool insert, selection, decision making INTRODUCTION The most significant factors considered in the selection of the insert type are the cutting tool geometry and the type of clamping of the tool insert. The geometry of the insert plays a critical role in achieving the desired surface finish producible on the machined surface and in controlling the chips (Elmagrabi et al. 2007). Dogra et al. (2011) have also illustrated that tool geometry has significant influence on chip formation, heat generation, tool wear, surface finish and surface integrity during turning. Patel et al. (2012a) specified that importance of selection of tool insert has been highlighted recently to be of enormous economic significance in maximizing tool life and surface roughness in machining. In literature several authors have illustrated the effects of tool geometry on machining performance. Elmagrabi et al. (2007) have discussed the effect of tool material on tool geometry. In addition, they also presented the selection of the shape of cutting tool (insert). Özel et al. (2005) investigated the effects of cutting edge geometry, workpiece hardness, feed rate and cutting speed on surface roughness and resultant forces in the finish hard turning of AISI H13 steel. Theile et al. (1999, 2000) presented research results of an experimental investigation of effects of cutting edge geometry and workpiece hardness on residual stresses in finish hard turning of AISI steel. Rodrigues and Coelho (2007) studied the influence of the tool edge geometry on work piece roughness at high speed cutting. Adesta et al. (2009) experimentally investigated the effect on tool wear and surface roughness under different rake angles and different cutting speed. Feng (2001) illustrated an experimental study of the impact of turning parameters on surface roughness. Günay (2008) investigated the interaction between the surface quality and rake angle in machining of AISI 1040 steel. Dogra et al. (2011) studied the effect of tool geometry variation on finish turning. From literature review it has been revealed that limited work has been carried out in field of selection of cutting tool insert for CNC turning process. Patel et al. (2012a) selected the cutting tool insert by Analytical Hierarchy Process (AHP), Revised Analytical Hierarchy Process (RAHP) and Technique for Order Preference by Similarity 160

162 to Ideal Solution (TOPSIS). In another paper, Patel et al. (2012b) selected the cutting tool insert by Simple Additive Weighting (SAW) and Weighted Product Method (WPM). Although few MADM approaches have been suggested by the Patel et al. (2012a, b) for selecting the cutting tool insert for CNC turning process, still there is need for a simple as well as systematic tool to guide the decision maker to identify and select the best cutting tool insert from a given set of alternatives. Cutting tool insert selection is a multi-attribute decision making problem as the decision maker has to assess a wide range of alternative options and selecting one based on a set of conflicting attributes. From literature it has been found that various MADM approaches such as AHP, GTA, TOPSIS, VIKOR, PROMTHEE, UTA, ANP, SAW, WPM, DEA, MOORA, ELECTRE, GRA etc. are available to tackle and solve these MADM problems. In this paper, an attempt has been made to select the cutting tool insert by grey relation analysis (GRA) for a given application. A real time example has been cited to demonstrate and results have been matched with those as derived by the past researchers. Grey relational analysis (GRA) has been used for solving a variety of problems in different areas such as optimization of bridge construction plan (Zhan et al. 2009); selection of public relations firms in the high-tech industry (Hsu 2006); personnel selection (Zhang and Liu 2011); selection of home mortgage loans (Lin and Yang 1999); ranking of factors influencing economic benefit in hospitals (Sun 1999); ranking of advanced manufacturing system (Goyal and Grover 2012); to determine a shortlist of advertising agencie (Lin and Hsu 2001); energy performance of office buildings (Lee and Lin 2011). GREY RELATIONAL ANALYSIS (GRA) Grey system theory was suggested by Deng (1982) to solve vague problems having poor and incomplete information (Deng 1982, Wen 2004, Moran et al. 2006, Lin et al. 2004, Dong 1982). Grey relational space is based on the combined concepts of system theory and space theory (Chang 2012). The grey relational theory is based on the levels of similarity and variability among all factors in the considered series to establish their relationship (Yang and Chen 2006). Yang and Chen (2008) has illustrated GRA as a theory and methodology that deals with poor, incomplete, or uncertain systematic problems. GRA elucidates multi-attribute decision making problems by combining entire range of performance attribute values being considered for every alternative into one, single value, which results in reduction of original problem to a single attribute decision making problem. Consequently, alternatives with multiple attributes can be compared easily after the GRA process (Li et al. 1997). Grey Relational Analysis (GRA) can be used to measure the degree of similarity or difference between two sequences based on their relation, known as grey relational grade. The alternate having highest grey relational grade between the reference sequence and itself will be considered as the best choice (Gnanasekaran et al. 2010, Wu and Chen 1999). The procedure of grey relational analysis is shown in Figure 1. Generation of referential series Normalisation of data set Calculation of the grey relational coefficient Calculation of the degree of grey equation coefficient Ranking of alternatives Figure 1. Flow diagram for methodology The steps involved in grey relational analysis are as follows (Gnanasekaran et al. 2010): 1) Generation of referential series: Let X0 represents the referential series with j entities: 161

163 X 0 = {X o (1), X o (2), X o (3),.., X o (j),, X o (n)}, And let X i is the compared series: X i = {X i (1), X i (2), X i (3),., X o (j),, X o (n), i = 1, 2, 3,, m. Compared series (X i ) can be represented in matrix form in the following way: X1 1 X1 2 X X1 n X 1 X 2 X X n X3 1 X3 2 X X3 n Xi (1) X 1 X 2 X n n n Xn n 2) Normalisation of data set: In this step, series data is treated using the following three situations [31]: Larger-the-better: Xi( j) min Xi( j) * j Xi ( j) (2) max Xi( j) min Xi( j) j where max Xi( j) is the maximum value of entity j and min Xi( j ) is the minimum value of entity j. j Smaller-the-better: max Xi( j) Xi( j) * j Xi ( j) max Xi( j) min Xi( j) j Nominal-the-best: * Xi( j) Xob( j) Xi ( j) 1 max max Xi( j) Xob( j), Xob( j) min Xi( j) j where Xob( j) is the objective value of entity j, min Xi( j) Xob( j) max Xi( j ). After, normalisation of data referential series of X becomes * * 0 X 0 and Xi( j) becomes Xi ( j ). j 3) Calculation of the grey relational coefficient: The grey relational equation is used to compute grey relational coefficient ( ) 0 j using the following equation: where min min min 0i( j) i max max ( j) max 0i i j j ( ) 0 ( j) 0 i( j) = the absolute value of the difference between j j min max i j (5) 0i max j * X0 and j j i (3) * Xi at the point of j. is named as distinguishing coefficient. The value of z is usually based on different additional information. In any case, there is 0 1, usually = ) Calculation of the degree of grey equation coefficient: In this step, grade of the grey relational coefficient 0i is calculated by using equation given below: (4) 162

164 n 0 i i 0 i j 1 W ( j) x ( j) Where W i (j) is the weight of the evaluative criteria. Ranking of alternatives: The alternative is categorised on the basis of grey relational coefficient ILLUSTRATIVE EXAMPLE In order to demonstrate and validate the application of the GRA methodology for selecting tool insert problems, a real time example is illustrated. 0i. Patel et al. (2012b) have presented an illustrative problem for the selection of tool insert in CNC turning process for better surface finish. In this problem, Patel et al. (2012b) have considered 5 CNC turning tool insert alternatives i.e. CCMT 09 T3 02 PF, VBMT PF, DNMG PF, TNMG PF, SCMT 09 T3 04 PF and 5 attributes i.e. nose angle (NA), approach angle (AA), rake angle (RA), clearance angle (CA) and angle of inclination (AI). Moreover, Patel et al. (2012b) have solved this problem by Simple Additive Weighting (SAW) and Weighted Product Method (WPM) method. The data of the CNC turning tool insert selection attributes is shown in Table 1. In this paper, the same problem is used to select CNC turning tool insert using the Grey relational analysis (GRA) methodology; the following procedural steps are carried out. Table 1: Data of the CNC turning tool insert selection attributes (Patel et al. 2012b) Insert No. NR AA RA CA AI Tool insert 1: CCMT 09 T3 02 PF, Tool insert 2: VBMT PF, Tool insert 3: DNMG PF, Tool insert 4: TNMG PF, Tool insert 5: CMT 09 T3 04 PF Generation of referential series of X 0 The data of five CNC turning tool inserts is represented in the matrix form as given below: Xi Then the referential series of X 0 is (1.2, 107.5, -6, 7, -7) and the compared series is: X 1 = (0.2, 95, 0, 7, 0) X 2 = (0.2, 93, 0, 5, 0) X 3 = (1.2, 107.5, -6, 0, -7) X 4 = (0.8, 91, -6, 0, 6) X 5 = (0.4, 45, 0, 7, 0) Normalisation of data set Normalisation of data is done by using equation (3) to (5). For attributes, such as nose angle (NA), approach angle (AA) and clearance angle (CA), equation (2) is used and for rake angle (RA) and angle of inclination (AI), equation (3) is used. On basis of type of attribute equation (3) to (5) is used for the normalisation of data, as shown in Table 2. Based on the calculation, the referential series of X becomes (1, 1, 1, 1, 1). * 0 (6) 163

165 Table 2: Normalized data of CNC turning tool insert selection attributes Insert No. NR AA RA CA AI Calculation of the grey relational coefficient ( ) 0 i j In this paper, the distinguished coefficient was fixed at 0.5 The values of ( ) 0 i j are calculated by using equation (6) and the calculation results are shown in Table 3. Table 3: Grey relational coefficient of CNC turning tool insert selection attributes Insert No. NR AA RA CA AI Calculation of the degree of grey equation coefficient 0i It may be noted that same weights of different criteria have been used as used by Patel et al. (2012b). The weight used by Patel et al. (2012b) are as W NR = 0.4, W AA = 0.25, W RA = 0.2, W CA = 0.1 and W AI = These criteria weights are used here for the grey relational-based analysis. In GRA, the alternative with the highest grey relational grade is the most important or optimal alternative. The result of the grey relational grade calculation for each CNC turning tool insert is as follows: Table 4: Grey relational grade of CNC turning tool insert Insert No. NR AA RA CA AI Grade Obtaining the CNC turning tool insert ranking From the grey relation grade of each insert, the ranking order is: 1. DNMG PF 2. TNMG PF 3. CCMT 09 T3 02 PF 4. VBMT PF 5. SCMT 09 T3 04 PF By arranging in descending order, the tool insert selection ranking order is It may be observed that the above ranking is for the given preferences of the decision maker. Further it may be noted that the ranking order will change with respect to a change in weighting value for each criterion. On the basis of above calculations, it has been found that CNC turning tool insert no. 3, i.e. DNMG PF is right choice for the given problem of selection of a suitable Tool insert for work tool combination of machinery operation. Patel et al. (2012b) have found ranking of tool insert for SAW method as and for WPM method as Hence from the ranking of Patel et al. (2012b), it has been found that ranking of our result exactly matches with SAW method. CONCLUSION The application of the GRA method is suggested for the selection of cutting tool insert for the CNC turning process. For proving the applicability and potentiality of GRA in solving such problem, an example of selection of tool insert for CNC turning process is taken. The results of this study matches with the result of past researchers. The use of grey relational analysis (GRA) method is observed to be quite capable and computationally easy to evaluate and select the best tool insert from a given set of alternatives for given conditions. This method uses the measures of the considered criteria with their relative importance in order to 164

166 arrive at the final ranking of the cutting tool inserts. Moreover, this method is computationally very simple, easily comprehendible, and robust which can simultaneously consider any number of quantitative and qualitative selection attributes, while offering a more objective and logical selection approach. As a future scope, a fuzzy GRA based methodology may be developed to aid the decision makers to take decisions in presence of imprecise and incomplete data. REFERENCES 1. A.R. Rodrigues, and R.T. Coelho, Influence of the Tool Edge Geometry on Specific Cutting Energy at High-Speed Cutting, Journal of the Brazilian Society of Mechanical Sciences and Engineering, 29(3) (2007) A-Y Chang, Prioritising the types of manufacturing flexibility in an uncertain environment, International Journal of Production Research, 50 (8) (2012) C. Feng, An Experimental Study of the Impact of Turning Parameters on Surface Roughness, Proceedings of the Industrial Engineering Research Conference, Institute of Industrial Engineers, C.T. Lin, and P.F. Hsu, Selection of advertising agencies using grey relational analysis and analytic hierarchy process, Journal of International Marketing and Marketing Research, 26 (3) (2001) C.T. Lin, and S.Y. Yang, Selection of home mortgage loans using grey relational analysis, The Journal of Grey System, 11 (4) (1999) C-C. Yang, and B-S. Chen, Supplier selection using combined analytical hierarchy process and grey relational analysis, Journal of Manufacturing Technology Management, 17 (7) (2006) E.Y.T. Adesta, M. Riza, M. Hazza, D. Agusman, and Rosehan, Tool Wear and Surface Finish Investigation in High Speed Turning Using Cermet Insert by Applying Negative Rake Angles, European Journal of Scientific Research, 38(2) (2009) H. Zhan, Q. Fang, and W. Chen, Grey correlation method in the decision of bridge design plans, Kybernetes, 38 (10) (2009) J. Moran, E. Granada, J.L. Miguez, and J. Porteiro, Use of grey relational analysis to assess and optimize small biomass boilers, Fuel Processing Technology, 87 (2006) J.D. Thiele, S.N. Melkote, Effect of cutting edge geometry and workpiece hardness on surface generation in the finish hard turning of AISI steel, Journal of Material Processing Technology, 94 (1999) J.D. Thiele, S.N. Melkote, R.A. Peascoe, and T.R. Watkins, Effect of cutting-edge geometry and workpiece hardness on surface residual stresses in finish hard turning of AISI steel, Journal of Manufacturing Science and Engineering, 122 (2000) J.H. Wu, and C.B. Chen, An alternative form for grey relational grades, The Journal of Grey System, 11 (1) (1999) J.L. Deng, Introduction to grey system theory, The Journal of Grey System, 1 (1) (1982) J.L. Dong, Control problems of grey systems, Systems and Controls Letters, 5 (1982) K.L. Wen, The grey system analysis and its application in gas breakdown and var compensator finding, International Journal of Computational Cognition, 2 (1) (2004) M. Dogra,V.S. Sharma, and J. Dureja, Effect of tool geometry variation on finish turning A Review, Journal of Engineering Science and Technology Review, 4(1) (2011) M. Günay, Investigation of the interaction between the surface quality and rake angle in machining of AISI 1040 steel, Journal of Engineering and Natural Sciences, 26 (2008) M.Y. Sun, Grey relational analyzing the influencing factor of economic benefit in hospital, The Journal of Grey System, 11 (1) (1999) N. Patel, R.K. Patel, U.J. Patel, and B.P. Patel, Insert Selection for Turning Operation on CNC Turning Centre using MADM Methods, International Journal of Latest Trends in Engineering and Technology, 1(3) (2012a) N.H. Elmagrabi, F.M. Shuaeib, and C.H.C. Haron, An overview on the cutting tool factors in machinability assessment, Journal of Achievements in Materials and Manufacturing Engineering, 23(2) (2007) N.V. Patel, R.K. Patel, U.J. Patel, and B.P. Patel, A Novel Approach for Selection of Tool Insert in CNC Turning Process Using MADM Methods, International Journal of Engineering and Advanced Technology, 1 (5) (2012b) P. Li, T.C. Tan, and J.Y. Lee, Grey relational analysis of amine inhibition of mild steel corrosion in acids, Corrosion, 53 (1997) P-F Hsu, Developing a new model for selecting public relations firms in the high-tech industry, Journal of Modelling in Management, 1 (2) (2006) S. Gnanasekaran, S. Velappan, and S. Ayappan, An integrated model for supplier selection: an automobile industry case study, International Journal of Services and Operations Management, vol. 6, no. 1, , S. Goyal, and S. 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167 DEVELOPMENT OF GRAPH THEORETIC MODEL FOR ECONOMIC ANALYSIS OF COMBINED HEAT AND POWER SYSTEM Nikhil Dev*, Rajesh Attri**, Vivek Sharma***, Amit Rana**** ABOUT THE AUTHORS *NIKHIL DEV; ASSISTANT PROFESSOR, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA **RAJESH ATTRI; ASSISTANT PROFESSOR, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA *** VIVEK SHARMA; 2LECTURER, DEPARTMENT OF MECHANICAL ENGINEERING, ADVANCED INSTITUTE OF TECHNOLOGY & MANAGEMENT, PALWAL, HARYANA, INDIA ****AMIT RANA; M.TECH STUDENT, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ABSTRACT The cost of a Gas Turbine Power Plant (GTPP) set up and cost of electricity generation per unit is a function of its basic structure (i.e., layout and design), availability (maintenance aspects), efficiency (trained manpower and technically advanced equipments), cost of equipments and maintenance, pollutants emission and other regulatory aspects. Understanding of its structure will help in the improvement of performance, design, maintenance planning, and selection of new power generation systems for cost minimization. A mathematical model using the graph theoretic approach is developed to evaluate the cost of a GTPP. In the graph theoretic model, a directed graph or digraph is used to represent abstract information of the system using directed edges, which is useful for visual analysis. The matrix model developed from the digraph is useful for computer processing. Detailed methodology for developing a system structure graph (SSG), various system structure matrices, and their permanent functions are described for GTPP. KEYWORDS: GTPP, system structure, graph theoretic approach, GTA, cost. INTRODUCTION The use of gas turbines for power generation has increased in recent years and is likely to continue to increase in the future. At present, the demand of gas turbine systems in electrical power generation accounts for more than 50% of the world market of the thermal power plants (Dev et al a,b). A real GTPP is a very large and complex system. Cost of its components and subsystems are integrated with each other in such a manner that any of its component or system can t be studied without taking the effect of others. Generally, Thermodynamic and Thermo-economic model are used for the analysis of gas turbine power plant (Dev et al. 2010). Thermodynamic model of a GTPP gives solution for optimum efficiency whereas Thermoeconomic model is useful for the analysis of GTPP on efficiency and cost basis in association with each other. For the complete analysis of GTPP a multi attribute decision making (MADM) technique is required which can study the effect of one parameter on the others. In literature, a number of MADM approaches have been reported to model various systems and sub-systems. One of such approach is Graph theoretic approach (GTA). GTA is a logical and systematic approach useful for modeling and analyzing various kinds of systems and problems in numerous fields of science and technology. In the present paper a mathematical model has been developed using graph theoretic approach that enables the prediction of the cost of an GTPP by taking into account the cost of its three systems, that is, the air compressor, combustion chamber, gas turbine and the interactions between various systems. SYSTEM STRUCTURE OF GAS TURBINE POWER PLANT In this part system modeling of gas turbine power plant and its analysis is described. Gas turbine power plant considered for the present analysis is shown in Figure

168 Figure 1. Schematic flow diagram of Gas Turbine Power Plant The air at the ambient temperature is compressed by the air compressor and directed to the combustion chamber. The compressed air mixes with the natural gas from the fuel supply system to produce hot combustion gas in the combustor. The hot combustion gas is delivered to atmosphere through stack. For the graph theoretic analysis gas turbine cycle power plant is divided into following three systems: 1. Air compressor system (S1) 2. Combustion chamber system (S2) 3. Gas turbine system (S3) The system is modeled considering its structure on the basis of reliability, efficiency and cost. Let each of the three systems of plant be represented by vertices Si s (i=1,2,3) and interconnection between two systems (Si, Sj) is represented by edges cij s (i=1,2,3) connecting the two vertices Si and Sj. In actual system all three systems affect each other. The graph theoretic representation [S, c] of vertex and edge sets of the three system gas turbine power plant, called system structure graph (SSG) is shown in Figure 2. Figure 2. System structural graph of gas turbine power plant: Air compressor system (S1), Combustion chamber system (S2), Gas turbine system (S3) This is based upon the working of gas turbine power plant as per the following: 1. The ambient air comes to the compressor after being filtered by air filters. Compressor and turbine are attached with a shaft. So the power to compress the air comes to the compressor from the turbine. This is represented by the edge c31. S1 is the compression system. 2. After compression air goes to the combustion chamber. Fuel is added in the combustion chamber. This is represented by edge c A blade is cooled by being made hollow so that a coolant air can circulate through it. Coolant air is obtained directly from the compressor, thus bypassing the combustion chamber. Edge c13 represents the bypassing of cooling air. 167

169 4. Fuel supplied to the combustion chamber is generally compressed natural gas (CNG). For the analysis calorific value (CV) of the fuel is considered irrespective of the composition. Fuel supply is taken a part of combustion chamber. Outlet temperature of combustion chamber system [S2] depends upon thermal stress limit of gas turbine blade material. Highest temperature of flue gas coming out from combustion chamber is controlled by changing air-fuel (A/F) ratio. Combustion product flows to gas turbine as shown by edge c23. The system structure graph of Figure 2 represents the internal structure of the GTPP at system level. It clearly shows different systems and their interconnections in the GTPP as discussed above. GRAPH THEORETIC APPROACH A graph theoretic model is a versatile tool that has been used in various applications. It helps to analyse and understand the system as a whole by identifying system and subsystem up to the component level (Dev et al. 2011). Graph theoretic and matrix model consists of digraph representation, matrix representation and permanent representation. Digraph representation is useful for modelling and visual analysis. Matrix representation is useful in analyzing the digraph model mathematically and for computer processing. Permanent multinomial function characterizes the system uniquely and the permanent value of a multinomial represents the system by a single number, which is useful for comparison, ranking, and optimum selection (Singh et al. 2012). GTA is a systematic and logical approach that is applied in various disciplines (e.g., Dev et al c,d,e,f,g). The following features highlight the uniqueness of this approach over other similar approaches: It presents a single numerical index for all the parameters. It is a systematic methodology for conversion of qualitative factors to quantitative values, and mathematic modelling gives an edge to the proposed technique over conventional methods. It permits modelling of interdependence of parameters under consideration. It allows visual analysis and computer processing. It leads to self-analysis and comparison of different power plants. A. Digraph Representation of GTPP system The digraph basically depicts the graphical representation of the interdependence between various decision attributes taken two at a time and their relative importance for quick visual perception (Chakladar et al. 2009). A GTPP cost digraph is prepared to present the effect of one system on the others in terms of nodes and edges. Let nodes represent system and edges represent their interactions. It represents GTPP systems (Si s) through its nodes and dependence of factors (cij s) through its edges. Si indicates the inheritance of systems and cij indicates degree of dependence of jth system on the ith factor. In a digraph cij is represented as a directed edge from node i to node j. The digraph permits to show the proposed GTPP systems and interactions between systems. Figure 3. Digraph showing attributes of Gas Turbine Power Plant and their interdependencies in the system (attributes: Air compressor system (S1), Combustion chamber system (S2), Gas turbine system (S3)) In particular three systems identified form the GTPP cost digraph. If all the three systems of GTPP are linked to each other then digraph for the GTPP will be as shown in Figure 3. B. Matrix Representation of GTPP system (VPMGTPP) A digraph is a visual representation so it helps in analysing the system to a limited extent only. As the number of nodes and their interrelations increases, the digraph becomes complex. In such a case, simple analysis of the digraph is expected to be difficult and complex. To overcome this problem, the digraph is usually represented in a matrix form (Jense and Gutin 2000, Chakladar et al. 2009). This matrix representation of a digraph gives oneto-one representation. 168

170 Matrix is a square one of N N dimension in which all the attributes take the positions of diagonal elements and the relative importance of attributes takes the position of off-diagonal elements, where N is equal to the number of attributes in the digraph model. Matrix corresponding to digraph shown in figure can be written as: S c c A c S c c c S Systems In this matrix diagonal elements represent the contribution of subsystems in GTPP cost and the off diagonal elements represent interdependencies of each element in the matrix. This matrix (A) is called variable permanent matrix for GTPP i.e. VPMGTPP. C. Permanent Representation (VPFGTPP) Both digraph and matrix representations are not unique as they are changed by changing the labelling of nodes. To develop a unique representation, independent of labelling, a permanent function of the matrix (VPMGTPP) is proposed. Permanent is a standard matrix function and is used in combinatorial mathematics (Jurkat and Ryser 1966, Chakladar et al. 2009, Deo 2000, Balakrishnan 2005). This permanent function has terms like determinant of the matrix. All the terms of the permanent function have a positive sign instead of terms having positive and negative signs alternatively in determinant. The expression for permanent function corresponding to three-element digraph, as shown in Figure 3, is written as: Per A [ S S S S c c S c c S c c c c c c c c ] (2) (1) The permanent of matrix (i.e. equation 1) is a mathematical expression in symbolic form. The physical significance of various grouping of equation (2) is explained as under: The first term (grouping) represents the interaction of three major systems (i.e. S1S2S3). The second grouping is absent in absence of self-loops. Each term of the third grouping represents a set of two-system interdependence loop (i.e. c21c12 or c31c13 or c32c23) and efficiency measure of the remaining one system (i.e. S1 or S2 or S3). Each term of the fourth grouping represents a set of three-system interdependence loop (i.e. c12c23c31 or c13c21c32). In general, if there are N numbers of systems in GTPP and relative importance exists between all systems, then the variable permanent matrix (VPMGTPP), for the considered GTPP digraph, is written as: i j k m n Systems Si cij cik cim cin i c ji S j c jk c jm c jn j cki ckj Sk ckm c kn k B cmi cmj cmk Sm c mn m c ni cnj cnk cnm Sn n The permanent function of variable permanent matrix (VPM GTPP ), for this matrix B is written as: (3) 169

171 2 i i j k m n ij k l m n i j k m n ij jk ki l m n 2 2 ij jk kl li m n ij ij i j k m c c c c S S n i j k m c c S n msn cijc jkcklclmcmi Sn c i j k m n ijc jkck i j k m i clms n n ij kl mn ij jk ki lm mn ln i j k m c c c n i j k c c c c c c m n 2 c i j k m n ijc jkcklcli c mn Per( B) S... c S S S S c c c S S S (4) The permanent of matrix (i.e. equation 4) is a mathematical expression in symbolic form. Equation 4 contains n terms. The equation 4 contains terms arranged in N+ 1 groups, where N is number of elements. The physical significance of various grouping is explained as under: The first term (grouping) represents a set of N unconnected elements, i.e. S 1 S 2 S 3..S N. The second grouping is absent in absence of self-loops. Each term of the third grouping represents a set of two-element loop (i.e. c ij c ji ) and is the resultant dependence of characteristics i and j unconnected elements. Each term of the fourth grouping represents a set of 3 elements loop (c ij c jk c ki or its pair c ik c kj c ji ) is measure of remaining N-3 unconnected elements. The fifth grouping contains two subgroups. The terms of first sub grouping consist of 2 elements loop (i.e T ij T ji and c kl c lk ) and component(s m ). The terms of second grouping are a product of 4- element loop (i.e. c ij c jk c kl c li ) or its pair (i.e. c il c lk c kj c ji ) and component (i.e.c m ). The terms of sixth grouping are also arranged in two sub-groupings. The terms of first sub-grouping are a product of a two element loop (i.e. c ij c ji ) and a 3 element loop (i.e. c kl c lm c mk ) or its pair (i.e. c km c ml c lk ). The second sub-grouping consists of a 5 component loop (i.e. c ij c jk c kl c lm c mi ) or its pair (c im c ml c lk c kj c ji ). D. GTPP Cost index (GTPP CI ) For the graph theoretic analysis gas turbine power plant (GTPP) is divided into following three systems: 1. Air compressor system (S 1 ) 2. Combustion chamber system (S 2 ) 3. Gas turbine system (S 3 ) GTPP cost index (GTPP CI ): = f (three systems) = f (Air compressor system, Combustion chamber system and Gas turbine system) = f (S 1, S 2 and S 3 ) The endeavor here is to co-relate these three systems, their quantification based on their cost and interdependencies of three systems. Based on the above quantification it is proposed to find the cost of GTPP i.e. GTPP CI. The permanent function of GTPP system i.e. (VPF GTPP ) is used for the evaluation of (GTPP CI ) because it contains all the possible components of GTPP system and their interdependence. The numerical value of GTPP system matrix (VPM GTPP ) is named as the GTPP CI : GTPP CI = Per [A] = Permanent function of GTPP system matrix (VPM GTPP ) To calculate this index, the values of S i and c ij are required. The value of S i should preferably be obtained from the available or estimated data. Faisal et. al. (2007) have explained that if data regarding the variables from some previous research or field study is available it can be used to determine the index. But in case no quantitative values are available and in order to avoid complexity at system or subsystem level, values for inheritance may be taken from Table 1. From literature it has been found that Wani and Gandhi (1999) have used data from previous research for selecting the values of the variables while Kulkarni (2005) had used a questionnaire to measure each attribute in terms of weightage to arrive at the values of the variables. 170

172 Table 1. Quantification of factors affecting gas turbine cycle power plant cost S. No. Qualitative measure of cost at sub-system level Assigned value of cost at subsystem level S i 1 Exceptionally low 1 2 Very Low 2 3 Low 3 4 Below average 4 5 Average 5 6 Above Average 6 7 High 7 8 Very High 8 9 Exceptionally High 9 Faisal et. al. (2007) have explained that numerical values for the off-diagonal elements (c ij 's) representing relative impacts between the variables at system level or subsystem level cannot be measured directly. Rao and Padmanabhan (2006) had used the scale proposed by Saaty in his Analytical Hierarchy Process (AHP) to assign values to the relative importance between attributes. However, values can be assigned through proper interpretation by experts (Wani and Gandhi 1999, Faisal et. al. 2007). Table 2 suggests these qualitative values of relative impacts of variables. Table 2. Quantification of interdependencies/ off diagonal elements S. No. Qualitative measure of interdependencies c ij 1 Very Strong 5 2 Strong 4 3 Medium 3 4 Weak 2 5 Very weak 1 DEVELOPMENT OF GRAPH THEORETIC MODEL OF GAS TURBINE POWER PLANT The graph theoretical methodology combines various attributes relevant to a GTPP into a single measure so that a comprehensive ranking of the two or more plants could be made on the basis of their cost. GTPP being very large system has to be divided in to small systems and no system should be independent. Inheritance of every system and their interdependency decides the value of GTPP cost index. In the following section system structure modeling of GTPP and its Graph Theoretic analysis is described. 171

173 A. Digraph Representation of GTPP system Digraph is used to represent the factors and their interdependencies in terms of nodes and edges. In an undirected graph, no direction is assigned to the edges in the graph, whereas directed graphs or digraphs have directional edges. S ij indicates degree of dependence of j th factor on the i th factor. In the digraph S ij is represented as a directed edge from node i to node j. The digraph permits to analyse GTPP cost. Diagraph for the GTPP discussed above is shown in Figure 4. Figure 4. Digraph showing three attributes of Gas Turbine Power Plant and their interdependencies in the system (attributes: Air compressor system (S 1 ), Combustion chamber system (S 2 ), Gas turbine system (S 3 )) B. Matrix Representation of GTPP system (VPM GTPP ) The increase of nodes and edges make the digraph more complex and the visual analysis becomes more difficult. This complicated visualization process is made easy by the matrix representation and this matrix representation of a digraph gives one-to-one representation Systems S1 c12 c13 1 A* 0 S2 c 23 2 c31 0 S 3 3 C. Permanent Representation (VPF GTPP ) Both digraph and matrix representations are not unique as they changes by changing the numbering of nodes. To develop a unique representation, a permanent function of the matrix GTPP CI is proposed. The permanent of VPM GTPP is called the variable permanent system structure function (VPF GTPP ). The permanent function for matrix (5) is written as: Per A* [ S S S S c c c c c ] (6) The physical significance of various groupings in equation (6) is as follows: The first term of the equation (6), S 1 S 2 S 3, indicates that for the gas turbine system to exist all the three systems must be at their place. Second term shows that combustion chamber cost is affected by combustion chamber inheritance and interaction of air compressor and gas turbine system. The last term indicates that effect of interaction among the three systems. In the next section, an example is solved for the demonstration of the proposed methodology. (5) 172

174 EXAMPLE For demonstration the proposed methodology, a GTPP is taken as an example. It is proposed to find the value of GTPP cost index (GTPP CI ). For determining the value of this index, numerical values of inheritance of all systems and their interdependencies are required, i.e. in VPF GTPP (equation (9). Step by step methodology discussed in the previous section is used to evaluate GTPP cost index in this example. 1. Step 1. The various systems affecting the GTPP cost are identified in figure Step 2. The dependencies of systems are visualized through digraph shown in Figure Table 1 and 2 are used to determine numerical values for inheritance of systems and their interactions. It is suggested to find hypothetical best and hypothetical worst value of GTPP cost index (GTPP CI ). GTPP cost index (GTPP CI ) is at its best when the inheritance of all its systems is at its best. Maximum value of Per [A * ] is obtained when inheritance of all systems is maximum, i.e. value taken from Table 1 is 9. The values of off diagonal elements are taken from Table 2 as explained below: Cost of air compressor has a direct effect on the cost of combustion chamber and that is why c 12 is assigned a value of 5. Compressed air from the compressor is sent to the gas turbine for the cooling of gas turbine blades. This cooling air decreases the temperature of the combustion gases in the gas turbine. Their effect is not much pronounced and hence c 13 is assigned with the value of 3. Gas turbine and air compressor is attached with other and power to drive the compressor comes from the turbine. But there is no power transfer from combustion chamber to the air compressor. So c 21 is assigned value 0 and c 31 as 3. After combustion in combustion chamber flue gases enter the gas turbine. As the cost of gas turbine is dependent upon the condition of flue gases coming out of combustion chamber and gas turbine efficiency, a value of 5 is given to c 23. Thus, equation (5) may be written for the maximum value of Per A * as A max (7) The value of permanent of the above function is 885, i.e. maximum Per A * = 885. Similarly GTPP cost index (GTPP CI ) is at its worst when the inheritance of all its systems is at its worst i.e. value taken from Table 1 is 1. Thus, equation (5) may be rewritten for the minimum value of Per A * as A min (8) The value of permanent of the above function is 85, i.e. minimum Per A * = 85. The value of Per A * indicates the value of GTPP cost index (GTPP CI ). Thus, the maximum and minimum value of cost index (GTPP CI ) indicates the range with in which it can vary. Experts can use this range to decide a threshold value for a given set of similar power plant. Monitoring at regular interval may be carried out by third party to assess power plant cost. Moreover, the values may be carried out at regular interval. 173

175 CONCLUSION In this paper a methodology for evaluation of GTPP cost index is proposed using digraph and matrix approach. The graph theoretical methodology consists of the GTPP digraph, the GTPP matrix and the GTPP permanent function. The GTPP digraph is the visual representation of the characteristics and their interdependence. The GTPP cost matrix converts digraph into mathematical form. The GTPP permanent function is a mathematical model, which helps to determine GTPP index. Thus the approach helps to express GTPP cost in quantitative terms, which has more often been expressed in qualitative terms. The procedure also helps to compare different industries in terms of efficiency, cost and reliability and rate them for a particular period of time. The approach based on graph theoretic approach presented in this paper for the prediction of GTPP cost has the following features: It is a qualitative cum quantitative method for modeling GTPP cost. It permits modeling of interactions/dependencies existing between factors/ subsystems. GTPP cost can be represented by graph theoretic, matrix and permanent function models. Cost is quantified by a single numerical index representing its competitiveness and suitability. These models can easily be modified to consider new factors/subsystems emerging with technological development. Sensitivity analysis to identify the critical elements is easily carried out. The method permits to generate alternative for GTPP cost improvement. This is an effective tool for evaluation, comparison, ranking and selection of an optimum GTPP system. Practical implementation of the proposed methodology in a systematic manner will help industry to identify, analyse and evaluate factors responsible for GTPP cost. Evaluation and comparison will also lead to identify critical areas that are roadblocks to GTPP cost. The GTPP cost index not only help an organization to achieve intangible objectives- better efficiency, reliability through continuous improvement but also have long lasting effects on tangible objective profitability through productivity. REFERENCES 1. Balakrishnan VK (2005) Graph theory. McGraw-Hill, New Delhi 2. Chakladar ND, Das R. and Chakraborty, S. A digraph-based expert system for non-traditional machining processes selection, Int J Adv Manuf Technol (2009) 43: , DOI /s Dev N, Attri R (2012a) Exergetic Analysis of Combustion Chamber of a Combined Heat and Power system Proceedings of the National ConferenceTAME-2012, p Dev N, Attri R, Mittal V, Kumar S, Mohit, Satyapal, Kumar P (2012b) Thermodynamic analysis of a combined heat and power system Research Journal of Recent Sciences, vol 1, No.3, pp Dev N, Attri R, Mittal V, Kumar S, Mohit, Satyapal, Kumar P (2012c) Economic and thermal analysis of thermal system Research Journal of Recent Sciences, vol 1, No.4, pp Dev N., Samsher, Kachhwaha S.S. (2010), Computational Analysis of Dual Pressure Non-reheat Combined-Cycle Power Plant with Change in Drum Pressures International Journal of Applied Engineering Research, vol 5, No.8, p Dev N., Samsher, Kachhwaha S.S. (2012d), System modeling and analysis of a combined cycle power plant International Journal of System Assurance and Engineering Management, DOI /s y. 8. Dev N., Samsher, Kachhwaha S.S., Attri R (2012e), A review of Combined Cycle Power Plant thermodynamic cycles Proceedings of the National ConferenceTAME-2012, p Dev N., Samsher, Kachhwaha S.S., Attri R (2012f), Exergy analysis and simulation of a 30MW cogeneration cycle Frontiers of Mechanical Engineering. 10. Dev N., Samsher, Kachhwaha S.S., Attri R (2012g), GTA-based framework for evaluating the role of design parameters in cogeneration cycle power plant efficiency Ain Shams Engineering Journal. 11. Dev N., Samsher, Kachhwaha S.S., Mohit (2011) Mathematical Modelling and Computer Simulation of a Combined Cycle Power Plant Advances in Intelligent and Soft Computing (Springer s AISC), 2011, Vol 131, p Faisal, M.N., Banwet, D.K. and Shankar, R. (2006) Mapping supply chains on risk and customer sensitivity dimensions, Industrial Management and Data Systems, Vol. 106, No. 6,pp Faisal, M.N., Banwet, D.K. and Shankar, R. (2007) Quantification of risk mitigation environment of supply chains using graph theory and matrix methods, European Journal of Industrial Engineering, Vol. 1, No. 1, pp Jense JB, Gutin G (2000) Digraph theory, algorithms and applications. Springer, London 15. Jurkat WB, Ryser HJ, Matrix factorisation of determinants and permanents, Journal of Algebra 3:1 11, Kulkarni, S. (2005) Graph theory and matrix approach for performance evaluation of TQM in Indian industries, The TQM Magazine, Vol. 17, No. 6, pp Attri R, Dev N, Sharma V, Graph theoretic approach (GTA) A Multi Attribute Decision Making (MADM) Technique Research Journal of Recent Sciences, vol 2(1) (2013), pp Singh, M., Khan, IA, Grover, S. (2012) Selection of manufacturing process using graph theoretic approach, Int. 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176 INDIAN AUTOMOBILE SECTOR - INNOVATION KEY TO SUSTAINABILITY Akhil Kapoor*, Siddharth Jain**, Siddharth Jindal*** ABOUT THE AUTHORS *AKHIL KAPOOR; CONSULTANT, AON HEWITT **SIDDHARTH JAIN; CONSULTANT, AON HEWITT ***SIDDHARTH JINDAL; CONSULTANT, AON HEWITT ABSTRACT Indian automobile industry, with a turnover of over USD 58 billion is supported by an automotive component supplier base of over USD 40 billion. With more than 10,000 small and big auto component suppliers in India, the competition is intense and OEMs (Original Equipment Manufacturers) farm for partners offering, cost effective products and be partners in offering innovative solutions. Though global joint ventures offer attractive and an effective solution to substitute demand of domestic innovation by imported technology, the partnership at times tends to hinder Indian suppliers from innovating or developing indigenous capabilities. An Aon Hewitt research based on over 60 auto component suppliers, has identified the challenges and bottlenecks faced by the industry to innovate and build new products. Additionally, we have identified steps organizations can initiate to bring in innovation and institutionalize the practice. KEYWORDS: Automobile Sector, Innovation, Original Equipment Manufacturers etc. THE INDIAN AUTOMOTIVE AND AUTO COMPONENT INDUSTRY AN INTRODUCTION The Indian automobile sector had emerged as a sunrise sector for the Indian economy, with a gross turnover over of USD 58 billion ( ) (SIAM, 2013). Experiencing phenomenal growth over the past few years the sector has attracted global automobile majors to Indian shores, looking to leverage India's cost-competitive manufacturing practices. However, the current economic slowdown in India and rising commodities prices, has impacted the automobile sector dramatically slowing down its pace of growth. After more than a decade the automobile sector in India for the first time is experiencing negative growth in FY compared to (Today, 2013) The slowdown of the economy has impacted the entire value chain of the industry, with auto component manufacturers being the worst affected by the slowdown. The auto component suppliers with a base of INR 24,800 Crore (US$ 43.5 billion ) and dominated by small and medium Enterprise (SME) contributes significantly to GDP (Manufacturing) (IBEF, 2013) for FY 12 GDP at factor cost of 2.1% (Bhasker, 2013). Most industry analysts expect the auto component industry s growth to remain weak due to the prevalent subdued macroeconomic environment, uncertain fuel prices and rising interest rates, besides an uncertain global economic environment. However, other developing markets like Brazil, Africa, China, and other Asian markets though not booming, but are still expanding, hence presenting pockets of opportunity. (ICRA, 2013) Additionally, in our experience with Indian auto comp suppliers, it has been observed that they have primarily grown with their parent OEMs or in the product segment they have specialized in, and their performance is heavily linked to their respective OEMs performance. Due to the high dependence of the Indian auto component suppliers on their OEMs, the industry has failed to exploit the full potential of its capabilities. The challenges faced by the Indian auto component suppliers are: Aversion to fast changing technology Quality of Talent Over / misaligned capacities Rising Costs 175

177 (Mckinsey ACMA, 2012) Technological developments in the automotive sector are in an accelerated mode with transition into Hybrid and electrical models, be it 4-wheelers or 2-wheelers. With ever increasing and complex customer requirements, the OEMs need to place intelligent bets on the technologies of the future. However, Indian auto comp suppliers have been slow in adapting to the changing technology landscape. With high focus on their core capabilities, risk of diversifying has been low, which has made OEMs look for international suppliers with R&D capabilities to develop required parts for their changing needs. (Mckinsey ACMA, 2012) With limited R&D know how, Indian auto comp suppliers are further constricted in their growth strategy by low availability of quality manpower. With quality engineers preferring IT industry to manufacturing, the struggle for quality talent at entry level is fierce. Furthermore, adding to the strain is the quality and issues of shopfloor workmen (Presence of Union and rising wages). With suppliers at the bottom of the hierarchy in from a talent attraction perspective, supply of quality talent is a challenge. Adding to the challenges is the high dependency of suppliers on certain OEMs and product segments. Supplier capacities have grown based on OEM demands, with cyclical demand of the OEMs, the suppliers are forced to keep idle capacities. Additionally, their high dependence on only few OEMs, and any fluctuation in demand results in increased idle capacity, impacts their overhead costs. Further impacting suppliers profitability is the high inflation. With inflation at an all-time high, suppliers are faced with rising costs of raw material, consumables and labor. Since the beginning of industrial revolution, it has been observed that successful organizations are those who continuously innovate and are two steps ahead of their customers and competitors. From Ford to Toyota, from Sony to Apple, the companies which have innovation embedded in their DNA are the ones who survive and succeed. With challenges aplenty, the Indian auto component industry need to break away from traditional ways of manufacturing and become more agile and able in managing technology. Additionally, for the industry to be sustainable in the long term there is a need to inculcate an innovative culture, thereby improving its competitive positioning in the global arena? ENABLERS FOR INNOVATION AON HEWITT S POINT OF VIEW AND LITERATURE REVIEW While most organizations acknowledge the need to innovate, they continue to struggle with the process and enablers for innovation. However, drivers to innovate are well established and include the external environment and organizational need, that is, to decrease costs and increase profitability (Baker, 2002). Surprisingly, while most organizations are aware of the need to innovate, they tend to ignore the enablers for innovation. Additionally, most researchers and theorists agree that in order to innovate it is imperative for organizations to have a structure, culture, and processes that are conducive and promote innovation. The factors identified by researchers and theorist laying foundation to drive innovation are from four perspectives: ((Mitchell, 2012), (Baker, 2002) (Hamel, 2000) and (Jonach & Sommerlatte, 1999) Individual Project Organization Environment Heritage (2006) and Kanter (2006), argue that for organizations to drive innovation it is essential that appropriate strategy, culture, environment, and processes are formulated and driven across the organization. In our research, it was observed that for organization to embark upon a journey on being future ready, innovation be it incremental or radical, needs to be part of an organization s DNA. From our study of organizations, it was observed that factors driving innovation at the blue collar and white collar levels in organizations can be classified into the following categories (refer figure 1): Ability to Innovate Intent to innovate Hygiene Factors Existential Factors Kanter (2006), Heritage (2006) and Baker (2002), argue that at an individual level in organization, organizations need to focus on establishing employee processes and employees welfare. In our research, which focused on 176

178 Leadership and Human Resource Management, it was observed that to drive innovation in organizations the foundation needs to be laid through the Existential Factors. The definition of existential factors based on our study involved two facets, which are at the blue collar level and white collar. For the blue collar, this involves basics such as receiving salary on time, availability of clean restrooms, uniforms, lockers, hygienic food, etc. and for white collared employee, those would extend to include having established HR systems and processes and well-articulated HR policies. Building on the existential factors, Hamel (2000) suggests that to develop innovation competency, organizations must create an environment (Internal and External), culture and structure that promote innovation. Hamel s (2000) finding, in our research translate to hygiene factors, which include for blue collar, shop floor environment availability of proper tools and safety equipment, the behavior of supervisors and line leaders. For white collared workforce, this extends to the culture of the organization and may include things like a pleasant work environment, a sense of job security, friendly co-workers and approachable management. However, Kanter (2006), Heritage (2006) and Baker (2002) explain that to drive organizational innovation it is vital for organizations to have a strategy driving innovation. Kanter (2006) suggests that organizations need to find the right balance for innovation in their strategy. Additionally, Heritage (2006) and Baker (2002), identify with the need for strategy to be driven by the leadership of the organization providing roadmap of the organization for next 3 5 years. Based on our findings, it was found that organizations which can articulate their aspirations and strategic intent, and bring employees on-board through an effective cascade down the line will move on the road to innovation. Moreover, intent to innovate and sustainable growth requires extensive communication by the senior leadership; hence it is imperative to have established communication channels across levels of the organization (Heritage, 2006) Laying the foundation and providing a roadmap to innovate is critical. However, capability development and enhancement of the organization in driving innovation across all its employees would serve as an engine to an innovative organization (Heritage, 2006) (Kanter, 2006) (Baker, 2002). Ability to innovate, in our frameworks examines an organization s ability to develop its employees through various types of trainings and effectiveness of organizational training practices. It also focuses on building the required infrastructure capability to foster innovation. Figure 1: Aon Hewitt findings fitment to literature research findings OUR RESEARCH - METHODOLOGY, FINDINGS, ANALYSIS & DISCUSSION Aon Hewitt, in its association with leading players in the automotive sector, conducted diagnostic analysis of over sixty supplier organizations (Tier 1 vendors to major OEMs in India) to assess their HR capability and their future readiness. The diagnostic was done on the following practices within each organization: Company Mission, Vision 177

179 Strategic Business Plan Innovation Statutory Compliances Health and Safety Employee Welfare Union Relations Performance Management System Training and Development The primary research included visiting 2-3 plants of each participating organization. The methodology that was followed was: 1. Interactions with the promoter/ CEO 2. Focused group discussions with the leadership/ top management 3. Interactions with the HR department to capture existing people practices 4. Focused group discussions with the white collared workforce 5. Focused group discussions with the blue collared workforce The assessment was based on a five point scale ranging from nascent to mature stage (refer Figure 2). The various people practices and systems were rated after a careful evaluation taking into account: The Intent of the Senior leadership behind introducing a particular HR practice & system Accountability measures created and linkages established to business Process documentation and application Actual effectiveness in the system The analysis methodology is explained in detailed in the below figure: Figure 3: Elements of the Rating Scale 178

180 The diagnostic was done on the following practices within each organization: Company Mission, Vision Strategic Business Plan Innovation Statutory Compliances Health and Safety Employee Welfare Union Relations Performance Management System Training and Development The primary research included visiting 2-3 plants of the participating organizations. The methodology that was followed was: 6. Interactions with the promoter/ CEO 7. Focused group discussions with the leadership/ top management 8. Interactions with the HR department to capture existing people practices 9. Focused group discussions with the white collared workforce 10. Focused group discussions with the blue collared workforce NascentDevelopingAdequateCapableMatureIntentTop executive has limited focus on the processfocus is not shared by the second line leadershipleadership is committed to the process The process is one of the key strategic priorities for the top teamtop team invests significant individual bandwidth in driving the processaccountabilitynot a core/stated role or function within the organizationis a stated role/function at an operational level in the organizationpresence of a dedicated sr. mgmt role to take care of the process/functionrole is decentralized within the function and exists across various entities It s a business partnership role and is seamlessly integrated across the organizationprocesslimited or no existence of the processprocess exists but not defined and is inconsistentprocess is defined and consistently applied across the organizationprocess is reviewed and measured for effectiveness and impact Process is continuously improved uponeffectivenesseroding business value and employee satisfactionindifferent to business needs and employee satisfactionaligned to business and positively impacts employee satisfactionis a key driver of employee satisfaction and positively impacts businessis a key employee value proposition and provides the organization a competitive edgemedium RiskHigh RiskLow Risk INITIAL FINDINGS To identify the factors that influence innovation in an organization, a correlation was run between all the variables assessed to prepare the correlation matrix (Figure 4). 179

181 Based on the correlation results, it was found that 4 factors Company Vision and mission, Health and Safety, Employee Welfare and Training & Development had significant degree of correlation with Innovation (R > 0.50 as the criteria). Building on our initial findings and the correlation matrix, the hierarchical relationship impacting innovation was linked to the proposed hypothesis (Figure 5). Post establishing the factors impacting innovation and proposing the linkages to the hypothesis, hierarchical regression was run on the factors identified to ascertain the impact of the factors on innovation. Through hierarchical regression it was established the amount of variability, company vision and mission (intent to innovate) and training and development (capability to innovate) had on innovation, keeping existential factors like Employee welfare and Hygiene factors like Health and Safety constant. For the multi variable hierarchical regression, the existential variable Employee welfare was entered providing the variance accounted for by this independent variable. In the second step, the Hygiene variable Health and Safety was entered into the step 1 model. Next, the entry of the first and second step was repeated by entering the Intent to Innovate (Company vision and mission) in the regression equation. And finally, Capability to Innovate (Training and development) predictor variable was entered providing for the unique contribution of Capability to innovate to the dependent measure Innovation. The process output confirming the multi variable hierarchical regression and the order of variable entry is shown in the above table (Figure 6) the Existential Variable (Employee Welfare) in step 1, Hygiene variable (Health and Safety) in step 2, Intent to Innovate (Company Vision and Mission) in Step 3 and Capability to Innovate (Training and Development) in Step

182 COEFFICIENTS (A) In addition to the aforesaid analyses, the independent variables were examined for collinearity. Results of the variance inflation factor (all less than 2.1) suggest that the estimated βs are well established in the following regression model (refer Figure 8). RESULTS The results of the hierarchical regression predicting innovation from Employee Welfare, Health & Safety Company Vision & Mission and Training & Development are reported in the above table. The results of step one indicated that the variance accounted for (R2) with the first predictors (Employee Welfare) equaled.355 (adjusted R2=.345), which was significantly different from zero (F(1, 61)=33.613, p<.05). Next, Health and Safety scores were entered into the regression equation. The change in variance accounted for (ΔR2) was equal to.117, which was statistically significant increase in variance accounted for over the step one model (ΔF(1,60)=13.243, p<.05). In step three, Intent to innovate (Company vision and mission scores) were entered into the regression equation. The change in variance accounted for (ΔR2) was equal to.066, which was a statistically significant increase in variance accounted above the variability contributed by the previous predictor variables entered in step two (ΔF(1,59)=8.463, p<.05). Finally, in Step four, Capability to Innovate (Training and Development scores) were entered into the equation. We observed a marginal increase in variance accounted for (ΔR2 =.001), which was not a significant increase. 181

183 INTERPRETATION OF THE RESULTS This analysis is useful as it shows the percent variability in the dependent variable (Innovation) that can be accounted for by all the predictors together. The change in R2 is a way to evaluate how much predictive power was added to the model by the addition of another variable in subsequent steps. For example, in this case, the % of variability accounted for went up from 35.5% to 47.2% with addition of Health and Safety, which is a significant increase. Similarly, the % of variability accounted for went up to 53.8% with addition of Company Vision and Mission, which again is a significant increase. The research statistically validates our hypothesis and confirms that there exists a hierarchical relationship between the predictor variables Employee Welfare, Health & Safety, and Company Vision and Mission to determine Innovation. Training and Development was not found to be statistically significant. It augments our point of view that providing trainings to employees will only help in process innovations which are incremental in nature. For organizations to step into product innovations and new product development, they need to invest in hiring quality talent and provide them with systems and technologies to set up centers of research and development. CONCLUSION AND RECOMMENDATIONS - BRINGING INNOVATION TO LIFE Through our research, it has been established that an organization needs to concentrate on existential and hygiene factors to establish the foundation for becoming an innovative organization. The intent and capability development, need to be the catalyst to successfully institutionalize innovation in the organization. Additionally, for successful deployment of the 4 factors the why, what and how need to be defined and communicated effectively to build an innovative company. It is important that which stakeholders of the company are responsible for driving these factors and at what stage. 1. EXISTENTIAL FACTORS: As per Maslow s (1943) pyramid of individual s needs, human beings basic needs are to be addressed, which are physiological needs, which relate to basic human survival i.e. getting air, water, food and shelter. Therefore, individuals concentrate all their efforts on securing them. In an organization s context an employee cannot innovate if he has to keep worrying for his food, wages, benefits etc. Organizations need to understand that innovation does not happen overnight. It takes time to build, institutionalize and then reap benefits of this culture. Therefore, innovation cannot be brought in as a policy; it needs to be built with time. The first step companies should take in this direction is to provide all necessary facilities to its workers. Our research shows that organizations need to do more than just fulfill all their statutory requirements. In addition to being compliant with statutory requirements, organizations need to think and act to draft processes and policies around employee benefits, canteen facilities, and minimum wages among others. 2. HYGIENE FACTORS According to Maslow (1943), once the basic factors are taken care of, humans try to concentrate on long term sustainability of their basic factors i.e. trying to secure them for life. Therefore, they look for job security, financial stability, good health, insurance etc. In an organization s context, one can interpret that workmen can innovate only if they feel secure. There are three levels of security expected by the employees: A. Job Security: Employees need not fear that they experimenting or innovating can cost them their jobs. They should know that they are important, organizations recognize their existence and as long as the organization grows, employees grow with them. B. Environment Security: A worker cannot be expected to be productive in an unsafe environment, an environment where there are open burners, faulty equipment and no safety equipment. Most of their energy will be concentrated on trying to finish work and reach back safely. C. Culture / Behavior Security: Employees need to be assured that novel thinking will not be penalized. They need to know that their supervisors expect them to be productive and innovative and at the same time respect them. An organization needs to re-affirm this message through HR interventions that as an organization we encourage and not penalize innovative experiments. For enhancing job security and work culture, organizations need proactive and strong HR policies. For example, institutionalizing HR policies such as recruitment boards and exit interviews ensure that the good talent is not lost, and the reason a person is departing the company is documented and analyzed. Further, managers 182

184 (especially supervisors) need to be trained on company values and encouraging innovations. This can be further reinforced through active CEO messaging, Kaizen Schemes, and recognizing innovation through monetary / non- monetary rewards. 3. INTENT TO INNOVATE Both existential and hygiene factors, are essential for organizations to exist and operate effectively, but does not guarantee innovation. Existence of these factors will not directly influence an employee s decision or intention to innovate. Only, if the employer clearly mandates, to reward and recognize innovation, will employees work towards innovating. Relating it to Maslow s (2011) pyramid, human beings will put in effort which will help build their self-esteem. They would put in effort in places where they will be recognized and rewarded. Organizations need to actively communicate to its employees that they intend to innovate. Further, they should ensure that innovation (and what it means for the organization) is a part of the vision, mission and core values of the firm. They should believe that they will grow in the market through innovation, new product development, and improved processes. At the workmen level, this can be encouraged by activation of suggestion schemes and monetary/ non-monetary recognitions. For employees, innovation awards and CEO messaging can play an important role. 4. ABILITY TO INNOVATE Ability to innovate is not a driving factor but one of the pre-requisites for successful organizations. If the first three drivers are fulfilled, but the firm does not have the ability to innovate, then employees will be disengaged as they will not have the tools to innovate. In the long run, employees might feel unaligned to the company s vision and objectives as they would feel incompetent in contributing to organization s growth. Ability to innovate would require developing organization s capability in two domains mainly: A. Employee Capability to Innovate: Employees need to be trained on new technologies and global trends in innovation. Organizations need to train employees on various subjects both inhouse and outside the organization. Further, experiential learning should be encouraged through quality circles and cross functional teams. Adopting international standards such as TPM (Total Production Maintenance) and management systems such as the ISO will also foster talent development. B. Infrastructure to Innovate: Innovation requires both man and machinery. Employees need to be given essential infrastructure and environment to think freely, and implement new ideas. Organizations need to hire the best talent, and invest in R&D centers to encourage innovation. For building design and new product development capabilities, organizations should set up a R&D budget and invest in building capabilities to succeed in the competitive scenario. REFERENCES 1. Baker, K. A. (2002, 06 10). Innovation. Retrieved May 3, 2013, from The Air University: 2. Bhasker, V. V. (2013). Indian Auto Component Industry: A decade of growth and way forward. Research Journal of Management Sciences, Hamel, G. (2000). Leading the Revolution. Boston : Harvard Business School Press. 4. Heritage, C. (2006). Microsoft: Innovation through HR's partnership. Strategic HR review, IBEF. (2013, April 01). Auto Components Industry in India. Retrieved May 03, 2013, from Indian Brand Equity Foundation: 6. ICRA. (2013, March 01). Indian Auto Component Industry. Retrieved April 05, 2013, from ICRA: 7. Jonach, R. S., & Sommerlatte, T. (1999). The innovation Premium: How the Next - Generation Companies are achieving peak performance and profitability. Reading, MA: ArthurD. Little, Inc: Perseus Books. 8. Kanter, R. M. (2006). Innovation: The Classic Traps. Harvard Business Review, Maslow, A. H. (2011). Hierarchy of Needs: A Theory of Human Motivation. Kindle. 10. Mckinsey ACMA. (2012, 09 05). ACMA. Retrieved April 05, 2013, from ACMA: Mitchell, M. (2012, 10 12). Amanet. Retrieved 05 03, 2013, from American Management Association: SIAM. (2013, March 05). Society of Indian automobile manufacturers. Retrieved May 03, 2013, from SIAM - Gross Turnover: Today, B. (2013, March 10). Auto industry seeks more rate cuts from RBI to revive demand. Retrieved 04 01, 2013, from Business Today: 183

185 ECONOMIC ANALYSIS OF A COGENERATION CYCLE POWER PLANT Nikhil Dev *, Rajesh Attri **, Vivek Sharma ***, Krishan Kumar **** ABOUT THE AUTHORS * NIKHIL DEV; ASSISTANT PROFESSOR, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ** RAJESH ATTRI; ASSISTANT PROFESSOR, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA *** VIVEK SHARMA; LECTURER, DEPARTMENT OF MECHANICAL ENGINEERING, ADVANCED INSTITUTE OF TECHNOLOGY & MANAGEMENT, PALWAL , INDIA **** KRISHAN KUMAR; M.TECH STUDENT, DEPARTMENT OF MECHANICAL ENGINEERING, YMCA UNIVERSITY OF SCIENCE AND TECHNOLOGY, FARIDABAD, HARYANA, INDIA ABSTRACT Electricity generation and distribution is a work of many decision making processes for making it economical viable proposition. Therefore, the complete analysis of cogeneration plant requires multi attribute decision making (MADM) technique to study the effect of one parameter on the others. In this paper a mathematical model, using the combination of graph theory and matrix method is developed to evaluate the cost of a CGCPP construction. The maximum and minimum value of CGCPP cost index is calculated which indicates the range with in which it can vary. Experts can use this range to decide a threshold value for a given set of similar power plant. Monitoring at regular interval may be carried out by third party to assess CGCPP present cost. KEYWORDS: CGCPP, digraph, matrix method, gas turbine, system structure, graph theory INTRODUCTION Cogeneration is the production of electrical energy and useful thermal energy from the same energy source that is why it is called combined heat and power (CHP) system (Dev et al a,b). Cogeneration cycle power plant is a very large and complex system. Cost of its components and subsystems are integrated with each other in such a manner that any of its component or system can t be studied without taking the effect of others. From the literature review, it has been revealed that there are two models i.e. thermodynamic and thermoeconomic model for the analysis of cogeneration cycle power plant. Thermodynamic model of a cogeneration cycle power plant (CGCPP) gives solution for optimum efficiency or maximum work. Thermoeconomic model is useful for the analysis based on efficiency and cost in association with each other. For the complete analysis of cogeneration plant, a multi attribute decision making (MADM) technique is required to study the effect of one parameter on the others (Dev et al. 2010). A number of MADM techniques have been suggested in the literature to model various systems and their elements. Graph theory is one of such methodologies. Graph theory and matrix approach as a decision making method offers a generic, simple, easy, and convenient decision making method that involves less computational efforts. In view of these advantages, GTA method is proposed in this paper for the prediction of cost of a CGCPP by taking into account the cost of its four systems, i.e. the air compressor, combustion chamber, gas turbine and heat recovery steam generation (HRSG) and the interactions between various systems. SYSTEM STRUCTURE ANALYSIS OF COGENERATION CYCLE POWER PLANT In this part, system modeling of cogeneration cycle power plant and its analysis is described. Cogeneration cycle power plant considered for the present analysis is shown in figure

186 Figure 1. Schematic flow diagram of cogeneration Cycle Power Plant The air at the ambient temperature is compressed by the air compressor and directed to the combustion chamber. The compressed air mixes with the natural gas from the fuel supply system to produce hot combustion gas in the combustor. The hot combustion gas is delivered to the gas turbine where the power is generated. The exhaust gas passes through a heat recovery steam generator where water is converted steam. The steam produced is used as process steam. For the graph theoretic analysis cogeneration cycle power plant is divided into following four systems: 1. Air compressor system (S1) 2. Combustion chamber system (S2) 3. Gas turbine system (S3) 4. Heat Recovery Steam Generator system (S4) The system can be modeled considering its structure on the basis of reliability, efficiency and cost. Let each of the four systems of plant be represented by vertices Si s (i=1,2,3,4) and interconnection between two systems (Si, Sj) is represented by edges cij s (i=1,2,3,4) connecting the two vertices Si and Sj. In actual system all four systems doesn t affect each other. The graph theoretic representation [S, c] of vertex and edge sets of the six system cogeneration cycle power plant, called system structure graph (SSG) is shown below: Figure 2. System structural graph of cogeneration cycle power plant: Air compressor system (S1), Combustion chamber system (S2), Gas turbine system (S3), Heat Recovery Steam Generator system (S4) This is based upon the working of cogeneration cycle power plant as per the following: 1. The ambient air comes to the compressor after being filtered by air filters. Compressor and turbine are attached with a shaft. So the power to compress the air comes to the compressor from the turbine. This is represented by the edge c31. S1 is the compression system. 2. After compression air goes to the combustion chamber. Fuel is added in the combustion chamber. This is represented by edge c

187 3. A blade is cooled by being made hollow so that a coolant air can circulate through it. Coolant air is obtained directly from the compressor, thus bypassing the combustion chamber. Edge c13 represents the bypassing of cooling air. 4. Fuel supplied to the combustion chamber is generally compressed natural gas (CNG). For the analysis calorific value (CV) of the fuel is considered irrespective of the composition. Fuel supply is taken a part of combustion chamber. Outlet temperature of combustion chamber system [S2] depends upon thermal stress limit of gas turbine blade material. Highest temperature of flue gas coming out from combustion chamber is controlled by changing air-fuel (A/F) ratio. Combustion product flows to gas turbine as shown by edge c Depending upon the temperature of flue gas, HRSG [S4] may be used for (i) partial heating (regeneration) of the compressed air leaving the compressor (c42), (ii) generating steam in a dual or multipressure steam cycle. 6. Flue gases coming out of combustion chamber and entering to HRSG system [S4] are shown by the edge c34. The system structure graph (Figure 2) represents the internal structure of the CGCPP at system level. It clearly shows different systems and their interconnections in the CGCPP as discussed above. GRAPH THEORETIC APPROACH A graph theoretic model is a versatile tool that has been used in various applications. It helps to analyse and understand the system as a whole by identifying system and subsystem up to the component level (Dev et al. 2011). Graph theoretic and matrix model consists of digraph representation, matrix representation and permanent representation. Digraph representation is useful for modelling and visual analysis. Matrix representation is useful in analyzing the digraph model mathematically and for computer processing. Permanent multinomial function characterizes the system uniquely and the permanent value of a multinomial represents the system by a single number, which is useful for comparison, ranking, and optimum selection (Singh et al. 2012). GTA is a systematic and logical approach that is applied in various disciplines (e.g., Dev et al c,d,e,f,g). The following features highlight the uniqueness of this approach over other similar approaches: It presents a single numerical index for all the parameters. It is a systematic methodology for conversion of qualitative factors to quantitative values, and mathematic modelling gives an edge to the proposed technique over conventional methods. It permits modelling of interdependence of parameters under consideration. It allows visual analysis and computer processing. It leads to self-analysis and comparison of different power plants. CGCPP cost index is function of considered systems i.e. air compressor system, combustion chamber system, gas turbine system and heat recovery steam generation system. In mathematical form, it is represented as: CGCPP cost index (CGCPPPI) = f (systems) = f (Air compressor system, Combustion chamber system, Gas turbine system and Heat recovery steam generation system) The permanent function of CGCPP system (i.e. equation (3)) is proposed, here, for the evaluation of CGCPPPI because it contains all the possible components of CGCPP system and their interdependence. The main features of CGCPP Cost Index (CGCPPI) are as follows: 1. This index is a means to evaluate the cost of existing cogeneration cycle power plant. 2. The value of index may be used for self-analysis of a cogeneration cycle power plant. Higher value of index indicates that an organization has to improve the weak links of power plant. 3. Index value may be used for the comparison of similar cogeneration cycle power plants. To calculate this index, the values of Si and cij are required. The values of these parameters and their interdependence are found on the basis of the production system data available in the organisation and the experience of production personnel. If a quantitative value is not available, then a ranked value judgement on a scale (e.g., from 1 to 10) is adopted. Table 1 is suggested for this purpose. To assign numerical values to the interdependence of parameters cij, the opinions of production experts can be recorded. But this interdependence of parameters cannot be measured directly and, hence, qualitative values may be adopted. These qualitative values of the interdependence of parameters are also assigned on a scale (e.g., 1 to 5), as suggested in Table

188 Table 1. Quantification of factors affecting cogeneration cycle power plant cost S. No. Qualitative measure of factors at sub-system level affecting cogeneration cycle cost Assigned value of factors at sub-system level S i 1 Exceptionally low 1 2 Very Low 2 3 Low 3 4 Below average 4 5 Average 5 6 Above Average 6 7 High 7 8 Very High 8 9 Exceptionally High 9 Table 2. Quantification of interdependencies S. No. Qualitative measure of interdependencies c ij 1 Very Strong 5 2 Strong 4 3 Medium 3 4 Weak 2 5 Very weak 1 DEVELOPMENT OF GRAPH THEORETIC MODEL OF COGENERATION CYCLE POWER PLANT The graph theoretical methodology combines various attributes relevant to a thermal power plant cost into a single measure so that a comprehensive ranking of the two or more plants could be made on the basis of their cost. Cogeneration cycle power plant being very large system has to be divided in to small systems and no system should be independent. Inheritance of every system and their interdependency decides the value of CGCPP cost index. In the following section, system structure modeling of CGCPP and its graph theoretic analysis is described. DIGRAPH REPRESENTATION OF CCPP SYSTEM Digraph is used to represent the factors/systems and their interdependencies in terms of nodes and edges. Sij indicates degree of dependence of jth factor/system on the ith factor/system. In the digraph Sij is represented as a directed edge from node i to node j. The digraph permits to analyse CGCPP cost and gives a feeling of interactions between the systems. Diagraph for the CGCPP discussed above is shown in figure.3. Figure 3. Digraph showing six attributes of Cogeneration Cycle Power Plant and their interdependencies in the system (attributes: Air compressor system (S 1 ), Combustion chamber system (S 2 ), Gas turbine system (S 3 ), Heat Recovery Steam Generator system (S 4 )) VARIABLE PERMANENT SYSTEM STRUCTURE MATRIX (VPSSM) FOR A CCPP In order to obtain proper characterization of CGCPP systems as derived from combinatorial considerations, a variable permanent matrix, also known as the permanent function, is proposed. Use of this concept in system structure modelling helps in retaining the structural information of the system. 187

189 For the system under consideration (cogeneration cycle power plant in this case), corresponding to Figure 3, and variable permanent structure matrix (T c ) can be written as: Systems S1 c12 c Tc 0 S2 c c31 0 S3 c c42 c43 S4 4 PERMANENT REPRESENTATION OF SYSTEM STRUCTURE MATRIX (VPSSM) FOR A CCPP The permanent of VPSSM is also known as variable permanent system structure function. Permanent Function for CCPP (for matrix expression (1)) is written as per Jurkat and Ryser (1966) formula as: Per T [ S S S S c c S S c c S S c c S S S c c c ] (2) c Every term in the Per [T c ] is representing the part of the system and interlink. For example the S 1 S 2 S 3 S 4 shows that all four systems are linked to each other. Any of the system cannot be omitted. EXAMPLE For demonstration the proposed methodology, a CGCPP is taken as an example. It is proposed to find the value of CGCPP cost index. For determining the index we require numerical values of inheritance of all systems and their interdependencies, i.e. in VPM-s for CGCPP (equation (1)). Step by step methodology discussed in the previous section is used to evaluate CGCPP cost index in this example. Step 1: Various systems (four systems in the present case) affecting the CGCPP cost are identified, as shown in figure 2. Step 2: A digraph is developed for these four systems, as shown in Figure 3. The dependencies of systems are visualized through the digraph. Step 3: The variable permanent matrix is developed for the CGCPP system. The inheritance of systems and their interdependencies are discussed with experts as per table 1 and 2. Step 4: The value of permanent function (CGCPP cost index) is calculated. It is suggested to find hypothetical best and hypothetical worst value of CGCPP cost index. CGCPP cost index is at its best when the inheritance of all its systems is at its best. Maximum value of Per [T c ] is obtained when inheritance of all systems is maximum, i.e. value taken from Table 1 is 9. Thus, equation (1) may be written for the maximum value of Per T c as T The value of permanent of the above function is 8325, i.e. maximum Per T c = Similarly CGCPP cost index is at its worst when the inheritance of all its systems is at its worst i.e. value taken from Table 1 is 1. Thus, equation (3) may be rewritten for the minimum value of Per T c as T (4) (3) (1) 188

190 The value of permanent of the above function is 125, i.e. minimum Per T c = 125. The value of Per T c indicates the value of CGCPP cost index. Thus, the maximum and minimum value of cost index indicates the range with in which it can vary. Experts can use this range to decide a threshold value for a given set of similar power plant. Monitoring at regular interval may be carried out by third party to assess power plant cost. Moreover, the values may be carried out at regular interval for the assessment of power plant cost. CONCLUSION In this paper, a methodology for evaluation of CGCPP cost index is proposed using digraph and matrix approach. The graph theoretical methodology consists of the CGCPP digraph, the CGCPP matrix and the CGCPP permanent function. The CGCPP digraph is the visual representation of characteristics and their interdependence. The CGCPP cost matrix converts digraph into mathematical form. The CGCPP permanent function is a mathematical model, which helps to determine CGCPP index. Thus the approach helps to express CGCPP cost in quantitative terms, which has more often been expressed in qualitative terms. The procedure also helps to compare different plants in terms of efficiency, cost and reliability and rate them for a particular period of time. REFERENCES 1. Dev N, Attri R (2012a) Exergetic Analysis of Combustion Chamber of a Combined Heat and Power system Proceedings of the National ConferenceTAME-2012, p Dev N, Attri R, Mittal V, Kumar S, Mohit, Satyapal, Kumar P (2012b) Thermodynamic analysis of a combined heat and power system Research Journal of Recent Sciences, vol 1, No.3, pp Dev N, Attri R, Mittal V, Kumar S, Mohit, Satyapal, Kumar P (2012c) Economic and thermal analysis of thermal system Research Journal of Recent Sciences, vol 1, No.4, pp Dev N., Samsher, Kachhwaha S.S. (2010), Computational Analysis of Dual Pressure Non-reheat Combined-Cycle Power Plant with Change in Drum Pressures International Journal of Applied Engineering Research, vol 5, No.8, p Dev N., Samsher, Kachhwaha S.S. (2012d), System modeling and analysis of a combined cycle power plant International Journal of System Assurance and Engineering Management, DOI /s y. 6. Dev N., Samsher, Kachhwaha S.S., Attri R (2012e), A review of Combined Cycle Power Plant thermodynamic cycles Proceedings of the National ConferenceTAME-2012, p Dev N., Samsher, Kachhwaha S.S., Attri R (2012f), Exergy analysis and simulation of a 30MW cogeneration cycle Frontiers of Mechanical Engineering. 8. Dev N., Samsher, Kachhwaha S.S., Attri R (2012g), GTA-based framework for evaluating the role of design parameters in cogeneration cycle power plant efficiency Ain Shams Engineering Journal. 9. Dev N., Samsher, Kachhwaha S.S., Mohit (2011) Mathematical Modelling and Computer Simulation of a Combined Cycle Power Plant Advances in Intelligent and Soft Computing (Springer s AISC), 2011, Vol 131, p Jurkat WB, Ryser HJ, Matrix factorisation of determinants and permanents, Journal of Algebra 3:1 11, Singh, M., Khan, IA, Grover, S. (2012) Selection of manufacturing process using graph theoretic approach, Int. J. of System Assurance Engineering and Management, DOI: /s z. 189

191 EMPLOYEE PERCEPTION TOWARDS COMPENSATION AND MOTIVATION: A STUDY OF MANGALAYATAN UNIVERSITY EMPLOYEES Ms.Ranu Chaubey * ABOUT THE AUTHOR * MS.RANU CHAUBEY; LECTURER, IBM, DEPARTMENT, MANGALAYATAN UNIVERSITY, BESWAN, ALIGARH ABSTRACT A successful organization can run only with the help of their satisfied employees. A satisfied employee will always encourage the levels of service and quality which in turn will affect customer satisfaction and retention and therefore will significantly influence profitability of the firm. This paper attempts to study the relationships of employee perception towards compensation and employees motivation. The study was focused on the employees of Mangalayatan University of various department and their levels of satisfaction due to the compensation. The data was collected through self designed questionnaire, sample size of 150 respondents were used. The results were analyzed by using linear regression and found that there was no significant impact of compensation and motivation instead other factors like working conditions, better lighting etc.influenced employee sensitivity. KEYWORDS: Customer Perception, Compensation, Motivation INTRODUCTION It is more common for companies to think in terms of customer satisfaction. It is not as common for organizations to see the linkage between employee satisfaction and customer satisfaction. Research and experience establish a strong correlation between satisfaction and profitability. Employee satisfaction plays an essential role in shaping company profits. Federal Express, Southwest Airlines, Banc One, British Airways, Taco Bell, Ritz Carlton, USAA Insurance and American Express are examples of companies that subscribe to this philosophy. But employee satisfaction depends on number of factors which can be due to the reason the way he perceives, i.e. employee perception plays a vital role in employees satisfaction. Compensation, incentives, work environment, respect from peers and superiors, etc.can be some of the factors which determines the employees satisfaction. An employee is satisfied or not can be seen from the factors like rate of absenteeism, turnover of employees, lowered productivity, increased costs etc.the structure of, managers compensation is an important variable in the design of management systems. Accordinagly, it has received significant attention at the top management level(tosi and Gomez- Mejia,1994:Ittner et al.,1997)as well as the level of the division(keating,1997) or of the sales organization(bartol,1999).a truly motivating environment is one where employees feel that their opininions are valued and where they can experience a sense of belongingness. REVIEW OF LITERATURE A variety of methods can be used to measure satisfaction levels among employees. The largest surveys of workers in the United States were administered by the work institute of America. The finding from this research reveals that salary and wage don t rank as high in importance as most people would commonly think. In fact the top ten reasons considered very important in deciding to take current job, include:- 1. Open Communication 2. Effect on Family/Personal life 3. Nature of work 4. Management Quality 5. Supervisor 6. Control over work content 7. Gain New Skills 190

192 8. Job security 9. Co-worker Quality 10. Job Location Using the same theory and hypothesizes vast review of various studies suggested the same results. One of them was done by Bowen and Lawler (1992) whose study examined that employee satisfaction depends on the kind of service that is offered whether to empower frontline employees and to what extent. In a production line context where low costs and high volumes are important the tie to the customer is transaction-oriented, the tasks are routine and simple, the environment predictable with few surprises, and the employees have low growth and social needs so, therefore, empowerment is not necessary. Similar studies were done by Barber, Dunham, Formisano (2006) who examined the attitude of 110 employees of a financial service organization before and after the introduction of a flexible plan. Potential confounds due to the complexity of the intervention were exposed. One more factors was analyzed from the studies of Chen, Choi & Chi (2002), which was equity and social justice. They examined how local employees of international joint ventures (IJVs) perceived disparity between their compensation and foreign expatriates compensation from equity theory and social justice perspectives and found results that perceived compensation fairness was related positively to compensation satisfaction but negatively to intention to quit. Similarly Cooper, and McKenna (1987) examined the equity theory studying on pay level satisfaction is influenced when comparison of one s pay relatives to that of referent others is made. In the same light Dyer and Theriault (1976) found that lower satisfaction with pay raises results when they perceived appropriateness of pay criteria. As concluded by Gaynor and Gertler (1995), Heller stein and Neumark (1995), those compensation arrangements with greater degree of revenues sharing (capitation) dramatically reduce the agent s effort; this results is sportive of theory arguing that firm s adopt second-best incentives structure in order to spread-best incentives structures in order to spread risk.pfeffer & Langton (1993). Guay & Larcker (2003) analyzed the stock and option compensation and the level of managerial equity incentives are aspects of corporate governance that are especially controversial to shareholders, institutional activists, and governmental regulators. Bergman & Jenter (2007) analyzed whether the popularity of option compensation may be driven by employee optimism. They provided empirical evidence that firms use broadbased option compensation when bloodedly rational employees are likely to be excessively optimistic about company stock, and when employees are likely to strictly prefer options over stock. Need and wants of the employee as analyzed by Goodrich Jeanne, Paula M.singer(2004) who stated in their study that pay,benefits,,the work environment and the intrinsic rewards that it offers, all needs and wants.bowon & Oh(2002) examined that in order to enhance R&D personnel are satisfied with their compensation both economic and non-economic. Money & Graham (1999) studied what factors affect sales forces performance and job satisfaction in sales mangers of the country. A model that integrates factors like comparative advantages, valuations of benefits, and some other benefits can reduce the marginal cost to an employee of extra working time (Oyer,2005).Steven H.Appelbaum,Loring Mackenzie(1996) observed that there were many approaches to incentives compensation such as cash bounes,stock purchase and profit sharing like individual and group incentives concepts, several behavioral theories associated with rewards and compensation, and convergent and divergent views and conclusions from the business community. Although results of Wieselhuber and Koeniginstr (2005) were that compensation systems are an essential tool to link corporate goals such as customer orientation with individual and organizational performance. OBJECTIVES OF THE STUDY 1. To develop and standardize broad measures to evaluate employee perception towards compensation. 2. To develop and identify a measure for evaluating motivation. 3. To evaluate the relationship between employee perception and motivation. 4. To indicate future scope for research in this area. RESEARCH METHODOLOGY The Study:- The study was exploratory in nature with survey method being used to complete the study. Population for the study was employees of Mangalayatan University, Beswan, Aligarh. Purposive sampling techniques were used to select the sample. Sample size was 150 respondents. Tools Used for data Collection:- 191

193 Self-designed questionnaires were used for evaluating employee satisfaction with compensation system and employee motivation. Data was collected on a Likert type scale, where 1 stands for minimum agreement and 5 stands for maximum agreement. Tools Used for Data analysis:- Item to total correlation was applied to check the internal consistency of the questionnaires. The measures have standardized through computation of reliability and validity. Linear Regression Test was applied to identify the relationship between employees perception towards compensation and motivation. Results and Discussion:- Foremost the study, the consistency of all the items was checked through item to total correlation. Under this total of every item with the total of all the items were measured and the computed value is compared with standard value(i.e ).if computed value is found less than standard value than whole statement is dropped, as the computed value was more than standard value. Reliability Measure:- Reliability test was carried out using SSS software and the reliability test measures are given below:- The reliability of satisfaction with compensation was found 0.8 and the reliability of employee motivation was found so that both questionnaires were found reliable. Validity Measure:- Face validity was applied to the questionnaire and it was found to be very high. Regression Analysis of Employee Perception towards Compensation and Motivation:- The regression was calculated by taking the two variables employees perception towards compensation and motivation by using SPSS software. In this the employee perception towards compensation was independent variable and employee motivation was the dependent variable.therefore, regression was calculated by taking dependent and independent variable. Null Hypothesis (Ho): It states that there is no significant impact of satisfaction with compensation on employee motivation. Table 1: Showing item to total correlations for the satisfaction with compensation Items Computed Correlation Value Consistent Accepted/Dropped 1-Strong sense of belonging Consistent Accepted 2-Responsibilties Consistent Accepted 3-Education and training Consistent Accepted 4-Experience Consistent Accepted 5-Rewarded for work Consistent Accepted 6-Effort beyond that normally expected Consistent Accepted 7-Talk about this organization Consistent Accepted 8-Values Consistent Accepted 9-Working in organization Consistent Accepted 10-Benefits package Consistent Accepted 11-Most recent raise Consistent Accepted 12-Current Salary Consistent Accepted 13-Amount of benefits Consistent Accepted 14-Organization s pay structure Consistent Accepted 15-Overall level of pay Consistent Accepted 16-Size of current salary Consistent Accepted 17-Spend the rest of career with this Consistent Accepted organization. 18-Complete satisfaction Consistent Accepted Table 2: Showing item to total correlations for the employee motivation Items Computed Correlation value Consistent Accepted/Dropped 1-Working hours Consistent Accepted 2-Bouns paid by Consistent Accepted organization 3-Training programs conducted by Consistent Accepted 192

194 organization 4-Activities of team Consistent Accepted leaders 5-Appreciation by boss Consistent Accepted 6-Increments in salary Consistent Accepted 7-Promotion Consistent Accepted 8-Rewards Consistent Accepted 9-Promotion of Consistent Accepted colleagues 10-Compensation policies of my organization Consistent Accepted Table 3: Showing Alpha reliability statistics for perception towards compensation Reliability statistics:- Cronbach s Alpha N of Items Model Table 4: Showing Alpha reliability statistics for employee motivating Reliability Statistics:- Cronbach s Alpha N of Items (Constant) VAR00002 Table 5: Coefficients Unstandardized Standardized Coefficients Coefficients Beta T Sig. B Std.Error Dependent Variable:VAR00001 Dependent Variable: Employee motivation Y=a+bx Y= X X=Satisfaction with Compensation (independent variable) Y=Employee motivation (dependent variable) ANOVA table summary indicates that the value of F(1.485) is significant at 22.5% level of significance and the F value is not significant at 5% level of significance (t=1.219,) insignificant at 22.5%.The beta value (.100) indicates insignificant positive relationship between the employee perception towards compensation and employee motivation. That means both these variable are correlated but the relationship is insignificant. Results of the regression clearly show that the perception towards compensation does not affect the motivation. Regression Results Variable Entered/Removedb Model Variable Entered Variables Removed Method 1 VAR00002a. Enter All requested variable entered. Dependent variable:var00001 Model Summary:- Model R R Square Adjusted R Square Std.Error of the Estimate 1.100a A.Predictors: (Constant), VAR00002 ANOVAb Model Sum of Squares df Mean Square F Sig. 1 Regression Residual Total Predicators(constant),VAR00002 Dependent Variable:VAR a 193

195 1. Reliablity-Motivation Case Processing Summary:- N % Cases Valid Excludeda 0.0 Total Reliability Statistics Cronbach s Alpha N of Items IMPLICATION OF THE STUDY This study will be useful to know the impact of employee perception towards compensation and employee motivation. This study will also contribute to the organizations, which are taken as sample because it provides a way of finding the employees satisfaction. SUGGESTION OF THE STUDY Research can be done on perception towards compensation and employee performance. Compensation should be per the needs & government norms. More extensive research can be done by increasing the sample size and populations of the study. CONCLUSION In present time the compensation is very important part of the organizations. This study was all about the employee perception towards compensation & Motivation of frontline executives. The study found its results through by using standardized questionnaire which was developed for the purpose. This study came to conclusions that there is no employee s motivation the reasons of this may be the employees were giving more importance to other factors like working conditions, participating in decision making, recognition than the compensation. REFERENCES 1. Barber, Alison E. Dunham Randall B.Formisano Roger A. (2006), Personnel Psychology, Vol 45(1): Bartol, K.1999.Reframing sales force compensation systems: an agency theory-based performance management perspectives. Journal of personal selling & sales Management 29(3) Bergaman Nittai K and Jenter Dirk(2007),Employee sentiment and stock option compensation, working papers, Massachusetts Institute of Technology (MIT),Sloan Management Review,vol.33: Bowon Kim, Heungshik Oh (2000), Economic compensation compositions preferred by R&D personnel of different R&D, Types and Intrinsic values R&D Management, vol.32: Chen Chao, choi jaepil and chi shu-cheng (2002), Making justice sense of local expatriate compensation Disparity: Mitigation by Local Referents, Ideological Explanations, and Interpersonal sensitivity in china-foreign joint ventures, Academy of Management Journal; Aug 2002, vol.45 Issue 4, p Core John E,Wayne R.Guay & David F.Linker(2003),Executive Equity compensation and Incentives: A survey, Economic Policy Review, and Vol.9(1). 7. Dyer L, Theriault R.Guay & David F.Linker (2003), Executive Equity compensation and Incentives: A survey, Economic Policy Review, and Vol.9 (2). 8. Dyer L, Theriault R. (1976), the determinants of pay satisfaction. Journal of Applied Psychology.61 (5), Folger R, Konovsky M.A (1989), Effects of procedural and distributive justice on reactions to pay satisfaction. Academy of Management Journal. 10. Gaynor, M.and P.Gertler. (1995), Moral hazard and risk spreading in partnerships. AND Journal of Economic. 11. Knoll Michael S. (2004), the Tax Efficiency of stock-based compensation Tax Notes, vol.102 (15). 12. Krueger, Alan B.(1990),Incentive Effects of Workers compensation Insurance NBER working paper no Money R.Bruce, John L.Graham (1999), Journal of international Business studies, Vol Tremblay Michel, Sire Bruno and Pelcht Anni (1998) Human Relations, Volume Retrieved on January 5th, http// Retrieved on January 5th, http// /making-justice-sense-local-expatriate-compensation-disparity-mitigationby-local-referents-ideological-explanations-interpersonal-sensitivity-china-foreign-joint-ventures Retrieved on January 5th, http// Retrieved on January 6th,

196 A STUDY OF CUSTOMER SERVICE IN DINDIGUL DISTRICT CENTRAL CO-OPERATIVE BANKS LIMITED K.S.Sridharan * ABOUT THE AUTHOR * K.S.SRIDHARAN; RESEARCH SCHOLER, JAWHARALAL NEHRU TECHNOLOGICAL UNIVERSITY, HYDERABAD & PRODUCTION ENGINEER-INTEGRAL COACH FACTORY-CHENNAI ABSTRACT Communication is a vital link between organizational departments/members. Organization s core objective is to produce goods and services at economic costs. To achieve this organization need to be managed effectively. One of the simplest definitions of management is getting things done through people It means that all must know what is expected from them and this can be achieved only if proper communication system prevails in an organization. If a Manager fails to communicate clearly to his sub ordinate then the subordinate may not understand and will produce results that may differ from what Manager had in mind. This will lead to delay in accomplishment of tasks hence communication plays important role in an organization. One may wonder what is so great in Communication in the present scenario of availability of E- mails, cell phone, fax etc. The success of communication depends on clearly understanding the role of sender, receiver and the communication process. KEYWORDS: Communication types, Speaking Vs listening, written communication, Readability index INTRODUCTION Organization is a team of individuals working towards achievement of goals set. Organization members are connected through a chain called communication. If one critically analyze the working of people in any organization the predominant activities they perform are Speaking (giving information/instruction) and listening (actively listening what is communicated) Communication is not an end by itself, it is a process through which sender successfully communicates information/ideas/orders and it is to be understood by the receiver as intended by the sender. This can be achieved only if the sender chooses proper medium, knows recipients level of understanding, appropriate body language etc., The success of communication depends on the role played by both sender and receiver. We are familiar with generation gap. Similarly there is Communication gap (Figure-1) which needs to be addressed for effective communication COMMUNICATION AN OVERVIEW Organization is considered as communication network and it is the lifeline connecting people. Different types of communication system prevail and are depicted in the figure-2. When organization is small (consists of few individuals) one to one communication is possible, but in bigger industries separated by distance, departments and large number of people, different levels, it become complex. 195

197 COMMUNICATION PROCESS Normally minimum two persons are involved in a communication process. One is called as sender and the other is receiver. It is quite common that sender should take at most care and understand the receiver s level of understanding, background, and communicate. Here the total responsibility lies with the sender. Let us understand this by trying to find out answers to the following questions Who is responsible for success of communication? What is the role of sender in communication? What is the role of receiver in communication? Which role is critical and why? 196

198 SENDER- The role of sender is important when he has some motive/instruction/need/ information and hence has an active role to play and must take the following points into consideration Make the listener at ease He shall ensure the receiver is comfortable to receive the information.any hostile situation will impair the receiver s listening Use simple words Use of complicated words will lead to wrong interpretation by the listener Understand listener Listener s background, and his understanding capacity are to be taken into account by sender so that appropriate words/and symbols can be used while communicating Beware of environmental disturbances Environmental disturbances may affect listener s capacity to listen and hence avoid such disturbances Matching body language with communicating words - While communicating beware of body language including voice, tone If there is no correlation between words and body language it may send wrong signal and the communication may not be effective. Example when one is welcoming a person by saying welcome but if his body language ie facial expression,tone, eyes are not in tune it may convey different meaning Logical unfolding of the subject- If the matter to be communicated is not with any logical sequence it will make the listening difficult Do not put too many facts/details at one go- Too many facts at a time may confuse the listener Check your speed of delivery and pronunciations If the delivery of information is speedy listener may find it difficult to comprehend Be in listeners shoe Understand the listeners mood/emotions etc., LISTENER Even though sender has a major role in communication process, the role of receiver is also equally important. Listener must listen with a purpose of understanding. There is a big difference between hearing and listening as hearing is concerned with physical activity, where as listening is with a motive of understanding Listening is important because of the following Listening requires effort It requires concentration and hence effort is needed to understand the communication It is an attitude It reflects ones attitude to other person and how one treat/respect the other person Ego prevent listening I know everything attitude Why should I listen as I know everything attitude leads to poor listening Basic nature It is the human nature that we tend to talk more than to listen and one need to develop the shill of listening Listening is a weak activity We consider listening as a weak activity and feel inferior when we listen to others Day dreaming When listening we switch off the mind and go to dream world. If a person decides not to listen it is very difficult for the speaker to make him understand. When contradicting information is received our mind goes to situations to prove the speaker wrong rather than understanding his point of view Speaking speed Vs listening speed- Mind is capable of understanding much more than the speakers ability to deliver. Mind wanders during that period Listening is not taught to us It is not taught to us in a systematic way. We tend to listen less as we go higher in organization ladder Most of industrial disputes arise due to poor listening If a supervisor is not listening to his subordinate s legitimate grievances they may go to higher ups and complain that the supervisor has not listened to them (please note the actual complaint now is not listening rather than the legitimate grievance) Develop listening skill - Bench mark shall be Judge listening to an argument Do not dwell on the in adequacies of the speaker like his dress, mannerism.etc. Hearing is concerned with ears only and it is a physical activity but listening is hearing with a purpose to understand. Hence Listening is much more than hearing. Do not interrupt when speaker is delivering - It is the human tendency to indicate I also know and interrupt the flow of the speaker. Keep your ears and eyes open that is observe the body language also 197

199 Show body language that you are listening by nodding your head, saying hym Listening skill of Doctors plays a vital role in treatment of patients. WRITTEN COMMUNICATION Another common activity performed by employees in an organization is written correspondence. In this how the information is conveyed decides response. In communicating with external agencies it represents organizations attitude towards others It is not a place to show ones proficiency/expertise /knowledge in the language. It must convey meaning and arouse the interest of the reader. How readable a passage can be found out by Readability index devised by Robert Gunning and explained as given below PROCEDURE: Take a sample passage of 100 words. Divide the total number of words by number of sentences it contains. Count the no. of words that contains 3 syllables or more but do not count words that are capitalized (Name, place, organization s name etc.). Add the events II & III and multiply by 0.4 and this is the FOG index, If the Value is Between Good Danger point 14 Not readable. The skills learnt by the human beings are in the sequence given below. o Listening o Speaking o Reading o Working (Listening is the first skill learnt and hence forgotten) The basic activity of any person working in an organization is decision making. It means data are required for effective decision making. If a person not listening properly, he may not receive full information and hence, his decision making skill is affected. CONCLUSION Organizational members are tied together by communication chain. In this weakest link is listening. We play the role of sender or receiver in an organization whatever is the position/grade in an organization. Though the sender has to communicate effectively listener has an important role in successful communication. Sender and receiver are two sides of the same coin. A good listener can only be a good communicator Most of the misunderstandings between Husband and Wife, Parent and Children, Manager and Sub ordinate can be traced due to lack of listening As one goes higher in the organization s ladder more listening skill is required as he cannot be present in all the places He must depend on the information he receives from down the line. If the listening attitude is poor he may not receive all information with the result his decisions will be wrong. THINK IT OVER Written Communication 198

200 POINTS TO THINK a) If communication is internal is that required? b) Is writing 11th Feb2013 is better or the one shown? Why? c) Is addressing the recipient gender as Sir is better or as Sir/Madam Discuss d) How do you respond to letters often marked as Urgent / Immediate e) Whether too many references are need to be indicated? f) Is DO letter necessary? What are the limitations of such letters? g) How you feel when you receive letter with spelling mistakes, without punctuation marks, long, not logically unfolding of subject, not folded well, arranged? h) Is it necessary to indicate For GM/PRODUCTION, M/S ABC & CO., Chennai and what is missing Comment i) What is CC and how to decide the recipients of the letter? j) Comment on the alignment of the letter? k) Explain the need of using abbreviation in letter and if used how it should be? 199

201 l) In today s fast world when everyone is connected through net and cell phones communication is being talked about - comment the statement THINK IT OVER -Listening You are viewing a particular programme in a television channel which is of interesting to you No one forced you to watch that and doing so because of specific liking (any programme is telecasted in-between advertisement only!) Inspire of it how much you are able to reproduce even though it is visual Please think when information is communicated how much receiver would have received THINK IT OVER Body language STEPS 1) Communicate the following drawing to your friend so that he can draw 2) While doing do not use any body language 3) Tell your friend not to ask any questions 4) 4) Repeat the steps -1 Now allow him to ask questions and clarify them and do not use body language 5) Finally use body language also to communicate Please check up whether your friend is able to draw the drawing after step-1, 4 and 5 What is the role of the sender and receiver in successful communication process? REFERENCES 1. Luis. S. R Vas (Sep 2005). Skills for Excellence Delhi : Pustak Mahal Master Your Communication - Chapter 10 Page 138 to Peter Thomson (1995) Sell Your Way to the Top - New Delhi: Excel Books Communication Skills- Chapter 6 Page 53 to Topic on Communication. - Management Practice and Integrated materials management Course Material for Graduate Diploma in Materials Management from Indian Institute of Materials management- Paper IX 4. S.S.Khanka (2000) Organisational Behavior - New Delhi: S.Chand & Company Chapter 15, Communication- Page

202 MANAGING STRATEGIC FUNCTIONS OF AN INNOVATIVE RETAIL MODEL FOR SELLING OF SPARINGLY-USED FASHION APPAREL ABSTRACT Japjee Kaur Kohli*, Mankomal Kaur Thapar** ABOUT THE AUTHORS * JAPJEE KAUR KOHLI; ASSISTANT PROFESSOR, INSTITUTE OF APPAREL MANAGEMENT, APPAREL HOUSE, SECTOR 44, GURGAON, HARYANA (INDIA) ** MANKOMAL KAUR THAPAR; ASSISTANT PROFESSOR, NATIONAL INSTITUTE OF FASHION TECHNOLOGY, HIGHTECH CITY, MADHOPUR, HYDERABAD, ANDHRA PRADESH (INDIA) Growing demand for fashion apparel in Indian retail market has attracted many investors, both from India and abroad, to set up their retail businesses in fashion apparel. High cost and scarce availability of fashion apparel prohibit a large number of urban fashion savvy customers from fulfilling their desires and dreams of wearing high-end fashion apparel. Indian apparel retail market exhibits trends of selling new as well as old apparel. Prevalence of several retailing models in Indian retail market and ambition of apparel business community to maximize profit appears to have over-taken the social cause, ecology and sustainability aspects. A new retailing model for retail selling of sparingly-used fashion apparel (SUFA) has earlier been proposed by the authors. For the success of the proposed model in Indian retail market the challenges posed by innovative features and functions as envisaged in the retailing strategy of innovative conventional retail (ICRM) are effectively implemented using the intelligent planning and functional management approach. In the present paper an attempt has been made to earmark strategic functions and streamlining of process for their execution and implementation of retailing strategy. The differentiating features and advantages of the innovative model are also described. The opinions of customers and retailers and market trends obtained from face-to-face interviews have been taken into consideration for evolving, formulating, linking and managing of functions envisaged in strategy of innovative model. KEYWORDS: Sparingly-used fashion clothing, retail modelling, sustainability, innovation, utility life, job opportunities, Eco-balance INTRODUCTION Retailing of fashion apparel is a business process that caters for and flourishes with the needs, desires and aspirations of customers. Retailing strategy for fashion apparel, a key element of a retailing business, broadly merges policy, process, functions and modes of operation in a target retail market in a statement (Cain, 2011). Retailing of fashion apparel envelopes five basic components namely; people, strategy, process, structure and reward (Maital & Seshadri, 2007). Like any other product the business model for retailing of fashion apparel also lays down the business concept catering for rules, regulations, sequence, relationships, financials, structure, control and governance of operations and activities of business focuses on the style, strength, capacity, organisation and strategic functions of the business. Price, cost and value are the pillars of fashion apparel business and these tools help in innovation of business model and strategy (Maital & Seshadri, 2007, pp ). Price and cost are closely related to brand image and value. In value addition in apparel is seen as a viable approach for innovating apparel product. However, this strategy has a cost constraint which needs to be managed effectively. Apparel and textiles are directly linked to industrial manufacturing processes without which it is impossible to meet the demand of hundreds of millions of customers (FICCI, 2012). Manufacturing processes consume huge scare resources like water, power and farming product, naturally occurring salts, vegetation and air and continuously discharge harmful effluents, chemicals and wastes, thereby posing threat to human life and ecology (Carr, 1995; Wood & Bishop, 1992; Nese, et al., 2007). Most retail selling business models do not cater for 201

203 sustainability which is one of the main global issues at present (George & Bock, 2012). Obviously, there is a dire need for develop or innovate retail business models that are people and nature centric. Fashion apparel are selling all over the world but impact of inflation, reducing purchasing capacity of consumers due to inflation and increasing prices of fashion apparel is being felt by most customers. However, in India the economy is growing and apparel market is showing slow but upward trends (Chel, 2009; Garg, 2007; TE Online, 2009). The possibility of foreign direct investment (FDI) in retail by international brands has begun to influence the apparel retail market (Franchise India, ; Anon., 2013). Many fashion savvy customers are now hesitating to buy apparel of their choice from brand-company outlets in spite of increase in foot-fall in malls, super markets and hyper markets. Such a fashion apparel market scenario requires new or innovative apparel retail models for increasing the customers affordability and interest (SM., 2012). In another research paper we have described an innovative model, (ICRM), for retail selling of sparingly-used fashion apparel (SUFA) in Indian retail market (Kohli & Thapar, 2013). The retailing model and strategy is configured such that integrates the features of conventional retail model (CRM) and innovative feature to promote the customer centric and eco-centric retailing of fashion apparel (Colovic, 2012). In this paper we present the managerial aspects of strategic functions of the innovative model. Differentiating features and advantages of the model are also briefly discussed. PREVAILING CONCEPTS IN RETAIL Numerous retail selling models have been developed and executed in various developed economies. Some of them have survived unexpected and ever changing economic environment, fluctuations in market trends and variations in customer behavior and buying habits. Some of the successful models include, 5-p sales model, mental conditioning sales model, relationship sales model, strategic sales model, value added sales model, partnering sales model, problem solving sales model, franchise model, auction sales model, loyalty sales model, razer and blades sales model, e-retailing sales model and tele-sales model (McPheat, 2009; Grehalva, 2004). Retailing practices in India include festive retail selling (FR}, in which a retailer works-out marked price by adding up material cost, labour cost, overheads, profit and festive discount, is similar to `end of the season sale or `clearance sale. This retailing approach enables a retailer to reduce the waiting time of clothing products in inventory. Bait retail (BR) approach focuses on the selling strategy of prompting customers through manipulation of the selling price of products for sale. In multiple-products retail (MPS)strategy the offer is made to the customer, e.g., `two or more apparel of same type are clubbed as as package and price is marked such that it appears to have charged for one or more but less than those put in a package. Main objective is clearing the stock and earning collective profit. Goodwill retail (GR) selling is adopted for retaining customers. Some pay back amount of price when the clothing product is returned undamaged. Customer retention, enhancing goodwill and short time financial gain are main considerations here. Rejected apparel retail (RAR) is similar to conventional retailing except that the clothing offered for sale is slightly defective. The apparel consignments are sometimes rejected for export and such apparel are sold to whole seller or retailers at low price to clear out the floor space and to recover some cost. The price of the new apparel and price of rejected apparel are significantly different and provide opportunity for earning profit through retail. Discarded apparel retailing (DAR) is another approach for selling previously used and discarded clothing to poor customers by small retailers. There is perennial demand for cheap or disposal clothing. Easy-installment retail (EIR) is often carried out by apparel retailers. In EIR the selling price is determined by adding up profit margin, cost price and interest on cost and customer pays total price in two or more easy installments. This allows a customer to buy more number of clothing at a time and reaps the benefit of deferred payment in the form of easy installments. Tele-retail (TR) is new to Indian market but it is picking up fast. In this case the overheads come from bills of electricity, telephone, internet, wages of tele-callers, taxes and rents. The sale is promoted through discounts and freebies. Delivery operation is sometimes costly and technology involved raises overheads. Customer is doubtful of quality and delivery of clothing products. Bargain retailing (BR) is one of the most prevalent selling models in the Indian retail market dominated by tourists. In BR of apparel a retailer demands escalate price from customer. In BR a tug-of-war between retailer and customer decides the final price. However, customer is always doubtful of the price paid and profit varies from customer to customer. Internet retailing, retailing through radio and newspaper, door-to-door retailing, mobile and call centre retailing, exhibition-cum-sale retailing and consultative retailing are also in vogue. During the last two decade franchise model (FM) has succeeded in establishing itself in retailing of branded fashion apparel in organized manner. Many foreign and Indian brands are now retailing fashion clothing using franchise. 202

204 CONVENTIONAL RETAIL MODEL (CRM) Retailing is not new to India but retail market is highly unorganized and scattered (Chel, 2009). A retailer following CRM basically exploits demand or need opportunity to earn profit and relies on simple fundamentals and strategy of buy a product at low cost price and sell it in profit. Retailer s reputation, goodwill and market competition and demand of apparel primarily dictate the level of sales and reward i.e., profit. Price of designer apparels are determined by taking into account apparel quality, designer s public image and reputation, brand value and market demand, and invariably the marked price comprising direct and indirect expenses besides profit margin. A retailer following CRM is least concerned about what happens to a clothing product after it is sold. Customer, after use, usually disposes of clothing products as waste. Basic features of CRM are shown in Table 1 Market Commodity Activity Selection, Purchase, Sale Exchange Commodity, Money Outcome Satisfaction. Profit The CRM is one of the most dominating retailing models in Indian apparel retail market. It is characterized by the general expression; Profit: (Selling price cost price). Many of apparel retail selling models are modified or innovated versions of CRM. Apparel, whether new, seconds or used ones, are available and sold in the retail market. These basic factors i.e., cost, price and value form a business tripod for sale of apparel as a commodity. Each factor significantly contributor to formulation of retail strategy. Satisfaction of customer and retailer is dictated by the value of the commodity. INNOVATED CRM The block diagram of routine underlying ICRM is shown in figure 1. The ICRM brings customer, retailer and artisan in a functional loop as shown in figure 1. Apart from usual buying and selling function, innovated model requires retailer to (i) carry-out inspection Figure 1: ICRM and evaluation of the SUFA offered for sale (ii) get value addition done at his or her cost by engaging artisans and (iii) estimate total cost and selling price. The movement of SUFA takes place from retailer to customer to retailer to artisan to retailer and loop is completed. The model envisages repetition of SUFA movement according to above loop for extracting profit from same fashion apparel. Figure 2: S-C-O Representation diagram The exchange of money between retailer and customer in terms of selling price, S, cost price, C, and overheads, O, is shown in figure 2. Initially a retailer sells new fashion apparel to a customer at selling price of (OC1) shown along retailer axis and with a profit margin of P1. After some time and use the customer sells SUFA to a retailer at a price of (OA3) shown along customer axis, thus gaining by this amount in the deal. The retailer after negotiation and contracting engages artisans to improve the value of the SUFA at a cost of (OB1) such that SUFA after value addition costs him [(OA3+ OB1) = (OC3)]. Retailer again sells SUFA to another customer at a selling price of (OC2), with a profit margin of P2. The sale of SUFA initiates second cycle and the process continues. Consideration of the salient aspects of ICRM and S-C-O representation diagram as described above leads to the following functions as envisaged in retail strategy of the ICRM. Purchase: Inspection, Evaluation, Negotiation, Selection Technical: Design, Repair, Embellishment, Packing, Liaison 203

205 Financial: Estimation, Costing, Pricing, Payment Managerial: Planning, Scheduling, Coordination, Settlement, Contracting Selling: Display, Judgment, Response, Billing, Receipt MANAGING FUNCTIONS Most retailers are well aware of and experienced to manage CRM retailing functions like purchase, liaison, financial and selling functions. Technical functions need extra time, effort and resources and need to be integrated in the CRM. The following approach helps in phase-wise sequencing of functions for their execution and management. Invariably retailer possess Figure 3: Sequencing of functional activities sufficient competencies and skills like oral and written communication, negotiation skills, customer handling skills, visualization and presentation of ideas, judgment and calculation skill, time and finance control skills for managing business. However, some of them can easily control the flow of work of ICRM for SUFA. The salient features of ICRM are presented in Table 2. From Tables I & 2 the function-involvement matrix as shown in Table 3 has been developed. Market Activity Exchange Outcome Commodity Selection, Purchase, value addition, Sale Commodity, Money Satisfaction, Profit Table 2: Salient features of ICRM The matrix indicates that out of eight functions retailer would out source three functions i.e., value addition, embellishment and packing to retail his culture of retailing at his outlet and perform remaining functions himself or herself. Table 3: showing function-involvement matrix FUNCTION OUTCOME INVOLVEMENT 1-Inspection Rejection / acceptance Retailer 2-Evaluation Life / cost estimate Retailer 3-Value addition Cost / time / design materialization Retailer & artisans 4-Embellishment Improved status of apparel Artisans & artisans 5-Pricing & marking Marked price & profit Retailer 6-Packing Presentable apparel Artisan 7-Presentation Display Retailer 8-Selling Resale Retailer The management of outsourced work and functions for value addition adds to the responsibilities of retailer. The following functions require efficient management of retailer s time, efforts and resources. Selection: judging and selecting sparingly-used fashion apparel based on quality, value and life. Costing: experience based assessment of cost to be paid to customer Negotiation: convincing and making customer to agree to accept proposed price Improving: deciding value addition and repair, if necessary, of sparingly-used fashion apparel Designing; drafting value addition, fixing location and maximum cost of value addition Contracting: liaison with artisans for repair/ value addition Estimating: evaluating cost and expected profit of finished apparel ready for sale Presentation: deciding window display, advertisement or packing of sparingly-used fashion apparel Selling: attracting customer, negotiating sale, handing over sparingly-used fashion apparel to customer and receiving price 204

206 IMPLEMENTATION AND MANAGEMENT It follows from above that basic abilities required for managing ICRM include recognition, alignment, generating, choosing, executing, implementation and learning. Quality function deployment (QFD) allows retailer to create links among various elements of management involving customer, and artisans. Thus following managerial functions are essential for putting ICRM operational. SELECTION Competency and experience of retailer plays important role at the time of buying sparingly-used apparel for resale from a customer. Assessment of quality of offered sparingly-used fashion apparel through scanning search is a judgmental activity carried out by a retailer. He or she must bear in mind the dynamics of `VALUE: PRICE: COST relationship (Maital & Seshadri, 2007, pp ) while dealing with customer at the time of buying SUFA. If SUFA fails to create value, relative to similar fashion garment, then its price and cost become irrelevant. For a profit yielding SUFA price is determined by value and not by cost. The estimate of life of SUFA offered for resale to retailer is necessary as the cost to be paid to customer depends on the use (wear) life, utility life, in-fashion life and remaining life. Thus retailer is required to use his or her intellect, competency and previous purchase experience of new cloths while inspecting and evaluating the cost and life of offered apparel. Thus outcome of the strategic function relies upon the ability of the retailer to apply his or her intuition to guess the life of sparingly-used apparel from physical condition and appeal status of the apparel. The figure 4 displays used life and utility life of sparingly used apparel as a function of quality. The quality of the sparingly used fashion apparel goes down with use within utility life of the apparel. This difference in utility life and utility life spent at the time of buying by retailer is the remaining life. Figure 4: Quality & life as a function of time Difference in utility life and the used life (converted to months) gives storage or wardrobe life of the sparinglyused fashion apparel. It is easy to realize that the ratio of utility life and use life is greater than unity, revealing that sparingly-used fashion apparel remains unused for a large part of utility life. SUFA retains its high level of quality for a long time. One of the objectives of the innovated CRM is to promote use of SUFA for increased number of days. This is possible when the customer is lure to use or sell the sparingly-used fashion apparel to retailer for resale by retailer to another fashion savvy customer at lower price. NEGOTIATION AND CONTRACTING Retailer assesses the cost of sparingly-used fashion apparel keeping in view the market competition, status of offered product, resale value, expenses for value addition and for performing other functions before the product is put on display for resale. Usually the payment to customer is relatively small fraction of the cost of new product i.e., less than 25% of marked price of new product. Price paid to customer after negotiation with customer and overheads for making SUFA resalable have significant impact upon marked price which ultimately determines profit margin according to following components of pricing. [Retailer s Profit = {Selling price customer compensation cost of (ornamentation + packing & transport + presentation) other overheads}] According to above expression costing for purchase is given the sum of customer compensation, cost of value addition, packing and other expenses; whereas costing-for-sale is given in terms of profit: (Marked price Total cost). Retailer has to negotiate price with customer and embellishment and packing expenses besides transportation and allied expenses to keep direct and indirect overheads within expected limits. Negotiation skills include convincing both customer and artisans to accept offered price, settle other formalities, responsibilities and functions. Contract between retailer and artisan/s, in the form of a memorandum of understanding (MOU), is signed to fix the responsibilities, charter of duties and claims besides payment terms, advances, supply of 205

207 resources agreed, modes and time schedule for supply of finished apparel. Both the parties are bound to honour the terms and conditions of MOU and maintain cordial business relations. DESIGN AND VALUE ADDITION Value addition function comes under the domain of fashion design and needs judicial addition of value to the apparel to ensure that it is saleable (Oakley, 2011; Cagna, 2011). Fashion apparel has typical designer touch and appeal but there is always a scope for further improvement. Prevailing embroidery and ornamentation practices invariably provide desired improvement at relatively low cost. Location of ornamentation, type, style and size, materials, colours, threads, gems etc are prescribed by retailer in design specification sheets and artisans are required to adhere to what has been specified. A retailer in fashion apparel business and aware of customers preferences, if capable of re-designing the embellishment elements to be developed on SUFA, succeeds in getting value addition done from local artisans at low cost and keeps control on overheads. Alternatively design idea may be passed on to artisans for design and development of pattern to be incorporated. The activity management block diagram (Joe Tidd, 2001) for value addition of SUFA is shown in figure 5. In order to ensure embellishment at reasonable cost, it is necessary that communication between the two is maintained and status of progress in embellishment and allied work as per contract is communicated to retailer. Advance information permits retailer to plan for display of SUFA for sale and allocate necessary resources. The activities of retailer and artisan, shown separately, indicate a close interlinking between technical functions and strategic functions. Carefully implemented financial management of functions keeps cost, overheads and price within the control. Value addition to SUFA requires retailer s time, attention and effort to interact with artisans, complemented by choices and likings, for timely delivery of value added SUFA for resale. In ICRM the prominence of design function i.e., embellishment or ornamentation is also evident due to presence of a close loop of activities comprising design, embellishment and costing before apparel is ready for outlet. Once the embellishment is completed the artisan is required to carry out inspection to ensure that all the elements specified in retailer s design specification sheet are completed successfully. PACKING AND DELIVERY After completion of embellishment the SUFA is packed according to the retailer s specification. Artisan is required to ensure that SUFA is not damaged/ spoiled during handling, wrapping and packing. A tag for identification and completion of inspection as per specification or already supplied by retailer is put at appropriate location and wrap is properly sealed using temporary seal. The sealed SUFA is packed in a box or plastic bag as required and made ready for delivery. Safe transportation of packed SUFA to retailer s outlet or store for delivery is carried out by artisan. After accepting delivery of value added SUFA the retailer makes payment to artisan as per agreed terms and conditions. REVIEW OF COST ESTIMATES Retailer, after receiving SUFA (VA) from artisan, reviews the cost and overheads (envisaged and actual) to fix the selling or marked price. Review of financials enables retailer to determine the limit of the profit and amount of discount. Review of marked price, a strategic function of ICRM, permits retailer to align or adjust retailing activities and marked price with the market forces for achieving competitive advantage. PRESENTATION AND SELLING OF SUFA (VA) Display of packed SUFA (VA) comes under the domain of visual merchandizing but retailer can perform this function depending on available space for display and mountings. In order to gain retailing advantage, a retailer has to put SUFA on display depending upon inventory or storage capacity. Main benefit lies in clearing the inventory as quickly as possible. Thus display and presentation of SUFA at prime location allures customers and improves chances of early sale. If, SUFA is presented among new apparel it may or may not get attention of the customers. Thus, a trade-off is carried out for presentation of SUFA vis-à-vis new fashion apparel and location and time for display are materialized. Provision of discount on marked price or any other trick used for attracting the attention and enhancing interest in SUFA invariably promotes sale. 206

208 Selling is principle function of retailer as it is an integral part of retailing business. Proficient execution of selling function usually results in profit or reward for retailer. Retailer is required to ensure that the SUFA is treated by customers as a new product. He is supposed to evolve a selling strategy that enable him make customer believe what he or she asserts and makes claim before a fashion savvy customer. Managing looped activities of ICRM is a key to achieving high ratio of esteem function to cost function, being a deciding factor for profit. Retailer s previous relation with artisans may give him or her cost edge or advantage over competitors but packing of finishes apparel adds to the cost which needs to be recovered by adopting judicious profiting strategy. LEARNING EXPERIENCE New operations, functions and responsibilities attached to ICRM for retailing of SUFA require additional planning, time, efforts from retailer. Integration of technical function to which retailers are not connected directly puts certain constraints on the on-going business but streamlining of such functions and related activities yields good returns. Retailer gains experience through his or her direct involvement and management of technical and other activities. A retailer, equipped with knowledge and experience in handling micro-operations may not find it difficult to expand or diversify his retailing business. Retailer s exposure to a new business path widens his commercial quotient and facilitates speedy decisions on issues related to size, scope, sourcing, engaging, trade-off, and other managerial aspects of retailing in SUFA. ADVANTAGES OF ICRM Main advantages of ICRM as applied to SUFA are given below: (i) On selling SUFA a customer gets a part of price (OA3) back. (ii) Retailer gets SUFA at low price as compared to the price of new fashion apparel (iii) Retailer after managing value addition gets additional opportunity for diversification of retail business. (iv) Artisans and sales personnel get job opportunity. (v) Uniqueness of ICRM lies in integrating customer, retailer and artisan in a new format of retail business in which customer uses and then provides procurement support to retailer and artisan also provides ornamentation support to retailer. Managing the two i.e., customer and artisan essentially opens up profiting opportunities for retailer, refund for customer and compensation for artisan (vi) Disposal of SUFA as a waste material is delayed. (vii) Additional requirement of natural resources needed for manufacture of new apparel are deferred. (viii) Discharge of pollutants, effluents, chemicals and waste materials is reduced. (ix) Power and energy required for manufacture of apparel can be utilized elsewhere. DISCUSSION Numerous poor or fashion savvy customers desire to wear new and in-fashion apparel, which are usually costly and beyond their reach. It is a common knowledge that many rich customers buy fashion apparel and use them for a short period before storing them in wardrobe. The wear life of fashion apparel is invariably many times shorter than their wardrobe life. The ICRM for retailing of sparingly used apparel derives its fundamentals from its life, utility and profit. Life and utility of sparingly-used fashion apparel govern value which prompts a customer to buy it. The display condition of sparingly-used fashion apparel i.e., appearance, quality, fitness, style, design, in-fashion status influence the value status given by customer to apparel and consequent profit to retailer. Higher value status yields higher profit during sale operation. Scanning of retailing process of new fashion apparel reveals several gaps in value chain of fashion clothing, behaviors and habits of customers, retailers, market trends, life cycle and retailing practices prevalent in fashion clothing market. A opinion survey on ICRM has resulted in the following observations which paved way for finding gaps and innovation in CRM. Retailer makes profit only once (Multiple profit),retailers are not averse to selling old clothing products (Quality differential), Cheap labour for repair and embellishment is available (Value addition), Customers like in-fashion clothing (Desire fulfillment), Low price used-clothing is selling in market (Utility loss), Marked difference in prices of new and used clothing (Intermediate range absent), High end fashion clothing is not affordable (High profit margins), No customer dependent generation of supply and demand for clothing (No model), Customers desire for wearing branded or designer clothing (Poor brand access), Lower middle class customers spend significant amount on used clothing (Class discrimination), Dumping of discarded clothing adversely affects environment (Sustainability issues). The ICRM envisages change in role of retailer from a mere seller to a sellercum- activity manager. The selling strategy for SUFA necessitates fulfillment of certain functional requirements to succeed in retailing and realize profit. As the retail market is evolving fast it would be essential for retailers to adapt new models and refine strategies for retailing. Before concluding the discussion we, therefore, quote 207

209 Peter Drucker, who once stated that When you see a successful business, then know that someone once made a courageous decision CONCLUSION The ICRM has been evolved from CRM, a well established retailing practice in Indian market. ICRM, as applied to SUFA, provides opportunities of jobs for artisans and sales persons and at the same time adds to the functional responsibilities of the retailer. Effective management of various strategic functions is expected to promote retail and profit possibilities. Addition of value to SUFA is a strategic function that differentiated ICRM from other retailing models. Enlargement of portfolio for retailer adds to his retailing assets. The delayed disposal of apparel to garbage bins or landfills promotes ecological balance. Desires and aspirations of numerous customers of wearing fashion apparel, which are otherwise beyond their reach, can be fulfilled at relatively lower cost through retailing of SUFA(VA) using ICRM. REFERENCE 1. Amin, Z., Water Pollution: a Global Environmental Issue. [Online] Available at: [Accessed 13 March 2013]. 2. Anon., Retailing in India. [Online] Available at: [Accessed 29 March 2013]. 3. Cagna, J. D., Six Design Principles for Business-Model Innovation. [Online] Available at: 1 March 2013]. 4. Cain, D. d., New retail design strategies. [Online] Available at: 28 February 2013]. 5. Carr, C. M. ed., Chemistry of the textiles industry. s.l.:springer. 6. Chel, S. R., Indian unorganized retail sector & its challenge. [Online] Available at: [Accessed 25 February 2013]. 7. Colovic, G., Strategic Management in Garment Industry. New Delhi: Woodhead Publishing. 8. DeGroot, R., The 12 Models of Selling. [Online] Available at: 14 March 2013]. 9. FICCI, Economic Survey: A FICCI Analysis. [Online] Available at: 25 Febuary 2013]. 10. Franchise India, India - Fashion & Lifestyle Franchise Report s.l.:s.n. 11. Garg, R., Retail Industry in India:challenges Opportunties and Strategies. [Online] Available at: and-strategies html [Accessed 21 February 2013]. 12. George, G. & Bock, A. J., Models of Opportunity: How Entrepreneurs Design Firms to Achieve the Unexpected. New York: Cambridge University Press. 13. George, G. & Bock, A. J., n.d. The business model in practice and its implications fro entrepreneurship research. Entrepreneurship Theory and Practice, 35(1), pp Grehalva, R., Unleashing the Power of Consultative Selling "Selling the way your customer wants to buy...not the way you like to sell". s.l.:p2p People to People Communications. 15. Joe Tidd, J. B. a. K. P., Managing Innovation. Chichester: John Weely & Sons, Ltd Kohli, J. K. & Thapar, M. K., An innovative model for retailing of sparingly- used fashion clothing. s.l., s.n. 17. Maital, S. & Seshadri, D., Innovation Management. New Delhi: Response Books. 18. Maital, S. & Seshadri, D., Innovation Management: strategies, concepts and tools for growth and profit. New Delhi: Response Books, A division of Sage Publications. 19. Maital, S. & Seshadri, D., Innovation Management: strategies, concepts and tools fro profit and growth. New Delhi: Response Books, A division of Sage Publications. 20. McPheat, S., The 5 P s of Selling. [Online] Available at: 1 March 2013]. 21. Nese, T., Nuket, S. & Ismail, T., Pollutants of Textile Industry Wastewater and Assessment of its Discharge Limits by Water Quality Standards. Turkish Journal of Fisheries and Aquatic Sciences, Volume 7, pp Oakley, M., Organising Design Activities. In: R. Cooper, S. Junginger & T. Lockwood, eds. The Handbook of design management. New York: Berg, pp Rouse, M., relationship marketing. [Online] Available at: 28 February 2013]. 24. Rouse, M., March. gap analysis. [Online] Available at: [Accessed 28 February 2013]. SM., N., Luxury at its best. [Online] Available at: 3 March 2013]. 25. TE Online, Global Recession Impacts on Fashion Industry: Strategies for Survival. [Online] Available at: [Accessed 20 February 2013]. 26. Wood, K. N. & Bishop, A. L., Effluent Guidelines Compliance through Waste Minimization. Water Science & Technology, 26(1-2), pp

210 HUMAN RESOURCE MANAGEMENT PRACTICE: A CORE PART OF ORGANIZATION ABSTRACT Mr. Pankaj Shankar Kumbhar * ABOUT THE AUTHOR * MR. PANKAJ SHANKAR KUMBHAR; ASSISTANT PROFESSOR, DEPARTMENT OF SOCIAL WORK, TILAK MAHARASHTRA VIDYAPEETH, GULTEKADI, PUNE (INDIA) Human resource management is the process of managing the people of an organization with a human approach. Human resource development approach to man power enables the manager to recognize the employees as an important asset retained potential of the organization. Its aim is to bring together and develop into an effective organization the men and women its human resource who make up an enterprise and giving regard for the well being of the individuals and of a working groups to enable them to make their best contribution to its success. Human resource management practices helps to improve the productive contribution of the people in an organization. Social work profession is directly concern with imparting professional services to the human society for achieving sustainable development. An organization always needs specialized services to address the typical needs of the people working in the organization. The social work profession has developed intervention strategies, based on scientific knowledge with main aim of resolving the problems of the people by their own efforts. In this paper author has made an attempt to analysis the situations in the organization related to human resource management practices implemented by management of the organization. KEYWORDS: Human Resource Management, HRM Importance. INTRODUCTION Contribution of human resources in the organizational development is significant. It would be ungrateful on the part of organization, if they neglect employee s wellbeing. Considering this fact modern sensible and socially responsible organizations do attempt to accept in managing their human resources, over the ages organizations have realized that if they fail to utilize their manpower carefully and tactfully, it will become difficult for them to survive in the globalize market. They have also realized that giving proper treatment to employees,understanding their real worth and making attempts to enhance their skill, knowledge, caliber, providing them satisfying internal customers and making the company competitive are vital for over development. These human resource management practices comprise human resource planning, recruitment, selection, training, promotion, motivation, performance appraisal, job evaluation, etc. however many times procedural lacunas are found in these practices and specially identifying its relation with recruitment and selection. Human Resource Management Practices aims at creating not only an environment of learning in the organization but also translating the learning in to performance in a way that every individual continuously learns,acquire knowledge abilities and skill necessary for the accomplishment of organizational goal. The purpose of Human Resource Management is to enhance the productivity of the human assists in the organization in order to attain the objectives of the organization. HUMAN RESOURCE MANAGEMENT PRACTICES Human Resource Management means management people at work. The success or failure of an organization depends on materials, machines, and equipment but on the efficiency of the personnel who are to put in their best efforts for an efficient performance at their job. 209

211 Human Resource Management may be defined as the art of procuring, developing and maintaining competent workforce to achieve organizational goals efficiently. The Human Resource Management function includes a variety of activities an key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees,ensuring they are high performance dealing with performance issues and ensuring your personnel and management practices conform to various regulation. The Human Resource Management functions and Human Resource Development profession have undergone tremendous change over the past years ago; large organizations looked to the personnel department mostly to manage the paperwork around hiring and paying people. More recently organizations consider the HR Department as playing a major role in staffing, training, and helping to manage people so that people and the organization are performing at maximum capability in a highly fulfilling manner. FUNCTIONS OF HUMAN RESOURCE MANAGEMENT Creating and promoting a human resources philosophy in the organization and getting the approval and commitment of the top management. Determining the human resources needs of the organization Educating the executives and managers of the organization regarding the various aspects of the human resources approach adopted in the organization. Formulating and envisaging human resource planning and carrier planning. Designing, developing, introducing, directing and evaluating the human resources development programmer. Developing and maintaining an effective communication system. Establishing and maintaining a team spirit not only in the Human Resource Management Department, but in other departments also. HUMAN RESOURCE MANAGEMENT PROCESS Appropriate policies and strategies must be formulated and implemented not only for making use of the manpower but developing and maintaining human resources. Management at all levels, must foster a human resource management philosophy consider your people as your resources and assets and not liabilities and view and value their contribution as indispensable for the survival and growth of your organization. HUMAN RESOURCE PLANNING Human resource planning involves gathering of information, making objectives and making decisions to enable the organization achieve its objectives. Human Resources planning program would assist the organization to manage its staff strategically. The programmed assists to direct actions of Human Resource department. Poor human resource planning and lack of it in the organization may result in huge costs and financial looses. 1. Forecasting 2. Inventory 3. Audit 4. Human Resources Plan 5. Auctioning of Plan 6. Human Resources Plan and Strategic Management 7. Monitoring and Control. These are the some steps in Human Resource Planning. RECRUITMENT Labour is an important factor of production than other factors of production. So there is a fundamental truth that people are most important assets of an organization. The success of every organization is mostly depends upon how peoples are acting in an organization. Hence right person should be procured at the right place. Recruitment is the indication about the values, ethics and principles of an organization. It represents the first context that a company makes with potential job seekers. By the process of recruitment many job seeker individuals will come to know about the company. Hence they will decide whether they want to work for it or not. A well managed and well planned recruitment process will collect high quality applicants. Whereas the organization and not planned recruitment will result into poor performance of the candidates 210

212 Hence, the recruitment process should inform the qualified and experienced candidates about the employment opportunities in the organization. It will create a positive image about the company. That will lead a provision about the sufficient information about the employment position. Then the candidates will make comparison with their education, qualification and interest. That will ultimately result into the inspiration among the top quality, candidates to make an application for the vacant position in the organization. Recruitment is the process of searching for prospective employees and stimulating them to apply to for jobs in the organization. Recruitment is the development and maintenance of adequate manpower resources and involves the certain of a pool of available labor upon whom the organization can depend upon when it needs additional employees. RECRUITMENT PROCESS 1. Identify Vacancy 2. Prepare job description and person specification. 3. Advertising the Vacancy. 4. Managing the response. 5. Short listing. 6. Arrange Interviews. 7. Conducting Interview and decision making. It is the primary duty of the Human Resource Department to Procure and Maintain an adequate qualified working force of various personnel necessary for making the organization. Recruitment of efficient personnel like other elements as money, materials etc leads to the organization success. Recruitment means search of the prospective employees to suit the job requirement as represented by job specializations a technique of job analysis. For this purpose, the department is to locate the sources where from the required human resource can be available and to attract them towards the organization. Recruitment is the process of discovering the potential applicants for actual or anticipated organizational vacancies. Recruitment is a positive process of human resource management because it increases the selection ratio by attracting large number of applicants for the job. Recruitment enables to management to select suitable employees for different job. Recruitment has assists major objective developing and maintaining adequate man power resources, with the required skills, upon which the organization can depend when it needs personnel. SELECTION On the other hand selection is the process to catching up the candidates who are best from the applicants. Selection is considered as the next step after recruitment. It is concerned with seeking to eliminate as many unqualified candidates as possible in view to find out right and qualified candidate. If a wrong person is selected the company will have to suffer a loss. It will continue even after candidates exist from the company. Selection is one of the dimensions of human resource management practice. Selection is mechanism that determines the overall quality of human organization resources. The economic value of good selection procedures is higher than most people realize. Selection is an important function of human resource department. Selection means to choose right person from among the prospective candidates to fill in the vacant posts in the organization. The success of the organization depends upon the quality of personnel selected for the job. Faulty selection may lead to wastage of time and money and spoils the environment of the organization. Thus, selection is the most important function of the human resource management. The importance of selection may be judged from the following fact: 1. Procurement of Qualified and Skilled Workers: Scientific selection facilities the procurement of well qualified and skilled workers in the organization. 2. Reduced coast of training and development: Proper selection of candidates reduces the cost of training because qualified personnel have better grasping power. 3. Absence of personal problems: Proper selection of personnel reduces personnel problems in the organization. Many problems like labour turnover, absenteeism and monotony shall not be experienced in their severity in the organization. 211

213 PROCEDURE FOR SELECTION Selection procedure used by a particular organization depends on a number of factors including its size, resourcefulness and staff objectives. Selection techniques also differ according to size of the business and the kind of the personnel that are to be selected. Following are the major steps of the selection procedure CONCLUSION Human Resource Management practices aim at creating not only an environment of learning in the organization but also translating the learning into performance in a way that every individual continuously learns acquire knowledge, abilities and skills necessary for the accomplishment of organizational goal. Two best purpose of recruitment are: 1. To find out the best qualified and promising employee for a job. 2. Influence of technological changes as the second factor influencing recruitment. The criteria for employee selection reveals preliminary screening, checking, reference, employment test, employment interview, physical examination as the criteria set by organization. Screening of candidates is essential before selection to ensure that the right person is assigned to the right job. Checking references helps to collect past history of the candidate which the selection procedure similarly employment tests also helps us in assessing the candidates caliber and his aptitude conduction interview before selecting employees, this enables the organization to find out how good the candidates communication and technical skills are. REFERENCES 1. B.B.Tandon and P.P.Arya, Human Resources D Hand book, Deep and Deep B.R. Virmani, Premila Seth, Management Training and Development, Vision books Bartel A (1994), Productivity Gains From the Implementation of Employee Training Programmes Industrial Relations Vol- 33, No-4 P Biswajeet Pattanayak, Human Resource Management, Publication- Prentice Hall of Indian Delhi C.B.Mamaria, Personnel management, Himalaya publishing house Davar R. S. (1976), Personnel Management and Industrial Relations in India Vikas Publishing House Pvt. Ltd. New Delhi, P Don Horvey and Robert Bruce Bowin, Human Resource Management : An experiential Approach, Preso Prence Hall, New Jersey Dr. P. Subbarao, Essential of Human Resource Management and Industrial Relations, Himalaya Publishing house, Mumbai 9. Dr. S. K. Gupta, Personnel Management and Industrial Relations, 4th Edition, Vishal Publishers, Meerut 10. Dr. T.N.Bhagolival, Personnel Management Industrial Relation, Sahitya Bhavan Dr. V.P.Michael, Human Resource Management and Human Relations, Himalaya Publicating House. 212

214 12. Flippo Edwin, Principle of Personnel Management, MC Graw Hill Gary Dressler, Human Resource Management, Publication- Prentice Hall of Indian Delhi Jayagopal R., Human Resources D-Conceptual Analysis and Strategies, Streling Joyce D. Ross, Human Resource Management, Personnel Journals. 16. Jucuis Micheal, Richarad Irwin, Personnel Management, Lewin D, The Contemporary Human Resource Management Challenges to Industrial relations, Bargaining Group Conference, Newyork, ILR Press. 18. M.C.Farland, Macmillan, Personnel Management Theory and Practice 19. M.M.Varma, R.K.Agarwal, Human Resource Management, King Books Publication Nigerian Federal Ministry of Economic Development (1986), Management in Nigeria Manpower Studies. No Onah B. S. (Jan 28, 1984) Manpower Development and Utilization, Business Time- P Shola L. A. (1983). Employees and Labour Recruitment. Business Times, P T.V. Rao (1989), Managing Human Resource, New Perspective, personnel today, Jan- March 1989, P National Institute of Personnel Management (NIPM), Calcutta. 24. T.V.Rao, Human Resources Development. 25. William B. Werther, J R. Keith Davis, Human Resource and Personnel Managements, 3rd edition, Mcaraw hill, Newyork

215 UNITY IN DIVERSITY ALONG WITH CROSS CULTURAL DIFFERENCES Abhiruchi Pandey *, Jaya Jain** ABOUT THE AUTHORS * ABHIRUCHI PANDEY; DEPARTMENT OF MANAGEMENT, SRI RAMSWAROOP MANAGEMENT GROUP OF PROFESSIONAL COLLEGES, UPTU, LUCKNOW, UTTAR PRADESH, INDIA ** JAYA JAIN; DEPARTMENT OF MANAGEMENT, SRI RAMSWAROOP MANAGEMENT GROUP OF PROFESSIONAL COLLEGES, UPTU, LUCKNOW, UTTAR PRADESH, INDIA ABSTRACT Globalization has opened new doors of opportunities for professionals all over the world. With Organizations expanding at a tremendous rate, they are opening offices at various locations around the world. In such a case, a problem that is often encountered by employees is targeted towards addressing issues around cross-cultural differences. It is indeed a challenge to adjust and blend in the new environment, culture and workplace. Economic and political spaces between nations are becoming smaller and international trade continues to increase, the movement of people between countries is becoming more fluid. With competition for talented global workers increasing, companies are becoming increasingly aware that creating cross cultural environment in the workplace is critical for long term success. Depending on who is moving from where, cultural issues could range widely. For some using the first name is acceptable and for the rest it is crossing the line, some believe that patting on the shoulder is positive motivation, but for others it may border on indecency. Assuming the context of people coming from the west to India, such employees face very little challenges around mingling with people as Indians by nature are quite hospitable and quick to make visitors feel at ease. However, food and language can become quite rampant roadblocks. The organization can help employees adjust to new environment through induction ceremonies and encouraging a culture of mentoring. KEYWORDS: Cross cultural differences, cross cultural training, self governance, managing diversity Discrimination, INTRODUCTION Globalization, the expansion of intercontinental trade, technological advances and the increase in the number of companies dealing on the international stage have brought a dramatic change in the frequency, context and means by which people from different cultural backgrounds interact. The diversification of the social, cultural and economic world is seeking the attention of the companies and the organizations all over the world. Diversity is no longer confined to America; it is spreading to the whole world. Mostly every country is realizing the importance of plurality in the organization. This is not only because of the internationalization of markets or globalization in general but also because of technological developments, better infrastructure as well as fast transportation, global demographic changes and urbanization (Haq 2006, Cox 2001, Gilbert/Ivancevich 2000, European Commission 2008, Council of Europe 2004, Judy/D Amico 1997). The automated technology is connecting the whole world including the customers, employees all over the world. Dynamic companies look for people who are different from us because the diverse workforce may bring different talents, interests, and viewpoints (Simmons, 1996). The organizations which fail to embrace diversity effectively and do not take a holistic approach to eliminate discrimination and injustice will adversely affect both employees and customers. Organizations must concentrate on holistic strategies that address broader human resource issues, and value diverse employees. 214

216 As more and more number of firms move from domestic, multi domestic, multinational strategies to operating as a truly global firm, the significance and impact of cultural diversity increase markedly (Adler, 1997). More and more people are migrating to sustain their life, in search of better opportunities which is increasing the workforce diversity in organizations around the world. Therefore the special management initiatives should be taken and changes in the corporate culture must be realized to reduce the cultural differences. Cultural plurality is often faced by discrimination and stereotypes, if not managed effectively. Talented employees will be overlooked and human resources wasted. Therefore, a diversity-valuing environment must be created and organizational learning of all employees must be enabled. Different cultures and cultural backgrounds between a highly diverse staff base brings with it obstacles, challenges and difficulties. LITERATURE REVIEW Geert Hofstede defined culture as the collective programming of mind that distinguishes the members of one human group from another. Based on his five dimensions of culture on an extensive survey at IBM in which he investigated the influence of national culture. By filtering out IBM s dominant corporate culture from his data on IBM s national subsidiaries, Hofstede was able to statistically distinguish cultural differences between countries. Hofstede classified a country s cultural attitudes as five dimensions power distance, uncertainty index, individualism/collectivism, and Masculinity/Feminity and time orientation. In 1998, management consultants Trompenaars and Hampden-Turner published their seven dimensions of culture model to explain national cultural differences in organizations and to show how managing these differences in a heterogeneous business environment is a major challenge for international managers. Kluckhohn and Strodtbeck (1961) suggested that there are important variations in how individuals relate to each other across cultures. Kluckhohn (1962) states that culture consists of patterns, explicit and implicit, of and for behavior groups, including their embodiments in articles (p.73). Culture affects how people think and behave (Hodgetts and Luthans, 1994). OBJECTIVES OF THE STUDY 1. The effect of cross cultural differences on organizations. 2. The problems associated with cross cultural diversity. 3. Determinants of cultural differences. 4. Impact of culture on management. 5. Strategies for managing cultural differences. Diversity is the variation of social and cultural identities among people existing together in a defined employment or market setting. Today, in most countries there are a significant amount of individuals who are from different cultures so managers are faced with a multicultural work force in all their offices across the world. Because all of them are culturally distinct, many problems like misperception, misinterpretation, misevaluation, miscommunication, ambiguity, and confusion are bound to rise. By managing diversity, it means its effects and implementing behaviors, work practices and policies that respond to them in an effective way. The firm s corporate culture should be like a melting pot where employees and partners with their diverse talent could create a salad bowl, where each one is different but when they come together, they create synergies, which lead to an excellent work. According to Rollins and Stetson cultural diversity is a highly complex field with multiple distinctions and the majority of attributes cannot be discovered immediately. Rollins and Stetson developed an Iceberg Model of Differences. It divides seen and unseen attributes into two levels, whereof the first includes easily detectable characteristics and the second more personal, inner and unobservable traits. Cross cultural differences or heterogeneity is not only confined to the common man but it is hitting the high profile people of countries who face problems while travelling to another country. The increased attacks by the terrorist on America have led to an environment which is prone to cross cultural differences. The Americans do not trust the people coming from different countries and therefore create cross cultural issues by harassing the people, interrogating them etc. 215

217 EFFECTS OF CROSS CULTURE DIFFERENCES ON ORGANIZATIONS As we are moving towards globalization the heterogeneity of the group is increasing, the environment is changing and the mind set of people is also being affected. These changes can be favorable or unfavorable. Diversity if not managed properly will lead to negative impact on the organization. FAVORABLE EFFECTS OF CROSS CULTURAL DIFFERENCES Competitive advantage- Every organization wants to achieve competitive advantage because of which they promote a multi cultural labour force to enhance their productivity. Increase Teamwork Increased plurality leads to better performance and productivity and increased organizational commitment. Creativity and flexibility- Diverse workforce leads to generation of creativity and innovations which helps in problem solving areas. Diversity enhances creativity and innovations and produces advantages. Diversity helps organizations for entering the international arena. Diverse teams make it possible to enhance flexibility and rapid response to change. UNFAVORABLE EFFECTS OR PROBLEMS OF CROSS CULTURAL DIFFERENCES Communication- communicating to each other becomes very difficult in an organization. Employees from different countries, different cultures fail to understand each other. Interpersonal conflicts- Heterogeneity features a large number of different ideas, perception and perspectives which increases the number of alternatives leading to interpersonal conflicts. Absenteeism and turnover- the conflicts arising out of cross culture differences and harassment done in the organizations lead to absenteeism and employee turnover. Racism and discrimination- In Asian countries or in America this problem persists which has led to the physical and mental harassment. DETERMINANTS OF CULTURAL DIFFERENCES There have been many attempts to define cultures and what differentiates them. The study by Hofstede defined and differentiated between cultures on various dimensions. 1. Power distance- degree of inequality in power between a less powerful individual and a more powerful one in which they belong to same social system. 2. Masculinity Vs feminism- refers to the distribution of emotional roles between the genders. It opposes a tough masculine to tender feminine society. 3. Uncertainty avoidance- is the extent to which a culture programmes its members to feel either comfortable or uncomfortable in unstructured situations. 4. Individualism Vs Collectivism- is the degree to which individuals are supposed to look after themselves or remain integrated into groups usually around the family. 5. Long-term Vs Short-term orientation- refers to the extent to which a culture programs its members to accept delayed gratification of their material, social and emotional needs. IMPACT OF CULTURE ON MANAGEMENT The impact of culture on management is reflected by changes in basic values, attitudes, beliefs and behavior of the people. Culture can affect technology transfer, managerial attitudes, managerial ideology and even government-business relationships. Moreover culture affects how people think and behave (Hodgetts and Luthans, 1994). STRATEGIES FOR MANAGING CROSS CULTURAL DIFFERENCES The extent to which managers and employees recognize cultural diversity and it s potential advantages and disadvantages defines an organization s approach (strategy) to manage cultural diversity. Adler (1997) has identified the following strategies for managing cultural differences. Run meetings to expose employees to other cultures To manage effectively in a global or a domestic multicultural environment, we need to recognize the differences and learn to use them to our advantage, rather than either attempting to ignore differences or simply allowing differences to cause problems (Adler, 1997). Rather managers should be taught how to respect the differences at work and how to work with them to maximize the contribution of each employee (Cascio, 1998). Adler (1997) has identified the following strategies for managing cultural differences. 216

218 (i) (ii) (iii) (iv) (v) (vi) Ignore cultural differences- by this strategy the mangers try to ignore or do not recognize the cultural differences or its impact on organization. Minimize cultural differences- This strategy of minimizing cultural differences is commonly adopted by ethnocentric organizations. Here managers do recognize cultural diversity but only as a source of problems. Manage cultural differences- The organizations which adopt the strategy of managing differences are synergistic organizations. These types of organizations recognize the impacts of cultural diversity that leads to both advantages and disadvantages. Run meetings to expose the employees to other cultures. Provide workshops, tips and techniques for communicating effectively in cross-cultural work environments. Coach employees to mediate conflicts related to cultural misunderstandings. Provide opportunities for employees to respond to situations from viewpoints different than their own. CROSS CULTURAL TRAINING Cross cultural training is now becoming an integral part of staff training as managers and HR staff wants to ensure that effective communication is developed between employees. By introducing cross cultural training, cross cultural team building organizations are becoming more competitive in the global marketplace as synergy in the organizations grows. Cross cultural training can be divided into Cross cultural awareness training and country specific training. Cross cultural awareness training- its main objective to introduce analyse and constructively tackle the different manifestations of culture in the workplace. Country specific training these programmers are aimed at individuals or teams that regularly visit a foreign country or who frequently interact with overseas clients METHODS OF CROSS CULTURAL TRAINING Cultural assimilator- it s a tool that consists of a number of real life scenarios. The scenarios can be defined as critical incidents that describe interactions between host and expatriates. Contrast American method- it involves demonstration of behaviors that are completely opposed to what is seen in the context of culture self reference criterion. CONCLUSION Cultural diversity widens the range of options open to everyone; it is one of the roots of development, understood not simply in terms of economic growth, but also as a means to achieve a more satisfactory intellectual, emotional, moral and spiritual existence. If cultural diversity is not properly managed, organizations will suffer from discrimination, prejudices and increased employee turnover; hence, the upper management has to pay special attention to its diversity management strategy in order to stay competitive and successful in the long run. It is imperative that employees who are to be expatriated are well-informed regarding the challenges they might face in a foreign land. Coping with foreign culture, both organizational and national, needs wellplanned preparation. A well structured cross cultural training will help the employees to prepare for coping with the changes in the working styles, beliefs and values they are expected to face. REFERENCES 1. Von Bergen, C. W., Soper, B., & Foster, T. (2002). Unintended Negative Effects of Diversity Management. Public Personnel Management, 31 (2), Thomas, D., & Ely, R. (1996). Making Differences Matter: A New Paradigm for Managing Diversity. Harvard Business Review, Sept.-Oct., Sagrestano, L. M. (2006). Health Implications of Workplace Diversity. In M. S. Stockdale & F. 4. J. Crosby (Eds.), The Psychology and Management of Workplace Diversity (2nd ed. pp ). Malden, MA: Blackwell Pub. 5. Milliken, F. J., & Martins, L. L. (1996). Searching for Common Threads: Understanding the Multiple Effects of Diversity in Organizational Groups. The Academy of Management Review, 21 (2), Reynolds, Paul D, (1986). Organizational culture as related to industry, position, and performance: A preliminary report, Journal of Management Studies, May, pg Rajib Lochan Dhar(2008) Strategic human resource management, Excel Books publication, Hayes, Erika, (1999). Winning at Diversity, Executive Excellence, New Delhi: Sage, July, pg Gordon, A. (1995). The Work of Corporate Culture: Diversity Management. Social Text, 44, Vol. 13 (3), Luijters, K., Van der Zee, K. I., & Otten, S. (2008). Cultural Diversity in Organizations: Enhancing identification by valuing differences. International Journal of Intercultural Relations, 32,

219 A STUDY ON EMERGING ISSUES OF TRAINING IN INDIAN SCENARIO Amit Kumar* ABOUT THE AUTHOR * AMIT KUMAR; RESEARCH SCHOLAR, INSTITUTE OF BUSINESS MANAGEMENT, MANGALAYATAN UNIVERSITY, ALIGARH, UTTAR PRADESH, INDIA ABSTRACT Training plays a vital role in business development as well as organizational development. Some organization considers training as a tool to achieve organizational excellence where as some organizations consider it just as a statutory compliance or a rhetoric or formality to be shown in records, while some consider it as a waste of time and money and a fancy the time and business environment are changing, organizations are also changing their environment for imparting training to their employees. Due to the globalization, market competitions and demand for the improved quality of products and services, it became necessary to keep their employees updated with latest technology.more so, training is essential for organizational as well as personnel development and to stand as a successful organization in market place. There are certain emerging issues in training that we have to address to achieve better results through training. If we design, follow proper and requisite training programmes and training schedule through a planned cycle, we can achieve earmarked results and we can expand our business globally.the importance and use of information technology for bringing about remarkable change in organizational performance and employees skills, competence level (Invincible Human Asset / Intellectual capital formation) to win and excel in global market cannot be ignored or by passed altogether rather it has emerged as an inseparable facilitating, complementing and integral tool that guarantees maximum benefit with minimum cost. Hence, the further elaboration is attempted in the next pages of my research paper.this research paper is based on secondary data available on internet as well as other published media. KEYWORDS: Training, Training Programs, Training and Development, Training Cycle. INTRODUCTION Training is a learning process that involves the acquisition of knowledge, sharpening of skills, concepts, rules or changing of attitudes and behaviours to enhance the performance of employees. Training is an activity leading to skilled behaviour. It is not what you want in life, but it is knowing how to reach it. It is not where you want to go, but it is knowing how to get there. It is not how high you want to rise, but it is knowing how to take off. It is not a set of goals, but it is more like a vision. It is not the goal you set, but it is what you need to achieve it. Training is about knowing where you stand (no matter how good or bad the current situation looks) at present and where you will be after some point of time. We can say training is about the acquisition of knowledge, skills and abilities (KSA) through professional development. OBJECTIVE OF THE STUDY The objective of the study is to review the emerging issues of training in Indian scenario. 218

220 REVIEW OF LITERATURE Various studies have been and are being done in the field of training and development and of course various opinions have been given by various research scholars. As we know that due to the changing culture of organization and trends in technology, everything wants changes, so every research work needs improvements and further developments. Kirkpatrick s model of evaluation is being applied. This model consists of four levels of evaluation. The first level is the reaction level in which the reactions of the trainees are understood to mean the way in which they perceive and subjectively evaluate the relevance and quality of the training. It attempts to answer questions regarding the participants' perceptions - Did they like it? Was the material relevant to their work? This type of evaluation is often called a smiley sheet. According to Kirkpatrick, every program should at least be evaluated at this level to provide for the improvement of a training program. At this level, evaluation measures the satisfaction of the people who followed the training. In conjunction with that, positive reactions are of critical importance in creating sufficient learning motivation. In this sense, the participants' reactions have important consequences for learning (level two). Although a positive reaction does not guarantee learning, a negative reaction almost certainly reduces its possibility. Learning can be described as the extent to which the attitudes of the participants change, their knowledge increases or their skills are broadened as a consequence of the training. This is a second level of evaluation of learning behaviour whereby evaluation is intended to measure the progress made in terms of knowledge, skills or attitudes. In other words, evaluation tests the participants to see whether new skills have been acquired. At this point, evaluation can relate to the method used to transfer the knowledge, skills and attitudes. To assess the amount of learning that has occurred due to a training program, level two evaluations often use tests conducted before training (pre-test) and after training (post test). Assessing at this level moves the evaluation beyond learner satisfaction and attempts to assess the extent students have advanced in skills, knowledge, or attitude. Measurement at this level is more difficult and laborious than level one. Methods range from formal to informal testing to team assessment and self-assessment. If possible, participants take the test or assessment before the Training (pre-test) and after training (post test) to determine the amount of learning that has occurred. A third evaluation level is that of changes in job behaviour or performance. This involves studying the change in job behaviour which takes place as a result of the training. Evaluating at this level attempts to answer the question - Are the newly acquired skills, knowledge, or attitude being used in the everyday environment of the learner? At this point, evaluation sees whether tasks are performed differently before and after the training. In order for positive reactions and learning effects actually to lead to changed job behaviour, the transfer of acquired skills to the work situation must especially be ensured. The quality of this transfer is strongly dependent on the support the participant receives after the training, especially from his immediate supervisor or coach (Kirkpatrick, 1998). From a study by Bergenhenegouwen (1997), which explain the low effectiveness of training courses, are found in this area in which immediate bosses who have more of a discouraging effect, who themselves do not set a satisfactory example or provide insufficient supervision. For many trainers this level represents the truest assessment of a program's effectiveness. However, measuring at this level is difficult as it is often impossible to predict when the change in behaviour will occur, and thus requires important decisions in terms of when to evaluate, how often to evaluate, and how to evaluate. Level four evaluation attempts to assess training in terms of organizational results. At this point, evaluation checks how the results are evaluated at the end of the training initiatives. An evaluation of the results therefore measures the progress made at organizational level. Frequently thought of as the bottom line, this level measures the success of the program in terms that managers and executives can understand - increased production, improved quality, decreased costs, reduced frequency of accidents, increased sales, and even higher profits or return on investment (Level 5 - ROI). From a business and organizational perspective, this is the overall reason for a training program, yet level four results are not typically addressed. Determining results in financial terms is difficult to measure, and is hard to link directly with training. According to Kirkpatrick (1998), the subject of evaluation or the level at which evaluation takes place is dependent on the phase during which the evaluation takes place. In Kirkpatrick's four-level model, each successive evaluation level is built on information provided by the lower level. Assessing Training Needs often entails using the four-level model developed by Donald Kirkpatrick (1994). According to this model, evaluation should always begin with level one, and then, as time and budget allows, should move sequentially through levels two, three, and four. Information from each prior level serves as a base for the next level's evaluation. 219

221 RESEARCH METHODOLOGY This research paper is based on secondary data available on internet and other published media like Journals, Books. Company Manuals and Policies, News Papers and Magazines etc. Though we have reviewed various case studies, research papers already published on training and development related data. EMERGING ISSUES IN TRAINING Training is important and necessary for employees as well as organizations. For over all development of the employees and organization, training is must. Being an important function, training still has some issues, as they are shown in Figure 1 and Figure 2. They can be considered as under: Management issues Absence of proper follow up Social issues No Training Cycle Environmental issues Psychological issues Legal issues Safety issues Quality Trainers Adequate Training Material Financial issues Training process has different phases and stages and issues can be at any phase and process. We must plan training in such a way so that it give maximum benefit to the organization as well as to the employees. Figures 1: Training Issues Management Issues: Management issues includes the attitude of senior management or Top Level Managers. Training depend upon the management decision. Financial Issues: Financial issues includes proper allocation and utilization of funds that is allotted to training and development. Budget constraints is also comes under this category. Technical Issues: Generally technical issues related to the current technology. It belongs to the proper setup of information technology related equipments like adequate quality of computers, projectors, Monitors, Speakers, Screens etc. There are so many other issues as mentioned in Figure 1 above. 220

222 Figures 2: Emerging Issues in Training Training needs identification: There is no doubt that training enhances the skills as well as working efficiency but if identifies the training need then it will be more useful for the participants. Statutory Compliance: It is another issue in training the some of the organizations fulfil training just as a statutory compliance as well as maintaining the records only. Participants Attitude: Generally it is seen that some of the participants takes training seriously while some of the participants understand training just as a picnic or passing the time only. Less Importance: Some organizations takes training seriously, they understand the role of training in organizational development as well as personnel development while some organizations take just completing the records. Back bench function: As various study shows that some managers are also understand training as back bench function. Quality trainers and Adequate Training material: In India there are still limited Trainers. Out of them there are only a few who have sharp knowledge of their subjects. An adequate training material is also an issue so far. Training Cycle: Most of the organizations and institutes do not have training cycle. They just have training calendar, nominate the employees for training and complete the simple process only. LIMITATIONS AND RECOMMENDATIONS Nowadays most of the organizations do not share their data being so many reasons like market competitions, misuse of the data etc. So primary data collection is always difficult for research. Training Cycle: Training cycle provides a systematic approach for training. It covers all aspects of the training like: Identify the training needs. Design the training programs. Delivering the training. Evaluate the training. Every organization must follow a training cycle for organizational as well as personnel development. 221

223 Figure 1: Basic Training Cycle Figure 2: Training Development Cycle CONCLUSIONS: Training is an important function for every organization. The organizations who have given importance on training, now they are on the peak. In the modern era of technology and competitions, we can achieve organizational as well as personnel goals with the help of proper training and we can be the Leader in the market only through the Training. We can say that Training is the only way for perfection. CONTRIBUTION OF THE STUDY This research paper will add the data to the existing training and development literature. This research paper will also help the organizations as well as institutions and managers to find out the issues in training and development. REFERENCES 1. Evaluation Findings (1994). Issues in training programme 2. Thorburn, M.J., Training of CBR Personnel: Current issues: Future Trends 3. Kirkpatrick, D. L. (1976). Evaluation of Training. Training and Development Handbook: A guide to Human Resource Development(2nd ed., pp ). New York: McGraw-Hill. 4. Kirkpatrick, D.L. (1998). Evaluating Training Programs: The Four Levels. San Francisco: Berrett-Koehler. 5. Web Based Training 6. Training Cycle 222

224 ENTREPRENEURSHIP LIFE CYCLE Aruna Panchumarthi* ABOUT THE AUTHOR * ARUNA PANCHUMARTHI; APRINCIPAL, S.K.S.D. MAHILA KALASALA, W.G.DT, AP, TANUKU ABSTRACT The research reported in this paper is about entrepreneurship in the new business startups which plays a significant role in maintaining as well as creating a new enterprise. This study tracks the strategies of building and motivating organizations and the key characteristics of successful entrepreneurs. Risk taking in entrepreneurship is discussed in an elaborated way. Bankruptcy law and its significance on an enterprise are also addressed. KEYWORDS: Entrepreneurship, Strategies of Building and Motivating Organizations, Business Startups INTRODUCTION Entrepreneurship denotes the creation of some combination that did not previously exist. Entrepreneurship is a source of success for people and governments. Entrepreneurs will conduct business locally and internationally depends on their capabilities. Entrepreneurship has received an importance due to their success leads to society s success. If entrepreneurship can be viewed as integrating the innovation and growth, the most important thing to be considered is maintaining the growth to the current market. In society it is relatively easy to start a small business, but it is very difficult to maintain and build it to multinational company size. BUILDING THE ORGANIZATION Beginning a business is not a rare thing rather so many businesses are popping up daily. Their motives for doing so are to become a boss to them self and unanswerable to higher authorities, financial gain or financial freedom. Whichever be the source of motivation, the sole aim of the entrepreneur is to succeed the financial freedom and should get more revenue than the current position. Strategic plans that are developed must be implemented effectively for the organization to be successful. The successful entrepreneur must be concerned with building the organization to handle the growth, and motivating employees particularly those who have joined the organization after the start-up phase and transition phase. Building an organization is necessary to cope with the challenges of growth, the threats of more direct competition, and the increase in size and complexity of the operation. Growth requires more resources, more people, and more innovations. Direct competition creates a need for greater innovation which makes the product cheaper. Key new players who are experts in their field or function must be added in order for the business to withstand more intense competition and exploit expanding opportunities in difference sectors. As these new players enter the firm, they need a manager to help or direct them and integrate them into the team. The transition to professional management, seen as critical to highpotential venture success, can be accomplished by adding these professionals. Infrastructure is necessary to support the larger scope and the increased number of customers. An effective structure encourages coordination and unity of action in maintaining the business plan and to maintain critical path. Decisions have to be made relative to scope of responsibility and the nature of functional requirements. New infrastructure must be built or acquired. Change must be enabled and managed without neglecting the entrepreneurial courage. This process of in organic and organic growth is repeated multiple times as the organization grows and matures paying heavy dividends for effective leadership by the entrepreneur in building the company. Motivating the organization is the key for success. The development of infrastructure and the recruitment of skilled workers alone will not create a winning team but the work with proper plan will lead a great success. The entrepreneur is responsible for bringing the team together with greater commitment and motivation to focus on factors that are critical to the success of the enterprise. Establishing a firm goal is a critical first step, often it is possible with the input of the key players. People respond positively to strategic planning and achievable objectives and strategies. Leadership is the key source of success; leader can fill the confidence on customers, shareholders and work team. Motivation is not depending solely on strategy and vision but it mostly depends on the requirement and behavior 223

225 of the person. Company s success is depending on addressing critical issues like creating fair and working policies on how customers and employees are to be treated, and structuring awards and rewards. The management of the organization needs to understand operational issues, and must still maintain a personal involvement at multiple levels of the organization [1] [9]. CHARACTERISTICS OF ENTREPRENEURS Entrepreneurial characteristics can be developed, based on behavior of the person and certain needs, such as learning capability and interest on a particular business. Successful entrepreneur shows the distinct characteristics which are discussed below [5] [8] [12]. Resourcefulness Every problem is having solution but it only needs to investigate or search the solution in a deeper way. Entrepreneurs never stop their imagination in solving problems. They strongly believe on no end for innovation and they love to solve the problems. Entrepreneurs are skilled in finding solutions for difficult problems with an easy method. They know how to succeed in life and to whom they need to approach to solve the particular problems. Always entrepreneurs can t solve the problems themselves, they won t hesitate to take help from professionals. Their sole aim is achievement of the goal of enterprise but not the person. They are concerned about the success of organization rather personal benefit. They seek good team players with more strategic planners and they assume team s achievement is equal to personal achievement. Curiosity Curiosity is the source of energy to the entrepreneurs. Learning is an unending process in an entrepreneur s life. Successful entrepreneur searches for better opportunities in different sectors. Since they are result oriented they will not stick with one technology or business in which they already mastered but they will look beyond their boundary for better profits and prospects. Initiation and Ownership In history most of the times initial players are having more market share than others, due to this reason entrepreneur is eager to initiate the process and tries to get the ownership on the product. The entrepreneur is an independent and highly self-motivated innovator with imagination to his work. Entrepreneurs actively seek and take initiative. They will not run from the problem rather they travel towards solving the problem. They never fear for failure, they love the process which starts from initiation to ownership. They like to develop their skills in which the enterprise is in a need or in an area where the enterprise is uncompetitive to other companies. They also like situations where their personal impact on problems can be measured. Even though they are not key players in an organization with their ownership capabilities they will make the enterprise to depend on them. Teamwork Successful entrepreneur seeks a good team for the success of enterprise. Entrepreneur is an independent thinker and he will develop his team with an independent thinking for common goal of success. He will give his motivation and courage to his team so that each team member will think that they are not the employees but employer to the company. As enterprise grows, team size will also grow and at that point of time entrepreneur will apply his time on maintenance and motivation of the team rather on personal involvement in projects. Friendly Competition Entrepreneur knows the rule as no competition no innovation and growth. Due to competition every year many companies are undergoing bankruptcy due to their drawback on innovation, marketing and team work. Entrepreneur studies more on these aspects before even startup of the company. Entrepreneur keeps on eye on what others are doing and, what to do to reach them. Competition with self-imposed standards is an internalized kind of competition and Entrepreneur will try to compete himself first than others. Entrepreneur s efficiency increases with the competition. Accountability Entrepreneur is accountable to his workforce, share holders and customers. He will not hesitate to take the blame of failure. He always believes on failure is the first step for success. Due to this quality his work team will see him as a leader to their organization and enterprise depends on him. Uncertainty Entrepreneurs have more uncertainty due to the level of competition in present market. In contrast to the professional manager, entrepreneurs are able to live with modest to high levels of uncertainty concerning job and 224

226 career decisions and security. Job security and permanency are considerably lower on the entrepreneur's hierarchy of preferences compared to his/her managerial counterpart. Entrepreneurs success depends on his imagination to solve the complicated problems and building and leading his enterprise better than other competitors. Even though their lives deal with uncertainty they will always try to build their products with more reliability. Challenging the Problems Successful entrepreneurs who got success are possessing high level of motivation and determination to solve their problems. They are not situation based workers rather they are committed workers. In fact, their selfconfidence and general optimism seems to translate an impossible task to a possible task. They believe that every problem is having one particular solution but need to search rigorously for that solution. Interestingly enough, if the task is unsolvable, the entrepreneur senses the difficulty early and tries for professionals help to solve the very difficult problem. They always look forward for developing high skill sets or recruiting this quality people to help him in difficult situations. They will estimate the problems difficulty to its profit to their organization and if the time consumption for solving the problem is unworthy then they give up sooner than others. Destiny Entrepreneurs are goal setters and goal oriented. They have a clear idea on setting short term and long term goals for themselves and to the organization. These goals seem to be unbelievable, but they are realistic and attainable. They believe that if there is no pressure there will be no progress in growth. They are action oriented. They are motivated by a high need for achievement. Their desire on destiny might be having the influence of their past life, friends and their family members. They are very punctual in finishing tasks. They are offended at wasted time. They evaluate their performance in regular periods and try to meet the goals. Hence, having distinct, measurable goals is an effective way for entrepreneurs to set importance, and guide their time allocations. Intelligent Risk Taking The successful entrepreneur knows about no risk and no gain. Risk taking is an integral part of the business. They prefer to take moderate, calculated risks where the chances of winning are medium and probability of failure is less. Before jumping to the business many people will work in enterprises in their interesting area and they will reduce their own enterprises risk with the usage of their experience with their old employer. Risks are preferred which provide a reasonable and challenging chance of success, and a situation whose outcome is influenced as much by one's ability and effort as by mere luck. This entrepreneurial characteristic is one of the most important, since it has such significant implications for the ways decisions are made, and thus for the success or failure of the business. They take the risks at an optimal value where the potential loss is less, but the potential profit is high. Dealing with Bankruptcy Entrepreneurs know the severity of failure. They are calculative and know when to go for bankruptcy. They are not afraid of failure. Even though they are more motivated for success they are not averse to the probability of failure. The persons who fear failure will neutralize whatever achievement motivation they may possess and most of times they will end their lives as a employee than an entrepreneur. They will tend to engage in a very easy task, where there is little chance of failure and little chance of benefit. Feedback Usage Entrepreneurs are curious to know their feedback and are highly passionate to improve their performance. They are very concerned about their capabilities, especially about doing good and bad. Without information or feedback about performance the entrepreneur cannot know how well the organization is doing. Successful entrepreneurs will conduct market surveys to demonstrate a capacity to seek and use feedback on their performance in order to take corrective action and to improve. All feedback can be extremely valuable in helping the organization to develop greater expertise in lacking areas. Solving Power Entrepreneur will try to solve the world s toughest or interesting problem so the company s product will get a multinational reputation. Globalization is the important factor for the success of the company and they need to provide the solutions with different communities and countries at cheaper rates. 225

227 Belief Successful entrepreneurs have a high level of belief on their capabilities. They tend to believe strongly in themselves and their abilities to achieve their short term and long term goals. They also believe that they can change their life with their hard work and commitment. They have a major influence on their personal destinies, and have little belief in luck. Lively interest Entrepreneurs have a quality of interest on success and fame. They have an ability to work for long hours for the success of the project. Their interest is driven by their commitment and financial benefit. Even though entrepreneur s main aim is financial success they work mainly due to their interest on trading. Building the Enterprise Building the building is not a brick work but it is brilliant work like this entrepreneur is willing to build the enterprise with performance culture in which his enterprise will build the markets and shareholders with more profits. Entrepreneur will try to build his market so that no one is able to beat his enterprise in near future. Long Term Play This is one of the key behaviors which differentiate the entrepreneur successful or unsuccessful since so many companies re grown from bankruptcy due to their long term play in market and their commitment to their customers. Entrepreneurs who create high potential ventures are driven to build a business, not based on their initial profits but due to their commitment. They make a commitment to a long term project and to working towards goals that may be quite distant in the future. Success span of the enterprise depends on the type of business like the papayas ripen in 1 or 2 years but the oranges take 4 or 5 years. Based on their own experience venture capital investors know that the successful building of a growth business requires a total concentration and involvement on the attainment of the long term goal. Level of Success Individual entrepreneur s success can be measured with different parameters like money, satisfaction, leadership and market share. Financial benefit has a very special meaning to the successful entrepreneur. Profits, equities, share value, capital gains, and net worth are seen as measures of how well the entrepreneur is doing in chase of self established goals and reaching the level of competitors. Highly successful entrepreneurs will try to keep more room between themselves and competitors. The entrepreneur is involved in a continuous process of making money, for this entrepreneur studies the market strategy and growth opportunities with different companies and invests his money in another company and then starting all over again this is continuous cycle. This cycle never seems to end and the money is a way of measuring meter to individual s performance. Imagination Entrepreneur will always keep his imagination to his work to give best value to his customers and share holders. Imagination is the key source for the success of the enterprise. Entrepreneur s imagination will help to keep the company in a competitive way with other companies. Entrepreneur believes that imagination will only give future developments which are not profitable at this point of time but are strongly required for sustaining the company in future in a better prospective. Leading the Enterprise Entrepreneur is having a good mentor and leader qualities so that he/she will lead the enterprise with continuous learning from market. Entrepreneur will observe the market continuously and he will mould his enterprise with the current market change. To lead the market enterprise should follow the market trend. RISK TAKING AND ENTREPRENEURSHIP Many of the entrepreneurial ventures fail to succeed due to the reason of lack of leadership skills, innovation, commitment, lack of marketing strategies, and insufficient knowledge in record keeping systems. Significant risk for a enterprise occurs not at the beginning stage but at the point when major irreversible investment in infrastructure is required. Growth involves organic in which the growth is internal to enterprise and in-organic in which growth is depending on other companies by buying out other small companies. In both the cases risk plays a vital role. If the risk taking entrepreneurs are more then the variety of businesses are more and due to this society will have more economical growth. In this competitive world calculated risk is necessary for not becoming obsolete in market. Of course, there are several kinds of people like strongly appose risks, risk neutral, or risk enthusiastic. In countries with bankruptcy laws that are not friendly to an entrepreneur, only those daring persons who are the most comfortable with risk will be willing to make new startups. In societies with friendlier 226

228 entrepreneur bankruptcy laws, people who are either risk enthusiastic or risk neutral may be willing to participate in new startups. As the personal, material, infrastructure and work force costs are reduced, new set of people from diverse fields will evolve. Competitions lead the firms to be more imaginative in solving problems like higher costs and efficiency and in return benefiting the society. As innovation in society increases smaller firms becomes obsolete due to the competition from bigger firms. In this risk centered market only best and efficient player are able to sustain for long time. Higher competition contributes to the higher risk of bankruptcy to smaller and in efficient companies [7] [3]. BANKRUPTCY LAW Bankruptcy is the end of the enterprise. Entrepreneurs who are having unresolved debts can file bankruptcy to liquidate or reorganize their debts. Without this bankruptcy law, firm may not distribute its returns to the creditors in a lawful manner due to this reason in United States as soon as they are decided to make bankruptcy they need to file chapter 13 and for that they need to fulfill some conditions like they need to inform their asset values, bank accounts, monthly profit and loss statements etc to a bankruptcy court. If the bankruptcy cost is high companies are reluctant to file bankruptcy and continue to operate their firms with more losses and, during this process they will deplete the mankind resources more and it is bad to the society. Bankruptcy law is to resolve conflicts that may arise among creditors when a firm becomes bankrupt. Bankruptcy is planned for honest debtors, who would otherwise exist. Due to this bankruptcy law so many companies reborn after bankruptcy and serving the society in a better way [9] [11]. CONCLUSION What emerges from these findings about the entrepreneur is strategic plans that are developed must be implemented effectively for the organization to be successful. The successful Entrepreneur must be concerned with growth and changes. Characteristics of entrepreneurs are distinct and clear. Many enterprises are failing due to their lack of innovative and leadership skills. Friendly bankruptcy law is helpful to the society and the entrepreneurs and some times that is helpful to replenish the bankrupted firms. REFERENCE 1. Patricia P. M., Benjamin M. O. (2000). International Entrepreneurship: The Intersection of two research paths. Academy of Management Journal, Vol. 43, No. 5, Autio, E., Sapienza, H. J., and Almeida, J. G. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. Academy of Management Journal, 43: Davis, K.A., and Garry D. C., (1999). Teams Alone are Not Enough, Engineering Management Journal, 11:3, pp Arora, A., Fosfuri, A., and Gambardella, A. (2001). Markets for technology: The economics of innovation and corporate strategy. Cambridge, MA: MIT Press. 5. Jeffry, A, Timmons, (1978). Characteristics and Role Demands of Entrepreneurship. American Journal of Small Business, Volume III, Number James W. Carland, Frank Hoy,William R. Boulton and Jo A. C. C. (1984). Differentiating Entrepreneurs from Small Business Owners: A Conceptualization. Academy of Management Review Vol. 9, No Blackman, R. and Thompson, J. H., (1986). The White House Conference on Small Business," Journal of Small Business Management (January 1987), pp Ken Veit. (1996). The Reluctant Entrepreneur, Harvard Business Review, Nov-Dec Annemarie M. F., Hiemstra, Koen G. van der Kooy, and Michael Frese, (2006). Entrepreneurship in the Street Food Sector of Vietnam Assessment of Psychological Success and Failure Factors, Journal of Small Business Management, 44(3), pp Mary Kwak, (2002). What s the Best Commercialization Strategy for Startups?, IT Sloan Management Review. 11. Seung-hyun L., Mike W. P and Jay B. B., (2007). Bankruptcy Law and Entrepreneurship Development: A Real Options Perspective, Academy of Management Review, 2007, Vol. 32, No. 1, Kevin Daum. (2006). Entrepreneurs: the artists of the business world. VOL. 26 NO pp , Emerald Group Publishing United, ISSN Journal of Business Strategy. 13. Shaker A. Zahra, Harry, J., Sapienza and Per, D. (2006). Entrepreneurship and Dynamic Capabilities: A Review, Model and Research Agenda. Journal of Management Studies 43:

229 DETERMINANTS OF INFLATION IN SAUDI ARABIA: ARDL MODEL Dr Tarek Tawfik Alkhteeb * ABOUT THE AUTHOR * DR TAREK TAWFIK ALKHTEEB; ASSISTANT PROF. COLLEGE OF BUSINESS ADMINISTRATION IN ALKHARJ, SALMAN BIN ABDULAZIZ UNIVERSITY, SAUDI ARABIA ABSTRACT The present study aims to examine the important internal and external factors influencing inflation in the Kingdom of Saudi in the short run and in the long Run. Reviewing the previous theoretical and empirical studies dealing with inflation and its determinants, the present study used ARDL model to examine the factors that have determining effect on inflation in Saudi Arabia. The adequacy of model is also verified on the basis of various diagnostic tests. The result shows that money supply and inflation in the world economy has significant and positive effect on inflation in Saudi Arabia, while growth in GDP has negative effect on the same. Thus, in order to control inflation, tight monetary policy along with increase in domestic production to meet the demand of the economy and reorienting the sources of imports in order to reduce the import cost is required. KEYWORDS: Inflation, Imported Inflation, Economic Growth Rate, Money Supply and Economic Openness. INTRODUCTION Inflation is considered as one of the most important problems facing all communities irrespective of their economic levels and social conditions including Kingdom of Saudi Arabia. The present study deals with the phenomenon of inflation which is affecting the Saudi community socially and economically. Imported inflation is one of the reasons for growing rate of inflation in Saudi. The study intends to examine the determining variables which has causing a rise in price level in Saudi Arabia so that appropriate measures may be taken to achieve stability in the level of local prices and in maintaining the standard of living of Saudi people. STATEMENT OF THE PROBLEM The study problem reflects in the rise in the general level of prices in the Kingdom of Saudi Arabia during last few years as a consequence of increases witnessed in the rate of world inflation. This inflation caused decrease in purchasing power of money and varied consequences. So, the world market remained unstable suffering from wide fluctuation in the prices of oil as well as the increase has been witnessed in the inflation rate imported from Business Partners of the Kingdom. OBJECTIVES The present study aims to specify the important determining factors of inflation in the Kingdom of Saudi Arabia which is supposed to have clear impact on the inflation rate whether these factors are internal and related largely to the fiscal and monetary policies or they are external factors related significantly to the world economy. This study relies on previous experimental studies which have dealt with the inflation and the variables which have effect on the inflation rate in the Kingdom. DATA RESOURCES This study relies on the data issued by different Government Bodies at the level of Kingdom of Saudi Arabia particularly SAMA and Ministry of Commerce and Industry as well as it relies on the statistics issued by different international bodies such as U.N.O, Word Bank, International Monetary Fund (IMF) and other relevant international bodies. The study will cover the period GC. 228

230 THE METHODOLOGY AND MODEL The present study relies on analytical descriptive method and the focus will be given on ARDL model using a number of statistical tests in order to make sure the validity of the model and to know that it has no problem of statistical estimation. The test of this model will be based on several statistical tests such as: Jarque - Bera normality test& Breusch-Godfrey Serial Correlation LM Test& ARCH Test & Ramsey RESET Test & Wald Test & Stationarity tests. These tests will be carried out in order to insure that the model is free from the problems of multicollinearity & homoscedasticity & autocorrelation. The present study adopts the similar line which has been followed by most of the previous applied studies in terms of specifying important determining factors of inflation. It is supposed that this method has significant impact whether these factors are internal and related to financial and fiscal policies or they are external and related to world economy. In the frame of economic theory, the present study assumes that the level of inflation in the Kingdom is affected by several factors or determinants. The assumption is based on the previous empirical studies which discussed the inflation phenomenon and variables which might have an effect on inflation rate in KSA and which can be summarized as follow: 1. Growth rate of GDP with fixed prices, 2. World Inflation Rate, 3. Annual Growth Rate of money supply, 4. Government expenditure / GDP 5. Industrial Production Index of Developed Countries, 6. Degree of Economic Openness (Size of External Trade/GNP ) (Rough Indicator), 7. Growth Rate of Actual Prices of Oil, 8. Saudi Riyal Exchange Rate, 9. Population Growth Rate, 10. Imported Inflation (Imports / Expenditure of GDP) (Rough Indicator), And 11. World Index of Export Prices. ARDL MODEL In order to achieve the objectives, the study has relied on Autoregressive Distributed Lag Model (ARDL), which has been presented by Pesaran and Shin (1998), with the aim to know the determinants of inflation in the Kingdom in short and long term both. It s worth mentioning here that the selection of ARDL model is because it has many distinguished characteristics compared with other standard models, such as following: 1. This model can be used irrespective of the degree of integration of the variables whether it is of (1) level or (0) level i.e. irrespective of whether there is stationary or not. 2. This model adopts sufficient number of lagged periods in order to obtain best data of General Frame model (Laurenceson and Chai, 2003). 3. This model gives best results of parameters in long term (Gerrard and Godfrey,1998). 4. Through this model, we can get error correction model by simple linear conversion as the error correction model helps in measuring short-term relation between variables of model (Banarjee et al,1994). 5. This model is considered as very appropriate if there is less number of samples. Therefore, this model will be more suitable with the size of sample used in this research as it reached approximately 30 samples during the period GC. 6. The use of this model will help to estimate the components of long and short term both at the same time as the long term coefficients of independent variable is calculated by dividing the coefficient of this slow variable for one time. MATHEMATICAL STRUCTURE OF ARDL MODEL: ΔCPI= α0 + Σβ1ΔGDPGRt-I + Σβ2ΔMSGRt-I + Σβ3ΔWEPIt-I + λ1lgdpgrt-1 + λ2lmsgrt-i + λ3lwepit-1 + λnlwepit-1 + μt.. (2) Δ: Indicates to first difference α0: Intercept βi: Parameters of short period (Error Correction) λi: It represents long term relation i: Time period μt: Indicates random error limit N: number of variables contained in the model 229

231 It is worth mentioning here that the application of model ARDL contains two steps. In the first step, joint significance of the coefficients λi is examined to find the existence of long run relationship between the variables under study. More formally, a joint significance test is performed. The null (H0) and alternative (HA) hypotheses are as follow: H0: λ1= λ2= λ3= 0 H1; λ1 λ2 λ3 0 In the second step, short term and long term relation between the variables are examined. EMPIRICAL RESULTS AND ANALYSES QUALITY PERFORMANCE OF ARDL MODEL: Before relying on this model to use in estimation of long and short term effects, it is important to ensure the quality performance of this model through conducting following diagnostic tests: 1) Lagrange Multiplier Test of Residual [Breush-Godfrey (BG)] 2) Autoregressive Conditional Heteroscedasticity (ARCH) 3) Normal Distribution Test of for random errors (Jarque-Bera( JB) 4) Regression Equation Specification Error Test (Ramsey RESET Test) 5) Double Linear Test (correlation coefficient between each two variables of the independent variables) The results are given in table 1. The results show the following: 1) BGLM test indicates that there is no serial correlation in the estimated model. 2) ARCH test indicates that the null hypothesis doesn t deny about the random error (Homoscedasticity) in the estimated model. 3) The JB test doesn t reject the hypothesis which says that the random errors were distributed as normal distribution in the estimated model. 4) RESET test indicates to validity of figure used in the model. 5) In order to make sure that there is no Multicollinearity problem in the model, the correlation matrix between the independent variables has been estimated as well as it has been ensured that there is no value of correlation coefficients exceeds 0.7 and as a result there is no problem of linear link in the estimated model. The value of coefficient of determination (R2) indicates that the explanatory power independent variables of the study reached approximatley 0.77 and the value of F indicates to the quality of model estimated for each of variables statistically. 6) The statistics of Wald Test indicates to the existence of long term relation between variables as it indicates that the estimated value according to this test reached about which is a significant value at the level of 1%. Table No. (1): Results of Diagnostic Tests of ARDL model Jarque - Bera Normality test Breusch-Godfrey Serial Correlation LM Test: χ2 = F= ( ) )) Source: this table estimated by the Author using (EViews 5) Values in small parantheses shows significance level JB NORMALITY TEST ARCH Test: F= )) Series: Residuals Sample Observations 30 Mean Median Maximum Minimum Std. Dev Skewness Kurtosis Jarque-Bera Probability Ramsey RESET Test F= )) Wald Test )) 230

232 1) STRUCTURE STABILITY TEST FOR THE COEFFICIENTS OF ARDL-ECM: After estimation of error correction format of ARDL model, test for parameter stability for short term and long term has been conducted. To achieve this, we will use two tests which are (1) Cumulative sum of Recursive Residual (CUSUM) (2) Cumulative sum of squares of Recursive Residual (CUSUMSQ). The figure (1a and 1b) makes it clear that the estimated coefficients for the used unrestricted error correction model is stable during the period of study as the graph for the statistic of above mentioned two tests for this model is within critical limit at the potential level 5%. Graph No. (1a) Diagrams for statistic of each of CUSUMSQ for the stability of coefficients of error correction model for ARDL model Graph No. (1b) Diagrams for statistic of each of CUSUM for the stability of coefficients of error correction model for ARDL model CUSUM 5% Significance STATISTICAL ESTIMATION OF ARDL MODEL: Before implementation of proposed model, we will use Augmented Dikey Fuller (ADF) in order to test stationarity and make sure that unit root exists or not. Regression results for non-stationary economic variables will produce misleading results in regression analysis and the results of this estimation will reflect in raising the coefficients of determination. This step is very important before implementation of ARDL model as it makes sure that the variables are not static in second differences of its values or are integrated of the second level in order to avoid misleading results. If there existed integrated variables of second level, the critical value for F test cannot be applied because the above mentioned method relied on the hypothesis that the variables either will be integrated of zero level { I(0) } or will be integrated of one level {I(1)}. Therefore, conducting this test will specify the level of joint integration before implementing ARDL model and it will be very important to ensure that variables are not integrated of second level. It is know that this test will examine null hypothesis as the variable contains unit root i.e. it is non stationary while the alternative hypothesis views that the significant variable doesn t contain unit root i.e. it is stationary. In order to specify the level of joint integration for the variables using unit root test, it is clear from the following table that original values for the levels of these variables are still and then it can be said that the variables MSGR 231

233 GDPGR is integrated of zero level i.e. I (0) and variables CPI, WEP is integrated of one level I (1). The significance of this statistical evaluation has been proved at the levels of 1% and 5%. Table No. (2): Results of unit root test using ADF Order of Integration First Difference Level Variable I(1) ** CPI I(0) * GDPGR I(0) * MSGR I(1) * WEP Source : this table estimated by the Auther based on (EViews5) Note: * and ** shows significant at 1%, 5% respectively. STATISTICAL EVALUATION OF ARDL MODEL BOTH LONG AND SHORT TERMS TOGETHER In order to know the determining factors of inflation at Kingdom Level in both long and short terms, the factors, whether it is internal or external, have been specified and the efforts have been made to reach optimal combination of these factors according to the ARDL model. The efforts showed that the best combination includes three main determining factors of this inflation which are: GDPGR, MSGR, WEP as it is clear from the estimations as per mentioned in the table No. (3). The important results of estimations of this model can be summarized as follow: 1) The coefficient of GDPGR is negative and statistically significant in the long run. This proves the hypothesis that GDP growth has negative impact on inflation in Saudi Arabia by fulfilling the increased demand of the economy. However in the short run, this variable is not significant. 2) The long run coefficient of money supply is also found to be negative and significant. This shows that pumping of more money provides fuel to inflation in Saudi Arabia. This variable, however, is also not significant in the short run. 3) The variable WEP (World Index for Export Prices) has positive and significant effect on inflation rate in both long run and short run as the significance of this statistical evaluation proved at the potential level 10% in the short term and at the potential level 1% in the long term. 4) The explanatory capacity of these three variables contained in ARDL model reached about 71% which indicates that these three variables explains about 71% of variation in inflation rate at Kingdom level in both long and short term. Table No: (3): Results of Statistical Evaluation of the model using ARDL methodology (long and short term) Variable Coefficient Std. Error t-statistic Prob. D(GDPGR) D(MSGR) D(WEP) CPI(-1) GDPGR(-1) MSGR(-1) WEP(-1) R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Akaike info criterion Sum squared resid Schwarz criterion Log likelihood Durbin-Watson stat Source: This table estimated by the Auther based on (EViews 5) STATISTICAL EVALUATION OF ARDL MODEL IN SHORT TERM (ERROR CORRECTION MODEL) In order to measure the short term relation, error correction model has been used as this model has two characteristics; first, represents in measuring short term relations while the second one measures speed of 232

234 modification to rebalance in the dynamic model as it is clear in the Table No. (4) which contains results of error correction model. Following is the summary of study and analysis of results in table 3: 1) There existed negative effect but it is insignificant for growth rate in Real National Product in short term as the estimated value of partial elasticity for this variable reached about which means that the growth in Real National Product with the average of 1% will cause decline in the inflation rate with average of 0.02% but the significance of this evaluation has not been prove at the potential levels. 2) There existed positive effect of the growth rate in money supply on inflation rate as the estimated value of partial flexibility reached 0.06 which means that the growth in money supply with the average of 1% will cause increase in the inflation rate with average of 0.06% but the significance of this evaluation has not been prove at the potential levels. 3) There exited statistically positive and significant effect of World Index for the prices as the estimated value of partial flexibility of this record for inflation rate shows that the increase in the value of this record with 1% will cause increase in the inflation rate with 0.17% and the significance of this statistical estimation has been proved at the significance level 1%. 4) The estimated value of coefficients of error correction indicates the existence of integrated relation between the variables as the parameter value of coefficients of long term error correction has been rectified with the average of 15% between two periods, the thing which indicates that the adaptation in the model was slow relatively. Table No. (4): Estimations of error correction model (ARDL-ECM) ARDL) Variable Coefficient Std. Error t-statistic Prob. D(Y2(-1)) D(X1) D(X3) D(X11) ECM(-1) C R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Akaike info criterion Sum squared resid Schwarz criterion Log likelihood F-statistic Durbin-Watson stat Prob(F-statistic) Source: this table estimated by the Auther based on (EViews 5) Note :Error correction coefficient ECM (-1) must be a negative and and significant for getting accurate estimates STATISTICAL EVALUATION OF ARDL MODEL IN LONG TERM In the second step of the analysis, we will measure the long term relation among the variables as the results show in the table 5 Which indicates the existence of long term negative relation between the growth rate in Real domestic product and inflation rate in the Kingdom as the increase in the growth rate of Real domestic product with 1% will cause decline in the inflation rate with 1.1%. The significance of this statistical estimation for the coefficients of partial elasticity for this variable has been proved at the potential level of 1% which is consistent with the economic theory. The growth in money supply has positive and significant sign implying that with increase in growth rate in money supply by 1% will cause increase in inflation rate by 0.57% as per the value of coefficients of partial elasticity for this variable. Also, the results of estimation of model show that the world index of export prices has positive effect on the inflation rate in the Kingdom and this is also consistent with the determination of economic theory as this increase in the prices of exports reflects in the imports of Kingdom from abroad. The effect of inflation rate globally depends on the size of imports of Kingdom on the one hand and on the average prices of these imports on the other hand. The significance of this statistical estimation for these three variables has been proved at the significant levels. According to the value of coefficients of partial elasticity for this variable, the increase in the value of world price index for the exports with 1% will cause increase in the inflation rate in the Kingdom with 1.1% (Table 5) 233

235 Table No. (5): Results of measuring the long term relation for the ARDL model Variable Coefficients t-statistics Prob. X1(-1) ** X3(-1) ** X11(-1) * Source: this table estimated by the Auther based on Microsoft (EViews 5) Note: * and ** shows significant at 1%, 5% respectively. CONCLUSION AND POLICY IMPLICATIONS The main objective of the paper has been to examine the determinants of inflation in Kingdom of Saudi Arabia in the short run and in the long run. For the purpose we applied ARDL Model. The result shows that money supply and inflation in the world economy has significant and positive effect on inflation in Saudi Arabia, while growth in GDP has negative effect on the same. The above findings suggest that the inflationary pressure needs: 1) Use the determining factors of the inflation which have been found from the study to frame appropriate economic policies to reduce domestic inflation rates. 2) SAMA should frame monetary policies that will reduce money supply provided that there should be balance between this money supply and growth in the real GDP in a way that does not cause increase in inflation rate. 3) Follow some appropriate import policies in order to reduce the effect of imported inflation since results of the study found positive effect of world price index of export prices on the local inflation rate in the Kingdom. 4) Review import policies and to redirect imports from countries with less inflation rates as the Kingdom import most of its items from many partners where the inflation rate is very high and consequently the inflation transfers to the Kingdom by these imports and this kind of inflation is called Imported Inflation. 5) Government should frame policies to make the country self reliant on animal and agricultural products as the Kingdom import a big portion of it from foreign market and which is one of the important basic reasons of imported inflation. 6) Encourage private sectors to invest more and establish more production units so that the supply capacity of the country may be increased to and reduce the country s dependence on import. REFERENCES 1. Alshathree, Sh. (2003), Determinants of inflation in GCC, Master Dissertation, Economic Department, King Saud University, Sadi Arabia. 2. Bertocco, G. (2002), On the determinants of inflation in Italy: Evidence of cost-push effects before the European Monetary Union, Economics and Quantitative Methods, Department of Economics, University of Insubria. Availableon 3. Burdekin, R., Salamun, S., Goodwin, T., and Willett, T. (1994). The effects of inflation on economic growth in industrial and developing countries: Is there a difference?. Applied Economics Letters 1, Darrat A. (1985), The monetary Explanation of Inflation: The experience of three major OPEC economies, Journal of Economics and Business, Vol. 37, pp Dhakal D. and Kandil, M. (1993), The inflationary experiences of six developing countries in Asia: An investigation of underlying determinants, Applied Economics, Vol. 25, pp Dibooglu, S., and Kutan, A. (2005). Sources of inflation and output movements in Poland and Hungary: Policy implications for accession to the economic and monetary union Journal of Macroeconomics, Dickey, D., Fuller, W. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica 49, Dwyer A. Lam K. and Gurney A.( 2010), Inflation and the output gap in UK, Treasury Economic Working Paper, No. 6, pp Engle, R. and Granger, CWJ( 1987), Cointegration and error correction: representation; estimating and testing, Econometrica, Vol. 55, pp Gary G. Moser (1995), The Main Determinants of Inflation in Nigeria, IMF Staff Papers, Internal Monetary Fund, IMF, 42, Gueorguiev, N. (2004), Sources of inflation disinflation policies in Romania? In: Romania: Selected Issues and Statistical Appendix International Monetary Fund Country Report No. 04/220. International Monetary Fund, Washington. 12. Hasan, M. and Alogeel, H. (2008), Understanding the Inflationary Process in the GCC Region: The Case of Saudi Arabia and Kuwait, International Monetary Fund Working Paper No, 08/193. International Monetary Fund, Washington. 13. Juselius, K. (1992), Domestic and foreign effects on prices in an open economy: The case of Denmark, Journal of Policy Modeling, Vol. 14, pp

236 14. Kandil, M. and Hanan, M. (2009), Determinants of inflation in GCC, International Monetary Fund Working Paper No, 09/82. International Monetary Fund, Washington. 15. Karla, S. (1998), Inflation and money demand in Albania, International Monetary Fund Working Paper No. WP98/101. International Monetary Fund, Washington. 16. Keran, M. and Al Malik, A. (1979), Monetary sources of inflation in Saudi Arabia, Federal Reserve Bank of San Francisco Economic Review, San Francisco. 17. Mehran H.( 2007), Inflation in the Gulf Cooperation Council Countries and therole of oil funds in economic stability, Discussion Paper Series, Arab Planning Institute, Kuwait (in Arabic). P Pesaran M.H., Y. shin, and R.J. Smith (2001), Bound Testing Approaches to the Analysis of Level Relationships, Journal of Applied Econometrics, 16 (February) Phillips, P., Perron, P. (1988). Testing for a unit root in time series regressions. Biometrika, 75, Romer, D. (1993). Openness and inflation: Theory and evidence. Quarterly Journal of Economics, 108, Stock, J. and Watson, M. (2003). Introduction to Econometrics. Addison Wesley, Boston. 22. Sultan, Z.A. (2011), Inflation in Kingdom of Saudi Arabia: A Bound Test Analysis, European Journal of Social Sciences Volume 24, Number 2 pp Terra, C. (1998). Openness and inflation: A new assessment. Quarterly Journal of Economics, 113, ABBREVIATIONS: ADF: Augmented Dicky-Fuller, UECM: unrestricted error correction model; AIC: Akaike information criteria; ARDL: Autoregressive distributed lag; OLS: Ordinary least square; VECM: Vector Error Correction model; CUSUM: cumulative sum of recursive residual. 235

237 INNOVATION MANAGEMENT AND CHANGE PROSPECTS Megha Jain * ABOUT THE AUTHOR * MEGHA JAIN; LECTURER, DEPARTMENT OF APPLIED SCIENCES AND HUMANITIES, RAWAL INSTITUTE OF ENGINEERING AND TECHNOLOGY, FARIDABAD ABSTRACT Change is essential for the survival of business organizations. It is an alteration in the work environment whether structurally with the human resources or job design or technologically. Change Management is important for business organizations to a. Compete in the domestic and international markets b. It helps to reduce those incidents that would effect efficiency and helps to maintain company productivity. c. It helps to build healthy corporate relationships with suppliers and vendors. Management of change depends upon different parameters. From external forces affecting organization to elements to be changed, every step needs management of change not only in the organization structure but also in the people. In order to manage change successfully, it is therefore necessary to attend to the wider impacts of the changes. In this paper I will analyse why organization and individuals resists to change what are the ways of overcoming resistance through innovative outlook and emerging horizons of management in changing environment. Change management is a broad discipline that involves ensuring that the change is implemented smoothly and with lasting benefits, by considering its wider impact on the organization and people within it. Each change initiative managed or encountered will have its own unique set of objectives and activities, all of which must be coordinated. KEYWORDS: Change Management, innovation, resistance to change. INTRODUCTION Managing change is a continuous process of aligning an organization with its marketplace, by being more efficient and effective than competitors, and continuously collecting feedback from within the organization (L. A. Berger, Sikora & D. R. Berger, 1994). When there is change in the organization, it builds a new equilibrium in the work environment,but it also disturbs the old equilibrium in the organization. Moran and Avegun s definition (1997) of Change Management is defined as the process of continually renewing the organisation s direction,structure,capabilities to serve the ever changing needs of the market place,the organization and the employees. For firms to achieve a change in the business practices and strategies, innovation is an important factor for the growth of the business. However for this to implement successfully there has to be a change in the overall mindsets of the people of the organization. It does not occur only on mechanical relationship. Managers want to bring changes in the organization, and employees want to maintain their status quo. Firms which do not change their operations with the changing environment (internal and external) will have to close their operations. This paper evaluates change management process and emerging horizons of management in the dynamic business environment. REASONS FOR RESISTANCE TO CHANGE INDIVIDUAL RESISTANCE TO CHANGE Insecurity Uncertainty about new job requirements and environment or post creates a sense of insecurity among employees. 236

238 Economic factors Technology related Change from labor intensive to capital intensive techniques of production creates a dilemma among the employees. Perceiving change differently Some managers may resist change because they may perceive the situation differently Lack of trust and understanding often creates a feeling among subordinates that the change is done at the interest of their cost. ORGANISATIONAL RESISTANCE TO CHANGE There are two types of change, revolutionary and evolutionary. Revolutionary change does not give enough time to the employees to adapt themselves to the changing environment. Evolutionary change gives sufficient time to adapt to the change. Organisation Structure Organisation with autocratic organizational structure with systematic work designs and roles will find it harder to accommodate change than a more flexible structure. Scarcity of resources Because huge investment is required in plants and machinery for change, any scarcity of resources will resist the organization to change its working standards. WAYS OF OVERCOMING RESISTANCE TO CHANGE CREATIVELY INNOVATING WAYS OF COMMUNICATING AND EDUCATING Leaders spend a huge time on different sessions so that change is easily digestible to large number of employees. They communicate via video taped messages and educate them on how changes in the work place will not benefit them in the long term but also guide them on their journey. Having an environment of open communication, creativity and freedom from distractions, will clearly outline organizations objectives, and its loop holes. This communication will then help to make a better understanding position for both parties. Participation in the decision making An organization which is decentralized and make employees participate in the change process will find it easier to make change in the management. Example in 1981 British Airways brought on board a new chairperson for which employees showed resistance. However due to his Participative leadership style he not only involved everyone into a new change but also explained why the change was essential and why restructuring and privatization was important. Encouraging with positive outlook The employees old skills will be obsolete if no training and education are provided. To make them move away from insecurity it is necessary to give them training and make them acquainted with new ways of performing work.. People will face adjustment problems upon changes but building support among individuals and groups is important and can prove to be beneficial. Reward acknowledgement People feel motivated if they are paid, promoted, appraised and recognised on time, and as Robert Evans said: If you consistently deny people confirmation that their efforts are adequate, you actually demotivate them. So it is important to reward behavior in support of change. Most of the times people feel uncomfortable because they are asked to adjust immediately in the changing environment without being rewarded or recognized. Negotiation and agreement By having discussion with the staff, the change leaders are able to discover the potential resister. They are the person or group with considerable power to resist and win clearly spoil the whole process of change. Therefore, the change leaders should have to take initiative to negotiate with them and even soliciting written letters of understanding. Once people were convincing, the level of resistance will be reduced. This will help to smooth the process of change. However, this can be very expensive if it alerts others to negotiate for compliance. Changing elements of the company Firstly any element with the organization that seems to be a hindrance in the change should be removed or changed. This will give make the employees easily adaptable to the changing environment. 237

239 Collect and analyze feedback The routine collection of data will help to build the opportunities and strengths of the organization (SWOT) and will assess the company s present situation,capabilities and problems so that the transformation can succeed. Motorola,General Electric and Nissan-Renault are some of the leading examples of successful change management. EMERGING HORIZONS OF MANAGEMENT IN CHANGING ENVIRONMENT 1. Contemporary Management theory Theory Z William Ouchi It combines the features of American Style of management (Type A) with Japanese style of mangement (Type J). it aims to establish a common set of business practices effectiveness of business firms. Excellence Movement: Thomas J. Peters and Robert H Waterman Jr. This theory has suggested some set of principles which leads to excellent performance by aligning the activities of the customers, businesses and the stake holders. Some of the features are : Getting things done on time Staying close to the customer Promoting autonomy and entrepreneurship Maximising productivity through people Doing what the company knows the best Maintaining a simple organizational structure Promoting both centralization and decentralization 2. Contemporary Challenges in the Management arena: Some of the challenges faced by managers today are a. Empowerment: Workers working in the organization must be communicated not only the organizational goal but also the individual goals. Though empowerment can be a challenge for the manager, but participative decision making can make the organization perform team work and in turn involve in the success of the company. b. Globalisation: Competition which retailers and manufacturers face in not only domestic but international also. The problem related to globalization is faced by managers in terms of finance, goods and services, advertising etc. Some of the other problems faced due to globalization are ambiguity, complexities as well as economic and political risk. c. Quality Management: Meeting the requirements of the customers,aiming for continous improvement or competing with international competitors with respect to quality and productivity are some of the challenges that managers face with regard to quality an productivity. d. Change: change is a continuous process. If firms want to compete in a dynamic environment it is necessary that they undergo a change A systematic approach to OCM is beneficial when change requires people throughout an organization to learn new behaviors and skills. If the organizations want to survive change has to be accepted not only internally but externally. Change may be required for not only work force but also for the technology, machinery or any part of the organization. e. Work force diversity: work force diversity is accepting and acknowledging differences among people with respect to age, class, sexual orientation, ethnicity, spiritual practice etc. Firms employ people from diverse set of background be it social, cultural or ethical. Diversity is not about differences among groups but differences among individuals. If organizations want to be successful in the future they must manage diversity at the work place because organization daily faces variety of issues and problems. Therefore managers must devise means such as mentoring programs to provide access to information and opportunities, because diverse work teams bring high value to the organization. f. Ethics and social responsibility: Ethics are the moral principles and values that govern the behavior of a person with what is right and what is not. For the success of the organization, it is 238

240 important for the leaders to consider ethical and social responsibilities. Business firms that do not adhere to the ethical standards are not accepted by the society. Organizations that do not follow ethics are not able to build reputation of their business. CHALLENGES OF INTERNATIONAL MANAGEMENT 1) Economic Environment: Refers to all economic factors that have an effect on the business. Therefore the businesses have to decide where they have to carry operation. Apart from this there are many facilities that capture foreign entrepreneurs to set up their business venture. The benefits of a developed country will always attract them to carry business operations. E.g. infrastructural facilities like roads, schools, transport affect the economic development of a country. 2) Political / legal environment: If the political environment is stable and where rules and regulations affecting business operations do not change frequently attract foreign business operations. Any kind of reduced trade barrier like tariffs and quotas or increased subsidies on tax and reduced interest rates on loans attract foreign business. 3) Cultural Environment : When a businessman establishes his business he takes into account the cultural, social beliefs,language,people etc to check whether he can get accustomed to the cultural environment of the economy or not. CHANGES IN THE MANAGEMENT ARENA 1) Changes in the way of communicating and using group technique: Earlier managers could easily predict human behavior but now and in the future this trend is declining due to changing human behavior managers have to develop different ways, models and techniques for controlling as well as predicting human behavior. 2) Focus of management shifted: there has been a shift from technical arena to non technical arena. Managers of today have to concentrate on every field of the society, whether it is opening up of medical facilities or educational institutions (CSR), managers in the future have to broaden their horizon. 3) Changes in the external environment: with rapid increase in consumer demands, the managers face a challenge of balancing environmental changes and changes in the structure of the organization. Unless they take into account the ethical standards of production or the interest of the society at large they cannot accomplish to achieve profits at the cost of social responsibility. FORCE FIELD ANALYSIS MODEL It helps to introduce change by balancing driving and restraining forces. The vertical lines indicate strength of a force. Organization represents balance of the two forces supporting and opposing. After a change is introduced the driving forces i.e. the supporting force overpowers the restraining forces and change is implemented. If the restraining force will overpower the driving force change may be postponed. Any new change which the management wants to introduce the supporting force must be increased. This will help to accept and introduce change and will be accepted. CONCLUSION Change in the organization takes place because of changes in the internal and external environment. Change is introduced to increase the effectiveness of the business. If managers are given proper training, and are made to participate in the organizational changes and business decisions,it enables them to deal with the change process and evaluate change. 239

241 REFERENCES 1. Academy of Management Review, Vol 22, Change Management Altering mindsets in a global context 3. Dr. Neeru Vashisht(2011) Principles of Management 4. Garg and Singh (2002), "Managing Change for Competitiveness", Global Journal of Flexible Systems Management, 3(4), Graetz, F. (2000) Strategic change leadership,management decision management 8. Management, 49(3),

242 A CRITICAL REVIEW OF ROLE OF INFORMATION TECHNOLOGY IN IMPARTING TRAINING PROGRAMS ABSTRACT Amit Kumar * ABOUT THE AUTHOR * AMIT KUMAR; RESEARCH SCHOLAR, INSTITUTE OF BUSINESS MANAGEMENT, MANGALAYATAN UNIVERSITY, ALIGARH, UTTAR PRADESH, INDIA Everybody knows that Training is very important for every organization. It is the only key to achieve the desired level of success for organization. Without training it will be very difficult to survive in modern era of technology. The purpose of this study is to review the different phases of imparting training programs. Now a day the market structure is changing rapidly, it is happening due to the Globalization, Market Competitions and Changing Environment in Technology. Due to the changing environment in technology and globalization, organizations and companies are expanding their business all over the world. They are planning and executing their strategies globally. That is why in India now a day s more than four thousand MNCs (Multi National Companies) are working, expanding and managing their business by attracting the customers through various schemes, promotions and gifts remain/stand in the market it is necessary to enhance the productivity and skill set of their employees as well as organization. Both the objects cannot be achieved without training. Due to the change and advancement in technology, information technology played a vital role in imparting training programs. Information technology made it s so easy that we can view or attend a training program, workshop or webinar by just sitting at one place at global level where as in ancient times it was just a dream and now information technology made it possible and true. Due to the increasing number of employees and expanding of the business at global level, now, we can train the employees only through information a days, it is the only media to keep updated with latest technology and knowledge acquisition and dissemination at global level. This research paper is based on secondary data available on internet as well as other published media. KEYWORDS: Training, Training Programs, Training and Development, Informational Technology INTRODUCTION Information Technology changed the entire scenario of imparting training programs in all over the world. With globalization and increasing area of business, it was just impossible to training their employees all over the world. But just about since last decade, information technology made it possible to keep their employees with latest the knowledge of latest technology and training. There is no doubt that training is the need of time. There are several factor, based on which, we can say that training is necessary for every organization or company. Information technology (IT) is the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data, often in the context of a business or other enterprise. The term is commonly used as a synonym for computers and computer networks, but it also encompasses other information distribution technologies such as television and telephones. Several industries are associated with information technology, such as computer hardware, software, electronics, semiconductors, internet, telecom equipment, e- commerce and computer services. In a business context, the Information Technology Association of America has defined information technology as "the study, design, development, application, implementation, support or management of computer-based information systems". 241

243 Humans have been storing, retrieving, manipulating and communicating information since the Sumerians in Mesopotamia developed writing in about 3000 BC, but the term "information technology" in its modern sense first appeared in a 1958 article published in the Harvard Business Review; authors Harold J. Leavitt and Thomas L. Whisler commented that "the new technology does not yet have a single established name. We shall call it information technology (IT)." Based on the storage and processing technologies employed, it is possible to distinguish four distinct phases of IT development: pre-mechanical (3000 BC 1450 AD), mechanical ( ), electromechanical ( ) and electronic (1940 present). Training is the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies. Training has specific goals of improving one's capability, capacity, and performance. It forms the core of apprenticeships and provides the backbone of content at institutes of technology (also known as technical colleges or polytechnics). In addition to the basic training required for a trade, occupation or profession, observers of the labor-market recognize as of 2008 the need to continue training beyond initial qualifications: to maintain, upgrade and update skills throughout working life. People within many professions and occupations may refer to this sort of training as professional development. OBJECTIVE OF THE STUDY The objective of the study is to review the role of informational technology in imparting the training programs. REVIEW OF LITERATURE As we know that training and development is a function of Human Resource Management. Information technology imparts a very important role in each function of Human Resource Management. Information technology to its general meaning as a set of tools and systems for collecting, organizing, storing and disseminating information, including sound, image, text or numbers. Organisations intending to use Technology Based Leaning are faced with the choice of developing the materials themselves or purchasing existing packages. For generic training programmes, developing company-specific course material may be too expensive and time -consuming: it is more sensible to identify common training needs and then meet these needs with well-researched and well-designed packages so that the development costs are spread over a number of users. With the bespoke packages, producing some in-house materials is advisable as it would be cost -effective and efficient to solve the training demands from internal resources. In the light of this preliminary information, Van Den Brande (1993), identified certain trends within Technology Based Learning in Europe, and some components relevant to the framework of this study are: The majority of users of technology-based training are large companies delivering in-company training to their employees as a response to increased demand for better qualified people. This market is becoming more professionalised. The use of technology-based training by enterprises is linked to the level of technological integration and implementation at company, regional and national levels. An open attitude towards technology and its applications stimulates the use and production of technology-based learning. Technology-based learning is still seen as complementary to traditional education and training. A development from traditional training towards advanced technology - based learning is visible, depending on the level of techno-economic development at company, regional and national levels (pp ). More recently, Guest and Vermeersch (1997) predicted that the use of new distance learning technologies is set to revolutionise most companies training approaches and will ultimately transform their entire cultures. According to their report, the results foreseen from such developments in training technologies are: Cost reduction Continuous learning at the desktop and at home Electronic communities Leading-edge applications Training life cycles (pp ). They stated in their report, the Future of Multimedia Training (1997), that: The last four years have seen the rapid development of multimedia training on CD-ROM. It is anticipated that the next four will see a rapid growth in new distance learning solutions. As companies continue investing in networking and/or Internet solutions, and individuals further invest in PCs and Internet access for the home, the use of multimedia training both at the desktop and at home will increase (p.133). 242

244 Finally they conclude that: Over the next two years, video-based solutions will increasingly become the norm - true multimedia will be of prime interest for most corporate applications. As high quality images, video and audio become readily available on networks (particularly intranets) and DVD*, companies will push for its use. A true revolution is occurring, driven by end users demands. This will force companies to integrate new broadcasting and graphics skills and will require a radical shift in mind set (p.134). Digital versatile discs-a storage device with a greater storage capacity than CD-ROM. DVDs should eventually replace CD-ROM in the next five years (ibid., p.156). ROLE OF INFORMATION TECHNOLOGY IN TRAINING In this technological era the role of information technology is too much wider in Training. The following are the main role of information technology in training, as mentioned below: Online Training e- learning Online International Certification Web Based Training Computer Based Training Simulation Training Video Based Training Delphi Technique ONLINE LEARNING AND TRAINING Online learning is a subset of a collection of learning tools collectively referred to as flexible learning. Bates (1995) discusses the ACTIONS model for assessing learning technologies such as online learning. The ACTIONS model includes consideration of the access, costs, teaching and learning, interaction and userfriendliness, organization, novelty and speed of the training intervention being developed. Each of these issues is imperative to consider in the development of new training models, especially when one is considering the use of new training methodologies that have not yet been fully validated, such as online training. E-Learning Wild et al. (2002) discusses the development of an e-learning value chain within organizations which includes the following steps: assessing and preparing organizational readiness; designing appropriate content; designing appropriate presentations; implementing e-learning. Reducing the training process to a logical value chain provides additional methodologies that may help in the justification of training programs. Presentation of a well thought out and documented plan is far more likely to gain support than less structured ideas. Further, these steps combined with one of the currently accepted models can constitute a comprehensive and effective e- learning program. ONLINE INTERNATIONAL CERTIFICATION In online international certifications information technology played a vital role. Information technology made international certifications so easy that we can do it easily in all over the world. Many companies and organizations nowadays offering international certifications trough information technology. WEB BASED TRAINING / LEARNING Web-based training also referred as Internet-based training or online training is gradually becoming the modern way to impart training and education and is set to transform the world (Steed, 1999). The new training technique requires rich resources and environment for learning. The advancement in science and technology have provided us appropriate means to transfer knowledge via web, and the government agencies, corporate and the universities are using this technique on a worldwide scale (Khan, 2001) SIMULATION TRAINING A training simulation is a virtual medium through which various types of skills can be acquired. Training simulations can be used in a wide variety of genres; however they are most commonly used in corporate situations to improve business awareness and management skills. They are also common in academic environments as an integrated part of a business or management course. The word simulation implies an imitation of a real-life process, usually via a computer or other technological device, in order to provide a lifelike experience. This has proven to be a very reliable and successful method of training in thousands of industries worldwide. They can be used both to allow specialization in a certain area, and to educate individuals in the workings of the sectors as a whole, making training simulations incredibly versatile. It is important to emphasize 243

245 that training simulations are not just games; their aim is to educate and inform in an exciting and memorable way, rather than purely to entertain. DELPHI TECHNIQUE The Delphi method is a structured communication technique, originally developed as a systematic, interactive forecasting method which relies on a panel of experts. The experts answer questionnaires in two or more rounds. After each round, a facilitator provides an anonymous summary of the experts forecasts from the previous round as well as the reasons they provided for their judgments. Thus, experts are encouraged to revise their earlier answers in light of the replies of other members of their panel. It is believed that during this process the range of the answers will decrease and the group will converge towards the "correct" answer. Finally, the process is stopped after a pre-defined stop criterion (e.g. number of rounds, achievement of consensus, stability of results) and the mean or median scores of the final rounds determine the results. Delphi is based on the principle that forecasts (or decisions) from a structured group of individuals are more accurate than those from unstructured groups. The technique can also be adapted for use in face-to-face meetings, and is then called mini-delphi or Estimate-Talk-Estimate (ETE). Delphi has been widely used for business forecasting and has certain advantages over another structured forecasting approach, prediction markets Figure 1: Role of Information Technology in Training RECOMMENDATIONS In this era of technology organizations as well as individual to achieve their goal must following the new changes in technology and training and development field. Due to the below mentioned factors, information technology is the back bone of training in this era: Time saving Cost effective Wider reach 24/7 or At Any Place Any Time Continuous learning at the Desktop at Home Increased productivity & quality CONCLUSION Nowadays this is the era of Technology. If we use the current technology, there is no doubt that we can achieve our organizational as well as personal goals easily because nowadays it very difficult to survive in the market without technology. Now too much market competitions due to globalization and technological change. So achieving the business and organizational goals in this era without information technology is not possible. To add value to the business and making a global impact, use of latest technology is must. 244

246 CONTRIBUTION OF THE STUDY This research paper will help the organizations as well as institutions and managers to draw their attention to the importance of information technology in training and also they will focus on existing structure/ delivering methods of training in their concerned area. REFRENCES 1. method Guest, M. and Vermeersch, L. The Future of Multimedia Training. London: Financial Times Media & Telecoms Van Der Brande, L. Flexible and Distance Learning, Chichester: John Wiley & Sons Bates, A. W. (1995). Technology, open learning and distance education, London: Routledge. 6. Wild, R. H., Griggs, K. A., & Downing, T. (2002). A framework for e-learning as a tool for knowledge management. Industrial Management & Data Systems, 102(7), Khan, B. (2001). Web-Based Training, Educational Technology Publications, ISBN:

247 THE SUPPLY CHAIN MANAGEMENT IMPLEMENTATION ON MISURATA TEXTILE FACTORY (MTF) Khaled Amer *, Danilo Golijanin** ABOUT THE AUTHORS * KHALED AMER; UNIVERSITY SINGIDUNUM, DANIJELOVA 32, BELGRADE, SERBIA ** DANILO GOLIJANIN; UNIVERSITY SINGIDUNUM, DANIJELOVA 32, BELGRADE, SERBIA ABSTRACT In this study the analysis of the influence and development of Supply Chain Management (SCM) in Misurata Textile Factory (MTF) firm in Libya is presented. Some parameters such as Leadership, Supplier supply management, Vision and plan statement, Evaluation, Process control and Improvement, and Customer Focus, are analysed to establish if the current implementation of SCM systems on MTF is well organized. Based on the interview discussion with top management and middle managers of the firm, the findings indicate that the communication and knowledge transfer between the workers are limited, top management empowerment has not yet been implemented, the computerized information system does not exist due to its pursuit of immediate profits and short-term benefits. As a conclusion, current SCM implementation practices are not applied to the factory as the full package of the SCM implementation model. Therefore the firm could identify which areas urgently need improvement by using this model. KEYWORDS: Supply Chain Management, Misurata Textile Factory, Leadership, Vision. INTRODUCTION Supply chain management (SCM) has become a useful strategic tool for companies to achieve competitive advantage. This is the result of the improved and maximized use of the companies resources towards the implementation of supply chain. An extensive effort has been reported regarding SCM worldwide including triticale study, for instance, Handfield, Nichols, (1998). On the basis of this cooperation, supply chain management is no longer a new term in business circles. According to Ben-Daya et al., (2008) it is the integration of key business processes from suppliers to the end user that provides products, services and information that add value, inter and intra organizational communication and cooperation focused on specific sets of customer centered activities. Wei- Shuo Lo, (2003) claims that SCM has been widely implemented throughout the world. Many firms have arrived at the conclusion that effective SCM implementation can improve their competitive abilities and provide strategic advantages in the marketplace. Several researchers (David S.L., Philip K., Edith S.L., 2001) also reported that SCM implementation has led to improvements in both supply and productivity, as well as competitiveness in only 20-30% of the firms that have implemented it. A study conducted by Szulanski, G., (2000) indicated that a 90% improvement rate in employee relations, operating procedures, customer satisfaction, and financial performance is achieved due to SCM implementation. However, Elmuti, Dean, (2002) reported a 95% failure rate for initiated SCM implementation programs; Christopher. M. (1998) reported that SCM implementation has uncertain or even negative effects on performance. David S.L., Philip K., Edith S.L., (2001) indicated that achieving high product supply and pursuing successful SCM implementation are highly dependent on top management support. However, Gunasekaran, A., Patel, C., (2001) reported that there is no association between top management support for supply, supply and the level of product in cooperation supply and supply achieved. Many researchers suggested that effective product design can lead to the improvement of product supply and supply (David S.L., Philip K., Edith S.L., 2001), whereas Gunasekaran, A., Patel, C., (2001) reported that there is no relationship between systematic product design and the level of product achieved. Thus, conflicting research findings have been reported surrounding the effects of SCM implementation on overall business performance. It includes many different areas where it is possible for companies from all different business branches to improve their performance. In today s global market, more and more companies realize 246

248 that the performance of their businesses depends largely on external collaboration and coordination across the supply chain. Fugate et al., (2005) as chain members are primarily concerned about their individual interests that may not contribute to the overall supply chain performance; their decisions may result in an inefficient network system with problems like high costs, compromised customer service and a weakened strategic position. The aim of this study is to analyze the impact of the performance measurement and improvement of supply chain processes in the MTF firm in Libya and attempt to develop a SCM implementation model that can be used by Libyan manufacturing firms. THE RESEARCH METHODOLOGY Based on the current SCM implementation in MTF firm, this research aims at achieving the following research objectives: To develop a SCM implementation model in MTF firm in order to guide Libyan manufacturing firms in implementing SCM. Thus, new knowledge related to SCM implementation in Libyan manufacturing firms can be derived. In this research, new knowledge is generated from the existing SCM knowledge integrated with specific characteristics, top manager, middle manager and the average score between them. After reviewing the existing SCM literature, it has become very clear that this research project is the only one that systematically examines the effects of SCM implementation in Libyan manufacturing firms. In addition, this research attempts to develop a SCM implementation model that can be used by Libyan manufacturing firms. AN OVERVIEW OF MISURATA TEXTILE FACTORY (MTF) Wool textile complex for woven and tufted carpets, knitted garments, and blankets at Misurata can be considered as one of the Libyan biggest companies in the recent years, its major strength being in classic products; Lab ad "80% wool, 20% polyethylene"; wall carpets; double thickness carpet and woolen garments such as sweaters, pullovers, gloves, and scarves. A contract was signed on 23/7/1979 between Libyan government and a group of German companies to build this factory in a space of almost 10.5 hectare in the city of Misurata, about 200 km from the capital Tripoli. The factory started its real production stage in September The aim of the factory was to utilize the wool, which is available in huge quantities in Misurata and the nearby cities, and it does not cost much money to cover the northern and southern cities. The first phase of the factory cost 30 million Libyan Dinars "LD" (approximately US $ 123 million). The factory is located near the coast to facilitate export activities by sea into international markets. The factory makes different types of products for which wool is the main raw material. The factory has staff headcount of about 2270 as shown in Table 1 Table 1: Headcount at MTF Source: MTF marketing catalogue Number Nationality 310 Foreign (India, Turkey) 720 Arab (Tunisia, Morocco, Syria...) 1130 Libyan i. BUYING AND ORDERING THE RAW MATERIALS a. The factory buys its raw wool directly from farmers and sheep projects that belong to the government. These projects are in the middle region of Libya, which Misurata is a part of, and can be considered as rich source of wool compared with other parts of Libya. b. The factory satisfies its needs for plastic, polyester, PVC, plastic pipes (on which carpets are rolled) and Gout file locally from other Libyan factories such as Abukmash Petrochemicals; Ras-lanoof Poly-propylene factories, Soq-alkhames and Al-swani Plastic factories. These elements are always available in huge quantities because they mainly come from oil. c. The factory imports glue, cotton files and special liquid for making thickened glue (which is used in Ajme carpet manufacturing). These elements are imported from Europe. However, to avoid the shortage of these imported materials the factory always keeps extra amounts of them for emergency cases. The following Table 2 shows the required raw material in

249 Table 2 The required raw material in 2011 Source: (Othman A. O. 2011) No. Item Amount Unit Price per Tone 1 Raw wool per year Tone 750 LD 2 Gout file per year 130 Tone LD 3 Cotton file per year 70 Tone LD 3 Mokit carpet file per year 500 Tone 2 million LD 5 Triko file per year 90 Tone LD 6 Poly propylene file per year 250 Tone LD 7 Nylon file per year 200 Tone LD 8 Glue to cover the woven per year Tone RESULTS AND DISCUSSION SCM IMPLEMENTATION This subsection presents the weak areas of the factory s SCM implementation and the reasons leading to these weak areas depend on the assessment tool. The weak areas identified could be used by MTF to further improve its SCM implementation; they were regarded as potential improvement possibilities. Note that the identification of these weak areas was on the basis of unbiased, honest, and fact-based judgments. o Leadership There was strong evidence that top management empowerment had not been implemented in the firm. The MTF was centralized and hierarchical, and there was a strong tendency for employees to do things according to what they were told. They tended to wait for guidance from top managers or supervisors at all times. Thus, employees did not take any risk or responsibility if things went wrong; otherwise, they would be punished or fined. If things went wrong, employees tried to seek excuses to protect themselves in order to avoid being fined or criticized. Employees did not want to take any risk by doing things without permission. Top management did not pursue long-term business success but focused instead on annual business success, which was their most important goal. Top management still viewed SCM as less important than product supply and cost. In addition, top managers often organized discussion meetings after supply problems or delivery problems had happened; how to prevent problems from happening was not given sufficient attention. Top managers were reluctant to accept or implement employee suggestions if money was needed for their implementation. The factory s many problems occurred due to its focus on immediate profits or short-term benefits. The results shown in Figure 1 are based on the interview. They found that the top management empowerment had not been implemented in the firm. The first column lists the addressed areas that may affect leadership satisfaction. A number between 0 and 10 is used to score leadership satisfaction level. The number 0 means that leadership is extremely unsatisfied with the area and the number 10 indicates they are extremely satisfied with the area. Figure 1 Leadership 248

250 o Supplier Supply Management Long-term partnership between MTF and its suppliers had not yet been established. MTF had a special policy of rewarding purchasing personnel who could purchase products without immediate payment or less immediate payment. This was due to the shortage of capital. Otherwise, MTF could not have sufficient materials to maintain normal production. Such practices caused the problem that the firm would have to pay more in the future. If the buyer cannot pay immediately, the purchasing price is always higher. One interviewee said that it was very difficult for MTF to organize production. For example, after a contract was signed, the customer generally paid approximately 20% of the product s selling price in advance. After receiving the product, the customer would pay another 70% of the payment. The remaining 10% was used as a guarantee deposit. If the product had supply problems, the customer would use the deposit for delay, and so on. Thus, the firm did not have much money available to purchase products from suppliers. In total, MTF owed its suppliers approximately 10 million LD. MTF always received complaints from its suppliers. Due to the lack of partnership with suppliers and as well as mutual trust, MTF had to implement strict non-value added incoming inspection. Purchasing price was the most important factor in selecting suppliers, with supply chain falling behind the price. Such a practice indicated that MTF selected such a supplier that could provide the lowest price for suppliers. In a few cases, purchased products could not be accepted technically. For example, qualified suppliers of gears carpet rolls at 6 dinars per meter could be provided if the buyer paid immediately. However, MTF selected a supplier that could provide the service at the price of LD 3.5 per meter and did not ask the firm to pay immediately. Thus, it is not difficult to imagine what happened to the factory s supply chain. Since it considered price the first priority in selecting suppliers, supply problems inevitably happened during the process of production and in the operation of the final products. In fact, many of factory s supply chains occurred due to poor purchased products. The results shown in Figure 2 are based on interview. They found that the firm did not have much money available to purchase products from suppliers. A number between 0 and 10 is used to score supplier supply management satisfaction level. The number 0 means that supplier supply management are extremely unsatisfied with the area and the number 10 indicates they are extremely satisfied with the area. o Figure 2 supplier supply management Vision and Plan Statement MTF had a long-term vision statement that had been drawn up several years ago. However, many employees were not clear as to what the vision statement was. In fact, MTF did not use it as a guide in formulating its business strategies. In this regard, the general manager did not have a clear long-term vision. The reason for this was that the general manager had been appointed by the administrative to run MTF on a short-term basis, based on a contract. If he performed well, he would stay in the position longer. The decision made by the department in this regard was highly dependent on factory s annual business performance. Therefore, the general manager focused on yearly business performance rather than long-term business success. His target was to accomplish the yearly business performance indices assigned by the administrative department. To do so, MTF had a yearly policy statement to guide it in doing business. These 249

251 yearly policies varied year to year depending on its internal and external environments. Before these policies were in force, they had to be approved by the workers congress. The yearly policies were well communicated to employees at different levels. MTF did not have long-term overall business performance plans. Instead, it had only yearly strategic business performance indices and supply goals, which were formulated based on the assignments set up by the administrative department. This was because top management placed too much emphasis on short-term objectives. Although these plans were also presented to the workers congress for discussion, they would not be changed since they had been set up by the department. MTF did not have specific plans regarding which levels of employee and customer satisfaction should be reached. MTF actually drew up its supply improvement plans in terms of supply problems that it had. The information used in making the plans was mainly from customers complaints and its different departments or workshops. It was evident that supply improvement plans were easily implemented if little money was required; it would be problematic if much money were needed. In this regard, MTF did not provide sufficient resources for implementing supply improvement plans. The primary reason for this was that MTF tried to achieve cost reductions to maintain its profits. Thus, MTF general manager could survive. The results based on interview are shown in Figure 3. They found that the many employees were not clear as to what the formulation of vision and plan was and the firm did not provide sufficient resources for implementing supply improvement plans. A number between 0 and 10 is used to score vision and plan statement satisfaction level. The number 0 means that vision and plan statement are extremely unsatisfied with the area and the number 10 indicates they are extremely satisfied with the area. o Figure 3 vision and plan statement Evaluation The SCM implementation model was used in evaluating the factory s SCM implementation practices and overall business performance. The author conducted the evaluation guided by the assessment tools. Although MTF tried to improve a number of job-related facets that might affect employee satisfaction, the employee satisfaction level as a whole remained unclear to some extent. In fact, MTF did not evaluate its employee satisfaction and did not have employee satisfaction data. In this regard, the issue of employee satisfaction did not receive much attention from MTF. This was because it was easy to recruit new employees from the labor market. Furthermore, MTF already had a redundant workforce, which it considered a heavy burden. Competitive benchmarking with its major competitors was not conducted by MTF. Thus, SCM implementation and overall business performance of its main competitors remained unclear to a certain extent. Thus, MTF lost opportunities for further improvement of its supply of products and services. In fact, this practice had actually not caught top management s attention. The data on appraisal costs and prevention costs were not available. The firm mixed these two types of supply costs with its normal overhead expenses. Thus, it was not clear as to how much money was spent on appraisal and prevention. It is no doubt that MTF spent a great deal of money on various inspection activities, as it had approximately 30 specialized inspectors. 250

252 Many inspection activities were actually non-value added. In fact, the availability of appraisal costs and prevention costs was valuable to MTF in formulating effective improvement actions so as to reduce these costs. MTF did not have an integrated computerized information system for collecting, processing, analyzing, disseminating, and storing relevant information. Information technology remained at a primitive level. Thus, it was difficult for different departments and workshops to share their information. Its major information flow was through handwritten documents. Therefore, working efficiency was low and some problems occurred due to the poor information system. MTF did not have such a computerized information system in place due to its pursuit of immediate profits and short-term benefits. Based on the evaluation, the current situations of the factory s SCM implementation and overall business performance were obtained. The evaluation results as showing in Figure 4 indicate that the different scores with columns depend on specific characteristics, the first column lists addressed areas that may affect Evaluation satisfaction. A number between 0 and 10 is used to score evaluation satisfaction level. The number 0 means that evaluation are extremely unsatisfied with the area and the number 10 indicates they are extremely satisfied with the area. o Figure 4 evaluation Employee Participation Employees did not have any intention of reporting their own working problems because they were afraid of being fined or laid off. As a result, MTF lost many opportunities for supply improvement. In fact, employee working performance was highly related to monthly pay. If employees had their own working problems, they would be penalized according to the factory s penalty rule. MTF did not implement the system of job rotation as many working posts required operators with special qualification certification to do. Such regulations were stipulated by relevant governmental agencies. For example, operators cannot operate cranes without qualification certification. Due to the money limitation, it was impossible for MTF to send many employees to different special job training activities. Therefore, employees lacked multidisciplinary skills. Based on the interview the results are shown in Figure 5. They found that the improving employee commitment and job rotation were not clear as to what the crossfunctional team and within-functional team was and the firm did not provide sufficient resources for worker s congress. A number between 0 and 10 is used to employee participation satisfaction level. The number 0 means that employees participation are extremely unsatisfied with the area and the number 10 indicates they are extremely satisfied with the area. 251

253 o Figure 5 employee participation Customer Focus MTF did not fully conduct market investigation. For example, designers hardly went out to collect information for improving product design due to the lack of money. Designers also rarely visited customers in order to understand the performance of their products on site. Thus, information sources used for product design were very limited. Designers only made use of customer complaint information and customer requirements specified in contracts for designing products. Customer expectations, future requirements, and competitors offerings remained unclear to a certain extent for designers. How to delight customers was not the focus of designing products. MTF did not have customer satisfaction information on the supply of products and services from its competitors. Thus, customers views on the factory s competitors were unclear. In fact, such information would have been valuable to MTF in further improving its supply of products and services. The first column lists addressed areas that may affect Customer Focus satisfaction. Based on the interview the results are shown in Figure 6. They found that the market investigation and customer satisfaction survey were not clear as to what the supply warranty was and the firm did not provide sufficient resources for customer information system. A number between 0 and 10 is used to score Customer Focus satisfaction level. The number 0 means that customers focus are extremely unsatisfied with the area and the number 10 indicates they are extremely satisfied with the area. Figure 6 customer focus 252

254 CONCLUSION This model shows that the application of these SCM practices in combination can lead to improvements in overall business performance. In order to assist users in applying this model in practice, the processes of its use and the guidance of formulating the improvement plan are presented. Based on the evaluation, the strengths and weaknesses of the factory s SCM implementation were identified. The factory s current SCM implementation practices showed that in the SCM implementation the full package was not used as a model. It is better to say that this factory only implemented a part of SCM. The weaknesses of the factory s SCM implementation provided opportunities for MTF to improve its SCM implementation. The factory s deputy general manager agreed that MTF would implement this improvement plan in practice. Thus, it can be concluded that this SCM implementation model can be used to evaluate the factory s SCM implementation, identify strengths and weaknesses therein, and assist the factory in formulating the improvement plan. Therefore, the SCM implementation model developed in this study is applicable to this factory. What is more, this SCM implementation model can be used in other Libyan manufacturing firms. In fact, the case study was conducted in only one Libyan manufacturing firm. The case study further shows that this SCM implementation model can be used to benchmark firms continuous improvement, self-assess their supply improvement efforts, and measure their progress over time. Through using this model, firms can quickly identify which areas urgently need improvement. Thus, resources can be allocated more wisely. In fact, SCM implementation is a systematic approach. No universal standard of SCM implementation exists. A firm should not follow the practices presented in this SCM implementation model strictly; when they start using it, they should combine their uniqueness with the practices of this model and consequently develop their own models and ways to excellence. Their own measurement systems can better fit their situations. This case study also provides an example of how to use this SCM implementation model in practice. Firms that want to use this model can take this case study as an example. In fact, implementing SCM is a continuous improvement process. It is a never ending journey. Implementing this model does require patience, tenacity, and commitment from people at every level in MTF. It will take some time to see the effects of implementing this model. These results show that the factory s SCM system is not perfect but that has an ability to improve and do so indefinitely and this is exactly where the truth of the following quote lies: there is always room for improvement it s the biggest room in the house. REFERENCES 1. Ben-Daya, M., Darwish, M., Ertogral, K., The joint economic lot sizing problem: Review nd extensions. European Journal of Operational Research 185 (2), Christopher. M. (1998), Logistics and supply chain management : strategies for reducing costs and improving services, 2nd Edition, Financial Times Management/ London. 3. David S.L., Philip K., Edith S.L., 2001, Design and Management for Supply Chain, the McGraw-Hill Companies, USA. 4. Ellram, Dean., (2002). The Perceived Impact of Supply Chain Management on Organizational Effectiveness. International Journal of Supply Chain Management Vol. 38, No. 1, pp Fugate, B., Sahin, F., Mentzer, J.T (2005). Supply chain management coordination mechanisms. Working Paper, The University of Tennes- sees, Knoxville, TN, USA. 6. Gunasekaran, A., Patel, C. Tirtirorglu, E., Performance Measures and Metris in a supply chain environment. International Journal of Operations and Production Management 21 (1-2) pp Handfield. R.B, & Nichols. E.L. J (1999), An Introduction to Supply Chain Management, Prentice Hall, Upper Saddle River, NJ. Prentice-Hall International Editions. 8. Szulanski, G., 2000, The process of knowledge transfer: A diachronic analysis of stickiness, Organizational Behavior and Human Decision Processes, 82(1), pp Wallaec and Terterove (eds) (2002), Doing Business with Libya / consultant editors a, London: KoganPage, DOIN 10. Wisner, J. D.,(2003):A structural equation model for supply chain management strategies and firm performance, in: Journal of Business Logistics, Vol. 24, No. 1, pp

255 FACTORS DETERMINING THE PURCHASE DECISION OF RURAL CONSUMERS TOWARDS CONSUMER NON-DURABLES Dr.K.N.Ushadevi *, Salini.R.Chandran ** ABOUT THE AUTHORS * DR.K.N.USHADEVI; ASSOCIATE PROFESSOR, COLLEGE OF CO-OPERATION BANKING &MANAGEMENT KERALA AGRICULTURAL UNIVERSITY, THRISSUR, KERALA ** SALINI.R.CHANDRAN; RESEARCH SCHOLAR COLLEGE OF CO-OPERATION BANKING &MANAGEMENT KERALA AGRICULTURAL UNIVERSITY, THRISSUR, KERALA ABSTRACT Rural consuming system and its evolution are different from that of urban consumption pattern. Material prosperity in the rural India due to effect of liberalization and globalisation, which in turn resulted in increased production and improved transportation and communication facilities. Increasing rural development investment has increased the purchasing power of the rural folks. All these have induced the marketers to turn their attention towards rural markets. Urban and Rural consumers are differing with respect to their consumption pattern, purchase decisions, purchase behaviour and perception towards products. The studies proved that the urban market is already saturated and the growth rate over the past few years showed a declining trend. Indian rural market has been burgeoning with rising incomes and demographic pressures. Hence the study was undertaken with the objective of to identify the factors influencing the rural consumers trowrds consumer non-durables. The study was confined to three districts of Kerala representing north, south and central zones. The districts selected were Thiruvanadapuram, Thrissur,and Wayanad. Through multi stage sampling procedure one panchayath from each district and three wards of each panchayath were selected. T.From each Panchayath 100 consumers were selecte through random sampling method from the selected wards.the selection of non durables were made by classifying the products under five common categories viz. food items, toiletries, beverages, processed fruits and vegetables and edible oil vegetables and coconut oil and palm oil (Edible oil).the study found out that major factors that influence the purchase decision on consumer non durables include quality followed by price and availability of credit. The influence of brand image and dealers were found to be marginal. KEYWORDS: Consumer, Food Items, Toiletries, Beverages, Edible Oil INTRODUCTION Consumer non durables are those items which a consumer purchases frequently and its shelf life is very low and a daily used item by the consumer. In practice the purchase of non durables involves a routine decision making process. But with the increased number of competitors and diversified new product arrivals in the market necessitated the consumers to shift their decision making from routine to extensive problem solving. Now even for the purchase of an essential item like rice the decision related to how, when, what and from where to purchase involve intensive information search. PURPOSE OF RESEARCH Kerala s economy is distinguished from the rest of the country due to certain unique characteristics like rapid growth of population, highest density ratio, greater share of non-agricultural equipments, high level of literacy, health conditions, higher level of infrastructure, adaptation of technological advancement in communication, high level of urbanization etc. Although Kerala is lagging behind many other Indian states and territories in terms of percapita GDP and economic productivity, Kerala s Human Development Index and standard of living statistics are the best in India. In the four of the most important social indicators of social development, adult literacy, life expectancy, infant mortality and birth rates Kerala is not only far ahead of India and every other Indian state, but it also stands out among the low income countries of the world and even on a par with some 254

256 middle income European countries. Moreover Kerala s achievements are distributed equally across urban rural, male female and low caste/ high caste population. In this respect, Kerala outshines the rest of India. Kerala s share in the population of India is 3.1 per cent; out of this 74 per cent live in rural Kerala. This shows the vast potential of rural market in Kerala. Because of the development and spatial advantage of the state rural consumers of Kerala express a distinct behaviour when compared to a typical rural consumer.. Thus the study looks into the Dynamics of rural consumer behaviour in Kerala. OBJECTIVES OF THE STUDY To identify the factors influencing the purchase decision of rural consumers towards consumer non durables. METHODOLOGY LOCALE OF THE STUDY: The study was confined to three districts of Kerala representing north, south and central zones. SAMPLE DESIGN The districts selected were Thiruvanadapuram,Thrissur and Wayanad, based on the prominence of its rural characteristics. Through multi stage sampling procedure one panchayath from each district and three wards of each panchayath were selected. From each of the above Panchayaths three wards were selected at random from each Panchayath. Again by applying random sampling method was adopted to select the respondents.from each Panchayath 100 consumers were selected from the selected wards. Thus a total of 300 household consumers constituted the sample of the study. SELECTION OF THE PRODUCTS:. The selection of non durables were made by classifying the products under five common categories viz. food items, toiletries, beverages, processed fruits and vegetables and edible oil and from each category two products were selected. The products include wheat flour and Rava (food items), bath soap and toothpaste (toiletries) Tea and Coffee (Beverages) Jam and Pickle (processed fruits and vegetables ) and coconut oil and palm oil (Edible oil). STATISTICAL TOOLS USED FOR THE STUDY 1) Index For analysing the satisfaction out of the selected products by the respondents, satisfaction indices were calculated using the formula: 11 3 SI Sijx 100 j 1 j 1 max sj 2) Kendall s coefficient concordance To know the concordance/agreement among the judges in ranking the factors influencing the purchase decision and product features influencing consumer choice, Kendall s coefficient of concordance was used. Kendall s coefficient of concordance (W) was calculated by using the formula: S W 1 K 2 3 (N - N) 12 ANALYSIS AND DISCUSSIONS Factors Influencing The Purchase Of Food Items Among the food items Rava and Wheat flour were selected for the study. The parameters selected were quality, price, availability, advertisement, credit facility, influence of dealers brand image etc. Table 1Factors influencing the purchase of Food items South zone Central zone North zone Grand Total Parameters N = 100 N = 100 N = 100 N = 300 Score Rank Score Rank Score Rank Score Rank 1 Price S.No. 255

257 2 Quality Advertisement Availability Company s brand image 6 Credit facility Influence for dealers/agents KENDALL S W TEST RANKS Area Mean Rank South zone 1.82 Kendall s W Central zone 2.09 X North zone 2.09 Asym. Sig As a whole, analysis revealed that quality influenced most followed by price and availability of credit. Brand image and dealers influence on the purchase seemed to be the least. It can be concluded that rural people seemed to be both quality and price conscious.. Factors influencing the purchase of Toiletries Toiletries are the most essential item for all human being. The items selected in this group include bath soap and tooth paste and for which hundreds of brands and alternative products are available. Table 2 Factors influencing the purchase of Toiletries S.No. Parameters South zone N=100 Central zone N=100 North zone N=100 Grand Total N=300 Score Rank Score Rank Score Rank Score Rank 1 Price Quality Advertisement Availability Company s brand image Credit facility Influence for dealers/agents Influence for Friends/Relatives Festival/discount offers KENDALL S W TEST RANKS Area Mean Rank South zone 1.71 Kendall s W 0.61 Central zone 2.14 X North zone 2.14 Asym. Sig Table2 revealed that irrespective of area, quality and price are the prominent factors influencing the preference of toiletries followed by advertisement. It is observed that advertisement coverage is very large in the case of these items. However, the manufacturers are offering so many incentives with toiletry items the respondents in the northern and central zones are not much influenced by it whereas the influence of this parameter on southern zone people is more. Further in the southern zone availability of the product also influenced them highly. Whereas in other zones its influence was not much but the brand image of the product considered as an important factor. Sl. No. Factors influencing the purchase of beverages Tea and coffee are selected under the category of beverages. These products are available in both in loose form and packed form. Further large number of brands is also available at different prices with different packages sizes. Table 3 Factors influencing the purchase of Beverages Parameters South zone N = 100 Central zone N = 100 North zone N = 100 Grand Total N =

258 Score Rank Score Rank Score Rank Score Rank 1 Price Quality Advertisement Availability Company s brand image 6 Credit facility Influence for dealers/agents 8 Influence for Friends/Relatives 9 Festival/discount offers KENDALL S W TEST RANKS Area Mean Rank South zone 1.82 Kendall s W Central zone 2.09 X North zone 2.09 Asym. Sig From the analysis it is evident that quality and price are the major parameters influencing the purchase decision. Advertisement ranked third in case of north and central zones whereas in southern zone availability of the product ranked third. Further, it can be noticed that availability of credit facility and brand image(except in northern zone) also come under the top ranks. Influence of dealers seemed to be the least an the purchase of beverages. Factors influencing the purchase of edible oil Among the edible oil coconut oil and palm oil were selected for the study. The factors influencing these decisions are presented in Table 4. Table 4 Factors influencing the purchase of Edible oil South zone Central zone North zone Grand Total N = 100 N = 100 N = 100 N = 300 Parameters Score Rank Score Rank Score Rank Score Rank 1 Price Quality Advertisement Availability Sl. No. 5 Company s brand image 6 Credit facility Influence for dealers/agents 8 Influence for Friends/Relatives 9 Festival/discount offers KENDALL S W TEST RANKS Area Mean Rank South zone 2.43 Kendall s W Central zone 2.57 X North zone 1.00 Asym. Sig Table4 revealed that quality and price occupy first and second place respectively among the parameters in all the regions. Credit facility comes third except in the case of northern zone where availability of the product 257

259 influenced more advertisements also affect their purchase decisions in the case of edible oil. Brand image of the products had only least influence on them. Factors influencing the purchase Processed Fruits & Vegetables Pickle and Jam are the major products selected for the study. Table 5 depicts the factors influencing the purchase towards the processed fruits and vegetables. Table 5 Factors influencing the purchase of processed fruits & Vegetables Sl. No. Parameters South zone N = 100 Central zone N = 100 North zone N = 52 Grand Total N = 252 Score Rank Score Rank Score Rank Score Rank 1 Price Quality Advertisement Availability Company s brand image 6 Credit facility Influence for dealers/agents 8 Influence for Friends/Relatives 9 Festival/discount offers KENDALL S W TEST RANKS Area Mean Rank South zone 1.89 Kendall s W 0.37 Central zone 2.22 X North zone 1.89 Asym. Sig Influence of dealers and brand image were the least in their purchase decisions. Much difference cannot be noticed in different zones of Kerala. FINDINGS AND DISCUSSION The major factors that influence the purchase decision on food items is quality followed by price and availability of credit. The influence of brand image and dealers were found to be marginal. Quality and price are the major influencing factors in case of toiletries. Advertisement also played a major role in influencing the purchase decision of consumers. In the case of beverages price ranked first followed by quality and advertisement. Availability of the product, quality and price are the parameters that influence the purchase decisions with respect to processed fruit and vegetables. For the purchase of edible oil quality and price occupy first and second place respectively were identified as the major factors influencing the purchase decisions. POLICY IMPLICATIONS The findings of the study expose the dynamics of consumer behaviour pattern of rural consumers in Kerala. The first and foremost task in planning a rural marketing strategy is to create awareness of the existence of particular brand in the market. The low level of brand awareness as revealed from the the brands of rava, pickle, jam, coconut oil and palm oil in the non-durable category calls for the need for focusing on the creation of awareness through advertisement campaign, organization of show cases, display activities etc. What methods are to be followed depends upon the merits of the situations and nature of the products to be sold The study also highlighted the fact that price conscious consumers are shifting to quality conscious nowadays. This stresses the need for providing quality products at reasonable price to the low-income level still exist in rural areas they prefer small packs which necessitates the need for providing low in packing. Thee influence of dealers, agents and friends on the consumers decision making process, suggest for taking them into confidence and to adopt motivational measures to promote sales. The study also suggesting minimizing the price differences of branded and non-branded consumer non durables so as to attract the rural consumers towards the branded products. 258

260 CONCLUSION To conclude rural consumers are changing from the traditional way of thinking and attitudes. The urban consumers are influencing them very much. In the regional differences are also only marginal among rural consumers and hence the need for considering the rural consumers as a single segment is very important. However a uniform marketing strategy for rural and urban consumers is not sufficient. Marketers have to frame appropriate strategies keeping the rural scenario and dynamics of rural consumer behaviour. REFERENCES 1. Bagozzi, R.P. and Dholakia, U. (1999), Goal setting and goal striving in consumer behaviour, Journal of Marketing, 63 (Special issue 99), P Bart J. Bronnenberg and Wilfred R. Vanhonacker (1996), Limited choice sets, local price response and implied measures of price competition, Journal of Marketing Research, 33, May, P Bhaskar S. Iyer (1990), Is the consumer really involved?, Indian Management, 29 (2), Feb, P Davis, H. and Rigaux (1974), Perceptions of marital role in decision processes, Journal of Consumer Research, P

261 EXCHANGE RATE AND SAUDI S IMPORT: SOME EMPIRICAL EVIDENCES 2 Dr. Zafar Ahmad Sultan* ABOUT THE AUTHOR * DR. ZAFAR AHMAD SULTAN; ASSISTANT PROFESSOR, COLLEGE OF BUSINESS ADMINISTRATION, SALMAN BIN ABDULAZIZ UNIVERSITY, ALKHARJ, KINGDOM OF SAUDI ARABIA ABSTRACT The import in Saudi Arabia is increasing at a very fast rate at around 16 percent per annum with the beginning of 21st century. This period has also witnessed the acceleration of economic activity. Keeping this in mind, the paper estimates the import demand behaviour of Saudi Arabia and tests the null hypothesis that import does not depend upon real income, exchange rate. The paper investigates the Saudi s import demand using cointegration method. The result shows that there exists long run equilibrium relationship between real import, real Gross Domestic Product (GDP) and real effective exchange rate (REER). Further, the elasticity of import demand with respect to income and exchange rate were found to be close to unit elastic in the long run if not in the short run. The evidence suggests that appreciation and not the depreciation of the domestic currency (Saudi Riyal) will be beneficial for the country as it will make the import cheaper to meet the growing development and consumption needs of the country in absence of adequate domestic production. KEYWORDS: Import, Exchange Rate, Domestic Income, Foreign Reserves. INTRODUCTION In pursuit of transforming Saudi s agricultural economy into developed industrial one by the government of Saudi Arabia, import for intermediate and capital goods grew at a very high rate. Import constitutes an important sector of Saudi economy. In the absence of sufficient domestic production and skilled and unskilled workforce, Saudi Arabia had to resort to large volume of imports of consumers as well as producers goods to meet the increasing demand on account of its fast growing population including expatriates, and the developmental needs of the country. Though growth of imports declined in the 1980s and 1990s owing to declining oil prices and consequent decline in economic growth of the economy, it once again picked up since the beginning of the 21st century. During 2000 to 2008 it increased at an annual compound rate of about 12.4 percent. Since then it registered a fluctuating growth. In dollar terms it increased from $30.0 billion in 2000 to $129 billion in 2011 at an annual compound rate of 20 percent. During the period, the import of food related items that constitute about 18 percent of total imports, increased at annual compound rate of 13 percent. Building related items; industrial chemical and related products; equipments, and transport equipments; are the items that witnessed higher rate of growth. But electrical appliances and parts; and general minerals and products recorded highest rate of growth during the period of around 22.8 percent and 30.2 percent respectively during the period. The high rate of growth of import also corresponds to high rate of GDP growth that increased at annual compound rate of about 15 percent. It is in this context that the paper seeks to examine the factors responsible for the rapid growth in imports. Saudi Arabia follow pegged exchange rate policy vis a vis US dollar since Exchange rate has a direct impact on price of import and hence import bill. With constant exchange rate the price of import may be expected to remain constant provided there is no change in conditions in other countries related to cost of their exportable. However, Saudi Arabia imports only 14 percent of its total imports from United States of America (USA). 2 This paper is part of the research project funded by the Deanship of Scientific Research, Salman bin Abdulaziz University, K.S.A. I am grateful to them for the same. Parent Institute: P.G. Department of Economics, L.S. College, Muzaffarpur, B.R. Ambedkar Bihar University, Muzaffarpur, Bihar, India. 260

262 Therefore rest of the 85 percent import remains subject to exchange rate variation and depends upon the kind of movement of dollar with respect to other currencies. Appreciation of dollar would make import cheaper and increase the amount of import in real terms required to meet the growing needs. We know that policy regarding import control depend upon the domestic condition of the country and the objective of policy regime. To meet the consumer and developmental needs of the economy if the need for importable goods is high, and the domestic substitutes are not sufficiently available, controlling import is not right option. Depreciation is useful only if the country intends to control import to protect and promote domestic industry. However its impact on import bill will depend upon the price elasticity of import. Hence, estimating price elasticity of aggregate import demand of Saudi Arabia is important in order to assess the policy of exchange rate regime. Thus the purpose of present paper is to estimate the aggregate import demand function of Saudi Arabia. It seeks to examine the sensitivity of Saudi s import to various determinants like the GDP of the country, exchange rate. Number of studies has been done to estimate import demand and its determinants for many of the countries; both developed as well as the developing one, but there is hardly any serious work done in the case of Kingdom of Saudi Arabia, which largely depends upon imports in the absence of sufficient domestic production. The rest of the paper is organized in following way. Next section briefly presents a review literature related to import demand function. This is followed by a brief discussion on methodology to estimate aggregate import demand function for Kingdom of Saudi Arabia. Empirical results are discussed in section four. Final part concludes the paper. REVIEW OF LITERATURE Number of studies has been done to examine the behavior of import and factors affecting import demand of developing and developed countries. Some of the studies have related import to relative price of imports and income of the country (Dutta and Ahmad, 1997; Sinha, 1997; Cheong, 2003; Chang and Juang, 2005; Kalyoncu, 2006). All these studies found a negative relation of import with its price and negative relation with income of the country. In addition to income and relative price of import, Dutta and Ahmad (2006) also used dummy variable to incorporate the effect of trade liberalization on imports, while examining India s import function. He concluded that the income and price has respective positive and negative influence on import demand while liberalization has not significantly affected India s import. In addition to above studies, there are number of studies which have included foreign exchange reserves as an important determinant of import demand. Zelal Kotan and M. Saygili (1999) in their paper estimated the import demand function for Turkey for the period of 1987 to Using quarterly data they incorporated two different models- Engle-Granger approach and Bernanke-Sims structural VAR model. The result of the Engle-Granger approach shows that in the long run, import is significantly related to income, nominal depreciation rate, inflation and international reserves. Further, import has been found to be income and price elastic. The Bernanke-Sims structural VAR model shows that the anticipated change in real depreciation rate and unanticipated change in income and real depreciation rate have significant effect on import. Moran (1989) included foreign exchange receipt and international reserves, in addition to relative price of import and income of the country, in his model and found significant coefficient for these variables in the case of developing countries. A.K. Dash (2005) also found long run cointegrating relationship between import, foreign reserves, income and import price and domestic price. However, the import is found to be more sensitive to the price of domestically produced goods than the other factors. Arize et al (2004) in the case of Pakistan, Arize and Osang (2007) in the case of Latin America, Sultan (2011) in the case of India, and Arize et al (2012) in the case of Asian countries also found cointegration relationship between import, income, relative price of import and foreign reserves.. Further, he found that the elasticity of import is greater than one with respect to income, close to one with respect to import price, and small with respect to foreign reserves. Some studies have also been used exchange rate as determinant of import. For example, Zelal Kotan and M. Saygili (1999) in the case of Turkey, found cointegrating relationship between income, exchange rate and other variables. Literature reviewed above ware related to other countries. Some of the studies have also been done to examine the import demand function of Saudi Arabia. K. Doroodian et al (1994) estimated import demand function of Saudi Arabia for the period , applying Johnson s cointegration method on annual data, found existence of cointegration relationship between import, income, import price and domestic price. The study further found that relative import price formulation to estimate import demand function is inappropriate for Saudi Arabia. He 261

263 further found that the import demand is inelastic with respect to income and import price in the long run, while it is elastic with respect to domestic price. K.I. Aldakhil and N. Alyousef (2002) estimated import demand function for Saudi Arabia using the same variables as used by Doroodian et al (1994) and found cointegration relationship between these variables. However their results show elastic demand for Saudi s import with respect to income and domestic price while it is inelastic in relation to import price. B.R. Kolluri and C.R. Torissi (1987), while estimating import demand function for five oil exporting countries including Saudi Arabia for the period on the basis of regression equation, found that the demand for Saudi Arabia is elastic with respect to GDP since The coefficient of relative import price is not significant for Saudi Arabia and Indonesia. However when import price and domestic price is separated, import demand for Saudi Arabia was found to be significantly elastic with respect to import price but insignificant with respect to domestic price. Further, lagged foreign reserves was also found to be statistically significant and positively related to import demand. M.A. Aljebrin and M.A. Ibrahim (2012) has estimated import demand function for GCC countries and found that the demand for import has positive relation with domestic income, private consumption and gross capital formation and international reserves; and negative relations with government consumption and relative price of import. But including both, aggregate GDP and disaggregated GDP except net export (private consumption, government consumption and gross capital formation) simultaneously as explanatory variables means duplication of explanatory variables and may under parameterize the coefficients and may not be an appropriate model. From the above studies we find that none of the studies on Saudi Arabia has used exchange rate as a factor to affect the import and import bill. The present study intends to examine the relationship between import, exchange rate, gross domestic product and foreign reserves in the case of Saudi Arabia. MODEL SPECIFICATION AND METHODOLOGY Most of the econometric investigations of import demand function postulate that import is function of real income of the country and relative price of import (Houthakker and Magee, 1969; Leamer and Stern, 1970; Goldstein and Khan, 1976; Carone, 1996). Murray and Ginman (1976) argued that the relative price specification on traditional import demand function is inappropriate for estimating import demand function. Urbain (1992) also suggested that the use of two separate price terms is preferable to single price. He argued that modeling import demand using relative prices implies identical response of imports to change in import prices and domestic prices. But this does not seem to be realistic as economic agents use different information set to form their expectation about domestic and import price. The present paper, instead of using prices, has taken real effective exchange rate (REER) to directly capture the effect of exchange rate variation on import demand and on import bill by measuring the price elasticity of import demand. Further, to examine the import demand function for Saudi Arabia, foreign exchange reserves has also been included in the model. The reason for including foreign reserve in the model is that this is the only medium of exchange in international market and acts as a constraint for the foreign exchange scares developing countries to import necessary inputs. The desired level of import cannot be actualized in the absence of sufficient level of F.E reserves. Saudi Arabia is not foreign exchange scares country. This may not be a constraint for her. Still omitting this important variable may result in bias of a model s estimate and overstate the importance of the included variables. This is the reason the paper includes this factor also to examine whether it is significant for FE scares developing countries only or is important for FE abundant countries like Saudi Arabia also. One may expect a rise in demand for imports with increase in foreign reserves and vice-versa. With this background the import demand model of India for t period can be specified as M t = f (GDP t, REER t, FE t ) (1) Where, M t is Real import which is obtained by deflating import in dollar terms by wholesale price index in time period t. GDP t is real GDP of the country measured as constant GDP in dollar terms at constant price and constant exchange rate in time period t. REER t refers to real effective exchange rate in time t. FE t refers to real foreign exchange reserves in time t obtained by nominal foreign exchange reserves deflated by unit value index of import. l is natural log of respective variables. 262

264 For estimation purpose, the choice between linear and log linear model is important because the functional forms affect the explanatory power of the variables. Kmenta (1986) argued that the misspecification of functional form may result in misspecification of error term, that in turn results in violation of assumption of OLS and hence efficiency and biasness of the parameter. Though there are different test for the selection of appropriate model (Box and Cox, 1964; Sargan, 1964; Bera and McAleer, 1989); Khan and Ross (1977), Boylan et al (1980), and Doroodian (1994) are of the view that the log linear model should be preferred over linear model because of certain advantages associated with it. Since Saudi Arabia imports only small proportion of total world export (1.9%), it may not be unrealistic to assume that the world supply of export to India is perfectly elastic. The implication of this assumption is that the world may change the supply of export to India even without changing its price. With this assumption, our model reduces to single equation model i.e. estimation of mere import demand function. The long run import demand model can be expressed in following way, l Mt = β0 + β1 l GDPt + β2 l REERt +β3 l FEt + νt (2) Where, νt is white noise error term. l indicates the natural logarithm of the respective variables. The theory of demand says that there is negative relationship between price and its quantity demanded assuming other things constant. Since exchange rate has direct impact on price of import as depreciation of domestic currency vis a vis foreign currency makes import costlier in foreign currency terms and appreciation has opposite effect. The REER index has been constructed in such a way that depreciation causes increase in the index value and vice versa, hence we would expect a negative relationship between REER and import of Saudi Arabia. The increase in income (GDP) of the country would cause increase in aggregate demand and so of imports also. However, the relationship between the demand for import and GDP also depends upon the source of increase in GDP. If GDP increases due to increase in production of import substitute goods, then import will have negative relation with the GDP. Foreign exchange reserves enable a country to make its demand effective. Whatever the quantity of import is desired, it will not be constrained if a country has sufficient amount of foreign reserves. If foreign reserves are limited, the amount of import determined by its determinants like level of economic activity (real GDP), cost of import etc, may not be actualized. Thus, higher the reserves, the country would have more capacity to import, and one may expect a country to import more and vice versa. On the basis of these propositions we expect negative sign for β2, and positive sign for β3. β1 may take either positive or negative sign depending on the sources of growth of GDP i.e. β1 > 0 or β1 < 0; β2 < 0; and β3 > 0. The study is based on annual data for the period from 1980 to The data on amount of import and GDP in dollar terms are taken from UNCTAD STATS, The data on unit value index of import and wholesale price index are taken from International Financial Statistics published by IMF. Data on REER has been taken from World Bank, World Development Indicator. To avoid spurious result, Johnson s cointegration test (Johnson, 1995) is applied to estimate long run relationship (level relationship) after finding first order integration of the variables under consideration based on Augmented Dicky Fuller (ADF) (Dicky-Fuller, 1981) test and Philips-Perron (PP) test (Philips-Perron, 1988). In this method, the number of cointegrating relations is tested on the basis of trace statistics and maximum Eigen statistics. Once presence of cointegration is established, we estimate an error correction model (ECM) that includes both long run and short run information. M t n n n n 0 ECT t 1 1 i M t i 2i GDPt i 3i REER t i 4i FEt i t i 1 i 1 i 1 i 1 ---(3) Error correction model consists of two types of components. One, error correction term with one period lag (ECTt- This measures the speed of adjustment to long run equilibrium condition i.e. to the extent the disequilibrium created in previous period is corrected in period t. Two, the first difference lagged regressors, the coefficients of which (α2i, α3i, α4i) are impact multiplier (short run effect). This measures the immediate impact that a change in regressors will have on the dependent variable. εt is white noise error term. EMPIRICAL ANALYSIS Since the application of cointegration requires that all the variables should be integrated of the same order, we start the analysis by examining the unit root properties of the variables. The result is shown in table 1a and 1b. The result of both the methods (ADF test and PP test) shows all the variables are non stationary at level but are stationary at first difference. This implies that all the variables are integrated of order one i.e. I (1). Thus we can 263

265 apply Johansen cointegration approach to examine the long run relationship of import with income of the country (GDP), exchange rate and foreign exchange reserves. The cointegration results are given in table 2a and 2b. The tables show that the trace statistics and maximum Eigen value are greater than the critical value at 5 percent and 10% level respectively. Hence we reject the null hypothesis that there is no cointegration relationship between these variables. The trace statistics and the Eigen statistics for at most one cointegration (r 1), however, is less than the critical value. Thus we cannot reject the null hypothesis and conclude that the there is one cointegrating vector among four variables included in the model. In other words, there is unique equilibrium relationship among import, relative price of import, GDP and foreign exchange reserve. The long run relationship can be expressed in following form: lm t = 1.05LGDP t lreer t lfe t S.E. (0.113) (0.225) (0.079) t-values [9.29] [5.17] [4.21] The result shows that import has long run relation with all these variables. The import is negatively related to exchange rate and has positive relation with income of the country and the foreign exchange reserves. Thus, the result provides strong support for the theoretical prediction about the impact of income, foreign exchange reserves and the exchange rate of the country. All the coefficients have expected sign. The result further shows that import is almost unit elastic with respect to GDP and real effective exchange rate with values 1.05 and respectively; but inelastic with respect to foreign reserves with just 0.33 in line with most of the studies (Khan and knight, 1988; Dutta and Ahmad, 1999; Arize et al, 2004; Sultan, 2011, Arize, Most of the studies on Saudi Arabia (K.I. Aldakhil and N. Alyousef, 2002; B.R. Kolluri and C.R. Torissi, 1987) found elastic demand for imports except K. Doroodian et al (1994) whose result shows inelastic demand for import with respect to income. ESTIMATION OF ERROR CORRECTION MODEL (SHORT RUN DYNAMICS) The result of ECM is given in table no. 4. The coefficient of error correction term with one period lag is negative and significant signifying that above long run relationship is stable and any disequilibrium created in the short run will be temporary and will get corrected over a period of time. The magnitude of coefficient shows that import will adjust about 40 percent of its total deviation from long run equilibrium level in one time period i.e. in a year. That means it will take two and a half years for import to reach its long run equilibrium path if any disturbance is created in the short run. Further, in short run, coefficients of income and exchange rate have expected sign and are significant. As compared to the long run coefficients, the short run coefficients are smaller for these variables and are inelastic. Foreign reserves, however has not been found to be significant in the short run. CONCLUSION AND POLICY IMPLICATIONS Over the past few years, Saudi Arabia s import has increased at a rapid rate. The period has also witnessed a high rate of growth of the economy. In the light of this, the paper intended to examine the determinants of Saudi Arabia s merchandise import, both in long run and in the short run, applying Johansen s cointegration and vector error correction method and the implication for current exchange rate regime. The main results of the study can be summarized as follows. The cointegration result shows that there is long run equilibrium relationship between India s real import, real income, exchange rate and the foreign exchange reserves. The empirical estimate shows that long run import is about unit elastic with respect to income and exchange rate and inelastic with respect to foreign reserves. This implies that the import volume would grow in proportion to growth in income of the country and appreciation of the dollars and hence of riyal. The elasticity of import with respect to foreign exchange reserves is relatively small in comparison to income elasticity and exchange rate elasticity. However it constitutes an important determinant of import, and omitting such an important variable may cause misspecification of the model and may lead to overemphasizing the influence of the variables included in the model. With respect to exchange rate also, Saudi s import is found to be significantly related both in the long run and in the short run. Close to unit elastic demand implies that Saudi s import bill is not responsive to exchange rate. 264

266 This implies that appreciation of riyal would make import cheaper and increase import volume without increasing import bill. This would help in fulfilling the domestic needs for importables without imposing any cost to the country. This further implies that for the country continuing with the pegged exchange rate system would benefit the country so long as the dollar is strong in international market as the current evidences show. REFERENCES 1. Aldakhil, K.I. and N. Alyousef (2002), Aggregate Import Demand Function for Saudi Arabia: An Error Correction Approach, Journal of Economic and Administrative Science, Vol.18(1), pp Aljebrin, M.A. and M.A. Ibrahim (2012), The Determinants of the Demand for Imports in GCC Countries, International Journal of Economics and Finance, Vol.4 (3), pp Arize, A.C., Malindretos, J.,Grivoyannis, E.C. (2004), Foreign Exchange Reserves and Import Demand in Developing Economy: The Case of Pakistan. International Economic Journal 18, Arize, A.C., and Osang, T. (2007), Foreign Exchange Reserves and Import Demand: Evidence from Latin America. The World Economy 30, Arize, A.C., (2012), Foreign Exchange Reserves in Asia and its Impact on Import Demand, International Journal of Economics and Finance, vol.4, no.3, 2012, pp Bera, A.K. and Mc Aleer (1989), Nested and Non-Nested Method for testing linear and log-linear Regression Models. Sankhya B: The Indian Journal of Statistics 51, Box, G.E.P. and Cox, D.R. (1964), An Analysis of Transformations. Journal of the Royal Statistical Society, series B 26, Boylan, T.A., Cuddy, M.P., and O Muircheartaigh, I. (1980), The Functional Form of the Aggregate Import Demand Equation: A Comparison of Three European Economies. Journal of International Economics 10, Carone, G. (1996), Modeling the U.S. Demand for Imports Through Cointegration and Error Correction. Journal of Policy Modeling 18, Cheong, T.T. (2003). Aggregate Impot Demand Function for Eighteen Countries: A Cointegration Analysis. IIUM Journal of Economics and Management 11, Chang, T. Y.H. Ho, and Juang, C.J. (2005), A Reexamination of South Korea s Aggregate Import Demand Function: The Bound Test Analysis. Journal of Economic Development 30, Charemza, W.W. and Deadman, D.F. (1992), New Directions in Econometric Practice. England: Edward Elgar Publishing Ltd., Dash, A.K. (2005), An Econometric Estimation of the Aggregate Import Demand Function for India. IBRC Athen, Aryan Hellas Ltd. Available at Deyak, C.A., Sawyer, W.C. and Sprinkle, R.L. (1989), An Empirical Examination of the structural stability of the Disaggregated U.S. Import Demand. The Review of Economics and Statistics 71, Dickey, D.A. and Fuller, W.A. (1979), Distribution of the Estimators for Autoregressive Time Series with Unit Root. Journal of the American Statistical Association 74, Dickey, D.A. and Fuller, W.A. (1981), Likelihood Ratio Statistics for Autoregressive Time Series with Unit Root. Econometrica 49, Doroodian, K., Koshal, R.K. and Al-Muhanna, S (1994), An Examination of Traditional Aggregate Import Demand Function for Saudi Arabia. Applied Economics 26, Dutta, D. and Ahmad, N. (1997), An Aggregate Import Demand Function for Bangladesh: A Cointegration Approach. Applied Economics31, Dutta, D. and Ahmad, N. (2006), An Aggregate Import Demand Function for India: A Cointegration Analysis. Available at 20. Dooodian, K., Koshal, R.K., and Al Muhanna, S. (1994), An Examination of Traditional Aggregate Import Demand Function for Saudi Arabia. Applied Economics 26, Engel, R.F. and Granger, C.W.J. (1987), Cointegration and Error Correction Model: Representation, Estimation and Testing. Econometrica 55, Granger, C.W.J. and Newbold, P. (1974), Economic Forecasting: The Atheist Viewpoint. In: Modeling the Economy, G.A. Renton (Ed.), Heinemann, London. 23. Gafar, John S. (1988), The Determinants of Import Demand in Trinidad and Tobago: Applied Economics 55, Goldestein, M. and Khan, M.S. (1976), Large versus Small Price Changes and the Demand for Imports. IMF Staff Working Paper 3, Heien, Dale M. (1968), Structural Stability and the Estimation of International Import Price Elasticities in World Trade. Kyklos 21, Houthakker, H.S., and Magee, S.P. (1969), Income and Price Elasticities in World Trade. Review of Economics and Statistics 41, International Monetary Fund (IMF), International Financial Statistics. Washington D.C.. various issues. 28. International Monetary Fund, (2009), World Economic Outlook Available at Johnsen,S. (1995), Likelyhood Based Inference in Cointegrating vector Autoregressive Model, New York, Oxford University Press. 30. Kalyoncu, H. (2006), An Aggregate Import Demand Function for Turkey. MPRA Paper No Available at Khan, M.S. and K.Z. Ross (1977), The Functional Form of the Aggregate Import Demand Equation. Journal of International Economics 7, Kmenta, J. (1986), Elements of Econometrics. 2nd edition, Macmillan, New York. 265

267 33. Kolluri, B.R. and C.R. Torissi (1987), Aggregate Import Demand and Elasticities of Major Oil Exporting Countries, Journal of International Economic Integration, Vol. 2(2), pp Kotan, Z and Saygili, M. (1999), Estimating an Import Function for Turkey. Discussion Paper No. 9909, The Central Bank of the Republic of Turkey, Available on internet at Leamer, E.E. and Stern, R.M. (1970), Quantitative International Economics. Allyn and Bacon Inc., Boston. 36. Moran, C. (1989), Imports Under a Foreign Exchange Constraint. The World Bank Economic Review 3, Murray, T. and Ginman, P.J. (1976), An Empirical Examination of Traditional Aggregate Demand Model. Review of Economics and Statistics 58, Philips, P.C.B. and Perron, P. (1988), Testing for a Unit Root in Time Series Regression. Biometrica 75, Salas, J. (1982), Estimation of the Structure and Elasticities of Mexican Imports in the Period Journal of Development Economics 10, Sargan, J.D. (1964), Wages and Prices in the United Kingdom: A Study in Econometric Methodology. In: Econometric Analysis for National Economic Planning, P.E. Hart, G. Mills and J.K. Whitaker (Eds.), Butterworth, London. 41. Sinha, D. (1997), Determinants of Import Demand in Thailand. International Economic Journal 11, United Nations, UNCTAD Handbook of International Trade and Development Statistics. New York and Geneva. 43. Available at UNCTADSTAT, (2011), Urbain, J.P. (1992), Error Correction Model for Aggregate Imports: The Case of Two Small and Open Economies In: International Trade Modelling Dagenais, M.G. and P.A. Muet, (Eds.), Chaoman and Hall, London, World Bank (2011), World Bank (2011), APPENDIX Table 1a: Result of Augmented Dicky Fuller Unit Root Test Variables Level First Difference Order of C C&T C C&T Integration lm t I(1) lgdp t I(1) lreer t I(1) lfe t I(1) Critical 1% Level 5% % Critical values are of Mc Kinnon (1996) And ** represent significant at 1% and 5% level. Number of lags based on Schwarz information criteria (SIC) criteria. Table 1b: Result of Philips-Perron Unit Root Test Variables Level First Difference Order of C C&T C C&T Integration lm t ** ** I(1) lgdp t I(1) lreer t I(1) lfe t I(1) Critical 1% Level 5% % Critical values are of Mc Kinnon (1991) And ** represent significant at 1% and 5% level. Number of truncation lags is determined by Newey-West criterion. Table 3a: Johnson s cointegration Test Result Lag interval 1 to 1 Unrestricted Cointegration Rank Test (Trace) Hypothesized No. of CE(s) Eigenvalue Trace Statistic 0.05 Critical Value Prob.*** None * At most At most

268 At most Trace test indicates 1 cointegration at 0.05 level *denotes rejection of the hypothesis at 0.05 level ***Mac Kinnon-Haugh-Michelis (1999) p-values Table 3b: Lag interval 1 to 1 Unrestricted Cointegration Rank Test (Maximum Eigenvalue) Hypothesized No. of CE(s) Eigenvalue Maximum Eigenvalue 0.05 Critical Value Prob.*** None** At most At most At most Trace test indicates 1 cointegration at 0.05 level *denotes rejection of the hypothesis at 0.05 level **denotes rejection of the hypothesis at 0.05 level ***Mac Kinnon-Haugh-Michelis (1999) p-values Table:4 Estimate of Long Run Normalized Cointegrating Coefficients LRIMP LRGDP LREER LFEUVM(-1) ( ) ( ) ( ) The figure in small parantheses indicate standard error of the coefficients Table 5: Result of Error Correction Model Variables Coeffecients Standard Error t-values ECT(-1) * lm t lm t lm t lrgdp t lrgdp t lrgdp t lreer t lreer t lreer t lfe t lfe t lfe t Adj. R-squared = 0.48 LM (1) = (0.2286), LM(2) = (0.6116), LM (3) = (0.2761) 267

269 KNOWLEDGE MANAGEMENT: THE ESSENCE OF THE COMPETITIVE EDGE Deepali soni* ABOUT THE AUTHOR * DEEPALI SONI; ASSISTANT PROFESSOR, DEPARTMENT OF MANAGEMENT, BLS INSTITUTE OF TECHNOLOGY MANAGEMENT, BAHADURGARH, HARYANA ABSTRACT Knowledge is a broad and abstract notion that treated as a powerful tool for any kind of organization to remain in a frame in todays competitive world,however there has been growing interest in treating knowledge as a significant organizational resource.consistent with the interest in organizational knowledge and knowledge management leads to the information system i.e. knowledge management system(kms).the objective of KMS is to support creation,transfer and application of knowledge in organization.this paper provides a review and interpretation of knowledge management in different field of organization and concluded its potential in success and growth of an organization. KEYWORDS: Competitive, Consistent, Potential, KMS INTRODUCTION Knowledge Management is the discipline of enabling individuals, teams and entire organizations to collectively and systematically capture, store, create, share and apply knowledge, to better achieve their objectives. Although there is nothing new in managing knowledge as such, there is something totally new about doing this collectively and systematically using some new strategies, new innovative knowledge processes, knowledge communities/networks, with some new supporting and enabling tools and technologies. This has never been possible before, and for those organizations that implement effective knowledge management, the benefits can be substantial. The benefits to the organization can be highly strategic and transformational, as well as what are these new strategies, processes, knowledge networks, tools and technologies that have enabled a new and much better way of knowledge working? A hallmark of the new economy is the ability of organizations to realize economic value from their collection of knowledge assets as well as their assets of information, production distribution, and affiliation. Despite the competitive necessity of becoming a knowledge-based organization, senior managers have found it difficult to transform their firms through programs of knowledge management. This is particularly true if their organizations have long histories of process and a tradition of business success. This research examines the issue of effective knowledge management from the perspective of organizational capabilities. This perspective suggests that a knowledge infrastructure consisting of technology, structure, and culture along with a knowledge process architecture of acquisition, conversion, application, and protection are essential organizational capabilities or preconditions for effective knowledge management. Through analysis of surveys collected from over 300 senior executives, this research empirically models and uncovers key aspects of these dimensions. The results provide a basis for understanding the competitive predisposition of a firm as it enters a program of knowledge management. Argues that the knowledge management process can be categorized into knowledge creation, knowledge validation, knowledge presentation, knowledge distribution, and knowledge application activities. To capitalize on knowledge, an organization must be swift in balancing its knowledge management activities. In general, such a balancing act requires changes in organizational culture, technologies, and techniques. A number of organizations believe that by focusing exclusively on people, technologies, or techniques, they can manage knowledge. However, that exclusive focus on people, technologies, or techniques does not enable a firm to sustain its competitive advantages. It is, rather, the interaction between technology, techniques, and people that allow an organization to manage its knowledge effectively. By creating a nurturing and learning-by-doing kind of environment, an organization can sustain its competitive advantages. 268

270 KIND OF KNOWLEDGE There are two kinds of knowledge: tacit, which is hard to articulate, versus explicit knowledge, which can be expressed in words and numbers and can be easily communicated and shared in hard form, as scientific formulas, codified procedures, or universal principles. Tacit or unarticulated knowledge is more personal, experiential, context specific, and hard to formalize. This kind of knowledge is difficult to communicate or share with others, and is generally inside the heads of individuals and teams. Since knowledge may be an organization's only sustainable competitive advantage, it is very important to capture tacit knowledge. How can we transfer it? By putting mechanisms of socialization, mentorships, apprenticeships, and opportunities for face-to-face communication in place. Intranets and can help it flow through an organization, but tacit knowledge often moves laterally through informal channels of communication, through communities of practice. For example, those groups that hang around the coffee machine are exchanging knowledge, just as are the smokers who huddle near the entrance to the building at break time. The information that is passed in this way is very important because it is useful for helping people to get their work done more effectively, in part, because nobody is willing to question or think about the process very much. Communities of practice must have their place in a comprehensive knowledge management effort. Knowledge is intangible, dynamic, and difficult to measure, but without it no organization can survive; flows of knowledge are an organization's capacity to learn. They are all you really have. LITERATURE REVIEW The Knowledge Summit of the CII is always a great place for the rivers of knowledge, from CEOs, academicians, consultants and visionaries to flow into a body of practitioner wisdom that assembles at the confluence! This year's edition held in Mumbai epitomised the best of thinking that prevails in India todaythinking that could solve the dilemmas that face industry as it struggles for growth in a weak economy, find solutions for everyday problems of dealing with too much of data and information and potentially even build the truly inclusive India that many of us dream of! While Adi Godrej (CII president), IT CEOs Infotech's BVR Mohan Reddy, Accenture's Avinash Vashistha and Tech Mahindra's CP Gurnani and Uma Ganesh of GTT emphasised support at the top for the proliferation of knowledge and learning across Indian organisations, the timely input of eminent consultants, Noshir Kaka of McKinsey and Tom Stewart of Booz provided the participants the tools to build a coherent knowledge strategy that could place knowledge at the centre of all organisation processes and reach out to transform the expectations and attainments of external as well as internal stakeholders. However at the end of a glorious exchange of ideas over two days through eclectic panels, workshops and master classes, the icing on the cake was an emotional exhortation by Padmashri awardee IIT's Deepak Phatak to the audience to think of India and adopt young underprivileged Indians into the knowledge community and give them a chance to dream bigger dreams. In that last point lies the true power of knowledge management. After many decades of struggle with the basic task of information management, we have reached a stage in most companies where business intelligence and analytics are actually working, providing sliced and diced inputs to CXOs for accurate decision making. Availability of such capabilities inside the firm enables knowledge managers to deliver tools not only through customer and dealer portals on the demand and supply side but also potentially to a full community outside the four walls of the organisation. The immense capability of our human resource leaders and many willing CXOs could be leveraged through technology to power Centres of Excellence in University campuses and help students immerse themselves in the vast ocean of corporate knowledge even before they graduate and start looking for jobs. A superb new initiative in the US created by serial entrepreneurs Monica Chandra and Bob Phillips called Turn Right Advice Solutions has already launched a full technology platform to enable students in colleges in the Eastern part of the US to connect with mentors all over the US. Today most enlightened corporate executives are looking for avenues to engage with the younger generation and they would like to do it without travel and all the hassles that entails. Technology enables mentors and mentees to have interaction without leaving either of their locations and the rich advice that practitioners can provide is now freely available to ambitious colleges and students in well packaged and delivered formats. 269

271 It is path breaking initiatives like this which will truly supplement the large budget outlays for skills and education announced by finance minister Chidambaram in his development and inclusion budget and this needs all well-meaning Indians to get off the fence and plunge into the education challenge in our country. A couple of non-profits like NES are already experimenting with technology for recognition as well as mentoring of students but this is an area where significant funding from excellent entities like the National Skills Development Corporation could change the face of youth aspiration our country. Back to the corporate agenda and the relevance of knowledge management today when collaboration and analytics tools dot the landscape of information technology is at a peak! A research study shows that the amount of data being thrown from all sides is the equivalent of reading over 170 full newspapers every day for a year. The loss of information and knowledge in this data inundation has caused a potential loss of revenue of over $30 billion to Fortune 500 companies alone and the benefits of embracing comprehensive knowledge management systems cannot be over emphasised. For this to happen, knowledge management has to move from the IT manager's dashboard to the corner office and get the leadership focus it deserves. Corporate chiefs seeking to implement KM as a collaboration enabler across and beyond their organisation will do well to refer to the research completed a few years ago at IIT Bombay which had established that there is a clear path towards knowledge management maturity that can be pursued by organisations. The first activity should be a comprehensive optimisation and in some cases total reengineering of business processes to ensure that knowledge flows are not orthogonal to the process flow. Then comes the case for judicious incorporation of technology to speed up the knowledge exchange. The role of leadership itself will change as the organisation moves from a knowledge initiation phase through knowledge actions and progresses towards maturity from benevolent support to front line action but throughout the process a culture of learning and sharing has to be maintained. Truly a noble endeavor for the organisations of tomorrow! OBJECVETIVES AND METHODOLOGIES OF THE ANALYSIS By keeping the view point of literature review,the objective of the study has been drawn;primarily to have deep insight in to knowledge management and to explore the topic at a great length with reference to contemporary issue selected from the secondary source of literature and data.some cases across diverse domain pertaining to knowledge management are also being analysed in the paper so as to get familiarized that how knowledge management contributed towards the success of an organizational know about the practices adopted for development of knowledge management system in some organization is also one of its objective of this paper. What are big organization are doing for developing knowledge management : Working towards Creating Knowledge based Society at wipro and Infosys: A knowledge organisation is part of the society and it can't have knowledge workers if the society does not produce knowledge workers. Infosys and Wipro has been spending considerable resources and efforts toward sharing and creating a knowledge society. Some of their unique contributions are: Wipro has collaborated with IIM Bangalore to start a part time postgraduate diploma programme in software management. Wipro is the major sponsor of the programme and has donated a fond of rupees twenty million towards research and development. The programme is of three years duration and is conducted on Fridays and Saturdays. Twenty software professionals from Wipro and six software professionals from Infosys are participating in the first programme Infosys operates a scheme titled as "catch them young". As a part of the scheme students at school level are selected by Infosys and trained by Infosys for a month in software technologies. Subsequently they work on a project for a period of two months under the guidance of Infosys employees. In addition, Infosys has been working towards creating IT awareness among rural areas. It has been also helping IT teachers to improve their professional competence.knowledge workers take pride in these initiatives of their organisations and possibly experience a sense of superordinate purpose in being associated with their respective organisations. THE CONTEXT: GAMMA CORP AND NBS Gamma is a large computer software and hardware company with a well established services arm supplying technical expertise. Our focus has been on a subset of these services, referred to here as Novel Business Services (NBS). NBS s aim is to create projects that support new business approaches, and it is an important one because 270

272 it creates opportunities to sell Gamma s other products. One consequence of this is that Gamma s software often needs to be customized in order to link to legacy and third party software, and it is the consultants2 who support this. So let me take a few moments to remind us of the timeless principles, in the context of knowledge management, and then briefly discuss the best aligned strategies for identifying, creating, storing, sharing and using knowledge. 1. TIMELESS BUSINESS PRINCIPLES A principle should be scaleable. It can be equally applicable to an individual, team, organization or community. In other words, it can apply to all sizes of organization, all types of organization, and can be applied anywhere. Principles are beyond time and space. I remember, in the 1980 s I first learned from Claus Moller, an international management consultant and founder of Time Manager International, in Europe, that there are, at least, three evergreen principles for organizations they are Productivity, Relations and Quality. He said For how long do you think Senior Management will be interested and absorbed in finding better ways to increase productivity? The answer is for ever, of course. Productivity is an evergreen. For how long do you think Senior Management will be interested and absorbed in improving relations? That is, relations with customers, employees, suppliers, partners, in fact all the key stakeholders? The answer is for ever, of course. Relations is an evergreen For how long do you think Senior Management will be interested and absorbed in developing quality? That is product quality, service quality, team quality and even personal quality? The answer is for ever, of course. Quality is an evergreen. Productivity, relations and quality are timeless principles, or evergreens, and must be perennials on the board room agendas around the world. But what underpins these evergreens? Fundamentally, I maintain it is knowledge. It is strategic and operational knowledge, for increasing productivity, improving relations and developing quality that underpins what the organization does. Knowledge Management strategies must be aligned to productivity, relations and quality. Why? Because, all senior management are ultimately interested in increasing sales and or service; reducing costs; and optimizing the delivery of value and/or profit. That s what effective productivity, improved relations, developing quality and knowledge management delivers. There is no rocket science here! This is, surely, common sense! But I suggest to you that it is not as common a practice around the world as it could be. We need to go back to basics from time to time, and certainly, from generation to generation of managers. 2. IDENTIFYING KNOWLEDGE I remember working with a Container Port in Asia. They certainly had the best operational knowledge, the best logistics knowledge in Asia. They are world class. They thought that codifying this logistics knowledge was all they needed to do to practice effective knowledge management. But when we worked together they realized that effective knowledge management is also about transforming themselves to meet future customer needs. Although they were the best in moving containers on/off ships, and this had served them well in the past, this was not good enough for surviving for the future. They needed to know why customers would wish to use containers, and what they would put in them, for the future. They needed to transform from operational to customer focused knowledge management. The key question to ask, when embarking on a knowledge management initiative is: What key areas and types of knowledge, if they could be much better managed, would make a big difference to achieving and/or exceeding the objectives over the next few years Identifying key knowledge areas for the future is critical to successful knowledge management. 3. CREATING KNOWLEDGE People often say to me, we would like to be a more creative and innovative organisation. When I look around most organizations, I see no shortage of new learnings, new ideas, and new insights. They are bubbling up all around, all the time. The problem, I believe, is not so much a shortage of new learnings, ideas and insights, but a shortage of collective and systematic methods, processes and tools to capture them and do anything meaningful with them. Most organizations practice what we call episodic learning and episodic innovation. What 271

273 is the point of trying to review a project six or twelve months down the line? By then most of the best ideas and learnings, that always tend to happen at the beginning of the project, are forgotten! Effective knowledge management can provide new innovative continuous daily and weekly processes that take the organization from episodic learning and innovation to continuous learning and innovation. Learning or regular after action reviews can answer the questions Why were there differences? and What can we really learn from this and do better next time? 4. STORING KNOWLEDGE This is the easier part. The Web has radically and fundamentally changed the economics, processes and tools of information and knowledge. Storing is easy. In fact, too easy. What is more difficult is deciding, from all the choices, the best strategy for storing. 5. SHARING KNOWLEDGE This is the most difficult part. We are told that 70% of the knowledge management effort is concerned with culture. That is not to say that the strategies, processes and technologies are less important at all. It is simply to say that they are relatively easy to implement. There are several strategies for bringing about a naturally flourishing knowledge sharing culture. In this few minutes let me simply make a few points about a virtuous process towards a natural knowledge sharing culture. o Trust is the lifeblood of any organization. People naturally work together at their best when they trust one another o When there is sufficient trust, people will naturally communicate and naturally collaborate o o This leads to an increased natural learning, at all levels. Learning increases confidence and competence and this leads to natural knowledge sharing But beware. The other side of the coin is that there is no trust, or not sufficient trust.if unattended, this leads to a vicious downward spiral of doubt and fear. 6. USING KNOWLEDGE So, if we apply all the best strategies, processes and tools to identify, create, store and share knowledge, are we practicing effective knowledge management? CONCLUSION As remarkable as the new technologies are, they are not the total answer, but provide great potential. They need to be enabling new innovative knowledge processes across rich knowledge communities. These new knowledge processes and knowledge communities need to be strategically aligned to the objectives of the organization. And most importantly, they need to be aligned to the principles of organizational success. We need to go back to basics. Much of the confusion and disappointment concerning knowledge management stems from confusion between information and knowledge since not even KM experts link knowledge to action. There is no clarity. People are investing in systems to capture, organize, and disseminate information, and then call it knowledge. But knowledge, by definition, cannot be converted into an object and given from one person to another. Knowledge only diffuses when there are learning processes whereby human beings develop new capacities for effective action, with internal learning communities in place that offer psychological safety and trust. When there is negativity and unrealistic expectations in the workplace, and arrogant people who believe they know everything, knowledge cannot be diffused. Lack of communication within an organization made evident by continually reinventing the same wheel is one sure sign that the knowledge base is not being utilized and built upon. Much of the interest in knowledge management comes from the problem of diffusing innovative practices within an organization. Improved diffusion of knowledge will not happen simply because the CEO says it should, or because management buys new information technology hardware. Information technology, while critical for enabling the spread of information, cannot capture and store knowledge. Only people can do that. Effective organizational learning infrastructure will need to augment the natural workings of the informal communities of practice that already exist. One of the key challenges of the knowledge-based economy will to foster innovation. The only way to accomplish that goal is to build an infrastructure that is not dependent upon traditional hierarchies because they do not encourage the dissemination of knowledge. And remember, if you want to build an organization for the 21st Century, hire for diversity, curiosity and allow your employees to grow beyond their wildest dreams. Let them explore their own limits, collaborate with each other, and most 272

274 importantly, give them enough time to reflect on what they know so they can give back to the organization. You may be surprised to find out just how much expertise your company already has in place. How do you know you have a good system in place? When information is widely disseminated throughout the organization. Wherever it is needed, it is accessible, and it is accessible at a fast rate of speed. REFERENCES 1. M. S. Ackerman. Augmenting the Organizational Memory: A Field Study of Answer Garden. In Proceedings of the Conference on Computer-Supported Cooperative Work (CSCW'94). 1994, M. S. Ackerman and C. Halverson. Re-Examining Organizational Memory. Communications of the ACM,43, Bair, Jim. Knowledge Management: The Era of Shared Ideas. Forbes, September 22, 1997, Vol. 1, No. 1, p Bontis, Nick. There's a Price on Your Head: Managing Intellectual Capital Strategically. Ivey Business Quarterly, Summer 1996, Vol. 60, No. 4, p Butters, Gerry. Networking in 2005: Its Only Limitations May Be the Boundaries of Imagination. Telecommunications, January 1998, Vol. 32, No. 1, p Cole-Gomolski, Barb. Knowledge Managers Need Business Savvy. Computerworld, January 25, 1999 Vol. 33, No. 4, p

275 ANALYZING INTERNATIONAL BUSINESS CYCLES ON ANCIENT INDIAN MYTHOLOGICAL TIME SCALES: INSIGHTS OF AADI PURAN ABSTRACT Dr. Rajiv Sikroria *, Dr. Vandana Srivastava ** Modern business innovations may be easily traced in our Indian religious books and Puranas. Religious books are not only full of life balance equations, spiritual content, wealth acquisition theories but also suggest managing business on ancient time scales. Most of the business innovations are due to exploration of our ancient epics. That s why; Swami Daya Nand Sarawasti once said return towards Vedas The researchers aim to analyze different business cycles on ancient time scales as proposed in one of the eminent epic- Aadi Puran. They believe some concrete strategy can be laid down and minimize business related adversities such as low income, reduced employment level and lesser National Output. Present paper works upon current business related complexities and diving remedies through exploration of Indian Epics. Paper is conceptual in nature and work with literature review and secondary data. OBJECTIVES OF THE RESEARCH PAPER To determine whether the modern business phases (theories) are sufficient to depict trade cycles? To find out how mythological business cycles with respect to time factor is different from modern approaches? To explore and compare fundamentals of Mythological Business cycles and Modern business cycle approaches. KEYWORDS: Epic- Aadi Puran, low income, reduced employment level and lesser National Output, ancient time scales. OVERVIEW ABOUT THE AUTHORS * DR. RAJIV SIKRORIA; ASSISTANT PROFESSOR, GLA UNIVERSITY, MATHURA, UTTAR PRADESH ** DR. VANDANA SRIVASTAVA; ASSISTANT PROFESSOR, GLA UNIVERSITY, MATHURA, UTTAR PRADESH Recession, the most troubling word in recent past demolished not only big business houses, Bankers, downturns of economic cycles of developed economies but adversely affect even a poor country in despair. Fortunately our Indian Economy was least affected by global recessionary pressures and we managed somewhat in a better manner. Yes! The credit goes to us, as our propensity to save is greater than propensity to consume. A.F. Burns (1946) suggests, Business cycles are not only the fluctuations in economic activities but critical commercial convulsions of earlier centuries or short term variations of their own types. National Bureau of Economic Research (NBER) USA accepts these cycles as peaks or troughs of business cycles. Business cycles are oscillations of business activities over a period of time. Modern business complexities are not only due to national economic variables but are largely affected by international business cycle operations. If we recall the melt down of U.S. Economy and downfall of Lehmann Brothers, An International Banker in 2008, adversely affected almost all big economies of the globe. It resulted in reduced National production & output, salary cuts, wide spread unemployment, low economic growths, low industrial production, closure of organizations even professional and technical institution were no exception to such activities. Some of the economies were at the verge of collapse. Some of them had lesser impact. India 274

276 As per Researchers conception about time and business cycles is, time being as flow concept not the stock one. We can only identify some of the peculiar point and associate them with the business activities of a particular industry. Even some of the existing firms may experience different phases of business cycle; they may not be concurrent to the industrial phases. This may be validated from empirical data. Present research paper does not deal with phenomenon. LITERATURE REVIEW Time being as flow concept and you may plot indefinite number of points to show some focused and critical business activities. Rationalism and logical explanations may simply reveal how economic fluctuations occur but they fail to explain why they happen. Why not a constant business cycles operations without fluctuations? Why these vibrations are occur over a period of time. Men are definitely not the cause of uncertainty and if he is, even then why not he would control this chaos on time? We may blame the intensions of the people, but they reflect foggy picture. Although, the cause is not documented any economics and other management literature. According to Shrimad Bhagwat Purana & Bhagvadgeeta, God (Vishnu) himself said, for every good or bad I am only the reason, none other than me can create, control or destroy. Hence for every happening or non happening I must be visualized as prime cause. Shrimaadbhagvad Maha Purana says, flow of Time is eternal. Therefore explanation of Methodological business cycles and all other cycles are measured time scale, which eventually outcomes as construction and destruction in long- long period, at the wish of Lord Vishnu. Infinitesimal equal division of time cycle is Kälchakras and every time cycle is subdivided in two equal halves. The division is as follows- A. Avasarpani Kala (Regressive): 1) Sushama-Sushama 2) Sushama 3) Sushama-Duhshama 4) Duhshama-Sushama 5) Duhshama 6) Duhshama-Duhshama B. Utsarpani Kala(Progressive): 1) Duhshama-Duhshama 2) Duhshama 3) Duhshama-Sushama 4) Sushama-Duhshama 5) Sushama 6) Suhshama-Sushama The explanation of these phenomena is clearly explained in our Indian epics and Puranas. According to Hinduism and Vedic Literature (The Aadi Purana- Shiv Parvati conversation), the cause of negative and positive waves, wealthy or disaster and many combinations and permutations of six phases during Avasarpani Kala and Utsarpani Kala. 1. Sushama ( Business Boom) 2. Sushama-Dushama ( Wealth with some negative wave-unhappiness) 3. Dushama-Dushama ( Deep trouble and Recession) 4. Dushama ( Worst and very tough time) 5. Dushama-Sushama ( Recovery with moderate negative phase) 6. Sushama-Sushama (good old days for a less time) is During the phase of Sushama Dushama (happiness with some unhappiness)when business activities raises up and attain peaks, people moral values get dilute and greed for more profit and wealth raises up. By this time, business activities slows down and results in decreased revenues and sales. THE MODERN APPROACHES- Clement Juglar(1860), argued that economic cycles last between 8 to 11 years, one can observe variation in the period hence flexibility in time can be easily seen. According to Joseph Schumpeter there are four phases of business cycles. a. Growth( Expansion) b. Crisis c. Trough (Recession) d. Revival (Recovery ) 275

277 Real business cycle theory: The trade fluctuations are accounted for by real (in contrast to nominal) shocks. Unlike other leading theories of the business cycle, RBC theory sees, recessions and periods of economic growth as the efficient response to exogenous changes in the real economic environment. The level of national output necessarily maximizes expected utility, and government should therefore concentrate on longrun structural policy changes and not intervene through discretionary fiscal or monetary policy designed to actively smooth out economic short-term fluctuations. Therefore "real" in that they do not represent a failure of markets rather reflect the most efficient possible operation of the economy. Keynesian in his Economics and Monetary theory explains recessions as the failure of some market to clear. American Scholars A.F. Burns, S. Kuznets, M. Abramo(1930) advocated persuasive swings of fluctuations occur due to immigration and natural rates of population growth, capital imports and increasing rates in money supplies. Keynes (1938) said Economic fluctuations occur due to macroeconomic factor like- National Income, National Output, Employment level, Aggregate demand and Aggregate supply. Alvin H. Hansen (1941) emphasized on construction, related to durable goods or capital goods sector to be the first clue to the causation of business cycles. Hawtrey, Frideman, e.tal explained monetary theory attributes the business cycle for expansion and contraction of bank money and credit. Schumpeter, Hansen, e.tal came up with the theory of innovation which leads to clustering of important inventions in different industries. Pigou, Bagehot, e.tal advocated psychological theory which treats the cycle as a case of people s infecting waves of pessimism and optimism. Hobson, Sweezy, Foster, Catchings, e.tal propounded theory of under consumption and said too much income goes to wealthy or thrifty people compared to what can be invested. Hayek, Mises argued too less investment causes recession and propounded underinvestment theory of business cycle. Jevons, H.L Moore brought sunspot-weather crop theories. Kalecki traces recession due to political causation. Hicks (1951) Observes business cycle occur due to dynamic behavior of business. G. Haberler (1958) came up with Prosperity and depression theory. International theory of Collective greed & ill Intension: Sikroria. Rajiv & Srivastava. Vandana (2012) observes business cycle causation due to internationalization of peoples greed of earning money and wealth at the cost of others, manipulations, generation of black money, capital drainage, corruption and wrong intensions of society as a whole being prime operative function for recession and depression, although other variables may also affect the cycle but they are not the deterministic components. In the recent past, the global recession inititated in the State of United America (Prime cause so far quoted was facilitation of credit to subprime market) and moved the wave in almost all Economies of the world, the prime reason emerged as fear begets fear. In expectation of fear of reduced of Aggregate Demand some of the industrialist reduced their output intentionally (ill intension) and employee demand also reduced drastically, which resulted in reduced income of the people or anticipation of job loss. National output in aggregate reduced, as a result the people (In Private sector) lost jobs and salary cuts; demotion and lack of new job opportunity get created. The theory also visualizes all six phases during the period of Avasarpani Kala and Utsarpani Kala, which occur only due to wishes of God. As a result we may get either prosperity or depression in due course of time. ASSUMPTIONS OF INTERNATIONAL THEORY OF GREED AND ILL INTENSION: 1) Technologically production processes are uniform and stable. 2) Quality Products are produced because of quality checks and total quality production. 3) Markets are full of uncertainties and imperfection behavior. 4) Other factors like taste, fashion, trend, population are constant. 5) Fair competition among the sectors. 6) No government support in form of tax benefits, tax holidays, economic subsidies and grant in aid. MERITS: 1) Explains the business behavior and cycles with great precision of time frame. 2) Business cycles are affected due to Human factor which results due to excessive greed and wrong intensions and psychological factors, other than technological one. 3) Domestic business cycles are affected by International business cycles as today s Economies are open to the rest of the world. 4) Business cycles have been observed in totality and it also visualizes fluctuations because of god s act. 5) Positive phase automatically regains as people realizes their fault and some of them tries to work on their value system. The subsequent section lays the foundation of research methodology, data explanation and data analysis 276

278 RESEARCH METHODOLOGY Researchers have chosen secondary data for study purpose. Intensive literature review was conducted for the research work and it can be traced back from Prevedic and Vedic literature of Indian religious scriptures. The foundation of the concept lies down with one of the strongest and vivid Shrimaad BhagvadmahaPurana, Shrimaad Bhagvad Geeta and Aadi Purana. Although the researchers could not get numerical values but reached to strong conceptual foundation of time as a flow concept and is one of the dimensions of god and for every happening or non happening only and only he is responsible, whether it be good time or bad time or worst time. This has been validated with the review of different cantos and verses. The reason for selecting them is simply the authenticity and reliability of the institution (NBER, USA). Since the recent recession initiated from American Economy and the sadist wave moved to almost big or small economy of the globe. The data were analyzed with the help of SPSS-17.0 Version. The business cycle of USA Economy from June 1854(IV) to December 2009(II) quarter has been taken for the analysis purpose. The researchers have downloaded the data from NBER, USA website. The data analysis was conducted with descriptive statistics which reveals standard deviation, mean, standard error, skewness and kurtosis. For further analysis a non parametric test was conducted and one way ANOVA resulted in analysis of variance (single tail) test for finding out the variance among the rows and columns. OBJECTIVES OF THE RESEARCH PAPER To determine whether the modern business phases (theories) are sufficient to depict trade cycles? To find out how mythological business cycles with respect to time factor is different from modern approaches? To explore and compare fundamentals of Mythological Business cycles and Modern business cycle approaches. RESEARCH HYPOTHESIS 1) Business cycles do not depend on more than four phases. 2) Business cycle phases are not different from each other, hence equal variance has been assumed. Table No: 1 Secondary data representing different phases of U.S. Economy from period of December 1854 (IV) to June 2009 (II). Time Frame Peak (Sushama) Recession (Sushama to dushama) Trough (dushama) Recovery (Sushama - Sushama ) December 1854 (IV) June1857(II)-December 1858 (IV) October 1860(III)-June 1861(III) April 1865(I)-December 1867(I) June 1869(II)- December 1870 (IV) October 1873(III)- March 1879(I) March 1882(I)-May 1885(II) March 1887(II)- April 1888(I) July 1890(III)- May 1891(II) January 1893(I)- June 1894 (II) December 1895(IV)- June 1897(II) June 1899(III)- December 1900 (IV) September 1902(IV)- August 1904(III) May 1907(II)- June 1908 (II) January 1910(I)- Janurary 1912(IV) January 1913(I)- December 1914 (IV) August 1918(III)- March 1919(I)

279 January 1920(I)- July 1921 (III) May 1923(II)- July 1924(III) October 1926(III)- November (IV) August 1929(III)-March 1933(I) May 1937(II)- June 1938 (II) February 1945(I)- October 1945 (IV) November 1948(IV)- October (IV) July 1953(II)- May 1954 (II) August 1957(III)- April 1958 (II) April 1960(II)- Feb 1961 (I) December 1969(IV)- November (IV) November 1973(IV)- March 1975(I) January 1980(I)- July 1980 (III) July 1981(III)- November 1982 (IV) July 1990(III)- March 1991 (I) March 2001(I)- November 2001 (IV) December 2007 (IV)- June 2009 (II) Average, all cycles: Sushama Sushama to Dushama Dushama Sushama - Sushama (33 cycles) * (16 cycles) ** (6 cycles) (11 cycles) * 32 cycles, ** 15 cycles, Source: NBER U.S. Business Cycle Updates as explained by Indian Mythological Context The determination that the last expansion began in June 2009 is the most recent decision of the Business Cycle Dating Committee of the National Bureau of Economic Research. Table No: 2 Announcement Dates with Links to Announcement Memos Turning Point Date Peak or Trough Announcement Date with Link June 2009 Trough September 20, 2010 December 2007 Peak December 1, 2008 November 2001 Trough July 17, 2003 March 2001 Peak November 26, 2001 March 1991 Trough December 22, 1992 July 1990 Peak April 25, 1991 November 1982 Trough July 8,

280 July 1981 Peak January 6, 1982 July 1980 Trough July 8, 1981 January 1980 Peak June 3, 1980 Source: Public Information Office, National Bureau of Economic Research, Inc Massachusetts Avenue, Cambridge MA 02138, USA, DATA ANALYSIS: Table No: 3 Descriptive Statistics for data of U.S. Economy for different phases of business cycle during the period of December 1854 (IV) to June 2009 (II) N Minimum Maximum Mean Std. Deviation Skewness Kurtosis Statistic Statistic Statistic Statistic Std. Error Statistic Statistic Std. Error Statistic Std. Error p2t t2t p2p p2t Valid N (list wise) 32 *descriptive statistics for average 32 cycles of U.S. Business cycle during (SPSS-17.0) output Table No: 4 Representing Chi Square Statics for different Business Phases. peak trough previous peak2 Chi-Square a b c d df Asymp. Sig Table No: 5 ANOVA test for different business Phases ANOVA Sum of Squares df Mean Square F Sig. p2t Between Groups Within Groups Total p2p Between Groups Within Groups Total p2t1 Between Groups Within Groups Total

281 INTERPRETATIONS: 1) Our Null hypothesis not supported by secondary data and we found there are more than four phases during the cycle, with the Avasarpani and Utsarpani Kala with further flow division of phases with time named as Sushama ( Business Boom), Sushama-Dushama ( Wealth with some negative waveunhappiness),dushama-dushama ( Deep trouble and Recession), Dushama ( Worst and very tough time), Dushama-Sushama ( Recovery with moderate negative phase), Sushama-Sushama (good old days for a less time). 2) Data analysis also do not support our second Hypothesis of equal variance during different phases as the calculated value of ANOVA P2t (2.650), P2P and P2T1 (3.908) which is greater than the tabular value 0.078, and respectively. 3) The Chi square value (A non-para metric test) calculated value (Peak), (trough), (Previous Peak to trough) and 5.125(Previous peak to peak) is also greater the tabular value 0.219, 1.000, and respectively for all different phases. 4) Details of rest of the Descriptive statistics for the data are tabular in table no. 3 with the values of standard deviation, standard error, kurtosis and skewness. 5) International Theory of Collective greed and ill Intension conclude a business cycle operates because of human factors at large which happen due to excessive collective greed and ill intension of people of different countries. A cycle regains as soon as there is some improvement in people intension and integrity. Moreover it also view alternation is human behavior is due to god functionary. Hence Super- Natural factor is the prime cause for all phases of business activities. CONCLUSIONS 1) Business cycle has more than four phases Broadly named as Avasarpani and Utsarpani with further flow division of phases with time named as Sushama ( Business Boom), Sushama-Dushama ( Wealth with some negative wave-unhappiness),dushama-dushama ( Deep trouble and Recession), Dushama ( Worst and very tough time), Dushama-Sushama ( Recovery with moderate negative phase), Sushama-Sushama (good old days for a less time). 2) There is significant difference between different phases of business; moreover other cycles are also not of similar magnitude as that of previous phases. Hence these business cycles differ in no only time period but also in magnitude and intensity. 3) International Theory of Collective greed and ill Intension conclude a business cycle operates because of human factors at large which happen due to excessive collective greed and ill intension of people of different countries. A cycle regains as soon as there is some improvement in people intension and integrity. Moreover it also view alternation is human behavior is due to god functionary. Hence Super- Natural factor is the prime cause for all phases of business activities. 4) The paper also concludes that modern theories are only supportive to explain business behavior but human factors, god functionality and time precision are prime factor to explain business cycle behavior. REFERENCES 1. Bhargava, P.L India in the Vedic Age. Lucknow: Upper India Publishing. 2. Dimmitt, Cornelia; van Buitenen, J. A. B. (1978). Classical Hindu Mythology: A Reader in the Sanskrit Puranas. Philadelphia: Temple University Press. ISBN Doniger, Wendy (editor) (1993). Purāṇa Perennis: Reciprocity and Transformation in Hindu and Jaina Texts. Albany, New York: State University of New York. ISBN Handoo, Jawaharlal (editor) (1998). Folklore in Modern India. ISBN Hardy, Friedhelm (2001). Viraha-Bhakti - The Early History of Krsna Devotion in South India. ISBN </ref> 6. Flood, Gavin (1996). An Introduction to Hinduism. Cambridge University Press. ISBN Johnson, W.J. (2009). A Dictionary of Hinduism. Oxford University Press. ISBN Kaushal, Molly (editor) (2001). Chanted Narratives - The Katha Vachana Tradition. ISBN Majumdar, R. C.; Pusalker, A. D. (1951). The history and culture of the Indian people. 1: The Vedic age. Bombay: Bharatiya Vidya Bhavan. 10. Mackenzie, Brwon (1990). The Triumph of the Goddess - The Canonical Models and Theological Visions of the DevI- BhAgavata PuraNa. State University of New York Press. ISBN </ref> 11. Mittal, Sushil (2004). The Hindu World. Routledge. ISBN Moghe, S. G. (editor) (1997). Professor Kane's contribution to Dharmasastra literature. New Delhi: D.K. Printworld (P) Ltd. ISBN Monier-Williams, Monier (1899). A Sanskrit-English Dictionary. Oxford University Press. 14. Pargiter, F.E. (1922). Ancient Indian Historical Tradition. London: Oxford University Press. 15. Pargiter, F. E. (1962) [1922]. Ancient Indian historical tradition. Original publisher Oxford University Press, London. Delhi: Motilal Banarasidass. OCLC

282 16. Rao, Velcheru Narayana (1993). "Purana as Brahminic Ideology". In Doniger Wendy. Purana Perennis: Reciprocity and Transformation in Hindu and Jaina Texts. Albany: State University of New York Press. ISBN Shulman, David Dean (1980). Tamil Temple Myths: Sacrifice and Divine Marriage in the South Indian Saiva Tradition. ISBN Singh, Nagendra Kumar (1997). Encyclopaedia of Hinduism. ISBN Thapan, Anita Raina (1997). Understanding Gaṇapati: Insights into the Dynamics of a Cult. New Delhi: Manohar Publishers. ISBN Cooley, Thomas F. (1995). Frontiers of Business Cycle Research. Princeton: Princeton University Press. ISBN X. 21. Gomes, Joao; Greenwood, Jeremy; Rebelo, Sergio (2001). "Equilibrium Unemployment". Journal of Monetary Economics 48 (1): Doi: /S (01)00071-X. 22. Hansen, Gary D. (1985). "Indivisible labor and the business cycle". Journal of Monetary Economics 16 (3): doi: / (85)90039-x. 23. Kydland, Finn E.; Prescott, Edward C. (1982). "Time to Build and Aggregate Fluctuations". Econometrica 50 (6): doi: / Long, John B., Jr.; Plosser, Charles (1983). "Real Business Cycles". Journal of Political Economy 91 (1): doi: / Lucas, Robert E., Jr. (1977). "Understanding Business Cycles". Carnegie-Rochester Conference Series on Public Policy 5: doi: / (77) Plosser, Charles I. (1989). "Understanding real business cycles". Journal of Economic Perspectives 3: Summers, Lawrence H. (1986). "Some Skeptical Observations on Real Business Cycle Theory". Federal Reserve Bank of Minneapolis Quarterly Review 10 (Fall):

283 TRADE POLICIES AND TRADE PERFORMANCE IN INDIA ABSTRACT Sufaira.C * In this Paper we try to understand how India s trade performance has responded to trade policy in the past and how trade policies have affected both the volume and composition of trade. India s foreign trade policy during the last five decades may be broadly split into import substitution policy, export drive policy and export acceleration policy. Today, there has been worldwide debate about Doha Development Agenda, trade was for discussion and a good numbers of researchers and policy makers believe that developing countries can achieve economic growth through free market while others believe that developing countries should protect their industries from imported goods and promote their economic activities, which will lead to the economic growth. Like many developing countries, India depends on the rest of the world; the level of interdependence has increased in last decade. India has increasingly liberalized its trade frontiers leading to lower barriers to trade, for both goods and services. Trade policy in India has exerted a major influence on the composition and aggregate growth of trade. KEYWORDS: India, Trade Policy, Trade Performance ABOUT THE AUTHOR * SUFAIRA.C; RESEARCH SCHOLAR, CENTRAL UNIVERSITY OF KERALA, KASARAGOD INTRODUCTION In this Paper we try to understand how India s trade performance has responded to trade policy in the past and how trade policies have affected both the volume and composition of trade. Today, there has been worldwide debate about Doha Development Agenda, trade was for discussion and a good numbers of researchers and policy makers believe that developing countries can achieve economic growth through free market while others believe that developing countries should protect their industries from imported goods and promote their economic activities, which will lead to the economic growth. Like many developing countries, India depends on the rest of the world; the level of interdependence has increased in last decade. India has increasingly liberalized its trade frontiers leading to lower barriers to trade, for both goods and services. Trade policy in India has exerted a major influence on the composition and aggregate growth of trade. External trade environment and domestic policies have a great impact on trade. Since 1991, India has pursued diverse economic policies aimed at improving trade and enhances economic development. Domestic policies involved included Exchange rates, tariff structure, export taxation, import control, foreign exchange allocation systems and adjustment policies to external policies. The main aim of this trade policy was stimulate domestic production and promote exports. HISTORICAL SCENERY India s foreign trade started to gain significance during the latter half of the 19th century. The period saw expansion in India s foreign trade. The rise in the output of such crops as oilseeds, cotton, jute and tea was largely due to a flourishing export trade. Prior to independence, India s foreign trade was typical of a colonial and agricultural economy. Exports consisted mainly of raw materials and plantation crops, while imports composed of light consumer goods and other manufactures. Over the last six decades, India s foreign trade has undergone a complete transformation in terms of composition of commodities. The exports cover a wide range of traditional and non-traditional products while imports mainly consist of capital goods, petroleum products, raw materials, intermediates and chemicals to meet the ever increasing industrial demands. The pattern of export trade during was marked by two main trends: 1) among commodities which were directly or largely based on agricultural production such as tea, cotton textiles, jute manufactures, hides and skins, spices and tobacco exports did not increase on the whole; and 2) there was a significant increase were in the exports of raw manufactures like iron ore but these were not significant to offset the decline in traditional exports (Bhat 2011). 282

284 In , basic primary products dominated the Indian export sector. The primary products were: cashew kernels, black pepper, tea, coal, mica, manganese ore, raw and tanned hides and skins, vegetable oils, raw cotton and raw wool. These products constituted 34 percent of the t