Adhyayan June 2013 Final

Adhyayan
A Journal of Management Sciences

ISSN : 2249-1066
Vol.3 No.I, June 2013
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Editorial
It is a matter of pride and honour to introduce this 1hird volume of ADHYAYAN-
The Joumal of Management Sciencea, Lw:know. Thill peer R'iviewed iuue of 1he
Joumal. iDcmporate9 a OODpgation of various R'isearoh papers on diverse fields of
Managemellt and allied areas.

The 81lthors are a mix from varioWI well-known iutituma and universities of 1he
coUDtry. I am s:ure the joumal will serve as a valuable addition to 1he JllllllaFDleDt
literature and will alao prove to be a valuableR'iferencomaterial.
I would a1ao like to place on recanl my sincere thanks to all the memben of 1he
editorial and advisory board for their umelenting !Npport to Adhyayan. I also
Binc:erely 1hank 1he &.PJliWiable efforhJ of the membera of 1he editorial team for
helpiDgto bring out this iuue of1he joumal.
I am alao gratefUl to reviewers for provkting their comments and suggestiODS. Our
Binc:cre fiWiec::iation goes to all the au1hors :fur their timely eon1ribution and to 1he
readers ibrtbeirincessantsupport.
We look fmwani to your COJDDU:nt& on this issue and aqgeatiolUI on matters
concemiDg the jOlJIIIal.
__l=::f
Prof. (Dr.) M. Mehro1ra
Editor-in.Oricf

hwow
EDITOR'S DESK
1. Utilizing Information Systems for Model Management in Decision Making
Environments- Ruben Swing
2.
3.
4.
5.
6.
7.
The information overload in modem commercial world asks for a blended approach, from
information system and managerial requirements to fulfill organizational goals. In this paper
the author explains the optimum utilization of modeling approaches to create a foolproof
support system for all managerial levels.
Determinants of Factors Affecting Bid-Ask Spread for Companies Listed in SME
Platform ofBombay Stock Exchange- SouvikBanerjee, Dr. C.A. K. T.Rangamani
This paper gives a descriptive analysis of various factors or determinants that affect Bid Ask
Spread for companies listed in SME segment ofBombay Stock Exchange. Emphasis has been
given on establishing a pattern between these factors and liquidity concerns post listing.
Emerging Characteristics and Trends ofMNCs in India-MayankBajpai, Prof. (Dr.) M.
Mehrotra
This paper focuses on impact oflndian multinational firms and its affect on the host country
economically, culturally and socio-politically. It also talks about reaping benefits from MNCs'
for the gross development of the country.
Relationship of Customer Preferences, Service Quality & Customer Satisfaction in
Banking Sector: Critical Analysis of Literature Review-Dr. Sunayna
This paper gives us an insight on the relationship between service quality and customer
satisfaction. Emphasis is on enhancement of service quality to attain maximum customer
satisfaction in retail banking industry.
Herzberg's Theory: Implications in Present Scenario-Zubair Ahmad
The present scenario is marked by customer-service oriented jobs, high unemployment rates,
idle and closed plants, the diverse workforce, and decline of unionization. The purpose of this
study is establish a relation between Herzberg's theory of job satisfaction and other motivating
factors with respect to present organizational situations.
Women Entrepreneurship: The Key Accelerator for Empowered India - Dr. Shailja
Dixit, AnuragDixit
This paper projects emergence of women entrepreneurship as a strong contributor to
economic growth. It also highlights on major constraints and challenges faced by women
entrepreneur and opportunity available to them.
Shop & Hop: VIrtually an Emerging Landscape of Retail & Its Impact on Economy-
Abhiruchi Pandey, Jaya Jain
This paper focuses on latest trends of digital marketing with respect to online shopping. It also
provides an insight of present comparative standing of online shopping with respect to brick
and mortar retailers or mall culture.
15
25
32
48
55
73
8.
9.
10.
The Influence of Consumer Attitude on Brand Extension Assessment - Rishikesh
Padmanabhan, Dr. K. S. Chandrasekar
This paper evaluates the association of consumer assessment towards brand extension on the
basis of previous experiences of parent brand. The study has been done in reference to high
involvement product.
Repercussion of Junk Food Advertisements on Minds of Children A Study- Parmeet
Kaur, RituAhuja
The study indicates a link between junk food, food promotions and eating behaviors of
children. This paper also sets a clear view about the attitudinal reactions of parents as well as
their children about junk food advertisements.
Are Contract Workers the Golden Trap: A Case of Maruti Suzuki Ltd. - Dr Swati
Agrawal
This case brings out the facts on long term employer-employee relationship. It showcases an
adverse effect ofhiring contract workers on the organizational health with special reference to
Maruti Suzuki Ltd.
87
94
104
Utilizing Information Systems for Model Management in
Decision Making Environments
Mr. Ruben Swing
Central Institute of Management and Technology, Lucknow
Abstract
Computer-based information systems and models encounter forbearance and doubt by
management, because they frequently do not converge the knowledge needs of management
in a company. Solving this problem entails managing, modeling and information systems
development as a management discipline. This discipline includes the undertaking of
development, maintenance, efficient use and preserving of models and systems. The paper
finishes with a standard analysis of relationship between management levels and model
management activities, and contemplates possible use of computer-based information
systems for efficient model management.
Key Words: Information system, management levels, model management.
I. The Problem
Contemporary organizations are challenged with growing managerial complexity resulting
from shorter product life cycles, increasing market demands, increasing organizational size,
increasing capital amount, and altering laws that demand a reduction of environmental
pollution and market liberalization. This growing complexity has conventionally been met
by allocating slack resources (e.g. large work in-process capital and stocks) and independent
tasks or working groups (Galbraith, 1973). More lately, managerial complexity is also
managed with, by the making of precise company strategies aiming at a reduction of the
amount and diversity of markets and products to be managed (e.g. emphasis and role
strategies, see Ansoff, 1987; Porter, 1985) and planning at outsourcing of company
divisions.
The subject of this paper is to investigate the strategy of increasing the prevailing
information processing capacities in organizations. This concern is inspired by the
increasing technical opportunities of computer-based information systems in recent years
(lower priced and improved user-interfaces) and progresses in human intellectual
competences to make reason out of data, e.g. as a outcome of enhancements in system
dynamics (Senge, 1990; Vermix, 1990). The difficulty with both developments is that they
frequently are means and technologies without a clear link to managerial needs. If we do not
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2 AdhlJalJan
gravely consider what managerial prerequisites can be met by both, and what are its
restrictions it's quite possible that the well-recognized problems with M.I.S. and Operations
Research, which both overshoot demands and pretended much more than what could be
regarded as realistic (Ackoff, 1967 and 1979).
The aim ofthis paper is to gain reasons from insights in business management, by which we
can evaluate the value or models and the impact of computer-based information systems for
management. To avoid a technology thrust, the author has first described management
categories that describe different model needs. Secondly, the author has examined the
probable functions of computer-based information systems in management (development,
maintenance, use and conservation) of models. Both these analyses will unite to a standard
view of types of models and computers for different management levels.
II. Management Types and Need for Models
Because of their ability to assess problems and find means-ends relations in a methodical
way, models can be of much value to management. Usage of the models is highly dependent
on nature of models (mathematical or qualitative, complex or simple, formal or informal).
Different types of management require different types of models. Oddly enough, no explicit
thought about the relation between management types and the shape of models is known to
me. Therefore, taxonomy of management has been first, followed by investigating its
significance for models.
A. Taxonomy of Management
The most well-known taxonomy of management consists of a distinction between strategic
planning, tactical management, and operational planning and control (Anthony, 1965).
Strategic management is concerned with the definition of company goals, policies and
general guidelines projecting the course of organization. Tactical management is concerned
with the procurement of resources, the preparation of acquisition tactics, determination of
plant locations, and the arrangement and monitoring ofbudgets. Operational management
involves effective and efficient use of existing facilities and resources to carry out activities,
and monitoring and control of activities in relation to correctly planned goals and (budget)
limitations.
B. Strategic Management & Models
When planning organizational goals, management aims at suggesting what the company
should do and what should be like for staying viable. This idea generating process mostly
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Utilizing Information Systems for Model Management in Decision Making Environments
3
uses only implicit models about goals and means. Sometimes, like in Delphi-sessions, such
a management procedure is well organized and specifically aims at finding consent among
its participants (Linstone and Turoff, 1975). This can be done by first finding consent about
the main issues at stake and then second, members can start discussing relations between
these variables. One step further, people can try to enumerate these relationships. Though at
the strategic level, models remain rather soft, and extensive endeavour is not done in
building very precise models. For the most part acquiring a mutual terminology at this
position which is politically adequate is very essential (De Geus, 1988).
The evolving model must be motivating and directing people in the organization on account
of inaccurate models at this stage (often with very inaccurate classifications), they are
supple enough to be used for legitimation or clarification of activities and they are every now
and then enhanced after mirroring on actions (Mintzberg, 1987). On the other hand, many
business scientists have obtained knowledge which, when used well, expands the chance for
developing effectual plans and policies and making the organization more ardent as well
(Ansoff, 1987;Porter, 1985;BuzzellandGale, 1987).
Besides these, more or less scientific tools, also much information from informal media,
newspapers and literature could be used. It is essential to have inspired minds which connect
all these impressions and make logic out of them with relevancy for finding a way the
company should go. In this case, management is undoubtedly coherent as well as perceptive
(Mintzberg, 1976).
System dynamics modelling is extremely useful for strategic management, because it is a
means for organizing ideas in a organized way (from very soft to very mathematical) and it
aids the comprehension of accidental effects of policies (Vennix 1990). An instance of
this method oflogic is offered by Senge. Senge (1990: 99-100) asserts that quality circles
were introduced to correct problem solving by ways of open communications. Open
communications, however, were viewed as threats to conventional union-management
relationships, because they were inconsistent with adversarial outlooks of unions to
management and were a threat to management's uni-lateral control. This means: the more
successful quality circles are, the more resistance they will meet, probably leading to their
failure at a later stage. The models for strategic management in particular systems dynamics
will typically be very soft, having no clear measurements of variables and no estimation of
parameters. This kind of soft modeling (Checkland, 1981) is exactly what is necessary for
successful strategic management.
C. Tactica/ManagementandModeling
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4 AdhlJalJan
At this management level, various models are developed and enhanced on the basis of
experience. Business schools are evolving ideas especially in this area; e.g. econometric
models for planning fund needs (e.g. M. Aiso, 1973 for an econometric method to monetary
projecting). Many quantitative variables are included here. Just to cite a few: interest rates,
inflation, development prospects of manufacturing and markets, necessity for capital and
people, fiscal policy with regard to interests, dividends, taxes assets etc. and on the essence
of these variables, one could create a model by which estimates can be made regarding fund
needs and decide the best type of funding (loans, stocks). These models can be utilised many
times with certain variations on parameters involved (interest rates etc.).
For budgeting many models can painlessly be built by means of a spreadsheet. Besides, one
wants a system for evaluating budgets and supporting cost accounting, which comprise a
model with process variables to be calculated, and assessment tools for associating
performance alongside settled on standards (Lawler and Rhode, 1976; Hofstede, 1981 ).
The determination of plant location contains decisions that can be reinforced by models as
well. Important variables are: human resources available in the area, availability of
transportation and other infrastructures, obtainability of mineral resources, fiscal policy,
political stability and support from (local) government.
New products must be developed, produced and marketed. These activities entail great sums
of money, which sometimes can give uncertain influence to a company's profits. In this
situation, market information is mostly obsolete before the product comes on the market.
Therefore, a more long-term view is required, in which features of the aimed market(s) are
systematically linked. This would perhaps lead to a more or less qualitative view, containing
ideas about cause-effect relationships.
At this level of management, system dynamics models can be helpful for assessment for
decisions. One example of this kind is given by Senge (1990: 316-320). A computer
company had a very effective sales group, realizing each year a 20% growth in sales.
Therefore, each year more salesmen were appointed. Each year the growth in sales
personnel was comprehended by hiring experienced people from other companies. At a
certain moment, there were not enough experienced people to get from competitors. The
strategy of personnel growth, therefore, did not work anymore. The company had to start
training programmes for junior salesmen, led by seniors. The last group was not motivated
for this teaching job, because they received the main income from the contracts they
achieved. The company had to choose between a different payment system for seniors or to
decide to restrict growth ambitions. Just hiring more junior salesmen would only lead to
more management problems for the sales division and could harm the reputation of the
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5
company.
While at the level of strategic management specifically soft models were suggested, at this
level of management more proper and quantitative models are relevant as well. We will call
these models medium (soft/hard).
D. OperationalManagement
This management level is concerned with the effective and efficient use of existing facilities
and resources within given budget constraints. At this level the principle of models is to be
clear-cut of the definitions of performance indicators, measurement instruments (for
providing feedback information) and ideas about efficient actions to regulate behaviour. The
model functions as a rigid set of rules and is very far from the dynamics explained earlier.
Functional organizations with steady environments do not suffer much from the rigidity of
control systems. On the other hand, when there are more subtleties in organizational
environment, the organization can fail to make contact with its environment at operational
planning and control stage. Feedback should be applied to the principles of management
(theory) which are used at this level and are imposed by tactical management.
The addition of system dynamics produces crucial understandings, which should be added.
It is not so that the realisation of these dynamics is only computer-based. Systems around the
control system are essential for providing people with the necessary feedback. These sub-
structural systems can comprise of open communications between people to find improved
ways of learning, a management flair that supports learning and that is not built on uni-
lateral control, a refinement that targets shared sustenance and accountability for the
common goals of the group and a political atmosphere in which class struggles are made
subordinate to company performance should be created ( cf. Argyris and Schon, 1978).
In a marketing company, management was based on the basis of hierarchy. This meant that
reports were sent to the top in the organizational hierarchy and reviewed by management.
Occasionally actions were carried out to motivate people and to regulate organizational
behaviour. This method of the management did not fit with the opinion of the new president
of the company. He recommended that the company should become more adaptable and
more people should be concerned with management matters. Consequently, a project called
"MIS" was set up with the goal of computing performance of people and divisions. The
information from this system has become available for top level management and CEOs.
This signified that heads of the divisions had access to data about their co-workers as well,
which motivated the presidents to be knowledgeable about data from their own department.
During the consultations ofthe CEOs with division presidents, performance problems were
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6 AdhlJalJan
discussed on basis of the data. The open consultations were not only a control on what is
happening, but also led to reinforcing each other in finding resolutions. In this way
intellectual models received many new useful ideas never thought about in the specific
division.
In relation to other management types these models are very quantitative, formal and
precise, and are called hard models. However, technical they may look alike, they do not
make human and social processes entirely obsolete.
III. Computer-Based Information Systems and Model Management
In the preceding section, the impression of diverse modelling needs connect to different
management types has become clear. Now, I will review the function of computer-based
information systems in these modelling methods. The modelling process is pointing at
supporting management. This can only be understood when well-managed, leading to high
satisfaction of the model user. Analogous to information systems management, one can
describe four functions in model management development, maintenance, use and
conservation. The development process is well described in the literature on information
systems development and modelling. When completed, the systems is said to be connected
or implemented. This denotes that it ought to be ready for use, which suggests that it should
be ready and available. Furthermore, it must be maintained, denoting that it should be
improved when necessary. When the expenses for upkeep of the systems are too high
relative to the user's satisfaction, the system or model should be rejected and the model
management procedure can start again with developing a new model. In the subsequent
section, We will survey these roles for model management in relation with computer
systems in more detail.
A. Development
Particularly in the region of strategic management, the development of a model is
significant, because the process of model development is documented as an important
learning result. When the knowledge is attained, the model is discarded, as strategic
management processes are typically non- repetitive, directing at finding composition in
fuzzy problems and agreeing on the way the problem(s) should be perceived. Computer
systems can support the management level in three ways:
1. Use of prevailing external systems (data and models) by which associations with
other companies are possible.
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7
This kind of system is PIMS, a database which encompasses data concerning
competitive standpoint, market qualities, and capital and product group. Built upon an
enormous database with market choices and business results of over 3,000 companies
and strategic business units, an econometric prototype has been developed with which
data of a particular company subscribing to PIMS (Buzzell and Gale, 1985), is compared
with others and examined (anonymously). The goal of PIMS is to find the critical
success factors which are appropriate to the company in its exact market and situation.
2. Frame works for structured thinking at the strategic level.
An interesting instance in the support of structured thinking is established in
ANSPLAN, software by which management thinking is systematized by reassuring the
correct questions and problems in a systematic way (Ansoff, 1986). A portion of
ANSPLAN comprises of the SPA (Strategic Position Analysis), which is divided up in
an analysis of the market and an analysis of competitiveness. In the competitiveness
analysis estimates of demand and profits are attained on basis ofthree methods:
Extrapolation of past progresses.
Developing anticipation under "stable" market development This implies that
deviations that will impact success and that positively are going to occur are also
considered.
Developing expectations under "chaotic" conditions. Here the chance
element is taken into deliberation and optimistic (opportunities) and pessimistic
(threats) situations are developed.
The supplementary part of ANSPLAN reinforces evaluating strengths and weaknesses
of existing human resources, company competencies and other company assets. A
relationship between market developments and organizational strengths and
weaknesses heads to the description of an organizational strategy.
3. Tools for organizing thought: System dynamics modelling.
Although PIMS is quite beneficial for relating the organization with others, ANSPLAN
possesses the competency to develop an individual's ideas in a systematic way.
Nonetheless, both the above mentioned software use many deductions that are not every
time considered as pertinent especially, when cause and effect, or means-ends
relationships, are considered. PIMS is constrained to the economic variables only, while
ANSPLAN doesn't clearly reinforce thinking in terms of means and ends. The
prominence of system dynamics is that it does not require considerable beliefs for
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8 AdhlJalJan
management, excluding the impression that management is centred on a theory of
actions that encompasses thinking about the feedback processes, functions and
dysfunctions of likely policy alternatives. When companies confront catastrophic
situations, novel ways of thinking must be developed that can handle conditions never
encountered before ( cf. De Geus, 1988). Our knowledge and experiences, then can act
as conditions making things even worse. In this form of condition thinking, Delphi-
research are significant.
Computers can support these procedures with offering adaptable tools for the
organization which are thought only in terms oflogic and not of assumptions. One tool
which enables the extensible development of systems dynamics models is STElLA
(Vermix, 1990: 52-54and223).
In the process of development, methods of analysis are conceived for organising
insights. This is normally one of the main processes of strategic management models
and therefore model development tools must, contain the least of presumptions, or must
have extended a larger high standing, which also could act as a legitimation for action
(e.g. Ansplan and PIMS). Also in the case of reused models the relation between
management and models is very loose, leaving management with many tasks in thinking
and deciding themselves.
B. Maintenance
At the strategic management level, models are used for finding a way of thinking about the
problem at stake. The determined technique for thinking is established in data-gathering and
analysis departments (De Groot, De Wolf, 1989). At the tactical management level, intricate
problems which occasionally have a tendency of repeating, are handled, and it is worthwhile
considering to keep a model and do research on it to improve it as well.
Dual kinds of supportable information are appropriate here: quantitative types (centred on
statistics, mathematics and econometrics) and qualitative types (centred on knowledge
based systems).
Quantitative Models
PIMS is yet again a worthy instance for a quantitative model here. Knowledge from
economics is defined in an econometric model and the constraints are predicted on basis of
the data received from the applicant companies. The Strategic Planning Institute (SPI) now
sustains the model and offers distinct companies with information about their position in
relation to other companies via the model. Certain companies develop their own models for
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management.
Qualitative Models
9
These models can have a vastly flexible form. Presently, knowledge engineers are learning
the function of computers for upholding qualitative knowledge. Certain key developments
in the area of application of knowledge based systems for dealing with manufacturing are
cited by Kerr (1991). Some ofthe elementary characteristics of the system Kerr studied
was that the ideologies in which a production process should be done, can be formalized
in so-called production rules. This implies that one can state accurately which elements
must be supplementary to the process and in what quantity and proportions. This has large
repercussion for the scheduling of purchasing, stocks and supplies. Besides, the
effects of market strategies can be spread on in terms of needed volumes. Fundamentally, the
models developed are sustained not only because they are programmed, but also because
engineers and managers have access to them, and can verify their validity and improve them
when necessary.
Models at the tactical management level have a rather composite, formal and quantitative
shape. Nevertheless, they are not used without a critical view and only when appropriate.
Individual experiences and new perceptions must be added to the model, and therefore (like
a good computer based information system) it must be open for maintenance activities.
C Use
At the operation management level, processes are monitored by comparing processes and
activities with standards. The standards are chosen on the basis of a theory of action, which
management thinks will give them most success. Thus, the standards and the ideas behind
them are a structure of reference by which actions and data are interpreted and management
actions are motivated. This structure of reference is of course limited by the general policy
and purposes delineated at the strategic and tactical management levels in the organization.
Again one could distinguish quantitative and qualitative models.
Quantitative Models
Operations managers are often given certain aims and short term goals. These are typically
defined in a precise quantitative form. Performance control is only the contrast of this norm
with real performance at certain point in time. Nevertheless, there is more at risk than
comprehending that a performance criterion not achieved is only the start for fmding out
means how this problem can be solved and how management hypotheses should be
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10 AdhlJalJan
changed. It is occasionally quite challenging to find the main cause of the problem, as
information can be concealed for management, and there is no open learning orientation
(Argyris and Schon, 1978). Also the organizational adjustments involved for effective
learning, and the system dynamics modelling tools can be valuable for analysing the
condition and finding the roots for the problems discovered. The organizational techno-
structure can be valuable in being supportive to the development of models and ideas for
solutions (Mintzberg, 1979). They are also the sentinels of models and knowledge for the
problems which are not used on a daily basis.
Qualitative Models
For examining the roots of the problem and activities to be taken, the use of knowledge-
based systems is rising in prominence. As specified earlier production rules can be
formalized and become part of an expert system. Coupled with a monitoring system,
analysis of problem causes is possible and actions can be triggered. In monitoring of
chemical processes, this can be part of the process control system. In manufacturing it can
act as a supplement to current production planning and resource planning systems like
MRPII (Kerr, 1991). This implies that computers are used as tools for the analysis of data.
For developing such models and systems, a well- defined view must exist of the production
process and about aspects influencing its performance. Also feedback loops must be
defined. Systems Dynamics then is an integral part of systems development and the way
processes are actually controlled.
Particularly at the operational management level, hard models are presented not to be used
critically. Even not applying them could harm the uniformity of management. This in no
way implies that managers have no decision discretion any more. The application of a
particular model does not necessarily imply that only a single solution is possible. Use of the
systems relevant here is highly essential at this level, it can be any MIS, DSS, MRPII.
D. Conservation
Organizations always are in apprehension between renewal and reusing of results. From the
perspective of efficiency, it is not clever to regard all problems as exclusive and, thus, having
to reinvent solutions. Thus, it might be valuable to conserve knowledge spawned from
experience and earlier research in models, knowledge bases and databases. Conservation
can be understood by giving particular organizational units this job. In stringent functional
organizations, this undertaking is (implicitly) assigned to the techno structure (saving
knowledge about technology of production in the shape of soft or hard models) and the
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11
assisting staff (saving administrative data about precise cases, cumulative or individual)
(Mintzberg, 1979). Moreover, a lot of this knowledge can be saved on computer systems in
model bases and knowledge-base. When these models and knowledge bases are not used
frequently (especially in case of tactical management), knowledge about them starts to
corrode, leading to underutilization of existing knowledge. In this case, internal consultants,
the support staff of the organization, or experts within a functional unit or working group,
could act as model consultants. The model consultant also should make models available for
organizational groups that have not been involved in the development of the model, or have
never encountered the related problems before.
The maintenance of models can be both, effective and efficient at the operational
management level because the same models are used on a very recurrent basis in recurring
decisions. At the tactical management levels, model conservation is valuable, because ofthe
costs of developing them afresh. As specified before, the model should then be open for
modifications and improvements. At the strategic management level, model conservation is
frequently outsourced and done by highly respected institutes that also take charge of
refining the models on basis of new scientific visions.
As much motivating the topic of model conservation may be, some caution is necessary
because it could easily lead to a conservative mind not adapting to new and future problems.
So, a system dynamic method for knowledge conservation is extremely crucial for keeping a
critical view on the influence ofhistorical solutions for the future.
IV. The Synthesis
It was proposed that strategic management chiefly uses the model development activity,
with explicit computer support and at the tactical level of management critical reuse of
models is suggested, demanding model maintenance activities and models that are open for
maintenance. The compulsory use of models at the operational level is also proposed. The
conservation activity is mainly subcontracted at the strategic application field, embedded in
computer applications that are regularly used at the operational management level. These
recommendations are summarised in Table 1.
The table defines a standard view on model types and computer use for the different
management levels. Deviating from these standards (the empty cells 1 through 6) will
probably lead to the same problems OR and MIS have met in the past, for the reason that
there exists a discrepancy between their features and management demands.
1. The medium soft/hard models used for strategic management can probably be
challenging to use, as strategic management may feel hindered by assumptions which
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12 AdhlJalJan
they find irrelevant.
Tablet: Standard Relations Between Management Level, Model Management, Model
Type & Computer Use
Management Model Mana2ement Activity
Level Development Maintenance Use Conservation
Soft
modelling.
Outsourced
Computer
conservation by
Strategic support by
highly respected
Stella,
institutes
Ansplan,
PIMS
Medium
Moderate
soft/hard
conservation,
models.
e.g. by
Tactical
Computer
specialists in
technology
support
structure and
withDSS
support staff.
Hard models.
Much
Computer
Conservation,
Operational support: DSS,
e.g. by DSS and
MIS,
knowledge
Knowledge
based systems.
based systems
2. Also utilizing too many soft models for tactical management, will not provide them with
organizational goals and directives. They will feel trouble with the vagueness of the
models and feel insecure for using them during decision making.
3. Hard models for tactical management will indicate problems, as tactical management
will feel that the model is too strict and over precise.
4. Application of medium soft/hard models to operational management will point to failure
because the model does not give the provision for making the precise decisions needed
at this management level.
5. Hard models for strategic management are too precise and therefore lead to strict
opposition and disqualifications of the supplier or consultant proposing it.
6. Soft models will cause prohibition ofthe consultant or supplier again.
5 and 6 are very evidently wrong. Cells 1 through 4 are more problematic to evaluate,
because for more than one management level. Also, it needs a very exact understanding of
ISSN: 2249-1066, Vol. 3, No.1, June 2013
13
the way management is, and also the way it thinks and works.
V. Conclusion
In this paper the author has explained an association between modelling, computer based
information systems and managerial requirements for both technologies. The subsequent
understandings lead to some proposals that could elucidate past problems in this area and
give ideas for avoiding them in the future. Yet, for this projected model it should not only be
utilised and preserved, but also be upheld and if necessary be substituted by better ones. For
example, one might study in more detail the organizational environmental surroundings
concerned with effective model and computer use in a management context. What ought to
be aimed at is not the optimization of models and computers, but the optimization of the
interface between the, models and computers and the organizational goals.
References
[1] Ackoff, R. 1967. Management misinformation systems. Management Science 14:
147-156
[2] Ackoff, R.L. 1979. The future of operational research is past. Journal of the
operational research society, 30: 93-104
[3] Aiso,M.1973.ForecastingTechnique,IBMSystemsJournal12:187-209
[4] Ansoff, Igor. 1986. Competitive Strategy Analysis on the Personal Computer.
Journal ofBusiness Strategy 6: 28-36
[ 5] Ansoff, Igor. 1987. Corporate Strategy, second edition. London: Penguin Books.
[6] Anthony, R.N. 1965. Planning and control systems: a framework for analysis.
Harvard University Press.
[7] Argyris, Chris and Donald A. Schon. 1978. Organizational learning: a theory of
action perspective. Reading, Mass., Addison-Wesley pub I.
[8] Buzzel, Robert D. and Bradley T. Gale. 1987. The PIMS Principles: linking strategy
to performance. The Free Press. New York.
[9] Checkland, Peter. 1981. Systems Thinking, Systems Practice. John Wiley and Sons,
Chichester.
[ 1 0] Galbraith, Jay R. 1973. Designing complex organizations. Reading, Massachusetts.
[ 11] Geus, A. de .1988. Planning as Learning. Harvard Business Review: pp. 70-74
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[12] Groot, E. de, and W.J.M de Wolf. 1989. Spiegel voor Strategen. [A study ofPIMS
andAnsplan in 16 Dutch companies]. Dutch society for Strategic Policy.
[13] Hofstede, Geert. 1981. Management Control of Public and Not-For-Profit
Activities. Accounting, Organizations and Society i 6: 193-211.
[14] Kerr, Roger. 1991. Knowledge based manufacturing management: applications of
artificial intelligence to the effective management of manufacturing companies.
Addison-Wesley, Sydney, Australia.
[15] Lawler III, Edward E. and John R. Rhode .1976. Information and Control in
Organizations. Goodyearpubl., Santa Monica.
[ 16] Linston, Harold A. and Murray Turoff .197 5. ( eds.) The Delphi Method: techniques
and applications. Reading Mass., Addison-Wesley
[17] Mintzberg, Henry. 1976. Planning on the left side and managing on the right.
Harvard Business Review July-August: 49-58
[18] Mintzberg, Henry. 1979. The Structuring of organizations. Englewood Cliffs, New
Jersey, Prentice Hall.
[19] Mintz berg, Henry. 1987. Crafting Strategy. Harvard Business Review, July-August,
pp.66-75.
[20] Porter, Michael. 1985. Competitive advantage: creating and sustaining superior
performance. Free Press, New York.
[21] Senge, Peter M. 1990. The Fifth Discipline: the art and practice of the learning
organization. Doubleday Currency, New York.
[22] Vennix, Jac. A.M. 1990. Mental Models and Computer Models: design and
evaluation of computer-based learning environment for policy-making. University
ofNijmegen.
[23] Weston, J.F. and E.F. Brigham. 1979. Essentials of Managerial Finance, fifth
edition. The Dryden Press, Hinsdale, Illinois.
*****
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
Determinants of Factors Mfecting Bid-Ask Spread for
Companies Listed in SME Platform of Bombay Stock Exchange
Abstract
Souvik Banerjee
Assistant Professor, Sri Sri Institute of Management Studies, Goa
Dr. C.A. K.T.Rangamani
Senior Professor, VIT Business School, VIT University, Chennai
Trading platforms exclusively for Small and Medium Enterprises (SMEs) is a new
phenomenon in India, as traditionally these companies depended on capital from
owner and their close associates to be used as equity capital. In West there is a
vibrant SME segment for equity in mainstream stock exchange for long. After
introduction in India, in a very short span of time this segment has seen a good
amount of activity. The main concern of investors in these IPOs is lack ofliquidity of
scrip's post listing. To maintain liquidity, the capital market regulator SEBI has
mandated that there should be two way quotes by market makers, so that investors do
not face liquidity related issues. In this paper, the analysis offactors that affects bid-
ask spread for companies listed in SME segment of Bombay Stock Exchange (BSE)
has been conducted in detail.
Key Words: SMEs, Bombay Stock Exchange (BSE), MSMEs, SEBI
I. Introduction
For long time, Indian equity markets had entry barrier for Small and Medium Companies.
Thus for most of the small and medium Indian companies door was closed to raise money
from the formal equity market. Few companies who are relatively bigger, used to venture
abroad, to list in markets like AIM (Alternative Investment Market) ofLSE (London Stock
Exchange).
AIM of LSE was launched in 1995 and it has more than 2200 entities listed. Companies
raised more than 24 billion Great Britain Pound ( GBP) to list in this market.
There are 72 India focussed companies listed in LSE-AIM. However, market capitalization
of these companies are much higher than the companies that are getting listed in SME
segment of Bombay Stock Exchange (BSE hence forth) or National Stock Exchange (NSE
hence forth).
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16 AdhlJalJan
However, if we track the journey ofLSE-AIM, we can put things into perspective for SME
Segment oflndian Stock Exchanges.
LSE-AIM started its journey on 19th June, 1995 with 10 listed entities and combined market
cap of only GBP 82.2 million. This exchange is for companies that aim to raise money more
than GBP 10 million and also get some international visibility. This need was felt in 1930s,
that the smaller businesses do not get adequate equity capital (Arcot, Black and Owen,
2007).
Initial Public Offerings (IPOs) of companies under chapter XB of Issue of Capital and
Disclosure Requirements (ICDR) of2009 to list in SME Segment ofBSE and NSE are given
as follows. These companies can raise capital under this rule:
An issuer whose post-issue face value capital does not exceed ten crore rupees shall
mandatorily issue its specified securities in accordance with provisions of this Chapter.
An issuer, whose post issue faces value capital, is more than ten crore rupees and up to
twenty five crore rupees, may also issue specified securities in accordance with
provisions of this Chapter, depending on its discretion.
II. India's SME Scenario
Special roles for SMEs were earmarked in the Indian economy with the advent of planned
economy from 1951 and the subsequent industrial policy followed by the Government. By
and large, SMEs developed in a manner, which made it possible for them to achieve the
desired objectives. The Micro, Small and Medium Enterprises Development (MSMED)
Act, 2006 provided for facilitating the promotion and development and enhancing the
competitiveness of MSMEs and for matters connected therewith or incidental thereto. It
emphasized on the following:
Remove impediments due to multiple laws.
Introduce statutory consultative and recommendatory bodies on MSME policies.
Improve registration procedure ofMSMEs.
Statutory basis for purchase preference and credit policies.
Improve realization of payments due to MSMEs.
The Prime Minister's Task Force (Jan. 2010) has recommended to set-up a dedicated
Stock Exchange I Platform for SMEs. SEBI has also laid down the Regulations for
the governance of SME Exchange I Platform.
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Determinants of Factors Affecting Bid-Ask Spread for Companies Listed in SME Platform of Bombay Stock Exchange
17
III. Regulations by Securities & Exchange Board of India (SEBI)
SEBI has issued a final Circular on May 18, 2010 for setting up a stock exchange I a trading
platform by a recognized Stock Exchange having nationwide trading terminals for SMEs.
The necessary amendments are made to various SEBI's Regulations. Chapter XB has been
inserted in the SEBI (Issue of Capital and Disclosure Requirements {ICDR}) Regulations
for the SME Platforms.
Chapter XB ofiCDR Regulations specifies that the provisions of main ICDR Regulations in
respect of matters not specifically dealt or excluded under Chapter XB, shall mutatis
mutandis apply to any issue of specified securities under Chapter XB.
Model SME Equity Listing Agreement has been notified vide SEBI's Circular No.
CIR/CFD/DIL/6/20 10 dated 17th May, 2010.
SEBI issued Guidelines for Market Makers on SME Platform vide its Circulars, Nos.
CIR/MRD/DP/14/2010 dated 26th April, 2010; CIR/MRD/DSA/17/2010 dated 18th May,
2010; CIR/MRD/DSA/SE/43/2010 dated 31st December, 2010 and Chapter XB ofiCDR
Regulations.
BSE is the first Stock Exchange in the Country to receive final approvals from SEBI for
launch of the SME Platform, vide its letter dated OW/MRD/DSA/30653/2011 dated 27th
September, 2011.
Difference in IPO process under this rule:
A. Underwriting by Merchant Bankers and Underwriters for these Issues
The issue made under this Chapter shall be hundred percent underwritten. The
underwriting under this regulation shall be for the entire hundred percent of the offer
through offer document and shall not be restricted up to the minimum subscription
level. The merchant banker shall underwrite at least fifteen percent of the issue size
on his or their own account.
B. Draft Offer document
The SMEs issuers, making a public issue or a rights issue, are not required to file the
draft offer document with SEBI. While filing the prospectus with the SME
exchange, they are required to file a copy with the SEBI on which SEBI will not issue
any observation.
C Number of Investors
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18 AdhlJalJan
Minimum 50 investors required while listing IPO. No post-listing continuous
requirement of minimum number of shareholders.
D. /PO Process and Post Listing
The minimum application size in terms of the specified securities shall not be less
than one lakh specified securities. Further no allotment shall be made pursuant to
any initial public offer ifthe number of prospective allottees is less than fifty.
Grading ofthe IPO is not required.
Further, SEBI has made the process of market making mandatory in a SME public
offering and the responsibility is on the merchant banker to ensure compulsory
market making through the stock brokers of the SME exchange for a minimum
period of three years from the date oflisting of the specified securities. Pursuant to a
SEBI circular dated April 26, 2010, SEBI has laid down the norms for the market
makers involved in the process of market making such as registration of the market
makers, the obligations and responsibilities of the market makers, risk containment
measures and monitoring of market makers etc.
Periodical financial results may be submitted on "half yearly basis", instead of
"quarterly basis".
SMEs need not publish their financial results, as required in the Main Board and can
make it available on their website.
E. Rationale for granting special treatment to SMEs under chapter XB of Issue of
Capital and Disclosure Requirements(/ CDR) of 2009
This relaxation (like no requirement ofiPO grading) of rules provides much needed
reduction in cost of an IPO.
Other relaxations like allowing publication of annual results in website, reduces
operating cost, post listing.
Mandatory market making, up to 3 years, post listing provides much needed
liquidity to investors
100% underwriting ensures that, the issue will not fail
Benefits for SMEs to list in equity market:
1) Provide SMEs with equity financing opportunities to grow their business - from
expansion to acquisition
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19
2) Expand investors' base which in tum will help for getting secondary equity
financing, including private placement
3) Enhance Company's visibility. Media coverage can provide SMEs with greater
profile and credibility leading to increase in the value ofthe shares
4) Incentive for greater venture capital participation by providing them an exit route
There are a total of 11 companies listed in BSE SME, they are as follows;
Anshus Clothing
BCBFin.
Bronze Infra.
Comfort Commotrade
J ointeca Edu.
Jupiter Infomedia
Max Alert Sys.
Monarch Health
RCLRetail
SangamAdvisors
SRG Hsg. Fin.
Following are the only companies listed on NSE 'Emerge':
Thejo Engineering Limited
Veto Switch Gears and Cables Limited
IV. Registered Market Makers in BSE-SME Platform
Asit C. Mehta Investment Intermediates Ltd.
BCB Brokerage Pvt. Ltd.
Keynote Capitals Ltd.
IKAB Securities & Investment Ltd.
Systematic Shares & Stocks India Ltd.
Networth StockBroking Ltd.
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
20 AdhlJalJan

Share India Securities Ltd .

K.M. Jain StockBrokers Pvt. Ltd .

SMC Global Securities Ltd .

NVS Brokerage Pvt. Ltd .

NNM Securities Pvt. Ltd .

DJS Stock & Shares Ltd .

Prabhudas Lilladhar Pvt. Ltd .

ISJ Securities Pvt. Ltd .

Pilot Capital Pvt. Ltd .

Karvy StockBroking Ltd .

Shah Investors Home Ltd .

Master Capital Services Ltd .

Nirman Share Brokers Pvt. Ltd .

Guiness Securities Ltd .

Oswal Shares & Securities Ltd .

Mili Consultants & Investment Pvt. Ltd .

UrjainvestmentPvt. Ltd .

Rikhav Securities Ltd .

Comfort Securities Ltd .

Vertex Securities Ltd .

RJ StockBroking Pvt. Ltd .

Narayan Securities Ltd .

Prudent Broking Services Pvt. Ltd .

Trade bulls Securities Pvt. Ltd .

Sunflower Broking Pvt. Ltd .

Choice Equity Broking Pvt. Ltd .

Basan Equity Broking Ltd .

ISSN: 2249-1066, Vol. 3, No.1, June 2013
LUCKNOW
21

PRL Stock & Share Brokers Pvt. Ltd .

Intensive Soft Share Pvt. Ltd .

Ajcon Global Services Ltd .

Sherwood Securities Pvt. Ltd .

FRR Shares & Securities Ltd .

Asiatic Portfolio Ltd .

Aristro Capital Markets Ltd .
V. Calculations and Interpretations
One of the major issues in SME Segment is liquidity, to allay the investor's fears, SEBI has
made market making mandatory for all the companies listed in SME Segment.
For our research we have taken all the companies listed in BSE SME platform. Out of 11
companies, two companies namely RCL Retail did not bid and Comfort Commotrade didn't
ask quote, so these two companies, are kept out of analysis.
In this paper, we tried to ascertain the factors that determine the bid- ask spread quoted by
market makers.
Table 1: Company-wise Market Makers for BSE SME Platform
Sl.No. Company Name Market Maker
1. Anshus Clothing Oswal Shares And Securities Limited
2. BCB Finance IKAB Securities and Investment Limited
3. Bronze Infra-Tech Sherwood Securities Private Limited
4. Jointeca Edu. Ajcon Global Services Ltd
5. Jupiter Infomedia BCB Brokerage Pvt. Ltd
6. Max Alert System Comfort Securities Limited
7. Monarch Health Net worth StockBroking Limited
8. Sangam Advisors K.M. Jain Stock Brokers Private Limited
9. SRG Housing Finance ISJ Securities Private Limited
Bid-Ask spread as a percentage of Bid Price on one particular day (2nd January, 2013) is
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22 AdhlJalJan
taken into account as the dependent variable(Y). Independent variables are:
X
1
=Quantity Reserved for Market Makers in IPO as %total free float.
X
2
= Post Issue Promoter Holding in%
X
3
= Issue Size(in terms oftotal amountofmoneyraised)
X
4
= Number of Shares Issued to the public.
X
5
= Independent Directors as a percentage of the board.
X
6
= Price to Earnings Ratio, as calculated by LTP (Last Traded Price) and Earning per Share
(EPS).
X
7
= Lot Size ofBuy (Bid).
Table 2: Bid-Ask spread as a percentage of Bid Price on 2nd January, 2013
Differen
Quantity
ce of
Reserved
Pro mot Issu
Total
Name Bid&
for Numbe In depend
Sl. Market
er e
r of ent PIE= Buy
of Ask Boldin Size
N
Compa Price as
Makers
gin% (in
Shares Director LTP/E Quanti
o. as%of Issued as%of PS ty
ny %of
Quantity
(post Rs.
to Board
Bid
Offered
issue) Cr.)
Public
Price
to Public
Anshus
2.71646 18,71,9 23.0769
1. Clothin 20.00000 68.5 5.05 0.6 4000
85 95 2
g
2.
BCB
1.6666 22.06897 62.22 8.85
353999
0.6 54 4000
Fin 1
3.
Bronze
2.649 17.85124 50.4 8.56
57,03,9
0.5 155 8000
Infra 91
4.
Jointeca
5.3333 11.21845 64.32 5.35
35,68,9
0.3333 63.2 8000
Edu 95
Jupiter
14,99,9 47.5490
5. Info me 4.5161 13.63636 57.02 4.08 0.6 6000
dia
96 2
Max
39,99,9 27.8787
6. Alert 5.6179 17,64700 56.48 8 0.5 6000
System
92 9
Monarc
17,99,9
h 4.2771 20.00000 10.17 7.2 0.2857
-
3000 7.
93 16.7002
Health
Sangam
19,62,0 37.9310
8. Advisor 9.0909 17.43119 49.68 5.07
00
0.3333
3
6000
s
9.
SRG
3.5714 15.70439 65.01
7.00 25,98,0
0.5
31.6176
6000
HsgFin 8 00 5
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23
Multiple Regression Analysis
After doing multiple regression analysis, we get the following equation with R-
squaredvalueof 0.901087 at 95% confidence level.
Y=-23.4784+1.080582X
1
-0.04181X
2
-0.38781X
3
-(1.182E-06)X
4
-1.85387X
5
-0.06194X
6
+
o.0037512 X
7
Table 3: Correlation of Independent
Variables with Dependent Variable
Two Variables Correlation
Y, x, -0.38307
Y, x2 -0.1674
Y, x3 -0.47104
Y, x4 -0.29603
Y, Xs -0.61467
Y,X6 -0.2429
Y,X1 0.247357
The equation derived by multiple regression gives the factors affecting liquidity in
BSE SME segment. Research in this paper shows, that following 7 variables have
significant effect on bid-ask spread for companies listed in SME platform of
Bombay Stock Exchange:
Quantity Reserved for Market Makers in IPO as % of total free float,
Post Issue Promoter Holding in percentage (%)
Issue Size (in terms oftotal amount of money raised)
Number of Shares Issued to the public,
Independent Directors as a percentage of the board,
Price to Earnings Ratio, as calculated by dividing LTP (Last Traded Price) with Earning
per Share (EPS)
Lot Size ofBuy (Bid).
From the equation, it can be clearly interpreted that independent variable 5 (i.e. independent
directors as a percentage of the board) has the highest impact on the dependent variable
followed by independent variable 1 (Quantity Reserved for Market Makers in IPO as %total
free float), where as variable 4 (Number of Shares Issued to the public), has the least impact.
The other factors like issue size, price to earnings ratio, post issue promoter holding have
their impact in descending order.
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24 AdhlJalJan
The negative sign in the regression equation shown above, indicates that most of the
independent variables (except variable no. 7) have an inverse relationship with the bid-ask
spread (dependent variable).
VI. Conclusion
The research done, shows that bid-ask spread in SME segment of BSE is less when the
company is better governed (has more independent directors on the board), has higher
mopped up capital, share price has more price to earnings ratio, has higher promoter
shareholding post issue, has lower lot size and has lower percentage (%) reserved for the
market makers. Less bid-ask spread is a sign ofhigher liquidity.
VII. Recommendations
To make the SME segment more vibrant and liquid, and attract more companies as well as
investors, the regulator (SEBI) should think of the following suggestions, as came out from
the research:
At least 50% ofthe board should comprise of the independent directors, to have better
overseeing and good corporate governance of the companies listed.
Lot size should not be more than 100, for good vibrancy of the market.
The percentage of shares held by the market makers should be capped to 15% of the free
float. So that public shareholding increases and consequently liquidity in the market
increases.
References
[1] BSE SME segment handbook
[2] www.bsesme.com
[3] http:/ /www.nseindia.com/emerge/
[ 4] http:/ /www.londonstockexchange.com/ companies-and-advisors/aim/aim/aim.htm
*****
ISSN: 2249-1066, Vol. 3, No.1, June 2013
Emerging Characteristics and Trends of MNCs in India
Abstract
Mayank Bajpai
Institute of Cost Accountants of India
Prof. (Dr.) M. Mehrotra
Director, School of Management Sciences, Lucknow
India, one of the fastest growing economies with a projected GD P growth rate of nearly 9%
is also expected to produce the most new multinational companies, overtaking China as
potentially the emerging world's largest source of new multinationals. On the other hand
India too has undergone different economic, cultural, socio-political changes since 1990
when the economy opened its door to the world. This paper aims to study the impact of
Indian multinationals on the destination countries and the effect of transnational
corporation's strategies in India on its future.
Key Words: Indian multinationals, emerging markets, MNC impact on India, Key
strategies of Indian MNCs, Growth of service sector.
I. Introduction
Globalization was initially believed to be driven by the West with developed countries
setting the rules and western companies and consumers reaping the benefits. However
global economic environment is fast evolving and in today's complex and dynamic business
environment the only factor constant is change, whereby the new trend in globalization is
characterized by multinationals from emerging markets gobbling up western companies'.
Although firms are becoming more global, markets while still large are becoming more
local. Emerging market multinational firms are faring well against challenges at both their
home turfs and in developed markets. They are in the process redefining management
practices and innovation thus having an overall impact on the global business environment.
About 70% of the world's growth in the next five years is expected to come from emerging
markets.
Emerging markets provide an invaluable catalyst to companies in their core activities at
home, which are then leveraged internationally as is evident from the fact that not even a
single emerging market firm was world class a decade ago and now they are world's best in
25 industries. BRIC (Brazil, China, India and Russia) nations are all set to dominate the
global business scenario.
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26 AdhlJalJan
II. The Indian Business Powerhouses
During the last decade we have seen Indian companies outgrowing their national roots and
making a mark in the global market. These new multinationals are expected to become more
prominent in the future, providing a host of opportunities for infrastructure and business
service firms in developed economies. Some will become International powerhouses of the
future requiring high levels of support services around the world - IT and telecoms services,
for example.
Domestic companies are symbolizing success nationally and internationally, they have
made it big while staying archetypically Indian in nature undisputedly emerging as Indian
MNCs. In an increasingly globalized world this is a paradigm shift. A number of these
companies have successfully leveraged their expertise not only to the advantage of the
Indian economy but also to spearhead the global economy (Table 1)
Table 1: Indian Multinational Companies; Turnover, Sales
Top 10 Indian MNC's Sales Total Forex Earnings Forex/Sales
(By Turnover) (Rs. Crores) (Rs Crores) (%)
Jindal Saw 3873.1 2446.2 63.2
KEC Int'l 2093.2 1257.8 60.1
Lupin 2013.7 1093.9 54.3
Cipla 3572.1 1865.1 52.2
Dr. Reddy's Labs 6422.9 3092.5 48.1
Ranbaxy Labs 6017 2755.9 45.8
Jindal Stainless 4978 2267 45.5
MRPL 8563.3 11917.2 41.7
Nalco 5942.5 2318.2 39
Sterlite Industries. 24386.8 4244.1 17.4
Bharti Airtel 53487 8457 15.81
Reliance telecom 40971 7541.14 18.40
Source: Economic Times Intelligence Guide Database
A. Leading Sectors
While talking about Indian presence in global business the first thought that comes to mind
is the IT sector, a sector that revolutionized the Indian business scene and placed India on the
global business map. Thus making India lead the globalization of knowledge industry.
ISSN: 2249-1066, Vol. 3, No.1, June 2013
27
Besides IT many non IT companies are also making a foray into the international business.
Starting by aggressively exporting from their low-cost operations in India and gradually
opting for options as going in for overseas acquisitions, making Greenfield investments in
foreign markets, signing joint ventures or a mix of all these. Indian Pharmacy companies
were amongst the first to touch the foreign shores beginning their journey by exporting from
their low cost bases, they are now aggressively acquiring companies in their overseas
market.
A similar trend is visible in auto ancillaries, steel and metal sectors. India is only one of the
major markets for these companies, which are expanding their footprints in overseas
markets. In the Pharma sector, Dr Reddy's Labs acquired BetapharmArzneimittel, Ranbaxy
acquired Terapia and Sun Pharma is trying to wrest control over Taro. Bharat Forge and
Amtek auto have followed a similar model in the auto ancillary sector.
Table 2: Cross-border deals by Indian firms post-liberalization
12,000 ,---------------------------, 250
10,000 .............................................................................................................................................................................................................................. .
r::: 8,000 ........................................................................................................................................................................................................... .
. Q
.E
6,000 ........................................................................................................................................................................................................ .
Q)
::J
Ill
>
4,000 ..................................................................................................................................................................... .
2,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
D By value D By numbers ---- 3 per Mov. Avg
(By value)
3 per Mov. Avg
(By numbers)
Source: UNCTAD
200
150
Q)
.0
E
::J
100 r:::
>
CD
50
In their quest for better technology and to increase their scale of operations electrical
equipment companies such as Havels and Crompton Greaves are following the same
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
28 AdhlJalJan
footsteps. Suzlon Energy is also aiming for the same, as it tries to fill the market share and
technological gap between itself and its global peers in wind energy. In the metals space,
Tata Steel bought Corns, while Hindalco bought Novelis. Textile is another sector where
many Indian companies have emerged as MNCs. The textile industry is the third-largest
group among Indian MNCs.
The rise of Indian multinationals stems from the fact that these companies have been
operating in a very traditional manner resulting into low debts and high liquidity.
Liberalization, Privatization and Globalization policy of 1990 has given a wider horizon and
a global vision free from many regulatory shackles to the Indian companies. As per
UNCTAD, India's cumulative outward FDI increased exponentially from about $0.5 bn in
1995 to about $62 bn by 2008. This includes both FDI investment abroad and acquisition of
global assets. Thus, globalization oflndian business has been on the rise since the mid '90s
and has significantly accelerated in recent years. (Table2).
Availability of large, talented and cheap manpower in India gives companies a major
advantage and helps them to remain cost-competitive amidst cutting-edge technology. 2007
was a record year for out-bound mergers and acquisitions from India. A total of 223 deals,
worth $33 billion, were transacted. This represented an increase of 300 per cent over the
previous year. The average deal size increased from $58 million in 2006 to $150 million in
2007. Europe topped the list as far as investment destinations were concerned, accounting
for 54 per cent of the total value. The US followed in second place, accounting for 27 per
cent. In terms of sectoral composition of these M&A deals, metals led the way with 56 per
cent ofthe total value, followed by engineering (7% ), IT (7% ), oil and gas ( 4% ), Pharma and
healthcare (3% ). Other sectors contributed the remaining 23 percent.
B. StrategiesoflndianMNCs
Internationalization of the Indian companies does not conform to the conventional form
where firms expand overseas to exploit their firm specific advantages; rather, these firms
have largely been driven by a search for resources, technology and other strategic assets.
Several Indian companies have entered foreign markets targeting their exports at the ethnic
population. Raymonds and Birla-VXL, have a number of showrooms in West Asia top sell
their range of textiles items. Shaw Wallace launched a beer brand called Lai Too fan in UK
through Shaw Wallace Overseas; the target consumers of this brand sold at the up market
Indian restaurants are Indians.
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Table 3: Investment Factor considered by Indian companies ( Investment factors
considered by Indian MNCs on a Scale of 10)
Economic Basic Conditions 6.9
Political Development 6.1
Legal Indicators 5.6
Infrastructural Standards 4.2
Total Expenditure Comparison 7.0
Financing and Taxation 6.3
Staff Management 5.8
Cultural Influences 7.5
Source: Yojana
29
Most of the companies use local management and skills (only 4-5 Indians are sent) through
adoption of their own best practices, suitably modified for local conditions. Cultural
integration is the key, achieved through extensive communication at every level including
Indian personnel learning to speak the home country's local language. Acquisitions facilitate
quicker transformation by enabling transfer of status and reputation which helps emerging-
economy firms to overcome the liabilities of newness and foreignness in global markets,
and allow integration of new and diverse organizational practices with their traditional
management techniques (Cuervo-Cazurra, Maloney, & Manrakhan, 2007; Uhlenbrnck,
Hitt, & Semadeni, 2006; Vermeulen & Barkema, 2001). Acquisitions have been a strong
alternative mechanism to indigenous R&D efforts and internal development of innovation
capabilities (Business Line, 2007a; Vanhaverbeke, Duysters, & Noorderhaven, 2002). Such
capabilities are essential to enter higher value-added segments. For instance, in announcing
the acquisition of US-based Wausaukee Composites Inc. (WCI), the Managing Director of
Sintex Industries, a leading plastic manufacturing company in India, commented: with a
portfolio of established products that have tremendous growth potential ... [WCI] will enable
[Sintex] to enhance its various skills in manufacturing and marketing of value-added
offerings, which will be extremely relevant in a rapidly changing Indian business
environment (Sintex Industries, 2007). Advanced markets are likely to be superior venues in
which to acquire knowledge-based resources.
A case in point is the Tata Steel-Corns merger, where it is expected that Tata Steel, with a
20% cost advantage in slab production, will supply low-cost slabs to Corns. In tum, Corns,
with its superior product-finishing facilities, branded products and access to a wider
geographical market, can realize better average yields for the combined entity (Business
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30 AdhlJalJan
Line, 2007b ).
C. Trends inActivities ofMNCs in India
Globalization started with many international companies making a foray into the Indian
markets to take advantage of the availability of cheap labor, large English speaking
population, leverage the growing middle class market and increasing disposable incomes of
the rural Indian population. A recent trend that has emerged in the process of globalization is
global R&D activity being predominantly located in East and Southeast Asia including
India. Most R&D in India was in IT but increasingly chemicals, life sciences and
engineering specialties are seeing R&D related activity. Another recent trend is that India is
now looking for a big leap in KPO. India automatically becomes a natural choice if we
analyze the comparative costs of various aspects of KPO for different countries some of
which are great record of software development, Government Support and policies, English
Language proficiency, Strong tertiary education, Process quality focus, Skilled workforce,
Cost advantage, Entrepreneurship, Reverse brain drain, Expansion of existing relationships,
leverage relationships in West to access overseas markets Indian domestic-market growth.
With the more enlightened and aware Indian consumer the MNCs are really slogging out
hard to get their share of attention.
III. Conclusions and Recommendations
This study reveals that the way Indian firms have internationalized is very unconventional,
rather than Greenfield projects these Indian firms however have globalized in search for
resources, technology and related assets.
Following remarks summarize the points made in this paper and suggest a way forward:
1. These new Indian multinationals are also increasingly likely to operate in the higher
value-add business services or manufacturing sectors and not in the more basic natural
resource extraction sectors.
2. In order to reap the long term gains from globalization Indian companies need to create
employment and benefit the economies of the destination countries.
3. These companies need to provide enormous opportunities for business-to-business
suppliers in the host countries, in the infrastructure and business services sectors in
particular, as the new multinationals are likely to require services all around the world.
4. The multinationals in India now look at it as the knowledge hub where a lot of technical
talent is available at a reasonable cost.
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31
5. With India emerging as the nation of young people, growing affluence of its rural
population and an educated middle class a lot can be harnessed by the MNCs from this
growing market in the coming years.
References
[1] Dalal Street
[2] Emerging Multinationals
[3] Kumar Nagesh. Emerging TNCs: trends, patterns and determinants of outward
FDI by Indian enterprises, 2006.
[4] Parwan Ravi. The Indian Tiger Is on a Global Prowl. The Economic Times 500
stories, 2005.
[5] Transnational Corporation Vol. 17 Number 3 UNCTAD December, 2008
[6] The rise ofNew Multinational Companies from Emerging Economies. Price
Waterhouse Cooper report, April2010.
*****
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Relationship of Customer Preferences, Service Quality &
Customer Satisfaction in Banking Sector : Critical Analysis of
Literature Review
Dr.Sunayna
Assistant Professor, Chandigarh Business School, Punjab
Abstract
All the banks in India offer similar kinds of services, but they could provide differences in
terms of service quality. This paper analyzes past studies regarding service quality and
customer satisfaction in the retail banking industry. The relationship between service
quality and customer satisfaction and their effect is also explained in this paper. Improved
service quality should be adopted to give maximum satisfaction to customer and this paper
contributes knowledge and background for banks to apply these findings to better shape and
focus their position in the market and also to provide maximum satisfaction to customer.
Key Words: Banking, customer preferences, service quality communication, customer
I. Introduction
All customers in marketplace are involved with all kinds of services like in educational
institutions, fitness centers, insurance, retail and transportation, as well as in banking in their
everyday life. Customer service has increasingly played a critical role in bank's operations
in today's highly competitive business environment.
Managing quality of services is difficult as compared to goods due to the heterogeneity,
perish-ability, intangibility and dimensions of services. All the players of banking industry
are providing more or less same services to customers. Banking practitioners have to pay
close attention to superior service provision because service quality does not impact only on
the customer decision-making process, but also influences customer satisfaction, purchase
retention, loyalty and business survival as shown in many studies.
II. Objectives
The objective of this paper is to review the literature regarding relationship between service
quality and customer satisfaction and their effect in the retail banking industry, from various
kinds of studies and sources. It will lead to understandings of aspects of service quality and
customer satisfaction. Past studies examined are mainly about service quality, customer
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Relationship of Customer Preferences, Service Quality & Customer Satisfaction in Banking Sector: Critical Analysis of Literature Review 33
satisfaction and their relationship in banking services. This research will seek to close the
gap in this field of study.
III. Problem Identification
The major problems for this paper are to explore the body knowledge of service quality,
customer satisfaction and their relationship in the retail banking industry.
IV. Service Sector in India
There was a time when it was believed that industrial revolution was the only solution to
social problems such as poverty and unemployment. Now, however, the service sector
promises to fulfill the task. Services touch the lives of every person everyday, be it in the
field of food services, communication, leisure services or financial services, to name a few.
Our welfare and the welfare of our economy are now based on services. Services lie at the
very hub of economic activity in any society. No wonder that the service sector will be the
biggest driver of new economic growth and profit earner in the new millennium for the
world in general and India in particular. The services sector can best be characterized by its
diversity.
Pattnaik and Chhatoi (2006) said that, when a customer buys a service in the service market,
he buys time, knowledge, skill or resources of someone else who is the provider or supplier
of the service.
Service sector plays an important role in the development of our country. Studies have
shown that the employment elasticity (to GDP Growth) in the services sector is higher than
that in both the agriculture and manufacturing sectors; therefore, the growth of service
sector helps in the generation of employment opportunities in the country. Pattnaik and
Chhatoi, (2006) also said that the services sector by providing complementary services to
industry and agriculture acts as a catalyst in the growth of the entire economy.
Service sector emerged as the largest contributor to the country's GDP and grew faster than
the agriculture and industrial sectors. In year 1993-94, the agriculture sector had 26.5%
share in the real GDP which was reduced to 20.5% in the year 2004-05. Similarly, the
industrial sector had 22.1% share in real GDP in the year 1993-94 which was reduced to
21.9% in 2004-05. While in the case of the services sector, its share in real GDP increased
from 50.5% in the year 1993-94 to 57.6% in 2004-05. Trade, transportation,
communication, financial services, software services including the Information Technology
Enabled Services (ITES) and Business Process Outsourcing (BPO) which are the key
movers of services sector. Banking sector plays a significant role in the economic
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34 AdhlJalJan
development ofthe country.
Pattnaik and Chhatoi (2006) said that, bank by providing remittance facility with their vast
branch network, help in the free flow of funds to different parts of the country, wherever
there is a need for it, instead of allowing them to lie dormant in stagnant pools.
V. Banking in India
The banking system in India is significantly different from that of other Asian nations
because of the country's unique geographic, social, and economic characteristics. India has a
large population and land size, a diverse culture, and extreme disparities in income, which
are marked among its regions. There are high levels of illiteracy among a large percentage of
its population but, at the same time, the country has a large reservoir of managerial and
technologically advanced talents. About 30 to 35 percent of the population resides in metro
and urban cities and the rest is spread in several semi-urban and rural centers. The country's
economic policy framework combines socialistic and capitalistic features with a heavy bias
towards public sector investment. India has followed the path of growth-led exports rather
than the "export led growth" of other Asian economies, with emphasis on self-reliance
through import substitution. These features are reflected in the structure, size, and diversity
of the country's banking and financial sectors. The banking system has had to serve the goals
of economic policies enunciated in successive five-year development plans, particularly
concerning equitable income distribution, balanced regional economic growth, and the
reduction and elimination of private sector monopolies in trade and industry. In order for
banking industry to serve as an instrument of state policy, it was subjected to various
nationalization schemes in different phases (1955, 1969, and 1980). As a result, banking
remained internationally isolated (few Indian banks had presence abroad in international
financial centers) because of preoccupations with domestic priorities, especially massive
branch expansion and attracting more people to the system. Moreover, the sector has been
assigned the role of providing support to other economic sectors such as agriculture, small-
scale industries exports, and banking activities in the developed commercial centers (i.e.,
metro, urban, and a limited number of semi-urban centers).
International isolation ofbanking system was also due to strict branch licensing controls on
foreign banks already operating in the country, as well as entry restrictions facing new
foreign banks. A criterion of reciprocity is required for any Indian bank to open an office
abroad. These features have left the Indian banking sector with weaknesses and strengths. A
big challenge facing Indian banks is how, under the current ownership structure, to attain
operational efficiency suitable for modem fmancial intermediation. On the other hand, it has
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been relatively easy for the public sector banks to recapitalize, given the increases in non-
performing assets (NPAs ), as their Government dominated ownership structure has reduced
the conflicts of interest that private banks would face.
VI. Service Quality
From the marketer's perspective, service quality can be viewed as the level of service
attributes needed to make the service acceptable and profitable in the market place, thus,
satisfying the marketer's need for profitability and economic success. On the other hand,
customer's view of service quality has equivalent to the level of service attributes required to
satisfy their own needs and requirements. In this respect, marketers try to define service
quality in advance while customers make during and after use evaluations.
Lewis (1993) said that customers perceive service quality in a subjective (sometimes
irrational and sentimental) way and in clearly human terms. Zeithaml et al. (1990), Zeithaml
and Parasuraman (2004) had opinion that unlike products; the quality of services is
evaluated by customers not only by the service outcome (core service) but also by the
production and delivery process as well as by the "peripherals" related to the service .
As a result of the characteristics of services, the principles and practices of product quality
control cannot be used for assessing service quality. Bitner and Hubert (1994),
Gronroos,(1982, 1984), Lehtinen and Lehtinen (1982) and Lewis and Booms (1983) said
that, to assess the quality of services, and form an impression about the relative inferiority/
superiority of a service provider and its services, customers compare the level of the service
delivered to them with their own personal expectations, shaped by past experience.
Gronroos, (1982, 1984), Takeuchi and Quelch (1983); Parasuraman et al. (1985, 1988)
named the result ofthis comparison is as Perceived Service Quality. However, Parasuraman
et al. (1988) explained the perceived service quality as the customer's global attitude or
judgment "related but not equivalent to satisfaction" of the overall excellence or superiority
of a service. However Berry et al. (1988) tells that, what counts in services is the
conformance to the wishes of customers rather than to any predetermined set of
specifications.
As, Lewis and Booms (1983) put the service quality as a measure of how well the service
level delivered matches customer expectations. Delivering quality service means
conforming to customer expectations on a consistent basis. This means that, in the final
analysis, customers are the exclusive judges of service quality, no matter what the marketer
thinks. Berry and Parasuraman (1991) said that, if customers disagree with the marketer's
perspective, then the service is problematic. Lewis (1993) explained that there is no other
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36 AdhlJalJan
fact or reality about service quality but what customers perceive about a service.
Gronroos (1982, 1984), Parasuraman et al. (1985), Oliver (1980) gives the disconfirmation
paradigm, which define service quality as a result of the comparison between perceived and
expected service performance. In this respect, researchers have generally adopted either the
Nordic (European) model developed by Gronroos (1982, 1984), or the American model
developed by Parasuraman et al. (1985, 1988).
Quality Dimensions in the Banking Sector across the Globe
1. Gronroos (1982) suggest three dimensions of service quality: technical quality,
functional quality and corporate image.
2. Lehthinen and Lehthinen (1982) identified three dimensions of service quality:
physical quality, corporate quality and interactive quality.
3. Gronroos (1984) refined their previous work into three dimensions of service
quality.
4. Parasuraman et al. ( 1985) identified ten dimensions of service quality
5. Parsuraman et al. (1988) refmed their previous work and explored five dimensions
of quality: reliability, responsiveness, empathy, assurance & tangibility.
6. Gronroos (1990) explored six dimensions of service quality.
7. Parasuraman et al. ( 1991) refined five dimensions of service quality and devised the
final version of SERVQUAL (replicate in three service industries. banking,
telephone repairing and insurance)
8. Cronin and Taylor (1992) developed SERVPERF to compare with SERVQUAL.
9. Avkiran (1994) developed four factor scale that consists of seventeen items to
measure Service quality.
10. Johnston ( 1997) identified eighteen dimensions of service quality.
11. Oppewal and Vriens (2000) explored twenty eight attributes to measure service
quality.
12. Bahia and Nantel (2000) developed six dimensions of service quality contained
thirty one items.
13. Suresh Chander et al. (2002) developed five dimensions of service quality that
consists of forty one item scale.
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Relationship of Customer Preferences, Service Quality & Customer Satisfaction in Banking Sector: Critical Analysis of Literature Review 3 7
14. Malhotra et al. (2005) used 10 dimensions to measure service quality of conflicts.
VII. Customer Satisfaction
Despite extensive research on customer satisfaction, its antecedents, and consequences, no
consensual definition of customer satisfaction has been developed yet. Various definitions
are either fundamentally or partially inconsistent with one another even when these
definitions have overlapping components. In general, customer satisfaction is viewed as a
response, based on evaluations, and expressed sometimes during the purchase-consumption
process.
Churchill and Surprenant (1982) explained the customer satisfaction as a cognitive response
while Westbrook and Reilly (1983) understand that customer satisfaction is comprised of
both cognitive and affective dimensions.
Cadotte et al. (1987) explain the customer satisfaction as an emotional response while
Peterson and Wilson (1992) had opinion that customer satisfaction lacks in definitional and
methodological standardization.
Westbrook and Oliver( 1991) ) considered the customer satisfaction as a result of post-
choice response, Fomell (1992) as a result of post-purchase, Mano and Oliver (1993) as a
result of post consumption, and Halstead et al(1994) explained that customer satisfaction
take shape during consumption.
Vavra (1997) explained the customer satisfaction as the end state resulting from the
consumption experience. The end state might be a positive perception of the reward
sacrifices ratio or an emotional response to the consumption and use experience or resulting
from the comparison of rewards and sacrifices against anticipated consequences from
consuming and use of the product or service.
Customer Satisfaction in Banking Industry
Banking is one of the numerous services in which the customer satisfaction has had an ever
increasing importance in the corresponding research areas. This is essentially because the
banking sector is becoming more and more competitive. Retail banks are pursuing this
strategy, in part, because of the difficulty in differentiating based on the service offering.
Customer satisfaction in banking has not been neglected by researchers.
Rust and Zahorik (1993) provided a mathematical framework for assessing the value of
customer satisfaction. The framework enables managers to determine which customer
satisfaction elements have the greatest impact, and how much money should be spent to
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38 AdhlJalJan
improve particular customer satisfaction elements. They demonstrated the application of
their approach in a pilot study of a retail banking market.
Athanassopoulos (2000) performed a complete survey on customer satisfaction in retail
banking services in Greece. The study proposed an instrument of customer satisfaction that
contains service quality and other attributes. The performance implications of customer
satisfaction instruments are also explored.
Manrai L.A. and Manrai A. K. (2007) developed and tested some hypotheses regarding the
relationship between customer satisfaction and bank service switching behaviour as it is
mediated by the importance of a particular bank service to a particular customer and by the
nature of competitive offerings for different types ofbanking services available from other
banks.
Gil et al. (2007), in their research exhibited that services encountered directly and
significantly affect perceived service value which is the fmal antecedent to customer
satisfaction in banking industry. Finally, Sweeney and Swait (2008) investigated the
important role ofbrand ofbanks in managing the churn of current customers and improving
their satisfaction.
VIII. Service Quality and Customer Satisfaction
Although service quality and customer satisfaction are dominating the market literature, it is
common to find no clear distinctions between the two constructs. Nguyen ( 1991) considers
that service quality and customer satisfaction represent the same concept while Dabholkar
( 1993) suggest that, service quality and customer satisfaction converge in time to represent
the same thing: a kind of global attitude. Iacobucci et al. (1995) said that sometimes the
terms "service quality" and "customer satisfaction" are used interchangeably both in
industry and in academia. This confusion is largely a result of two factors (Figure 1.1 ). The
first factor is somewhat exclusive, use of the disconfirmation paradigm to conceptualize
both service quality and customer satisfaction as functions of expectations and performance
perceptions. The second factor is that the two constructs have similar consequences.
Figl: Service Quality and Customer Satisfaction
Source: Iacobucci et a!., 1995
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Iacobucci et al. (1995) suggest that the difference between service quality and customer
satisfaction may only reflect managerial versus customers' concerns; that is when service
providers deliver high quality services, customers are satisfied or not depend upon
experiencing these services. However, Shemwell et al. (1998) explain the position that
service quality and customer satisfaction are conceptually distinct but closely related
constructs that prevail in the literature. Service quality researchers tend to consider service
quality as a more long-term and general evaluation as opposed to satisfaction which is a
transaction specific assessment. Based on these grounds Parasuraman et al. (1988) proposed
that the instances of satisfaction over a time period lead to a perception of general service
quality. This argument gained support from other researchers such as Bitner (1990), who
developed a transaction appraisal model in services and empirically supported the effect of
satisfaction on service quality, and Bolton and Drew (1991b) who suggested that
satisfaction leads to service quality.
On the contrary, researchers of customer satisfaction propose that perceived service quality
is an antecedent of customer satisfaction. For example, Cronin and Taylor (1992) reported
that, in their analysis for the causal relationships between satisfaction, service quality, and
purchasing intentions, the coefficients of the path:
'Service purchasing intentions' were all significant while the ones
of the path:
'service 'purchasing intentions' were not.
Parasuraman et al. (1994) pointed out that conflicting arguments might result from the
holistic focus of research on service quality contrary to satisfaction research which is mainly
based on specific transactions. They proposed that service quality and customer satisfaction
should be examined under both viewpoints. The prevailing general conclusion is that when
the term service quality is used to refer to a global, long-term attitude about a service
provider, then customer satisfaction is generally recognized as an antecedent of service
quality. However, where the term is used to refer to something rather more specific (quality
ofthe delivered service or quality of the service encounter, for example), then there seems to
be a strong case for seeing quality as an antecedent of satisfaction.
Kristiansen et al. (1999) propose that the relationship of perceived quality with customer
satisfaction depends on product category and the process of satisfaction depends on price
and other factors such as:
1. The complexity of evaluation
2. The objective quality ofthe product and
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3. How prestigious the product is with respect to the customer's social status?
These factors are included in the European Customer Satisfaction Index ECSI which links
customer satisfaction with its determinants and its outcome, namely customer loyalty. In the
ECSI model, perceived quality is divided in two components namely hardware, referring to
the quality of the attributes of the product/service and human-ware referring to the human
contact.
IX. Service Quality and Customer Satisfaction in Banking
Avkiran (1994) in their research found that the banking industry has a link between service
quality and customer satisfaction. Levesque and McDougall (1996) investigated the
influence of key determinants of service quality on customer satisfaction in financial
institutions. They found a substantial impact of service problems on customer satisfaction
and their intensions to switch. Yavas et al. ( 1997) suggest that service quality is an essential
determinant of customer satisfaction.
Islamic banks working in different parts of the world assessed their performance in
reference to service quality and customer's responses. An empirical study was conducted by
Naseer, Jamal and Al-Khatib in 1999 to measure customer awareness and satisfaction by
using a sample of 206 respondents towards Islamic banking in Jordan. It was observed by
them that customers have awareness about products oflslamic bank but expressed a sense of
dissatisfaction towards some ofthe services.
Oppewal and Vriens (2000) empirically investigated the relationship between service
quality and customer satisfaction by using original SERVQUAL instrument with 10
dimensions as devised by Parasuraman et al. (1985). This study gave a direction to relate
service quality and customer satisfaction.
Service quality gained significance with the passage of time due to increased competition
among service firms. It was examined that how customer satisfaction affects the customers'
behavioral consequences. The study conducted by Athanassopoulos, Gounaris and
Stathakopoulos in 2001 found a strong impact of customer satisfaction on their decision to
stay with the existing service provider; and restrain their negative behavioral intentions.
Kayis, Kim and Shin (2003) conducted a comparative analysis of Australian and Korean
banks to fmd out the quality management practices and its outcomes. They found a
meaningful relationship between perceived service quality and customer satisfaction. They
suggest that organizations should focus on service quality as an input to customer
satisfaction for long-term benefits and business success.
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Wang et al. (2003) said that now banks have realized the importance of service quality for
successful survival in today's global and highly competitive environment.
Jamal (2004) investigated the customer behavior in retail banking by considering service
quality and its outcomes. It was observed that customers have varied experiences of
satisfaction and dissatisfaction for utilization of self-service technologies. Financial sector
is becoming more conscious about the performance evaluation regarding quality of
products/services according to customers' expectations.
In another study conducted by Duncan and Elliott (2004), findings reveal a positive
correlation between financial performance and customer service quality scores.
Curry and Penman (2004) reported that service quality is inevitable for differentiation to
compete in the banking sector. They suggested that the right service could retain the
customers for long-term benefits. So, banks should maintain the level of services by proper
allocation of resources to meet customer requirements. Findings indicate that financial
institutions require reasonable procedures to evaluate the overall satisfaction of their
customers.
However, Joseph et al. (2005) said that understanding of changing needs and expectations of
customers is an essential prerequisite for the financial sector.
Jabnoun and Khalifa (2005) proposed and tested a measure of service quality to compare
conventional and Islamic banks in UAE. The study found that four dimensions were
significant in case of conventional banks. While only personal skill and values were crucial
in determining service quality in Islamic banks.
Nelson and Chan (2005) in their study found that bank-customer relationship quality is
evident between satisfied and dissatisfied customers. Both types of customers have clearly
distinctive feelings regarding their service experience.
Al-Hawari and Ward (2006) found that customer satisfaction plays an inter-mediator role in
the relationship between service quality and financial performance of the banks.
In another study by Nelson (2006), overall customer satisfaction was investigated in
Malaysian banking industry by collecting data from 220 customers of 15 retail banks. It was
found that overall customer satisfaction is one of the key determinants of relationship
quality.
Razak et al. (2007) in their study suggested that bank should start service quality
improvement programs to enhance customer satisfaction and customer loyalty.
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42 AdhlJalJan
X. Contribution of Knowledge
This research provides information on effect of service quality on customer satisfaction as
well as service quality improvements in retail banking. Hence, bankers can apply
knowledge and findings for their banks to build or improve a competitive edge, increase
customer satisfaction and maintain long-term profits.
XI. Conclusion
Nowadays, banks are working in a dynamic business environment as they experience cut
throat competition and changes in customer demand, and a decrease in profit margins.
Understanding of changing needs and expectations of customers is an essential prerequisite
for the financial sector (Joseph et al. 2005). Thus, it is significant for banking practitioners to
focus on a service quality improvement (Razak et al., 2007), to satisfy their customer as
customer satisfaction plays an inter-mediator role in the relationship between service
quality and financial performance of the banks (Al-Hawari and Ward, 2006). Many
researchers found meaningful relationship between perceived service quality and customer
satisfaction. They all suggest that banks should focus on service quality as an input to
customer satisfaction for long-term benefits and business success.
XII. Suggestions and Recommendations
On the basis of critical analysis ofliterature review, researcher suggested that banks should
consider the demographic profile of each customer while giving the banking services to
these customers, as each customer have individual needs and wants according to their
demographic status. Bank manager should offer customized services to customers of
different age group. They should offer service according to age as customers of different age
group have different needs of banking services. Bank should also provide customized
services to business class customers and service class customers. Likewise the married
customers have need of different type ofbank services as compared to unmarried customers.
So it is suggested that banks should consider the demographic profile of each customer
while giving the banking services to these customers as each customers have individual
needs and wants according to their demographic status.
Bank should give more attention towards tangibility dimension of service quality. Bank
should have modem equipments and fixtures. Physical facilities at bank should be visually
appealing. Materials associated with the bank's service (such as ATM card, debit cards,
catalogs, or statements) should be visually appealing and the bank staff should be friendly
and courteous to the customers.
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In order to give better customer service and more satisfaction to customers, it is suggested
that bank should concentrate on some important points like the sales persons in the bank
should give prompt service to customers, bank staff should perform services right the first
time, the bank should understand the specific needs of customers, staff of the bank should
appear neat and clean, the bank staff should keep their promise, operating hours of the bank
should be more convenient to customers, personal attention should be given.
Finally, it is important that service quality be re-assessed on a regular basis. The first
assessment provides a baseline for comparison with future assessments. This comparison is
essential for measuring the effectiveness of service quality improvement efforts and
identification of service quality drifts as they come into view. The regularity of
reassessments will vary with the individual firm's situation. However, customer satisfaction
studies can be typically conducted either quarterly or annually.
References
[1] Al-Hawari, M., & Ward, T. (2006), The effect of automated service quality on
Australian banks' financial performance and the mediating role of customer
satisfaction, Marketing Intelligence & Planning, 24 (2), 127-14 7.
[2] Athanassopoulos, A.D. (2000). Customer Satisfaction Cues to Support Market
Segmentation and Explain Switching Behaviour. Journal of Business Research,
47(3):191-207
[3] Athanassopoulos, A.D., Gounaris, S. and Stathakopoulos, V. (2001). Behavioural
responses to customer satisfaction: an empirical study. European Journal of
Marketing, 35(5/6):687-707
[4] Avkiran NK (1994). Developing an instrumentto measure customer service quality
in branch banking. Inter. J. Bank Mark, 12: 10--18.
[ 5] Bahia K, Nantel J (2000). A Reliable and Valid Measurement Scale for the Perceived
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****
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
Herzberg's Theory: Implications in Present Scenario
Zubair Ahmad
Sr. Lecturer, Dept. of Business Administration, Azad Institute of Engineering & Technology,
Lucknow.
Abstract
The major factor that keeps the employees bounded with the organization is motivation.
Various management thinkers have conducted several studies to understand the
relationship between motivation, efficiency and satisfaction. One of the outstanding effort in
this regard is Herzberg's two factor theory.
Herzberg in his theory took two categories containing various factors that may have impact
on employee satisfaction. The study was conducted on a group of people and the theory was
propounded. This theory is relevant even today, keeping this in mind, this study is conducted
in the Lucknow city but interviewing a selected sample of respondents working in different
capacities.
Motivation in simple terms may be understood as the set of forces that cause people to
behave in certain ways. A motivated employee generally is more quality oriented. Highly
motivated worker are more productive than apathetic worker. One reason why motivation is
a difficult task is that the worliforce is changing. Employees join organizations with different
needs and expectations. Their values, beliefs, background, lifestyles, perceptions and
attitudes are different. Not many organizations have understood these and not many HR
experts are clear about the ways of motivating such diverse worliforce.
Now-a-days, employees have been hired, trained and remunerated but they need to be
motivated for better performance. Motivation in simple terms may be understood as the set
of forces that cause people to behave in certain way. People are motivated towards
something they can relate to and something they can believe in. Times have changed, people
want more. Motivated employees are always looking for better ways to do a job. It is the
responsibility of managers to make employees look for better ways of doing their jobs.
The purpose of this study was to identifY through hypothesis testing how Herzberg's theory
ofjob satisfaction is relevant in present scenario. The study was conducted using structured
questionnaire on private and public sector employees. Chi-square technique was applied
and chi value was computed to test the formulated hypotheses in order to find relevance of
Herzberg theory in present context.
Key Words: Motivation, hygiene factors, job satisfaction, satisfaction, dissatisfaction.
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49
I. Herzberg Theory ofMotivation
Traditionally job satisfaction has been assumed to follow a single underlying continuum.
One end of this continuum was supposed to represent a high level of satisfaction with the
job, while the other end was purported to reflect a high level of dissatisfaction with the job.
Points between the two extremes were assumed to reflect various degrees of satisfaction/
dissatisfaction.
Frederick Herzberg and associates in 1959, conducted extensive interviews on two hundred
engineers and accountants using critical-incident method for data collection. Herzberg
made a theoretical departure from traditional continuum concept by suggesting that job
satisfaction was hypothesized to operate on a continuum which ranged from high to no job
satisfaction while job dissatisfaction operated on another continuum which ranged from no
to high job dissatisfaction. These two continua were hypothesized to be independent of each
other. Based on extensive empirical investigation, Herzberg set forth a two-factor theory of
job satisfaction which received both widespread support and criticism. Herzberg published
two-factor theory of work motivation in 1959. The theory was highly controversial at the
time it was published; claims to be the most replicated study in this area, and provided the
foundation for numerous other theories and frameworks in human resource development
(Herzberg, 1987). The theory states that job satisfaction and dissatisfaction are affected by
two different sets of factors. Therefore, satisfaction and dissatisfaction cannot be measured
on the same continuum. Herzberg's research was conducted during the late 1950s within a
thirty mile radius of Pittsburg, which was at that time, was a centre for heavy industries. It
was the time of full employment and nearly 100% utilization of plants and facilities.
Although demo graphical information of the workers studied was not explicitly stated by
authors in the literature. So, it is implied that the majority of workers studied were white
males. It was also a period of heavy unionization. This is in stark contrast to the current
work environment of customer-service oriented jobs, high unemployment rates, idle and
closed plants, the diverse workforce, and decline of unionization.
Herzberg's Two-Factor Theory divides motivation and job satisfaction into two groups of
factors known as the motivation factors and hygiene factors. According to Frederick
Herzberg, "motivating factors are six job content' factors that include achievement,
recognition, work itself, responsibility, advancement, and possibility of growth. Hygiene
factors are the 'job context' factors, which include company policy, supervision, work
conditions, relationship with peers, salary, personal life, relationship with subordinates,
status, and job security". Basically the theory differentiates factors between intrinsic
motivators and extrinsic motivators. The intrinsic motivators, known as job content factors,
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50
define things that the people actually do in their work; their responsibilities and
achievements. These factors are ones that can contribute a great deal to the level of job
satisfaction which an employee feels at work. Job context factors, on the other hand, are
extrinsic factors that someone as an employee does not have much control over; they relate
more to the environment in which people work than to the nature of the work itself
(Schermerhorn, 2003). Herzberg identifies these factors as the sources for job
dissatisfaction. "Hertzberg reasoned that because the factors causing satisfaction are
different from those causing dissatisfaction, the two feelings cannot simply be treated as
opposites of one another. Opposite of satisfaction is not dissatisfaction, but rather, no
satisfaction. Similarly, the opposite of dissatisfaction is no dissatisfaction. While at first
glance this distinction between the two opposites may sound like a play on words, Herzberg
argued that there are two distinct human needs portrayed" ("Herzberg's Motivation-
Hygiene Theory," 2002).
Therefore, the basic premise of two-factor theory is that if an employer or manager is trying
to increase job satisfaction and ultimately job performance for an employee or co-worker,
they need to address those factors that effect one's job satisfaction. The most direct approach
is to work on intrinsic, job content factors, giving the employee encouragement and
recognition which helps them to feel more valued.
II. Research Methodology
There has been a lot of study in the area of motivation and job satisfaction which still
remains unexplored to some extent and yet a general understanding that has not been
developed when it comes to studies conducted at different times and in different work
environment. One ofthe greatest challenges that organizations face today is how to manage
turnover of work force that may be caused by migration of lot of industrial workers.
Therefore, it has become an important area of research that how to reduce turnover and
absenteeism and improve performance of an organization. Moreover, it has been observed
many a times that employees who are satisfied with their jobs are still not good performers.
This may be because of lack of motivation and commitment for the organization. The
purpose of this present study is to retest Herzberg's theory of job satisfaction using a
questionnaire in the light of critical incident technique used in original study.
As the research is descriptive in nature the study relies on primary data collected from
employees from various sectors. Survey was conducted at Saharaganj walk-in and fun
republic walk-in. About 60% of the employees are from the private sector and 40% from
public sector. Primary data has been collected by the researcher through standard structured
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51
questionnaire. The questionnaire consists of 10 questions and all are 5 point Likert scale
based questions. Sample size of 200 is taken and convenience method of sampling is
adopted.
Tool used : Chi-square Test
Chi-square test is applied to test the goodness of fit to verify distribution of observed data
with assumed theoretical distribution. Therefore it is a measure to study the divergence of
actual and expected frequencies; Karl Pearson's has developed this method to test the
difference between the theoretical (hypothesis) and the observed value.
Chi-square test
Degrees ofFreedom V=(R-1)(C-1)
Where,
'0' =Observed frequency
'E' =Expected frequency
'R' =Number of rows
'C' =Number of columns
III. Interpretations and Calculations
Hypotheses
H
0
: There exist no significant relationship between Herzberg hygiene factors & job
satisfaction.
H
1
: There exist significant relationship between Herzberg hygiene factors & job
satisfaction.
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52
Table: Relation between Hygiene Factors & Job Satisfaction
SINo. Factors
Strongly
Agree Undecided Disagree
Strongly
Agree Disagree
1. Company policy 86 57 12 24 21
2. Working conditions 116 61 14 9 0
3. Technical supervision 26 95 30 22 27
4. Salary 174 17 4 5 0
5. Status 53 73 5 40 29
6. Personal life 55 92 17 33 3
7. Job security 143 24 0 23 10
Interrelationship with
8. peers, supervisors and 47 65 22 44 22
subordinates
Table for Chi-square Test
0 E (0-E) (O-E)
2
(O-E)
2
/E
86 87.5 -1.5 2.25 0.03
57 60.5 -3.5 12.25 0.20
12 13 -1 1 0.08
24 25 -1 1 0.04
21 14 7 49 3.50
116 87.5 28.5 812.25 9.28
61 60.5 0.5 0.25 0.00
14 13 1 1 0.08
9 25 -16 256 10.24
0 14 -14 196 14.00
26 87.5 -61.5 3782.25 43.23
95 60.5 34.5 1190.25 19.67
30 13 17 289 22.23
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53
22 25 -3 9 0.36
27 14 13 169 12.07
174 87.5 86.5 7482.25 85.51
17 60.5 -43.5 1892.25 31.28
4 13 -9 81 6.23
5 25 -20 400 16.00
0 14 -14 196 14.00
53 87.5 -34.5 1190.25 13.60
73 60.5 12.5 156.25 2.58
5 13 -8 64 4.92
40 25 15 225 9.00
29 14 15 225 16.07
55 87.5 -32.5 1056.25 12.07
92 60.5 31.5 992.25 16.40
17 13 4 16 1.23
33 25 8 64 2.56
3 14 -11 121 8.64
143 87.5 55.5 3080.25 35.20
24 60.5 -36.5 1332.25 22.02
0 13 -13 169 13.00
23 25 -2 4 0.16
10 14 -4 16 1.14
47 87.5 -40.5 1640.25 18.75
65 60.5 4.5 20.25 0.33
22 13 9 81 6.23
44 25 19 361 14.44
22 14 8 64 4.57
Total 490.96
Calculated value of x
2
=490.96
Tabulated value of X
2
at a(p)= 0.05, d.f.28 = 41.333
Interpretation
Since, calculated value of X
2
is much greater than tabular value of X
2
, we reject H
0
and
conclude that, there exists significant relationship between Herzberg hygiene factors and
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54
job satisfaction.
IV. Conclusion
The study has proved that, there is a significant relationship between Herzberg's hygiene
factors and job satisfaction. Herzberg's study was conducted keeping in mind certain
predetermined assumptions which may or may not be applicable in all the situations. The
employee criterion for job satisfaction is subjected to various personal priorities that
ultimately determine how and in what manner the employee will react.
Some factors which are relevant in present scenario and also in Herzberg theory are
company policy, working conditions, technical supervision, salary, status, personal life, job
security, interrelationship with peers, supervisors and subordinates. In all the above factors
salary plays the most important role then comes job security, working conditions, company
policy and other factors. These factors give motivation to all employees and where salary
structure, job security and company policy are in favour of the employee, turnover rate
decreases and they can perform better in terms of quality also. Training also gives
motivation to employees, so when there is a need of training, every effort should be done to
provide training to employees.
References
[ 1] Decenzo DavidA. and Robbins Stephen P., 2002, Human Resource Management, 7th
ed. John Wiley and Sons, Inc.
[2] Emmert, M. and Tamer W. A., 1992, Public Sector Professionals: The effect of
Public Sector Job on Motivation, Satisfaction and Work involvement, American
Review ofPublicAdministration, Vol. 22, pp.3 7-48.
[3] Herzberg Fredrick, Work and the Nature ofMan, Clevated, Ohio, World Publishing
Co., 1966.
[ 4] Likert, Rensis New Pattern ofManagement, New York, Me. Graw Hill, 1961.
[5] Steers, R. and Black, J. 1994,"0rganization Behavior", 5th ed, Harper Collins. Their
Reward," Wall Street journal, pp. B-1.
[6] Wagar, Terry H., 1998, "Determinants of Human Resource Management Practices
in Small Firms: Some Evidence from Atlantic Canada", Journal of Small Business
Management, pp.13-23.
*****
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
Women Entrepreneurship The Key Accelerator for
Empowered India
Dr. Shailja Dixit
Asst. Professor, Amity Business School, Gomti Nagar, Lucknow
Anurag Dixit
Dean, VIMS, Gomti Nagar, Lucknow
"There is a women at the beginning of all great things". -Lamartine
"Women is the Builder, Moulder & Nation's Destiny". -Rabindranath Tagore
Abstract
Women entrepreneurship is an increasingly salient part oft he economic makeup and
is a key contributor to economic growth in almost all countries. Any strategy aimed
at economic development will be unbalanced without involving women who
constitute half of the world's population. Women entrepreneurs comprise about a
third of enterprises globally and contribute significantly to employment generation
and development. Skill, knowledge and adaptability in business are the main
reasons for women to take up entrepreneurship. Nonetheless, their potential is
underutilized, and women's under-representation as leaders in both business and
the political arena remains a concern. In many countries, women are not only less
likely to turn to entrepreneurship, but their businesses are more likely to be informal,
generate less revenue and employ fewer staff. Reasons for these are varied and
include unfavorable business regulations, continued cultural barriers, gender
stereotypes, women's double roles at home and work, as well as unequal access to
resources and bank credit.
Major objectives of the study are to assess the role of women entrepreneurs in
creating new economy, to ascertain the factors in the emergence of women
entrepreneurs' highlight the major constraints and challenges faced by women
entrepreneur and opportunity available to them. At the end the paper makes some
suggestions for increase or promotion of women entrepreneurs and healthy growth
ofwomen entrepreneurs in India.
Key Words: Women entrepreneurship, economic development, challenges & opportunities
in India.
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56
I. Introduction
"Women are the most underutilized economic asset in the world's economy."
-Angel Gurria, Secretary-General, OECD.
The dawn of 21 t century has come with greater trials and tribulations and lesser
stability in every domain of social life. A central driver and the most vital aspect of
modern civilization and of economic growth over the past century is the increased
role ofwomen. The position and status ofwomen in any society is an index of its
civilization and progress. Nearly 1 billion women around the world will enter the
global economy during the coming decade. They are poised to play a significant role
in countries around the world as significant as that ofthe billion-plus populations of
India and China. Yet this "third billion" has not received sufficient attention from
governments, business leaders, or other key decision makers in many countries.
Research from United Nations Entity for Gender Equality and the Empowerment of
Women indicates that there is a direct link between increased female labor
participation and growth. It is estimated that if women's paid employment rates were
raised to the same level as men's, America's GDP would be 9 percent higher; the
Euro-zone's would be 13 percent higher, and Japan's would be boosted by 16 percent
and in developing economies, the effect is even more pronounced. The United Arab
Emirates would see a boost of 12 percent in GDP, and the Egyptian economy would
grow by 34 percent. It is estimated worldwide that, approximately one third of all
businesses are owned by women. Despite this, there is a need for changing mindset
towards women so as to give equal rights as enshrined in the constitution.
Simply put, empowering half of the potential workforce has significant economic
benefits beyond promoting gender equality (Duflo 2005, World Bank 2012). This
growth stimulus is particularly true for female entrepreneurship and the economic
dynamics that entrepreneurship promotes.
II. Literature Review
A. EntrepreneurshipMeaning
The origin of the basic word "Entrepreneurship" is from a French word
"Entreprendre", where it cradled and originally meant to designate an organizer of
certain musical or other entertainments. Since then, the term "Entrepreneur" is used
in various ways and various views. Broadly speaking, a person who assumes and
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Women Entrepreneurship The Key Accelerator for Empowered India
57
bears all types of risks involved in an enterprise, who organizes the various inputs or
factors of production and who innovates news ideas, concepts, strategies and
methodology in business from time to time is known as Entrepreneur. Schumpeter,
1934, describes that entrepreneur is someone who innovates and whose function
is to carry out new combinations called "enterprises" and are the prime
movers in economic development.
B. WomenEntrepreneurship
"Women Entrepreneurship" means, an act of business ownership and business
creation that empowers women economically, increases their economic strength as
well as position in society. Women entrepreneurs have enormous potential to bring
prosperity in the world and therefore encouraging women entrepreneurship is very
important (Me. Connell, 2007). These women entrepreneurs are generally
classified into self-entrepreneurs, inheritance entrepreneurs, and partner
entrepreneurs (Starr andYudkin, 1996).
Studies show that women business owners are making significant contributions to
global economic health, national competitiveness and community commerce by
bringing many assets to the global market. As per the analysis of research study,
women entrepreneurs have demonstrated the ability to build and maintain long-term
relationships and networks to communicate effectively, to organize efficiently, to
be fiscally conservative, and to be aware ofthe needs of their environment and to
promote sensitivity to cultural differences. Researchers contend that women
business owners posses certain specific characteristics that promote their creativity
and generate new ideas and ways of doing things.
C. Quantifying Economic Contribution ofWomen
One can determine the relationship between economic activity (GDP) and
employmentforagivencountrybyusingthefollowingequation:
per capita GDP =labor productivity x amount of work produced per person x employment
rate x age factor.
Hence, positive changes in labor productivity, hours worked, employment rate, and
demographics all positively affectGDP.
Amore scientific form ofthe equation looks like this:
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58
pacap."ta GDP-GDPIB X BIE X EIWAI' X WAI'/P
Where:

hour worked/employment (annual average in workiq hour per employed
person).
employment/working-agepopulation (1 S-64) (employment rata).

Goldman Sachs, in 2007 calculated the impact of greater female participation in
workforce that em have a hqe impact on national economy. It assumed that raising
female employment to the male employment level in a country would boost the
overall employment rate by a meuurable amount [(male rate-to-overall
rate )/overall rate ]-andalsopercapitaGDPbyaaimilaramount.
IlL The Global Women
..4. PositiiJIIO/WOIIWIIIIIIITqmwii'Gioklly
In tile 21atcentury, womenajoymme fi'wlam ad powertlwl ever before. However, they
an: still d.isadVIIItagcd when compved to men in virtually all aapecls of life. Women an:
ckprived of equal accesa to education, heallh can:, capiCa1, and dcciaion making power& in
the political, social,IUid buincss Whmu, men are cmlited with perf'Ol'llliq dJree
quarters of all economic adivitics in developing c:ountrics, women aetwilly pcafwm 53
pm:ent of the work, according to the United Natiou. The 1995 UN HUDWlDevelopment
hporf.states1hat"ani!Biimatecl$16trillioninglobalou1]ndiscummtly'invUible',ofwbic:h
$111rillioniaeatimatedtobeproduoodbywomen".
The graph below clearly dtmcmsbates 1hat 865 ID111ion wam1111 live outside the Global
Bccmomic system worldwide, which will grow to 1 billion in the comingdooade.
AllCO!ding to the Global EnbepeneurBhip M<mifm (GEM) 13th Aimwd Survey Report
(2011) CCJildnc:ted in 54 ec<momiel, 8l"'mD"8 divene geographies and a nmge of
development levels, it is e,t'imatcd that 388 million tmln!pnmmm Willa actively engaged in
starting IUid nmning new buaineasea in 2011. Tbeae included an eatimate that 163 mmjon
women early-slllio enttepreU1118, 165 million YOULI8 early-ctap cmbeplen"lll'S
between the ages of181U1d3S, 141 million early-stage en1Zepmltul'l whoexpec1ed to create
a least five new jobs in the lieD five years, 6S million early-slap entrepreneurs who
'

59
expedtd to create 20 or more new jobs in lhc l!eld five years, 69 million early-stage
elllrepreDew's tludofii:rilmovadveproduds IDd services dware new to customers ami have
:few o1lu!r compll1itun, 18 million early-ataga ~ dw sell at least 2S% of their
produc11andservices iD.tmulionally.
865 million ww
worl4wido lead liC4
outside the -nomio
II)'Btm1
91.8
2020 {Ill Mmlou)
649.3
Thcae 865 million
women in 2020 will
~ v h l y glOW 10
1 bil&n infoUowiJis
decade
JJ. CtmtlihfllillllafWOlffiiiiB11tnp,_,,_.,.GIDklECOIIIIIIf,1
Overlhcnextfi.veyears,thcBottonConsultingOroup(BCO)eslimatesthatglobal.incomes
of women wiD grow from Sl31rillian to SIS trillicm. That incremental SS trillion ia nearly
twice the growth in GDP expeetcd from China. ($4.4 to $6.6 trillioa) aDd IDdia ($1.2 trillion
to $1.8 trillion) combined. Globally, womc:n are the biggest emergiDg market ever sem.
0ven11, men cam nearly twice u IDIICh IDOI1CY u women today, but that gap wiD shrink u
momwumenmdartholabarfarceand atbipiii'WIIpl1han evbaf'ore. 'I'h11vastmajority of
new illcome growth over lhc neatt1al yeara wiD come from womCD. Tb chart below ahowa
thaOrowthofWomen'sc:ontributiontoForbmeSOOCompamas:fi:mnl997to2007. 'l'hedata
ahows1hatgmdual.lywomc:nareiacreuiDgdWrabaleinbulille8aatal.llevel8global.ly.
'l'hlmiiiRI abou18 nrillian WOIIIe!HlWUCl entmprises in 1hll U.S. These businesaes hava an
amma1 impactof$3 trillionandcreateormaintain moretlum23 mjmonjobs i.e.16%ofal.l
U.S. cmploymant, acc:onliDgto1h11 Canter for WOIIICIII's BusiniiSS Rctsoan:h. The Canter also
fouDd dw while women-owned :lhmJ accoiiDt far 40"AI of al.l privately held :firma, only one
in fi.vewomcn-ownedfirms have revenue over $1 million.
ISIIN: :1149-1006, W. 3, N"' I,-:1013
60
Table 1: Growth in Women's Contributions to Fortune 500 Companies from 1997 to 2007
Level in Fortune 500 Companies Increase from 1997 to 2007
CEOs 2 to 13
Top earning officers 61 to 142
Board seats 643to831
Corporate officers 1,173 to 1,344
Source: Catalyst Census of Women
Research shows the contribution of women entrepreneurs towards GDP in various countries
globally.
Table 2: Women Entrepreneurs towards GDP
Country Gross Impact on GDP Net Impact on GDP
Argentina 19% 12%
Brazil 15% 9%
China 8% 5%
Denmark 4% 3%
Egypt 56% 34%
France 7% 4%
Germany 7% 4%
India 45% 27%
Italy 19% 11%
Japan 15% 9%
South Africa 17% 10%
Spain 10% 6%
Sweden 3% 2%
Tanzania 3% 2%
United Arab Emirates 19% 12%
United Kingdom 8% 5%
United States 8% 5%
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
61
C. Global Problems For Women Entrepreneurs
Globally, only 20% of women cite income from a business as the main source of wealth. The
survey said that, today's global picture of female wealth was largely driven from earnings
and business ownership (83.9%) or from personal investments (32.8%), which compares
favorably to marriage (24. 7% ), divorce (2.2%) and inheritance (19 .9% ).
Global Competitiveness Report 2011, shows that economic participation of Asian countries
is far behind Europe and USA; despite that the survey titled 'Barclays Wealth Insights: A
Question of Gender' said that, "compared to any other global regions, wealth generated by
female entrepreneurship is highest in Asia, where 26% cite income from a business as their
main source of wealth".
Outputs
THE THIRD BILLION INDEX
Finland
Canada ""' Australia
""' //Norway
Germanx.__ .
France -----
AfricaK . Sweden
Smgapore
D / Belgium
S o
1 , , -o -, Netherlands
D o: \
'" ------------o---o- -o- o--f;ii Qr-il-ci!Jt - 1>\).-----------
Chad : !If : Brazil
D D ' or I /A Argentina ll. United
D D D '-a ,,,.. States
0 Egypt D D __ , : Japan
D D D '\. D D :ll.
D 0 I
/ DO ?D D:
India / 0 D
Morocc Jordan P., 1 Kuwait
oo :
/ D Turkey United 4mb
Syrus ? Emirate:
Saudi Arabia 1
80
70
60
40

30
20
I
20 30 40 50 60 70
Source: Third Billion Index (Booz & Company); data from World Econorni c Forum and Economist Intelligence Unit
Fig: Five Country Clusters, Based on Performance in Economically Empowering Women
In a research conducted by Booz & Co. on Women Entrepreneurship in 128 countries the
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
62 AdNJQ\lan
result shows:
Argentina "On the Path to Success"
Bmzil "On the Path to Success"
China
ss
"Forging Their Own Padl"
Gemumy
s
"On the Path to Success"
India use "At the Starting Gate"
11aly 33""' "On the Path to Success"
Japan 43
111
'Taking the Right Steps ..
SoWh Africa "On the Path to Success ..
Tanzania
"At the Starting Gate"
United States 3ot' "On the Path to Success"
The research shows that economic pat1icipation of women is maximum in North America
and lowest in Latin America. InAsia it is fairly low as compared to Buropean Countries.
1. Economic Parddoatlon
6.0 ----,
5.0
r--
4 0
i-
r--
3.0 1- r--
1-
2.0
I- -- 1-
t.O
i-
!-----;
00
f1IICICJ.. As1"
Alr'lnA
The economic opportunity available for women entrepreneurs is maximum in European
Countries and low for Asian countries.
2. Economle Opportanlty
60
5 .0
r--
r--
J
-
I
-
d .O
3 .0
2 .0
1.0 -
0 .0
M lddtc E a.z.t & A!iiu
Alu (;: SI
-
.--
.--
-
-
-
-

ISSN: 2249-1066, Vol. 3.No.l.llme2013
The educational attainment for women is lowest in Africa and maximum in Eastern
Europe resultins is maximlDD women capable for starting their own business.
3. Educatiooal AUaimneD.t
!S.U
G.O
,..----
,..----
r- -
- 1-
4.0

-
r-- - I--
;> I)
-
r-- - I--
1.0
- r-- - I--
0.0
Mieldl!: & A!.iJ. Al teti:X. O:::eo::u'lia Llll iu Ati'M.'ti01 EU 15 C.G'.ft'1fl
Amea Euro:>e
:rv. The Indian Woman
A. PosilionOflmlilzn Womm
63
The Indian woman has never given a chance to prove that they lag behind anyone despite
that the women are 1reated as second citizen of the country. According to 20 ll census, the
sex ratio in India is 1 female /1.08 males and the literacy rate oflndia as per the Provisional
Population Totals of Census 2011 is 74.04. Male Literacy Rate is 82.14 which is higher than
the female literacy rate of 65.46. It is significant to note that the gap in literacy rate among
males and females has reduced to 16.68 in the country. The progress towards gender equality
is slow and is partly due to the failure to attach money to policy commitments. The data
shows that there is considerable change in the position of women in Indian society. Thble
below indicates demographics, health and family welfare, literacy and employment etc of
Indian society.
Table 3: Progreu of Indio Women, 2008
Development Indieaton WomeD Men Total WomeD Men Total
1. Demography
i) Population
264.1 284.0 548.1 495.7 531.2 1027.1
(in million in 1971 & 2001)
ii) Decennial Growth (1971 &
24.9 24.4 24.6 21.7 20.9 21.34
2001)
IliSN: 2249-1066, 3, No. 1, 1lme 2013
64
2. Vital Statistics
i) Sex Ratio (1971 & 2001) 930 - - 933 - -
ii) Expectation of Life at Birth
50.2 50.5 50.9 66.91 63.87 -
(1971 & 2001-06)
iii) Mean Age at Marriage (1971
17.2 22.4 - 19.3 23.9 -
& 1991)
3. Health and Family Welfare
i) Birth Rate (1971 & 2008) - - 36.9 - - 22.8
ii) Death Rate (1970 & 2008) 15.6 15.8 15.7 6.8 8.0 7.4
iii) Infant Mortality Rate (1978 &
131 123 127 55 52 53
2008) Per 1000 live births
iv) Child Death Rate (2007)
- - - 16.9 15.2 16.0
(0-4 years) (2007)
(5-14 years) - - - 1.2 1.1 1.2
v) Maternal Mortality Rate
468 - - 254 - -
(1980 & 2006)
4. Literacy and Education
i) Literacy Rates ( 1971 & 2001) 7.9 24.9 16.7 54.28 75.96 65.38
Gross Enrolment Ratio (1990-
91 & 2006-07) (%)
Classes 1-V 85.5 113.9 100.1 107.8 114.4 111.2
Classes I-VIII - - - 45.3 46.6 46.0
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65
5. Work and Employment
i) Work Participation Rate
14.2 52.8 34.3 25.68 51.93 39.26
(1971 & 2001) (%)
ii) Organized Sector 19.3
155.6 174.9 51.21 (19%) 218.72 269.93
(No. in lakhs in 1971 & 2006 (11%)
iii) Public Sector
8.6 (8%) 98.7 107.3
30.03
151.85 181.88
(No. in lakhs in 1971 & 2006 (16.51%)
6. Decision Making
i) Administrative
lAS (2002 & 2006)
535
4624 5159 571(11.9% 4219 4790
(10.4%)
IPS (2005 & 2006)
142
3056 3198 150 (4.7%) 3059 3209
(4.4%)
ii) Political
PRis (No. in lakhs in 1997 & 8.14
17.84 25.98 10.38 (36.83 17.79 28.18
2009) (31.3%)
Legislative Assemblies 141
2632 2773 229 (5.6%) 3838 4067
(No. in 1985 & 2000) (5.1%)
Parliament (No. in 1989 &
~ (61%) 721 768 80 (10.12%) 710 790
2009)
Notes:
@Refers to 1995 in respect of only 9 States viz. Gujarat, Haryana, Kerala, Madhya Pradesh, Punjab,
Rajasthan, Tripura and West Bengal. Figure in parentheses indicate the percentage in the total and
year of the data in respective columns. Data from Planning Commission. India, Ministry of Human
Resource Development, Department ofWomen and Child Development. (200 1 ).
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66
Source:
Working Group on Empowerment of Women: Tenth Plan (2002-07): Report. New Delhi. p. 43.
India, Ministry of Human Resource Development, Department of School Education and Literacy.
(2009). Annual Report 2008-09. New Delhi. p. 307-08,317-18. India, Registrar General. (2008).
Sample Registration System: Statistical Report 2007. New Delhi. p. 83-84. India, Registrar
General. (2009). Sample Registration System Bulletin, October 2008. New Delhi. p. 1-5.
B. Contribution of Indian Woman Entrepreneur towards Indian Economy
The performance of the Indian economy since the later part of 1990s marks a significant
departure from that of earlier periods in terms ofGDP growth. This is coupled with a distinct
demographic advantage arising due to the fast-changing age distribution of population in the
country (MoL&E, 2010). After the slowdown in growth in 2008-09, Indian economy has
experienced a robust and broad-based growth of8.4 per cent in 2009-10, mainly driven by a
turnaround in industrial output, and continued resilience of service sector. Over past few
years, India has moved to a higher growth phase of 8 to 9.5 per cent, and the dip in growth in
2008-09 is viewed to be a minor slump in the Indian economic growth story.
Overall annual growth rate in GDP between 1999-2000 and 2004-05 was about 5.99
percent. In the case of contribution ofwomen, the growth rate was lower at 5.61 per cent as
against 6.1 per cent in the case of males. While the growth rate of GDP in formal sector was
about 7.6 per cent, it was only 4.5 per cent in the informal sector. GDP contribution of
females in formal sector, however, recorded a higher growth rate of 9.2 per cent.
Apart from women workers, Indian women-entrepreneurs have been making a considerable
impact in almost all the segments of economy which is more than 25% of all kinds of
businesses. In India "Entrepreneurship" is very limited amongst women especially in the
formal sector, which is less than 5% of all the business.
Table 4: Women Work Participation
Country Percentage
India (1970-1971) 14.2
India (1980-1981) 19.7
India (1990-1991) 22.3
India (2010-2011) 31.6
USA 45
UK 43
Canada 42
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67
Indonesia 40
France 38
Sri Lanka 35
Brazil 35
Source: Centre for Monitoring Indian Economy Report, 2011
Table 5: Women Entrepreneurship in India
States No. of Units Registered No. of Women Entrepreneurs Percentage
Tami1Nadu 9618 2930 30.36
Uttar Pradesh 7980 3180 39.84
Kera1a 5487 2135 38.91
Punjab 4791 1618 33.77
Maharastra 4339 1394 32.12
Gujrat 3872 1538 39.72
Karnatka 3822 1026 26.84
Madhya Pradesh 2967 842 28.38
Bihar 7344 1123 15.04
Other States & UTS 14576 4185 28.71
Total 64,796 19,971 32.82
Source: Centre for Monitoring Indian Economy Report 2011
C. Problems for Indian Women
Despite much economic advancement since liberalization began, role of women in Indian
economy still lags well behind that of advanced economies (e.g., Dunlop and Velkoff 1999,
Mammen and Paxson 2000, Ghani 2010, World Bank 2011 ). Cross-country data from the
World Bank Entrepreneurship Snapshots find that India's rate of entrepreneurship rate is
lower than its stage of development would suggest; similar comparisons also highlight that
India's gender ratio is lower than its peers. This dual under-performance has cultural and
economics antecedents, but it is starting to change.
The global survey called the Third Billion Index shows on its scorecard the depleted position
of women in the country which is demanding a change for good. India gets placed at a dismal
115 on a recent global survey on women empowerment out of 128 countries surveyed. India
needs to make serious considerations to scale up the meter by employing measures to
empower women and establish a world standard in equality among the sexes.
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68
This study shows that the position of women work participation as well as women
entrepreneurship both is low in India in comparison to selected countries of the world.
Women work participation in India is 31.6 per cent where as in USA it is 45, UK 43, Canada
42, France 3 8, Indonesia 40, Sri Lanka and Brazil both 3 5 per cent.
The report prepared by the international consulting and management firm Booz & Company
ranked India on various parameters like access to work policy, entrepreneurial support,
advancement, and equal pay. It is true that women are sophisticated to play leading parts in
the global economy in the future; even then they are not given the required consideration by
government's decision makers and business leaders in many countries.
This situation is seen as a missed opportunity for large number of women all over the world
which can amount to a great number of workforces just by employing them. As for India,
with the second largest population in the world, it creates just 14 percent of world skill pool.
With 5.5 million Indian women embarking into the professional world every year, fully
fledged to succeed and climb corporate ladders, the trend seems positive.
The tradition, customs, socio cultural values, ethics, motherhood subordinates to sibling
husband and men, physically weak, hard work areas, feeling of insecurity, cannot be tough
etc are some peculiar problems that Indian women are coming across while they jump into
entrepreneurship.
V. Major Findings
Independent of the way different studies have been conducted, women entrepreneurs are
found to have an important impact on the economy, both in their ability to create jobs for
themselves and to create jobs for others. Although the actual economic impact in most
countries has not been assessed, women entrepreneurs have an important impact on the
economy.
1. In all countries women still represent a minority of those that start new firms, are self-
employed, or are small business owner-managers. Obviously, this economic resource, if
not untapped, has not been successfully explored yet.
2. Specific obstacles to women's entrepreneurship are: type of education, lack of role
models in entrepreneurship, gendering of entrepreneurship, weak social status,
competing demands on time and access to finance.
3. Women's entrepreneurship must be examined both at the individual level (i.e. the choice
ofbecoming self-employed) and at the firm level (the performance of women owned
and managed firms) in order to fully understand the differences between men's and
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69
women's entrepreneurship.
4. Women's entrepreneurship is dependent on both demand side (political and institutional
framework, family policy and market sources) and supply side factors (the availability
of suitable individuals to occupy entrepreneurial roles).
5. In addition, women's entrepreneurship depends on both, situation of women in society
and role of entrepreneurship in that same society. Both the factors that affect gender
system and factors that affect entrepreneurship in society are involved.
6. In order to provide accurate statistics on women's entrepreneurship, a number of
possible method biases need to be controlled.
VI. Recommendations
1. Better Support System to Empower Women
Government and business leaders need a better understanding of women as employees,
producers, and business owners and strengthen the impact of their contribution through
improved measures like, infrastructure improvements (such as safe roads for travel to
work), the removal oflegal restrictions on female participation in the workforce, more
cultural support for female leadership, or more inclusive approaches to risk and credit.
2. Ensure Proper Child Care and Equal Treatment
Increase the ability of women to participate in the labor force by ensuring the availability
of affordable child care and equal treatment in the work place.
3. Listen to Voice ofWomen Entrepreneurs
The creation of government offices of women's business ownership is one way to
facilitate this. Such offices could have programme responsibilities such as providing
women's business centres, organizing information seminars and meetings and/or
providing web-based information to those wanting to start and grow a business.
4. Incorporate Women's Entrepreneurial Dimension in Formation Policies
This can be done by ensuring that the impact on women's entrepreneurship is taken into
account at the design stage.
5. Promote Development ofWomen Entrepreneur Networks
These are major sources of knowledge about women's entrepreneurship and valuable
tools for its development and promotion. Co-operation and partnerships between
national and international networks can facilitate entrepreneurial endeavours by women
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70
in a global economy.
6. Periodically Evaluate Impact Policies on Women-owned Businesses
The objective should be, to identify ways to improve the effectiveness of policies and
measure the impact on women entrepreneurs.
7. Ensure that Women Entrepreneurs are not Hampered by Discriminatory Laws
Although women represent 40-50% of businesses in developing countries; World
Bank/IFC's doing business project has identified several legal and regulatory barriers
facing women in terms of working timings, loans, their credibility etc.
8. Help Women-owned Companies, Scale Their Businesses by Meeting their
Distinctive Needs
These needs include lack of access to capital and business networks. While women own
about 30% of US businesses, only about 5% of all equity capital investments in the US
go to businesses headed by women and just 3% get investments from venture capital,
according to Babson College research.
9. Improve Women'sAccess to Global Supply Chain
At present, global spending on supplier diversity is largely un-documented. According
to researches, women entrepreneurs' are largely ignored in global supply chain.
VII. Conclusion
Women empowerment is one of the momentous issues of contemporary development
policies in developing countries. Data from World Bank, World Economic Forum and other
organizations demonstrates that, women-owned businesses can be the tipping point for a
global economic comeback. Giving women the chance to become financially independent
and make the most of their talents is the key to higher living standards and stronger
economies. With the global economy still struggling through a slow and spotty recovery, it is
in everyone's interest to help women make the most of their potential. This is truer today,
than ever before. Despite the admirable efforts of these women-and millions like them in
rich and poor countries around the world, they need support systems to succeed.
Governments and corporations will need to step in with smarter policies that can remove
social, cultural, and professional constraints on women and foster greater economic
opportunities.
At the end, it is concluded that women empowerment which is declared as Millennium
Development Goal by UNDP, could be achieved only when, all concerned bodies will work
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
71
in cooperation and women's capabilities and their contributions are applied in full potential
for the economic and potential development of entire society and thus ensuring sustainable
development.
References
[ 1] Aid in Support ofWomen's Economic Empowerment," OECD-DAC, January 2011.
[2] Annual Report of the UN Economic and Social Commission for Asia and the Pacific
(ESCAP), 2007.
[3] Batliwala, S. (1994). The meaning ofWomen's Empowerment: New Concepts from
Action. Pp.127-138 in Population Policies Reconsidered: Health, Empowerment
and Rights.
[4] DFID (2007). Gender Equality Action Plan 2007-2009 making faster PDFID
(2007). Gender Equality Action Plan 2007-2009 making faster Progress to Gender
Equality.ADFIDPracticePaper, UK.
[ 5] ILO, 'Global Employment Trends for Women', 2009.
[ 6] Interventions, and Policy. Asian Development Review, 17, 96-131.
[7] Kabeer, Naila (1999). Resources, Agency, Achievements: Reflections on the
Measurement of Women's Empowerment. Development and Change, 30,435-464.
[8] Kishore, S. and Gupta, K. (2004). Women's Empowerment in India and Its States:
Evidence from the NFHS, Economics and Political Weekly
[9] Klasen, S. (2006). UNDP's Gender-related Measures: Some Conceptual Problems
and Possible Solutions, Journal ofHuman Development, 7 (2), 243-27 4.
[10] Rajagopala Nair and Mohan P. Philip, "Entrepreneurial Motivation in Kerala,"
Enchanting Kerala, http:/ I enchantingkerala.org/kerala-articles/ entrepreneurial-
motivation-in-kerala.php.
[11] Report on the Gender Initiative: Gender Equality in Education, Employment and
Entrepreneurship," OECD, May2011,p. 34.
[12] Sylvia Ann Hewlett et al., "The Battle for Female Talent in India," Center for Work-
Life Policy, 2010.
[13] United Nations Development Programmed (UNDP) (1995). Human Development
Report 1995: Gender and Development. New York and Oxford: Oxford University
Press.
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[14] United Nations Development Programmed (UNDP) (1998). Human Development
Report 1998: Consumption for Human Development. New York and Oxford:
Oxford University Press.
[15] World Bank (2001). Engendering Development: Through Gender Equality in
Rights, Resources, and Voice, New York: Oxford University Press.
[ 16] World Bank, 'World Bank calls for expanding economic opportunities for women as
global economic crisis continues', press release 29 January 2009.
[17] Women's Economic Empowerment: Issues Paper," DAC Network on Gender
Equality(GENDERNET),April2011,p.26.
[ 18] World Economic Forum, "Women's Empowerment: Measuring the Global Gender Gap",
2005
[ 19] UNICEF, 'Women and Children: The Double Dividend of Gender Equality', 2007.
*****
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
Shop & Hop: Virtually an Emerging Landscape of Retail and
Its Impact on Economy
Abhiruchi Pandey
Lecturer, Sri Ramswaroop Memorial Group of Professional Colleges, Lucknow
JayaJain
Sr. Lecturer, Sri Ramswaroop Memorial Group of Professional Colleges, Lucknow,
Abstract
E-commerce is a way of trading in goods and services through the electronic medium. In
simple words, electronic commerce means buying and selling of goods and services over the
World Wide Web. The global financial crisis has seen retailer's turn towards e-commerce.
Retailers who are looking to maximise overheads and also improve their profit margins and
consumers who are lookingfor greater value and convenience, continue to drive the growth
in online shopping. In this e-age, online shopping is a trend which is sweeping away the
traditional brick-and-mortar retailers and the shopping trolleys of shopping malls. In
today's scenario even the big players or big brands are trying to promote and sell their
products online.
Online shopping is a form of electronic commerce (e-commerce) whereby consumers,
directly purchase goods or services from a marketer, over the internet without any mediator.
It can also be called as, the internet market place or the virtual shopping ore-shopping.
The online shopping is a boon to the new generation, as it saves a lot of money by the way of
fuel and parking. Moreover, it is said that internet shopping is growing in a big way in India
and at present accounts toRs. 2000 crore business, and it is said that by 2015, it will reach to
Rs. 7000 crore. There was a time when mall culture was an innovation in the market where
people could get all the products under a single roof But the recent trend of online shopping
gives the ease to consumer to shop around the world by just a click of his mouse. It is a
makeover ofteleshopping.
This paper focuses on the growing trend of digital marketing in the form of online shopping
internationally.
Key Words: Online shopping, e-commerce, traditional shopping, drivers, challenges, retailing,
internet.
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
74
I. Introduction
E-commerce is a domain conducting business on Internet. It represents the digital age. E-
commerce stands for electronic commerce and is associated with buying and selling of
goods through the electronic medium, i.e., internet, phone, mobile etc.
II. Types ofE-Commerce Models
1. Business to Consumer (B2C): This is the most common model of e-commerce. In this
model, online businesses sell to individual consumers. The business houses need to
have an e-commerce website which will list all their product categories with detailed
information about products through photographs and animation.
2. Business to Business (B2B): It is the largest form of e-commerce. In this form,
buyers and sellers both are business entities and do not involve any individual
consumer. It is like the manufacturing and supplying of goods to a retailer or a
wholesaler.
3. Consumer to Consumer (C2C): Through this model, a consumer can sell his used
items to rest of the consumers which can be done through auction or bidding. e.g.
eBay.com.
4. M-Commerce: M-commerce is done through mobile phones. It is commonly used by
fmancial institutions due to which it is also known as mobile banking. The consumer
can also use M-Commerce model for paying their utility bills, insurance premiums,
telephone bills, income taxes etc.
Table: B2C E-Commerce Sales* in Select Countries in
Asia-Pacific Region, 2006-2011 (billions)
2006 2007 2008 2009 2010 2011
Australia $ 9.5 $ 13.6 $20.4 $26.4 $28.7 $ 31.1
China** $2.4 $ 3.8 $6.4 $ 11.1 $ 16.9 $24.1
India $ 0.8 $ 1.2 $ 1.9 $ 2.8 $4.1 $ 5.6
Japan $36.8 $43.7 $56.6 $69.9 $80.0 $90.0
South Korea $ 9.6 $ 10.9 $12.4 $ 14.0 $ 15.9 $17.9
Asia-Pacific $59.1 $73.3 $97.7 $ 124.1 $ 145.5 $ 168.7
Note: converted at average annual exchange rates (projected for future
years); total B2C e-commerce sales include all purchases made on a retail
website, regardless of device used to complete the transaction;
*includes online travel, event ticket and digital download sales;
** expludes Hong Kong
Source: eMarketer, January 2008
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Shop & Hop: Virtually an Emerging Landscape of Retail & Its Impact on Economy
Fig: Distribution of 82C E-Commerce Sales* in Select Countries in
Asia-Pacific Region, 2006-2011 (o/o of total)
2006
China India
4% lo/o
2011
Australia
SouthKorea 18%
16,...
75
Note: Converted at average annual exchange rates(projected for future years); total B2C
e-commerce sales include all purchases made on a retail website, regardless of device used to
complete the transaction;
*includes online travel, event ticket and digital download sales;
**excludes Hong Kong
III. E-Commerce Mechanics -A Process Innovation in Retailing
Dawson (200 1) identified a new commerce, comprised of an innovative force, laden with
information enabling companies to speed up activities and increase their scope.
Sl. No. Characteristics of New Commerce
1. New commerce companies operate through multiple marketing channels.
2. Channel structures in new commerce are intermediated in new ways.
3. New commerce retailers operate internationally.
4. New commerce uses new forms of non price competition.
5.
In new commerce. organisational scale and scope economies become more
important than establishment scale and scope economies.
6.
New commerce companies do not subscribe to a traditional view of
difference between goods and services.
7.
New commerce companies are using the convergence of information and
communications technologies as a primary source of innovation.
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8. New managerial ideas support innovation process.
9. Customer loyalty is a central concept in new commerce.
10. Public sector policies relate to old commerce not new commerce.
Source: Adapted from Dawson (2001)
IV. Benefits of E-Commerce
Growing awareness among the business community has given rise to various opportunities
in e-commerce. The increased cost efficient internet connections and PCs have resulted in
adaptation of net commerce among the consumers. Consumers now get benefited of
innovations by:
1. Easy accessibility to a fast growing online community.
2. Unlimited shelf space for products and services.
3. Timeless and limitless reach.
4. Lowest operational cost for the national and international
brands.
V. Digital Marketing
Digital marketing is a way of advertising and marketing a product through digital sources
like internet, television, radio and mobile phones. It is similar to the traditional marketing
such as direct marketing but in a digital fashion.
There are two forms of digital marketing: Push and Pull. Through Pull digital marketing, the
consumer sees the content by searching the web while in push digital marketing, the content
is sent to the customer via e-mail. Examples of Pull Digital marketing are websites and
blogs, streaming media. Examples of Push Digital marketing are email, text messages and
web feeds.
VI. Online Retailing
Online retailing covers a broad spectrum of business activities; e.g. banking, retailing,
entertainment, information portals and auction houses. In most instances, exchanges occur
between an online retailer and an online consumer. In the case of auction sites, such as e Bay,
exchanges may occur between individual bidders with the business site acting as an
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77
intermediary. Online retailing differs from traditional direct retailing in three ways:
1. Huge data creation and collection,
2. Information and communication is global in scope,
3. Centralized control mechanisms are absent (Brown and Muchira, 2004, p.63).
VII. Online Shopping
Online shopping, is the buying and selling of product or services over the internet, instead of
going to traditional brick and mortar store. Amazon. com, which was founded by JeffBezos,
was the first online bookstore which made history.
The term online shop can be substituted with the words like e-shop, e-store, internet shop,
web shop, web store, online store or virtual store. The process of online shopping is a type of
B2C online shopping.
VIII. History of Online Shopping
The onset of online shopping started with the introduction of World Wide Web server and
browser in 1990 by Tim Berners-Lee. It got commercialised in 1991. In 1994, a German
company, Inter shop introduced its first online shopping system. In 1995, Amazon emerged
as an online shopping portal followed by eBay in 1996.
IX. Shopping Cart System in Online Shopping
A customer can find a product of his interest by visiting the website of the retailer by
searching from the various alternatives available with the help of shopping search engine.
The virtual shopping cart system is similar to the physical shopping trolley system in a
conventional store. The online retailers, allows the customer to accumulate multiple items
and to adjust quantities. Then the process of"checkout" follows in which the payment and
delivery information is collected by the retailer. The customers can have a permanent online
account for the sake of convenience as the information will be entered once and can be used
in future. After the transaction is completed, the customer receives a confirmation e-mail.
X. Mode of Payment
Credit cards are the most commonly used mode of payment by the online shoppers.
Alternatively, they can also pay by:
1. Billing to mobile phones and landlines
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2. Cash on delivery
3. Cheque
4. Debit cards
5. Direct debit in some countries
6. E-money in some cases
7. Gift cards
8. Postal money orders
XI. Mode of Product Delivery
After the transaction is complete, the question arises is how to deliver the product. There are
several modes of delivery such as:
1. Downloading: This method is often used for digital media products such as software,
. . .
music, movies, or Images.
2. Drop Shipping: The order is passed on to the manufacturer or third party distributor,
who ships the item directly to the consumer, by passing the retailer's physical location
to save time, money, and space.
3. In Store Pickup: The customer orders online, fmds a local store using locator
software and picks the product up at the closet store. This is the method often used in
the bricks and clicks business model.
4. Printing Out: provision of a code for, or emailing of such items as admission tickets
and scrip (e.g. gift certificates and coupons). The tickets, codes, or coupons may be
redeemed at the appropriate physical or online premises and their content reviewed to
verify their eligibility (e.g. assurances that the right of admission or use is redeemed at
the correct time and place, for the correct amount and for the correct number of uses).
5. Shipping: The product is shipped to the customer's address or that of a customer-
designated third party.
6. Will Call, COBO (in Care Of Box Office): or "at the door" pick up. The patron picks
up pre-purchased tickets for an event, such as plays, sporting events, or concert either
just before the event or in advance. With the onset of the Internet and e-commerce
sites, which allow customers to buy tickets online, the popularity of such services has
increased.
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XII. Factors Affecting the Online/Offline Shopping Preferences
Conceptual model ofthe role of product and consumer characteristics in online/offline
shopping preferences.
Attribute Values
,.---
.......
Perception of
--"
Utility of
--" Consumer
Product shopping Shopping
Characteristics
--v
Characteristics
--v
online/offiine
--v
Preferences

Attributes
Weights
XIII. Type of Products which are Most Likely Preferred to be
Purchased Online/Offline
79
Several studies have shown that "high touch" products that consumers feel they need to
touch, smell or try on are those that require an offline presence at least at the final purchase
stage (Chiang and Dholskia 2003;Lynch, Kent, and Srinivasan 2001). Levin et al. (2003)
showed that the special importance of being able to personally handle and inspect the
product before purchasing underlies the preference for traditional brick-and-mortar
shopping methods for products like clothing, sporting goods, and health and grooming
products. At the other extreme, "low touch" products like airline tickets and computer
software, generally favour online services because of the special importance placed on
shopping quickly. In between this spectrum, products like books and CDs where some
attributes like large selection play important role, are better delivered online while other
important attributes like personalised service are better delivered "virtually" offline or by
providing surrogate experiences through feedback provided by others.
Using a classification scheme similar to the high touch-low touch distinction, Girard,
Silverblatt, and Korgaonkar (2002) adopted the Ford, Smith, and Sway (1998) typology of
search, experience, and credence products to examine the influence of product class on
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preference for shopping on the Internet. Girard et al. found that preference for shopping
online was particularly strong for search products like books and PCs where most of the key
attributes can be determined online. By contrast, Alba et al. (1997) point to the greater
reliability of experimental information coming from in-store visits. However, Klein (1998)
argues that the multimedia capabilities of the Web can tum experience goods into search
goods by substituting in store visits with virtual encounters.
Related to the conclusions of Klein (1998) and Girard et al. (2002), Peterson and Merino
(2003) describe the Internet as replacing many of the traditional search methods such as
word-of -mouth and hands-on-experience. Consequently, consumers may focus less on
brand information and more on the attributes of their product searching goal.
XIV. Types of Consumers who are most likely to Purchase Online &
Offline
In a study, while sampling a nationwide panel of consumers, who had online capabilities at
home, Swinyard and Smith (2003) compared those who did not make purchases online
during the preceding holiday shopping season. They found that online shoppers were
younger, wealthier, better educated, more computer literate, more likely to spend time on
computer, more likely to find online shopping to be easy and entertaining, and less fearful
about financial loss resulting from online transactions. Bellman, Lohse, and Johnson (1999)
also found Internet shoppers to younger, more educated and wealthier, to have a more
"wired lifestyle", and also having more time-constrains than non-Internet shoppers.
Childers et al. (2001) like Klein (1998), found perceived substitutability of the electronic
environment, for personally experiencing products, to be an important predictor of online
shopping attitudes.
XV. Comparison of Online and Offline Shopping Across Stages
Paralleling models of consumer behaviour in more traditional environments. Haubl and
Trifts (2000) suggest that potential online consumers use a two-stage process of screening
products to identify a promising subset and then comparing these products to make a
purchase decision. Perceived risk of online purchasing in the form of concern about product
returns and refunds and the security of transactions on the Internet can deter online shopping
at the final stage (Levin et al., 2005). This is a particularly important issue in contemporary
marketing practice because those consumers who switch modes between the "search" stage
and the "fmal purchase" stage are utilising the resources of one shopping mode while
providing profit to the other mode.
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XVI. Shopping Trolley vs. Shopping Cart
In the past the only mode of shopping available, was a nearby shopping store, where we had
the opportunity to see the product before purchasing.
The internet revolution has changed the way in which we spend our money. Through online
shopping, we have a wide market to visit just by clicking the mouse of our PC or a laptop.
Traditional shopping limits our reach, as all the products are not available in a single store. In
contrast to this, the online shopping helps the shopper to shop beyond the geographical
boundaries ofthe country.
The traditional shopping restricts the payment mode to just cash payments, which makes the
shopper conscious of his pocket capacity. Whereas the online shopping has opened the
doorways of various modes of payment thereby allowing the shopper to shop with the help
of even plastic money (credit cards, debit cards, shopping cards, e-money, gift vouchers
etc.).
There are instances where traditional shopping has made itself superior than online
shopping. When a shopper has to shop for a product whose aesthetics play an important
criteria of evaluation and selection, online shopping lags behind traditional shopping in
which the shopper can touch, feel and smell the product.
The immediate requirements of a consumer can be addressed with the help of traditional
shopping practices. For instance, the top-up needs in the form of grocery in the kitchen, milk
for the baby, life saving medicines, fresh vegetables etc.
XVII. Advantages of Online Shopping
Advantages
To Consumers To Retailers ToE-Retailers
To Consumers
1. Convenience
2. Better Information
3. Price and Selection
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4. Ability to shop 24x7
5. Wider product availability
6. Customised and personalised information and buying options
7. Easy comparison shopping
To Retailers
1. Location is unimportant
2. Saves on wages and premises costs
3. Reaches larger audience
4. Accepts orders, 24-hours a day
ToE-Retailers
1. Global reach
2. Better customer service
3. Low capital cost
4. Mass customization
5. More value added services
XVIII. Disadvantages of Online Shopping
Disadvantages
To Consumers To Retailers
For Consumers
1. Credit card frauds and security concerns
2. Lackofinteraction
3. Can't see or feel the merchandise
ToE-Retailers
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4. Don't know how (Unawareness)
5. Premium charged for delivery
6. Difficulties with returning goods (Refund/ Exchange)
For Retailers
1. May lack know-how and technology
2. Substantial set-up, investment and ongoing costs
3. Complex logistics of fulfilment
4. E-selling less powerful than face-to-face
5. Uptake slow for goods selected by taste or smell
6. Legal problems
7. Less role for traditional high street retail expertise
8. After-sales care difficulties
ForE-Retailers
83
1. The site must be available and operational24 hours a day. This may mean employing
a night shift of customer service operators or maintenance staff.
2. The internet market is still only small in comparison to the traditional market.
3. The retailer must be vigilant maintaining the site. Regularly updating of offers,
prices, specials and products is required. Checking for errors, working links and
prompt answering is required.
XIX. Online Shopping in India
Indian e-commerce space percentage is getting higher as more and more online retailers
enter the market. The internet has been around in India since quite some time now. Although
this level of entry in the e-commerce market is good from a long term perspective, the
challenge is that most entrepreneurs don't have the resources or capital, to wait for years
before they can get profits.
Major Indian portal sites have also shifted towards e-commerce instead of depending on
advertising revenue. The web communities built around these portal sites with content have
been effectively targeted to sell everything from event and movie tickets to the computers
and grocery. Online shopping is truly catching on in India, traditional brick and mortar
stores are also getting the hang of doing business online. The trends demonstrate that
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traditional stores will keep on doing sufficient business while the online stores increase their
virtual presence on the internet.
XX. Online Shopping- TheN ext Big Thing in India
Online retailing has been a distant concept in India, except in the travel and ticketing sector.
The Future Group has been an early mover while others such as Reliance Retail, RPG
Cell com, and Tata Woolworths are gearing up to launch their own online shopping portals.
Importantly, smaller players such as Vishal Retail, Subhiksha and Spinach too are seriously
looking ate-tailing as a future revenue generator. Says, R Subramaniun, MD, Subhiksha,
"We are investing Rs 12 crore into this venture and expect 3-4% of total business coming
from online. We'll deliver across 400 towns we are present in."
The challenges in replicating the success of physical stores online are very different, and
retailers are eyeing a different set of value adds and experiences to hook customers. Some
are planning to introduce virtual shopping, where the customer can get a feel of moving
around in a mall, and can click on the items he/she wants to buy.
Online retail is also expected to benefit the credit cards business. According to credit card
companies, retail has been instrumental in boosting average consumer spending per card at
stores. According to an AT Kearney report, credit card transaction value in organised retail
has been growing at 35% in India.
XXI. Top Online Retailers in India
For more than a decade now, online merchandisers have increasingly grown their sales
activities to the point they now have reached. The Indian retail industry is valued at $270
billion, with organized retail cornering 4.5%. The organized pie is expected to see a growth
at a CAGR of37% (India Retail Report 2007) which is growing at an average rate of 4% p.a
(as per 2010 estimates).
Having the growing shopping mall trend in India, more and more net clever people are
shifting towards online shopping. And if comScore report is to be believed then there is
exceptional rise in the numbers of online retail visitors in India this year. Latest comScore
data figures that nearly 60 per cent of online users in India visited a retail site in November
2011 and the number of online shoppers increasing 18 per cent in the last year.
Table: List of Top Online Retailers 2011
Total Retail Audience 46390 100.00%
Total Retail Sites 27171 58.57%
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Top 10 Online Retailers Unique Website Visitors %age
Amazon Sites 6805 14.67%
Apple.com 3450 7.44%
Samsung Group 2759 5.95%
Flip kart. com 2675 5.77%
Homeshop 18.com 2286 4.93%
Naaptol.com 2145 4.62%
Bookmyshow.com 2125 4.58%
Myntra.com 2110 4.55%
Priceindia.com 2047 4.41%
Alibaba.com 1973 4.25%
XXII. Conclusion
Many countries in Asia are taking advantage of e-commerce through the opening of
economies, which is essential for promoting competition and diffusion of internet
technologies. With the rapid growth of internet, e-commerce is set to play an important role
in the 21st century, the new opportunities that will be thrown open, will be accessible to both
large corporations and small companies.
A multitude of strategies may be available to retail and shopping mall managers competing
in the new "Internet shopping" era. Two strategic alternatives include "brick-and-mortar"
retailers competing directly with internet retailers by offering "Internet shopping-type
benefits" and combining forces with internet retailers in a strategist effort to serve
consumers from all shopper categories.
References
[1] Armstrong, A., Hagel, J., 1996. The real value of on-line communities, Harvard
Business Review 7 4 (3 ), 134--141.
[2] Baker Michael, "Multi Channel Retailing", ICSC Research Quarterlyv.6, no.3 (Fall
1999).
[3] Kathryn M. Kimery Third-Party Assurances: "Mapping the Road to Trust in-
Retailing", Central Missouri State University.
[ 4] Tractinsky Noam, Ben-Gurion "A Study on Web-Store Aesthetics in E- Retailing: A
Conceptual Framework and Some Theoretical Implications", by University of the
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Negev, Israel & OdedLowengart, Ben-Gurion University ofthe Negev, Israel
[ 5] http:/ /www.leapfrogg.co. uk/what-we-do/
[ 6] http:/ /www.dmnews.com/can-digital-marketing-save-retail/article/123 849/
[7] http:/ /en. wikibooks.org/wiki/E-Commerce _and_ E-Business/E
Commerce_ Applications: _Issues_ and_ Prospects.
[8] http:/ /tanmaysblog. wordpress.com/20 11/02/02/ growth-of-e-commerce-and-
digital-marketing-in-india
[9] http://www.indianexpress.com/news/digital-marketing-is-just-starting-in-india/702272
*****
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The Influence of Consumer Attitude on Brand Extension
Assessment
Rishikesh Padmanabhan
Assistant Professor, Manipal Global Education Services, Bangalore
Dr. K. S. Chandrasekar
Prof. & Chairman in Mgmt, School of Business Mgmt. & Legal Studies, University of Kerala
Abstract
In this day and age, branding and brand extension are central part of a business and brand
extension has become imperative in the growth of an organization. From the past
researches, it has been identified that the fit between the core and extended product in any
category is the most important and positive factor for brand extension success. Conversely,
there are exceptions like ITC limited which was successful, even in far extension such as
cigarettes (core product) to apparel, foods, personal care and stationery (extended
products). This paper analyzes the influence of effects of consumer attitude (both positive
and negative) on the assessment of brand extension extenuating brand belief and gender
with special reference to high involvement products.
Key Words: Brand extension, brand assessment, category fit, consumer attitude, influence
I. Introduction
It is evident from the history that branding has been an essential division of marketing
products and services (Blois, 2000). Earlier, it used to be considered as a delightful name on
product cover, later on, it was understood as a promise for the customers on quality.
Past researches recognize the fact that, consumer attitude always depend on the consumer's
awareness or its past association with the parent brand, while assessing a brand extension.
Usage of branding as a strategy for enhancing the brand extensions into new product
extensions clearly indicate the requirement for understanding customer influence on brand
extension evaluation.
Attitude plays an important role, while the consumer records a product extension in his mind
which is an essential element for product extension evaluation as per the consumer
evaluation studies conducted on mood effects (Howard and Barry 1994: Isen et al. 1978;
Miniard, Bhatia, and Sirdeshmukh 1992, Kahn, 1995; Menon and Kahn, 1995). For
instance, the consumer will even be willing to accept a varied extension if in a good attitude
compared to consumers with negative attitude.
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Even though there have been researches done on consumer attitude on brand extension
evaluation, there hasn't been any proper method for analyzing the course of action that
influences the consumer. According to Luomala and Laaksonen (2000), positive attitude/
mood stimulates the customer for purchase where they seems to be much sensible while
evaluating the brand and on the other hand, the consumers may be either in good or bad
mood (unconsciously), where the effect of that would be problematic and the decision
becomes more complex.
II. Literature Review
Kotler ( 1991) elucidated brands as highly indispensable and intangible resource of a firm as
they stand for the space captured by a firm's goods and services in the mind of the consumer
and on the retail shelf space that has been occupied by the same. Brand names always serves
the customer in identifying and examining the decision making activity (Birger
Wemerfelt,1988). Researches done by Parker and Dawar (1994) signals that the trust of
consumer is more on brand as compared to cost or physical appearance.
Consumers repeatedly evaluate products by converting their evaluations ofthe parent brand
and the extended one (Boush & Loken, 1991 ).
Companies always can use attitude as an advantage, by effectively utilising advertisement
strategies to use "attitude" in favour of them through advertisements and also the
components that improve consumer attitude (Gardner, 1985). For example the consumer
will always relate a car manufactured by Toyota as a representative of brand Toyota,
whereas it will be very less in low involvement products such as sandals etc. (Boush and
Loken 1991 ). From the past researches it can be identified that the similarity of the brand is a
key influence factor in brand extension evaluation. Broniarczyk and Alba (1994) explain
that brand extension evaluation can also be encouraged by brand specific associations apart
from the similarity between the core brand and the extended brand.
Researches done by Braon and Miniard, 2002 indicates that the influence of positive
consumer attitude is very significant while evaluating a brand. It is observed that there is a
positive correlation between the core and the extended brand, where the consumer depends
on the core brand for evaluating the extensions which is more likely for products that fall
under similar category under the same brand name and the same is less likely for brands
under dissimilar category. This study is basically intended to analyze the aspects of
correlation between attitude and brand extension evaluation. Consumer decision making
becomes important, when it comes to purchase of irregular, luxurious products or services
which is more complex and relevant while purchasing high involvement products as far as
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The Influence of Consumer Attitude on Brand Extension Assessment
89
the customer is concerned.
This study is basically intended to analyze the aspects of correlation between attitude and
brand extension evaluation for high involvement products.
III. Hypotheses
A. EvaluationofBrandExtension
According to Yeung & Wyer, 2004, consumer while evaluating a brand may not be doing it
in detail, but may depend upon the attitude that he had, when he experienced the product for
the first time. It depicts the fact that, attitude plays an important role irrespective of the
resemblance ofthe extended brand with the parent brand.
Pahl Wostl had done a number of researches on consumer attitude and expresses that gender
differences will alter the buying behavior. It is being suggested that, the dimensions of
consumer attitude will increase his views of the parent brand similarity with the brand that
has been extended. Certain attitudes can impact the consumer evaluation judiciously and
similar kind of extensions through the inspiration of perceptions of comparison.
B. Attitude of the customer and influence of communication
Research studies explored the importance of attitude and its impact of consumer buying
behavior as recalling a purchase (Stemthal and Lee, 1999). Within this type of research, a
number of attitude types will be taken into consideration such as positive attitude, joyful
attitude, unhappy attitude and irate attitude and the study restricts its investigation on
positive and unhappy attitude.
Positive attitude will always deliver a joyful surrounding and influence the consumer to
communicate effectively involved with less thinking in decision making with the brand,
whereas an unhappy environment will be challenging and will make it much difficult for the
consumer in thinking and decision making. Therefore, it is important to investigate the
attitude effect for understanding its impact for further improvement on both these in
influencing the decision making of the consumer and the following hypothesis were
postulated for the study.
C. Attitude and its effect on Brand Extension
H
0
: Positive attitude will result in a fair evaluation of distant brand extension only for
utilitarian brands (excluding hedonic).
H
1
: Negative attitude will have an undesirable evaluation for close brand extension only for
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utilitarian brands (excluding hedonic).
H
2
: For females, positive attitude will result in an improvement of brand extension
evaluation for distance brand extension, but for men, it can't be meaningful.
H
3
: For men, the negative attitude will result in an improvement of brand extension
evaluation for close brand extension but for female, it can't be meaningful.
IV. Research Methodology
Experimental study was conducted for this research. Attitude, Brand excellence, brand
extension, Brand belief and Gender were taken for the experimental study. The Extensions
were distinguished as distant and close extensions. Positive attitude was aimed at distant
extensions and unhappy/negative attitude was on close extensions. Brand belief was split up
in to utilitarian and hedonic. A total of 100 business management students participated and
convenience sampling method was used for the study. The questionnaire was prepared by
considering the variables such as attitude, brand excellence, brand belief and brand
extension. Familiar and most common products which are known to both male and female
(students) were considered for the study. Nokia mobile phones and Titan watches were
selected for a preliminary test and put as representation of utilitarian and hedonic brands. It
was also checked to explore the respondents understanding level on the similarity ofNokia
mobile phones to other possible extensions such as MP3 player, computer, camera and
mobile applications. Correspondingly time piece, anklet wallet etc. were chosen to evaluate
the resemblance level of watch. The respondents were requested to choose the product
categories on the basis of distant and close extensions. Consequently Nokia digital camera
(Close extension) and Nokia web applications (distant extension) were formed. Titan time
piece (Close extension) and Titan anklet (distant extension) were formed for hedonics. The
extension was classified as distant and close extensions wherein terms of close extensions,
the gap between the parent and extended brand would be insignificant while in distant
extensions, there would be no relation in the product set between the parent and extended
brand. Positive attitude was aiming at distant extension and the unhappy/negative attitude
was focusing on close extensions. Brand belief was classified in to hedonic and utilitarian
and the hypothesis Ho and H
1
were formulated accordingly. Similarly Gender was
considered as a variable for hypothesis H
3

The common brands known to both male and female segments were taken into
consideration for both hedonic and utilitarian brands. Significance of hypothesis has been
tested and represented by "P". The confidence level for the test is 95% and the significance
level is 5%. So if the "P" value is less than 5%, then it would be significant. Here in all
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hypotheses, value ofP is less than that and hence it is significant.
V.Findings
To analyze the impact of brand extension acceptance based on attitude, the respondents
mood was manipulated as mentioned above in methodology of the study. The results of the
experiment on the basis of positive and unhappy (negative) attitude states that there are
remarkable difference between both these attitudes, wherein the case of positive attitude
MPositive= 4.756 and unhappy attitude Unhappy= 2.153 Cronbach's (alpha) was used to test
reliability of the variables such as attitude and brand resemblance. The cronbach's value was
between 0.7405 and 0.8429, which shows high reliability as a value above 0.7 is acceptable
and it is considered as reliable.
It has also been proved that attitude boosts the assessment of utilitarian brand. On the other
hand, it is not noteworthy for hedonic brands (P value= 0.123 ). Hence, the positive attitude will
always have positive inclination towards the evaluation of distant brand extension for
utilitarian brand and not for hedonic brand. Thus, H
0
is accepted.
As regard to the unhappy attitude (negative), the result depicts that there is significant
impact on utilitarian brand with closer extension (PvaJue = 0.228), which explains that
unhappy attitude will not have negative effect for a hedonic brand but will have for a
utilitarian brand and thus H
1
is accepted.
The positive attitude for men doesn't seemed to be noteworthy on distant extensions, but
proved to have a positive effect on brand extension evaluation with P value (PvaJue = 0.029)
specifically on variables such as brand attitude and brand resemblance which is the expected
steady result and thus H
2
is accepted.
It is always likely that the mood has got different effect on different Gender. As awaited, the
unhappy attitude effects were superior in men than women. The brand extension evaluation
with (Pvalue = 0.026) on variables such as brand attitude and brand resemblance were steady
for women and thus H
3
is accepted.
Table 1
N o/o
Cases Valid 100 100.0
Excluded 0 0 .0
Total 100 100.00
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
92
Table 2: List-wise Detention of all Variables in Procedure
Utilitarian Brands Gender
Y.
Positive Unhappy
e
t
e e
e
e
n n n
n
PValue 0.123 0.228 0.029 0.026 - -
Attitude - - - - 4.756 2.152
Table 3: Reliability Statistics
Cronbach's Alpha No. of Items
0.8391 4
VI. Conclusion
The outcome of the study proves that even though attitude can influence brand extension
evaluation, the processes accountable for these results varies. Precisely when consumers are
encouraged to think through the relation between the parent brand and the extended brand,
attitude has a circuitous impact on brand extension evaluations especially on high
involvement products.
VII. Suggestions and Recommendations
Consumer researches are progressively focusing to understand methods of brand extension
evaluation. Consequently efforts have been made to examine the factors that influence
"parent brand-extended brand" similarity by putting forth, the possibility of evaluation done
for the parent brand would be utilized in evaluating its extensions (Alba & Broniarczyk,
1994; Sood & Zhang, 2002). Similarly the focus of the study was to analyze the
importance/influence of attitude and its involvement level in brand extension evaluation.
The outcome of the study indicates that effect of attitude on customers while considering
brand extension evaluation is very high especially in high involvement products, that is
attitude indirectly influences evaluations facilitates the opinion of"parent brand-extended
brand" similarity.
Hence, upcoming researches should also investigate the possibility of generalizing these
findings into other products and services.
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
93
References
[1] Arthur Cheng-Hsui, C., & Shiou-Huei, C. (2010). The Impact of Consumer Mood
on Brand Extension Evaluation. Proceedings for the Northeast Region Decision
Sciences Institute (NEDSI), 15-20.
[2] Barone, M. J., Miniard, P. W., & Romeo, J. B. (2000). The Influence of Positive
Mood on Brand Extension Evaluations. Journal of Consumer Research, 26( 4 ), 3 86-
400.
[3] Kang-Ning, X., & Yu-Tse, L. (2009). Mood Awareness and Brand Extension.
Advances in Consumer Research, 36103 7-1038.
[ 4] Martinez, E., & de Chematony, L. (2004). The Effect ofBrand Extension Strategies
upon Brand Image. JournalofConsumerMarketing, 21(1), 39-50.
[5] Xie, Y. (2008). Consumer Innovativeness and Consumer Acceptance of Brand
Extensions. Journal ofProduct&BrandManagement, 17(4), 235-243.
[ 6] http:/ /www.business-standard.com/article/management/brand-extension-good-or -
bad-1120 11600079 l.html.
[7] http://www.thehindubusinessline.com/industry-and-economy/marketing/fmcg-
brand extensions-work -better-than-new-launches-nielsen/article414 7062.ece
[8] http:/ /www.ats. ucla.edu/stat/spss/faq/alpha.html
[9] http://www. statisticshowto. com/ articles/how-to-calculate-expected-value-in-
statistics/
[10 http:/ /books.google.co.in/books?id=5yE_ wuCeukUC&pg=PA68&lpg
=PA68&dq=customer+decision+making+on+high+involvement+products&sourc
e=bl&ots=a 7Ykh 7 6wPQ&sig=8AbMVDOg 14N d7 eDd 1 XqiaiCs-
IE&hl=en&sa=X&ei= _ NGVUbT4Ms7KrAf6zYCYDQ&ved=OCFMQ6AEwBA#
v=onepage&q=customef'l/o20decision%20making%20on%20high%20involvemen
t%20products&f=false
*****
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
Repercussion of Junk Food Advertisements on Minds of
Children- A Study
Parmeet Kaur
Research Scholar, New Delhi Institute of Management, New Delhi.
RituAhuja
Research Scholar, AITM, Palwal, Haryana.
Abstract
Junk food is defined as a food that is oflittle nutritional value and high in fat, sugar, salt, and
calories. They contain insufficient vitamins, minerals, proteins and amino acids. Junk food
is easy to carry, purchase and consume. Generally, a junk food is given a very attractive
appearance by adding food additives and colours to enhance flavour, texture, appearance.
And such junk food is highly promoted through television (TV) advertisements. Now-a-days
TV watching is considered to be normal daily activity for children. Advertisements,
especially in children's TV programmes are ofjunk food that is coupled with attractive gifts,
toys, games, offers, etc. Children get attracted towards such goods and free offers. TV
advertisements affect young children's unhealthy food consumption. The study in this paper
indicates that there is a positive attitude of children, towards junk food and there is a strong
link between junk food promotions and eating behaviours of children. Based on the results,
the paper concludes that, parents are aware of bad effects ofjunk food, but still, they fulfill
their child's demand ofjunkfood items.
Key Words: Junk food, television advertisements, attractiveness, pester power.
I. Introduction
Television food advertising has attracted attention, for its potential role in promoting
unhealthy eating among children. Today, television advertising is filled with fast food i.e.
soft drinks, burgers, pizzas, candies, cereals etc.
Majority of advertisements of food product, are for fast food, cereals, and other foods which
are high in fat, sugars, sodium and are low in nutritional value. These advertisements are
coupled with attractive gifts, toys, games, offers, etc. Toys like Pokemon, Ben, Chota
Bheem are very popular among kids. Such offers have a very long lasting influence over
children, which may encourage pester power. Pester power is a child's ability, to affect their
parents' purchase decisions.
Food companies such as, McDonald's put their logos, symbols on toys, games and other
supplies. They also distribute coupons. McDonald's offers cups, toys and other labelled
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Repercussion of Junk Food Advertisements on Minds of Children -A Study
95
items through its outlets throughout the world. Even Kinder Joy has adopted surprise gift
strategy.
Toys like these, convert children into soft-drink consumers and advertisers for these
product. Children love such toys and gifts and fast food companies reinforce such desires.
Food companies in order to increase their profits, market share etc. completely ignore the
health perspective of children. They make use of all such words which may mislead children
and even their parents. Like Nestle Milk bar use the word 'calcium', Sunfeast noodles use
Yippee, Complan uses 'complete food', Real juice uses' real', Me Cain uses 'Fresh', 'healthy',
Lays uses 'baked' or 'cooked in healthy oil'.
The overall strategy of fast food companies is to establish brand loyalties as early in a consumer's life
as possible. Coca Cola, and Me Donalds, target commercials at young children for the sole reason
that it will probably make them life-long consumers. Junk food is one of the mainstays of food
advertising to children, who form the key market for junk food advertisers.
II. Objectives
Aim ofthe topic is to find the answers specifically aiming at :
1) To what extent does junk food advertisement have an influence over children and on
their parents, in buying the product?
2) Extent of attraction among children towards junk food advertisements, which have free
offer.
3) To identify catchy tricks of advertisers, that arouses interest among children.
4) Awareness and attitude of parents and children in terms of creating a balance in relation
to free gifts offered and the product.
III. Research Methodology
The different heads of research methodology are specified in following sections.
A. Area of Study
The area of study was taken as South Delhi.
B. Questionnaire
Time utilized for filling up each questionnaire, was 10 minutes.
C. Period of Study
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96
PeriodofstudywasAugust2012.
D. Sample Size
Sample Size was 150.
E. ResearchApproach

Qualitative approach was used in the study which could describe the underlying motives of human
behaviour. In this approach main area of focus was junk food advertisement and its impact. This
approach includes subjective assessment of attitudes, opinions and behaviour of children and their
parents separately in order to interpret their individual behaviour, reasons and actions and also
analyzing the various factors which motivates them to behave in a particular manner.
E Research Type
Descriptive research and conclusive oriented was used to find the nature of the problem.
Descriptive research was conducted so as to fmd solutions of the problem. Even in this, the
main area of inquiry was kept as junk food advertisement and its impact.
G. Sampling Methods
1) Convenience sampling method (while approaching families at different school gates)
2) Judgmental I Purposive sampling method.
H. Data Collection
1) Secondary data- that is information available in internet sites, research journals, books,
magazines, newspapers.
2) Primary data through
(a) Questionnaire filled by parents. The questionnaire carried mixed questions having
multiple choice, close ended question and some basic open ended questions.
(b) Personal Interview with the parents of different income levels and with their kids
(with a general approach).
L DataAnalysis Tools
Statistical data analysis was used, starting with the basic tabulation of data and summarizeing the
data in order to relate critical points with study objectives.
IV. Repercussion of Junk Food Scoring Model
It is possible to construct a Repercussion of Junk Food Scoring Model with the data
(responses obtained from the questionnaire). The 20 questions in the questionnaire can be
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97
classified and grouped as follows.
Table No. 1: Repercussion of Junk Food Scoring Model
Subject
Q.
Question Theme
no.
1 How many children do you have?
2 What is the age of your child/children?
3 Are you working?
Background
4 What is your educational level?
5 You belong to which state I VT?
6
Do you have any background of commerce or
management?
7
How much time your child spends on watching
Less = positive answer
TV everyday?
8 Does your child demand anything from you? Less = positive answer
How often does your child take Junk Food in a
9 week (wafers, cold drink, ready to eat snacks Less = positive answer
etc)?
10
Does your child watch advertisements in
Yes =positive answer
Behaviour
between TV programs?
11
Does your child prefer those goods that offer
Yes =positive answer
free gifts, stickers, toys, games?
12 Does your child collect free gifts? Yes =positive answer
13 What attract him/her the most?
14
Does your child pressurize you to buy things
No= positive answer
that he/she has seen in TV ads?
15
What do you want to include in your child's
diet?
Health
16 Do you prepare snacks at home? Yes =positive answer
Concern
17 What is your child's demand for his/her meals?
18
Given two options, what does your child
prefer?
Physical
19 In general, would you say your child health is? Good = positive answer
Activities
20 How often your child gets sick? Less = positive answer
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The questions from 1 to 6 are basic information, which are kept out of scoring. Q 10, 11, 12,
16, 19 have been assigned each with score 1 for a yes/positive answer. Q 7, 8, 9, 14, 20 being
a negative question, score 1 was assigned for answer No/Less.
Table No.2: Pattern of Distribution of Repercussion of Junk Food Scores
No. of Percentage
Cumulative
Score Respondents of
Percentage
(Frequency) Respondents
1 0 0 0
2 1 0.67 0.67
3 4 2.67 3.34
4 5 3.33 6.67
5 13 8.67 15.34
6 22 14.67 30.01
7 20 13.33 43.34
8 19 12.67 56.01
9 19 12.67 68.68
10 16 10.66 79.34
11 13 8.67 88.01
12 10 6.66 94.67
13 8 5.33 100
14 0 0 100
150 100
Table No.3: Compress form of Distribution pattern (ref Table No 2)
No. of Percentage
Cumulative
Score Respondents of
Percentage
(Frequency) Respondents
1 to 5 23 15.33 15.33
6 to 10 96 64 79.33
11 to 14 31 20.67 100
150 100
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99
V. Conclusion
From the results we can see majority ofthe sample scored between 6 to 10 i.e. 64% oftotal
sample. The questions that had reduced the score (to 6 or 7 out of14) were Question No. 7, 9,
14. Majority of respondents scored zero in these questions, being these negative questions
which indicates the time spent on watching TV, junk food consumption, lifestyle of
children, behavior of children, their ability to create pressure on their parents by demanding
them again and again (Pester power). There is a change in nature of child-parent
relationships. Parents now, take their child's demands more seriously. Also, the increased
work pressure on parents and longer work hours has led to creation of a society, that has
higher disposable income that means rich in cash in hand but poor in terms of time, which
makes it even more attractive and easy, to buy their children's demand as to way out of the
time-consuming task of fending off their demands. And the children are now able to make
their parents buy things by asking for, again and again.
Besides, the respondents scored one mark each in questions like 10, 11 etc, which indicated
TV viewing, and attractiveness of children towards free gifts, stickers, toys, games. This
shows a positive attitude of children toward junk food. One can conclude that TV addiction,
increases junk food consumption among children. They easily get influenced by what is
shown in TV advertisements. In addition to above, respondents scored one mark each in
question No 12 & 13 that indicates that there is a clear link between food promotions and
eating behavior in children. It shows that the catchy tricks used by advertisers do succeed in
arousing interest among children. Junk food advertisements do a brainwash of children's
mind. The brain of children gets 'imprinted' with food logos and attractive offers.
On analyzing the data of the respondent who scored between 1 to 5, shows that their
children watch less TV hence demand less, most of these respondent's children are either
young i.e. pester power is less or parents spend more time with their kids or parents are
more conscious about their children's health.
On analyzing the data of the respondent who scored between 11 to 14, shows that even
though the parents in this category, are concerned for their child's health, but since children
are older in age, mostly above 5 years, they get easily fascinated by free gifts, toys and hence
they like to make collection of such items. They get influenced by advertisements and then
they influence their parent to buy such products. The consumption of junk food is high.
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100
Impact of Junk Food Ads
I
Behavioural
I
Change in Eating
Habits
I
More Pester Power
I
Attractiveness
I
Certain
Product
I
I
I
Psychological
I
Thinking Pattern
I
Imaginative world -
becoming strong,
taller, popular etc.
Figure No. 1: Impact of Junk Food Ads on Children

VI. Suggestions
We must not forget the bad effects of these foods advertised, over the health of children
during their growing stages. One problem with junk foods is that they're low in satiation
value that is, people don't tend to feel as full when they eat them, which leads to overeating.
Overweight rates are increasing day by day, a major cause of which is advertisements and
marketing strategies, by fast food companies on television. Another problem is that junk
food tends to replace other more nutritious foods. Instead we should promote healthier,
more nutritious food choices.
Children are naive and vulnerable, therefore, their inability to understand such
advertisements makes it unethical to display them for large amounts of time throughout the
day and causes the child's parents to get involved financially.
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101
Marketers will do anything to encourage even the youngest children to ask for the advertised
products, thereby encouraging young generation to become lifetime consumers. In order to
prevent this parents and guardians should sit with the children, while they are watching TV.
Do make them watch TV programmes, but avoid TV advertisements. Just because fast-food
marketers try to get you to buy fatty, sugary foods doesn't mean you have to let them get
inside your head.
We need to educate parents- along with kids- on healthier eating habits.
References
[ 1] Banerjee Soupamo, 2012, Watch out for what you eat. It could be killing you slowly
and sweetly: says new CSE junk food and nutrition study, Centre of Science and
Environmment (online) Available at: http://cseindia.org/content/watch-out-what-you-
eat-it-could-be-killing-you-slowly-and-sweetly-says-new-cse-junk-food-and(Accessed
24July2012)
[2] Dillon Eric, 2006, Gale/Greenhaven, Available at: Google Books
<booksgoogle.com> (Accessed 3 Sept 20 12)
[3] Doheny Kathleen, 2012, Fight Junk Food Marketing to Kids, (online) Available at:
http://www.webmd.com/parenting/raising-fit-kids/food/junk-food-marketing
(Accessed21 July2012)
[4] Jackie & Sculle, 1999, Fast Food-Roadside Restaurants in the Automobile Age (e
book), JHU Press, Available at: <booksgoogle.com> (Accessed 1 Aug 2012)
[5] Kotler, Philip & Keller, Kevin Lane (2006)Marketing Management,12th Edition,
Prentice-Hall,Inc Pg 59,74,94,204,265,328,332,350,390,395,585
[6] Neergaard Lauran, 2012, Trans-fat ban made fast food a bit healthier in New York,
The Bulletin (online) 19 July. Available at:
http://www. bendbulletin.com/article/20 120719/NEWSO 107/207190305/ (Accessed 22
July,2012)
[7] Rashad & Grossman, Chou Shin-Yi, 2005, Fast-Food Restaurant Advertising On
Television And Its Influence On Childhood Obesity, NBER Working Paper Series,
(online) Available at: http://www.nber.org/papers/w 11879 (Accessed 22 July 20 12)
[8] Read & Digest,2013, Junk Food: Facts and Health Effects, (online)Available
at: http:/ /readanddigest.com/junk-food-facts-and-health-effects/(Accessed 2 April20 13)
[9] Smith. F. Andrew, 2006, Encyclopaedia of Junk Food And Fast Food (e book),
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
102
Greenwood Publishing Group, Available at: Google Books <booksgoogle.com>
(Accessed 1Aug2012)
[10] Soni . S. & Upadhyaya .M, Pester Power Effect of Advertising, Available at:
http://dspace.iimk.ac.in/bitstream/2259/355/1/313-324.pdf (Accessed 2April20 13)
Appendix
Questionnaire on Junk Food and their advertisements.
The questionnaire is presented to the respondents, after discussing with them the objectives of the
study, benefits of the study, in formations required, knowledge etc.
Questionnaire
1) How many children do you have?
2) What is the age of each of your child/children?
3) Are you working?
4) What is your educationallevel?
5) You belong to which state I VT?
6) Do you have any background of commerce or management?
7) How much time your child spends on watching TV every day?
8) Does your child demand anything from you?
9) How often your does your child take junk food in a week (wafers, cold drink, ready to eat snacks
etc)?
1 0) Does your child watch advertisements in between TV programmes?
11) Does your child prefer those goods that offer free gifts, stickers, toys, games?
12) Does your child collect free gifts?
13) What attract him/her the most:
a) Toys, Stickers
b) Games
14) Does your child pressurize you to buy things that he/she has seen in TV advertisements?
a) Never
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103
b) Sometimes
c) Mostly
15) What do you want to include in your child's diet?
a) Wheatproduct&milk
b) Wheat product, milk, junk food & cold drinks
16) Do you prepare snacks at home?
17) What is your child's demand for his/her meal?
a) Wheat product, milk, junk food & cold drinks
b) Junk food, cold drinks
18) Given two options, what does your child prefer?
a) Homemade snacks
b) Ready to eat snacks from market
19) In general, would you say about your child's health?
20) How often your child gets sick?
*****
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
Are Contract Workers the Golden Trap: A Case of Maruti
Suzuki Ltd.
Dr Swati Agrawal
Associate Professor (HR/OB), Jaipuria Institute of Management, Noida
Abstract
Employees are the key to success of any organization with employer-employee relationship
at its centre. At times, this relationship between employer-employee gets disturbed,
resulting in conflict, sometimes to the extent of strikes and non cooperation. Maruti Suzuki
plant in Manesar and Gurgaon has been the centre stage of this conflict in recent times. The
author in this article tries to bring the new picture of Industrial Relations in modern India,
where competition is increasing at ever fast rate and organizations are using modern HR
intervention like engagement tools. Despite this, organizations fail to ensure mutually
rewarding employer-employee relationship. This article brings out the fact that how lack
of long term relationship, due to hiring contract workers to reduce cost, results in loss of
trust and effective employer-employee relationship. Content of the article has been derived
from secondary resources and open dialogue with some employees from Maruti Suzuki
Plant.
Key Words: Conflict, contract, employee and employer.
I. Introduction
Are the labor unions back? The riot that followed the labour management dispute in
Gurgaon over the Honda Motorcycle and Scooter India spat could be the first major sign of
the things to come, and recently we witnessed the case ofMaruti Suzuki Ltd. After a decade-
and-a-half of market friendly policy changes, the union seems to be sticking their neck out
again to ensure they are being heard.
Maruti Suzuki India Ltd. has been continuously making changes, especially in last few years
to face competition. As a joint venture between Government oflndia and Suzuki Motors of
Japan, the company began a new era as manufacturers of people's car in the late 1983, when
commercial production and sales ofMaruti 800 began (Sen, 2011 ). The company was able
to establish as a model employer, using several Japanese techniques, for integrating
employees into production process. Mid 1990s, the company witnessed decline in market
share, with entry and growth of new passenger automobile in India. Lately, in Maruti has
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Are Contract Workers the Golden Trap: A Case of Maruti Suzuki Ltd.
105
introduced several initiatives to increase its production, which has resulted increase in
production by 2000, though employment in mid 1990s to 2000, has increased only by 65%
(Sen, 2011).
In 2002, change in ownership resulted, with Suzuki buying 1.2 million new issued Maruti
Suzuki shares for Rs 3.280 for share by paying Rs 400 Cr. As a result of this, Suzuki share
increased to 54.2% and govt holding decreased to 45.5% from exitising 49.7%. Later
Government of India through IPO offioaded its stake and fmally exist the venture by 2004
(http://en.wikipedia.org/wiki/Maruti_Suzuki). Starting from 2000, right upto 2011, the
company has faced labour problems, strikes, and disturbances.
II. Employee Relation
From the inception, till mid 90's Maruti Suzuki has relatively few problems related to
workforce and management. But competition after liberalization and ever expanding
automobile sector made management unable to handle people issue in the demand of high
efficiency, due to which, Maruti ftrst time faced strike in the year 1995.
Late 1990's almost all major players in global market launched their models in India, with
many establishing manufacturing and ancillary units in India. This made the market very
competitive. The result was to revamp the people management practices and policies for
labourers. Is Maruti able to do this successfully?
One such practice is the habit ofhiring contract workers. The contract workers are different,
from what we see in other organized sectors. The job of hiring these people is given to
contractors. In this case contractors are responsible for everything (like salary of worker,
leave issues and etc) while company just pays the contract amount. They get no medical
proftts, insurance, savings or disability concern. A regular worker in Maruti gets paid
Rs.25000 a month, after 3 years of service as a trainee. Contract worker can get paid
anything between 4644/- (Haryana minimum wage) to Rs.l2000/- depending upon
contractor. Though both regular and contract workers have same amount of work.
Labor Unrest in 2000
At ftrst glance, it appears, everything is good in the Maruti Suzuki factory, there is a
common canteen, uniform for managerial staff and workers, communication programmes
through tasks, management union forum.
After the 3 days and 2 days strike in Gurgaon facility in April 1995 and March 1998
respectively, major unrest was seen in the year 2000, 89 days strike, longest ever in Maruti in
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106
Gurgaon facility. In 2000 the extensive emphasis on production and output, resulted in a
pen down agitation in the Gurgaon plant in September. With the break down ofManagement
Union talk with no result in September 2000, agitation of workers started; which later
become the cause of change of culture in Maruti Suzuki. These agitation were in form of
hunger strike, tool down strike, started earlier with black badges strike. In same period,
management came up with incentive scheme. According to the scheme, incentives paid
would depend upon the sales of the company. The purpose was again productivity but it was
not accepted by unions for obvious reasons as sales are dependent upon many factors
beyond the control oflabourers. Union demanded previous incentive scheme, according to
which 65 % of all savings in labour cost will be distributed to labourers as bonus.
Till late 1990s, labour wage structure was at relatively higher side of market average. At that
time workers satisfaction was also at higher side as they were receiving significantly higher
salaries. Generally wage revisions results from bilateral negotiations, but with increased
market competition and decline in profit, company could not make it to the expectations of
labour. As a result agitation started to grow in the company.
Labor Unrest in 2011
Production stopped at Manesar facility on June 4, 2011, when employees of Maruti Suzuki
demanded, to form a new independent union for Manesar facility. Management refused,
giving reason of existing union in Maruti, Maruti Udyog Kamgar Union (MUKU). This
union is mainly dominated by workers at the Gurgaon plant. Management on the other hand
asked, Good Conduct Bond from workers.
The refusal of management was followed by series of strike on August 29, September 25
and October 7 for 10 days which has an impact of full closure of Suzuki's India operation
(Bureau, Business Line, 2012 ).
For modem India, the strike by 2,000 workers ofMaruti's Manesar factory is a new age labor
law case for the reference. Since no intimation or notice was given to the management about
the strike, the strike was called illegal according to Industrial Disputes Act, 1947. R.C.
Bhargava, Chairman, Maruti Suzuki India said, "Our stand is clear. The strike is illegal.
Even the Haryana government and labor commission have said the same. Still, we will
continue to talk" (Hindustan Times, 2011 ).
The Haryana government toughened its stand on the workers ofMaruti Suzuki's Manesar
plant by declaring the strike as illegal deed and imposed a ban on the strike by passing
prohibitory orders. In a press statement, Haryana Minister of State for Labor and
Employment, Shiv Charan Lal Sharma, pointed out that the state government had also
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Are Contract Workers the Golden Trap: A Case of Maruti Suzuki Ltd.
107
referred the matter to the local labor court under the provisions of the Industrial Disputes
Act, 1947. This move ofthe state came even as the Maruti's management offered, striking
workers a peace proposal. Seven days into the strike, the management expressed their
readiness to "review" the two demands of workers ifthey in return, agree to call off the strike
and make up for the losses in production due to the strike.
During the 2001 strike, the Company derecognized the Maruti Udyog Employees' Union
which had spearheaded the workers' agitation, and recognized the Maruti Udyog Kamgar
Union, a new Union, which is reportedly regarded by the strikers as a pliable pro-
management body, the basis for the demand to register a new union being a key issue in the
current agitation.
The management's efforts to enforce order in the plant by suspending four workers on 28,
July 2011 led to a day-long 'tool down' strike. Over the course of the next month, further
dismissals and suspensions intensified the grievances which were amplified to include
'absence of proper breaks, low wages and equitable treatment of contract workers. The
workers at the Gurgaon plant, who are subject to similar hours and conditions of work, did
not join the strike.
The other issue which has formed a road block is the requirement that the workers sign a
'good conduct bond' before entering the plant. A four sentence undertaking which
acknowledges the company's right to dismiss worker- indulging in slow working,
intermittent stoppage of work, etc. has raised concerns on the legality and purpose of the
bond in the present dispute. The workers interpreted this condition to be effectively a
'lockout'. With leadership in strike being diffused, somehow, the strike went off, but the
reason to unrest, still remains. Management, workers representatives, government, hasn't
done much to avoid any such future strike.
The management suggested a modification in the structure of the existing union and the
company agreed to the establishment of individual bodies at the Manesar and Gurgaon
facilities to deal with plant-level issues. Maruti has also proposed the formation of a
governing council comprising of workers' representatives from both the plants to deal with
corporate level issues like wage negotiations. However, the management made it clear that
they would not accept any union which had members from outside or with political
affiliation.
Maruti Suzuki for long has been introducing different policies and activities which are pro
workers like engagement tools. Pay is also not very different from market average.
However, high focus on productivity is resulting in employee dissatisfaction. Drivers to this
unrest were mainly environmental, social issues, workers problem in Gurgaon- Manesar
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
108
belt. Political forces and outside environment are also reasons for prevailing problem in
Maruti plant. With change in management, it's also evident that Japanese culture doesn't fit
well with Indian workers needs and aspirations and they are not able to understand influence
of social and political issues on the work environment.
What cheap and convenient in the short term, like hiring contract workers doesn't work over
longer period. For organization, contract workers act as flexible labour, and are also paid
less in comparison to permanent workers, however any HR intervention like engagement
tools used in Maruti Suzuki plants fail to serve its purpose of increasing organization loyalty
for contract workers, with whatever benefit, organistaion perceives remains for very short
period. In present time of complex, multistage manufacturing operations, organisation
needs people with skills. Whenever workers leave or are forced to leave, organisation will
need to train new people. With constantly changing workforce, no company can maintain
growth.
Questions for Case Discussion:
1) Discuss past and present scenario of industrial relation in Maruti Suzuki plant.
2) Elaborate pros and cons ofhiring contract workers.
3) Suggest a framework for ensuring effective employer-employee relationship, when the
strategy ofMaruti Suzuki is of expansion.
References
[1] Bureau, Business line, Maruti Staff Continue Strike, retrieved from
[2] Sen, Ratna (2011) Industrial Relations at Maruti- Suzuki, Indian Journal of
Industrial Relation, vol. 47,pp.191-204
[3] http:/ /hindu.com/businessline/2000/09/28/stories/142807 a6.htm, accessed on
November, 2, 2012
[ 4] http:/ /hresonance. blogspot.in/20 11/06/maruti -suzuki -strike-can-we-count-on.html,
accessed on June 2, 2011
[5] http://en.wikipedia.org/wiki/Maruti_Suzuki accessed on November, 11, 2012
[6] Ians, Hindustan times (2011), retrieved from http://www.hindustantimes.com
/India-news/N ewDelhi/Talks-fail-strike-at-Maruti -plant-in-Manesar-enters-1 Oth-
day/ Article 1-708856, accessed on June 14, 2011.
*****
ISSN: 2249-1066, Vol. 3, No. 1, June 2013
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