SRM Digest 2010

SRM MANAGEMENT DIGEST - 2010
April - 2010 Editor

Prof. Dr. R. Velu
SRM School of Management SRM University Email:rvallimanalan@yahoo.co.in Mobile: 09884091724 Hello Readers, I am very happy to inform you that this present SRM Management Digest 2010 carries intensive and inspiring research articles of the International Conference on Retail Excellence 2009. This conference was conducted in SRM University from December 22 to 24, 2009 with overwhelming response from the academic community and corporate leaders. A number of research scholars, subject experts and corporate executives attended and presented thought-provoking research articles on the topic of Retail Excellence with different approaches from various business schools across the world. Undoubtedly, it can be observed by the modern businessmen that growth of retail business is an integral part of the growth of world business. To an extent the retail business evolves with the various factors of the micro as well as the macro environment to take off the main business to usher in the stage of steady state economy. However, the research scholars, subject experts and corporate executives indicated that a number of cultural, social, political, economical and technological problems have emerged as barriers to the growth and development of retail business at the present moment. With well tested business strategies, policies and tactics the problems of retail business can be overcome. The research articles of the conference explored the problems of retail business and contributed sound suggestions and recommendations as well, to systematically develop the retail sector globally. With the contributions from the creative and innovative minds, the object of the conference would be fullled only when further research is initiated in this direction. Growth of retail business in a country would certainly accelerate the economic growth and propel the nation to higher strata of development, more specically rewarding all the participants in the retail business. Editor
Volume: 8
EDITORIAL
ISSN 0973-6905
Associate Editor
Prof. Oliver Linton London School of Economics
SRM MANAGEMENT DIGEST

Volume: 8, April 2010 Annual Blind Referred Digest of SRM School of Management ISSN 0973-6905
Editor
Dr. Velu
2010 by SRM School of Management SRM Nagar, Kattankulathur - 603 203 Kancheepuram District, Tamil Nadu, India
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Published by SRM School of Management SRM University SRM Nagar, Kattankulathur - 603 203 Kancheepuram District, Tamil Nadu, India
SRM MANAGEMENT DIGEST - 2010

April - 2010 Volume: 8 ISSN 0973-6905
Chief Editor
E D I T O R I A L B O A R D
Dr. R. Velu Economics
Associate Editor
Dr. Oliver Linton London School of Economics
Referees
Dr. Jayashree Suresh Dean, Strategic Business Management Dr. R. Krishnaraj General Management Dr. T. Ramachandran Financial Management Dr. Ravi Lochanan Operations Management Dr. A. Chandra Mohan Human Resources Management Dr. Shanthi Venkatesh Marketing Management
SRM Management Digest - 2010
CONTENTS
AN APPLICATION OF CLUSTER ANALYSIS TO IDENTIFY COUNTRIES WITH SIMILAR MEDICAL FACILITIES Dr Usha Ananthakumar, Mr. Deepak Mittal PARTNERSHIP E- RETAILING MODEL FOR INDIAN RURAL MARKET Mr. R. Suresh, Dr. B. Rajasekaran EMERGENCE AND SPREAD OF RETAILING Mr. D. Subramaniam PROSPECTS/ PROBLEMS/EMERGING TRENDS: ORGANISED RETAILING VS UNORGANISED RETAILING Mr. Sukanya Hegde DEVELOPING E-TAILING STRATEGIES FOR THE FUTURE Saif Sami, Salma Ahmed ROLE OF E BANKING SERVICES IN THE BANKING SECTOR Ms.H.Vasanthakumari, Dr. S. Sheela Rani GROWTH, CHALLENGES AND TECHNOLOGY IN RETAILING AN INDIAN PERSPECTIVE A.DuraiKannan, B.L.Sairam Subramaniam, Dr. A. Ramachandran EMERGING TRENDS AND OPPORTUNITIES IN RETAILING SECTOR A STUDY A.R.Krishnan CUSTOMER RELATIONSHIP MANAGEMENT IN INDIAN RETAIL Anupama.C.R, Leela Prapurna E-RETAILING: ATTRIBUTES AND SECURITY CONCERNS Mr. Saleem Hadi , Dr. Salma Ahmed A STUDY ON MEASURING SERVICE QUALITY IN SUPERMARKET Ms. K. Rajamani, Dr. V. Sampath DETERMINANTS OF CUSTOMER LOYALTY IN LEADING RETAIL SUPERMARKETS IN UNITED KINGDOM: AN EXPLORATORY STUDY Mr. Ramiah Kumar Gandhi Mr. Velummailum Gobiraj Mr. Balasundaram Nimalathasan RETAIL MANAGEMENT ATTITUDES AND ITS IMPACT ON INTERNEES PERFORMANCE: A STUDY ON SELECTED RETAIL ENTERPRISES IN BANGLADESH Ramiah Kumar Gandhi, Mohammed Abu Taher,Prof. Balasundaram Nimalathasan
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DYNAMISM OF RETAILING BUSINESS AND ECONOMIC DEVELOPMENT AN INDIAN PERSPECTIVE V. Sugumaran, R. Arivazhagan ECONOMIC SLOWDOWN: MOUNTING PRESSURES AND ANGER MANAGEMENT IN WORK PLACES-AN ANALYSIS Dr. G. Ramesh BUSINESS VALUE OF IT Dr. Mu.Subrahmanian, Mr. Lakshmi Vishnu Murthy Tunuguntla KNOWLEDGE MANAGEMENT VISTA: KEY DRIVERS Dr. N. Muthu, Dr. Radha Ganeshkumar, Dr..J.Padmini QUALITY OF WORK LIFE (QWL) IN IT SECTOR INDIAN SCENARIO Mr. V. Hemanth kumar, Dr. P. Premchand Babu THE ROLE OF HUMAN RESOURCE ACCOUNTING IN HUMAN RESOURCE MANAGEMENT Dr. P. Premchand Babu, Mr. Mir Irfan Ul Haq, Mr. M. Madana Mohan, IMPACT OF BANK CREDIT ON RURAL POOR WITH SPECIAL REFERENCE TO PUBLIC SECTOR BANKS Dr. S. Chandirakala EFFECTIVENESS OF MICROFINANCE INDUSTRY AGAINST THE BACKDROP OF GLOBAL RECESSION Mr. D. Mylesh Raju, Mr. L. Suresh Mallya ACADEMICIANS PERCEPTION TOWARDS LEARNING ORGANIZATION: A COMPARATIVE STUDY Dr. Babita Agarwal, Prof. Sunil Chouhan EFFECTIVENESS OF IMPACT OF ORGANIZATIONAL CLIMATE IN THE ORGANIZATIONS Mr. G. Sukumaran, Dr. R. Kannan HOW TO MANAGE WORKPLACE EMOTIONS AN EMPIRICAL STUDY Ms. D. Chitra, Dr. V. Mahalakshmi EMERGING TREND IN INDIAN PHARMACEUTICAL RETAIL SECTOR Ms. V.S.Sheeja, Dr.R.Krishnaraj AN EMPIRICAL STUDY: INFLUENCE OF SERVICE QUALITY ON ATTITUDINAL LOYALTY IN RETAIL BANKING Mr.S. Arun Kumar, Dr. B. Tamil Mani, Mr S.Mahalingam & Mr M.Vanjikovan,
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AN APPLICATION OF CLUSTER ANALYSIS TO IDENTIFY COUNTRIES WITH SIMILAR MEDICAL FACILITIES

Dr Usha Ananthakumar Associate Professor, SJMSOM, IIT Bombay Deepak Mittal, M. Mgt passed out student, SJMSOM, IIT Bombay 1. Introduction Cluster analysis is an exploratory data analysis tool for solving classication problems. Detailed account of Cluster analysis can be found in Anderberg (1973) and Everitt, Landau, and Lesse (2001). Its objective is to sort cases (people, things, events, etc) into groups, or clusters, so that the degree of association is strong between members of the same cluster and weak between members of different clusters. It reveals associations and structure in data which, though not previously evident, nevertheless are sensible and useful once found. Cluster Analysis nds application in various disciplines like life sciences, behavioral sciences, earth sciences, medicine, engineering sciences, policy sciences, technology, marketing and many others. Some of the applications that give a avor of the usage of cluster analysis across varied elds are mentioned below. Cluster analysis is widely used in market research when working with multivariate data from surveys and test panels. Market researchers use cluster analysis to partition the general population of consumers into market segments and to better understand the relationships between different groups of consumers/potential customers. The broad areas where cluster analysis nds merit in marketing research are segmentation of the market and determination of target markets, product positioning, new product development and selection of test markets. Recently, Lonial, Menezes and Zaim (2000) used cluster analysis to recognize the product benet related market segments for personal computers. Five attributes were identied namely Screen Size, price, memory, hard disk drive and processor chip. The 81 participating students were formed into clusters on the basis of the similarities in their preferences for the ve product attributes. 3 clusters were identied showing differential preference for different attributes. Carlson, Kinsey and Nadav (2002) performed cluster analysis to group consumers based on where they obtained their food from. Data was taken for 5589 individuals in 2540 households in the US. The sources of food include restaurants, stores, bars, cafeterias; home grown food etc. Nine clusters were formed based on similarity of the source of food. They were named home cookers; carry outs, ofce goers etc. based on where they got their food from. Cluster analysis nds prominence in the eld of Horticulture/Agriculture because of the large number of plant species and also varieties of hybrid seeds. It helps nd groupings amongst different species based on the desired attributes. In agriculture it helps nd the right kind of crop for the right area, factors increasing productivity in one area as compared to other and so on. Anjum, Butt, van Zuilichem and Ahmad (2002) applied cluster analysis for classication of quality of spring wheats. The variables were total bread scores, total chapati scores and overall quality characteristics. In total scores most cultivars fall into the same group. However distinction exists in case of scores taken independently for bread or chapatti scores. So the results allow for selection of different end use and classication of similar cultivars. Plotkin, Chave and Ashton (2002) applied Cluster analysis to identify Spatial Patterns in Malaysian Tree Species. The technique was applied to six study species within a 50-ha forest census in peninsular Malaysia. Density based method was used for clustering. It
was found that the distribution of trees in clusters varied according to species because of different tree diameters. Thus cluster sizes exhibited equilibrium and non equilibrium behavior depending on species life history. Application of clustering to psychology helps understand human behavior. It helps the psychologists to analyze groups of people and understand the reasons behind their particular behavior or problem. This is a means to understand the thinking of people. Dixon, Cross and Adams (2001) applied cluster analysis to determine the psychological makeup of academically gifted students who are admitted to and leave home to attend a residential school. A sample of 156 students was analyzed using Wards hierarchical method. Results indicated six different cluster groups that were described as mathematics focus (21%); social focus (18%); non athletic group (21%); low overall self-concept group (16%); verbal group (9%); and non spiritual/religious group (14%). Cluster analysis is used to cluster diseases, cures for diseases or symptoms of diseases and thus offers useful results in the eld of medicine. It is also used to cluster weather data to identify similar areas and time periods in respect to weather phenomenon. This is particularly signicant in forecasting dangerous weather situations like fog, storms etc. Clustering is used for Data mining applications that involve partitioning data items into related subsets. Another common application is the division of documents, such as World Wide Web pages, into genres. Thus, cluster analysis is a tool of statistical analysis that has applications across various elds in innumerable ways. As new techniques and methods are developed in cluster analysis, the range of applications is also expected to witness a substantial increase in the future. The current study is done with the objective of identifying countries with similar medical facilities across the globe. For the development of
any country, it is crucial to know the health standards of a particular country in relation to other countries in order to initiate appropriate steps to improve the standards of the country. 2. Data Analysis The data was obtained from http://www. who.int, the ofcial website of the World Health Organization. The data was taken from a study conducted by WHO in which 193 countries had been surveyed to obtain a measure of the medical facilities in those countries with respect to certain variables. The data for the study was nally taken for 190 countries as the data for 3 countries was not complete. The number of variables was reduced to 20 and the variables relating to demographics that were not part of the main study were left out. The variables for the study are dened in Table 1. As the data comprises 190 countries, the analysis was carried out continent wise to gain closer look at each of the continents and later were analysed as a whole for the entire world to gain overall insight of the problem. Three different methods of hierarchical clustering methods, namely, average linkage, complete linkage and Wards method were used to analyse the data. Different methods were used as it is best to validate the consistency of the results of cluster analysis using different approaches. Single linkage method was avoided due to chaining effects whereas centroid method suffered from reversals. Since the variables were all measured on different scales, the data was standardized to zero mean and unit variance using within group standard deviations. The software used for the analysis was SAS version 9 for Windows. The outputs of cluster analysis for various continents and for the entire world are discussed in the following subsections. 2.1 North America This section explains in detail the clustering procedure for the North American continent. The total number of observations or the number of
countries was 23. In the rst step the values for pseudo F statistic and t2 were obtained for the last 15 steps. The plots for the same were obtained versus the number of clusters. This helped in determining the number of clusters. The results shown in Fig. 1 are for the average linkage method. The pseudo F statistic peaks at 3 and t2 shows a sharp drop at 3. Hence the right numbers of clusters are 3. The same data when applied to complete linkage or the ward method yielded the same number of clusters i.e. 3. Next the dendrogram was developed and the output obtained for 3 clusters is given in Fig. 2. The dendrogram shows the clusters in the sequence of their formation. In Fig. 2, all the countries are clustered into one single cluster as is the case with the hierarchical clustering. The results obtained using the Ward method and the complete linkage method were exactly the same with the same countries falling in the same clusters. This may not be the case with all the continents where there might be some minor variations. The names of the countries and their respective clusters are shown in Table 2. Comparing some of the facts of the clusters obtained with each other and to the whole world the gures given in Table 3 are obtained. Cluster 2 is clearly the best of the lot with facilities way above the world averages and the other clusters. Cluster 3 shows very poor facilities that are much below those of the world average also and can be thus considered a third world country. It is pertinent to note here that the cluster 3 that has only one country has statistics that are way apart from the other two countries and can thus be considered as an outlier. That leaves us with two main clusters. However, the inclusion of Haiti in our analysis helped identify it as a third world country with regards to medical facilities.
cluster 3 showing the lowest. The exception here is that of serial no 22 i.e. Cuba which despite a very low GDP gures in the top cluster. Fig. 4 compares the clusters on 3 other factors namely, Percentage of population below poverty line (PBPL), Literacy rate and Urbanization rate. Although it is clear that for North America literacy is more or less constant across nations, the two important things that come from this plot are those marked in the boxes. They show higher urbanization and low values of PBPL for cluster 2 that are factors accounting for its better facilities. 2.2 South America The results of the cluster analysis study for South America gave exactly similar results to the three methods applied. There were no deviations for the 12 observations in the cluster formation in all the three cases and the number of clusters obtained was 2. The clusters that emerge are given in Table 4. A comparison of certain facts of these clusters along with that of world data is given in Table 5. Clusters 1 and 2 are different only in terms of the mortality rates and number of medical personnel. The mortality rates are quite less for this continent as a whole considering the fact that the other gures are quite close to the world average. It can be inferred that a higher GDP can be the reason for the better overall facilities in cluster 1. Although literacy rates remain the same, cluster 1 is characterized by higher urbanization and lower values of PBPL. 2.3 Oceanic The total number of countries was 16 and the number of clusters formed was 3.The results for the ward and complete linkage method are exactly the same. In case of average linkage there is a shift of two observations from cluster 3 to cluster 2. The clusters that emerge from this analysis are given in Table 6. Table 7 gives a comparison of these clusters with that of the world data. Cluster 1 stands out in all parameters compared to the other clusters or the world average. Cluster 3 has very poor gures. It
The above results are used to relate the medical facilities with the socio-economic factors namely, GDP, literacy rates, urbanization rate and population below poverty line. Plot that compares the clusters on GDP is given in Fig. 3. The medical facilities are better with the increase in GDP. This is obvious with cluster 1 showing medium values and
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can be seen that Cluster 1 has high GDP gures with the exception of Niue. Urbanization was also very low for Niue but it still gures in the cluster with the best facilities. This can be explained from the fact that Niue is the least populated country of the sample with a population of just 1000. 2.4 Europe Complete and ward method gave two clusters with similar results. Average method gave four clusters with cluster 3 and cluster 4 having just one observation each. The list of countries falling in different clusters is given in Table 8. A comparison of the information of these clusters with that of the world data is given in Table 9. For Europe both the clusters have values better than the world average which shows that this continent is better than other nations even on the global level. Cluster 2 has slightly better gures than cluster 1. Although the overall GDP gures for Europe are quite high there is a progressive increase as one moves from cluster 1 to cluster 2. Further the European countries showed a uniform value for literacy and urbanization rates with above 98.5% literacy for most of the countries. The urbanization was slightly more for cluster 2 though the difference was miniscule. This can be understood from the fact that the general living conditions in Europe are good. 2.5 Asia Both ward and complete method gave two clusters and average method gave 3 clusters with one of the clusters having just one observation which is an outlier. It identies one of poorest nations, namely Afghanistan in terms of medical facilities in Cluster 1. The output is shown in Table 10. From Table 11, it is evident that Asian countries have lesser government expenses on health; this can be because most of these nations are developing nations. Cluster 1 or Afghanistan shows very poor gures. In general Asia is mostly below the world averages. With regard to GDP, high uctuations are seen in these countries but the median and the high values belong to cluster
2. Cluster 2 in Asia has the best facilities. Cluster 3 has lower values of literacy though the difference in urbanization is not much profound. 2.6 Africa Although average and complete method gave results, ward method that gave 4 clusters shows more well separated clusters as compared to the other methods in case of Africa. The list of countries in various clusters is given in Table 12. Cluster 1 and cluster 4 have comparatively lesser number of observations as compared to cluster 2 and 3. From Table 13, it is clear that the entire African continent shows values that are below the world averages. Within Africa, cluster 1 emerges as the one with the best facilities. Cluster 4 also shows some good gures. Cluster 1 exhibits the best values for GDP and very low values of PBPL as compared to others. The level of literacy and average level of urbanization is also higher for this cluster. Cluster 2 and 3 are marked by poor values of GDP except for Equatorial Guinea in Cluster 2 that has very high GDP gure. However, it can be observed that the facilities of Equatorial Guinea are way below the other countries. 2.7 Comparison with World data Cluster analysis applied to the entire data of 190 countries suggested 2 clusters by average and complete linkage method and 3 clusters by ward method. Since it was more helpful to divide the data into 3 clusters the ward method was used and the list of countries falling into various clusters is given in Table 14. From Table 15, it follows that Cluster 1 represents the countries that are below the world average and Cluster 2 is at par with the average values of the world whereas cluster 3 is above it. Observations 32 out of 39 European countries are in cluster 3 i.e. 82% of the total wEuropean continent Only 3 countries of North America out of a total of 23 countries are in cluster 3. They are USA, Canada and Cuba.
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For cluster 1 Africa constitutes 73 % and Asia is 23 % 85% of Africa falls into cluster 1 whereas the rest of it is in cluster 2. 91.66 % of South America countries (11 out of
12) fall in cluster 2. 47 % of Asian countries also fall in this cluster. Asia is the only continent spread uniformly across the three clusters i.e. 30% in cluster 1, 47% in cluster 2 and 23% in cluster 1.
Table 1 Variable Denition S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Variable P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14 P15 P16 P17 P18 P19 P20 Variable Denition no of physicians per 10000 of population no of nurses/midwives per 10000 of population no of health workers per 10000 of population no of hospital beds per 10000 of population total expense on health as % of GDP Govt. expense on health as % of total Govt. expense immunization coverage as % 1 yr olds (measles) immunization coverage as % 1 yr olds (DTP3) immunization coverage as % 1 yr olds (HepB3) tb detection rate as % of total cases tb success rate as % of total cases tb new cases per 10000 population new borns with low weight as % of total births maternal mortality ratio per 10000 live births adult mortality rate b/w 15-60 years per 10000 population under 5 years mortality rate per 10000 live births under 28 days mortality rate per 10000 live births Life expectancy at birth in years healthy life expectancy at birth in years Births attended by skilled personnel as % of total births
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Table 2: Clusters of North American continent Cluster 1 Antigua and Barbuda Dominica Barbados Bahamas Grenada Saint Kitts and Nevis Saint Vincent and the Grenadines Trinidad and Tobago Belize EI Salvador Honduras Nicaragua Dominican Republic Guatemala Costa Rica Panama Mexico Jamaica Saint Lucia Field Survey : 2010 Cluster 2 Canada United States of America Cuba Cluster 3 Haiti
Table 3: Comparison of cluster information of North America with the world data
Cluster number Cluster 1 Cluster 2 Cluster 3 World
Average number Average of medical government personnel / expenses beds per 10000 (%) population 21.45 10.04 68.8 13.6 3.8 15.8 32 8.44
Immunization coverage (measles, DTP3, HepB3) % 1 yr olds 85.57 92.44 50.66 81.6
Average mortality rates per 10000 population 542.73 368.91 1443.25 833.07
Average life expectancy in years 66.7 74.01 48.4 61.33
Field Survey : 2010 Table 4: Clusters of South American continent
Cluster 1 Argentina Uruguay Chile Venezuela Bolivia Guyana Brazil Colombia Paraguay Ecuador Peru Suriname
Cluster 2
Field Survey : 2010
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Table 5: Comparison of cluster information of South America with the world data
Cluster number
Average number of medical personnel / beds per 10000 population
Average government expenses (%)
Immunization coverage (measles, DTP3, HepB3) % 1 yr olds 87.16 83.7 81.6
Average mortality rates per 10000 population 377.48 637.5 833.07
Average life expectancy in years
Cluster 1 22.12 Cluster 2 13.42 World 32 Field Survey : 2010
8.87 9.8 8.44
70.5 64 61.33
Table 6: Clusters of Oceanic countries Cluster 1 Australia New Zealand Niue Cook Islands Samoa Tonga Fiji Micronesia (Federated States of) Solomon Islands Palau Kiribati Marshall Islands Tuvalu Field Survey : 2010 Table 7: Comparison of cluster information of Oceanic countries with the world data Cluster 2 Nauru Vanuatu Papua New Guinea Cluster 3
Cluster number
Average number of medical personnel / beds per 10000 population 77.12 24.56 18.93 32
Average government expenses (%) 12.71 8.43 8.45 8.44
Immunization coverage (measles, DTP3, HepB3) % 1 yr olds 91.22 91.4 56 81.6
Cluster 1 Cluster 2 Cluster 3 World

Field Survey : 2010
72.48 62.61 59.32 61.33
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Table 8: Clusters of European continent Cluster 1 Albania Bosnia and Herzegovina Serbia and Montenegro Republic of Moldova Romania Belarus Russian Federation Estonia Lithuania Latvia Ukraine Bulgaria Poland Slovakia The former Yugoslav Republic of Macedonia Czech Republic Hungary Andorra Austria Belgium Croatia Denmark Slovenia Portugal Spain France Luxembourg Switzerland United Kingdom Germany Iceland Netherlands Sweden Greece Italy Malta Finland Ireland Norway Field Survey : 2010 Table 9: Comparison of cluster information of Europe with the world data Cluster 2
Cluster number
Average number of medical personnel / beds per 10000 population 66.84 74.28 32
Immunization coverage (measles, DTP3, HepB3) % 1 yr olds
Average mortality rates per 10000 population 521.95 236.5 833.07
Cluster 1 Cluster 2 World Field Survey : 2010
8.74 11.66 8.44
93.43 87.31 81.6
67.26 75.03 61.33
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Table 10: Clusters of Asian continent Cluster 1 Afghanistan Armenia Qatar Saudi Arabia United Arab Emirates Republic of Korea Singapore Bahrain Oman Iran (Islamic Republic of) Syrian Arab Republic China Viet Nam Malaysia Sri Lanka Thailand Brunei Darussalam Field Survey : 2010 Table 11: Comparison of cluster information of Asia with the world data Cluster 2 Turkey Cyprus Israel Jordan Lebanon Kuwait Azerbaijan Uzbekistan Kazakhstan Kyrgystan Turkmenistan Mongolia Tajikistan Cluster 3 Bangladesh India Yemen Pakistan Nepal Lao Peoples Democratic Republic Iraq Myanmar Indonesia Philippines Bhutan Maldives Cambodia
Democratic Peoples Timor-Leste Republic of Korea Georgia Japan
Cluster number
Average number of medical personnel / beds per 10000 population
Immunization coverage (measles, DTP3, HepB3) % 1 yr olds 48.6 92.77 69.73 81.6
Cluster 1 3.02 Cluster 2 42.24 Cluster 3 10.52 World 32 Field Survey : 2010
15.5 6.8 5.8 8.44
38.5 66.7 56.78 61.33
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Table 12: Clusters of African continent Cluster 1 Algeria Tunisia Morocco Cape Verde Mauritius Egypt Libyan Arab Jamahiriya Angola Burundi Sierra Leone Burkina Faso Mali Guinea-Bissau Chad Cluster 2 Mauritania Ethiopia Guinea Cameroon Senegal Congo Equatorial Guinea Cluster 3 Benin Gambia Sao Tome and Principe Djibouti Ghana Kenya Uganda Cluster 4 Botswana Swaziland Lesotho Zimbabwe Zambia Nambia South Africa
Table 13: Comparison of cluster information of Africa with the world data
Cluster number
Average number of medical personnel / beds per 10000 population 26.61 3.54 3.62 15.93 32
Immunization coverage (measles, DTP3, HepB3) % 1 yr olds 89.29 54.37 77.21 82.76 81.6
Average mortality rates per 10000 population 500.39 1694.1 1577 2246.7 833.07
Cluster 1 Cluster 2 Cluster 3 Cluster 4 World Field Survey : 2010
5.9 5.76 9.08 8.87 8.44
66.18 44.87 47.22 38.7 61.33
Table 14: Comparison of cluster information of all countries with the world data Cluster number Average number of medical personnel / beds per 10000 population 6.91 25.37 71.24 32 Average government expenses (%) Immunization coverage (measles, DTP3, HepB3) % 1 yr olds Average mortality rates per 10000 population Average life expectancy in years
Cluster 1 Cluster 2 Cluster 3 World Field Survey : 2010
7.2 8.35 10.03 8.44
65.56 88.46 90.37 81.6
1578.4 530.04 407.38 833.07
47.23 66.24 70.61 61.33
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Pseudo F Statistic 12 11 10 9 8 7 6 5 4 3 2 1 0 10 Number of Clusters PLOT Pseudo F Statistic Pseudo T-Squared Statistic 20 30
Fig 1 : Plot of pseudo F statistic and t2 statistic vs. number of clusters

Name of Observation or Cluster
Cluster 1
Cluster 2 Cluster 3
R-Squared
Fig 2 : Dendrogram of countries in North American continent
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Cluster 2
GDP per capita US $
Cluster 2
Cluster 3
3. Plot of GDP vs. countries of North American Continent
Fig. 4. Plot of PBPL, literacy rate and urbanization rate vs countries of North American continent
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3. Conclusions The clusters give an indication on the relative standings of the different countries/regions in terms of their medical facilties. The study tried to relate the facilities with the socio-economic factors namely GDP, Literacy rates, Urbanization rate and Population below poverty line. The results of this study are summarized below: The results of the cluster formation were similar for different methods used. This shows that there were natural clusters in the data. In general the countries can be divided into three clusters, above average, average and below average medical facilities. The medical facilities in the countries show a relation with the socio-economic factors like GDP, Literacy rates etc. However, there are 2 exceptions, that of Niue and Equatorial Guinea. 2 Countries, namely Haiti and Afghanistan were identied as having the poorest facilities. (i.e. they emerged as outliers) Europe emerged as the continent with the best facilities whereas Africa was the worst. Asia was the only continent to be spread uniformly across the three clusters. This segmentation may further be used to draw out comparisons and identify key focus areas. This can be used by organizations like WHO, Government agencies, World Bank, other international medical organizations like Red Cross etc. to formulate policies regarding resource allocation. A benchmarking exercise can help governments in adopting best practices being followed in providing health care.
References 1. Anderberg, M.R. (1973) Cluster Analysis for Applications, Academic Press New York 2. Anjum, F.M., Butt, M.S., van Zuilichem, D.J., and Ahmad,I. (2002) Classication of Quality of Spring Wheats by Cluster Analysis, International Journal of Food Science and Technology, Vol. 37, pp. 101-106 3. Carlson,A., Kinsey,J., and Nadav,C. (2002) Consumers Retail Source of Food: A Cluster Analysis, Family Economics And Nutrition Review, Vol. 14 (2), pp. 11-20 4. Dixon,F.A., Cross,T.L., and Adams,C.M. (2001) Psychological Characteristics of Academically Gifted Students in a Residential Setting: A Cluster Analysis, Psychology in the Schools, Vol. 38(5), pp. 433-445 5. Everitt,B., Landau, S., and Lesse,M. (2001) Cluster Analysis, Fourth edition, Oxford University Press New York 6. Hardle, W., and Simar, L. (2003) Applied Multivariate Statistical Analysis, Springer. 7. Johnson, R.A., and Wichern, D.W. (1992) Applied Multivariate Statistical Analysis, Prentice Hall, N.J., USA. 8. Lonial,S., Menezes,D., and Zaim,S. (2000) Identifying Purchase Driving Attributes and Market Segments for PCs Using Conjoint and Cluster Analysis, Journal of Economic and Social Research, Vol. 2, pp. 19-37. 9. Plotkin,J.B., Chave,J., and Ashton,P.S. (2002) Cluster Analysis of Spatial Patterns in Malaysian Tree Species, The American Naturalist, Vol. 160(5), pp. 626-644
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PARTNERSHIP E- RETAILING MODEL FOR INDIAN RURAL MARKET

R. Suresh, Research Scholar Department of Management Studies Manonmaniam Sundaranar University, Tirunelveli, Tamil Nadu Dr. B. Rajasekaran Department of Management Studies Manonmaniam Sundaranar University, Tirunelveli,Tamil Nadu 1. Introduction The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-thirds of countries consumers live in rural areas and almost half of the national income is generated from rural market. It is only natural that rural markets form an important part of the total market of India. India is classied in around 600 districts, and approximately 6,30,000 villages, which can be sorted in different parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest towns, etc. Retailing is the nal phase of the distribution channel and it is clear by now that it is distribution that drives growth in rural Indian markets. Hence retailing will be signicant and will undergo greater organization and maturity as is being witnessed in the urban markets , even in the rural markets. Innovative retail models which take into account the nuances of rural markets are the way forward. India offers a huge, sustainable and growing rural market which can be tapped effectively through innovative distribution channels with retailing being the most critical element of this strategy as it is the nal touch point and the actual touch point with the customer which can be the most critical inuence in the buying process. The paper highlights the challenges and opportunities in rural retailing and suggests a new model for rural distribution. 2. Recent trends in rural retailing Multiple drivers leading to a consumption boom Favorable demographics Growth in income Socio economic changes Raising aspirations: Value added goods sales Food and agri- inputs retailing key drivers of growth ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural hyper markets. HLL is using its Project Shakti initiative leveraging women self-help groups to explore the rural market. Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve the rural markets. 3. Rural retailing challenges The rural market of India is large and scattered in the sense that it consists of over 700 million consumers from 6, 30,000 villages spread throughout the country, Hence market coverage becomes the greatest challenge Nearly 60 % of the rural income is from agriculture. The demand pattern for products is mostly seasonal The rural consumer values old customs and tradition. They do not prefer changes. Rural consumers have diverse socioeconomic backwardness. Different types of strategies need to be adopted. The infrastructure facilities like roads, warehouses, communication system, and nancial facilities are inadequate in rural areas. Hence physical distribution becomes costly due to inadequate infrastructure facilities. 4. Rural retailing Opportunities At present 85% of the organized retailing takes place in Indias urban areas. But the good thing is that the retail focus has already shifted to the rural
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areas. The Indian rural market with its vast size and demand base offers the following opportunities to marketers: Infrastructure is improving rapidly In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected. More than 90% villages are electried, though only 44% rural homes have electric connections. Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is connected by STD. Social indicators have improved a lot between 1981 and 2001 Number of pucca houses doubled from 22% to 41% and kuccha houses halved (41% to 23%). Percentage of BPL families declined from 46% to 27%. Rural literacy level improved from 36% to 59%. Per square foot space is cheap in rural areas Low penetration rates in rural areas 5. Challenges in Rural Distribution The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media. The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptability and awareness (4 As).This study mainly focuses on the distribution aspect in rural market. Product availability is considered as the important
challenge because of changing phase of rural demographics. Indias 6, 30,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, nding them is not easy. However, given the poor state of roads, it is an even greater challenge to regularly reach products to the far-ung villages. Any serious marketer must strive to reach at least 13,113 villages with a population of more than 5,000. Marketers must trade off the distribution cost with incremental market penetration. Over the years, Indias largest MNC, Hindustan Unilever, a subsidiary of Unilever, has built a strong distribution system, which helps its brands to reach the interiors of the rural market. To service remote village, stockists use auto-rickshaws, bullock-carts and even boats in the backwaters of Kerala. Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company depot supplies, twice a week, large distributors which who act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. LG Electronics denes all cities and towns other than the seven metros cities as rural and semi-urban market. To tap these unexplored country markets, LG has set up 45 area ofces and 59 rural/remote area ofces. Study on buying behaviour of rural consumer indicates that the rural retailers inuences 35% of purchase occasions. Therefore sheer product availability can affect decision of brand choice, volumes and market share. Some of the FMCG giants like HUL took out project streamline to signicantly enhance the control on the rural supply chain through a network of rural sub-stockists, who are based in the villages only. Apart from this to acquire further edge in distribution HUL started Project Shakti in partnership with Self Help groups of rural women. 6. Existing Models of Rural Distribution HULs Project Shakti Project Shakti is HULs smart way of reaching 10 lakh homes directly in the villages where traditional distribution system cannot hope to enter through
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the use of Self Help Groups (SHGs). The project was started in 2001 in 50 villages involving women belonging to micro-credit SHG in the Nalgoda District of Andhra Pradesh. 50 SHGs were selected. These SHGs were covered by three Mutually Aided Cooperative Thrift Societies (MACTS). Each MACTS had 14 to 15 SHGs under them. HUL along with a social service organization, Marketing & Research Team (MART), assisted the women in getting micro-credit to set-up an enterprise to distribute HULs range of products. HUL selected a woman from an SHG as Shakti entrepreneur to start an enterprise with an initial loan from her SHG. After three month training, each woman began serving 6 to 10 villages having population of 1000 to 2000. HUL delivered stocks at her door-step. From there on, she had to supply to village retailer as well as sell directly to consumers. She would pocket different prot margin for each different sale. 7. ITCs Choupal Sagar Choupal Sagar, a farmers Mall of ITC, is a place where the rural consumer gets almost all of his requirements under one roof. From clothes, FMCG goods, watches, home furnishings and consumer durables to automobiles to tractors, pumping sets, fuel, pesticides, seeds to health care, retail banking to restaurants and much more are available in the Sagars. Initial investment in each shopping is Rs 5crore (Rs 50 million). Till now ITC is able to setup only 24 Choupal Sagars across Madhya Pradesh, Uttar Pradesh and Maharashtra. 8. Hariyali Bazaar The rst outlet came up at Del Pandarwa (near Shahjahanpur in Uttar Pradesh) in July 2002 and so far 15 Hariyali Bazaars have been set up: six in UP, ve in Punjab, three in Rajasthan and one in Haryana. On an average, each centre is attracting 150-200 farmers a day. Each Bazaar operates in a catchment of about 20 km radius and approximately 15,000 farmers live in this area. Each center provides help to improve the quality of agriculture in the area through 247 support by a team of qualied
agronomists. They provide a complete range of good quality, multi-brand agriculture inputs, access to modern retail banking and farm credit at reasonable rates of interest, farm produce buyback opportunities and access to new markets. 9. GODREJ Aadhaar GODREJ Aadhaar, the rural retail initiative of Godrej Agrovet Ltd. The Godrej Aadhaar brand has grown to a chain of 18 stores providing a host of services to farmers and their families within a year of setting up. The company is now in the process of developing these outlets into a one-stop solution for all the needs of the rural population. Godrej Aadhaar offers an array of services for rural house holds from the basic food, grocery, apparel, footwear to furniture, kitchenware and home appliances to value-added services including banking, postal services pharmacy to be made available at these stores to ease the burden of the entire farmer community. The Future Group has already acquired Godrej Aadhaar in 2008 from Godrej Agrovet. Aadhaar now functions as a retail store that provides inputs to farmers; it also sells FMCG and electronic products to the rural retail customer. 10. New e-business model for last mile distribution ITC Choupal sagar model can concentrate only to selected areas, the expansion of such type of store becomes problem due to high setup cost. The HUL project shakthi model can cater only at the micro level with limited product choice for the customers. The new model can be scaled up similar to ITC choupal sagar, but it should operate with lowcost, low capital investment model without losing its corporate social responsibility. The outlets can be setup as small-sized functional stores with an approximate area of 1,500-2,000 sq.ft, warehouse space retail outlets taken on rent or lease.,. The new model can be developed by the participation of 100 to 150 Self Help Groups with the support of corporate. The Model becomes more viable due to
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SRM Management Digest - 2010 Nature of the market
the increase in number of SHGs in India. A single warehouse can concentrate on 20 to 30 rural kiosks covering an average of (each kiosk covers six villages) 150 villages. The total households covered by one distribution hub will range from 20,000 to 25,000. The key players in the new model is given in gure 1
Financial strength of SHGs. SHG concentration. NGOs /Government support Corporate requirements.
12. Operational Aspects of the e-Business Model

NGOs/Government
SHGs
Banks
Modern information and communications technologies (ICTs) and web based marketing of FMCG and durables hold great promise for the development of rural market in India There are a number of ways in which ICTs may serve the development process. For instance rural entrepreneurs can benet because ICTs help to improve access to markets or supply chains
Distribution HUB
(SHG CORPORATE PARTERNERSHIP)
Corporate
Post Office
and provide a broader base for decision-making. Moreover, many local communities have experienced that ICTs have increased bottom-up participation in the governance processes and may expand the reach and accessibility of government services and public infrastructure.Internet and Information Kiosks exist in various kinds, each with their respective merits. The Information Kiosks can be setup by the Government/ NGOs support with the help of local SHG Group to sell the products and services. These Kiosks can also operate like i-Shakti to provide information and services to meet villagers needs in medical, health and hygiene, animal husbandry, agriculture, education and womens empowerment among others. The business uses click and brick model i.e., use of both the online as well as the ofine channel. The operational aspect of the new model is given in gure 2.
C1 (P1 Pn) C2 (P1 Pn) Cn
Rural Homes
Fig. 1: Key players in the new Model Payment options: The payment for product purchase can be made by cash or by using Kisan Credit cards or commonwealth cards at the respective kiosk operated by SHG. Distribution channel: Distribution can be taken care with the participation of postal network. Postman service can be used to deliver the product to the rural households. Alternatively private network with the participation of SHG can be utilized for the product delivery mechanism. 11. Factors need to be considered for setting the new model The new model can be formed with SHG members as equity holders. .The SHG can contribute at the individual level or at the group level with the marketing support of corporate. The number of SHGs and e-kiosks can be decided based on the following factors. Nature of the product. Scale of operation.
,
D I S T R I B U T I O N
,.(P
Pn)
Postal Network
Distribution HUB Government Services

(SHG CORPORATE PARTERNERSHIP)
NGOs Services
.
RURAL KIOSK
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13. Benets of new e-business model Being a theoretical model the benets can be derived based on the success elements derived from the various models under operation. 1. Wider acceptance due to its high level of corporate social responsibility. 2. Eradication of poverty by sharing the prots by the SHG. 3. Availability of the product to the rural consumers at affordable prices. 4. Choice of brands. 5. Availability of government and NGOs services. 6. Possibility of adding mandi system for procurement from small farmers. 14. Scope for further research Being a conceptual study it has its own limitations. Further research can be conducted in the areas of rural customers opinion on the new model, product requirements, SHGs entrepreneurial spirit and investment capacity, Financial viability of the new model ,Government and NGOs support and distribution mechanism. The future research in the above areas can serve as a solution to enhance the new model. 15. Conclusion Spending in the rural segment is growing rapidly and consumption patterns are closing in on those of urban India. Several Indian and multinational rms have been making inroads into Indian rural market by setting their own distribution models. Companies such as Unilever, Phillips and Nestle have long been known to Indias rural Markets. The basic problem in Indian rural market is accessibility. The scattered population and change in rural demographics makes an obstacle for growth. The suggested model may cater to the rural market
by increasing the socio-economic aspects of the rural households due the presence of increased rural communication infrastructure. 16. References 1. Burke, R.R. (1997). Do you see what I see? The future of virtual shopping. Journal of the Academy of Marketing Science, 25 (4), 352360. 2. Graham, J.R. (2000). Marketing strategies for businesses that are more Bricks than Clicks. The American Salesman, 45 (9), 19-25. 3. Prahalad, C.K.,(2005). The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Prots, Pearson Education. 4. Kashyap,Pradeep & Raut, Siddhartha(2009), The Rural Marketing book, Biztantra, New Delhi, India 5. Lee,Kiefer & Carter, Steve(2009), Global Marketing Management,Oxford university press, New Delhi, India 6. National council of Applied economic Research, Delhi( NCAER),(2002) The India market Demographic Report 2002.Retrived from http://ncaer.org/ 7. Mckinsey Global Institute(MGI),The bird of gold: The rise of Indias Consumer Market Report 2007 8. Shyam Shiradhonkar (2009), Rural Retail Market Report for Aadhar. 9. VOICE Report (2008), A Report on the Success and Failure of SHGs in India Impediments and Paradigm of Success. 10. Census of India(2001), Census of India Report 2001,Reterived from http:// censusindia.gov.in/
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EMERGENCE AND SPREAD OF RETAILING

Mr. D. Subramaniam, Research scholar Sri Chandrasekhara saraswathi Vishva maha vidyalaya university Kanchipuram
1. Introduction Retailing has come to be recognized as a discipline due to rapid growth in market coverage and investments in this sector in India and the world. There are various factors responsible for retail revolution across the globe, including in India. The demographic prole of the consumer has changed and due to economic development and increased income level has become afuent. Also it has been observed that the powers have slowly started moving out of brands into retailers hands due to their proximity with customers and improvements in customer service. The emergence of private labels will substantiate this fact. All the mass produced products are being served to mass consumers through retail platforms allowing the customer to choose from wider assortments. There has been revolution in retail industry. The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the countrys GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. 2. Traditional Retail Scene in India India has the most unorganized retail market even today. Traditionally small retailers have shops in front and houses at the back of such stores. More than 99% of retailers function in less than 500 sq.ft of area. Retailers decide the prices on ad hoc basis or by seeing the face of the customers. There is no separate accounting for goods consumed for self and traded. Such is the growth of retail industry in our country and it is the scenario not only in rural but also in urban cities.
3. Evolution of retail sector and Current Trends in retail sector Over the years customers needs have changed and their expectations also have changed. The demographic prole also has changed warranting a different response from the retailing sector. The evolution of the Customer expectation trend is as below: Table 1 Customer Expectation
Period Customer expectation
Pre- 80s Mid- 80 s 1990 s 2000 s
Price sensitive , Value for money Quality and Price Quality + enjoyment + Price + time Quality + enjoyment + entertainment + price + time + energy + stress
The buying patterns in India vary according to the customs and life style of a region. In south approximately seven hours is spent on shopping per week which is the highest in the four zones of our country. This trend has brought in more Malls and super markets in the south than in other zones. Apart from quality and range of products, value for money and attractive displays and human touch plays a vital role in retailing. Also there is emphasis on schemes and promotions while making a brand choice. Further the trend is towards convenience and exibility in terms of exchange/return policies. There are varieties in the kind of retail structures such as Kirana stores- traditional independent stores Department stores like the ones in USA and Europe with areas in excess of 2500 sq.ft with wide range of products.
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Discount stores big stores like wall mart where discounts are dominant factors as they have a large economy of scale as they hold substantial power in the market.. Also they have capacity technology enabling them to control more of marketing network than the manufacturers. Category killers - dominate one area of merchandise like sports goods etc. As they buy huge quantities their prices are very low and competitive than general discounters. Specialty stores They concentrate on one type of merchandise and offer in a manner that makes it special like home furnishing etc. Super stores and hyper markets They are away from traditional shopping areas and enjoy greater accessibility by car, greater economy of scale and they have warehousing facility as well with areas in the range of 50,000 sq.ft etc The recent trend is to extend e-tailers where shopping is done online.
and form innovative and strong supply chain that will cut through distribution and increase margins leading to retail clustering phenomenon. Also the other important factors contributing towards emergence of a strong retail economy in India include faster turnaround time, birth of an attractive market due to strong consumption cycle. 5. Post liberalization Post liberalization enabled many global retail giants to enter our country as vast middle class and untapped retail industry attracted them. The Indian retail is expected to grow 25 per cent annually. The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations. Global retail consultants KSA Technopak have estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 200506. The Indian retail sector is estimated at around Rs 900,000 crore, of which the organized sector accounts for a mere two per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer. Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself. In their preparation to face erce competitive pressure,
4. The Retail Mix Like marketing mix the retail mix also has some factors forming the vital composition for growth and success. There is always a trade off that takes place between price and merchandise against factors like service, location, marketing communication, quality and stores ambience. The retailing does the following functions like providing assortments , sorting, Breaking bulk, rendering services, risk bearing, holding inventory, channel of communication , transport and advertising functions. Thus there is no doubt that retail links the producer and the ultimate customer for the mutual win-win status. The ratio of customers to retail store is 150:1 in India which means that there is one store for every 150 Indians. However the ratio in developed countries is higher which means small retailers come together
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Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values combining products, image and reputation into a coherent retail brand strategy. Also the future trends that will emerge in India are likely shift their gears in such a way that those who are in retail with broad varieties and shallow assortment will move towards narrow variety and deep assortments.. This is based on the concept that retail change is based on cyclical uctuations in variety and assortment. 6. Opportunities and Strategies for Retail Sector in India With more than 54 % of population in India less than 25 years of age, the needs and tastes of the consumers have undergone a tremendous transformation. The impact of globalization and the advancements in IT also has altered the preferences of the consumer due to wide range of choices available now. Multi-storied malls and huge complexes offer shopping, entertainment and food under one roof. The Indian retailing sector is at an inexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. Emerging opportunities in the services sector, increased personal disposable income, entry of global products etc are going to be the key growth drivers of the organized retail sector in India. 7. Options Available for Retail Sector for Growth in India A PEST analysis helps strategists to evaluate the growth options available in this sector. This analysis does a scanning of the environment covering political, Economical, social and technological aspects. The current political environment has enabled liberalization and the consistent GDP growth has testied the soundness of policies which are favorable for the growth of the retail sector.. Even
the global meltdown had very little impact compared to other economies. The demographic prole of our country also is favorably positioned with younger group forming the bulk of our population. Many retailers have chosen to extend e-commerce applications and e-tailing has also contributed to the growth of this sector. Thus PEST analysis reveals the favorable climate prevailing in our country fro the retail sectors growth. But the Indian retail scene has witnessed too many players in too short a time, crowding several categories without looking at their core competencies, or having a well thought out branding strategy. Nevertheless, retailing in India is gradually inching its way toward becoming the next boom industry. The trends that are driving the growth of the retail sector in India are

Low share of organized retailing Increase in disposable income and customer aspiration Increase in expenditure for luxury items
Another credible factor in the prospects of the retail sector in India is the increase in the young working population. In India, hefty pay packets, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector. These key factors have been the growth drivers of the organized retail sector in India which now boast of retailing almost all the preferences of life - Apparel & Accessories, Appliances, Electronics, Cosmetics and Toiletries, Home & Ofce Products, Travel and Leisure and many more. With this the retail sector in India is witnessing rejuvenation as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. The retailing conguration in India is fast developing as shopping malls are increasingly becoming familiar in large cities. When it comes to development of retail space specially the malls,
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the Tier II cities are no longer behind in the race. If development plans till 2007 is studied it shows the projection of 220 shopping malls, with 139 malls in metros and the remaining 81 in the Tier II cities. The government of states like Delhi and National Capital Region (NCR) are very upbeat about permitting the use of land for commercial development thus increasing the availability of land for retail space; thus making NCR render to 50% of the malls in India.
Organized retailing in India has been largely an urban Phenomenon with afuent classes and growing number of double-income households. More successful in cities in the south and west of India. Reasons range from differences in consumer buying behavior to cost of real estate and taxation laws. Rural markets emerging as a huge opportunity for retailers reected in the share of the rural market across most categories of consumption
o
ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural hypermarkets. HLL is using its Project Shakti initiative leveraging women selfhelp groups to explore the rural market. Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve the rural markets.
Fig 1. Retail Space Distribution in Delhi, NCR

o
India is being seen as a potential goldmine for retail investors from over the world and latest research has rated India as the top destination for retailers for an attractive emerging retail market. Indias vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. Even though India has well over 5 million retail outlets, the country sorely lacks anything that can resemble a retailing industry in the modern sense of the term. This presents international retailing specialists with a great opportunity. The organized retail sector is expected to grow stronger than GDP growth in the next ve years driven by changing lifestyles, burgeoning income and favorable demographic outline. At year end of 2000 the size of the Indian organized retail industry is estimated at Rs. 13,000 crore
IT is a tool that has been used by retailers ranging from Amazon.com to eBay to radically change buying behavior across the globe. E-tailing slowly making its presence felt.
Fig 2. Retail Sales In India
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8. Challenges & Opportunies Retailing has seen such a transformation over the past decade that its very denition has undergone a sea change. No longer can a manufacturer rely on sales to take place by ensuring mere availability of his product. Today, retailing is about so much more than mere merchandising. Its about casting customers in a story, reecting their desires and aspirations, and forging long-lasting relationships. As the Indian consumer evolves they expect more and more at each and every time when they steps into a store. Retail today has changed from selling a product or a service to selling a hope, an aspiration and above all an experience that a consumer would like to repeat. For manufacturers and service providers the emerging opportunities in urban markets seem to lie in capturing and delivering better value to the customers through retail. For instance, in Chennai CavinKare, LimeLite, Marico, Kaya Skin Clinic and Apollo Hospital, Apollo Pharmacies are examples, to name a few, where manufacturers/service providers combine their own manufactured products and services with those of others to generate value hitherto unknown. The last mile connect seems to be increasingly
lively and experiential. Also, manufacturers and service providers face an exploding rural market yet only marginally tapped due to difculties in rural retailing. Only innovative concepts and models may survive the test of time and investments. However, manufacturers and service providers will also increasingly face a host of specialist retailers, who are characterized by use of modern management techniques, backed with seemingly unlimited nancial resources. Organized retail appears inevitable. For retail industry in India, things have never looked better and brighter. Challenges to the manufacturers and service providers would abound when market power shifts to organized retail. 9. Conclusion Thus the retail sector has facilitated producer to reach the ultimate customer and created a situation where economy of scale is achieved by the producer which is passed on to the customer. The win -win situation for producer and retailer is extended to the customer as well. The employment opportunities and the investment that this sector has attracted are playing a crucial role in the countrys economic growth.
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PROSPECTS/ PROBLEMS/EMERGING TRENDS: ORGANISED RETAILING VS UNORGANISED RETAILING

Sukanya Hegde Director, National Institute of Management Studies
1. The Retail The word Retail originates from a FrenchItalian word retailler meaning someone who cuts off or shreds a small piece from something . Retailing includes activities of marketing and selling products or services to end consumers for their own household or personal use. Retailer is a Person or Agent or Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer.Kinds of Retailing Unorganised Traditional or Unorganized retail outlets are normally street markets, counter stores, kiosks and vendors, where the ownership and management rest with one person only. This sector accounts for two thirds of the market and requires low skilled labor. These are highly competitive outlets, with negligible rental costs (unregistered kiosks or traditional property), cheap workers (work is shared by members of family) and low taxes and overheads. 2. Organised Retailing Organized retailing comprises mainly of modern retailing with busy shopping malls, multi storied malls and huge complexes that offer a large variety of products in terms of quality and value for money makes shopping a memorable experience. 3. Retailing Scenario in India Most of the retail sector in India is unorganised, which were known as mom-pop stores. The biggest advantage in this sector is the consumer familiarity that passes on from one generation to the next. The transformation stage of the retail sector started in late 1990s. The emergence of pure retailer has started at this stage as it is been perceived as a
beginner and the organised retailing is getting more attractive. In India, the retail business contributes around 11 percent of GDP in 2005 . Of this, the organized retail sector accounts only for about three percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector....An important aspect of the current economic scenario in India is the emergence of organized retail. There has been considerable growth in organized retailing business in recent years and it is poised for much faster growth in the future. Major industrial houses have entered this area and have announced very ambitious future expansion plans. Transnational corporations are also seeking to come to India and set up retail chains in collaboration with big Indian companies. However, opinions are divided on the impact of the growth of organized retail in the country. Concerns have been raised that the growth of organized retailing may have an adverse impact on retailers in unorganized sector .In the context of divergent views on the impact of organized retail, it is essential that an in-depth study on the possible effects of organized retailing is to be Observed. The government today said there would be no negative impact of organised retailing on the unorganised sector, which accounts for 96 per cent of retail business. Moreover, 3.5 crore people have got jobs in the retail sector and the incomes too have increased in recent times. The retail industry is divided into organised and unorganised sectors. Over 12 million outlets operate in the country and only four per cent of them being larger than 500 sq ft (46 m2) in size. Organised
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retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. Most Indian shopping takes place in open markets and millions of independent grocery shops called kirana. Organized retail such supermarkets accounts for just 4% of the market as of 2008. Regulations prevent most foreign investment in retailing. Moreover, over thirty regulations such as signboard licences and anti-hoarding measures may have to be complied before a store can open doors. There are taxes for moving goods to states, from states, and even within states. Globally, the retail industry has grown at a brisk pace with a Compounded Annual Growth Rate (CAGR) of 7.77% during the period 2001-2006. The growing expansion of the top global retailers has ensured globalisation of the industry; however the opportunity for growth of organised retail is immense in countries such as India, S. Korea, Vietnam etc. where organised retailing is still at a nascent stage. The Indian retail industry has witnessed a massive transition during the last few decades. The Indian retail has grown at a CAGR of 11.2% during the period FY04-FY07, with food and grocery accounting for the major share. Despite the industry being dominated by the unorganised retailers, the organised retailing revenues have soared at a CAGR of 19.5% during the period FY04-FY07. The apparel and footwear segment occupies the major share in the organised retail pie. The Indian retail industry has strong linkages with the economic growth and development of the economy. It is primarily characterised by its hierarchical growth structure, high working
capital requirements etc. The factors such as rising urbanisation, growing consumer class, growing per capita expenditure, greater interest evinced by the Venture capitalists / Private equity rms in the industry etc. have been driving the growth of organised retail. Recently released study by the Indian Council for Research on International Economic Relations, predicts that the unorganised-retail sector in India will grow each year by about 10% to hit nearly $500 billion in 2011-12. The organised-retail sector, which makes up just 4% of the total industry, is likely to grow much more quickly. Some of the large format Hypermarkets like Big Bazaar which do not have any competing unorganized sector competitors have been doing well but the corner store formats like the local Reliance Retail, Spencers stores have yet to get their act together. These stores routinely appear to be not sufciently stocked, they do not have all the essentials, stacking is not professionally, cashiers have to be sought out and the overall appearance is really shabby. Whereas the competiting kiranas are as usual very well stocked, offer home deliveries, lots of local products etc. the retail chain corner stores are at the risk of losing whatever credibility they have built in the last couple of years. The unorganized sector stand alone shops are as robust as ever inspite of the hullabaloo they raised in the initial days of the retail chains, and the chains themselves are to be blamed for this mess. 4. Growth An increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at six per cent . [4] The Retail Business in India is currently at the point of inection. Rapid change with investments
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to the tune of US $ 25 billion is being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to management consulting rm Technopak Advisors Pvt. Ltd., it is valued at about US $ 350 billion. Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years.]India has topped the A.T. Kearneys annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. The Indian economy has registered a growth of eight per cent for 2007. The predictions for 2008 is 7.9%. ] The enormous growth of the retail industry has created a huge demand for real estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300 malls are estimated to be operational in the country. Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the world Indian retail density of six per cent is highest in the world. 1.8 million households in India have an annual income of over 45 lakhs. While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are signicant challenges as well given that over 90% of trade is conducted through independent local stores. Challenges include: Geographically dispersed population, small ticket sizes, complex distribution network, little use of IT systems, limitations of mass media and existence of counterfeit goods. 5. Major Indian Retailers The low-intensity entry of the diversied Mahindra Group into retail is unique because it plans
to focus on lifestyle products. The Mahindra Group is the fourth large Indian business group to enter the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and Bharti Enterprises Ltd. The other three groups are focusing either on perishables and groceries, or a range of products, or both.
Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe Deposit Lockers PGC Retail -T-Mart India, Switcher , Respect India , Grand India Bazaar ,etc., REI AGRO LTD Retail-Formats:6TEN Hyper & 6TEN Super RPG Retail-Formats: Music World, Books & Beyond, Spencers Hyper, Spencers Super, Daily & Fresh Pantaloon Retail-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station, Brand Factory, Depot, aLL, E-Zone etc. The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan Industries with World of Titans showrooms, Tanishq outlets, Chroma. K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise brand stores. Pyramid Retail-Formats: Pyramid Megastore, TruMart Nilgiris-Formats: Nilgiris supermarket chain Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain Vishal Retail Group-Formats: Vishal Mega Mart BPCL-Formats: In & Out Reliance Retail-Formats: Reliance Fresh Reliance ADAG Retail-Format: Reliance World German Metro Cash & Carry Shoprite Holdings-Formats: Shoprite Hyper
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Paritala stores bazar: honey shine stores Aditya Birla Group - more Outlets Kapas- Cotton garment outlets
6. Entry of MNCs The worlds largest retailer by sales, WalMart Stores Inc and Sunil Mittals Bharti Enterprises have entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-carry facilities over seven years. The rst of the stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses, is slated to open in north India by the end of 2008. Carrefour, the worlds second largest retailer by sales, is planning to setup two business entities in the country one for its cash-and-carry business and the other a master franchisee which will lend its banner, technical services and know how to an Indian company for direct-to-consumer retail. The worlds fth largest retailer by sales, Costco Wholesale Corp (Costco) known for its warehouse club model is also interested in coming to India and waiting for the right opportunity. Opposition to the retailers plans have argued that livelihoods of small scale and rural vendors would be threatened. However, studies have found that only a limited number of small vendors will be affected and that the benets of market expansion far outweigh the impact of the new stores. Tesco Plc., plans to set up shop in India with a wholesale cashand-carry business and will help Indian conglomerate Tata group to grow its hypermarket business. 7. Challenges To become a truly ourishing industry, retailing needs to cross the following hurdles:[19] Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail
businesses. Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options Intrinsic complexity of retailing rapid price changes, constant threat of product obsolescence and low margins.
The ICRIER report says the unorganised retail business is likely to grow at 10 per cent annually from $309 billion in 2006-07 to $496 billion in 201112.The ndings of the study are based on survey of 2,020 unorganised small retailers across ten major cities, 1,318 consumers shopping from both organised and organised retail outlets, 100 intermediaries and 197 farmers. The study, however, does not deal with the impact of foreign direct investment (FDI) on small retailers. The impact of FDI on unorganised retail is being assessed by the NCAER. Organized Retailing in the last decade has emerged as one of the sunrise industries in India, closely following the IT and biotechnology industry. The boom in the sector started after the liberalization measures were initiated in 1991 in the country. Several large chains have entered the bandwagon and achieved fair to signicant success. Indian retailing has evolved over the past decade, from largely an informal and disorganized marketplace to an increasingly corporatised industry at least in the urban India. This is the largest among all the industries, accounting for over 10% of countrys GDP and around eight per cent of employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of heavy initial investment that are required to break even with other companies and compete with them. The Indian Retail Industry is gradually inching its way towards becoming the most boom industry. The total concept and idea of shopping has undergone
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an attention drawing change in the format and consumer buying behavior; ushering in a revolution in shopping in India. Modern retailing has entered into the retail market in India as is observed in the form of bustling shopping centre, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. Large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working women population and emerging opportunities in the services sector are going to be the key factors in the growth of organized retail sector in India. In India, the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the Indian retail industry to grow faster. Indian retail is expected to grow 25% annually. The Indian retail sector is witnessing tremendous growth with the changing demographics and an improvement in the quality of life of urban people. The growing afuence of Indias consuming class, the emergence of retail entrepreneurs and a variety of imported products particularly in the food and grocery segment, has been one of the main drivers for the current retail boom in the domestic market. Retailing, one of the largest sectors in the global economy, it is going through a transition phase in India. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains, convenience stores and fast-food chains. The traditional grocers, by introducing self-service formats as well as valueadded services such as credit and home delivery, have tried to redene themselves. However, the boom in retailing has been conned primarily to the urban markets in the country. Even there, large chunks are yet to feel the impact of organized retailing. There are two primary reasons for this. First, the modern
retailer is yet to feel the saturation effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identied with lifestyles With organized retail in India pegged at Rs 25,000 crore (Rs 250 billion) -- out of a total of Rs 800,000 crore (Rs 8,000 billion -- and a double digit growth rate, marketing companies are setting up shops to provide differentiated services to clients. Till now sales people were the link between the retailer and the producer. But sales personnel are busy selling a product and do not have a fair idea of what retailing is about. The focus is to prioritise retail. That is, not only to sell a product to a consumer but to get the consumer to interact with the product. Gone are the days when retailing meant mere availability of a product. With competition becoming stiffer companies are looking at experiential marketing. Also the lack of proper metrics to measure marketing spends is a serious issue. In todays swiftly changing business environment, there is no option but to be in the know - to be constantly on the move, keeping tabs on the shifting trends in the market place and maneuvering your strategy to stay on top. The retail arena today is very different - the opportunities are incredible but exploiting them is extremely tough. Super smart shoppers know all the rules of the game. They can instantly sense a good buy and lap it up or sniff out a bad product and dismiss it. Their expectations are tough to meet but for retailers aiming to make a big sale, there is not much of a choice but to nd ways to win customers over and keep them permanently happy. In an environment, which is still restrictive in many ways and lacks adequate infrastructure, this becomes a formidable task. So how are Indian retailers coping up and how long will it be before organized retail becomes the primary way of selling. This report also surveys the property market and reiterates the signicance of IT in organized
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retail before presenting a payback analysis to reveal the nancial aspects involved. Indias attempt to go the international way in retailing has met with some... Conclusion Even though India has well over ve million retail outlets of all sizes and styles (or non-styles), the country sorely lacks anything that can resemble a retailing industry in the modern sense of the term. This presents international retailing specialists with a great opportunity. It was only in the year 2000 that the global management consultancy AT Kearney put a gure to it: Rs. 400,000 crore (1 crore = 10 million) which will increase to Rs. 800,000 crore by the year 2005 an annual increase of 20 per cent. Retailing in India is thoroughly unorganised. There is no supply chain management perspective. According to a survey by AT Kearney, an overwhelming proportion of the Rs. 400,000 crore retail market is UNORGANISED. In fact, only a Rs. 20,000 crore segment of the market is organised. As much as 96 per cent of the ve millionplus outlets are smaller than 500 square feet in area. This means that India per capita retailing space is about two square feet (compared to 16 square feet in the United States). Indias per capita retailing space is thus the lowest in the world (source: KSA Technopak (I) Pvt Ltd, the India operation of the US-based Kurt Salmon Associates). Just over 8 per cent of Indias population is engaged in retailing (compared to 20 per cent in the United States). There is no data on this sectors contribution to the GDP. From a size of only Rs.20,000 crore, the ORGANISED retail industry will grow to Rs. 160,000 crore by 2005. The TOTAL retail market,
however, as indicated above will grow 20 per cent annually from Rs. 400,000 crore in 2000 to Rs. 800,000 crore by 2005 (source: survey by AT Kearney) Given the size, and the geographical, cultural and socio-economic diversity of India, there is no role model for Indian suppliers and retailers to adapt or expand in the Indian context. The rst challenge facing the organised retail industry in India is competition from the unorganised sector. Traditional retailing has established in India for some centuries. It is a low cost structure, mostly owner-operated, has negligible real estate and labour costs and little or no taxes to pay. Consumer familiarity that runs from generation to generation is one big advantage for the traditional retailing sector. In contrast, players in the organised sector have big expenses to meet, and yet have to keep prices low enough to be able to compete with the traditional sector. High costs for the organised sector arises from higher labour costs, social security to employees, high quality real estate, much bigger premises, comfort facilities such as air-conditioning, back-up power supply, taxes etc. Organised retailing also has to cope with the middle class psychology that the bigger and brighter a sales outlet is, the more expensive it will be. The above should not be seen as a gloomy foreboding from global retail operators. International retail majors such as Benetton, Dairy Farm and Levis have already entered the market. Lifestyles in India are changing and the concept of value for money is picking up. Indias rst true shopping mall complete with food courts, recreation facilities and large car parking space was inaugurated as lately as in 1999 in Mumbai. (this mall is called Crossroads).
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Local companies and local-foreign joint ventures are expected to more advantageously position than the purely foreign ones in the edgling organised Indias retailing industry. 8. Reference 1. Retailing Management by Swapna Pradhan, published by Tata McGraw-Hill Publishing Company New Delhi. 2. Retail Management by Barry Berman and Joel R. Evans published by Pearson Education(Singapore) Pte.Ltd, Indian Branch. 3. Retail reality. November 7, 2007. 4. ICRIER Begins Survey of Indian Retail Sector. March 19, 2007. 5. Retailing in India Unshackling the chain stores. The Economist. 2008. http://www.
economist.com/displayStory.cfm?story_ id=11465586. 6. India again tops global retail index. June 22, 2007. 7. Interview - Technopak Advisors Pvt. Ltd.. December 11, 2006. 8. Economic and nancial indicators July 3, 2008. 9. Indian Retail story from Myths to Mall. August 11, 2007. 10. Centre consulting states for setting up retail regulator. July 2, 2008. 11. www.articlesbase.com 12. www.ibef.org 13. www.managementparadise.com
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DEVELOPING E-TAILING STRATEGIES FOR THE FUTURE

Saif Sami, Research Scholar
Aligarh Muslim University, Aligarh
Salma Ahmed, Reader

Aligarh Muslim University, Aligarh
1. Introduction The Internet has changed the way many consumers shop, not just in the digital domain, but also in the physical world. Imagine a prospective book-buyer who spends an hour or two browsing the aisles of his or her favourite neighbourhood bookstore, and who also perhaps spends some money on a coffee at the store. In addition, this prospective customer makes a mental note of interesting titles which he or she might likely buy. Later that evening, this same person gets home, and places an online order for the very same books at an online bookstore. In effect, this new breed of customer is: harvesting the amenities offered by the physical bookstore (like the plush sofas, the ability to browse, community interaction, special events, and the latte) and milking the convenience, the hassle free shopping, and the discount pricing offered by the online bookstore. Sounds simple enough, but the prospects for retailers might be alarming. Consumers are getting smarter in using e-tailers (and online search engines and agents) for convenience and comparisonshopping. Anecdotal evidence and initial qualitative research also suggest that they are less likely to have qualms about not buying from a retail outlet. In addition to these traditional comparisonshoppers who are looking for the best prices, the e-tail model is also attracting a growing segment of customers who are technologically competent, place a high emphasis on convenience, and are willing to
pay a premium price if they nd the product they are looking for. This suggests that there could be an ongoing migration of these cash cows from retail shopping to e-tail. It is, therefore, necessary to reexamine the basic issues confronting e-tailers and traditional bricks-and-mortar retailers as they seek to innovate in the digital domain. For the purposes of this paper, e-tailing is dened as the process of selling products and services through an online interface like the World Wide Web. The main features of e-tailing include: largely virtual interactions between buyer and seller; the provision of a range of services by the seller that seek to enhance the quality of interaction over conventional channels like in-store retailing; a set of complex networked linkages between various facets of the value chain and the use of speed and content as key ingredients of competitive differentiation. Traditional retailers have to recognise the radically different nature of e-tailing if they plan to move to selling in an online format. Conversely, bricks-and-mortar retailers have many strong competencies which e-tailers might nd hard to imitate. 2. Classication of Internet Retail Stores Internet retail stores have various types or styles of outlets. The level of service and support to the consumer classies these basic types. The basic types of retail classications are:
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On-line store fronts companies that have brick and mortar stores and may sell items similar too or the same as their physical outlets. Catalogue sales may be a company that does not have a physical store but sells by catalogue on-line and by direct mail solicitation, such as a specialty company that sells ne art or jewellery. Content sites providing information and support may sell items but their main goal is to give logistical or technical support of goods and services, such as Microsoft technical support or Hewlett Packard computer/hardware technical support. Web trafc control sites, such as malls and search engines example would be Yahoo.com that has retail sales but only through other Dot Com companies. Directing consumers to specic sites that sell products or services generates their sales and prots.
require service or technical expertise. These retailers have a xed market base with a specic customer base. Microsoft is an example of unique product companies that may require a high level of expertise. 4. Market Awareness Market awareness is paramount for retailers on the Internet. Finding a retailer on the Internet may be the difference between success and failure. A savvy computer oriented consumer may have the ability to use a search engine to nd the product or company in which they are interested. Most consumers may use the dot com method but this may limit accessibility of newer companies entering the market as the .com domain is full or the name of the company may be already been purchased in that domain. Many retailers wishing to improve exposure will add their Internet site location in direct mail campaigns, catalogues, on the sides of delivery vehicles, and inside of brick and mortar places of business. 5. Virtual Shopping The more innovative concept, whether it is a new idea, new product, or new promotion, the greater the risk. Traditionally, companies use marketing research to minimize the risk. Technological advances into virtual reality and alternate media have improved research techniques and opened larger cross-sections of consumers. Virtual shopping has the ability to limit the distribution of products to brick and mortar stores before testing the marketability of a product or service. Traditional marketing in a brick and mortar business yields a traditional purchase if it appeals to the consumer. The limitations on this type of marketing are dependent on the appropriate product being marketed to the consumer and the sales are limited to inventory on hand at that location. If the item appeals to the masses, then the sales continue until the inventory is depleted or reordered. A brick and mortar business with an Internet marketing site can utilize the site to beta test new items and serve
The retailers intention can be determined by the focus of the Internet site. Each of these distinctive site types has the ability to either generate sales or advertising revenues. 3. Marketing Strategies On The Web Some retailers wish to expand the overall market penetration to markets in which they are not currently active. These retailers typically do not intend to offer a broad based discount strategy but instead rely on their name recognition and status of the product. Service to the consumer is important but is not directly attributable to the price. Another market strategy stresses volume business and is heavy into discounts. These retailers focus on pricing over product. Service is not their main focus. Their product line tends to be very broad; these may or may not have a brick and mortar store but are tied directly to a store of another name. The last marketing strategy focuses attention to service and product with price being a xed constant. These businesses have a unique product that may
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as a backup to reallocate items from one sector of the country to another when products may sell better in one market or the other. This business will be able to take advantage of the Internet in testing products but also have a physical site for marketing of the products. An Internet only business must rely on curious consumers or piggy-back marketing with other sites for new items. Sales are limited by exposure and the consumers inability to physically touch the product and may be at a disadvantage. In reviewing each of these types of businesses, it is apparent that the integration of the Internet with a traditional brick and mortar business has a marked advantage over the Internet only or brick and mortar only businesses. 6. New Marketing Paradigm Traditional mass marketing communications exists in the form of direct mail, billboards, newspaper, radio, and television advertising. The key to this type of marketing is to inform, persuade, and retain the actual or potential customers and get the message across. Marketing on the WORLD WIDE WEB requires the consumer to actively seek out the site or be drawn to the site by curiosity or by interactivity. The goal of the new marketing paradigm is to seek out the consumer using traditional communications and blend in with the new Internet marketing tools to attract and excite the consumer. A combination of these marketing techniques, click and bricks, will yield a superior marketing package. Using the Internet site to promote the locations of the brick and mortar businesses have also shown to increase in traditional business with consumers that want a product immediately. The click and bricks business has an advantage in the beta marketing of products and the ability to react to shifting market share of products. Further, they may move items around to focus on regional demand and ll in gaps in their marketing strategy. The most important aspect of the click and bricks technique from a marketing perspective is the manner in which the Internet transforms these marketing functions. Informational
and the image of having an Internet presence site drives the new marketing paradigm and ultimately the consumer. 7. Wakeup Call To Dot Com Industry Basic marketing indicates that if the marketers cannot provide the time and place utility to customers that they may lose interest in the purchase. Some Internet sites are very busy and require long periods to load. This delay may be exacerbated by the browsers limitations and timeout function. This function interprets the long period required for loading as a problem and will disconnect from the site being loaded. The creativity of a Web site may contribute to the long loading and make it difcult for the browser to navigate through the Web site. Internet marketers must remember the old saying, Keep it simple. The navigation throughout the web site is also a key. Software upgrades have improved searches and chopped 10 seconds off the time it takes for some pages to appear. Long periods of loading and difculty in using common Internet computer functions, such as the back, reload, stop, and refresh buttons, may cause fatal errors and conicts with the consumers computer program. The average Internet access provider still uses dial-up servers and the availability and affordability of cable modems and DSL access is still very limiting. America on-line still boasts to be the largest Internet access provider with Microsoft (MSN) rapidly closing the gap between these dial-up servers. This competition has kept the growth and viability of dial-up providers strong. Web site administrators and constructors must deal with these issues to insure a smooth transition and ease of use of the web site. Protability of Internet only marketers has been a big disappointment for many start-up companies. The Internet only basis of these start-ups was doomed from the beginning mainly due to the lack of exposure or heavy requirements for initial capital outlay left these types of companies with a large debt that many could not overcome. Even
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for the big companies that started out with a large amount of venture capital, such as Amazon.com, the road has been very rocky. The combination of click and brick business ventures has proven to be the optimal type of marketing platform. 8. Price of a Customer All marketers must conduct a cost-benet analysis of the cost of acquiring one customer and must be weighed against the potential for those customers sales. E-tailers fall into poor pricing practices such as rampant discounts, free shipping, and the desire to sell anything. Success is measured in terms of sales rather than prots. Many e-tailers sell things below cost and try making up the difference by selling advertising space. The space is normally purchased by other e-tailers and that will cause the overall e-tailing market to show poor returns on investment dollars. It was found that 41% of online buyers were happy with dot-com customer service. Improving service by calls to online shoppers on customer service lines has improved sales of some retailers by more than 60%. Repeat customers account for 76% of some e-tailers orders. The Internet creates a more pricesensitive shopper. The free ow of information enables people to be more price conscience. The important point, though, is that this price pressure does not only have an effect online it also affects real-world prices and margins. When networking is so prevalent all prot margins will come under attack. Companies cannot avoid this attack by not selling their wares online. 9. Attracting And Keeping The Customer Some brick and mortar companies are relying on their brand names to attract new customers. Other large retailers are offering low-cost or free Internet services to attract rst time online customers. The attraction of the Internet still remains convenience
and low prices. Straying off this course will tend to discourage the consumer and miss the opportunity for the sale. Electronic payment ability appears to be key to the success of the individual company. Many of the companies were grounded by their own limitations and tend to have slow sales or no sales. An e-tailer that required payment by methods other than electronic tended to slow the sale to the point of losing the sale. Secure transactions across the Internet are a prime concern for many potential customers. Secure credit card transactions over the Internet require cooperation between the credit card company, the e-tailer, and the consumer. Encryption of data is required but the success of encryption relays on the ability of the parties to exchange information, interpret the information, and keep the information secure. In particular, by often making it necessary to separate the settlement from the informational and contracting steps in an acquisition, the security concern is a serious obstacle to consumer-oriented E-commerce. 10. Customer Relationship Management Use of the click and brick approach to customer relationships allows for the business to react to changes in consumer focus more rapidly. The use of an Internet based business sector will allow for the shopping and interest levels of a consumer to be actively measured. This can be done by the use of cookies which is an electronic data collector between the on-line visitor and the site or URL. The cookie collects data from the visitor on where in the site the visitor reviews, how long at that site, and communicates between the URL and the visitor. These cookies can be used to compile the data and popularity of a specic sector and how in-depth the visitor checked the site. This can be used to review the attractiveness of the items or how a beta test item is received. Also help in the ability of the company to
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enhance the site to visitors satisfaction and keep the click and brick on track with their customer. It will assist the click and brick with strategic planning and help build the relationships and create a value with the consumer, thus helping further assisting the company with discovering what the buyer wants and providing that consumer with the objectives desired. Buyer and seller focus will be enhanced to the point of mutually satisfying exchanges and yield higher sales and prots. 11. The Divide: Key Elements of Online Shopping Several unique elements make online shopping different from the traditional in-store retail model. Besides offering convenience and expanded product variety, the online model also makes it easy for consumers to access and compare data from multiple sources. Visiting three e-tailers, for example, would take less time than driving up to one physical store. Search capabilities within e-tail stores replace physical browsing through endless aisles at a traditional retailer, especially if the product is hardto nd or out-of-stock. The immediate challenges of such capabilities for the retail (and e-tail) environments include: (a) the erosion of brand equity and customer loyalty, (b) cannibalization of in-store retail sales, and (c) price competition. These challenges are already being experienced across a range of business, from specialty retailers who deal exclusively in hard goods, to fullservice stock brokerages who deal mainly in infomediation and knowledge transfer. 12. How Should Traditional Retailers Respond? First, retailers need to make a Go/ NoGo decision on whether they should have an e-tail storefront. If they go ahead with establishing an online presence, the main challenges will be for operations and marketing. Initial research suggests that the
addition of an e-tail channel might be relatively easy if the company also had cataloguing experience. Second, retailers can use their e-tail storefronts to capture valuable customer demand data, and conduct pricing and promotional experiments. Consumers are often willing to spend signicant time in personalizing their experience, and this clear opportunity to hear the voice of the customer is greatly facilitated by several off-the shelf tools that capture and analyse data from online visits. Such data can provide a good basis for forecasting future demand patterns and customer preferences. In a typical retail environment, such data is available but extremely hard to distill and analyze, and several leading retailers are faced with challenges in handling the data glut. Third, retailers can signicantly enhance the in-store experience throughout the retail network to attract customers. Through carefully managed convergence, e-tail storefronts and catalogues can be innovatively deployed to increase awareness and drive customer demand. As the costs of advertising on the Web increase (leading to an increase in customer acquisition and retention costs), several innovative retailers have also begun to use direct marketing and traditional media channels to get their online presence across to customers. Thus a lot of synergies can be achieved by combining some of the core retailer strengths with an online business channel. Only time will tell if these strategies succeed in exploiting the possibilities of e-tail without losing out on the richness and inherent advantages of in-store retail. 13. What E-Tailers Can Learn From Their Counterparts Traditional retailers have several competencies which a pure e-tailer can be hard pressed to match, but which are equally important when competing in a digital format. Two such skills that can prove extremely important to e-tail success are outlined below:
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a) Merchandising Skills and Assortment Planning One of the core strengths of a good retailer is the ability to plan merchandise assortments based on early detection of customer trends and to source products through a network of trusted suppliers. An efcient supply chain plus the ability to allocate adequate resources to merchandising needs in a timely fashion add to the ability to stay on top of competition. b) Forecasting and Demand Management Although many retailers would like to get an accurate handle on future customer demand, only a few have succeeded in harnessing information technology to solve this problem. Matching supply to demand remains one of the most pressing problems for any retail organization. Harnessing the power of information technology through large and accurate data warehouses, and using focused data mining solutions should help both retailers and e-tailers reduce stockouts, manage inventory and respond accurately to customer demand. E-tailers are nding that the process of data collection is more dynamic in a digital environment, but not necessarily easier to analyze or act upon. They have to address problems which have been around in retail operations for a long time, and which critically impact success at the end of the day. 14. Conclusion There are several important lessons to be learnt in the transition from bricks-and-mortar retail to the digital e-tail world. While skills like speed, differentiation, and branding are equally if not more important in the digital world, it is the ability to transform core operations and practices to this new medium which might make the difference between success and failure. Retailers need to examine the viability of such a transition, and look into the
synergies of using the new channel of e-tail. e-tailers, on the other hand, need to revisit some basic retail functions, and develop further competencies in the areas of merchandising and demand forecasting. Further, strategic partnerships between webbased businesses and bricks and mortar companies will benet both entities. The ability to establish your e-tailing business can only be enhanced with strong partnerships. A web-based business could market the goods online and handle customer service. A leading bricks and mortar company would select merchandise and negotiate volume discounts with vendors then place those items in a strong technological platform that is capable of handling millions of customers. This would expand the strong points of each company allowing for a strong partnership. A brick and mortar company with online services, storefronts, and catalogue sales has the greatest chance for retail survival in the emerging e-commerce. The theory that retailers should identify the 20% of customers who provide 80% of the prots and market specically to them would have to be altered to a specic marketing focus. The ability of technology will allow for the 20% of each of the three types of sales strategies- online, storefront, and catalogue sales to be identied and change the marketing strategy to focus on these customers. There are many ways to limit the use of the advertising rupee and focus on your primary audience. The standalone e-tailer that has but one outlet, the Internet, will not be able to hold their margins and will follow the path of so many others that have come before them, bankruptcy. Every retailer can take advantage of the Internet and forming alliances can be very benecial to all parties. Integration of businesses is the wave of the future and the e-tailer needs to consider all its options.
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ROLE OF E BANKING SERVICES IN THE BANKING SECTOR

Ms.H.Vasanthakumari, M.Com., MBA, M.Phil, (Ph.D), Senior Lecturer Department of Management Studies, Sathyabama University Dr. S. Sheela Rani, Professor Department of Management studies New college Institute of Management,Royapettah,Chennai 600 014 1. Introduction E - Banking is a new delivery channel for banks in India. The E -banking channel is both an informative and a transactional medium. However, E -banking has not been popularly adopted in India as expected (Ravi et al., 2007). Malhotra and Singh (2007) carried out a study to nd the E -banking adoption by the banks in India. The study suggests that larger banks or banks with younger age, private ownership and lower branch intensity possess high probability of adoption of this new technology. Banks with lower market share also perceive E -banking technology as a means to increase the market share by attracting more and more customers through this new channel of delivery. E - Banking involves consumers using the Internet to access their bank account and to undertake banking transactions. At the basic level, Internet banking can mean the setting up of a web page by a bank to give information about its products and services. At an advanced level, it involves provision of facilities such as accessing accounts, transferring funds, and buying nancial products or services online. This is called transactional online banking (Sathye, 1999). Opening an account, however, has always required an actual in-person visit to the branch to sign a signature card but now an Internet-friendly account opening procedure can expand the geographical footprint of a bank as well as improve customer convenience (Community Banker, 2006). IT has played a crucial role in the nancial services. Internet has proved a magic wand for nancial services and products, particularly in banking sector. Banking sector has been early adopted of technology to offer the latest modes for transacting business. Banks have transformed themselves and are offering services through internet, from computerization to networking to ATMs, and now E- Banking, banks have moved up the value chain. 2. Denition of E-Banking E-banking is dened as the automated delivery of new and traditional banking products nd services directly to customers through electronic, interactive communication channels. E-banking includes the systems that enable nancial institution customers, individuals or businesses, to access accounts, transact business, or obtain information on nancial products and services through a public or private network, including the Internet. Customers access e-banking services using an intelligent electronic device, such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk, or Touch Tone telephone. While the risks and controls are similar for the various e-banking access channels, this booklet focuses specically on Internet-based services due to the Internets widely accessible public network. Accordingly, this booklet begins with a discussion of the two primary types of Internet websites: informational and transactional. 3. Objectives To study the role of E Banking services in the banking sector. To explore the E - banking services offered by banks. To Study the development and status of E Banking in India. To know how E Banking creates values for the
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banks and their customers. To suggest some remedial measures to improve E-banking services in the banking sector. 4. Review of Literature In the extant literature, the most cited attributes that inuence the use of e-banking are: convenience of usage (Venkatesh and Davis, 1996; Elizabeth, 1999; and Poon, 2008), Perceived ease of use (Davis, 1989; and Wang et al., 2003), Perceived usefulness (Wang et al., 2003; Davis, 1989), Perceived credibility (Wang et al., 2003), Cost reduction (Devlin, 1995; Gerlach, 2000; Jun and Cai, 2001; Siriluck and Speece, 2003; and Poon, 2008), trust (Hoffman et al., 1999; and Gerrard and Cunningham, 2003), Security (Sathye, 1999; and Poon, 2008), government supports (Simon and Victor, 1994; Attaran, 2000; Zugelder et al., 2000; Bala et al., 2002), awareness, reluctant to change (Simon and Victor, 1994), choice of access to bank (Elizabeth, 1999), technology, and helpfulness of staff, and banks reputation (Mols, 1999). As for Internet banking, Joseph et al. (1999) investigate the inuence of Internet on the delivery of banking service. Their study identies six underlying dimensions of electronic banking service quality. They are convenience and accuracy, feedback and complaint management, efciency, queue management, accessibility and customization. Jun and Cai (2001) identied to seventeen service quality dimensions of Internet banking service quality. These are reliability, responsiveness, competence, courtesy, credibility, access, communication, understanding the customer, collaboration and continuous improvement, content, accuracy, ease of use, timeliness, aesthetics, security and divers features. It is also suggested that both Internet-only banks and traditional banks offering Internet banking services should focus more on the following important dimensions e.g., responsiveness, reliability and access .
5. Development of E -banking in India The nancial reforms that were initiated in the early 1990s and the globalization and liberalization measures brought in a completely new operating environment to the banks. The bankers are now offering innovative and attractive technology-based services and products such as Anywhere Anytime Banking, Tele-Banking, Internet Banking, Web Banking, etc. to their customers to cope with the competition. The process started in the early 1980s when Reserve Bank of India (RBI) set up two committees in quick succession to accelerate the pace of automation of operations in the banking sector. A high-level committee was formed under the chairmanship of Dr. C. Rangarajan, then Governor of RBI, to draw up a phased plan for computerisation and mechanization in the banking industry over a ve-year time frame of 19851989. The focus by this time was on customer service and two models of branch automation were developed and implemented. Having gained experience in the earlier mode of computerization, the second Rangarajan committee constituted in 1988 drew up a detailed perspective plan for Computerization of banks and for extension of automation to other areas such as funds transfer, e-mail, BANKNET, SWIFT, ATMs, E -banking, etc. The Government of India enacted the Information Technology Act, 2000 (generally known as IT Act, 2000), with effect from 17 October 2000 to provide legal recognition to electronic transactions and other means of electronic commerce. RBI had set up a Working Group on e -banking to examine different aspects of e-banking. The Group had focused on three major areas of E banking such as (1) technology and security issues, (2) legal issues and (3) regulatory and supervisory issues. RBI had accepted the recommendations of the Working Group, and accordingly issued guidelines on internet banking in India for implementation by banks. The Working Group has also issued a report on e-banking covering different aspects of E -banking.
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E - Banking in India is currently at a nascent stage. While there are scores of companies specializing in developing e-banking software, security software and website designing and maintenance, there are few online nancial service providers. ICICI bank is the rst one to have introduced e -banking for a limited range of services such as access to account information, correspondence and, recently, funds transfer between its branches. ICICI is also getting into e-trading, thus offering a broader range of integrated services to the customer. Several nance portals for provision of non-banking nancial services, e-trading and e-broking have come up. Commercial applications such as Electronic Bill Presentment (EBP) and Procurement systems may not be introduced in India immediately, but are likely to have a greater impact than the retail applications. The corporate sector is adequately computerized and has already recognized the important role of e-commerce in future. Increasingly, companies are setting up websites even where there are no immediate tangible benets to them from doing so. 6. Status of E -banking in India In Indian context, many publications throw light over the importance of e -banking and also its prospects for the Indian banking industry. Unnithan and Swatman (2001) studied the drivers for change in the evolution of the banking sector, and the move towards electronic banking by focusing on two economies, Australia and India. In India, Although many major banks have started offering E -banking services, the slow pace will continue until the critical mass is achieved for PC, internet connections and telephones. However, the upsurge of IT professionals with growing demands is pressuring the government and bureaucracy in the country to support and develop new initiatives for a faster spread of E -banking. Rao and Prathima (2003) provided a theoretical analysis of E -banking in India, and found that as compared to the banks abroad, Indian banks offering online services still have a long way
to go. For online banking to reach a critical mass, there has to be sufcient number of users and the sufcient infrastructure in place. Various authors have found that E -banking is fast becoming popular in India (Gupta, 1999; Pegu, 2000; Dasgupta, 2002). However, it is still in its evolutionary stage. By the year 20062007, a large sophisticated and highly competitive E -banking market will develop. Almost all the banks operating in India are having their websites, but only a few banks provide transactional E -banking. A survey carried out by Malhotra and Singh (2006) shows that only 48% of the commercial banks operating in India as on March-end 2005 offers e -banking. In India, comparatively less number of studies has been conducted on the current status of e -banking and customer satisfaction compared to other countries. Thus, there is a lot of scope for the research to present new ideas concerning e -banking in India which may be useful to the Indian banking industry. There are a series of papers that observe that e -banking has revolutionized the banking industry and the banking industry is under pressure to offer new products and services. However, to succeed in todays electronic markets a strategic and focused approach is required. 7. Internet users in India The role of internet is becoming inevitable to corporate and society. Across the world, governments and corporate are increasingly working towards the better utilization of the internet. The internet which was initially perceived as a communication media is now metamorphosing into a powerful business media (Sakkthivel, 2006). According to the Internet & Online Association of India (IOAI), the Indian internet population is currently over 25 million and is expected to grow to 100 million by 2007 (Survey by New Media Review, 2005). In July 2005, Internet World Stats reported that there were 39,200,000 internet users in India representing 3.6% of the population. (Internet World Stats, August 2005). Even with millions of web users in its cities, the internet penetration rate for India remains well below 5%.
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Despite Indias technology outsourcing power, the countrys internet penetration rate is low. JuxtConsult, a research rm based in New Delhi, surveyed urban internet users in April 2005 by talking to 30,000 Indian web users about their lifestyle and their web use. There are about 17.5 million urban dwellers in India who use the internet consistently with an additional 5.2 million who use it occasionally. Thus, in India, slowly but steadily, the Indian customer is moving towards e -banking. A number of banks have either adopted e -banking or are on the threshold of adopting it. The banks started e -banking initially with simple functions such as getting information about interest rates, checking account balances and computing loan eligibility. Then, the services are extended to online bill payment, transfer of funds between accounts and cash management services for corporate. Recently, banks have started to facilitate payment of e-commerce transactions by directly debiting bank accounts or through credit cards. It will add to the revenues of the bank. 8. Role of E - Banking in the Banking sector Electronic banking (e-banking) is the newest delivery channel of banking services. The denition of e-banking varies amongst researches partially because electronic banking refers to several types of services through which a banks customers can request information and carry out most retail banking services via computer, elevision or mobile phone (Daniel, 1999; Mols, 1998; Sathye, 1999). Burr, 1996, for example, describes it as an electronic connection between the bank and customer in order to prepare, manage and control nancial transactions. Electronic banking can also be dened as a variety of the following platforms: (a) Internet banking (or online banking), (b) telephone banking, (c) TVbased banking, (d) mobile phone banking, and (e) PC banking (or ofine banking). In this paper, the ATM (Automated Teller Machine) channel is also added to the research. The channels comprise two major groups: the traditional channels and e-channels. (1) The traditional channels are dened on the basis
of the type of human assistance: teller, retail or corporate manager. (2) E-channels are divided into 4 sub-groups on the basis of how the channel is seen by clients, with some exceptions based on the technological processes of transaction execution: Internet-based (online bank for corporate clients Telehansa.net, online bank for private clients Hanza. net, ofine bank for large corporate clients Telehansa), card-related (ATM Automated Tellers Machine and POS payment terminal), Phone channels (call center, IVR, mobile bank) and Automated channels (virtual bank core channels where direct debit and incoming payments are effected).. Services are one of the primary benets which a customer looks for while adopting a new channel. The consumers consider the benets and weigh them against the costs associated. The Internet offers a lot of benets to consumers, like any time anywhere banking, updated information, convenience, faster transaction, etc. E Banking services are replacing traditional services and creating a new scale in transformation. In the initial stage, e- channels were introduced in metropolitan cities and urban areas, but recently some banks have started focusing on rural and semi urban areas. New private sector banks are taking the lead in capturing rural and semi urban sector. The different e- channels such as ATMs, Credit and debit cards, Tele-banking, Mobile banking, online banking and Smart Cards, are changing the face of the retail banking sector. New private sector banks and foreign banks are attracting customers in a big way. The potential customers and big companies are shifting their accounts from traditional banks (not fully computerized) to E banks (fully computerized and provide different e channels). If traditional banks, mostly public sector banks, do not transform their business by introducing IT, their survival will become difcult, as now-adays IT is not a matter of convenience but a survival
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factor. Therefore, e banking services are a potent factor for transformation in this e age. 9. Classication of Internet Banking in India The Reserve Bank of India (RBI), the central bank in India, constituted a working group on Internet Banking. The group divided the internet banking products in India into the following three types based on the levels of access granted: 10. Information-Only System General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided on the banks website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and the banks application system. No identication of the customer is done. In this, there is no possibility of any unauthorized person getting into the production systems of the bank through the Internet. 11. Electronic Information Transfer System The system provides customer-specic information in the form of account balances, transaction details, and statement of accounts. The information is still largely in the read-only format. Identication and authentication of the customer is through password. The information is fetched from the banks application system either in batch mode or ofine. Here also, the application systems cannot directly access the production systems of the bank through the Internet. 12. Fully Electronic Transactional System This system allows bidirectional capabilities. Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, the web server and the application systems are linked over secure infrastructure. It comprises of the basic requirements in terms of technology covering
computerization, networking and security, interbank payment gateway and legal infrastructure or introduction of Internet banking. The recommendations cover the risks that are associated with Internet banking technology, security standards, and supervisory control of (RBI, 2001). 13. How E banking creates values for the banks and their customers The major impact of technological revolution in banking can be stated in terms of: Paradigm shift from traditional banking to customized banking as the services can be delivered via computer. Convenient banking i.e. Anytime, Anywhere banking. A customer can check balance by logging into banks website through a user name and password. In this way he can enquire balance, status of cheques, perform funds transfers, order drafts, request issue of cheque books etc. The prime factors or reasons for using Internet banking include convenience, saving of time, better control over nances, and more information available. It has been observed that customers who adopt online banking are typically more protable to the bank, stay with the bank longer and use more products strengthening the bank customer relationship8. Information Technology and Internet banking has bridged the information gap, which was interestingly because of human involvement. Banks can make the information of products and services available on their site, which is, an advantageous proposition. Prospective customer can gather all the information from the website and thus if he comes to the branch with queries it will be very specic and will take less time of an employee. Customer can visit these websites and can compare the services offered by a bank with that of another. Customer can get all the information, by saving money and time. The trend thus emerging out is that
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of virtual corporate system where the human role is minimized to maximum effect. The overall banking size and structure has increased considerably. It can also be accredited to the current market characteristics. More private players and multinational banks are establishing their base in India. Earlier nationalized bank dominated the scenario. Now after deregulation private banks have emerged as a powerful force. For example with over a million customer accounts, 600 branches and a network of 2,000 ATMs across country ICICI bank leads the way10 in private bank category. As a result, there is a erce competition among these players for capturing the savings of individuals and current accounts of organizations. This has been spearheaded by the liberalization in the insurance industry. Insurance industry is giving erce competition through their offerings on various policies. This sudden surge has necessitated the use of technology in offering better services competitively. Most of the banks have coupled IT with their offering to add value. Several banks have been positioning themselves as a one-stop shop nancial service provider with a fairly exhaustive range of products, including deposit products, loans, credit cards, debit cards, depository (custody services), investment advice, bill payments and various transactional services. These apart, banks have also been entering into the business of selling third-party products such as mutual funds and insurance to the retail customers. To provide their customers greater exibility and convenience as well as to reduce servicing costs, banks have been investing to computerize their branches and in new delivery channels such as ATMs, phone banking, internet banking and mobile banking. 14. Practical implications Banks are encouraging internet banking to reduce service delivery costs and improve service quality for customers. However, a greater
understanding of the impact of this relationships is essential. 15. Conclusion E Banking has changed the traditional patterns of bank operations. These changes in technology, competition and lifestyles all have an impact on how banks operate today. Actually the customer had to physically visit the bank ofce in order to carry out banking operations. With the introduction of e banking customers are saving money and time since they dont have to physically visit the bank ofce. Every bank realizes that they must provide some kind of e banking to their customers in order to survive. Through e banking banks can better maintain the relationship with customers because with e banking customers tend to interact more with provided services. It also increases the revenues of banks and can easily gain competitive advantage through differentiation of banking services and thereby an image improvement. In true E -banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing internet banking is increasingly becoming a need to have than a nice to have services. 16. References 1. Attaran M (2000), Managing Legal Liability of the Net: A Ten Step Guide for IT Managers, Information Management and Computer Security, Vol. 8, No. 2, pp. 98-100. 2. Bala S, Suganthi R and Balachander K G (2002), Malaysian Regulation Versus E-banking, Journal of International Banking Regulation, Vol. 4, No. 1, pp. 84-95. 3. Burr, W. Wie Informationstechnik die Bankorganisation verndern knnte, Bank und Markt 11, 1996. 4. Devlin J F (1995), Technology and Innovation in Retail Banking Distribution, International Journal of Bank Marketing,
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GROWTH, CHALLENGES AND TECHNOLOGY IN RETAILING AN INDIAN PERSPECTIVE

A.DuraiKannan, Asst.Professor & Head B.L.Sairam Subramaniam, Asst.Professor Dept of Management Studies,SSM College of Engineering., Komarapalayam Dr. A. Ramachandran Director, SNR Institiute of Management Sciences,Coimbatore
1. Introduction Organized Retailing has played a major role world over in contributing to the nations GDP and in providing opportunities for skilled employment. This can be best seen in countries like U.S.A., U.K., Mexico, Brazil, Thailand, Malaysia Hong Kong, Sri Lanka, Dubai and more recently China. Organized Retailing is the second largest industry in the United States both in terms of the number of establishments and also in terms of employment. Traditionally the retail industry in India was largely unorganized, comprising of drug stores, medium, and small grocery stores. Most of the organized retailing in India have started recently and is concentrating mainly in metropolitan cities. Today retail sector exhibits a highly fragmented market structure with more than 12 million retail outlets. It has the highest retail density in the world. In terms of ownership, it primarily consists of independent, owner managed shops. The retail business includes a variety of traditional retail formats e.g. kirana stores where the basic necessities of life -- grocery are available. Indian organized retail market is growing at a fast pace due to the boom in the India retail industry. In India the retail industry amounted to Rs 10,000 billion accounting for about 10% to the countrys GDP. The organized retail market in India out of this total market accounted for Rs 350 billion which is about 3.5% of the total revenues. The retail segment is expected to grow 12-15% in the next 5 years (i.e. by 2010) from a base level of Rs. 1800 Billion (in 2002). This in turn would drive the other sectors like infrastructure, employment etc.
The growth in the Indian organized retail market is mainly due to the change in the consumers behavior. This change has come in the consumer due to increased income, changing lifestyles, and patterns of demography which are favorable. Now the consumer wants to shop at a place where he can get food, entertainment, and shopping all under one roof. This has given Indian organized retail market a major boost. There are about 120 lakhs retail outlets with an average size of a unit being less than 500 sq. ft. These vital statistics have led A.T. Kearney to rank India as the most attractive retail destination. Indian retail industry is witnessing a fast paced revamping exercise where the traditional formats are making way for modern formats like departmental stores, hypermarkets, supermarkets, specialty stores and Western-style malls, which are appearing in metros and second-rung cities alike. The foremost reason for this sea of change is the burgeoning middle class with a good amount of disposable Income. According to the widely discussed Goldman Sachs BRIC report of October 2003, Over the next 50 years India could emerge as the worlds third largest economy. Table 1. Growth of Retail Outlets in India (000)
Outlets Food Retailers NonFood Retailers Total Retailers 1996 1997 1998 1999 2000 2001 2769.0 2943.9 3123.4 3300.2 3480.0 3682.9
5773.6
6040.0
6332.2
6666.3
7055.5
7482.1
8542.6
8983.6
9455.6
9966.5
10534.4
11165.0
Source: P.G.Chengappa, Lalith Achoth, Arpita Mukherjee, B.M.Ramachandra Reddy and P.C.Ravi, Evolution of Food Retail Chains: The Indian Context, 5-6th Nov. 2003, www.cci.com
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2. The Drivers of Growth of the Organized Retailing Sector Providing Quality Real Estate The government is easing land regulations and releasing land for retail. Rs.8 trillions is being invested in real estate in coming 5 years 19. Retailers are foraying into retail property development and mall management. E.g. Rahejas, DLF, Pantaloon, Provogue, etc. Pantaloon Retails Rs3.5bn fund- Kshitij and foreign fund Horizon- US $350m, will develop 51 retail properties10. Another booster is entry of foreign players and provision for 100% FDI in real estate for townships for retail with oor space of over 5,00,000 sq. ft. 3. Foreign Direct Investment (FDI) in India FDI is a concept wherein a foreign partner invests directly in a company. This investment would be for the purpose of getting a higher dividend or for getting managerial control in the company. Normally a direct investment in a retailer organization gives the foreign investor a controlling interest in the domestic company. The presence of a foreign investor normally is a win -- win situation for both the investor as well as the recipient country. World Bank Study on FDI in India has suggested that opening of FDI in the retail sector in India would be benecial both in terms of technological inputs, new products and also employment generation on lines similar to the IT sector. The benet of allowing FDI in India can be seen through the benefits that China has reaped by allowing FDI up to 49% in this sector. In India with the per capita consumption being quite low, it is difcult to imagine the Mom and Pop shops being driven out. Most of these Mom and Pop shops satisfy the locality requirements rather than the convenience requirement. 4. Shift in the prole of the Indian Customer It is estimated that the consuming class and the climbers are expected to grow from a level of 120.8 million households (in 2001- 02) to a level of 157.2 million households (in 2006-07) thus registering a growth of 5.5% p.a. The Marketing White book has
estimated that out of the total consuming class and the consumer class, almost 56% (~ 46 million) is expected to be concentrated in urban India. The proportion of the consuming class and the climbers in the urban markets are likely to drive the demand signicantly especially for lifestyle products. 5. Young Population with high disposable Income According to KSA Technologies, India has the lowest median age of 24 for over 1000 million populations when compared with the other populous countries like China, USA and UK. This young population by virtue of its mere size would drive the consumption pattern as this group has the ability and willingness to spend. Fig. 6 & 70 demonstrates this amply. 6. Changing pattern of households by income The changing size of the population especially in the age group of 20 34 years is very clearly depicted in following gure. This class is the relevant class for the retail industry and is growing very rapidly. 7. Availability of Brands and Merchandise Consumerism and brand proliferation has been another enabler for organized retailing in India. Most of the worlds largest and leading brands are currently available in India. For e.g. Louis Philippe, Van Huesen, LOreal, Peppe, Arrow, Tommy Hilger etc. 8. Media Proliferation The presence of a large number of media and the corresponding exposures has led to the increase in consumer spending especially on apparels. 9. Inbound Tourist / Impact of Globalization. There is a large vast of NRI population in the country. The availability of international goods at comparable prices is also one of the drivers of the industry. Again the impact of globalization has resulted in an increase in both the depth and width of a product, which in turn has resulted in an increase in consumerism.
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10. Urban Opportunity Indian retailers inspired by Wal-Marts growth in small American towns are tempted to follow suit. However, in India the share of 35 towns with a population of 1 mn plus grows faster than their smaller counterparts, from 10.2% today to reach 14.4% by 2025. While the share of the towns in the overall retail market, would grow from 21% to 40% by 2025. Retailers should therefore focus on the top 37 towns in the next decade, as the opportunity in rural India is smaller and fragmented. 11. Challenges before retail sector However, behind this rosy picture, lies a mountain of challenges. The economy being in a developing phase poses structural support shortage. Also, heavy initial investments are required by large retailers, and break even is difficult to achieve, so many of the top players have not tasted success so far. But the future is promising; the market is growing, government policies are becoming favorable and emerging technologies are facilitating operations. The sudden speed picked up by the retail juggernaut has left the support infrastructure in a state of inertia. The challenges identied are:
12. Infrastructural problems Shortage of retail space The traditional realty players dont have retail property development experience as reected in their exterior focused design and improper tenant mix. The shortage is mostly visible in the larger metros due to the mall revolution & lack of town planning. Owing to space scarcity in major metros many retailers are entering tier 2 & tier 3 cities. Unless real estate costs lower, retailers would take a long time to break-even. 13. Supply Chain & Logistics infrastructure 50,000 crore worth of food produce is wasted in India each year due of lack of a robust supply chain infrastructure. This causes logistics costs to be 10-12% of the GDP. Absence of efficient logistics companies forces retailers to incur huge costs to set up individual SCM & logistics infrastructure. Measures of supply chain efciency. While global retailer 7-Eleven has a stock turn of 50, India hangs between 4-10. Also, stock-out levels among Indian retailers lies from 5 to 15%, when the global average is less than 5% 7.
Innumerable Intermediaries
Inefficiency & Wastage
Reduced Quality
Increase in Price through the Chain
(Figure - Indian Supply Chain problems)
Farmer Additional Cost Wastage Mark -up Price
100
Grower CoOperative 10% 2% 13.2% 113
Distribution Co. 40% 2% 50% 170
Retailer 25% 2% 50% 255
(Table-How cost escalates up the supply chain- an illustration)
Source:3.bp.blogspot.com
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14. Inconsiderate Regulatory Framework A retailer requires around 12 to 15 clearances at the Central, state and local level to set up operations because there is no single window clearance process. The provisions of The Shops and Establishments Act also vary. There are various restrictions on interstate movement of goods, especially food grains. 15. Fragmented Indian retail industry It is greatly fragmented compared to other the developed and developing countries. Only 3% of total Indian retail is organised. Fragmented market results in high inventory levels, high proportion of retail business taking place in the unorganized rural areas. India is witnessing oversupply from unorganized formats like kirana & paanwalas. Around 4.3m outlets cater to 1.2bn people, i.e. 280-persons per outlet as against the global average of 1,800-persons per outlet. The Chinese & Vietnamese retail markets too suffered from small-scale, fragmented, provincial operating models. 16. Uncertain about benets of technology Most Indian retailers are still uncertain about benets of technology. Retail IT budget in India is currently 1% of total spends which is lower than US spends. Significant IT investments are needed in merchandise planning, distribution management and POS to capture & analyse customer data . While Indian retailers are still to adopt bar coding, Wal-Mart and Metro are experimenting with Radio Frequency Identication technology. There is high dependency on few consultants & vendors are not IT-savvy. 17. Limited FDI It is depriving India of the resultant consolidation in the sector because foreign retailers provide employment, spend more on marketing, advertising, bulk purchases; have wealth of retail experience from developed retail markets, introduce larger product variety & improved shopping experience. This will also aggregate demand, bypass the existing intermediary system, invest in the supply chain, ensure lower prices to end-customers and higher returns to farmers.
18. Untapped Rural potential Indias greatest need is to take the benet of retailing to the doorstep of the farmer, ITC chairman YC Deveshwar says.70% of India lives in villages & consumes over one third of most durable and nondurable products. Retailing in rural India is a different ball game because before targeting a share of their wallet, the Indian rural market requires an income propeller. In China (2004) too the Ministry of Commerce has realised the rural potential and by 2009 will build a rural retail network. 19. Availability of skilled personnel The non-availability of trained personnel especially at the managerial level is one of the key challenges to this sector. The ability to hire and retain quality manpower will be one of the most important success factors for this industry 20. Technology-A Trump Card for Retail In the current business environment, the Indian retail industry faces major challenges that are affecting protability and its overall outlook for the future. As operational costs climb, consumers are becoming more technology-savvy and are demanding immediate access to information and a personalized experience. Companies are required to stand out from the competition in order to make their business protable. By using technology, retailers can gain several benets like:

Implement new initiatives more quickly: Simplify management: Improve application performance and availability:
.Reduce operational, capital and energy costs Gain management exibility
21. Enterprise Resource Planning (ERP) Now more than ever, retailers need enterprise solutions to secure sustained growth. They need to quickly learn that enterprise solutions such as Enterprise Resource Planning (ERP) systems can enhance their business,
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offering benefits like operations integration, realtime data, efficient inventory and merchandising management, and ensuring reductions in processing and warehousing costs. 22. Benets of enterprise solutions for the retail industry The enterprise solutions range from the integration of shop floor (point of sale) with top oor (corporate) functions to modular applicationbased development and deployment of solutions for the retail industry. Many ERP systems, provide integrated solutions for retail companies in the fashion industry, supermarkets, department stores, hypermarkets, pharmacy, health food, furniture and furnishings, books and music, fast food chains, and ne dining. The solutions are designed to deliver the breadth and depth of functionality demanded by the busiest retailer, without the need to build, manage and maintain multiple applications and interfaces. 23. Forecasting advanced business analytics Customers are becoming much more demanding these days, forcing both large and small retailers to operate more quickly and efciently. The solutions help retail companies with forecasting, thus providing all departments with a common forecast to drive the retail enterprise. 24. Optimising inventory management With implementation of resource systems, customers can rest assured that they have the correct inventory. ERP solutions reduce overstocks with correct forecasting on performance of a product or promotion. Customers can cost effectively track sales by stock-keeping unit (SKU) and calculate turnover rates for a single item, merchandise category, or the entire organisation. 25. Speeding communication Accurate business analytics helps organisations make better decisions, improve efciencies, manage inventory, manage marketing promotions and increase
sales, improve end-of-day reporting, view and print journals by batch or receipt number, and run reports by SKU, store, or region. 26. Scalable in size and business The solutions have the ability to manage a growing number of SKUs or locations in a scalable manner, which is a critical requirement for any retail forecasting and replenishment solution. 27. Efcient store management An in-store system uses magnetic strips, barcodes or RFID to monitor actual versus intended product location on the oor or in the stockroom. This greatly enhances the ability to monitor stocks and control wastage and pilferage. 28. Better understanding of customer tastes The solutions help retailers gain better understanding of their customers purchase patterns, products that sell, and promotions which should be run. Finally, the solution assists in expediting checkouts, targeting customer preferences to offer up-sells and cross-sells, and implementing automatic discounts for frequent shoppers. It helps reduce instances of shrinkage, false returns, credit card fraud, and unauthorized discounts 29. Smart Technology Reaps Richer Rewards Connecting with customers Meeting these challenges effectively within static or shrinking budgets becomes easier through an integrated approach. Retailers need to use the strength of the network to connect with todays consumer, collaborate more effectively with employees, maintain security and reduce operating costs. In a connected retail world, one can convert a satised shopper into a loyal advocate and in turn, help increase sales, reduce costs and create competitive differentiation by enhancing customer services, retail solutions for instant call connection and efcient call routing.
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By using the right solutions, retailers can transform multiple networks and point solutions into an agile architecture. These retail architectures, centralised applications and flexible management capabilities help satisfy customers and employees while reducing costs and delivering business capabilities faster to various stores. 30. Improving collaboration and performance Consumers expect to find information on demand, and products and services tailored to their preferences. To meet these high expectations at the point of purchase, much communication and collaboration is required throughout the supply chain, store management and operations. Increasingly, suppliers, retailers and consumers need to share information among and across all channels for retailers to deliver products and assortments that sell well abroad and also in the niche market segments. Using technologies such as telepresence helps improve operational and employee efciency while delivering capabilities that can convert satised shoppers into loyal advocates. A powerful collaboration solution and telepresence can help retailers increase sales, reduce costs and achieve competitive differentiation, even in an uncertain economy. Retailers can create innovative customer experiences by connecting customers with product experts or other specialists using in-store kiosks or a consultative meeting room. 31. Integrating information and systems By using the network as a platform, one can easily integrate access to information to users, employees, customers and suppliers. Security, management, rich connectivity, video, media, mobility, voice and identity services are embedded in the network. As a result, retailers can provide users with access to the information at any time and by using any device. With network-based services available to all devices, one can also execute new retail strategies and implement new applications far more rapidly, easily and cost-effectively than ever before. Collaboration
with critical supply chain members can help accelerate product innovation, time to market and response to trends. For example, US-based Procter & Gamble uses telepresence solutions to link 1,38,000 employees across several countries and improve collaboration among its product teams and external creative agency. The ability to collaborate in real time enables the company to stimulate innovation and reduce time to market for new products. Other retailers have been able to quickly tune product selections, adjust pricing strategies and take advantage of unexpected buying opportunities by using collaborative technologies to link essential members of their global supply chains. Retailers must change the way they operate by doing more through the following ways: Creating more technology-enabled solutions for consumers Enabling better use of data for analysis and insight Providing customers, associates and merchants access to information Focusing less on maintaining old services and more on creating new ones 32. Conclusion The size of Indian retailing sector is both an opportunity and a challenge. The race for space is on, with much still to go for! Despite the challenges involved, India remains an exciting and dynamic market, with consumers hungry for choice and modern retail formats. By 2015, KSA Technologies expects the Indian retail market to have evolved from a smallscale, highly fragmented, provincial operating model to a modern, large-scale cross-regional one. In addition, new opportunities exist for transforming traditional retail business models. Retailers can dedicate space for telepresence kiosks that provide on-demand access to non-retail expertise, such as healthcare, banking, and other convenient services that help generate higher revenue per square foot of the retail store space. Networks play an integral role
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in improving ROI and also supporting green strategies that can reduce costs and improve the quality of life for employees, work quality and strategic business processes that create a competitive advantage. Retail solutions are proven to transform business models, boost revenue and productivity, and signicantly reduce travel spending. It also has an environmental and social impact, enabling employees to minimize travel, thus encouraging work life integration and allowing organizations to reduce their carbon footprints. Going forward, as retail executives develop their strategies for the future, one thing is clear: the competition for the customers attention and same store growth will be erce. Hence, connecting a brand to its customers has never been more important or challenging than ever before. But, it is also becoming much easier to accomplish as stores adopt a connected retail strategy that allows them to use the strength of the network to connect their brands to todays consumers. References 1. Levy,Weitz, Retailing Management, 5th Indian edition 2003, TMH publications, New Delhi
2. . Obarski A.M, Retail Business is show business!, Marketing Mastermind, October 2003, pp 23-24. 3. Srinivasan Priya, The Great Marketing Rush, Business Today, July 18, 2004, pp 58-62. 4. Sonpal Avirat, Retail Innovation, Retail Biz, September 2006. 5. Ghose Atanu, Customized IT Solutions, Retail Biz, November 2006. 6. Divekar Remona, Hi-tech returns, Retail Biz, December 2006 7. Kotler Philip Marketing Management Millennium Edition. 8. www.theindiabusinessline.com 9. Economic times ,small to big-the retail story,13th march 2007,p.19 10. Parthasarathy and vimala.the Changing face of Indian retailing Marketing Mastermind April 2004,p.13 11. Jagdish Mahapatra VP, Enterprise Business West, Cisco India www.retailing360.com 12. Jayanta Bhattacharya, Marketing Manager of Tectura ,www.retailing360.com 13. www.indiaretailforum.in 14. www.thehindubusinessline.com
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EMERGING TRENDS AND OPPORTUNITIES IN RETAILING SECTOR A STUDY

A.R.Krishnan Research scholar, SRM University School of Management
1. Retail Industry in India Retail is Indias largest industry, accounting for over 10 percent of the countrys GDP and around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. They said, the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. The Indian retailing sector is at an inexion point where the growth of organized retail and growth in the consumption by Indians is going to adopt a higher growth trajectory. The Indian population is witnessing a signicant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail. 2. Technology Impact The other important aspect of retailing relates to technology. It is widely felt that the key differentiator between the successful and not so successful retailers is primarily in the area of technology. Simultaneously, it will be technology that will help the organized retailer score over the unorganized players, giving both cost and service advantages use less than three workers. Today, online systems link point-of-sales terminals to the main ofce where detailed analyses on sales by item, classication, stores or vendor are carried
out online. Besides vendors, the focus of the retailing sector is to develop the link with the consumer. `Data Warehousing is an established concept in the advanced nations. With the help of `database retailing, information on existing and potential customers is tracked. Besides knowing what was purchased and by whom, information on softer issues such as demographics and psychographics is captured. The traditional retailers will always continue to exist but organized retailers are working towards revamping their business to obtain strategic advantages at various levels - market, cost, knowledge and customer. With differentiating strategies - value for money, shopping experience, variety, quality, discounts and advanced systems and technology in the back-end, change in the equilibrium with manufacturers and a thorough understanding of the consumer behavior, the ground is all set for the organized retailers. It would be important to note, however, that the retailing industry in India is still a `protected industry. It is one of the few sectors which still have restrictions on FDI. Given the current trend in liberalization, it will not be long before the retailing sector is also thrown open to international competition. This will see a further segregation of the international retailing brands and the domestic retailers, thereby injecting much greater dynamism into the market. 3. Major Retailers in India Indias top retailers are largely lifestyle, clothing and apparel stores. This is followed by grocery stores. Following the past trends and business models
59
in the west retail giants such as Pantaloon, Shoppers Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores. 4. Retailing Scenario-India The retail scenario in India is unique. Much of its in the unorganized sector, with over 12 million retail outlets of various sizes and formats. Almost 96%
of these retail outlets are less than 500 sq.ft. in size, the per capita retail space in India is being two sq.ft. Compared to the US figure of 16 sq.ft. Indias per capita retailing space is thus the lowest in the world. With more than 9 outlets per1, 000 people, India has the largest number in the world. Most of them are independent and contribute as much as 96% to total retail sales.
Table 1. Trends and Opportunities
Trends Rapidly growing middle class consumers Increase in per capita spending by consumers Consumer Pull
Opportunities
Changes in social structure and consumer behavior
Growth in the no of double income house holds Less time at the disposal of DI families Through media and other communication networks Preference of products and brands Rising workforce with global travel Increasing usage of credit and debit cards Growing youth population Online retailing
Retailer proximity to consumers Evolution of family owned establishment Changes occurring in the retail scenario
Global retailers for FDI Corporate interest In retailing
Source: Researcher Point of View 4.1. Consumer- the Prime Mover A variety of factors seem to influence the growth in the retailing industry. `Consumer Pull, however, seems to be the most important driving factor behind the sustenance of the industry. An analysis of the `monthly purchase basket of the consumers surveyed indicated that the average monthly household spends on food and grocery related items varied across income segments. Based on the distribution of the more than 15 lakh households in Chennai across income segments and the average spend, a conservative estimate of the grocery retailing potential at Chennai will be around Rs. 300 crores. Besides increasing purchasing power, a variety of other factors also seem to fuel the retailing boom. However, in India there are no uniform trends with respect to consumer buying behaviour. Organized retailing has denitely made headway in the upper class. However, even in this segment, items such as milk, With increase in double-income households and working women, there is an increasing pressure on time with very little time being available for leisure. In this scenario, consumers are seeking the convenience of one-stop shopping, whereby they could have better utility of time. They are also seeking speed and efciency in processing, as a result. Being more aware, consumers are on the look-out for more information, better quality and hygiene as well as increased customer service. These changes in consumer behaviour also augur well for the retailing industry.
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fruits, vegetables and a signicant portion of `throughthe-month purchases seem to be done at traditional outlets. The middle income class prefers shopping for processed food and personal care in supermarkets and fall back on traditional outlets for bulk shopping. Organized retail outlets seem to be associated with branded items/special purchases. Organized retailing does not seem to have made an impact on the lower class, except for `curiosity shopping. The biggest question before organized retailers therefore, is whether this really means a huge untapped potential for the organized retailers and whether the conversion in mindset going to be easy. 5. Trends in Retailing The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies. A sudden concept of `non-store shopping emerged, which threatened to take away the potential of the store. More importantly, the very nature of the customer segment being addressed was almost the same. The computer-savvy individual was also a sub-segment of the `store frequenting trafc. Internationally, the concept of net shopping is yet to be proven. And the poor nancial performance of most of the companies offering virtual shopping has resulted in store-based retailing regaining the upper hand. Other forms of non-store shopping including various formats such as catalogue/mail order shopping, direct selling, and so on are growing rapidly. However, the size of the direct market industry is too limited to deter the retailers. For all the convenience that it offers, electronic retailing does not suit products where `look and see attributes are of importance, as in apparel, or where the value is very high, such as jewellery, or where the performance has to be tested, as of consumer durables. The most critical issue in electronic retailing, especially in a country such as ours, relates to payments and the various security issues involved. 6. Recent Trends Include: Retailing in India is witnessing a huge revamping exercise. India is rated the fifth most
attractive emerging retail market: a potential goldmine. Estimated to be US$ 200 billion,of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion. As per a report by KPMG the annual growth of department stores is estimated at 24%. Ranked second in a Global Retail Development I n d e x of 30 developing countries drawn up by at Kearney. 7. The Emerging Retail Sectors Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, and Apna Bazaar), convenience stores (ConveniO, HP Speed mart) and fast-food chains (McDonalds, Dominos). It is the non-food segment; however that foray has been made into a variety of new sectors. These include lifestyle/fashion segments (Shoppers Stop, Globus, Lifestyle, Westside), apparel/ accessories (Pantaloon, Levis, Reebok), books/music/ gifts (Archies, Music World, Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo). The emergence of new sectors has been accompanied by changes in existing formats as well as the beginning of new formats: Hyper marts: Large supermarkets, typically 3,500-5,000 sq. ft. Mini supermarkets, typically 1,000-2,000 sq. ft. Convenience stores, typically 750-1,000sq. Ft. Discount/shopping list groceries In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for
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money image. The attractiveness of the other stores actually appeals to the existing afuent class as well as those who aspire for to be part of this class. Hence, one can assume that the retailing revolution is emerging along the lines of the economic evolution of society. 7.1. Spread of Organized Retailing Organized retailing is spreading and making its presence felt in different parts of the country. The trend in grocery retailing, however, has been slightly different with a growth concentration in the South. However, the Mecca of retailing is undoubtedly Chennai. What was considered a `traditional, conservative and `cost-conscious market, proved to be the home ground for most of the successful retail names - Food World, Music World, Health and Glow, Vitan, Subhiksha and Viveks -to name a few. The choice of Chennai as the `retail capital has surprised many, but a variety of factors acted in its favour. Chennai, in spite of being a rapidly growing metropolis offers reasonable real estate prices, one of the most critical elements for the industry. Chennai has been witnessing a high industrial growth and increasing presence of the MNCs, both in the IT sector as well as outside it. The industrial boom has led to the emergence of new residential areas with aggregation of professionals as well as a rapid increase in the
number of `double-income households and growth of the nouveau riche/upper middle class with increased purchasing power. This has been combined with the increasing need for touch and feel shopping (especially for the large migrant population). All the factors have acted favourably in nurturing the industry. 7.2. Retail Management Skills It is a fact that the retailing industry is in its starting phase in our country. The benets of organized retailing will only be felt once an equitable scale is achieved. This to a large extent depends on the store size, the walkthroughs, and bills per customer per year, average bill size and the revenue earned per sq. ft. But besides resources and bottom-line, a variety of other aspects need to be in place for tasting success. The need for qualied and trained manpower is of utmost importance. The need for specialized skills is increasingly felt in the areas of: Strategic management - strategizing, targeting and positioning, marketing and site selection, among others Merchandise management - Vendor selection, inventory management, pricing and so on Store management - Layout, display, customer relationship, inventory management, etc. Administrative Management - Human resources, nance, marketing and so on
Table 2 Forecast of Retail Marketing in India
2004 Retail trade Retail sales (Rs bn) Retail sales (US$ bn) Retail sales volume growth (%) Retail sales US$ value growth (%) 16.6 15,029 331.8 9.2
2005
2006
2007
2008
2009
16,743 394.0 6.5
18,621 448.7 6.6
21,351 502.4 9.8
24,248 551.1 8.9
27,704 608.9 9.4
18.7
13.9
12.0
9.7
10.5
Source: Economist Intelligence Unit. India Forecast February 1st 2005
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The retail sector in India is undergoing substantial growth and development, driven by the impact of rising incomes, increasing urbanization, low interest rates, greater brand competition and a youth-driven culture. Retailing is undergoing a structural shift in India as supply slowly shifts from small, family-oriented shops to larger, organized retail outlets. The rising number of attractive stores and foreign brands, coupled with readily available credit, will support steady gains in retail sales during the forecast period. Retail sales growth in India (in volume terms) during the next ve years will slightly outperform growth in real private consumption, at an average annual rate of 8.2% in 2005-09 compared with growth in private consumption of closer to 6.6%. Several factors suggest that retail sales growth should remain strong over the next ve years. Apart from steady income gains, consumer nancing has become a major driver in the consumer-durables industry. In the case of more expensive consumer goods such as refrigerators, washing machines, colour televisions and personal computers, retailers are joining forces with banks and nance companies to market their goods more aggressively. Among department stores, other factors that will support rising sales include a strong emphasis on retail technology, loyalty schemes, private labels, and the subletting of oor space in larger stores to smaller retailers selling a variety of products and services, such as music and coffee. The greatest opportunities
for retail sales growth are likely to be in the food and groceries sector; of the US$180bn-200bn in retail sales cited by the CII, around US$90bn-100bn of sales take place in supermarkets. Yet modern retailing large shops and supermarkets constitutes only about 0.5% of the total food retailing sector. The rest is composed of traditional kiosks and small shops. 8. Analysis and their interpretations To explain why individuals choose particular brands of durables, four alternative hypotheses may be advanced: 1. The pre sold Consumer Hypothesis: Consumers have already decided on specic brands prior to entering retail outlets. The retail outlet is simply a pickup station, and the task of the retail sales man involves little more than order taking. 2. The pliable customer hypothesis: Brand choice is determined by in-store inuence -particularly by the actions of retail sales man. 3. The store loyalist hypothesis: Brand choice is determined by store loyalty. Consumers limit brand choice to brands carried by their favorite outlets. 4. The rational shopper Hypothesis: Consumers select brands after a careful appraisal of product qualities by objective comparisons of physical characteristics, price, and other practical considerations Q.No: 1 How deliberately do consumers plan and shop for durables?
Table :3
Factors Like to shop around carefully Like to shop around some Prefer to make up our minds and go and buy Dont kike to shop, we make up our mind quickly Other Total
No of respondents 43 18 12 22 14 109
Percentage 43 8 12 25 12 100
63 Chart 1
Percentage 50 45 40 35 30 25 20 15 10 5 0 Dont kike to Prefer to Like to shop Like to shop shop, we around some make up our around minds and make up our carefully go and buy mind quickly Other
Percentage
Q.No :2 In which specic features you keep in mind when you shop? Table 4
Factors No specific features Mechanical properties Brand Size or capacity Appearance Performance Price Total
No of respondents 39 21 21 19 13 9 5 126
Chart 2
Percentage 31 17 17 15 10 7 3 100
35 30 25 20 15 10 5 0 Series1
Br an d
ra nc e
ro pe rti es
fe at ur es
an ce
ap ac i
sp ec i
ca lp
ec ha ni
N o
9. Implications The traditional marketing theory that consumers are impulsive only when it comes to buying inexpensive, frequently purchased products is contracted. To ascertain extent, durables are also impulse items, and these research ndings offer less support to the rational shopper hypotheses than might have been assumed by marketing strategies.
Si
ze
Pe rfo rm
Ap pe a
or c
fic
ric e
ty
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Q.No:3 How do consumers rate potential brand choice determinants? Table 5
Factors Size Availability Price and value Competent sales people Reputation for quality Brand name availability Location Services Fashion
Chart 3
No of respondents 90 80 70 60 50 40 30 20 10 0 Brand Size Competent name Availability sales availability people Services
No of respondents 86 85 81 68 67 65 63 56
No of respondents
Q.No:4 How do you rate the following factors are important Table 6
Factor Reputation of brand Durability Price Size Reputation of dealer Availability Financing Inside design Discount by dealer Color Visual sound and clarity Sieve offered
Refrigerator 75 75 62 57 53 53 49 48 37 12 --
Television 72 65 41 52 39 77 48
Washing machine 69 60 33 44 44 45 35 13 -30
65 Q.No:5 What source of information affects brand choice? Table 7
Factor Media Advertisements Magazines articles Catalogs Total
No of respondents 54 22 15 09 100
Chart 4
60 50 40 30 20 10 0 Media Advertisements Magazines articles Catalogs
Percentage 54 22 15 09 100
Series1
10. Implications Advertising media support the pre sold consumer Hypotheses, other studies show considerably lower level of brand choice decisiveness prior to shopping. Q.No:6 Do consumers switch brands?
11. Findings To a large extent customers do switch brands. From the reports only 22% of buyers purchased the brand owned previously. Even among respondents reporting satisfaction with their previous brand, only 26% purchased the same brand again. 12. Recommendations use technology to create to immediate and tangible benet to the consumer 1. make the technology easy to use 2. execution matters: prototype, test, dene 3. recognize that customers response to tech varies 4. Build systems that are compatible with the way customers make decisions
5. 6. 7.
study the effect of technology on what people buy and on how they shop coordinates all technologies that it touches the customers use technology to tailor marketing programs to individual customers requirements build systems that leverage existing competitive advantage
8.
13. Conclusion 1. Shopping for durable is not particularly deliberate activity 2. Product information is more likely to be contained by store visits than by advertising
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3. 4. 5.
Many customers shop without specic brands in mind Store loyalty is somewhat stronger than brand loyalty Brand switching is common
retail 5. Consumer Goods and Retail Forecast June 2005 www.eiu.com 2005 The Economist Intelligence Unit Limited David Gibert, retail marketing management, Pearson Education, Indian reprint, 2003 Michel Levy, Barton A. Weitz, retailing management, 5th ed, Tata Mc Graw Hill Publishing Co. Ltd. New Delhi 2003. 8. Gibson G,Vedamani, Retail Management, Jaico Publishing House, 2003. Small Retail Stores Thrive on Customer Relations an Empirical Study Marketing Master mind, Vol IX, issue 2 Feb 2009, P.68. Marketing for Home Appliances through Cyber Retailers, Global Management Review, Vol. 1, issue1 Nov 2006 P.12-19.
14. References Priya Chandrasekhar, Business Line: Catalyst Thursday, February 15, 2001 1. Eva Mueller, A study of Purchase Decisions, Part 2 sample Survey. In L.H. Clark (Ed), Consumer Behavior. Vol. The Dynamics of consumer reaction (New York: New York University Press, 1955), P.62. 2. 3. Harvard business review, July august 1999, page no 163-168 R.Ferber, Factors Inuencing Durable goods Purchases, I.H.Clark (Ed), Consumer behavior, Vol II, The life cycle and consumer behavior, PP, 82-83. AT Kearney Report, The 2004 global
6.
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10.
4.
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CUSTOMER RELATIONSHIP MANAGEMENT IN INDIAN RETAIL

Anupama.C.R Senior Lecturer, Dept of IT, IFIM B School Leela Prapurna PGPRM Student, IFIM BSchool
1. Introduction CRM or Customer Relationship Management is a company-wide business strategy designed to reduce costs and increase protability by solidifying customer loyalty. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one, holistic view of each customer in real time. This paper focuses on customer relationship management in the Indian retail segment. The following are some important facts about the current state of CRM in the Indian retail Industry 75% of retailers believe customer-centricity is a top three success factor for 2009 and 80% of retailers expect an increased focus on consumer centricity this year, according to IDCs new The State of Customer Centricity study[1]. The study, sponsored by Demand Tec and Precima, found that retailers need help with segmenting customers, identifying most protable customers, and overall customer quality. The study found a signicant difference between high performers and the rest of the pack when it comes to collecting the customer data that will inform key initiatives. The high performers use consumer insights more frequently in sales/ merchandising (80%) compared to the norm (60%) [2].
these most valuable customers and to leverage 80% non structured data of about 20% of these most valuable customers[3]. These facts highlight the importance of customer relationship management in the Indian Retail Sector. But the actual reality is that very little CRM initiatives are taken by the Indian retailers especially in the supermarket segment. That will be the main point of focus of this paper. 2. Literature Review Levy and Weitz, authors of Retailing Management[2007] dene CRM as, A business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailers protable customers.In words of Parvatiyar and Seth (2001), CRM is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer.Greenleaf and Winer (2002) have explained CRM as, Customer Relationship Management is a business strategy to select and manage customers to optimize long-term value.. Maninder S Gerewal, Managing Director, Religare Technova, (2007) saysThe primary driver is the need to change tracks to be able to grow in the current economic environment. The growth in the previous years meant focus on increased production and enhancing services delivery. This focus has now changed to customer need and customer retention and the ability to cross-sell in an identied target customer base. Dwivedy of Microsoft (2009) says, Today, getting new customers is a problem. Retaining them is even harder, which is in direct proportion to the growth factor of CRM.
Its a proven fact that 80% of organization revenue comes form 20% of its customers; it becomes imperative to design CRM solutions keeping in mind
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3. Nature and Scope of Study The paper is organized into two main parts. The rst part deals with the retail industry in India in general and also it deals with the state of CRM in the Indian retail industry. The second part of our deals with the CRM in the supermarket segment. Primary data were collected from different sources to illustrate that there are no customer relationship management initiatives taken at the supermarkets. Suggestions include two architectures for implementing CRM in the supermarket segment. 4. Analysis of Retail Industry in India The Indian retail market, which is the fth largest retail destination globally, has been ranked the second most attractive emerging market for investment after Vietnam in the retail sector by AT Kearneys seventh annual Global Retail Development
Index (GRDI), in 2008.[2] The share of retail trade in the countrys gross domestic product (GDP) was between 810 per cent in 2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010. The Indian Retail Sector has caught the worlds imagination in the last few years, topping the list of most attractive retail destination list for the past three years in a row. It had retail giants like wal-mart, Tesco etc sizing up potential partners and waiting to enter the fray. Indian Retail Industry is the largest employer after Agriculture (around 8% of the. population) and it has the highest outlet density in the world. The organized retail sector of India will form about 10 percent of the total retailing Business in India and is expected to worth US $70 billion by the end of 2010. The graph given below shows the predicted rate of the growth of retail industry in India
3000 2500 2000 1500 1000 500
All Figs in US$

2450 1705 1161 783 8 280 18 2003 2008 Modern Retail 410 110 2013 GDP 860 615 220 2018
Retail
Chart1: Indian Retail Growth Across

Source: Technopal Estimates Go/
Fig 1: Growth of Indian Retail In the Beginning unorganized retail dominated the Indian market. But now the trend is changing and organized retail is steadily growing and this is indicated by the graph given below.
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Projected Retail Growth ProjectedRetail Growth
2010- 11P
43.8 460.6
2006- 07P
16.5 337.3 12.9 311.7 0 50 100 150 200 250 300 350 400 450 500
2005- 06E
Total Retail
Source: Crisil Research
Organised Retail
Fig2: Projected retail Growth The following are the major players in the Indian retail industry
Table 1: Major Retail Player in India
5. Present State of CRM in Indian retail CRM in retailing mainly deals with developing a business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailers protable customers. The main goal of using CRM in retail is to develop a base of loyal customers who patronize the retailer frequently [4]. CRM is an iterative process that turns customer data into customer loyalty through four sequential activities shown in the CRM Model Fig 3:Model of CRM
Implementing CRM Strategies / Programs Action Developing CRM Strategies / Programme Collecting Customer Data Learning Analyzing Customer Data and Identifying Target Customers
CUSTOMERS
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CRM is quite a new phenomenon in retailing industry [5]. It is only big retailers who have installed CRM systems to identify and track customer purchases and take appropriate management decisions, especially on managing customer relationships. Now, organized retailers like Big Bazaar, Westside, Shoppers Stop, etc., have started concentrating on providing more value to their valuable customers using targeted promotions and services to increase their share of wallet, i.e., the percentage of the customers purchases made from these retailers with these customers. Almost all of them have started Loyalty Programs, i.e., frequent shoppers program in order to reward the existing customers. These programs help the retailers in increasing the number of footfalls as well as enhancing their sales revenues and prots. For example, Shoppers Stop, one of the leading apparel retailer in India, had net sales of Rs. 1.6 Billion, increasing net prots by 96% with the companys loyalty program, First Citizen Club (a CRM program) accounting for 63% of the sales 6. Customer Loyalty card Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior behavior which is potentially of benet to the rm. In marketing generally and in retailing more specically, a loyalty card, rewards card, points card, advantage card, or club card is a plastic or paper card, visually similar to a credit card or debit card, which identies the card holder as a member in a loyalty program. Loyalty cards are a system of the loyalty business model. A retail establishment or a retail group may issue a loyalty card to a consumer who can then use it as a form of identication when dealing with that retailer. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff.The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by the
store concerning customer privacy, typically nondisclosure (by the store) of non-aggregate data about customers. The store one might expect uses aggregate data internally (and sometimes externally) as part of its marketing research. These cards can be used to determine, for example, a given customers favorite brand of beer, or whether she is a vegetarian. [6] Where a customer has provided sufcient identifying information, the loyalty card may also be used to access such information to expedite verication during receipt of cheques or dispensing of medical prescription preparations, or for other membership privileges (e.g., access to a club lounge in airports, using a frequent yer card). 7. Major Loyalty card initiatives in India I-mint is Indias largest coalition loyalty program, with approximately 5 million members. BPCLs Petro-Bonus, is a pioneering program managed by Direxions, and also one of the largest in the country with about 2 million members for the fuel card program. It also has variants for eets and convenience store customers. Likewise IOCs Fleet Card Program XTRAPOWER has recently crossed 1 million marks. IOC has launched a loyalty program XTRAREWARDS for Retail Customers.[7] The Maruti Suzuki Auto Card, launched in association with Citibank and Indian Oil had 370,000 cardholders as at October 2008. But our main observation is that CRM systems and some kind of loyalty card initiatives are present only in the malls and in the hyper markets in India. But in most of the supermarkets, there is no form of customer relationship initiative and not even the concept of loyalty cards [8]. 8. Customer Relationship Management in supermarkets-An Analysis In most of the supermarkets, very traditional methods are followed today also as a part of CRM. Some of them are Personalized attention Good quality of products Home delivery No upper and lower bound on shopping using food coupons
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Discounted prices Faster billing Monthly account system Exchange of damaged goods without any terms and conditions Observation showed that even initiatives like loyalty cards are seldom undertaken by the supermarket personnel. To understand the major points where CRM can be integrated in a supermarket setup, it is necessary to understand the billing process at the supermarkets. Essentially the billing process at supermarkets is done with the help of point of sale terminals also called as POS terminals. The next section highlights the working of a POS terminal 9. The Essentials of Point of Sale Terminals Point of sales (POS) or checkout is both a checkout counter in a shop, and the location where a transaction occurs. Colloquially, a checkout refers to a POS terminal or more generally to the hardware and software used for checkouts, the equivalent of an electronic cash register. A POS terminal manages the selling process by a salesperson accessible interface. The same system allows the creation and printing of the voucher. The following are the main components Checkout system
A checkout system generally involves the following components: General computer hardware Checkout hardware Checkout software Miscellaneous store hardware Checkout hardware Specic to the POS industry, generally including: USB Credit card reader USB Receipt printer Cash drawer USB Barcode scanner USB PIN pad with Integrated Card Swipe Checkout software Top POS soft wares are the following: Radiant/Aloha Internally Developed Micros Smart Shoppe The following are the main types of sales data that be obtained from any POS terminal. The sales data that we get from the POS is of 3 different dimensions. They are time wise sales generated for each hour, value wise slab wise, till wise cash counter wise. The following gures gives the snapshots of the data visualized in three dimensions Value wise:
Table 2 : Sales Statistics Value Wise

Value FromTo <= 0 0 200 201 500 501-1000 1001-2000 2001-5000 5001-10000 10001-20000 20001>= Total Sales -1600.00 43984.00 108717.00 171747.00 321827.00 279772.00 104696.00 11990.00 0.00 Total Bills 17 528 326 242 231 100 17 1 0 Items -12.60 1480.58 2674.05 3824.68 5688.73 4547.28 1114.65 1.00 0.00 Per Bill Sale Value Item -94 83 334 710 1393 2798 6159 11990 0 -1 3 8 16 25 46 66 1 0 Sales Distr % -0.15 4.22 10.44 16.50 30.91 26.87 10.06 1.15 0.00
Field Survey : 2010
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Table 3 : Sale Statistics Time Wise Bill

Time From-To 09 : 00 09 : 59 10 : 00 10 : 59 11 : 00 11 : 59 12 : 00 12 : 59 13 : 00 13 : 59 14 : 00 14 : 59 15 : 00 15 : 59 16 : 00 16 : 59 17 : 00 17 : 59 18 : 00 18 : 59 19 : 00 19 : 59 20 : 00 20 : 59 21 : 00 21 : 59 22 : 00 23 : 59 Total Total Total Sales 5950.00 27725.16 31781.00 53507.00 86764.00 72759.00 72191.00 76159.00 84903.00 88947.00 149156.00 151134.00 110007.00 31094.00 1041133.00 Bills 17 41 51 76 131 94 88 116 124 150 187 210 156 21 1462 Items 198.01 596.51 589.29 1109.76 1820.25 1205.95 1236.15 1461.03 1567.85 1749.36 2482.69 2035.34 2033.82 424.35 19318.36 Per Bill Sale Value Item 350 676 623 704 662 774 820 657 685 12 798 720 705 1481 712 12 15 12 15 14 13 14 13 13 593 13 14 13 20 13 Sales Distr % 0.57 2.66 3.05 5.14 8.33 6.99 6.93 7.32 8.15 8.54 14.33 14.52 10.57 2.99 100.00
Table 4 : Sales statistics bill wise

Till Number 6 7 10 12 13 14 16 17 19 20 22 24 28 31 32 45 16 Total Sales 31961.00 3755.00 107215.00 90668.00 105932.00 90600.00 137445.00 61312.00 119028.00 52801.00 28985.00 39575.00 2852.00 91635.00 70163.00 7206.00 1041133.00 Total Bills 71 76 121 105 109 95 193 88 125 48 80 57 53 113 107 21 1462 Items 214.00 133.00 2083.58 1655.93 1949.84 1691.59 3146.49 1458.38 2258.32 712.85 319.74 149.00 74.43 1743.51 1642.54 85.16 19318.36 450 49 886 864 972 954 712 697 952 1100 362 694 54 811 656 343 712 Per Bill Sale Value Item 3 2 17 16 18 18 16 17 18 15 4 3 1 15 15 4 182 Sales Distr % 3.07 0.36 10.30 8.71 10.17 8.70 13.20 5.89 11.43 5.07 2.78 3.80 0.27 8.80 6.74 0.69 100.00
Field Survey : 2010
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The following are the important analysis that we made about the sales data from the supermarket We have made the analysis using one year sales data
# bills 500 400
# bills
300 200 100 0

07-08 08-09 09-10 10-11 11-12 12-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-07 AM AM AM AM PM PM PM PM PM PM PM PM PM PM PM PM PM AM
Time Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Fig 4: Bill wise Analysis
# Items per bill 25
# Items
20 15 10 5 0
07-08 08-09 09-10 10-11 11-12 12-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-07 AM AM AM AM PM PM PM PM PM PM PM PM PM PM PM PM PM AM
Time Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Fig 5: Analysis of Number of items per bill
The following are some of the important observations from the analysis: Number of items per bill stay at in a day Weekends see 50% increase in the umber of items per bill Number of bills peak during 11am-2pm and 6pm-10pm Weekends see 100% increase in the number of bills generated Load factor during peak hours of a weekday equate to off-peak on weekends From the above details it is very clear that though different types of analysis can be done with the help of the data collected from the POS, none of them contain even a single piece of data about the customers. The entire billing time can be divided into scanning time and trading time.
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Scanning time: The time taken by the cashier to scan the items. Trading time; The time taken to complete the trading process (mode of payment - cash, credit cards, coupons).
Avg. Scanning Time
12 10 8 6 4 2 01-10 11-20 21-30 31-40 41-60 61+ # Ietms per bill Cash Coupon Credit Card
Scanning Time (in minutes)
Fig 6: Average Scanning Time
Avg. Trading Time

3.5 3.0 2.5 2.0 1.5 1.0 0.5 01-10 11-20 21-30 31-40 41-60 61+ # Items per bill Cash Coupon Credit Card
Trading Time (in minutes)
Fig 7: Average trading time
Iy wa found that even two parameters are added to get the customers details (say for example customer name & address) while billing during trading time it may affect only 1% of billing time. The cashier can make use of the trading time to get the details so that we can track the details of the customers as well. In the next section we propose two architectures that can be used in supermarkets to track details of loyal customers as well as track buying patterns of customers. We have identied that following are some of the main advantages of tracking the customer details: Identify loyal customers Take steps to retain loyal customers Track buying patterns of customers Design customized promotional offers to boost sales Helps in category management (based on which combinations of products are sold together) Forecast sales of products Make efcient inventory &product planning
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In the next section we propose two architectures to implement customer tracking systems in supermarkets. 10. Architecture for implementing customer Tracking system in supermarkets We are proposing two architectures for implementing customer tracking system in supermarkets. The rst architecture is given below
POS TERMINAL Database
Data Mining tool
Customer Details
Fig 8:Architecture
The following are the main implications of the architecture A DBMS is required Space in the supermarket for placing the server One/two people to maintain and manage the entire setup An initial investment of about 50,000-75,000 Rs is needed An extra amount of Rs 30,000 is needed every month as a cost towards this set up
Advantages A secured feeling of data/information for the supermarket owners Since all the data is available within the building itself, it can be used to perform any kind of analysis at all points of time
We feel the above architecture can be used at well established supermarkets with signicant daily turnovers. For start ups we are suggesting an alternative architecture using the concept of software as a service (SaaS).This is a pay and use model in the sense, the customer will be charged according to the extent of usage of the software./ service. But the main benet is that the customer does not have the responsibility of maintenance, employing people, allocation of space etc. A memorandum of understanding is signed between the service provider and the customer based on the terms and conditions of the usage of software/service. As and when the customer wants to stop the usage of software /service, he is free to do that and inform the service provider about the same. This is how software as a service model works. The architecture given below uses this concept.
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POS Terminal
SaaS CRM
Customer Details
Fig 9:Architecture 2
Advantages of this model Cost effective because it is pay according to usage No extra space required No extra people need to be employed
Challenges involved The supermarket owners may feel insecure about their data Most of the supermarket owners are not tech savvies, hence making them understand and accept this concept is difcult.
11. Conclusion Customer Relationship management is very important in the present scenario when the whole world is suffering from something which is often referred to as global meltdown. The retailing industry in India is also affected to a great extent. One of the ways in which the retail industry can recover faster is by revitalizing relationships with the customer. For this purpose the concept of customer relationship management is very important. In a place like India where there is a supermarket at a distance of every 5-10 kilometers, adoption of Customer centricity measures at the supermarkets is very crucial for their success or sometimes even for their survival. But making them realize the importance of CRM and making them adopt measures will still take some more time. References 1) KPMG_Analysis_and_Retailers_Association_of_India 2) Cartesian Economic Meltdown Survey, Dec 2008 3) KPMG Analysis, Prowess 4) A T Kearneys Report, June 2008. 5) Indian Retail Industry by Rocsearch 6) http://www.destinationcrm.com/Articles/News/Daily-News/What-Is-CRM-46033.aspx
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E-RETAILING: ATTRIBUTES AND SECURITY CONCERNS

Saleem Hadi Research Scholar Dr. Salma Ahmed Reader, Department of Business Administration, AMU Aligarh
1. Introduction Business is done with many communication technologies today, walk-in retail, mail-order phone, mail-order fax etc. The Web and the Internet are just one another communication medium with its own benets and disadvantages. There has been an exponential increase in online shopping and the unprecedented rate of growth in the number of retailers selling online. E-retailing has made internet an extremely competitive marketplace where most e-retailers have yet to turn a prot. Todays e-retailers promise their customers that online experiences will be satisfying ones, and it is being found that convenience, site design, and nancial security are the dominant factors in consumer assessments of e-satisfaction. Currently the most important concerns of people with respect to e-commerce and e-retailing are security, privacy and consumer protection issues. This paper aims at dening the term e-retailing and examining the role of online convenience, merchandising, site design, and security in consumer e-satisfaction assessments. 2. E-Retailing: Denition & brief history It is proposed that Internet retailing should be dened as all the activities involved in selling goods or services via the Internet directly to nal consumers for their personal, non-business use, to qualify as Internet retailing, the Internet must serve as a channel for selling to consumers. This denition also reafrms that the online sale of both tangible goods and service offerings are relevant to the domain. Whatis.com in 2000 dened it as the selling of retail goods on the Internet. Sinha and Gvili
in 2001 dened it as Web retailing consists of transactions of products and services over the Net to nal consumers. Internet retail sites consist of web sites where visitors can actually purchase product and dont include shopping domains that provide free downloads, product reviews, or purchasing incentives such as coupons, nor other types of e-commerce sites such as auction, travel, reservation, or nancial service sites. As for classications of Internet retailing, a diverse range of businesses operate in the market such as rms with Internet stores only like Amazon.com, multi-channel retailers with Internet as well as xed location stores like Woolworths, manufacturers that sell directly to the public over the Internet like Reebok (Francis & White,2004). E-retailing began to work for some major corporations and smaller entrepreneurs as early as 1997 the year when Dell Computer reported multimillion dollar orders taken at its Web site, 1997 was also the year in which Auto-by-Tel reported that they had sold their millionth car over the Web and Nielsen Media reported that 10 million people had made purchases on the Web and it was predicted by Jupiter research that e-tailing would grow to $37 billion by 2002. E-retailing has resulted in the development of software tools termed as e-tail ware for creating online catalogs and managing the business core related to e-retailing. A new trend is the price comparison site that can quickly compare prices from a number of different e-retailers and link you to them. ( Schappell 2000)
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3. E-Retailing attributes Shopping Convenience E-retailing is promoted widely as a convenient avenue for shopping. Shopping online can economize on time and effort by making it easy to locate merchants, nd items, and procure offerings (Balasubramanian, 1997). Consumers do not have to leave their home or travel to nd and obtain merchandise online and also have the luxury of browsing items by category. These time and browsing benets of online shopping join to make e-retailing a more positive experience. Convenience also includes but is not limited to the extent which a customer feels that the website is simple, intuitive and user friendly it is accepted that a convenient website provides a short response time, facilitates fast completion of a transaction, and minimizes customer effort. Because of the nature of the medium itself, online customers have come to expect fast and efcient processing of their transactions. If customers are stymied and frustrated in their efforts to seek information or consummate transactions, they are less likely to come back. Merchandising Perceptions of online merchandising represent another set of elements that positively impacts e-retailing. Merchandising is dened here as factors associated with selling offerings online separate from site design and shopping convenience. This includes the product offerings and product information available online. It seems reasonable to expect that satisfaction would be higher when consumers perceive online stores to offer superior product assortments as superior assortments can increase the probability and the consumer needs will be better met. This is especially likely when consumers desire items not widely distributed example specialty goods which are produced in limited quantities, or which are unavailable at brickand-mortar stores because shelf space is limited. For example, a traditional book superstore may carry 150,000 titles but an Amazon.com carries millions
of titles. The probability of locating any one title would be higher at the online store. The probability of consumers satisfying needs online would also be higher. Secondly, the wider assortment of products can include items of better quality that may be attractive to consumers. The lower search costs traditionally associated with online shopping are thought to result in consumers buying better quality items. Buying better quality items, in turn, can improve satisfaction by delimiting the costs of failed products. Finally, we expect more extensive and higher quality information available online to lead to better buying decisions and higher levels of satisfaction. Importantly, online buyers perceptions that e-retailing offers them better selection, however, refers to the selection available on the Internet in general, rather than the selection on individual sites, which is often perceived as limited as compared to the retailers ofine stores and even catalogs. It seems reasonable to expect that customer satisfaction would be more positive when consumers perceive online stores to offer superior product selections. (Chung and Shin 2008) Site Design and Usability In addition to possible convenience and merchandising effects, the ambience associated with the site itself and how it functions could play a role in whether consumers are satised with their online shopping experiences. According to Manes (1997) a good Web-site design is about good organization and easy search. This includes offering consumers uncluttered screens, simple search paths, and fast presentations. Each of these elements of site design could impact customer satisfaction levels. Shopping is thought to be pleasurable and satisfying to consumers when the retailing sites are fast, uncluttered, and easy-to-navigate. Fast, uncluttered, and easy-to-navigate sites economize on shopping time. (Szymanski & Hise) Potential ecommerce customers will typically scan a number
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of web sites before deciding on one to buy from, so it is important that your web design be structured for usability. A measurement of usability consists of several different factors, but boils down to how well a web site gives its visitors what they a really looking for. Below are some of the features that make a website usable and provide the customer with a satisfactory stay and use. Make it easy for customers to nd Products in different ways This becomes especially true if there are a large number of products on the site. Room should be made on the web design layout for navigation in product categories it should allow a potential customer to browse products by price, by name and by the date added. Some customers might be looking for something inexpensive while others will want to browse the newest products. The customers should be given shortest route from their entry point to what theyre looking for. Avoid a cluttered layout The web design should make it clear to visitors what it is that they will nd on the e-retailing web site. A design layout, cluttered with too many options, wont give the visitor a clear idea of what they can or should do on the site. Add search capability If customers have something specic in mind, they should be given the option of searching it by name, description or price. Search should be made simple and straightforward, so that customers dont inadvertently get lost in overly helpful web design. Make the Checkout Process Very Simple The one place you will lose ecommerce customers with bad web design is in the checkout process. Anywhere from 30 to 60 percent of customers abandon their shopping carts at the last moment due to usability problems. You can avoid this by keeping the checkout process simple, using only one or two pages and requesting the necessary information. Make sure to use clean web design layouts for the forms and the conrmation pages. http://www.impliedbydesign.com/articles/usability-
tips-for-ecommerce-web-design.html User Friendliness Many sites are abandoned on the forms page it should be made sure that not too much information is being asked for from customers. Surveys and other data collecting methods that people may nd intrusive must be used. Invite Feedback from the customers, and provide options for them to reach you. Check the time it takes for a real person to respond to an inquiry. Follow up to make sure questions have been answered satisfactorily. And make sure email links and phone numbers reach people who can actually help. Once again, ask your friends to test the system. Fix what needs xing. (Wehr, 2008). 4. Threats to E-retailing E-retailing or broadly e-commerce systems have to cope with many threats and nuisances, viruses being the most common of those, they disrupt e-commerce operations and have been termed as a Denial of Service (DoS) tool. There are bigger threats than viruses and it comes from The Trojan horse remote control programs and their commercial equivalents. These programs allow data integrity and fraud attacks to originate from a seemingly valid client system and can be extremely difcult to resolve. A hacker can initiate fraudulent orders from a victim system and the e-commerce server wouldnt know the order was fake or real. Password protection, encrypted client-server communication, publicprivate key encryption schemes are all negated by the simple fact that the Trojan horse program allows the hacker to see all clear text before it gets encrypted. (Marchany & Tront 2002). There are a number of reasons why security vulnerabilities arise in shopping cart and online payment systems. The reasons are not exclusive to these systems, but their impact becomes much greater simply because of the wide exposure that an online website has, and because of the nancial nature of the transactions. One of the main reasons for such vulnerabilities is the fact that web application developers are often not very well versed with secure programming techniques. As a result,
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security of the application is not necessarily one of the design goals. This is exacerbated by the rush to meet deadlines in the fast-moving e-commerce world. Even one days delay in publishing a brand new feature on your website could allow a competitor to steal a march over you. Weve typically found this in cases where e-commerce sites need to add functionality rapidly to deal with a sudden change in the business environment or simply to stay ahead of the competition. In such a scenario, the attitude is to get the functionality online; security can always be taken care of later. Another reason why security vulnerabilities appear is because of the inherent complexity in most online systems. Nowadays, users are placing very demanding requirements on their e-commerce providers, and this requires complex designs and programming logic. (Mokhey, K.K. 2004). 5. Security issue of E-Retailing To gain the loyalty of customers their trust must be gained rst, this has always been the case but on the web where business is conducted at a distance and risks and uncertainties are magnied it becomes truer than ever. Online customers cant look a sales clerk in the eye, cant see and touch products, they have to rely on images and promises and if they dont trust the company presenting those they will shop elsewhere. One attribute that e-shoppers name as most important is trust. Price does not rule the web, trust does. (Reichheld & Schefter, 2000). The security of online transactions continues to dominate discussions on Internet commerce and perhaps with good reason. According to certain surveys 75% of Internet shoppers emphasize credit-card security as a major consideration when deciding whether or not to buy items. In view of the above scenario it becomes imperative for e-retailers to put emphasis on security of the data collected from the customers and also employ ways for protecting the integrity of their network.
E-commerce security strategies deal with two issues i.e. protecting the integrity of the business network and its internal systems; and also accomplishing transaction security between the customer and the business as it is most critical to bolstering consumer condence in a particular e-retailing site. Transaction security depends on the organizations ability to ensure privacy, authenticity, integrity, availability and the blocking of unwanted intrusions. Transaction privacy can be threatened by unauthorized network monitoring by software devices called sniffer programs. Transaction integrity requires methods that prevent the transactions from being modied in any way while it is in transit to or from the customer. Encryption is the most common method of ensuring condentiality and Error checking codes are an example of such a method. The main tool businesses use to protect their internal network is the rewall. A rewall is a hardware and software system that allows only those external users with specic characteristics to access a protected network. The original design was supposed to allow only specic services (e.g., email, web access) between the Internet and the internal network. The rewall has now become the main point of defense in the business security architecture. ( Marchany & Tront 2002) Another common attack is to guess a users password. This style of attack is manual or automated. Manual attacks are laborious, and only successful if the attacker knows something about the shopper. For example, if the shopper uses their childs name as the password. Automated attacks have a higher likelihood of success, because the probability of guessing a user ID/password becomes more signicant as the number of tries increases. Tools exist that use all the words in the dictionary to test user ID/password combinations, or that attack popular user ID/password combinations. The attacker can automate to go against multiple sites at one time. Popular technique for gaining entry into the shoppers system is to use a tool, such as SATAN,
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to perform port scans on a computer that detect entry points into the machine. Based on the opened ports found, the attacker can use various techniques to gain entry into the users system. Upon entry, they scan your le system for personal information, such as passwords. While software and hardware security solutions available protect the publics systems, they are not silver bullets. A user that purchases rewall software to protect his computer may nd there are conicts with other software on his system. To resolve the conict, the user disables enough capabilities to render the rewall software useless. 6. Vulnerable Points that the attacker can target Vulnerability of a system exists at the entry and exit points within the system. The attacker can target the shoppers computer and scan it for useful information; he can snoop onto the Network connection between shopper and Web sites server or even attack the Web sites server. Rogue programs can also be produced targeting the software vendor or even the shopper can be tricked into false transactions or even into giving his sensitive passwords. 7. Defenses Despite the existence of hackers and crackers, e-retailing remains a safe and secure activity. The resources available to large companies involved in e-Commerce are enormous. The companies will pursue every legal route to protect their customers but at the end of the day, the system is only as secure as the people who use it. Education is the best way to ensure customers take appropriate precautions, following are few of those Installing personal rewalls: A computer is connected to the network it becomes vulnerable to attack. A personal rewall helps protect computer by limiting the types of trafc initiated by and directed to it. The intruder can also scan the hard drive to detect any stored passwords.
Encryption: Condential information should be stored in encrypted form. Appropriate Passwords: Use appropriate password policies, rewalls, and routine external security audits. Secure Socket Layer (SSL): Secure Socket Layer (SSL) is a protocol that encrypts data between the shoppers computer and the sites server. When an SSL-protected page is requested, the browser identies the server as a trusted entity and initiates a handshake to pass encryption key information back and forth. Now, on subsequent requests to the server, the information owing back and forth is encrypted so that a hacker snifng the network cannot read the contents. (Khusail & McKegney, 2005). Peripheral Component Interconnect (PCI), Secure Electronic Transaction (SET) and Kerberos: Credit card details can be safely sent with SSL, but once stored on the server they are vulnerable to outsiders hacking into the server and accompanying network. A PCI (peripheral component interconnect: hardware) card is often added for protection, or another approach altogether is adopted: SET (Secure Electronic Transaction) which is developed by Visa and MasterCard, SET uses PKI for privacy, and digital certicates to authenticate the three parties: merchant, customer and bank. More importantly, sensitive information is not seen by the merchant, and is not kept on the merchants server. Equally important is protection from malice or carelessness within the system, and many companies use the Kerberos protocol, which uses symmetric secret key cryptography to restrict access to authorized employees. Protection of Transactional Information: Sensitive information has to be protected through at least three stages. Credit card details are supplied
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to the merchant or the payment gateway is handled by the servers SSL and the merchant/servers digital certicates, when these details are passed to the bank for processing they go through complex security measures of the payment gateway and when customers order and details are with the merchant it is handled by SSL, server security and digital certicate. http://www.ecommerce-digest.com/ecommercesecurity-issues.html 8. Conclusion Without trust, most prudent business operators and clients may decide to forgo use of the Internet and revert back to traditional methods of doing business. To counter this trend, it becomes highly essential for businesses to pay due attention towards the modalities of the online business and issues of network security at the ecommerce sites, as the vulnerabilities acquire a graver dimension due to the nancial nature of transactions on these sites. What is at stake is not only a direct loss of revenues, but companies may face a serious loss to their reputations as well. In some cases, they may be faced with legal penalties for violating customer privacy or trust, It is of paramount importance for designers and developers of web applications to consider security as a primary design goal and to follow secure coding guidelines in order to provide the highest possible degree of assurance to their customers. 9. References 1. Sinha, I. & Gvili, Y. (2001). A Cross-Regional Study of Consumer Perceptions of Shopping on the Internet. EBI Working paper (number EBI-2001-03), Temple University, Fox School 2. Francis, J. E. and White L. (2004) Internet Retailing: Back to the Future Macquarie Graduate School of Management http://74.125.155.132/sc holar?q=cache:NHSocH5uO9kJ:scholar.google. com/++E-retailing+denition,+scope,+advantag es&hl=en&as_sdt=2000 Accessed: 26/11/2009
3. Schappell, D. (October 2000 http://searchcio.

techtarget.com/ D e f i n i t i o n / 0 , , s i d 1 8 2 _ gci212079,00.html 4. Balasubramanian, Sridar. (1997). Two Essays in Direct Marketing, Ph.D. Dissertation, Yale University, New Haven,CT 5. Chung, K. H. & Shin, J. I. (2008) The Relationship among e-Retailing Attributes,eSatisfaction and e-Loyalty Management Review: An International Journal, Volume 3 Number 1 Summer 2008 http://74.125.153.132/ search?q=cache:F78zVHC75MgJ:www. kinforms.org/index.files/MRIJ3(1)2008(2). pdf+E-retailing,+convenience&cd=10&hl=en &ct=clnk&gl=in Accessed 26/11/09 6. Manes, Stephen. (1997). Web Sites: Slow by Design?, Informationweek, (August, 4): 124. 7. Szymanski, D. M. & Hise, R. T. e-Satisfaction:An Initial Examination Texas A&M University 8. Usability Tips for Ecommerce Web Design http://www.impliedbydesign.com/articles/ usability-tips-for-ecommerce-web-design.html Accessed: 27/11/09 9. Wehr, L. (2008) Usability http://www. practicalecommerce.com/articles/730-Five-FastSteps-to-Improve-Website-Usability Accessed: 27/11/09 10. Mookhey. K. K. (2004), Common Security Vulnerabilities in e-commerce Systems, http:// www.securityfocus.com/infocus/1775 Accessed 27/11/09 11. Marchany, R. C. and Tront, J. G. (2002) E-Commerce Security Issues Proceedings of the 35th Hawaii International Conference on System Sciences 2002
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A STUDY ON MEASURING SERVICE QUALITY IN SUPERMARKET

Ms. K. Rajamani Lecturer in Management Sciences, Velammal Engineering College, Chennai Dr. V. Sampath Reader in Commerce, Yadava College, Madurai
1. Introuction In India, chain store supermarkets have progressed exponentially in the retailing eld in the two decades (Farquhar, 2002). From an almost exclusive focus on satisfying the needs of the more afuent white consumer, retailers had to change their marketing strategies in order to bring consumers into their store. Driven by highly competitive management, the larger national chains are continuously ghting for market share and continue to apply pressure on smaller, independent retailers. Survival will depend on astute marketing, building relationships and emphasizing the quality of services in meeting the changing needs of the consumer. Service quality is an elusive and abstract construct that is difcult to dene and measure (Parasuraman, Zeithaml & Berry,1988; Carman,1990). Measuring service quality poses difculties for service providers because of its unique characteristics: intangibility, heterogeneity, inseperability and perishability (Bateson, 1995). Parasuraman et al. in their attempt to dene service quality, identied various dimensions of service quality. The authors dene service quality as a global judgement of an attitude relating to the superiority of a service. Lewison (1998) describes service quality as the difference between customers expectation and perception of the service actually received. Gronroos (1984) maintains that service quality comprise three dimensions, namely technical and functional quality and corporate image. The technical quality of an outcome refers to the actual outcome of the service encounter. The customer will also be inuenced by the way in which the technical quality is transferred functionally. The accessibility of the store personnel, the appearance, behaviour, what they say and how they say it, also impacts on the customers view of the service. The functional quality answers the question, how the customer gets the service. Corporate image refers to the consumers general perception of the supplier of the service. Evident from these denitions is that service quality is a subjective concept and many factors both internal and external inuence a customers expectations of a service. 2. Retail Service Quality Retail service quality is also highly associated with future consumption behaviour in terms of the customers intention to visit, purchase and recommend the store to family and friends. All the underlying dimensions of service quality play a role in stimulating repeated store patronage and the spread of good word-of-mouth. However, it is noteworthy to point out that problem solving did not record strong positive correlations as compared with the other dimensions when it came to intention to visit and purchase although it was signicantly related to those two intentions. A possible explanation could be that Indians have become accustomed to the fact that most clothing stores in India generally do not accept returned or exchanged goods through their goods sold are not returnable or exchangeable policy or even to expect the employees of the store to handle their complaints professionally (Ramayah & Jasmine, 2003). Therefore, Indians have come to accept this as some sort of a shopping norm which does not very much affect their intentions to continue visiting and purchasing in the stores. Nevertheless, it is still worthwhile for the retailers to apply prompt and professional problem-solving methods including having a proper system of returns and exchanges
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(Christo & Terblanche, 1997) as this can certainly delight the customers while positioning a favourable impression of the store in the customers minds. 3. Servqual Instrument Despite the fact that SERVQUAL has been empirically tested in various studies involving pure service settings, it has not been proven to be successfully applied in a retail setting (Dabholkar at al., 1996; Mehta et al., 2000) and also more specically, in apparel specialty stores. Service quality in pure service settings and retail settings differ in the sense that quality is seen from the perspective of not only services but goods as well. Measuring service quality, therefore, can be rather complicated and difcult especially in apparel specialty retailing where it combines the selling of goods and services to the customers as well as the customers expectations of knowledgeable, helpful staff to assist them during their shopping experience (Gagliano & Hathcote, 1994). The need for a measurement instrument that can accurately assess service quality in a retail environment was answered by Dabholkar et al. (1996) who developed and empirically validated a scale to measure retail service quality distinctively. In developing the instrument, the researchers conducted a triangulation of research techniques involving interviews with several retail customers, in-depth interviews with six customers and a qualitative study that monitored the thought process of three customers during an actual shopping experience. These three differing methods combined with a review of service quality related literature and some modication to the original SERVQUAL scale produced a hierarchical factor structure scale which Dabholkar et al. (1996) aptly named as the Retail Service Quality Scale (RSQS). According to Dabholkar et al. (1996), retail service quality had a hierarchical factor structure which comprised of ve basic dimensions. Further criticism was levelled by Teas (1993). His studies examined the operational and conceptual issues
associated with perceptions minus expectations (P-E) and developed alternative models of perceived service quality based on evaluated performance. Teas (1993) concluded that the evaluated performance model could overcome some of the problems associated with the P-E gap conceptualisation of service quality. Peter, Churchill and Brown (1993) also caution on the use of difference in scores (Gap Model), i.e. by subtracting the expectations from perceptions and report that it can create problems with regard to validity. A retail store experience involves more than a non-retail store experience in terms of consumers negotiating their way through the store, nding the merchandise they want, interacting with store personnel, returning merchandise, all of which inuence consumers evaluation of service quality. Whilst the measure of service quality for pure service and retail environments are likely to share some common dimensions of service quality, measures of retail service quality must capture additional dimensions (Siu & Cheng, 2001:90). Furthermore, it may well be that consumers use different criteria to evaluate competing goods retailers who sell a mix of goods and services than they use to evaluate retailers that are primarily or exclusively service rms (Vazquez, Ignacio, Del Bostique, Diaz & Ruiz, 2001). Virtually all grocery retailers may offer services for sale, or offer services that facilitate the sale of goods. Services such as short waiting time at till-points, safe customer parking, returns, refunds and exchanges, store appearance, merchandise assortment, friendliness of staff, convenient operating hours, credit, payment of utility bills vary between supermarkets. Grocery retailers frequently sell identical goods; service becomes a means of differentiation (Berry, 1986). Therefore it stands to reason that every item purchased in a supermarket, includes a service
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component. When one buys groceries, one also buys convenience in the form of store hours, short-pay point queues, merchandise selection, ease of returns and exchanges, convenient operating hours etc. The main purpose of this study is to develop a multi-dimensional scale that can be used to measure consumers perception of service quality in supermarkets. Empirical studies were undertaken in two phases. Firstly, qualitative research was undertaken in the form of focus group interviews. The responses were then paraphrased and condensed into themes, which were then utilised in the scale construction. Secondly, two pilot studies with sample sizes of seventy-ve and seventy respectively were undertaken to purify the measuring instrument. The general procedure used by various researchers (Churchill, 1979; Parasuraman et al., 1988; Avkiran, 1994; Babber, 1992; Phillip & Stewart, 1999; Sureshchander, et al., 2002) served as a framework in developing the customer service quality instrument. 4. Research objectives The survey method was used to obtain relevant data to evaluate the scale and the factor structure. The questionnaires were administered at three supermarkets in a mall intercept type situation. The rationale for such a data collection method is based on the theory that respondents will be more attentive to the task of completing the questionnaire and will provide meaningful responses when they are contextualised in the environment that they are evaluating (Dabholkar et al., 1996). Furthermore, being in a relevant environment, consumers would be more likely to focus on issues important to them for evaluating the quality of service at the supermarket. A six point Likert scale ranging from strongly agree to strongly disagree with a category not applicable in the end was used. In addition the questionnaire contained a statement on overall service quality, intentions to shop, intentions to recommend the supermarket to a friend and complaints about poor
service. Demographic information was collected which included marital status, age and income levels. The questionnaire made use of a perceptionsbased measure of service quality in the light of the suggestions put forward by various researchers (Cronin & Taylor, 1992; Carman, 1990; Teas, 1993; Vasquez et al., 2001; Dabholkar, et al., 1996; Boulding, Kalra, Staelin & Zeithaml, 1993; Kim & Jin, 2002) that consumers evaluate service quality mainly on perceptions. The response data was rst analysed for reliability using Cronbach alpha. Multivariate statistics, namely factor analysis was utilised to reduce the variables into identiable factors. 5. Pilot Study Arising out of focus group interviews a structured questionnaire comprising forty items was administered to seventy-ve supermarket consumers. The standardised alpha for the scale was recorded at 0.87, exceeding the suggested level of 0.70 as recommended by Nunnally (1978). Factor analysis (varimax rotation) was then performed on the forty latent variables. Loadings of 0.30 and above according to Churchill and Iacobucci (2002) were retained. Five factors with eigenvalues greater than one were retained. Five factors were extracted. The reliability of the factors ranged from 0.78 to 0.41. Item reduction was then undertaken due to the low reliability values on certain dimensions. Items with low factor loading and low item to total correlations were investigated. This resulted in an eduction of three items. Upon making the adjustments, a further seventy questionnaires using a thirty-seven item scale were administered. Standardised alpha was recorded at 0.94. At the dimension level the Cronbach alpha ranged from 0.91 to 0.63. Further item reduction as suggested by Aldlaigan and Buttle (2002) was undertaken by examining low item correlations, multiple loadings and unstable variables and interitem correlations. This resulted in a reduction of four items from the scale.
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The iterative process was re-run with thirtythree variables in the calculation of Cronbach alpha. Standardised alpha was recorded at 0.94. Average inter item correlation was 0.34 indicating strong correlations amongst variables and data stability. Factor analysis (varimax rotation) showed greater clarity in terms of loading onto appropriate dimensions. At a dimension level Cronbach alpha ranged from 0.90 to 0.78 demonstrating good internal consistency and reliability. However some variables still required closer scrutiny. A further two variables were removed as it showed instability and in doing so resulted in the improvement of the reliability values. Cronbach alpha and factor analysis (principal components-varimax rotation) were computed to establish reliability and a factor structure. A thirty one-item scale comprising ve dimensions, were established through several iterations. The standardised alpha for the scale was recorded at 0.94 and at the dimension level, the reliability ranged from 0.90 to 0.78. 6. Analysis Against the background of the pilot study, the study was then extended to a sample of 500 supermarket consumers to establish the scales reliability, validity and robustness of the factor
structure on a larger sample size. Pr ior to factor analysis the appropriateness of factorability on the data set was established. The Bartletts Test of Spericity was 8246.80 at an observed signicance level of 0.00 rejecting the hypothesis that the population correlation matrix is an identity matrix, i.e. with zero correlations. The Kaiser-Meyer Olkin (KMO) measure of sampling adequacy (MSA) was 0.95 which is considered marvelous by Kaiser (1974:35). In the nal sample a clearer factor structure emerged as a result of several iterations, which resulted in the extraction of three factors with 30 variables. The computation of the Cronbach alpha and nal factor structure is reected in table I. A complete factor structure and loading within each factor is reected in Table VI. In addition the testing for response bias in the data collection procedure required the computation of separate coefcient a values for the rst two thirds and second one third of the completed responses. It was hypothesised that the a values would not be signicantly different from both groups (split samples) of responses. The standardised a emerged as 0.94 and 0.94 respectively, inferring that the difference is small to indicate that there were any signicant differences in the data sets.
Table 1 Reliability Values
DIMENSIONS
Cronbach alpha (40 variables) 0.74 0.77 0.78 0.61 0.41 0.87 75
Cronbach alpha (30 variables) 0.90 0.88 0.85 0.94 607
Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Over all Factor N
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Factor one labelled reliability, comprised ten variables and accounted for 40.9% of the variance. This factor incorporates the reliability and personal interaction aspects of the retail service quality scale of Dabholkar et al. (1996). The items that loaded onto this factor relate mainly to the human element aspects of service delivery. The above conclusions were supported by comments from focus group interviews where participants viewed proper complaints handling, short waiting time at cashiers, staff friendliness, courtesy, personal interaction and merchandise availability as important in improving services. Comments from participants, like To date nobody telephoned me back. Since then, I stopped shopping at this particular supermarket and Many times I had to wait in long queues at the cashier, reiterates the view that customers place reliability as one of the key determinants in evaluating services. The second factor labelled atmospherics, comprised ten variables and accounted for 5.89% of the variance. This factor combines the tangible aspects of the SERVQUAL scale and the physical aspects of the retail service quality scale. This notion is also supported by the ndings of focus group interviews. Some excerpts from the focus group interviews were: In the fruit and vegetable section, you nd leaves all over the oor and they do not even care to pick it up and in the prepared food section of this supermarket, the assistants working with food did not wear hats. I found it dirty because hair can fall into the food served to customers. Consistent with the literature on atmospherics Bitner (1993) reafrms that store atmosphere and appearance are important in global evaluations of a retailers service. Further insight and evidence from environmental psychology support the notion that atmospherics induced by store environment inuence the attitude as well as the behaviour of the consumers (Donovan, Rossitter, Marcoolyn & Nesdale, 1994). Kotler (2000) is of the view that the environment offered by the store has an impact, inuences the customers decision to visit
the store and also guides the consumers inferences about service quality. The third factor labelled policy, comprised ten variables and accounted for 4.41% of the variance. This factor captures aspects of service quality that are inuenced by the supermarkets responsiveness to the needs of the customer. These ndings are in congruency with the qualitative studies undertaken. Participants in the focus groups, inter-alia, referred to the following: You cannot shop freely if you know that your car is not safe in the parkingand Whilst shopping, I found the shelfpackers are busy packing products on the shelves. I nd it quite disturbing because we need space to move around with our trolleys. Combining the conclusions obtained from literature review, exploratory research and the main survey, a factor structure with three basic dimensions is proposed. 7. Validity Content validity was also ascertained by pre-testing the questionnaire and a review of the questionnaire by academics and practitioners in the eld. The instrument was further puried during the various pilot-testing stages during which changes were made to the questionnaire. The scales convergent validity was assessed for statistical signicance by using Pearsons correlation coefcients. The three dimensions of service quality, namely reliability, atmospherics and policy were correlated with the overall measure of service quality (B1) of the questionnaire, i.e. overall, how would you rate the quality of service at the supermarket? Table II reects that the marked correlations are all signicant at p< 0,05. This implies that the three dimensions of service quality do in fact converge with the measure of overall service quality. Furthermore, the reliability of a scale as measured by coefcient alpha reects the degree of cohesiveness among scale items and is also an indirect indicator of convergent validity (Parasuraman et al.,1988). The Cronbach alpha values (refer to table I) for the three dimensions are high in the study.
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Table 2 Correlation of Overall Service Quality And Service Quality Dimensions
Variable B4 Reliability
B4 1.00 -0.49*
Reliability
Atmospherics
Policy
1.00 0.69* 0.73* 1.00 0.67* 1.00
Atmospherics -0.53* Policy -0.39*
* Marked correlations are signicant at p< 0.05
Discriminant validity was measured by including an item in the study (B4) relating to complaints about poor services offered by the supermarket. The marked correlation in Table III depicts negative correlations between complaints about service offered by the supermarket and overall service quality, thus providing evidence of discriminant validity.
Table 2 & 3 Regression Analysis
DIMENSIONS * Reliability Atmospherics Policy
B 0.2949 0.3945 0.1024
BETA 0.2980 0.5024 -0.1142
T 5.4127 7.8090 -1.8337
p - level 0.0000* 0.0000* 0.0719
R = 0.5570 R2 = 0.3103 *p< 0.0000 DIMENSIONS * B Reliability Atmospherics Policy 0.2067 0.3092 0.0558 R2 = 0.1866
Adjusted R2 = 0 .3069 BETA 0.23056 0.4432 -0.0687 T 4.7417 5.6181 -0.9210
F= 3.603 p - level 0.0000* 0.0000* 0.3573
R = 0.4320 *p< 0.0000
Adjusted R2 = 0.1826
F= 3.603
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DIMENSIONS *
BETA
p - level
Reliability Atmospherics Policy
0.1776 0.3505 0.0305 R2 = 0.2168
0.1971 0.4901 -0.0336
3.0599 6.5115 -0.5304
0.0000* 0.0000* 0.5959
R = 0.4656 *p< 0.0000
Adjusted R2 = 0.2129
F= 3.603
* Service quality dimensions regressed with overall rating of service ** Service quality dimensions regressed with store patronage *** Service quality dimensions regressed with store recommendations Table IV reports on the results of the multiple regression analysis computed in order to establish the predictive power of the three service quality dimensions in assessing predictive validity. The three service quality dimensions were regressed with the following opinion data: overall service quality (B1), store patronage (B2) and recommendation of the supermarket to a friend (B3). Amongst the three dimensions, reliability and atmospherics seem to have greater impact on overall service quality, store patronage and recommendation of the store to a friend. Policy turned out to be poor predictor in this regard. According to the beta coefcients, atmospherics makes the largest impact across the three equations and reliability is the second largest predictor of service quality. These ndings are also in line with the results of some earlier studies that have highlighted the importance of soft issues (for example, the physical aspects of the store, complaints handling, trust, politeness) in improving service quality (Sureshchander, et al., 2002; Powell, 1995).
8.Analysis of Customer Prole & Service Quality
Perception The socio demographic data was used to examine their association with the identied factors. Table V reects the socio-demographic variables in relation to the identied factors. From the table, it is evident that gender is not signicantly related to reliability, atmospheric and policy variables. This implies that the three factors that emerged from the study are not in any way inuenced by the gender categories. However, marital status is signicantly related to the reliability factor implying that married and single consumers view the various reliability aspects of service quality differently. Age, on the other hand, is signicantly related to all the three dimensions implying that age plays a role in establishing service quality perceptions. The study reveals that income levels are signicantly related to reliability and policy aspects in shaping consumers perceptions of the quality of services offered by supermarkets.
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Table 4 Analysis Of Variance: Demographic Variables And Service Quality
VARIABLES
Df
RELIABILITY F P 0.2975
ATMOSPHERICS F 1.072 P 0.3008
POLICY F 0.702 P 0.4024
Gender 1:605 Marital status 4:602
1.087
2.510 *
0.0408
1.614
0.1691
1.378
0.2400
Age
5:601
6.964 *
0.0000
3.351 *
0.0054
4.406 * 3.555 *
0.0006
Income
5:580
6.579 *
0.0000
1.027
0.4009
0.0035
* significant at p< 0.0500

Table 5 Factor Loading
Q.No. VARIABLES DESCRIPTION 1. 2. 3. 4. 5. 6. 7. 8. 9. Handling of customer complaints Waiting time at cashiers Provision for customer suggests and comments Contact staff are polite to customers Safety in transacting with the store Willingness to help customers Knowledge to answer customer questions Respond to customer requests Employees give you personal attention
FACTOR 1 0.656227 0.600444 0.532962 0.667524 0 ,502843 0.694613 0.708557 0.674576 0.696923
FACTOR 2
FACTOR 3
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21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 10. 13. 14. 11. 12. 16. 17.
Error free sales transactions Employees are appropriately dressed The fresh food display is always fresh The store uses time saving technology The store h as modern looking fittings and equipment The physical facilities are appealing Clearly specified sales slips are given to customers The brands sold at this store are trustworthy A broad variety of brands are offered The retailers own brands are of a high quality The store has convenient operating hours Adequate till packers are availab le Convenient Cash withdrawal facilities are available Merchandise is always available Safe customer parking Store layout enables customers to move around The store is characterized by its pleasant aroma Prices of products are clearly visible
0.494265 0.597551 0 .573046 0.644694 0.721088 0.680132 0.718639 0.669626 0.620241 0.608552 0.635372 0 .518990 0.659225 0.599847 0.415771 0.547363 0.615037 0.541063
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18.
Layout makes it easy for customers to find products needed The retailer leads as a corporate citizen The store provides good service at a reasonable cost
0.600439
19. 20.
0.581341 0.465614
9. Recommendations The study demonstrated that customers attach great importance on the atmospheric variable (physical aspects), the reliability and the policies of the retailer. For supermarkets to establish or enhance service quality, they have to ensure that staff is polite and courteous to customers, have the knowledge to answer customer questions and handle complaints effectively and promptly. Atmospherics and reliability seems to be strong predictor of overall service quality, store patronage and recommendation of the supermarket to friends. Managements of supermarkets should place greater emphasis on the atmospheric and reliability variables in order to enhance service quality perception among consumers. While the retailers policy may not seem to be a strong predictor of overall service quality, store patronage and recommendations of the store to friends, its value should not be underscored. Store policies must be responsive to the needs of the customer. Store policies such as in-house cash withdrawal facilities, payment of utility bills, safe customer parking are essential ingredients of enhanced service quality and customer satisfaction. The role of technology should not be underestimated. New technology and interactive marketing can create new opportunities for supermarkets. Retailers can use technology to simplify and improve the services offered to customers. Routine and repetitious tasks can be handled by a system, freeing employees to deal with more important customer requests and problems.
10. Limitations This study undertaken within the supermarket setting, adds to the growing literature, which calls for the re-examination of how to measure and manage service quality. The results of this study cannot be accepted as being completely relevant and applicable to all retailers who offer a mix of goods and services, because of the limited sample size, the sampling procedure and particularly its focus on supermarkets. The instrument has been validated by collecting data from customers of a supermarket chain in a developing country. There is a possibility that perceptions may vary from customers from other developed countries. The interpersonal category (human element) recorded a number of incidents in the focus group interviews. There would be value in additional work to analyse these incidents further to try to establish a more detailed perspective on key inuencing factors impacting on service quality perceptions. Previous research (Zeithaml, 1988; Sproles, 1977; Stafford & Enis, 1969; Injazz et al., 1994; Yoon & Kijewski, 1997) states that the relationship between quality and price appears to be product specic and generally weak. Should supermarkets continue to emphasise low prices in their competitive strategies or should they accept the risk of asking customers to pay a premium for enhanced services? The development and testing of the supermarket service quality instrument has implications for other goods retailers as well. Based on this study and other studies cited, it appears that and that future research
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on Service Quality should involve the development of industry-specic measure of service quality. 11. Conclusion The ndings of this preliminary study do provide basic support for a three-factor structure for supermarket service quality in terms of reliability and validity. The ve dimensions conceptualized at the beginning of the study with forty variables were empirically reduced to thirty variables and emerged as three distinct and interpretable factors, namely, reliability, atmospherics and policy. Although managements of supermarkets can pride themselves on many success areas on service quality, with increasing competition, efforts will have to be continuously focused on service excellence. Schiff, (2001:04) aptly sums up service quality in the competitive retail environment as, being best in class in service quality is not the result of any one persons effort; it comes from leadership, focus and passion at every level of the organization . 12. Implications For Future Research This study undertaken within the supermarket setting, adds to the growing literature, which calls for the re-examination of how to measure and manage service quality. The results of this study cannot be accepted as being completely relevant and applicable to all retailers who offer a mix of goods and services, because of the limited sample size, the sampling procedure and particularly its focus on supermarkets. 13. References 1. Aldlaigan, A.H. & Buttle, F.A. 2002. SYSTRA-SQ: a new measure of bank service quality. Industrial Journal of Service Industry Management, 13(3):362--381. 2. Avkiran, N.K. 1994. Developing an Instrument to Measure Customer Service Quality in Branch Banking. International Journal of Bank Marketing, 12(6):10--8.
3. Babber, S. 1992. A dynamic model for continuous improvement in the management of service quality. International Journal of Operations and Production Management, 12(2):38--48. 4. Berry, L.L. 1986. Retail Businesses are Service Businesses. Journal of Retailing, 62: 3--6, Spring. 5. Boulding, W., Kalra, A., Staelin, R. & Zeithaml, V.A. 1993. A Dynamic process model of service quality:from expectations to behavioural intentions. Journal of Marketing Research,30:7--27, February. 6. Buttle, F. 1996. SERVQUAL: review, critique, research agenda. European Journal of Marketing, 3030(1):8--32. 7. Babakus, E & Boller, W.G. 1992. An empirical assessment of the SERVQUAL Scale. Journal of Business Research, 24:253:268. 8 Carman, J.M. 1990. Consumer Perceptions of Service Quality: An Assessment of the SERVQUAL dimensions. Journal of Retailing, 66:33--55. 9. Churchill, G.A. Jr. 1979. A paradigm for Developing Better Measures of Marketing Constructs. Journal of Marketing Research. 16:64--73, February. 10. Dabholkar, A., Thorpe, I.D. & Rentz, O.J. 1996. A Measure of Service Quality for Retail Stores: scale development and validation. Journal of the Academy of Marketing Science, 24(1):3--16. 11. Gronroos, C. 1984. A service quality model and its marketing implications. European Journal of Marketing, 18(4):36-44. 12. Injazz, J.C. Atul, G. & Walters, R. 1993. A study of price and quality in service operations. International Journal of Service Quality
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Management. (2):23-33. 13. Kaiser, H.F. 1974. An index of factorial simplicity. Psychometrika, 39(1):31--36. 14. Parasuraman, A., Zeithaml, V. & Berry, L. 1988. SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1):12--35, Spring. 15. Parasuraman, A., Zeithaml, V. & Berry, L. 1991. Renement and Reassessment of the SERVQUAL Scale. Journal of Retailing, 67(4):420--450, Winter. 16. Powell, C.T. 1995. Total quality management as competitive advantage: a review and empirical study. Strategic Management Journal, 16:15-37. 17. Schiff, L. 2001. How customer satisfaction improvement works to fuel business recovery. Journal of Organisational Excellence. 20(2):3--
18. Siu, N.Y.M. & Cheung, J.T.H. 2001. A measure of retail service quality. Marketing Intelligence & Planning, 19(2): 88--96. 19. Teas, K.R. 1993. Expectations, Performances Evaluation and Consumers Perceptions of Quality. Journal of Marketing, 57:18--34. 20. Vazquez, R., Ignacio, A., Del-Bostique, R., Diaz, A.M. & Ruiz, A.V. 2001. Service Quality in supermarket retailing: identifying critical service experiences. Journal of Retailing and Consumer Services, (8):1--14. 21. Yoon, E & Kijewski, V. 1997. Dynamics of the relationship between product features, quality evaluation and pricing. Pricing Strategy and Practice. 5(2):45-60. 22. Zeithaml, V.A. 1988. Consumer perceptions of price, quality and value: A means-end model and synthesis of evidence. Journal of Marketing. 52:2-22
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DETERMINANTS OF CUSTOMER LOYALTY IN LEADING RETAIL SUPERMARKETS IN UNITED KINGDOM: AN EXPLORATORY STUDY
Ramiah Kumar Gandhi SRM University, Kattankulathur Velummailum Gobiraj Balasundaram Nimalathasan 1. Background and Signicance In the ever-changing business world, almost every organisation pays most attention to the customers ever than before. For any organisation, good understanding of customers, their needs and wants, their expectations on price and quality of goods and services increase the potential to succeed. As a result, customer centred marketing has occupied the top place in modern marketing concept. Every organisation is ready to pay any means to identify and understand the customers and their needs. Consumers reaction will be in favour of an organisation when their desires and expectations have been either met or exceeded in the course of experiencing the service. In the context of a retail supermarket, satisfaction could be interpreted as just meeting the expectations of the customers, not any sort of exceeding or falling short of the expectations. Most of the retailers try to achieve competitive advantage by taking the responses of the customers beyond the level of just satised towards exceeding their expectations. Pleasing customers are very harder today (Kotler, 2003). Customers are more challenging component for any organisation rather than their competitors. Their buying behaviours are ckle, at least three times a year expecting the best deal from the suppliers. Besides the above, the worst thing is ninety percent of dissatised customers just switched to another supplier without complaining to former supplier (Kotler, 2003). A marketing strategy which is considered today as the best one may not produce same results in future. Thus, every organisation must pay their attention in complete satisfaction of their customers. Since, highly satised customers more likely become loyal customers and potentially buy the new products introducing by the company and shows the word of mouth and also pay less attention about competitors and other brands as well. Above to all, considering cost related to customers, cost for retaining existing customers are very less than acquiring the new customers and also existing customers are much more protable in many ways for instance, word of mouth. Here, wordloyalty or loyal customers captures the predominant place. Because, Hill & Alexander (2006) pointed out that only through the loyalty, customer retention can be secured. 2. Statement of the Problems Factors determining customer satisfaction and customer loyalty have been brought to light by marketing research. But, this information still is far away for some producers engaging in the productions and services. Consequently, producers are unable to exploit this information for their success. According to Verdict consulting research (2007), retail supermarket sector in UK is one of most competitive segments and also pointed out that this competition will create more challenging environment in maintaining their market share. However, some retailers are very successful than their competitors even during the period of European economic downturn. This encouraged the researchers to do this research. We hope that this research will answer the following question regarding customer loyalty effectively. 1.What are the main factors determining customer satisfaction in retail supermarkets? 2.How can an organization in retail supermarkets improve their customer loyalty so that, existing and future customers switching can be kept at
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minimum level? 3. Objectives The present study has the following objectives 1. To examine necessary factors of customer loyalty in leading super markets of UK; and 2. To determine the key factors of customer loyalty in leading super markets of UK. 3. To suggest some measures in order to improve the customer loyalty in leading 4. Literature Review Managing customer loyalty is the one of major element of customer relationship management. Customer satised with the present service of organisation will likely dissatisfy if the rm does the same service later. So every organisation has struck with the question how they can increase their loyalty level by adopting the right approaches. Stone (2000) pointed out in his book that using information on the customer data base, there is no reason for a customer loyalty programme other than nely tuned to meeting customers relationships needs. Loyalty becomes a winning factor for any organisation facilitating with high productivity, solid prot and feasibility for steady expansion, competing in present world. When considering the present states of disloyalty, it is obvious that it would damage the corporate performance by 25 to 50 percent and possibly more (Shajathan, 2006). Loyalty is dened as a state of mind, a set of attitudes, beliefs, desires and so on (Stone, 2000). Kotler (2008) said that delighted customers become loyal to the organisation and customer relationship management (CRM) plays an important role in making customers loyal. Further, among the satised customers, completely satised customers only can be a delighted one. Thus CRM has to focus on customer delight rather than satisfaction. However, Hill and Alexander (2006) argue that misunderstanding of customer loyalty by the senior
manages and marketing executives have mislead strategies for securing the customer loyalty and also criticised that many of them take afford to attract the customers by giving some bribe to customers. Instead, customer loyalty has to be earned by the suppliers and customer retention can be achieved when the suppliers satisfy the requirements raised by the customers better than their rivals. Realty is that in the twenty rst century, both not only customers and but also suppliers have to true, faithful and rm in meeting the customers needs. Furthermore, Hill & Allexander (2006) categorised loyalty into four types such as (1) Monopoly loyalty (where customers have little or no choice and they are completely dissatised and far away from devoted); (2) Cost of change loyalty (where customers have choice of alternative suppliers and reluctant to change their current due to the cost and other bothering factors, needs immense afford to change); (3) Incentivized loyalty(this is the type of loyalty created by mass advertisement and targeted the customers who are not spending their own money for instance frequent business iers);(4) Habitual loyalty(this can be viewed most commonly due to the time constraints and familiar routines, convenient location and little afford for instance lling up petrol on the way to work). This paper is focus on this Habitual loyalty. Here, convenient location, size of supermarket, variety of goods, competitive price plays a signicant role. Moreover, degrees of loyalty can differ from one customer to another for instance one customer is more loyal than other. Hill & Alexander (2006) dened these degrees as suspects, prospects, customers, clients advocates and partners in a pyramid. According to them, degrees of positive commitment increases along pyramid from suspects to partners and also distinguishes the truly loyal customers. Less loyal customer is likely to switch the supplier. Based on the previous studies, we can say that there are some studies in different countries,
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but detailed and comprehensive studies has not yet been conducted in UK especially in supermarket through exploratory study. Hence the present study is made on determinants of customer loyalty in leading supermarket in United Kingdom (UK). 5. Research Design Exploratory studies are a valuable means of nding out what is happening; to seek new insights; to ask questions and to assess phenomena in a new light (Robson, 2002). It can be linked to the activities of the traveller or explore (Adams & Schvaneveldt, 1991). Its great advantage is that it is exible and adaptable to change (Naipul, 1989). It describes research approach, sampling procedure, data sources, instrumentation, reliability, validity and mode of analysis. 5.1 Research Approach As this paper is a business and management research, it has a characteristic of positivist and interpretivist and also involves in deductive approach (Hussey & Hussey, 1997; Robson, 1993) as well as inductive approach (Easterby-Smith, Thrope & Lowe (2002). Combining these two research approaches in same piece of research is perfectly possible and advantageous for a research. 5.2 Period of Study This research was conducted from September to October, 2009. 5.3 Sampling strategy Five leading (i.e.,Asda; Iceland; Sainsbury; Somereld and Tesco) retail supermarkets involved in food stall around the city of London are selected as cluster sampling due to time constraints, the travel, and other costs related to the data collections. In the case of customer respondents, ten customers with age of 18 years and above for each sampling supermarket are considered as purposive and random sample for the study. The sample procedure paid more attention on selection of appropriate samples so that samples
can cover different background of people as London is mostly multicultural city in UK. 5.4 Data Sources The study was complied with the help of primary data. Primary data were collected through mailed questionnaire. Moreover, the desk study covered various published and unpublished materials on this eld. 5.5 Measures The questionnaire will be administrated to ve leading retail supermarkets in the city of London and ten customers for each supermarket. Based on the literatures and experts advice questionnaire is to be designed. In the questionnaire, a seven point Likert summated rating scale from strongly disagree (-3) to strongly agree (+3) was adopted to identify the variables of customer satisfaction and loyalty. The study has an idea of pre-test the questionnaire in order to receive optimal outcomes from the study. 5.6 Reliability and Validity The reliability value of our surveyed data was 0.897 for variables of customer loyalty. If we compare our reliability value with the standard value alpha of 0.7 advocated by Cronbach (1951), a more accurate recommendation (Nunnally & Bernsteins, 1994) or with the standard value of 0.6 as recommendated by Bagozzi & Yis (1988). Researchers nd that the scales used by us are highly reliable for data analysis. Validation procedures involved initial consultation with expert researchers. The experts also judged the face and content validity of the questionnaires as adequate. Based on their comments, some contents and words were revised to make the meaning clear. Hence, researchers satised content and construct validity. 5.7 Statistical Tools Used In the present study, we analyse our data by employing factor analysis. For the study, entire analysis is done by personal computer. A well known
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statistical package like Statistical Package for Social Sciences (SPSS) 13.0 Version was used in order to analyze the data. 6. Analysis and Findings To identify potential underlying dimensions of the customer loyalty of the respondents are used in the present section; responses of the variables are subjected to factor analysis method. Before applying factor analysis, testing of the reliability of the scale is very much important as it shows the extent to which a scale produces consistent result if measurements are made repeatedly. In the present section, researchers, therefore, used Cronbachs Alpha scale as a measure of reliability. Its value is estimated to be 0.897 for total customer loyalty variables. If we compare our reliability value with the standard value alpha of 0.6 advocated by Cronbach (1951), a more accurate recommendation Nunnally & Bernstein (1994) or with the standard value of 0.6 as recommendated by Bagozzi & Yis (1988) researchers nd that the scales used by us are highly reliable for factor analysis. After checking the reliability of scale, an examination of the correlation matrix (for details please see Vide
appendix-Table-1) reveals moderately signicant correlations between some of the variables. These are L3 with L8; L4 with L14; L7 with L18, and L27; L8 with L3; L9 with L23; L11 with L2, L23. L14 with L3 and L4. L16 with L3; L18 with L7; L20 with L23; and L23 with L20 and L21. But no correlation comes out as damaging as to cause multicolinerity (Hague & Taher, 2007) and so the matrix is suitable for factoring. Further, we tested whether the data so collected is appropriate for factor analysis or not. The appropriateness of factor analysis is dependent upon the sample size. In this connection, MacCallum, Windaman, Zhang & Hong (1999) have shown that the minimum sample size depends upon other aspects of the design of the study. According to them, as communalities become lower the importance of sample size increases. They have advocated that if all communalities are above 0.6 relatively small samples (less than 100) may be perfectly adequate. In this regard communalities of customer loyalty been shown in table-1.
Table-1: Communalities of the Customer Loyaltys Variables
Sl.No 1 2 3 4 5 6 7 8 9
Customer Satisfactions Variables L1 L2 L4 L5 L6 L7 L8 L9 L10
Initial 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Extraction 0.731 0.726 0.792 0.827 0.741 0.754 0.774 0.762 0.896
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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Source: Survey Data
L11 L12 L13 L14 L15 L16 L17 L18 L19 L19 L20 L21 L22 L23 L24 L25 L26 L27
1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
0.842 0.714 0.646 0.613 0.811 0. 684 0.764 0.823 0.827 0.814 0.780 0.803 0.838 0.825 0.783 0.827 0.826 0.811
Extraction Method: Principal Component Analysis From table-1, it is clear that a sample size of fty as used in the present study is good for a suitable factor solution because all communalities are 0.6 and above. Kaiser Meyer- Olkin (KMO) measure of sampling adequacy is still another useful method to show the appropriateness of data for factor analysis. The KMO statistics varies between 0 and 1. Kasier (1974) recommends that values greater than 0.5 are acceptable. Between 0.5 and 0.7 are mediocre, between 0.7 and 0.8 are good, between 0.8 and 0.9 are superb (Field, 2000).
In this study, the value of KMO for overall matrix is 0.644 (For details please see table-2), there by indicating that the sample taken to process the factor analysis is statistically signicant. Bartletts test of sphericity (Barlett, 1950) is the nal statistical test applied in the study for verifying its appropriateness. This test should be signicant i.e., having a signicance value less than 0.05. In the present study, test value of chi-square 768.726 (P=0.000) is highly signicance (as also given in table-2) indicating that the data is appropriate for the factor analysis. This means that the correlation matrix is not an identity matrix.
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Table-2: KMO and Bartletts test Kaiser Meyer- Olkin Measures of Sampling Adequacy 0.622 0.622 Bartletts Test of Sphericity Approx. 768.726
768.726
Chi- Square df
351
df 351 Significance 0.000

Source: Survey Data After examining the reliability of the scale 0.000
and testing appropriateness of data as above, we next carried out factor analysis to indentify the key factors of customer loyalty. For this, we employed principal component analysis (PCA) followed by the varimax rotation [Generally, researchers recommend
as varimax, details please see Taher, Rahman, & Ferdausy,(1993) and Ather, & Nimalathasan (2009)] When the original customer loyalty variables are analysed by the PCA in this regard has been revealed table-3.
Table-3: Total Variance Explained
Component Total 1 2 3 4 5 6 7 8 9 10 7.928 2.546 2.132 1.980 1.583 1.475 1.205 1.161 1.021 0.922
Initial Eigen Val ues Percent of Variance 29.363 9.428 7.896 7.334 5.863 5.464 4.463 4.299 3.780 3.416 Cumulative Percent 29.363 38.792 46.687 54.022 59.884 65.348 69.812 74.111 77.891 81.307
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11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Source: Survey Data
0.731 0.630 0.563 0.491 0.423 0.387 0.331 0.319 0.280 0.181 0.158 0.139 0.120 0.102 0.085 0.068 0.040
2.709 2.333 2.084 1.820 1.566 1.433 1.224 1.182 1.038 0.671 0.585 0.514 0.445 0.377 0.316 0.250 0.147
84.016 86.349 88.432 90.253 91.818 93.251 94.476 95.658 96.695 97.366 97.951 98.465 98.910 99.287 99.603 99.853 100.000
Extraction Method: Principal Component Analysis From the table-3, it can be seen that nine components extracted from the analysis with an eigen value of greater than one i.e., rule of thumb (Tabachnick & Fidell,1996) which explained 77.891 percent of the total variance. Further, it is worth
mentioning out here that factor loading greater than 0.30 are considered signicant, 0.40 are considered more important and 0.50 or greater are considered very signicant (Hair, Anderson, Tatham & Black, 2003). The rotated (varimax) component loadings for the three components are presented in table-4.
Table-4: Total Variance Explained
Component 1 2 3
Eigen value 7.928 2.546 2.132
Percentage of Variance Explained 29.363 9.428 7.896
Cumulative Percentage of Variance Explained 29.363 38.792 46.687
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4 5 6 7 8 9
1.980 1.583 1.475 1.205 1.161 1.021
7.334 5.863 5.464 4.463 4.299 3.780
54.022 59.884 65.348 69.812 74.111 77.891
Source: Survey Data Extraction Method: Principle Component Analysis For parsimony, only those factors with loadings above 0.50 were considered signicant (Pal, 1986; Pal & Bagi, 1987; Pal, 1997; and Hair, et.al., 2003). In this regard rotated component analysis has been shown in table-5.
Table -5: Rotated Component Matrix for Customer Loyalty

Customer Loyalty Customer Loyalty Variables Group I Group II Group III Group IV Group V Group VI Group VII Group VIII Group IX
Provision of information Clarity of information or advice provided Respond to written or postal enquires Consistence in quality of brand Easy access to employees Management Good employees Problem solving Public relations Rate the overall quality of your relationship with supermarket Easy access to information Recommendation of the Product or Service Recommendation of the Supermarket Doing repeat purchase Consistency of the Brand Sales promotion Coupons and Premiums Overall satisfaction of the loyalty schemes
0.724 0.706
0.704
0.592
0.554 0.801 0.722 0.694 0.645 0.544 .553
0.519 0.788
0.743
0.707 0.579 0.776 0.766 0.763
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Loyalty card New brand Comparison with Manufacturers brand Comparison with other supermarkets brand Innovative The value of brand Satisfaction with brand Environmentally friendly organization Benchmarking with their experience 0.795 0.616 0.730 0.810 0.710
0.723 0.624 .873
.879
Source: Survey Data Extraction Method: Principal Component Analysis; Rotation Method: Varimax with Kaiser Normalization. 7. Rotation converged in 5iterations Each of nine customer loyalty group listed in table-5 is labelled according to the name of the value that loaded most highly for those variables. The higher a factor loading, the more would its test reect or measure as loyalty group (Pallant, 2005; Hema, et.al., 2000). The variables getting highest loading becomes the title of each group of customer loyalty e.g. provision of information- title of customer loyalty group I and the like. Customer Loyalty Group - I: Provision of information These group are represented by seven variables with factor loadings ranging from 0.724 to 0.554 They are provision of information; clarity of information or advice needed; respond to written or postal enquires; consistency in quality of brand and easy access to employees. Customer Loyalty Group -II: Management Three variables ranging from 0.801 to 0.519 belong to management; good employees; problem solving; public relations; rate the overall quality and easy access of information. Public relations loaded fairly highly on customer loyalty group VIII as well; because of its higher loading and greater relevance it is also included in this group. Customer Loyalty Group -III: Recommendation of the Product or Service This group comprises recommendation of the product or service; recommendation of the supermarket; doing repeat purchase and consistency of the brand with loadings 0.788 and 0.579 respectively. Customer Loyalty Group -IV: Sales promotionThis customer loyalty group encompasses sales promotion; coupons and premiums; overall satisfaction of the loyalty schemes and loyalty card with loadings 0.776 and 0.730 respectively. Customer Loyalty group-V: New brand Three variables ranging from 0.810 to 0.616 belong to new brand; comparison with manufacturers brand; comparisons with other supermarkets brand. Customer Loyalty group- VI: Innovative Only an innovative variable consists in this group with loadings 0.795. Customer Loyalty group- VII: The value of brand - This group contains the value of brand and satisfaction with brand with loadings 0.723 and 0.624 respectively. Customer Loyalty group- VIII: Environmental friendly organization This customer loyalty group consists only one variable i.e., environmental friendly organization with loadings 0.873. Customer Loyalty group- IX: Bench marking Only bench marking variable consists in this group with loadings 0.879.
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Table -6: Ranking of Variables according to their importance
Key Customer Satisfaction Factors Customer Loyalty group-1: Provision of information Customer Loyalty group-2: Management Customer Loyalty group -3: Recommendation o f the Product or Service Customer Loyalty group-4: Sales promotion Customer Loyalty group-5: New brand Customer Loyalty group -6: Innovative Customer Loyalty group -7: The value of brand Customer Loyalty group -8: Environmentally friendly organization Customer Loyalty group -9: Bench marking
Source: Survey Data As depicted in table-6, the customer loyalty group Sales promotion; Provision of information; Management; Recommendation of the Product or Service; New brand; The value of brand; Innovative; Bench Marking and Environmental friendly organization got the ranks of rst, to nine respectively and constitute the key factors of customer loyalty in leading retail supermarkets in UK. In addition, these groups are considered for further analyses as dependent variables. 8. Policy Implications In this context, the following policy actions may be considered worthwhile. 9. Customer Care Customer care should be improved further by enhancing the service quality to make dissatised customer to satised customers; satised customers to loyal customers and loyal customers to more loyal.
No. of. Variables 5 6 4 4 3 1 2 1 1
Factor Score 0.884 0.878 0.862 0.951 0.734 0.423 0.567 0.043 0.055
Rank 2 3 4 1 5 7 6 9 8
10. Employees Training As these are big super markets, most of employees worried about the job allotted them. It is rare to nd out an employee who knows the products very well. Some employees dont worry about customers needs when that is beyond his/her duty. In most cases, when customers need the employee, they could nd any one nearby in the shop oor. This frustrates customers. Because, time is very important issues almost for all. They have a very little time to shopping these routine items. Thus, more staff with good training about customer care is needed to improve the customer satisfaction and to overcome these issues. 11. Satisfaction of the local different ethnic groups The super markets should satisfy the local different ethnic group of customers. For example, some respondents are worried about the product lines that dont include the Asian products. Some respondents worried about online delivery, free
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delivery to home for the customers buying more than a certain limits, family offer, more branded products, more advertisement. 12. Infrastructure facilities The convenient location of super markets, parking facilities, fair price, and sales promotion- for instance, Buy one get one free and half price, friendly atmosphere, choices of products are the best things they enjoy when shopping the super markets. 13. Concluding Remarks The results show that nine factors extracted from the analysis that together accounted 77.891 percent of the total variance. Finally, on the basis of factor score, these factors were ranked (1)Sales promotion; (2) Provision of information; (3)Management; (4)Recommendation of the Product or Service; (5)New brand; (6) The value of brand; (7)Innovative; (8) Bench Marking and (9) Environmental friendly organization got the ranks of rst to nine respectively and constitute the key factors of customer loyalty in leading retail supermarket in UK. Moreover, outcome of the research would be helpful to the practitioners, researchers, planners, policy makers and academicians, who are involved in the concerned area. 14. References 1. Adams,G.&Schvaneveldt,J.(1991). Understanding Research Methods, 2nd ed, New York,Longman. 2. Ather,S.M. & Nimalathasan, B. (2009). Factor Analysis: Nature, Mechanism & Uses in Social and Management Researches. Journal of the Institute of Cost of Management Accountant of Bangladesh, XXXVII (2), 12-17. Bartellet, M.S. (1950). Tests of Signicance in Factor Analysis. British Journal of Statistical Psychology, 3, 77-85. Bagozzi, R. P. & Yi, Y. (1988). On the Evaluation of Structural Equation Models. Journal of the
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RETAIL MANAGEMENT ATTITUDES AND ITS IMPACT ON INTERNEES PERFORMANCE: A STUDY ON SELECTED RETAIL ENTERPRISES IN BANGLADESH
Ramiah Kumar Gandhi, Research Fellow, Sathyabama University, Chennai Mohammed Abu Taher,SAARC Scholar, Department of Management Studies
University of Chittagong, Bangladesh, Prof. Balasundaram Nimalathasan, Dept of Management Studies, Univ. of Chittagong, Bangladesh
1. Internship Programme: An Overview Every year Department of Management Studies (DMS) University of Chittagong, Bangladesh is allowed internship training program with live practical exposure for Master of Business Administration (MBA) graduates. The basic objective of internship is to provide practical exposure to the students in a working environment. Internship can be really helpful to any MBA graduates, who are looking for hands-on expertise. As an intern, they can widen knowledge, competencies, and experience related to their career. DMS provides internship program to help students to assimilate information and bridge gap between academics and career. This is helpful for the student as pre-work experience that employers are looking out for in a candidate. It provides a supervised pre-professional learning experience, in which students apply their skills and knowledge in a professional setting. After completion of MBA written exam, the internees are required to undergo internship program with business organizations, autonomous and governments enterprises, multinational companies (MNCs) and other research bodies or development projects where the students get an opportunity for translating theoretical conception into real life situation. 2.Theoretical Background In general terms, an internship is viewed as a short-term practical work experience in which internees receive training and gain experience in a specic eld or career area of their interest. The internship experience enables internee to apply classroom theory within the actual world of work thus bridging the gap between theory and practice. The value of internships is well documented in research literature (Kok, 2000). Various studies (Petrilose & Montgomery, 1998; Gabris & Mitchell, 1989; Downey & DeVeau, 1987) outline the value and variety of the benets enjoyed by those internee participating in internships, including a better understanding and knowledge of the tasks and practices performed by industry professionals, improved self-condence, enhanced employment and professional growth opportunities, the ability to network within the industry by creating personal contacts, exposure to management activities, and the development of skills relevant to their particular Failure to create and support opportunities for faculty to re-enter the industry squelches the overall over all motivation for these individuals to perform in the classroom, seek outside experiences for the students, and contributes to little or no interest in researching the issues facing the industry. Internships provide real world industry demands and hands- on learning needed to rekindle skills and update their knowledge. Boyle & Crosby (1997) said that internships for both faculty and students should be required to adequately evaluate the quality of educational programmes. Department or faculty internships were important for those who teach courses that are vocationally-oriented (Baha & Glon, 1988). Samennk (1995) noted that internships are outlets that should be used to invigorate faculty and bring excitement back to the classroom as well as stimulate new research interests. This idea is mirrored by other researchers that believe vocationally-oriented faulty tend and starve for the excitement of guest service and fast-paced production missing in their teaching careers (Chesser, Ellis & Rothbery, 1993).
108 sources. During data collection, the authors were always careful of the objectives and hypotheses of the study. Primary data were collected through the questionnaire. Secondary data were collected from research studies, books, journals, newspapers and ongoing academic working papers. The collected data may be processed and analysed in order to make the study useful to the practitioners, researchers, planners, policy makers and academicians. 5.3 Measures The questionnaire was administrated managers in different retail enterprises which were attached the internees in Bangladesh. It has been prepared based on ve Likert scale (1= Excellent; 2 = Very Good; 3= Good; 4 = Average and 5= Unsatisfactory) to identify variables of the RMA and IP.
career choice. Therefore, the present study is initiated to identify dimensions of retail management attitudes towards internees performance in some selected retail enterprises in Bangladesh 3.Objectives The main objective of the present study is to nd out the impact of RMA towards IP in selected retail enterprises in Bangladesh. To attain the main objectives, the specic objectives are: 1. To identify the factors that determining RMA; 2. To recognize the factors that determining RMA; and 3. To identify the relationship between RMA and IP. 4. To suggest some measures to enhance the IP. 4.Hypotheses The following hypotheses are taken for the study 1. RMA and IP are positively correlated. 2. RMA has impact on IP. 5.Research Methodology Methodology is vital part of any research as it facilitates any research with systematic way to collect data and interpret them. When only anyone does the research in systematic way with clear purpose, it can be a real research and can achieve the dened objectives for the research. In this way, it is essential to describe the methods to be used in collection of data and to analyse the data as well. Research methodology describes sampling strategy, data sources, measures, reliability & validity and statistical tool used
5.4 Reliability and Validity The reliability value of our surveyed data was 0.900 for RMA and IP variables. If we compare our reliability value with the standard value alpha of 0.7 advocated by Cronbach (1951), a more accurate recommendation (Nunnally & Bernsteins, 1994) or with the standard value of 0.6 as recommendated by Bagozzi & Yis (1988). Researchers nd that the scales used by us are highly reliable for data analysis. Validation procedures involved initial consultation with experts (i.e., academic committee) from DMS, University of Chittagong. The experts also judged the face and content validity of the questionnaires as adequate. Hence, researchers satised content and construct validity. 5.5 Statistical Tools Used
5.1 Sampling Strategy These retail enterprises have been selected through random and purposive sampling. Hence ultimate sample is seventy ve retail enterprises in Bangladesh. 5.2 Data Sources Given the nature of the present study, it was required to collect data from the primary and secondary
In the present study, we analysed the collected data by inferential statistics (i.e.,factor analysis, correlation and regression).For the study, entire analysis is done by personal computer. A well known statistical package for social sciences (SPSS) 13.0 version was used in order to analyze the data.
109 6. Results and Discussion This section focuses on the identication of potential, underlying dimensions of the RMA of the respondents. The responses for the variables are subjected to factor analysis method. Before applying factor analysis, testing of the reliability of the scale is very much important as it shows the extent to which a scale produces consistent result if measurements are made repeatedly. This is done by determining the association in between scores obtained from different administrations of the scale. If the association is high, the scale yields consistent result, thus is reliable. Cronbachs alpha is most widely used method. It may be mentioned that its value varies from 0 to 1 but, satisfactory value is required to be more than 0.6 for the scale to be reliable (Malhotra, 2002; Cronbach, 1951). In the present study, we, therefore, used Cronbachs alpha scale as a measure of reliability. Its value is estimated to be 0.900 , If we compare our reliability value with the standard value alpha of 0.6 advocated by Cronbach (1951), a more accurate Table-1: Correlation Matrix IN IN RE JI AC AOUP T AWI MA EFF CRE 1 0.294 0.600 0.449 0.495 0.427 0.337 0.430 0.417 0.341 1 0.288 0.423 0.420 0.569 0.460 0.562 0.496 0.381 1 0.499 0.449 0.405 0.293 0.416 0.450 0.253 1 0.349 0.386 0.368 0.386 0.362 0.327 1 0.453 0.550 0.642 0.477 0.443 1 0.445 0.428 0.590 0.516 1 0.457 0.524 0.520 1 RE JI AC AOUP T AWI
1
recommendation Nunnally & Bernstein (1994) or with the standard value of 0.6 as recommendated by Bagozzi and Yis (1988) we nd that the scales used by us are highly reliable for factor analysis. After checking the reliability of scale, an examination of the correlation matrix (For details please see table-1) reveals moderately signicant correlations between some of the variables. These are IN with JI; RE with T, MA; AOUP with AWI and MA; T with EFF and CRE; AWI with EFF and CRE; MA with EFF and EFF with CRE.1 But no correlation comes out as damaging as to cause multicolinerity and so, the matrix is suitable for factoring. IN: Initiative; RE: Resourcefulness; JI: Job interest; AC: Ability to Communicate; AOUP: Ability to Operate Under Pressure; T: Time; AWI: Ability to Work Independently; MA: Maturity; EFF: Efciency; CRE: Creativity
MA
EFF
CRE
0.511 0.365
1 0.500 1
Source: Survey data After checking the reliability of scale and correlation matrix, we tested whether the data, so, collected is appropriate for factor analysis or not. The appropriateness of factor analysis is dependent upon the sample size. In this connection, MacCallum, Windaman, Zhang & Hong (1999) have shown that the minimum sample size depends upon other aspects of the design
of the study. According to them, as communalities become lower the importance of sample size increases. They have advocated that if all communalities are above 0.6 relatively small samples (less than 100) may be perfectly adequate. In this regard communalities of characteristics have been shown in table-2. Efciency; CRE: Creativity
110 Table-2: Communalities
Management Attitudes 1 2 3 4 5 6 7 8 9 10 Initiative Resourcefulness Job interest Ability to Communicate Ability to Operate Under Pressure Timeliness Ability to Work Independently Maturity Efciency Creativity
Initial 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Extraction 0.701 0.567 0.774 0.516 0.572 0.587 0.605 0.556 0.608 0.560
Source: Survey Data; Extraction Method: Principal Component Analysis The appropriateness of factor analysis is dependent upon the sample size. In this connection, Kaiser Meyer- Olkin (KMO) measure of sampling adequacy is still another useful method to show the appropriateness of data for factor analysis. The KMO statistics varies between o and 1. Kasier (1974) recommends that values greater than 0.5 are acceptable. Between 0.5 and 0.7 are mediocre, between 0.7 and 0.8 are good, between 0.8 and 0.9 are superb (Field, 2000). In this study, the value of KMO for overall matrix is 0.879 (For details please see table-3), thereby indicating that the sample taken to process the factor analysis is statistically signicant. Table-3: KMO and Bartletts Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartletts Test of Sphericity Approx. Chi-Square df Sig.
Source: Survey data
.879 310.59 45 .000
Bartletts test of sphericity (Barlett, 1950) is the third statistical test applied in the study for verifying its appropriateness. This test should be signicant i.e., having a signicance value less than 0.5. In the present study, test value of ChiSquare 310.594 is signicant (as also given in table-3) indicating that the data is appropriate for the factor analysis. After examining the reliabity of the scale and testing appropriateness of data as above, we next carried out factor analysis to indentify the variables for management attitudes. For this, we employed principal component analysis (PCA) followed by the varimax rotation, (Generally, researchers recommend as varimax). Statistical Package for Social Science (SPSS) software (version 13.0) was used for this purpose. When the original ten variables were analysed by the PCA. Two variables extracted from the analysis with an Eigen value of greater than 1 (i.e., rule of
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thumb), which explained 60.452 percent of the total variance (For details please see Table-4). The rst component explains the most and about 35.421 percent and second component explains 25.031 percent. The remaining variance, as we know, is explained by other components. Table-4: Total Variance Explained
Component
Extraction Sums of Squared Loadings Total % of Variance 49.680 10.772
Rotation Sums of Squared Loadings Cumulative Cumulative % Total % of Variance % 3.542 2.503 35.421 25.031 35.421 60.452
1 2
4.968 1.077
49.680 60.452
Source: Survey Data The PCA are further Orthogonally Rotated using Varimax with Kaiser Normalization algorithm. It is worth mentioning out here that factor loading greater than 0.30 are considered signicant. 0.40 are considered more important and 0.50 or greater are considered very signicant. The rotated (Varimax) component loadings for the two components (factors) are presented in Table-5. For parsimony, only those factors with loadings above 0.50 were considered signicant (Pal, 1986; Pal & Bagi, 1987; Hair, Anderson, Tatham, & Black, 2003). Table-5: Rotated Component Matrix for MA
Components Variables AWI CRE RE EFF T MA AOUP JI IN AC

Source: Survey data Each of two management attitudes listed in table-5 is labelled according to the name of the value that loaded most highly for those attitudes. The higher a factor loading, the more would its test reect or measure as characteristics (Pallant, 2005; Hema, Anura, Tilak, & Basil, 2000).
Descriptions Ability to Work Independently Creativity Resourcefulness Efciency Timeliness Maturity Ability to Operate Under Pressure Job interest Initiative Ability to Communicate
1 0.759 0.739 0.726 0.703 0.699 0.612 0.602
0.865 0.804 0.652
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The management attitudes getting highest loading becomes the title of each group of management attitudes. e.g. Ability to Work Independently - title of characteristics group I and the like. Management attitudes group-I: Ability to Work Independently-These attitudes are represented by seven variables with factor loadings ranging from 0.759 to 0.602. They are ability to work independently; creativity; resourcefulness; efciency; timeliness; maturity and ability to operate under pressure. Management attitudes group-II: Job interest-Three management attitudes variables ranging from 0.865 to 0.652 belong to job interest; initiative and ability to communicate. Analyses presented in the above sections produced the following list of two management attitudes groups suitable for representing management attitudes of the selected organizations. In addition, these groups are considered as independent variables and internees performance are considered dependent variables as well for further analyses. From these, correlations analysis was carried out to nd out the relationship among the variables. Further the following; model was formulated to examine the impact of management attitudes towards internees performance. IP=f (AWI, JI) IP = O + 1(AWI) + 2 (JI) + e Where 0 , 1, and 2 are the regression co-efcient AWI = Ability to Work Independently. JI e = Job Interest = error term IP = Internees performance To test how well the model t the data and ndings, correlation (r), R, R2 (Coefcient of determination), variance, analysis of variance (ANOVA) and the t statistic are used. Correlation analysis is performed to nd out the pairwise relationship between variables; AWI, JI and IP. Hence, the results are summarised in table-6. Table-6: Retail Management Attitudes and Internees Performance
Variables IP MA AWI
MA 0.741** (0.000)
AWI 0.705** (0.000) 0.894** (0.000)
JI 0.624** (0.000) 0.899** (0.000) 0.606** (0.000)
** Correlation is signicant at the 0.01 level (2-tailed) Table-6 shows that the correlation values between the variables. RMA and IP are positively correlated with the value of 0.741 which is highly signicant at 1 percent level of signicance. In addition, AWI and JI are also positively correlated with IP. Hence hypothesis one is accepted. Thus, the ndings are in line with those of Boyle & Crosby (1997).
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Further a multiple regression analysis is performed to identify the predictors of IP as conceptualized in the model. A enter wise variable selection is used in the regression analysis and table-7 provides the summary measure of the model. Table-7: Predictors of Internees performance - Model summary
Model 1
Predictors: (Constant), AWI; JI
R 0.747
R2 0.558
Adjusted R2 0.477
The management attitude (AWI and JI) in the above model revealed the ability to predict IP (R2 = 0.558). In this model value of R2 denotes that 55.8 percent of the observed variability in IP can be explained by the different in retail management attitudes namely AWI and JI. The remaining 44.2 percent is not explained which means that the rest 44.2 percent of the variation in IP is related to other variables which are not depicted in the model. This variance is highly signicant as indicated by the F value (F=45.431 and P = 0.000) and an examination of the model summary in conjunction with ANOVA indicates that the model explains the most possible combination of predictor variables that could contribute to the relationship with the dependent variable. Table -8: Coefcients for predictors of Internees Performance
Source: Survey data In the above model, t value for AWI is highly signicant at 1 percent level. It indicates that with increasing level of AWI, IP will be increased 5.244 levels. Furthermore, JI is also highly signicant at 1 percent level which claries that with the increasing a unit of JI, IP will be increased 3.154. Therefore, hypothesis two is also accepted. 7. Policy implications Although the present study was conned to RMA and Its impact on IP, it may be appropriate to state briey the policy implications for the study. In this context, the following policy actions may be considered worthwhile. 8. Organizational Climate The organization should create a supportive organizational climate. Unfortunately the organizations today continue to be highly formalized with accompanying inexible, impersonal climate. Therefore the structure should be decentralized with participative decision-making and upward communication ows.
Models 1 AWI JI Constant
Unstandardized Coefcients -.368 .696 .409 Std.Effor .219 .133 .130
Standardized Coefcients Beta
t -1.680
Sig 0.097 0.000 0.002
.517 .311
5.244 3.154
114 14 Concluding Remarks From the results obtained by the study, it is apparent that the perceived management attitudes have a signicant impact on IP. Further the study found that the RMA and IP performance are highly correlated.
9. Efcient Retail management Efcient retail management, capable of performing its duties professionally and thereby satisfying both the parties- the retail managers and internees is indispensable. 10. Arrangement of Rountine Training Facilities Training to internees has become an essential factor at this moment. For better assessment of training needs, retail management should arrange routine task to internees.
Text and References 1. Bartellet, M.S. (1950). Tests of Signicance in Factor Analysis. British Journal of Statistical Psychology, 3, 77-85. 2. Bagozzi, R. P., & Yi, Y. (1988). On the Evaluation of Structural Equation Models. Journal of the Academy of Marketing Science, 16 (1), 74-95. 3. Cronbach, L.J. (1951). Coefcient Alpha and the Internal Structure of Tests. Psychometrika, 6(3), 297-334. 4. 5. Hair, J.F., Anderson, R.E., Tatham, R.L., & Black, W.C. (2003). Multivariate Data Analysis, New Delhi: Pearson Education, 5e. Hema, W., Anura, D.Z., Tilak, F. & Basil, P.(2000). Factors Contributing to the Success of Manufacturing Enterprises in Sri Lanka: An Empirical Investigation. Sri Lankan Journal of Management, 5(1&2), 110-130. 7. 8. Kasier, H.F. (1974). An Index of Factorial Simplicit. Psycometrica, 39: 31-36. Malhotra, N.K. (2002). Marketing Research: An Applied Orientation, (3rded.). New Delhi: Pearson Education Asia. 9. MacCallum, R.C., Windaman, K.F., Zhang, S., & Hong, S. (1999). Sample Size and Factor Analysis, Psychological Methods, 4:84-99. 6.
11. Personal Relationship Develop and maintain personal relationship social support at work and away from work can help alleviate the internees performance. 12. New Technology New technologies should be used to enhance the internees performance. 13. Direction for the Future Researches Researches usually stem from the need of the society. Generally, a research raises more problems and issues than it proposes to solve. To full the existing need and to identify problems, it is naturally expected that the present study will encourage, stimulate and even provoke future researches in the area of retail management in Bangladesh. A few suggestions for further researches based on the experience of the present study are given below. 1. The comparative study of RMA and IP between the enterprises with in Bangladesh may be made. 2. The comparative study of RMA and IP among SAARC countries and Bangladesh can be made. 3. A separate study may be done between executive position and RMA on IP. 4. A Specic in-depth study may be undertaken on the small, medium and large industrial enterprises of Bangladesh to identify RMA on IP. 12. 11. 10.
Nunnally, J. C., & Bernstein. (1994). Ira Psychometrics Theory, New York: McGrawHill, Pallant, J. (2005). SPSS survival Manual, Sydney: Allen and Unwin. Pal, Y. (1986). A Theoretical study of Some Factor Analysis Problems and Pal,Y. and Bagai, O.P. (1987). A Common Factor Better Reliability Approach to Determine the Number
115 of Interpretable Factors, A Paper presented at the IX Annual Conference of the Indian Society for Probability and Statistics held at Delhi, University of Delhi, India. 13. Pal, Y.(1997). A New Factoring Criterion Based on Principal Factor Reliability Coefcients and its Comparison, with some well knew 14. Factoring
Criteria,
Indian
Psychological
Review, 48(3):187-200. Retrieved August 18, 2009, from http://www. igurutraining.com/internship-training.php
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DYNAMISM OF RETAILING BUSINESS AND ECONOMIC DEVELOPMENT AN INDIAN PERSPECTIVE

V. Sugumaran, MBA., MCS., M.Phil., PGDCA, Assistant Professor Karunya School of Management, Karunya University, Coimbatore R. Arivazhagan, B. Tech., MBA, Assistant Professor SRM School of Management, SRM University, Chennai
1. Introduction Retailing involves a direct interface with the customer and the coordination of business activities from end to end- right from the concept or design stage of a product or offering, to its delivery and post-delivery service to the customer. The industry has contributed to the economic growth of many countries and is undoubtedly one of the fastest changing and dynamic industries in the world today. Retailing can be dened as the buying and selling of goods and services. It can also be dened as the timely delivery of goods and services demanded by consumers at prices that are competitive and affordable. 2. Retailing Scenario In India The retail scenario in India is unique. Much of its in the unorganized sector, with over 12 million retail outlets of various sizes and formats. Almost 96% of these retail outlets are less than 500 sq. ft in size, the per capita retail space in India being 2 sq. ft. compared to the US gure of 16 sq. ft. Indias per capita retailing space is thus the lowest in the world. With more than 9 outlets per 1,000 people, India has the largest number in the world. Most of them are independent and contribute as much as 96% to total retail sales. The growth and development of organized retailed in India is driven by two main factors lower prices and benets the consumers cant resist. The retail business in India in the year 2000 was Rs.400000 crore and is estimated to go to Rs.800000 crore by the years 2005, an annual increase of 20%. The contribution of the organized retail industry in
the year 2000 was Rs.20,000 crore and is likely to increase to Rs.160000 crore by 2005. 3. Retail Industry In India Retail is Indias largest industry, accounting for over 10 percent of the countrys GDP and around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. That said, the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way to becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping. Modern retail has entered India as seen in sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. 4. The Emerging Sectors In Retailing Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/
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grocery chains (Food World, Nilgiris, Apna Bazaar), convenience stores (Convenio, HP Speed mart) and fast-food chains. It is the non-food segment; however that foray has been made into a variety of new sectors. These include lifestyle/fashion segments (Shoppers Stop, Globus, Life Style, Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, Music World, Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo). The emergence of new sectors has been accompanied by changes in existing formats as well as the beginning of new formats. 5. Retailing Scenario- Global View Retailing in more developed countries is a big business and better organized than what in India. According to a report published by McKinsey & Co.
along with the Confederation of the Indian Industry the global retail business is a worth a staggering US$ 6.6 trillion. In the developed world, most of it is accounted for by the organized retail sector. The service sector accounts for a large share of GDP in most developed economies. And the retail sector forms a very strong component of the service sector. In short, as long as people need to buy, retail will generate employment. Globally, retailing is a customer-centric with a emphasis on innovation in products, processes and services. With total sales of US$ 6.6 trillion, retailing is the worlds largest private industry, ahead of nance and engineering. Some of the worlds largest companies are in this sector: over 50 Fortune, 500 companies and around 25 of the Asian Top 200 rms and retailers. Wal-Mart, the worlds second largest retailer, has a turnover of US$ 260 billion, almost one-third of Indias GDP.
Fig -1 Retail Sales in 2000
As many as 10% of the worlds billionaires are retailers. The industry accounts for over 8% of GDP in western countries, and is one of the largest employers. According to the U.S.Department of Labor, more than 22 million Americans are employed in the retailing industry in over 2 million retail stores.
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6. The Indian Economic Survey for 2007 has set the target growth rate of GDP to be 9% for the period from 2007-2012
other aspects of business. The combination of these factors has created a situation that is unique in Indias history as an independent country. Business growth has lead to individual prosperity which is, in turn, leading to explosive growth of further business opportunities. Although Indias per capita income still laces it in the list of developing countries, a signicant population segment has emerged that is truly middle-class.
India has had one of the consistently highest GDP growth rates of the last few years. Further successive Indian governments have steadily liberalised policies related to investments (domestic and foreign), banking, trading and all
2008 2007 2006 2005 2004 2003 0.00% 2.00% 4.00% 6.00% 8.00% 10.00%
Fig 2
Growth Rate of Real GDP
Almost half of India shopping centre space existed by the end of 2007 in the contributions of Mumbai and Delhi. This over-shopping is likely to lead to the failure of a signicant number of these malls. Paradoxically, despite the proliferation of malls, for retailers and brands, high real estate rental costs are possibly the biggest headache. In many instances, brands have signed on high-rent shops with the aim of balancing their portfolio over time, and fully expect these shops not to make money in the foreseeable future. 7. Government Policy Towards Retail There has been vigorous opposition to foreign direct investment (FDI) in retailing from small traders who fear that foreign retailing companies would take away their business, lead to the closure of many small trading businesses and result in considerable unemployment. Given the political clout of the small trading community,
because of their enormous numbers, the government has barred FDI in retailing since 1997. Hence, at present, foreign retailers can only enter the retailing sector through franchising agreements. 8. Growth of Retailing In India Indian retailing industry has seen phenomenal growth in the last ve years (2001-2006). Organized retailing has nally emerged from the shadows of unorganized retailing and is contributing signicantly to the growth of Indian retail sector. RNCOS India Retail Sector Analysis (2006-2007) report helps clients to analyze the opportunities and factors critical to the success of retail industry in India. Organized retail will form 10% of total retailing by the end of this decade (2010). From 2006 to 2010, the organized sector will grow at the CAGR of around 49.53% per annum. Cultural and regional differences in India are the biggest challenges in front of retailers. This factor deters the retailers in India from adopting a single retail format. Hypermarket is emerging as the most favorable format
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for the time being in India. The arrival of multinationals will further push the growth of hypermarket format, as it is the best way to compete with unorganized retailing in India. 9. Growth of Retail Outlets In India India is rapidly evolving into a competitive marketplace with potential target consumers in the niche and middle class segments. The market trends indicate tremendous growth opportunities. Global majors too are showing a keen interest in the Indian retail market. Over the years, international brands like Marks & Spencer, Samsonite, Lacoste, McDonalds, Swarovski, Dominos among a host of others have come into India through the franchise route following the relaxation of FDI (foreign direct investment) restrictions. Large Indian companies among them the Tata, Goenka and the Piramal groups are investing heavily in this industry. 10. Suggestions 1. Merger and buy-out of weak retailers by a stronger one, especially in metros and big cities may be another step towards this direction. This would give the new retailer the desired leverage to be world class. 2. Use of technology to the greatest extent possible may also help strengthening the retailers position in the marketing channel. First step may be taken with setting up of a network of independent rms believing in use of technology for business excellence. 3. Then a collection of strong retail organizations may pressurize the suppliers and other channel members to use compatible technology. This may open the door for implementation of QR or ECR or other relevant concepts for the retailers.
11. Conclusion According to this years Global Retail Development Index India is positioned as the leading destination for retail investment. This followed from the saturation in western retail markets and we nd big western retailers like Wal-mart and Tesco entering into Indian market. Indias retail industry accounts for 10 percent of its GDP and 8 percent of the employment to reach $17 billion by 2010. There are about 300 new malls, 1,500 supermarkets and 325 departmental stores being built in the cities very soon. This market research report The Indian Retail Sector An Outlook (2005-2010) analyzes the greatly divided Indian retail market and the trends in its business. Issues such as foreign investment restrictions, modern merchandizing in India, logistics and payment terms for distribution, role of channel members and growth trends in different regions are discussed. The market research report further analyzes the sustainability of the Indian retail sector and on the basis of 25 domestic and international companies the report has given a suitable business model. 12. References 1. Barry Berman&Joel R.Evans (2009), Retail management a strategic approach, PHI, Delhi. 2. Gibson G.Vedamani (2007), Retail Management functional principles and practices, Jaico Publishing House, Mumbai. 3. Business line 4. www.inretail.in 5. www.bre2fashion.com
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ECONOMIC SLOWDOWN: MOUNTING PRESSURES AND ANGER MANAGEMENT IN WORK PLACES-AN ANALYSIS
Dr. G. Ramesh Senior Lecturer in Commerce, SRM University Kattankulathur, Tamil Nadu-603 203 1. Introduction Faced with a dramatically altered business landscape in the last few years, structure and content of work have changed tremendously making it more cognitively complex and more time pressured. Nowadays, employees are expected to adapt quickly to the demands of radical developments in the industry and the organisations. Corporates are hardly realizing the problems of employees and unlikely to provide life long careers even to the best of the best in the eld. Declining job security is making more and more employees despise their jobs. When organizations are responding more rapidly to market pressures by developing mass customization processes, it creates and increases the pressure of employees. In such a situation employees need to learn how to control anger and anger management methods need to be given prominence. Work pressure results in anger which affects their professional as well as personal lives. Ignoring the existence and the seriousness of anger can result into serious complications and even long-term ailments. Hence there is a desperate need to minimize such ailments, keep damages at low and pave way for overall well being and productivity of the employees. 2. What anger really means Anger is momentary temptation and madness that focus attention on animate or inanimate object. It is a strong feeling of extreme annoyance, displeasure and hostility. It is the outcome of emotional hurt when people feel mistreated or faced with serious problems in achieving personal targets. It is a negative state of mind and bad condition of physique. It is the result of tense, irritable and frustrated feeling of individuals. It weakens the body and mind of the people. They feel hurt, physically lashed out and fear being out of control. When a person becomes angry with others, they appear to be unpleasant and faulty persons by exaggeration of their negative behavior. At the moment of anger, others good qualities are easily ignored. In many cases, the instrincally faulty person or thing which caused the anger does not really exist. 3. Causes of anger In a work place, anger is experienced by all, at one point or another in their careers. In the present complex work environment, anger is a common human emotion felt by people more often than they would like to admit. As the recent economic breakdown woes adversely affect employee morale and motivation, anger is especially on the rise. Employees are hurt by the sudden recession and layoffs. They are more hassled by the increase in their work due to the recent changes. Some individuals are always angry with others and few are capable of controlling their emotions. Hence, the anger level of people varies in its intensity, duration and frequency. There is a constant insecurity and stress and tempers y easy in such situations. In the modern corporate world, employees are working for organisation which faces tough competition and fast technological break through. Every body has accepted by now that change is unavoidable. It is like death and taxes it should be postponed as long as possible quoted Peter F.Drucker in his book Management Challenges for the 21st century. Present organizations are certainly different from earlier group by becoming more agile and focused on identifying value from the customer
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perspective. When every enterprise aspires to be leader of the market, many struggle in the race for reaching the top. This creates serious problems for the employees of the enterprise by constantly checking and improving their performances over a period of time. It develops pressures, stress and anger on the work. Racing has always been more of a mental than a physical problem to me said Roger Banister. Continuous pressures and constant monitoring of employees performance results in tension to them which in turn leads their anger. In these cases, anger is the outcome of perception of threat on future. The causes of anger are many and varied in nature. What causes a lot of anger for one person may not cause anger for someone else. This is due to the fact that a large part of anger is a matter of perception of situation. Anger is generally resulting from both internal things and external events. A study on the internal things (personal factors) which causes anger among employees (50) of a private rm in Chennai city exhibits the following: 5. Personal factors causing employees anger: Physical and mental problems in adjusting to the demands and constraints of the work. Inability to cope up with the change and its speed. Perceived job insecurity. Extreme fear or stress and spiritual void. Health problems, drug abuse and alcoholic behaviour. Unreasonable expectations Emotional reasoning of small and normal events. Memories of past traumatic and enraging events like intimidation by others, mistreatment by the superiors. Aggressive and retaliatory nature of employees. Chronical problems angry with themselves. Poor judgmental capabilities of staff over others intention and behavior. Long hours of frustration and stress.
Absence of optimistic mind set. Procrastination of work till deadline for completion. The study has also disclosed some of the external factors contributing the anger of employees in the work place. They are: 6. External Factors Contributing Employees Anger: Uncomfortable surrounding causing frustration and stress. Intimidation and injustice by the management. Mistreatment and humiliation by the superior. Job insecurity and continuously changing nature and contents of job. Hurtful criticisms and conict between employees. Betrayal of others and threatening to take employees genuine needs. Unreasonable attack on employees and their ideas. Disturbing situations like abuse, irritations and unfairness. Lack of outside support. 7. Consequences of Anger Anger a normal human behaviour. However, when gets out of control, it leads to problems of work and personal relationship outside the job. Anger is an extremely destructive emotion that harms people who store it than others to whom it is meant. When an individual is angry, it makes both physical and mental effects on him. For every minute you are angry, you lose sixty seconds of happiness quoted Ralph Waldo Emerson. Anger can lead to injury, high blood pressure, increased heart problems and heart attack. It may cause to other life threatening coronary heart diseases. It can also cause depression, constant feeling of failure and agitation mindset among the employees. In rare cases, it results in violent rage or
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possible suicide. High and uncontrolled anger at work places ends up with physical attack on others, loss of jobs and added troubles to employees personal lives. It damages the relationship with other employees and builds an attitude of resentment. Whether justied or not, anger affects the reputation of employees and takes a heavy toll on the personality of people. When anger rises, think of the consequences said Confucius. Depending on how it is managed effectively and expressed appropriately, anger can also help to energise people at work and motivate them for a better performance. When expressed in a constructive manner, it leads to positive changes in the work place. People who feel angry about social injustice often achieve positive results. Successful employees who are smarter and more thorough about dealing with anger are capable of achieving top things by exploiting opportunities and making the best use of available resources. Osho said, Anger is a temporary madness. Some people learned the art of patience as a response to this momentary behaviour. When situations are becoming tough, approaching things with cool head can lead to achieving desired results in an orderly manner. The best answer for a difcult condition is sterling performance in time rather than blaming others for their angry outbursts. 8. Management of Anger Anger is a common emotion of a human being. As per the research studies of Yale Scholar Signal Barsade and Donald Gibson of Faireld University, One out of every four employees is rather angry at work. This anger, in most cases, is directed at the organisation or at the workers direct seniors, they added. When a person is under stress, he / she tends to become angry because the work not done or slow phase in which it is progressing. This anger aficts the employees mind almost everyday. It is really natural that a comment, a criticism or a mistreat can cause employees anger. Becoming angry in these situations is the spontaneous and normal response but the limits of the anger should be in control.
When anger level is beyond the control of employee, it is denitely blameworthy. The managers have to publicly state the disapproval of outbursts when their magnitude is of high decibel levels. An employee can respond to anger in three major ways suppressing, expressing and calming. Suppressing is an act of hiding anger. When anger is suppressed and not allowed as outward expression it can turn inward to a person who stores it. Every time you get angry you poison your own system, said Alfred Montapert. If anger is not expressed it can create great harm to people developing it by causing hyper tension, high blood pressure and even heart attack. Hence angry employees should know how to control anger instead of trying to suppress it. Expressing anger in an orderly and assertive manner is a clever approach. This will yield expected results in many cases by getting best out of the situations. Delaying the process of retaliation and practicing the art of patience can result in better expression of anger. Calming is a direct approach aimed at getting out of angry feelings earlier with the help of relaxation tools, using humour and taking timeout. Anger is best recognized and well controlled if it is properly understood. As human beings, every employee has his/her own beliefs, expectations and emotions. They react to negative situations in their own style. Some people use verbal abusing and others physically express the anger in uncontrollable situations. They treat it as a sign of strength over others. Actually, it is an expression of madness in a strange way which never produces any fruitful results. Anger management is best done when it is started with the understanding of potential negative consequences of anger and possible rewards to the people who practices patience in angry moments. The greatest remedy for anger is Delay said Seneca. Patience is a powerful prerequisite which can solve the inner problems of employees and their
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problems with others. Employees having difculty in controlling anger are not bad people. They have to apply practical methods in the daily life to reduce anger and nally prevent it from arising at all. There are a lot of strategies and techniques available for people who try it to discover their true interest in ofcial and personal lives. Anger management activities are many and there is a chance of trying one by one. Depending upon the anger patterns of employees, they have to select a best method for feeling least possible damage to the self and others. Controlling the anger of employees at work place is not an easy task. It requires determined commitment, honesty and tremendous inner strength of people. There are a number of anger management strategies available. Effectiveness of many of them has not been proved. What is effective and useful to one, may not help others. Depending upon the level of anger and the frequency in which it arises, employees will have to select a model that best suits them. Dr. Tony Fiore and Dr. Ari Novick in their most acclaimed book, Anger Management for 21st century suggested a set of eight key anger management tools. They are listed below: Recognize stress before it turns into anger. Develop Empathy by seeing things from other are perspective and willing to listen. Respond to the anger (through appropriate method) rather than reacting to it. Getting angry hardly solves anything. Recognize and modify the inner conversation to determine how to express anger. Communicate others assertively without getting hostile to anybody or anything. Learn to adjust expectations according to reality Do not forget things but forgive others. Retreat and think anger things are over by taking temporary time-out form the situation. All these steps are interactive in nature and
very useful in releasing the tension in the present cut throat work environment. However in the heat of the moment, it can be hard for employees to remember and adapt to these copying strategies and skills. It may take some time and require few intense efforts to put these techniques into practice. In order to keep the anger under control and mange it properly the following other strategies are also recommended: Relaxation by deep breathing, relaxation books and others Problem solving by nding ways to face the problem instead of avoiding it. Cognitive Restructuring by changing the way people think Humour and Joy by motivating a sense of happiness to lighten angry feelings. 9. Anger Management: Responsibility of the Managers In a workplace, an angry worker is not only unproductive but also spread the behaviour to other people making their work lives difcult. The current economic downturn has heavily impacted the job structure and heightened the chances of job insecurity to many of the employees. Due to sudden lay-offs and increased pressures for retaining the jobs, employees anger level is always on rise. Rather than blaming the employee for his/her angry outbursts, it is more effective to nd the causes of anger and tackle the problem. Negative and cynical comments about others, disgruntled attitude and snapping at other staffs are some of the symptoms of building anger. These signs are to be properly noticed, adequately recognized and carefully addressed. Efforts must be made to identify the angry workers at an early stage before it escalates and reaches out others. In the management of anger let the management not receives a shock through complacency. Leaders can address the employees problems and seek solutions in the following manner:
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Identify the anger in time. Listen and recognize the real problem. Anger is the outcome of a feeling of being uncared for. Show that the employees problems are recognized and will be addressed. Create a common ground and make employees feel that everyone face the problem situation. Draw the anger limits. Noise is a major source of distraction and anger. Hence, ensure that noise levels are kept to a minimum. Disapprove too excessive outbursts. Show that sheer bad behavior serves no purpose and not to be tolerated. Discuss the past achievements of the employees and motivate them to achieve high. 10. Conclusion Recently, the worst of the downturn appears to be over at least in India, conditions start reverting to normalcy and business starts picking up again. However, anger continues to be a major problem in many workplaces. It is worth assessing the responsiveness of the organisation to this problem. It is time to look at some of the strategic imperatives that business managers should focus on for the future. In many of the anger situations, organisation becomes enemy of the employees. There is plenty, the management can do to convert the depressing situation into a positive and energetic one. Quite obviously, the characteristic of future winning organisations would be to adopt a proactive approach within the rm among its employees to deal with the changing circumstances and increasing pressures. Complexity and contradictions are inherent in any enterprise due to the multiple objectives of people in it. Hence the task is not to eliminate anger but to manage it through innovation. Organisations with anger management programmes adapt more quickly in times of rapid changes. Although anger management is under looked in many places, a
systematic approach is always considered as the best solution to protect human resources. Corporates can stretch a lot and offer more attention to health care of employees and ease emotional burden of people. Besides the employees must understand that winning is not every thing in the life. They should not struggle to achieve perfectionism in all the tasks: after all no one is perfect in this world. They have to accept that the price for winning is very high in tough times. They have to look into other dimensions of life by appreciating and enjoying things beyond work. When they know how to x their job, it becomes a lot easier to them. The recent slowdown has bad a domino effect across the globe and has not been favorable for the employees. Darwins Survival of the ttest theory rings true in todays corporate context. In the end, anger is the perfect time when employees come to know how much strong they are and how fast they respond to the difcult situations. Employees are incharge of their careers; Why not they do something to make jobs anger - free, interesting and enjoyable? 11. References 1. All India Management Association, Executive Health Stress Management, NewDelhi, The Journal of All India Management Association, April 2009. 2. Linder Hobeche., Understanding Change, New Delhi; Elsevier, 2006. 3. Ramiya Bhas, Standing Tall, Times Ascent, Chennai: The Times of India, December 17, 2008. 4. Stephen P.Robbins., Decide and Conquer, New Delhi: Prentice Hall, 5. Uzma Hyder, When Optimism Erodes, Anger Explodes; Chennai, The Hindu, July 8, 2009 6. 7. 8. www.google.com www.anger-management-techniques.org/ www.angermanagementresource.com
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BUSINESS VALUE OF IT
Dr. Mu.Subrahmanian, Professor Department of Management Sciences, Velammal Engineering College, Chennai, India Lakshmi Vishnu Murthy Tunuguntla, Research Scholar School of Management, SRM University ,Chennai, India
1 Introduction The ITs role is changing, becoming increasingly strategic and business-focused. While traditional IT activities, such as application development, data center operations, and user support, are still important, they are now generally considered table stakes and are often delivered through outsourcing, off-shoring, or shared services. At the same time, we are nding IT is being asked to support the company in new and more strategic ways. Consequently, we believe that going forward, the main focus for effective IT functions is to increase collaboration with the businessusing information and technology to help drive business improvement, competitiveness, and performance. So the business value is dened as follows: Business value is the benet for business units and the enterprise as a whole, represented in dollar terms that is a result of IT solutions or services as evidenced by one or more of the following. Direct Contribution to the corporations market position or revenue Deliverables and results that solving customer business needs or challenges Customer cost savings or nancial benets Also IT enables protable business growth. This is the bottom line of a recent global study of IT capability a study performed across hundreds of companies: IT is critical to rm growth because it enables rms to scale -- an ability to manage increases in the complexity of their business processes, organization, and business model. The new face of IT requires new skills and capabilities. In the future, the ideal IT staff wont consist of narrow technology specialists, but of people with business savvy and
strong analytic, interpersonal, and communication skills who can work hand-in-hand with the company to achieve its strategic objectives. 2 Review of Literature a) In 2008 IT Governance Institute (ITGI) USA conducted a survey and the Key Findings of the Survey are as follows : o Although championship for IT governance within the enterprise comes from the C-level, in daily practice IT governance is still very much a CIO/IT director issue. The few non-IT people in the sample have a much more positive view of IT than do the IT professionals themselves. o The importance of IT continues to increase. o Self-assessment regarding IT governance has increased and is quite positive o Communication between IT and users is improving, but slowly. o There is still substantial room for improvement in alignment between IT governance and corporate governanceas well as for IT strategy and business strategy. o IT-related problems persist. While security/ compliance is an issue, people are the most critical problem. o Good IT governance practices are known and applied, but not universally. b) In 2008, CA labs have sponsored a Research Program to Craneled University UK for to study the business value of IT management and develop an approach to understand and assess the value of their IT management investments. CA says In the current challenging economic climate,
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its more important than ever for CIOs to measure the value of their IT assets: after all, technology is a key enabler of business success and constitutes a major portion of an organizations capital investment. Typically however, current metrics for new IT projects and existing IT management and assets are all cost-based. In reality, IT value should be related to a companys worth, and give an accurate, value-based metric for future investment. c) In 2007, a research conducted by Paul Williams and John Spangenberg has found the following factors for maximizing the share holder value from IT investments. o Reduce risk through robust and properly applied and monitored internal controls. o Achieve appropriate maturity (CMMI) of all key processes usually level 3 and above to reduce risk and achieve economies of scale in the delivery and value management of automated solutions. o Be prepared to innovate and not just follow the pack. o Focus IT investments on properly aligned business objectives. o Monitor the investment portfolio mix among investment categories (e.g., strategic change vs. keeping the lights on). o Be prepared to use innovative funding models, including government/state grants and risk sharing with credible development partners. o Seek early returns from IT investments through stepped phases, thus reducing individual project duration. o Ensure active IT investment portfolio management, including the cancellation or rationalisation of non-value-adding projects. d) In 2006 a paper published at Knowledge@ Wharton says Traditionally, information technology simply involved gathering data for Finance and then pushing it out in a series
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of reports, observes Wessels. But today, IT is no longer just about information gathering. Instead, it gives CFOs timely access to critical parts of a business, enabling them to engage in more analytical functions that force them to rethink the way in which their business operates. The result, Wessels and others observe, is that IT/Finance alignment has become a key catalyst for business strategy. According to a survey released by CFO magazine in December 2005, 77% of CFOs say they regard IT as a strategic function instead of as a utility and, accordingly, 65% plan to spend more on IT this year compared to last year. CFOs are . . . increasingly being looked upon as chief performance ofcers, charged with developing and upgrading key performance indicators (KPIs) that measure the effectiveness of a businesss operations -- including those dependent on technology. Determining just what those KPIs are, however, is an important rst step. Wessels says that its not unusual for companies to focus on activity that is easy to measure, like total sales or market share, instead of focusing on strategic indicators that relate to the complete activity and long-term health of the enterprise, such as customer satisfaction. Once the KPIs have been identied, a CFO can utilize them to identify weak or inefcient business processes -- and that is where technology can be applied or augmented usefully. A comprehensive IT-Finance effort means more than just integrating a series of systems, he says. First, the underlying business processes must be examined -otherwise you may be simply taking a bad way of doing things and making it twice as fast. The roadblocks for getting adequate returns on IT investment are two-fold, notes James
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Blyth, chairman of Diageo -- the worlds leading premium drinks company. One, its difcult to sustain a technology-based competitive advantage; two, companies often lack the management discipline they need when evaluating technology proposals. i) Speaking at the 2005 Wharton Globalization Forum, Blyth said that approval of IT spending [at Diageo] is subject to enormous evaluation and scrutiny. Investments are phased in, performance milestones are set at each stage, and funding has to be defended at each step. Through a series of key acquisitions and divestments, Diageo became the worlds leading premium drinks company by 2002, Blyth noted, but we could not operate efciently as a single global business because our systems and processes [were fragmented]. The solution: Diageo invested in a SAP solution, which allowed for integration and was also a catalyst for deeper changes in the organization, such as the reduction of back ofce support activities and the addition of a technology-driven shared service center. Its an example of creating value from a broader business change, Blyth said. j) In 2006, the Intel Corporation conducted a program to meet the challenge of business value. o A standard set of nancial measurements of Business value, which are called business value dials that serve as a common language throughout the company and are based on customer business objectives. o A standard measurement methodology to determine the impact of IT solutions o A Common valuation process with Finance acting as independent auditors. o A business value portfolio of the forecasted and delivered results determined by customer generated critical success indicators o A set of ground rules used to dene
the programs operation and to drive accountability for the business value realized by our customers. k) In 2005 Marco Iansiti, and David Sarnoff from Harvard Business school conducted a research in the midsized rms and found the following. o The amount a company spends on IT is a poor indicator of IT functionality and business impact. It is easy to spend a considerable amount of money on technology with very little improvement in the functional capability of the Business. o Intensive examination of our data and indepth case studies sheds further light on how rms use IT to accelerate business growth. The best rms couple the design of their information technology system with the design of the rm. o In each of the case study rms, the design and implementation of critical business processes is tightly integrated with the design and implementation of IT capabilities needed to manage these processes. This integration allows companies to achieve business processes scalability. This is a fundamentally different view of scalability than is traditionally used in IT. Classically, IT scalability focuses on things such as the scalability of electronic transactions processing. Here, the corporations focused on using IT to improve the scalability of critical business processes. o Research shows that rms achieve higher growth through the use of information technology to scale their business processes more effectively than their competitors. The business scenario approach to measuring IT capability gives us a good window into process scalability as it was designed to measure exactly this impact of IT within the rm. Companies that score higher on our business scenario-based measurement of
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IT capability have automated their business processes, and thus enjoy the benet of relatively higher business process scalability. o Using IT to achieve business process scalability provides: o Improved process knowledge and process standardization, which enables the rm to more easily manage the complexity involved in growth. o Streamlined operations that can grow without signicant additions to headcount. o Flexibility to take advantage of new opportunities and respond quickly to exogenous changes. o Better visibility into critical business parameters to guide important management decisions. To be in alignment, a rms core business processes must be enabled by integrated IT capabilities. Each iterative expansion or modication of this core business process must be made with an intimate knowledge of how IT can be used to enhance
or simplify the process In December 2004 there was another survey conducted by IBM business consulting services. Though nancial institutions are doing well at planning the initial business expense of IT projects, they are still falling short in several ways : o A lack of structured risk evaluation on a portfolio level o Insufcient transparency in managing projects that go over budget o Scarcity of systematic methods to track project performance. In fact, benets realization data was available for only 31 percent of those interviewed in a recent IBM study. Compounding the problem, few rms actually reserve funds as a contingency for projects that exceed their budgets, though there is a compelling need to do so. The repercussions can be considerable, as evidenced by one study participant whose projects, on average, ran more than 60 percent over budget. With so much at stake, nancial services CIOs need a more effective way to manage IT investments. l)
3 Talent Management Business-driven IT requires skills and capabilities that are very different from traditional IT. This shift has tremendous implications for the IT workforce
OLD IT Internal focus Write the application Design systems Manage Systems Probable requirements for New IT External focus Integrate the application Design Process Manage Business and Vendor relationships Back office/code/geeks Front office/communication/empathize IT context, inward focus Programming languages Software revision management System flow Specialty, Value Collocate with Peers and company Business context, outside focus Requirements Translation Business Change Management Process flow Commodity, outsourced Globally dispersed , Virtual teams Now Hiring People with
Business savvy. Strong communication and people skills. Deep technical expertise. Good at w orking local and virtual teams. Able to adapt to constantly changing processes. Comfortable moving effectively between business requirement sand IT requirements.
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People with this broad mix of skills are difcult to nd. And its likely the search will become even more difcult. Many IT functions in our experience dont know or wont admit that they have a talent problem. But to keep up with the changing needs of the company, IT leaders must be brutally honest about their staffs current skills and capabilities While IT is becoming increasingly business-centric and execution is largely employing a distributed delivery model, most IT functions are still hiring for the old era. There appears to be very little alignment between the skills needed to be effective in this new model versus what they are actually hiring or developing within the IT function. 4. Analysis of the data collected from Literature Review There are three scenarios that are emerging from the analysis 1. The internal IT department catering to the
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business side. For eg. A pharmaceutical Industry having its own internal IT department There is IT product development organization that provides Products and maintenance services to the business. For eg. A telecom organization like Sprint (A US telecom organization) is supported by Amdocs A telecom billing product development organization) There is system integrating IT organization like Satyam supporting the Insurance businesses in USA through maintenance contracts There is a hardware manufacturing organization that supplies computers and other components to different organizations.
The interactions among various levels of IT are depicted pictorially in the diagram given below.
Telecom Business organization
IT Function
IT system integrators
Pharmaceutical Business organization
IT Function
IT Product development organizations
Banking Business organization
IT Function
Hardware /software suppliers
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In the gure above the interaction among
Telecom Business organization Vis--vis IT system integrators, Product development organizations and hardware/soft ware suppliers is possible. For the sake of simplicity only limited interactions are shown in the diagram. The approach towards the assessment of the Business value of IT is different in each case. However we are trying to present a
generics model that describes the elements that need to be present in business value assessment for any type of organization. The customization of this model needs to take place depending on the business context. The following table describes the major elements of the Business value planning and the issues in these areas.
Business value planning Strategic alignment Selection of core business process areas for IT implementation
Business case related issues Risk assessment of the IT initiatives Service level agreements between the Business and the IT Accountability issues Agreed approach for Value assessment of IT IT Governance
Issues Focus of IT is mostly not based on cus tomer related objectives and business priorities Right business processes that are critical for the success of the organizatio n are not mapped with the IT implementation In many cases the business cases that are approved are not monitored on a periodic basis and is not shared with the business side Proper risk management mechanism at a portfolio level is not in place Service level agreements between the business and IT are existing but does not talk about appropriate metrics that are to be shared on a periodic basis The accountability for the per formance is not linked to the performance There is no agreed approach for value assessment between the business and IT IT projects are managed from a technical p erspective rather than business perspective. Insufficient transparency in managing projects that go over budget Scarcity of systematic methods to monitor and control the project In the IT org anizations there are no Operational level agreements among the groups that collectively support the business which results in SLA satisfaction The metrics programs are either tedious are meager. There is very limited relationship between t he Metrics and the business goals. Appropriate metrics are not used to assess the business value The approved business case is not monitored throughout the lifecycle and the value generated is not monitored Very limited communication about the value generated between the IT and end users IT investment portfolio management does not include the cancellation or rationalisation of non -value-adding projects The new IT paradigm demands new skills that are radically different from the old skills
IT Project investment management Availability of operational level agreements (OLA) to meet SLAs
Metrics program Business case monitoring and reporting Communication between IT and end users
IT Project - Portfolio management Talent management
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5. Leading practices: What market leaders are doing We highlight below some of the leading IT investment practices that are currently under way at companies participating in the study. 6. Alignment Alignment entails close cooperation between business and IT through the widespread establishment of coordination mechanisms. Key to successful alignment is joint portfolio management of transformational projects considering the business value, risks and changes in organization, processes and IT. Budget, priorities and planning cycles are combined and aligned to enable joint ownership and decision making. Service level management (at the strategic, tactical and operational levels) and issue resolution are established and synchronized. Meetings, review boards, account managers and closely cooperating project leads support ongoing coordination between business and IT groups. 7. Accountability Accountability is established through contracts with the business that assigns clear portfolio management responsibility through the use of welldened roles. An accountability pyramid is dened to link each project to the strategic initiatives. Whats more, individual and team targets, performance measurement and compensation are aligned at each level of the pyramid. Clear and uniform roles and responsibilities are dened and in effect for project management and portfolio management practices. Wherever possible, accountability is combined for business and IT. 7. Program control Program control centers on the consistent use of standard process measures to manage and determine effectiveness of the overall program. For better
management of projects on a regular basis, reporting is dened and differentiated for various management levels revealing deviations early, allowing quick action and monitoring. Effective program control also helps dene necessary organizational changes and start relevant communication to implement those changes. 8. Project management Project management capabilities are key contributors to successful projects. Leading rms stress compliance to standard project management methodology, encouraging certication and establishing professional development programs. Post-project evaluations and other means are used to share knowledge and lessons learned among project teams. IT projects are viewed holistically, as part of a larger business project. One project manager may be responsible for the whole or two project managers may be jointly accountable one for the business and one for IT. 9. Value realization The purpose of value realization is to measure and communicate how well the projected benets of key initiatives are achieved. To accurately measure benet attainment, CFO involvement and commitment helps dene the approach, delivery cost model and agreed-upon key performance indicators (KPIs). Well-designed systems and processes enable the collection of reliable, timely data. Through regular (monthly) tracking of project progress, nancial services rms can uncover any deviations from expected performance early on. And measuring doesnt end as soon as the project does. A key aspect of value realization is post-implementation evaluation to assess the actual benet realization at future points in time. Initial project planning needs to include benet assessment after the project has been delivered. As important as the capability to measure IT project performance is the capability to communicate those results. Customized dashboard
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tools are increasingly being used to communicate the realized value of an IT investment in business terms. 10. Scope for Research in this area o To understand the reasons for challenges involved in Value delivery by IT to the business and Business value assessment. o Strategy Level Reason for Limited Business alignment between IT and Business Strategy Accountability Issues Communication Plans Lack of IT Governance o Methodology Method to assess the value of the Business Lack of Structured Risk evaluation on a portfolio level Focus on nancial and non nancial benets o Operational
11. Model for assessing the Business Value
Limited communication between the IT and End users Limited visibility on managing the projects that go over the budget Mapping between the Business indicators agreed upon at business case stage and measurements collected during the delivery cycle Value realization capture and reporting o To understand the impact of the Human resources on the Value delivery by IT o Understanding of the Business-driven IT skills and capabilities that are very different from traditional IT. o Understanding the impact of this paradigm on the Talent management o HR Practices needed to develop resources for Value Delivery o A generic model that consists of the Critical elements for assessing the Business value of IT based on the study
133 12. References a - Reaching efcient frontiers in IT investment management, Daniel W. Latimore, CFA, IBM Business Consulting Services
Cormac Petit dit de la Roche, CA(SA) Managing Consultant, IBM Institute for Business Value, Financial Services Sector. Koos Quak, Principal, IBM Business Consulting Services, Financial Services Sector. Peter Wiggers, Senior Consultant, IBM Business Consulting Services b - Why IT Matters in Midsized Firms Marco Iansiti, David Sarnoff Professor of Business Administration, Harvard Business School George Favaloro, Keystone Strategy, Inc. James Utzschneider, Microsoft Corporation Greg Richards, Keystone Strategy, Inc. Boston, MA 02163, USA c IT and Shareholder Return: Creating Value in the Insurance Industry, Paul Williams, FCA, John Spangenberg, Ph.D., and Sonja Kovaleva, Ph.D. d IT Governance global status report 2008 ITGI, USA e- Putting Business First Steven Hateld, Principal, Deloitte Consulting LLP Aaron Eisenberg, senior Manager, Deloitte Consulting LLP Bhushan Shethi, Senior Manager Deloitte Consulting LLP f - Measuring the Business value of Information technology Practical strategies for IT and Business managers David S. Sward g - CA Labs Sponsors Major Research Program to Study the Business Value of IT Management h - IT/Finance Alignment: A Boon for Strategy, but Will the Trend Continue? By Knowledge @Wharton I. Corporate Governance and IT Governance: exploring the boards perspective Professor Ernest Jordan David Musson Macquarie Graduate School of Management J. Measuring and Demonstrating the Value of IT, ITGI USA K. VAL IT frame work, ITGI
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KNOWLEDGE MANAGEMENT VISTA: KEY DRIVERS

Dr. N. Muthu Dr. Radha Ganeshkumar Dr.J.Padmini Dept of Management Studies, SRM Valliammai Engineering College, and Kattankulathur-603 203
1. Introduction
Knowledge management is really about recognizing that regardless of what business you are in, you are competing based on the knowledge of your employees. -Cindy Johnson Knowing ignorance is strength; ignoring knowledge is sickness. The growth of knowledge management as a strategy of consultancy companies is one of a series of such strategies dating from Taylors (1911) scientic management of the early part of the last century. Time and motion study developed directly out of scientic management and continued till the 1970s as a widespread industrial engineering technique. In the late 1930s, the human relations school emerged out of research between 1927 and 1932 at the Western Electric Hawthorne Works in Chicago (Mayo, 1933) and had a considerable inuence in the emerging consultancy companies after the Second World War. In the second half of the last century, the pace of new techniques quickened considerably. 2. Denition of Knowledge Management According to Petrides, L.A. & Nodine, T.R. (2003) Knowledge management is a discipline that promotes an integrated approach to identifying, managing and sharing all of an enterprises information. These information assets may include databases, documents, policies and procedures as well as previously unarticulated expertise and experience
resident in individual workers.The New Knowledge Management is the name for the body of issues, models, and practices representing the broadening of scope of knowledge management from a concern with knowledge sharing, broadcasting, retrieval, and teaching, collectively knowledge integration, to a concern with these things, as well as knowledge making, or knowledge production. 3. Knowledge Cycle Gartner denes Knowledge management as an integrated and collaborative approach to the Creation, Capture, Organization, Access and Use of Information Assets. Knowledge is created and captured. It is put on paper in a report, entered into a computer system of some kind, or simply remembered. Knowledge is organized, where it is classied and modied. Knowledge is shared and used. When knowledge is shared and used, its modied by the resources that use it. This takes us back to knowledge creation. The Knowledge Management Cycle in the institutional context is described below:
Figure No: 1 The Knowledge Management Cycle
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Brown J.S. & Duguid, P. (1991), KM focuses on processes such as acquiring, creating and sharing knowledge and the cultural and technical foundations that support them. The key aspects involved are:
sharing the experience of knowledge is a unique culture of our country. India is a nation endowed with natural and competitive advantages as also certain distinctive competencies. But these are scattered in isolated pockets and the awareness on these is inadequate. During the last few centuries the world has undergone a change from agriculture society, where natural labor was the critical factor, to industrial society where the management of technology, capital and labor provided the competitive advantage. In the 21st century, a new society is emerging where knowledge is the primary production resource instead of capital and labor. Efcient utilization of existing knowledge can create comprehensive wealth for the nation in the form of better health, education, infrastructure etc. for improving the quality of Work life (QWL). Ability to create and maintain the knowledge infrastructure, develop knowledge workers and enhance their productivity through creation, growth and use of new knowledge will be the key factors in deciding the prosperity of this Knowledge Society. Whether a nation has emerged as a knowledge society or not is judged by the way the country effectively deals with knowledge creation and knowledge deployment. 6. National Knowledge Commission (NKC) in India
Figure No: 2 Chart Showing National Knowledge Commission (NKC) in India
People How do you increase the ability of an individual in the organisation to inuence others with their knowledge Processes Its approach varies from organization to organization. There is no limit on the number of processes Technology It needs to be chosen only after all the requirements of a knowledge management initiative have been established.
Culture The biggest enabler of successful knowledge-driven organizations is the establishment of a knowledge-focused culture Structure The business processes and organizational structures that facilitate knowledge sharing
4. Where Does KM Come From? Te c h n o l o g y ( e . g . ) , I n f r a s t r u c t u r e , Database, Web, Interface Globalization (e.g.), World wide markets, North American integration Demographics (e.g.), Aging population, Workforce mobility, Diversity Economics (e.g.), Knowledge economy Customer relations (e.g.), Quality Increase in information (e.g.), Specialization, Volume, Order 5. Core Competence For Knowledge Society A knowledge society is one of the basic foundations for the development of any nation. The acquisition of knowledge has therefore been the thrust area throughout the world and
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National Knowledge Commission (NKC) consists of six Members. The Planning Commission is the nodal agency for the NKC for planning and budgeting purposes as well as for handling Parliament related responses. The focus is on:
their organizations.ensuring that the right information is available in an easily digestible format to employees across the organization at the point of need so they can leverage experiences and make more effective business decisions. The essence of managing knowledge is concerned with deciding with whom to share, what is to be shared, how it is to be shared, and ultimately sharing and using it. Managing knowledge produces value when shared knowledge is used and reused. Consistent value occurs when there is an atmosphere of trust and motivation for people to share and use knowledge, when there are systematic processes to nd and create knowledge, and, when needed, there is technology to store and make knowledge relatively simple to nd and share. (CIO Council, 2001). Today, considered the knowledge most is increasingly asset of
Identication of key focus areas and Identication of diverse stakeholders and understanding major issues in the area. Constitution of Working Groups of experts and specialists; organization of workshops, extensive formal and informal consultations with concerned entities and stakeholders
Consultation
with
administrative
Ministries and the Planning Commission and Discussion in NKC to nalize recommendations in the form of letter to the PM from the Chairman, NKC. The letter will be supported by the relevant explanatory documents and widespread dissemination of NKC recommendations to state governments, civil society and other stakeholders, also using the NKC website. Initiating the implementation of the recommendations under the aegis of the PMO. And nalizing the recommendations based on stakeholder feedback and coordinating/ following up the implementations of proposals.(Source: National Knowledge Commission {NKC}) 7. Managing Organizational Knowledge The idea of KM arises from McElroys (1999) analysis of two fundamental types of KM concerns. This Knowledge Management solution provider enables workers to capture, manage and share information throughout
important
organizations [Carneiro, 2000] and it is assumed that every experience is reusable [Basili and Rombach, 1991]. This does not apply only to specic parts like programming code but also means that any knowledge can be reused by others. Identifying, managing, and transferring knowledge and best practices has worked for some companies, sometimes saving or earning them literally billions [ODell and Grayson 1998]. But Knowledge management is an evolving practice, since the most developed and mature knowledge management projects we studied were unnished works in progress (Davenport and Prusak, 1998). A new emphasis is on an economy based on services, ideas and intangibles rather than physical product and process is emerging. In tandem with this there is a thrusting
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imperative to manage organisational knowledge. For fty years there has been a settled business equilibrium, dominated by established rms, that is now prone to radical reform (Deighton, 1997). In a world of dynamic change, managers can no longer afford to be complacent about knowledge (Nonaka & Takeuchi, 1995). More organizations fall prey to their own inertia than those which learn to change and adapt (Starbuck, 1983). Karl Wiig (1997) and the American Productivity and Quality Center identied six emerging KM strategies in a study of organizations considered to be leading the way in this area. The objectives of knowledge management in an organisation should be as follows: 1. To bring about transparency of knowledge and improve documentation of knowledge
2. Build positive organisation culture and improve communication and cooperation 3. Turn implicit into explicit knowledge and improve education, training & team work among employees 4. Promote individual development and improve retention of knowledge 5. Improve access to existing knowledge and improve acquisition of external knowledge 6. Improve sharing of knowledge and improve management of innovations The Knowledge management process in an organisation is to create, collect, organize, rene, disseminate, maintain. The Key KM drivers are Technology, Culture, Competition, Intelligence and Leadership.
Figure No: 3 Knowledge management process and the Key Drivers The factors inuencing the selection of a KM Strategy are with the appropriate examples in the organisational context illustrated in the Table No. 1 below
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Table No: 1 Factors inuencing the selection of a KM Strategy
Factor Current/Planned
Examples Goals, desired applications, technology capabilities,
Knowledge Management analytic/synthetic approach Strategy Business Sector Characteristics Strengths, Weaknesses, Opportunities and Threats (SWOT) Value Focus Operational Excellence, Product Leadership or Customer Intimacy Organisational Structure Hierarchical Organisational Culture Nature of Knowledge Team spirit, Individualistic, Sharing, Learning Explicit, Implicit or Tacit; Task Type; Symbolic/Numeric/Geometric/Perceptual
The strategies states below reect the different natures and strengths of the organisations involved (Wiig, 1997; Manasco, 1996): 1. Knowledge Strategy as a Business Strategy- A comprehensive, enterprise-wide approach to KM, where frequently knowledge is seen as the product. 2. Intellectual Asset Management StrategyFocuses on assets already within the company that can be exploited more fully or enhanced. 3. Personal Knowledge Asset Responsibility Strategy- Encourage and support individual employees to develop their skills and knowledge as well as to share their knowledge with each other. 4. Knowledge Creation Strategy-Emphasises the innovation and creation of new knowledge 8. Attributes of an Effective KM Program Improve customer service by streamlining response time and Boost revenues by getting products and services to market faster and enhance employee retention rates by recognizing the value of employees knowledge and rewarding them for it Streamline operations and reduce costs by 6. Customer-Focused Knowledge Strategy- Aims to understand customers and their needs and so provide them with exactly what they want. through R&D. Adopted by market leaders who shape the future direction of their sector. 5. Knowledge Transfer Strategy- Transfer of knowledge and best practices in order to improve operational quality and efciency.
Highly regulated, Innovative, Risk factors, Competitive ness, Globalization, etc. Reputation, Leading product, Changing regulations, Acquisitions and Mergers, Globalization, etc.
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eliminating redundant or unnecessary processes Foster innovation by encouraging the free ow of ideas and Improve decision making
9. Knowledge Management Vision Create a strategy and managing process for accelerating knowledge management that will introduce a culture change as well as effective tools and processes to further enable employees as knowledge workers, improve productivity, and use knowledge intensity to achieve sustainable growth.
Figure No: 3 Knowledge Management Vision
To acquire and maintain highly talented and motivated reservoir of multi-disciplinary human resources to meet the needs of the organisation, and to continuously create new opportunities for employees to upgrade their capabilities and channelize their potential for growth leading to TOTAL KNOWLEDGE WORKERS. It is better to recall the words of Peter Drucker, Managing for the Future, 1992, A knowledge society requires literacy -because of the vastly expanding corpus of knowledge we will also be required to learn how to learn. Yogesh Malhotra (1998), KM embodies organizational processes that seek synergistic combination of data and informationprocessing capacity of information technologies, and the creative and innovative capacity of human beings. In summary, KM is systematic leveraging of information and expertise to improve organizational
innovation,
responsiveness,
productivity
and
competence. It involves coordination of organization wide activities of acquiring, creating, combining, storing, retrieving, sharing, diffusing and developing knowledge by individuals and groups in pursuit of organizational goals. KM strategy and architecture must synchronize with organizations mission and strategy. 10. Tracing The History of KM in the Organisational Context 1950s- Working Hard, Maximize utilization of Men and Machines 1960s- Cost Reduction. Shop-oor management, Quality Circles, Statistical Quality Control, Maximize utilization of Materials 1970s- Strategic Management, Market Planning, Product Branding and Energy Conservation. Peter Drucker contributed his thought that Information and knowledge are organizational resources, Peter Senge
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introduced the concept of learning organization and Leonard-Barton came up with the well-known case study of Chaparral Steel , a company having KM strategy 1980s -Total Quality Management, Quality Circles Movement and focus on human element in quality management and International quality system standard. Knowledge (and its expression in professional competence) as a competitive asset was apparent and Managing knowledge that relied on works done in articial intelligence and expert systems. KM related articles began appearing in journals and books 90s until now: Information Technology, Computerization of data, information, systems & procedures and International standards on quality and environment systems. A number of management consulting rms had begun in-house knowledge management programs and Knowledge management was introduced in the popular press, the most widely read work to date is Ikujiro Nonakas and Hirotaka Takeuchis The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation (1995). The International Knowledge Management Network (IKMN) went online in 1994. KM becomes big business for such major international consulting rms as Ernst & Young, Arthur Andersen, and BoozAllen & Hamilton The Future: In the next several years ad-hoc software will develop into comprehensive, knowledge aware enterprise management systems. KM and E-learning will converge into knowledge collaboration portals that will efciently transfer knowledge in an interdisciplinary and cross functional environment. Information systems will evolve into articial intelligence systems that use intelligent agents to customize and lter relevant information. New methods and tools will be developed for KM driven E-intelligence and innovation. Organizations are realizing that intellectual capital or corporate
knowledge is a valuable asset that can be managed as effectively as physical assets in order to improve performance. The focus of knowledge management is connecting people, processes and technology for the purpose of leveraging corporate knowledge. The database professionals of today are the Knowledge Managers of the future, and they will play an integral role in making these connections possible. 11. Key Challenges of KM For Indian Corporate Sector The Key challenge in the corporate environment is to manage wild birds in captivity without clipping their wings. The corporate sector faces great challenge as how to attract, develop and retain talent and as to how to improve productivity of knowledge workers to achieve organizational goals and as to how to utilize their potential measures of performance and also to reward individual and team performance. Reacting instantly to new business opportunities and ensuring successful partnering and core competencies with suppliers, vendors, customers, and other constituents and shortens the learning curve. 12. The real success of KM lies on understanding the following aspects: 1. Explaining what KM is and how it can benet a corporate environment 2. Evaluating the rms core knowledge, by employee, by department, and by division 3. Learning how knowledge can be captured, processed, and acted on 4. Addressing the still neglected area of collaboration 5. Continue researching KM to improve and expand its current capabilities 6. Dealing with tacit knowledge A knowledge sharing culture is an environment
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where individuals are willing to disseminate information regardless of the size of the organization or company. In order to do so, individuals must adhere to the norms, values, attitudes and beliefs established by the organization. When these aspects of the knowledge sharing are breached, information will not reach the intended audience and will thus cause a knowledge-transfer bottleneck. In order to improve a knowledge-sharing culture, a structured plan should be followed. As India moves rapidly into a knowledgebased economy, the increasing importance of the concepts and practices from the emerging eld of KM is evident. KM is a multi-disciplinary and cross-functional approach which aims to facilitate organizations in maximizing their corporate intellectual assets for business excellence. KM draws on principles, practices and technologies from a wide spectrum of disciplines including information systems management, articial intelligence and computer science, organizational learning and management, research and training, and domain background and knowledge in different application contexts and settings. Many KM issues and challenges have surfaced which impede KM adoption but have yet to be adequately addressed. Despite the increasing KM awareness and interest among organizations, there exists a wide range of views and perceptions on KM. It is still generally unclear, among researchers and practitioners. These include the denition and conceptualization of what knowledge really is in their respective work contexts, how an organization initiates and implements KM projects, what elements do KM practices comprise and entail exactly how KM can contribute to business growth and developments, and the organisational hurdles related to the adoption of KM. The current lack of a deeper empirical insight of the subject and industrial perceptions have motivated this study of KM-related issues. Over the past decade, several management philosophies have emerged. Among these include business process reengineering (BPR),
total quality management (TQM), organizational learning (OL) and knowledge management (KM). The implementation and practice of KM are often faced with many difculties and challenges. General KM approaches prescribed in the literature or recommended by consulting companies may not necessarily be successful in various organizations due to different business and cultural contexts as well as the presence of other organizational barriers. The purpose of KM, in the new economy is to provide on line, real time access to knowledge, information and data throughout the organization and to its customers in that order. The organizations slogan in KM should be: Anyone, Anytime, Anywhere and Anything for organizational performance, efciency and competitive advantage. For governments, this requires a radical change in mindset stripping away unnecessary bureaucratic procedures that cause delays and hamper information and knowledge ow, putting in place the appropriate networks (human and technical) and above all recognizing that they must compete with private sector organizations in the quality of services rendered to customers/ citizens. To this end, governments must understand that the stakeholders in any KM initiative include: management, employees, partners, customers and even other governments; and their roles are to participate, collaborate and learn in all stages of KM. Furthermore, with the looming retirement of a large number of civil servants, KM initiatives would be benecial for many. These are the components of an effective knowledge management system. The business needs are to reduce support and training costs; to capture, manage, and maintain valuable knowledge across the organization; to empower end users with tools that help them solve common and repetitive issues and to provide consistent and repeatable knowledge transfer within your organization. Global Most Admired Knowledge Enterprises (MAKE) studies have been announced by Telco and TATA Group (primarily due to Tata Steel & TCS)
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has been named as one of the winners of this coveted award. Toyota is the overall Global MAKE Winner. As per the summary report available Tata Group was rated high in two of the following knowledge dimensions; developing knowledge workers through senior management leadership (8th place) and creating an environment for collaborative knowledge sharing (13th place). 13. The 2006 Global MAKE Winners have been recognized as leaders in: 1. Creating a corporate knowledge-driven culture 2. Developing knowledge workers through senior management leadership 3. Delivering knowledge-based products/ solutions 4. Maximizing enterprise intellectual capital 5. Creating an environment for collaborative knowledge sharing 6. Creating a learning organization 7. Delivering value based on customer knowledge 8. Transforming enterprise knowledge into shareholder value 14. Closing Thought KM as a discipline is still in its infancy, especially in the public sector, evidenced by little discussion in the current literature. Governments are realizing its importance for running the public sector and starting to practice it. Public sectors have to face these by taking a proactive attitude and make it happen in order to reap the benets. To succeed in the attempt, special considerations to lack of awareness, public and private sector difference, and the need for a generic KM framework to be developed must be taken into account. Critical success factors can be categorized into primary categories such as leadership, culture, structure, roles, and responsibilities; information
technology infrastructure and underlying principles of entrepreneurial success tells about the following KM lines. Dont be afraid of failure or mistakes. Work your butt off, but keep a balance. Write goals down & follow up monthly. And know why youre doing it. A KM strategy that furthers organizational dialogue is more relevant today. 15. References 1. Brown J.S. & Duguid, P. (1991) Organisational learning and communitiesof-practice, Organisational Science. ODell, C. & Grayson Jr., C.J. (1998) If only we knew what we know. Stewart, T. (2002) The Wealth of Knowledge. 2. Carneiro, Alberto: How does knowledge management inuence innovation and competitiveness? Journal of Knowledge Management, Vol. 4, Issue 2, pp. 87 98, 2000. 3. Davenport, T. H., and Prusak, L. Working Knowl-edge, Harvard Business School Press, Boston,1998. 4. Davenport, T., Prusak, L. (1998), Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Cambridge. 5. Davenport, T.H., Probst, G.J.B. (2002), Knowledge Management Case Book, John Wiley & Sons, Weinheim 6. Davenport, Thomas H. and Prusak, Laurence: Working Knowledge How Organizations Manage What They Know. Harvard Business School Press, Boston, Massachusetts, 1998. 7. Davenport, Thomas H. and Vlpel, Sven C.: The rise of knowledge towards attention management. Journal of Knowledge Management, Vol. 5, Issue 3, pp. 212221, 2001. 8. Deciphering the Knowledge Management Hype, Dr. Yogesh Malhotra, www.brint. com/km/whatis.htm, 1998. 9. Drucker, P. .The Post-Capitalist Executive,.
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10.
11.
12.
13.
Managing in a Time of Great Change, Penguin, New York, 1995. Gupta, A., and Govindarajan, V.Knowledge Flows within Multinational Corporations. Strategic Management Journal (21), 2000, pp. 473-496. Malhotra, Y. .Beyond .Hi-Tech Hidebound. Knowledge Management: Strategic Information Systems for the New World of Business,Working Paper, BRINT Research Institute, 1999. Marler, Kevin: Rapid Emerging Knowledge Deployment. Crosstalk: The Journal of Defense Software Engineering, Vol. 12, Issue 11, pp. 1416, 1999.100 Mason, J. (1997), Qualitative Researching, Sage Publications, London, .
14. Mc Adam, R, Mc creedy, D, (1999), A critical review of KM models, The Learning organization Vol. 6 No.3 pp 91-100. 15. McElroy, M.W. (1999), The Second Generation of KM, Knowledge Management October 1999 pp. 8688. 16. National Knowledge Commission{NKC 17. Nonaka, I Konno, N. (1998), The concept of building a foundation for knowledge creation, California Management Review, Vol. 40 No.3, pp.41-53. 18. Nonaka, I. (1991), The knowledge-creating company, Harvard Business Review, No. November-December, pp.96-104. 19. Nonaka, I. (1994), A dynamic theory of organizational knowledge creation, Organization Science, Vol. 5 No.1, pp.14-37.
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QUALITY OF WORK LIFE (QWL) IN IT SECTOR INDIAN SCENARIO

V. Hemanth kumar Sr. Lecturer Dept. of Mgmt. Studies,Sri Sairam Engg. College, Chennai, TN. Dr. P. Premchand Babu Professor S.K. Inst. of Management, S.K. University, Anantapur, A.P.
The term Quality of work life is perceived in different ways as per their convenience, but in general it refers to a conducive environment, where in the employees feel a home away from home, but the question is that, whether is it the myth or reality? The concept of multitasking is a widespread factor and the employees are getting sandwiched between the two great tasks, i.e., work life and personal life. The common challenges in the corporate world are about Talent Management, and if managed effectively, reduce the attrition rate in the corporate sector. The instances encountered during the survey conducted among the 280 IT professionals in South India (Chennai, Bangalore & Kerala) from different concerns are like Cultural discrepancies, Communication channels, Health related issues because of stress / burnout, Compensation & Benets, Training & Development, Policies and Procedures, Job Security, Career growth, etc., these factors affect not only the employees work life and personal life, but also the development of the company as a whole. The remedial measures are possible through the conduction of effective and customized Quality of Work-Life programs according to their organizations. The necessity of maintaining a good QWL and its benets are discussed ahead. 1. Work life in Indian IT companies The IT industry has just started to take a few concrete steps in this direction. Organisations in this sector are aiming at driving a culture whereby an employee is not looked down upon or ridiculed when he/she has a personal commitment to fulll. They are given adequate time and space to spend quality time and effort towards fullling both work and personal objectives, Indian IT rms are in an increasingly
competitive environment with aspirations for greater heights. Employees nd it difcult to maintain a balance between work and life, and as the result the quality of work is also affected directly or indirectly. Table 1 Factors affecting Employees Work Life:
FACTORS 1. Cultural discrepancies 2. Communication channels 3. Health related issues because of stress/ burnout 4. Compensation & Benets 5. Training & Development 6. Policies and Procedures 7. Job Security 8. Career Growth PERCENTAGE 12% 11% 15% 15% 8% 10% 14% 15%
Cultural discrepancies,
Fig. 1 Factors
affecting Employees Work Life
Communication channels, Health related issues because of stress / burnout, Compensation & Benefits, Training & Development, Policies and Procedures, Job Security, Career growth,
2. Need for QWL The Quality of Work Life programs aims at integrating the socio-psychological needs of employees the unique requirements of a particular technology, the structure and process of the organization and the socio-culture milieu. It seeks to create a culture of work commitment in organization
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and society at large so as to ensure higher productivity and greater job satisfaction of the employees. Quality of working life is the degree to which members of the organization are able to satisfy their personal needs through their experience in the organization. The focus is on the problem of creating a human work environment where employees work co-operatively and contribute to organisations objectives. Robert Owen, British entrepreneur, a cotton mill owner in Scotland in the early 19th century, pioneered ideas about better treatment of workers. Owen argued that improving working conditions would not only improve workers quality of work life but lead to a 50 to 100 percent increase in productivity. Quality of Work-life programs are essential if an organisation wants to be known as an employer of choice. Without a good Quality of work-life, we may leave our energy and resources and lose focus on the objective. As a result of not having focused intentions and considered choices, energy of employees is lost to unimportant activities or unconscious commitments. In such a situation, it becomes even more important for organisations to seek out constructive ways to help its employees understand and identify the need for having an improved quality of work life which shall be achieved by maintaining a balance in their personal as well as professional life. As the both are interdependent aspects. The planned and effective QWL programs shall fetch the organization with the following. Benets: Improved productivity Improved quality of production Offering better customer service Highly engaged workforce Reduced absenteeism
Improved employee morale and commitment Reduced attrition rates Attraction of best talent Greater exibility in staff attitudes and ability to deal with changes HR departments of organisations play an important role in designing the QWL. The reason is obvious. Supporting the employees as they balance home and work responsibilities leads to a highly engaged workforce thereby becoming a large contributor to employee loyalty, 3. High Package Higher the expectation Even as staff salaries are increasing in India, IT services companies are insisting on a higher performance from their staff. The appreciation of the India rupee against the US dollar has also meant that staff salaries in India have got more expensive. A supportive and fun environment is must for any organisation to maintain the work-life balance in the lives of its employees. Spending quality time is always more important than just spending time. Though people who have been successful in the longer term have used the strategy of spending more time at the workplace, they have been able to balance this with adequate time with their families. So, in the long run its not the question of spending time at work or at home, but spending quality time at both places matters a lot. 4. Factors affecting the QWL The IT companies and their employees operate in an environment that has seen many changes in recent years. Organizational Structure: Organisations are increasingly dependent upon their IT infrastructure to deliver 24/7 availability, so infrastructure management software and services are evolving to meet these needs. The different type of organizational structure are like Flat, Tall, Matrix
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and the like, the structure also includes the hierarchy and the channels involved in the relating the crew and taking decisions and passing on the bottom of the pyramid. Many feel convenient with the minimal levels of managerial hierarchy to gather or pass the information. This has a got a vital impact in the determining the working environment. 5. Culture and climate The development of your organization and, particularly, how you manage change impacts the success of your business. Organization development activities intervene in the interactions of your people systems such as formal and informal groups, work culture and climate, and organization design to increase their effectiveness using a variety of applied behavioral sciences. Experts also believe that organisational culture has a great impact on who stays and who goes. And the culture of an organisation is determined by the quality of the relationship between bosses and their subordinates. According to a popular sayingemployees never leave the company, they leave their bosses. An inefcient boss creates poor work culture, which is one of the frequent reasons for quitting. 6. Occupational Health care The safe work environment provides the basis for the person to enjoy working. The work should not pose a health hazard for the person. The employer and employee, aware of their risks and rights, could achieve a lot in their mutually benecial dialogue. Work represents such a role in life which has been designated to it by the person himself. On the one hand work is an earning of ones living for the family, on the other hand it could be a selfrealisation providing enjoyment and satisfaction 7. Policies and Procedures An organisation is viewed as a place where employees meet their aspirations of growth and development, values of trust, teamwork and transparency. If a company respects them and their
skills, realize their potential and provide them with a healthy environment to learn and grow with exible compensation, employees take that as a strong reason to stay on. 8. Compensation & Benets The research salary, salary calculators, salary surveys, salary comparisons, basically, all things salary, online, is one of the most frequent requests for information received by the Society for Human Resource Management (SHRM). This makes sense when you consider the importance of salary to attract talented people, retain key employees, and maintain an excited, motivated workforce. Given the shifts occurring in attitudes and practices about salary and compensation, this is not surprising. Organizations are struggling to keep up with changes in salary and compensation thinking. There were days long back, when organizations gave equivalent increases to all organization members. These salary increases, in the one percent to ve percent range, sent the wrong message to under performers. They left organizations with too small of a budget to adequately reward their top performers. While many companies still use this as their salary criteria, forward thinking organizations are thinking about salary and compensation in a very different way. 9. Suitability of Working hours The working hours in the organization are normally eight to twelve hours in the corporate scenario, and that concept of exi-time if adopted shall be much ease for the employees in the software development activities. The exi time is prevailing in the Indian software concerns but even then its not followed to the fullest as per the views given by the employees, but if considered shall contribute to a good working environment. 10. Communication Face-to-face or person-to-person interpersonal communication is the most frequent
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communication method most people use at work. Additionally, people communicate via email, newsletters, phone messages, presentations and meetings. Poor communication is the most frequently cited problem in organizations. Maintaining transparency in communication and following the channels accordingly shall create a good and effective communication system in the organization. 11. Motivational Techniques Employee motivation, positive employee morale, rewards and recognition are explored in these resources. What creates motivated, contributing people? It is the reward and recognition system contribute to or deate employee motivation, positive morale and retention is possible through enhanced quality of work life. The organisations reward strategy reects its power to drive quality employees. Apart from salary, recognition of work is a healthy retention strategy. If the organisation values its employees, recognizes and appreciates their skills and work, it pays. It is important to keep an eye on fast track people who are intelligent and excellent performers. Performance is a primary requirement; therefore, excellent performers should be valued. They should be identied, nurtured and provided growth opportunity, HR experts believe that money, though a key factor, is not the only one which makes employees quit. Attrition also happens when people hate their working conditions, do not like their team-mates or perhaps do not like what they are doing. There are also cases when people leave their job for family reasons or when they wish to migrate. 12. Celebrations at Work The corporate life style is very tedious and materialistic now-a-days, as the type of work is monotonous and the employees get bored and stressed often, which reects in poor quality output in their results. In-order to cope up with this situation, the HR should introduce some new activities Music, Poetry,
Art etc. competitions among the workers during leisure and boost them up. Also they are expected to form the club-membership and a get together among the employees and their family members for a movie or for an outing, etc., which will directly reect in their performance in a notable way. 13. Retaining strategies As competition for employees increases, attracting and retaining employees will become a challenge. To ensure that your organization remains a desirable place to work by providing opportunities for learning. 14. Training and development The relevant training and development is very essential for the young professionals. To train employees in new skills, new ideas, and new ways of performing work? These tips and tools about training design for employees will help you design training to facilitate employees interest in the training. The right training design will ensure your ability to help learners adopt the new ideas received in the training, and creates an effective work force in the organizational setup. 15. Job security The IT jobs are highly paid profession and the stability is not sure in this sector, hence it is quite obvious that it lacks security and becomes the major factor that affects the employees attitude and in turn reects the performance in a negative manner. The employees gain condence and feel comfortable in the work lace only if they are given some sort of assurance for their job. 16. Study assistance - time off for study Employees and the organisation are very keen in talent acquisition and talent retention, for whichthe employees are asked to update their knowledge base through training and upgrade their qualication so as to suit the client requirements to serve them better, hence the study assistance to be provided in monetary
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and non-monetary aspects. Like the managers are sposored for their executive programms at leading institutes to enhance their potentials. 17. Opportunities for advancement / Career Growth Employers often fail to understand the importance of providing opportunities for development of their employees or their career growth. A conducive working atmosphere, good culture, training and career growth with adequate salary are some provisions that contributes for a good QWL. Recognizing the contribution of outstanding achievers also inspires others to try hard and put in their best. A good organisational behaviour also focuses on areas like training, career development and believe in equipping workforce better on the professional aspect. 18. HRs role An efcient HR focuses on creating a good work culture and work out different strategies in line with organisational philosophy. According to experts, HR managers must use the combination of growth, learning opportunity and pay attention to employees personal needs and active participation in both work life and personal life. The needs of the employees should be regularly gauged through open communication, polls and feedback mechanisms to maintain consistency in performance and high motivation levels. 19. Results Discussion and Strategies The research reveals that the major requirements that are expected form the employees end from their management and work place is good Compensation & Benets, a working environment that does not harm their health, good prospects for career growth, security for their job, and the like These requirements are to considered with utmost care by the employers, and perform an effective Internal Marketing strategy through enhancing the Quality of Work life, keeping in mind the requirements and expectations form the employees.
If failed to give immediate attention to these facts, it might slowly affect the business and may incur a heavy loss in manpower resources and also in their nancial turnover & prot. The strategies that forms part in improving the quality of work life are like, Flexible working hours for employees is a widely used strategy, as it is a health related aspect. It is also suggested that employees should be given a exible window time period during which they can report to ofce. Adequate leave options provided to the employees is also viewed as a healthy HR practice to help them spend adequate time with their families. Organisations should keep reviewing their QWL strategy. Individual development plans for employees by employers or mentoring by colleagues in order to monitor progress and satisfaction in the workforce are ways to improve the quality of work-life. Quality of Work-life program is about creating a conducive and healthy work environment for employees who are striving to better integrate their work and personal responsibilities. By implementing proactive programmes and initiatives that support employees, IT sector can strengthen their employee commitment and loyalty, resulting in Quality outputs, improved customer satisfaction and healthier bottom lines. It is believed that satised employees contribute to greater business benets for the employer. In a culture where an organisation understands the personal needs of the employee, they in turn respect the time they spend at the workplace. This in turn leads to productive employees which ultimately reects in the prot of the organisation,. Apart from increase in productivity, Quality of worklife programs also brings in a remarkable difference in improved quality, reduced absenteeism, improved retention and better customer service. Happy employees perform better than disgruntled and stressed ones because enhancements in the Quality of work-life brings about clarity, transparency and a clear mission and vision for employees to achieve their tasks in a smarter way than before.
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20. Conclusion The absolute fact that prevails in the corporate life is prolonging the implementation of plans, related to enhancing the Quality of Work Life. The factors discussed above are not in practice to the fullest, and the management should fasten the implementation process which shall contribute to success of the individual and the organization as a whole. In an ideal organization where there is a good QWL, the employees work hard, love their job, worship their workplace, feel like a family and would never leave. 21. References Chabbra T.N., Organisation Theory and Behaviour, Dhanpatrai & Sons, 2001, 3rd Edition. Frone, M. R. (2003) Work-family balance. In J. C. Quick & L. E. Tetrick (Eds.), Handbook of Occupational Health Psychology (pp. 143-162) Washington, D.C.: American Psychological Association Frank Torney, Global competency, Atlantic publications, 2nd Edition Ganesh Sheroms, Competency Based HRM, Tata McGrahill Publications, 2005
Gerald Devons, Trainers way of C Edition
3rd
Gupta C.B., Human resource Management, 2003, 6th Edition. Haar, J. M. (2004) Work-Family Conict and Turnover Intention: Exploring the Moderation Effects of Perceived WorkFamily Support. New Zealand Journal of Psychology Kirby, E. L., & Krone, K. J. (2002) The policy exists but you cant really use it: Communication and the structuration of work-family policies. Journal of Applied Communication Research. Kossek, E. E., Noe, R. A., & DeMarr, B. J. (1999) Work-family role synthesis: Individual and organizational determinants. International Journal of Conict Management. Prasad L.M., Human Resource Management, Sultanchand &Sons, 2001 Raju PVL., Performance Management, ICFAI university press, 2004.
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THE ROLE OF HUMAN RESOURCE ACCOUNTING IN HUMAN RESOURCE MANAGEMENT

Dr. P. Premchand Babu, Professor, Dept. of Management Studies, S.K. University, Ananthapur, A.P. Mir Irfan Ul Haq, Professor M. Madana Mohan, Associate Professor, Vishwa Vishwani Institute of Systems and Management, Hyderabad 1. Introduction Human Resources Accounting (HRA) is the process of identifying and measuring data about human resources and communicating this information to interested parties. Basically it is an information system that tells the management what changes over time are occurring to the human resources of the organization. Human Resources are the energies skills talents and knowledge of people which are, or which potentially can be applied to the production of goods or rendering useful services. Such investment in human resources refers to all forms of investments directed to raise knowledge, skills and aptitudes of the organizations workforce. The importance of human resources in business organization as productive resources was by and large ignored by the accountants until two decades ago. During the early and mid 1960s Behavioral scientists attacked the conventional accounting system for its failure to value the human resources of the organization along with its other material resources. In this changing perspective the accountants were also called upon to play there role by assigning monetary value to the human resources deployed in the organization. In the management terminology this is called Human Resource Accounting. Human Resources Accounting (HRA) is the process of identifying and measuring data about human resources and communicating this information to interested parties. Basically it is an information system that tells the management what charges overtime are occurring to the human resources of the organization. 2. Human Resources Accounting in India: The concept of HRA in India is of recent origin and is struggling for acceptance. In India, HRA has not been introduced so far as a system. The Indian Companies Act does not provide any scope for furnishing any signicant information about human resources in nancial statements. But a growing trend towards the measurement and reporting of human resources, particularly in the public sector is noticeable during the past few years. BHEL, Cement Corporation of India, ONGC, Engineers India Ltd., National Thermal Power Corporation, Minerals and Metals Trading Corporation, Madras Reneries, Oil India Ltd., Associated Cement Companies. SPIC, Metallurgical and Engineering Consultants India Ltd., Cochin Reneries Ltd. etc. are some of the organizations which have started disclosing some valuable information regarding human resources in their nancial statements. 3. Human Resource valuation Models: For valuing human resources, different models have been developed. Some of them are opportunity cost Approach. Standard cost Approach current purchasing power Approach, Lev and Schwartz present value of future earnings Model Flameouts stochastic rewards valuation Model etc. Of these, the model suggested by Lev and Schwartz have become popular. Under this method, the future earnings of the human resources of the organization until their retirement is aggregated and discounted at the cost of capital to arrive at the present value. 4. Human Resource Accounting for Human Resource Management HRA system consists of two aspects namely. (a) The investment made in human resources. (b) The value human resource. Measurement of the investments in human resources will help to evaluate the charges in human resource investment over a period of time. The information generated
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by the analysis of investment in human resources has many applications for managerial purposes. The organizational and human performance can be evaluated with the help of such an analysis. It also helps in guiding the management to frame policies for human resource management. The present performance results will act as input for future planning and the present planning will have its impact on future results. The same relationship is also applicable to the areas of managerial applications in relation to the human resource planning and control. 5. Investment in human resources can be studied under two heads. (1) Investment pattern (2) Investment in current costs. 6. Investment pattern in human resources: The human resource investment usually consists of the following items:(1) Expenditure on advertisement for recruitment. (2) Cost of selection (3) Training cost (4) On the job training cost (5) Subsistence allowance (6) Contribution to provident Fund (7) Educational tour expenses (8) Medical expenses (9) Ex-gratia payments (10) Employees Welfare Fund. All these items inuence directly or indirectly the
human resources and organization.
the
productivity of the
7. Investment in current costs: After analyzing the investment pattern in the human resources of an organization the current cost of human resources can be ascertained. For this purpose, current cost is dened as the cost incurred with which the organization derives benet of current nature. These are the costs which have little bearing on future costs. Thus the expenses incurred for the maintenance of human resources are termed as current costs. Current costs consist of salary and wages. Dearness allowance, overtime wages, bonus, house rent allowance, special pay and personal pay. 8. Human Resource cost coefcient After ascertaining the human resource investment and the current costs on human resources for a few years the human resource cost coefcient can be estimated. For this purpose. First of all Total Human Resource cost (THRC) can be ascertained. THRC = Human Resource Investment plus human resource current costs. Human Resource cost coefcient is computed by taking the share of each class of human resources in the total human resource cost. The following Table shows the Total cost and cost coefcient of Chennai Port Trust for 5 years ending on 31.3.2008. (See Table) The co-efcient will give idea to the management regarding how the investment in human resources is spread among various classes of human resources.
Year
THRC 2003-04 2004-05 2005-06 2006-07 2007-08 175.08 215.34 289.82 315.28 353.51
Officers Coefficient
0.0808 0.0889 0.1060 0.1140 0.1117
THRC
Staff Labour THRC CoCoefficient efficient

0.8175 0.8116 0.8020 0.7962 0.8038 220.45 240.75 251.44 248.31 267.72 0.1017 0.0995 0.0920 0.0898 0.0845
Total
1772.04 1964.64 2192.56 2201.66 2544.99
2167.5 2420.73 2733.82 2765.15 3166.22
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9. Times Rate or Return Another technique that can be employed for measuring the efciency of human resource of organization is Times Rate of Returns. Times Rate of Return is a direct indicator of the production performance of the human resource. For this purpose the total operating income of the organization is taken as the contribution made by human resources. This operating income is apportioned among different classes of human resources in the ratio of human resource cost co-efcient. The share of operating income is reduced by current costs on human resources and the resultant is the value of output that can be attributed to the investment made in human resources. The Times Rate of Return is computed by dividing the net operating income by the net investment in human resources. A high Times Rate of Return is an indicator of high efciency of the human resources. 10. Percapita Investment and percapita operating Income The efciency of human resources can also
be studied by making an analysis of the percapita investment and percapita operating income. For this purpose, the number of human resource in different categories is compared with the investment made in human resources and operating income. While a higher percapita investment shows the concern of the management for the human resources a higher percapita operating income shows the efciency of the human resources in contributing towards the income of the organization. 11. Value of Human Resources The value of human resources of an organization is useful information to the top level management for its planning and control purposes. All the commonly suggested valuation models are not free from limitations. However, the model suggested by Lev and Schwartz with slight modications is widely used by organizations for valuation of their human resources. The value of human resources using productivity Linked Human Resource valuation Model of Chennai Port Trust as on 31.3. 2008 is given below.
Table showing human resource value Category Class I- Ofcers Class I- Ofcers Class I- Ofcers Class I- Ofcers Shore Labourers Total Amount(in lakhs) 852 291 8320 3472 465 13400 Average 6,50,700 3,98,730 2,20,520 1,81,042 1,24,778 2,13,823
HRA Ratios : -To analyze HRA information and to relate to other variables ratio analysis can be used. The ratios are:(1) Human Resources to Total Resources (2) Human Resources to Capital Assets (3) Human Resources to Salaries & Allowances (4) Human Resources to Operating Income
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(5) Human Resources to Prot before tax (6) Human Resources to Value Added 12. Rate of Return on Human Resources: In order to study the efciency of the management of an organization in utilizing its Human Resources for generating income, the human contribution is compared with value of Human Resources. If the rate of return is less than the cost of capital of the organization, it means that the Human Resources of the organization remain under utilized. If the rates of return are above the cut off rate, then it can be concluded that the Human Resources are properly utilized for generating income for the organization. As part of my study in Chennai Port Trust for the purpose of calculating the Human Resources contribution, the following methodology is adopted. The income of Chennai Port Trust consists of three items. These are (i) Cargo handling and storage charges (ii) Port and Dock charges (including pilot age fees) (iii) Estate rentals. Of these, estate rentals are non - operating and hence excluded from this study. The total operating income of the Trust was 6194 lakhs during 2007-08. This income is earned by Human Resources. Capital assets and capital contribution. The interest on capital during the year is Rs.828
lakhs. The remaining income is Rs.5316 lakhs. This income is generated by Human Resources and capital assets. The value of Human Resources and capital assets are 13400 1akhs and 24,333 lakhs respectively. When the above income of Rs.5366 lakhs is divided in the ratio of Human Resources and capital assets, the Human Resources contribution can be arrived at which amounts to Rs.1905.61 lakhs. When this gure is compared with the value of Human Resources. The rate of return on Human Resources can be ascertained at 14.22%.The above approach has a major limitation that it divides the total operating income in the ratio of human asset and capital asset on the assumption that the contribution of both these factors towards the operating income of the Port Trust is on the basis of their value. Because of this limitation another approach can be attempted. In this approach, it is tried to ascertain the operating income contributed by Human Resources by analyzing each income of the Port Trust. An analysis of the two major heads of operating income viz. Cargo handling and storage charges and Port and Dock charges reveals that there are certain incomes which are earned without any human effort. Such items are Demurrage on general Cargo, hire on equipment for container handling, miscellaneous charges, Port dues and income from pollution control unit. The total of such income during the year 2007-08 amounted to Rs.834 Lakhs.
The remaining income is the result of the combined effort of Human Resources and capital assets. Such incomes during the year are:Cargo handling and Rs. storage charges:Handling and storage Charges on general Cargo Storage of goods in bonded warehouse Handling and storage Charges on general Cargo Storage of goods in bonded warehouse Crainage Petroleum, oil and Lubricants handling charges 841.79 0.11 46.25 2950.74
(in Lakhs)
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Wharfage of containerized cargo Import cargo on stream landing Export Cargo on stream landing Port and Dock charges:Towage and mooring fees Berth hire charges Pilotage fees Dry Docking charges Water supply to shipping Total
Study conducted by the planning and Research Cell of the Cochin Port Trust during 2008 has revealed that nearly 12% of the operating income is contributed by Human Resources and the remaining 88% by other factors. Following the above ndings, the income generated by Human Resources by Cochin Port Trust during 2008 can be estimated at to 643.22 lakhs. The value of Human Resources as on 31st March 2008 is Rs.13.400 lakhs and hence the return on Human Resources investment is only 4.8%. Under both these approaches the return on Human Resources is less than 18%. Hence it is concluded that the Human Resources of Chennai Port Trust is not properly utilized by the management. In a business organization the above approach can be adopted very easily. Such an analysis will give an idea about the utilization of human resources in an organization. Thus the Human Resources management becomes easy and more effective. 13. Conclusion The HRA system tries to evaluate the worth of Human Resources of an organization is a systematic manner as a whole to the organization and the society and record them for presenting the information in a signicant manner in the nancial statement to communicate their worth with changes over the period and results obtained from their utilization to the uses of nancial statements. The amount of investment made in the Human Resources and its value can be utilized by the Human Resources management personnel to
139.98 19.62 0.33
56.75 445.57 779.85 779.85 63.84 5360.18

determine how far the investment in Human Resources is utilized by the management in producing income for the organization. Such information will be in the best interest of the Management Human Resources and the Society. The Human Resources - an indispensable but often neglected element is thus to be fore grounded into the industrial arena for the betterment of the economy.
14. References 1. Prabhakara Rao D, Human Resources Accounting Inter-India. Publications New Delhi. 1986 2. Bhargava. P.P. Human Resources Accounting A tool for control and management ofassets, Anmol Publication New Delhi 1990. 3. Dasgupta.N. Human Resources Accounting Sultan Chand & Sons New Delhi 1980 4. Flamholtz, E.G. A Model for Human Resource Valuation: A Stochastic Process With Service Rewards. The Accounting Review, 1971, (April): 253-67. 5. Flamholtz, E. Towards a psycho-technical systems paradigm of organizational measurement. Decision Sciences, 1979, (January), 71-84. 6. Flamholtz, E.G. Human Resource Accounting: Advances, Concepts, Methods and Applications, Boston, MA: Kluwer
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Academic Publishers, 1999 7. Flamholtz,E.G., Bullen, M.L., and Hua, W. Human Resource Accounting: A Historical Perspective and Future Implications. Management Decision, 2002, 40 (10), 947954. 8. Flamholtz,E.G., Bullen, M.L., and Hua, W. Measuring the ROI of management development: stochastic An application of the valuation model. and rewards
10. Lev, B., and Schwartz, A., On the Use of the Economic Concept of Human Capital in Financial Statements, Accounting Review, 1971 (January), 103-112. 11. Moore, R. Measuring how human capital appreciates in value over time. Plant Engineering, 2007, 61 (4), 29.
12. Ryan, P. , and Ryan, G.P. Capital Budgeting Practices of the Fortune 1000:How Have Things Changed? Journal of Business and Management, 2002, Winter, 355-364.
Journal of Human Resource Costing
Accounting, 2003, 7 (No.1-2, Spring), 21-40. 9. Johanson, U. and Mabon, H. The personnel economics institute after ten years : What has been achieved and where we are we 1998, 3 (No.2, Autumn), going? Journal of Human Resource Costing and Accounting, 65-76
13. Sandervang, A.From learning to practical use and visible results: A case in competence development from a Norwegian business rm. Journal of Human Resource Costing and Accounting, 2000, 1 (2), 87-100.
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IMPACT OF BANK CREDIT ON RURAL POOR WITH SPECIAL REFERENCE TO PUBLIC SECTOR BANKS
Dr. S. Chandirakala, Lecturer, P.G. and Research Department of Commerce, D.G. Vaishnav College, Chennai 600 106.
1. Introduction The speedy economic development of a country depends on the developmental role of the commercial banks to a greater extent as they play a signicant role in poverty alleviation. The Indian banking sector has aided the economic growth of the nation on a continuous basis by facilitating the economic activities of production, distribution and consumption. The banking industry is entrusted with the responsibility of the nancial requirements of all the sections in the country. The development of the rural areas depends mainly on agriculture and its allied activities as that accounts for about 37% of the total national income. This is mainly due to the fact that 75% of the Indian population still lives in rural areas and out of that 80% depends purely on agricultural activities. The social responsibilities of the commercial banks towards rural development lies in elimination of poverty, providing health care facilities, equal employment opportunities, development of small scale entrepreneurs, etc. Thus various regulatory measures have been taken in order to enable the banking sector to play a vital role in the economic development of the rural and backward areas. To realise the same the government both at the centre and the state modied gradually a variety of schemes for the upliftment of the rural areas for providing the necessary nancial support through community development programmes and integrated rural development programmes. A major step taken since nationalisation for achieving the
rural upliftment was the expansion of branches in rural areas and priority sector lending. As per this the credit policy was implemented to encourage the ow of credit to priority sectors like agriculture, cottage and small scale industries. 2. Importance of Rural Credit In India, in spite of various efforts taken by the government, rural poverty continuous to be signicant over the past few decades. But due to the poverty alleviation programmes introduced by the government in successive years, the poverty levels reduced from 56.44% of Indian population in 197374 to 26.10% during 2000-01. The planned economic growth, increased money supply and banking habits, active guidance by RBI led to the rapid progress of banking industry after independence. The Service Area Approach (SAA) introduced in April 1989 caters to the overall credit needs of villages that were allocated to the various branches of commercial banks. This scheme was introduced in order to facilitate the rural borrowers to have an easy access to institutional credit. However the various schemes introduced for the upliftment of the rural masses by the government have not resulted in substantial improvement in the conditions of the poor. The key to programming for rural credit lies in recognising their problems and constraints and formulate the programmes that are more suitable for their specic needs. Majority of the rural credit should be focussed on short term and long term loans for working capital and investment purposes relating to agricultural and other inter related activities.
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The development of the neglected rural sector depends much on the removal of poverty and unemployment. This can be achieved by providing career opportunities and managerial training to small entrepreneurs. In order to achieve the same banks play a key role through rural credit. 3. Problems of Rural Credit The condition of the rural poor has not improved signicantly, despite the various developmental activities towards rural development since independence. In some cases, due to lack of information government benets like free power, subsidised interest rate, storage and transportation facilities never reaches the rural poor. Poor infrastructural facilities, lack of education, proper planning but poor implementation to development schemes and mismatch between bankers and poor borrowers views on rural credit also leads to the total lack of rural development. Fewer branches with lesser number of small loans and shorter repayment schemes add to the problems of rural credit. In some incidences, inadequate credit appraisal leads to poor recovery rate and high rate of defaulters. Apart from this large scale corruption at the lower level bank ofcials lead to administrative problems in which rich borrowers are certied for subsidy schemes. High transaction costs, rigidity of rules, nonparticipation in selection of activities and weekly integrated plans with inadequate marketing facilities posses as another important huddle. 4. Statement of The Problem The rural development is the back bone of the national development. Hence, any study which focuses its attention to ascertain the factors rural development has a fascinating and wide scope. There is an urge for special programmes for the direct improvement of the conditions the poor to achieve economic growth and hence the active role of banks
in providing credit in eradicating poverty in rural areas has assumed greater importance. The Indian economy consists mainly of agriculture, small-scale industries and cottage industries. The banks while investigating the purposes of loan should give special consideration to the special requirements of the poor. The rural people are in need of loans for improving productivity and for socio-cultural commitments. During hardships they need money for survival and operating needs too. In short all the poor require is instant nance at a cheaper rate of interest without stringent procedures. The commercial banks play a vital role in improving the living conditions of the poor through various poverty alleviation schemes by ensuring greater access and sustainable ow of credit. Thus it is highly important in studying the success of commercial banks in implementing such schemes to achieve the poverty alleviation. 5. Objectives 1. To analyse the extent of nancial assistance provided by banks in rural areas. 2. To assess the level of improvement in the standard of living of the rural folk. 3. To the social developments in the rural areas through banks participation. 6. Hypothesis The extent of nancial assistance provided by banks is not signicant in rural areas. The bank loans do not improve the standard of living of the beneciaries. There is no relationship between the social development of rural poor and the banks contribution.
7. Research Design of The Study The study is conducted using both analytical and descriptive type of methodology. The study is based
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on both the primary data and secondary data. The primary data is obtained through properly framed questions covering the personal details, details of extent of nancial assistance provided by banks, level of improvement in the standard of living of the beneciaries and the banks contribution for their social development. The questionnaire comprises both optional type and statements in Likerts 5-point scale ranging from strongly agree to strongly disagree. The study is based on survey method. The primary data was collected from 200 samples from 4 villages in Tiruvallur district namely Attarampakkam, Thandalam, Periyapalayam and Mathur based on simple random sampling method. The primary data collected were analysed with the help of percentage analysis, one sample t-test and descriptive analysis.
8. Analysis of Data And Intrepretations: Inuence of Demographic Variable on Rural credit: The percentage analysis revealed that more than three fth (60%) of the respondents were of the age group 31 40 in which the minimum age was 25 and the maximum age was 45. Among the respondents 31% passed their higher secondary followed by high school pass out of 30%. The occupation of more than 60% of the respondents was agriculture as the sample is mostly taken in rural areas. It is inferred that 60% of them had savings habits prior obtaining loan. Among the respondents 72% have taken loan in public sector banks and 63% of them have opted short term loans for agricultural purposes for a period of 1 6 months.
One-Sample t test for Extent of Financial Assistance in Rural Areas: Hypothesis I: The extent of nancial assistance provided by banks is not signicant in rural areas. Table 1 - Opinion of rural borrowers on extent of nancial assistance Table 1 - Opinion of rural borrowers on extent of nancial assistance N Normal time lag in sanctioning loan Sufcient loan for business expansion No delay in obtaining loan Easy Interaction with bankers Non Requirement of surety 200 200 200 200 200 Mean 3.28 2.96 3.32 3.24 2.84 S t d . Std. Error Deviation Mean 1.053 1.125 0.767 1.099 1.118 0.074 0.080 0.054 0.078 0.079
Normal Rate of interest
200
3.63
1.077
0.076
From the above table it is found that the mean value ranges from 2.84 to 3.63 with consistent standard deviation for 1 variable and more variability for 5 variables. The standard error mean are also found to be consistent for all the 6 variables
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Table 2 - One sample t test for extent of nancial assistance
df
95% Condence S i g . M e a n Interval of the (2-tailed) Difference Difference Lower Upper 3.43 3.12 3.42 3.39 3.00 3.78
Normal time lag in sanctioning loan Sufcient loan for business expansion No delay in obtaining loan Easy Interaction with bankers Non Requirement of surety Normal Rate of interest
44.108 37.223 61.100 41.682 35.914 47.687
199 199 199 199 199 199
.000 .000 .000 .000 .000 .000
3.282 2.960 3.315 3.240 2.840 3.630
3.14 2.80 3.21 3.09 2.68 3.48
From the above table it is found that the t values 44.108, 37.223, 61.100, 41.682, 35.914, and 47.687 are statistically signicant. This shows that the borrowers strongly agreed with nominal time lag in sanctioning and no delay in obtaining the loan. More over they nd it easy to interact with the bank ofcials. The banks charge nominal rate of interest and the amount of loan sanctioned is sufcient for expansion of business activities. Thus the extent of nancial assistance provided by banks in the rural areas is signicant. Therefore the null hypothesis is rejected at 5% level of signicance.
One-Sample t test for Improvement in the Standard of Living of the Rural Poor: Hypothesis II: The bank loans do not improve the standard of living of the beneciaries. Table 3 - Opinion of rural borrowers on improvement in their standard of living
N Creation of permanent employment Amortisation based on income Bank loan clears prior debts Increased business income thro loan Marketing assistance by banks 200 200 200 200 200
Mean 2.75 3.11 3.07 2.87 2.88
Std. Deviation 1.065 1.267 1.254 1.304 0.933
Std. Error Mean 0.075 0.090 0.089 0.092 0.066
The mean values of these 5 variables range from 2.75 to 3.11 with consistent standard deviation for 1 variable and more variability for 4 variables. The standard error mean are also consistent for all the 5 variables.
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Table 4 - One sample t test for improvement in the standard of living of rural poor 95% Condence S i g . M e a n Interval of the (2-tailed) Difference Difference Lower Creation of permanent employment Amortisation based on income Bank loan clears prior debts Increased business income thro loan Marketing assistance by banks 36.534 34.707 34.617 31.115 43.668 199 199 199 199 199 .000 .000 .000 .000 .000 2.750 3.110 3.070 2.870 2.880 2.60 2.93 2.90 2.69 2.75 Upper 2.90 3.29 3.24 3.05 3.01
df
The t values are statistically signicant at 5% level of signicance. Therefore the conclusions are interpreted from the rural borrowers as the bank loans led to the creation of permanent employment by clearing their prior debts. It has resulted in their increased income and the amortization of the bank loan is also based on such income. Moreover the banks also help to a certain extent in marketing their products. As the signicant value is 0.00 and it is less than 0.05, there is signicant difference between the test value and actual calculated mean. Hence the null hypothesis is rejected and concluded that there exists a signicant improvement in the standard of living of the respondents due to the bank credit. One Sample t test for social development of respondents: Hypothesis III: There is no relationship between the social development of rural poor and the banks contribution. Table 5 - Opinion of rural borrowers on social development S t d . Std. Error Mean Deviation 1.084 1.067 1.111 1.345 1.311 0.077 0.075 0.079 0.095 0.093
N Banks motivate best use of schemes Improved standard of living Banks pass subsidy to needy Technical assistance to borrowers Existing schemes needs improvement 200 200 200 200 200
Mean 3.60 3.63 3.46 2.80 3.47
From the table it is substantiated that the mean values of 5 variables if social development of rural poor due to banks participation range from 2.80 to 3.63.
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Table 6 - One sample t test for social development
df
Sig. Mean (2-tailed) Difference
95% Condence Interval of the Difference Lower Upper 3.75 3.78 3.61 2.99 3.65
Banks motivate best use of schemes Improved standard of living Banks pass subsidy to needy Technical assistance to borrowers Existing schemes needs improvement
46.950 48.106 44.039 29.441 37.443
199 199 199 199 199
.000 .000 .000 .000 .000
3.600 3.630 3.460 2.800 3.470
3.45 3.48 3.31 2.61 3.29
The t values display high signicance at 5% level. Thus to upshot, banks motivate the borrowers for better usage of the various nancial assistance provided by them thereby improving their standard of living. Banks pass on the benets of subsidy offered by the government to the needy people. They also offer guidance and technical assistance to the beneciaries. However the respondents strongly feel that the existing schemes need further improvement for the betterment of the rural areas. Hence the third hypothesis is rejected and concluded that banks play a vital role in the social development of rural masses.
9. Descriptive Analysis Table 7 - Descriptive Analysis of variable on rural credit
N Age Education Occupation Saving prior taking a loan Amount of Saving Bank loan taken Loan Scheme 200 200 200 200 200 200 200
Minimum 1 1 1 1 1 1 1
Maximum 3 5 3 2 3 3 2
Mean 2.10 2.44 1.65 1.40 1.42 1.51 1.37
S t d . Deviation .63 1.33 .88 .49 .67 .84 .48
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Normal time lag in sanctioning loan Sufcient loan for business expansion No delay in obtaining loan Easy Interaction with bankers Non Requirement of surety Normal Rate of interest Creation of permanent employment Amortisation based on income Bank loan clears prior debts Increased business income thro loan Marketing assistance by banks Banks motivate best use of schemes Improved standard of living Banks pass subsidy to needy Technical assistance to borrowers Existing schemes needs improvement Valid N (list wise)
200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200
1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1
5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5
3.28 2.96 3.32 3.24 2.84 3.63 2.75 3.11 3.07 2.87 2.88 3.60 3.63 3.46 2.80 3.47
1.05 1.12 .77 1.10 1.12 1.08 1.06 1.27 1.25 1.30 .93 1.08 1.07 1.11 1.35 1.31
From the above table it is clear that the rural credit has direct implications on the major factors. The main indices that affect rural credit are standard of living with mean value of 3.63 and standard deviation 1.07 followed by banks motivation mean 3.60 and standard deviation 1.08 and rate of interest mean 3.63 and standard deviation 1.08. These variables with maximum mean value rely directly on the rural credit. Higher the rural credit moir will be the mean values. This signies the active participation of banks in the rural areas.
10. Suggesstion For Futher Improvement The following are the suggestions given for improving the active participation of the banks for the overall development of rural poor. 1. The banks should have a sustainable relationship with the borrowers as recovery of the previous loans and sanctioning of fresh loans should take place simultaneously. The banks should consider modications in the terms and conditions of the credit supply. 2. The banks should provide expert advice
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and practical training to the borrowers in selecting income generating activities based more on practicability and protability. Sufcient freedom should be given to the borrower in selecting the activities in diversied utilisation of the loan amount. 3. Difcult procedures connected with obtaining loan should be easy. Banks should be more of user-friendly to the rural poor. The restriction on the list of approved activities for lending loan should be redened on the basis of demand based activities. Moreover banks should concentrate on solving the problems of borrowers in continuing smooth running of the existing business. 4. This can be done in a better way by proper training, awareness on savings and credit discipline, inculcating self condence based on mutual support system, exibility in utilisation of funds etc. Banks should ensure providing adequate amount of loan to credit worthy people to enable them to expand their business activities. 5. In order to cater to the needs of highly dispersed population in the rural areas, opening satellite branches on weekly market days at various places can link the production and consumption credit needs of the poor and application of credit schemes of the banks in a better way. For repayment of such loans banks can depend on agents like NGOs to have cost effectiveness and good recovery rate. 6. Group based lending like SHGs and lending on the security of common property should be adopted completely. Credit for women should be encouraged more in tribal areas. 7. Though the money lenders charge exorbitant interest, their timely assistance and zero
formalities are far more superior to banks. Thus cooperation or a combination of banks and traditional money lenders can ensure solving all rural credit problems, to great extent. 11. Conclusion The existing credit policy needs a lot of modications to suit the exact requirement of the rural poor. Flexibility in lending, supply of timely and adequate credit at minimum interest to the needy persons and proper supervision over the end-use of credit are the need of the hour in order to make the assistance of commercial banks a successful one. Thus properly designed and effectively implemented bank assistance can be a means not only to alleviate poverty and empower the rural poor but also be a viable economic and nancial proportion. 12. References 1. http://www.nabard.org/fileupload/DataBank/ Speeches/MD_speech_Shri%20Y.S.P.%20 Thorat_241105.pdf http://rbidocs.rbi.org.in/rdocs/content/ PDFs/90024.pdf http://en.wikipedia.org/wiki/Rural_credit_cooperative http://www.jstor.org/pss/4399896 h t t p : / / w w w 3 . i n t e r s c i e n c e . w i l e y. c o m / journal/113451427/ abstract?CRETRY=1&SRETRY=0 6. 7. h t t p : / / w w w. r b i . o r g . i n / s c r i p t s / B S _ SpeechesView.aspx?Id=318 SHARMA N.K., Social Responsibility and Prot Motive of Commercial Banks,Yojana, July 2002, pp.13-16 VASANTH DESAI, Indian Banking Nature and Problems, Himalaya Publishing House, New Delhi 1987, p.160.
2. 3. 4. 5.
8.
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9.
LAL NIGAM B.M., Banking Law and Practice, 5

th
11. SGSY
Guidelines
Ministry
of
Rural
Revised
Edition,
Konark
Development, Government of India, New Delhi, June 2006. 12. URVASHI GULATI, Womens Development in India with special reference to Rural Women, Kurukshetra, Vol.XLIII, No.11, Aug 1995.
Publishers, Delhi 1997, pp.154-165. 10. The Director, Association of State Bank Ofcers, A Guide of Banks Finance in Poverty Alleviation Programmes, ASBO Publications, Chennai, 1996, pp199-205.
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EFFECTIVENESS OF MICROFINANCE INDUSTRY AGAINST THE BACKDROP OF GLOBAL RECESSION

D. Mylesh Raju L. Suresh Mallya Valliammai Engineering College, Kattankulathur 1. Introduction Micronance Earlier the word micronance referred only to the monetary assistance that was offered to poor people who otherwise would not have got such nancial aids from banks. The major reasons for denial by the banks to these kinds of offerings to such people range from seeking of securities to repayment defaults. No sooner did Mr. Yunus khan plunged into this activity, the unbankables got access to banks assistances in various forms which included micro credits, savings and other nancial services. 2. Paradigm shift The word Microcredit referred only to the assistance in the form of money whereas Micronance included other related aspects such as insurance facilities, technical assistances etc... 3. Recession The downtrend in the performance level of almost all major sectors of an economy could be one of the factors that indicate the onset of recessionary environment in that economy. No matters whether it stabs only a certain province or the entire world, the word recession could possibly mean: Credit crunch Reducing disposable income Symptom of economic depression Industrial performance at malaise. 4. Recession and Micronance The type of businesses covered, i.e. the loan extension and other facilities provided by the MFIs are normally given to the following businesses: Cattle rearing Curd processing Building material shop Dry and wet grinding Candle making Coir unit Dry sh Fish and Fish products Idly making Tailoring Lace and embroidery Honey processing Coconut shell products Tea and snacks Milk booth Sari and garment selling General and departmental stores
The following issues are deemed to be Achilles heel for micronance institutions under recessionary conditions. Increase in operating cost Procrastination in payments Decrease in morale among employees Lack of Interest among borrowers Decline in source of funds Increase in default rates Intervention by money lenders Decrease in liquidity
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5. The major objectives of this research include Whether recession 2008-really had an impact on the micronance lenders. Difculties faced by micro creditors and the extent of difculties
risks a lot better. Indian MFIs and banks survived because Indias comfortable position allowed the RBI to meet dollar liquidity needs ( Jayanth R Varma, 2008). The sources of fund are limited for MFI either due to regulations or due to lack of initiatives on the part of MFIs. Though some MFIs have moved from their complete dependence on banks, they still are single largest fund providers for bank credit. (Icfaian journal of management research, 2008-09). 7. Methodology Qualitative study: It is a qualitative type of work and does not include any numerical information and quantitative analysis. Research tool used: A thoroughly rened
6. Literature review As mentioned in the introduction, there exist a lot of differences between the concepts of Micro credit and Micronance. Micronance refers to small-scale nancial services primarily credit and savings and also to all types of nancial services provided to low-income households and enterprises - Robinson (2001). It is presumed that micronance activity has had an incredible growth in India. But it was found that even in the normal economic scenario there prevail a lot of difculties regarding their effective survival. Despite the success of micronance institutions; only about 2% of worlds roughly 500 million small entrepreneurs are estimated to have access to nancial services (Barry et al. 1996).Indian Micronance has continued growing rapidly with the main objective of nancial inclusion extending outreach to a growth share of poor households to approve 80% of population that is yet to be reached directly to the formal institutions (Ghate, 2007). Regarding the various problems faced by the micronance institutions there were many researches that had been done and various ndings were also elucidated with evidences by many researchers. The present system with regard to this micronance area needs to reduce the cost of lending by improving or innovating the delivery mechanism. The interest rates charged by them should cover the cost of delivering these loans (Y.C.Nanda). Some banks and non bank nances companies with large exposure to consumer credit faced mounting losses and the markets become uneasy about their nancial health (Jayanth R Varma, 2008). The global crisis has been a wake up call for Indian banks to manage their liquidity risks and credit
questionnaire which consists of closed ended questions those are intended to obtain the matters of fact that have high pertinence to the subject being investigated and the details sought in the questionnaire orbit around the following: Type of business covered by the micronance institutions under investigation. Businesses affected during recession. List and the encountered. extent of problems
8. Mode of administration of the questionnaire: Telephone Samples: Five micronance institutions were selected and they were administered the questionnaire through telephonic mode and the appropriate responses were noted down with full care in order to ensure credibility of the results. The respondents include the authority concerned from the following micronance lending institutions: Dhan foundation. Equitas foundation.
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9. Findings Problems
Annai Indhra Gandhi trust. Canara bank. Indian bank.
Increase in Procrastination in operating cost payments Institutions Dhan Very high Medium Medium Medium High High Very low Very low Very low Low
Decrease in morale of the employees High Very low Low Medium Medium
Lack of interest among borrowers Low Low Low Medium Medium
Equitas Annai Indhra Gandhi Trust Canara Bank Indian Bank Problems
Decrease in Increase in default source of funds rates Institutions Dhan Low Low Low Low Very low Medium Low Low Low Low
Intervention from Decrease in liquidity money lenders Low Low Low High Medium Medium Medium Low Low Low
Equitas Annai Indhra Gandhi Trust Canara Bank Indian Bank
It was found from the reply of respondents that most of the micronance institutions in the area under investigation have had their source of funds, to a large extent, from Banks. Though government also funded them to carry out operations of MFIs, due to earlier predictions made by researchers and economists that US recession would have an adverse impact on India, the problems pertained to liquidity and supply of money to these organizations were made recession proof by pursuance of appropriate and necessary steps. None of the individuals and foreign lenders was found to involve in providing source of funds to these MFIs. If it had been the case, i.e if these participants had contributed to working of MFIs, then the recession would have been a difcult period for MFIs effective survival during the global economic meltdown. The only one sector that had evidenced the impact of recession was building material shop. Hardly there were identiable effects of recession in other businesses. It was afrmed by all respondents
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that all other businesses except building material had a large bearing on humans routine and normal life. It is unlikely that an individual would stop his consumption with regard to food, garments due to recession. The operation cost was also found to have shown a slight increase because the managers of these institutions had to be motivated all the while and counseling had to be given to the beneciaries regarding regular payments as an action of caution to avoid delayed payments and other potential recessionary problems, albeit in reality no such considerable problems were reported. For instance, only one default case was reported in one of these institutions during the period of one year (2008-2009).
during this recession, there are some minute pitfalls in their operations and pursuance of normal activities during recession .But those problems can be fully eliminated if MFIs give due considerations to those areas. One such area is hike in operation cost. The common problem of delayed collection can be solved by employing simplest measures such as introduction of penalty amount, rewarding on-time payers, denying access to multiple borrowings etc...These are all paramount to be done; otherwise the situation during adverse situations would not be in a manageable state as these factors stoke the adversity further. For instance, multiple borrowings, unambiguously would lead to default at least to one of the MFI. It is apparent from above discussion that Micronance activity will be on the right track towards its throne by passing through the adverse conditions such as recession even in a much better way if the above suggestions are considered and implemented.
10. Results and discussions Results Give a man a sh and you feed him for a day. Instead it is better to teach a man to sh and you feed him for his life time. This premise can be considered as a basic concept behind the success of micronance industry. It can be concluded that though there were major slumps in the performance of hi-tech industries and decrease in major economic factors like GDP, employment, disposable income etc., the recession in fact, has had almost negligible impact on the micronance. It was also found from the study that the government is poised to plunge into this eld to have a regulatory control and to magnify the role and reach of micronance activity in a wider scope.
12. References
1. Djuricin D. (2009). The Impact of Global Financial Crisis on the Serbian Economy and Responses from the Economic Policy, Kopaonik Business Forum, March 2009. 2. Gandhi Subramanian, Global nancial crisis of 2008-2009 Triggers, Travails and treatments, The Icfai journal of Applied Economics, September 2009. 3. Naveen K Shetty and Veerashekharappa: The micronance promise in nancial inclusions-Evidence from India, The Icfai journal of applied economics, Vol III, September and November 2009. 4. B . T a m i l m a n i , R u r a l W o m e n Microentrepreneurs: An empirical study
11. Discussions It is found that though recession has not hit the micronance institutions that much badly
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on their social profile, business aspects and economic impact, The Icfai journal of Applied Economics, June 2009. 5. Anand, High cost of nance in micro credit business in Andhra Pradesh (INDIA): problems and solutions, The Icfaian journal of Applied Economics, September 2009. 6. Ghate prabhu, Indian Micronance: The challenges of rapid growth, Sage publications, New Delhi, 2007.
pdf 4. http://ec.europa.eu/europeaid/infopoint/ onferences/2009/04_20_microfinance_ en.htm 5. http://www.mykro.org/will-the-globalnancial6. crisis-hurt-micronance/2008/10/ http://www.themix.org/publications/ i mpact- nancial-crisis-micronanceinstitutions
Websites 1. http://mostlyeconomics.wordpress.com/ 2. https://www.microfinanceinsights.com/ index.asp 3. h t t p : / / w w w . c g a p . o r g / g m / document-1.1.1305/ FN_52%20ENG.
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ACADEMICIANS PERCEPTION TOWARDS LEARNING ORGANIZATION: A COMPARATIVE STUDY

Dr. Babita Agarwal, D.Litt, Ph.D {English} MBA {HR}, Reader Shri Vaishnav Institute of Management School, Prof. Sunil Chouhan ( M.Sc {Stats} Pursuing Ph.D, Lecturer, Shri Vaishnav Institute of Management Sch. No. 71, Gumasta Nagar, Indore . 1. Introduction The intense global competition, rapid change of technology and higher consumers demands have prompted companies to look for competitive advantage for survival. Under these circumstances, companies may differentiate themselves on the basis of the knowledge they possess which are from their employees (Black and Synan, 1997). In order to stay competitive in business, an organization needs to ensure that knowledge is being created, transferred and shared in the organization. To promote this, the organizations environment plays an important role. Many organizations like Xerox, and General Electric have pledged to build a Learning Organization where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together (Peter, 1990; Garvin, 1993). Stata (1989) stressed the point that the rate at which individuals and organizations learn may become the only sustainable competitive advantage. The most discussed model on learning organization comes from Senges (1990) ve disciplines of learning organization encompassing personal mastery, mental models, shared vision, team learning and system thinking. Watskins and Marsick (1996) further developed the seven dimensions of learning organization to measure its existence in an organization. The dimensions are continuous learning , inquiry and dialogue, team work, embedded systems, empowerment, systems connections and provision of leadership. University is the place where teaching and learning activities are performed. It provides a meeting place for the learners to meet with the teachers in pursuit of knowledge. Besides providing knowledge in academic areas to the learners or students, university should also be a place where continuous learning occurs among academics and students. With the learning culture, it is believed that creation and transmission of knowledge would be able to take place effectively. In a strategic response to the changing environmental situations and pressure, many universities are now applying new ideas and changing to new ways of operating; they have become a learning organization (Patterson, Each institution has its own capabilities and core competencies. In order to create a sustainable competitive advantage in this highly competitive industry, it has to ensure that its competencies fullled the criteria of valuable, rare, non-substitutable and costly to imitate (Hanson et al. 2005). The educational institution is considered as service industry where it provides knowledge to students through the expertise of academic staffs. Therefore, one of the best competitive advantage that should be created is through its human resources. In order to get smarter, the organization needs to capture its organizational knowledge. Prahalad and Hamel (1990) have described the following criteria of how organizations learn, and identify the outcomes of the process as the development of core competencies: 1) Adopt a learning approach to strategy, focuses on the learning process, which implies listening to different opinions (from peers, customers, controllers, etc.) and an overall attitude of openness. A key ingredient of this criterion is in how banks process their managerial experiences. Learning Organizations
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/Managers learn from their experiences rather than being bound by their past experiences. 2) In Generative Learning Organizations, the ability of an organization/manager is not measured by what it knows (that is the product of learning )but rather by how it learns the process of learning . Management practices should therefore encourage, recognize and reward: openness, systemic thinking, creativity, a sense of efcacy and empathy. A learning climate is also necessary, as it requires strategic processes in place to support the acquisition of information and its transformation into knowledge. Participative policymaking focuses on the actors/stakeholders who are involved in organizational policy-making processes and on the nature of the relationships characterizing such a process. The movement has to come from the bottom-up with understanding and shared purpose. 3) Access and transparency of information, focuses on the mechanisms which generate participation and support empowerment within an organization, allowing knowledge sharing and the access to knowledge bases and to information. The criterion basically focuses on informing and empowering. These can be done by making information as widely available as possible; by using information systems to help employees to understand the content of the data, which must be accurate, complete, representative, updated. 4) Formative accounting focuses on the formative processes through which control procedures take place and their results are then discussed between the controlling actor and the controlled one, with the aim to generate improvement and learning. Formative approaches should be shared on an organizational level and become part of the overall procedural schemes. The accounting, budgeting and reporting systems have to be set up so they assist learning and give added value. 5) Internal exchange and dialogue, focuses on the
horizontal processes taking place among units. In other words, it focuses on the functions and responsibilities as they are articulated within the organization and on the relevant communication ows. 6) Reward exibility, focuses on a special kind of exibility, which is strictly linked to the capacity to successfully adapt to changes and to generate innovation. The assessment of exibility goes beyond the assessment of individual productivity in traditional terms and poses interesting questions concerning what the company considers reward able or to be rewarded. In other words, it is relevant to see what is the organizational culture affecting the internal reward system. It is important to see if reward and recognition systems are in place - processes and systems that recognize acquisition of new skills, teamwork as well as individual effort, celebrate successes and accomplishments, and encourages continuous personal development. The employees expect reward for their training or developments they have put effort in, become more skilled - expect greater reward. This reward might be either extrinsic (promotion, increase in pay) or intrinsic (greater fulllment through a more demanding or higherstatus job). In the same time, it must be highlighted that there is a risk in linking reward systems with opportunities for learning and personal development, which may eventually make employees behave in a Pavlov-like way. 7) Inter-company learning , focuses on the fact that organizations start a praxis in creating opportunities of dialogue with other organizations, Within this criterion, the following indicators could be proposed: investigations of the companys climate; use of suggestion boxes; set up of an Exchange forum; use of tools and methodologies to socialize knowledge; sharing of self-development plans with the boss; detection of employees perception of autonomy, responsibility and empowerment 8) Self-development, focuses on the possibility to access learning opportunities and to start personalized
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development processes. This criterion could be related to Senges discipline of personal mastery and with Stewarts requirement of individuals committed to self-development. The problem here consists in who owns the learning , the employees or the employers, and the uses to which the new learning will be put. 2. Review of Literature Kumar and Idris (2006) found that team learning , embedded system and provision of leadership possess strong relationship with knowledge performance. Dymock and McCarthy (2006) have conducted a research to explore employee perception of the development of a learning culture in a medium-sized manufacturing industry that inspires to become a learning organization. Provision of leadership and continuous learning dimensions received the highest score of mean in this research. Ortenbald (2004) proposes an integrated model of a learning organization that includes organizational learning, learning on-the job, a climate of learning and an organizational structure that is exible and organic. Chang and Lee (2007) further explained that learning organization covers individual, grouping and organizational learning with the simultaneous proceeding effort for organizational and individual learning. It is a type of collective activity to reach organization shared vision. Murray and Donegan ( 2003) explore the links between rm competencies and organizational learning. The result suggests that a rms competitive advantage can be increased as a result of competencies that are established from a learning culture. Johnsons (2002) study examines the actions that a leader can take in order to transform an organization into a learning organization and studies four leaders of widely diverse organizations. The research indicates that leaders who were successful in implementing the learning organization concepts used it as the solution to a business problem, while devoting time and attention to the transformation.
Griego, Geroy and Wrights (2000) study focus on current practices, which predictably lead to learning organizations . The objective of their research was to determine the practices of learning organizations that lead them to success. The study nds that appropriate rewards and recognition are vital learning organizations and that an environment of knowledge sharing and learning systems is an indication of a learning organization. Watkins and Marsick (1993, 1996) have proposed seven dimensions to measure the learning organization characteristics. The dimensions are: continuous learning , inquiry and dialogue, team work, embedded system, empowerment, system connections and provision of leadership. Many studies have attempted to link the seven dimensions with knowledge performance. Selden (1998) evaluated the relationship between the seven dimensions and knowledge performance and it was found that all dimensions except inquiry and dialogue were signicantly correlated with knowledge performance. Based on previous ndings, Garvin (1993) has dened Learning Organization as an organization skilled at creating, acquiring and transferring knowledge, and at modifying its behavior to reect new knowledge and insights. According to him, learning organizations are skilled at ve main activities: systematic problem solving, experimentation with new approaches, learning from their own experience and past history, learning from the experiences and best practices of others, and transferring knowledge quickly and efciently throughout the organization. He has shown that learning organization can be measured and manifested through series of activities. 3. The Objectives of This Study To examine the inuence of the academicians perception of learning organization To recognize the need for individual learning for all levels of Faculty. To encourage faculty to accept responsibility
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for their own careers and their personal growth. To examine the inuence of reward and incentives on stretching the abilities of individuals.
4. Research Methadology H0:There is no signicant difference regarding the perceptions of organizational level learning between the government and private education Institutions. H1: There is signicant difference regarding the perceptions of organizational level learning between the government and private education Institutions. 5. Result and Discussion ( Tables 1 and 2 are attached at the end of the references) The mean score for private Institutes (56.55) is higher than that for Government Institutes(50.5). This difference is statistically signicant, implying that the private Institutes of management have a more positive perception on the existence of organizational level learning in their organizations than the Government Institutes does. The practical implication of the study is that the Government Institutes need to pay conscious attention to encourage learning practices at the organizational level. The management should encourage their employees to participate in a range of educational activities apart from their routine tasks, facilitate individual and team learning and encourage the employees to share their knowledge as these attempts will help the organizations attain the best out of their employees. Most importantly, to merit the trademark of a true learning organization, more effort on the part of the management is required in granting encouraging incentives for staff who take the initiative to learn. In future, we could investigate into the particular mechanisms of learning practices at different levels, and to examine the correlation of learning and performance outcomes . The ndings of the study will enable the
management of universities/colleges to understand the factors motivating their employees share knowledge and thus provide suitable motivational programs, development opportunities and training programs. The management will be able to create learning and sharing workforce that are able to deliver high service quality and get good return on investment on major decisions. Moreover, it would produce meaningful research output for the private higher education industry that will lead to future training and consultancy activities. This study will contribute towards the literature of learning behavior and knowledge sharing willingness of faculty members of the private higher education industry in terms of understanding what determines the faculty members level of knowledge sharing toward their organizations. To summarize, all institutions under study need to exercise great efforts to establish a structure system, and culture to encourage an ongoing learning process as the concept of learning organization is an idealized model of coping with organizational change as a shift from traditional organization. 6. References Black, D H & Synan, C D (1997) The learning organization: the sixth discipline? Management Accounting British. 75 (10), 70-72. Stata, R. (1989) Organizational learning -the key to management innovation. Sloan Management Review. 30(3), 63-74. Garvin, D A (1993) Building a Learning Organization. Harvard Business Review. July-August 1993, 78-91. Hansen, M., Nohria, N. and Tierney, T. (1999) Whats your strategy for managing knowledge? Harvard Business Review. 77 (2), 106.
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Kumar, N & Idris, K (2006) An Examination of Educational Institutions Knowledge Performance: Analysis, implications and outlines for future research. The Learning Organization. 13 (1), 96-116. Senge, P.M. (1990). The Fifth Discipline. New York: Doubleday. Selden, G. (1998) Dimensions of the learning organization in family-run businesses. Unpublished doctoral dissertation, University of Georgia, Athens, GA. S Murray, P., & Donegan, K. (2003). Empirical linkages between rm competencies and organizational learning . The Learning Organization, 10(1), 51-62. Ortenbald, A. (2004) The learning organization: towards an integrated model.
The Learning Organization. 11 (2/3), 129 Watskins, K. and Marsick, V.(Eds) (1996) Creating the Learning Organization. American Society for Training and Development, VA: Alexandria Griego, O. V., Geroy, G. D., & Wright, P. C. (2000). Predictors of learning organizations : A human resource development practitioners perspective. The Learning Organization 7(1), 5-12. Johnson, J. R. (2000). Leading the learning organization: Portrait of four leaders. Leadership & Organization Development Journal, 23, 241-9. Senge, P. (1990). The fth discipline: The art and practice of the learning organization. New York: Currency Doubleday.
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EFFECTIVENESS OF IMPACT OF ORGANIZATIONAL CLIMATE IN THE ORGANIZATIONS

G. Sukumaran, Associate Professor Kanchi Krishna Arts College, Kilabi, Kancheepuram Dr. R. Kannan, Director, Management Studies Srinivasan Artis and Science College, Perambalur 1. Introduction Set of factors which draw attention of HRD in organizations stem from changing organizational environment and organizational necessities to adapt and innovate in response to these changes (Gupta, 1988: 13-14). Some of these factors are: 2. Increasing competition Increasing competition requires higher efciencies as well as better human resources to meet the challenges. Such competition also makes it difcult to recruit the right kind of people. 3. Expansion and Growth Organizational growth and expansion leads to increased complexity of operation, Managers of these organizations need a higher level of managerial skills. As such the organizations require more sophisticated systems for optimum utilization of its large human resource pool. 4. Rapid Technological change Rapid change in technology demands frequent changes in organizational structure and systems as well as change in the required skills. All these changes create conict, stress and obsolescence of skills and the need to innovate solutions related to these problems. 5. Lack of suitable manpower Due to lack of sufcient industrialization, increasing competition and changing technologies, many organizations face the problem of getting suitably trained and skilled people at various levels. This necessitates the organization to develop its own human resources. 6. Changing needs of people Due to various sociological changes, the needs and aspirations of the employees change from time to time. These needs are related to work benets, career growth etc. Organizations need to develop ever new response to these changing needs through more suitable human resource management policies and systems. 7. Organizational climate change The success of an organization depends to a large extent upon the capabilities, competence, efciency and effectiveness of its human resources. The HRD system is an essential tool for management in order to develop a strong capability, competence and responsibility among the employees of a concern. M.N. Kulkarni observed that HRD is an aid to the efcient running of the enterprise. It is now a rm belief that the organizations can improve their effectiveness and productivity through the development of human beings. Thus, HRD is the core of existence and strength of an organization, no organization is immune to the need of HRD to acquire and increase its capabilities for stability and renewal 8. Organizational climate and organizational goals Climate is helpful in the fulllment of committed goals of an individual, organization and society. It increases the capabilities and efciency of an individual which is likely to reect itself in the long run in the well-being of the individual good reputation of the institution and ultimately the wellbeing of the society. Geary Rummler thus observed in this connection after having gained experience in
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his organization. I have seen real success in last four years when the HRD function was managed in opportunities fashion in our organization. climate developed a clear idea for what it wanted to accomplish and then waited and watched for just the right opportunity. 9. Climate Mechanism In the eld of management sciences, 1980 can be called decade of computers and HRD. The present decade is likely to continue to be a decade of new technologies in every eld including human resources. It is now well recognized that human competency development is an essential pre-requisite for the development of any organization. Climate, therefore should be a continuous process in the organizations. However the nature of efforts and investments in developing human resources may vary from organization to organization depending on its need, nature of capabilities the organization wants to build up, the change process, size of the organization etc. 10. Climate variables
climate development can be considered as HRD instrument or sub-system. Accordingly, there can be various other HRD sub-systems including review discussions, feedback and counseling, communication policies job rotation, rewards, job enrichment programmes etc. 11. HRD Climate A healthy organizational climate is required for utilizing and enchanting employee competencies and to develop employee motivation. HRD also aims at climate development. A healthy climate is one where: 1. 2. 3. 4. 5. 6. The free expression of ideas, opinions and suggestions (openness) is encouraged. There is promotion of collaboration among various individuals, teams and departments. People say what they mean, so what they say, and where people can be trusted. Initiate pro-activity and creativity. Problems are diagnosed, confronted and solved collectively or individually. Every senior sees developing subordinates as his responsibility. Seniors support their subordinates and juniors respect their seniors. Problems, mistakes and difcult situations are handled with a learning orientation. Participation is encouraged. Every incident is treated opportunity. as a learning
The organizational climate is built if the following variables are attributed to practice in the organization 1. 2. 3. 4. 5. 6. 7. 8. 9. Managements Policy on HRD Potential Appraisal Organizational development (OD) Goal-setting Role Analysis Performance appraisal Career planning Executive Development Training
7. 8. 9. 10. 11. 12.
People have a sense of satisfaction in their work. People feel that they are cared for and have a sense of belonging.
Although any systematic or formal method which facilitates in increasing employee competency or helps in employee motivations and organizations
HRD aims at developing such a climate through periodic diagnosis and appropriate intervention to reach the organizational objectives. HRD climate is grouped into OCTAPACE culture
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through above mentioned HRD mechanisms.. 12. Objectives of the Study The following are the core objectives of the study. They are : 1. To analyze organizational climate suitable for the HRD objectives, needs, and practices of HRD in IT companies. To study the existence of different objectives of organizational climate in IT industry.
practice of HRD elements in the organization and their determination about organizational goals. In order to determine the HRD climate the HRD climate statements, are given to the respective executives. These climate statements are posed according to the nature of executives. This information got through questionnaire and also interacting personally with all levels of executives in IT companies. These personal interviews gave useful and perfect information for further statistical analysis. 15. Sample size Sample that is chosen for the study covers all parts management of IT companies in Chennai. Totally 220 employees are selected on proportionate random sampling method. Out of the sample, 138 employees only 136 returned the lled in questionnaires and of them 134 only were found useful for the analysis. Hence, the exact sample of the study was 134. The statements in the each questionnaire are checked for reliability using Cronbachs Alpha Criterion to include in the questionnaire and the samples obtained in a random way in those two organizations satisfy the probability normal distribution using Kolmogrov Smirrov Test. The data collected from the executives are subjected to statistical analysis to give torrent of results regarding HRD practices in IT companies. 16. Statistical tools used 1) One sample t-test is applied to obtain the predominant factors of climate and signicant difference among them in the study. 2) One-way analysis of variance is used to nd the inuence of demographic variables on consumer behaviour. 3) Factor analysis and cluster analysis are applied to obtain the factors of HRD climate and classication of employees. 17. Level of satisfaction of various determinants of Organizational climate In this study the various determinants like recruitment and selection, training and development, career advancement, wages and allowances, promotion, welfare and social security, working
2.
13. Hypotheses 1. Different levels of management are independent of different HRD climate. The elements of HRD climate and their effectiveness are independent of personal proles of executives. There is no signicant impact of elements of HRD on the HRD climate.
2.
3.
14. Methodology The objectives of the study are based on three level executives Top, Middle and Lower. So three questionnaires are formed for top, middle and lower level executives. The opinions of these above mentioned executives are sort through the questionnaire comprising 5 point scales, 5 - Strongly Agree, 4 Agree, 3 Medium Agree nor Disagree 2 Disagree, 1 Strongly Disagree. Besides these questions certain personal demographic variables, questions are asked to the executives according to their limitations. The demographic variables Age, Salary, Educational Qualication, and Total Experience are introduced in the questionnaire. For all the three executives are asked to express their opinions about elements of HRD climate. They are also asked to express their views on the effect of
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condition, level of workers participation, collective bargaining, standard of safety, performance appraisal, style of leadership, work load, communication facilities, recognition of merit, authority and responsibilities, human relations, grievances handling as such in the questionnaire have been considered. The respondents are requested to express their opinion in 5-point scale ranging from 1-stronglydisagree, 2- disagree and 3-neutral, 4-agree and 5-strongly agree. So a one-sample t-test is applied and following results are obtained. Table 4.1 One-Sample Statistics for various determinants of Organizational climate Mean LOS1 LOS2 LOS3 LOS4 LOS5 LOS6 LOS7 LOS8 LOS9 LOS10 LOS11 LOS12 LOS13 LOS14 LOS15 LOS16 LOS17 LOS18 3.3700 3.4800 3.3500 3.0800 3.1400 3.6100 3.8100 3.6400 3.4500 3.7000 3.4000 3.6600 3.5400 3.8100 3.3400 3.7700 3.4400 3.4200 Std. Deviation .78695 .68873 .78335 .77434 .80428 .58422 .44256 .55994 .57516 .59459 .75210 .51679 .64228 .44256 .69949 .50960 .74291 .71322 Std. Error Mean .07870 .06887 .07833 .07743 .08043 .05842 .04426 .05599 .05752 .05946 .07521 .05168 .06423 .04426 .06995 .05096 .07429 .07132
It is observed from one-sample statistics table that the mean values of determinants of Organizational climate are greater than 2. The signicance with the test value 2 is presented in the table.
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Table 4.2 One-Sample Test for various determinants of Organizational climate
Sig. (2-tailed)
Mean Difference
95% Condence Interval of the Difference Lower Upper

.5261 .6167 .5054 .2336 .2996 .7259 .8978 .7511 .5641 .8180 .5492 .7625 .6674 .8978 .4788 .8711 .5874 .5615
LOS1 LOS2 LOS3 LOS4 LOS5 LOS6 LOS7 LOS8 LOS9 LOS10 LOS11 LOS12 LOS13 LOS14 LOS15 LOS16 LOS17 LOS18
4.702 6.969 4.468 1.033 1.741 10.441 18.303 11.430 7.824 11.773 5.318 12.771 8.408 18.303 4.861 15.110 5.923 5.889
.000 .000 .000 .304 .085 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000
.37000 .48000 .35000 .08000 .14000 .61000 .81000 .64000 .45000 .70000 .40000 .66000 .54000 .81000 .34000 .77000 .44000 .42000
.2139 .3433 .1946 -.0736 -.0196 .4941 .7222 .5289 .3359 .5820 .2508 .5575 .4126 .7222 .2012 .6689 .2926 .2785
From the above table it is found that mean values of wages, allowances and promotion transfer policies are in signicant and remaining values are highly signicant. So it is inferred that the employees in Orchid chemicals are agreed with wages, allowances and promotion transfer. The employees are satised with recruitment and selection, training and development, career advancement, wages and allowances, promotion, welfare and social security, working condition, level of workers participation, collective bargaining, standard of safety, performance appraisal, style of leadership, work load, communication facilities, recognition of merit, authority and responsibilities, human relations, grievances handling. 18. Pre-dominant factors of Organizational climate Factor analysis is a multivariate tool generally used to reduce enormous number of variables into major factors. In this study factor analysis has been applied on eighteen variables to determinants of Organizational
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climate and the results are displayed in the table. Table 4.3 Total Variance Explained Pre-dominant factors of Organizational climate Component Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 8.708 2.292 1.514 .899 .771 .658 .583 .480 .392 .351 .322 .254 .237 .180 .130 .101 .085 .042 Initial Eigenvalues % of Variance 48.380 12.735 8.413 4.996 4.282 3.655 3.239 2.666 2.178 1.950 1.789 1.413 1.318 1.000 .720 .564 .470 .233 Cumulative % 48.380 61.115 69.527 74.523 78.805 82.460 85.699 88.365 90.543 92.493 94.282 95.695 97.013 98.014 98.734 99.297 99.767 100.000 Rotation Sums of Squared Loadings Total 6.473 4.109 1.933 % of Variance Cumulative % 35.959 22.829 10.739 35.959 58.789 69.527
Extraction Method: Principal Component Analysis. From the above table it is found that the eighteen variables explain 69.527 percent of total variance, which is statistically signicant. The variables loading in each factor is established in the table.
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Table 4.4 Rotated Component Matrix for Pre-dominant factors of Organizational climate
Component 1 LOS3 LOS1 LOS11 LOS17 LOS6 LOS18 LOS15 LOS4 LOS2 LOS5 LOS8 LOS12 LOS13 LOS16 LOS7 LOS14 LOS10 LOS9 .885 .838 .828 .793 .759 .753 .746 .729 .728 .581 .842 .828 .787 .747 .729 .517 .876 .699 2 3
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 4 iterations. Factor one consists of the variables: Career advancement avenue (.885) Recruitment and selection process (.838) Performance appraisal process (.828) Human relation (.793) Welfare social security (.759) Grievances Handling Procedure (.753) Recognition of merit (.746) Wages and allowances (.729) Training and development (.728)
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Promotion transfer policy (.581) So this factor is named as organizational culture. Factor two has been formed through these variables Level of workers participation (.842) Style of leadership (.828) Work load (.787) Authority and responsibilities (.747) Working condition (.729) Communication facilities (.517) So this factor is identied as work environment.
the major factors organizational culture, work environment, Safety and negotiation. The employees expect a conducive climate to offer rened culture, with pleasant work atmosphere. They demand safety and negotiable settlements to their problems. It is inferred that the employees are satised with recognition and facilities and they are highly satised with work place, recognition, and encouragement, sharing of opinions, organizational objectives, interpersonal relationship opportunities and team spirit in the organization. .It is concluded that the main objectives of organizational climate of IT industry are encouraging developments and facilities and relationships. It is found that 61 percent of the employees are highly satised with organizational culture, work environment, safety and negotiation and strongly agree with encouraging development, facilities and relationship in the organization. Remaining 39 percent are poorly satised with organizational culture, work environment and safe negotiation and just agree with encouraging development and facilities and relationship. So it is concluded that on the whole the employees possess good organizational climate in Orchid chemicals. 21. Conclusions The organizational climate in IT companies It is found that the demographic variables like education, age, salary and experience for all level executives in the IT sector organizations are satisfactory and especially the experience of the employees force the executives to practice HRD to avoid unnecessary impediments to developmental activities. The top-level executives are very much enthusiastic in implementing the HRD elements, management policy in favour of HRD, performance appraisal and organizational development for the smooth conduct of organization.
19. Factor three comprises the variables Standard of safety (.876) Collective Bargaining Process (.699) Therefore it is suitably called as Safety and negotiation So it is concluded that the Organizational climate of employees in Orchid chemicals depends upon the major factors organizational culture, work environment, Safety and negotiation. The employees expect a conducive climate to offer rened culture, with pleasant work atmosphere. They demand safety and negotiable settlements to their problems. 20. Findings The employees in IT industry are agreed with wages, allowances and promotion transfer. The employees are satised with recruitment and selection, training and development, career advancement, wages and allowances, promotion, welfare and social security, working condition, level of workers participation, collective bargaining, standard of safety, performance appraisal, style of leadership, work load, communication facilities, recognition of merit, authority and responsibilities, human relations, grievances handling. It is concluded that the Organizational climate of employees in IT industry depends upon
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HOW TO MANAGE WORKPLACE EMOTIONS AN EMPIRICAL STUDY

D. Chitra, Sr. Lecturer Panimalar Engg., College, Chennai Dr. V. Mahalakshmi, HOD & Dean Panimalar Engg., College, Chennai
1. Introduction In an organization, employees are continually faced with emotionally charged encounters requiring specic emotional display. At least one third of the workers experienced emotionally laden job situations. The emotional labour or displaying organizationally sanctioned emotions to customers and is directly related to customer evaluations. Demands for emotional labour have also been found to have a negative impact on emotional exhaustion and wellbeing. Emotional exhaustion, a core component of burnout has in fact found to be a strong predictor of turnover. Thus, managers have become increasingly concerned with nding ways to increase the likelihood that employees will display appropriate emotions as well as to reduce the negative consequences of emotional labour (i.e., emotional exhaustion, employee health problems, and turnover). There are two ways that managers may address these concerns; By building trust and Creating opportunities for employees to have happiness at work. The trust in the supervisor and trust in coworkers can have a signicant positive impact on organizational outcomes including greater productivity, citizenship, behavior commitment, team member cooperation, perceived team performance, and team satisfaction .The employees who have greater trust in their manager have less stress and burnout. There are three reasons why emotions are a fundamental aspect of the experience of trust. People often decide if they can trust someone by examining the emotions they feel toward that person. The emotional people experience during
interpersonal interactions may colour their experience of trust such that if they are experiencing positive emotions, they will be more likely to trust others. Individuals typically experience strong negative emotions when violations of trust occur. From the ndings, it was observed that employees who experience greater trust report less stress and burnout.
The workplace happiness is an essential characteristic for enhancing employee motivation and productivity, reducing stress, and increasing customer satisfaction. Proponents of happiness at work claim that when people have fun doing their jobs, they are more energized and motivate, get along together better, provide better customer service experience less stress. Humor plays an important role in reducing the potentially negative impact of jobrelated stress and emotional labour .The experiencing positive emotions has positive health consequence. 2. Variables The model includes two variables (job satisfaction and emotional exhaustion) and three antecedents: emotional labour experienced fun, and Trust. There are undoubtedly individual (e.g., age, gender, personality, experience, occupation, person-job t) and organizational (e.g., culture, social support) factors that may inuence trust, fun (happiness), emotional labour and emotional exhaustion; however, these factors are beyond the scope of this study.
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3. Emotional Labour Emotional labour has been dened as a process of emotion management whereby individuals control their true emotions by displaying what they perceive as acceptable workplace behaviors and emotions. The emotional labour is a multidimensional construct. It is determined by both the frequency and duration of interaction between the human service provider and the recipient, as well as the emotional dissonance experienced by the human service provider. Frequency of contact with others, particularly external stakeholders, places more burden on an individual to display organizationally or professionally sanctioned emotion. Emotional dissonance or the conict between genuinely felt emotions and organizationally or professionally sanctioned emotions, make regulation of emotional expression labor-intensive. It is proposed that both the intensity of emotion and the range or varieties of emotions are important dimensions of emotional labour. 4. Emotional Exhaustion Emotional exhaustion is regarded as the core component of job burnout. It is characterized by feelings of tiredness and fatigue, a lack of energy and the depletion of an individuals emotional resources. Emotional exhaustion has been found to be a common phenomenon in helping and caring workers. While emotional labour has been conceptualized as having multiple dimensions including dissonance, variety, intensity, duration, and frequency it is found that only one component of emotional labour--emotional dissonance--was associated with higher emotional exhaustion and lower job satisfaction. It is not emotional labour itself that is distressing, but ones perceptions of the emotions as being inauthentic. The suppressing and faking either positive or negative emotions was signicantly related to emotional exhaustion. In contrast, the genuine experience of positive emotions was not signicantly related to emotional exhaustion, whereas the genuine experience of negative emotions was signicantly
related to emotional exhaustion. H1: Respondents who report greater emotional dissonance will also report greater emotional exhaustion. H2: Respondents who express greater negative emotions on the job will report greater emotional exhaustion. 5. Job satisfaction Job satisfaction has been found to be adversely affected by job-related stress and burnout .It is found that workload was negatively related to burnout and job satisfaction. There is a negative relationship between emotional labour and job satisfaction. However, high emotional labour was positively related to job satisfaction, and only emotional dissonance was related to job dissatisfaction, it is found that the suppression of unpleasant emotions led to decreases in job satisfaction, whereas displaying or amplifying pleasant emotions increased job satisfaction. It is concluded that the display of pleasant emotions by customer service providers begets agreeable behavior among customers. The resultant improvement in the quality of social interactions, in turn, has a positive effect on job satisfaction H3: The greater the emotional dissonance experienced by respondents, the lower their job satisfaction. The greater the expression of negative emotions by respondents, the lower their job satisfaction. The greater the expression of positive emotions by respondents, the higher their job satisfaction.
H4:
H5:
6. Experienced Fun (happiness) Experienced fun (happiness) is the extent to which a person perceives the existence of fun in their workplace .It involves the experience of joy or amusement it follows that employees who experience more fun on their job will also feel more positively
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about their job. That is, they will experience greater job satisfaction. H6: There will be a positive relationship between experienced fun and job satisfaction. The proponents of happiness claim that when people have fun doing their jobs, they experience less stress. The humor plays an important role in reducing the potentially negative impact of jobrelated stress and emotional labour. The individuals who experience more fun at work will be less likely to experience emotional exhaustion. H7: There will be a negative relationship between experienced fun and emotional exhaustion. 7. Trust Trust involves a persons expectations, assumptions, or beliefs about the likelihood that anothers future actions will be benecial, favorable, or at least not detrimental to ones interests When trust is high, employees believe their supervisor and coworkers are open, honest, truthful, consistent, fair, and have good intentions .It is possible, however, that the level of trust that one has in his or her manager and co-workers may not be the same. The employees who have greater trust in their manager report have less stress and burnout. The reason for this is that employees who have a high degree of trust in management may be less likely to fear punitive repercussions and more likely to feel that management will be both emotionally supportive (i.e., be sympathetic) and instrumentally supportive (i.e., provide help on the job). Similarly, individuals who have greater trust in their co-workers should experience lower emotional exhaustion. Thus, employees should experience fewer overloads and less anxiety when they have trustworthy coworkers. H8: There will be a negative relationship between trust in ones manager and emotional exhaustion. H9: There will be a negative relationship
between trust in ones coworkers and emotional exhaustion. Those with higher trust in their manager and in their co-workers would be happier in their job. The trust in leadership was most strongly related to attitudinal variables (e.g., job satisfaction, organizational commitment, intent to quit), followed by citizenship behavior, and nally job performance: H10: There will be a positive relationship between trust in ones manager and job satisfaction. H11: There will be a positive relationship between trust in ones coworkers and job satisfaction. 8. Trust and Experienced Fun (happiness) The level of trust that individuals have in their manager and co-workers is likely to inuence the extent to which they experience fun in the workplace. In the presence of untrustworthy coworkers or supervisors, employees are likely to experience negative emotions. When two or more people share in an amusing experience, there is a commonality or bond created among them. The emotions people experience during interpersonal interactions may color their experience of trust such that if they are experiencing positive emotions, they will be more likely to trust others. The workplace experiences which are accompanied by positive emotions will lead to positive interpersonal exchanges and the building of greater trust. In sum, it is likely that the relationship between trust and fun is reciprocal such that a certain level of trust is necessary in order to experience fun, and the more employees experience fun, the more they will trust those with whom they are having fun: H12: There will be a positive relationship between experienced fun and trust in ones supervisor. H13: There will be a positive relationship between experienced fun and trust in the peers.
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9. Methodology Census Survey was used to collect data from 142 employees. A non-disguised structured questionnaire was designed and distributed among 142 employees. The major ndings can be summarized as follows: Most of the respondents (72%) were female and 54% were married. Although respondents ranged in age from 20 to 59, the mean age was 30 years. About 40% of the sample consisted of managers, with the remaining portion holding various administrative positions. The mean number of years in the current position was 3 years, with 7 years (SD = 7.07). The survey consisted of three sections: Work-related emotions, work-related beliefs and attitudes, and Demographics. Demographic information was tapped through single item questions, including gender, age, marital status, education, job title, job tenure, and type of employer. 10. Work-related emotions The work-related emotions included measures of emotional labour and emotional exhaustion. The emotional labour measure consisted of three parts: Requirement to display positive emotions, requirement to display negative emotions, and Emotional dissonance. The Emotion Work Requirements Scale (EWRS) was used to measure work requirements to express positive and negative emotions. Four items measured requirement to display positive emotions and four items measured requirement to display negative emotions. Examples of items from the positive scale include: I frequently reassure people who are distressed or upset and
I usually have to express friendly emotions (e.g., smiling, giving compliments, making small talk).
The two items adapted from the negative scale of the EWRS were: I frequently have to hide my anger or disapproval about something someone has said or done and I often hide my disgust over something someone has said or done. : I usually have to tell people things they dont want to hear and I ordinarily have to attempt to get people to do things they dont want to do. For each item, respondents were asked to indicate their level of agreement using a 6-point scale (0=Not Applicable, 1=strongly Disagree, 5= strongly Agree). The co-efcient alpha of .80 for this three-item scale was used. Two items were added that assess the frequency of emotional dissonance experienced by respondents: I spend most of my work day hiding my true emotions and I spend most of my work day faking positive emotions. Each item was rated on a 6-point scale (0=Not Applicable, 1=strongly Disagree, 5= strongly Agree). Emotional exhaustion was measured using six items. The alpha of .89 for this six item measure was used. Using a 7- point scale (1=never, 2=less than 12 times a year, 3= once a month, 4=more than once a month but less than once a week, 5=once a week, 6=2 to 4 times a week, 7= 5 times a week or more), respondents were instructed to indicate the frequency with which they felt a particular emotion.
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11. Work-related beliefs and attitudes The work-related beliefs and attitudes section consisted of four measures: (1) Level of fun experienced at work, (2) Job satisfaction, (3) Trust in ones supervisor, and (4) Trust in ones coworkers. The level of fun experienced at work was measured using 5 items. Sample items include: At my workplace, we try to have fun whenever we can, Managers encourage employees to have fun at work and We laugh a lot at my workplace. Job satisfaction was measured using 5 items job satisfaction index. Coefcient alpha of .88 was reported for this reduced 5-item measure. Sample items include: I feel fairly satised with my present job, and Each day at work seems like it will never end. Trust in ones supervisor was measured using a 7-item measured. It reported a coefcient alpha for this measure of .82 (rst administration) and .87 (second administration). Sample items include:
I can expect my supervisor to treat me in a consistent and predictable fashion, My supervisor is not always honest and truthful (R), In general, I believe my supervisors motives and intentions are good. The same 7 items were used to measure trust in ones coworkers with the word coworkers substituted for supervisor.
18. Results Table 1 contains the mean scores, standard deviations, correlations, and reliability coefcients for the variables measuring work-related emotions, experienced fun, and job satisfaction. The mean scores indicate that respondents were generally satised with their jobs (M=3.7, SD=.62 on a 5-point scale) and did not experience high levels of emotional exhaustion (M=3.77 on a 7-point scale), although there was a considerable amount of variation in emotional exhaustion (SD = 1.2). Respondents experienced a moderate level of fun in their workplaces (M=3.16, SD=.63). Positive emotional work requirements were experienced (M=3.83, SD=.58) more than negative emotional work requirements (M=2.95, SD=.70) and respondents did not experience high levels of emotional dissonance (M=2.51, SD=.75).
Table 1. Mean, Standard Deviation, Reliability Estimates, and Correlations for Variables Measuring Work-related Emotions and Attitudes.
Variables 1. Positive Emotion Requirements 2. Negative Emotion Requirements 3. Emotional Dissonance 4. Experienced Fun 5. Trust in Supervisor 6. Trust in Coworkers 7. Emotional Exhaustion 8. Job Satisfaction Mean 3.83 2.96 2.76 3.15 3.56 3.62 3.78 3.69 SD .58 .70 .86 .62 .78 .61 1.20 .63 1 (.66) .30*** .30*** .00 .01 .00 .24** .00 (.72) .35*** -.24** -.14 -.10 .24** -.24** (.87) -.30*** -.28** -.12 .36*** -.26** (.79) .50*** .46*** -.34*** .57*** (.91) .38*** -.19* .46*** (.88) -.21** .52*** (.87) -.46*** (.86) 2 3 4 5 6 7 8
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In general, respondents modestly agreed that they could trust their coworkers (M=3.62, SD=.61) and their supervisors (M=3.56, SD=.78). Correlations were used to test all hypotheses. Consistent with study a signicant positive relationship between emotional dissonance and emotional exhaustion (r = .36, p<.000). As predicted, those participants who experienced greater work requirements to express negative emotions had greater emotional exhaustion (r = .24, p<.01). These ndings provide support for hypotheses 1 and 2. Emotional dissonance and negative emotional work requirements were hypothesized to be negatively related to job satisfaction. As predicted, these correlations were signicant (r = -.26, p< .01, and r = -.24, p< .01, respectively), thereby supporting both hypotheses 3 and 4. However, positive emotional work requirements were not found to be signicantly related to job satisfaction, failing to provide support for hypothesis 5. It is predicted that respondents who experience greater levels of happiness would report higher levels of job satisfaction (hypothesis 6) and lower levels of emotional exhaustion (hypothesis 7). Both of these hypotheses were supported (r = .57, p< .001 and r = -.34, p< .001, respectively .A signicant negative correlation between trust in ones supervisor and emotional exhaustion (r = -.19, p< .05) and trust in ones coworkers and emotional exhaustion (r = -.21, p< .05.It is found that trust in ones supervisor and ones co-workers were positively related to job satisfaction (r = .46, p<.001, r = .52, p<.001, respectively). Thus, hypotheses 8, 9, 10 and 11 were supported. As predicted, trust in ones supervisor and trust in ones coworkers were both related to experienced fun (r = .50, p<.001; r = .46, p<.001, respectively), providing support for both hypotheses 12 and 13. In order to examine the combined effects of antecedent variables on the outcome variables,
two step-wise multiple regression analyses are conducted. For these analyses, a composite measure of emotional labour has been created. The composite score consisted of the average of the ratings for 13 items: The ve emotional dissonance items and the eight items used to measure positive and negative emotional work requirements. The coefcient alpha for this composite measure was .89. The regression results showed that both experienced fun and emotional labour made unique and signicant contributions to the explained variance in emotional exhaustion (Beta = -.40, p< .001; Beta = .22, p< .01, respectively). The amount of additional variance explained by trust in supervisor and trust in coworkers was not signicant. When job satisfaction was the dependent variable, all three variables of experienced fun (happiness), trust in supervisor and trust in coworkers made unique and signicant contributions to the explained variance (Beta = .35, p<.001; Beta = .29, p<.001; Beta = .21, p<.05, respectively). The amount of additional variance explained by emotional labour was not signicant. The positive and negative emotional dissonance displays on emotional exhaustion and job satisfaction. The multiple regression analysis showed that only emotional dissonance was a signicant predictor of job satisfaction and emotional exhaustion (Beta = -.24, p<.05; Beta = .36, p<.001, respectively). The amount of additional variance explained by either the positive or negative emotional work requirements was not signicant. The results show both trust and workplace fun may have benecial effects in the management of workplace emotions. Respondents who reported higher levels of trust in their coworkers and their supervisor reported lower levels of emotional exhaustion and higher levels of job satisfaction. Similarly, those who
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experienced higher levels of fun in the workplace reported lower levels of emotional exhaustion and higher levels of job satisfaction. Clearly, these are two important elements for maintaining a positive work environment. A key concern for managers involves nding ways to build trust in the workplace. The, managerial trustworthiness can be inuenced through behavioral consistency, behavioral integrity, sharing and delegation of control, communication (e.g., accuracy, explanations,) and demonstration of concern .It has also been suggested that HR policies and practices (e.g., equitable reward systems, fair performance appraisals) have a positive impact on trust The development of trust is a function of an organizations ability to create a setting within which trust can develop over time. The experienced fun is signicantly related to trust in ones supervisor and trust in ones coworkers. It is suggested that workplace fun maybe an effective means of creating the positive attitudes, moods and emotions that are necessary for building trust. The employees give general perceptions about the intentions and attitudes of the organization towards them from the policies and procedures enacted by individuals and agents of the organization. Thus, when organizations provide opportunities for employees to have fun at work (e.g., parties, awards, games, special events), employees will perceive those organizations as committed to and supportive of them and they will reciprocate by providing their own commitment to the organization. Another explanation for the positive relationship between experienced fun and trust--a certain level of trust may be necessary in order for employees to experience fun. That is, trust may be a precondition for fun. Thus, organizations with low levels of trust may nd that the introduction of fun activities in the workplace results in resistance and cynicism. It follows that certain types of fun
activities may be more successful than others depending on the level of trust in the organization. For example, celebrating birthdays, with cake and ice cream, providing gifts during festivals, taking them for a tour along with their families may be effective in both high trust and low trust workplaces because these are perceived by most people as comfort foods. Those celebrations may help to promote the positive moods and emotions and social interactions and exchanges that are necessary for building trust. . 19. Conclusion It is found that both experienced fun and trust were associated with lower levels of emotional exhaustion. Moreover, high levels of trust were associated with higher levels of experienced fun. These ndings represent an important preliminary step in understanding the value of workplace fun(happiness) and trust in reducing emotional exhaustion .As the employees are satised they work effectively and they will be empowered in the organisation 20. References 1. Barnett, R. C., Brennan, R. T., Gareis, K. C. (1999). Journal of Applied Biobehavioral Research, 4(2), 65-78. 2. Berg, D. H. (2001). the power of a playful spirit at work. The Journal for Quality & Participation, 24 (2), 57-62. 3. Brotheridge, C.M., & Lee, R. T. (2003). Development and validation of the Emotional Labour Scale. Journal of Occupational & Organizational Psychology, 76 (3), 365-379. 4. Chan, K., Gee, M., & Steiner, T. (2000). Employee happiness and corporate nancial performance. Financial Practice & Education, 10(2), 47-53. 5. Costa, A. C., Roe, R. A. & Taillieu, T. (2001). Trust within teams: The relation with performance effectiveness. European Journal of Work & Organizational Psychology, 10 (3), 225-244.
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6. Gorman, H. (2000). Winning hearts and minds? Emotional labour and learning for care management work. Journal of Social Work Practice, 14(2), 149-159. 7. Grandey, A. A. (2000). Emotion regulation in the workplace: A new way to conceptualize emotional labor. Journal of Occupational Health Psychology, 5, 95-100.. 8. Korsgaard, M. A., Brodt, S. E., & Whitener, E.M. (2002). Trust in the face of conict: The role of managerial trustworthy behavior and organizational context. Journal of Applied Psychology, 87(2), 312-319. 9. Kruml, S. M. & Geddes, D. (2000). Exploring the dimensions of emotional labor. Management Communication Quarterly, 14 (1), 8-49.. 10. .. McGhee, P. (2000). The key to stress management, retention, and protability? More workplace fun. HR Focus, 77(9), 5-6. 11. Moore, J. E. (2000).Why is this happening? A causal attribution approach to work exhaustion consequences. Academy of Management Review, 25, 2, 335-49. 12. Morris, J. A., Feldman, D. C. (1996). The dimensions, antecedents, and consequences of emotional labor. Academy of Management Journal, 21, 989-1010.
13. Morris, J. A., Feldman, D. C. (1997). Managing emotions in the workplace. Journal of Managerial Issues, 9 (3), 257-274. 14. Schaubroeck, J. & Jones, J. R. (2000). Antecedents of workplace emotional labor dimensions and moderators of their effects on physical. Journal of Organizational Behavior, 21(2), 163-183. 15. Waldrop, S. (2003). Battling burnout: Maintaining enthusiasm in a challenging environment. Physical Therapy, 11(6), 38-46. 16. Weiss, H. & Cropanzano, R. (1996). Affective events theory: A theoretical discussion of the structure, causes and consequences of affective experiences at work. Research in Organizational Behavior, 18, 179. 17. Wharton, A. S. & Erickson, R. J. (1993). Managing emotions on the job and at home: Understanding the consequences of multiple emotional. Academy of Management Review, 18 (3), 457-486. 18. Whitener, E.M. (2001). Do high commitment human resource practices affect employee commitment? A cross-level analysis using hierarchical linear modeling. Journal of Management, 27(5): 515-535.
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EMERGING TREND IN INDIAN PHARMACEUTICAL RETAIL SECTOR

V.S.Sheeja Dr.R.Krishnaraj SRM School of Management SRM University, Kattankulathur
1. Introduction Pharmaceutical retailing has been spreading its roots in the Indian market for the past one decade. The emerging trend in the Indian pharmaceutical retail sector is also adding up to the development of the Indian organized retail sector. The relaxation by the government on regulatory controls on foreign direct investments has added to the process of the growth of the Indian organized retail sector. The growth of the Indian organized retail sector is anticipated to be heavier than the growth of the gross domestic product. Alterations in peoples lifestyle, growth in income levels, and encouraging conventions of demography are proving favorable for the new emerging trends in the Indian organized retail sector. The Pharmaceutical retailing is becoming highly mechanized and organized day by day due to following factors: -Concept of franchising -Increase role of information technology in retail marketing. - Importance of branded pharmaceuticals -Revolution of packing of products. -Trends like collaborating with the manufacturer -Increase utilization of multiple sourcing -Visual merchandising and its role in retailing -Attractive post purchase Service 2. Indian Pharmaceutical Retail Market The current pharmacy retail market size is estimated to be of US$ 5 billion and it is expected to grow to US$ 8.7 billion by 2010. Pharmacy retail is growing at the rate of 20-25 per cent annually. Twelve to fteen, big players dominate the organized
pharmacy retail chain. There are more than 3500 organized retail pharmacy outlets in India and it is expected to grow to 10,000 by the end of 2010. (www.livemint.com). Apollo Pharmacy: A division of Apollo Hospitals Enterprises Ltd., is Indias rst and largest branded network, with over 720 outlets in 17 states. Apollo pharmacy is accredited with - International Quality Certication and is open for 24 hours. Apollo will have 1000 pharmacies by the end of nancial year 2008-09. It is giving free health insurance on purchase of above Rs. 6000 in a year. Fortis Health world: Pharmacy chain promoted by the Singh family of Ranbaxy. It operates under two models - Company owned and operated stores and Franchisee owned stores. Currently Fortis has around 40 stores and planning to expand its presence to over 100 cities. Med Plus Health Services: Hyderabad based pharmacy chain, MedPlus was launched in 2006 currently operates more than 500 stores in Andhra Pradesh, Maharashtra, Karnataka, Tamil Nadu, Gujarat and Rajasthan and plans to increase it to 1000 by March 2009. Mauritius based iLabs Management LLC has invested $5.2 mn in Med Plus. Tulsi: Tulsi is a pharmacy retail chain of Future Group. Most of the Tulsi outlets are located in Big Bazaar. Future Group currently has over 35 Tulsi outlets across the country. Life Ken: promoted by Lifetime Healthcare Pvt Ltd
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is a leading Pharmacy Retail chain in Bangalore and Chennai. Life Ken operates in total 82 Stores in Bangalore, Chennai and Mumbai. The list comprises 37 Life Ken Stores, 11 Pill and Powder Stores and 7 stores in Spencers Stores in Bangalore. Life Ken is planning to open new retail pharmaceutical chain in the cities of Mumbai, Pune, Hyderabad and Kochi and is also set to expand to other cities in the South and West and then to North and East. Guardian Life care Pvt. Ltd is North Indias largest retail chain of Pharmacy, Wellness, Health and Beauty Retail outlets. The company has 149 outlets in 16 cities. Guardian Life care plans to open another 150 new stores across India by March 2009 and Guardian chain will grow to 400 stores by March 2010 and will be investing Rs.100 crore to fund our expansion. 98.4: a pharmacy chain operating in Delhi and NCR is a brand of Global Health line. Parent company has presence in Europe and the Middle East. 98.4 has 27 stores in India and is expected to ramp up the count to 300 by 2011. SAK CRS: SAK Consumer Retail Services Ltd is a subsidiary of Delhi based business group, SAK Industries. Its store brand, CRS Health- the Wellbeing Place, is one of Indias premier Retail Pharmacy brands. The CRS Health stores have representation in all major centres in India to include Delhi, Noida, Gurgaon, Pune and Chennai. There are more than 30 CRS Health stores in India. 3. Foreign Player Medicine Shoppe, the Indian arm of global chain Medicine Shoppe International started its operations in India in February 1999. Medicine Shoppe follows the model of franchisee stores in India. A pharmacy chain operating in Delhi and NCR is a brand of Global Health line. Parent company has presence in Europe and the Middle East. It has 27
stores in India and is expected to ramp up the count to 300 by 2011.
4. Modes of Operation Company Managed Stores - Company owned pharmacy outlets are owned and manage by company itself. Major pharmacy chains in India like Fortis, Apollo, Alchemist, Subhiksha and Dial for Health have their own pharmacy chains. Franchisee - Medicine Shoppe, Med Plus, Medicine Shoppe operates through the model of franchisee stores in India. 5. Pharmacy Chain Formats Hospital Pharmacies - They catered mainly to the requirements of patients admitted in the hospital. They were housed in the hospital building and dispense a limited number of medicines. The average size of such stores is 150-200 sq. ft Retail Stores/Standalone stores - The second category of stores, near the residential areas, provide the benets of proximity to consumers. Some of these stores offered home delivery. The target customers of the store were the educated middle and upper class households Malls/Shop-in-shops - The biggest advantage, most retailers say, of having in-store outlets at supermarkets or departmental stores is the fact that popularity of either brand rubs off on the other. Guardian pharmacy recently signed an agreement to open outlets at Spencers stores in east India and is negotiating rights for northern India too. Spencers has tie-up with Life Ken Medicines for store-instores at its Daily stores in the South. New-u, retail outlet of H&B Stores Ltd. is located in Malls. Townships - Many pharmacy chains are planning to set up their pharmacy chain in townships. Apollo is planning to set up Medicity near Pune. Apollo has
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signed an agreement with Hindustan Construction Co (HCC) to set up the Medicity inside the upcoming project named Lavasa near Pune. The innovative & globally accepted trends that are attracting customers towards organized Vs unorganized fragmented retail sector are - Emergency services - Genuine medicines -Competent professional staff - Advanced biogeneric products -Customer care via patient counseling -Prescription reminder services -Relling prescription on phone call/e-mail -Cash facility -Computer generated receipts -Cold chain maintenance Pharmaceutical companies will prefer large organized retail outlets since it will make distribution easier for them &better networking for getting feedback. Organized Pharma retailing is customer centric activity with due stress on innovation on products, process and services. To ensure quality effectiveness and success of retail practices, the emphasis should laid on a reliable supply chain management, adequate capital investment, effective retail outlet positioning HR training and retention strategies along with reduced shrinkage and pilferage 5. Opportunities in Retail Sector Retail pharmacies are waiting to take off. The potential is huge and the scenario is similar to what happened in traditional retail. Nobody thought that people would want to go and buy everything from one place like Big Bazaar, Pantaloons and Shoppers Stop. Similarly, things are slowly changing in the pharma retail space. Today, retail chains like Apollo have an all-India presence through 300 odd outlets. The growth rates of other chains like Medicine Shoppe, and Guardian and Trust pharmacy chain are phenomenal as they are adding
three-four outlets every month. (www.retail.com). There is clearly a consumer-driven requirement for pharmacy chains. Consumers want to ensure that the medicines that they buy are not fake or spurious. In addition to counterfeiting, it is also the location that is an important issue. Traditionally, chemists or pharmacists have adopted a neighborhood centric model, where consumers typically go and get medicines from the same neighborhood shop. Hence, convenience of location will be an important success factor for retail pharmacy chains. Other factors, such as good bargains, discounts, ensuring the quality of medicines and avoiding retail substitution will also ensure the growth of retail chains. Coming days will see a number of players emerging and a lot of consolidation happening. The regulatory and the union-driven issues will always be there. But I guess, eventually the economics at the end of the day would drive the decision for a large MNC or domestic player in favor of an organized retail chain. This is because the unorganized retail segment is not capable of capturing and sending back real time data to the pharmaceutical company like their organized counterparts. Any pharmaceutical company would like to know which of its medicines and in what quantity are being sold on any given day; how it can manage its inventory, what should be its pricing and which regions are doing better than the others. This data will be effectively captured and transmitted by the organized players once they have a national presence and considerable investments in IT. The advantages of the organized players, like the ability to provide real time data that will probably give them an edge over the unorganized sector. 6. Conclusion The ambience, ready availability of drugs, reliability, quality consciousness that chains can offer, increasing brand awareness, and more importantly price discounts based on economies of sale in procurement that they enjoy, value added services such as diagnostics and lab facilities will
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ensure the pharmaceutical retail chains to spur customer migration to organized retailers. Organized retail sector have transformed the concept of a medical store in to a professionally structured and managed organization and will further highlight the trends shaping the future of organized pharmaceutical retail scenario in India.
7. Reference www.businessinsights.com. Accessed on 5th December, 2009 www.livemint.com. Accessed on 2nd December, 2009 www.retail.com. Accessed 5th December, 2009
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AN EMPIRICAL STUDY: INFLUENCE OF SERVICE QUALITY ON ATTITUDINAL LOYALTY IN RETAIL BANKING

Asst. Prof. S. Arun Kumar Mr S.Mahalingam & Mr M.Vanjikovan Department of Management Studies, Saranathan College of Engineering, Trichy Dr.B. Tamil Mani, Reader, Gandhigram University, Dindugul 1. Introduction Financial liberalization has led to intense competitive pressures and private banks dealing in retail banking are consequently directing their strategies towards increasing service quality level which fosters customer satisfaction and loyalty through improved service quality. Private Banks dealing in Retail banking is pursuing this strategy, in part, because of the difculty in differentiating based on the service offering. Typically, customers perceive very little difference in the banking products offered by private banks dealing in services as any new offering is quickly matched by competitors. Studies by (Parasuraman et., al 1985) and (Zeithmal et., al 1990) noted that the key strategy for the success and survival of any business institution is the deliverance of quality services to customers. The quality of services offered will determine customer satisfaction and attitudinal loyalty. For this reason, researcher on customer satisfaction and attitudinal loyalty is often closely associated with measurement of service quality. As globalization and liberalization of nancial institutions accelerate competition among banks in offering products and services becomes more intense. Customers in India become more educated better informed, more internalized, and as Indian economy becomes more and more knowledge based, the demand for high quality services expands with increases in customers buying power. The nancial sector reform in India was designed to infuse greater competitive vitality in the system. To achieve this objective, the Narasimhan Committee was formed. The Narasimhan Committee report suggested wide ranging reforms for the Indian banking sector in 1992 to introduce internationally accepted banking practices and enable Indian banks (which were hitherto resisting liberalization and opening of their markets) to achieve service excellence. This paper endeavors to ll the gap in the service quality which determine customer satisfaction and attitudinal loyalty literature by exploring the dimensions of customer perceived service quality in the context of the Indian retail banking industry, how these dimensions of customer perceived service quality determine customer satisfaction and attitudinal loyalty . A set of service quality variables, drawn from customers perceptions about service quality as well as the bank marketing and service quality literature have been drawn up. These parameters have been used in the context of three of the largest private retail banks in India (ICICI, HDFC &AXIS) to identify the underlying dimensions of service quality which determine customer satisfaction and attitudinal loyalty. Finally, the paper has drawn upon the ndings of the service quality dimensions and its correlation with attitudinal loyalty to contend the initiatives that banks managers can take to enhance employees skills and attitudes and instill a customer-service culture. 2. About private banks in retail banking Initially all the banks in India were private banks, which were founded in the pre-independence era to cater to the banking needs of the people. In 1921, three major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of India. In 1935, the Reserve Bank of India (RBI) was established and it took over the
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central banking responsibilities from the Imperial Bank of India, transferring commercial banking functions completely to IBI. In 1955, after the declaration of rst-ve year plan, Imperial Bank of India was subsequently transformed into State Bank Of India(SBI). Following this, occurred the nationalization of major banks in India on 19 July 1969. The Government of India issued an ordinance and nationalized the 14 largest commercial banks of India, including Punjab National Bank (PNB), Allahabad Bank, Canara Bank, Central Bank of India, etc. Thus, public sector banks revived to take up leading role in the banking structure. In 1980, the GOI nationalized 6 more commercial banks, with control over 91% of banking business of India. In 1994, the Reserve Bank of India issued a policy of liberalization to license limited number of private banks, which came to be known as New Generation tech-savvy banks. Global Trust Bank was, thus, the rst private bank after liberalization; it was later amalgamated with Oriental Bank of Commerce (OBC). Then Housing Development Finance Corporation Limited (HDFC) became the rst (still existing) to receive an in principle approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. At present, Private Banks in India includes leading banks like ICICI Banks, ING Vysya Bank, Jammu & Kashmir Bank, Karnataka Bank, Kotak Mahindra Bank, SBI Commercial and International Bank, etc. Undoubtedly, being tech-savvy and full of expertise, private banks have played a major role in the development of Indian banking industry. They have made banking more efcient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive. Retail banking is typical massmarket banking where individual customers use local branches of larger commercial banks. Services
offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so 3. Review of Literature Zeithaml and Bitner (2003) dened perceived service quality as a global judgment or attitude relating to the superiority of a service. It is widely accepted today that service quality is a multidimensional concept. There have been a wide variety of service quality models in the literature. One of the most widely used models is the SERVQUAL, which was developed by Parasuraman, Zeithaml, and Berry, (1988). The model proposed that service quality is measured by ve dimensions: reliability, assurance, tangibles, empathy, and responsiveness. Reliability refers to an organizations ability to perform the promised service dependably and accurately; assurance refers to employees knowledge and their ability to convey trust and condence; tangibles refers to an organizations physical environment, such as facilities, equipment, and communication materials; empathy refers to employees willingness to provide individualized attention to customers; and nally responsiveness refers to employees willingness to help customers and to provide prompt services. Each dimension is measured with four to ve items. The model is a useful management tool since it aims to identify the gaps between customers expectations and customers perceptions of the services. The measurement of perceptions vs. expectations has been a disputable issue in the literature. While it seems logical that identifying the gaps is the best way to dene quality, identify possible problems, and predict loyalty, there have been some researchers (e.g., Cronin & Taylor, 1992; Teas, 1993), who questioned the gap model, suggesting that measuring perceptions alone might be a better indicator of service quality, than measuring the differences between expectations and perceptions (Robledo, 2001; Zeithaml et al., 1996). From a methodological point of view, it is not always easy to
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adopt the gap approach, since in a real life setting it requires to collect data twice (before and after using the service) from the same customers, and compare their answers. However, from a management point of view, identifying the gaps in customers evaluations is always a very useful task, since strategies can be designed in order to close these gaps. In the present study, we adopted the gap approach aiming to identify service quality gaps, and use these gaps in order to predict satisfaction, and attitudinal Loyalty. Our decision is justied by the value of this approach for managerial implications. The importance of measuring service quality evaluations has been well justied in the literature. Studies have showed that service quality evaluations are closely related to positive behavioral intentions and customer loyalty (Backman & Veldkamp, 1995; Baker & Crompton, 2000; Bloemer et al., 1999; Zeithaml et al., 1996). Negative scores in the gap model are worrying signs for organizations, since they might mean that these customers will soon quit, if actions are not taken. As previously noted, increasing customers retention rates is an important task for service organizations, because it is usually associated with nancial benets for the organizations. 4. The Relationship between Service Quality and Customer Satisfaction According to Zeithmal and Bitner (2003), Satisfaction is the consumer fulllment response. It is a judgment that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulllment. An application of the SERVQUAL model been suggested that satisfaction is a broader concept than service quality. It includes both cognitive and affective evaluations, while service quality evaluations are mainly a cognitive procedure (Oliver, 1997; Tian-Cole & Crompton, 2003). A number of studies in the services marketing literature have reported that these two constructs are strongly related (e.g., Alexandris et al., 2001; Caruana, 2002; Cronin & Taylor, 1992; Spreng
& Chiou, 2002; Spreng & McKoy, 1996; Woodside et al., 1989). 5. Service quality & attitudinal loyalty Measurement scale used for this study In this research study additional three extra variables has been added to the original SERVQUAL scale ,the variables are Service charge charged by the bank, interest rate and Customer complain handling system suggested by the researcher like (Bahia and Nantel,2000 ,Sureshchander 2003) after careful validation by academicians and industry experts and in the case of the Attitudinal measurement domain ve variables namely 1)Say positive things about your bank 2)Recommend your bank to someone who seeks your advice 3)Encourage friends and relatives to do business with your bank 4)Consider your bank as your rst choice to buy / Transact services and 5)Do more business with your bank in next few years which is explicitly extracted from the Behavioral Intention Battery proposed by (Zeithaml, Berry and Parasuraman (1996), a comprehensive multidimensional framework of customer behavioral and attitudinal intentions for use within a service industry. Only attitudinal loyalty dimension is taken for this research study rather taking the entire behavioral intention dimensions. 6. Research Model In accordance with the literature, the developed research model is shown in g.1. In the research model the perceived service quality of private banks dealing with retail banking was measured by using ve dimensional SERVQUAL with three additional variable added to it, the perceived service quality was hypothesized to have a direct effect on attitudinal loyalty , a hypothesis was tested to nd the relationship between Overall service quality and Overall attitudinal loyalty.
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Tangibility Reliability Responsivenes s Assurance Empathy Price/CHS

Figure 1 Hypotheses: Perceived overall service quality of private banks dealing with retail banking has a positive effect on customer overall attitudinal loyalty. 7. Research Objective To understand the Socio-demographic prole of private retail banking consumers. To nd out the correlation and relationship between overall service quality which determine customer satisfaction (Latent) and attitudinal loyalty. To identify the key dimensions of perceived service quality as well as to investigate prevailing service quality level in the private retail banking consumers. 8. Methodology A descriptive research was used to gain an insight into consumers perceived service quality offered by private banks with respect to ve dimensions of SERVQUAL scale. Primary data were collected for the research. An undisguised structured questionnaire, SERVQUAL by Parusuraman, et al (1985), was used for the research. The respondents were asked to provide belief rating for services offered by private banks dealing with retailing, using ve point rating scale ranging from 1 (strongly disagree) to 5 (strongly agree).The sample size used was 100 respondents. As Nunnaly (1978) as cited by Devellis(1991) mentioned that a sample of 100-300 sample of respondents is sufcient to test measurement scales .The population from which our sample was selected is from the Tamil speaking customers of the two private banks in Tirchirappalli, Tamilnadu ,India. The two banks were selected as per the business world Real 500 nance companies ranking statistics (Source: Business World, 2 November 2009). The respondents were selected on the basis of convenience sampling. The questionnaire is personally administered to the valued customers both in English and also in their respective vernacular language for better understanding. 9. Analysis And Findings Prole of the respondent: As the data indicate that the large group of respondents belong to age groups between 36-45 age (64%) followed by 26-35 age (29%), gender proportion with male (52%) female(48%), marital status proportion with married (59%), unmarried (41%), educational qualication with majority PG qualication with (48%) and followed by (30%) of UG qualication, occupation of respondents with government (27%), private (35%), self employed(17%), about monthly income 10001-25000 (62%) followed by 2500140000 (18%), Number of dependents Three dependents (38%) followed by two dependents (29%), Type of account Saving A/C(64%) followed by Current A/C (22%), Frequency of visit -1-2 times fortnightly (33%) followed by 1-2 times per month (32%).
Service quality
H1
Attitudinal loyalty
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Table1:Reliability statistics
Cronbach's Alpha .941
N of Items 25
industry experts. After the literature review synthesis, construct validity observed after the establishment of agreement between the measuring instrument and theoretical concepts through which theoretical relationship and empirical relationship is examined in this study as per the requirements. 10. Factor Analysis Table2: KMO and Bartletts Test
After identifying the dimension underlying a factor, a researcher may prepare a scale of those dimensions to measure the factor. Such a scale has to be tested for validity and reliability. Proper validity and reliability testing can be done using CFA. However, research study commonly uses the Cronbachs alpha coefcient for establishing scale reliability. The Cronbachs Alpha coefcient is an indicator of internal consistency of the scale. A high value of the Cronbachs Alpha coefcient suggests that the item that make up the scale hang together and measure the same underlying construct. A value of Cronbachs Alpha (.941) which is above 0.7 can be used as a reasonable test of scale reliability. Measurement instrument also satisfy the requirement of content validity which refers to the extent to which a measurement reects the specic intended domain of content by getting validation from academicians and
Table3:Dimensions or Factors
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartletts Test of Approx. Sphericity Chi-Square df Sig.
.868 1505.992 300 .000
The hypotheses are: Ho: The factor analysis is not valid H1: The factor analysis valid The signicance (0.000) is less than assumed value (0.05) so we reject H0. This means that the factor analysis is valid. Inferring the KMO coefcient (0.868) the value is more than 0.05. So, this implies that the factor analysis for data reduction is effective.
Loading .671
% of variance
Cronbachs alpha
Factor 1(Reliability, Responsiveness and Empathy) Customer have a problem, excellent banks will show sincere interest in solving it Employees in a bank should give prompt service. Employees should always be willing to help customers Employees never too busy to respond to customers request Employees of a bank should give their customers personal attention Bank has excellent complaint handling system Factor 2(Assurance ,Empathy and Responsiveness) Tell customers when exactly the services will be performed Behavior of employees should instill condence in customers Employees should have the knowledge to answer customers questions Bank employees should understand the specic needs of their customers
.532 .751 .606 .582 22.702 .605 .579 .682 .751 .585 17.113 .855 .884

Factor 3(Assurance, Empathy and Price) Customer of a bank should feel safe in all the transaction A bank should give customers individual attention Bank charge reasonable service charge Factor 4(Reliability) Promises to do so by a certain time, they will do so The services of a bank should be performed right the rst time Factor 5(Tangible and Empathy) Have State of the Art Technology/Modern Equipment. The operating hours of the bank should be convenient Materials(E.g. Brochures and Statements) visually Appealing .548 .733 .729 .828 .615 .747 .538 .780 8.873 .406 9.316 .680 10.981 .743
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From the above Table 3, it is clearly elucidated that in order to test the validity of the ve factor structure of service quality of retail banking, an exploratory factor analysis on gap scores for respondents was performed. This was performed for gap score (Perception minus Expectation) for checking the applicability of gap analysis for the factor structure using the principal component factoring method and Varimax rotation with Kaiser normalization. Hence, the sample was identied with ve dimensions that explain 68.9 percent of the total variance, With reference to the reliability of the scale measurement in relation to the variables composing each factor, the Cronbach Alpha coefcient were calculated and were judged to be satisfactory (between .884 to .684 besides the fth dimensions were alpha = .406) the loading of the majority of the items was deemed satisfactory (>.5). Coefcient alpha higher than .7 is considered to be good (Nunnaly, 1978).And for each factor their corresponding percentage of variance denoted and from the factor analysis, it is inferred that only ve factors have Eigen values over one, so the result has ve factors namely Factor 1(Reliability,
Responsiveness and Empathy), Factor 2(Assurance, Empathy and Responsiveness), Factor 3(Assurance, Empathy and Price), Factor 4(Reliability) and Factor 5(Tangible and Empathy). The Rotated Component Matrix during the analysis indicates that the 25 items (22 original items+3 additional validated items added) do not match with the ve factor structure as described by (Parasuraman et al., 1988, 1991b). The table clearly indicates that the gaps score between the perceptions and expectations do not support the original ve dimensions of the retail banking service quality scale as suggested by (Parusuraman, berry, zeithmal, 1988). Other rotation methods such as Equamax rotation with Kaiser Normalization also failed to improve the factors loading and factor structure as suggested by them since the south Indian consumers preferences, culture and demographic setup will vary, these results indicate potential problems in using the gap model to measure service quality at the factor level using the same factor structure proposed by (Zeithmal, berry, Parusuraman, 1988).
11. Multiple Regression Analysis Model 1 Table4 Model Summary Adjusted R R Square R Square .999(a) .998 .998 Std. Error of the Estimate .03004
a Predictors: (Constant), FACTOR 5, FACTOR 3, FACTOR 4, FACTOR 1, FACTOR 2
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Table 5 ANOVA (b)

Model 1 Regression Residual Total Sum of Squares 47.860 .085 47.945 df 5 94 99 Mean Square 9.572 .001 F 10606.976 Sig. .000(a)
a Predictors: (Constant), FACTOR 5, FACTOR 3, FACTOR 4, FACTOR 1, FACTOR 2 b Dependent Variable: OVER ALL SERVICE QUALITY Table 6 Coefcients (a)
Model Unstandardized Coefcients B 1 (Constant) FACTOR 1 FACTOR 2 FACTOR 3 FACTOR 4 FACTOR 5 .000 .333 .215 .175 .114 .162 Std. Error .005 .005 .005 .005 .004 .007 Standardized Coefcients Beta .040 66.749 41.575 34.905 26.802 22.759 .968 .000 .000 .000 .000 .000 t Sig.
.433 .282 .199 .152 .144
a Dependent Variable: OVER ALL SERVICE QUALITY The overall average of all the variables pertaining to each dimension extracted using factor analysis is fed into multiple regression analysis. In multiple regressions we have taken ENTER method since all our predictor variables were entered simultaneously and from the model summary Table 4. The adjusted R square value tells us that our model accounts for 99% of variance in the SERVQUAL scores which seems to be a very good model and also the ANOVA Table 5 reports that the overall signicance of our model as p<0.05 ,our model is signicant. From the coefcient Table 6, the standardized beta coefcients give a measure of the contributions of each variable to the model. A large value indicates that a unit change in this predictor variable has a large effect on the criterion variable. The t and sig (p) values gives a rough indication of the impact of each predictor variable. We can conclude from the table, factor 1 and factor 2 got large beta value which predicts the overall service quality to a greater extent. 12. Testing the relationship between Service quality and Attitudinal Loyalty Hypotheses: Overall Perceived service quality of private banks has a positive effect on customer overall attitudinal loyalty. H0: There is no signicant relationship between Overall Perceived service quality and overall attitudinal loyalty. H1: There is a signicant relationship between Overall Perceived service quality and overall attitudinal loyalty. Table 7 Chi-Square Tests
Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 407.650(a) 262.867 9.821 100 df 253 253 1 Asymp. Sig. (2-sided) .000 .322 .002
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In order to test the causal relationship between perceived service quality and attitudinal loyalty, their hypotheses were tested in this study. Hypotheses were framed, to check whether the overall service quality has any signicant relationship with overall attitudinal loyalty and the same was tested using Chi-Square analysis. Since the calculated P value (.000) is smaller than level of signicance (.05). Hence the null hypothesis (Ho is rejected), so there is a signicant relationship between Overall Perceived service quality and Overall attitudinal loyalty. Further both the construct namely overall service quality and overall attitudinal loyalty were checked for their positive correlation using correlation technique which is illustrated in Table8. Table 8 Correlations
OVER ALL SERVICE QUALITY OVER ALL SERVICE QUALITY ATTITUDINAL LOYALTY
Pearson Correlation Sig. (2-tailed) N Pearson Correlation
-.315(**) .001
100 -.315(**) .001 100
100 1
ATTITUDINAL LOYALTY
Sig. (2-tailed) N
100
** Correlation is signicant at the 0.01 level (2-tailed). Limitations of the Study and suggestions for The correlation coefcient gives a mathematical future research value for measuring the strength of linear relationship between two variables. It can have values from -1 to 1 with: a. +1 representing absolute positive linear relationship (as x increase, y increase). b. 0 representing no linear relationship (x and y have no pattern). c. -1 representing absolute inverse relationship (as x increases ,y decrease) In this study, to test the correlation between overall service quality and overall attitudinal loyalty bivariate correlation technique is used to conform the Correlation between these two constructs, Since r = -.315 and +1 denotes , the variables namely overall service quality and attitudinal loyalty are positively correlated. Hence, it is concluded that respondents who give positive opinion about overall service quality will develop attitudinal loyalty towards their private banks. It is reported that the correlation is signicant at the 0.01 level. This study was carried out mainly in Tiruchirappalli, Tamil Nadu of south India and therefore the results obtained may not be applicable to the country as a whole, since the banking consumers differ in their preference,culture and demographics in various parts of the country. The small sample size of 100 may also be error-prone. Factor analysis with such a small sample would have questionable applicability. The real problem was found to be in the factor structure as compared to the proposed structure, most of the items did not merge according to the dimensions proposed by (Parasuram et al., 1988). The reason for this inconsistency is because of generalized wording of the statements and a lack of specicity. For example the statement, This bank has modern looking equipment, is too general and needs modication and addition of three more statements namely banks will give competitive Interest rates, will charge reasonable service charge, has good complaint handling system to resolve our problems. The linkage between service quality and
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attitudinal loyalty is only studied here, rather it is advisable to nd the linkage between service quality, mediated through customer satisfaction and all the dimensions of behavioral intention dimensions battery proposed by (Zeithaml, Berry and Parasuraman (1996 ) .Therefore, it would be suggested to redene the factors according to the results obtained under the Indian conditions and then carry out the gap analysis for accurate response from the respondents and also for more pertinent suggestions for improvements. Also, similar studies with relatively large sample rigorously derived across all the states of India, which would measure the validity and reliability of the proposed instrument by (Parasuram et al., 1988) could be more effective. 13. Conclusion To gain and sustain competitive advantages in the fast changing retail banking industry in India, it is crucial for private banks to understand in-depth what customers perceive to be the key dimensions of service quality and what impacts the identied dimensions have on customers attitudinal loyalty. The statistical analyses of survey responses in this study reveal interesting ndings. The study suggests that customers distinguish ve dimensions of service quality in the case of the private retail banking. These ve dimensions of customer-perceived service quality are: namely Factor 1(Reliability, Responsiveness and Empathy), Factor 2(Assurance, Empathy and Responsiveness), Factor 3(Assurance, Empathy and Price), Factor 4(Reliability) and Factor 5(Tangible and Empathy). . The rst Factor is primarily related to the sincere interest bank show towards customer, prompt service, employee willingness to help customers, employees never busy to respond to customer request and has a good complaint handling system. The second factor is primarily associated with employees instill condence in customers, knowledge to answer customer questions, understand the specic needs of their customers. The third factor is primarily associated with the bank showing individual attention to customers, bank charging reasonable service charge
and customer should feel safe in their transaction .Finally; the fth Factor encompasses items related to the banks performing the service right the rst time and provide their services at the time they promise to do so. Finally, fth factor encompasses modern looking equipment bank should posses to enhance service facilitation, convenient operating hours and bank should carry visually appealing materials like brochures or statements or pay-in-slips/withdrawal slips etc. Identifying the underlying dimensions of the service quality construct in the Indian retail banking industry is the rst step in the denition and provision of quality service (Zeithaml, Berry and Parasuraman (1996). The results of this study also offer strong support for the intuitive notion that improving service quality can increase favorable behavioral intentions (Attitudinal Loyalty) namely, customer saying positive things about their bank to other people, recommending their bank to someone who seeks their advice ,encouraging friends and relatives to do business with their banks ,considering their bank ass your rst choice to transact services and doing more business with their bank in next few years. Furthermore, the results yielded an intricate pattern of service quality-attitudinal loyalty relationship at the level of the overall dimensions. Hence, these issues should be a central concern for retail bank managers as well as service management academics and practitioners to explore the specic component and train their employees in those areas and to delight the customers in the needed domain to enhance service quality and build attitudinal loyalty to retain the valued customers who is the most protable customers for the banks as proposed by (Backman & Veldkamp, 1995; Baker &Crompton, 2000; Bloemer et al., 1999; Zeithaml et al., 1996). 14. References 1. Alexandris, K., Dimitriadis, D., & Kasiara, A. (2001). Behavioural consequences of perceived service quality: An exploratory study in the context of private tness clubs in Greece. European Sport Management
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Quarterly, 1, 251280. 2. Backman, S., & Veldkamp, C. (1995). Examining the relationship between service quality and user loyalty. Journal of Park and Recreation Administration, 13, 2941. 3. Baker, D., & Crompton, J. (2000). Quality, satisfaction and behavioural intentions. Annals of Tourism Research, 27, 785804. 4. Bloemer, J., Ko de Ruyter, & Wetzels, M. (1999). Linking perceived service quality and 5. service loyalty: A multi-dimensional perspective. Journal of Marketing, 33, 1082 1106. 6. Caruana, A. (2002). The effects of service quality and the mediating role of customer satisfaction. European Journal of Marketing, 36 (7), 114. 7. Cronin, J., & Taylor, S. (1992). Measuring service quality: a re-examination and extension. Journal of Marketing, 56, 5568. 8. Nunnally JC. Psychometric Theory. 2d ed. New York: McGraw-Hill Book Company, 1978. 9. Oliver, R. (1997). Satisfaction: A behavioural perspective on the consumer. New York:McGraw Hill.Otto, J., & Ritchie, J. R. B. (1996). The service experience in tourism. Tourism Management,17, 3, 165174. 10. Parasuraman, A., Zeithaml, V. A., and Berry, L. L. (1985). A Conceptual Model of Service Quality and Its Implications for Future Research. Journal of Marketing, 49, 4150. 11. Parasuraman, A., Zeithaml, V., & Berry, L. (1988). SERVQUAL: Multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64, 1240. 12. Robledo, M. A. (2001). Measuring and managing service quality: integrating customer expectations. Managing Service
Quality, 11, 1, 2231. 13. Spreng, R., & Chiou, J. (2002). A crosscultural assessment of the satisfaction formation process. European Journal of Marketing, 36 (7/8), 18. 14. Spreng, R., & Mckoy, R. (1996). An empirical examination of a model of perceived service quality and satisfaction. Journal of Retailing, 72, 201214. 15. Sureshchandar, G. S., Rajendarn, C. & Anantharaman,R. N. 2002. The relationship between service quality and customer satisfactiona factorspecic approach. Journal of Services Marketing, 16(4): pp. 363-379. 16. Teas, R. K. (1993). Expectations, performance evaluation and consumers perceptions of 17. quality. Journalof Marketing, 57, 1834. 18. Tian-Cole, S., & Crompton, J. (2003). A conceptualization of the relationships between service quality and visitor satisfaction, and their links to destination selection. Leisure Studies, 22, 6580. 19. Woodside, A., Frey, L.,&Daly, R. T. (1989). Linking service quality, customer satisfaction ,and behavioural intention. Journal of Health Care Marketing, 9, 517. 20. Zeithaml, V. A., & Bitner, M. J. (2003). Services Marketing: Integrating Customer Focus Across the Firm. New York: McGrawHill. 21. Zeithaml, V., Berry, L., Parasuraman, A. (1996). The behavioural consequences of service quality. Journal of Marketing, 60, 3146. 22. Zeithaml, V. A., Parasuraman, A., Berry, L.L. (1990). Delivering Quality Service.Balancing Customer Perceptions and Expectations, The Free Press, NewYork: NY.
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SRM MANAGEMENT DIGEST - 2010

April - 2010 Editor

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SRM MANAGEMENT DIGEST - 2010

Dr. R. Velu Economics

SRM Management Digest - 2010

SRM Management Digest - 2010

SRM Management Digest - 2010

SRM Management Digest - 2010

AN APPLICATION OF CLUSTER ANALYSIS TO IDENTIFY COUNTRIES WITH SIMILAR MEDICAL FACILITIES

SRM Management Digest - 2010

SRM Management Digest - 2010

SRM Management Digest - 2010

SRM Management Digest - 2010

SRM Management Digest - 2010

Cluster number Cluster 1 Cluster 2 Cluster 3 World

Average life expectancy in years 66.7 74.01 48.4 61.33

Field Survey : 2010 Table 4: Clusters of South American continent

Field Survey : 2010

SRM Management Digest - 2010

Average number of medical personnel / beds per 10000 population

Average government expenses (%)

Immunization coverage (measles, DTP3, HepB3) % 1 yr olds 87.16 83.7 81.6

Average mortality rates per 10000 population 377.48 637.5 833.07

Average life expectancy in years

Cluster 1 22.12 Cluster 2 13.42 World 32 Field Survey : 2010

8.87 9.8 8.44

Average government expenses (%) 12.71 8.43 8.45 8.44

Immunization coverage (measles, DTP3, HepB3) % 1 yr olds 91.22 91.4 56 81.6

Average life expectancy in years

Cluster 1 Cluster 2 Cluster 3 World

72.48 62.61 59.32 61.33

SRM Management Digest - 2010

Average government expenses (%)

Immunization coverage (measles, DTP3, HepB3) % 1 yr olds

Average mortality rates per 10000 population 521.95 236.5 833.07

Average life expectancy in years

Cluster 1 Cluster 2 World Field Survey : 2010

8.74 11.66 8.44

93.43 87.31 81.6

67.26 75.03 61.33

SRM Management Digest - 2010

Democratic Peoples Timor-Leste Republic of Korea Georgia Japan

Average number of medical personnel / beds per 10000 population

Average government expenses (%)

Average life expectancy in years

15.5 6.8 5.8 8.44

38.5 66.7 56.78 61.33

SRM Management Digest - 2010

Average government expenses (%)

Average life expectancy in years

Cluster 1 Cluster 2 Cluster 3 Cluster 4 World Field Survey : 2010

5.9 5.76 9.08 8.87 8.44

66.18 44.87 47.22 38.7 61.33

Cluster 1 Cluster 2 Cluster 3 World Field Survey : 2010

7.2 8.35 10.03 8.44

65.56 88.46 90.37 81.6

1578.4 530.04 407.38 833.07

47.23 66.24 70.61 61.33

SRM Management Digest - 2010

Fig 1 : Plot of pseudo F statistic and t2 statistic vs. number of clusters