modern retailing challenges in india -...
TRANSCRIPT
Volume 6, Number 4, October – December’ 2017
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MODERN RETAILING CHALLENGES IN INDIA
T. Sanjeev Kumar1 J. Prasanna Kumar2 G. Raghavendra3
ABSTRACT
The Indian Retail Industry is the fifth largest in the world. Comprising of organized and unorganized sectors, Indian retail
industry is one of the fastest growing industries in India, especially over the last few years. Though initially the retail industry
in India was mostly unorganized, however with the change of taste and preferences of consumers, the Industry is getting more
popular these days and getting organized as well. Retailing in India is one of the pillars of its economy and accounts for about
10 percent of its GDP. The Indian retail market is estimated to be US$ 600 billion and one of the top five retail markets in the
world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people.
As of 2003, India's retailing industry was essentially owner manned small shops. In 2010, larger format convenience stores and
supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centres. India's retail
and logistics industry employs about 40 million Indians (3.3%) of Indian population. This paper focused on Modern Retailing
Challenges in India.
KEYWORDS
Hypermarts, Logistics, Metros, Pyramid, Pantaloons, Retail Marketing etc.
INTRODUCTION
The India Retail Industry is the largest among all the industries accounting for over 10 per cent of the country's 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. However, all of them have not yet tasted success because of the heavy initial investments 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 next boom industry. Today, organized retail operations, chain stores and international investment are starting
to move in, leading at least part of the retail sector to dramatically increase its scale of operations and integrate itself more closely
into the international economy, potentially reducing farm-to-market losses of agricultural products, encouraging infrastructure
improvement, and driving the training of the middle segments of the labour force. The trends that are driving the growth of the retail
sector in India are:
Low share of organized retailing,
Falling real estate prices,
Increase in disposable income and customer aspiration,
Increase in expenditure for luxury items.
The retailing configuration 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, the Tier II cities are no longer behind in the race. lf 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.
MEANING
Retail management includes all the steps required to bring the customers into the store and fulfil their buying needs. The various
process, which helps the customer to procure the desired merchandise from the retail store for their end use, refers to retail
management.
1 Assistant Professor, Department of Management Studies, GATES Institute of Technology, Andhra Pradesh, India,
[email protected] 2 PG Student, Department of Management Studies, GATES Institute of Technology, Andhra Pradesh, India,
[email protected] 3 PG Student, Department of Management Studies, GATES Institute of Technology, Andhra Pradesh, India,
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DEFINITION
A process of promoting greater sales and customer satisfaction by gaining a better understanding of the customer of goods and
services produced by a company typical retail management strategy for a manufacturing business created by the retail process that
distributes the finished products created by the business to consumers to determine and satisfy what buyers want and require.
OBJECTIVES OF STUDY
To study the Modern retailing challenges in India.
To be able to understand different concept regarding Retail Management.
To learn and gain additional knowledge about the nature if Retail Store now a days.
METHODOLOGY
This study is descriptive in nature. We had done conceptual paper the total information, which we collected, from different secondary
sources as well as our own knowledge on this particular topic.
Secondary sources consist of online databases websites Retail, and journals, case study, newspapers books and etc.
RETAILING FORMAT IN INDIA
Malls: The largest retailers are located mainly in metro cities, in proximity to urban outskirts. They range from 60,000 sq. ft. to
7,00,000 sq. ft. and above. Examples include Shoppers Stop, permitting the use of land for commercial development thus increasing
the Pyramid, Pantaloons, etc., availability of land for retail space; thus, making NCR render to 50% of the malls in India.
Specialty Stores: Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword RPG's Music World and
the Times Group's music chain Planet M, are focusing on specific market segments, and have established themselves strongly in
their sectors.
Discount Stores: As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk
reaching economies of scale or excess stock left over at the season.
Department Stores: Large stores ranging from 20000-50000 sq. ft., catering to a variety of consumer needs. Departmental Stores
are expected to take over the apparel business from exclusive brand showrooms.
Hyper marts / Supermarkets: Large self-service outlets, catering to varied shopper needs are termed as Supermarkets. These are
located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales.
Convenience Stores: These are relatively small stores 400-2,000 sq. ft. located near residential areas.
MBO: Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do
well in busy market places and Metros.
MODERN RETAILING CHALLENGES IN INDIA
The first challenge facing the organized retail sector is the competition from unorganized sector.
Supply Chain Management: The retail scenario is characterized by logistical challenges, constant changes in consumer
preferences and evolution of new retail formats. All this increases the challenges faced by the industry.
Frauds in Retail: Frauds, including vendor frauds, thefts, shoplifting, and inaccuracy in supervision and administration
are the challenges that are difficult to handle.
Challenges with Infrastructure and Logistics: The lack of proper infrastructure and distribution channels in the country
results in inefficient processes.
In retail sector, Automatic approval is not allowed for foreign investment:
Taxation, which favours small retail businesses.
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Developed supply chain and integrated IT management is absent in retail sector.
Lack of trained work force.
Low skill level for retailing management.
Intrinsic complexity of retailing-rapid price changes, threat of product obsolescence and low margins.
Organized retail sector has to pay huge taxes, which is negligible for small retail business.
Cost of business operation is very high in India.
India's growth story starts with the growth its retail sector. The sector has evolved dramatically from traditional village fairs, streets
hawkers to malls. During the last few years, the Indian retail market has seen considerable growth in the organized segment.
However, the modern trade in India still faces many challenges –
Rigid Regulations: India has numerous labour laws and has numerous rigid regulations such as maximum number of
employees per company in certain sectors of the economy, which limits the growth of modern trade a lot, as it restricts
the number of employees.
High Real Estate Cost: It will increase the investment of the entrepreneur and new entrepreneurs are hesitant to take high
risk by investing more amount of money in new business.
High Personnel Cost: Since they have to provide higher customer service, they provide specific managers to handle such
organized trade customers and this increases the personnel cost. For this reason, they have to recruit skilled and qualified
managers and they expect a handsome amount of money in the form of salary.
Customer Direct Interface: Nowadays packaging is very important. Good and attractive packages increase sale of the
product. It has become necessary for the product to stand by itself by communicating directly to consumers. Although
experimental marketing is a big opportunity, it comes with an additional cost of attractive packaging, which increases the
cost price of the product.
Lack of Basic Infrastructure: When the infrastructure is not good, for example, if the mall does not have proper parking
facility, then the customers will not go to the mall for shopping. In addition, when there is no systematic infrastructure,
there is a delay in delivery of products.
Shrinkage: There are many products kept on the many shelves in the malls and more often than not they remain unsold,
which leads to a lot of wastage and reduces the profit margin. Therefore, the entrepreneurs suffer a loss.
Highly Competitive Retailers: There is a stiff competition as there many retailers which have been established long back
and are running successfully and they have their loyal customers which is a disadvantage for new retailers. The market
share is volatile as the customer can shift to the competitive brand with a slight change in price.
Customers are more Demanding: Customers have high service expectation. They expect attention and different variety
of products to choose the best from them.
The Hidden Challenges
Modern retailing is all about directly having first-hand experience with customers, giving them such a delighting experience that
they would like to enjoy repeatedly. Thus, challenges like retail differentiation, merchandising mix, supply chain management, and
competition from supplier's brands are the talk of the day. In India, as we are moving to the next phase of retail development, each
player endeavour to offer experiential shopping. One of the key observations by customers is that it is very difficult to find the
uniqueness of retail stores.
Challenges of Unorganized Retail Sectors
India's organized and unorganized retail sectors can co-exist and thrive, who foresees bright prospects for retail sector in India it is
quite possible for both the organized and unorganized sector retailers to co-exist and flourish," said Rakesh Kacker, Additional
Secretary Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution" India has a huge potential
for growth in retailing sector.
CONCLUSION
The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services. It
is also the second largest industry in India in terms of numbers of employees and establishments. The India Retail Industry is the
largest among all the industries accounting for over 10 percent of the country's GDP and around 8 percent 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.
However, all of them have not yet tasted success because of the heavy initial investments that are required to break even with other
companies and compete with them.
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CONTOURS OF NATIONAL FOOD SECURITY BILL
P. Sudhakara Rao4 Dr. A. Sathish Babu5
ABSTRACT
The almighty has created human beings with some definite purpose and each individual is unique. However, some people are
fortunate enough to have sufficient and nutritious food and some people are less fortunate and struggling for two square meals
and when it is not available going to bed with hungry. The post independence era has witnessed sufficient food grain stocks but
they are not reaching empty stomachs. Right to live is a fundamental and onus is laid on the shoulders of parties in power to
provide food for sustenance. Democratic experience indicates that opulence is concentrating in a few hands and apex court has
intervened and gave direction to Government that nobody has to go to bed with hungry. Hence, it became necessity on the part
of Government to bring many household to bring within the orbit of nutritious zone and an endeavour has been made in form
of National Food security Bill 2013. An attempt has been made in this paper to analyse the issues and implications and to
understand whether the poor will really benefit out of the magnum opus Bill.
INTRODUCTION
The God has created human beings with a definite purpose, each individual is a unique personality and the survival, and sustenance
depends upon the basic need of “FOOD”. If we go into the historical pages, man is an adventurist and has the enthusiasm to search
for new knowledge and for food and fodder. In the quest to search for food and fodder, he has travelled distant destinations and tried
to the proximate places of water. However, the availability of food and nourishment depends upon various factors. A few fortunate
people are able to get rich food in the sense food containing fibre, proteins. Varieties of foods are available to the taste bud of the
man and he has seen, tasted various varieties that are available in different places, countries, and continents. Over a period, the
population has grown without leaps and bounds and a vast majority of people is living on insufficient food or suffering from
malnutrition. If the total world population is 900 million, nearly one-third population is living in abject poverty. The same situation
is prevailed in India that out of 120 crores of population nearly 35% populations who are said to be below poverty line and going to
the bed with hunger.
On the eve of the 50th anniversary of India’s independence, the then president of India Mr. K. R. Narayan had listed out the two
major achievements of India i.e., adhering to democratic system of governance uninterruptedly and the launch of a green revolution
in agriculture. Even though India attained self-sufficiency, in food grains, many years back and food gains are stocked in godowns
and poor people are outside the purview of two square meals. The pathetic part is that nearly 35% of India’s population remains in
the clutches of food insecurity. This has prompted the apex court to give a direction to the Union Government that no individual is
to go to the bed with hunger.
The development of India means the development of both Agriculture and Industry, which are two wheels to the economy and
economic engine, is to be properly propelled means the development of these two sectors because of the reason that both are Siamese
twins. The development of any Nation depends on its man power, once human resources in India were considered as brain drain,
and now it is viewed as Brain Gain. However, this phenomenon is confined to a few sectors and overall development means the
development of all constituent parts. The Indian mother has entered in to 68th year but many souls are desperately looking for two
square meals per day, which is a distant dream. Healthy population is an insignia for development. When the society is
knowledgeable one, the role of human resources is vital. It is incumbent on the part of parties in power to provide basic need of
food, shelter, education, health for all on the Indian geographical abstract.
INDIAN AGRICULTURAL SCENARIO
The culture of India is “Agriculture”. The Indian mode of living is agriculture and “India Lives in its Villages” is the standard adage.
Fifty five percent of Indian population is living on agriculture with 5 cents to 5 acres land. Agriculture depends on monsoons. We
have achieved self-sufficiency through “Green Revolution” followed by “White Revolution”. “Yellow Revolution”, “Blue
Revolution”, the position is to be taken further in view of the growing demand for the growing population. Over all agriculture
scenario indicates that most of the farmers are feeling that agriculture is uneconomical and Indian farmer is born in poverty, grown
4Research Scholar, Department of Management, Rayalaseema University, Andhra Pradesh, India, [email protected] 5Associate Professor, P.G. Department of Commerce & Management Studies, V.R.S. & Y.R.N. (P.G.) College, Andhra Pradesh,
India, [email protected]
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up in poverty, nurtures poverty, gives poverty as heredity, and dies in poverty. There are varied reasons for this situation. Prominent
among them are:
Spurious seeds,
Improper water management,
Indiscriminate usage of pesticides,
Lack of drip irrigation,
Low yield,
Debt trap,
Insufficient transport facilities,
Illiteracy,
Alternative crop development is at the lowest ebb,
Lack of marketing facilities,
Dearth of information,
Inefficient agricultural marketing committees,
Dominant role of middle men,
Banks are not giving loans in agricultural seasons,
Dependence on private money lenders,
Farmers’ co-operative societies are not properly functioning,
Minimum support price not taking into consideration about input costs,
Negligence attitude of government and its policies,
Fertile lands are taken by the governments in the name of SEZ’s.
Fertile lands for construction of power plants.
All these are contributing factors for low progress for the last one decade and several farmers across the country are committing
suicides and as such agriculture has become un-economical and India’s backbone “THE FARMER” spinal cord is bended. He is
leaving the farm sector and migrating to other areas such as real estate development and industrial ventures. In this drastic
debilitating situation, over 200 million women, children, men, destitute, un organized sector people without steady income are going
to bed with hungry bellies. It is estimated that one side there are buffer stocks and on the other side, hungry people are there. It is
estimated that 45% children are under nourished and this has prompted the Government to introduce Food security to marginally
eliminated people.
DEFINITION OF FOOD SECURITY
The World Bank has defined food security as “Access by all people at all time enough food for an active and healthy Life”. Here
the emphasis is on physical availability and economic accessibility of food to the people.
REASONS FOR FOOD INSECURITY
Poor harvest coupled with rising demand has resulted into enhancement in Food prices and inflation,
Un favourable weather conditions,
Tight supply pushed the food prices to un precedent heights,
Public investment in Agriculture is reducing,
High yielding crops varieties are not introduced,
Insufficient inputs in minor irrigation,
Low technology utilization.
A WEAK PUBLIC DISTRIBUTION SYSTEM
An open dissemination shop otherwise called Fair Price shop or Ration shop. These shops offer wheat, rice, lamp oil and sugar at a
value lower than advertise cost. To purchase things one must have apportion card. India has 4,78,000 shops constituting the biggest
conveyance net work on the planet. The presentation of apportioning in India goes back to 1940's Bengal starvation. The following
are the structural shortcomings.
There are a few occurrences that purchasers are accepting stale and sub-par quality grains in the fair price shops.
Beguiling merchants supplant great supplies got from the Food Corporation of India (FCI) with second rate stock and
offer FCI stock operating at a profit showcase.
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It is a common practice in many ration shops that large numbers of Bogus Ration cards are found. This happens with the
connivance of Revenue Department.
Corruption starts from issuing of supplies. Less weight per bag, gunny bag weight will also be included in the net weight,
pilferages are common, and dealers claim that they have to pay bribes to revenue officials. In order to do that they are
resorting for unlawful activities.
The dealers’ commission is very low and due to which they are resorting to malpractices, illegal diversion of commodities,
holding, and black marketing. In some states they are demanding for that, they must be recognized as Government
employees and requesting for salary instead of commission.
Numerous acts of neglect make protected and nutritious nourishment distant and exorbitant to numerous poor along these
lines bringing about their sustenance frailty.
In order to prevent bogus cards Aadhaar card seeding is taking place. However, it is a surprise many bogus Aadhaar cards
are also in circulation. These people are not eligible for ration.
Territorial portion and scope of PDS are unsuitable and the fundamental target of value adjustment of basic products has
not met.
Which household comes under BPL or APL have not been classified properly until date.
A well-conceived distribution system aims to supply food to the poor and vulnerable sections of the society. However, in practice,
it is a totally a failure. It is estimated that minimum 65% of the subsidized food grain are not reaching the Below Poverty Line
people. Main factors for this situation are:
Below poverty Line people are eliminated from the scheme due to lack of Aadhaar card, ration card etc.,
White collar people and rich people are also in forefront to get white colour card to get government facilities,
Corruption in the Civil supplies Department,
No proper mechanism to check Bogus ration cards,
No severe punishments to those who had done wrong,
Lack of education and awareness about various Acts among BPL people.
All these are the major causes for people to feel insecurity in food. In India, people belonging to BPL occupied the eastern indo-
gangetic plains or rain-sustained territories.
LEGAL INITIATIVE
The privilege to nourishment is a standout amongst the most essential privileges of humanity. Hunger remains unacceptable. Many
practices in food production technology are simply unsustainable. As indicated by AMARTYA SEN, Noble prize victor "when
India accomplished freedom over 67 years back, the general population of the nation was highly distressed by endemic Hunger".
The Government cannot escape with extensive scale starvation yet it can escape with endless craving. It has been acknowledged as
a major aspect of Indian lifestyle. India has biggest number of hungry individuals on the planet. Yearning and lack of healthy
sustenance are yet real human and social issues. Specialists are depicting this circumstance as “SILENT EMERGENCY”.
LEGAL RELIEF
India is a signatory to the general presentation of Human Rights (1948) and the International agreement on Economic, social and
social rights (1966) which perceived a privilege to sufficient sustenance. Aside from this, the mandate standards of state arrangement
in the constitution of India give that it is the commitment of the state to raise the level of nourishment and way of life of its kin and
need to enhance general wellbeing.
In 1996, the zenith court likewise announced that the privilege to live ensure in any socialized society suggests "the privilege to
nourishment" among different rights. The common freedoms affiliation had likewise fought in the Supreme Court that the privilege
to sustenance is additionally a piece of "basic appropriate to life" gave in article 21 of the constitution. In the meantime, the summit
court gave a few between time orders. In the year 2001, the court requested the execution of eight midway supported plans as
legitimate qualifications these include:
The Public Distribution Scheme (PDS),
Antyodaya Anna Yojana (AAY),
The Mid Day Meal Scheme,
The Integrated Child Development Services (ICDS).
Among others, in the year 2008, the court ordered that below poverty Line (BPL) families be entitled to 35 Kgs of food grains per
month at subsidized rates.
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PREAMBLE
Subsequent to the summit court arranges in the year 2010 October, the National Advisory council (NAC) drafted a National
sustenance security Bill proposing lawful qualifications for around 75% of the populace. Consequently, Dr. C. Rangarajan made a
few recommendations including lessening the extent of the populace qualified for nourishment benefits and mechanizing PDS.
SALIENT FEATURES OF NATIONAL FOOD SECURITY BILL-2013
The Bill looks for "to accommodate nourishment and wholesome security in human life cycle approach by guaranteeing access to
sufficient amount of value sustenance at reasonable costs to individuals to carry on with an existence with poise and for mattes
associated therewith and coincidental thereto".
ENTITLEMENTS
Need family units are qualified for 5 kg of sustenance grains per individual every month and 2.43 crore Antyodaya families to 35
kgs for each family every month.
The joined scope of need and Antyodaya family units might reach out up to 75% of the rustic populace and up to half of
the urban populace.
More or less the Bill does away the refinement amongst BPL and APL. Both are qualified for 5 Kg grain for every
individual every month.
The PDS issue costs are given in plan at Rs. 3/2/1 individually for rice/wheat/millets. They might be re-examined
following 3 years.
CHILDREN ENTITLEMENT
For the kids in the age gathering of a half year to 6 years, the Bill ensures an age suitable supper for nothing out of pocket through
the neighborhood Angnawadi. For youngsters matured between 6-14 years are free late morning supper should be given each day
(with the exception of on school Holidays) in all schools keep running by neighborhood bodies up to class VIII. For kids under a
half year "selective bosom nourishing might be advanced.
ENTITLEMENT OF PREGNANT AND LACTATING WOMEN
Each pregnant and lactating mother is qualified for a free feast at the nearby Angnawadi (amid pregnancy and a half year after labor)
and in addition maternity advantages of Rs. 6,000/- in portions. With the end goal of organization, the Bill accommodates the
production of state Food commission, each commission might comprises of a seat individual, five different individuals and a part
secretary.
TRANSPARENCY AND GRIEVANCE REDRESSAL
The Bill accommodates a two level review structure, including the District Grievance Redress officer (DGRO). The obligatory
straightforwardness arrangements incorporate:
Placing all PDS related records in people in general area and keeping them open for examination to the general population.
Conducting occasional social Audits of the PDS and other welfare plans.
Setting up cautiousness panels at state, District, Block and Fair value shop levels to manage all plans under the Act.
The Bill likewise expresses focal and state governments should attempt to continuously embrace different PDS changes.
The Bill gives the punishment to be forced on open hirelings or specialist if discovered liable of neglecting to conform to
the help suggested by the District grievance change Officer.
One of the unique plan to be executed in a very man centric culture like India is that "eldest ladies or ladies of 18 years
old or above will be leader of the family unit.
Social Audits and watchfulness boards of trustees to guarantee straightforwardness and responsibility. Arrangements have
additionally been made for exposure of records identifying with PDS, social Audits.
The Bill accommodates punishment to be forced on open hirelings or expert if discovered liable of neglecting to agree to
the alleviation prescribed by the DGRO.
Even though the president of India accented the Bill, but a million Dollar question arises in the minds of many people, experts,
Economists, Policy makers that weather it really assure the poor freedom from hunger.
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ADVANTAGES OF THE BILL
Right to sustenance turned into a legitimate right. The Bill plans to give lawful directly finished financed sustenance grains
to 67% populace.
The Bill gives uniform allotment of sustenance grains in both amount and costs.
Continuation of Antyodaya and Annayojana. Security to 2.43 crore poorest of poor families under the AAY to supply 35
Kg sustenance grains for every month per family would proceed.
For kids in the age gathering of a half year to 6 years the bill ensures an age proper feast. National support to pregnant
women without limitations.
The machinery for implementation will use the infrastructure like PDS and Angnawadi. This prevents further wastage of
money to develop infrastructure.
DISADVANTAGES OF THE BILL
Can India deliver enough nourishment to adapt up to the request made by the bill? If there should be an occurrence of a
National debacle or cataclysm like surge, starvation, dry season not just there will be a sudden interest for sustenance, the
generation likewise descends drastically. A definitive changes and unpredictable rainstorm additionally posture yearly
dangers to crops.
Some specialists are of the assessment that this bill is excess and contemptuous in a creating nation.
The Government buys grain at a financial cost of Rs. 18/- per kg. This incorporates the value it pays to ranchers. Cost of
stocking, the sustenance conveyance under the plan the Government will pitch the nourishment to apportion cardholders
at Rs. 1/- and 3/- per kg which is an endowment of Rs. 16/- per kg.
When the debasement has leaked in practically every part of Indian Governs, can the nourishment security Bill get away
from its grip? It is excessively an idealistic dream. Nearly everyone expect that agents and authorities will take the
advantages from poor people and just a negligible would have the capacity to stream down to the penniless.
The Reserve bank of India (RBI) has cautioned that expanded open spending could extend the Governments shortfall and
further develop hoisted swelling. Business analysts say that India would I will be able to bear the cost of such an exorbitant
endowment load when the financial development has eased back to 10 years low. The cost of sustenance sponsorship will
go up from 0.8% GDP to around 1.5% GDP. This is significant where the Government does not have enough assets.
The Bill proposes to give sustenance grains to individuals at exceptionally modest rates may demoralize the agribusiness
generation in the nation. There is still no lucidity concerning who will bear the weight of the enormous appropriation that
will be spent.
The onus falls on the ranchers and it will make their life harder. The low costs of the financed sustenance can contort the
market and ranchers who cannot pitch to the Government guaranteed program will miss out the open market since costs
will constrained down. The definition and criteria about the poor is still vague and ambiguous.
Sufficient storing facilities are not available even now in India.
The apex court gave a direction that Aadhaar card is not mandatory to receive Government benefits.
National population register is not fully prepared.
Aadhaar card issuing nodal agency is not efficiently functioning in issuing cards to deserving citizens.
CONCLUSION
The union Government has given time to implement the scheme up to April-2015 and respective states have to equip themselves to
give food security to people. However, there are many doubts in the minds of experts, economists about the cost that will have to
be spending by the Union Government and has to decide the role of state Governments in planning and executing the scheme
successfully. Some are of the opinion if all the schemes that are in vogue are consolidated it will not be a burden on the exchequer
of the Government. Experience indicates that Government is promulgating many Acts but in practice they remain on the paper only,
System failure can be observed and let us hope that same fate will not be met with this Food security Bill-13 and the Bill will be an
important aspect of a comprehensive long term development strategy that give solace to many a poorest people on the Indian soil.
REFERENCES
(2013). Food security Bill.
(2011, September 27). Allow alternatives to PDS say experts. The Indian Express.
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*****
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AGRICULTURAL MARKETING REFORMS IN INDIA: AN EMPIRICAL REVIEW
Dr. Avinash Sahurkar6 Mahendra More7
ABSTRACT
Agriculture sector plays a vital role in India’s economy. Over 58% of the rural households depend on agriculture as their
principal means of livelihood. As per the 2nd advised estimates by the Central Statistics Office (CSO), the share of agriculture
and allied sectors (including agriculture, livestock, forestry and fishery) is estimated to be 17.3% of the Gross Value Added
(GVA) during 2016-17 at 2011-12 prices. In the initial period, marketing for agriculture was required to increase productivity,
provide a market for agricultural produce, arrangement for agricultural credit, etc. However, in today has scenario,
agricultural marketing is needed to enhance the efficiency of the producers to market their agriculture produce so that they can
earn desired market margin. The purpose of this research is to understand the status of agriculture marketing reforms in India.
This study also examines the role of government initiative in transforming farmers and agriculture sustainable development.
KEYWORDS
Agriculture Sector, Marketing, Reforms, Sustainable Development etc.
INTRODUCTION
The agricultural produce sector has been one of the most important components of Indian economy. Considerable progress has since
been achieved in scaling new heights in the production of food grains, commercial crops like cotton, sugarcane, tea etc., fruits,
vegetables and milk. The increasing trend of agricultural production has brought, in its wake, new challenges in terms of finding
market for the marketed surplus. There is also pressure from all segments of agricultural economy to respond to the challenges and
opportunities that the global markets offer in the liberalized trade regime. To benefit the farming community from the new global
market access opportunities, the internal agricultural marketing system in the country also needs to be integrated and strengthened.
In particular, the market system has to be revitalized to a) provide incentives to farmer to produce more; b) convey the changing
needs of the consumers to the producers to enable production planning; c) foster true competition among the market players and d)
to enhance the share of farmers in the ultimate price of his agricultural produce.
LITERATURE REVIEW
Shashi Yadav (2016) in his research paper tried to identify various problems faced by the Indian agricultural sector with solutions
done by the government until today and still to do. Suresh C. Babu et al. (2013) presented a critical review of the current state of
agricultural extension reforms in India and based on the field case studies in four states —Bihar, Himachal Pradesh, Maharashtra
and Tamil Nadu. In addition, the Shakeel-Ul-Rehman highlights some of the organizations and institutions that provide direct and
indirect agricultural marketing and allied services for the ease and accessibility to the producer/farmer on one side and the consumer
on the other. The paper also highlights some alternative services available in agricultural marketing in India that could provide
additional value in the agricultural development. In the end the paper provide some suggestions that could help to make agricultural
marketing services better, more valuable and economical for the producer/farmer, the consumer and the country as whole (Shakeel-
Ul-Rehman, 2012). Rehman, et. al., (2012) in their paper suggested that the need to strength the regulated agricultural market
system arises from changing nature of linkages between agriculture and markets. It has also been observed that better and easy
market access and efficient information flow can bring much desired market orientation of the production system.
OBJECTIVES
To study the agriculture marketing reforms in India.
To understand the role of governments in agriculture marketing reforms in India.
To know the association between agriculture marketing reforms and farmers development.
METHODOLOGY
The present study is based on the secondary data. The data has been procured from the related articles, research papers, reports and
11th plan document of the government of India. This research is essentially aimed at understanding the importance of agriculture
6Associate Professor, Lokmahavidyalaya, Maharashtra, India, [email protected] 7Assistant Professor, Sinhgad Institute of Management & Computer Application, Maharashtra, India, [email protected]
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marketing reforms on farmer’s development. Researchers have also considered the views/ opinions expressed and experiences
shared by the experts in the subject area under consideration.
Agricultural Marketing Reforms in India
Application of reforms is essential in making any plan effective and providing the intent in all its aspects. Many outlooks published
by agencies like United Nations and the United States Department of Agriculture had termed the main focus areas of Indian agrarian
economy with two major issues, where raising required returns for farmers and reducing costs for buyers are addressed. Karnataka
states had done a lot to participate all the agriculture produce marketing committee (APMC) of the state to participate and function
in a united way. In the words of Prabhu Lal Saini, agriculture minister of Rajasthan, “Incorporation and electronic simplification of
agricultural markets is a feature that we have learnt from a state like Karnataka”. Contributing all the APMC’s of the nation may
not be a distant dream, keeping an eye over their nature of enormous fundamental prospective in agri-marketing.
Promotion of Agricultural Markets in Private / Co-operative Sector
State Governments, under the present Acts, alone are authorized to recruit the process of setting up of regulated agricultural markets.
As a result, private sector cannot take initiative in setting up markets equipped with best services. High funds with business skills
required for making and managing the market infrastructures have to come from private sector. In order to inspire private sector to
make enormous investments required for improvement of another marketing infrastructure and supporting services, requirements
of the APMC Act would need modification to create a lawful role for the private sector in market development.
Market Access to Farmers
A single unified market for agriculture commodities in the countrywide market may not be a single solution for whole agri-marketing
problems. It will still play a major role for better results. The National commission on farmers had detected that the compactness of
APMC is poor and it would be helpful if the market is within 5 Km from the farmers house or farm field. This policy can be used
to connect farmers to the market field.
Contract Farming
Seed manufacture by seed companies and sugarcane manufacture under catchment area of a sugar producing components are few
classic examples of contract farming in India. Contract farming as done by PepsiCo in Punjab for tomatoes or Mc-Cain for potatoes
in Gujarat is a perfect example of contract farming. Contract farming can help to get farmers new technology at affordable scale.
Contract farming may present a potentially good example.
Direct Marketing
Direct marketing inspires farmers to start grading of farm produce at the farm gate and avoids the necessity to haul produce to
regulated markets for sale. Direct marketing empowers farmers and processors and other bulk buyers to save on transport costs and
to significantly increase price awareness. Direct marketing also provided motivation to large scale marketing firms to increase their
purchases directly from producing areas. Direct marketing by farmers to the consumers has been experimented in India through
Apni Mandis in Punjab and Haryana. The APMC Acts will also have to be adjusted to license private and co-operative sectors to
take up direct marketing of agricultural commodities from the making areas and the farmers’ fields, without the need of going
through licensed traders and regulated markets. Such reforms will incentive private enterprise in structure consumer oriented market
infrastructure in the country.
Negotiable Warehousing Receipt System
There is an essential to introduce a negotiable warehouse receipts system in the country, with large profits such as increased liquidity
in rural areas, lower costs of financing, shorter and more well-organized supply chains, improved rewards for grading and quality,
growth of other productivity-enhancing agricultural services and better price-risk management. All these progresses will result in
higher returns to farmers, better service to consumers and macro-economic welfares through a more healthy trade balance in
agricultural commodities. Introduction of the system for agricultural commodities will also improve effectiveness of Indian
agriculture in the local and global markets. It will also facilitate the banks to increase the quality of their lending portfolio to the
agricultural sector.
Information Technology in Agricultural Marketing
Market information is required for farmers in design production and marketing, and is equally required for other market participants
in inward at best trading decisions. The animation and dissemination of complete and correct marketing information is the key to
attaining both operational and pricing efficiency in the marketing system and IT has an important role to play in the process.
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Marketing Extension, Training and Research
Training and extension systems in agricultural marketing will have to inform and adjust the recipients to respond to these challenges.
It is essential to construct capacity of each of the recipient group namely the farmers, market functionaries and other officials
involved in the agricultural marketing activities. The objective of informing training to marketing functionaries and stake holders
should be to create an atmosphere of Good Marketing Practices in the country to promote the welfares of farmers as well as
consumers.
Market Infrastructure Development
Market infrastructure is important for the performance of various marketing functions and growth of the size of the market and for
transfer of proper price signals leading to enhanced marketing efficiency. High investment and business skills are required for
creation and management of the agricultural marketing infrastructure.
Role of Government in transforming Agriculture development
According to IBEF (2017) Report government initiatives, in its Budget 2017–18, for the sustainable development of agriculture:
Total distribution for urban, agricultural and allied sectors for FY 2017-18 has been increased by 24% year-on-year to Rs
1,87,223 crore (US$ 28.1 billion). A dedicated micro-irrigation fund for Agriculture and Rural Development
(NABARD)will be set up by National Bank with a corpus of Rs 5,000 crore (US$ 750 million). The government plans to
set up a dairy processing fund from Rs 2,000 crore (US$ 300 million) to Rs 8,000 crore (US$ 1.2 billion) over three years.
The involvement of women in Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has increased
to 55% and provision to the scheme has been increased to a record Rs 48,000 crore (US$ 7.2 billion) for FY2017-18.
At subsidized interest rate of 7% per annum, short-term crop loans up to Rs 300,000 (US$ 4,500) would be provided to
the farmers. An additional incentive of 3% is provided to farmers for prompt payment of loans within due date, making
an effective interest rate for them at 4%.
The recent major government initiatives in the agri sector are as follows:
Government of India is introducing a new AGRI-UDAAN programme to guide start-ups and to empower them to connect
with potential investors.
The Government of India has introduced the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) with an investment of Rs
50,000 crore (US$ 7.7 billion) to development of irrigation sources for providing a permanent solution from drought.
The Government of India, as a part of the scheme for Agro-Marine Processing and Development of Agro-Processing
Clusters (SAMPADA), plans to triple the capacity of food processing sector in India from the current 10% of agriculture
produce and has also dedicated Rs 6,000 crore (US$ 936.38 billion) as investments for mega food parks in the country.
The NITI Aayog has planned various reforms in India's agriculture sector, including liberal contract farming, direct
purchase by private players from farmers, direct sale to consumers by farmers, and single trader license, among other
measures, in order to double rural income in the next five years.
The Government of India has allowed 100% FDI in marketing of food products.
The Maharashtra State Agriculture Marketing Board (MSAMB) has operationalized 31 farmer-to-consumer markets in
the state, and plans to open 100 more such markets in the future, which would enable better financial compensations for
the farmers by permitting them to directly sell their produce in open markets.
The Ministry of Labour and Employment plans to amend the Minimum Income Act to increase the daily minimum income
of untrained agricultural labour in C-class towns from the current income of Rs 160 (US$ 2.4) to Rs 350 (US$ 5.2) in the
central sphere per day.
According to the Agriculture Ministry, 50,000 hectares of area is accessible for coconut farming in Bihar, the Coconut
Development Board plans to equip the farmers thus making India the world leader in production, productivity and
processing for value addition and export of coconut (www.ibef.org, 2017).
CONCLUSION
The Central and State governments need to create an enabling policy environment for agricultural marketing reforms awareness and
utilization at optimum level among the farmers and other stakeholders of agriculture sector. Government needs to review the status
of agricultural marketing reforms and its effect on the development of farmers. There is also need to take pragmatic steps for solving
farmers problems, issues and challenges so that farmers can take the maximum advantage of all such reforms and policies framework
from the government.
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REFERENCES
Yadav, Shashi. (2016). Problems and Prospects of Agricultural Marketing in India. Management Insight, 12(2), 58–65.
Babu, Suresh C., Joshi, P. K., Claire J. Glendenning, Kwadwo Asenso-Okyere, & Rasheed Sulaiman V. (2013). The State of
Agricultural Extension Reforms in India: Strategic Priorities and Policy Options. Agricultural Economics Research Review, 26(2),
159-172.
Shakeel-Ul-Rehman. (2012). Agricultural marketing services in India. Arth Prabhand: A Journal of Economics and Management,
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Rehman, S., Selvaraj, M., & Ibrahim, M. S. (2012). Indian Agricultural Marketing: A Review. Asian Journal of Agricultural and
Rural Development, 2(1), 69-75.
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A STUDY OF GOVERNMENT SCHEMES
FOR SMALL SCALE AGRO FOOD PROCESSING INDUSTRY
Vimal Deep Saxena8 Dr. Parag Kalkar9
ABSTRACT
Agro food processing enterprises play a crucial role in the overall economic condition of India. These firms are one of the
biggest contributors and their growth portrays the development of the country. However, the intense competition and several
challenges make it difficult for these firms to survive in cut-throat era of competition. Indian Government, considering all those
issues, has created a separate ministry named as, Ministry of Food Processing Industries, to look after this industry and
implement various schemes.
The government is running many schemes to make this industry attractive and provide more and more benefits to this industry.
This research paper is an effort to understand all those schemes of government for agro food processing industry. The data
collected from 63 firms which are of small and medium size and operating in Pune district Maharashtra, India. Data was then
analyzed with the help of Chi-square statistical tool to test the hypothesis.
KEYWORDS
Agro Food Processing, Government Schemes, Small and Medium Enterprises etc.
INTRODUCTION
Growth and development in any economy is accelerated by growth of industries and firms. The national income depends on the
collective performance of the industry in the country. Commonly, the agro-industry is assumed to be an industry connected with
agriculture. The level of involvement from grass root level to internationalization of agro-processing industry highlights the growth
and contribution of the industry in the Indian economy. With government support and improved research and development, the
mechanized production and processing industry was developed, especially the processing of rice, coarse cereals, pulses, oil seeds,
fruits and vegetables, cotton, jute, animal produce, fish and fish products, plantation crops, commercial crops, medicinal and
aromatic plants, apiculture, floriculture, etc.
The agro-industry in India is highly unorganized (42 per cent, organized - 25 per cent, small-scale - 33 per cent) with a product-
focus approach. The industry is characterized by less technology and is labor-intensive, few firms implement quality standards,
firms are mostly proprietorship-based businesses, they are less competitive and they focus on quantity rather than quality.
To support the agro-industry, in terms of know-how, the Government of India has established agricultural universities in all states,
as well national institutes like Indian Institute of Technologies (IITs), National Institute of Technologies (NITs), Indian Council of
Agricultural Research (ICAR), National Dairy Research Institute (NDRI), Central Food Technological Research Institute (CFTRI),
etc., and many agri-research institutes in India for research and training and skill development. There are quality testing laboratories
established to control the quality of the agro-products. The Government of India has initiated several steps to make bank finance
available to agro-firms with tax-holiday privileges (Deloittee, 2009; KPMG, 2009). Beyond that Indian Government has also set up
a separate ministry to take care of food processing industry (MOFPI).
Although the Indian economy has registered a growth rate in the agro-industry sector, it is still prone to some weaknesses and
threats. One of the major threat the agro-industry is facing is competition from global players and large players in the domestic
region (Kachuru, 2006). Apart from this, the agro-industry still operates in a product-driven and risk-adverse mode without adequate
market linkage and flexible strategies. These weaknesses and threats are in need of farm-level competitiveness, managerial
excellence and business strategies for firms in the agro-industry to survive and grow (Deloittee, 2009; KPMG, 2009). The Ministry
has a clear goal of attaining these objectives by facilitating and acting as a catalyst to attract quality investments from within India
and abroad into this sector with the aim of making food processing a national initiative.
8Assistant Professor, Sinhgad Business School, Maharashtra, India, [email protected] 9Director & Professor, Sinhgad Business School, Maharashtra, India, [email protected]
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Table-1: Principal Characteristics of Registered Food Processing Unit (2011-12)
Unit
Factories
(numbers)
Persons Engaged
$ (Numbers)
Fixed Capital
^ (Rs. Crore)
Value of Output
(Rs. Crore)
Food Processing units#, of which 36,881 17,76,643 1,45,038 7,34,340
Grain Mill & Starch Products 19,010 3,66,500 17,553 1,58,213
Vegetable & Animal oils and fats 3,394 1,21,232 18,409 1,97,325
Beverages 1,997 1,47,482 22,420 53,301
Dairy Products 1,653 1,49,775 10,695 87,015
Fruits and Vegetables Products 1,078 62,448 5,060 10,309
Prepared Animal Feeds 755 44,462 2,741 26,602
Fish, Crustaceans etc. 390 42,081 2,150 15,228
Meat Processing & Preserving 146 20,621 1,362 10,008
Sources: Annual Survey of Industries (ASI), MOSPI; # Includes Food Products & Beverages (Division-10 & Division-11 of NIC
2008 classification); *: Factory Registered under Factory Act 1948; $: Person Engaged included all persons employed directly or
through an agency including family members; ^: Fixed Capital: Depreciated value of Fixed Assets owned by factory.
In India, Ministry of Food Processing Industry is very active and available to help agro processing industry. Indian good processing
industry covers many sub sectors namely; fruits and vegetable; meat and poultry; milk and milk products, alcoholic beverages,
fisheries, plantation, grain processing, consumer products groups like confectionery, soya based products, chocolates and cocoa
products, mineral waters and high protein foods, etc. The most promising sub-sectors consists of soft-drink bottling, confectionery
manufacture, fishing, aquaculture, grain milling and grain-based products, meat and poultry processing, tomato paste, fast-food,
ready to eat breakfast cereals, food additives, flavors etc. These different kinds of products are processed under food processing
which are broadly classified as:
Figure-1
Segments
Food Processing
Consumer food
Grain processing
Marine products
Meat and Poultry
Milk
Fruits & Vegetables
Sources: Authors Compilation
SOME OF THE MAJOR GOVERNMENT SCHEMES
Government of India through Ministry of Food Processing Industry keeps a close watch to develop the agro food processing industry.
Ministry has introduced many schemes and policies in order to nurture the industry. These schemes are very much beneficial to the
agro processing industry and they also ensure the right development of the industry. Some of these schemes introduced by
government are mentioned as:
Pradhan Mantri Kisan SAMPADA Yojana
Government of India (GOI) has approved a new Central Sector Scheme – Pradhan Mantri Kisan SAMPADA Yojana (Scheme for
Agro-Marine Processing and Development of Agro-Processing Clusters) with an allocation of Rs. 6,000 crore for the period 2016-
20 coterminous with the 14th Finance Commission cycle. The scheme will be implemented by Ministry of Food Processing
Industries (MoFPI). Pradhan Mantri Kisan. It is a comprehensive package ensure the modern infrastructure with efficient supply.
The following schemes will be implemented under PM Kisan SAMPADA Yojana:
Mega Food Parks,
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Integrated Cold Chain and Value Addition Infrastructure,
Creation / Expansion of Food Processing & Preservation Capacities,
Infrastructure for Agro-processing Clusters,
Creation of Backward and Forward Linkages,
Food Safety and Quality Assurance Infrastructure,
Human Resources and Institutions.
PM Kisan SAMPADA Yojana is expected to leverage investment of Rs. 31,400 crore for handling of 334 lakh MT agro-produce
valued at INR 1,04,125 crore, benefiting 20 lakh farmers and generating 5,30,500 direct/indirect employment in the country by the
year 2019-20.
Mega Food Parks
The Scheme of Mega Food Park aims at providing a mechanism to link agricultural production to the market by bringing together
farmers, processors and retailers so as to ensure maximizing value addition, minimizing wastage, increasing farmers’ income and
creating employment opportunities particularly in rural sector. The Mega Food Park project is implemented by a Special Purpose
Vehicle (SPV) which is a Body Corporate registered under the Companies Act. However, State Government, State Government
entities and Cooperatives are not required to form a separate SPV for implementation of Mega Food Park project. Subject to
fulfillment of the conditions of the Scheme Guidelines, the funds are released to the SPVs.
So far Nine Mega Food Parks, namely, Patanjali Food and Herbal Park, Haridwar, Srini Food Park, Chittoor, North East Mega Food
Park, Nalbari, International Mega Food Park, Fazilka, Integrated Food Park, Tumkur, Jharkhand Mega Food Park, Ranchi, Indus
Mega Food Park, Khargoan, Jangipur Bengal Mega Food Park, Murshidabad and MITS Mega Food Park Private Limited, Rayagada
are functional.
Cold Chain
The objective of the Scheme of Cold Chain, Value Addition and Preservation Infrastructure is to provide integrated cold chain and
preservation infrastructure facilities, without any break, from the farm gate to the consumer. It covers pre-cooling facilities at
production sites, reefer vans, mobile cooling units as well as value addition centres which include infrastructural facilities like
Processing / Multi-line Processing/ Collection Centres, etc. for horticulture, organic produce, marine, dairy, meat and poultry etc.
Scheme for Creation / Expansion of Food Processing / Preservation Capacities
The main objective of the Scheme is creation of processing and preservation capacities and modernization/ expansion of existing
food processing units with a view to increasing the level of processing, value addition leading to reduction of wastage. The setting
up of new units and modernization/ expansion of existing units are covered under the scheme. The processing units undertake a
wide range of processing activities depending on the processing sectors which results in value addition and/ or enhancing shelf life
of the processed products.
Agro Processing Clusters
The scheme aims at development of modern infrastructure and common facilities to encourage group of entrepreneurs to set up food
processing units based on cluster approach. Under the scheme, effective backward and forward linkages are created by linking
groups of producers/ farmers to the processors and markets through well-equipped supply chain consisting of modern infrastructure
for food processing closer to production areas and provision of integrated/ complete preservation infrastructure facilities from the
farm gate to the consumer.
Each clusters have two basic components i.e. Basic Enabling Infrastructure (roads, water supply, power supply, drainage, ETP etc.),
Core Infrastructure/ Common facilities (ware houses, cold storages, IQF, tetra pack, sorting, grading etc) and at least 5 food
processing units with a minimum investment of Rs. 25 crore. The units are set up simultaneous along with creation of common
infrastructure.
Scheme for Creation of Backward and Forward Linkages
Under the scheme, financial assistance is provided for setting up of primary processing centers / collection centers at farm gate and
modern retail outlets at the front end along with connectivity through insulated/ refrigerated transport.
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The Scheme is applicable to perishable horticulture and non-horticulture produce such as: fruits, vegetables, dairy products, meat,
poultry, fish, ready to cook food products, honey, coconut, spices, mushroom, retails shops for perishable food products etc. The
Scheme would enable linking of farmers to processors and the market for ensuring remunerative prices for agri produce.
Food Safety & Quality Assurance Infrastructure
Quality and Food Safety have become competitive edge in the global market for food products. For the all-round development of
the food-processing sector in the country, various aspect of Total Quality Management (TQM) such as quality control, quality
system and quality assurance should operate in a horizontal fashion. Apart from this, in the interest of consumer safety and public
health, there is a need to ensure that the quality food products manufactured and sold in the market meet the stringent parameters
prescribed by the food safety regulator. Keeping in view the aforesaid objectives, government has been extending financial
assistance under the scheme under the following components:
Setting Up / Up-gradation of Quality Control/Food Testing Laboratories.
HACCP / ISO Standards/Food Safety/Quality Management Systems.
National Horticulture Board (NHB)
Setting up of cold storage (of capacity above 5000 MT and up to 10000 MT) and their modernization are eligible for assistance
under the NHB Scheme of Capital Investment subsidy for construction/ expansion/ modernization of cold storage for Horticulture
Products (a sub scheme under MIDH). It is open ended credit linked scheme with scale of assistance @ 40% of capital cost of
project limited Rs 30.00 lakhs per project in general area and 50% limited to Rs 37.50 lakhs per project in case of NE, Hilly & amp.
National Horticulture Mission (NHM)
Cold storage (long-term storage and distribution hubs) up to 5000 MT capacity are eligible for assistance under the open-ended
scheme of NHM / HMNEH (a sub scheme of MIDH). The assistance is extended as subsidies to credit linked projects @ 35% of
capital cost of project in general area and 50% in case of Hilly & Scheduled area.
Small Farmer Agri-Business Consortium (SFAC) Assistance to Cold Storage
Setting up of cold storage as a part of an integrated value chain project are eligible for subsidy provided the cold storage component
is not more than 75% of TFO (Total Financial Outlay). The scale of assistance as subsidy to projects is @ 25% of capital cost and
maximum ceiling to Rs 2.25 crores in general area and 33.33% and maximum ceiling up to Rs 4 crores in case of NE, Hilly &
Scheduled area. Integrated Scheme for Agricultural Marketing (ISAM)-Operational Guidelines.
Agricultural and Processed Food Products Export Development Authority (APEDA) Assistance for Cold Chain
Setting up of cold chain are assisted by APEDA as a part of strategy to develop the industries relating to the scheduled products for
export. The Scale of assistance as 40% subsidy subject to a limit of Rs 75 lakhs for cold chain projects with mechanized handling
system.
Development Commissioner Micro, Small and Medium Enterprises (MSME)
Are implementing scheme for promotion and technology up gradation of Small Scale Industries (SSI). Under the scheme Credit
Linked Capital Subsidy Scheme (CLCSS) DC MSME provides subsidy at the rate of 15% of the investment in plant and machine to
micro and small manufacturing enterprises (MSEs). Maximum amount of subsidy is Rs 15 lakhs and maximum ceiling of investment
in plant and machinery is Rs 1 crores.
Food Processing Unit
Under Horticulture Mission For North Eastern Region and Himalayan States (HMNEH) a sub scheme of MIDH Food processing
units for horticulture products are extended credit linked back ended capital investment assistance of 50% of project cost
(ceiling amount of project cost is Rs 8 crores ) in the States of J&K, Himachal and Uttarakhand. (Relevant page 49)
Venture Capital by Small Farmer Agri-Business Consortium (SFAC)
SFAC extents venture capital assistance in form of equity to agribusiness projects. The quantum of SFAC support is 26% of
promoter’s equity or amount of Rs 50 lakhs whichever is lower in general area and 40% of the promoter equity or amount of Rs 50
lakhs whichever is lower in Hilly and NE regions . This venture capital is repayable to SFAC after the repayment of term loan.
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Venture Capital by SIDBI Venture Capital Limited (SVLC) Funds Details of SVLC
Extents support to MSME through one of its scheme Smaridi Fund with a corpus of Rs 450 crores invested by Department for
International Development (DIFD) UK and SIDBI. The scale of support is between Rs 5 to Rs 25 Crores in form of equity
and convertible instrument payable after 7 years.
Ministry of Micro, Small and Medium Enterprise
To promote innovation and entrepreneurship culture at grassroots level, Ministry of MSME under its scheme for Promotion of
Innovation, Entrepreneurship and Agro Industry have been allotted budget of 210 crores.
Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship outcome-based skill training scheme of the new Ministry of Skill
Development & Entrepreneurship (MSDE). The objective of this skill certification and reward scheme is to enable and mobilize a
large number of Indian youth to take up outcome based skill training and become employable and earn their livelihood. Under the
scheme, the monetary reward would be provided to trainees who are successfully trained, assessed and certified in skill courses run
by affiliated training providers. The scheme will be implemented through the National Skill Development Corporation (NSDC).
Those all schemes are playing a role of an additional hands to support the industry. This paper is developed to understand the
government schemes, and most importantly the implementation and accessibility to the schemes by firms. The respondents firms
(small and medium enterprises) are taken as defined by MSMED Act 2006 situated in Pune City and PCMC.
OBJECTIVES
To understand agro food processing industry in India.
To understand various Indian government schemes for agro food processing.
METHODOLOGY
The study was conducted using sample survey data collected from various firms established in Pune city and PCMC area of
Maharashtra. The Indian agro industry deals with supply, process and distribution of agricultural or farm products. For many, the
agro industry consists of post-harvest activities engaged in transformation, preservation and production of agricultural products for
intermediary and final consumption. So there exist many types of firms in the industry based on the product or service type. This
study purposively target fruits and vegetable processing units.
The study includes small and medium enterprises that were registered with Pune DIC from 2010-11 to 2014-15. A structured
pretested questionnaire was designed and presented to all sample firms. However, I received only 63 questionnaires returned which
further used to calculate and testing the hypothesis. Information was collected from the small and medium enterprises in the region.
The questionnaire mainly contained 15 close-ended questions, keeping the objectives of this study in view. All the questions of
questionnaire were designed to test the phenomena of study.
Hypothesis
H0: Government schemes for agro food processing are not known to firms in Pune District.
H1: Government schemes for agro food processing are known to firms in Pune District.
STATISTICAL ANALYSIS
Firm growth can be measured in terms of assets or employment of sales revenue. However, growth measurement in terms of assets
and employment can lead to biased results if the industry consists of a mixture of capital-intensive and labor-intensive firms
(employment is biased against capital-intensive firms and assets are biased against labor-intensive firms).
The questionnaire considered various factors and was consisting of 15 dichotomous questions related to the topic found after an
intensive literature review. The final data recorded as follows:
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Table-2: Record of Data
Units / Responses Yes No Total
Small Enterprises 22 12 34
Medium Enterprises 13 16 29
Total 35 28 63
Sources: Authors Compilation
This data is recorded on the basis of responses received from respondents. There were 15 questions so maximum yes was considered
under “yes” and maximum no was considered as “no” while recording the data in above table.
Table-3: Chi-square Calculation
Obs Freq. (Oij) Exp Freq. (Eij) (Oij – Eij) (Oij – Eij)2 (Oij – Eij)2 / Eij
22 18.88 3.12 9.7344 0.5155
12 15.11 - 3.11 9.6721 0.6401
13 16.11 - 3.11 9.6721 0.6003
16 12.88 3.12 9.7344 0.7557
Total 2.5116
Sources: Authors Compilation
The calculation table of chi-square wherein all the data put and calculated shows the value of chi-square (2.5116). Wherein, the chi-
square table value at 1 degree of freedom and 10 % level of significance is 2.706.
Chi-square Calculated Value < Chi Square Table Value
As the calculated value is less than the table value so the null hypothesis that, “Government schemes for agro food processing are
not known to firms in Pune District” is accepted.
Chi-square statistical analysis tool is used to evaluate the variables and interpret the data collected through questionnaire. All the
responses were collected in yes or no. There were two types of respondents. Some of the responses were from small scale companies
(34 companies) and rest from medium scale companies (29 companies). So both the respondents were treated separately as both
have got different point of views to see the organizations and their growth patterns. As most of the questions were in yes and no so
it was easy for the respondents as well to answer. The responses from the respondents were taken in yes and no and counted to mean
value and then recorded in the table-2.
FINDINGS AND DISCUSSION
The data collection was not only limited to the questions mentioned in questionnaire. But through observation also many things
have come across regarding the industry. Mainly it was related to the change in production competency of firms from traditional to
professional organizations. Market segmentation, Product diversification and uses of latest technologies are some of the main
changes in positive side observed in the firms. Both capital and labor intensive firms focusing more on skill development of
employees by providing more training to their employees. Market integration included both horizontal integration and vertical
integration. For government is running the schemes to integrate these firms. In the vertical integration, both forward and backward
integration were considered.
The inconsistency in the growth of firms was also found in sample firms. This shows that the high-growth firms had higher value
of assets than the average value of assets of all sample firms. That is why; different schemes have been made by the government to
support all types of firms. However, the implementation of the schemes was found a bit tricky, as in many cases firms were not even
completely educated and knowledgeable about the schemes.
Considering the tricky part, it was also found that the firms using the government schemes, were mainly taking the help from
consultants or taking expert advice. This situation can be possible when firms get less knowledge about the schemes. However, due
to the absence of the experts, they end up by giving huge charges to the consultants to take benefits from the schemes introduced
by the government.
Among the entire sample firms, many firms were using any one of the schemes to take benefits provide by the government. However,
there were also many firms which were not using those schemes and in some case, there were not even aware of.
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Considering the growth patterns of the organizations, various innovative ways are advised to be used. For which Government
schemes are playing a considerable role. In some of the cases the role of external consultants is also very crucial. However the cost
incurred by the firm for these external consultants were significantly and positively related to the growth of firms, as it helps to take
the benefit of government schemes.
CONCLUSION
The Indian agro-processing industry is very lucrative and contributing a lot for the economic development of the country. These
organizations though play a major role in countries’ development; however beg for its survival in many cases. The significant uses
of the government schemes determine the faster growth in the Indian agro-industry. Choices of strategies selection are very
important as mistakes in strategy selection may bring down the growth rate of the firm. Knowledge of different schemes is also
important so the access benefits can be reaped to take organization ahead. Further the growth of these firms and implementation of
the government schemes were found on one line. It was also observed that governments schemes do play a major role in determine
overall growth of agro-food processing industry.
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A STUDY OF STRATEGIC PRACTICES FOLLOWED BY
SMALL SCALE AGRO PROCESSING UNITS IN PUNE DISTRICT
Rohini Sawalkar10 Dr. Smita Sovani11
ABSTRACT
Agriculture is one of the important sectors in Indian economy contributing to GDP, employment and overall development of
economy. Agro processing industry is dependent sector on working of agriculture. Growth of agro processing industry in
Maharashtra state is noticeable in recent years. Lots of innovations are taking place in industry which is contributing to holistic
development of sector.
Strategic practices are very important for working and growth of industry. Many management thinkers have contributed
significant concepts to the field of strategic management. In this study Porter’s generic strategies are focused for understanding
strategic practices followed by small scale agro processing units in Pune district of Maharashtra state.
In present study questionnaire consisting 20 questions related to Porter’s Generic Strategies are tested for small scale agro
processing units. Results are tabulated and tested with the help of statistical tools and conclusions are drawn there from.
KEYWORDS
Agro Processing Industry, Generic Strategies, Strategic Practices etc.
INTRODUCTION
Michel porter has made significant contribution to the field of management through Generic strategies. Popularly known three
generic strategies are cost leadership strategy, differentiation strategy, and focus strategy.
Cost leadership strategy focuses on all elements of manufacturing and operating processes in enterprise that contribute majorly to
reduce or control the cost of product.
Differentiation strategy considers various aspects of internal operations that contribute to unique selling proposition of products
manufactured by firm.
Focus strategy takes in to account aspect of specific small market or concentrates on special group of customers.
Figure-1
Sources: Authors Compilation
10Assistant Professor, MIT College of Engineering (CMSR), Maharashtra, India, [email protected] 11Professor, Sinhgad Institute of Management, Maharashtra, India, [email protected]
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OBJECTIVES OF STUDY
To understand strategies practices followed by small scale agro processing units in Pune district.
To understand Porter’s generic strategies.
SIGNIFICANCE OF STUDY
Small scale agro processing units are growing in every step. This study will help industry to understand current practices followed
by agro processing units. This will also help to focus on failure points. Understanding of these aspects helps researchers as well as
agro processing units to concentrate on growth boosting factors for rapid growth of sector.
RESEARCH METHODOLOGY
Descriptive method of research was designed with a questionnaire carrying 20 questions and presented to 50 enterprises (owners,
managers) in agro processing units in various areas of Pune district. The questionnaires were collected by personal visitations and
also by e-mail responses. Dichotomous type questions were used to prepare a table of association of attributes. Scores were
calculated for individual firms and average mean score was considered as acceptance rule for decision making.
Responses were collected from nonfood agro processing units only.
DATA ANALYSIS
A study involving 50 small scale non-food agro processing enterprises in Pune district was undertaken to understand whether they
practice generic strategies developed by Michael Porter or not.
It is observed that agro processing units in Pune strict are following Porter’s Generic Strategies.
It is independent of the size and type of the agro processing unit.
The hypothesis was tested for the same.
Ho1: “Small scale agro processing units in Pune district are practicing porter’s generic strategies”.
The following table shows the required data:
Table-1
Sources: Authors Compilation
Tabulated data shows the strategic practices of agro processing units in Pune district.
Data shows that out of 50 enterprises 35 units follow cost leadership strategy, 12 units follow differentiation strategy and three
units do not follow any of generic strategy.
Rule application of average mean accepts null hypothesis that: “Small scale agro processing units in Pune district are practicing
porter’s generic strategies”.
FINDINGS
Small scale agro processing units don’t know the terminology in management language but their answers to questions
asked proved that they are practicing generic strategies.
Cost leadership strategy is used by major enterprises.
Strategic decision making is difficult task for enterprises.
Strategic practices make enterprise more stronger on competition side.
Porter’s Generic Strategies Yes No
Cost Leadership 35 15
Differentiation 12 38
Focus 0 0
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LIMITATIONS
Study is limited to 50 enterprises only.
Only non-food processing units are considered for study.
Study is limited to Pune district of Maharashtra state.
Study is limited to generic strategies only.
CONCLUSION
Agro processing units in Pune district are concern about growth and facing competition in market. Hence are making strategic
changes in their working. These changes are leading towards practice of generic strategies. Competitive advantage that firms are
gaining through these practices making firms more confident about the strategies.
ACKNOWLEDGEMENT
We thank all the enterprise from Pune district that responded to our questionnaire and thus helped in collection of the data. We also
thank Mr. Vimal Deep Saxena for supporting us to conduct the said research.
REFERENCES
(2008, May 5-16). The Importance of Agro Industry for Socioeconomic Development & Poverty Reduction (Discussion Paper).
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Gupta, S. P. (2009). Statistical Methods (38th Ed.). New Delhi: Sultan Chand & Sons.
Kothari, C. R. (2004). Research Methodology- Methods and Techniques (2nd Ed.). New Delhi: New Age International (P) Ltd
Publishers.
Bordean, O. N., Borza, A. I., Nistor, R. L., & Mitra, C. S. (2010, August). The Use of Michael Porter’s Generic Strategies in the
Romanian Hotel Industry. International Journal of Trade, Economics and Finance, 1(2).
Cooper, D. R., & Schindler, P. S. (2003). Business Research Methods. New Delhi: Tata Mc Grew Hill Publishing Company
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TO STUDY THE EFFECTIVENESS OF PARTNER SATISFACTION
AND TO MEET ITS’ CUSTOMERS EXPECTATIONS IN THE RETAIL INDUSTRY:
CASE STUDY ON SHOPPERS STOP
Dr. Aparajita D. Amist12 Mamta Chawla13
ABSTRACT
Measure satisfaction is an alarming statistic. Most companies believe that they have they follow the best practice – in their
industry hence thinking they are the best and that they have no unhappy partners. The reality is, 96% of unhappy partners don’t
complain. Not only is it the leading indicator to measure partners loyalty, identify unhappy partners, reduce churn and increase
revenue; it is also a key point of differentiation that helps you to attract new partners in competitive business environments.
Partner satisfaction is a marketing term that measures how products or services supplied by a partner to any retail organization
and meet a customer’s expectation. Partner’s satisfaction is important because it provides marketers and business owners with
a metric that they can use to manage and improve their businesses. Partner satisfaction is the ultimate indicator of how likely
a customer will make a purchase in the future. Asking partners to rate their satisfaction on a scale of excellent-poor is a good
way to see if they will become repeat partners or new one.
In a competitive marketplace where businesses compete for partners, partner satisfaction is seen as a key differentiator.
Businesses who succeed in these cut-throat environments are the ones that make customer satisfaction a key element of their
business strategy.
Partner satisfaction is the metric can use for gain more profit. By measuring and tracking partner satisfaction you can put new
processes in place to increase the overall quality of your partner service.
KEYWORDS
Partner Satisfaction, SSL etc.
INTRODUCTION
What is Retailing?
Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or
household use. It includes every sale to the final consumer. Retailing is also the last stage in the distribution process (Barry Berman,
Joel R. Evans, Retail Management : a strategic approach 2004,3). Today the retail trade comprises a wide and varied collection of
outlets for goods and services. In order that retail exchange can take place, the retailer must offer to sell products and services that
are valued by customers. Retailers create value for customers by offering the right merchandise, creating a pleasant atmosphere,
decreasing shopping risks, increasing shopping convenience and reducing price by controlling costs. (Tony Kent, Ogenyi Omar,
Retailing, 2003, 27) Retailers provide important functions that increase the value of the product and services they sell to consumers
and facilitate the distribution of those products and services for the manufacturers to produce them. These value-creating functions
include:
Providing an assortment of products and service,
Breaking bulk,
Holding inventory,
Providing services.
Retailers are the final business supply chain that links manufacturers to consumers. A supply chain is a set of firms that make and
deliver a given set of goods and services to the ultimate consumer. (Levy/Weitz, retailing management 2004,7)
The purpose of the study is to understand whether large retail stores in India offering products in categories as diverse as ethnic
wear, western clothing, kids wear, books, jewelry etc. having a large base of partners from whom it sources merchandise. The study
12Dean, Amity Global Business School, Uttar Pradesh, India, [email protected] 13Assistant Professor, Amity Global Business School, Uttar Pradesh, India, [email protected]
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is a partner / vendor Relationship Assessment Programme which aims to understand the vendor relationship Here we want to know
whether the partnerships have mutual vulnerability and risk sharing. Can these relationship’s survive on this type of independence.1
Creating a vendor partnership program starts with an assessment of a retailer’s existing vendor compliance-related processes,
organizational structure, technical solutions and tools, as well as the current program’s business objectives. This involves collection
and analysis of data and core documentation, as well as interviews with those participating in and affected by the program, from the
retailer’s employees to its key endors.2
Types of Partners – Vendor Participation
There are 4 broad types of partner organisation in the current survey.
Consignment / Sale Return Segment: These are those organization in whose case the entire merchandise supplied to consignment
basis. That is, the goods are lifted by SSL from the partner organization, but stocks/merchandise that does not get sold at the SSL
stores are returned to the partner company and not paid for by SSL. SSL pays the partner only for the value of goods that are
purchased by the end-customers from its stores. Other areas are similar to what was explained for own bought partners. Some
prominent examples of consignment partners are TANTRA T-Shirts and Moustache International.
Outright Bought: Brands are those brands owned by the partner and good supplied to SSL under the label of these brand is “bought
outright” by SSL at the start of season. E.g. goods offered by the brands of companies like Madura Garments, Levi Strauss, Welspun
India, Mattel Toys are bought outright by SSL and sold at their stores, under the same label/brand name of the manufacturer or
Partner Company.
Private Label: Private Label manufactures are those who manufacture and supply merchandise to SLL that is sold under their
brands such as Stop, Life, Kashish etc.
Concessioner Partners: these are those organization in whose case, the in-store space is operated by personnel who are employees
of the partner organization. SSL charges these companies a percentage commission on sale as fees for allowing use of its stores.
Some examples are Gili, Gitanajali Jewels, Gini & Jony.
Shoppers Stop and Its Partners (Retailing Companies Whom They Supply Goods And Services)
The foundation of Shoppers Stop was laid on October 27, 1991, by the K. Raheja Corporation group of companies. Being amongst
India's biggest hospitality and real estate players, the Group crossed yet another milestone with its lifestyle venture.
Shoppers Stop has progressed from being a single brand shop to becoming a Fashion & Lifestyle store for the family. Today,
Shoppers stop is a household name, known for its superior quality products, services and above all, for providing a complete
shopping experience.
Shoppers Stop operations expanded to 81 stores in 38 cities. Shoppers stop has become the highest benchmark for the Indian retail
industry.
OBJECTIVES OF THE STUDY
To determine the satisfaction level of Partners of Shoppers Stop.
To identify the expectation level of Partner which they need from Shoppers Stop.
A questionnaire was designed to assess the various parameters of wanting to partner with Shoppers Stop (SSL). Some of them
included questions on the overall quality aspects – in the store during festivals/ store planning/ relationship with SSL/ visual
merchandising / digital marketing / net income or ROI from the business relationship
QUALITY OF RELATIONSHIP
Overall Quality Relationship with SSL
Despite the word ̋ relationshipʺ in its name, it stands on the Quality basis. Quality of Partner Relationship Management , about
understanding the needs of one’s business partners and satisfying those needs to the best of one’s ability while building trust
between the two parties . An organization must learn to communicate with its partner, using self‐ disclosure skills to articulate
its needs.
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Figure-1: Shows Overall Quality Relationship with SSL
Sources: Authors Compilation
Interpretation: The graph shows a total of 32 partners, 9 partners rated their relationship with Shoppers Stop as an excellent
one, 16 partners rated as very good, 5 partners rated as good and 2 partners rated as fair. From the above chart, I can easily
say that none of their associates are dissatisfied with the kind of relationship they maintain with Shoppers Stop. Here we can say
that they create personal trust and generate strategies which they share with their partners to make their relationship
stronger.
Net Profit / Return on Investment with SSL
ROI is important for a partner to evaluate whether their investment in the partnership is worth keeping their money in.
Figure-2: Profit Contribution of Shoppers Stop towards their Partner’s
Sources: Authors Compilation
Interpretation: According to the partner’s net income and ROI after their association with SSL, 8 partners are very highly
satisfied, 16 partners are highly satisfied, 5 partners rated as moderate basis and 2 partners rated as a low basis. There is a
no partner who has rated as a very low basis. This shows that on most of the partners are highly satisfied with their share with SSL.
The Amount partner invested with SSL, helps them to received good enough return with increasing business of SLL.
Marketing Team
Figure-3: Performance of Marketing Team
Sources: Authors Compilation
Interpretation: This marketing team going to help during festivals, discount sales, special events/sales provided by Shoppers Stop.
On this special time or in regular days Shoppers Stop marketing team perform very efficiently that’s why 14 partners rated Shoppers
Stop in an Excellent basis, 13 partners rated as very good and 4 partners rated as a good, and 1 partner rated as a fair.
5 2 9
16
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Store Planning
Figure-4: Overall Store Planning of SSL
Sources: Authors Compilation
Interpretation: Store Planning is very important part for any retail organisation because:
Store Location Priority: Store should be open in proper/ main COD area (central of district) where all target customers
can come easily.
The store must offer a positive ambience to the customers. The customers must leave the store with a smile.
All materials should be kept in proper place so that customer can easily identify their needed items.
Shoppers Stop put necessities near in front, Put seasonal items and new products in prime locations.
Merchandising Department of SSL
Figure-5: Quality Merchandising Department of SSL
Sources: Authors Compilation
Interpretation: Here from the above chart, one can interpret that Shoppers Stop merchandising department performs very well. As
Shoppers Stop is known by a largest retail chain, but their strategy distinguish them from their competitors. They have:
Merchandising department deals with the fact that the partner’s and consumer’s needs change from season to season
and during the seasons too. The merchandiser has to take responsible risks to ensure that the product line will sell,
fashion has to change but this has to be accepted by the consumer and partner too.
Guiding and training of partners to supply/make those kind of products, when the need arises.
Inspiring commitment and performance on the part of the merchandising department of Shoppers Stop.
For this above reason all partners are happy to work with SSL. That’s why 17 of the partners rated SSL as an Excellent basis,
6 and 5 partners rated as very good and good basis and 3 as a fair basis. No partners are dissatisfied with SSL.
14
12
10
8
6
11
6
2
0 0
Excellent Very good Good Fair Poor Don’t know / Na
13
Volume 6, Number 4, October – December’ 2017
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B2B Website
Figure-6: Quality of B2B Website
Sources: Authors Compilation
Interpretation: In order to perform well in the current business scenario, an organisation should manage their B2B website in a
proper way so that their associates can get necessary information in a single click. Shoppers Stop B2B website gives sufficient
information to their partners.
This website is appropriate and packed with relevant information.
Pricing: Businesses are usually more concerned with cost, value, and revenue potential. In shoppers stop costing of every
product is very reasonable.
Shoppers stop B2B sales department has strong communication skills and is able to connect with a variety of partners.
They specialize in sales, negotiation and decision making.
For this reason every partner prefers their B2B website and most partners rated them as excellent or very good. They have an
opportunity to expand the personal yet serious design of B2B sites. They even increased brand awareness through an
additional channel. They continuously try to improve their target group for additional revenue.
CONCLUSION
Although Shoppers Stop has an appreciable mind share but comparatively lacks in market share. The Partners rate Central
and Lifestyle as the Preferred Partners over Shoppers Stop:
Companies are making half-hearted efforts to motivate their partners.
Sales promotion schemes on a brand might not be up to the mark for attracting buyers to buy the brand materials that
somehow affect the partner’s profit.
Shoppers Stop is trying to understand and work on their partner satisfaction level with them. Just how this is done in such a
competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to
increase their market share. The creativity and effectiveness of each company's marketing strategy will ultimately determine the
winner with respect to sales, profits, and customer loyalty.
Store Location of Shoppers Stop is not in a proper COD area. SSL has to give more attention on their location preferences.
Shoppers Stop should offer more Variety of Brands.
Brand Ranking has not been updated for the last 2 years. They should update their Brand Ranking on a weekly basis.
Distribution Centres which transfer to store, helps SSL to work more efficiently.
Auto Replenishment in store should be 120%.
Time lag for placing order to their partners is very huge. They should order their inventory within time.
12 10
6
3 1
0
Excellent Very good Good Fair Poor Don’t know/ Na
Volume 6, Number 4, October – December’ 2017
ISSN (Print): 2279-0934, (Online): 2279-0942
PEZZOTTAITE JOURNALS SJIF (2015): 6.622, SJIF (2016): 7.452
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